Seven Network Limited v Australian Competition and Consumer Commission
[2004] FCA 885
•9 JULY 2004
FEDERAL COURT OF AUSTRALIA
Seven Network Limited v Australian Competition and Consumer Commission [2004] FCA 885
TRADE PRACTICES – notice to provide information – whether notice must be addressed to someone suspected of contravening the Act – whether matters alleged are capable of constituting contraventions of the Act – whether prescribed publication of matter by a prescribed information provider – whether mere identity of possible witness sought ‑ Trade Practices Act 1974 (Cth), s 155 and s 65A
MEDIA LAW – broadcasting services – where network broadcast statements of another – whether network made the representations – whether publication of an advertisement or publication in connection with the possible supply of goods or services – Trade Practices Act 1974 (Cth), s 65A
Trade Practices Act 1974 (Cth) s 6, s 52, s 65, s 155
Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368 cited
Riley McKay Pty Limited v Bannerman (1977) 15 ALR 561 considered
SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 cited
Universal Telecasters (Qld) Ltd v Guthrie (1978) 32 FLR 360 applied
WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 consideredSEVEN NETWORK LIMITED ACN 052 816 789 v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
N 502 of 2004
BRANSON J
9 JULY 2004
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 502 of 2004
BETWEEN:
SEVEN NETWORK LIMITED ACN 052 816 789
APPLICANTAND:
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
RESPONDENTJUDGE:
BRANSON J
DATE OF ORDER:
9 JULY 2004
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The application be dismissed
2.The applicant pay the respondent’s costs.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 502 of 2004
BETWEEN:
SEVEN NETWORK LIMITED ACN 052 816 789
APPLICANTAND:
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
RESPONDENT
JUDGE:
BRANSON J
DATE:
9 JULY 2004
PLACE:
SYDNEY
REASONS FOR JUDGMENT
INTRODUCTION
This proceeding calls for consideration of the ambit of the power given to the Australian Competition and Consumer Commission (‘the Commission’) by s 155 of the Trade Practices Act 1974 (Cth) (‘the TPA’). Section 155 of the TPA relevantly provides:
‘(1)…if the Commission, the Chairperson or the Deputy Chairperson has reason to believe that a person is capable of furnishing information … relating to a matter that constitutes, or may constitute, a contravention of this Act … a member of the Commission may, by notice in writing served on that person, require that person:
(a)to furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a competent officer of the body corporate, within the time and in the manner specified in the notice, any such information;
…
(5) A person shall not:
(a)refuse or fail to comply with a notice under this section;
….’
THE NOTICE
The notice in writing that is the subject matter of the dispute between the parties (‘the Notice’) was signed by the Chairman of the Commission on 23 March 2004. It was served on the applicant (‘Seven Network’) by facsimile transmission on or about 24 March 2004.
The Notice identifies three matters that constitute, or may constitute, contraventions of s 52 of the TPA. The first two matters relate to the broadcast on 31 October 2003 and 30 January 2004 respectively of an item on Channel 7’s Today Tonight television program which featured a mentoring program marketed under the name ‘Wildly Wealthy Women’ (‘the WWW program’). The third matter relates to the publication on the Today Tonight website of material in respect of the WWW program. The notice alleges that during the two broadcasts and on the Today Tonight website the following three representations were made:
‘(a)that participants in the mentoring program would become wealthy through investing in property;
(b)that participants in the mentoring program would become wealthy by investing in property even if they have no money at present;
(c)that participants in the mentoring program would become millionaires by investing in property.’
The three representations will hereafter be referred to simply as ‘the representations’.
In respect of the first two matters, the Notice alleges that the representations were made by Seven Network (or a wholly owned subsidiary of Seven Network) and/or Dymphna Boholt and Sandy Forster, the principals of the WWW program. The Notice further alleges that Seven Network (or the relevant wholly owned subsidiary of Seven Network) and/or Dymphna Boholt and Sandy Forster had no reasonable grounds for making the representations. In respect of the third matter, it is alleged that Seven Network (or a wholly owned subsidiary of Seven Network) caused the publication of material on the Today Tonight website which promotes the WWW program and makes the representations. It is further alleged that Seven Network (or the relevant wholly owned subsidiary of Seven Network) had no reasonable grounds for making the representations.
The information that the Notice required to be furnished in writing was the names and addresses of various persons. These persons were identified either by position (eg the Executive Producer of the Today Tonight television program broadcast on 31 October 2003) or by reference to their responsibility (eg each person responsible for the text and the publication of the content of the Today Tonight website).
STATUTORY FRAMEWORK
Section 52 of the TPA is found in Division 1 of Part V of the TPA. It relevantly provides that:
‘A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.’
Section 6(3) of the TPA extends the application of certain provisions of the TPA including s 52. It relevantly provides:
‘… the provisions of … Divisions 1 … of Part V … have, by force of this subsection, the effect they would have if:
(a)those provisions … were, by express provision, confined in their operation to engaging in conduct to the extent to which the conduct … takes place in a radio or television broadcast; and
(b)a reference in those provisions to a corporation included a reference to a person not being a corporation.’
Section 65A of the TPA limits the operation of certain provisions of the TPA, including s 52, in respect of the media and others in the business of providing information. Section 65A(1) relevantly provides:
‘(1)Nothing in section 52 … applies to a prescribed publication of matter by a prescribed information provider, other than:
(a)a publication of matter in connection with:
(i)the supply or possible supply of goods or services;
…
(iii)the promotion by any means of the supply or use of goods or services;
…
where:
…(vi)the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with:
(A)a person who supplies goods or services of that kind … ;
… ; or
(b) a publication of an advertisement.’
The Commission accepts that Seven Network and its wholly owned subsidiaries are prescribed information providers and that the publications identified in the Notice are prescribed publications within the meaning of s 65A of the TPA.
Section 155 of the TPA is relevantly set out in [1] above.
This proceeding has been instituted in reliance on s 163A of the TPA which, amongst other things, authorises a person, in relation to a matter arising under the TPA, to institute a proceeding in this Court seeking a declaration as to the validity of anything purporting to have been done under the TPA. Seven Network seeks a declaration that the Notice is ‘unauthorised, invalid and of no effect’ and specified consequential relief.
GROUNDS ON WHICH RELIEF IS SOUGHT
The application filed by Seven Network claims declaratory relief without identifying the grounds upon which that relief is claimed. The outline of submissions filed on behalf of Seven Network identifies the grounds upon which relief is claimed as follows:
‘(a)the Notice was not authorised by the enactment in pursuance of which it was purported to be issued;
(b)the issue of the notice was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be issued;
(c)The Notice is invalid as:
(1)it does not disclose the necessary relationship between the information that is sought and the matter in respect of which it is sought;
(2)it does not sufficiently identify any matter which is said to constitute, or may constitute, a contravention of the Act by the applicant.’
EVIDENCE
Seven Network sought to read affidavits sworn by certain officers of the Seven Network. The Commission objected to the affidavits being read on the ground that, in each case, the evidence contained in them was not relevant to any issue in the proceeding. Counsel for the Commission argued:
‘Unless on its face that notice discloses some deficiency, the only way in which the applicant could seek to make out a challenge is by reference to some suggested inadequacy in the material that was before the Chairman when he issued the notice. But the case hasn't been put on that basis and that information has neither been sought nor put before the Court.
It is not open to an applicant in judicial review proceedings to impugn the decision to issue the notice based upon evidence not shown to have been before the decision maker. The only circumstance, of course, in which original evidence of the kind sought to be introduced can ever become relevant in such a proceeding or the principle basis is as a jurisdictional fact. A jurisdictional pre-condition of the exercise of the power. But it is not even arguable that it is a jurisdictional fact of a kind susceptible of proof by original evidence in the Court that the particular matter constitutes or may constitute a contravention ….’
I have not found it necessary to determine whether this proceeding, which has been instituted in reliance on s 163A of the TPA, is, or is for evidentiary purposes to be equated with, a judicial review proceeding. The evidence contained in the affidavits is not, in my view, probative of any fact in issue in this proceeding whether or not it is equated with a judicial review proceeding.
PROPER APPROACH TO SECTION 155
Section 155 of the TPA gives the Commission power to obtain information, documents and oral evidence. The Notice requires information only to be furnished to the Commission. For convenience s 155 will be considered hereafter only to the extent that it authorises the Commission to require information to be furnished to it.
As Fisher and French JJ observed in SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 (‘SA Brewing’) at 359:
‘Section 155 of the Trade Practices Act 1974 (Cth) provides the Trade Practices Commission [now the ACCC] with a powerful investigative tool.’
However, it is an investigative tool with limitations. It must only be used for proper purposes. Proper purposes are purposes that enable the Commission to exercise its statutory functions (Riley McKay Pty Limited v Bannerman (1977) 15 ALR 561 (‘Riley McKay’) per Bowen CJ at 565).
The form or content of the notice must convey to the recipient with reasonable clarity what information he or she is required to furnish and on what basis the Commission is entitled to require him or her to furnish it (Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368 (‘Pyneboard’) per Northrop, Deane and Fisher JJ at 374).
Additionally, a notice may only be served under s 155 where the Commission, the Chairperson or the Deputy Chairperson ‘has reason to believe’ that a person is capable of furnishing information in relation to a matter that constitutes, or may constitute, a contravention of the TPA. The statutory requirement of ‘reason to believe’ involves both a belief in fact and reasonable grounds for that belief. The required belief is a belief that the person to whom the notice is to be given is capable, relevantly, of furnishing information relating to known or suspected facts (WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 (‘WA Pines’) per Brennan J at 180 and Lockhart J at 186).
Whether or not the known or suspected facts relate to a matter that constitutes, or may constitute, a contravention of the TPA is a question of law; it is not affected by a belief held by the Commission, the Chairperson or the Deputy Chairperson (WA Pines per Brennan J at 179). In referring to a matter that may constitute a contravention of the TPA, s 155 is not referring only to known facts. A matter which may constitute a contravention can involve a body of facts which are not fully known but which, when fully known, may disclose a contravention. As Brennan J pointed out in WA Pines at 179:
‘The character of a matter is determined objectively, and if it could be shown that a contravention would not be constituted by a concatenation of facts which exist or have existed and facts which might reasonably be expected to exist or to be about to exist or to have existed, there would be no “matter” relating to which a person could furnish information etc. as provided for by s 155(1).’
A s 155 notice is not limited by any requirement that the information required to be furnished be information that will establish or tend to establish a contravention of the TPA. In WA Pines Lockhart J at 188 observed that:
‘The Commission may seek to exercise its powers under s 155 to obtain information or documents that may be exculpatory rather than inculpatory.’
Brennan J at 180 expressed the same view.
Nor is there any requirement in s 155 that the person on whom the notice is served be a person suspected of having contravened the TPA. The only requirement is that:
‘the information or documents sought are capable, in a broad investigative context, of being properly regarded as related to any one of the “matters” which the notice identifies.’ (Pyneboard at 376).
CONSIDERATION
Whether Matters Capable of Constituting Contraventions
Seven Network contended that, by virtue of s 65A of the TPA, the matters identified in the Notice as matters that constitute, or may constitute, contraventions of s 52 of the TPA by Seven Network or its subsidiaries are incapable of bearing that character. On that basis Seven Network contended that the Notice ‘fails to satisfy the nexus for validity or “necessary relationship” identified in s 155(1)(a) of the Act’. I assume that this contention was advanced in support of ground (c)(1) of the grounds on which relief is sought in this matter (see [11] above).
In considering the above contention, the first two matters that the Notice identifies can be dealt with together. They each involve assertions that conduct engaged in by Seven Network (or a wholly owned subsidiary of Seven Network) and/or Ms Boholt and Ms Forster may constitute contraventions of s 52 of the TPA. That is, they assert that (a) Seven Network (or one of its wholly owned subsidiaries) may have contravened s 52, or (b) Ms Boholt and Ms Forster may have contravened s 52 or (c) Seven Network (or a wholly owned subsidiary of Seven Network) and Ms Boholt and Ms Forster together may have contravened s 52.
Section 65A of the TPA has no operation in respect of the conduct of Ms Boholt and Ms Forster. As the conduct relied upon in the first two matters took place in a television broadcast, s 6(3) of the TPA gives s 52 an extended operation such that it cannot be said that Ms Boholt and Ms Forster are incapable of having contravened s 52 in the broadcasts identified because they are not a corporation or corporations. To the extent that the first two matters involved conduct of Ms Boholt and Ms Forster, I reject the contention that they are incapable of being matters that constitute, or may constitute, contraventions of s 52 of the TPA.
The Commission accepts that s 65A of the TPA has an operation in respect of Seven Network and its wholly owned subsidiaries. However, s 65A does not render Seven Network and its wholly owned subsidiaries logically incapable of contravening s 52 by reason of the broadcast of the items on the Today Tonight program. The protection which s 65A gives to a prescribed publication of matter by a prescribed information provider is limited. It does not extend to, for example, the publication of an advertisement (s 65A(1)(b)). It also does not extend to the publication of matter in connection with the possible supply of services where the publication was made pursuant to a contract, arrangement or understanding with a person who supplies services of that kind (s 65A(1)(a)). It is at least theoretically possible that investigations will reveal that the Today Tonight program items concerning the WWW program were in truth advertisements. It is also theoretically possible that investigations will reveal that the Today Tonight program items concerning the WWW program involved the publication of matter in connection with the possible supply of services pursuant to a contract, arrangement or understanding with a person who supplies services of that kind. I therefore also reject the contention that by reason of s 65A the first two matters are incapable of being matters that constitute, or may constitute, contraventions of s 52 of the TPA by Seven Network or one of its wholly owned subsidiaries.
The third ‘matter’ identified in the Notice relates to the publication, from October 2003 until the institution of this proceeding, on the Today Tonight website of material which promotes the WWW program. The contravention of s 52 alleged by this item is a contravention by Seven Network, or one of its wholly owned subsidiaries, only. The reasons set out above for concluding that, notwithstanding s 65A, Seven Network, or one of its wholly owned subsidiaries, could contravene s 52 even in respect of a prescribed publication apply equally in respect of a publication on a website.
For the above reasons I reject the contention that the matters identified in the Notice are incapable of constituting contraventions of s 52 of the TPA by reason of s 65A of the TPA.
No Representations Made by Seven Network
Seven Network further contended that no representations of the kind identified in the Notice were made by Seven Network or one of its wholly owned subsidiaries. I assume that this contention was advanced in support of ground (c)(2) of the grounds on which relief is sought in this matter (see [11] above).
Seven Network has not sought a declaration that nothing in the contents of the Today Tonight program items and the Today Tonight website respectively amounts to the representations or any of them (see Riley McKay at 569). In the circumstances it seems to me that the appropriate test in respect of the asserted representations is whether I am satisfied that it could not be established that Seven Network, or one of its wholly owned subsidiaries, made the representations. The relevant evidence before me is constituted by the transcripts of the two Today Tonight program items and a copy of the material that appeared on the Today Tonight website on 18 March 2004. At the hearing of any proceeding calling for proof of the making of the representations by Seven Network, or one of its wholly owned subsidiaries, additional evidence might be tendered (eg video recordings of the broadcasts and evidence of material appearing on the Today Tonight website on other days).
The transcript of the first Today Tonight program item reveals that the program compère said, amongst other things:
‘Depna Boholt and Sandy Forster are self‑proclaimed wildly wealthy women on a mission to make other women filthy rich too’;
‘Through shrewd investment in real estate the pair have become millionaires, their secrets to be revealed in a mentoring program called ‘Wildly Wealthy Women’;
‘Sandy, a former surf wear designer is now a prosperity coach teaching women how to think like millionaires. In eight months she’s bought more than $1 million worth of property with no money whatsoever’;
‘The knowledgeable pair are now on the hunt for hundreds of aspiring property millionaires to be part of their Wildly Wealthy Women mentoring program’;
‘The nine month program costs nearly $3,000. If that sounds a lot think again. They say they can turn anyone into a millionaire even those with no money’;
‘For your chance to learn how to be a property millionaire log on to wildlywealthywomen.com’; and
‘Too good to be true? Well we’ll be following the scheme’s progress to let you know.’
The transcript of the second Today Tonight program item reveals that the compère said, amongst other things:
‘The women you’re about to meet have made millions of dollars, and now they want to share their money-making secrets’;
‘A lucky seven women have been chosen from thousands to get the program for free’;
‘Dympna, an accountant, and Sandy, a prosperity coach, say they’ve created their own success and wealth from next to nothing and plan to teach other women to do the same’; and
‘But can these women become property millionaires? Well, over the next 9 months, we’ll be closely watching them to see if they actually become wildly wealthy women. We’ll let you know how they go.’The transcripts of the two Today Tonight program items show that Ms Boholt and Ms Forster used the broadcasts to promote the WWW program enthusiastically. It was not suggested by Seven Network that Ms Boholt and Ms Forster did not make the representations during the course of the Today Tonight program items.
I do not accept that the statements made by the compère during the first Today Tonight program item are incapable of supporting a finding that Seven Network, or one of its wholly owned subsidiaries, made the representations. While the words ‘Too good to be true?’ are capable of conveying scepticism, whether in the context of the broadcast they did convey scepticism, and if so to what extent, cannot be determined from the transcript alone. The intonation of the voice of the compère and his or her demeanour at the time might bear on the message conveyed by the words.
The statements made by the compère during the second Today Tonight program item are less fulsome than those made by the compère during the earlier program item. However, I am not satisfied that they are incapable of supporting a finding that Seven Network, or one of its wholly owned subsidiaries, made the representations. Additionally, it might be found to be unrealistic in all of the circumstances to treat the second Today Tonight program item as independent of the first program item. The remarks made by the compère at the end of the first program item might be found to look forward to the second program item and to link the two together, at least so far as some sectors of the viewing public were concerned. For these sectors of the viewing public the second program item might have been seen as a re-affirmation of the content of the first program item.
In any event, the authorities reveal that where a television station broadcasts a statement that is misleading or deceptive, it will ordinarily be found to have made that misleading or deceptive statement (see for example Universal Telecasters (Qld) Ltd v Guthrie (1978) 32 FLR 360 (‘Universal Telecasters’)). It was presumably for this reason that s 65A, which provides a measure of protection to prescribed information providers, was introduced into the TPA.
The material that appeared on the Today Tonight website on 18 March 2004 includes generous quotations of what was said by Ms Boholt and Ms Forster during the second Today Tonight program item. It also includes the address of the Wildy Wealthy Women website. I am not satisfied that the material shown to be on the Today Tonight website is incapable of supporting a finding that the website conveys the representations. On the authority of Universal Telecasters, Seven Network, which controls the content of the website, could be found to have made the statements included on the website. Should it be unable to rely on s 65A of the TPA it might thus be found to have contravened s 52 of the TPA.
For the above reasons I reject the contention that the Notice is defective insofar as it alleges that Seven Network or one of its wholly owned subsidiaries made the representations.
Identification of Possible Witnesses
Seven Network contended that the use of s 155 to identify possible witnesses in respect of elements of a possible contravention of the TPA is not an appropriate use of the section. I assume that this contention was advanced in support principally of ground (b) of the grounds on which relief is claimed in this matter (see [11] above).
In Riley McKay Bowen CJ gave consideration to, amongst other things, whether the following request for information from a company that advertised a product for sale by mail order was properly made under s 155 of the TPA:
‘whether the company has received any communication from a person to whom the company supplied it [ie the product] in which the person expressed an attitude as to its standard, quality, performance, uses, benefits or suitability for any purpose.’
At 568 Bowen CJ said:
‘It appears to me that if this question were confined to communications received by the company before the publication of the first advertisement or after the publication of the first advertisement and before the publication of the later advertisement, the information sought might be relevant to the question of a defence under s 85(1). Apart from this, it does not appear to me that the question has sufficient relevance. It is possible that communications received after all the advertisements had been published and run their course, if made available to the Commission, might lead it to particular individuals who might be possible witnesses as to the quality of the goods. It does not appear to me that this would be an appropriate use of s 155(1).’
The Chief Judge did not explain why he regarded the use of s 155(1) to lead the Commission to the identity of possible witnesses to be inappropriate. It may perhaps have been because his Honour did not consider that the name of a possible witness relates sufficiently directly to a matter that constitutes, or may constitute, a contravention of the TPA.
The Notice in this case seeks the names and addresses of the following individuals:
(a)the person who was the Executive Producer of each of the two Today Tonight television programs;
(b)each person responsible for the content of the items dealing with the WWW program broadcast on the two Today Tonight television programs;
(c)the compère of the items relating to the WWW program broadcast in each of the two Today Tonight television programs; and
(d)each person responsible for –
(i)the text; and
(ii)the publication;
of the content of the Today Tonight website in respect of the WWW program at any time in the period from 31 October 2003 to the date of the Notice.
In the context of the possible contraventions of the TPA identified in the Notice, each of the individuals whose name and address is sought by the Notice is more than just a possible witness on the issue of whether the person or persons who made the representations had reasonable grounds to make them. Each of them is a person who might reasonably be expected to have information touching on whether s 65A of the TPA has the effect of rendering s 52 of the TPA inapplicable to the publication of the relevant matter by Seven Network or one of its wholly owned subsidiaries. I do not regard their respective names as having only an indirect or remote connection with the matters identified in the Notice.
I reject the contention that the Notice is invalid on the basis that it merely seeks to identify possible witnesses in respect of a possible contravention of the TPA.
CONCLUSION
I am not satisfied that Seven Network is entitled to the relief which it seeks in this proceeding on any of the grounds identified in the submissions supporting its application to the Court. The application will be dismissed with costs.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate:
Dated: 9 July 2004
Counsel for the Applicant: A J L Bannon SC and J R Clark Solicitor for the Applicant: Freehills Counsel for the Respondent: N Williams SC and S T White Solicitor for the Respondent: Slater & Gordon Date of Hearing: 16 June 2004 Date of Judgment: 9 July 2004
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