Hesster Pty Ltd and Australian Communications and Media Authority and Worlaudio Communications Pty Ltd (Party Joined) and Bandkin Investments Pty Ltd (Party Joined)
[2006] AATA 1085
•15 December 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 1085
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V2004/1301
GENERAL ADMINISTRATIVE DIVISION ) Re HESSTER PTY LTD Applicant
And
AUSTRALIAN COMMUNICATIONS and MEDIA AUTHORITY
Respondent
And
WORLDAUDIO COMMUNICATIONS PTY LTD
Joined Party
And
BANDKIN INVESTMENTS PTY LTD
Joined Party
DECISION
Tribunal Justice Downes, President Date15 December 2006
PlaceMelbourne
Decision Affirm the decision under review. .............................................
President
CATCHWORDS
RADIOCOMMUNICATIONS – narrowband service apparatus licences – application to transfer licences – Australian Communications & Media Authority – transfer not effected by Authority – subsequent application for transfer to different transferee – Authority effects that transfer – discretionary considerations - impact of order of Supreme Court of New South Wales – first transaction not arms length – delay – lapse of time – decision under review affirmed – discussion of nature of statutory register - Radiocommunications Act 1992 (Cth)
Administrative Appeals Tribunal Act 1975 (Cth)
Radiocommunications Act 1992 (Cth)
Radiocommunications (Limitation of Authorisation of Third Party Users) Determination 2000 (Cth)Attorney-General v Times Newspapers Ltd [1992] 1 AC 191
Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
GB Radio Australia Pty Ltd v Australian Communications Authority (2002) 72 ALD 548
WorldAudio & Anor v GB Radio [2003] NSWSC 1023
WorldAudio v GB Radio [2003] NSWSC 855REASONS FOR DECISION
Justice Downes, President
Summary
1. In reasons for decision dated 24 September 2002 I described GB Radio Australia Pty Ltd v Australian Communications Authority (2002) 72 ALD 548 (at 552) [2002] AATA 919 (at para 18) as having “had an unfortunate history”. Four years later I must address a further chapter in the same saga. My earlier observations are now an understatement.
2. In the earlier proceedings I rectified the Register of five narrowband service apparatus licences so that GB Radio (Australia) Pty Ltd was shown as the licensee. On 10 July 2003 GB Radio lodged a valid application for transfer of two of the licences to Hesster Pty Ltd. The transfer was not registered. On 14 November 2003 the Supreme Court of New South Wales (McDougall J), made orders for specific performance of a contract between GB Radio and WorldAudio Communications Pty Ltd for use of the two licences. The orders for specific performance restrained GB Radio from transferring the licences to anyone else and required it to “withdraw” the transfer to Hesster. Hesster was not a party to the proceedings. On 9 December 2003 WorldAudio lodged an application for transfer of one of the two licences to it. The application was joined in by GB Radio. On 5 March 2004 the Australian Communications Authority transferred that licence to WorldAudio. In May 2004 an application for transfer of the second licence to WorldAudio was lodged with the Authority. The Authority transferred the licence in June 2004.
3. My decision in the earlier proceedings was unqualified. It left GB Radio free to seek a transfer of the licences. A valid application was lodged. The Authority did not act on it. There was no order of any Court restraining it from acting on the transfer. It subsequently transferred the licences to a third party. Although that may have been prompted by the orders made by the Supreme Court of New South Wales, the transferee was not a party to those proceedings. I have decided that the transferee (Hesster) was not bound by the orders and neither was the Authority. In those circumstances, the issue is whether I should again rectify the Register to show GB Radio as licensee and effect transfers to Hesster (which has never withdrawn the 2003 transfer applications and which is not subject to any obligation imposed by the Supreme Court of New South Wales to do so).
4. Had this matter come before me prior to the determination of the proceedings in the Supreme Court of New South Wales, I would not have hesitated to effect the transfer. The Authority should have then effected the transfer. However, circumstances have now changed. Hesster delayed in making the present application before the Tribunal until November 2004. The transaction between GB Radio and Hesster was not an arms length transaction. One person was associated with the mind of both companies. These and other circumstances cause me, notwithstanding the fact that the Authority did not correctly exercise the discretion at the time (because it initially refused to effect the transfer to Hesster) to affirm the decision under review. I will set out my detailed reasons below.
The Legislation
5. Since my decision in GB Radio, the Australian Communications and Media Authority (the present respondent), has replaced the Australian Communications Authority as the agency administering the Radiocommunications Act 1992 (Cth). However, most of the legislative framework governing apparatus licences, such as the licences under consideration, remains unchanged. Accordingly, the analysis contained in my decision in GB Radio (pp 552 – 554; paras [22] to [24]) is also applicable here.
6. Of particular relevance in the present case is s 131AB which confers a discretion (“may”) on the Authority to transfer a licence. Sub rule 131AB(2) relevantly provides:
“131AB Transfer of apparatus licences
...
(2) In deciding whether to transfer the licence, the ACMA:
(a) … must have regard to the same matters to which it must have regard under subsections 100(4) and (6) in deciding whether to issue such a licence; and …”
Only subs 100(4) is presently relevant. It is as follows:
“100 Issuing apparatus licences
(4) In deciding whether to issue an apparatus licence, the ACMA must have regard to :
(a) all matters that it considers relevant; and
(b) without limiting paragraph (a), the effect on radiocommunications of the proposed operation of the radiocommunications devices that would be authorised under the licence”
Jurisdiction is conferred on the Tribunal to review decisions of the Authority pursuant to s 292 of the Radiocommunications Act. The jurisdiction includes review of refusals to transfer an apparatus licence under s 131AB and refusals to correct the Register under s 153.
Jurisdiction: The Issue
7. WorldAudio says that it is the present licensee. The application for transfer from GB Radio to Hesster can only be effected if the licence is first transferred back to GB Radio. Because there is no application for review of the transfer to WorldAudio, the Tribunal has no jurisdiction.
Jurisdiction: The Result
8. This argument, if it was correct, would allow the form to govern the substance. That would not be consistent with modern statutory interpretation. Fortunately, the argument is not correct.
9. Although the present application for review was made after the transfer to WorldAudio had been effected, the transfer to Hesster was lodged before it. Hesster had a statutory right to have the Authority’s refusal to transfer the licence internally reviewed and to appeal to the Tribunal from an adverse decision on the reconsideration. The statutory right is not conditioned on the state of the Register. Accordingly, there is no want of jurisdiction in the Tribunal. Once the matter is before the Tribunal, the matter must be dealt with on the merits. Part of the merits is whether another transfer should have been effected. If the registered transfer was properly effected the application for review will fail on its merits. If it was not, the application for review will succeed. If making such a decision overrides another decision of the Authority, then so be it. The real question is whether the first transfer to Hesster should have been effected. If it has priority over a transfer wrongly effected, then the first transfer will ordinarily be effected.
10. The Tribunal has all the power of the original decision-maker (s 43 of the Administrative Appeals Tribunal Act 1975 (Cth)). It was no doubt because of these considerations that WorldAudio itself sought, without opposition, to be made a party to these proceedings. In any event, if Hesster is successful in these proceedings it will be because the transfer to WorldAudio should not have been effected and I see no reason why the power contained in s 153 of the Radiocommunications Act to correct the Register should not be exercised. Section 153 is not in the form of a “slip rule” provision. Ultimately, it seems to me, the legislature cannot have intended that if the Authority makes two mistakes rather than one a right to review is rendered nugatory.
Merits: The Issues
11. The merits argument in support of the Authority’s decision is pleaded by WorldAudio at two levels. The first argument is simple. Whatever should have been the position prior to the decision of the Supreme Court of New South Wales, thereafter it was easy. That court said that the transfer to Hesster should not be effected; indeed, it should be withdrawn. The Authority was right in acting on this decision. The second argument is somewhat more complicated. It says that the appropriate exercise of the discretion conferred on the Authority was not to effect the transfer to Hesster but to effect the transfer to WorldAudio. This argument particularly relies on the association between GB Radio and Hesster and says that Hesster should be treated as if it was also bound by the decision of the Supreme Court of New South Wales.
Merits: The Court Order Alone: The Result
12. It is easy to understand why it might be thought that when an order was made by the Supreme Court of New South Wales “to withdraw the application made to the ACA, on or about 10 July 2003, for the transfer of the Melbourne licence and the Sydney licence to Hesster Pty Limited” that that was an end of the matter. However, closer analysis may not bear out such a conclusion.
13. Suppose Hesster was an arms length purchaser of the licences who knew nothing about the interest of WorldAudio and had paid a substantial amount to acquire the licences. It might ultimately find that it had wasted its money because the claim of WorldAudio had priority over its claim. It would not be the first person to find itself in this position. But it might be the first person to find itself in this position if the priority of the two claims had never been adjudicated.
14. It is a fundamental tenet of our legal system in general, and its application to suits for specific performance in particular, that a person not a party to proceedings is not bound by the result. Suits in rem in admiralty are the exceptions which prove the rule. However, special procedures in those cases are designed to ensure that all interests are represented.
15. WorldAudio has argued that despite not being a party to the proceedings, Hesster was, in effect, bound by the orders of the Supreme Court once it was aware of them. There is no doubt that Hesster became aware of them at the time they were made. WorldAudio relies upon cases relating to third parties such as banks or bailees who hold assets of defendants. It also relies upon decisions, such as Attorney-General v Times Newspapers Ltd [1992] 1 AC 191, that relate to the effect of injunctions restraining publication of confidential information on newspapers which were not parties to the proceedings.
16. Reliance on these principles is misconceived. The first group of cases relate to circumstances when the legal position of the defendant and third party is not in doubt. They are generally confined to preserving assets. If a bank was claiming the benefit of a prior charge over an asset which was the subject of a suit between another party and its customer, the bank would not be bound by the result in the suit unless it was a party. The contrary view is not maintainable. That seems to me to be this case. It may be that if Hesster had been a party in the Supreme Court it would have lost. It may be that the court would ultimately have found that its claim had little merit. But that is a long way from saying that its claim should be adversely determined without its case being put. The second group of cases are public interest cases in which the third parties’ defence is no different to the defence of the defendants. That is not this case.
17. Accordingly, an order that GB Radio withdraw a transfer to Hesster, when Hesster was not a party to the proceedings, does not bind Hesster. The simple argument must fail.
Merits: Discretion: The Result
18. Hesster was incorporated as a shelf company. It was acquired by John Robert Evans on or shortly before 9 July 2003, when Mr Evans became the sole shareholder and director. He retained these positions until 14 June 2005 when he resigned as director and, for one dollar, transferred his share to Raymond Richards who became the sole director.
19. Mr Evans is a solicitor. Until December 2003 he was a partner at Gadens Lawyers. In this capacity he was a principal adviser to GB Radio. Although he lived in Melbourne he played a significant role in the litigation in the Supreme Court of New South Wales. However, the actual court work was handled by Sydney staff of Gadens. He became aware of the initial judgment of the Supreme Court of New South Wales on 10 October 2003, the day it was given.
20. Hesster’s sole function was to act as the trustee of a trust. The executed trust deed is dated 26 August 2003 although an earlier draft dated 9 July 2003 is also in existence. The trust is in favour of named parties “... for their respective financial rights and interests ...”. Eight parties are named. GB Radio is the first. It is described as “[t]he former legal and beneficial owner of the licences and the residuary beneficiary” of the trust. Others include the two directors of GB Radio (Roger Thomas and Kerry Grills), lawyers said to be owed fees and potential claimants to interests in the licences. The deed does not expressly deal with priorities. However, the deed provides that Hesster will transfer the licences to GB Radio or at the direction of a named panel “upon Hesster being satisfied that the respective financial rights and interests of the parties … have been satisfied or extinguished …” There are particular provisions in paragraph 1 of the Declaration of Trust giving priority to Gadens and Mr Evans but Mr Evans informed me at the hearing that the Gadens claims, at least, had been satisfied.
21. The second joined party, Bandkin Investments Pty Ltd, is not a beneficiary but the deed notes that following the restoration of GB Radio as licensee in respect of the licences, GB Radio authorised Bandkin to operate the Sydney licence. That authorisation appears to be contained in a letter dated 1 December 2002 from GB Radio signed by Mr Thomas and Mr Grills. The letter contains no term for the authorisation and no other terms and conditions. This is consistent with s 6 of the Radiocommunications (Limitation of Authorisation of Third Party Users) Determination 2000 (Cth) which requires such authorisations to be revocable at will.
22. WorldAudio became aware of the application for transfer of the two licences to Hesster, through its solicitors, Blake Dawson Waldron, by 14 August 2003. Thereafter, correspondence passed between Blakes and Gadens. Blakes asked for an undertaking from Gadens not to deal with or transfer the licences and to withdraw the transfer to Hesster. The first, but not the second, undertaking was given. The first undertaking was qualified. By letter dated 22 August 2003, from Gadens to Blakes, GB Radio positively asserted the assignment of the licenses to Hesster “to be held on trust for our client and certain other parties”. The existing undertaking was expressly stated to be confined to any “further transfer”. This letter prompted a further request for undertakings but these did not lead to any undertaking to withdraw the transfer and, as I read the demand, did not even seek it. WorldAudio apparently sought some interlocutory injunction from the Supreme Court of New South Wales because on 26 August 2003 the court made orders including the grant of an injunction restraining GB Radio “from taking any step to effect the transfer or registration of any such transfer” of the licences. However, no application was ever made to join Hesster as a defendant.
23. The suit was heard by McDougall J. On 10 October 2003 the court delivered reasons for judgment upholding WorldAudio’s claim against GB Radio. The reasons for decision make no mention of Hesster or its potential interest. The Court deferred making orders until the parties had considered the reasons. The Court then delivered reasons for judgment on the form of orders and costs on 7 November 2003. The orders included the following:
“14.[T]he defendant [GB Radio] be restrained from, by itself, its servants and agents or otherwise, taking any step to effect the transfer or registration of any transfer of the Melbourne licence or the Sydney licence to any person other than the plaintiffs;
“15.[T]he defendant [GB Radio] forthwith to withdraw the application made to the ACA, on or about 10 July 2003, for the transfer of the Melbourne licence and Sydney licence to Hesster Pty Ltd;”
24. Applications for the transfer of apparatus licences are to be made by the licensee (subs 131AA(1) of the Radiocommunications Act). However, they must be signed by both the licensee and the proposed transferee (subs 131AA(2)). That is a recognition that to the extent to which licence transfers are associated with commercial dealings, common law rights and obligations are likely to arise between the parties. If the proposed transferee needs to join in the application for transfer it does not seem to me that the transfer can be unilaterally withdrawn. Indeed, in accordance with the way ordinary commerce operates, it is much more likely that as between the transferor and transferee it will be the transferee and not the transferor who can redirect a transfer.
25. Accordingly, I do not think that an attempted withdrawal of a licence transfer application should be acted upon by the Authority unless the transferee joins in the application.
26. That takes me to the most significant matter before me which, unfortunately, requires some analysis of the merits. I say “unfortunately” because I do not think that it should ever have been necessary for either the Authority or this Tribunal to consider the merits of this case.
27. The essence of a public register is to facilitate public access to information relating to its subject. To be useful such information must be up to date. It will usually record a simple fact: in this case, the identity of the holder of a licence. Setting aside matters relating to the statutory role of the keeper of the Register, such as the cancellation of a licence for breach, the state of the Register will only change when both the licensee and a proposed transferee make such an application. It will not be appropriate for the keeper of the Register to determine on some other basis that a licensee has in some way ceased to be entitled to be the licensee and to transfer the licence to someone else. There are three good reasons for this. First, a system which permitted its keeper to change the identity of the licensee as a result of internal consideration, would not fulfil the object of certainty of a Register which lies behind such systems of registration. Persons inspecting the Register would accordingly be less certain that they could safely deal with the licensee. Secondly, the keeper is not a court and not equipped to deal with such disputes. Thirdly, the expenditure of public monies of a statutory Authority in determining private legal disputes is not appropriate.
28. I have no doubt that the keeper should act on a court order directed to the keeper. However, that would usually presuppose that the keeper was a party to the proceedings. It would also usually be appropriate for the keeper to act on an order of a court against the licensee. None of these circumstances will lead to either uncertainty through delay or the need for the keeper to make difficult decisions involving private rights.
29. Disputes relating to private rights should be determined by the courts in suits involving the disputants. I can see the wisdom of a keeper, upon receiving an application for transfer which is known to be disputed, giving the parties to the dispute a limited time, by invoking the jurisdiction of a court, to procure orders binding either the keeper or the other party to the dispute or both, before effecting the transfer which is before it. That will be likely to reduce potential involvement of the keeper in litigation. But I cannot see that it is appropriate to delay dealing with a transfer, merely pending the outcome of litigation, particularly where there is an unrelated person with a potential interest who is not a party to the litigation.
30. The desirability of the approach I commend can be tested by the facts of this case. If the Authority had given notice that it proposed to effect the transfer to Hesster at the conclusion of 14 days unless both parties withdrew it or it was ordered by a court not to do so, none of this saga would have occurred. WorldAudio would have either given up its claim or it would have sought interlocutory or final relief which bound Hesster or the Authority or both. The Authority would never have been in the position of having to consider the disputant’s claims on their merits. It would not have had to consider, for example, whether the claim of WorldAudio was sufficient to justify a delay in effecting the transfer to Hesster. It would not have had to consider whether it should register a transfer in the face of a prior inconsistent transfer application because of a decision of a court which did not bind the prior transferee.
31. I frankly find it most surprising that WorldAudio did not seek to join Hesster to the Supreme Court proceedings. That simple step, which would be likely to have been easily achieved, having regard to the position of Mr Evans, would have avoided this whole matter. However, if the Authority had taken its own appropriate action, either Hesster would have been joined or the matter would have been otherwise resolved. I note that although it would have been an option for Hesster to seek to be joined to the proceedings in the Supreme Court, I do not see that it had any obligation to take that action.
32. It follows from all of this that I affirm the opinion I expressed at the outset that the Authority should have effected the transfer shortly after it was lodged unless both parties to the transfer or a court required otherwise.
33. If this matter had come to the Tribunal for review in August 2003 I would have effected the transfer. However, I am not considering the matter on the facts as they were in August 2003. What occurred afterwards cannot be ignored.
34. First, the application for review was not made until 10 November 2004. This was more than one year after the Supreme Court decision and a considerable time after the transfer to WorldAudio had been effected. Secondly, Hesster, through Mr Evans, was on notice of all the relevant events. Hesster was aware of WorldAudio’s claim at the time it joined in the application for transfer of the licences and it also became aware of the result in the Supreme Court at the time it occurred. It must have been aware that GB Radio had joined in applications for the transfer of one of the two licences to WorldAudio. Hesster delayed for a substantial time after it gained this knowledge before taking any action. Thirdly, the transaction between GB Radio and Hesster was not an arms length transaction for value. The beneficiaries of the trust included Messrs Thomas and Grills (who also joined in the application to transfer the licences to WorldAudio). Other aspects of the transaction upon which I rely are set out above. It is true that WorldAudio is now in liquidation but its liquidator has appeared in the proceedings and asserted the validity of the transfer to it.
35. Although there was substantial delay in the commencement of these proceedings, that does not account for the delay between November 2004 and now. However, none of that delay was due to the processes of this Tribunal. Indeed, the Tribunal at all times sought to bring this matter on for hearing at the earliest opportunity. The matter was twice listed for hearing in 2005 but on each occasion the hearing date had to be vacated at the request of one or other of the parties. Failures by Hesster to comply with directions from the Tribunal were partly instrumental in causing the second adjournment. Because the second adjournment might have resulted in the matter being resolved through court litigation, a matter which the Tribunal has always encouraged, the vacation of the hearing date was acceded to.
36. The discretion conferred by the combination of para 131AB(2)(a) and subs 100(4) of the Radiocommunications Act is, in terms, quite wide. It extends to taking into account “all matters that [the Authority/Tribunal] considers relevant.” However, the object of all administrative decision-making is to arrive at “the correct or preferable decision” (Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634). Although the legislation may permit reference to a wide range of considerations, it does not follow that the preferable decision will include all these matters. That is so in the present case. The considerations relating to registers generally which I have set out above are not inconsistent with the legislation. Although s 153 of the Radiocommunications Act, for example, should not be confined to a “slip rule”, it is not without limits. I think that the decision-maker should be guided by the considerations I have discussed in determining what matters are considered to be relevant. I do not think that determining issues of, for example, trust law or priorities would be among the matters which would generally be relevant for the Authority to consider.
37. The first matter of relevance for consideration is that at the time the application for the transfer to Hesster was lodged, the transferor was the licensee and the application was in proper form. That should have led to the transfer being effected. However, I think that the totality of the matters tending to the opposite view now tip the balance sufficiently far in the other direction. There is lapse of time. There is delay. The transaction relied upon was not at arms length in the ways I have identified. I do not think that the fact that WorldAudio is in liquidation is a matter of significant weight. To my mind the preferable decision is now to leave the transfers to WorldAudio in place. It will still be open to Hesster, if it wishes, to invoke the jurisdiction of the courts to establish its claim in priority to WorldAudio. I accordingly propose to affirm the decision under review.
I certify that the preceding thirty seven (37) paragraphs are a true copy of the reasons for the decision herein of Justice Downes, President.
Signed: .............................................
Associate (Zoë Justice)Dates of Hearing 28, 29, 30 August 2006
Date of final submissions 13 September 2006
Date of Decision 15 December 2006
Counsel for the Applicant and the Mr A Sandbach
Joined Party (Bandkin InvestmentsPty Ltd)
Solicitor for the Applicant Cavoli & Co Solicitors & ConsultantsSolicitor for the Joined Party Lennon Settle Mazzeo Lawyers
(Bandkin Investments Pty Ltd)
Counsel for the Respondent Mr E de Zilwa
Solicitor for the Respondent Australian Government Solicitor
Counsel for the Joined Party Mr R Carruthers
(WorldAudio Communications Ms K WilliamsPty Ltd)
Solicitor for the Joined Party Blake Dawson Waldron
(WorldAudio Communications
Pty Ltd)
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