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Administrative Appeals Tribunal of Australia |
COURT
ADMINISTRATIVE APPEALS TRIBUNALCATCHWORDS
Broadcasting and Television Licenses - Refusal by Australian Broadcasting Tribunal to approve share transactions - review of decision by Administrative Appeals Tribunal - nature of inquiry - onus of proof that approval should be granted or withheld to transactions - effect of illegality of transactions lacking prior approval.Broadcasting and Television Act 1942 ss. 90J and 92F
Administrative Appeals Tribunal Act 1975
HEARING
CANBERRAORDER
The Administrative Appeals Tribunal affirms the decision of the Australian Broadcasting Tribunal dated 24 December 1980 -1. To refuse to approve pursuant to section 92F of the Act in so far as it affects Bisley Investment Corporation Limited and Lytona Pty. Ltd. and pursuant to section 90J of the Act in so far as it affects Bisley Investment Corporation Limited the acquisition by Bisley Investment Corporation Limited of 20.37% and the proposed acquisition by that company of a further 2.62% of the issued ordinary capital in Country Television Services Limited.
2. To approve pursuant to section 92F of the Act in so far as it affects Bisley Investment Corporation Limited and Lytona Pty. Ltd. the acquisition by Bisley Investment Corporation Limited of up to 15% of the issued ordinary capital in Country Television Services Limited.
3. To approve pursuant to section 90J of the Act in so far as it affects Bisley Investment Corporation Limited the acquisition by Bisley Investment Corporation Limited of up to 15% of the issued ordinary capital in Country Television Services Limited.
DECISION
BISLEY INVESTMENT CORPORATION LIMITED (Bisley) and LYTONA PTY. LIMITED (Lytona) have made an application dated 15 January 1981 for a review pursuant to the Administrative Appeals Tribunal Act 1975 of a decision following an inquiry by the Australian Broadcasting Tribunal (A.B.T.) consituted by David Jones (Chairman), James Oswin, (Vice Chairman) and Keith Moremon (Member for approval of -1. The purchase by Bisley Investment Corporation Limited ("Bisley") of 20.3%
of the capital of Country Television Services Limited.
2. The purchase by Bisley of a further 2.69% of the capital of Country
Television.
The applications were later described in the Tribunal's decision thus -
"Applications pursuant to section 92F of the Broadcasting and Television Act 1942 (the Act) by Bisley Investment Corporation Limited and Lytona Pty. Ltd. and pursuant to section 90J of the Act by Bisley Investment Corporation Limited with respect to share transactions involving the acquisition of shareholding interests in Country Television Services Limited"
It is convenient here to refer to the standing of Country Television
Services Limited for which purpose I accept what was announced
publicly on 20
August 1980 when the inquiry commenced in Orange and is not an area of dispute
between the parties -
"Country Television Services is the licensee of television stations CBN-8 Central Tablelands Area (Orange), CWN 6 Central Western Slopes (Dubbo), and owner of all shares in the licensee of commercial broadcasting station 2GZ Orange, which in turn holds all shares in the licensee of 2NZ Inverell."
On the 24 July 1980 the A.B.T., mindful of the provisions of the
Broadcasting and Television Act 1942 (the Act) sections 90J and
92F,
advertised publicly by a Notice that it would conduct an inquiry into matters
to which it therein referred to thus -
"The Australian Broadcasting Tribunal has received an application from Bisley
Investment Corporation Ltd seeking approval for the
following transactions
involving acquisition by Bisley Investment Corporation Ltd of shares in the
capital of Country Television
Services Ltd (licensee of commercial television
stations CBN-8 Central Tablelands Area and CWN-6 Central Western Slopes Area
and
owner of all shares in the licensee company of commercial broadcasting
station 2GZ Orange, which in turn holds all shares in the
licensee company of
commercial broadcasting station 2NZ Inverell):
(i) acquisition of 446,783 (16.03%) shares;
(ii) transfer of 114,050 (4.09%) shares from Rivstock nominees Pty Ltd., a
company owned by the three partners of Rivkin and Co. viz:
R. Rivkin, A.A.
Lakos and B.R. Potts;
(iii) acquisition of a further 80,050 (2.8%) shares in the open market.
Under the proposed arrangement, Bisley Investment Corporation Ltd. will hold
640,883 (22.99%) shares in the capital of Country Television
Services Ltd. and
therefore will have a prescribed interest in the licences of CBN-8 Orange,
CWN-6 Dubbo, 2GZ Orange and 2NZ Inverell.
The tribunal will conduct a public inquiry pursuant to sections 90J and 92F of
the Broadcasting and Television Act 1942 into the following
matters relating
to the transactions:
1. whether, as a result of the transactions, the applicant, or any other
person, has or will have a prescribed interest in
(i) more than four commercial broadcasting stations in any one state, or
(ii) more than eight commercial broadcasting stations in Australia;
2. whether, as a result of the transactions, the applicant, or any other
person, has or will have a prescribed interest in each of
three or more
commercial television station licences;
3. the extent (if any) to which the changes in the ownership and control of
the licensee (whether direct or indirect) that have occurred,
or will occur,
as a result of the transactions accord, or will accord, with the public
interest.
4. the effect of the transactions on the commercial broadcasting services
provided by commercial broadcasting stations 2GZ Orange
and 2NZ Inverell, and
5. the effect of the transactions on the commercial television services
provided by CBN-8 Orange and CWN-6 Dubbo."
The inquiry was held on 20 August 1980.
The decision dated 24 December 1980 but delivered and published on 6 January 1981, being of the majority, Messrs Oswin and Moremon, Jones dissenting, was -
"1. To refuse to approve pursuant to section 92F of the Act in so far as it
affects Bisley Investment Corporation Limited and Lytona
Pty. Ltd. and
pursuant to section 90J of the Act in so far as it affects Bisley Investment
Corporation Limited the acquisition by
Bisley Investment Corporation Limited
of 20.37% and the proposed acquisition by that company of a further 2.62% of
the issued ordinary
capital in Country Television Services Limited.
2. To approve pursuant to section 92F of the Act in so far as it affects
Bisley Investment Corporation Limited and Lytona Pty. Ltd.
the acquisition by
Bisley Investment Corporation Limited of up to 15% of the issued ordinary
capital in Country Television Services
Limited.
3. To approve pursuant to section 90J of the Act in so far as it affects Bisley Investment Corporation Limited the acquisition by Bisley Investment Corporation Limited of up to 15% of the issued ordinary capital in Country Television Services Limited."
The grounds of the application for review are -
"1. The Australian Broadcasting Tribunal ("the Tribunal") erred in law in
refusing to approve pursuant to Section 92F of the Act insofar
as it affects
Bisley Investment Corporation Limited ("Bisley") and Lytona Pty. Limited
("Lytona") and pursuant to Section 90J of
the Act insofar as it affects
Bisley, the acquisition by Bisley of 20.37% and the proposed acquisition by
that company of a further
2.62% of the issued ordinary capital in Country
Television Services Limited ("CTS").
2. That the Tribunal erred in law in declining to approve pursuant to Section
92F of the Act any shareholding acquisition by Bisley
of more than 15% of the
issued ordinary capital in CTS.
3. That the Tribunal erred in law in declining to approve pursuant to Section
90J of the Act any shareholding acquisition by Bisley
of more than 15% of the
issued ordinary capital in CTS.
4. That the Tribunal erred in law in holding that the applicants should, in
the public interest be limited to shareholdings of up
to 15% in the capital of
CTS by reason of the degree of influence a single major shareholder may be
expected to exercise.
5. That the Tribunal erred in law in its interpretation and application of
section 92F(4A) of the Act.
6. That the Tribunal erred in law in refusing to grant approval to the
application of Bisley and Lytona.
7. The decision is invalid upon the ground that the exercise of the Tribunal's discretion was based upon irrelevant considerations and/or upon the consideration of matters which were not established by the evidence and/or upon facts found by it contrary to the evidence and the weight of the evidence.
The said matters, facts and findings were:(i) that Bisley would have a considerable degree of influence in the running of CTS.
(ii) that the diverse shareholdings purchased by the applicants could, if the
transactions were approved, be concentrated into a single
non-local
shareholder.
(iii) that it would not be in the public interest for Bisley to have such a
large degree of influence in the operations of CTS by
virtue of being the
largest single shareholder.
(iv) that, by virtue of being the largest single shareholder, Bisley would
have a large degree of influence in the operations of CTS
which would not be
in the public interest.
8. That the Tribunal in the exercise of its discretion failed to give due
weight to the evidence as to the following matters.
(i) that 92.03% of the shares with respect to which approval was sort(sic) was
purchased from city interests.
(ii) that only one or possibly two Bisley directors were expected to be
appointed to the Board of CTS.
(iii) that Bisley was not seeking to control CTS.
(iv) that a 22.9% shareholding interest would not give Bisley effective
commercial control of CTS.
(v) that Bisley would not seek to change CTS's membership of Regional
Television Australia Pty. Limited.
(vi) that Bisley did not contemplate at this stage any change in the
programming of the stations belonging to CTS.
(vii) that the business acumen of the Board of Bisley would be available for
the use and benefit of CTS.
(viii) Bisley's expertise in the placement of surplus funds in highly liquid
and safe investments.
(ix) that Bisley's expertise in the fields of financing and leasing may be of
assistance to CTS in the area of securing any necessary
funds for capital
expenditure.
(x) that the expertise in three preceeding sub-paragraphs would be available
to CTS entirely for CTS's sole benefit."
Because of s.30(1)(c) of the Administrative Appeals Tribunal Act 1975 Country Television Services Limited applied to be and on 20 February 1981 was made a party to this proceeding for review.
It appears from his evidence to the A.B.T. that Mr. Rene Rivkin, partner in the stockbroking firm of Rivkin & Co. founded by him in 1971, was part owner of the company called LYTONA PTY. LIMITED (Lytona). Other owners were interests associated with the stockbroking firm. This company acquired 25% in Bisley Clothing Limited later Bisley Investment Corporation Limited (Bisley) a well established company involved in the 'apparel industry'. As at the time of finishing his statement tendered to the A.B.T. on 20 August 1980, Lytona owned 37.5% of Bisley. The other main shareholder was a company called SPEDLEY SECURITIES LTD. (Spedley) which owned 20.23% of the shares; or 18.73% in Attachment 1 (see later).
According to Mr. Rivkin's statement, Bisley was interested in the electronic
media because it believed it would be a very strong
growth area during the
"80's and 90's." In January 1980 he became aware that a parcel of shares in
COUNTRY TELEVISION SERVICES LIMITED
(Country Television) was available for
sale whereupon Bisley purchased 113,500 shares (pre bonus). Thereafter, from
time to time,
Bisley continued to purchase shares so that up to the date the
statement was presented to the A.B.T. it owned 757,144 shares (20.3%
of the
issued capital) in Country Television of which 10,166 (.27% of the issued
capital) have been acquired since 20 May 1980. The
origin of the bulk
purchased was said to be as follows -
"Approximately 9% (251,883) Mercantile Mutual
Approximately 2.1% (60,000) NZ Insurance
Approximately 4.9% (159,100) Rockhampton Television"
These were acquired before a bonus issue referred to below.
By letter, dated 28 May 1980, addressed to the Secretary, A.B.T., from Bisley and signed by Mr. Rivkin, advice was conveyed that Bisley had within the last month substantially increased its shareholding interest in Country Television so that it was then beneficially entitled to 560,833 shares in the company; and that it was the current intention that Bisley purchase a further 80,050 shares which would bring its total shares to 640,883 representing a little less than 23% of the issued capital of Country Television. Approval covering both the purchase of shares currently owned as well as the shares proposed to be purchased was therein sought.
In response to a press advertisement dated 24 June 1980, inviting comments from the public in respect of the proposed transaction, it seems that the Tribunal received eight submissions accepted as being relevant to the inquiry. Reference is made to these later.
The next event which may have some significance is that on 21 July 1980, an Extraordinary General Meeting of the shareholders of Country Television was held at which meeting there was approval granted for a one for three bonus issue of shares. In the Reasons for Decision of the A.B.T. it is recorded that the new shares were allocated on 15 August 1980 and converted into stock units. Reference has been made in submissions and evidence to the A.B.T. to the fact that at that meeting its Board held proxies representing 1,303,460 shares (pre-bonus) being approximately 46.76% of the issued capital of Country Television. On the day of the Extraordinary General Meeting, according to his viva voce evidence to the A.B.T., Mr. Rivkin met Sir Alvin Burton-Taylor, the Chairman of Directors, and other Directors of Country Television. It seems there was discussion about Bisley's share purchase in Country Television.
Further, he mentioned that in addition to the shares already acquired, it was not inconceivable "we" (Bisley) would like to go to 30%. He "indicated" to Sir Alvin Burton Taylor that it would be nice if Bisley could have two directors on the Country Television board. Sir Alvin's response was that it was a matter for the board, that he did not conceive of two directors, "one maybe". In a later conversation on the same day it was said that the board had a meeting; they would be happy for "one of us" to join the board at an appropriate time; that at the Annual General Meeting the board would move to increase the number of Directors to eight; that being the seat Bisley would have.
Mr. Rivkin's statement presented to the A.B.T. included -"Approximately 15 months ago, Lytona Pty. Limited, a company owned by myself and other interests associated with Rivkin & Co., acquired 45% of the shares in Bisley Clothing Limited, a well established company involved in the apparel industry. Lytona now owns 37.5% of Bisley. . . .
I believe that the board of Bisley (concerning the members of which
biographical details are given in the application) does possess
a great deal
of general business acumen and that this acumen is reflected in the
performance of Bisley which is also detailed in
the application. If this
application is successful, we certainly wish to make this acumen available for
the use and benefit of Country
Television Services Limited ("Country
Television")."
and -
"Bisley is interested in the electronic media which it believes will be a very
strong growth area during the 80 s and the 90 s. I
have therefore for some
time sought to have Bisley participate in this field of activity."
and - (referring to Bisley's shareholding in Country Television)
"6. Control of Country Television
I do not regard the holding as representing a controlling interest in Country
Television. An extraordinary general meeting of shareholders
of the company
was held on 21 July 1980. At that meeting the Board held proxies representing
1,303,460 shares (pre-bonus) being approximately
46.76% of the issued capital
of Country Television. A copy of a letter to Bisley Television from Country
Television dated 1 August
1980 evidencing this is annexed. By no stretch of
the imagination therefore, does Bisley control Country Television."
and -
"I wish to make it clear at the outset that I do not regard myself as an
expert in media matters. That is not to say that I do not
have a keen interest
in these matters and a desire to improve my knowledge of them."
and -
"I now wish to refer to particular skills which Bisley has which may be of
great assistance to Country Television and which will be
available to Country
Television, entirely for the benefit of Country Television should the
application be successful.
It is clear to Bisley that great technological changes will occur within
television over the next decade. Bisley considers that these
changes will
force television operators to find the wherewithal to fund very high levels of
capital investment. In this respect Bisley
can be of great assistance in two
ways:
(i) Bisley's expertise in the placement of surplus funds in highly liquid and
safe investments which nevertheless yield attractive
returns will enable
Country Television to build up its available funds more quickly than perhaps
would otherwise be the case.
(ii) Bisley has substantial expertise in the fields of finance and leasing and
may well be of great assistance to Country Television
in suggesting
particularly felicitous ways in which necessary capital expenditure can be
structured and in securing any necessary
funds as cheaply as possible.
I stress yet again that this expertise would be available to Country Television entirely for Country Television's benefit and not Bisley's."
In his viva voce evidence to the A.B.T. Mr. Rivkin said that the Bisley
investment was a "long term investment". He explained this
by continuing -
"I think the best way to define "long term" is the lack of knowledge of where it will lead. I cannot answer that. It was bought as a long-term investment. I am interested by what I believe to be growth opportunities in the media, electronic media in the eighties and nineties. Beyond that, I cannot usefully answer."
He said it was not his intention to get involved in any changes at all in
the Television Station or the Radio Station though -
". . . . I would attempt to show interest, but that was not my area."
He agreed that it was correct that Bisley did not seek control and did not believe it had control of Country Television; that there is a possibility in the future of gaining more shares, though there was no present plan to do so. He agreed that before acquiring the shareholding in Bisley he had obtained information as to the "enviable profit record" of Country Television; that he formed a conclusion that no one particular person or corporation controlled Country Television. If the shares were available and subject to price and approval of the Tribunal, Bisley would seek to purchase up to 30% of the shareholding.
He said he would be prepared to agree to the expenditure of, say, two million dollars for e.g. or in connection with the obtaining of a supplementary license. He did not at this stage contemplate any changes in the programming of the Station.
Sir Alvin Burton-Taylor, the Chairman of Directors of Country Television presented a written submission dated 15 July 1980, to the A.B.T. and also gave oral evidence both before the A.B.T. and the Administrative Appeals Tribunal. He himself is also a member of the Board of Directors of Email Limited a company which is said to be the biggest employer of labour in the Orange district.
In his written submission, his qualifications were set out. Further, he expressed concern as to the contrast between the single minded manner in which Country Television has devoted itself to regional television and broadcasting and, on the other hand, the transformation (however financially beneficial) which could ensue were the approval granted. He noted the transformation which had occurred in the company originally Bisley Clothing Limited when it came under the control of its present management. He submitted that it is in the public interests that Country Television should always concentrate its principal efforts upon television and broadcasting and related activities and that it should never be used or regarded simply as a financial vehicle or puppet of any kind. He requested the Tribunal to consider whether, in the event of the present application being wholly successful, some limit should be placed, in the public interest, on any further acquisitions of shares in the Company (Country Television) by Bisley or any persons or a company associated with it.
As to his association with the district, he said in his oral evidence to the A.B.T. that he had been seventeen years as chief executive of Email Limited, had had a connection with Orange since about 1957 and had been a director of Country Television from its inception. He said that it had been the policy of the Board to make provision for the eventuality related to the possible future needs of Country Television to provide capital for expansion in the television area.
In this regard he said that Country Television had properties that could be sold for $750,000, conservative shares in the stockmarket which could be sold for $1.7 million and cash $1.5 million invested in suitable ways at sensible rates. The total, i.e. about $4 million had been earmarked by the Board for possible future expansion in television and other things; that in the case of anyone who had a 20% interest in Country Television it would not be unreasonable to expect to have a seat on the Board. The provision of what is described as a supplementary station, he thought, might cost between $2 million and $3 million. He said that if any help was needed in respect of investments, it could be acquired and hired. By "help" he meant, I understand, the assistance of financial advisors.
Referring to the existing shareholding in Country Television he said that it had provided 50% of its shares for the district; that that percentage is now down to 24% but in numbers of people, these shares were held by 1,064 representing 47.7% of the shareholders.
He agreed that nothing was done to attempt to stimulate enthusiasm on the
part of people in local areas so they will pick up shares
that are for sale.
As to the way Bisley had acquired shares, he agreed that as to all except
2.54% of its acquired shareholding the
shares had come from persons, including
companies, located outside the relevant local areas. He was questioned on the
possibility
of control of the company as follows -
"But you would agree, would you not, that the situation as it is projected,
and let us assume for the moment within a 30 percent shareholding,
that it
would be unrealistic to talk about control having passed from the hands of the
board and of the majority of shareholders
in relation to the running of the
company and its various media outlets?----You cannot stop there. It depends on
what friends there
are and 20 percent plus 4.9 or plus X can be a lot more. 30
percent plus whatever can be a lot more dangerous and one could have
a silly
situation where perhaps the holder of 30 percent of shares could be sitting
there with a complete new board."
The percentage of shares in Country Television held by Email Limited he said
was 13.4. He said of the seven Directors of Country Television
at present,
three are resident in the Orange/ Dubbo area. The Directors he referred to as
Orange residents were Mr. Ridley, Mr. Yelf
and the Dubbo resident was Mr.
Walters. A Director who had considerable interests in Lithgow was Mr. Bracey.
He stated that he did
not always get 46.7% of the proxies; the reference being
to the percentage received in respect of the recent meeting at which there
was
approved a bonus issue. In his affidavit dated 20 May 1981 submitted to this
Tribunal, referring to proxies in his favour, he
wrote on this subject -
"I say that of greater relevance is the fact that at an Extraordinary General Meeting of the Company held on 3rd March 1980 for the purpose of adopting new Articles of Association and approving an increase of the nominal capital of the Company, the proxies received in favour of the Chairman represented only 18.4% of the issued capital. . . . . . . "
Mr. Rivkin's evidence to this Tribunal indicated that Bisley's intention as
to participation in and the influence it might have
in Country Television were
the same (as stated in the hearing before the A.B.T.); that on a weekly basis
the turnover of shares in
Country Television was of the order of 1,000 -
roughly average for that size of company. He said that the shares which had
been purchased
had not been registered; that they are being held by the
Commonwealth Trading Bank who are the registrars for the company; that Bisley
had presented no transfers of those shares to Country Television for the
purpose of having the register altered. He said he would
want to exercise
two-seventh's influence on a seven-man board to assist the company to perform.
As to why he and his colleagues wished
to participate through Board
representation in the management of Country Television, he said in cross
examination -
". . . . . . because I am personally and the Bisley board is interested in the
potential for development of the electronic media in
the next 10 or 20 years.
. . . . I am personally interested in the developments that will occur in what
will obviously be a growth
area."
In the context of attractions which Country Television had to Bisley he agreed it had a lot of liquid assets, an excellent cash flow and a very low gearing of debt to equity; the gearing ratio of Country Television was, for all practicable purposes, nil debt to equity.
One of the factors which suggested the investment was that Country
Television was "not geared"; that at the moment there are not
significant
borrowings; that he intended to convey with the expression "conservative
gearing" that Country Television with borrowed
funds would be able to do even
better in its non-television activities than it is doing at the moment; that
it had the capacity to
borrow was a matter of some interest to Bisley; and he
was intending to convey that this was one area in which he could make
suggestions
at Board level. As described, Lytona is an investment vehicle in
(sic) the partners of Rivkin & Co.; that the estimate of shareholding
that
Lytona holds in Bisley is 38.6%. Since the A.B.T. hearing Lytona has purchased
10,558 shares in Bisley, i.e. less than 1%. As
to Bisley acquiring 30%
shareholding in Country Television he said "That was our target figure. . .
the figure we chose and would
like to get to". He agreed that Bisley in making
the investment in Country Television was looking for a company in which it
could
be one of the top rungs of the ladder - so that it would have some
control over the destiny of its investment. Of what public company
accounting
standards permit, he said -
". . . . . where a company owns 20 per cent or in excess in another company
and is represented on the board it may equity account
the profits, one of the
other. . . "
(Thus Bisley could equity account its share in Country Television's profits).
Also, the present application includes approval for Bisley to acquire a further 2.69% of Country Television over and above shares it had acquired at the time of the Tribunal hearing; the figure in total of 22.9% is vital in as much as it was the maximum to which purchases could be made, if approved, without, under Stock Exchange rules, having to bid for the company at that time.
Mr. Rivkin said the acquisition of up to 30% in Country Television was a
matter which had been discussed by Bisley with the Directors
and amongst them
rather than it was the subject of a resolution of the Board; he did not
believe that in Country Television 30% represents
any greater degree of
control than 20%. Other evidence indicates he did not regard 20% as a
controlling interest in this company.
He referred to the Stock Exchange rules
under which he said a company may only but 3% every six months of another
company's capital
once it has already acquired 20% of that capital without an
obligation "to launch a full bid for the company" -
"Bisley is a smaller company by market capitalisation than Country Television
Services, and the last thing we could afford to do is
to bid for the entire
capital even if the tribunal approved.
It is just beyond our resources. So the answer is 30 percent is a figure that
we believe that we can afford as a useful figure. In
any case, to get to 30
percent it would take us from our current holding three periods of six months
- that is 18 months to get there,
if we could get there at all.
HIS HONOUR: When you say at all, you refer, do you, to the availability of
shares rather than the availability of cash?----Yes."
As to the availability of shares in Country Television his evidence included -
"What has been your observation of the turnover in Country Television since the hearing in Orange, in general terms?---- I would doubt that the turnover in the company has reached 50,000 shares since that day, but on a weekly basis it is something of the order of 1000 shares. There was one day where I thought about 18,000 shares changed hands but basically it is under 1000 shares a week average. That is my impression. As companies go, having regard to the size of the issued shareholding in that company, is that high, low or what?----I would say it is roughly average for that size company."
Since the A.B.T. hearing Bisley had bought 21,992 shares in Country Television. This might be 0.6%.
Mr. Rivkin said he personally gave instructions for the purchase of twenty odd thousand additional shares. The 'difference' between 15% and 22% (i.e. referring to percentage of shares in Country Television) is equity accounting.
As to whether, should the A.B.T.'s decision stand, Bisley would simply
retain the 15% of Country Television's capital, he said "I
have not thought
about it" but also he agreed, on the assumption that Bisley retained the 15%,
it would still afford to Country Television
the assistance by way of financial
expertise which it had in mind to make available. It is noted that in the
A.B.T. hearing he gave
this evidence -
"If, in fact, you are not successful in obtaining significantly more than just over 20 per cent of the share capital in CTS that Bisley has, what will you do with the shareholding you have obtained subject to approval, of course?----Continue to retain, and the initial plans will not change."
According to his evidence, Bisley is one of eight or ten listed companies under whose Articles shareholders can take shares in lieu of cash dividends. For the dividend declared by Bisley since the A.B.T. hearing, Lytona elected to take shares.
Whilst Mr. Rivkin was still giving evidence Counsel for Country Television
and Lytona gave an undertaking as follows -
"MR. SHAND: There is an undertaking which in form we would seek to give in
relation to the interest of Bisley in Country Television,
your Honour, and
another connected eventuality, the terms of which I will give to your Honour.
. . . . . . . . . . .
That in the event of any offer being received in Bisley's shareholding in
Country Television at some future time should it, contrary
to present
intentions, be disposed to sell the shares, they would first be offered to
residents of the viewing area or areas of the
licensee company at the price
offered to Bisley; further, that in the event of any takeover bid being made
for Bisley Mr. Rivkin
would attempt to have the value of Bisley's shareholding
in Country Television independently assessed and offered separately to the
residents of the viewing area or areas to which I have referred. I would
merely point out, your Honour, that the undertaking in relation
to any
takeover offer for Bisley cannot be given as a firm undertaking, as Bisley
being a public company, the views of the minority
shareholders would have to
be considered."
HIS HONOUR: That is why you use the word attempt?
MR. SHAND: Yes. That is the undertaking your Honour. That, of course, is given
on instructions.
. . . . . . . "
To correct his answers referred to earlier as to the fate of shares purchased by Bisley, two letters were produced by him (Exhibit 51), the first dated 15 January 1981 from Bisley to Country Television requesting Country Television to register the shares that had been lodged for registration; the second dated 9 February 1981 from Country Television in which it was said that Country Television considered any questions relating to the registration of share transfers should be deferred until the decision of the Administrative Appeals Tribunal is known.
Attachment 1 to the Decision of the A.B.T. sets out in diagrammatic form a
tracing of the shareholdings in Country Television by
Bisley and Spedley and
their shareholders. It is reproduced as attachment 1 to this judgment. Also
there is set out below a statement
of the progressive acquisition by Bisley of
shares in the issued paid up capital in Country Television, provided by
Counsel for Bisley
on 21 August 1981 at my invitation and accepted, I
understand, as accurate by the other parties. It will be noted that this
statement
dissects the figure of 22.99% at the top of attachment 1 i.e. into
shares held by Bisley 20.95% and proposed acquisition 2.03%. There
is also set
out a corresponding statement "Lytona Bisley" and "Spedley Bisley". These
figures were provided during the hearing.
BISLEY'S SHAREHOLDING IN COUNTRY TELEVISION4 January 1980 Share acquisitions begin.
AND APPLICATION FOR APPROVAL
28 May 1980 Bisley holds 20.12% of Country Television
(see para 1 of A.B.T. decision)August 1980 Bisley applies for approval of
Application for approval of acquisition
of 20.12% and for further 2.8%.
(see para 1 of A.B.T. decision).
(i) purchase of 20.37%20 August 1980 Date of A.B.T. hearing. Bisley holds
(ii) purchase of further 2.62%
-----
22.99%
(Para 3 of A.B.T. decision)
20.37% of Country Television.24 December 1980 Date of A.B.T. decision. Bisley holds
20.96% of Country Television.6 January 1981 Date on which A.B.T. decision handed down.
Bisley purchases 400 shares. TotalApplication for approval
holding still 20.96%.
CURRENT STATUS OF APPLICATION
Application for approval
of acquisition of further 2.62%
-----Percentage held by Bisley 20.95%
22.99%
-----%Further proposed acquisition
LYTONA BISLEY11 April 1980 36% (letter Bisley 28/5/80)
20 August 1980 ABT hearing 37.2%
29 May 1981 Now 38.6%
SPEDLEY BISLEY20 August 1980 ABT hearing 20.23%
In addition to that provided by Bisley and by Sir Alvin Burton-Taylor for Country Television seven submissions were accepted by the A.B.T. as being relevant. They were by or on behalf of Mr. Gordon Ratcliffe, Mr. L.A. Gillies, Miss G. Carpenter, Mr. Ernest C. Crouch, the Venerable Norman C. Kempson, the Reverend Ian B. Crooks and Mrs. Doris K. Connaughton B.E.M. Mr. Gordon Ratcliffe's submission was addressed to the A.B.T. and was dated 4 July 1980. I may summarise it by saying that he objected strongly to the acquisition by Bisley of the proposed shareholding. He expressed general approval of the way in which Country Television has been carried out over the years; that it is at the moment in the hands of capable management which has allowed continual improvement to local services and State, Federal and International news and coverage of events plus the entertainment programmes. He submitted that any assumption of control or ownership by an "investment corporation" must make monetary returns the main object and not service to the community. He submitted that it was essential to maintain decentralization of ownership and control of such a "potential propaganda mindbending instrument" as television and radio. The Venerable Norman Clifford Kempson of Holy Trinity Rectory, Orange, being the Archdeacon of Marsden and an executive officer of the Anglican Diocese of Bathurst stated that for seven years he had been deeply involved with the Bathurst/Orange Development Corporation and had held other offices in the area. He expressed that there was a deep concern with a creation and maintenance of a sense of "community" in the region. His submission need not be quoted in detail.
He stated that -"This region stands to lose immeasurably if Channel 8's community building sense is lost, and it becomes merely a repeater station for big city interests or worse, just an avenue of investment for those who have no love or care for those of us who live here."
Mr. Ernest C. Crouch, in a submission dated 16 July 1980 which was also
addressed to the Tribunal, set out his impressive qualifications
and stated
that he had come to Orange in 1935 and in that year joined Country
Broadcasting Services as Chief Engineer and was associated
with the
establishment and building of Stations 2GZ, 2NZ, CBN8 and CWN6., television
translators and links etc. and advice and assistance
to other stations. He
assisted in the company's application for CBN-8 and CWN-6 licences. In 1973 he
retired from Country Television,
but continued as Consultant Engineer until
the change to colour transmission. He objected to the proposal that Bisley
acquire a prescribed
interest and in his submission he said -
"I feel that if the proposal of Bisley Investment Corporation Limited to
purchase and hold a prescribed interest in the licences of
CBN-8, CWN-6, 2GZ
and 2NZ is approved and realised, it will not be in the best interests of
these Stations and their listeners and
viewers and will conflict with the
basic rights and desires of the rural population in the listening and viewing
areas.
It also appears to me as wrong or incorrect practice to permit purely Investment Organisations to obtain any measure of control of Public, especially Rural, Services such as our Broadcasting and Television Stations."
The Reverend Ian B. Crooks of the Communications Council of the Anglican Diocese of Bathurst sent a submission to the Tribunal dated 20 July 1980. In it he set out his earlier history prior to being appointed to the Communications Council in April 1977 as the Director of that Council. He stated that he valued the co-operation and encouragement he received from the staff and management of CBN-8/2GZ Orange "to maintain the Anglican Church's commitment to a locally produced programme, covering local events, with recognisable people and local scenes." He stated that he did not believe "that the people of the West would be as well served by a company whose major shareholders exist beyond its boundaries."
Miss G. Carpenter also of Orange, in her submission of 9 July 1980, referred to attempts being made by interests from Sydney or Melbourne to acquire shares in such quantity as would enable the present status-quo to be effected. She stated that it was the intention of the company Country Television to have its capital subscribed by country people for their benefit not only from an entertainment but also from a financial point of view. She expressed the opinion that Country Television had provided an excellent service under capable management; that it would be a pity to see this present state of affairs disturbed by alternate management from the big cities whose interests are not usually oriented to country people. She requested that the Broadcasting Control Board resist any attempt at any takeover of what is a well-run, valuable industry in the central West of N.S.W.
Mr. L.A. Gillies, in a submission received by the A.B.T. on 9 July 1980, stated that as a stockholder and member of the company he wished to express his concern at a possible takeover of it; that the present Board had always served country interests very well and this may not be the case with other city Board interests. He did not approve of any change in membership or management.
Miss Doris K. Connaughton, B.E.M., in her submission of 24 July 1980, expressed general appreciation of the programmes of Country Television which had included many for the benefit of the rural and local communities. She questioned whether such considerations would be available in a strictly commercial approach which would be the natural outlook of a commercial undertaking such as appeared to be possible where returns for money invested would be of prime consideration. She stated that she would like to be assured that complete control of programming would not take place and that Country Television would not be the object of an eventual "takeover".
Mr. G. West who represented in the Parliament of New South Wales the electoral district of Orange, made an affidavit dated 25 May 1981. He wrote approvingly of the way Country Television had with its programmes, some of which he referred to specifically, identified itself with local interests. Further, it had provided advertising for local businesses at favourable rates. Businessmen were appreciative of being able to use this facility at prices they could afford. Though not aware of anything to the detriment of Bisley he was also not aware that it was in any way allied to the region he represented.
I consider some weight should be given to the views expressed by these persons.
In his evidence to the Administrative Appeals Tribunal, Sir Alvin
Burton-Taylor expressed concern about shares in Country Television
accumulating in one hand. Again he was questioned about the aspect of control
which he described as "a very intricate and complex
matter". He said, inter
alia, -
"I believe that 22.9 (%) could be a controlling situation under some
circumstances and with 30 the ability to block any special resolutions,
and,
in fact, probably 22.9 would be enough to do that. I think it is a control
position, yes."
He did not suggest that 15% amounted to commercial control.
Section 119A of the Act reads -"119A (1) Subject to this section, an application may be made to the Administrative Appeals Tribunal for a review of -
(a) to (f) . . . . . . .
(g) a refusal by the Tribunal to grant approval under section 90J or 92F;
(h) to (k) . . . . . . .
(2) Notwithstanding section 27 of the Administrative Appeals Tribunal Act 1975
-
(a) . . . . . . .
(b) an application in pursuance of paragraph (g) of sub-section (1) may be
made only by or on behalf of the person applying for the
approval.
. . . . . . . . . . . . "
Section 43(1) of the Administrative Appeals Tribunal Act 1975 reads -"For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing -
(a) affirming the decision under review;
(b) varying the decision under review; or
(c) setting aside the decision under review and
(i) making a decision in substitution for the decision to set aside; or
(ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal."
The task of this Tribunal is referred to in Drake v. Minister for Immigration and Ethnic Affairs 2 A.L.D. 60 at 68 per Bowen C.J. and Deane J. -
"The question for the determination of the Tribunal is not whether the
decision which the decision-maker made was the correct or preferable
one on
the material before him. The question for the determination of the Tribunal is
whether that decision was the correct or preferable
one on the material before
the Tribunal."
See also per Smithers J. at p.77 -
"The duty of the Tribunal is to satisfy itself whether a decision in respect of which an application for review is duly instituted is a decision which in its view was objectively the right one to be made."
The area of inquiry undertaken by the A.B.T. is set out in the majority
decision paragraph 10 including -
"(iii) the extent, (if any) to which the changes in the ownership and control
of the licensee (whether direct or indirect) that have
occurred, or will
occur, as a result of the transactions accord, or will accord, with the public
interest;
(iv) the effect of the transactions on the commercial broadcasting services
provided by commercial broadcasting stations 2GZ Orange
and 2NZ Inverell, and
(v) the effect of the transactions on the commercial television services provided by CBN-8 Orange and CWN-6 Dubbo."
It is common ground that each share in Country Television carries one vote; that there is no graduated voting scale in that Company's Articles of Association. It is not suggested that there is any relevant limitation or qualification on the use of the votes.
Counsel for the A.B.T. and Country Television do not ask me to decide exactly the most appropriate figure for percentage level of shareholding for Bisley in Country Television. They seek to uphold the decision of the majority of the A.B.T.; and not to argue that there should be any adjustment of the approval in so far as it affects Bisley and Lytona of the acquisition by Bisley of up to 15% of the paid up capital in Country Television.
Were Bisley to hold or retain more than 15% of the paid up capital in Country Television shares (and thus be in a position to exercise control of an equivalent number of votes) it shall, for the purpose of Division 2 and Division 3 of Part 1V of the Act, be deemed (but not to the exclusion of any other person) to be in a position to exercise control of that company and of the acts and operations of it. (See s.90E(1), s.92B; and see as to control of licenses s.90D, s.92A). It has been submitted by senior Counsel for Bisley and Lytona that s.92B is a provision of singificance only in relation to the restrictions imported by the Act and placed upon multiplicity of ownership or control of television licenses; that control in the Act relates only to the restriction it seeks to place upon ownership or control of a multiplicity of licenses and, not expressly or by implication upon concentration of share ownership in a licensee company. This argument, I consider, is not borne out by a reading of the Act and I do not accept it.
On the unchallenged evidence of Mr. Rivkin, I find that the witness, interests associated with him and Bisley, or any of them, have no business link with city or metropolitan television or radio interests; and further, that Bisley, Lytona or Mr. Rivkin himself or through any other company in which he has an interest does not possess any interest in television or radio stations in Australia outside those which are involved with the licensee company Country Television.
Again relying on his evidence, I find that Bisley was looking for a company with a country television license or licenses being a company where it would be possible to acquire shares that would "put Bisley at the top of the ladder"; and that one of the reasons it selected Country Television for its investment was that the latter did not have one major shareholder controlling over 50% of the shareholding; that Bisley wanted the shareholding so that it could have some control over the destiny of its investment.
I find that any expert advice and guidance which might be made available to Country Television by Bisley will, on Mr. Rivkin's evidence, be available if Bisley's shareholding remains at 15%; so that no disadvantage then to Country Television will result from a failure to approve a greater than 15% shareholding. Such advice and guidance can, of course, be obtained readily anyway from professional advisers. Earlier I have referred to Mr. Rivkin's evidence bearing on the likelihood of retention of a 15% shareholding.
The holding of a radio or television licence is in its nature monopolistic,
at least in a given area. There is potential for great
profit and for the
exercise of significant influence over manners, customs, education, political
opinion and even morals of viewers.
Policy of the legislature may be inferred
from the Act. These extracts show its concern with control -
The issue and operation of licenses and licensees is to be controlled; see
e.g. Part 111B.
A person is not to hold a prescribed interest in licenses to exceed certain
numbers and in areas specified in s.90C(1) and s.92(1).
The holding of directorships in two or more companies in a position to
exercise control of numbers of broadcasting and television
licenses is
restricted, e.g. s.90F, s.92C.
Licenses are subject to conditions that shares representing not less than
eighty percent of the issued capital of the licensee (company)
will be
beneficially owned by persons each of whom is resident in Australia; and more
than 15% of the issued capital of a licensee
company will not be beneficially
owned by a non resident; and that Articles of Association contain certain
provisions as to eligibility
to hold shares and as to securing the disposal of
shares; and that changes in the Memorandum or Articles of Association require
approval,
e.g. ss. 90G, 90K, 90L, 92G, 92D AND 92FA.
The attainment by a person without approval of a prescribed interest in a
licensee company (shareholding exceeding the 15% of the
total of the amounts
paid on all shares in that company) can attract that the person is to cease to
have shareholding interest in
the licensee company amounting to a prescribed
interest, e.g. s.904, 92F.
The Tribunal may hold an inquiry dealing with the granting or refusal of approval in circumstances set out in s.90J and s.92F ss.(4).
The words attributed to the then Postmaster-General, Mr. Davidson, on 19 April 1956, in the hearing headed "South Western Telecasters Limited Licensee of Commercial Television Stations BTW-3 Bunbury and GSW-9 Southern Agricultural and Commercial Broadcasting Stations 6TZ Bunbury, 6C1 Collie and 6NA Narrogin - Share Transactions", seem relevantly to reflect the same theme.
"The conduct of a commercial television service is not to be considered as
merely running a business for the sake of profit. Television
stations are in a
position to exercise a constant and cumulative effect on public taste and
standards of conduct, and, because of
the influence they can bring to bear on
the community, the business interests of licensees must at all times be
subordinated to the
overriding principle that the possession of a licence is,
indeed, as the royal commission said, a public trust for the benefit of
all
members of our society. . . . The Government is firmly of the opinion that the
ownership of commercial television stations should
be in as many hands as
practicable and that it should not be possible for any one organisation to
obtain control of any substantial
number of stations."
Mr. Davidson said further on 12 May 1960:
"These provisions were enacted to express this Government's policy that this very important channel of communication should not fall into the hands of too few, and that the benefit derived from the exercise of licences which lay in the grant of the Government should be spread widely through the Australian community . . . . This area of mass communication is one in which the Government has consistently taken the stand that there should not be an undue aggregation of power in the hands of any few."
In the Act "Control" is not defined, but described in expanded terms in s.90(1), 91(1). Whether or not having legal or equitable force there can be control by means of agreements, arrangements or understandings or practices.
There has been argument as to which party, if any, should bear the onus in the inquiry referred to in s.90J(4) or 92F(4). Senior Counsel for Bisley submitted that since the Tribunal may not refuse to grant approval or give a notice to cease to have shareholding interests (s.92F(3)) unless it considers it necessary in terms of s.90J(4A) and s.92F(4A) to do so, those who oppose the giving of approval would bear an onus to satisfy (according to the appropriate standard which is no doubt the civil onus) the A.B.T. and then the Administrative Appeals Tribunal that refusal to grant approval would best accord with public interest.
This submission relies on the use of the words in ss.(4A) "shall not refuse. . . . . unless". Arguably it could be and is said that there is an implication of no refusal without a positive case for refusal put forward or emerging.
On a broader approach, it is noticed that once a person becomes the holder of shareholding interests amounting to a prescribed interest or being already such a holder becomes the holder of further shareholding interest, that person may apply to the Tribunal for approval of such a transaction; further, the Tribunal shall not refuse to grant approval unless it has held an inquiry in terms of s.90J(4) or s.92F(4).
Presumably the justification or otherwise for such a shareholding, which carried with it the "deemed" control referred to in s.90E and 92B., will emerge at the inquiry. It would, in my view, be not readily acceptable for the A.B.T. to have to approach that inquiry upon an understanding that one who has applied for the approval need not, in the circumstances brought about by its acquisition, at least assist, so far as it can, the A.B.T. to determine what is necessary to maintain that degree of ownership and control to which accords with the public interest; and particularly when the A.B.T. may well find it necessary to direct the applicant to cease to have shareholding interests. The disposition of the shares has raised an issue which may well bear on the future control of the licensee company and hence of the manner of exercise of the license. It seems common sense that the party seeking approval is best able to inform the A.B.T. by evidence or otherwise of e.g. what it can and will offer to the licensee company, and hence to the public. The A.B.T., not having been immediately willing to approve the proposed or completed acquisition transaction, is obliged so it can reach a decision, to hold an inquiry; thereat, it seems appropriate that the applicant show how its participation will be such that despite the disturbance by the applicant of ownership and control, public interest will best be served by granting the approval sought. In fact, Bisley has attempted to do this in its application to the A.B.T. and this Tribunal.
My view is that on a consideration of the whole section and the interests to be protected, a pre-condition or refusal to approve a transaction is that there is held the ss.(4) inquiry. That inquiry is concerned with the public interest. The moving party, subject to what appears below, is the person seeking approval. There is no prima facie notion, I suggest, that a shareholding acquisition of or beyond the prescribed interest is to be assumed in accord with public interest; but rather the reverse.
Then it is to be investigated whether the applicant is to have the approval he seeks; i.e. if to refuse is necessary to maintain the relevant ownership and control; or whether there should be an approval granted to the applicant in aid of its maintenance.
This leads one towards the view that if there can be said to be an onus it is on the party seeking approval to a transaction to show that a refusal will not be necessary in order to maintain both such (which may imply a degree of) ownership and control as will best accord with public interest. In arriving at its decision the A.B.T. or this Tribunal would consider both the present and the future.
Some reference of the nature of the inquiry would be found, I suggest, in
s.25 of the Act, i.e. -
"(1) The Tribunal shall, without regard to legal forms and solemnities, make a
thorough investigation into all matters relevant to
an inquiry under this
Division, and may give all such directions and do all such things as the
Tribunal considers are necessary or
expedient for the expeditious and just
hearing of the inquiry.
(2) The Tribunal is not bound by legal rules of evidence and may inform itself
on any matter in such manner as it thinks fit.
(3) Subject to section 19, the Tribunal shall ensure that every person having
an interest in proceedings before the Tribunal at an
inquiry is given a
reasonable opportunity to present his case and, in particular, to inspect any
documents to which the Tribunal
proposes to have regard in reaching a decision
in the proceedings and to make submissions in relation to those documents."
As to the applicability of s.25 see R v. Australian Broadcasting Tribunal (later cited) at p.303.
The use of the expression in s.25(3) "to present his case" does support that the applicant bears the duty of persuasion. However, having regard to the use of the term "thorough investigation" and the observations made in R. v. Australian Broadcasting Tribunal and Others; Ex parte Hardiman and Others [1980] HCA 13; (1979) 29 A.L.R. 289, it is open to question finally whether there is really an onus of proof in the ordinary sense once the A.B.T. is required itself to make such an investigation.
I consider there is no onus of proof in the sense in which that expression is ordinarily used on any party to the inquiry; though inferences may in appropriate circumstances be drawn against a party where e.g. there is a failure to provide information which might be thought to have been peculiarly within the knowledge of that party.
Being concerned to review a decision, I am not directly charged with determining whether e.g. Bisley has infringed the provisions of sub-sections(5) of s.90J and s.92F. It appears that e.g. Bisley, lacking approval, did become a party to transactions to which the sections apply.
Mr. Rivkin who holds a Law degree from the University of Sydney, agreed in
evidence that in his statement tendered in writing to
the Tribunal, both
before and after the purchase of the shares, he had carefully studied the Act
though "without much comprehension
because I think it is a very difficult Act
to comprehend." He was a "self adviser"; but was aware that an application to
the Tribunal
would be necessary if his plans were successful. His examination
included a reading of s.92F including s.92F(5). He agreed that he
appreciated
if Bisley were successful in its proposed purchase it would be acquiring "more
than a prescribed interest in Country
Television's licenses"; however, he did
not think that if the purchases did take Bisley's holding above 15% and the
Tribunal's approval
was not obtained in advance, Bisley would be in breach of
s.90F(5). Asked to explain why, he said -
". . . .because there had been several acquisitions of prescribed and other
interests under this Act that had just taken place before
our acquisition,
which were subsequently approved, and accordingly I took the view that the Act
had certain contradictory sections
and in fact that (5) was to be read with
(4)(a) and other sub-sections, and I do not believe that even today the courts
have really
clarified sub-sections (4) and (5).
HIS HONOUR: When you say certain acquisitions, you mean quite apart from
Bisley - - -?----Yes - other companies' acquisitions of other
prescribed
interests in other companies.
MR. HANDLEY: Around about January 1980 share transactions involving Ansett and
Murdoch's companies in the Sydney and Melbourne and
Adelaide licenses were
very much in the public news, were they not?----Yes.
May we take it from your last answer that you relied upon these other activities, which were very much in the news at that time, on reaching the conclusion, rather than---It was my real view reinforced by those other activities."
His evidence is that the Bisley share purchase cost some $2,500,000. After such an examination of the section and as a "self adviser". . . without much comprehension" of the Act it was, to say the least, unwise (though perhaps commercially advantageous) to proceed to acquire the shareholding now held by Bisley; particularly without consulting, as Mr. Rivkin's evidence suggests, practising lawyers. His evidence does not persuade me that he really believed Bisley's transactions in the shares of Country Television, lacking prior approval, did not involve a contravention of ss.(5) of 90J and s.92F once their total reached a prescribed interest.
The Tribunal referred to this aspect of the application thus -"The Tribunal, although acknowledging that a breach or breaches of section 92F(5) has occurred, has taken the same view as that which applied in the recent announcement concerning Ansett Transport Industries Limited that section 92F(5) is directory not mandatory. The Tribunal believes it does have power to grant approval for all or some transactions the subject of the application notwithstanding that section 92F(5) has been contravened. (pp.74-80 Reasons for Decision, Ansett Transport Industries Limited - September 1980)."
In his submission on behalf of Country Television, Senior Counsel criticised the use of the words "mandatory" and "directory" in the context.
My view is that expressions "mandatory" and "directory" are inapposite and incongruous as applied to s.90J(5) and s.92F(5) in the present context. These sub-sections describe, with respect, in relatively simple terms a criminal offence appropriate in and harmonious with the Act which is concerned to limit the achieving of control (or deemed control) without approval. To argue that despite what might be illegal acquisitions offensive to s.90J(5) and s.92F(5) approval may be given after the acquisition is open; but the use of such terms could be to obscure what is really intended to be conveyed by the sub-section. I agree with the submission of senior Counsel for Country Television that the only approval which can prevent what otherwise might be a breach of the sub-sections is approval in advance. See R V. Australian Broadcasting Tribunal and Others; Ex parte Hardiman and Others (supra) at p.301. Even so, I do not accept the further proposition that Bisley, if it had been a party to an illegal transaction, was thereby disentitled to approval where, in an inquiry or on a review, approval was considered appropriate, or necessary, in terms of s.90J(4A) and s.92F(4A) in accordance with public interest. If it were found to best accord with public interest in terms of s.90J(4A) and s.92(4A), my view is that there could be approved a share purchase even if by a transaction which itself provided evidence of breach of e.g. s.90J(5) or s.92F(5); though the breach itself might tend to support a refusal of approval.
In the Second Interim Report to the Standing Committee of Attorneys-General
on Disclosure of Substantial Shareholdings and Takeover
Bids by the Company
Law Advisory Committee (the Eggleston report), there appears -
"3. Overseas legislation: In the United Kingdom Act of 1967 provision was made
requiring the disclosure of substantial shareholdings
in listed companies in
cases in which any person was in a position to control the voting in respect
of 10 per cent or more of the
shares carrying full voting rights. This
legislation was recommended by the Jenkins Report (paragraphs 141 to 147
inclusive) and
followed the example set by the United States, which had for
many years required such disclosure in respect of shares subject to
the
control of the Securities and Exchange Commission.
4. Reasons for requiring disclosure: Legislation such as that referred to
above is, in our opinion, justified by the consideration
that in the case of
companies whose shares are traded on stock exchanges, shareholders are
entitled to know whether there are in
existence substantial holdings of shares
which might enable a single individual or corporation, or a small group, to
control the
destinies of the company, and if such a situation does exist, to
know who are the persons on whose exercise of voting power the future
of the
company may depend.
. . . ."
These recommendations were implemented in Division 4 of the Companies Act 1981. They are not precisely in point here but do confirm that the "destinies" of companies may be controlled by single individuals or small groups.
The legislature provided in the Act for an inquiry for the purposes referred to in s.90J and s.92F where a prescribed interest has been acquired and, having regard to e.g. s.90J(4A), appears to equate possible control with a shareholding amounting to that interest.
It is necessary that this Tribunal should notice the decisions of the A.B.T. in similar applications. First, however, it is to be remarked that in this application for approval and subsequent review, Country Television strenuously resisted the application and has continued to contest the entitlement of Bisley to a significant shareholding. Further, the A.B.T. itself has been represented both at the application and here and to this Tribunal has sought to oppose any enlarging of the shareholding of Bisley. Seven local residents, each with qualifications impressive in themselves and associated with the viewing area and the Member who represents the area in the Parliament of New South Wales, have, for reasons which they have severally set out, in effect, opposed the Bisley application.
Decisions of the A.B.T. though provided by the parties were not referred to in detail at the hearing before this Tribunal. The first of these is a Report and Recommendation on the Inquiry by the Australian Broadcasting Tribunal into the application by Associated Broadcasting Services Ltd. to acquire all the ordinary shares not already held by it, in Ballarat and Western Victoria Television Ltd., licensee of commercial television station BTV Ballarat. This Inquiry was conducted by Vice-Chairman James H. Oswin at Ballarat, 2 August 1977.
Inevitably each inquiry was concerned with its own particular situation. In one (10 February 1979) regarding a share acquisition by Mr. Eric Dare in Darling Downs T.V. Limited, a written submission was received from the Association for Better Media which argued that all commercial media should be owned by Public Companies in which shareholdings ought not exceed 5%. The licensee Company did not object but its Chairman of Directors said there had been no adverse reaction by shareholders to the application which, he said, would have no effect on the then current level of local ownership; that Mr. Dare "had a contribution to make to the Company and its shareholders". This attitude is reflected in the statement of the A.B.T. approving the acquisition.
In another inquiry concerned with acquisitions by members of the Bendat
family of shares in South Western Telecasters Limited in
the Bunbury area,
there was considerable opposition. The application was for an increase beyond
an existing 35% acknowledged by the
A.B.T. as an effective commercial control
level. The A.B.T. in its reasons stated -
"The Tribunal has no doubt on the evidence that Mr. Bendat had effective commercial control before these transactions and therefore in a real sense they were not adding to the control that already existed, had been approved and not opposed."
It also acknowledged the good service being provided by the several stations involved under the ownership of the Bendat family. Approval was given to the transactions.
It is not appropriate to comment on the A.T.V.-10 Melbourne decision where there was refusal of an approval, since the decision is currently under review. And the issues are not similar.
In circumstances where the A.B.T. is charged with a continuing function to administer the Act and to consider granting or withholding approval referred to in s.90J and s.92F of the Act, this Tribunal in a review ought notice relevant aspects of A.B.T. decisions in this area. Weight has been given by the High Court to opinions of persons in a similar situation in other disciplines. See e.g. Eclipse Sleep Products Inc. v. The Registrar of Trade Marks [1957] HCA 86; (1957) 99 C.L.R. 300 at p.308; Joseph Bancroft & Sons Co. v. Registrar of Trade Marks [1957] HCA 87; (1957) 99 C.L.R. 453 at p.457; F. Hoffman-La Roche & Co. A.G. v. Commissioner of Patents (197) [1971] HCA 3; 123 C.L.R. 529 at p.543. To authorities cited may be added Epstein v. Medical Board of Victoria [1945] VicLawRp 54; (1945) V.L.R. 309 at 310; Medical Board of Victoria v. Meyer [1937] HCA 47; (1937) 58 C.L.R. 62 at 104; Georgussis v. Medical Board of Victoria [1957] VicRp 98; (1957) V.R. 671 at 679. In Re Frederick 1957 S.A.S.R. 149, as I read it, the Court did give weight to the special knowledge of the Board whose decision it considered.
It is at least arguable, quite apart from the authorities to which reference
has been made, that s.33 of the Administrative Appeals Tribunal Act 1975 which
reads -
"(1) In a proceeding before the Tribunal -
(a), (b) . . . . . .
(c) the Tribunal is not bound by the rules of evidence but may inform itself
on any matter in such manner as it thinks appropriate.
. . . . . . . "
enables, even invites this Tribunal to have regard, inter alia, to the views and opinions adequately proved of those whose appointments require them to consider and make decisions in areas where policy, expert knowledge and recurrent experience might play a part.
A.B.T. decisions to which reference has been made do not present such a similarity of issues as to enable there to be discovered a consistent pattern. But the nature of the controversy (or the lack of it) and the particular circumstances of a licensee company may well permit a greater degree of control by one person (or a group) in one licensee company than is justifiable in another. There is notable in all the decisions a preoccupation, quite properly, with control. Apart from considering that one should have a similar concern, I have not found them of great assistance here.
On 24 June 1981 The Broadcasting and Television Amendment Act 1981 (Amendment Act), except for s.2(2), came into operation. After completion of evidence and submissions on 10 June 1981, argument was invited as to the affect it may have on this review.
Section 48 of the Amendment Act reads -"(1) In sub-section (2), "transaction" has the same meaning as in Division 2 or 3 of Part 1V of the Principal Act.
(2) In relation to -
(a) any proceedings before the Tribunal instituted before, on or after the
date of commencement of this section in which approval
by the Tribunal of a
transaction entered into before that date was or is sought;
or
(b) any application made before, on or after that date to the Administrative
Appeals Tribunal for the review of a decision of the
Tribunal in any such
proceedings,
the Principal Act applies as if this Act had not been enacted.
(3) In determining whether the Principal Act as amended by this Act applies in
relation to matters other than those referred to in
sub-section (2), that
sub-section shall be disregarded."
"such proceedings" in s.48(2)(a) refer to the
". . . proceedings before The Tribunal. . . . in which approval . . . . . . .
of a transaction entered into before that date was sought."
"Transaction" as defined in the principal Act s.90(1) and s.91(1) would
include the purchase and perhaps a proposed purchase acquisition
of shares in
Country Television. Bisley in its application, filed with the A.B.T. on 13
August 1980, sought approval to both in these
terms -
"1. The purchase by Bisley Investment Corporation Limited ("Bisley") of 20.3%
of the capital of Country Television Services Limited.
2. The purchase by Bisley of a further 2.69% of the capital of Country
Television."
There followed a reference to Lytona's shareholding in Bisley as at 11 April 1980, and there having been an increase in that number since that time. It is clear from Counsel's opening address to the A.B.T. that Bisley was seeking approval not only to an already completed purchase of 20.3% of the "capital" in Country Television but also to a further 2.69% thereof.
Section 48 appears to require the application of the Principal Act
unaffected by the Amendment Act to what may be described as applications
regarding completed transactions. On one reading of it, given that there is a
proceeding before the Tribunal in which approval is
sought of a transaction
already entered into, then the Amendment Act may not affect the proceedings or
the application to the Administrative
Appeals Tribunal, i.e. there is to be no
application of the Amendment Act once one ingredient in the proceedings is the
dealing with
a transaction already entered into. This follows from these facts
which appear to preserve the application of the (Principal) Act
and the non
application of the Amendment Act -
1. There were proceedings before the A.B.T. instituted (i.e. by application).
2. In those proceedings approval by the A.B.T. of a transaction entered into
before that date (viz. the disposition by assignment
of the beneficial
ownership of the 20.37% of shares to Bisley) was sought.
3. An application to the Administrative Appeals Tribunal was made for the
review of a decision made by the A.B.T. in such proceedings.
4. Therefore the Principal Act applies as if the Amendment Act had never been
enacted.
Paragraph 4 is operative even if in addition to the approval sought as to a transaction entered into, approval was also sought to a proposed transaction.
The A.B.T. was by force of the Act s.90J(2) and 92F(2) required to consider a transaction which is (merely) proposed.
To The Administrative Appeals Tribunal an application for review of a refusal to grant approval (i.e. inter alia to a proposed transaction) might be made. s.119A(g). And the powers and discretions of this Tribunal are then set out in the Administrative Appeals Tribunal Act 1975 s.43, i.e. to affirm vary set aside the decision under review, in terms of that section; part of which decision is that which relates to the finding in respect of a proposed transaction or transactions.
An alternate view of s.48(2) is that it only excluded reference of the Amendment Act to the Principal Act in respect of (completed) transactions and left proposed transactions to be subject to the processes of the Amendment Act.
In my opinion, having regard to what was being considered at the A.B.T. inquiry, this Tribunal would in its review include the proposed as well as the completed acquisition.
This, of course, does not mean that future proposals may not be the subject of applications to the A.B.T.
I do not accept the submission by Counsel for Bisley that there is no valid reason here for this Tribunal to distinguish between a shareholding of 15% and one of 20.37% (or 22.99%) i.e. in terms of public interest; nor the proposition advanced by Mr. Rivkin introduced by "we do not believe" that in Country Television "30% does not represent any greater degree of control than 20%."
No doubt if approval is or had been granted for an acquisition of 20.37% (or 20.95% or 22.99%) that very fact would be of advantage to Bisley in seeking further approval of shareholding up to 30%.
The present approval of up to 15% would enable Bisley to exercise some influence over Country Television. Further, considered with holders of smaller parcels of shares who now or may in the future have similar ideas, its views would be more significant. Lytona and Spedley, so far as evidence shows, make up 55% of the shareholding in Bisley. The remainder with or without Spedley could influence the activity of Bisley to a course not easily predictable now or in the future; an activity not necessarily to be controlled by Mr. Rivkin. Though Spedley is said by Mr. Rivkin to be "unrelated" to Lytona, there is no evidence from which Spedley's relationships with other shareholders or its views or ambitions for Bisley may be determined; nor any evidence as to how shareholders in Bisley other than Lytona might combine with or pursue different policies to those of Mr. Rivkin. Whatever influence Bisley may exert on Country Television will not include any assistance to it in its function i.e. activity in radio and television, since Bisley concedes no skill or experience in those fields. Nor does the Bisley or the civilian evidence express dissatisfaction or suggest that improvement or change is called for in the operation of Country Television.
In its consideration as to what is for the public interest referred to in
s.90J(4A) and s.92F(4A) this Tribunal is not concerned
only to avert a
situation which clearly will not best accord therewith; but also one where
there is a real chance of disadvantage,
even one not necessarily immediate, so
that it might decide that it is necessary to refuse approval in order to
maintain the ownership
and control mentioned in ss.4A(b) which ownership and
control if approval is granted might not be maintained. In a different
context,
the High Court, in Re Australian Broadcasting Tribunal and Others; Ex
parte 2HD Pty. Ltd. [1979] HCA 62; (1979) 27 A.L.R. 321 at p.329 said -
". . . When the purpose of the statute is to promote and protect the public interest the statutory discretion, if not relevantly confined, should be read as enabling the Tribunal to protect the public against the possibility of prejudice or detriment. The Tribunal was rightly concerned with the possibility of influence that might arise from the concentration of ownership which it found to exist as a matter relevant to the public interest. It was entitled to refuse the application in order to eliminate the possibility of that influence. There is, in our opinion, no sound reason for concluding that the exercise of the Tribunal's power to refuse consent should be conditioned by a finding expressed in the terms that there is a probability, rather than a possibility, that a concentration of ownership will give rise to a situation of influence resulting in a lack of autonomy and independence."
In my opinion this statement applies also to the function of the A.B.T. and the Administrative Appeals Tribunal.
I consider that it is not possible exactly to anticipate what might be the result in the future of permitting Bisley to hold more than 15% of Country Television shares. With a holding of shares beyond that percentage there is a real possibility in the future there could well be exerted control or a degree of control by Bisley inhibiting the discharge by Country Television of its responsibility according to its present high or appropriate standards to the people of the area reached by its signals. The possibility of control would increase if Bisley in any efforts it might make towards greater influence were to be assisted by a "friendly" shareholder or group. It is necessary to bear in mind that an approval now could have long term results on the Bisley-Country Television relationship; and that Bisley is a company the attitudes and intentions of which may not always be those of Mr. Rivkin or Lytona.
Senior Counsel for Country Television has argued that the attitude of Bisley and those controlling its actions without first obtaining approval is relevant to a consideration of their respect for obligations under the Act.
He referred to St. John Shipping Corporation v. Joseph Rank Ltd. (1957) 1 Q.B. 267 at e.g. pp. 284 and 285. This authority is instructive as to the disinclination of Courts to assist to give effect to an illegal contract inter parties rather than stating that no contracts forbidden by a Statute can found legal rights. This Tribunal has not before it e.g. any claim by Bisley to enforce a contract against a reluctant share vendor.
Counsel for Country Television submitted that such illegality became a factor in the assessment of public interest (cf. R v. Australian Broadcasting Tribunal and Others; Ex parte Hardiman and Others supra at p.301-2); and the presence of a penalty for purpose of s.90J(5) and s.92F(5) "implied a legal compulsion to do the act in question": British Medical Association v. The Commonwealth [1949] HCA 44; (1949) 79 C.L.R. 201 at p.289.
Already I have indicated that the illegality is a factor to be considered which may operate against the granting of approval but not necessarily requiring its refusal.
To grant the approval sought might involve the disregard of a persistent course of illegal acquisition; nevertheless in my opinion, as earlier stated, this can and should be done where appropriate. To allow the concentration of voting power for which approval is sought by Bisley would in circumstances which may well arise permit a significant degree of control by an entity which does not even pretend to be able to assist Country Television in the exercise of its primary function. Any contribution Bisley could make by way of financial or investment advice, so Mr. Rivkin assured the Tribunal in emphatic terms, will be available anyway, i.e. if Bisley retains the 15% shareholding; or obtainable otherwise.
In my opinion the disregard by Bisley of the ss. (5) in its acquisition of shares provides some evidence showing Bisley's attitude to its obligations under the Act. Strict adherence to the law must, it seems, yield to other considerations. Such conduct reduces one's confidence in evaluating what might be the future course of Bisley in its participation in the affairs of Country Television.
Quite apart from the decisions cited as to illegality and whatever disadvantage in this exercise should be incurred by Bisley because of its persistence in acquiring shares in the face of the wording of s.90J(5) and s.92F(5), I am of opinion that in order to maintain such ownership and control of Country Television as best accords with public interest it is necessary that the approval sought beyond that granted by the A.B.T. decision should be refused.
ATTACHMENT 1Diagram omitted.
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