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Federal Court of Australia - Full Court |
Last Updated: 12 January 2009
FEDERAL COURT OF AUSTRALIA
Macquarie Media Holdings Limited (ACN 116 024 536) v Australian Communications and Media Authority [2009] FCAFC 1
BROADCASTING – Broadcasting
Services Act 1992 – prohibition on controlling more than one
commercial television broadcasting licence in the same licence area –
exemption
for licensees in underserved areas – additional licence
allocated jointly to two existing licensees – statutory exemption
from the
more than one licence prohibition – whether exemption lost when existing
licensee taken over by a third party –
Broadcasting Services Act s 38B, s
53(2), s 73A(1) and Schedule 1.
STATUTORY INTERPRETATION –
legislative scheme to provide additional television services to underserved
licence areas – legislative amendment in
2001 to overcome unanticipated
consequence of 2000 Act – scope of 2001 provision repealing and
re-enacting an exemption from
a statutory prohibition on controlling more than
one commercial television broadcasting licence in the same licence area –
significance of legislative history of the exemption and of extrinsic materials
explaining its context and purpose – purposive
and contextual construction
– conflicting possible constructions – construction adopted which
was reasonably open and
more closely conformed to the legislative intent.
Broadcasting Services Act 1992 (Cth) ss 6,
7, 38A, 38B, 53(2), 55(3), 55(4), 67, 73, 73A, Divs 2 & 3 of Pt
5
Broadcasting Services Amendment (Digital Television and Datacasting) Act
2000 (Cth)
Broadcasting Legislation Amendment Act (No 2) 2001
(Cth)
Broadcasting Act 1942 (Cth) s 89A
Judiciary Act
1903 (Cth) s 39B
Re Ku-ring-gai
Co-operative Building Society (No 12) Ltd [1978] FCA 50; (1978) 22 ALR 621
cited
Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1 cited
CIC Insurance
Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 applied
R v L
(1994) 49 FCR 534 cited
Comcare v Thompson [2000] FCA 790; (2000) 100 FCR 375
cited
Pearce and Geddes, Statutory Interpretation in
Australia (6th ed, 2006)
Butler and Rodrick, Australian
Media Law (3rd ed,
2007)
MACQUARIE MEDIA HOLDINGS
LIMITED (ACN 116 024 536), MACQUARIE MEDIA GROUP PTY LIMITED (ACN 110 357 036),
MACQUARIE MEDIA MANAGEMENT
LIMITED (ACN 115 524 019), MACQUARIE MEDIA
INTERNATIONAL LIMITED (ARBN 118 577 423), REGIONAL MEDIA NO 1 PTY LIMITED (ACN
124 719
400) and REGIONAL MEDIA NO 2 PTY LIMITED (ACN 124 720 289) v AUSTRALIAN
COMMUNICATIONS AND MEDIA AUTHORITY
No NSD 1787 of
2008
FINN, BENNETT AND EDMONDS JJ
12
JANUARY 2009
ADELAIDE (VIA VIDEOLINK TO SYDNEY)
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DATE OF ORDER:
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WHERE MADE:
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THE COURT ORDERS THAT:
2. The orders made on 14 November 2008 be set aside.
3. The respondent pay the appellants’ costs of this appeal and at first instance.
THE COURT DECLARES THAT:
1. None of the appellants was or is in a position to exercise control (as defined in section 6 of the Broadcasting Services Act 1992 (Cth) (the Act)) of the commercial television broadcasting licence allocated under section 38B of the Act in respect of the Tasmania TV1 licence area for the purposes of Divisions 2 and 3 of Part 5 of the Act by reason of its being in a position to exercise control (including by any of the mechanisms set out in Schedule 1 of the Act) of Southern Cross Broadcasting (Australia) Pty Limited ACN 006 186 974 (SCB) or of any company of which SCB is in a position to exercise control.
2. None of the appellants was or is in a position to exercise control (as
defined in section 6 of the Act) of the commercial television
broadcasting
licence allocated under section 38B of the Act in respect of the Darwin TV1
licence area for the purposes of Divisions
2 and 3 of Part 5 of the Act by
reason of its being in a position to exercise control (including by any of the
mechanisms set out
in Schedule 1 of the Act) of SCB or of any company of which
SCB is in a position to exercise
control.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
The text of entered orders can be located using eSearch on the
Court’s website.
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ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF
AUSTRALIA
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BETWEEN:
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MACQUARIE MEDIA HOLDINGS LIMITED
(ACN 116 024 536) First Appellant MACQUARIE MEDIA GROUP PTY LIMITED (ACN 110 357 036) Second Appellant MACQUARIE MEDIA MANAGEMENT LIMITED (ACN 115 524 019) Third Appellant MACQUARIE MEDIA INTERNATIONAL LIMITED (ARBN 118 577 423) Fourth Appellant REGIONAL MEDIA NO 1 PTY LIMITED (ACN 124 719 400) Fifth Appellant REGIONAL MEDIA NO 2 PTY LIMITED (ACN 124 720 289) Sixth Appellant |
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AND:
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AUSTRALIAN COMMUNICATIONS AND MEDIA
AUTHORITY
Respondent |
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JUDGES:
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FINN, BENNETT AND EDMONDS JJ
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DATE:
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12 JANUARY 2009
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PLACE:
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ADELAIDE (VIA VIDEOLINK TO SYDNEY)
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REASONS FOR JUDGMENT
1 The general rule under the Broadcasting Services Act 1992 (Cth) is that a person must not be in a position to exercise control of more than one commercial television broadcasting licence in the same licence area: s 53(2). Licence areas are designated by the Australian Communications and Media Authority under, and in accordance with, the Act. The one licence rule is subject to two exceptions both of which relate to underserved, usually regional, licence areas. In areas served by a single licence or by two licences, special provision has been made for an additional licence to be allocated for that area to the existing licensee (in a single licence area): s 38A; or to one or other of the two licensees or to a joint venture company owned by both of them (in a two licence area): s 38B.
2 The present appeal concerns two distinct, two licence areas – the Darwin TV1 licence area, and the Tasmania TV1 licence area. In each of these respectively, an additional licence was allocated to a joint venture company owned jointly by the two existing licensees. At the time the additional licences were allocated (in Darwin in May 2007 and Tasmania in November 2002), the appellant Macquarie Group of companies had no interest in, or control of, either of the then existing licences in either licence area. The Group later acquired 100 per cent control of one of the original "parent" licences in each area and a 50 per cent interest in the licensee of the additional s 38B licence in each area.
3 Divisions 2 and 3 of Part 5 of the Act enshrine the limitations on persons in the position to exercise control of commercial television broadcasting licences, and on directorships of companies in positions to control the exercise of such licences. Sections 73 and 73A of the Act provide both for the manner in which an additional licence granted in one and two licence areas respectively is to be exempted from the provisions of Division 2 and 3 and for the duration of that exemption.
4 The Macquarie Group is now in a position to exercise control of a parent licence and the additional licence in both the Darwin and Hobart areas. The issue which arises in this appeal is whether the Macquarie Group members were entitled to the exemption from the one licence rule prescribed in s 53(2). The primary judge held in judicial review proceedings that, on the proper construction of s 73A, they were not.
5 The appeal challenges his Honour’s construction of that provision.
BACKGROUND
6 As this is a matter in which legislative history contrives the terms of the construction debate between the parties, it is necessary to commence with an historical account both of the genesis and evolution of the current s 73A and of the section’s legislative context.
(1) The additional licence provisions: Single licence areas
7 We deal with this matter because the appellants rely upon the provisions dealing with single licence areas in aid of the construction they seek to place on s 73A.
8 The 1992 Act at its inception acknowledged the possibility of an existing licensee in a single licence area being given permission to operate a second broadcasting service in that area: see s 73(1) as at 1992. For as long as the requisite permission remained in force the two "services" so provided were "to be taken to be one service provided under the one licence": ibid.
9 In 1995 a new regime for one licence areas was introduced. It made provision for the allocation of an additional licence to the existing licensee. At the same time the then s 73 was repealed and in its stead a new s 73 was enacted to provide an "exemption from ownership limits". It utilised the same device, as will be seen, as is used in the current s 73: for the purposes of Part 5’s control provisions the existing licence and the additional licence were (subject to prescribed limitations) to be treated "as being only one licence": s 73(1) of the 1995 Amendment. The exemption, though, did not apply to the licences at any time after they were "first held by a different person": s 73(2). We later discuss the significance of this qualification.
10 Section 38A was amended in 1998 and 2000 by which time the section assumed in substance its present form. Insofar as presently relevant, it now provides in sub-sections (1) and (2) that, if a particular licence area is the licence area of only one commercial television broadcasting licence that is in force and additional such licences can be allocated for that area, the existing licensee may apply to ACMA for an additional licence and, subject to being satisfied about certain prescribed conditions, ACMA must allocate an additional licence for that area to the existing licensee. Further the section (i) allows two separate licence areas which overlap to be treated as if they were one in specified circumstances: s 38A(7); (ii) requires that the licensee continue to provide services under the additional licence for at least two years from the date of its allocation: s 38A(9); (iii) renders, for that 2 year period, any attempt to transfer either the parent licence or its additional licence of no effect "unless both of those licences are transferred at the same time by the same person to the same transferee": s 38A(10).
11 As a result of amendments in 1998 and 2000, s 73 achieved its present form. It now provides:
73 Additional licence under section 38A not to result in breach of ownership limits
(1) If an additional licence has been allocated under section 38A to the holder of an existing licence, the existing licence and additional licence are to be treated, for the purposes of this Part [ie Part 5], as being only one licence.
(2) This section does not apply to the licences at any time after either of the licences is first held by a different person (whether or not it continues to be held by a different person).
12 We would note in passing that, as s 73(2) does not apply to transfers of the parent and additional licences at the same time to the same transferee, it does not on its face preclude such a transfer after the 2 year prohibition in s 38A(10) ceases to be operative. The manifest intention of s 73 when considered in light of s 38A(10) is to link the exemption to the licences being held by the same licensee, whether that person be the original licensee or a later transferee: see also the Revised Supplementary Explanatory Memorandum to the Broadcasting Services Amendment Bill 8.11.1994, p 10.
(2) Part 5, Divisions 2 and 3
13 Before dealing with the provisions concerned with allocating an additional licence in two licence areas, it is necessary to digress and consider the limitations on control of licences etc contained in Divisions 2 and 3. For present purposes we need only refer to ss 53 and 55.
14 Section 53, which is in Division 2, provides:
53 Limitation on control of commercial television broadcasting licences(1) A person must not be in a position to exercise control of commercial television broadcasting licences whose combined licence area populations exceed 75% of the population of Australia.(2) A person must not be in position to exercise control of more than one commercial television broadcasting licence in the same licence area.
15 Section 55 of Division 3 provides, insofar as presently relevant:
55 Limitation on number of directorships – television... (3) A person must not be:(1) A person must not be a director of a company that is, or of 2 or more companies that are, between them, in a position to exercise control of commercial television broadcasting licences whose combined licence area populations exceed 75% of the population of Australia.
if each of those licences have the same licence area. (4) A person must not be:(a) a director of a company that is in a position to exercise control of a commercial television broadcasting licence; and
(b) a director of a company that is in a position to exercise control of another commercial television broadcasting licence;
if each of those licences have the same licence area.(a) a director of a company that is in a position to exercise control of a commercial television broadcasting licence; and
(b) in a position to exercise control of another commercial television broadcasting licence;
16 We would emphasise that the critical notion in both s 53 and s 55 is that of being "in a position to exercise control of a commercial television broadcasting licence". Section 6(1) of the Act defines "control" to include "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." Section 7(a) in turn prescribes that the mechanisms set out in Schedule 1 are to be used in deciding whether a person is in a position to exercise control of (inter alia) a licence.
17 Clause 1 of Schedule 1 has been described as "a legislative essay" which explains, justifies and illustrates the Act’s approach to control for its purposes: see Butler and Rodrick, Australian Media Law, [15.225] (3rd ed, 2007). It is unnecessary for present purposes to analyse the Schedule in any detail, save to emphasise the following. (a) As s 6 of the Act indicates, "control" is not circumscribed by the need to prove a legal right to exercise control. (b) Clauses 2 and 3 set out the rules for deciding where a position to exercise control exists and these in the main focus upon the practical arrangements or actual circumstances existing in described contexts. For present purposes it is only necessary to refer to cll 2(1)(a) and (b) which, insofar as presently relevant, provide:
(1) For the purposes of this Schedule, a person is in a position to exercise control of a licence or a company if:
(i) the person is the licensee;(a) the person, either alone or together with an associate of the person, is in a position to exercise control of the licensee or the company; or
(b) in the case of a licence (other than a datacasting transmitter licence or a restricted datacasting licence):
(c) By way of exception, cl 6 deems a person to be in a position to exercise control of a company if that person has company interests in it exceeding 15 per cent. (d) Relatedly cl 7 applies the 15 per cent rule to a chain of companies with the consequence that where a company interest of 15 per cent is maintained through the chain, the person at the beginning of the chain "is to be regarded as being in a position to exercise control of the last company in the chain".
18 We simply note in passing that in the present matter the Macquarie Group begins a chain that ends with the two additional licensees and the Group is deemed by clauses 6 and 7 to be in a position to exercise control of them, hence, of their respective licences: see also Schedule 1 cl 2(1)(a). We would emphasise, though, that while control for present purposes is thus related to company interests, the concept of a "position to exercise control" in s 53 and s 55 is far more wide ranging in what it comprehends, as s 6 of the Act and Schedule 1 indicate.
(3) Two licence areas
19 The provisions dealing both with the allocation of an additional licence in two licence areas and with exemption from the control provisions of Part 5 – s 38B and s 73A – evolved in two stages. The following description of that process is drawn largely from the primary judge’s reasons.
(i) Stage 1: the 2000 Amending Act
20 In 2000, the Act was amended by the Broadcasting Services Amendment (Digital Television and Datacasting) Act 2000 (Cth) (the 2000 Amending Act). While the 2000 Amending Act generally dealt with revised arrangements for the introduction of digital television and with a new regulatory regime for the provision of datacasting services, it also made provision for the grant of additional licences in underserved regional licence areas or markets in which there were fewer than three commercial television services. This appears to have been viewed as a means of facilitating the provision of digital television in those licence areas. The Explanatory Memorandum to the Broadcasting Services Amendment (Digital Television and Datacasting) Bill 2000 (Cth) and Datacasting Charge (Imposition) Amendment Bill 2000 (Cth) noted that the Bill that became the 2000 Amending Act (at 7):
encourages the issue of an additional commercial television licence in 1 and 2 station markets by:• providing a mechanism for the issue of a licence in 2 station markets (items 19, 23, 41, 44, and 54 of Schedule 1); and
• enabling a licensee allocated an additional licence to multichannel the existing and new services in SDTV digital mode on the one channel (item 86 of Schedule 1);
21 How this objective would be achieved in these markets was discussed in more detail in the Explanatory Memorandum in a section that identified the issue, identified options and then identified a preferred option. The issue was described as follows (at 55):
Underserved licence areas are characterised by small populations, often spread thinly over large geographical areas. This has the disadvantages of increasing the costs to broadcasters of their infrastructure establishment and maintenance, while also limiting the revenue base available due to the restricted availability of advertising earnings. There has, therefore, been little industry interest in providing additional independent commercial television services in most of these markets. Consumers within underserved regional television licence areas currently receive fewer commercial services than most viewers within metropolitan licence areas. As part of the arrangements for the introduction of digital television services, Schedule 4 of the [the Act] requires the Minister for Communications, Information Technology and the Arts to cause to be conducted, before 1 January 2000, a review into, amongst other matters:This review was undertaken by the Department of Communications, Information Technology and the Arts in 1999, in consultation with the industry.‘whether any amendments of laws of the Commonwealth should be made in order to ensure that underserved regional licence areas are provided with up to the same number of commercial television broadcasting services as are provided in metropolitan areas.’ (paragraph 59(1)(d))
22 The preferred option was discussed in the following terms (at 61):
B6 Conclusion and Recommended Option The proposed approach aims to allow for a timely introduction of new analog and digital services in these markets while maintaining the quality of existing services to consumers. In developing these proposals, account has been taken of the particular economics of underserved markets - widely dispersed populations requiring extensive transmission infrastructure coupled with small populations and, therefore, low advertising revenue bases. Restrictions on competition are supported for the following reasons:The most effective way to introduce new services in these markets within a reasonable timeframe is to allow for incumbents to provide such services. New digital technology further enhances the ability for new, economically viable services to be introduced in these markets. The Government recognises that this will impact on the ability to receive HDTV and will review the situation in 2005. However, there are significant benefits to the early introduction of new services. ... Two Service Markets The s.38A option does not apply to two service markets. The best prospects for introducing new services in these markets lies in providing incentives and flexible options for incumbent broadcasters to provide additional services. Such services could be provided at a lower cost than would be incurred in establishing an independent service. (Emphasis added.)• The high costs of transmission infrastructure rollout for new services is not likely to be covered by any increase in advertising revenues;
• The viability of new independent services is highly unlikely;
• Current services are unlikely to be able to be sustained if there is an increase in competition at this stage (noting that some two service markets have had competition introduced only recently), especially in the conversion to digital;
• Consumers are unlikely to support new services which do not present some local programming, or are of an inferior quality;
• There is little interest by new broadcasters in providing services in these areas.
23 Following this commentary, the Explanatory Memorandum explained, in an orthodox way, the purpose of the proposed s 38B (item 23 in the Bill) and s 73A (item 41):
Item 23 New section 38B New section 38B will allow one additional licence to be allocated in each 2-station market, i.e. each licence area with only two CTV licences in force. However, an additional licence cannot be allocated under section 38B if one of the existing licences was issued under section 38A. Under subsection 38B(1), there are three alternative mechanisms for the allocation of the additional licence (see subsection (1)):(1) application by a joint-venture company jointly owned by the existing licensees;
(2) separate applications from both licensees, and price-based allocation;
For the additional licence to be allocated, the two existing licensees must, within 90 days of commencement of the section (which will be a day to be proclaimed), give the ABA a joint written notice specifying one of the above alternatives. Additional licence allocation is subject to the ordinary requirements in section 37 (see new subsection (24)). Thus an additional licence can only be allocated to an Australian company with a share capital, which meets the suitability test in section 41. When the additional licence is allocated, it becomes a condition of that licence, and of the parent licence (both licences in the case of a joint venture company) that the licensee concerned will continue to provide services under the licence concerned for at least 2 years after the additional service commences (see subsections (20) and (21)). A joint-venture holder of one additional licence cannot transfer that licence for 2 years after allocation. In other cases, both the existing and the additional licences may be transferred within 2 years, but they must be transferred at the same time to the same transferee (see subsection (22) and (23)). Item 41 New section 73A The effect of new subsection 73A(1) is that if an additional licence is allocated to one of the existing licensees under new section 38B, the existing licence and the additional licence are treated for the purposes of the control rules in Part 5 of the Act as one licence. However, the licences cease to be treated as one licence once one of the licences first becomes held by a different person (subsection (2)). Subsection (3) deals with the situation where the additional licence (the section 38B licence) was allocated to a joint-venture company wholly beneficially owned by the existing licensees. The effect of subsection (3) is that while the joint-venture company holds the section 38B licence, and the joint-venture company is ‘partly-owned’ by an existing licensee, the existing licence and the section 38B licence are treated as one licence. Subsection (3) applies separately to both existing licences. Subsection (4) provides that for a company to be ‘partly-owned’ by another company under subsection (3), it is necessary that at least one share in the company must be beneficially owned by the other company.(3) application by one of the existing licensees.
24 When introducing the Bill in the House of Representatives on 10 May 2000, a spokesman for the relevant Minister said the following in relation to the provisions concerning underserved areas:
In the case of two-station markets, the bill will provide for a third digital-only service to be provided either by one of the existing incumbents or by a joint venture by the two incumbents. If only one of the incumbents provides the new service they can elect to do so by multichannelling in SDTV format--with exemption from HDTV requirements, again subject to review in 2005. The new service is required to commence by 1 January 2004, or any earlier time notified by the ABA. These changes will provide the opportunity for incumbent broadcasters in solus and two-service markets to provide new digital services with lower roll-out costs, and provide the potential for new services for consumers in these regions.25 It is unnecessary for present purposes to set out in any detail the provisions of s 38B in its original form. The provisions reflected what was foreshadowed in the explanatory memorandum. It was amended in the following year to overcome unforseen difficulties in its application (which are not presently relevant). The current version of s 38B is set out in part below.
26 More important for present purposes was the proposed new s 73A, the terms of which contrast sharply with the present s 73A. The 2000 Act version provided:
73A Additional licence under section 38B not to result in breach of ownership limits
(1) If an additional licence has been allocated under subsection 38B(6), (7), (8) or (9) to the holder of an existing licence, the existing licence and additional licence are to be treated, for the purposes of this Part, as being only one licence.
(2) Subsection (1) does not apply to the licences at any time after either of the licences is first held by a different person (whether or not it continues to be held by a different person).
(a) the company remains:(3) If an additional licence has been allocated under subsection 38B(5) to a company, then, while:
(ii) partly owned by another company that was the holder of one of the existing licences at the time of the allocation; and(i) the holder of an additional licence; and
(b) the other company remains the holder of the existing licence;
the existing licence and the additional licence are to be treated, for the purposes of this Part, as being only one licence.
(4) For the purposes of this section, a company (the first company) is partly owned by another company if, and only if, at least one share in the first company is beneficially owned by the other company.
27 Though accommodating itself to the possibility of the additional licence being allocated to a joint venture company, the section in substance mirrors the approach taken in s 73 (a) in treating the existing licence and additional licence as being one for Part 5 purposes and (b) of tying the exemption to the holding of the two licences by companies that were related at the time of the allocation, or thereafter by a company that has had the licences transferred to it at the same time by the prior licensees: see s 38B(23).
(ii) Stage 2: the 2001 Amending Act
28 In 2001, the Act was further amended by the Broadcasting Legislation Amendment Act (No 2) 2001 (Cth). Section 38B was amended to remove what was seen to be a veto power arising if one of the existing licensees refused to cooperate in providing a joint notice under s 38B(26) (a subsection which is unnecessary to set out). The section now provides, insofar as presently relevant:
38B Additional commercial television licences in 2-station markets (1) If:(a) a particular licence area is the licence area of only 2 commercial television broadcasting licences (the parent licences) that are in force; and
(b) neither of those licences was allocated under section 38A; and
(c) an additional commercial television broadcasting licence can be allocated for the licence area;
then, within 90 days after the designated time for the licence area:
(d) the existing licensees may give the ACMA a joint written notice stating that:
(i) a company specified in the notice (the joint venture company) will apply for an additional commercial television broadcasting licence for the licence area; and
(ii) the joint-venture company is jointly owned by the existing licensees; and
(iii) the joint-venture company is formed in Australia or an external Territory and has a share capital; or
(e) each existing licensee may give the ACMA a written notice stating that the licensee will apply separately for an additional commercial television broadcasting licence for the licence area.
29 The section goes on to indicate how ACMA is to deal with an application and make an allocation of an additional licence depending upon whether the application is made by a joint venture company or by one or both of the existing licensees severally. As with s 38A(10), s 38B(22) and (23) impose restrictions upon the transfer of licences. These subsections provide:
(22) During the period of 2 years after the date of allocation of an additional licence under subsection (5), any attempt by any person to transfer the additional licence is of no effect.
(23) During the period of 2 years after the date of allocation of an additional licence under subsection (6), (7), (8) or (9), any attempt by any person to transfer either:
(a) the additional licence; or
(b) the parent licence concerned;
is of no effect unless both of those licences are transferred at the same time by the same person to the same transferee.
30 For its part, the 2000 Act s 73A was repealed and re-enacted in quite different terms. Having foreshadowed in the "Outline" that the primary purpose of the change to be made was "to ensure that an incumbent broadcaster allocated an additional licence under section 38B would not be in breach of the control provisions of the BSA in situations involving overlapping licence areas", the Revised Explanatory Memorandum for the 2001 Bill stated (at 13-14):
Item 4: Section 73A The effect of existing subsection 73A(1) is that if an additional licence is allocated to one of the existing licensees under new section 38B, the existing licence and the additional licence are treated, for the purposes of the control rules in Part 5 of the Act, as one licence. However, the licences cease to be treated as one licence once a different person first holds one of the licences (subsection (2)). Subsection (3) deals similarly with the situation where the section 38B licence was allocated to a joint-venture company wholly beneficially owned by the existing licensees. This item repeals and substitutes section 73A. New section 73A will operate in a way more appropriate to markets with overlapping licence areas, and the varying corporate structures used by broadcasters. New subsection 73A(1) operates so that for each person (including a company) who is in a position to exercise control of a section 38B licence when it is allocated (this includes the holder), the section 38B licence is disregarded for the purposes of the control rules in Divisions 2 and 3 of Part 5 of the BSA. However, the licence is disregarded in relation to that person only until that person is no longer in a position to exercise control of the licence. New subsection 73A(2) is a subsidiary rule to cater for people (including companies) in an intermediate control position. It applies where:During the period that this intermediate person is in a position to exercise control of the licence, the licence is also disregarded in relation to that person for the purposes of the control rules in Divisions 2 and 3 of Part 5. New subsection 73A(2) effectively protects all persons who fall within a chain of control which begins with a person who controlled the licence when it was allocated.• a person who is covered by new subsection (1) (ie a person who was in a position to exercise control of a section 38B licence when it was allocated and remains in such a position) is also in a position to exercise control of some other person (the intermediate person); and
• the intermediate person is also in a position to exercise control of the licence.
31 When the Bill was introduced in the House of Representatives on 5 April 2001, there reference was again made to overlapping licence areas (Hansard, Representatives, 26537):
The bill amends the act to ensure that a third licence can be allocated under section 38B, by enabling the existing licensees to apply either jointly or separately. In addition, section 73A provides an exemption from the normal control provisions which limit a broadcaster to owning only one licence in a licence area where the broadcaster has been allocated a section 38B licence to provide a third digital service in the same licence area. However, in a limited number of cases involving overlapping licence areas section 73A does not provide an exemption from the control provisions for all licensees. The bill amends section 73A of the act to ensure that an incumbent broadcaster allocated an additional licence under section 38B would not be in breach of the control provisions in these situations.32 This theme was repeated in a Bills Digest prepared by the Parliamentary Library (at 2):
Item 4 of Schedule 1 of the Bill substitutes a new section 73A, which protects the controllers of additional licences granted under section 38B from being in breach of the control rules (ie. That no person shall control more than one licence in a licence area). This was considered necessary because the existing provisions of section 73A may not protect certain licensees in some circumstances. In particular, the current provisions were not drafted to cater for situations where a large licence area overlaps a number of smaller separate licence areas, the licences for which are controlled in common.33 The theme concerning overlapping licence areas (as well as corporate structures) was also picked up in a Senate Report on the Bill (at 3-4):
Amendments to section 73A1.20 Section 73A of the Act, provides an exemption from the normal control provisions which limit a broadcaster to owning only one licence in a licence area. Where the broadcaster has been allocated a licence under section 38B to provide a third digital service in the same licence area, the existing and additional licences are treated as one licence for the purpose of the ownership limits. However, in a limited number of cases involving overlapping licence areas, section 73A does not provide an exemption from the control provisions for all licensees.
(Emphasis added.)1.21 The bill repeals and substitutes section 73A (item 4) so that it will operate in a way more appropriate to markets with overlapping licence areas and the varying corporate structures used by broadcasters.
34 It should be noted in passing given the obvious legislative concern with overlapping licence areas that for Part 5 purposes, s 51 provides:
51 Means of dealing with overlapping licence areas If:the rules in this Part apply to the 2 licence areas, but not between those licence areas and other licence areas, as if the 2 licence areas were one.(a) more than 30% of the licence area population of a licence area is attributable to an overlap area; or
(b) a licence area is entirely within another licence area;
35 It is not necessary for present purposes to illustrate circumstances in which the old s 73A would fail to exempt an existing licensee holding an additional licence for an area affected by multiple overlaps. A detailed illustration has been annexed to the appellants’ submissions. It demonstrates why the language of s 73A was changed so as to refer to disregarding the s 38B licence in relation to "a person" rather than providing for the existing licence and the s 38B licence to be treated as being only one licence for the relevant licence area.
(4) Section 73A
36 This now provides:
73A Additional licence allocated under section 38B not to result in breach of control rules
(1) If an additional licence is allocated under section 38B, then for the purposes of Divisions 2 and 3 of this Part:
(a) the licence is to be disregarded in relation to a person who is in a position to exercise control of that licence at the time it is allocated; and
(b) the licence is to be so disregarded until that person first ceases to be in a position to exercise control of that licence.
(2) If, during the time a licence is disregarded in relation to a person under subsection (1), that person is in a position to exercise control of another person who is in a position to exercise control of the licence, then, for the purposes of Divisions 2 and 3 of this Part, the licence is also to be disregarded during that time in relation to that other person.
37 The contrast in language between the new and the old s 73A is arresting. The change in focus to "a person in a position to exercise control of [a s 38B] licence" may have provided an effective means to deal with the overlapping areas mischief identified in the extrinsic materials. But did it do so at the price of reducing the scope of the exemption previously given?
38 Before turning to this question of construction it is appropriate to refer to several additional aspects of the Act.
39 First, while both s 38A(10) and s 38B(22) and (23) impose time-bound restrictions on the transfers of both the additional licence and the existing licence, and of the additional licence alone, the Act does not provide for the vetting of a transferee of a commercial television broadcasting licence: see s 48. The requirement of the Broadcasting Act 1942 (Cth), s 89A for prior regulatory approval of transfers was abandoned.
40 Secondly, while the Act through Part 5 imposes control restrictions both on persons in the circumstances prescribed in Divisions 2 and 3, and in Division 5A on transactions that result in unacceptable media diversity situations and unacceptable three-way control, it is now relatively unconcerned with the identity as such of the owners from time to time of commercial television broadcasting licences: on media ownership and control, see generally Butler and Rodrick, Ch 15.
41 Thirdly, s 67 of the Act provides a procedure for ACMA to give prior approval to temporary breaches of the Act. It provides, insofar as presently relevant:
...(1) A person may, before a transaction takes place or an agreement is entered into that would place a person in breach of a provision of Division 2 or 3, make an application to the ACMA for an approval of the breach.
(4) If, after receiving an application, the ACMA is satisfied that:
(a) if the transaction took place or the agreement was entered into, it would place a person in breach of a provision of Division 2 or 3;
(b) the person will take action to ensure that the breach of that provision ceases; and
(c) the breach is incidental to the objectives of the transaction or agreement;
(5) The period specified in the notice must be 6 months, one year or 2 years.the ACMA may, by notice in writing given to the applicant, approve the breach arising as a result of the transaction or agreement and specify a period during which action must be taken to ensure that the breach ceases, being a period that commences on the day on which the transaction takes place or the agreement is entered into.
(6) The ACMA may specify in a notice the action that the ACMA considers the person is to take so that the person is no longer in breach of the relevant provision.
42 ACMA can only grant one extension of the period and the period so granted must not exceed the lesser of the period originally specified or one year: s 68.
43 This procedure was availed of in this proceeding. The view taken by ACMA in the various applications made to it pursuant to s 67(4) was that the appellant companies and their directors actual and to be appointed would be in breach of s 53(2) and s 55(3) of the Act unless given prior approval that has given rise to this application under s 39B of the Judiciary Act 1903 (Cth) for declaratory relief.
THE PROCEEDINGS BELOW
44 The parties have proceeded on an Agreed Statement of Facts. For present purposes it is only necessary to note that after the additional licences were granted to joint venture companies in the Darwin TV1 licence area and the Tasmania TV1 licence area, the Macquarie Group acquired 100 per cent of Southern Cross Broadcasting (Australia) Pty Ltd ("SCB"). Through an intermediate company, SCB wholly owned a licensee company for the areas of Darwin and Tasmania, each licensee company jointly owning the joint venture company for the same area that had been allocated an s 38B additional licence.
45 From July 2007 the appellants were in a position to exercise control of SCB, hence, of each of the joint venture licensees. From that time some number of s 67 applications were made to ACMA and approvals were given.
46 The declarations sought in the proceedings, put shortly, were that, in the circumstances, (i) none of the appellants contravened s 53(2) of the Act in respect of the Tasmania and the Darwin additional licence; (ii) the conditions for the issue of an approval by ACMA pursuant to s 67(4) in respect of any breach of s 53(2) never arose; (iii) none of the appellants were in a position to exercise control of 2 commercial television broadcasting licences in the respective Tasmanian and Darwin licence areas for the purposes of s 55(3) of the Act; and (iv) the conditions for ACMA issuing approvals pursuant to s 67(4) in respect of a breach by any director of the applicants of s 55(3) never arose.
47 As earlier indicated, the primary judge dismissed the application. It is unnecessary to rehearse the arguments advanced before his Honour and the reasons he gave for his decision (although we will refer to the latter in passing). The submissions made to us traverse the same grounds and, save in relation to one matter which we will later note, involve the same questions as those raised below.
THE PARTIES’ CASES
48 The respondent’s contention has a seductive simplicity. It is that the words of s 73A(1) should be given their apparent meaning. Where an additional licence has been allocated under s 38B, for Part 5 purposes that licence is to be disregarded in relation to a person who was in a position to exercise control of that licence at the time it was allocated and the licence is to be so disregarded until that person first ceases to be in a position to exercise control of that licence. The subsection was directed at incumbents, not subsequent investors. It imposes a temporal limitation upon the class of persons who qualify for the exemption. While s 73(2) gives incumbents some capacity to introduce new entities into their corporate structure, the persons so introduced are themselves subordinate to the person who is in a position to control them and the additional licence. In other words the two parts of s 73A have a separate but harmonious operation.
49 The appellants’ construction in contrast is less obvious, more complex and is policy and purpose driven. Importantly, the appellants do not contend that they, themselves, are persons to whom the s 73A exemption applies. In this they acknowledge that they were not in a position to exercise control of either of two additional licences at the time each was allocated. Nonetheless they say they now are related to persons who were respectively in such a position at the times the additional licences were allocated. These persons were (a) the two joint venture companies who became and still remain the respective licensees of the additional licences and (b) the Southern Cross companies (now Macquarie Group owned) which are in positions to exercise control of the joint-venture companies via the 50 per cent shareholdings in those companies. It is these companies that provide the links between the appellants and the licences. What, it is said, s 73A does on its proper construction is to remove those links for the purposes of any inquiry undertaken for the purposes of Part 5, Divisions 2 and 3 in relation to the s 38B licences that have been allocated. It does this because s 73A directs that the licence is to be disregarded in relation to each such person as was in a position to exercise control of the respective licences at the time each was allocated. Once the licences are disregarded the joint venture companies are not to be regarded as licensees: cf Schedule 1 cl 2(1)(b)(i); nor are the Southern Cross companies to be regarded as persons in a position to exercise control of the licensee: cf Schedule 1, cl 2(1)(a); in any control inquiry into whether the appellants were in breach of s 53(2) or their directors were in breach of s 55(3): see s 7 and Schedule 1.
50 The matter of emphasis in this construction of s 73A is that the direction ‘to disregard’ given by the section is "for the purposes of Divisions 2 and 3 of Part [5]". Those words are not qualified with the result that the existence of the fact of the additional licence in relation to a person who was in a position to exercise control of that licence is incapable of forming part of the body of facts which would need to be proved to establish a contravention of a provision of Division 2 or Division 3: see Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] FCA 50; (1978) 22 ALR 621 at 635.
51 In consequence it is contended the primary judge did not give full effect to the unqualified words "for the purposes of Divisions 2 and 3". The construction he adopted treats the subsection as creating an "immunity" only in favour of the persons in respect of whom the licence is to be disregarded so that it is only in relation to alleged contraventions by those persons that the subsection applies: [29], [34].
52 The appellants’ construction of s 73A(2) – the "subsidiary rule to cater for people (including companies) in an intermediate position": Revised Explanatory Memorandum, item 4 – is that accepted by the primary judge (at [30]) and is presently non-controversial. The subsection permits a limited measure of corporate restructuring "downstream" from a company that falls within s 73A(1). In the present matter, for example, it could permit corporate restructuring below SCB to the respective licensees, but not restructuring of the Macquarie Group above SCB.
CONSIDERATION
53 There are several preliminary matters to which we should refer. First, it seems to be common ground that, if the old s 73A had remained in force, the appellants would have had the benefit of the exemption it provided. For so long as the existing and additional licences were to be treated as one for Part 5 purposes, it was immaterial when the Macquarie Group acquired its company interests in the Southern Cross and joint venture companies. In this respect, and subject to the proviso mentioned, the old s 73A was indifferent to changes in the common ownership and/or control of both of the licensees.
54 Secondly, as noted at [35] above, we accept that it was necessary in dealing with the overlapping areas problem which prompted the re-enactment of s 73A in 2001 that the language of the exemption had to change so as to refer to disregarding the s 38B licence in relation to "a person who is in a position" etc rather than to providing for the existing licence and the additional s 38B licence to be treated as being only one licence for the relevant licence area. We further accept that the change so made was effective in extending the scope of the s 73A exemption in the manner envisaged.
55 Thirdly, the extrinsic materials explaining the purpose informing the repeal and re-enactment of s 73A provide no indication of any parliamentary intent otherwise to contract the scope of s 73A in its 2000 Act form. Whether in fact the 2001 Act on its proper construction did so, is a matter now in issue.
56 Fourthly, it is said by the respondent that the policy informing the introduction of s 38B additional licences was one designed to encourage "incumbents" (to use the language of the extrinsic materials for the 2000 Bill) to introduce new services in two licence areas. It was not directed to encouraging later investors. While the extrinsic materials make quite plain that the legislative scheme proposed in the 2000 Act was clearly directed at incumbent licensees in the first instance, the very terms of s 38B as then enacted were not intended to advantage only incumbents at the time of allocation of a s 38B licence. In this the 2000 Act scheme reflected the policy informing the s 38A scheme introduced in 1995. Both s 38A(10) and s 38B(23) exhibited, and still exhibit, the clear intent of keeping the parent and the s 38B licences together under common control for at least two years from the date of allocation of the latter licence – hence the requirement in those subsections respectively that for that period the licences could only be transferred "at the same time by the same person to the same transferee". Contrary to the view expressed by the primary judge (at [24] and at [35]) who appears not to have been taken to either of these subsections, we do not consider either that the then s 73A limited the immunity to the existing licensee at the time of the s 38B allocation or that the then s 73A and s 38B(23) could not be construed harmoniously. Subsections 38A(10) and 38B(23) do not manifest an intent adverse to later investors. Rather, in the anti-competitive restriction they impose, they evidence the same purpose of securing the sustained provision of enhanced services to the viewing population of licence areas that informed generally the scheme of s 38A and s 38B: see Explanatory Memorandum to the 2000 Bill at pp 57-59. What we would infer from the terms of the 1995 and 2000 Acts in relation to ss 38A, 38B, 73 and 73A, is that there was no objection or impediment manifest in the language and purposes of these provisions either to the joint transfer of parent and s 38A or s 38B licences, or to the later investment in companies holding both a parent and a s 38A or s 38B licence ie to subsequent incumbents. Given the purposes inspiring these two Acts, this is unsurprising.
57 Turning to the s 73A(1) of 2001, while accepting its efficacy in achieving its declared purpose in relation to overlap areas, it needs to be acknowledged that it may well have had quite unanticipated consequences. It is clear that, for the purposes of a Division 2 and Division 3 "control enquiry", a s 38B licence is only to be disregarded in relation to a person in a position to control the exercise of it (a) if that person was in that position at the time the licence was allocated, and (b) then only until that person first ceases to be in that position. This temporal limitation vis-à-vis that person appears to produce a very obvious difficulty with the joint transfer provisions of s 38B(23). Is this specific provision, which envisages the joint transfer of parent and s 38B licences after the latter’s allocation, to be taken to have been impliedly repealed by the general terms of the s 73A(1) exemption? On implied repeal see eg the observations of Gaudron J in Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1 at 17; and see generally Pearce and Geddes, Statutory Interpretation in Australia, [7.10] (6th ed, 2006) and see also [7.18]-[7.21]. This issue does not arise directly for consideration in this appeal and, while adverted to by the appellants, has not been the subject of submissions by either side. Nonetheless what it points up is at least some infelicity in the terms of the new s 73A(1) and, at worst, the oblique repeal of an already manifest parliamentary intent to permit joint transfers of parent and s 38B licences notwithstanding that the primary purpose of the 2001 Bill was, as has been seen, quite limited in its purpose and no mention of such a significant repeal was foreshadowed.
58 Whether or not the new s 73A is properly to be described as, in substance, an amendment or a repeal of the old s 73A, and whether or not the precise classification matters for present purposes: cf Pearce and Geddes, [7.1]-[7.3]; one thing is clear. The genesis of the section lay in a limited mischief which it was intended to – and did – cure, as the extrinsic materials to which we have referred make plain. In this at least the "context" of the provision is clear: cf CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. That context, furthermore, does not suggest that the scope of the old s 73A was sought otherwise to be circumscribed or curtailed. Unless constrained by the language of the section to reach a different conclusion, it is appropriate in our view to approach the section’s interpretation not only with such matters of context in mind but also having regard to the beneficial purposes intended to be served by the allocation of additional licences under s 38A and s 38B to single and two licence areas – the more so having regard to the object in s 3(1)(a) of the Act to promote "the availability to audiences throughout Australia of a diverse range of ... television services".
59 While it may be convenient to describe s 73A as providing an immunity to a person who might otherwise be in breach of s 53(2) or s 55(3) and (4), it is important to appreciate the manner in which s 73A functions. In the circumstances in which it applies, it contrives the application of the control rules of Schedule 1 which are required by s 7 to be used (inter alia) in deciding whether any person is in a position to exercise control of a licence or a company for the purposes of the above sub-sections. This it does by prescribing that a licence is to be disregarded in relation to a person who satisfies the twin requirements of s 73A(1). Such disregarding obviously can produce the same practical consequence as the counterfactual ordained by s 73 and the old s 73A: though there are in fact two licences, the provisions of the one licence rule will apply as if there were only one. In this at least there is practical consistency between the old and the new provisions.
60 While it is tempting, as the primary judge held and as the respondent contends, to say that such disregarding can only operate for the benefit of a person who satisfies the twin criteria of s 73A(1) – and "the apparently plain words of [the] provision": cf CIC Insurance Ltd at 408; considered in isolation lend support to this – is this a necessary or proper construction of the Act? In our view, it is not. We agree with the construction proposed by the appellants. It is "reasonably open and more closely conforms to the legislative intent" as we perceive this to be: cf CIC Insurance Ltd at 408; having regard to the mischief the section was designed to remedy, the extrinsic materials we have mentioned and the legislative history and beneficial purposes of the provisions designed to secure and sustain the allocation of additional licences in one and two licence areas.
61 In reaching this conclusion we do not consider we are engaging impermissibly in redrafting legislation so as to secure in the circumstances "an assumed desire of the legislature": R v L (1994) 49 FCR 534 at 538; see also Comcare v Thompson [2000] FCA 790; (2000) 100 FCR 375. Rather, we are giving effect to a provision in a way which its language can support; which is consistent with what hitherto was unregulated by the scheme, ie changes in the control of the licensee companies; and which, while effectuating the purpose animating the s 73A amendment, avoids a curtailment of the additional licence scheme which was not foreshadowed and for which there is no apparent justification. Moreover the construction we favour maintains the pre-existing similarity in operation between the s 38A one licence, and s 38B two licence, schemes. It is difficult to see why the Parliament would not also amend the former if it intended to amend the latter.
62 While s 73A(1) contrives the Schedule 1 control inquiry by requiring the disregard of the licence in relation to a person who satisfies the sub-section’s criteria, there is nothing in the subsection which limits that disregard to when the inquiry is into that person (or a director of that person), but which requires the licence to be regarded in relation to that person when, for example, the control inquiry is being conducted in relation to another person which itself controls that person. We see no reason for so narrowing the language of s 73A. In our view irrespective of whether the person into whom a s 7 inquiry is being made for s 53(2) and s 55(3) and (4) purposes itself satisfies the s 73A(1) criteria, if another person who satisfies those criteria provides an element in the chain which is being relied upon to show the former person is in a position to exercise control of a licence or a company, then effect must be given to s 73A so that in that inquiry the licence must be disregarded in relation to that person. Even though so doing may break the chain of control and so provide an "upstream company" with the benefit of a favourable determination for s 53(2) or s 55(3) and (4) purposes, such in our view was the legislative intent.
63 We do not consider that s 73A(2), in making provision for downstream restructuring, throws any light on the proper construction of s 73A(1). It may well be the case that s 73A(2) may have a more circumscribed operation on the view we take of s 73A(1) than it would have had were the respondent’s construction accepted, a matter adverted to by the respondent: Respondent’s Outline of Submissions, [15]. Nonetheless, the subsection has possible work to do as is illustrated in the example given in the appellants’ submissions (Attachment C, Example 2, which it is unnecessary to set out here). While the Parliament considered it necessary to make express provision for downstream restructuring in a chain of control, on the construction we have given to s 73A(1) it was simply unnecessary for the Parliament similarly to address possible changes in the "upstream" control of an existing chain.
64 Finally, there has been a deal of controversy before us as to whether the primary Judge’s construction of s 73A(1) left it with no application in relation to s 55. It is unnecessary for us to enter upon that matter in any detail. Suffice it to say that his Honour’s primary focus in the matter was on the need to show that a person or company was in a position to exercise control of an additional licence for s 73A purposes and, in consequence, little mention was made of how s 73A(1) would apply to an alleged breach of s 55. Though it is not of any present moment, we agree with the respondent’s submission that had his Honour explicitly addressed s 55 he would have concluded that s 73A(1) operated on it in much the same way as his reasoning suggested it would operate in relation to s 53(2). Be this as it may, what is clear is that the primary control inquiry required by s 53(2) and s 55(3) and (4) requires the address for their respective purposes of the question whether a person or a company is in a position to exercise control of a commercial television broadcasting licence (or licences). It is that inquiry which s 73A(1) in its limited way manipulates. And to the extent it does apply that subsection, by requiring an additional licence to be disregarded in relation to a person, can result in that person (or company) or another person (or company) not being in breach of s 53(2) or s 55(4) or a director of that company (or of another company), not being in breach of s 55(3) or s 55(4).
CONCLUSION
65 We are satisfied that the primary judge erred in the circumscribed
construction he gave to s 73A(1) and in the consequential conclusion
he reached
that the appellants’ application for declarations be dismissed. We will
order that the appeal be allowed and that
the orders made on 14 November 2008 be
set aside. We will make the declarations sought by the appellants in their
notice of appeal
(though with some minor modifications) and will order the
respondent to pay the appellants’ costs of the appeal and at first
instance.
Associate:
Dated: 12
January 2009
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Solicitor for the Appellants:
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Clayton Utz
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Counsel for the Respondent:
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Mr A Robertson SC with Mr S Lloyd SC
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Solicitor for the Respondent:
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Australian Government Solicitor
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