FEDERAL COURT OF AUSTRALIA
Australian Communications Authority v Viper Communications Pty Ltd
(ACN 067 892 308) [2000] FCA 1664
TELECOMMUNICATIONS - application to enforce compliance with the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) - whether it is sufficient compliance with the Act for service providers to join the Telecommunications Industry Ombudsman (TIO) Scheme without becoming members of the company TIO Ltd - whether a requirement that service providers become members of the TIO Scheme or TIO Ltd will result in an abrogation of those members’ fundamental common law rights – whether certain applications lodged by the respondents were valid applications to join the TIO Scheme.
Bropho v State of Western Australia and Another (1990) 171 CLR 1 considered
Coco v The Queen (1994) 179 CLR 427 considered
Public Service Board of NSW v Osmond (1986) 159 CLR 657 applied
Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth)
ss 126-133
Telecommunications Act 1997 (Cth) s 101, s 102, ss 244 – 251
Telecommunications Act 1991 (Cth) s 64
Constitution 1901 s 51(xxxi), s 55
Judiciary Act 1903 (Cth) s 78B
AUSTRALIAN COMMUNICATIONS AUTHORITY v VIPER COMMUNICATIONS PTY LTD (ACN 067 892 308)
N 1451 of 1999
AUSTRALIAN COMMUNICATIONS AUTHORITY v ALBURY LOCAL INTERNET PTY LTD (ACN 069 269 432)
N 210 of 2000
MATHEWS J
22 NOVEMBER 2000
SYDNEY
|
IN THE FEDERAL COURT OF AUSTRALIA |
|
|
BETWEEN: |
AUSTRALIAN COMMUNICATIONS AUTHORITY APPLICANT
|
|
AND: |
VIPER COMMUNICATIONS PTY LIMITED (ACN 067 892 308) RESPONDENT
|
|
|
N 210 OF 2000 |
|
BETWEEN: |
AUSTRALIAN COMMUNICATIONS AUTHORITY APPLICANT
|
|
AND: |
ALBURY LOCAL INTERNET PTY LTD (ACN 069 269 432) RESPONDENT |
|
DATE OF ORDER: |
|
|
WHERE MADE: |
THE COURT ORDERS THAT:
1) The answer to the first question is “yes”.
2) The answer to the second question is “no”.
3) The matter is to be relisted for further directions.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA |
|
|
N 1451 OF 1999 |
|
BETWEEN: |
AUSTRALIAN COMMUNICATIONS AUTHORITY APPLICANT
|
|
AND: |
VIPER COMMUNICATIONS PTY LIMITED (ACN 067 892 308) RESPONDENT
|
|
|
N 210 OF 2000 |
|
|
BETWEEN: |
AUSTRALIAN COMMUNICATIONS AUTHORITY APPLICANT
|
|
|
AND: |
ALBURY LOCAL INTERNET PTY LTD (ACN 069 269 432) RESPONDENT |
|
REASONS FOR JUDGMENT
1 The respondents in this matter are internet service providers. As such, they are “eligible carriage service providers” under the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) (“the 1999 Act”) and are obliged to enter into a scheme providing for a Telecommunications Industry Ombudsman (“the TIO scheme”). The TIO scheme is, under s 128 of the 1999 Act, operated by the Telecommunications Industry Ombudsman Ltd (“TIO Ltd”). The primary issue involved in this case is whether the respondents’ obligation to enter into the TIO scheme obliges them to become members of TIO Ltd, a company limited by guarantee. If so, a further question has been raised as to whether certain applications lodged by the respondents were valid applications to join the TIO scheme.
Legislative Scheme
2 When the issue first arose, the applicable legislation was contained in Part 10 of the Telecommunications Act 1997 (Cth) (“the 1997 Act”). On 2 August 1999 these provisions were replaced by corresponding provisions of the 1999 Act. For ease of reference I shall, where possible, refer only to the current provisions. Except in one respect, which I shall mention later, the two sets of provisions are identical.
3 The provisions relating to the TIO are contained in Part 6 of the 1999 Act, comprising ss 126 to 133. Those provisions are as follows:
126 Simplified outline
The following is a simplified outline of this Part:
· Certain carriers and carriage service providers must enter into the Telecommunications Industry Ombudsman scheme.
· The membership of the scheme must be open to all carriers and carriage service providers.
· Carriers and carriage service providers must comply with the scheme.
127 Eligible carriage service providers
For the purposes of this Part, an eligible carriage service provider is:
a) a carriage service provider who supplies:
i) a standard telephone service, where any of the customers are residential customers or small business customers; or
ii) a public mobile telecommunications service; or
iii) a carriage service that enables end-users to access the Internet; or
b) a carriage service intermediary who arranges for the supply of a service referred to in subparagraph (a)(i), (ii) or (iii).
128 Telecommunications Industry Ombudsman scheme
1) Each carrier and each eligible carriage service provider must, in association with other carriers and other eligible carriage service providers, enter into a scheme providing for a Telecommunications Industry Ombudsman.
Note: Section 129 provides for exemption from subsection (1) of this section.
2) The scheme is to be known as the Telecommunications Industry Ombudsmanscheme.
3) To avoid doubt, there is only one Telecommunications Industry Ombudsman scheme, namely, the scheme operated by Telecommunications Industry Ombudsman Limited (ACN 057 634 787).
4) The scheme must provide for the Telecommunications Industry Ombudsman to:
a) investigate; and
b) make determination relating to; and
c) give directions relating to;
complaints about carriage services by end-users of those services.
5) The following is an example of such a complaint: a complaint about billing, or the manner of charging, for the supply of carriage services.
6) The scheme must not provide for the Telecommunications Industry Ombudsman to investigate complaints about:
a) the levels at which tariffs are set; or
b) the content of a content service.
7) The membership of the scheme must be open to all:
a) carriers; and
b) carriage service providers.
129 Exemptions from requirement to join sheme
1) The ACA may, by notice in the Gazette, declare that a specified carrier or eligible carriage service provider is exempt from the requirement set out in subsection 128(1). The declaration has effect accordingly.
Note: Carriers or providers may be specified by name, by inclusion in a particular class or in any other way.
2) In deciding whether a carrier or provider should be exempt from the requirement set out in subsection 128(1), the ACA must have regard to the following matters:
a) the extent to which the carrier or provider deals with residentail customers in relation to the supply of carriage services;
b) the extent to which the carrier or provider deals with proprietors of small businesses in relation to the supply of carriage services;
c) the potential for complaints under the Telecommunications Industry Ombudsman scheme about services supplied by the carrier or provider.
3) Subsection (2) does not, by implication, limit the matters to which the ACA may have regard.
4) Before making a delcaration under this section, the ACA must consult the Telecommunications Industry Ombudsman.
130 Direction to join scheme
1) The ACA may give a carriage service provider a written notice directing the provider to enter into the Telecommunications Industry Ombudsman scheme.
2) The provider must comply with the direction.
3) In deciding whether to give a direction to a provider under this section, the ACA must have regard to the following matters:
a) the extent to which the provider deals with residential customers in relation to the supply of carriage services;
b) the extent to which the provider deals with proprietors of small businesses in relation to the supply of carriage services;
c) the potential for complaints under the Telecommunications Industry Ombudsman scheme about the services supplied by the provider.
4) Subsection (3) does not, by implication, limit the matters to which the ACA may have reagard.
5) Before giving a direction under this section, the ACA must consult the Telecommunications Industry Ombudsman.
|
131 Determination that a class of carriage service providers must join scheme |
1) The ACA may make a written determination that the members of a specified class of carriage service providers must enter into the Telecommunications Industry Ombudsman scheme.
2) A copy of the determination must be published in the Gazette.
3) In deciding whether to make a determination under this section in relation to a class of carriage service providers, the ACA must have regard to the following matters:
a) the extent to which members of that class deal with residential customers in relation to the supply of carriage services;
b) the extent to which members of that class deal with proprietors of small businesses in relation to the supply of carriage services;
c) the potential for complaints under the Telecommunications Industry Ombudsman scheme about services supplied by members of that class.
132Members of scheme must comply with scheme
A carrier or carriage service provider who is a member of the Telecommunications Industry Ombudsman scheme must comply with the scheme.
133` Register of members of scheme
1) The Telecommunications Industry Ombudsman is to maintain a Register of the names of the members of the Telecommunications Industry Ombudsman scheme.
2) The Register may be maintained by electronic means.
3) The Telecommunications Industry Ombudsman must ensure that the Register is open for inspection, at all reasonable times, by members of the public.
4 Section 101 of the 1997 Act, which still remains in force, provides that a service provider must comply with the service provider rules as applicable to the provider. The service provider rules require, inter alia, that service providers must comply with both the 1997 and 1999 Act. Section 102 of the 1997 Act, as relevant here, provides as follows:
102 Remedial directions—breach of service provider rules
(1) This section applies if a service provider has contravened, or is contravening, a service provider rule.
(2) The ACA may give the provider a written direction requiring the provider to take specified action directed towards ensuring that the provider does not contravene the rule, or is unlikely to contravene the rule, in the future.
(3) The following are examples of the kinds of direction that may be given to a service provider under subsection (2):
(a) a direction that the provider implement effective administrative systems for monitoring compliance with a service provider rule;
(b) a direction that the provider implement a system designed to give the provider’s employees, agents and contractors a reasonable knowledge and understanding of the requirements of a service provider rule, in so far as those requirements affect the employees, agents or contractors concerned.
(4) A service provider must not contravene a direction under subsection (2).
Factual Background
Viper Communications Pty Ltd (“Viper”)
5 On 17 September 1999 a remedial direction under s 102(2) of the 1997 Act was sent by the applicant (“the ACA”) to Viper requiring it to enter into the TIO scheme within 14 days of receipt of the direction. This was received on 21 September 1999. There was no response.
6 On 16 December 1999 the ACA commenced the present proceedings, seeking an injunction requiring Viper to take all steps reasonably required to enter into “the scheme known as the Telecommunications Industry Ombudsman scheme operated by Telecommunications Industry Ombudsman Limited”. These proceedings were initially defended by Mr Mark Russell, a director of Viper, who was assisted by Mr Adam Todd, a non-lawyer. Later, on 27 June 2000 I declined to make the orders sought in notices of motion filed by Viper and the other respondent (“Albury”) to be represented by a non-lawyer. Pursuant to O 80 r 4(1) I referred the respondents to the Registrar for referral to the pro bono panel for legal assistance. Subsequent to this, Mr Nicholas Leeming of Counsel was retained on behalf of both Viper and Albury.
7 On 4 May 2000, while these proceedings were pending, Viper forwarded an “application” to join the TIO scheme. Several alterations and additions had been made to the standard application form. This application was not accepted by the TIO because of the alterations.
Albury Local Internet Pty Limited (“Albury”)
8 On 26 May 1999 the ACA served on Albury a remedial direction pursuant to s 102(2) of the 1997 Act, requiring it to enter into the TIO scheme within twenty-one days of the receipt of the direction.
9 On 7 June 1999, and again on 15 June, Albury sought an exemption from the requirements of s 128(1) pursuant to the then s 247 of the 1997 Act (s 129 of the 1999 Act). On 16 August 1999 the ACA informed Albury of its decision not grant the exemption. A later request for reconsideration was also rejected.
10 On 13 March 2000 the ACA commenced the present proceedings against Albury seeking identical relief to that claimed against Viper.
11 On 2 May 2000 Albury forwarded an “application” to join the TIO scheme, also with alterations and additions. It was not accepted by the TIO.
12 The ACA’s case against the two respondents raise identical issues. Accordingly, on 12 May 2000, by consent, an order was made consolidating the two proceedings.
General
13 The directors of both Albury and Viper have expressed concern about the respondents being required to become members of a corporation, TIO Ltd. They fear that the respondents might become exposed to unquantifiable and excessive financial obligations as a result of this membership. Both respondents are prepared to join the TIO scheme, but not to become members of the company. They claim that it is not necessary for an eligible carriage service provider, in order to comply with s 128 of the 1999 Act, to become a member of TIO Ltd. They urge that it is sufficient compliance with the legislation for service providers to join the TIO scheme without becoming members of the company. In any event, they claim that the applications which they have already lodged with the ACA, being applications to join the TIO scheme but not TIO Ltd, constitute adequate compliance with the requirements of s 128 of the 1999 Act.
14 In the event that the respondents are unsuccessful in these submissions, they have raised a constitutional challenge to the validity of s 128 of the 1999 Act. They submit that in so far as this section purports to require them to become members of a corporation, it is invalid because
(a) It is a law purporting to impose taxation which has not been enacted in accordance with s 55 of the Constitution: and/or
(b) It is a law purporting to acquire property other than on just terms, contrary to s 51(xxxi) of the Constitution.
15 Notice under s 78B of the Judiciary Act 1903 (Cth) has been filed with the Court. However by agreement of the parties, any argument on the constitutional issue has been deferred pending the resolution of the other issues which this case has presented. These are essentially legal issues, and the parties have agreed that they be encapsulated into two questions, to be determined on a preliminary basis. Those questions relate first, to whether an eligible carriage service provider, in order to comply with s 128 of the 1999 Act, must become a member of TIO Ltd. A negative answer to this question would resolve the whole case in favour of the respondents. Neither the second question nor the constitutional challenge would need to be addressed.
16 If the first question is answered in the affirmative, the second question will need to be addressed. That question relates to whether the applications lodged by Viper on 4 May 2000 and Albury on 2 May 2000 were valid applications to join the TIO scheme pursuant to s 128 of the 1999 Act. An affirmative answer to this question would again resolve the case in favour of the respondents. If there is a negative answer, the constitutional challenge to the validity of s 128 of the 1999 Act will remain outstanding.
17 Before turning to the two questions, it is apposite to describe the history and functions of the TIO scheme.
THE HISTORY OF THE TIO SCHEME
18 The TIO scheme had its genesis in 1991. Section 64 of the Telecommunications Act 1991 (Cth) (now repealed) empowered the Minister to impose conditions on telecommunications licences by way of declaration. On 22 November 1991 the then Minister, Mr Beazley, signed two declarations, relating respectively to general carrier licences and mobile telecommunications licences, containing the following requirement:
“Industry Ombudsman
A licensee must, in association with other carriers, enter into, and comply with, an Ombudsman scheme, providing for investigation in relation to complaints by consumers about all matters relating to service, billing and the manner of charging for telecommunications services.”
19 By the end of 1993 the scheme was fully implemented. It consisted (and consists) of three components. They were:
1. Telecommunications Industry Ombudsman Ltd (TIO Ltd)
On 11 June 1993 TIO Ltd, a company limited by guarantee, was registered in the Australian Capital Territory. Under its Memorandum of Association, its primary objects were as follows:
“The objects of TIO Limited are to establish a telecommunications industry ombudsman scheme and to appoint a Telecommunications Industry Ombudsman with power on behalf of TIO Limited:
(1) to receive, investigate, make determinations relating to, give directions relating to and facilitate the resolution of:
(a) complaints as to the provision or supply of (or the failure to provide or supply) carriage services by a member of TIO Limited, other than complaints in relation to the general telecommunications policy or commercial practices of such a member;
(b) complaints from owners or occupiers of land in respect of which a holder of a carrier licence under the Telecommunications Act 1997 has exercised its statutory powers as a carrier, where the carrier is a member of TIO Ltd, other than complaints in relation to the policy or commercial decision of a carrier to exercise its statutory rights as a carrier in relation to that particular land; and
(c) such other complaints as may by agreement with the complainant, be referred to the Telecommunications Industry Ombudsman by a member of TIO Limited; and
(2) to exercise such jurisdiction, powers and functions as may be conferred by or under any legislation or instrument.”
Its earlier members were the three telecommunication carriers then subject to the scheme (Telecom, Optus and Vodafone). Since July 1997, its membership has also included internet service providers. The Board of the company consists of eight directors, seven of whom are appointed by the members. They are invested with traditional corporate responsibilities relating to the administration of the company.
2. The Telecommunications Industry Ombudsman (TIO)
The TIO is the person who receives, investigates and facilitates the resolution of complaints and disputes. He/she is responsible for the overall performance of the scheme, and manages the day-to-day operation of the complaint resolution process. The first TIO was Mr Warwick Smith.
3. The Council
The Council is regarded as one of the innovative aspects of the TIO scheme. It provides a bridge between the other components of the scheme, and enables policy considerations to be divorced from the day-to-day management of the scheme.
The Council is comprised of nine members. Four are industry representatives (members of TIO Ltd) and four represent consumer and community interests. It is chaired by an independent Chairperson. The primary responsibilities of the Council include the oversight of the TIO scheme and the maintenance of the independence of the TIO. The Council acts as intermediary between the TIO and the Board of the company. Whilst the TIO has responsibility for the day-to-day operation of the scheme, it is the Council’s function to advise the TIO on policy and procedural matters. The Council also makes recommendations to the Board as to who should be appointed as Ombudsman, a recommendation which the Board is obliged to accept.
The first Chairperson of the Council was the Honourable Lionel Bowen AC.
20 The TIO scheme was hailed as a “world first” by those involved in its inception. It was described in the TIO’s first annual report (the 1994 annual report) in the following terms:
“Our Scheme is not a government Scheme, it is not an industry Scheme – it is an independent Scheme that reports publicly by this annual report and community forums.”
21 One of the unusual aspects of the scheme was, and remains, the manner in which it funds its ongoing operations. Funds are provided by members under a formula which obliges them to contribute to the scheme’s on-going costs according to the proportion of complaints lodged against them. Members against whom no complaints have been lodged will have no liability to contribute to the funding of the scheme. This was hailed as providing a “real incentive” for carriers to address complaints early, before they progress to the stage of a TIO complaint.
22 The first legislative recognition of the TIO scheme came with the enactment of the Telecommunications Act 1997 (Cth) (“the 1997 Act”). Part 10 of that Act, comprising ss 244 to 251, was identical with the corresponding provisions of Part 6 of the 1999 Act (quoted earlier in par [3]) with one exception namely, that. s 128(3) of the 1999 Act was not included in the 1997 legislation.
23 The 1997 Act had the effect of significantly altering the membership structure of the TIO scheme. Until then, the only bodies required to join the scheme were the three telecommunications and mobile phone carriers. However the 1997 Act extended the scheme to include internet service providers. This was achieved by including internet service providers within the definition of “eligible carriage service providers” who were required to enter into the scheme. (s 245(a)(iii) 1997 Act; s 127(a)(iii) 1999 Act).
24 This was the only substantial change to the TIO scheme which was effected by the 1997 Act, at least as relevant to this case. As the Explanatory Memorandum made clear, the legislature was not seeking to intervene into the conduct or operation of the scheme:
“It is expected that the TIO scheme will continue to operate along current lines, however the detail of its operation is effectively a matter for the members of the scheme.”
25 In 1999, Part 10 of the 1997 Act was repealed. It was replaced by Part 6 of the 1999 Act. As mentioned earlier, the new provisions mirrored the previous legislation in all but one respect. This was the insertion of a new provision, subs (3), into s 128. That new subsection provided:
“to avoid doubt, there is only one Telecommunications Industry Ombudsman scheme, namely, the scheme operated by Telecommunications Industry Ombudsman Limited (ACN 057 634 787).”
26 The circumstances giving rise to the addition of this new provision were explained in the Explanatory Memorandum. They bear repetition here. Under the general heading “Problem Identification” the following passage appears:
“TIO
In October 1998, a firm of solicitors wrote to the TIO asking ‘the basis upon which it is said that the Telecommunications Industry Ombudsman Limited ACN 057 634 787 is the scheme contemplated by section 246 of the Telecommunications Act 1997.’
It was unclear whether the solicitors’ clients were objecting to joining the TIO, or contemplating attempting to set up a rival scheme. However, there is an identified issue that at least some carriage service providers may seek to exploit a perceived ambiguity in the Act.”
27 Under that part of the Explanatory Memorandum headed “Specification of the Desired Objective” the following passages appear:
“TIO
The objective is to remove any uncertainty, to ensure that there is only one TIO scheme.
Part 10 of the Telecommunications Act 1997 considerably broadened and strengthened the role of the TIO beyond the provisions of the 1991 Act. In particular, subsection 246(1) required carriers and eligible carriage service providers in association with each other to ‘enter into a scheme providing for a Telecommunications Industry Ombudsman’. Subsection 246(2) provides that ‘the scheme be known as the Telecommunications Industry Ombudsman’.
The Telecommunications Industry Ombudsman Limited (ACN 057 634 787) is a company limited by guarantee with a Memorandum and Articles of Association. The TIO’s logo and the logo in conjunction with the words Telecommunications Industry Ombudsman were registered as Associated Trade Marks under the Trade Marks Act 1955 on 1 December 1995.
The Act and Explanatory Memorandum envisaged that the Telecommunications Industry Ombudsman Limited, the existing industry-based scheme was the scheme for the purposes of section 246.”
28 Under “Identification of Options”, the Memorandum listed the following options;
“TIO
Option 1 Take no specific action and rely on the current legislation to require all carriers and carriage service providers to enter into the existing TIO scheme.
Option 2 Make a minor amendment to section 246 of the Telecommunications Act 1997 to remove any possible doubt of the intention that there should only be one TIO scheme.”
29 Finally, in the section of the Memorandum dealing with “Assessment of Impacts (Costs and Benefits) of Each Option”, a clear preference was expressed for Option 2.
“TIO
Option 1 If no specific action were taken and reliance is placed on the intent of current legislation, it is possible that certain carriage service providers could exploit perceived ambiguity in the Act to avoid joining the existing TIO scheme and/or to seek to establish a rival scheme.
……..
It is difficult to envisage any benefits flowing from the establishment of a rival TIO scheme. A rival organisation could reduce the consistency and continuity in handling consumer complaints, leading to disadvantage to consumers.
Option 2 A minor amendment to section 246 of the Telecommunications Act 1997 could remove any possible ambiguity and ensure that there is only one scheme, achieving the intent of the legislation.
There would be no cost involved, and indeed there would be potential savings in that it would avoid the possible duplication of the establishment of a rival scheme.
There are benefits in having only one TIO scheme, as envisaged by the Act, as aside from the cost advantages of establishing and running a single organisation, there would also be greater continuity and consistency in the handling of consumer complaints.”
30 Later in the Explanatory Memorandum it was noted that no consultation had been undertaken in relation to this amendment, given that its effect was to clarify “the original intent of the Telecommunications Act 1997”. Finally in relation to this amendment, the Explanatory Memorandum made the following observation:
“To address the concerns of the Telecommunications Industry Ombudsman that the TIO not be put to the unnecessary expense of proof, subclause 128(3) provides that, to avoid doubt, there is only one Telecommunications Industry Ombudsman scheme and the company Telecommunications Industry Ombudsman Limited (ACN 057 634 787) is the operator of that scheme. That company has been conducting business under that name since 1993. The business conducted by the company is known as the ‘TIO scheme’ and the ‘Telecommunications Industry Ombudsman scheme’.”
ThE FUNCTIONS OF THE TIO
31 The primary functions of the TIO are to investigate, make determinations relating to, and give directions relating to, complaints about carriage service providers by end-users of those services. The focus of the TIO scheme is on individual complaints, which may be made by any person directly affected by the provision of services by scheme members.
32 The powers of the TIO were the subject of much discussion during the hearing, and it is apposite to quote those parts of the TIO’s Constitution relating to its powers.
“6. POWERS OF THE TIO
6.1 Binding Decisions
After completion of an investigation and in the absence of a conciliated settlement of a complaint, the TIO shall resolve a complaint:
(a) (i) by making a determination that the member the subject of investigation pay compensation to a complainant,
(ii) by directing a member to provide a carriage service,
(iii) by directing a member not impose or amend a charge in relation to a service,
(iv) by directing a member to provide specified operator services,
(v) by directing a member to include or omit an entry in any electronic or printed directory,
(vi) by directing a member to supply goods or services the subject of the complaint or undertake any necessary corrective or other work to resolve the complaint,
(vii) by directing a member to make an appropriate correction, deletion or addition to a record,
(viii) by directing a member to attach to a record a statement provided by the complainant of a correction, deletion or addition sought by the complainant, and/or
(ix) by directing a member to do, not to do, or to cease doing, an act,
provided that the total of such determinations or directions in relation to an individual complaint are not to exceed in value $10,000; or
(b) by dismissing the complaint.
All decisions by the TIO under paragraph 6.1 shall be automatically binding upon members. However, the complainant may elect whether or not to accept the decision of the TIO within twenty one (21) days of the TIO’s decision. If the complainant accepts the decision of the TIO, the complainant shall fully release the member from all claims, actions etc in relation to the complaint. In the event that the complainant does not accept the decision of the TIO, the complainant may pursue his or her remedies in any other forum the complainant may choose and the member is then fully released from the TIO’s decision.
6.2 Recommendations
After completion of an investigation and the unsuccessful conciliation of a complaint, the TIO may also make recommendations to a member in relation to any or all of those matters identified in paragraph 6.1 up to the total value of $50,000 and a member shall be obliged to consider whether or not to give effect to any such recommendation provided that a decision not to give effect to any such recommendation shall not be the subject of further complaint to the TIO from a complainant.
6.3 Reasons
The TIO shall provide only such written reasons as give effect to any decision or recommendation under paragraph 6.1 or recommendation under paragraph 6.2.
6.4 Findings of Fact
Where a complaint involves a total amount in excess of $50,000 the TIO may make findings of fact but shall make no determinations, directions or recommendations about compensation or other remedial actions.
6.5 Arbitration
Where a complaint involves a total amount in excess of $50,000, if the complainant and the member agree, the TIO may, if he or she so agrees, exercise arbitration powers in respect of the complaint.”
THE LIABILITY OF MEMBERS OF TIO LTD
33 It is plain from statements made by the respondents’ directors, and from correspondence between the respondents and the TIO, that the respondents fear that they will be visited with unquantifiable financial liabilities if they are required to become members of the company, TIO Ltd. It is therefore apposite to describe the potential financial liabilities of members of the company.
34 As already mentioned, the ongoing operational costs are funded according to a formula based on each member’s share of complaints made to the TIO. In this regard, it is clear that by far the largest number of complaints relate to the three “carrier” members (Telstra, Optus and Vodafone), who therefore bear the lion’s share of the scheme’s operating costs. According to the TIO’s most recent annual report (30 June 1999) internet service providers comprise 86.7 per cent of the membership of TIO Ltd, but account for only 6 per cent of all complaints.
35 In addition, the Board of the company has power to impose a special levy on members under Article 6.1 of the Articles of Association. As with the operating costs, this levy will be funded by members according to their percentage share of complaints received in the previous quarter.
36 Finally, all members bear a potential liability in the event of the winding up of TIO Ltd. However this is limited to $100 per member.
37 It can thus be seen that members who do not generate complaints will suffer few if any financial obligations under the scheme. Nevertheless, the respondents have expressed concern about their potential liabilities if they become members of the company.
THE QUESTIONS TO BE ANSWERED
38 I turn now to the two questions which are to be answered at this stage of the proceedings. They were the subject of both written and oral submissions by Dr Griffiths of Counsel for the applicant and Mr Leeming of Counsel for the respondents. They are in the following form:
“1. On the true construction of s 246 and s 128, must each eligible service provider become a member of Telecommunications Industry Ombudsman Limited (ACN 057 634 787)?
2. If question 1 is answered ‘Yes’, then were the applications lodged by Viper Communications dated 4 May 2000 and Albury Local Internet (dated 2 May 2000) valid applications to enter into the scheme providing for a Telecommunications Industry Ombudsman pursuant to s 246 and s 128?”
39 I shall discuss each of these questions in turn:
The First question
Applicant’s Submissions
40 Dr Griffiths referred to the history of the TIO scheme as demonstrating that the scheme is not a creature of statute. Both the company, TIO Ltd, and the scheme itself, were operating well before they received legislative imprimatur in the 1997 and 1999 Acts. In requiring carriage service providers to join the scheme, and, as members, to comply with the scheme, Parliament was merely giving legislative recognition to a scheme which had already been operating in the telecommunications industry for some years. It was this pre-existing scheme, and only this scheme, which Parliament was referring to in Part 10 of the 1997 Act and Part 6 of the 1999 Act, Dr Griffiths urged. In requiring that carriage service providers enter into that scheme, the legislature must be taken to have been requiring that they do so in accordance with the procedures adopted by the scheme. Or, to put it more precisely, membership of TIO Ltd had always been the vehicle by which membership of the TIO scheme was acquired. Therefore, the 1997 and 1999 Acts, in requiring that carriage service providers become members of that scheme, must be taken to have been requiring that they do so by the same means.
Respondents’ Submissions
41 Mr Leeming conceded that, without more, there might have been some force in the applicant’s submissions. However, he urged that the implication which the applicants sought to draw from the legislation, namely that membership of the TIO scheme necessarily involves membership of the company, should not be drawn.
42 Mr Leeming pointed out that, whilst the 1997 Act did not purport to alter the institutional structures by which the TIO scheme operated, it profoundly affected the scheme’s membership structure. Before the 1997 Act came into operation on 1 July 1997, there were only three organisations who were obliged, as a condition of their licence, to become members of the TIO scheme. They were Telecom, as it then was, Optus and Vodafone. A further sixteen service providers had voluntarily joined the scheme. As a result of the 1997 Act’s inclusion of internet service providers as “eligible carriage suppliers” who were obliged to join the scheme, the membership increased dramatically. As at 30 June 1999 there were 866 members of the TIO scheme, 86.7 per cent of whom were internet service providers. In spite of this, five of the eight directors are appointed by the three original carrier members. Moreover no resolution of members can be passed, be it an ordinary or a special resolution, without at least one of the three carrier members voting in its favour. In other words, the internet service providers, whilst constituting the great majority of the company’s membership, have no direct capacity to influence the governance of the company either at membership or at Board level.
43 Central also to the respondents’ submissions are Mr Leeming’s criticisms of the TIO’s powers under the scheme. He described the TIO’s determinations and directions as having seven characteristics:
· they are legally binding on members of the scheme;
· they depart from the administration of justice according to law;
· no reasons are to be given for them;
· there is no appeal from them;
· although binding upon members, they are not binding on complainants;
· regardless of the outcome of a complaint, it is the member of the scheme who pays for it;
· this regime applies in respect of all complaints up to $10,000.
44 Mr Leeming submitted that, having regard to all these matters, a requirement that internet service providers become members of the TIO scheme will result in an abrogation of those members’ fundamental common law rights. He relied upon the presumption that legislative provisions will not be construed so as to have this consequence unless they are expressed in the clearest and most unambiguous terms. In this regard, Mr Leeming relied on the High Court judgments in Bropho v State of Western Australia and Another (1990) 171 CLR 1 and Coco v The Queen (1994) 179 CLR 427, both of which I shall discuss later. He contended that s 128(1) was neither clear nor unambiguous.
Discussion of Issues
45 I must commence with the proposition that the legislature intended, when it passed Part 10 of the 1997 Act and Part 6 of the 1999 Act, that eligible carriage service providers should join the existing TIO scheme. This is the clear import of the explanatory memoranda, if not of the provisions themselves. And whilst Mr Leeming correctly points out that the effect of the 1997 Act was to significantly alter the membership structure of the TIO scheme, it is difficult to see how this affects the question of construction raised here. The institutional structures which were put in place back in 1993 remained untouched under both the 1997 and the 1999 Acts.
46 The legislation is not, however, silent about all aspects of the TIO scheme. It requires that it meet certain conditions. In particular, s 128(4) mandates that the scheme provide for the TIO to (a) investigate, (b) make determinations relating to, and (c) give directions relating to complaints about carriage services by end-users of those services.
47 This requirement is met under the terms of the TIO Constitution. Clause 3 of the Constitution specifies the “Functions of the TIO”, the first of which is “to investigate, make determinations relating to, and give directions relating to complaints about carriage services by end-users of those services”. Clause 6.1 of the Constitution (quoted above at par [32]) empowers the TIO to make determinations and directions which are binding on members. Accordingly the TIO scheme, on its face, meets the requirements of s 128(4).
48 Section 128(7) of the 1999 Act provides that membership of the scheme must be open to all carriers and carriage service providers. This is a corollary to the obligation, under s 128(1), that all carriers and carriage service providers must enter into the TIO scheme. The requirement of s 128(7) is met by virtue of the Articles of Association of TIO Ltd, which require the company to accept an application for membership if the applicant is required by the Act to participate in the TIO scheme.
49 Accordingly, the TIO scheme, as presently conducted, appears to meet the positive requirements of s 128.
50 Mr Leeming submits that the TIO scheme, as it currently operates, is not the scheme which is recognised by the legislation in that “it goes well beyond what the legislation envisages”. His primary submission in this regard is that membership of the TIO scheme has the potential to operate unfairly to the respondents and to deprive them of their fundamental common law rights. In these circumstances, only legislation in clear and unambiguous terms will be construed so as to have this effect. Section 128, he submits, is anything but clear and unambiguous.
51 In making this submission Mr Leeming, as indicated, relies strongly on the High Court judgments in Bropho and Coco. Both of them bear discussion here.
52 In Bropho the court was concerned with the rule that statutory provisions worded in general terms are to be construed as prima facie inapplicable to the Crown. The majority judges (Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ) made the following observations:
“One can point to other ‘rules of construction’ which require clear and unambiguous words before a statutory provision will be construed as displaying a legislative intent to achieve a particular result. Examples of such ‘rules’ are those relating to the construction of a statute which would abolish or modify fundamental common law principles or rights (see, e.g. Benson v. Northern Ireland Road Transport Board) which would operate retrospectively (see, e.g. Maxwell v. Murphy) which would deprive a superior court of power to prevent an unauthorized assumption of jurisdiction (see, e.g. Macgrath v. Goldsbrough, Mort & Co. Ltd,) or which would take away property without compensation (Attorney-General v. De Keyser’s Royal Hotel).
The rationale of all such rules lies in an assumption that the legislature would, if it intended to achieve the particular effect, have made its intention in that regard unambiguously clear. Thus, the rationale of the presumption against the modification or abolition of fundamental rights or principles is to be found in the assumption that it is ‘in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not really used’ (Potter v Minahan, and see, also, Ex parte Walsh and Johnson; In re Yates). If such an assumption be shown to be or to have become ill-founded, the foundation upon which the particular presumption rests will necessarily be weakened or removed. Thus, if what was previously accepted as a fundamental principle or fundamental right ceases to be so regarded, the presumption that the legislature would not have intended to depart from that principle or to abolish or modify that right will necessarily be undermined and may well disappear.”
53 The High Court again discussed this principle in Coco. There, Mason CJ, Brennan, Gaudron and McHugh JJ said as follows:
“The insistence on express authorisation of an abrogation or curtailment of a fundamental right, freedom or immunity must be understood as a requirement for some manifestation or indication that the legislature has not only directed its attention to the question of the abrogation or curtailment of such basic rights, freedoms or immunities but has also determined upon abrogation or curtailment of them. The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the aspect of interference with fundamental rights.
So long as the requirement for express statutory authorization is understood in the sense explained above, we would accept the requirement as a correct statement of principle. At the same time, in our view, the principle was expressed more simply by Brennan J. in Re Bolton; Ex parte Beane in these terms:
‘Unless the Parliament makes unmistakably clear its intention to abrogate or suspend a fundamental freedom, the courts will not construe a statute as having that operation.’
In Bropho v. Western Australia, Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ. pointed out that the rationale against the presumption against the modification or abrogation of fundamental rights is to be found in the assumption that it is:
‘in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not really used.’
At the same time, curial insistence on a clear expression of an unmistakable and unambiguous intention to abrogate or curtail a fundamental freedom will enhance the parliamentary process by securing a greater measure of attention to the impact of legislative proposals on fundamental rights.
The need for a clear expression of an unmistakable and unambiguous intention does not exclude the possibility that the presumption against statutory interference with fundamental rights may be displaced by implication. Sometimes it is said that a presumption about legislative intention can be displaced only by necessary implication but that statement does little more than emphasize that the test is a very stringent one. As we remarked earlier, in some circumstances the presumption may be displaced by an implication if it is necessary to prevent the statutory provisions from becoming inoperative or meaningless. However, it would be very rare for general words in a statute to be rendered inoperative or meaningless if no implication of interference with fundamental rights were made, as general words will almost always be able to be given some operation, even if that operation is limited in scope.”
54 Mr Leeming submits that there are a number of aspects of the TIO scheme which are intrusive of common law rights. He specifies the right to receive reasons as one of these. However I do not understand this to be a common law right. (See Public Service Board of New South Wales v Osmond (1986) 159 CLR 657). The only common law right which I perceive as being affected by membership of the scheme is the right to have one’s claims or disputes litigated in a court of law. Under the TIO scheme the TIO’s determinations and directions are binding upon members who are denied the right of litigating these issues in courts of law. On the other hand, the TIO scheme provides a forum for resolving complaints against members in an expeditious and informal manner. Members are given an opportunity to present their case. There is no apparent abrogation of the rules of natural justice.
55 It is also important to remember that it is not membership of the company which abrogates members’ rights in this matter (assuming that their rights are abrogated), but rather membership of the TIO scheme. Moreover the aspect of the scheme which has this effect is specifically mandated in the legislation. As already mentioned, s 128(4) of the 1999 Act (s 246(3) of the 1997 Act) requires that the TIO, inter alia, make determinations and give directions relating to complaints by end-users of telecommunications carriage services. One must assume that the legislature, in imposing this requirement, intended the TIO’s determinations and directions to be binding upon members. Otherwise there would be little point in this provision. And if this matter needed legislative emphasis, it is received in s 132 of the 1999 Act (s 250 of the 1997 Act) which requires members of the scheme to comply with the scheme. This must be taken as requiring them to comply with determinations or directions issued by the TIO under its legislative mandate.
56 It follows that the aspect of the scheme which, according to Mr Leeming’s argument, is most intrusive of members’ rights is, to a large extent, mandated by legislation.
57 The High Court in Coco acknowledged that the presumption against statutory interference with fundamental rights might be displaced by implication, for instance if it is necessary to prevent the statutory provision from becoming inoperative or meaningless. This in my view is particularly apposite in this case, particularly if one examines what would happen if the respondents’ contentions were to succeed, and a negative answer be given to this first question.
58 In the event of a “no” answer to the first question, the respondents would be absolved of any obligation to become members of TIO Ltd. But where would that leave them under the legislation? They would still have an obligation under s 128 to “enter into a scheme providing for a Telecommunications Industry Ombudsman”. Under s 128(3) there is only one scheme, namely that operated by TIO Ltd. Membership of that scheme is achieved through membership of the company. No other means of gaining membership is provided under the TIO Constitution. Therefore the respondents would be unable to join the scheme referred to in subss 128(2) and (3). They would be forced to join some alternative scheme which did not require membership of the company as a means of gaining membership of the scheme. But this was precisely the evil which the legislature sought to avert when it inserted subs 128(3) into the 1999 Act. Indeed one cannot help wondering whether the solicitor’s letter which ultimately led to the insertion of subs(3) into s 128 might not have been prompted by precisely the same concerns that the respondents have expressed in these proceedings.
59 I return to Mr Leeming’s submissions relating to the abrogation of fundamental rights. As I commented earlier, it is not membership of the company which results in any reduction or derogation of members’ rights. Rather it is membership of the TIO scheme. And there is no ambiguity whatsoever as to the legislative requirement that internet service providers enter into that scheme.
60 In my view, the language of the legislation is clear and unambiguous. Internet service providers are required to become members of the TIO scheme as operated by TIO Ltd. There is only one such scheme, under which membership is gained through membership of the company, TIO Ltd.
61 The first question should be answered in the affirmative.
The SECOND QUESTION
62 The TIO has a pro forma application form which it requests prospective members to complete in order to gain membership. These forms have apparently not been prescribed by the Board of TIO Ltd, as envisaged by the company’s Articles of Association. Indeed there is no evidence that any application form has ever been prescribed by the Board. However as I understand it no point is sought to be taken on this account. Nor, in my view, could it be, having regard to Article 3.4 of the Articles which clearly envisages the possibility that there may be no application form prescribed by the Board.
63 On 2 May 2000 Albury completed a TIO membership application form but made several deletions and alterations. On 4 May 2000 Viper completed another application form with similar but less extensive alterations.
64 The essence of the alterations in both forms was to delete reference to the company, “TIO Limited”, and replaced it with the words “TIO Scheme”. In the case of Albury’s application, this was achieved by deleting the word “Limited” wherever it occurred and inserting the word “Scheme” in its place. Viper, in its application, was less assiduous in replacing the word “Limited” with the word “Scheme”, but the principles raised by the two documents are the same.
65 The operative portion of each application form is in the following terms:
“The applicant hereby agrees at all times while it is a member of the TIO to be bound by the terms and conditions set out hereunder:
1. DEFINITIONS
1.1 “Articles” means the Articles of Association of the TIO Limited as amended from time to time.
1.2 “Constitution” has the meaning ascribed in Article 12.5 of the Articles.
1.3 “Memorandum” means the Memorandum of Association of the TIO Limited.
1.4 “Services” means the ordinary business activities of the TIO Limited conducted as part of its obligations under the TIO Scheme.
1.5 “TIO Scheme” means the telecommunications industry ombudsman scheme.
2. AGREEMENT
2.1 The applicant shall comply in every respect with the Memorandum, Articles and Constitution of the TIO Limited.
2.2 The TIO Limited agrees that it will provide the services to the Applicant.”
66 In the form completed by Albury, the word “Limited” was replaced by the word “Scheme” on each occasion that it was used. In Viper’s application the alteration was made only in Clause 2.1, under the heading “Agreement”. As mentioned earlier, no distinction is sought to be drawn between the two forms on this account. This is a realistic approach, for it is the applicant’s agreement to comply with the rules of the organisation (in Clause 2.1 of the form) which forms the essential part of the application.
67 Dr Griffiths submits that an affirmative answer to the first question must, as a matter of logic and practicality, lead to a negative answer to the second question. In my view this must be correct. The same issues are essentially raised under both questions. In altering the form as they did, the respondents were seeking to join the TIO scheme without joining the company. This they were not at liberty to do, as my affirmative answer to the first question makes clear.
68 A negative answer must therefore be given to the second question.
CONCLUSION
69 Both questions have now been answered adversely to the respondents. Were it not for the constitutional challenge, the ACA would have been entitled to the relief sought in each case. However the constitutional challenge will now need to be argued and determined. Accordingly the matter will be relisted for further directions.
|
I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mathews. |
Associate:
Dated: 22 November 2000
|
Counsel for the Applicant: |
Dr J Griffiths |
|
|
|
|
Solicitor for the Applicant: |
Australian Government Solicitor |
|
|
|
|
Counsel for the Respondents: |
Mr M J Leeming |
|
|
|
|
Solicitor for the First Respondent: |
Mr P La Fontaine |
|
Solicitor for the Second Respondent |
- |
|
|
|
|
Date of Hearing: |
17 July 2000 |
|
|
|
|
Date of Judgment: |
22 November 2000 |
