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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Broadcasting and Television - reference of questions of law by Australian Broadcasting Tribunal under Broadcasting and Television Act 1942 - prohibition in Act on a foreign person being in a position to exercise control of a licensee company - whether premiums paid on issue of shares are amounts "paid on the shares" within the meaning of s.91(3)(b) - whether the "amount paid on shares" is the amount of the nominal value of the shares - whether "being in a position to exercise control" is defined exhaustively by ss. 90E and 92B - effect of deeming provisions - whether de facto control by other means is included - whether test for the existence of control of a company includes not only control of general meeting but also control of the board of directors - whether power of veto constitutes control - what constitutes presently existing right to control.Broadcasting and Television Act 1942: ss. 90, 91, 92A, 92B, 92D Acts Interpretation Act 1901: ss.15AA, 15AB.
HEARING
SYDNEYCounsel and Solicitors for Network Ten Holdings Limited, Network Ten Investments Limited and Kenneth Brian Stonier, George Edwin Limb and Sidney Baillieu Myer, the trustees of the Pemberly Trust:- T. Hughes Q.C. and S.D. Robb instructed by Dawson Waldron
Counsel and Solicitors for The News Corporation Limited, Cruden Investments Pty. Limited, Kayarem Pty. Limited, Mr. Keith Rupert Murdoch and Dame Elisabeth Murdoch:- R.P. Meagher Q.C. and W.M.C. Gummow instructed by Dawson Waldron
Counsel and Solicitors for Australian Journalists' Association and Actors Equity of Australia:- D.K. Catterns and S. Epstein instructed by Phillips Fox
Counsel and Solicitors for the Australian Broadcasting Tribunal:- N.R. McPhee Q.C. and D. Shavin instructed by the Australian Government Solicitor.
ORDER
The answers to the following questions of law arising in the proceedings before the Australian Broadcasting Tribunal which were referred pursuant to s.22B of the Broadcasting and Television Act 1942 are as stated below:QUESTION:
(i) Whether, in considering whether TNCL has a
shareholding interest such that it would beANSWER: Yes.
deemed to be in a position to exercise
control of NTHL and its subsidiaries
pursuant to sections 90E and 92B of the
Act, the premiums paid on the shares
referred to in paragraphs 9(b) and 10(b)
above (of the Special Case) are to be
included in the calculations of:
(a) "an amount equal to the value of
the shares", or
(b) "an amount equal to the value...of
the person's interest in the
shares",
within the meaning of paragraphs 90(3)(b)
and 91(3)(b) of the Act.
QUESTION:
(ii) Whether sections 90E and 92B exhaustivelyANSWER: Sections 90E and 92B do not exhaustively define the meaning
define the meaning of "being in a position
to exercise control, directly or
indirectly, of a company" within the
meaning of sub-sections 90G(1) and 92D(1)
and with the consequence that the Tribunal
is bound to find that the foreign persons
are not in a position to exercise control,
directly or indirectly, of the licensee
companies.
of "being in a position to exercise control directly orQuestion (ii).
indirectly of a company" within the meaning of sub-sections
90G(1) and 92D(1).
It is unnecessary to deal with the latter part of
QUESTION:
(iii) Whether, as at 5 September 1985, by reasonANSWER: Yes.
only of:
(a) Article 98(2)(b) of the Articles
of Association of NTHL; and/or
(b) Clause 4 of the Memorandum of
Association of NTHL and Article 8
of the Articles of Association of
NTHL;
TNCL was in a position to exercise control
of NTHL.
The determination of the remaining questions in the Special Case be stood over, liberty to restore reserved.
The parties who made applications to the Australian Broadcasting Tribunal
for approval of the transactions referred to in the Special
Case and who were
represented before this Court pay to Actors Equity of Australia, the
Australian Journalists' Association and the
Australian Broadcasting Tribunal
their costs of the reference to date.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
DECISION
The matter before the Court is a reference pursuant to Section 22B of the Broadcasting and Television Act 1942 ("the Act"). The most convenient method of stating the facts is to state the paragraphs of the Special Case. Paragraphs 1 to 6 inclusive are in the following terms:1. Several applications have been made to the Australian2. Paragraphs 7 and 8 attach the Memorandum and Articles of the relevant companies and a list of Directors of each of the relevant Boards but I shall not recite these except so far as may be necessary in dealing with particular questions submitted. Paragraphs 9 and 10 are as follows:
Broadcasting Tribunal ("the Tribunal") for approval of
transactions relating to the ownership and control of
certain radio and television licences. The applications
are made pursuant to sections 90J and 92F of the Act and
the Tribunal must consider approving the transactions
pursuant to sections 90JA and 92FAA of the Act.
2. The radio and television licences to which the
applications relate are -
TEN - 10 Sydney (commercial television)
ATV - 10 Melbourne (commercial television)
4AM - Atherton/Mareeba (commercial radio)
3FOX-FM - Melbourne (commercial radio)
United Telecasters Sydney Ltd is the licensee of TEN-10.
Austarama Television Pty Ltd is the licensee of ATV-10.
Far Northern Radio Pty Ltd is the licensee of 4AM.
Broadcast FM Pty Ltd is the licensee of 3FOX-FM.
Austarama Television Pty Ltd owned 20% of the shares of
Broadcast FM Pty Ltd and therefore was deemed to be in a
position to exercise control of Broadcast FM Pty Ltd
within the meaning of the Act until the sale of its
shares in the latter company on 30 June 1986.
3. The licensee companies were owned and controlled by The
News Corporation Limited ("TNCL") immediately prior to 4
September 1985. Mr K.R. Murdoch, at that time and until
February 1986, was a person who held shareholding
interests within the meaning of the Act of more than 50%
of the capital of TNCL. Since February 1986 Mr Murdoch
has held shareholding interests within the meaning of
the Act of slightly less than 50% of the capital of
TNCL. He was and still is deemed to be in a position to
exercise control of TNCL: section 90E and 92B of the
Act. On 5 September 1985 (Australian EST) Mr Murdoch
became a citizen of the United States of America. He
thereby ceased to be an Australian citizen on that date:
sub-section 17(1) of the Australian Citizenship Act
1948. Mr Murdoch is therefore a "foreign person" within
the meaning of sub-sections 90G(3) and 92D(3) of the
Act. As such, his continued control over the relevant
radio and television licences, if it exists, would be a
contravention of a condition of each of those licences
under sub-sections 90G(1) and 92D(1) of the Act.
4. TNCL is a "foreign person" under sub-sections 90G(3) and
92D(3) of the Act. As such, continued control by TNCL
over the relevant radio and television licences, if it
exists, would be a contravention of a condition of each
of those licences under sub-sections 90G(1) and 92D(1)
of the Act.
5. The Tribunal decided to conduct a public enquiry into
the transactions the subject of the applications.
Inquiries into the renewal of the licences for TEN-10
Sydney and ATV-10 Melbourne had been held in 1985. On 20
December 1985 the Tribunal had announced that, apart
from the ownership and control questions which would
arise in the transactions inquiry, there was nothing
arising from the renewal inquiries which would cause the
Tribunal not to renew the licences for the maximum
period allowed under the Act.
6. At the opening of the hearing on 30 April 1986, the five
transactions for consideration were -
Transaction A: The acquisition in June 1985 by News
Investment Pty Limited, now Network
Ten Investments Limted ("NTIL") of
5,840,633 shares in United Telecasters
Sydney Ltd;
Transaction B: The acquisition in August 1985 by NTIL
of 100,000 shares in Far Northern
Radio Pty Limited;
Transaction C: The acquisition on 2 and 3 September
1985 respectively by Network Ten
Holdings Limited ("NTHL") of 10,000 $2
ordinary shares, and 50,000 preference
shares in NTIL;
Transaction D: The allotment on 4 September 1985 of
318,853 $1 voting redeemable
preference shares in NTHL to the
trustees of Pemberly Trust;
Transaction E: The allotment and subsequent
redemption on 4 September 1985 of
291,859 $1 voting redeemable
preference shares in NTHL to Cruden
Investments Pty Limited, and of 24,822
such shares to Corcarr Nominees Pty
Limited as nominees for Kayarem Pty
Limited.
A further application was lodged with the Tribunal and
accepted by the Chairman during the course of the
inquiry for approval of the following transaction -
Transaction F: The acquisition by TNCL of
approximately 33,207 $1 ordinary
shares in NTHL pursuant to the
exercise of the option contained in
the deed dated 4 September 1985
between TNCL and NTHL.
A list of the applicants in relation to each of these
transactions is to be found in Appendix 1.
9. The relationship of TNCL to NTHL, NTIL and the licensee3. It is not necessary at this stage to recite paragraphs 11 to 18 inclusive.
companies resulting from the transactions A to E set out
in paragraph 6 above is shown in the attached chart
(Appendix 6). The total issued capital of NTHL is
$631,006, comprised of -
(a) 631,000 $1 voting redeemable preference shares held
as to 318,853 by the Pemberly Trust (see Trust Deed
at Appendix 7), and 312,147 by public shareholders
of TNCL;
(b) one $1 ordinary non-voting redeemable preference
share held by TNCL, issued at a premium of
$119,999, and
(c) five $1 (voting) ordinary shares held by TNCL
(until such time as Transaction F is approved).
The premium paid has been carried to a share premium
reserve account in the accounts of NTHL.
10. The total issued capital of NTIL is $120,050, comprised
of -
(a) 50,000 $2 non-voting preference shares held by
NTHL:
(b) 50 $1 non-voting redeemable preference shares held
by TNCL, issued at a premium of $999,999 each;
(c) 10,000 $2 ordinary shares held by NTHL.
The premium paid has been carried to a share premium
reserve account in the accounts of NTIL.
4. It will be noted that one senior Counsel represented a number of parties who were applicants before the Tribunal for the approval of several transactions those parties being NTHL, NTIL and Messrs Myer, Stonier and Limb as Trustees of a trust known as the Pemberly Trust. Another senior Counsel appeared for another group of parties namely News Corporation Limited, Cruden Investments Pty Limited, RAN Pty Ltd and Mr Rupert Murdoch. Senior Counsel also appeared for the Australian Broadcasting Tribunal but informed the Court that it was not his intention to make any submissions as to how the questions which had been referred should be resolved. He informed the Court that neither the Minister nor the Australian Government wished to take any active part in the proceedings. Junior Counsel appeared for Actors Equity of Australia ("Actors Equity") and the Australian Journalists' Association ("A.J.A."), both of whom had been joined as parties before the Tribunal.
5. The first question referred for determination by the Court is as
follows:-
(i) Whether, in considering whether TNCL has a6. It will be noted that paragraphs 9(b) and 10(b) refer to these paragraphs in the Special Case. They are quoted above. In order to understand the question of law which is posed, it is necessary to set out the relevant sections of the Act and to describe the legislative scheme. Division 2 of Part IV of the Act deals with the limitation of ownership or control of commercial broadcasting stations. Sections 90E and 90(3)(b) appear in Division 2. Division 3 of Part IV deals with commercial television stations. Sections 92B and 91(3)(b) appear in Division 3. The two divisions are substantially identical and, for the sake of convenience, I will refer to the "television" provisions in Division 3.
shareholding interest such that it would be
deemed to be in a position to exercise control of
NTHL and its subsidiaries pursuant to sections
90E and 92B of the Act, the premiums paid on the
shares referred to in paragraphs 9(b) and 10(b)
above are to be included in the calculations of:
(a) "an amount equal to the value of the shares",
or
(b) "an amount equal to the value ... of the
person's interest in the shares",
within the meaning of paragraphs 90(3)(b) and
91(3)(b) of the Act;
7. Section 92D(1) imposes a general condition upon the holding of a
television license. It provides that -
"... a foreign person shall not at any time during the8. Section 92B(1) sets out three situations in which a person will be deemed to be "in a position to exercise control" of the licensee company for the purposes of s.92D(1). The relevant provision for the purposes of this question is paragraph 92B(1)(b), which is as follows:
currency of the licence be in a position to exercise
control, either directly or indirectly, of the
company holding the license"
"92B(1) For the purposes of this Division, other than9. The term "shareholding interest" is defined in s.91(3)(b) of the Act as follows:
sub-sections 92D(2), (5) and (6) a person who ...
(b) has shareholding interests in a company, being
shareholding interests in respect of shares of a
kind carrying voting rights on all questions at
general meetings of the company, exceeding in
amount 15% of the total of the amounts paid on
all shares in the company of a kind carrying
such voting rights ...
shall be deemed (but not to the exclusion of any
other person) to be in a position to exercise control
of that company, of any votes, in respect of another
company, of which that company is in a position to
exercise control and of all acts and operations of
that company."
"(3) For the purposes of this Division -10. As appears from the words of paragraph 91(3)(b), the "value" to be given to the shares is not their market value. It is, rather, "the amount paid on the shares". The issue is whether the premium of $119,999 paid by TNCL for the issue to it of one ordinary redeemable preference share of $1 in NTHL, and the premiums of $999,999 paid by TNCL for the issue to it of each of its fifty non-voting redeemable preference shares of $1 each in NTIL are amounts "paid on the shares" within the meaning of paragraph 91(3)(b) of the Act.
...
(b) the amount of the shareholding interest is an
amount equal to the value of the shares, or of
the person's interest in the shares, as the case
requires, on the basis that the value of the
shares is equal to the amount paid on the
shares."
11. Counsel for both groups of applicants submitted that this question should be answered "No". It was argued that as a matter of the natural and ordinary meaning of words premiums are paid for shares not on shares. It was further contended that the settled meaning in company law of the expression "amount paid on shares" is the amount of the nominal value of the shares, and that such a meaning was well-established in 1965 when paragraph 91(3)(b) was incorporated into the Act. Reliance was placed upon the decision of the Victorian Supreme Court in Niemann v. Smedley (1973) V.R. 767, and the authorities there referred to. In that case it was held that the expression "amount unpaid on shares" within the meaning of s.218(1)(d) of the Companies Act 1961 (Vic) referred to the amount unpaid on the nominal value of the shares and did not include the amount unpaid on a share premium. Reference was also made to Drown v. Gaumont-British Picture Corp. Limited (1937) 1 Ch. 402 where Clauson J said, at p.403, that a "premium from its very nature is not part of the capital paid up on the shares".
12. It was also submitted by counsel for the two groups of applicants that to interpret the expression "amount paid on shares" so as to include a share premium would not accord with the legislative intention behind paragraph 91(3)(b), which was to promote certainty and ease of calculation of the "value" of shares. The expression "value" in paragraph 91(3)(b) was not given the meaning of market value because the market value of a share will vary over time and is in many cases difficult to determine. On the other hand, the nominal value of a share is a fixed and certain amount. It was argued that the object of paragraph 91(3)(b) in promoting certainty of calculation would be frustrated if the amount of a share premium was also to be included in determining the "amount paid on" a share. Counsel laid stress upon the practical difficulties which could arise in the calculation, for the purposes of ss.92B(1)(b) and (c), of the percentage amount of the relevant "shareholding interest". Problems would be caused by the fact that a company may issue shares at differing premiums and that records identifying such differing premiums may not be kept indefinitely. Moreover, shares will inevitably be traded in the market place and in the course of trading parcels of shares may be split up. When a purchaser acquires shares in a company, the parcel may thus include shares which have been issued at varying times with varying premiums. In many cases, it was argued, it would be an extremely difficult task for the purchaser to calculate the amount of the premium on each of the shares acquired, so as to determine whether he had complied with the provisions of s.92B(1) of the Act.
13. Whatever may be the position in other cases such forensic fears about difficulties in the market would be unlikely to be realised in the case of companies such as NTHL and NTIL. As will appear below, the articles of these two companies make provision for shares in respect of which dividends and the amount returnable on a winding up may depend on the amount of capital paid up and the amount of premium paid when the shares are issued. Presumably such companies would keep appropriate records to enable them to fulfil their duties under the articles and presumably the holders of such shares would be conscious of their rights in determining a sale price.
14. Counsel for Actors Equity and the A.J.A. submitted that the question
should be answered "Yes". It was argued that, contrary to
the submission of
the applicants, the expression "amount paid on shares" does not have a settled
and well-understood meaning in company
law. The provisions of the Companies
Code themselves recognise, it was said, that the expression "amount unpaid on
shares" is capable
of two meanings. It may refer to the amount unpaid on the
nominal value of the shares, as in s.360(1)(e) of the Code, the equivalent
provision to that which was at issue in Neimann v. Smedley. On the other hand,
it may also refer to the amount unpaid on the nominal
value of the shares
together with any unpaid premium. In support of the latter meaning, reference
was made to Schedule 3 of the Code
which contains the Table A Articles of
Association and in particular to Regulation 12(1), which states:
"The directors may make calls upon the members in15. Counsel argued that Regulation 12 of Table A demonstrates that (at its widest) the phrase "money unpaid on shares" includes unpaid premiums. It was pointed out that the wording of the Regulation is such that premiums are embraced within the concept of "money unpaid on shares".
respect of any money unpaid on the shares of the
members (whether on account of the nominal value of
the shares or by way of premium) ..."
16. The decision in Niemann v. Smedley was sought to be distinguished on the ground that the provision of the Victorian Companies Act there under consideration (s.218(1)(d)) concerned the liability in an insolvent winding up of a contributory holding a partly paid share in a company to contribute toward its capital. It was argued that the decision rested merely on the ground that because a premium payable on a share is not capital, a shareholder who has paid only part of the premium due on his shares does not have a statutory liability to the company's liquidator to contribute in that respect. Counsel contended that the shareholders in Niemann v. Smedley would have been liable for the amounts of their unpaid premium if the call on them had been made not by the liquidator but by their company's directors (and the company had used Table A articles). In such a case, it was argued, the shareholders could not have claimed that their unpaid premiums were not "money unpaid on shares" within Regulation 12.
17. It appears to me that the case of Niemann v. Smedley was decided in the
context of the statute there under consideration, in
particular s.18 and
s.218. Their Honours were at pains to point out that s.18(1)(c) and (3) and
s.218(1)(d) were dealing with "share
capital" the phrase used in s.18(3). They
added (at p.773):
"It appears to us indeed that prior to 1958 it was18. That proposition is no doubt correct. But it does not follow that the words have the same meaning in s.91(3)(b) of the Broadcasting and Television Act. I find Niemann v. Smedley of little assistance in this case.
well recognised that the expression "amount if any
unpaid on shares" in what is now s.218(1)(d) meant
the amount unpaid on the nominal value of the shares"
(emphasis added).
19. The Act unlike the Companies Code is not concerned with what is "capital" and it does not refer to the nominal value of the shares. Mention of either in s.91(3)(b) would have been sufficient to show an intention by Parliament to value on the basis of "capital paid on shares" or the "nominal value" of the shares. Parliament chose to use the general expression "the total of the amounts paid on all shares" (s.92B(1)) and "the amount paid on the shares" (s.91(3)). These expressions are certainly capable of applying both to amounts paid by way of capital and by way of premium on the shares.
20. The scheme of Division 3 of the Act is to regulate "shareholding interests" and "loan interests" which can be held by foreign persons in licensee companies. If the submissions on behalf of the two groups of applicants are correct there exists an unregulated class of "premium interest" (being neither a "shareholding interest" nor a "loan interest") by virtue of which a foreign person is free to take up a preponderant financial stake in any one or more Australian broadcasting or television stations. This would appear to be contrary to the purpose of Division 3 and to render s.92B(1)(b) and (c) largely nugatory. It seems to require one to read the words "amount paid on the shares" as the "amount of capital paid on the shares".
21. Before the enactment of s.56 of the Companies Act 1948 (U.K.) which now
appears in Australia in s.119 of the Companies Code there
was no statutory
prohibition preventing the distribution of share premiums as dividend (Drown
v. Gaumont-British Picture Corp. Limited
(1937) 1 Ch. 402). However, after the
statutory amendment the sum equal to the total amount of the premium had to be
transferred
to a "share premium account" which for most purposes had to be
treated as though it were share capital. Gower in Modern Company Law,
4th edn.
at p.221 stated the matter succinctly when he said:
"This reform is eminently sensible but it makes parThe position receives emphasis in the case of companies which have Articles of Association such as those of NTHL and NTIL.
value still more of a meaningless symbol for it
frankly recognises that what is important is not the
arbitrary par value but the value received for the
shares when issued."
22. In the case of NTHL one redeemable cumulative ordinary preference share
of $1 was issued to TNCL at a premium of $119,999. Such
shares in the Articles
are called "ordinary preference shares" (Article 7). The rights attaching to
these shares are set forth in
Article 9(1) as follows:
"(1) Each ordinary preference share shall confer the23. In the case of NTIL 50 non-voting redeemable preference shares of $1 each were issued to TNCL at a premium of $999,999 each. The rights attaching to these preference shares are set forth in Article 4(2) as follows:
following rights on the holder thereof:
(a) the right to receive out of the profits of
the Company available for dividend a fixed
cumulative preference dividend at the rate
determined by the directors on allotment
thereof (which without limitation may be nil)
on the capital paid up thereon and premium
(if any) paid to the Company in respect
thereof which shall accrue from day to day
from allotment and be due and payable
(whether earned or declared or not) half
yearly on such dates as the Directors shall
determine, but in any event not later than 30
June and 31 December in each year while
unredeemed and on redemption thereof and
shall rank for payment (pari passu with the
other ordinary preference shares) of dividend
in priority to voting preference shares,
ordinary and any other shares;
(b) the right in a winding up to payment (pari
passu with the other ordinary preference
shares) of capital paid up thereon and
premium (if any) paid to the Company in
respect thereof and any arrears of dividend
(whether earned or declared or not) up to the
commencement of the winding up in priority to
the voting preference shares, ordinary shares
and any other shares,
but shall not confer any further or other right
to participate in profits or assets or any right
to vote."
4.(2)(c) Each Redeemable Preference Share shall24. To value shares of this type on the basis of the "meaningless symbol" of par value, is not an intention one would readily ascribe to Parliament.
entitle the holder thereof to the following:
(i) the right to receive out of the profits
of the Company available for dividend a
fixed cumulative preference dividend at
the rate determined by the directors on
allotment thereof (which without
limitation may be nil) on the capital
paid up thereon and premium (if any)
paid to the Company in respect thereof
which shall accrue from day to day from
allotment and be due and payable
(whether earned or declared or not) half
yearly on such dates as the Directors
shall determine, but in any event not
later than 30 June and 31 December in
each year while unredeemed and on
redemption thereof and shall rank for
payment (pari passu with the other
Preference Shares) of dividend next
after the Preference Shares but in
priority to Ordinary and any other
shares;
(ii) the right in a winding up or return of
capital to payment (pari passu with the
other Redeemable Preference Shares) of
capital paid up thereon and premium (if
any) paid to the Company in respect
thereof and any arrears of dividend,
whether earned or declared or not, up to
the commencement of the winding up or
return of capital, as the case may be,
next after the Preference Shares but in
priority to the Ordinary Shares and
other shares,
but shall not confer any further or other
right to participate in profits or assets of
the Company or any right to vote.
25. Counsel for both groups of applicants, however, submitted that the Court should apply the rule of statutory construction that where an Act of Parliament imposes criminal liability any ambiguity should be resolved in favour of the liberty of the subject by refusing to extend the category of criminal offences. Reference was made to Scott v. Cawsey [1907] HCA 80; (1907) 5 CLR 132, at pp. 154-5; The King v. Adams [1935] HCA 62; (1935) 53 CLR 563, at pp. 567-8; and Beckwith v. The Queen [1976] HCA 55; (1976) 135 CLR 569, at p.576. It was argued that because the contravention of s.92D(1) is an indictable offence (s.132(1)), any doubt surrounding the meaning of the expression "amount paid on shares" in s.91(3)(b) should be resolved in favour of NTHL and Mr Murdoch.
26. It is to be noted that under the Act the indictable offence referred to is punishable in the case of a natural person by a fine not exceeding $5,000 and in the case of a body corporate by a fine not exceeding $10,000. One might be pardoned for thinking that the loss or denial of a television or broadcasting licence might constitute a weightier consideration than such a fine or that a company which for 50 $1 shares received $50 million would be unimpressed by the possibility of a fine of $10,000. The liberty of the subject does not seem to be involved. Any attempt to determine the interpretation of the section by such a consideration appears to be misconceived.
27. A more important rule in this context is that embodied in s.15AA of the Acts Interpretation Act 1901 requiring the Court to lean towards the construction that will promote the purpose of the Act. In the end the task of the Court is to ascertain and to enforce the actual commands of the legislature (Scott v. Cawsey (supra) at p.155). This will best be achieved by studying the words used and the context and the purpose or object underlying the Act.
28. When this is done it is seen that the general words used are appropriate to cover the total amount paid on the shares in the premium. It is also apparent that this serves the purpose or object underlying the Act.
29. One of the matters with which the Act is concerned is the possibility that a foreign person may at some time during the currency of the licence be in a position to exercise control of the company holding the licence. The detailed provisions directed to this subject are concerned with voting power and with power exercisable due to the extent of the financial stake in the company which a foreign person may have. The latter concept is dealt with in two ways - "shareholding interests" and "loan interests". The evaluation of the shareholding interest is the particular area with which we are invited to deal. To interpret the relevant sections as referring to the real or actual amount paid on the shares appears to serve the purpose or object of the Act better than reading those words as referring to par value or nominal value, which produces a result divorced from reality. The words par value or nominal value or capital paid up could quite easily have been used, if the intention had been to tie the value to this. The use of the general words appears to be deliberate.
30. In my opinion Question 1 should be answered "Yes".
31. The second question posed in the Special Case is as follows:
(ii) Whether sections 90E and 92B exhaustively define32. The question as framed raises two issues. Again it will be convenient to refer to the television provisions in Division 3. The first issue is whether s.92B(1) is exhaustive. The second is whether, in the event that the sub-section is exhaustive, the Tribunal is bound to find that TNCL is not in breach of s.92D. Counsel for Actors Equity and the AJA submitted that even if s.92B(1) sets out the only three situations in which a breach of s.92D will occur, that does not end the matter. It was contended that on the facts of this case NTHL falls within the terms of paragraph (a) of s.92B(1) with the consequence that the Tribunal is not bound to find that TNCL is not in breach of s.92D.
the meaning of "being in a position to exercise
control, directly or indirectly, of a company"
within the meaning of sub-sections 90G(1) and
92D(1) and with the consequence that the Tribunal
is bound to find that the foreign persons are not
in a position to exercise control, directly or
indirectly, of the licensee companies.
33. The first issue is the main one, namely, whether s.92B(1) defines
exhaustively the meaning of the expression "being in a position
to exercise
control of a company" in s.92D. Section 92B(1) is in the following terms:
92B.(1) for the purposes of this Division, other than34. The other pertinent section is 91(1), which relevantly provides:
sub-sections 92D(2), (5) and (6) a person who -
(a) is in a position to exercise control of more than
15% of the maximum number of votes that could be
cast on a poll at, or arising out of, a general
meeting of a company, whether he is in such a
position as regards all questions that could be
submitted to such a poll or as regards one or
more only of such questions;
(b) has shareholding interests in a company, being
shareholding interests in respect of shares of a
kind carrying voting rights on all questions at
general meetings of the company, exceeding in
amount 15% of the total of the amounts paid on
all shares in the company of a kind carrying such
voting rights; or
(c) has shareholding interests in a company exceeding
in amount 15% of the total of the amounts paid on
all shares in the company,
shall be deemed (but not to the exclusion of any other
person) to be in a position to exercise control of that
company, of any votes, in respect of another company, of
which that company is in a position to exercise control and
of all acts and operations of that company.
91. (1) In this Division, unless the contrary intention35. Paragraph (a) of sub-section 92B(1) contains a modified version of what may be called the common law test of "control of a company". In a series of English and Australian decisions it has been established that "control of a company" under the general law means control of a majority of votes at a general meeting on all matters able to be dealt with at such a meeting (See W.P. Keighery Pty Limited v. Federal Commissioner of Taxation [1957] HCA 2; (1957) 100 CLR 66, at pp.84-89; and Mendes v. Commissioner of Probate Duties (Vic.) [1967] HCA 23; (1967) 122 CLR 152, at pp. 161-164).
appears -
"control" includes control as a result of, or by means
of, trusts, agreements, arrangements,
understandings and practices, whether or not
having legal or equitable force and whether or
not based on legal or equitable rights;
36. Paragraph 92B(1)(a) relaxes this test in two ways. First, it reduces the necessary percentage of votes able to be cast at a poll from 50% to 15%. Secondly, the votes need be exercisable only in relation to one question rather than in relation to all questions. These amendments to the general test of control are evidence of Parliament's intention to widen the notion of "control of a company" for the purposes of the Act. That intention is also demonstrated by paragraphs (b) and (c) of s.92B(1), which introduce a new concept of control - that of a "shareholding interest" - into the Act.
37. The question is whether the legislature, despite its intention to broaden the meaning of "control of a company", nevertheless meant to confine the concept to the three situations set out in in s.92B(1). In support of that view, counsel for the two groups of applicants made a number of submissions. The principal submission, shortly stated, was that the concept of "control" must be confined to the three criteria in s.92B(1) because no other sensible meaning can be given to the words. It was argued that the Act distinguishes the concept of "control of a company" from the concepts of "control of the acts and operations of a company", "control of a licence" and "influence", all of which are contained in the Act. It was then contended that the expression "control of a company" cannot be given any of those meanings, and that in the absence of any other workable meaning, it must be taken that s.92B(1) contains an exhaustive definition of the expression.
38. Counsel for the two groups of applicants referred to s.92A(1) of the Act, which was evidently intended to define exhaustively the concept of "being in a position to exercise control of a licence". Reliance was placed on the fact that the marginal note to s.92A ("Meaning of Control of a Licence") is in identical form to the marginal note to s.92B ("Meaning of Control of a Company"). It was submitted, in accordance with s.15AB of the Acts Interpretation Act, 1901 that the marginal notes might be used in interpretation and showed that ss.92A and 92B were both intended to define exhaustively the meaning of the respective expressions.
39. Counsel also referred to s.92D(2), which imposes three prohibitions in relation to the aggregate control of a licence by two or more foreign persons. Paragraphs (a), (b) and (c) of s.92D(2) are substantially identical to paragraphs (a), (b) and (c) of s.92B(1), except that the relevant percentage is 20% and not 15%. Section 92D(2) is clearly intended to define exhaustively the prohibitions upon aggregate control of a licence by two or more foreign persons. It was argued that s.92B(1), read in conjunction with s.92D(2), must also be taken to define exhaustively the prohibitions upon control by singular foreign persons.
40. As far as this last argument is concerned, a study of the scheme and
history of Division 3 of Part IV suggests that ss.92D(1) and (2) deal with two
different concepts. Sub-section 92D(1) imposes the general condition that a
foreign
person shall not be in a position to "control" a licensee company.
Sub-section 92D(2) imposes the more specific condition that two
or more
foreign persons shall not fall within the terms of paragraphs (a), (b) or (c).
Prior to 1981, the Act treated the ownership
of shares by singular foreign
persons and aggregate ownership by two or more foreign persons in the same
way. The prohibition against
both types of share ownership was contained in
the one sub-section (old s.92D(1))and was worded in the way that s.92D(2) is
worded
in the present Act - that is, by expressing the licence to be "subject
to a condition" and then listing, in numbered paragraphs,
the situations in
which the condition will be breached. By contrast, the new s.92D(1),
introduced into the Act in 1981, uses the
general words "a person ... shall
not be in a position to exercise control, either directly or indirectly...".
It will be noted that
the same form of words was used in s.92(1) of the 1960
Act, which dealt with control of television licences. In his second reading
speech to the Broadcasting and Television Amendment Bill of 1960 (Hansard,
House of Representatives, 12 May 1960, p. 1704), the Postmaster-General,
Mr
Davidson, said of those words (at p.1705):
"The Government has made it quite clear that ...41. In using the same words in the present s.92D(1), the legislature in 1981 seems to have intended to convey a similar idea. If so, the notion of "control" conveyed by s.92D(1) is very wide, and would extend beyond the situations set out in s.92B(1). Indeed, if it were otherwise, there was little purpose to be served in altering the format of the Division. The legislature could simply have expressed s.92D(1) in the same way as s.92D(2), by stating that a licence was "subject to a condition" and then listing, in numbered paragraphs, the three situations in s.92B(1). Thus, the words of s.92D(2) do not, in my opinion, provide a basis for reading down the notion of "control" in s.92D(1).
section 92 refers not merely to legal control or
control by voting power, but to practical and
commercial control by any means."
42. Counsel for the two groups of applicants also placed reliance upon some
remarks of the Minister for Communications, Mr Sinclair,
made during his
second reading speech to the Broadcasting and Television Amendment Bill 1981
(Hansard, House of Representatives,
3 June 1981, p.2995). Referring to s.92D
of the Act, the Minister said (at p.3001):
"The interpretation of the provision has presented43. Further, counsel again made reference to the rule of construction of a penal statute (see answer to Question (i).
difficulties because of the lack of definition of
'resident' and the meaning of 'control' - that is,
whether it is commercial control, up to 50 per cent
of votes, or control as defined in the Act; that is,
15 per cent of votes and shares."
44. Finally, it was argued that s.91(1) cannot be relied upon to broaden the concept of "control" in s.92D. That sub-section, it was said, defines control by reference to "control" itself and says nothing of the content of the concept of control. It deals only with the means by which it is exercised, such as trusts, agreements, arrangements, undertakings and so forth.
45. I agree with the view that s.91(1) does not, of itself, widen the concept of control. That provision cannot be used as a basis for arguing that s.92B(1) is not exhaustive. However, despite the plausible arguments to the contrary, I am of opinion that there are other sufficiently strong indications in the Act that s.92B(1) was not intended to codify the meaning of the expression "being in a position to exercise control of a company" in s.92D.
46. First, regard must be paid to the nature and purpose of "deeming"
provisions. As Lord Radcliffe said in St. Aubyn v. Attorney-General
[1951] UKHL 3; (1952) AC
15, at p.53:
"The word 'deemed' is used a great deal in modern47. The word "deemed" may be used in any of those senses (see Redland Shire Council v. Stradbroke Rutile Pty Limited [1974] HCA 4; (1974) 133 CLR 641 at p.655). It is most often used for the purpose of putting beyond doubt what is uncertain or creating a statutory fiction (Muller v. Dalgety & Co. Ltd. [1909] HCA 67; (1909) 9 CLR 693, at p.696; Barclays Bank Limited v. Inland Revenue Commissioners (1961) AC 509 at p.528). It is true that there is no presumption, still less any rule, that wherever the word "deemed" is used in a statute it will serve that purpose (Hunter Douglas Australia Pty Ltd v. Perma Blinds [1969] HCA 27; (1970) 122 CLR 49 at p.67). The precise wording of the provision in question and the purpose for which it was included in the Act must always be considered. But it should be borne in mind that exhaustive deeming clauses are the exception rather than the rule.
legislation. Sometimes it is used to impose for the
purposes of a statute an artificial construction of a
word or phrase that would not otherwise prevail.
Sometimes it is used to put beyond doubt a particular
construction that might otherwise be uncertain.
Sometimes it is used to give a comprehensive
description that includes what is obvious, what is
uncertain and what is, in the ordinary sense,
impossible."
48. An example of an exhaustive deeming provision is to be found in the old case of R. v. Norfolk County Council (1891) 60 L.J.Q.B. 379. There a clause beginning, "The following ... shall be deemed to be" was held to be an exhaustive definition, because it purported to cover all of the categories which were logically open. This is not such a case. Section 92B(1) does not even go near to exhausting all of the possible situations in which effective control may be exercised over a company.
49. In my opinion, there are several indications in the Act that s.92B(1) was not intended to be an exhaustive definition. I do not think that the marginal note is decisive. Although permissible as an aid to interpretation, a marginal note is generally a "most unsure guide" (Dugan v. Mirror Newspapers Limited (1978) 22 ALR 439 at p.447). Similarly, I do not think that much reliance should be placed upon the general words of the Minister in his second reading speech of the 3 June 1981. Nor is it useful to have resort to the rule of construction relating to a penal statute.
50. One consideration is that words such as "if, and only if" are used elsewhere in the Act when it is intended to lay down an exhaustive definition (e.g. s.92D(4)). No reason was suggested as to why this legislative phrase was not used in s.92B(1) if the intention of Parliament was to make the section exhaustive.
51. A second consideration is that if s.92B(1) is exhaustive, the words "directly or indirectly" in s.92D(1) would appear to serve no useful purpose. Each of the criteria in s.92B(1) speaks of a type of control which is direct not indirect. Presumably the legislature in using the word "indirectly" in s.92B(1) envisaged less obvious forms of control than those contained in paragraphs (a), (b) and (c) of s.92B(1).
52. Thirdly, it is to be noted that s.92B(1) deems three consequences for a
person who fits any or all of the criteria in paragraphs
(a), (b) and (c).
That person is deemed to be in a position to exercise three types of control.
These are control of:-
(a) that company;53. Thus the deeming in s.92B(1), if it constitutes an exhaustive definition of being in a position to exercise control, defines exhaustively not one concept but three. Such a result does not fit well with the applicants' argument that the concept of "control of a company" must be kept distinct from the concept of "control of the acts and operations of a company". Moreover, that result would create problems with the operation of s.92A. Paragraph 92A(1)(c) provides that a person is deemed to be in a position to exercise control of a licence if that person is in a position to control, inter alia, "the operations conducted under the licence". If s.92B(1) is exhaustive, the only way a person can be held to control the "acts and operations" of the licensee company is by one of the means set out in paragraphs (a), (b) and (c). Yet, if that is so, sub-section 92A(2) is meaningless. Neither an advertiser who sponsors programmes, nor a supplier of programmes, could ever "control" the operations conducted under the licence within the meaning of the Act. Hence, there would be no need to exclude them from the operation of s.92A(1)(c).
(b) any votes, in respect of another company, of which
that company is in a position to exercise control;
and,
(c) all acts and operations of that company.
54. In my opinion, the object and purpose of Division 3 of Part IV of the Act would be better served by giving a broad meaning to the expression "control of a company" in s.92D(1). The words should not, in my view, be restricted by the deeming provisions in s.92B(1). They should be given their ordinary and natural meaning, recognizing the fact that effective control may be exercised over a company by means other than those contained in s.92B(1). I consider the term "in a position to exercise control of a company" in s.92D(1) should be taken to mean the power to direct or restrain what the company may do on any substantial issue. The situations referred to in s.92B(1) will be included within the expression "control of a company", but do not exclusively define its limits. The application of such a definition may give rise to difficult questions of fact in future cases, but that is to be preferred to an illogical interpretation of s.92B(1) which would stultify the purpose of the Act.
55. For these reasons, I would answer Question (ii) "Sections 90E and 92B do not exhaustively define the meaning of 'being in a position to exercise control directly or indirectly of a company' within the meaning of sub-sections 90G(1) and 92D(1)."
56. It becomes unnecessary to deal with the latter part of Question (ii).
57. The third question for the determination of the Court is as follows:
(iii) Whether, as at 5 September 1985, by reason only58. This question arises assuming ss. 90E and 92B do not define exhaustively the meaning of the expression "being in a position to exercise control of a company". It then becomes necessary to determine whether TNCL was, at 5 September 1985, in a position to exercise control of NTHL within the meaning of the Act.
of:
(a) Article 98(2)(b) of the Articles of
Association of NTHL; and/or
(b) Clause 4 of the Memorandum of Association of
NTHL and Article 8 of the Articles of
Association of NTHL;
TNCL was in a position to exercise control of NTHL;
59. It is convenient to set out the provisions in question. Article 98(2)(b)
of the Articles of Association of NTHL is as follows:
"98. (2) After the appointment of one or more Elected60. Clause 4 of the Memorandum of Association of NTHL is as follows:
Directors (as hereinafter referred to) pursuant
to Article 114(6) or the commencement of the
special meeting of holders for the time being
of voting preference shares to be held
immediately after the first annual general
meeting held after the adoption of this
Article, whichever shall first occur, but
subject to Article 100 the holders for the time
being of the voting preference shares may elect
or appoint as hereinafter provided up to one
half of the maximum number of Directors as
specified by sub-Article (1) above (hereinafter
referred to as the "Elected Directors") and the
holder or holders for the time being of the
ordinary shares may appoint as hereinafter
provided up to:
...
(b) during such time as a notice shall have
been given by the holder or holders for the
time being of a majority of the ordinary
shares on issue specifying a lesser number
than one half such maximum number and the
conditions and requirements for the
operation of the notice set out therein
have been and remain satisfied, such lesser
number."
"4.(1) A special resolution altering or adding to the61. Finally, Article 8 is as follows:
Articles of Association of the Company (as
altered or added to from time to time in
accordance with the Companies Act, 1981 and
this clause 4) shall not have any effect unless
and until the consent in writing of the holder
or all the holders for the time being of all of
the shares in the Company deemed pursuant to
Section 113(6) of the Companies Act, 1981 to
have been allotted on the date of the
incorporation of the Company to such alteration
or addition shall have been given to the
Company at its registered office.
(2) Amendment or omission of sub-clause 4(1) or
this sub-clause 4(2) shall be prohibited."
"8. Notwithstanding any other Article hereof in62. It will be seen that, as at 5 September 1985, Article 98(2)(b) entitled TNCL, as the holder for the time being of all of the ordinary shares in NTHL, to appoint up to half of the Board of NTHL. Thus, TNCL was in a position to assume a power of veto over management decisions to be made by the board of NTHL. However TNCL had in fact, appointed only three out of seven directors. It had not exercised its right to appoint a fourth director. By Clause 4 of the Memorandum of Association, TNCL had at 5 September 1985 a power to veto changes to the Articles of NTHL. Article 8 gave TNCL on the relevant date a right of veto over the allotment by NTHL of shares or options, and the granting by NTHL of any rights over unissued shares. The question at issue is whether, by reason only of its having these rights, TNCL was in a position to exercise control of NTHL.
addition to the other rights conferred by these
Articles, the ordinary shares shall confer the
right that no allotment of shares or options will
be made and no rights over unissued shares will
be granted by the Company without the prior
consent in writing of the holder or holders for
the time being of a majority of the ordinary
shares (which consent may be withheld or given
conditionally or unconditionally in the full
discretion of the holders of such majority)."
63. It is convenient to deal first with the effect of Article 98(2)(b) alone. Counsel for both groups of applicants submitted that the question should be answered "No". It was argued first, that TNCL's rights under Article 98(2)(b) were not relevant because the test for the existence of control of a company does not include control of its board of directors. Sections 90E and 92B show, it was said, that Parliament was concerned with the extent of foreign control only where it amounted to control over the general meeting of the company through voting power and the holding of shareholding interests.
64. I have already stated my view that ss.90E and 92B do not define exhaustively the meaning of the expression "in a position to exercise control of a company" for the purposes of the Act. That being so, there is no logical reason to read down the meaning of the expression by reference to ss.90E and 92B. Still less should it be read down by reference to the common law test of control laid down in cases such as Mendes (supra). Sections 90E and 92B were themselves enacted to widen the common law test. In my opinion, control of the board of directors of a company falls within the expression "in a position to exercise control of a company". Such a result is consistent with general company law principle. For example, a company is resident at the place where its "central management and control abides", which is the place where the board of directors meet (see Swedish Central Railway Company Limited v. Thompson (1925) AC 495 at p.503; North Australian Pastoral Company Limited v. Federal Commissioner of Taxation [1946] HCA 17; (1946) 71 CLR 623 at p.628).
65. The second argument advanced by counsel for both groups of applicants was that, even if control of the board of directors be relevant, TNCL's power was only to appoint half of the board of NTHL and did not put it in a position to exercise control of that company. It was argued that a power of veto does not constitute control in the relevant sense. Control, it was said, exists only where there is a power to get one's own will.
66. I do not agree that the concept of control is so limited. The Oxford English Dictionary defines "control" as "to exercise restraint or direction". A power to veto is a power to restrain, and hence to control. This view of control accords, in general, with the view of the concept recently taken by the New South Wales Court of Appeal in North Sydney Brick & Tile Co. Ltd. v. Darvall (1986) 4 ACLC 539 at p 545; See also Re Kornblum's Furnishings Ltd (1982) VR 123 at pp 132-134; and Re Herald and Weekly Times Ltd; T.V.W. Enterprises Pty Limited v. Queensland Press Ltd (1983) 7 ACLR 821 at p 838).
67. Counsel for both groups of applicants next argued that TNCL did not in any case have control of the board of directors of NTHL because it had, as at 5 September 1985, appointed only three out of seven board members. It was contended that even if a power of veto is sufficient to give control, TNCL did not at the relevant date have a presently exercisable power of veto. It merely had a right, as yet unexercised, to put itself in that position (by appointing a fourth director). Reference was made to the decision of the High Court in W.P. Keighery Pty Ltd v. Federal Commissioner of Taxation [1957] HCA 2; (1957) 100 CLR 66. It was there held that a company was "capable of being controlled" by a person or group of persons at a particular date within the meaning of s.105(1)(f) of the Income Tax and Social Services Contribution Act 1936-1952 only where that person or group had at the relevant date a presently exercisable power of control. The essence of the decision was that having a potential to exercise a power in the future is not the same as having a present right to exercise that power. (See also John Shields and Co. (Perth) Ltd. v. Commissioners of Inland Revenue (1950) 29 Tax Cas. 475).
68. Counsel relied upon the reasoning in Keighery in support of their argument that TNCL was not in a position to exercise control of NTHL at the relevant date. It was not enough, it was argued, that TNCL had appointed three out of seven board members and was entitled at that time to appoint one more. At best, TNCL was merely in a position to put itself in a position to exercise control of NTHL.
69. It is necessary to examine the decision in Keighery in more detail. The facts were that a company by the terms of the issue of its redeemable preference shares had reserved the power to pay off any part of the capital paid up on those shares. The power was subject to two conditions. First, that not less than seven days' notice of such a payment would be given and, secondly, that no such payment should be made between 24 June and 7 July. The company's two directors, Mr Keighery and his wife, had by virtue of the articles authority to exercise the power of redemption. One of the issues was whether, at 30 June, the company was "capable of being controlled" by Mr Keighery and his wife. The Court held that it was not because, inter alia, the Keigherys did not at 30 June have a presently exercisable right to redeem.
70. In my opinion, the decision in Keighery is not decisive of the present question. First, it is to be noted that the provision there in question, s.105(1)(f) of the Income Tax and Social Services Contribution Act, was worded differently from the provision now under consideration. The words "in a position" were not present. Those words, which appear in s.92D(1) of the Broadcasting and Television Act, convey a wider concept of control. They are capable of applying to a situation where the control is not being exercised in fact as at the date of the enquiry. The words are, thus, "in addition to, and expansive of, 'control' simpliciter" (see Equiticorp Industries Ltd v. A.C.I. International Ltd (1986) 10 ACLR 568 at p.572).
71. Secondly, the power in question in Keighery was a power to redeem preference shares. Such a power, by its nature, is contingent upon a number of factors, some of which may be out of the control of the holder of the power. The requirement that there be profits from which to redeem the shares is one example. The fact that the power in Keighery was contingent upon external conditions being fulfilled was an important factor in the Court's decision that the power was not presently execisable (see at pp.88-89). By contrast, in this case, the power to appoint directors was exercisable merely upon the issuing of a notice. It was not contingent upon the fulfilment of conditions outside TNCL's control.
72. There is a third reason for distinguishing Keighery from the present case. The power to redeem in Keighery was, by the terms of the issue of the shares, incapable of being exercised on the relevant date (30 June). It was, therefore, accurate to speak of the power as not being "presently exercisable". On the other hand, TNCL's power to appoint a fourth director was capable of being exercised on 5 September 1985. TNCL simply did not exercise it. As a matter of the ordinary use of language, the power was, in my view, "presently exercisable" even if it had not, in fact, been exercised. Thus, the requirement laid down in Keighery that the power must be presently exercisable is met in this case. It follows that TNCL was by, virtue of its being capable of appointing a fourth director on 5 September 1985, "in a position to exercise control" of NTHL at that date.
73. Counsel for both groups of applicants contended, however, that in order to hold that TNCL was in a position to exercise control of NTHL the Court would have to assume that the appointed directors would vote en bloc at the direction of TNCL. This was to assume that the directors would act in breach of their fiduciary obligations to the company. It would also, it was said, involve a possible finding of criminal misconduct under s.229(4) of the Companies Code.
74. Strictly speaking, the issue of the directors' adherence to their fiduciary duty is irrelevant to this question. It is TNCL's power to appoint directors, not its control of what they do, which is determinitive of whether it is thereby in a position to exercise control of NTHL. But were any assumptions needed to be made as to the conduct of the appointed directors, I would think it realistic to assume that they would act generally in the interests of the company which appointed them. Such behaviour would not, of itself, constitute a breach of duty "unless it can also be inferred that the directors, so nominated, would so act even if they were of the view that their acts were not in the best interests of the company" (Re Broadcasting Station 2GB Pty Limited (1964-1965) N.S.W.R. 1648 at p.1663 per Jacobs J). As was pointed out in the 2GB Case, it would make the position of a nominee or representative director an impossibility to require that he approach each company problem with a completely open mind. It is both realistic and not improper to expect that such directors will follow the interests of the company which appointed them subject to the qualification that they will not so act if of the view that their acts would not be in the interests of the company as a whole. In my opinion, it may be assumed that the nominee directors of NTHL will act in such a way. Such an assumption does not, however, lead to the assumption they will act in breach of their fiduciary duty as directors. The applicants' argument must therefore be rejected.
75. In my opinion, Question (iii) should be answered "Yes".
76. In view of the answers I propose should be given to Questions (i), (ii) and (iii), it appears to me it is unnecessary at this stage to give answers to the remaining questions referred by the Tribunal. I propose that determination of the remaining questions be stood over, with liberty to any party including the Tribunal to restore the proceedings for further consideration should they be so advised. The two groups of applicants should pay to Actors Equity and the A.J.A. and to the Tribunal their respective costs to date.
This is a reference by the Australian Broadcasting Tribunal pursuant to s. 22B of the Broadcasting and Television Act 1942 ("the Act"). The reference relates to applications made to the Tribunal for approval of transactions relating to the ownership and control of radio and television licences by The News Corporation Limited ("TNCL"), Network Ten Holdings Limited ("NTHL"), Network Ten Investments Limited ("NTIL") and others.
2. I have had the advantage of reading the reasons for judgment of the Chief Judge. His Honour has set out the relevant paragraphs of the Special Case and the statutory provisions so I need not repeat them.
3. Nine questions have been referred for determination by the Court, the most
important of which is the first question which is as
follows:
"Whether, in considering whether TNCL has a4. I agree with the conclusion of the Chief Judge that question (i) should be answered "yes" and with his reasons for that conclusion. I shall make some observations of my own.
shareholding interest such that it would be deemed
to be in a position to exercise control of TNHL and
its subsidiaries pursuant to sections 90E and 92B
of the Act, the premiums paid on the shares
referred to in paragraphs 9(b) and 10(b) above (of
the Special Case) are to be included in the
calculations of:
(a) 'an amount equal to the value of the shares',
or
(b) 'an amount equal to the value ... of the
person's interest in the shares',
within the meaning of paragraphs 90(3)(b) and
91(3)(b) of the Act."
5. Division 2 of Part IV of the Act is concerned with the limitation of ownership or control of commercial broadcasting stations. Division 3 of Part IV deals with the limitation of ownership or control of commercial television stations. The two divisions are substantially the same. The most important sections for present purposes are ss. 90E and 90(3)(b) which appear in Division 2 relating to commercial broadcasting stations and ss. 92B and 91(3)(b) in Division 3 relating to commercial television stations. Although the reference concerns both radio and television licences, and therefore Divisions 2 and 3 of Part IV of the Act, I shall for convenience refer to the sections in Division 3 relating to television stations as they were the provisions most frequently referred to in argument.
6. The Act is concerned to ensure, amongst other things, that foreign persons are not, during the currency of a television licence, in a position to exercise control, directly or indirectly, of the company holding the licence: s. 92D. The Act defines "control" very widely as including "control as a result of, or by means of, trusts, agreements, arrangements, understandings and practices, whether or not having legal or equitable force and whether or not based on legal or equitable rights": sub-s. 91(1).
7. The Act fastens upon voting power and financial interest in the licensee
company as the determinants of control: ss. 92B and 91.
The expression
"financial interest" is defined in sub-s. 91(1) as meaning a "shareholding
interest" or a "loan interest". Each of
those expressions is further defined.
A "shareholding interest" is defined, so far as is presently relevant, in
para. 91(3)(b) of
the Act as follows:
"(3) For the purposes of this Division -8. A person holds a "loan interest" in a licensee company if he is beneficially entitled to moneys payable by the company being moneys, other than interest, payable under debentures of the company or otherwise by way of repayment of moneys lent to or deposited with the company or moneys payable under negotiable instruments where the instrument is in respect of or the liability to pay the moneys is in substitution for the liability to pay moneys of the kind to which I have just referred: sub-s. 91(4).
...
(b) the amount of the shareholding interest is an
amount equal to the value of the shares, or of
the person's interest in the shares, as the
case requires, on the basis that the value of
the shares is equal to the amount paid on the
shares."
9. The Act is thus directed to ensuring that foreign persons are not in a position to exercise control of the licensee company through voting power or a power exercisable through their financial stake in the company. It is "shareholding interests" with which this reference is concerned.
10. It is plain that questions of control, whether through voting power or financial interests, are to be determined by practical and commercial considerations rather than highly refined legalistic tests. The relevant provisions of the Act are not directed to or concerned with subtleties of company law.
11. Paragraph 91(3)(b) does not measure the "amount equal to the value" of the relevant shares with reference to the nominal value or the par value or the capital paid up on the shares. The paragraph is concerned with the "amount" of the shareholding interest in the sense of the size of the shareholding and defines it as being an amount "equal to the value of the shares". The "value" attributed to the shares is not their market value, but "the amount paid on the shares". That expression (and the similar expression in sub-s. 92B(1) "the total of the amounts paid on all shares") is, I must confess, a curious use of language and the source of the problem in this case. If the legislature had desired to define the value of shares with reference to the capital paid up on the shares it could easily have said so; but it chose instead to use more general, though regrettably more elliptical, words.
12. It would be strange if Parliament intended that the size or amount of a person's shareholding in a licensee company is to be determined by juggling with the finer intricacies of company law when the critical words of the statutory provision are themselves not the true or accepted language of the company lawyer.
13. I cannot accept that Parliament intended that foreign persons could escape the legislative net by holding shares in a company, the paid up value of which is a mere scintilla of its total paid up capital, yet in fact have a huge financial stake or interest in the company through the payment of premium for the shares. As I discern the purpose of the legislation, both through the language of the Act, in particular Divisions 2 and 3 themselves, and the purpose underlying the Act, it would make a nonsense of it to hold that large amounts paid by way of premium for shares with a minimum par value fell outside the test of valuing the shares for which para. 91(3)(b) and sub-s. 92B(1) provide. I agree with the reasons given by the Chief Judge for his conclusion that the expressions "the amount paid on the shares" (sub-s. 91(3)) and "the total of the amounts paid on all shares" (sub-s. 92B(1)) are capable of applying both to amounts paid by way of capital and by way of premium on the shares.
14. The view that share premium is in essence capital or should at least be assimilated with capital has become increasingly and widely held in more recent years: see Courtaulds Investments Ltd. v. Fleming (1969) 1 WLR 1683 per Buckley J. at 1692-4 and the Report of the Cohen Committee on Company Law, Cmd. Paper 6659 para. 108. However, whether strictly part of share capital or not, the relevant words in para. 93(1)(b) and sub-s. 92B(1) encompass amounts paid by way of share capital and by way of premium on the shares.
15. Question (ii)
"Whether sub-sections 90E and 92B exhaustively16. I agree with the view of the Chief Judge that this question should be answered in the negative and with his reasons for that conclusion.
define the meaning of 'being in a position to
exercise control, directly or indirectly, of a
company' within the meaning of sub-sections 90G(1)
and 92D(1) and with the consequence that the
Tribunal is bound to find that the foreign persons
are not in a position to exercise control, directly
or indirectly, of the licensee companies."
17. Question (iii)
"Whether, as at 5 September 1985, by reason only18. I agree with the opinion of the Chief Judge that this question should be answered "yes" and with the reasons which he has given therefor.
of:
(a) Article 98(2)(b) of the Articles of
Association of NTHL; and/or
(b) Clause 4 of the Memorandum of Association of
NTHL and Article 8 of the Articles of
Association of NTHL;
TNCL was in a position to exercise control of
NTHL."
19. In view of the answers to these three questions it is unnecessary in my view to consider the remaining questions. Indeed, the answers to certain of those questions turn to some extent upon assumptions of hypothetical facts which it is generally undesirable to deal with in considering a Special Case.
20. I would stand over the remaining questions so that the Tribunal may consider the Court's answers to the first three questions and then deal with the applications before it. If it becomes necessary for the Court to consider the remaining questions, or any of them, the Tribunal or the parties may restore the matter to the list. I agree with the order for costs proposed by the Chief Judge.
Question (i) I agree with the Chief Judge, whose reasons I have had the benefit of reading, that this question should be answered in the affirmative.
2. The words "the amount paid on the shares" where used in the Act are not terms of art. As mentioned by the Chief Judge, Regulation 12(1) of Table A Articles of Association is an illustration of the use of the phrase "money unpaid on the shares" as applicable not only in the case of moneys unpaid on account of nominal value but as applicable also in the case of moneys unpaid by way of premium. In my opinion, a reference to the amount paid on shares is, as a matter of ordinary language, capable of picking up both share capital and any premium paid on the issue of the shares. Since 1948, in legislation, and, before that time as a matter of common understanding, there has been a tendency to assimilate a share premium to capital in the strict sense. The Cohen Committee on Company Law said in 1946 (no doubt having in mind Drown's Case) that "share premiums are in essence capital": (para.108) Cmd. 6659; see the discussion in Wallace and Young, Australian Company Law and Practice at p.224; Companies and Securities Law Review Committee, September 1986, Report to the Ministerial Council on the Treatment of Share Premiums - Appendix B pp.1-3 and p.26. In similar vein, the Companies and Securities Review Committee said (at p.3) that "(t)here should be no quarrel with the general philosophy that premiums received upon the issue of shares should be assimilated to paid-up capital"; see also Courtaulds Investments Ltd. v. Fleming (1969) 1 WLR 1683 per Buckley J. at pp 1692-4.
3. There is nothing in the context of the legislation which would justify placing upon the words now in question any special or limited meaning of the kind suggested by the applicants so as to restrict the operation of the legislation to what is, strictly speaking, capital. On the contrary, as the Chief Judge has said, the objects and purpose of the legislation would be better served if there were taken into account all amounts paid in this connection, whether they be capital in the strict sense or, to use the words of the Court of Appeal in Re Duff's Settlement (1951) Ch 923 at p 929, capital "notionally" paid up in the form of a premium.
4. Moreover, reference to the history of the legislation, if anything, reinforces this conclusion. The precursors of the provisions with which we are presently concerned used very different language. For instance, s.53B(a) of the Act, inserted by Act No. 33 of 1956, spoke of shares representing a stated percentage of "the issued capital". See also s.92D, inserted by Act No. 38 of 1965. The term "issued capital" is, of course, a term of art with a settled meaning. The present provisions, by contrast, make no reference to capital. Instead, they employ terms "the amount paid..." which, for this purpose, are neutral in their character and are thus capable of picking up both capital and strictly non-capital payments.
5. It was argued on behalf of the applicants that even if a share premium was
an "amount paid", it was paid "for" and not "on" the
shares. But, as has been
said, we are not here concerned with a term of art and, in my view, it is
accurate to describe a payment
by way of premium as a payment "on" the shares
in the sense that it is a payment made with reference to the shares. This
accords
with one of the dictionary meanings of "on" (see, e.g. the Macquarie
Dictionary, item 10) and is appropriate in the present context.
Question (ii)6. I agree with the answer to this question proposed by the Chief Judge for the reasons he has given.
7. To understand the intended meaning of s.92D(1), it is necessary to refer
to the history of the legislation so far as it has dealt
with foreign
ownership and control of a licence. For reasons which will appear, it will be
necessary also to mention the development
of the statutory restrictions on the
domestic control of a licence. By Act No. 33 of 1956, s.92 was inserted in
what became Division
3 of Part IV of the Act. It provided that a licence was
subject to a condition that -
(a) shares representing not less than 80 per8. By s.91, inserted at that time, it was provided that a person was not to own, or be in a position to exercise control, either directly or indirectly, of, more than -
cent of the issued capital of the licensee
will be beneficially owned by persons each
of whom is either a resident of Australia
(other than a company) or a company
controlled by persons (other than
companies) who are residents of Australia;
and
(b) shares representing more than 15 per cent
of the issued capital of the licensee will
not be beneficially owned by a person
(other than a company) who is not a
resident of Australia or by a company
controlled, directly or indirectly, by
persons who are not residents of Australia.
(a) one commercial television station within9. By Act No. 36 of 1960, in substituting a new Division 3, s.92D was inserted in substitution for the former s.92. In his Second Reading Speech, the Postmaster-General explained the mischief sought to be remedied:
the Australian Capital Territory or within
the radius of 30 miles of the G.P.O. in the
capital city of a State; or
(b) two commercial television stations in
Australia.
"I now come to a group of clauses in the bill10. By s.91(2) of the new Division, "control" was defined to include control as a result of, or by means of, trusts, agreements, arrangements, understanding and practices, whether or not having legal or equitable force and whether or not based on legal or equitable rights. By s.92(1) of the new Division, a person was not to be in a position to exercise control, either directly or indirectly, of licences in respect of more than one or two licences, as the case may be, in respect of commercial television stations as previously provided. For the purposes of s.92, a person was deemed to be in a position to exercise control of a licence if -
which substitute a new Division 3 for the
Division 3 of Part IV that is now in the act.
Division 3 in the act at present contains two
very significant sections. The first is section
91 which provides that a person shall not be in
a position to control directly or indirectly
more than two television licences. The second
is section 92 which provides that 80 per cent.
of the share capital of a company holding a
licence shall be held by residents of this
country and that no non-resident shall hold more
than 15 per cent. of that capital. These
provisions were enacted to express this
Government's policy that this very important
channel of communication should not fall into
the hands of too few, and that the benefit
derived from the exercise of licences which lay
in the grant of the Government should be spread
widely through the Australian community.
Experience has shown that this division could
fail to operate so as to carry out that policy
because a legal view could be taken that the
control of a company rests with the general
meeting of the company and that to control a
general meeting, and thus control the company,
it is necessary to be able to exercise as of
legal right 51 per cent. of the voting power in
the general meeting. The Government, however,
recognizes that a company may be effectively
controlled in a commercial sense by persons who
hold less than 51 per cent. of the voting power,
and also that in relation to such an activity as
the management of a television station, control
can be exercised by a variety of means other
than the possession of voting power at a general
meeting. The Government does not deviate from
the policy which it asked this Parliament to
express in sections 91 and 92 of the existing
act and accordingly I have retained them in
substance in the new Division 3. But the
Government is desirous that there should be no
frustration of that policy by sheltering behind
a legal concept whilst in truth and in
commercial reality the policy is being
defeated." (Emphasis added)
(a) that person was in a position to exercise11. By s.92B, for the purposes of Division 3, a person who was or who by any application or applications of this section, is deemed to be, in a position to exercise control of more than 15 per cent. of the total votes that could be cast at a general meeting was deemed to be in a position to exercise control of that company and of any voting rights of that company as a shareholder and of all acts and operations of that company.
control of the company that holds the
licence; or
(b) that person was in a position to exercise
control of the operations conducted under
or by virtue of the licence, the management
of the station or the selection or
provision of its programmes (s.92A).
12. Section 92D(1) imported a condition into a licence as to non-resident shareholding in the same terms as the earlier s.92.
13. By Act No. 38 of 1965, the Division of which s.92D formed part was repealed and replaced by a new Division. However, s.92D was re-enacted in the same terms as the previous s.92D(1).
14. By Act No. 113 of 1981, the present s.92D, described in the marginal note
as "Foreign shareholdings &c.", was inserted. By s.92D(1),
a licence is
subject to a condition that a foreign person shall not be in a position to
exercise control, either directly or indirectly,
of the company holding the
licence. By s.92D(2), a licence is subject to a further condition that two or
more foreign persons shall
not -
(a) be in a position to exercise control of15. A foreign person is defined for the purposes of s.92D as (a) a natural person who is not an Australian citizen; or (b) a company, wherever incorporated, that is controlled by a person or persons referred to in (a) (s.92D(3)). For the purposes of s.92D(3)(b), a company shall be deemed to be controlled by a person or persons if, and only if -
more than 20 per cent of the maximum number
of votes that could be cast on a poll at,
or arising out of, a general meeting of the
company holding the licence, whether as
regards all questions that could be
submitted or as regards one or more of such
questions;
(b) hold shareholding interests in the company
in respect of shares carrying voting rights
on all questions at general meetings,
exceeding in amount 20 per cent of the
total of the amounts paid on all shares of
that kind; or
(c) hold shareholding interests in the company
exceeding in amount 20 per cent of the
total of the amounts paid on all shares in
the company.
(a) the person is, or persons are, in a16. In his Second Reading speech on the Broadcasting and Television Amendment Bill 1981, the Minister for Communications, Mr. Sinclair, said -
position to exercise control of more than
50 per cent of the maximum number of votes
that could be cast on a poll at, or arising
out of, a general meeting, whether as
regards all questions that could be
submitted or as regards one or more only of
those questions;
(b) the person holds, or persons hold,
shareholding interests carrying voting
rights on all questions at general
meetings, exceeding in amount 50 per cent
of the total of the amounts paid on all
shares carrying such rights; or
(c) the person holds, or persons hold,
shareholding interests exceeding in amount
50 per cent of the total of the amounts
paid on all shares in the company.
(s.92D(4)).
"FOREIGN SHAREHOLDINGS17. As a concept, "control" is not defined in the Act. Section 91(1) merely defines it so as to include "control" achieved by various informal means. It becomes necessary then to look at the meaning attributed to the notion of "control" under the general law by way of background to the legislation.
The existing sections 90G and 92D of the Act
restrict ownership of shares, but not voting
rights, in licensee companies by any individual
non-resident to 15 percent, and by the aggregate
of non-resident shareholders to 20 per cent, of
issued share capital. The interpretation of the
provision has presented difficulties because of
the lack of definition of 'resident' and the
meaning of 'control' - that is, whether it is
commercial control, up to 50 per cent of votes,
or control as defined in the Act; that is, 15
per cent of votes and shares. These sections
have been redrafted to provide a redefinition of
restrictions on foreign shareholdings to provide
that only Australian citizens and companies in
which Australian citizens hold more than 50 per
cent of the votes and/or shares, may be 'in a
position to control' a licensee company...."
18. In Bank of New South Wales v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, Dixon J., in the context of a consideration of s.92 of the Constitution, described "control" as "an unfortunate word of such wide and ambiguous import that it has been taken to mean something weaker than 'restraint', something equivalent to 'regulation'." (At p.385). The notion of "control" of a company has, however, acquired a more settled meaning, at least in revenue matters. In B.W. Noble Ltd. v. Inland Revenue Commissioners (1925) 12 Tax Cas 911 at p 926, Rowlatt J., in a passage which has been cited frequently, said that "controlling interest" had a well known meaning, and referred to the situation of a man "whose shareholding in the company is such that he is the shareholder who is more powerful than all the other shareholders put together in general meeting." (See also per Viscount Simon L.C. in British-American Tobacco Co. Ltd. v. Inland Revenue Commissioners (1943) AC 335 at pp 339, 340; per Lord Cooper in John Shields and Co. (Perth), Ltd. v. Commissioners of Inland Revenue (1950) 29 Tax Cas 475 at pp 481-2; Barclays Bank Ltd. v. Inland Revenue Commissioners (1961) AC 509.) In W.P. Keighery Pty. Ltd. v. Federal Commissioner of Taxation [1957] HCA 2; (1957) 100 CLR 66, Dixon C.J., Kitto and Taylor JJ. said (at p 84) that "(t)he controlling authority of a company is its general meeting, and...the only way in which a company can be controlled, in the relevant sense of the word, is by the carrying of a resolution at a general meeting." In Mendes v. Commissioner of Probate Duties (Victoria) [1967] HCA 23; (1967) 122 CLR 152, Kitto J. (at p 165) held that if in the general meeting one person has the majority of votes on some subjects and another has the majority of votes on other subjects, "neither can truly be said to control the company. The control is divided between them." Taylor J. agreed (at p.166). Windeyer J. (at p.169) said that for the purposes of the revenue laws a member of a company who holds enough shares to give a majority of votes at a general meeting has "control" of the company. "That is the general rule. Control in that sense means the capacity to carry an ordinary resolution at a general meeting." See also Kolotex Hosiery (Australia) Pty. Ltd. v. The Commissioner of Taxation of the Commonwealth of Australia [1973] HCA 28; (1973) 130 CLR 64 per Mason J. at pp 77-8; [1975] HCA 5; (1975) 132 CLR 535 per Gibbs J. at pp 572-3. On the other hand, in The Commissioner of Taxation of the Commonwealth of Australia v. Commonwealth Aluminium Corporation Limited [1980] HCA 28; (1980) 143 CLR 646, the meaning of "control" of a business by non-residents for the purposes of s.136(a) of the Income Tax Assessment Act 1936 was seen to be different. Stephen, Mason and Wilson JJ. said (at pp.659-660) that shareholders, through their power to control the company in general meeting and perhaps through their power to elect directors, may be said to "control" the company, "but as a general rule they do not exercise de facto control of the company's business." Authorities such as Mendes were distinguished as being concerned with the different question of control of the company rather than its business (at p.660).
19. With this legislative history and general law background in mind, the question of the work intended to be done by s.92B(1) falls to be determined as a matter of statutory interpretation. It is plain that s.92B(1), in modifying the common law test, provides at least one definition of control of a licensee company for the purposes of s.92D(1). The matter of contention is whether s.92B(1) should be construed as the only way in which control can exist for this purpose or whether it is intended to be merely one of the ways in which control may be regarded as capable of being exercised.
20. Although s.92B(1) bears the marginal note "Meaning of control of a company", it is not, in form at least, framed as a definition or interpretative provision as is s.91(1). Rather, it provides that, in certain specified circumstances, a particular result will follow - a person shall be "deemed" to be in a position to exercise control of the company. Moreover, the provision is not expressed in exhaustive language: it does not in terms say (to borrow the language of s.92D(4)) that a company shall be deemed to be controlled by a person or persons "if, and only if" certain facts exist.
21. But, even if s.92B(1) is not in form an exclusive definition for the purposes of s.92D(1), is it in substance such a provision? On behalf of the applicants it is submitted that the deeming effected by s.92B(1) is intended to achieve this result.
22. In Muller v. Dalgety & Co. Limited [1909] HCA 67; (1909) 9 CLR 693, the respondents were
charged with the offence created by s.9A(1) of the Immigration Restriction Act
1901 which
provided:
"(1) If any vessel, having on board any23. Section 9D was as follows:
stowaway, who is a prohibited immigrant, comes
into any port in Australia, the master, owners,
agents, and charterers of the vessel shall be
jointly and severally liable on summary
conviction to a penalty of One hundred pounds
for each stowaway."
"Any person on board a vessel at the time of herThe marginal note to this section was "Definition of a Stowaway".
arrival from any place outside Australia at any
port in Australia who is not -
"(a) a bona fide passenger on the vessel, or
"(b) a member of the crew of the vessel whose
name is on the articles,
shall be deemed to be a stowaway, unless the
master of the vessel gives notice to an officer
that the person is on board the vessel, and does
not permit him to land until the officer has had
an opportunity of satisfying himself that the
person is not a prohibited immigrant."
24. It was held that s.9D did not exhaustively define the term stowaway as used in s.9A, but must be construed as an extension of that term, and as indicating that persons belonging to the class mentioned, though not in fact, apart from the section, stowaways, shall be deemed to be stowaways for the purposes of the Act.
25. Griffith C.J. said (at p.696):
"The first question for determination in this26. As Windeyer J. observed in Hunter Douglas Australia Pty. Ltd. v. Perma Blinds [1969] HCA 27; (1969) 122 CLR 49 at pp 65-7 a "deeming provision" may not create a "statutory fiction"; it need not import artificiality; rather it may simply state the effect of some matter - "the way in which it is to be adjudged". See also University of Wollongong v. Metwally (1984) 56 ALR l per Mason J. at p 12. Where "deemed" is used in a definition to extend its meaning not in a fictional sense but to include matters that might or might not fall within the scope of the word so defined, the position is similar to that where "includes" is used in a definition (see Ex parte Armstrong; Re Hughes (1963) 80 WN 566 per Walsh J. at p 568; D.C. Pearce, Statutory Interpretation in Australia, 2nd ed. at p 50).
appeal is whether sec.9D is to be read as an
interpretation clause in the sense of an
exhaustive definition, as suggested by the
marginal note, or it is to be read as extending
sub modo the sense which would otherwise be
given to that word as used in sec.9A.
The word 'deemed' may be used in either sense,
but it is more commonly used for the purpose of
creating what James L.J. and Lord Cairns L.C.
called a 'statutory fiction' (see Hill v. East
and West India Dock Co. (9 App Cas, 448 at
p 456), that is, for the purpose of extending
the meaning of some term to a subject matter
which it does not properly designate. When used
in that sense it becomes very important to
consider the purpose for which the statutory
fiction is introduced. An instance of the use
of the word in the other sense is to be found in
the case R. v. Norfolk County Council (60
LJQB, 379), where it was held that in a
clause beginning, 'The following...shall be
deemed to be,' the word imported an exclusive
definition and not an extension of meaning."
27. In my opinion, this is the present case. The evident object of s.92B(1)
is to fix, at 15 per cent, certain percentages of voting
power and
shareholding interests as a conclusive statement of the existence of control
of the company where control is achieved by
one of those means. But there is
nothing in the language of the Division or in the policy sought to be achieved
by its provisions
which suggests that it is not possible for a foreign person
to be in a position to exercise control by other means for the purposes
of the
Division, including s.92D(1). On the contrary, when the Division is read as a
whole bearing in mind the history of the legislation,
it appears that what
s.92B(1) is intended to do is to put beyond argument the issue of control
where one of the criteria (a), (b)
or (c) in that sub-section has been
satisfied - it has nothing to say on the different question whether, even if
none of those criteria
is satisfied, a foreign person is, nonetheless, in a
position, by other means, to exercise control of the company within the
meaning
of s.92D(1). Such a construction is consistent with the policy
intended to be achieved by the statute, as explained in the ministerial
statements, that de facto control can be exercised in various ways other than
owning or voting shares and that the objective of the
legislation is to ensure
that only Australian citizens and companies in which Australian citizens hold
more than 50 per cent of the
votes or shares may be in a position to control a
licensee company.
Question (iii)28. I agree with the answer proposed by Chief Judge and with his reasoning.
Remaining Questions29. I agree with the course proposed by the Chief Judge.
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