Bayside City Council v Telstra Corporation Ltd
72 In Bayside City Council v Telstra Corporation Ltd (2004) 216 CLR 595, the High Court considered the validity of s 611 of the Local Government Act 1993 (NSW) ("the NSW Act") and Pt 8 of the Local Government Act 1989 (Vic) ("the Victorian Act").
73 Section 611 of the NSW Act conferred power on local Councils to make an annual charge on a person in possession, occupation or enjoyment of a rail, pipe, wire, pole, cable, tunnel or structure laid, erected, suspended, constructed or placed on, under or over a public place. However, s 611(6) and other legislation exempted a number of bodies from the operation of the power, including the Crown, water supply authorities and railway, electricity network and pipeline operators. However, carriers and gas pipeline providers were not exempt.
74 Sections 154 and 155 in Pt 8 of the Victorian Act declared that all land in Victoria was rateable and empowered Councils to declare rates and charges on such land. Crown land and land used exclusively for public or municipal services land was exempted from such rates and charges, as were electricity companies and gas suppliers. Carriers were not exempt.
75 Telstra and Optus had each installed underground and aerial cables in local government areas. A number of Councils imposed charges or levied rates in respect of the land occupied by the cables. Telstra and Optus brought proceedings against the Councils alleging that s 611 of the NSW Act and Pt 8 of the Victorian Act discriminated, or had the effect of discriminating, against carriers.
76 At first instance, Wilcox J dismissed the proceedings, holding that cl 44(1) of Sch 3 was not a law under s 51(v) of the Constitution upon which s 109 of the Constitution could operate so as to render State laws invalid: see Telstra Corporation Ltd v Hurstville City Council (2000) 103 FCR 322. Having reached that conclusion, Wilcox J did not go on to consider whether the NSW and Victorian legislation had a discriminatory effect on carriers.
77 The Full Court of the Federal Court allowed the appeal, holding that cl 44(1) of Sch 3 was a valid exercise of the Commonwealth's legislative power, and that the NSW and Victorian legislation discriminated against carriers to the extent that they authorised local government authorities to impose rates and charges on carriers: see Telstra Corporation Ltd v Hurstville City Council (2002) 118 FCR 198.
78 By majority, the High Court dismissed an appeal from the judgment of the Full Court. Callinan J, in dissent, would have upheld the appeal on the basis that cl 44 of Sch 3 was beyond the legislative power of the Commonwealth. His Honour did not go on to consider the question of discrimination.
79 Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ held that cl 44 was constitutionally valid and that the NSW and Victorian legislation discriminated against carriers. McHugh J gave separate reasons, agreeing in the result.
80 The plurality considered the scope of cl 44, saying:
24 There is a question as to the extent of the application of cl 44, and, in particular, cl 44(1)(a)…[I]f a State or Territory law is discriminatory in one of the ways referred to in cl 44, and that discrimination involves adverse treatment that is differential by reference to an appropriate standard of comparison, it will attract the operation of that provision…Similarly…the kind of discrimination against carriers that attracts the potential operation of cl 44 is discrimination against them in their capacity as carriers. Clause 44 is concerned with State or Territory laws which impose discriminatory burdens upon carriers in carrying on activities as carriers authorised by the Telco Act.
(Footnote omitted.)
81 Their Honours then dealt with the application of the law to the facts as follows:
40 Discrimination is a concept that arises for consideration in a variety of constitutional and legislative contexts. It involves a comparison, and, where a certain kind of differential treatment is put forward as the basis of a claim of discrimination, it may require an examination of the relevance, appropriateness, or permissibility of some distinction by reference to which such treatment occurs, or by reference to which it is sought to be explained or justified. In the selection of comparable cases, and in forming a view as to the relevance, appropriateness, or permissibility of a distinction, a judgment may be influenced strongly by the particular context in which the issue arises. Questions of degree may be involved.
41 In the present case, the basis for the claim of discrimination is in a comparison between, on the one hand, the charges and rates imposed and levied in respect of the Telstra and Optus cables, and, on the other hand, the treatment of facilities, which are installed or operated above, on or under public land, by utilities or other users of such space and are said to be comparable…In the present case, however, Telstra and Optus point to a general pattern of State legislative treatment of facilities to which their cables have been made an exception.
42 Clause 44 does not, in terms, identify the kind of comparison that is appropriate for the purpose of considering whether a State law discriminates against carriers generally. (The comparison involved in deciding whether a State law discriminates against a particular carrier, or a particular class of carriers, is more straightforward.)…
43 In relation to aerial cabling, which appears to be what primarily attracted the attention of the local authorities, the facilities installed by electricity authorities constitute an obvious basis of comparison. The fact that they are singled out in the Explanatory Memorandum confirms that the kind of discrimination with which cl 44 is concerned, in its reference to discrimination against carriers generally, is the subjection of carriers, in that capacity, to a burden of a kind to which others in a similar situation are generally not subject, and that a similar situation includes the use of public space for the installation and maintenance of facilities such as cables, pipes, ducts and conduits. In relation to underground facilities, the position is somewhat more complex, but gas pipelines in New South Wales are, apart from the facilities in question in this case, the exception to a general pattern of exemption.
44 …Here there is a clear general pattern of exemptions, and it is sufficient to say that the existence of one other significant exception to that pattern (gas pipelines in New South Wales) does not negate discrimination. In addition, in the case of aerial cabling, there is an obvious basis of comparison, namely electricity facilities, which enjoy an exemption.
(Footnotes omitted.)
82 Justice McHugh considered what would amount to a reasonable or permissible distinction in the treatment of carriers and others. His Honour said:
68 The Full Court accepted that different treatment amounts to discrimination only if there is no reasonable distinction to justify different treatment. The appellants submitted that the key difference between Telstra and Optus on the one hand and the exempted bodies on the other is that the latter occupy land under statutory authorities granted by the States, while the appellants occupy land under authority granted by the Commonwealth. A State, they submitted, is entitled to prevent councils, which are the custodians of its land, from charging rates to the State's agents.
69 However, the question whether a reasonable distinction exists must be examined in light of the law prohibiting discrimination, not the potentially discriminatory law. As Gaudron J and I said in Castlemaine Tooheys Ltd v South Australia, a law "is discriminatory if it operates by reference to a distinction which some overriding law decrees to be irrelevant". It is of no present relevance whether or not, in exercising their powers under the applicable Local Government Act, councils are acting reasonably in perceiving a difference between State agencies and bodies authorised to carry out functions under federal law, such as Optus and Telstra. The question is whether the Telecommunications Act permits Optus and Telstra to be treated differently from State agencies in respect of rates and charges.
70 It is true, as Wilcox J noted, that cl 44(1) of Sch 3 to the Telecommunications Act provides no criteria by which a court may determine what differences are legitimate and what are illegitimate. His Honour observed that in this respect it differs from other federal statutes which prohibit discrimination and which provide such criteria, for example, the Racial Discrimination Act 1975 (Cth), the Sex Discrimination Act 1984 (Cth) and the Disability Discrimination Act 1992 (Cth).
71 For the purposes of this case, it is unnecessary to determine whether cl 44(1) prohibits all differential treatment of carriers. It is sufficient to say that the wide and unconditional language of cl 44(1) suggests that the Commonwealth Parliament intended to protect carriers from special burdens without regard to any policy objective of a State or Territory law which imposed that burden. If the Parliament had intended to allow such policy objectives to be relevant, it would have framed cl 44(1) so as to prohibit only unreasonable discrimination.
(Footnotes omitted.)
83 His Honour went onto consider the identification of the appropriate comparator:
77 Clause 44(1) prohibits discrimination against a particular carrier, class of carriers or carriers generally. If the discrimination alleged was against a particular carrier, the appropriate comparison would probably be other carriers. Where the discrimination is alleged to be against "carriers generally", however, the issue arises as to the appropriate entity with which "carriers" should be compared. Was the Full Court correct to conclude that the appropriate comparison here was between Optus and Telstra on the one hand and "other bodies which make a similar use of public places" on the other?
78 The appellants were unable to suggest any alternative point of comparison. Instead, they resorted to the suggestion that cl 44(1) is designed to prevent only laws aimed at carriers, rather than to ensure that carriers receive equal treatment. Such a narrow interpretation of "discrimination" is incompatible with the breadth of cl 44(1). In particular, the reference to the "direct or indirect" effect of a State or Territory law leaves no room for such an argument.
79 In cases like the present, the allegedly discriminatory law itself provides the comparator for the purpose of cl 44(1). The New South Wales and Victorian Acts confer a power to levy charges or rates on the owners or occupiers of public land, that is, land used for a public purpose. This indicates that the Full Court was correct in comparing the position of carriers with that of other owners or occupiers of public land. In turn, this invites a comparison with electricity suppliers, water suppliers, gas suppliers and other pipeline users. These entities resemble Telstra and Optus in their ownership and/or occupation and use of public land, a use which involves putting wires, cables or pipes over or under the land. Other owners or occupiers of public land, whose use of the land is perhaps less directly comparable with that of Telstra and Optus, include rail authorities, road traffic authorities and public transport authorities. Whether the comparison is made with the first group or the second group, the New South Wales and Victorian Acts exempt all - or in the case of New South Wales, almost all - of these entities from the operation of the legislation. This has the effect that the New South Wales and Victorian Acts authorise charges or rates that discriminate against Telstra and Optus.
(Footnote omitted.)
84 As to the fact that the NSW legislation also imposed charges on gas suppliers, McHugh J said:
80 In New South Wales, gas suppliers are the only bodies apart from Telstra and Optus that are subject to the charges...The Full Court assumed, correctly in my opinion, that this liability on the part of gas network operators did not mean that the New South Wales councils did not discriminate against Telstra and Optus. A person may be discriminated against even if some other person is treated equally unfavourably.
81 If many other persons were also treated unfavourably, a question might arise whether the law discriminated against a particular person. This question does not arise in the present case. The great majority of occupiers of public space in New South Wales are exempt from local government charges. That gas suppliers remain subject to these charges does not alter the fact that carriers are treated less favourably than most comparable entities.
(Footnote omitted.)