Powers of Regulators Brought Into the Spotlight by High Court Decision - Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd [2015] HCA 7

by K&L Gates LLP
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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 re-broadcast 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 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.

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.

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.

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
  • 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.

Notes:
[1] On 4 March 2015.

[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.

[6] Special leave to appeal was granted on 15 August 2014.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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