Nugent and Australian Broadcasting Authority
[2004] AATA 1389
•23 December 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1389
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/1113
GENERAL ADMINISTRATIVE DIVISION ) Re DR HELEN NUGENT Applicant
And
AUSTRALIAN BROADCASTING AUTHORITY
Respondent
DECISION
Tribunal Justice Downes, President Date23 December 2004
PlaceSydney
Decision
The decision not to approve under s 67 of the Broadcasting Services Act 1992 (Cth) the breaches by Helen Nugent of s 56 of the Act is set aside. In lieu thereof the Tribunal approves the breaches for the period of 2 years from 1 September 2004 during which time action must be taken to ensure that the breaches cease.
........[sgd Garry Downes]........
President
CATCHWORDS
BROADCASTING SERVICES – Broadcasting Authority refused prior approval for temporary breach of director’s control requirements – applicant giving undertaking to resign – circumstances of breach limited – minimal detriment – approval granted for 2 years
Administrative Appeals Tribunal Act 1975 (Cth) s 35A
Broadcasting Services Act 1992 (Cth) ss 51, 56, 67
REASONS FOR DECISION
23 December 2004 Justice Downes, President Introduction
1. The applicant Helen Nugent is a director of Macquarie Bank Ltd and UNiTAB Limited. Unitab holds two commercial radio broadcasting licences in Queensland. Regional Media Pty Ltd, a subsidiary of Macquarie Bank, recently acquired all the shares in RG Capital Radio Ltd. That company is in a position to exercise control of 35 regional commercial radio broadcasting licences.
2. Commercial radio broadcasting licences are granted with respect to licence areas. The Unitab commercial licences are in the Brisbane and Maryborough licence areas. The Brisbane and Nambour licence areas overlap. Because the Australian Broadcasting Authority has determined that more than 30% of the Nambour licence area is attributable to the overlap, for present purposes the Brisbane and Nambour licence areas are to be treated as one. RG Radio is in a position to exercise control of two commercial radio broadcasting licences in Maryborough and two in Nambour.
3. Subsection 56(a) of the Broadcasting Services Act 1992 prohibits persons from being:
“a director of a company that is, or of 2 or more companies that are, between them, in a position to exercise control of more than 2 commercial radio broadcasting licences in the same licence area”.
Upon the acquisition of RG Radio by Macquarie Bank Dr Nugent became such a person
4. Section 67 of the Act permits applications to the Authority for approvals of such a breach. By subs 67(4) if, among other things, the Authority is satisfied that the applicant “will take action to ensure that the breach … ceases” and “the breach is incidental to the objectives of the transaction” then it may approve the breach “and specify a period during which action must be taken to ensure that the breach ceases”. The period specified must be “6 months, one year or 2 years”. It must commence on the day on which the transaction takes place. In this case that was 1 September 2004.
5. On 17 August 2004 Dr Nugent made application for approval of the breaches. On 26 August 2004 the Authority refused to approve the breaches. Dr Nugent applied to this Tribunal for review of the Authority’s decision.
Applicant’s Undertakings
6. It is by no means certain that either Macquarie Bank or Unitab proposes to take steps to change their licence holdings in Maryborough and Brisbane/Nambour. Accordingly, the only certain basis upon which the decision-maker could be satisfied that the breaches will cease is an undertaking given by Dr Nugent that she will resign from one or other board prior to the expiring of the term of any approval under s 67 unless before that time the breaches have ceased for other reasons. If no approval is granted she will resign forthwith.
7. Dr Nugent has given the following further undertaking:
“Pending any decision by the AAT and for the duration of the period until the breaches are cured, if the AAT issues a section 67 notice:
(a)I will absent myself and will not participate in any discussions of the boards of Macquarie Bank Limited (MBL) or UNiTAB Limited (UNiTAB) relating to any matter concerning any broadcasting activity or operations of any relevant licensee.
(b)I will not participate in any discussions, whether at board level or otherwise, relating to any broadcasting activity or about the operations of the relevant licensees in connection with the broadcasting operations of either MBL or UNiTAB.”
Cessation of Breach
8. The evidence relating to whether action will be taken by either Macquarie Bank or Unitab so that the breaches cease is not entirely satisfactory. Their real positions remained in doubt until the last day of the hearing. It is, of course, entirely a matter for the two companies to determine whether any change will be made. They were entirely free to make it clear that they contemplated no changes. The consequence would be a finding that the breaches would not cease by action of the companies. However, they did not do that. The Chairman of Macquarie Bank, David Clarke, swore an affidavit. So did the Chief Executive and Managing Director of Unitab, Richard McIlwain. Counsel for the respondent wished to cross-examine both deponents. However, neither of them were available for cross-examination in person. This is not surprising so far as Mr McIlwain was concerned because he was in Queensland. However, Mr Clarke was apparently in Martin Place, Sydney two blocks from the hearing room in Market Street. Mr McIlwain was cross examined by telephone with the consent of the respondent. I would have preferred cross-examination by closed-circuit television. I also permitted Mr Clarke to be cross-examined by telephone. No advance notice of an application for Mr Clarke to be cross-examined by telephone was made to me as it should have been. Section 35A of the Administrative Appeals Tribunal Act 1975 (Cth) proceeds on the basis that witnesses will give their evidence in person. Leave needs to be granted for evidence to be given by telephone or any other means of communication. However, my refusing to permit cross-examination by telephone would have caused delay and may have meant the evidence could not be taken. Since the respondent did not object I allowed the evidence to be given by telephone. I would not ordinarily grant such leave when a witness could come to the hearing room in a few minutes.
9. At the time the evidence of Messrs Clarke and McIlwain was given neither Macquarie Bank nor Unitab seemed to me to have any fixed intention to take any action to cause the breaches to cease. In the case of Macquarie Bank this would require the disposition of two of its radio licences. In the case of Unitab there is some possibility that its Brisbane service might be transferred to an open narrow-casting licence which is not within s 56 followed by the disposition of its commercial licence. If this is achieved then Unitab would consider selling its Maryborough licence to a purchaser who would agree to broadcast Unitab programmes.
10. There is a further alternative means by which the breach in Brisbane might cease. This is because the present overlap is 31.4%. Section 51 of the Act deems two licences to be treated as one when the overlap exceeds 30%. There is some evidence before me that the overlap might reduce in time to 30% or less. Macquarie Bank is prepared to assist in steps to facilitate a reassessment of the overlap. However, the evidence that the overlap would reduce to 30% was very tentative. Depending upon how holidaymakers are treated it might increase. The overlap includes the Queensland Sunshine Coast and so this is not unimportant. In any event the deeming provision in s 51 operates on the licence area population as determined by the Authority. There is no certainty that the Authority will make a fresh determination in the near future.
11. On the last day of the hearing written undertakings as to what they would do were proffered on behalf of Macquarie Bank and Unitab. These had the advantage of making their relative positions more certain but did not change their basic status. Macquarie Bank would facilitate a fresh population determination for Brisbane/Nambour and assist Unitab with respect to disposition of a licence in Maryborough. Unitab would look at the possibility of obtaining an open narrow-casting licence in Brisbane and then sell its commercial licence. If it achieved this it would seek to sell its Maryborough licence to a purchaser who would take its programmes.
12. When all of the above is put together it seems to me to amount to very little. If that was all there was to be considered there would be no basis for any approval for any time.
13. However, that is not all that there is to consider. It is to be noted that the provision in subs 67(4) relating to cessation of the breach refers to action the person will take to ensure that the breach ceases. The person is the person in breach. In this case it is Dr Nugent. I do have an unqualified undertaking by Dr Nugent to take steps to ensure that the breach ceases by resigning from the board of one or other of the companies. However, she seeks the maximum period of 2 years. That is until 31 August 2006.
14. I am satisfied the discretion to approve a breach arises in the present case because of Dr Nugent’s undertaking. However, the circumstance is unusual because it does not depend upon a requirement for time to remove the breaches. Dr Nugent could resign immediately. It is not as though some corporate restructuring or dispositions which are more than a possibility require time to be put into effect.
15. There is evidence that Unitab would value the services of Dr Nugent in the next year or so. This is because they are about to engage in activities in which Dr Nugent has expertise. They prefer the services of a non-executive director who can advise the Board directly rather than as a consultant. There is evidence that it would take time to find a replacement for Dr Nugent. Both companies consider that the resignation of Dr Nugent would be a loss to the Board. These are matters which are relevant to a positive exercise of the discretion under s 67. However, they would not be significant factors if the circumstances of the breach were serious. I turn to those.
16. The facts underlying the breach in the present case must be close to the lowest level one could imagine. Macquarie Bank’s interest is through two levels of subsidiary. Dr Nugent is not on either subsidiary board. Her expertise is in banking not the media. The RG Radio radio stations are general commercial radio stations. Unitab’s principal role is to provide gaming and gambling facilities. Its radio stations are exclusively devoted to sporting, racing, gaming and gambling issues, particularly horse racing, and associated information. Dr Nugent’s expertise is related to the financial aspects of this enterprise, not to its media activities. Both companies have reasonably sized boards with members having a range of expertise. The breach for the Brisbane/Nambour licence depends upon the population of the overlap area being 1.4% in excess of the number at which the two areas are deemed to be one. If the population was 1.4% less there would be no breach.
17. I think it can be concluded from these facts that Dr Nugent would not be involved in decision-making associated with any relevant conflict of interest or any opportunity to exercise power contrary to Broadcasting policy if she continued as a director of both companies. In any event she has given an undertaking not to participate in discussions or deliberations relating to broadcasting activity. It is also useful to note that competition between the radio stations of RG Radio and Unitab must be limited. It is not as if they were both radio stations seeking to attract a single age group with broadcasting of contemporary music.
18. Although the evidence as to cessation is really limited to Dr Nugent’s undertaking to resign it seems to me that the evidence of detriment flowing from granting approval for the breaches to continue is very slight. It is appropriate to exercise the discretion under the section in favour of approval.
Time Limit for Approval
19. A time limit must be set for the approval. Section 67 requires the specification of “a period during which action must be taken to ensure that the breach ceases” (subs (4)). The time it will take to put an end to a breach must be a relevant factor. In the present cases there is no real time constraint. However, the discretion must encompass the allowing of time for an orderly resignation which takes into account the interests of the applicant and the companies. It seems to me that the time it will take to remove a breach is only one factor. The sections refer to “a period during which action must be taken” not “a period required for the taking of action”. In the special circumstances of this case it seems to me that the seriousness of the breach and factors associated with Dr Nugent’s usefulness to the boards of both companies without risk to Broadcasting policy are matters which can be taken into account.
20. The approval must be for 6 months, one year or 2 years in each case dated from 1 September 2004. A six month approval would only permit resignation. It would be a very short period to find a replacement for one of the boards. Twelve months would allow until 31 August 2004 or some eight months from now. Given the season of the year it might be closer to seven months. That would still create replacement problems and would be likely not to permit completion of the Unitab project with which Dr Nugent is involved. The remaining alternative is two years. That might be too long but there is no extension I can give between one and two years. Making a choice between the two I think that 2 years is the preferable time. This will certainly allow all possibilities to be explored which might cause the breaches to cease and will otherwise permit Dr Nugent to complete current projects and the companies to take time finding a successor.
Decision
21. The decision not to approve under s 67 of the Act the breaches by Helen Nugent of s 56 of the Act will be set aside. In lieu thereof the Tribunal approves the breaches for the period of 2 years from 1 September 2004 during which time action must be taken to ensure that the breaches cease.
I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Justice Downes, President
Signed: ........[sgd Shamus Toomey]........
AssociateDates of Hearing 4, 15 & 16 November 2004
Date of Decision 23 December 2004Counsel for the Applicant Mr A Robertson SC with Ms KC Morgan
Solicitor for the Applicant FreehillsCounsel for the Respondent Mr KP Smark
Solicitor for the Respondent Australian Broadcasting Authority
0
0
0