Foxtel Cable Television v Nine Network Aust

[1997] HCATrans 198

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S35 of 1997

B e t w e e n -

FOXTEL CABLE TELEVISION PTY LTD

Applicant

and

NINE NETWORK AUSTRALIA PTY LTD

First Respondent

AUSTRALIAN BROADCASTING AUTHORITY

Second Respondent

Application for special leave to appeal

DAWSON J
GAUDRON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 4 AUGUST 1997, AT 12.13 PM

Copyright in the High Court of Australia

MR N.C. HUTLEY:   If the Court pleases, I appear with my learned friend, MR N. PERRAM, for the applicant.  (instructed by Allen Allen & Hemsley)

MR A. ROBERTSON, SC:   May it please the Court, I appear with my learned friend, DR J.E. GRIFFITHS, for the respondent.  (instructed by Blake Dawson Waldron)

DAWSON J:   Before you begin, Mr Hutley, the Deputy Registrar certifies that he has been informed by the Australian Government Solicitor, the solicitor for the second respondent in the above matter, that the second respondent does not wish to be represented at the hearing of the application for special leave to appeal and will submit to any order of the Court, save as to costs.

MR HUTLEY:   If your Honour pleases.As pointed out by my learned friends in their response to our application, there is a defect in our application by omitting to identify the special leave questions arising.

GAUDRON J:   There is more than that, is there not?

McHUGH J:   The second question borders almost on contempt.

MR HUTLEY:   Your Honour, I think that was just a typographical error of some variety.  I do not know how it got through.  All we can do is apologise, your Honour.  There was some difficulty in typing.  One cannot say anything more than that, your Honour.

DAWSON J:   It does not seem to be a typing difficulty, Mr Hutley.

MR HUTLEY:   I do not know how it occurred, your Honour and probably it was an oversight and probably at some stage I was responsible because the thing went before me, your Honours.  I certainly did not notice it and if I had noticed it, it certainly would not be before your Honours.  All we can do is apologise, your Honours.

On that auspicious note, your Honours, the applicant is a licensee of a subscription broadcasting service which is defined in section 16 of the relevant Act and its licence is subject to the conditions specified in clause 10(1) of Part 6 of the Second Schedule of the Act.  The sections with which this application is concerned, your Honours, are conveniently set out at pages 74, 75 and over to 76 of the application book.

A breach of a condition is an offence under section 139(2) of the Act and exposes a licensee to other consequences including, ultimately, potentially the forfeiture of its licence and that appears from sections 141 to 143 of the Act.

The application is concerned with the true construction of the words “the right to televise an event” in clause 10(1)(e) of the licence conditions which is a condition imposed to give effect to what are called “the anti‑siphoning provisions” of the relevant Act.  That takes one to section 115 of the Act.  Section 115 has three aspects relevant to this application.  Under subsection (1) the Minister is given power to specify an event or events by a notice when the events have a certain character determined by the forming of an opinion by the Minister.  The Minister formed an opinion in respect of various events which resulted in a notice which appears at 25 and following of the application book.  The relevant events which were the subject of these proceedings fell within paragraph 5 of that notification which appear at the top of page 27 of the application book being test cricket matches and one day matches.

The second aspect of section 115 is that an event once placed upon a notice - - -

GAUDRON J:   Are there any events other than sporting events, just as a matter of interest?  It does say something about the national psyche, does it not?

MR HUTLEY:   Not currently identified, your Honour, but with the year 2000 coming up no doubt somebody will find some other sort of event to identify, but they are at the moment all sporting events.  An event, your Honours, is taken to be removed from a notice 168 hours after the conclusion of that event unless, prior to the expiry of that period, the Minister declares that the event continues to be a specified event.       Last and importantly, your Honours, one can never know the duration of the period of notification of event until the expiry of the 168 hours.  Thirdly, the Minister may amend a notice under subsection (1) to remove an event and that is under subsection (2). 

Now, if I could take your Honours then to clause 10(1)(e) which is the critical provision and without reading it your Honour, there are two important aspects of clause 10(1)(e).  Firstly, it prohibits a subscription television licensee and, if I could refer to that generally as it was throughout all argument as a “pay TV licensee”, it prohibits a pay TV licensee from
acquiring the right to televise an event, that is a specified event pursuant to section 115, unless, broadly speaking, a national free to air broadcaster -

DAWSON J:   That is the ABC and SBS?

MR HUTLEY:   No, there are two sections.  They are either the ABC, the national broadcasters or commercial broadcasters who have access to over 50 per cent.

DAWSON J:   So, it is the ABC, SBS or a commercial broadcaster who has a network?

MR HUTLEY:   A network which covers more than 50 per cent of the population broadly, and no distinction is made between those two.  So the other requirement is the restraint to televise an event continues unless, broadly speaking, such a national broadcaster has the right to televise that event.

DAWSON J:   What is the policy lying behind that, Mr Hutley?

MR HUTLEY:   Your Honour, there was a debate before the Full Court as to the policy.  In our submission, the policy is clear.  There was a concern within the government that pay TV broadcasters may be in a position through financial power to buy events which the government considered to be ones which ought to be on or ought to have the opportunity to be on free-to-air broadcasters.

DAWSON J:   Yes, well that would tend to be right, would it not?  You say it is right.

MR HUTLEY:   Your Honour, that is the evident policy, although it is important to note there is no compulsion to broadcast on anyone.  That was the policy and what we say, how it was effected was, in effect, excluding pay TV broadcasters from the market to buy the right to televise an event until the free-to-air broadcasters had exercised their, in effect, market power to acquire such rights as they wanted, subject to expiry within time unless extended.

DAWSON J:   Ultimately, the aim, although indirectly to be achieved, was to have available to the public important events free on television.

MR HUTLEY:   Your Honour, with this qualification:  it was recognised (1) that there was no compulsion on free-to-air broadcasters to acquire them so the desire to acquire and the extent of the acquisition was a matter of the commercial decision for free-to-air broadcasters.  It was perceived, obviously enough, that if pay TV broadcasters were excluded from the marketplace of acquisition until an acquisition of such as the free-to-air broadcasters wanted took place, that was likely to promote, as a matter of practicality, the broadcasting of some or all or parts of those materials.  There is no doubt about that.  We say, in effect, in this case the object has been given effect to.

DAWSON J:   But you say that by saying the right to televise does not mean the right to televise, that is put to air at the time of the event, but some weeks or even hours later.

MR HUTLEY:   Days, months, exactly.

DAWSON J:   And that would mean that the public did not have the right to see free something that was occurring, or the potential right, if I can put it that way.

MR HUTLEY:   But your Honour, what we say is, with respect, that makes the assumption which lies at the basis of the judgments from which appeal is brought, that there is some obligation upon free-to-air broadcasters to go out and buy things.  Channel Seven decided, in effect, it wanted highlights an hour a day for its own commercial purposes and, presumably, it also wanted to buy some right in the future, perhaps of minor commercial significance.  But what happened is that the marketplace, in effect, allowed them to acquire what they wanted.  They could have bought the whole free-to-air rights and then put on the highlights.

McHUGH J:   Yes, I know, but it is all a bit artificial, is it not, because Channel Nine made a substantial offer which is the subject of a non‑disclosure order and it was rejected.

MR HUTLEY:   Your Honour, the timing of that offer is not unimportant.  The offer had been made after the rights to Channel Seven had been sold. 

McHUGH J:   It was in October 1996 that News wrote to the Nine Network making the offer and it was not until 24 December that News sold the rights to Seven.  I may be wrong.

MR HUTLEY:   Your Honour makes the assumption that the offer made to Nine was accepted by Nine as opposed to another offer being made by Nine after it became aware of the arrangement with Channel Seven ‑ ‑ ‑

McHUGH J:   I assumed that ‑ ‑ ‑

MR HUTLEY:   Your Honour, one of the problems with the appeal is that everyone comes to this, with respect, and each of the first instance judges thinking there is something wrong with all this and that is quite apparent from the judgment, with respect.  One of the difficulties with it is the ABA never inquired into these things.  There is no dispute with the ABA that this was a sham or this was in some way a fraud of some variety.  The facts found by the ABA were simple.  Channel Seven acquired a right having two aspects, one to televise the whole event after three months, later changed to one week, and the right to have one hour of highlights.  That was a fact.

Then, subsequently, Foxtel relevantly acquired the free-to-air rights.  There was no inquiry as to the motives of any person, there was no inquiry as to the motives of ‑ ‑ ‑

McHUGH J:   It is a question of how the market is working.

MR HUTLEY:   Exactly, your Honour.

McHUGH J:   If people make substantial offers which one would think that any rational entrepreneur should accept and does not accept, it makes you wonder.

MR HUTLEY:   But, your Honour, with respect, that was never inquired into and one has to really set that aside and just ask the simple legal question, and if I could return to 10(1)(e) and I will try and identify that legal question ‑ ‑ ‑

DAWSON J:   A simple legal question, if I could attempt to identify it, is what do the words “right to televise” mean?

MR HUTLEY:   Precisely.

DAWSON J:   And in the context, they could only mean the right to take pictures of the event and transmit them.  That was the decision of the court below and in the context it seems perfectly reasonable.

MR HUTLEY:   Your Honour, there are two uses of the right to televise in clause 10(1)(e).

DAWSON J:   Yes.

MR HUTLEY:   There is an element which is an element of restraint and that restraint continues until another element exists.

DAWSON J:   Yes.

MR HUTLEY:   We say that has two logical consequences.  Logically, that entails that if the words “right to televise” are construed to require that any right, to qualify as such, have certain attributes, ie to be live, that has two entailments.  Firstly, the pay TV licensee is prohibited from acquiring that right with those attributes until the free-to-air broadcaster has rights with those attributes.  That is the first entailment.

The second entailment is that the pay TV licensee is free to acquire rights to televise which do not have those attributes.  For example therefore, if one construes the right to televise as a requirement to televise live tests, the logic of that is that the pay TV broadcaster is not restrained from acquiring the right to televise them half an hour after they occur.

DAWSON J:   Maybe so.

MR HUTLEY:   But, Your Honour, that leads to complete absurdity, we submit, because, in effect, that would completely distort the market.  If the aim is to ensure that free-to-air broadcasting ‑ ‑ ‑

DAWSON J:   Why would it, Mr Hutley?  I do not remember exactly where I read it, but someone said looking at a sporting event on television after it has occurred is like watching paint dry.

GAUDRON J:   Sometimes it is like that while it is currently going on.

MR HUTLEY:   Your Honour, they may expand the events in due course.  But, your Honour, true it is watching an event maybe four months later or three months later, half an hour later, is not watching paint dry.  The logic of the judgment of the Full Court is we are restrained, practically, from acquiring the rights live.  That entails that we are free to acquire them half an hour later.

I mean, a construction of the Act more calculated to frustrate its purpose, with respect to the Full Court, cannot be imagined.  The Full Court’s judgment proves too much because the moment you, in effect, construe the right to televise as carrying with it certain attributes, you necessarily find that a pay TV broadcaster can acquire any rights which do not have those attributes.

Those rights, in practice, can be almost as valuable, if not as valuable, if the Full Court has held that, in effect, one has to do it live or as close as technically feasible.  We all know tests can be sent live.  Does that mean and, in our respectful submission, the logic would seem to indicate, we can buy it five minutes delayed.  On one view one could say we had a triumph before the Full Court, but the practicality is that that just leads to absurd results.

DAWSON J:   There might be a matter of degree as to what constitutes a live television broadcast but otherwise it is not absurd.

MR HUTLEY:   But, your Honour, the problem is this.  We have got a licence.  What is the degree?  Is it an hour?  Is it two hours?  Is it overnight because many of these games, of course, take place in time zones where the real value is not to have it live but to have it the next day during prime time.

McHUGH J:   On the theory of the Full Court judgment, you can acquire the rights to televise Wimbledon at 6 am in Australia.

MR HUTLEY:   Yes, and your Honour, a simpler way to frustrate the object of this Act one cannot conceive.  If one is really telling the pay TV broadcasters that they are free to buy anything as long as it does not infringe the requirement that you have to acquire something which is as quickly as is technically available having regard to technology.

DAWSON J:   The alternative is that the public can be deprived of the right to see free the television of events such as the events in question here by means of an agreement, such as the one here, being reached in relation to a pay TV station.

MR HUTLEY:   Your Honours will have seen from the guidelines, I see the time your Honour, that as a matter of practice this system works very well because it is a marketplace.  It is aimed to, in effect, put out into the marketplace rights and keep certain players out of it.  Usually the participators in the marketplace will buy that which they think is worth it. 

Your Honours have to make an assumption, and we say justified, that there were people out there who wanted to buy the South African test live.  Channel Seven, in all likelihood, was the person who assessed what the marketability of those were, that the fact that highlights were sufficient.  I do not know what that was because, Your Honour, competing commercial needs‑ ‑ ‑

McHUGH J:   You have put some strong arguments that the decision below was right.  What is special about it, why should we grant special leave, because these are conditions that can be amended?

MR HUTLEY:   Your Honour, it governs the rights to an important area of industry and Your Honour will see from the notifications that the notifications go on for a decade.  Rights ‑ ‑ ‑

McHUGH J:   But we are talking about the condition, condition 10(1)(e).

MR HUTLEY:   Your Honour, people have made marketing decisions and judgments as to what they could or could not acquire in futuro, on the basis, we say, of what really was a clear meaning to the Act.  Now this gloss, and there are other glosses brought about by that logical problem which I could develop, but I see the time, has, in effect, thrown that marketplace, we would submit, into obvious confusion.  That Full Court judgment leads, in our respectful submission, to absurd results and in those circumstances, with the possible sanctions attended upon a breach of licence by a whole series of competitors in this marketplace ‑ ‑ ‑

DAWSON J:   Yes, but that is what makes it an unsuitable case for this Court to take on board because it is a matter of regulation which can be amended to accord with the necessities of the situation and, after all, although you point to the difficulties with one interpretation there are countervailing difficulties if you adopt the other interpretation.  This Court is not going to decide any point of great importance if it takes this ‑ ‑ ‑

McHUGH J:   The record, in this case, does not give us a global view of the whole market and how it all operates.

MR HUTLEY:   Your Honour, the market is confronted by the fact that every person has attended on a condition.  It is not specific to one individual.  Everyone has and, in effect, the competition for access to major events in this country is effectively determined by the true construction of that condition, which is general.

McHUGH J:   Yes, but it may be that if this condition continues on you will have to develop a better record to come up with.

MR HUTLEY:   Your Honour, in our respectful submission, the facts are simple.  The findings of fact before the ABA were simple and to the point.  It throws up directly the point of construction.  We say it is a proper vehicle because there really are no disputed facts.  The facts are just clear, acquisition by Seven, acquisition by us.  Was the acquisition of Seven sufficient to release us from the restraint?

McHUGH J:   Yes, but you are asking us to interpret this particular clause in the abstract without a record which shows how it really operates overall.  We would have to hear what counsel say from the Bar table.  That is how we will be informed about how the whole matter operates.

MR HUTLEY:   It is effectively construction of a piece of legislation.  In our respectful submission, the practical operation ‑ ‑ ‑

McHUGH J:   But surely the days have gone when people think you can just construe a document by looking at the words.  It has got to be construed against a factual background.

MR HUTLEY:   Your Honour, one of the difficulties with that is, as your Honour would appreciate, the pay TV industry is a new industry.

McHUGH J:   Yes.

MR HUTLEY:   This was a piece of legislation aimed to achieve a certain result which is discussed in the second reading speeches and such matters.  Really, in our respectful submission, the Court would not be assisted by materials going to the general way in which people have particularly reacted to particular circumstances.

McHUGH J:   I would like to know how it all operates, how the market operates, what goes on, what sort of offers are made, counter offers are made and what is the background for all of this.  It seems to me it is a matter much better dealt with administratively by changing these licence conditions if they lead to the absurd results that your argument asserts and which do seem to have some force.

MR HUTLEY:   But, your Honour, whilst that ever goes on, licensees are being threatened with, if they breach it, losing their licence.

DAWSON J:   They have to adopt the construction which is placed on it by the court in the meantime, of course they do.

MR HUTLEY:   Your Honour, that, if operated, we will say at the time we go through it, it logically leads to the position where you virtually cannot acquire anything other than precisely that which has been acquired by the free-to-air televiser.

DAWSON J:   It is an unsatisfactory position in any event, whichever way you look at it, whether you look at it your way or the way in which the other side would look at it, but that is not something which would attract special leave.

MR HUTLEY:   With respect, your Honour, we do not do damage to the language of the statute.  All we seek in respect of a statute with penalties, is that the language of the statute be played, rather than the glosses which have been put on either by Justice Lockhart or by the Full Court which lead to these results.

DAWSON J:   I see the red light is shining, Mr Hutley.

MR HUTLEY:   Yes, your Honour.

DAWSON J:   The Court need not trouble you, Mr Robertson.

This application raises only a point of construction which does not warrant a grant of special leave to appeal.  Special leave is accordingly refused.

MR ROBERTSON:   We ask for costs, if your Honour pleases.

DAWSON J:   Can you say anything about that, Mr Hutley?

MR HUTLEY:   I have nothing to say, your Honour.

DAWSON J:   Special leave is refused with costs.

AT 12.38 PM THE MATTER WAS CONCLUDED