Gosford-Wyong FM Radio P/L v Australian Broadcasting Tribunal

Re: GOSFORD-WYONG FM RADIO PTY. LIMITED
And: AUSTRALIAN BROADCASTING TRIBUNAL and GOSFORD COMMUNICATIONS LIMITED
No. NG1221 of 1988
FED No. 228
Broadcasting

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sheppard J.(1)

CATCHWORDS

Broadcasting - competing applications for a new commercial FM radio licence - purported grant of licence to successful applicant not made subject to payment of establishment fee - whether that circumstance invalidated decision - selection by Tribunal of most suitable applicant - whether failure to indicate Tribunal's second choice involved Tribunal in failure to carry out statutory function - absence of clear statement of criteria for selection of most suitable applicant - alleged failure to apply criteria consistently - alleged taking into account of irrelevant considerations - whether these matters singly or together invalidated decision.

Broadcasting Act 1942, ss. 82, 83

Radio Licence Fees Act 1964

Note: The amendments made by the Broadcasting Legislation Amendment Act 1988 were not applicable to the circumstances of this case.

HEARING

CANBERRA

#DATE 16:5:1989

Counsel for the Applicant: Mr. S.M. Littlemore

Solicitors for the Applicant: Messrs. Kencalo & Rimes

Counsel for the First Respondent: Mr. L.T. Grey

Solicitors for the First Respondent: Australian Government

Solicitor

Counsel for the Second Respondent: Mr. A. Robertson

Solicitors for the Second Respondent: Blake Dawson Waldron

ORDER

The application be dismissed.

The applicant pay to each of the respondents its costs of the application.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

These reasons need to be read against the background of associated proceedings, Wesgo Communications Pty. Limited v. Australian Broadcasting Tribunal and Anor., No. NG1207 of 1988, in which judgment is also being delivered today. I shall not repeat some of the matters stated in the reasons published in that case because they provide the background for the two cases. In the other proceedings, the applicant for relief was the holder of the licence for the existing AM station in the Gosford-Wyong area, radio station 2GO. That company is not a party to the present proceedings. The applicant is one of the nine companies which made application for the FM licence which is in question. It was unsuccessful. The second respondent is the successful applicant.

The statutory provisions which are in question are subsecs. 83(5), (6), (9) and (10) of the Broadcasting Act 1942 ("the Act"). Section 83 was amended by the Broadcasting Legislation Amendment Act 1988, but the amendments there made do not apply to the circumstances of this case. Subsection 83(5) of the Act provided that an applicant for the grant of a licence should, before the licence was granted, give an undertaking in writing to the Tribunal that he would, if the licence were granted to him, comply with the conditions of the licence and provide an adequate and comprehensive service pursuant to the licence and also encourage the provision of programs wholly or substantially produced in Australia. Subsection 83(6) was the subsection which was the principal source of concern in the Wesgo case. It provided that the Tribunal should not refuse to grant a licence to a person unless one or more of the circumstances provided for in the paragraphs thereof applied. It is unnecessary at this stage to refer further to the provisions of subsec. 83(6). Subsection 83(9) was as follows:-

"83.(9) Where there are 2 or more applicants for a licence, each of whom is a person to whom, but for this sub-section, the Tribunal would be required to grant the licence, the Tribunal shall grant the licence to the most suitable applicant."

So far as it is material, subsec. 83(10) provided:-

"(10) Where the licence is a commercial radio licence, the following provisions have effect:

(a) the Tribunal shall give the eligible applicant who, in the opinion of the Tribunal, is the most suitable applicant notice in writing that the licence is available to that applicant;

(b) if an applicant who is given notice under paragraph (a) or (c) tenders to the Commonwealth, before the end of the relevant period, an amount equal to the amount of the establishment fee, the Tribunal shall grant the licence to that applicant;

(c) if an applicant who is given notice under paragraph (a) or this paragraph does not tender to the Commonwealth, before the end of the relevant period, an amount equal to the amount of the establishment fee and there is at least one other eligible applicant:

(i) the application by the applicant given that notice shall be deemed to have been withdrawn; and

(ii) the Tribunal shall give the remaining eligible applicant, or the one of the remaining eligible applicants who, in the opinion of the Tribunal, is the most suitable applicant, notice in writing that the licence is available to that applicant;

(d) if an applicant who is given notice under paragraph (a) or (c) does not tender to the Commonwealth, before the end of the relevant period, an amount equal to the amount of the establishment fee, the Minister may:

(i) determine that, even though the relevant period has ended, the licence shall continue to be available to that applicant for such further period as is specified in the determination; or

(ii) determine that a fresh notice under subsection 82(1) should be published in relation to the proposed grant of the licence; ........ ........ ........ ........ ........ ...."

The later paragraphs of the subsection provided for what was to happen in relation to a number of other contingencies, none of which is relevant to the circumstances of this case. The expressions "eligible applicant", "establishment fee" and "relevant period" were defined in subsec. 83(11). An "eligible applicant", in relation to the grant of a commercial radio licence, meant a person to whom, but for subsec. (9), the Tribunal would be required to grant the licence. The establishment fee, in relation to the grant of such a licence, meant the fee payable on the grant of the licence under subsec. 6(1A) of the Radio Licence Fees Act 1964. It is unnecessary to refer to the detail of the definition of "relevant period", otherwise than to say that it would usually have been the period of 60 days commencing on the day on which the notice under subsec. 83(10) was given.
It is to be observed that the scheme of subsec. 83(10) of the Act was to bring about a situation in which the successful applicant did not receive a grant of the licence until such time as the fee had been paid. If the fee were not paid, para. 83(10)(c) requires the Tribunal to give to the remaining eligible applicant or the one of the remaining eligible applicants who, in the opinion of the Tribunal, was the most suitable applicant, notice in writing that the licence was available to that applicant. If that applicant did not pay the establishment fee, unless the Minister extended time further, it was necessary for him to determine that a fresh notice under subsec. 82(1) should be published in relation to the proposed grant of the licence. The terms of that section are referred to in the Wesgo judgment.
Counsel for the applicant made three submissions. They were:-

(a) The purported decision of the Tribunal dated 10 August 1988 was not authorized by the Act, which contemplated and required at least two discrete decisions on the part of the Tribunal before a licence of this type might be granted. The first of these decisions was said to be one in which the Tribunal reached the opinion that some applicant was the most suitable applicant. The next step which the Act contemplated was the tender within the relevant period of an amount of money equal to the establishment fee. Only if that condition were fulfilled was the Tribunal empowered to grant the licence to the most eligible applicant pursuant to para. 83(10)(b). Until the tender was made, the Tribunal was not empowered by the Act to grant the licence to that or any other applicant. A reading of the decision of the Tribunal disclosed that, the provisions of subsec. 83(10)(b) notwithstanding, the Tribunal did purport to grant a licence to the second respondent. The decision was premature and invalid because the necessary events required by para. 83(10)(b) had not transpired.

(b) The possibility existed that the most suitable applicant chosen by the Tribunal would not fulfil the requirements of para. 83(10)(b) by paying the establishment fee. The statutory scheme required the Tribunal to make a finding with respect to each applicant, making it clear whether that applicant was treated by the Tribunal as an eligible applicant for the licence and to establish a hierarchy of eligible applicants as a consequence of the inquiry which would allow the operation of subsec. 83(10) to take full effect should the provisions as to payment of a licence fee not be fulfilled by a person who would otherwise be entitled to the grant of the licence. The Tribunal failed in its report to establish any hierarchy of any applicants so as to permit the operation of subsec. 83(10) beyond the circumstances provided for in para. (b). The Tribunal has completed its inquiry and thus exhausted its function. In the absence of any indication by it of its subsequent preferences, its decision was unlawful.

(c) In deciding upon the most suitable applicant (see subsec. 83(9)

of the Act), the Tribunal took irrelevant considerations into account, failed to determine the criteria which would guide it in the choice which it had to make, and applied different criteria to different applications, with the consequence that the decision constituted an improper exercise of power. I shall come to the detail of how counsel put this part of the applicant's case when I deal with the submission in due course.

I deal with these submissions in the order in which I have stated them. The Tribunal's decision appeared in para. 5.1 of its report. The paragraph said:-

"The Tribunal decided to grant a commercial FM radio licence to Gosford Communications Limited for a period of five years to serve the Gosford-Wyong area of New South Wales. The licence will be granted on a date to be determined by the Tribunal after the specifications applicable to the licence have been determined by the Minister for Transport and Communications."

The point which counsel makes is that the words of the paragraph denote a straight out grant. The grant was not made conditionally upon the provisions of subsec. 83(10) being complied with. Subsection 83(9) made it clear that that subsection operated subject to subsec. (10).
In the Wesgo judgment I referred to the fact that set out as an appendix to the report were the relevant provisions of the legislation. These included subsecs. 83(9) and (10). I confess that I am at a loss to understand why the Tribunal did not indicate specifically that the grant was subject to compliance with the provisions of subsec. 83(10). But I am not prepared to conclude that that omission invalidates the decision. The Act will not permit the grant unless the provisions of subsec. 83(10) are complied with. I would not take the view that an experienced Tribunal which has taken the trouble to guide itself by setting out the terms of the relevant legislation in its report was unmindful of this matter. In any event it is only a mechanical matter. Either the licence fee will be paid or it will not. If it is, the grant will follow. If not, the balance of the subsection will take effect. That is, of course, subject to the remaining submissions. The first submission is rejected. I turn to the second.
Counsel for the applicant seemed to assume that the provisions of subsec. 83(10) created a situation in which the Tribunal was bound to specify an order of preference for each of the seven applicants which remained in the race after the withdrawal of one and the failure of another to satisfy it that it had the requisite management capability. I do not read the subsection in this way. It seems to me that it provided for the situation which was to prevail if the first applicant did not pay the fee by requiring the licence, in effect, to be offered to the next preferred applicant. Thereafter, unless the Minister extended the time for payment, there was to be a new inquiry notified under subsec. 82(1). But that does not provide a complete answer to the submission which has been made. The Tribunal did not go on to express a second preference. It follows that, if the second respondent, which was the successful applicant, does not pay the fee, the Tribunal has not indicated which of the remaining applicants it would prefer to have the licence.
I do not think that para. 83(10)(c) required that it should have done so. I think the proper construction of the paragraph is that it required the Tribunal to select the next most suitable applicant only if its first choice failed to pay the fee. I do not think that the Tribunal was bound to make its second choice in its original decision. This view of the paragraph gives it a sensible and practical operation. Although the "relevant period" would in most cases be 60 days, there could be cases where, by reason of extensions of time granted by the Minister or delay occasioned by litigation, as has happened here, the period would be very much longer. If the Tribunal made its second choice in its original report, it might be found that that applicant was no longer interested or that circumstances had changed so that it was no longer the next most suitable applicant. In my opinion the provisions of the paragraph were such as to require the Tribunal to indicate its second choice only if its first choice did not proceed and at a time when all relevant considerations could be considered as they then were, not as they were some months before when the Tribunal made its original decision.
If my conclusion as to the proper construction of the paragraph is wrong, there would arise a question whether I should, in the exercise of my discretion, set aside the decision which the Tribunal has made in which it expressed preference for Gosford Communications as the proposed licensee. I would not have taken that course. If, contrary to the view I have expressed, the Tribunal was bound to indicate its second choice, I concede that the problem may become difficult if it should turn out that Gosford Communications, after all, does not pay the fee. But I do not perceive the need, at least at this time, to invalidate an inquiry which, provided the fee is paid, is, upon the hypothesis on which I am considering the matter, otherwise valid. In other words, the point may never arise or, to put it more correctly, one may never need to know who the Tribunal's second choice would have been. In this sense the application raises an issue which is hypothetical. It follows that, if I had adopted the construction of para. 83(10(c) of the Act for which counsel for the applicant contended, I would have refused relief on discretionary grounds.
In the result the second submission is rejected.
The remaining submissions relied upon by counsel for the applicant were based on criticisms of the way in which the Tribunal selected the successful applicant, Gosford Communications. In order to deal with this submission, it is necessary to refer to a number of paragraphs of Section 4 of the report. It was headed, "ASSESSMENT OF THE APPLICANTS".
The Section commenced in para. 4.1 with the statement:-

"The aim of this section of the report is not to provide a compendium of each application or comments on every aspect of those applications, but to provide comment on only those aspects which, in the Tribunal's opinion, were either particularly meritorious or unsatisfactory. It can be assumed therefore, that the aspects not singled out for comment in this section were found to be satisfactory by the Tribunal. This approach has been made necessary by the large and detailed applications of high standard which were made for this licence."

The scheme of the following paragraphs of the report was to refer to the application of each of the eight applicants for the licence then in contention (one application had been withdrawn). Some of the features of each application were mentioned and comments were made about the strengths and weaknesses of it. The report concluded with Section 5 which contained one paragraph which I have earlier quoted.
In Section 4 of the report the Tribunal dealt with each application under a number of subheadings. In all cases these were "Company", "Management", "Proposed Service", "Finance" and "Conclusion". In one case, the application made by Radio Wave Pty. Limited ("Wave FM"), the discussion included additional subheadings, namely, "Technical Capability" and "Fitness and Propriety". Wave FM's application was said not to meet the requirements of s. 83 of the Act because Wave FM did not have the requisite management capability. Its application thus failed at the threshold. It was the only application to meet this fate. The fifth in line was the application which was successful, namely, the application made by Gosford Communications. Its application was dealt with under the five subheadings earlier mentioned. The Tribunal's conclusion was that it found Gosford Communications the most suitable applicant, "given that it proposes to provide a high quality, relevant service and has superior management capability relative to other applicants, which should ensure that this service is implemented".
The concluding paragraphs of the Tribunal's treatment of the earlier applications with which it had dealt (other than that of Wave FM) expressed unfavourable views about aspects of each of the applications. But only in respect of one of them, that made by The Narara Broadcasting Company Pty. Limited ("Narara"), was there an express statement that it was not to be the successful applicant. In para. 4.47 it was said that it "was not preferred" and short reasons were then given for that conclusion.
At the conclusion of its treatment of the Gosford Communications application, which, as I have said, was the fifth application to be dealt with, the Tribunal, as I have mentioned, decided that the licence should be granted to it. That conclusion was reached at that point notwithstanding that three applications were yet to be dealt with. The Tribunal went on to deal with these applications providing reasons why they had not been successful.

The essential submissions which were relied upon in support of this part of the applicant's case were based upon the proposition that, in assessing the question of suitability, the Tribunal's statutory function was not fulfilled unless it:-
(a) identified the criteria which it took into account upon the

issue of suitability;

(b) applied each of those criteria to each of the applicants;

and

(c) applied each of those criteria consistently in relation to

each of the applicants.

It was submitted that the Tribunal had complied with none of these requirements in reaching its conclusion that Gosford Communications was the most suitable applicant.

In developing his submissions, counsel for the applicant drew attention to four criteria upon which he said the Tribunal had relied in its reasoning to guide it to its conclusion. These were stability, localism, financial capability and Australian creative resources. Counsel submitted that the Tribunal's concept of stability as a factor leading to suitability was an irrelevant consideration and, in any event, quite inconsistently applied to the applicants. The submission that stability was an irrelevant consideration was based upon a suggested interrelation between the provisions of subsec. 83(6) and subsec. 83(9) of the Act. Subsection 83(9) of the Act has been earlier quoted. I have not quoted subsec. 83(6) fully but a number of its provisions are referred to in the Wesgo judgment. Essentially subsec. 83(6) obliged the Tribunal not to refuse to grant a licence unless one or more of the factors specified in the various paragraphs of the subsection applied. Sometimes these, if they existed, would be fatal to the grant of a licence; sometimes, particularly in the case of the various matters provided for in para. (c), the existence of a particular factor would not be fatal because the Tribunal would have a residual discretion to act in the public interest. The more important matters with which the paragraphs of subsec. 83(6) dealt were the satisfaction of the Tribunal that the grant of the licence would be contrary to a provision of the Act (para. (b)), the Tribunal not being satisfied that the applicant was (i) a fit and proper person to hold the licence, (ii) had the financial, technical and management capabilities necessary to provide an adequate and comprehensive service, (iii) was otherwise capable of complying with the conditions of the licence (sub-para. (i) of para. (c)), the need for the commercial viability of the service or services provided pursuant to an existing licence or licences (sub-para. (iii) of para. (c)), and it appearing to the Tribunal that a licence of the kind contemplated by the matters set out in the Minister's notice should not be granted (para. (d)).
It was the submission of counsel for the applicant that the various factors specified in these paragraphs of subsec. 83(6) were the only factors which the Tribunal could take into account in determining suitability under subsec. 83(9). I reject this submission. In my opinion the purpose of subsec. 83(6) was to provide a series of threshold matters which the Tribunal was obliged to consider in relation to the grant of a licence to a person. If that person surmounted each of the hurdles with which these matters confronted him, he would, if a sole applicant, be entitled to the grant of a licence. But if a number of applications were made and a number of applicants surmounted each of the hurdles provided for in subsec. 83(6), the Tribunal had then to act under subsec. 83(9) to determine which of the applicants was the more suitable or the most suitable. In my opinion, this reposed in the Tribunal an unconfined discretion of the kind which was the subject of consideration by the High Court in The Queen v. Australian Broadcasting Tribunal; Ex parte 2HD Pty. Limited (1979) 144 CLR 45, particularly at pp 49-50. In my opinion, nothing in subsec. 83(6) confined the matters which the Tribunal might properly take into account in determining suitability under subsec. 83(9). A wide range of matters was open to it to consider including, of course, those provided for in subsec. 83(6). Opening the matter up in this way might, in many cases, be the only way in which the Tribunal could reach a satisfactory conclusion on the question of which applicant was the most suitable.
In my opinion, it was well within the Tribunal's province to have regard to "stability" whether that referred to financial stability, management stability, the ability to provide a stable selection of programs or company stability in the sense of the likely stability of the company structure disclosed in a particular application. Contrary to the submission relied upon by the applicant, therefore, the introduction of stability as a criterion is not, "outside the statutory scheme" which governed the Tribunal in the discharge of the task which it had.
The next submission which related to the question of stability was that it was applied inconsistently to the applicants. In the development of this part of his submissions, counsel seems to have wrapped up a further submission, namely, that it was not open to the Tribunal to find that the company structure or the shareholding of Gosford Communications was stable. I have considered what the Tribunal had to say about this matter. It is a question of fact and a matter for the Tribunal to determine. I do not find in what the Tribunal said about it any reviewable error.
The principal matter upon which counsel for the applicant relied, however, was the matter of inconsistency. He said that stability was applied to distinctly different aspects of the applications. For Gosford Communications it meant stability of company structure so that in its case there was some assurance that the structure would remain for an appreciable period as it was foreshadowed in the application. This approach was contrasted with the approach adopted by the Tribunal to the application made by the applicant, referred to in the report as "Coast FM". The application was dealt with first. In para. 4.16 the Tribunal discussed a number of problems it saw in relation to the management of Coast FM and concluded the paragraph by saying, "Such arrangements have the potential to undermine the position and authority of the managing director and could create instability." It seems to me that the Tribunal was there discussing the question of management capability, one of the matters which it was specifically directed to consider in para. 83(6)(c) of the Act; see sub-para. (i)(B) thereof. The use of the word "instability" was apt in the context in which it was used and the Tribunal should not be taken to task for having used expressions such as "stability" or "instability" in the different context of stability of company structure. Similar considerations apply in relation to the use by the Tribunal, in relation to the board of a different applicant, Narara, of the phrase "very cohesive and stable" in relation to its board of management.
Other examples were given, but I do not propose to refer to them. One has to read the Tribunal's discussion of the suitability of the various applicants as a whole. I have earlier set out the scheme of its report in this respect. I have read the various paragraphs as carefully as I can. I do not find in them, when they are read as a whole, any indication other than that the Tribunal endeavoured to refer to a number of different matters in order to determine which of the applicants was the most suitable. One needs to read the detail of the Tribunal's discussion about each applicant with para. 4.1 of its report, which I have earlier quoted, in mind. I think, when Section 4 of the report is read as a whole, one must conclude that the Tribunal was aware of a large number of factors, some of which indicated that certain applications had weaknesses and others that they had strengths. It discussed the matters which were of greatest concern to it and, relying upon those matters, reached a conclusion (which involved it in making a value judgment) about each application. I am unable to perceive that, in the way that it went about its function, the Tribunal was guilty of any error which should lead to the interference of this Court.
In saying what I have said so far I have referred to the detailed matters put in relation to stability. I do not find it necessary to refer to the matters of localism, financial capability and Australian creative resources in detail. What I have said about stability applies equally, if not more strongly, to these matters.
At the heart of his submissions on this matter, is the contention by counsel for the applicant that the Tribunal would be guilty of reviewable error if it did not set out for itself in some clear paragraph of the report the criteria which it intended to take into account and then to approach every application with these clearly in mind, giving each application points for the extent to which it met each criterion. Only in this way, so counsel submitted, could the Tribunal hope to achieve a result which was fair to the parties.
In its introduction, the Tribunal, as I have mentioned, set out the more important elements to be considered in making a decision. These included the relevant matters specified in subsec. 83(6) of the Act, but they also included, "the selection of the 'most' suitable applicant if there are a number of suitable applicants". That was an indication that there might be taken into account a further selection of matters when the Tribunal came to suitability under subsec. 83(9). Accordingly, the matters set out in para. 2.1 of the report do not meet the objection which counsel for the applicant made to the report on the basis that it did not set out the criteria which would guide the Tribunal once it reached the stage of selecting the most suitable applicant.
I confess that this submission has given me a degree of anxiety. I think that most people required to make a judgment about the suitability of persons, for example, for employment, endeavour to be even-handed about the selection process which must, nevertheless, involve an approach which has a degree of subjectiveness about it. If one corrects exam papers or selects from amongst a number of persons the most suitable applicant for employment, one usually lays down criteria to guide one in the task at hand and endeavours to apply them evenly and consistently to all candidates or applicants. To many there will be less chance of error or unfairness if this procedure is adopted. But, in my opinion, that is only one way of going about a matter of this kind even if, to some, it may seem the most desirable way. The Tribunal was the body charged with the task of selecting the most suitable applicant. It was entitled to go about the matter in the way it thought would best achieve that end. Its failure to do as the applicant's submission suggests that it should have done, does not of itself vitiate the Tribunal's decision. It is not apparent to me that there is to be found in the Tribunal's reasoning processes and in the way it has gone about its task, some manifest unfairness, some conclusion which is manifestly unreasonable or any indication that it has taken irrelevant considerations into account or omitted relevant considerations from account using the terms "irrelevant" and "relevant" in the well-known sense that they have in the review of administrative action; see generally Minister for Aboriginal Affairs v. Peko-Wallsend Limited (1986) 162 CLR 24.
It may seem strange that the Tribunal, after reviewing each application, did not attempt to narrow the field to say, two or three applications, and then discuss the relevant merits of those applications in some final paragraphs comparing and contrasting them before reaching a conclusion. But again, it is not incumbent upon the Tribunal to go about its task in this way. To me, at least, it seems extremely unfortunate that the Tribunal should reach its conclusion in the middle of its discussion of the eight applications. The order of the Tribunal's reasoning process could not have been as it appears in the report. If it were, it would have reached its conclusion in the middle of its discussion with three applications yet to be dealt with. Presumably, the Tribunal must have decided that each of the applications should be unsuccessful except that of Gosford Communciations and chose to write its reasons as it has done by dealing with each application in the order in which the applications were presented to it for consideration. Again, however, I do not think that this criticism of the Tribunal's process warrants interference. However unsatisfactory it may seem to some, particularly I suppose, to disappointed applicants, that it should have gone about its task in this way, it was a method which was open to it and thus not one with which the Court should interfere.
In the result I have reached the conclusion that the submissions based on the Tribunal's detailed consideration of the various applications should, like the others relied upon by the applicant, be rejected. The application is dismissed with costs.

[1989] FCA 228

16 MAY 1989