Surveillance Australia Pty Ltd v McLennan

Surveillance Australia Pty Ltd (the appellant) appealed to the High Court of Australia against a decision of the Full Federal Court which had overturned a judgment of a single judge. The dispute concerned the interpretation of section 118 of the *Broadcasting Services Act 1992* (Cth) and its application to the appellant's acquisition of a controlling interest in a company that held a broadcasting licence. The appellant argued that its acquisition did not trigger the prohibition in section 118, which restricts foreign persons from acquiring a controlling interest in a company holding a licence for a commercial television broadcasting service.

The High Court was required to determine whether the appellant, a foreign person, had acquired a controlling interest in the relevant company within the meaning of section 118 of the *Broadcasting Services Act 1992*. This involved considering the definition of "controlling interest" as set out in section 118(2) and whether the appellant's acquisition of shares, combined with the rights and powers it held, constituted such control. The court also had to consider the proper construction of the term "control" in the context of the legislative purpose of section 118, which is to regulate foreign ownership of Australian broadcasting services.

The High Court held that the appellant did not acquire a controlling interest in the company. Their Honours reasoned that while the appellant held a significant percentage of shares, the ultimate control of the company rested with its directors, who were not subject to the appellant's direction or control in a manner that would constitute a "controlling interest" under the Act. The court emphasised that the definition of "controlling interest" required more than just a substantial shareholding; it necessitated the ability to control the composition of the board of directors or to influence the company's policy. The appeal was therefore allowed.