FEDERAL COURT OF AUSTRALIA

Harbour Radio Pty Limited v Australian Communications and Media Authority [2012] FCA 614

THE COURT ORDERS THAT:

1.    The Second Amended Originating Application for Judicial Review is dismissed.

2.    The Objection to Competency is upheld.

3.    The applicants to pay the respondent’s costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Introduction

1        The applicants challenge the decision of the Australian Communications and Media Authority (the ACMA) to make the Broadcasting Services (Commercial Radio Current Affairs Disclosure) Standard 2012 (the 2012 Standard) pursuant to subs 125(1) of the Broadcasting Services Act 1992 (Cth) (the BSA).

2        In broad terms, the applicants challenge the ACMA’s decision on the following grounds:

(a)    the decision was made in excess of the jurisdiction conferred on the ACMA by subs 125(1) of the BSA, including on the basis that the 2012 Standard was made in circumstances where relevant jurisdictional facts did not exist. In particular it is said that the ACMA acted without “convincing evidence” that a registered industry code of practice was not operating to provide appropriate community standards;

(b)    neither s 125 nor any other provision of the BSA conferred jurisdiction on the ACMA to make a standard such as the 2012 Standard which burdens communications on political and governmental matters and is not reasonably appropriate and adapted to serve any legitimate and relevant purpose;

(c)    the decision to make the 2012 Standard was not reasonably or rationally proportionate to the community safeguards it sought to protect; and

(d)    the ACMA’s decision was so unreasonable that no reasonable person could so exercise the power.

3        The proceedings are said to be brought in reliance upon the Court’s jurisdiction under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) and/or paragraph 39B(1A)(c) of the Judiciary Act 1903 (Cth), as well as s 23 of the Federal Court of Australia Act 1976 (Cth). The ACMA filed a Notice of Objection to Competency challenging the jurisdiction of the Court under the ADJR Act. There is no contest that the Court otherwise had jurisdiction. I will deal with the ACMA’s Objection to Competency later in these reasons for judgment. Suffice it to say at this point that one of the issues it highlights is the distinction between a challenge to the validity of the ACMA’s decision to determine the 2012 Standard, as opposed to the validity of the 2012 Standard itself. That may have implications for the grounds of review available to challenge the validity of an administrative decision, as opposed to the validity of a legislative instrument. It may also have implications for the admissibility of evidence in support of those respective challenges.

4        Macquarie Radio Network Limited, the second applicant in the proceedings, is a listed public company incorporated and operating in Australia. Its wholly-owned subsidiary, Harbour Radio Pty Limited, is the first applicant. It holds a commercial radio licence under the BSA, which authorises it to operate radio station 2GB.

5        Before summarising the respective arguments of the parties, it is convenient to set out some background matters relating to the making of the 2012 Standard.

Background

6        The decision to make the 2012 Standard was made by the ACMA on 14 March 2012. The 2012 Standard appeared on the Legislative Instruments Register on 27 March 2012. The 2012 Standard commenced on 1 May 2012. On 27 April 2012 the applicants’ application to stay the commencement of the 2012 Standard was refused (see Harbour Radio Pty Limited v Australian Communications and Media Authority [2012] FCA 439).

7        When the ACMA determined to make the 2012 Standard there were two other relevant instruments in force. The first was the Broadcasting (Commercial Radio Current Affairs Disclosure) Standard 2000 (the 2000 Standard). The 2000 Standard was one of three program standards which were made in response to an inquiry conducted by the Australian Broadcasting Authority (the ABA), commonly known as the “Cash for Comment Inquiry”. That inquiry resulted in findings by the ABA that 2UE Sydney had breached both the BSA and the Commercial Radio Codes of Practice resulting from broadcasts made by two of its presenters, Mr Alan Jones and Mr John Laws. The 2000 Standard introduced requirements for on-air disclosure of the existence of commercial agreements between presenters of radio current affairs programs and their sponsors. The 2000 Standard was made in circumstances where the ABA considered that industry self-regulation was not then operating to provide appropriate community safeguards in relation to, among other things, accuracy and fairness in current affairs programs.

8        The second relevant class of instrument was the Commercial Radio Codes of Practice dated September 2011. The various Codes are contained in a single publication. They include Code of Practice 2 (which deals with news and current affairs programs) and Code of Practice 3 (which deals with advertising). Neither Code deals directly with the particular issues which provided the impetus for the making of the 2012 Standard.

9        It is convenient to describe in general terms some other historical background to the making of the 2012 Standard.

10        In 2004, the ABA conducted an investigation into a complaint arising from the sponsorship by Telstra Corporation Limited (Telstra) of the Alan Jones Program on 2GB (2004 Investigation). In April 2004, the ABA published a report on the 2004 Investigation. It found that Telstra had entered into an agreement with Macquarie Radio Network (MRN) requiring MRN to advertise and promote Telstra’s telecommunications services on the Alan Jones Program. Mr Jones was not himself a party to that agreement and he received no payment in respect of it, but he had an equity arrangement with MRN which gave him an entitlement to shares. Under those arrangements Mr Jones was entitled to 20% of any increase in the value of MRN.

11        In its report on its 2004 Investigation, the ABA found that Mr Jones had previously made a number of on-air statements which were critical of Telstra, which contrasted with material post-dating the agreement which it found revealed that Mr Jones’ commentary in respect of Telstra became “predominantly positive”. The ABA also found that Mr Jones’ views on privatisation seemed to have changed over time. Notwithstanding that the existence of the agreement between MRN and Telstra had not been disclosed on-air, the ABA did not find any breach of the 2000 Standard. That was because the relevant agreement was found not to be caught by the definition of “commercial agreement” in the 2000 Standard. Nor did the ABA find that these circumstances gave rise to a breach of the applicable provisions of the Commercial Radio Codes of Practice then in force.

12        Although no breaches were found, the ABA saw merit in reviewing the existing regulatory measures. It stated that, although it did not consider that the 2000 Standard needed amendment, the Commercial Radio Codes of Practice may need to be amended to provide additional safeguards concerning accuracy and fairness in current affairs programs where a controversial issue of public importance is covered and a major advertiser or sponsor of the licensee has a particular interest in the issue. The ABA also indicated that there might be merit in reviewing the existing regulatory measures aimed at promoting fairness in current affairs coverage, particularly in achieving a clear distinction between editorial comment and advertising material, and in assessing whether and how commercial arrangements may impact on other program material.

13        In 2008, when the ACMA commenced its review of the three commercial radio standards made by the ABA in 2000, including the 2000 Standard, the subject of commercial interest disclosure was not directly covered in any of the Commercial Radio Codes of Practice. One of the concerns at that time of the industry peak body, Commercial Radio Australia (CRA), was to persuade the ACMA that any regulation of commercial influence should occur through an industry code of practice, not through a standard. As matters then stood, that subject was covered to some extent by the 2000 Standard, but not so as to cover the sort of arrangement which was the subject of the 2004 Investigation.

14        As part of its review, the ACMA published an Issues Paper in February 2010 entitled “Review of the Commercial Radio Standards: Issues paper”. The Issues Paper noted that the 2000 Standard had been framed largely as a response to what was described as a “listener knowledge” problem: that commercial radio listeners had no way of knowing, without being told, that a particular presenter had a direct commercial interest in a subject being commented on or discussed. The ACMA said that that issue was clearly a matter of public concern when the 2000 Standard was introduced, and it intended to test the extent to which that concern remained valid and whether there were any other concerns. The Issues Paper discussed the limited definition of “commercial agreements” in the 2000 Standard and stated that that definition did not allow for safeguards in relation to other arrangements, such as licensee arrangements, which may give rise to the same issues for listeners. One of the issues identified for discussion was whether any disclosure requirement should be extended to apply to all commercial arrangements that have the potential to affect program content.

15        The ACMA also commissioned research in both 2006 and 2009 which found that radio listeners continued to be concerned about the need to maintain a clear distinction between advertising or sponsored content and editorial content in news and current affairs programs. The 2006 research found that “most participants were strongly of the view that advertising/sponsored content and editorial content in news and current affairs programs on commercial radio should be clearly differentiated” (executive summary, page 6). The research also noted that participants had expressed the view that the same sponsorship disclosure requirements should apply whether or not a commercial agreement was with a presenter or a licensee (executive summary, page 8).

16        ACMA’s research in 2009, which was published in 2010, generally confirmed the 2006 research. An online survey conducted in August 2009 produced strong agreement that “advertising content on radio should be clearly distinguishable from other radio content”. It also confirmed that many commercial radio listeners were concerned about commercial influence in public interest material on commercial radio.

17        Public concerns about commercial influence in current affairs radio programs were also raised in an Options Paper published by the ACMA in March 2011 and entitled “Review of the Commercial Radio Standards: Options paper”. In that Options Paper, the ACMA noted that it had received competing submissions on whether the same disclosure standards should apply, irrespective of whether a commercial arrangement was with a program presenter or a licensee. It noted that CRA had argued against extending the scope of any disclosure regulation to all commercial agreements with the potential to affect program content because it was said that “it would be impossibly vague and onerous”. The ACMA suggested that, by not applying to situations where presenters (or other persons with significant influence over program content) have an actual or beneficial interest in a licensee company (but are not a party to a licensee agreement), the 2000 Standard failed to provide adequate community safeguards. The ACMA stated that it was “arguable” that the application of the 2000 Standard needed to be widened in order to provide adequate community safeguards. It added, however, that it was reluctant to extend regulation in a way that would make it “unnecessarily difficult” or “costly to administer”. Taking those matters into account, the ACMA described various options by which an appropriate balance could be achieved between these competing considerations. The options included requiring licensees to be responsible for ensuring that an appropriate disclosure was made where a relevant presenter has an actual or beneficial interest in the licensee company. The ACMA stated that it was satisfied that, while widening the 2000 Standard would increase the administrative burden for licensees, this burden “would be in proportion to the associated promotion of community safeguards”.

18        Another option raised by the ACMA in its Options Paper was to revoke the 2000 Standard and allow the regulation of commercial influence on commercial radio to be dealt with by an industry code. The ACMA invited submissions on how industry code provisions could address the issues raised by it in the Options Paper. It added that, if an industry code were to be introduced to regulate commercial influence on commercial radio, the ACMA would maintain a program standard until the code was developed and accepted. It stated that, in such an interim period, the ACMA would likely move to amend the 2000 Standard in accordance with its first option, namely to vary aspects of the 2000 Standard.

19        In November 2011, the ACMA published its final report entitled “Review of the Commercial Radio Standards”. In that report, the ACMA reiterated its concern to prevent circumstances in which a licensee’s commercial agreements could result in commercial influence in a current affairs program and deliver benefits to a presenter (even where that presenter was not a party to the agreement). It said:

The ACMA is concerned to ensure that such situations are regulated, so that the coverage of matters of public interest is not distorted by commercial interests.

20        In its 2011 report, the ACMA acknowledged that industry submissions in response to the Options Paper had strenuously argued against any broadening of the current regulation as identified in the Options Paper. The ACMA agreed that reform should not go as far as some of the options raised in the Options Paper, on the basis that unreasonable burdens on licensees could arise and, in any event, would extend beyond the ACMA’s main concern, which was the influence of presenters. Nevertheless, the ACMA concluded that, where a current affairs presenter receives benefits under a licensee agreement, this should be regulated in order to more comprehensively address the policy problem. In those circumstances, the ACMA announced that it had decided to widen the 2000 Standard so that on-air disclosure requirements would apply to both presenters’ agreements, as well as to licensee agreements, where a presenter also receives benefits.

21        Later in November 2011, the ACMA released for public comment a draft new standard to replace the 2000 Standard. Under cover of a letter dated 31 January 2012, the first applicant lodged with the ACMA a detailed written submission relating to proposed subs 5(2) of the draft standard, and the associated definitions of “dividend interest in a licensee” and “shareholding interest”. The first applicant explained why it opposed the 2000 Standard being extended to cover what it described as the “all advertiser extension” in the draft standard. It complained that compliance with the all advertiser extension “would require a labor [sic] intensive and entirely unworkable administrative process”. It also complained that the ACMA had neither sought nor received evidence that the current Commercial Radio Codes of Practice and the 2000 Standard were not operating to provide appropriate safeguards. It is evident from that submission that the first applicant’s opposition to the draft standard was predicated on a view that the all advertiser extension would operate so as to affect all current affairs presenters on 2GB even if only one presenter, who was a profit-sharing presenter, referred positively to a 2GB advertiser.

22        By letter dated 8 February 2012, the Acting General Manager of the ACMA, responded to the first applicant’s submission. The letter stated that the ACMA was proposing the “all advertiser extension” “because it considers that appropriate community safeguards require that contractual arrangements with advertisers of a kind similar to those involving Telstra, 2GB and Alan Jones that were considered in the ABA’s 2004 report, be covered by the Disclosure Standard, and that coverage should apply to all commercial radio licensees and their presenters of current affairs programs”.

23        As noted above the ACMA determined on 14 March 2012 to make the 2012 Standard.

Summary of relevant provisions of the BSA

24        Before setting out the terms of subs 125(1) of the BSA, under which the 2012 Standard was made, it is convenient to first describe some other relevant statutory provisions.

25        The objects of the BSA are set out in s 3. They relevantly include:

(b)    to provide a regulatory environment that will facilitate the development of a broadcasting industry in Australia that is efficient, competitive and responsive to audience needs; and

(g)    to encourage providers of commercial and community broadcasting services to be responsive to the need for a fair and accurate coverage of matters of public interest and for an appropriate coverage of matters of local significance; and

(h)    to encourage providers of broadcasting services to respect community standards in the provision of program material.

26        Section 4 of the BSA also identifies various elements of the “regulatory policy” underpinning the legislation. Subs 4(2) states that the Parliament intends that broadcasting services be regulated in a manner that, in the opinion of the ACMA, enables public interest considerations to be addressed in a way that does not impose unnecessary financial and administrative burdens on providers of broadcasting services.

27        The applicants’ challenge to the ACMA’s decision determining to make the 2012 Standard also relies heavily on the inter-relationship between the formulation of an industry code and the ACMA’s power to make a standard. One of the applicants’ main arguments is that the scheme of the BSA gives primacy to industry codes of practice and the ACMA’s powers, including its power to make a standard under subs 125(1), should not be construed in a way which undermines that primacy.

28        The development and regulation of industry codes of practice are dealt with in s 123 of the BSA, which relevantly provides as follows:

(1)    It is the intention of the Parliament that radio and television industry groups representing:

    (a)    commercial broadcasting licensees; and

    …

develop, in consultation with the ACMA and taking account of any relevant research conducted by the ACMA, codes of practice that are to be applicable to the broadcasting operations of each of those sections of the industry.

(2)    Codes of practice developed for a section of the broadcasting industry may relate to:

    (a)    …

(d)    promoting accuracy and fairness in news and current affairs programs; and

…

(4)    If:

(a)    a group representing a particular section of the broadcasting industry develops a code of practice to be observed in the conduct of the broadcasting operations of that section of the industry; and

(b)    the ACMA is satisfied that:

(i)    the code of practice provides appropriate community safeguards for the matters covered by the code; and

(ii)    the code is endorsed by a majority of the providers of broadcasting services in that section of the industry; and

(iii)    members of the public have been given an adequate opportunity to comment on the code;

the ACMA must include that code in the Register of codes of practice.

…

29        The applicants’ argument concerning the inter-relationship between industry codes of practice and the ACMA’s power to make a standard may be summarised as follows:

(a)    relevant industry bodies bear the primary responsibility for developing appropriate codes of practice dealing with prescribed matters;

(b)    in that context, the ACMA’s role is to ensure that community standards are safeguarded when it is asked by an industry body to register a code under subs 123(2);

(c)    the ACMA’s role is not to determine a code of practice or impose practices on the industry. The applicants dispute any suggestion that the legislative scheme is a model of “co-regulation”;

(d)    Part 9 of the BSA envisages that the appropriate form of regulation is industry-based codes and any measures in addition to, or in substitution for, an industry-based code are exceptional;

(e)    under the legislative scheme created by Part 9 of the BSA, subs 125(1) is a power which ordinarily would be exercised sparingly and only when needed;

(f)    subs 125(1) should not be used simply because the ACMA disagrees with an industry code of practice and seeks to substitute its own views on what should be an appropriate regulation; and

(g)    the ACMA can only make a standard if it is satisfied, based on “convincing evidence”, that a registered industry code has, in effect, failed.

30        Section 125 of the BSA is in the following terms:

125    ACMA may determine program standards where codes of practice fail or where no code of practice developed

(1)    If:

(a)    the ACMA is satisfied that there is convincing evidence that a code of practice registered under section 123 is not operating to provide appropriate community safeguards for a matter referred to in subsection 123(2) in a particular section of the broadcasting industry; and

(b)    the ACMA is satisfied that it should determine a standard in relation to that matter;

the ACMA must, in writing, determine a standard in relation to that matter.

(2)    If:

(a)    no code of practice has been registered under section 123 for a matter referred to in subsection 123(2) in a particular section of the broadcasting industry; and

(b)    the ACMA is satisfied that it should determine a standard in relation to that matter;

the ACMA must, by notice in writing, determine a standard in relation to that matter.

31        The applicants’ case also relies on the potentially serious consequences for a licensee if an applicable standard is breached. Compliance with applicable standards is a condition of a commercial radio broadcasting licence (BSA, Schedule 2, cl 8(1)(b)). Conduct in breach of a licence condition is also a criminal offence (subs 139(3), which attracts a penalty of 500 penalty units). It is also a continuing offence (s 140). Breach of a licence condition also renders a licensee liable to a civil penalty (subs 140A(3)), and the breaches are also continuing (subs 140A(8)). The ACMA is empowered to make remedial directions to a licensee who is in breach of a licence condition (s 141). Breach of a remedial direction can itself give rise to a criminal offence (s 142) and attract civil penalties (s 142A). Ultimately, a breach of a remedial direction and a breach of a licence condition may result in the ACMA suspending or cancelling a licence (subs 143(1)). The practical significance to the broadcasting industry of such sanctions is vividly illustrated by this Court’s decision in Australian Communications and Media Authority v Radio 2UE Sydney Pty Ltd (No. 2) (2009) 178 FCR 199.

The 2012 Standard

32        The object of the 2012 Standard is described in s 6 as “to encourage licensees to be responsive to the need for a fair and accurate coverage of matters of public interest by requiring the disclosure of commercial agreements or other arrangements that have the potential to affect the content of current affairs programs”. An outline of what the 2012 Standard does is set out in s 7, which is in the following terms:

7    Outline of what this standard does

This standard requires a licensee to ensure that:

(a)    a disclosure announcement is made on air during a current affairs program about any commercial agreement that may affect the content of the program; and

(b)    a statement is made on air during a current affairs program disclosing the payment of production costs by an advertiser or sponsor; and

(c)    a register of commercial agreements and other information is kept by the licensee; and

(d)    information and documents are kept and given to the ACMA if requested in accordance with section 14; and

(e)    a condition of employment of a presenter is that information or documents in relation to any commercial agreement are provided to the licensee; and

(f)    a presented is required to assist the licensee to comply with the obligations that relate to the broadcast or programs imposed on the licensee by the Act, the code and this standard.

33        In contrast with the narrower definition of a “commercial agreement” in s 6 of the 2000 Standard (which was limited to what broadly might be described as “presenter agreements”), s 5 of the 2012 Standard contains an expanded definition of “commercial agreement”. Subsection 5(1) deals with presenter agreements, while subs 5(2) deals with licensee agreements. Those provisions are in the following terms:

5    Meaning of commercial agreement

(1)    An agreement, arrangement or understanding (whether in writing or not), between a sponsor, or an agent of a sponsor, and a presenter, or an associate of a presenter (whether or not there are other parties to the agreement), is a commercial agreement for the purposes of this standard if it:

        (a)    provides for the presenter, in exchange for consideration provided to the presenter or an associate of the presenter, to:

            (i)    promote the sponsor; or

    (ii)    promote the products, services or interests of the sponsor; or

(iii)    refrain from making a negative comment about the sponsor; or

(iv)    provide services in respect of publicity, promotion or public relations for the sponsor; or

        (b)    imposes an obligation on a presenter or an associate of a presenter to provide things for the sponsor (other than a thing mentioned in subparagraph (a) (i), (ii), (iii) or (iv)), in exchange for consideration of $25 000 or more a year, and is not solely to:

                (i)    provide writing services for a publication; or

(ii)    perform or appear in a film, television program or theatrical production; or

(iii)    provide voice-over services for an advertisement.

    (2)    An agreement, arrangement or understanding (whether in writing or not), between a sponsor, or an agent of a sponsor, and a licensee, or a related body corporate of a licensee (whether or not there are other parties to the agreement), is a commercial agreement for the purposes of this standard if all of the following apply:

        (a)    the agreement provides for the licensee, in exchange for consideration provided to the licensee or a related body corporate of the licensee, to:

                (i)    promote the sponsor; or

(ii)    promote the products, services or interests of the sponsor; or

(iii)    refrain from broadcasting a negative comment about the sponsor;

        (b)    a presenter of the licensee does a thing mentioned in subparagraph (a) (i), (ii) or (iii);

        (c)    the presenter or an associate of the presenter has:

(i)    a beneficial or legal interest in shares in the licensee or a related body corporate of the licensee; or

(ii)    if a dividend were declared by the licensee or a related body corporate of the licensee – a beneficial entitlement to be paid or credited a dividend; or

(iii)    a contractual entitlement to a share of the licensee’s income or profits.

34        The obligation of a licensee to ensure that a disclosure announcement is broadcast in prescribed circumstances is found in s 8. It is in the following terms:

8    On-air disclosure of commercial agreements

    (1)    This section applies if:

(a)    a sponsor or an agent of a sponsor has a commercial agreement with a licensee, a related body corporate of a licensee, a presenter of a licensee or an associate of a presenter of a licensee; and

(b)    the licensee is broadcasting material in a current affairs program that:

(i)    promotes the name, products or services of the sponsor; or

(ii)    includes an interview with an agent, employee or officer of the sponsor in relation to a matter that concerns the sponsor, its products, services or interests; or

(iii)    is requested by the sponsor, or which is based on, or similar to, material provided by the sponsor; or

(iv)    directly promotes an issue which is directly favourable to the sponsor.

(2)    The licensee must ensure that a disclosure announcement that is clearly identifiable to a reasonable listener as a disclosure announcement, is broadcast on air during the current affairs program at the time of, and as part of, the broadcasting of any material in sub-paragraph (1) (b) (i), (ii), (iii) or (iv).

(3)    However, a disclosure announcement is not required to be broadcast if the material is:

    (a)    a news broadcast or bulletin; or

(b)    an advertisement that is clearly identifiable to a reasonable listener as an advertisement.

35        “Disclosure announcement” is defined in s 4 of the 2012 Standard to mean “a statement broadcast by a presenter that a commercial agreement exists”. The term “sponsor” is also defined in that provision to mean a person who:

(a)    directly benefits from the things provided by a licensee, a presenter or associate of a presenter under a commercial agreement; and

(b)    is not a licensee or a presenter.

36        As will emerge below, a central focus of the applicants’ challenge to the validity of the 2012 Standard relates to the alleged difficulties of compliance, particularly in relation to subparagraphs (8)(1)(b)(i) and (iv), which are set out above in [34].

37        It is also convenient to note at this point that, as the ACMA stated, those particular subparagraphs are not novel. They reflect paragraphs 7(1)(a) and (d) of the 2000 Standard. Subsection 7(1) of the 2000 Standard provided as follows:

7    On-air disclosure

1.    Subject to subsection (2), a licensee must cause to be broadcast during a current affairs program a disclosure announcement at the time of and as part of:

(a)    a broadcast of any material in which the name, products or services of a sponsor are mentioned; or

(b)    a broadcast of any material in which an agent, employee or officer of a sponsor is interviewed in relation to any matter that concerns the sponsor, its products, services or interests; or

(c)    any broadcast requested by a sponsor or which is based on or similar to any material which is provided by a sponsor; or

(d)    a broadcast of any material that directly promotes any issue which is directly favourable to a sponsor.

Competing constructions of the 2012 Standard

38        It emerged that the parties had different views concerning the proper construction and effect of the 2012 Standard in at least the following two respects.

39        First, according to the applicants, the effect of the 2012 Standard is that if:

(a)    a presenter has an equity-based, income-based or profit-based interest in a licensee (presenter with a prescribed financial interest); and

(b)    the presenter with a prescribed financial interest makes mention of, or a positive reference to, a licensee advertiser or any of its products, services or interests in the course of that presenter’s program, the agreement between that advertiser and the licensee is deemed to be a commercial agreement with the licensee. Section 8 then obliges the licensee to ensure that all the licensee’s current affairs presenters make a disclosure statement if a presenter with a prescribed financial interest mentions the name, products, services of the advertiser or conducts an interview with a representative of the advertiser or makes positive reference to an issue that is favourable to the advertiser.

40        In other words, the applicants’ view is that the effect of the 2012 Standard is that an advertiser who is a deemed influencing advertiser is deemed to have influence over the content of all current affairs presenters of the licensees because of a positive reference made by the presenter with a prescribed financial interest either to that advertiser, its products, services or even, most broadly, to the interests of the advertiser. Importantly, however, the applicants made clear that, even though they had a different view to the ACMA on this aspect of the meaning and scope of the 2012 Standard, they would adopt the ACMA’s narrower construction for the purposes of the case.

41        The ACMA takes a narrower view of this aspect of the meaning and scope of the 2012 Standard. It conveyed that view in a letter dated 21 March 2012 addressed to Mr Loewenthal, who is the Managing Director of MRN. It also developed its position during the hearing of these proceedings. In substance, the ACMA says that, in light of the purpose of the 2012 Standard and the operation of the 2000 Standard (which the 2012 Standard replaced), it should not be construed in the manner suggested by the applicants, whereby the mere existence of a commercial agreement of the type covered by subs 5(2) gives rise to an obligation to make a disclosure announcement every time any presenter promotes the sponsor. ACMA contends that the words “the licensee is broadcasting material in a current affairs program” in the chapeau to paragraph 8(1)(b) must logically be read as subject to an implicit contextual limitation that the licensee is broadcasting material in a current affairs program in accordance with the terms of a commercial agreement relating to the particular sponsor referred to in paragraph 8(1)(a). ACMA’s construction emphasises that an agreement of the kind described in paragraph 5(2)(a) is a commercial agreement regulated by the 2012 Standard only when a presenter with a prescribed financial interest does a thing mentioned in subparagraphs 5(2)(a)(i), (ii) or (iii).

42        The second point of difference concerns the proper construction of subparagraphs 8(1)(b)(i) and (iv) of the 2012 Standard. As to the former subparagraph, the applicants consider that the mere mention of, or passing reference to, the name of a sponsor or its products would satisfy that provision and a disclosure announcement would have to be made. The ACMA’s position on this question is that something more than a mere mention is required for a broadcast to “promote” the specified matters.

43        As to subparagraph 8(1)(b)(iv), the applicants seem to adopt a narrower view of the meaning and effect of the word “directly” (which appears twice in that subsection). In contrast, the ACMA contends that those are important qualifying words which operate to restrict the scope of the disclosure obligation by requiring a high level of specificity, as is also the case with subparagraphs 8(1)(b)(i) to (iii). In particular, the ACMA contends that the reference to “directly favourable to the sponsor” effectively means that the disclosure obligation does not arise unless an issue is being directly promoted by a presenter and in a way which connects that issue to a sponsor who is either explicitly identified by name or otherwise referred to in a way which would leave a listener in no doubt as to the identity of that sponsor. Mr Williams SC (who appeared with Ms Mitchelmore for the ACMA), said:

… there are both elements. It has to be direct promotion of an interest that is directly favourable. Both elements are required, in our submission. Now, in the ordinary case that will be satisfied only given the high threshold involved in the double directly test where the sponsor is identified by name. There might be examples where the sponsor is so clearly the only beneficiary. If one imagines, entirely hypothetically, campaigning against the harsh treatment given by the government to Western Australian mining billionaire heiresses.

44        These different constructions of the 2012 Standard bear upon those parts of the applicants’ challenge which complain that the 2012 Standard is unreasonable, irrational and disproportionate, as well as burdening communication about political and governmental matters in a way which is not reasonably appropriate and adapted to serve any legitimate purpose. I will return to these matters in due course, but note at this point that I generally agree with the ACMA’s construction.

Summary of applicants’ submissions

45        It is convenient to summarise the applicants’ submissions under the three broad heads of challenge raised in its Second Amended Originating Application for Judicial Review.

Excess of jurisdiction by reference to absence of alleged jurisdictional fact

46        The applicants contend that subs 125(1) of the BSA contains the following three jurisdictional facts and that each of them has to exist as a matter of objective fact before a standard can validly be made:

(a)    there is a registered code;

(b)    the code does not protect community standards; and

(c)    there is convincing evidence that the code does not protect community standards.

47        The applicants’ primary submission is that fact (c) did not exist.

48        The applicants rely on the High Court’s recent description in Gedeon v Commissioner of the New South Wales Crimes Commission (2009) 236 CLR 120 at [43]-[44] of what is a jurisdictional fact, where the Court said:

The expression “jurisdictional fact” was used somewhat loosely in the course of submissions. Generally the expression is used to identify a criterion the satisfaction of which enlivens the exercise of the statutory power or discretion in question. If the criterion be not satisfied then the decision purportedly made in exercise of the power or discretion will have been made without the necessary statutory authority required of the decision maker.

The concept appears from the following passage in the reasons of Latham CJ in R v Connell; Ex parte Hetton Bellbird Collieries Ltd:

“The subject matter with which the Industrial Authority deals is, inter alia, rates of remuneration. There is power to deal with this subject matter in respect of rates of remuneration which existed on the specified date only if the authority is satisfied that the rates in question are anomalous. Unless this condition is fulfilled, the authority cannot act – it is a condition of jurisdiction”.

49        The applicants also refer inter alia to the decisions of the Court of Appeal of New South Wales in Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55 and Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707 for guidance in the task of determining whether or not a criterion or other matter involves a “jurisdictional fact”. The applicants accept that the task of identifying a jurisdictional fact turns on a proper construction of the relevant statute.

Impermissible infringement of implied freedom of political communication

50        The applicants’ case on this ground was conducted on two bases. The first basis was that neither s 125 of the BSA, nor any other provision in that Act, conferred jurisdiction on the ACMA to make a decision imposing legal obligations contrary to the implied constitutional immunity from interference with communications on government and political matters. The second basis was that neither s 125, nor any other provision in the BSA, conferred jurisdiction on the ACMA to create a legal instrument which imposed legal obligations contrary to the implied freedom protected by the Constitution. It is to be noted that the applicants did not challenge the constitutional validity of s 125 itself.

51        The applicants rely on the two-limb test of validity developed in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567-568, as modified in Coleman v Power (2004) 220 CLR 1 at [93]-[96], [196] and [211]. The applicants describe the relevant test as requiring the following two questions to be addressed:

(1)    does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect?

(2)    if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedures prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people?

If the first question is answered “yes” and the second “no”, the law is invalid.

52        The applicants emphasise the broad range of matters that may be characterised as “governmental and political matters” (see, for example, Hogan v Hinch (2011) 243 CLR 506 at [49] per French CJ). They contend that the operation and effect of the 2012 Standard burdens political communication in a number of ways. In particular, they rely upon evidence given by Messrs Michael Thompson (the Executive Producer of the Ray Hadley Morning Show) and Robert Loewenthal illustrating the following types of burden said to be created by compliance with the 2012 Standard (the applicants also provided transcripts of various segments from Mr Hadley’s program):

(a)    if a presenter with a prescribed financial interest refers positively in the course of his or her program to either a 2GB advertiser or such an advertiser’s interests, then that advertiser becomes a deemed influencing advertiser (DIA), with the effect that 2GB is encumbered with obligations to ensure that:

    at least that presenter must make a disclosure announcement at the time of the mention of the DIA or any positive reference to an issue that is directly favourable to that DIA; and

    the specified details of the commercial agreement with the DIA are registered as required;

(b)    on any given day, 2GB may be a party to between 100 and 300 advertising agreements. The list of advertisers changes constantly with new advertisers being added to the list and other advertisers’ campaigns expiring;

(c)    2GB neither inquires of its advertisers nor makes independent inquiries of all the issues and interests that relate to or affect each individual advertiser. The applicants contend that that is what the 2012 Standard requires. They say that each time any entity is mentioned spontaneously in a program in a favourable light, an immediate inquiry would need to be made as to whether that entity was a current advertiser with the station. Any such an inquiry could take some time. Likewise, it is said that judgment calls have to be made very quickly as to whether an issue is directly favourable to an advertiser or sponsor. The applicants contend that, because of these problems, compliance with the 2012 Standard is impossible of fulfilment;

(d)    the requirement that disclosures be made at the time and as part of a program necessitates the regular and frequent interruption of a program’s flow; and

(e)    the practical burdens imposed by the requirement to make a disclosure statement are compounded by the ACMA’s attitude that such a statement needs to be made immediately.

53        These practical difficulties were developed by Mr Thompson by reference to the radio program presented by Mr Ray Hadley on 2GB. Mr Thompson gave evidence, which was not contested, regarding the dynamic and unplanned nature of Mr Hadley’s Morning Show. That program often deals with many unplanned topics which arise as a result of telephone calls or emails received from listeners. Those topics change direction quickly and often.

54        The difficulties of compliance were demonstrated by reference to the broad range of issues raised in Mr Hadley’s Morning Show on one selected day, namely 21 March 2012. One segment broadcast that morning involved the presenter being critical of both the mining tax and the carbon tax. Although the discussion of these taxes was in most instances planned, Mr Thompson highlighted the difficulties of compliance because he said that non-introduction of those taxes was likely to be directly favourable to at least mining companies and electricity providers. He said that there were 7 advertisers with 2GB involved in the electricity industry on that day, but he did not know each of those companies’ positions on the taxes. He raised the possibility that one of those advertisers, a business involved in solar energy, might agree with the carbon tax.

55        Mr Thompson gave further examples of the claimed impossibility of identifying all advertisers to whom an issue was directly favourable. One such example was where a shopping centre was to be opened in Sydney and a radio presenter promoted on-air the new centre’s benefits to both the community and small business if the development proceeded. He highlighted that there were likely to be private negotiations with potential tenants of the shopping centre and that it was impossible for 2GB to know which of the major supermarkets, retailers and other smaller businesses (many of whom were advertisers on 2GB) could be tenants of the centre. He said that the radio presenter’s promotion of the shopping centre would be directly favourable to the actual tenants of the shopping centre, but that 2GB could not know their identities.

56        Another example was a discussion about the possible introduction of a “junk food tax”. Mr Thompson said that if a presenter spoke against the introduction of such a tax, this would be directly favourable to many fast-food outlets, food manufacturers and restaurants, many of whom were advertisers on 2GB. However, he said that given the technical nature of any such proposed tax, there would be no way for a presenter to accurately identify what “junk food” would be taxed, consequently it would be impossible for 2GB to identify all advertisers affected by the presenter’s comments.

57        Mr Thompson gave several other examples of the difficulties of compliance.

58        Based on all these matters, the applicants contend that the first-limb of Lange (as modified by Coleman) is comfortably satisfied.

59        As to the second Lange issue, whether the 2012 Standard is reasonably appropriate and adapted to serve to a legitimate end which is compatible with the maintenance of the system of representative and responsible government, the applicants place particular reliance on the following passage from Nationwide News Pty Limited v Wills (1992) 177 CLR 1 at 30-31, where (after referring to the High Court’s earlier decision in Davis v The Commonwealth (1988) 166 CLR 79), Mason CJ said:

Davis establishes two propositions. First, that, even if the purpose of a law is to achieve an end within power, it will not fall within the scope of what is incidental to the substantive power unless it is reasonably and appropriately adapted to the pursuit of an end within power, i.e., unless it is capable of being considered to be reasonably proportionate to the pursuit of that end (South Australia v Tanner (1989) 166 CLR at p 165). Secondly, in determining whether that requirement of reasonable proportionality is satisfied, it is material to ascertain whether, and to what extent, the law goes beyond what is reasonably necessary or conceivably desirable for the achievement of the legitimate object sought to be attained and, in so doing, causes adverse consequences unrelated to the achievement of that object. In particular, it is material to ascertain whether those adverse consequences result in any infringement of fundamental values traditionally protected by the common law, such as freedom of expression.

60        The applicants contend that the 2012 Standard is not reasonably appropriate and adapted to the relevant purpose of safeguarding the community, but rather operates in a manner which is said to be unreasonable, unnecessary and ineffective because of numerous matters, the key elements of which may be summarised as follows:

    the 2012 Standard is substantially targeted at a forum for communications on government and political matters such that it should be characterised as having a “direct purpose” of restricting such communication;

    alternatively, if the 2012 Standard incidentally, rather than directly, targets such communications, it is not reasonably appropriate and adapted to the safeguarding of such interests;

    compliance with the 2012 Standard is in practical terms impossible of reliable achievement, yet non-compliance exposes the licensee to severe sanctions as described above;

    there is no particular immediate harm threatening a community that will be addressed by the 2012 Standard;

    there was no need for the 2012 Standard because there is no evidence that the 2000 Standard was failing in any respect;

    the 2012 Standard was made before any alternatives were genuinely considered, such as maintaining the 2000 Standard or encouraging the development of a new industry code;

    there was said to be an absence of appropriate research undertaken by the ACMA prior to making the 2012 Standard, including not making any assessment of the level of shareholding or interest a presenter must have before they could be a deemed influence, nor had there been any assessment as to whether the type of disclosure required by the 2012 Standard in fact addressed the harm or community concerns relied on by the ACMA;

    compliance with the 2012 Standard is unreasonably onerous, having regard to the following matters:

−    disclosures must be made immediately notwithstanding the flow and the format of the political discussion;

−    disclosures must be made within 90 seconds of an advertiser being mentioned;

−    no allowance is made for accidental or inadvertent omission; and

−    the presenter and his supporting team are required to have an instant knowledge of each of a large number of advertisers and every issue of concern to each of those advertisers;

    sections 5 and 8 of the 2012 Standard are vague, confusingly drafted and uncertain in their meaning;

    the effect of the 2012 Standard is to interfere with a range of human rights of the presenters and the public, including freedom of expression, right to privacy and right to property (as to the latter, it emerged that two presenters on 2GB felt compelled to sell their shareholdings in MRN because of the obligations created by the 2012 Standard. Mr Loewenthal also gave evidence that, to avoid the 2012 Standard applying to Mr Alan Jones, MRN would need to compensate Mr Jones if he could be persuaded not to redeem certain options which otherwise would result in him becoming a presenter with a prescribed financial interest); and

    there was no consultation on the final form of the 2012 Standard and the extent to which it differed from the draft Standard released for public comment by the ACMA in November 2011.

2012 Standard ultra vires the BSA on grounds of proportionality and unreasonableness

61        The applicants argue that, even if they are unsuccessful in arguing that the ACMA’s decision to make the 2012 Standard offended the constitutionally protected implied freedom of communication, the decision is invalid because the 2012 Standard is itself invalid. Citing the leading decision in South Australia v Tanner (1989) 166 CLR 161 at 164, the applicants contend that, as the 2012 Standard is a form of delegated legislation, such an instrument is invalid on the ground of proportionality if the following two tests are not satisfied:

(a)    the legislative instrument must, by its legal operation or practical effect, advance the prescribed purpose; and

(b)    the collateral consequences of the instrument must not be disproportionate to its effective operation in advancing the statutory purpose.

62        The applicants accept that the test of proportionality does not require the Court to assess the merits of the 2012 Standard. They acknowledge that the question whether the instrument is within the power conferred by the primary legislation is one for the Court to determine.

63        The applicants then contend that the 2012 Standard was not adapted to the statutory purpose set out in subs 125(1) of the BSA. They claim that there was no evidence that the 2000 Standard required any amendment to address a present threat or harm to community safeguards.

64        The applicants also submit that the ACMA’s decision to make the 2012 Standard is unreasonable and perverse. In this context, they reiterate many of their claims regarding the alleged impossibility of complying with the requirements of the 2012 Standard as set out above under the Lange test.

65        Finally, the applicants contend that, since the 2012 Standard burdens communication and interferes with freedom of expression, the ACMA carries the onus of establishing that its decision to make the 2012 Standard was “necessary and proportionate”.

Summary of respondent’s submissions

66        It is convenient to summarise the ACMA’s submissions under the same three broad heads of challenge relied upon by the applicants.

Excess of jurisdiction by reference to absence of alleged jurisdictional fact

67        The ACMA dispute that any of the three elements referred to by the applicants are jurisdictional facts. The ACMA submits that subs 125(1) contains a composite phrase which should be read as a whole and not divided into three separate elements. It draws attention to the applicants’ misdescription of the test in subs 125(1) as dealing with “protecting” community safeguards, as opposed to “providing” community safeguards. But, in common with the applicants, the ACMA describes the task of identifying a jurisdictional fact as involving an exercise in statutory construction, requiring consideration of the context of the relevant statutory formulation and the purpose or object underlying the legislation.

68        The ACMA contends that s 125 of the BSA requires the ACMA to be satisfied of two matters in order to determine a standard. Those two matters are:

(a)    it has to be satisfied that there is convincing evidence that a code of practice registered under s 123 is not operating to provide appropriate community safeguards; and

(b)    it has to be satisfied that it should determine a standard in relation to that matter which, in this case, means promoting accuracy and fairness in news and current affairs programs.

69        In arguing that the only jurisdictional facts in s 125 are the requirements that the ACMA have the requisite state of mind or satisfaction in respect of the two matters described above, the ACMA places particular reliance on the significance of the fact that s 125 makes express reference to the ACMA’s satisfaction and that considerable weight also has to be given to the value-laden nature of the judgment involved in reaching that satisfaction.

70        The ACMA accepts that its satisfaction is not immune from judicial review. It acknowledges that the scope of such review is accurately stated in cases such as R v Connell; Ex parte Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 430 per Latham CJ and Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 363 per Dixon J.

71        The ACMA also submits that even if s 125 contains a jurisdictional fact regarding the requirement of “convincing evidence”, objectively speaking there is convincing evidence that the industry codes of practice were not operating to provide appropriate community safeguards. In other words, the ACMA’s alternative position is that that particular alleged jurisdictional fact objectively existed in any event.

Implied freedom of political communication

72        Relying upon recent observations of the High Court in Wotton v Queensland [2012] HCA 2 at [22] and [33], the ACMA emphasises the need to distinguish between a challenge to the exercise of the power to make the 2012 Standard as involving a constitutional question, as opposed to a challenge involving the exercise of statutory power and whether the 2012 Standard is ultra vires s 125.

73        As to any constitutional question which properly arises, the ACMA generally agrees with the applicants’ statement of the relevant principles and, in particular, the two issues posed by Lange (noting, however, that the ACMA placed greater emphasis than the applicants on the need to modify the second issue so that appropriate attention was focused on whether the challenged provision served a legitimate end in a manner which was compatible with the constitutionally prescribed system of government). On the first of those two issues (namely that relating to burdening freedom of communication about government or political matters), the ACMA effectively accepts that subs 125(1) of the BSA and the related enforcement provisions could, in their operation or effect, burden the freedom of political communication. However, the ACMA emphasises the significance of the fact that the 2012 Standard does not apply exclusively to political communications. It applies more generally to current affairs programs, some – but not all of which – involve political communications. Accordingly, the ACMA argues that this is an appropriate case in which to apply the distinction between laws which incidentally restrict political communication, as opposed to laws which prohibit or regulate communications which are inherently political or a necessary ingredient of political communication. It contends that the significance of that distinction lies in the fact that a law satisfying the former description is more readily seen to be reasonably appropriate and adapted to the legitimate end it is to serve.

74        While accepting that extending the definition of “commercial agreement” in the 2012 Standard may increase the administrative burden on commercial radio licensees, the ACMA argues that that burden is justified by the improved promotion of community safeguards introduced by the 2012 Standard.

75        In contending that the 2012 Standard satisfied the second-limb of Lange, the ACMA says that the 2012 Standard is valid because it serves a legitimate end which is itself compatible with the maintenance of the constitutionally prescribed system of government, namely the promotion of accuracy and fairness in current affairs programs. The ACMA also places emphasis on the significance of the ACMA’s obligation under s 125 to consider “appropriate community standards”. It contends that the concept of “appropriate” community standards necessarily incorporates notions of the public interest, including the values underlying the implied freedom. It submits that, by incorporating into subs 125(1) the concept of “appropriate” community standards, the provision itself entrenches standards of decision-making akin to those denoted by the phrase “reasonably appropriate and adapted”. Accordingly, in determining whether or not to make a standard, the ACMA accepts that it is incumbent on it to have regard to what is constitutionally permissible.

Reasonableness and proportionality

76        The ACMA disputes some aspects of the legal principles relied upon by the applicants in challenging the 2012 Standard under these grounds. In particular, the ACMA denies the relevance to this ground of matters such as the perceived need for a standard, consideration of other regulatory alternatives, the sufficiency of anterior investigations and assessments, as well as any impact on the “human rights” of presenters and the radio audience.

77        Whilst accepting that the legislative scheme is one which involves radio and television broadcasting industries being “largely self-regulating”, the ACMA emphasises that that objective is balanced by the ACMA’s responsibilities to monitor the performance of registered industry codes of practice and to take appropriate regulatory action in prescribed circumstances.

78        The ACMA contends that the applicants overstate both the legal and practical effects of the 2012 Standard. The ACMA emphasises that there are significant overlaps in the relevant provisions of the 2000 Standard and in ss 5(2) and 8 of the 2012 Standard. In particular, the ACMA contends that, like s 8 of the 2012 Standard, s 7 of the 2000 Standard contained broad requirements for the making of disclosure announcements (subs 7(1) of the 2000 Standard is set out in [37] above). The ACMA draws particular attention to the fact that paragraph (7)(1)(d) of the 2000 Standard imposed disclosure obligations at the time of, and as part of, “a broadcast of any material that directly promotes any issue which is directly favourable to a sponsor”. In other words, the double-barrelled reference to “directly” in s 8 of the 2012 Standard is not novel.

79        The ACMA further contends that the 2000 Standard was never construed so as to require a licensee to make a disclosure announcement whenever there was a broadcast, on any current affairs program, of “any material in which the name, products or services of a sponsor are mentioned”, simply because one presenter had a commercial agreement with that sponsor. Something more specific was required. The ACMA states that the obligations imposed by s 7 of the 2000 Standard were construed as requiring a disclosure announcement where, for example, the broadcaster in question who had entered into a commercial agreement with a sponsor mentioned the products or services of that sponsor. Having regard to the ACMA’s submissions elsewhere, I did not understand the ACMA to submit that a mere passing mention of such products or services would suffice. The ACMA states that there was no intention to bring about a different result under the 2012 Standard.

80        As noted above, the ACMA has a different view from the applicants on the proper construction of two aspects of the 2012 Standard. First, having regard to the purpose of the 2012 Standard and the operation of the 2000 Standard, the ACMA’s position is that the former should not be construed as creating an obligation to make a disclosure announcement every time any presenter promotes a sponsor simply because of the existence of a commercial agreement caught by the definition in subs 5(2). Relying on case law emphasising the difference in an instrument between a definition provision and a substantive provision (see, for example, Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 at 635), the ACMA contends that there is an implied contextual limitation to the effect that the disclosure obligation only arises where the licensee is broadcasting material in a current affairs program in accordance with the terms of a commercial agreement relating to the sponsor. The ACMA contends that this construction of the 2012 Standard is reasonably proportionate to the end to be achieved and is not capricious or oppressive. As also noted above, although disagreeing with that construction, for the purpose of these proceedings, the applicants said that they would adopt the ACMA’s construction on this particular matter.

81        The second area of disagreement, and in respect of which the applicants make no similar concession, focuses on the meaning and scope of subparagraphs 8(1)(b)(i) and (iv). The applicants regard those provisions as creating lower thresholds than those which are advanced by the ACMA, with the consequence that compliance with them is more onerous. The ACMA describes both subparagraphs as operating by reference to a “high level of specificity”. In the case of subparagraph 8(1)(b)(iv), this is said to flow from the double-barrelled use of “directly” in that provision. In the ACMA’s view, this subparagraph does not operate to create a disclosure obligation unless a presenter with a commercial interest directly promotes an issue and makes a specific reference in that context to the relevant advertiser or sponsor. Moreover, any such reference needs to identify the advertiser or sponsor by its name or give such information as to leave a listener in no doubt as to the specific identity of that advertiser or sponsor.

Consideration and findings

82        It is convenient to deal with each of the three grounds of challenge in turn notwithstanding that they overlap to some extent, particularly grounds 2 and 3.

(a)    Jurisdictional fact

83        In my view, the only relevant jurisdictional facts created by s 125 of the BSA are the requirements that the ACMA have the requisite satisfaction which is identified in both paragraphs 125(1)(a) and (b). First, the ACMA must be satisfied that there is convincing evidence that a registered code of practice is not operating to provide appropriate community safeguards for a prescribed matter. Secondly, the ACMA must be satisfied that it should determine a standard in relation to that matter.

84        As Perram J recently observed in Australian and International Pilots Association v Fair Work Australia [2012] FCAFC 65 at [147], the principles relating to the identification of a jurisdictional fact are well-established, but their application “is not always easy or without controversy”. By reference to the High Court’s unanimous endorsement in Australian Heritage Commission v Mount Isa Mines Ltd (1997) 187 CLR 297 of Black CJ’s dissenting analysis of the issue (see (1995) 60 FCR 456), Perram J identified the following four propositions, which he described as being relevant to the proceedings in Australian and International Pilots Association (and which are also relevant to the proceedings here):

first, whether a statutory power is to be read as subject to the formation of an opinion about the existence of a matter by the decision maker or, instead, by the bare existence of the matter itself is a question of statutory construction (at 466); secondly, the resolution of that question is assisted by an examination of the nature of the task reposed in the decision maker – where that task is a difficult and complicated one involving the careful assessment of complex facts and the formation of opinions and value judgments on a potentially wide range of matters, this will suggest that Parliament intended that the decision maker would have power to make its own determination of that matter (at 466); thirdly, the inconvenience which may attend the conclusion that a matter is a jurisdictional fact is itself an indicator that this is unlikely to have been what Parliament intended (at 466); and, finally, the specialist qualifications of the members of an administrative tribunal may well be an indicator that it is this body, with its expertise, that is to resolve the issue at hand (at 467). The High Court's reasoning in Plaintiff M70/2011 v Minister for Immigration & Citizenship (2011) 280 ALR 18; [2011] HCA 32 at [57]-[58] per French CJ, [107]-[109] per Gummow, Hayne, Crennan and Bell JJ and [164] per Heydon J is consistent with this distillation, although the result in that case may show that its application is not always easy or without controversy.

85        In Mount Isa Mines, the High Court identified another relevant feature which favours a matter being a jurisdictional fact, namely the presence of detailed mechanisms for public consultation and their implications for certainty. Because of the relevance of that feature here, it is convenient to set out the following passages from Mount Isa Mines at 306:

The construction of the Act proposed by [Mount Isa Mines Ltd] would produce the result that, notwithstanding the detailed provisions made in this legislation for the giving of public notices and the receipt and consideration of objections, and notwithstanding the significant steps which may have been taken in public administration for a wide variety of laws by reason of the existence of an entry in the Register, a decision of the Commission to register will at all relevant times remain liable to challenge for absence of the requisite “jurisdictional fact” to enliven the obligation of the Commission to make the entry.

Those detailed mechanisms for public consultation and consideration by the Commission provide guidance on the ultimate issue in this litigation. They suggest that, on the proper construction of the Act, the Commission is given the power conclusively to determine whether or not a place should be recorded as part of the national estate and its determination of that question is not subject to a review provided the Commission otherwise conducts itself in accordance with the law.

86        In ascertaining by way of statutory construction whether a particular criterion involves a jurisdictional fact it is also relevant to pay close attention to the drafting of the relevant provision, with particular emphasis on whether it contains a subjectively-worded expression using concepts such as “satisfaction” or “opinion”.

87        In Anvil Hill Project Watch Association Inc v Minister for the Environment and Water Resources (2008) 166 FCR 54 at [21] the Full Court described this consideration as follows:

To constitute a condition precedent, the relevant fact or circumstance must exist independently of, and be objectively determined prior to, the exercise of the power or performance of the duty by the decision-maker. The starting point for ascertaining whether a fact or circumstance is a jurisdictional fact must be the words of the statute, read in their context. Although there is no strict verbal formula, the existence of a jurisdictional fact is frequently signalled by the use of expressions such as “where ‘x’ exists”, or “when ‘x’ exists” or “if ‘x’ exists”, then a person is empowered or obliged to act or refrain from action. The ‘x’ in this format is the relevant fact or circumstance which is a condition precedent to the exercise of a power or performance of a duty. In some instances, the fact or circumstance may be subjectively expressed. Examples of this include “where in the opinion of the Minister ‘x’ exists or, “if in the opinion of the Minister ‘x’ exists or “when” the Minister is satisfied ‘x’ exists, then the Minister is to exercise the power or perform the duty. Such language often indicates that the Minister must form the necessary opinion as a condition precedent to the power or duty, although the correctness of this opinion, once formed, is not a matter for review by the Court (original emphasis).

88        The significance of the presence or absence of subjectively-worded expressions is also illustrated by the High Court’s decision in Sutherland Shire Council v Finch (1970) 123 CLR 657. The issue there was whether it was for a court or the Minister to finally determine whether a report was “substantially unfavourable” to an employee in the context of subs 99(11A) of the Local Government Act 1919 (NSW). The absence of any express reference in that provision to the relevant matter turning on the Minister’s opinion was found to be an important factor indicating that the question whether a report was substantially favourable involved a jurisdictional fact. Gibbs J said at 665-666:

[The first condition] is satisfied if there has been a decision by a council to terminate the services of a servant and a report by the person who held an inquiry and if the report is one which can properly be regarded as “substantially favourable to the servant”. Before the Minister gives a direction, he must satisfy himself that this condition has been fulfilled and it is therefore true to say that the Minister is required to form an opinion as to whether the report is substantially favourable. However it does not follow that his opinion when formed is conclusive. The Minister must also form the opinion that the council has decided to terminate the services of the servant, and that the servant has made application within fourteen days, but he cannot acquire the power to give a direction by forming an erroneous opinion on those matters. The subsection does not state that the Minister may give a direction if in the opinion of the Minister the report is substantially favourable. No difficulty would have existed in framing the subsection to make the opinion of the Minister the governing consideration if that had been intended. The subsection, read naturally, treats the question whether the report is substantially favourable as an objective one; it refers to a report which is substantially favourable, that is, substantially favourable in fact and not merely in the opinion of the Minister (emphasis added).

89        In Anvil Hill, the Full Court contrasted the statutory text in Finch with the language of subs 75(1) and related provisions of the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). Those provisions were found not to require any objective factual determination as a condition precedent to the exercise of the Minister’s power under subs 75(1) to decide whether the subject of a proposed action which had been referred to the Minister was a “controlled action” (if it was a controlled action, the Minister then had to determine which of the “controlling provisions” in Part 3 of the EPBC Act applied to the action). The relevant question was whether the determination that a proposed action has, will have or is likely to have a significant impact on a matter protected by Part 3 of the Act involved a jurisdictional fact or was simply a matter for the Minister’s subjective determination. In upholding the primary judge’s ruling that no jurisdictional fact was involved, the Full Court made the following observations in [26]:

Section 75(1) of the Act imposes a duty on the Minister to decide whether a proposed action is a controlled action. In making this decision, the Minister must take into account the elements of a controlled action as defined by s 67, which in turn involves a determination whether the proposed action would be prohibited by a provision of Part 3 of the Act, including those provisions which give rise to what the appellant asserts is the condition precedent of s 75(1). The determination of this latter question involves a duty to determine whether there would be a prohibition under Part 3 of the Act which applies to the proposed action because the action has, will have or is likely to have a significant impact on a relevant aspect of the environment. The duty to make this determination is assigned to the Minister. It is not given to a court or tribunal, and is not expressed as an objective matter. As a result, the performance of this duty is not properly to be regarded as a condition precedent to the exercise of the power in s 75(1).

90        In Anvil Hill, the Full Court also approved the following matters which had been identified by the primary judge as indicating that subs 75(1) of the EPBC Act did not raise a jurisdictional fact:

(a)    the decision which the Minister had to make under subs 75(1) could be made on the basis of information and comment obtained under various other provisions of the Act, which was a matter “which suggests that the decision is not contingent upon the existence of a fact which must be determined objectively on the basis of admissible evidence before a court”;

(b)    exemptions from the Part 3 prohibitions applied where there was in force a decision of the Minister that the relevant provision was not a controlling provision, which indicated that the Act treated the Minister’s decision as central to the operation of subs 75(1) and not as a condition precedent on which the decision must be based;

(c)    the regime of the Act was that consequences flowed from the fact that a decision under subs 75(1) was made, rather than from a determination of the objective fact that the proposed action was or was not a controlled action. An example was to be found in subs 75(3) of the Act, which stated that the consequences of designating a person as the proponent of an action directly flowed from the Minister making a decision under s 75 that the action was a controlled action. The primary judge considered that the consequences ensuing from a decision which had already been made reinforce the conclusion that subs 75(1) involved a decision by the Minister, rather than an objective determination of whether “a significant impact” under Part 3 was established; and

(d)    finally, the primary judge found that the relevant objects of the Act were best promoted by a construction of subs 75(1) as not containing a jurisdictional fact on the basis that one of the legislative objects (to adopt “an efficient and timely Commonwealth environmental assessment and approval process that will ensure activities that are likely to have significant impacts on the environment are properly assessed”), and that the Act’s scheme of creating an “initial clearing house” to ensure the actions which were not likely to have significant impacts on the environment were properly assessed and not further impeded by a cumbersome approval process, would not be advanced by the availability of what in effect would be a merits review at an early stage of the process.

91        The Full Court then identified some further factors as supporting the primary judge’s view that there was no jurisdictional fact in subs 75(1) of the EPBC Act. They included the practical consequences of finding that the question of significant impact was a jurisdictional fact (see at [33]). If that was so, a judicial challenge could be made as to whether there was actually and objectively a significant impact on the matters protected by Part 3 of the Act immediately after the Minister had made a decision on the point. That would mean that “many months might elapse until a final resolution was reached”. The consequential substantial delays to the approval process established by the Act was described as being inconsistent with the purpose of the Act of adopting an efficient and timely environmental assessment and approval process.

92        Having regard to all these matters, I consider that the following features of the BSA strongly support the conclusion that, contrary to the applicants’ position, the reference in paragraph 125(1)(a) of the BSA to “convincing evidence” does not involve a jurisdictional fact.

93        First, the text of subs 125(1) of the BSA points to the ACMA’s satisfaction itself as constituting a jurisdictional fact and not the subject matter of that satisfaction. The Parliament could have provided a text something along the lines of “where there is no convincing evidence…”, which would indicate that that matter is a condition precedent to the exercise of the ACMA’s power to make a standard. Instead, the Parliament chose to insert a subjectively-worded expression in paragraph 125(1)(a), namely that “[I]f… the ACMA is satisfied that there is convincing evidence…”. The same is true of paragraph 125(1)(b). Such subjectively-worded expressions generally (but not invariably) indicate that the relevant state of mind itself is a condition precedent to the power or duty and that the correctness of that state of mind, once formed, is not a matter for review by the court (or at least not on its merits). The point is reinforced by the drafting of s 125 as a whole. Both paragraphs 125(1)(a) and (b) turn on the ACMA attaining a particular satisfaction or state of mind on prescribed matters. The same is true of paragraph 125(2)(b). But, in contrast, paragraph 125(2)(a) contains no such reference to “satisfaction”. Under that provision, whether or not a code of practice has been registered is an objective condition precedent which does not depend on the ACMA’s state of mind for its operation.

94        Secondly, the nature of the subject matter of the requisite satisfaction further supports the view that it is the ACMA’s state of mind which constitutes the condition precedent. In the case of paragraph 125(1)(a), that subject matter is that there is convincing evidence that a registered code of practice is not operating to provide appropriate community safeguards for a relevant matter. In my opinion, the concept of “not operating to provide appropriate community safeguards” involves matters of subjective judgment which are heavily value-laden. Furthermore, assessments as to whether there is “convincing evidence” or whether a registered code of practice is not operating to provide “appropriate community safeguards” require an assessment which could aptly be described in the terms used by Perram J set out in [84] above as “a difficult and complicated one involving the careful assessment of complex facts and the formation of opinions and value judgments on a wide range of matters”. Such considerations also apply to the ACMA’s state of mind under paragraph 125(1)(b) as to whether it should make a standard even if it has the requisite satisfaction identified in paragraph 125(1)(a).

95        Thirdly, it is relevant that the ACMA is a specialist regulator. Its functions are set out in subs 10(1) of the Australian Communications and Media Authority Act 2005 (Cth) (the ACMA Act). Those functions include assisting broadcasting service providers develop codes of practice that, as far as possible, are in accordance with community standards. The ACMA also monitors compliance with those codes of practice. Its functions also include such other functions as are conferred on it by inter alia the BSA (see paragraph 10(1)(o)(ii) of the ACMA Act). Although the ACMA Act does not specify essential qualifications for a person to be appointed a member of the ACMA, it is evident from its functions that it is very much a specialist regulatory body.

96        Fourthly, it is clear that the Parliament intended the ACMA to play an important and prominent role in ensuring that regulations affecting broadcasting provide appropriate community safeguards in respect of the subject matter of such regulations. That role is evident not only in the express terms of s 125, but also in other provisions in the BSA. For example, s 123 (which deals with codes of practice) has the effect that:

(a)    while industry groups have a statutory role in developing codes of practice under Part 9 of the BSA, it is made clear that that role is to be performed in consultation with the ACMA (subs 123(1)); and

(b)    an industry code developed by an industry group cannot be registered unless the ACMA is satisfied of various matters prescribed in paragraph 123(4)(b) of the BSA, including its satisfaction that the code of practice provides appropriate community safeguards for the matters covered by the code. Accordingly, it is the ACMA’s view on that matter which prevails.

97        In my view, the legislative scheme is one which, while creating what might be described as conjoint roles for both industry groups and the ACMA in developing a code of practice, in that interrelationship it is ultimately for the ACMA (and not industry groups) to determine whether a particular code of practice provides appropriate community safeguards (subject to the role of the Parliament under s 128, as discussed below). Mr Blackburn SC (who appeared with Ms Eastman for the applicants) submitted that unless the relevant provisions were construed so as to give primacy to the role of industry groups, the ACMA could “usurp or ride roughshod” over them. In my view, the applicants overstate the role of industry groups in developing a code of practice. It is a role which they share to some extent with the ACMA, but the legislative scheme does not bind the ACMA to accept the view of industry groups as to whether a particular code adequately provides for community standards. That is a matter for the ACMA to decide. In the particular case of the ACMA’s power to make a program standard under subs 125(1), that power is qualified by the threshold requirement that the ACMA be satisfied that there is “convincing evidence” that a code of practice registered under s 123 is not operating to provide appropriate community standards. But that does not give primacy to the role of industry groups in the manner claimed by the applicants. Rather, it simply qualifies the ACMA’s pre-eminent role when contrasted with the role of such groups. And, as noted above, the ACMA’s satisfaction is subject to some judicial review as described in Hetton Bellbird Collieries Ltd and Avon Downs.

98        The ACMA’s pre-eminent role in ensuring that appropriate community safeguards are provided for and maintained is evident not only in s 125, but also in other provisions of the BSA, such as s 123A. Under that provision, the ACMA is obliged to conduct a review of the operation of subs 123(3A) and (3C) (both dealing with classification of films) to see whether those subsections are in accordance with prevailing community standards. If, after conducting such a periodic review, the ACMA concludes that either subsection is not in accordance with prevailing community standards, it must recommend to the Minister that appropriate amendments be made to the BSA so as to ensure that those subsections are in accordance with prevailing community standards. Of course those particular provisions do not apply to industry codes of practice or standards, but their relevance lies in the fact that they form part of a broader legislative scheme which vests in the ACMA a pre-eminent role over industry groups in determining whether community standards are appropriately provided for.

99        Fifthly, in the context of the ACMA’s power or duty to determine a standard under s 125, it is also significant that it cannot do so unless it has first sought public comment on a proposed standard (or its variation or revocation): see s 126 of the BSA. As noted above, the presence of mechanisms for public consultation has been recognised as a relevant indicator of a matter not being a jurisdictional fact. This suggests that the decision whether or not to make a standard under s 125 is not contingent upon the existence of the fact which must be determined objectively on the basis of admissible evidence in a court, but must take account of various inputs, including public comment. Court processes are unlikely to be as effective as administrative processes in providing meaningful opportunities for public participation in such a decision-making process as making a standard.

100        Sixthly, I consider that some significance should attach to the fact that there is express provision in the BSA for the Parliament to amend a standard or code of practice which has been determined or registered under Part 9 (see s 128 of the BSA). That provision serves to underline the fact that, while the ACMA has an important role in providing and maintaining appropriate community safeguards, the Parliament is the ultimate guardian of “community safeguards”. The Parliament’s supreme role in this respect can comfortably be accommodated within a framework which sees the courts exercising a supervisory judicial review role in respect of the ACMA’s decision-making under s 125 of the BSA. Considerably more awkward issues concerning the relationship between the Parliament and the courts would arise if courts were required to determine on the merits whether there was convincing evidence that a registered code of practice was not operating to provide “appropriate community standards” and the Parliament could then amend any such standard. Of course, subject to constitutional constraints, the Parliament can always legislate so as to reverse the effect of a court decision. But the position is somewhat different here because s 128 of the BSA vests in the Parliament a specific power to amend a standard or code of practice which has been determined or registered under Part 9. In my view this consideration provides some further support for the conclusion that the Parliament did not intend the question of whether there is convincing evidence that a registered industry code is not operating to provide appropriate community safeguards to give rise to a jurisdictional fact in its own right and which can be determined on its merits by a court.

101        For completeness I should add that, even if I am wrong in rejecting the applicants’ arguments that the question whether or not there is “convincing evidence” involves a jurisdictional fact which the Court must determine for itself, I consider that that fact objectively exists by reference to the materials summarised above as providing the background for the ACMA’s decision to make the 2012 Standard (see [7] to [22] above). In this context, it is particularly important to note that none of the registered industry codes of practice deals squarely with the issue of commercial influence in news and current affairs programs in circumstances where a presenter had a relevant financial interest in a licensee. The research commissioned by the ACMA highlighted ongoing public concerns about such commercial influence notwithstanding the fact that the subject had been addressed to a limited extent in the 2000 Standard.

(b)    Constitutionally protected implied freedom of political communication

102        In my view, for the following reasons, the applicants have failed to make good their claim that the ACMA’s decision to make the 2012 Standard was invalid because that standard is incompatible with the constitutionally protected implied freedom of political communication.

103        First, as noted above, the applicants do not challenge the constitutional validity of subs 125(1) of the BSA. That provision, together with paragraph 123(2)(d), provides the statutory source of the ACMA’s power to make a standard. I accept the ACMA’s contention that if those sections are compliant with the implied protection, without any need to read them down to achieve validity, the applicants’ challenge to the exercise of the power under subs 125(1) raises a statutory ultra vires question, rather than a constitutional question (see Wotton at [22] and [33]). This aspect of the applicants’ case seems to turn on the proposition that neither s 125 nor any other provision in the BSA confers jurisdiction on the ACMA to determine to make a standard which imposes legal obligations contrary to the implied constitutional freedom.

104        Secondly, if it be the case that the applicants’ challenge somehow indirectly raises a question concerning the validity of subs 125(1) of the BSA, I also accept the ACMA’s contentions that that provision (together with paragraph 123(2)(d)) passes the two-limbed Lange test as modified in Coleman v Power.

105        My findings in this regard are as follows:

(a)    even if it is accepted that s 125 and its companion enforcement provisions burden the freedom of political communication by imposing an obligation on a licensee to make a disclosure announcement in prescribed circumstances, I accept the ACMA’s submission that the second limb of the Lange test should be assessed on the basis that those provisions only “incidentally” – and not directly – restrict political communication. That is because not all of the content of current affairs programs comprises political communications;

(b)    where a law or provision only incidentally restricts political communication, the second limb of the test is more readily satisfied by reference to a test which asks whether the law in question is reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of government (see Wotton at [25] and [30]);

(c)    subsection 125(1) serves a legitimate end, namely the promotion of accuracy and fairness in current affairs programs. That end is itself compatible with the maintenance of the constitutionally prescribed system of government because of the importance to that system of there being accurate and fair coverage of matters protected by the implied freedom;

(d)    further, in my view, subs 125(1) is also reasonably appropriate and adapted to serving that end in a manner which is compatible with the constitutionally prescribed system of government for substantially the same reasons as advanced by the ACMA and as summarised in [75] above. In particular, the presence in subs 125(1) of the phrase “appropriate community standards” has the effect of embedding in the provision an obligation on the ACMA to effectively address the implied constitutional protection. In my view, that phrase operates in a similar fashion to the phrase “reasonably considers necessary”, which provided the reference point for the exercise of the power of the Parole Board to impose conditions as considered by the High Court in Wotton, a provision which survived constitutional challenge in that case. And it is also to be noted that in both Wotton and here the exercise of the relevant power is reviewable by reference to applicable heads of judicial review; and

(e)    in my opinion, the question whether the burden of compliance created by the 2012 Standard could reasonably be considered to be appropriate and adapted to the fulfilment of the legitimate end described above largely turns on the proper construction of the provisions which the applicants say are so burdensome. As noted above, the applicants accept that, for the purposes of the proceedings, they adopt the ACMA’s view that the disclosure obligation only applies to a presenter who has a prescribed financial interest in a licensee. The relevant point of disagreement between the parties relates to the proper construction of subparagraphs 8(1)(b)(i) and (iv). The applicants’ uncontested evidence is aimed at establishing that there are formidable difficulties (if not an impossibility) of complying with those provisions. It is important to note, however, that that evidence is predicated on the applicants’ belief that either or both of those subparagraphs will frequently be engaged because the thresholds they set are said to be relatively low. In my view, for the reasons which follow, that does not reflect a proper construction of those subparagraphs.

Proper construction of subparagraphs 8(1)(b)(i) and (iv) of the 2012 Standard

106        Both those subparagraphs need to be construed taking into account the definition of “commercial agreement” in subs 5(2) of the 2012 Standard. In my view there is no basis upon which the reference to “commercial agreement” in paragraph 8(1)(a) should be construed otherwise than in accordance with the definition contained in subs 5(2).

107        Moreover, the obligation imposed by s 8 to make an on-air disclosure announcement does not arise merely because of the existence of an agreement, arrangement or understanding which falls within the definition of a commercial agreement in subs 5(2) of the 2012 Standard. Importantly, to my mind, that obligation only arises if there is in existence such a commercial agreement and the licensee also broadcasts material in a current affairs program and that material meets at least one of the four types of material described in subparagraphs 8(1)(b)(i) to (iv).

108        In my view, subparagraph 8(1)(b)(i) is not engaged merely because some mention or reference is made in passing to the name, products or services of a sponsor who happens to have a commercial agreement with a licensee. The term “promotes” should be given its natural meaning. That requires something more than a mere mention or reference in passing. According to the Macquarie Dictionary (fifth edition), the relevant meanings of “promote” are:

1. to advance in rank, dignity, position, etc. 2. to further the growth, develop, progress, etc., of; encourage.

109        For subparagraph 8(1)(b)(i) to apply, the material broadcast in the current affairs program must promote, in the sense of advancing or encouraging, the name, products or services of the sponsor. In the usual case a mere mention of a name, product or service, without more, is unlikely to amount to a promotion in the relevant sense. Considerations of promotion (or self promotion) are also necessarily implicit in subparagraphs 8(1)(b)(ii) and (iii), which deal respectively with the broadcast of material which includes an interview with a sponsor’s representative and is in relation to a matter that concerns the sponsor, its products, services or interests or, in the case of subparagraph 8(1)(b)(iii), material which is in effect requested or provided by the sponsor.

110        To the extent that any assistance is obtained from the Explanatory Statement to the 2012 Standard (see s 26 of the Legislative Instruments Act 2003 (Cth)), I consider that the following passage supports the construction of subparagraph 8(1)(b)(i) set out above:

The situations in which a disclosure announcement must be broadcast include interviews with employees of sponsors about issues that concern a sponsor, as well as direct promotion of sponsors or their products or services. However, the section is not intended to apply in circumstances where a presenter only mentions or refers to a sponsor or sponsor’s product in passing, as distinct from promoting the name, products or services of the sponsor, or doing one of the other things specified in paragraph 8(1)(b).

111        Turning now to the proper construction of subparagraph 8(1)(b)(iv), it should be acknowledged at the outset that the issues here are more complex. That is partly because there is some overlap in the elements which give rise to a “commercial agreement” in the definition in s 5 and the particular elements which give rise to an obligation to make a disclosure announcement where subparagraph 8(1)(b)(iv) is engaged. But they are not coterminous. For an agreement, arrangement or understanding to qualify as a commercial agreement within the definition in subs 5(2), it must satisfy all three of the elements set out in paragraphs 5(2)(a), (b) and (c). In broad terms, those three elements require the existence of an advertising agreement with a licensee which obliges the licensee to promote a sponsor; a presenter promoting that sponsor; and that particular presenter having a prescribed financial interest in the licensee. Each of those three broad elements can be satisfied in several different ways, as prescribed in each of paragraphs 5(2)(a), (b) and (c). For example, the component which requires material to promote the sponsor might be met by promoting the sponsor’s interests or by avoiding negative comments about the sponsor. The second element in the definition can be met by a presenter doing any one of the three things specified in paragraph (a). And the third element relating to the presenter having a prescribed financial interest can be met by a presenter having one of a number of financial interests in the licensee, such as by holding a beneficial or legal interest in shares or having a beneficial entitlement to be paid or credited a dividend.

112        As noted above, the applicants’ case largely targets the material described in subparagraph 8(1)(b)(iv). That is material which “directly promotes an issue which is directly favourable to the sponsor”. The significance of the double-barrelled reference to “directly” has been noted above. For the purposes of subparagraph 8(1)(b)(i), it is sufficient that the material “promotes the name, products or services of the sponsor”. A more demanding threshold is required for the purposes of subparagraph 8(1)(b)(iv), where the promotion of an issue is involved. An issue must not only be promoted for this subparagraph to be engaged, it must be directly promoted. This raises the threshold for the subparagraph to apply. Moreover, the direct promotion of an issue must also be “directly favourable” to the sponsor for the subparagraph to apply. I accept ACMA’s submission that the reference in subparagraph 8(1)(b)(iv) to “directly favourable to the sponsor” requires that a sponsor be specifically identified either by name or by necessary implication (see the example given by Mr Williams SC extracted in [43] above).

113        In other words, subparagraph 8(1)(b)(iv) is only engaged where there is high degree of specificity in terms of both the promotion of an issue and its favourable effects for a particular sponsor. The direct promotion of an issue which benefits or favours a particular sponsor only because of the sponsor’s membership of a class or group of persons is unlikely to be caught by subparagraph 8(1)(b)(iv). Similarly, the indirect or remote promotion of an issue which directly benefits an identified sponsor is unlikely to be caught. In my opinion, the threshold for the engagement of subparagraph 8(1)(b)(iv) is raised significantly by the double-barrelled requirement of “directly”. The effect of that double-barrelled requirement is that the specificity of the conduct caught by that subparagraph is at least as high as the level of specificity prescribed in subparagraphs 8(1)(b)(i) to (iii) concerning the broadcast of other material, the nature of which is specifically identified in those subparagraphs.

114        Of course, even if the views I have expressed above concerning the proper construction of s 8 are accepted and are acted upon, there will be some increase in the practical burdens for an affected licensee in complying with the obligation to make an on-air disclosure when compared with the 2000 Standard. And no doubt there will be room for reasonable minds to differ on whether even those higher thresholds are met in some cases. But there is nothing unusual in that and such a state of affairs, which also applies to many other legislative provisions, falls far short of establishing a proper basis for judicial intervention in the manner sought by the applicants. It was confirmed during the hearing that the applicants did not raise uncertainty as a separate head of challenge.

115        In my view, the burdens of compliance should not be of the extreme magnitude as described in the evidence of Messrs Thompson and Loewenthal. I accept the ACMA’s submission that the applicants’ evidence and submissions overstate the difficulties of compliance and are based upon an erroneous construction of s 8. In particular, they proceed on the erroneous basis that even a passing reference to the name or product of a sponsor is sufficient to trigger a disclosure obligation (assuming the other relevant elements are also met). Similarly, as is apparent from many of the examples relied on by the applicants, it is erroneously assumed that subparagraph 8(1)(b)(iv) is engaged if material is broadcast:

(a)    concerning an issue which has the potential to be beneficial to a sponsor notwithstanding that the sponsor is not specifically identified; or

(b)    involving the discussion of an issue in which a sponsor has some interest.

For the reasons given above I consider that those assumptions are misguided, primarily because they fail to give effect to the significance of the double-barrelled reference to “directly” in subparagraph 8(1)(b)(iv).

(c)    Proportionality and unreasonableness

116        There is no dispute between the parties that the 2012 Standard can be challenged on grounds of unreasonableness and lack of proportionality. The relevant principles are conveniently summarised in the following extracts from Hely J’s judgment at first instance in One.Tel Ltd v Australian Communications Authority (2000) 176 ALR 529 at [29]-[35] (on appeal, his Honour’s description of those principles was adopted by Hill J in One.Tel Ltd v Australian Communications Authority (2001) 110 FCR 125 at [72]):

It is common ground that the ambit of regulation-making power is subject to two limiting principles. The first is that the power must not be exercised in a manner which is arbitrary, capricious or unreasonable. The second is that the power must not be exercised in a manner which is disproportionate to the attainment of the objects for which it is conferred.

“Unreasonableness” (and the concepts of arbitrariness or capriciousness which are included therein) in this context, means that "the regulation is so oppressive and capricious that no reasonable mind can justify it": Qui v Minister for Immigration & Multicultural Affairs (1994) 55 FCR 439 at 446. It needs to be borne in mind that the fundamental issue is one of power, not expediency: Williams v Melbourne Corporation (1933) 49 CLR 142 at 149-150. In Minister for Primary Industries & Energy v Austral Fisheries Pty Ltd (1993) 40 FCR 381, Lockhart J emphasised at 384 that it is only in "an extreme case" that delegated legislation would be declared invalid on this ground.

As to the second principle, if the regulation-making power is purposive, the substantive operation of delegated legislation must be capable of being reasonably considered to be appropriate and adapted to achieve the purpose prescribed by the legislation pursuant to which the regulation is made. This requires that there is a reasonable proportionality between the object or purpose and the means adopted to achieve or procure it: Minister of State for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565 at 584.

If the subject matter of the statutory power cannot be described as purposive, then the question is whether there is a real and substantial connection between the delegated legislation and the subject matter of the grant of power. It is not sufficient that there be merely some connection between the delegated legislation and the subject matter of the regulation-making power. The connection must be so direct and substantive that the regulation is seen really to satisfy one of the descriptions by reference to which the regulation-making power is conferred: Dover Fisheries at 584-585.

Where no reasonable mind could justify the delegated legislation by reference to the purposes of the power, or the subject matter of the power, the conclusion is that there is no real connection between the delegated legislation and the power: Dover Fisheries (supra) 584-585, in which case there is invalidity. In Williams v Melbourne Corporation (supra) at 155, Dixon J put the matter in this way:

To determine whether a by-law is an exercise of a power, it is not always enough to ascertain the subject matter of the power and consider whether the by-law appears on its face to relate to that subject. The true nature and purpose of the power must be determined, and it must often be necessary to examine the operation of the by-law in the local circumstances to which it is intended to apply. Notwithstanding that ex facie there seemed a sufficient connection between the subject of the power and that of the by-law, the true character of the by-law may then appear to be such that it could not reasonably have been adopted as a means of attaining the ends of the power. In such a case the by-law will be invalid, not because it is inexpedient or misguided, but because it is not a real exercise of the power.

In South Australia v Tanner (1988-1989) 166 CLR 161 the majority said of the reasonable proportionality test of validity that: “it is not enough that the Court itself thinks the regulation inexpedient or misguided. It must be so lacking in reasonable proportionality as not to be a real exercise of the power” (at 168). In Tanner's case, Brennan J dissented in the result, but not in principle. At 179 his Honour said:

Moreover, it must be steadily borne in mind that the fulfilling of the statutory object is a limitation on the power to make the regulation. A regulation which is so widely drawn as needlessly to embrace a field of operation which is quite unconnected with the statutory object cannot reasonably be adopted in exercise of a power so limited.

The fundamental question is whether the delegated legislation is within the scope of what the Parliament intended when enacting the statute which empowers the subordinate authority to make certain laws: Dover Fisheries (supra) at 577.

117        Before applying those principles to the 2012 Standard, it is appropriate to say something further about the High Court’s decision in Williams v Melbourne Corporation (1933) 49 CLR 142. That case involved a challenge to a council by-law which restricted the transport of cattle or sheep to certain times and streets in Melbourne. Under the Local Government Act 1928 (Vic), the Council had a power to make a by-law for purposes which included regulating the driving of livestock in or along any specified street in any municipal district, including appointing the hours during which it was unlawful to transport livestock in particular areas.

118        In support of its argument that the by-law was unreasonable, the appellant adduced evidence to the effect that it was impossible, especially during the winter months, to get sheep and cattle to the sale yards located at Newmarket without using some of the streets regulated by the by-law during prohibited hours.

119        The appeal was dismissed. In a well-known judgment, which still accurately reflects the law in Australia, Dixon J held that the unreasonableness of a by-law is not a separate and distinct ground of invalidity, but rather involves a question of power.

120        As to the argument that it was not possible to obey the by-law (and noting that a similar argument is advanced by the applicants here), Evatt J stated at 156-157:

It is said that it is not possible to obey the by-law and that it is often disobeyed. But I think that this evidence amounts to no more than an assertion that it is very inconvenient so as to restrict the size of the mobs or to increase the number of men employed in driving them, as to ensure compliance with the by-law. This is only another way of saying that it is not economical or profitable to comply strictly with the terms of the by-law.

121        To similar effect, Starke J said at 150-151:

Persons who reasonably restrict the number of cattle driven and who employ a sufficient number of drovers can comply with the by-law without much difficulty. But all this is really a matter for the consideration of the by-law making authority. It is not the by-law that is unreasonable, but those who assert the right to drive mobs of cattle or flocks of sheep through a large and modern city. Some restriction is absolutely necessary in the interest of the good order of the city and the safety of its citizens, and the council has not transcended reasonable restrictions, in the sense above indicated, nor made a “fantastic and capricious” by-law (emphasis added).

122        Applying those principles here, the 2012 Standard is not invalid for unreasonableness. The 2012 Standard is not “unreasonable” in the relevant legal sense as being so oppressive and capricious that there is a want of power to make that instrument. In my view, if the relevant provisions of the 2012 Standard are given their proper construction, their operation does not produce the oppression or capriciousness claimed by the applicants. This is not the type of “extreme case” which would warrant a finding of unreasonableness in the relevant legal sense. It should be noted that, while the 2012 Standard extends the scope of the 2000 Standard in certain important respects, not the least being the definition of “commercial agreement”, many of the matters which are the focus of the applicants’ complaints of oppression and capriciousness were also found in the 2000 Standard. That is particularly the case with the wording of subparagraphs 8(1)(b)(i) and (iv). There was no evidence to suggest that there was industry concern that the comparable provisions in the 2000 Standard provisions were incapable of compliance.

123        Similar considerations apply to the applicants’ challenge based on disproportionality. The subject matter of the ACMA’s power to make a standard under subs 125(1) of the BSA is plainly purposive. The purpose of the power is to enable the ACMA to determine a standard which provides appropriate community safeguards for a matter referred to in subs 123(2) (assuming of course that the relevant preconditions to the exercise of that power are met). The object or purpose of the 2012 Standard is described in s 6. It is to encourage licensees to be responsive to the need for a fair and accurate coverage of matters of public interest by requiring the disclosure of commercial agreements or other arrangements that have the potential to affect the content of current affairs programs. In my view this is an accurate general description of the instrument. It accords with the object underlying s 125 of the BSA.

124        Moreover, in my view, the burden of compliance created by the 2012 Standard can reasonably be considered to be appropriate and adapted to providing appropriate community safeguards as specified in paragraph 125(1)(a) of the BSA. In particular, there is a reasonable proportionality between the object or purpose of paragraph 125(1)(a) and the means adopted in the 2012 Standard for achieving or procuring that object or purpose. The reasons for that view are substantially the same as those set out above concerning the second limb of Lange. The promotion of accuracy and fairness in news and current affairs programs is one of several topics identified in subs 123(2) of the BSA as providing the subject matter for an industry code of practice. Furthermore, the ACMA is empowered to determine its own standard in relation to that subject matter if it is satisfied that there is convincing evidence that a registered code of practice is not operating to provide appropriate community safeguards for that subject matter. To require licensees to make a disclosure announcement in the prescribed circumstances where a presenter has a financial interest in a licensee does not lack proportionality with that legislative purpose or object. Indeed, in my view, it is entirely consistent with it.

125        In coming to this conclusion I am particularly conscious of the need to approach this ground of challenge as one which focuses on the question of whether there is power to make such an instrument. Expediency is not the test. Nor is it relevant to consider whether there were other ways in which the power under s 125 of the BSA might have been exercised to produce a result more acceptable to the applicants. Such policy matters are the domain of the ACMA, not the Court.

126        In circumstances where the 2012 Standard is not invalid for unreasonableness, the applicants cannot succeed in their contention that the ACMA’s decision to make the Standard was itself unreasonable.

The ACMA’s Objection to Competency

127        For the following reasons, I consider that the ACMA’s Objection to Competency, which only targets the applicants’ reliance on the ADJR Act, should be upheld. The ACMA contends that its decision dated 14 March 2012 to make the 2012 Standard is a decision of a legislative and not an administrative character, with the consequence that it is not a decision which is capable of being reviewed under the ADJR Act.

128        The first point to note is that it is now well established that there is no simple rule for determining whether a decision is of an administrative or a legislative character (see RG Capital Radio Limited v Australian Broadcasting Authority (2001) 113 FCR 185 at [40] per Wilcox, Branson and Lindgren JJ).

129        Secondly, as the applicants contend, it should be acknowledged that a particular decision need not be exclusively legislative or administrative: it might have both qualities (see McWilliam v Civil Aviation Safety Authority (2004) 142 FCR 74 at [41]-[42] per Selway J).

130        Thirdly, although various considerations or criteria have been identified in the case law as relevant to the characterisation of a decision as administrative or legislative, none is decisive in its own right. Before identifying some of those relevant considerations and applying them to the circumstances here, it is also apposite to note the following observations of the Full Court in RG Capital at [42]:

… it must be emphasised that the task of the Court, at the end of the day, is to make a judgment on the critical issue that takes into account all of these considerations. No one consideration is decisive of the issue.

131        Fourthly, I will now set out the considerations which appear to me to be relevant to the task of characterising the ACMA’s decision and apply them to the circumstances here.

Legislative decisions determine the content of a general rule while administrative decisions apply a rule to particular facts: RG Capital at [43] to [50]

132        The 2012 Standard determines rules which are of general application. Those rules apply to all commercial radio broadcasting licensees. A separate decision will be required to determine whether in any particular instance those rules have not been complied with.

Significance of Parliamentary control: RG Capital at [51] to [56]

133        Control by the Parliament has been described as a fundamental (although not essential) characteristic of legislative power reposed in the Executive (see RG Capital at [53]). Such control may be manifested in provisions which allow for the disallowance of particular instruments, as was the case in Vietnam Veterans’ Affairs Association v Cohen (1996) 70 FCR 419 at 428 per Tamberlin J. In my view, a comparable provision is to be found in s 128 of the BSA, which expressly provides for the Parliament to amend a standard or a registered code of practice.

Publication of the making of a standard: RG Capital at [57] to [58]

134        Although this consideration was described by the Full Court in RG Capital as not being “a compelling indication of the legislative character of the decision” (at [58] and in circumstances where this criterion was not met in that case, yet the Full Court determined that the relevant decision was of a legislative character), its presence can reinforce a conclusion which is otherwise available that a decision is of a legislative character. In my view, that is the case here given the obligation imposed on the ACMA by s 127 of the BSA to publish certain matters in the Gazette, including notifying the public of the fact that a standard has been determined and where copies of it may be obtained.

Wide public consultation: RG Capital at [59]-[61]

135        In RG Capital, the Full Court stated that a statutory requirement of wide public consultation emphasised the general nature of a licence area plan as a legislative instrument, thus adding weight to other considerations which pointed in that direction. In my view, those observations apply equally here given the ACMA’s statutory obligation under s 126 of the BSA to seek public comment on a proposed standard before determining that it be made.

Wide policy considerations: RG Capital at [62] to [66]

136        Where the subject matter for decision involves complex policy questions, that is another pointer to a decision being of a legislative character. In RG Capital at [66] the Full Court observed that the breadth of considerations which had to be taken into account in making a decision are less persuasive than the nature and impact of the relevant decision but that, nevertheless, such a consideration might operate to highlight consistency with the overall characterisation of a decision as legislative and not administrative. Again, I consider that these observations are directly apposite here having regard to the breadth of the policy considerations implicit in both:

(a)    the notion of “appropriate community standards” in paragraph 125(1)(a) of the BSA; and

(b)    the ACMA’s residual discretion under paragraph 125(1)(b) going to the question whether it should proceed to determine a standard even if the conditions in paragraph 125(1)(a) are satisfied.

No merits review by AAT: RG Capital at [72]-[76]

137        A list of the ACMA’s decisions which are amenable to merits review in the Administrative Appeals Tribunal (the AAT) are set out in s 204 of the BSA. Although a decision by the ACMA under subs 123(4) of the BSA refusing to register an industry code of practice is subject to such review, it is notable that the ACMA’s decision or determination under s 125 is not. The Parliament’s decision not to include such decisions in the list of AAT reviewable decisions may be explicable on several grounds, but they would include that the Parliament may have considered such decisions to be of a legislative character.

Binding legal effect of a standard: RG Capital at [77]

138        In common with any standard made under Part 9 of the BSA, a standard determined under s 125 has a binding effect on licensees. Compliance with such a standard is a condition of the relevant commercial radio broadcasting licence (see clause 8(1)(b) of Schedule 2 of the BSA).

139        In my opinion, the combined effect of these considerations points strongly towards the ACMA’s decision under s 125 being a decision of a legislative character. The applicants point to other features of the BSA and the 2012 Standard which they say indicate that the ACMA’s decision has a dual character, being both administrative and legislative. They rely on such matters as the ACMA’s obligation to register a code under subs 123(4); its obligations under s 124 to maintain a Register of such codes which is open to the public; its role in monitoring a code and dealing with unresolved complaints, and the ACMA’s power under s 123A to review a code and make recommendations. It is notable that all these matters relate to the ACMA’s powers and functions in respect of industry codes of practice, not standards. None of those provisions bears directly on the characterisation of the ACMA’s determination to make a standard under s 125 of the BSA. In my view, there is no basis for characterising such a determination as anything other than legislative.

140        Accordingly, the ACMA’s Objection to Competency should be upheld. In circumstances where the applicants have failed to establish any of their substantive grounds of challenge no relevant practical consequences flow from this ruling in terms of the appropriate remedies which might otherwise have been available.

Orders

141        I dismiss the applicants’ Second Amended Originating Application for Judicial Review, uphold the ACMA’s Objection to Competency and order the applicants to pay the ACMA’s costs.

Associate:

Dated:    14 June 2012