ACCC v Channel Seven Brisbane Pty Limited [2008] HCATrans 381 (14 November 2008)

Last Updated: 19 November 2008

[2008] HCATrans 381

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S335 of 2008

B e t w e e n -

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

and

CHANNEL SEVEN BRISBANE PTY LIMITED

First Respondent

CHANNEL SEVEN SYDNEY PTY LIMITED

Second Respondent

CHANNEL SEVEN MELBOURNE PTY LIMITED

Third Respondent

CHANNEL SEVEN PERTH PTY LIMITED

Fourth Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 NOVEMBER 2008, AT 9.35 AM

Copyright in the High Court of Australia

__________________

MR S.T. WHITE, SC: May it please the Court, I appear with my learned friend, MS J.S. GLEESON, for the applicant. (instructed by Australian Government Solicitor)

MR T.E.F. HUGHES, QC: May it please the Court, I appear with my learned friends, MR A.S. BELL, SC and MR P. ZAPPIA, for the respondents. (instructed by Freehills)

GUMMOW J: Yes, Mr White.

MR WHITE: Thank you, your Honours. Can I commence by directing your Honours’ attention to paragraph 55 of the Full Court’s reasons at application book page 83 where your Honours will see that the Full Court found subparagraph (vi) of section 65A of the Trade Practices Act was concerned with a publication made on behalf of a person who supplies goods or services of a kind supplied by the prescribed information provider. Your Honours will then see in paragraph 56 that the Full Court gave further clarification to that when it stated that subparagraph (vi) extended the exception to goods or services supplied by some other person on its behalf, the reference to “on its behalf” presumably being a reference to the prescribed information provider.

In our respectful submission, there was a subtle change from paragraph 55 to 56 which was important in that paragraph 55 was speaking of a publication made on behalf of a third party who supplied goods or services, whereas 56 appears to be concerned with the supply of goods or services by the third party on behalf of the prescribed information provider. The error, we respectfully submit, is that subparagraph (vi) of section 65A does not speak in terms of a third party supplying goods or services on behalf of a prescribed information provider. It speaks of a publication of matter by the prescribed information provider in connection with goods or services on - - -

GUMMOW J: We see the text at page 74 and 75.

MR WHITE: Yes.

KIRBY J: Did the Minister explain this nuance in the second reading speech or not?

MR WHITE: No, he did not.

KIRBY J: It seems a little, well, surprising if every broadcaster in this nation is going to be liable for every misstatement that is made on its broadcast, and that is the problem from the point of view of freedom of expression of the interpretation you urge on the Court.

MR WHITE: It would not have that consequence, your Honour. It would be a situation in which the broadcaster enters into an agreement to broadcast the goods or services that are supplied by the third party. In other words, for example, in the case at hand, we had a broadcast in respect of the goods or services being supplied by the persons with whom the broadcaster had the contract or agreement.

KIRBY J: I see the point you are making, and we have all read the papers, but as I think you acknowledge, there is an issue here as to how one interprets the Act. After all, very clever people below us have reached different views and therefore there is an ambiguity in it. In the respondents’ camp is an interpretation that avoids interference in freedom of expression, or diminishes it. In your camp is the reality of the world today that a lot of broadcasts are forms of infotising. They are giving information mixed up with entertainment, mixed up with advertising. So that is the problem.

MR WHITE: That is a problem, and the problem is the gap that this construction appears to have, whereas advertisements are not exempted from the provisions of the Trade Practices Act. We now have a situation in which a publication of commercial - - -

GUMMOW J: I know you are right, but what is the text that indicates that advertisements are not excepted?

MR WHITE: Subparagraph (b), your Honour, of 65A. The opening words are:

(1) Nothing in section 52, 53, 53A, 55, 55A or 59 applies to a prescribed publication of matter by a prescribed information provider, other than . . .

(b) a publication of an advertisement.

KIRBY J: What was the purpose of hiving that off?

MR WHITE: Your Honour, it is by no means clear. One cannot divine anything from the second reading speech.

GUMMOW J: Just a minute. What is an advertisement? Is that a defined term?

MR WHITE: No, it is not defined.

GUMMOW J: What year was this introduced?

MR WHITE: In 1984, following some decisions of the Federal Court in which they held that - - -

GUMMOW J: I remember that. Now, what was an advertisement in 1984 may not be what is an advertisement in 2008, in view of the changing nature of the trade, the trade being the broadcast licensing trade.

MR WHITE: The problem that the Full Court’s construction gives is that whilst advertisements are not exempted, publications of commercial subject matter on behalf of or pursuant to a contract with a third party are exempted. In our respectful submission, that gap would not have been intended by Parliament, and that is the consequence of the Full Court’s reasoning in relation to subparagraph (vi).

GUMMOW J: The real question is, was the gap a mischief that was then perceived? Maybe it was not. If it now is, what is the consequence of the form of words that was adopted in 1984? Do you see what I mean?

MR WHITE: I do. As I submitted before, one cannot really get anything much from the second reading speech. The word “advertisement” is not defined in the legislation.

KIRBY J: Would one not read a statute like this as speaking to society and to trade practices as they develop from time to time?

MR WHITE: That would be our submission, and things have moved on considerably since 1984 by simply turning on the television and seeing the amount of so-called current affairs and programs of a type with which this proceeding was concerned. It raises significant issues, if your Honours please, because if in the situation at hand the respondents had engaged in misleading conduct, which they were found to have done both at trial and in the Full Court, they can hide behind section 65A.

There is a significant moral hazard, we would submit, if a broadcaster can simply, without checking the facts, go to air knowing that it can simply call in aid section 65A in those circumstances. We submit that has important public policy implications. We do understand the freedom of the press, and the reason for 65A was to introduce a deep harbour, a safe harbour, but how deep it goes, we submit, is not as far as the Full Court construed it.

The other problem with the Full Court’s construction, if the Court pleases, is that it renders really subsection (vi) irrelevant because it does not matter whether the goods or services were supplied by a third party to the prescribed information provider. The publication will remain a publication of relevant goods or services, which is what is covered by subparagraph (v). So, in our respectful submission, the construct of subparagraph (vi) does not add anything to paragraph (v), whereas the construction that the trial judge gave it, and the construction for which the Commission contends, does give subsection (vi) significant work to do.

GUMMOW J: Has there been any discussion of this section in the commentaries on the Act, in advance of this litigation, I mean.

MR WHITE: There has been, but all the commentary and the judicial reasons that have been given in relation to section 65A have not touched on the point which is thrown up by the Full Court’s decision which is whether there is this gap or not.

KIRBY J: But if this has been a provision of the Act since 1984 and if, as common experience shows, this is a phenomenon of the world today and if there have been no cases on it, why is it an important matter? It does not seem to have agitated anybody.

MR WHITE: It has agitated the Commission in the case at hand.

KIRBY J: It has not done much then.

MR WHITE: It probably will not, given the construct the Full Court has given because it effectively confines the operation of subsection (vi) to circumstances where it really does not add anything to the legislation. If it is construed the way the trial judge construes it, then there is an important role for this section to play in monitoring how broadcasters publish a broadcast of the kind in question, and which are becoming more common.

All the authorities in the past appear to have been dealing with the question of whether the goods or services were relevant goods or services in subparagraph (v), namely, self-advertising by the broadcaster, promoting its own products. That was not an issue in this case. This case rose up for the first time whether a broadcaster of a third party’s goods or services is to be exempted from the provisions of the Act, and we would submit that is a very relevant issue.

KIRBY J: Yes, it is relevant and arguably it is important. I am just wondering, if your construction is correct, what could a broadcaster do to defend itself in anticipation of proceedings of this kind?

MR WHITE: What it should have done in this case, for example, was to check the facts. If they are going to adopt and embrace representations made by the supplier of the goods, and in this case the court found that Channel Seven did adopt and embrace a number of the statements made by the women promoting the investment scheme being the subject of the broadcast, they should check those facts. If they do, then there is no liability. There has to be a breach of the section and also, of course, they have to have adopted the representation. The mere publication or broadcast, we accept, does not constitute an adoption by the broadcaster of the third party statement.

GUMMOW J: It is said in Mr Hughes’ written material that the acceptance of the construction you advance would produce a result that the exception to the exemption devours it, rendering it useless.

MR WHITE: We submit not, your Honour. I think this gets back to what Justice Kirby was saying. We do not contend that this would have the effect that broadcasters in all circumstances will be liable for any statement made by them in a broadcast. That would not be the outcome. This is confined to a situation in which a broadcaster publishes a broadcast promoting or otherwise in respect of a third party’s goods and engages in misleading conduct in relation to it. It is very much no different to an advertisement.

That is the problem with the Full Court’s reasoning. There is a distinction drawn which should not be drawn between advertising on the one hand and a broadcaster publishing matter in respect of a third party’s
goods for which it may or may not be paid, but which is not itself an advertisement. In our respectful submission, if the section does apply in that situation, then it has a significant ramification. Broadcasters, I suppose, need to know whether they are going to be exposed to liability in that situation on the proper construction of the section.

KIRBY J: If we do not grant special leave, they will know.

MR WHITE: Yes, they will certainly know, but they will know probably for the wrong reasons, we would submit, because the Full Court has strained the language to give effect to its conclusion by submitting that subsection (vi) refers to the supply of goods or services by a person who supplies goods of the kind by the prescribed information provider. Now, that is not the right question, with respect. The question is, is the publication in connection with goods or services on behalf of a person who supplies those goods or services? That is the right question, if the Court pleases.

GUMMOW J: Yes, Mr Hughes.

MR HUGHES: Your Honours, section 65A is a densely constructed provision. A careful analysis is required to adduce its meaning. The reasons for judgment of the Full Court contain such an analysis. In our submission, it is substantially correct, it is in accord with the policy declared in the second reading speech - - -

GUMMOW J: Where do we see that policy?

MR HUGHES: Your Honours will see that in the application book starting at page 77 and going over to 78. I will not read it all, but I would invite your Honours’ attention to the concluding paragraph on page 78 of the application book. The Minister said:

New section 65A will operate to exempt the media (and other persons who engage in businesses of providing information) from the operation of those provisions –

section 52 and others –

which could inhibit activities relating to the provision of news and other information. The exemption is not available, however, in respect of a publication of information relating to goods, services or land of a kind supplied by the information provider, or relating to goods, services or land where the publication is made pursuant to a contract, arrangement or understanding with a body corporate related to a body corporate that supplies such goods, services or land.

In the latter part of what I have read - - -

GUMMOW J: It is the next sentence that is important though, is it not?

MR HUGHES: Yes. I was going to concentrate for a moment on the use of the word “such”, which is a reference back to what has been previously said relating to goods, services or land which are supplied by the information provider. The next sentence is important:

These provisions ensure that information providers are not exempt from the consumer protection provisions of the Trade Practices

Act in respect of the provision of information where they have what might be regarded as a commercial interest in the content of the information.

We passed that test. We also say that the essence of the argument propounded by my learned friends is to make a subtle attempt perhaps which was expressly abandoned - - -

GUMMOW J: Subtlety is not necessarily a vice.

MR HUGHES: No. That is meant in a complimentary sense.

KIRBY J: It is not like you to compliment your colleagues.

MR HUGHES: Sometimes it is appropriate, especially when it might advance legitimately - - -

KIRBY J: To soften up the Bench.

MR HUGHES: - - - an argument that is put.

KIRBY J: But can you really contend that this is not an important matter and an arguable matter? After all, the primary judge came to a conclusion against you and there is no dispute about the misleading aspects of the material, so the matter is quite refined and presented and at least arguably is a matter of some significance for the administration of the Act.

MR HUGHES: Our essential point, your Honour – we have endeavoured to distil the essence of the case into a two-page - - -

GUMMOW J: Yes, we have read those.

MR HUGHES: Our essential point is that the reasoning of the Full Court does not give rise to a question of such a character as to warrant a grant for special leave because it is right, the reasoning of the Full Court, because also, very importantly, your Honours, the reasoning advanced by my learned friends involves disregarding the words “of that kind” in (vi)(A) and (vi)(B), words that are expressly there. What my learned friends are trying to do is to substitute for the words “of that kind” the words “of any kind” saying, in the process, that the kind of goods referred to are set out in the earlier part of the section, the four subparagraphs of paragraph (a).

Your Honours, it is apparent, in our respectful submission – and we say this is the fatal flaw in the argument for the applicants – that no kinds of goods or services are referred to in paragraphs (i) to (iv) of (a). You do not get to any kind of goods or services until one is confronted, as it were, with (v) and (vi). In (v), the reference is to the definition of goods and services of a relevant kind that is found in subsection (3).

KIRBY J: Yes. We see that on page 75.

MR HUGHES: Yes. So our essential position is that the judgment - - -

KIRBY J: What is intriguing about the case, Mr Hughes, is what one sees from one’s own experience of the slippage or mixing of information, entertainment and advertisement. That is a very modern phenomenon in the broadcasting field. It is not going to go away and it is therefore presenting an interesting and arguably important point of general significance for the operation of the Act.

MR HUGHES: Your Honour, there is one thing I want to say about that. I appreciate the force that what your Honour has just said might have in different circumstances, but this was a case in which the applicant expressly disavowed any reliance at all on the proposition that the case fell within (b) as an advertisement. That was not in issue. Otherwise, this would be perhaps an interesting case. But they did not come to - - -

GUMMOW J: No, they complain that it does not fall within (b), but there is some gap area as a consequence of that.

MR HUGHES: Yes.

GUMMOW J: They may be right, they may be wrong, but there seems to be a point.

MR HUGHES: If there is a gap, it was a gap that was expressly perceived by the legislature as appears from the second reading speech, your Honours.

KIRBY J: That is, as often is the case with a second reading speech, as you would know, they are written by very prudent officials for the Minister
and are finessed by the Minister, but it is really very general. It does not grapple with the issue we are now – probably for the reason Justice Gummow has mentioned, that the methods of broadcasting and what one sees in it have changed since the provision was inserted. It is, after all, 23 years.

MR HUGHES: The methods of broadcasting, if they have changed, were methods of a changed nature that were operative at the time when the applicant brought this case, and they have not ever contended that this case fell within (b) as an advertisement, even in the alternative. So one has a situation in which the extra judicial comment, which appears at page 110, paragraph 19 of our application book, is very relevant. I will not read it to your Honours. It is short and your Honours will read it for yourselves.

We therefore say that the case does not attract a grant of special leave. The essential argument, once “advertisement” is out of the way, your Honours, turns on the meaning of the expression “of that kind” which appears in (v) and (vi). That can only refer, in the light of the definition in subsection (3), to services of a kind supplied by the information provider and in which, in effect, they have a commercial interest. That is not this case.

KIRBY J: Yes. As I would not have the pleasure of sitting in the appeal, I am feeling very generous today with special leave. I will try to put that out of my mind.

MR HUGHES: Your Honour, with very great respect, however sorry we are your Honour will not sit on the appeal because of time - - -

KIRBY J: This is not the time for speeches, Mr Hughes.

MR HUGHES: Your Honour, we would suggest, should restrain your natural instincts of generosity.

KIRBY J: It is, they are, they have always been here.

MR HUGHES: That is the position we seek to take.

GUMMOW J: Thank you, Mr Hughes. Yes, Mr White.

MR WHITE: Your Honour, there are only two short matters. The first is, the example given by the Minister in the second reading speech - - -

GUMMOW J: What is the critical reasoning in the Full Court decision that you - - -

MR WHITE: The critical reasoning, your Honour, is found at paragraphs 55 and 56 where their Honours - - -

GUMMOW J: But what about what starts at paragraph 48?

MR WHITE: Your Honours, they, we would submit, are not compelling reasons why their Honours found that goods or services of that kind – and, in particular, the words “of that kind” is a reference to goods or services of the kind supplied by a prescribed information provider. In our respectful submission, the trial judge was correct in saying that the reference to “of that kind” in subparagraph (vi)(A) was a reference to the goods the subject of the publication being a reference back to (i) and (iv). Your Honours will see in (vi):

the publication was made on behalf of . . . with:

(A) a person who supplies goods or services of that kind –

We respectfully submit - - -

GUMMOW J: Just explain that again.

MR WHITE: The reference to the publication in (vi) refers one back to (a) and the goods and services in (i) through to (iv). Her Honour found that the reference to “goods or services of that kind” was a reference to the kind of goods the subject of the publication, which is a kind of good, and are contained in or referred to in (i) through to (iv). The Full Court said “of that kind” is a reference to the kind of goods in (v) being relevant goods or services, namely, goods or services supplied by a prescribed information provider. But, your Honour, it just does not work because of the words “on behalf of”. When you come to read (vi) and it says:

the publication was made on behalf of . . .

(A) a person who supplies goods or services –

that cannot be a reference to goods or services supplied to the prescribed information provider by a third party. It is a reference to a publication being made by the prescribed information provider on behalf of the third party. That is where the Full Court, with respect, gets it wrong. They transposed “on behalf of” from the publication to the supply of goods by the third party. In our respectful submission, it just cannot work that way. The way that we want it to be read, and the way her Honour read at trial was, the publication is made on behalf of a person who supplies goods or services of the kind the subject of the publication, which was the case at hand here. That is the commercial subject - - -

HEYDON J: Why say “of that kind”? Why not say “those goods or services”?

MR WHITE: It could have, but, your Honour, this is not a model of clarity, with respect, this section. It could have said, for example, a person who supplies relevant goods or services. There were a number of ways in which they could have framed clause (A). But, in our respectful submission, it is strongly arguable that it is a reference to the subject matter of the publication. That is what the trial judge found. The construct of the Full Court just does not work, with respect, because they ignore the words “on behalf of”, “the publication being made on behalf of”. It has got nothing to do with who supplies the goods or services in that sense.

The way in which the Full Court construed it, as I submit, does not work. The example given by the Minister in the second reading speech flies in the face of the construct of the Full Court; the second reading speech to be found at page 78. The last sentence of the second reading speech at about line 32 the Minister gives an example:

where a newspaper has agreed to publish a ‘news’ item about a product in exchange for the product supplier taking out paid advertising –

Now, that does not work with the Full Court’s construct and it now falls into the gap.

GUMMOW J: Why not?

MR WHITE: Because the Full Court was saying that the goods or services are ones which are supplied by a person who supplies goods or services of the kind of a prescribed information provider. So, for example, the example that the Full Court gave orally in addresses was a third party production house that was producing a program on behalf of Channel Seven and was supplying the product to Channel Seven who, in turn, then published it to the world. They said that subparagraph (vi) applies in that situation. But we are not concerned, with respect, with the supply. We are concerned with the publication on behalf of, not the supply of goods on behalf of. With respect, that is the problem. That example of the Minister now falls into the gap because of the construct by the Full Court. If the Court pleases.

GUMMOW J: There will be a grant of special leave in this matter. It will be a one-day case, gentlemen, I would have thought.

MR HUGHES: Yes.

MR WHITE: Yes, your Honour.

MR HUGHES: There will be a notice of contention which we will make it a one-day case, your Honour.

GUMMOW J: What will that be about?

MR HUGHES: About what the nature of the contract has to be to fall within the section.

GUMMOW J: That is not a factually contentious matter, is it?

MR HUGHES: No.

KIRBY J: But you are not trying to reopen the question of whether the broadcast contained misleading - - -

MR HUGHES: No, I am not. The notice of contention issue is whether there has to be an arrangement to publish the misleading information – whether the publication of the misleading information - - -

KIRBY J: That is very much bound up in the issue that will come up on the appeal, is it not?

MR HUGHES: Yes.

GUMMOW J: Yes. Thank you, Mr Hughes.

MR HUGHES: It is not a cross-appeal point. It is a notice of contention point.

GUMMOW J: Yes. Thank you.

AT 10.06 AM THE MATTER WAS CONCLUDED