Practice Groups:
Powers of Regulators Brought Into the Spotlight
by High Court Decision
Energy &
Infrastructure
Projects and
Transactions
Australian Communications and Media Authority v Today FM (Sydney) Pty
Ltd [2015] HCA 7
Commercial
Transactions and
Outsourcing
Australia Energy, Infrastructure and Resources, Alert
1 April 2015
By Jenny K. Mee and Renee C. Thomlinson
Summary
Recently 1 the High Court of Australia handed down its unanimous decision in Australian
Communications and Media Authority v Today FM (Sydney) Pty Ltd [2015] HCA 7 (HCA
Decision) which relates to the powers of the Australian Communications and Media
Authority (Authority).
The HCA Decision accepts that the Authority was permitted to make a finding of fact that
a licensee committed a criminal offence and in doing so had breached a licence
condition, despite the fact that no proceedings in relation to the criminal offence had been
commenced or successfully prosecuted.
There are numerous industries that are regulated through licences, authorisations and
associated conditions and it is expected the HCA Decision could have a wide reaching
impact on regulatory regimes generally. Accordingly, the HCA Decision:
•
may be concerning for participants in regulated industries, given that it dispenses
with the need for a regulator to prove that an offence has been committed prior to
taking administrative action
•
is likely to be well received by regulators as it reinforces their powers to take
administrative enforcement action.
The Facts
Today FM (Sydney) Pty Ltd (Today FM) recorded a telephone call between two of its
presenters and a nurse at a hospital in London at which the Duchess of Cambridge was
a patient. Today FM's presenters pretended to be the Queen and Prince Charles and
were provided by the nurse with information about the Duchess' condition. The recording
was broadcast during one of Today FM's programs some hours later and also rebroadcast the next day. The nurse who took the call and provided the information about
the Duchess subsequently committed suicide.
Investigation by the Authority
The Authority initiated an investigation into the broadcast and prepared a preliminary
investigation report. The report contained a preliminary finding that in broadcasting the
recording of the private conversation Today FM had breached a licensing condition,
specifically the condition imposed by clause 8(1)(g) in Schedule 2 to the Broadcasting
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On 4 March 2015.
Powers of Regulators Brought Into the Spotlight by High Court Decision
Services Act 1992 (Cth) (BSA Act). This condition requires the licensee not to use the
broadcasting service in the commission of an offence. In this case, the offence was a
contravention of section 11(1) 2 of the Surveillance Devices Act 2007 (NSW) (SDA
offence).
Initial Proceedings in the Federal Court of Australia
Today FM commenced proceedings in the Federal Court of Australia 3 (Initial
Proceedings) seeking orders to permanently refrain the Authority from:
•
making any determination that Today FM has committed any criminal offence
•
preparing any report purporting to determine or express any opinion that Today FM
used its broadcasting service in the commission of an offence.
In seeking these orders Today FM contended that:
•
the Authority was not authorised to find that it had breached the licence condition
until a competent court adjudicated that it had committed the SDA offence
or
•
in the alternative, if the Authority was authorised to find that it had breached the
licence condition, the empowering provisions impermissibly confer judicial power on
the Authority (Constitutional Challenge).
Today FM's application was dismissed on the basis that:
•
in determining whether Today FM had breached the licence condition the Authority is
not making a judgment of Today FM's criminal guilt
•
the product of the Authority's investigation is nothing more than its conclusion as an
administrative body of an issue relevant to the determination of the breach of the
condition
•
in regard to the Constitutional Challenge, the Authority has broad regulatory
functions, including conducting non-adversarial investigations .
Appeal to the Full Court of the Federal Court of Australia
Today FM's successfully appealed to the Full Federal Court of Australia (Full Court) 4 and
the Authority's determination that Today FM had breached clause 8(1)(g) of the licence
condition 5 was set aside.
Before the hearing of the appeal, the Authority released its final investigation report with
the same findings with respect to breach as in the preliminary investigation report. The
Authority notified Today FM that it had finalised its investigation and that it would
consider the compliance issues raised by the investigation, as well as any other
appropriate remedial measures, in due course.
2
Generally, section 11(1) prohibits a person from publishing or communicating a private conversation that has come
to the person's knowledge as a result of the use of a listening device.
3
On 18 June 2013.
4
The Full Court's decision was made on 14 March 2014.
5
This was set out in the Authority's final investigation report that was released before the hearing of the appeal.
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Powers of Regulators Brought Into the Spotlight by High Court Decision
The Full Court noted that:
•
as a matter of general principle, it is not normally expected that an administrative
body (such as the Authority) will determine whether particular conduct constitutes the
commission of a relevant offence
•
the determination of whether a criminal offence has been committed can generally
only be determined by a court exercising criminal jurisdiction
(together, the General Principle).
The General Principle informed the Full Court adopting a narrower construction of clause
8(1)(g) than that adopted by the primary judge, holding that:
•
the text of clause 8(1)(g) does not state that the Authority is to form an opinion on
whether or not a relevant offence has been committed and such words should not be
read into the text
•
the ordinary meaning of the phrase "the commission of an offence" in clause 8(1)(g)
connotes that a court exercising criminal jurisdiction has found that an offence has
been committed.
Accordingly, on this basis the Full Court held it was unlikely that the legislature intended
to empower the Authority to make an administrative determination or finding of a
commission of a criminal offence.
The Full Court also considered it incongruous that the Authority might determine that a
licensee had breached clause 8(1)(g) of the licence condition and cancel the licence in
circumstances in which the licensee is subsequently acquitted of the relevant offence.
The Full Court's conclusion meant that the Constitutional Challenge did not need to be
addressed.
Appeal to the High Court
The Authority was granted special leave to appeal against the Full Court's decision. 6 The
Authority's appeal was brought on the basis of the Full Court having erred in its
construction of the following three issues:
1. clause 8(1)(g) requires, for the purposes of enforcement action under other provisions
of the BSA Act, that the Authority may only find that a relevant offence has been
committed upon conviction by a criminal court (First Ground of Appeal)
2. clause 8(1)(g) requires the Authority to defer administrative enforcement action until
after (if at all) the conclusion of the criminal process and holding the Authority bound
by that process (Second Ground of Appeal)
3. the expression "commission of an offence" in clause 8(1)(g) extends to the
commission of offences by persons other than the commercial radio broadcasting
licensee (Third Ground of Appeal).
Today FM sought to have the Full Court's decision affirmed on the strength of the
Constitutional Challenge.
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Special leave to appeal was granted on 15 August 2014.
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Powers of Regulators Brought Into the Spotlight by High Court Decision
High Court Decision
The Authority's appeal was allowed on the First and Second Grounds of Appeal and the
Constitutional Challenge was rejected. The Full Court's decision was set aside.
In reaching its decision the High Court noted the following:
General Principle
The General Principle stated by the Full Court is expressed too widely. Courts exercising
civil jurisdiction are not uncommonly required to determine facts which establish a person
has committed a crime. Further, it is not offensive to principle that an administrative body
is empowered to determine whether a person has engaged in conduct that constitutes a
criminal offence as a step in the decision to take disciplinary or other action.
On this basis, the High Court held that the Full Court erred in construing clause 8(1)(g) in
light of the principle that "it is not normally expected that an administrative body will
determine whether or not particular conduct constitutes the commission of a relevant
offence".
Construction of Clause 8(1)(g)
The High Court drew a distinction between the following phrases:
•
"the commission of an offence", which refers to the fact of the commission of the
offence
•
"conviction for an offence", which refers to the finding of the criminal court.
The High Court held there is no warrant for holding that the words "commission of an
offence" in clause 8(1)(g) convey that the licensee has been convicted of an offence (or
that a court exercising criminal jurisdiction has found the offence proven).
Enforcement Powers of Authority
The Authority is responsible for the enforcement of licence conditions. The mechanisms
available to the Authority for enforcement, depending on the Authority's opinion as to the
seriousness of the breach, are:
1. administrative action
2. application for a civil penalty order
or
3. prosecution for the criminal offence.
The High Court noted that whether a licensee has used the broadcasting service in the
commission of an offence is a question of fact. It is a determination that may be made by
the Authority as a preliminary step to any one of the three mechanisms for enforcement
as detailed above. It is only in the third instance that the determination is made on the
criminal standard.
The High Court held that the Authority's enforcement powers would be significantly
confined if clause 8(1)(g) was interpreted as requiring a court exercising criminal
jurisdiction to find that the offence is proven before the Authority could find that the
licensee has used the broadcasting service in the commission of an offence and before
the Authority could take administrative enforcement action.
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Powers of Regulators Brought Into the Spotlight by High Court Decision
Authority Not to be Constrained by Criminal Proceedings
In the case of the clause 8(1)(g) licence condition, the High Court held that the Authority's
ability to investigate, report on and take administrative action is not required to be
deferred until after a court exercising criminal jurisdiction has found the relevant offence
is proven.
Further, the High Court held that:
•
there was no incongruity in the Authority suspending or cancelling a licence based on
its determination that the broadcasting service has been used in the commission of
an offence, despite the licensee's subsequent acquittal of the offence
•
the court trying the criminal offence has to determine guilt beyond a reasonable doubt
as compared with the Authority which is not adjudging and punishing criminal guilt
and is not constrained by the criminal standard of proof
•
the Authority is not bound by the outcome of the criminal proceeding and may come
to a contrary view based on the material and submissions before it.
Rejection of Constitutional Challenge
The trial judge in the Initial Proceedings held that the Authority's powers to investigate,
report on and take administrative enforcement action in respect of the breach of the
clause 8(1)(g) licence condition did not support the conclusion that the Authority is
engaged in the exercise of judicial powers. The High Court upheld this finding and as
such the Constitutional Challenge was rejected.
Takeaways
Although the HCA Decision was specifically concerned with the BSA Act, it is likely to
have consequences for a number of industries where participants are regulated through
various layers of licence and authorisation conditions.
It is common in many industries for licences or authorisations to contain conditions
relating to compliance with various laws. The condition might be a positive condition to
comply with certain laws, or a negative condition not to breach certain laws. The
condition might refer to specific laws or to laws more generally, and it may refer
specifically to the commission of an offence (as in the Today FM case).
This case illustrates that regulators may make their own factual findings and take
administrative enforcement action in relation to licence conditions in situations involving
the alleged commission of an offence, without reference to criminal courts or criminal
standards.
It should also be noted that in some cases the extent of administrative discretion in taking
enforcement action may be further enhanced or facilitated by specific provisions of the
legislation under which they operate. For example, the legislation might provide that a
licence or authorisation can be suspended or revoked if the regulator is satisfied of
certain matters, or if the regulator forms the view that the person is no longer a suitable
person to hold the licence or authorisation.
Accordingly, licence and authorisation holders need to be aware of:
•
the extensive powers of regulators to investigate, report on and take administrative
enforcement action, and make their own findings of fact independently of other
judicial proceedings that may be applicable in any particular set of circumstances
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Powers of Regulators Brought Into the Spotlight by High Court Decision
•
the fact that these extensive powers may facilitate the ease with which a licence or
authorisation is cancelled or suspended by an administrative decision maker.
Participants in regulated industries should take these matters into account in their
regulatory compliance programs.
Authors:
Jenny K. Mee
jenny.mee@klgates.com
+61.2.9513.2355
Renee C. Thomlinson
renee.thomlinson@klgates.com
+61.2.9513.2437
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