In brief

The High Court has handed down a series of high profile public law judgments in recent weeks that address matters likely to be of general interest to regulated industry. This article focusses on some of the lessons that can be learned from those cases, including the importance of adopting a thorough and disciplined approach to statutory interpretation, particularly when construing the ambit of a public authority’s regulatory powers.

Introduction

Does a regulator have the legal authority to undertake the investigative or enforcement action it is purporting to undertake? Two recent High Court decisions illustrate that this may not always be the case. The decisions provide a useful reminder about the importance of having a proper regard to statute when construing the scope of a public authority’s powers, as well as highlighting some of the complexities involved in statutory interpretation.

In Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd (2015) 89 ALJR 382 (the Today FM case), the High Court held unanimously that the Australian Communications and Media Authority (ACMA)was empowered totake investigative and enforcement action against the Sydney radio broadcasting network Today FM, for breach of a condition in its broadcasting licence that it was not to use its broadcasting service in the commission of an offence, notwithstanding that Today FM had not in fact been found guilty of committing an offence by a court of competent criminal jurisdiction.

In contrast, in Independent Commission Against Corruption v Cunneen (2015) 89 ALJR 475 (the Cunneen case), the High Court held by majority that the NSW Independent Commission Against Corruption (ICAC) lacked the power to conduct an inquiry into allegations that were made against Margaret Cunneen SC (Deputy Senior Crown Prosecutor for NSW) to the effect that she counselled her son’s girlfriend to fake chest pains to avoid a police breath test, with the intention of perverting the course of justice.

In both the Today FM and Cunneen cases, which have already been the subject of further judicial consideration,1 the applicants sought to rely (amongst other things) on the 'principle of legality' in contending that the regulators’ powers should be given a narrower construction.  The High Court referred to the principle in confining the scope of ICAC’s powers although was reluctant to apply it in its assessment of ACMA’s powers.

The approach taken by the High Court in both casesdemonstrates that regulatory powers are to be interpreted strictly by reference to their particular statutory framework and the nature of the rights or interests to be affected by the regulator’s action. However, the approach also highlights that the process of construction (and the application of the principle of legality) may well give rise to differing views and applications. As noted by the Full Federal Court in the Today FM case,2[a]s with many issues of statutory construction, reasonable minds may differ on the better construction of a particular provision”. The task of statutory construction is therefore a delicate one.

Overview of the cases

ACMA v Today FM

The Today FM case was concerned with the broadcast of a prank telephone call by two Today FM presenters to a hospital in London where Catherine, Duchess of Cambridge, was being treated for acute morning sickness. During the broadcast, the presenters pretended to be members of the Royal Family enquiring as to the Duchess’s health. A member of the hospital’s nursing staff believed them and divulged confidential information about the Duchess’s condition.

Following the broadcast, ACMA (which is charged with responsibility for regulating the broadcasting industry under theAustralian Communications and Media Authority Act 2005 (Cth)) notified Today FM that it would be investigating whether, in broadcasting the prank call, Today FM had breached a condition of its commercial radio broadcasting licence, which requires that a licensee not use the broadcasting service in the commission of an offenceagainst a law of the Commonwealth, States and Territories: see s 42(2)(a) and Sch 2 Pt 4 cl 8(1)(g) of the Broadcasting Services Act 1992 (Cth) (BSA).

Subsequently, ACMA provided Today FM with a copy of a preliminary investigation report, in which ACMA concluded that the conversation between the presenters and nursing staff was recorded in breach of s 7(1) of the Surveillance Devices Act 2007 (NSW) (SDA) and that by broadcasting it, Today FM had breached s 11(1) of the SDA (both of which amounted to criminal offences).

Today FM commenced proceedings in the Federal Court of Australia, seeking a declaration that ACMA was not empowered to make its findings, and injunctive relief to permanently restrain it from doing so.

Today FM’s central arguments were that:

  • as a matter of statutory construction, ACMA was not empowered to determine whether Today FM had committed a criminal offence, and
  • ACMA could not investigate, or make findings, in respect of whether Today FM had used its broadcasting service in the commission of a criminal offence until a court of competent criminal jurisdiction had separately determined that the offence had in fact been committed.

At first instance, Justice Edmonds found in ACMA’s favour. Today FM appealed to the Full Court of the Federal Court of Australia, which overturned Edmonds J’s decision.  ACMA was granted special leave to appeal to the High Court of Australia. The High Court allowed the appeal.

In finding unanimously in ACMA’s favour, the High Court concluded that ACMA was simply making an administrative determination that Today FM had committed a criminal offence. The Court took the following position:

  • There was nothing unusual or offensive to principle for an administrative body to make a determination as to the commission of a criminal offence as a step in the decision as to whether to take disciplinary action.
  • ACMA’s adverse findings as to the SDA were not binding and did not amount to a determination of legal rights for or against Today FM. The only immediate consequence of ACMA’s investigation was to reach a conclusion on an issue relevant to its determination as to whether Today FM’s licence condition had been breached.
  • Although the subject matter of the investigation may, in isolation, have appeared to involve an exercise of judicial power, the legislative context suggested that it was not. Relevant to that context was the fact that ACMA was tasked generally with regulatory responsibility rather than merely investigatory responsibility, that it could act on its own motion to exercise its investigation power, that the investigation was able to take place parallel to court proceedings, that it did not involve the resolution of a legal controversy between ACMA and the licensee, and that the consequence was only the forming of an opinion on a matter within ACMA’s remit.
  • ACMA’s regulatory functions would be unacceptably curtailed if it could act only after a court of criminal jurisdiction had first successfully prosecuted the licensee in respect of its commission of an offence.

ICAC v Cunneen

The Cunneen case has attracted significant public attention in the weeks since it was handed down, and appears to be having ramifications for both past and future ICAC investigations.3

The case was prompted by ICAC’s proposal to conduct a public inquiry into allegations that Margaret Cunneen SC and her son Stephen Wyllie counselled Wyllie’s girlfriend, Sophia Tilley, to fake chest pains in order to prevent investigating police officers from obtaining evidence of Tilley's blood alcohol level at the scene of a motor vehicle accident.

Under the Independent Commission Against Corruption Act 1988 (NSW) (ICAC Act), ICAC is empowered to investigate 'corrupt conduct'. Section 8(2) of the ICAC Act relevantly provides that 'corrupt conduct' is “any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the exercise of official functions by any public official" and which could involve certain kinds of misconduct listed in that sub-section, including perverting the course of justice.

Although the alleged conduct did not concern the exercise of Cunneen’s role as a Crown Prosecutor, ICAC alleged the conduct was 'corrupt conduct' because it could adversely affect the exercise of official functions by the investigating police officers and by a court that would deal with any charges arising from the motor vehicle accident. Cunneen, Wyllie and Tilley commenced proceedings in the Supreme Court, seeking a declaration that ICAC lacked the power to conduct its inquiry.

At first instance, Justice Hoeben dismissed the proceedings. By majority, the Court of Appeal (Basten and Ward JJA; Bathurst CJ dissenting) allowed the appeal and declared that ICAC did not have power to conduct the inquiry.

Again by majority, the High Court (French CJ, Hayne, Kiefel and Nettle JJ; Gageler J dissenting) upheld that decision, finding that the alleged conduct was not capable of being 'corrupt conduct'. The Court took the following position:

  • As an exercise in statutory interpretation, it was necessary to ensure that the scope of ICAC’s powers were construed by reference to the language and purpose of the statute as a whole, requiring a determination of what interpretation is most internally consistent and 'harmonious'.
  • In this case, there were two competing constructions of 'corrupt conduct' – one in which the definition would be met only where the conduct was capable of adversely affecting the probity of a public official’s exercise of an official function and the other where it would be met so long as the conduct was capable of adversely affecting the efficacy of the exercise of that function.
  • Taking into account other provisions within the ICAC Act, it was evident that the concept of 'corrupt conduct' in s 8(2) was intended to apply to both public officials and any other person, and to be broader than merely conduct that could adversely affect the honest and impartial exercise of official functions. However, it was also evident that the concept was intended to be limited to the particular typesof misconduct that were identified elsewhere in the Act.
  • Viewed as a whole, it was “more logical and textually symmetrical" to interpret s 8(2) as being confined to conduct having an injurious effect upon, or otherwise detracting from, the probity (or integrity) of the exercise of the official function – in other words, conduct associated with corruption in public administration. The provision was therefore not capable of applying to Cunneen.

Role of the principle of legality in Today FM and Cunneen

In both the Today FM and Cunneen cases, the applicants sought to rely on the 'principle of legality' in order to limit the action that could be taken by the regulator.

Identification of the principle

The principle of legality has been described (in Momcilovic v The Queen (2011) 245 CLR 1) as:

"[the] presumption that parliament does not intend to interfere with common law rights and freedoms except by clear and unequivocal language for which parliament may be accountable to the electorate. It requires that statutes be construed, where constructional choices are open, to avoid or minimise their encroachment upon rights and freedoms at common law…".4

Where the principle is engaged, there is a starting presumption (absent clear language to the contrary) that the statute not to be intended to:

  • invade fundamental rights, freedoms and immunities,
  • interfere with vested property rights or alienate property without compensation,
  • restrict access to the courts,
  • abrogate the protection of legal professional privilege,
  • exclude the rights to claims of self-incrimination,
  • deny procedural fairness to persons affected by the exercise of public power, or
  • give immunities for governmental bodies a wide application.5

As Justice Heydon described (again in Momcilovic):6

"Pursuant to the principle of legality, the common law of statutory interpretation requires a court to bear in mind an assumption about the need for clarity if certain results are to be achieved, and then to search, not for the intention of the legislature, but for the meaning of the language it used, interpreted in the context of that language".

Application in Today FM and Cunneen

In the Today FM case, the principle of legality was relied on by Today FM to assert that ACMA was not empowered to made a finding that a criminal offence had been committed (this being reserved for a court of competent criminal jurisdiction). The Full Federal Court relied on the principle in reaching its view in favour of Today FM, stating that:7

"the primary judge erred in not taking into account the relevance to the task of construction of the principle of legality. That principle requires that clear language be used to overthrow fundamental principles, such as maintenance of the separation between executive and judicial functions...".

However, the High Court did not endorse the application of the principle of legality in these circumstances, including because of its finding that ACMA was simply making an 'administrative' determination and not adjudging criminal guilt.

Justice Gageler was particularly critical of its invocation, commenting that:8

“The Full Court identified the premise of its reasoning as consonant with the Australian version of the common law principle of statutory construction which has come to be known in the United Kingdom as the 'principle of legality', and which has long been known in the United States as the 'clear statement rule. The principle insists on a manifestation of unmistakable legislative intention for a statute to be interpreted as abrogating or curtailing a right or immunity protected by the common law or a principle recognised by the common law to be important within our system of representative and responsible government under the rule of law. Outside its application to established categories of protected common law rights and immunities, that principle must be approached with caution. The principle should not be extended to create a common law penumbra around constitutionally imposed structural limitations on legislative power. …

I am unable to agree with the Full Court that the common law principle assists in the construction of cl 8(1)(g) of Sched 2 to the BSA. That is because the clause is not directed to defining the scope of the functions of the Authority. The clause is directed instead to prescribing a norm of conduct to which a commercial radio broadcasting licensee must adhere as a condition of its licence”.

In the Cunneen case, the principle of legality was relied on by Cunneen as favouring a narrower interpretation of the meaning of 'corrupt conduct' under the ICAC Act. In this instance, the majority of the High Court accepted that it did so, commenting that:9

"It is not likely that an Act which is avowedly directed to investigating, exposing and preventing corruption affecting public authorities – and for which the justification for the conferral of extraordinary powers on ICAC was said to be the difficulty of discovering and exposing corruption in the nature of a consensual crime of which there is no obvious victim willing to complain – should have the purpose or effect of extending the reach of ICAC to a broad array of crimes having nothing to do with corruption in public administration apart from such direct or indirect effect as they might conceivably have upon the efficaciousness of the honest and impartial exercise of official functions by public officials".

"The principle of legality, coupled with the lack of a clearly expressed legislative intention to override basic rights and freedoms on such a sweeping scale as ICAC's construction would entail, points strongly against an intention that ICAC's coercive powers should apply to such a wide range of kinds and severity of conduct".

By contrast, Justice Gageler was again critical of the resort to the principle of legality in these circumstances, stating that:10

"Mention was made of the 'principle of legality' in written submissions in this Court. No attempt was made, however, to identify any right or principle said to be put in jeopardy by an interpretation of the ICAC Act which would permit ICAC to investigate criminal conduct which has the potential to impair the efficacy of an exercise of an official function by a public official as distinct from limiting ICAC to investigating criminal conduct which has the potential to impact on the probity of an exercise of an official function by a public official. …

Unfocused invocation of the common law principle of construction sometimes now labelled the 'principle of legality' can only weaken its normative force, decrease the predictability of its application, and ultimately call into question its democratic legitimacy".

Comparative application of the principle in other recent cases

The elasticity of the principle of legality means that it is not always clear when the principle will be applied or how it will be applied from case to case. Although the principle was not applied in Today FM (and its use was criticised by Gageler J in Cunneen), there have been a number of recent cases that have applied it successfully in different contexts. For example:

  • The High Court of Australia held that the Australian Crime Commission could not exercise its compulsory examination powers in relation to an individual who had been charged with, but not yet tried for, an offence where the examination would include matters relevant to that offence. Such an exercise was held to abrogate the accused’s right to silence: X7 v Australian Crime Commission (2013) 248 CLR 92.11
  • The Full Court of the Family Court of Australia held that the Income Tax Assessment Act 1936 (Cth) did not provide the Commissioner of Taxation with the authority to use documents discovered in litigation for unrelated purposes. The Court was “unable to find anything in the text of… the Act which could be construed as ‘clear words’ relieving the commissioner from compliance with the implied obligation” that documents discovered in a proceeding are not to be used for a purpose unrelated to the proceeding.12
  • The New South Wales Court of Appeal held that a person required to produce documents at an ICAC inquiry would ordinarily be entitled to object to the production of documents on the ground of irrelevance.13 As noted by Basten JA:

"[27]… In short, the freedom of the citizen from arbitrary interference with documents under his or her custody or control, and the threat of deprivation of liberty for failure to produce them, without a right to object should not be accepted, absent a clear expression of statutory intention to that effect".

  • The current Royal Commission into Trade Union Governance and Corruption received several submissions that it did not have the power to find that a person has broken the law. In part awaiting the High Court’s judgment in the Today FM case, Commissioner Heydon drew on the principle of legality in limiting the findings of the Interim Report to conclusions that a person had engaged in conduct that may have been a breach of a relevant law, regulation or professional standard, that is, that there was credible evidence before the Commission that raised a probable presumption that a breach had occurred, rather than finding that a particular person had engaged in such conduct.14 In doing so, the Commissioner noted that:15

"[T]here are a number of matters which tend against the Commission stating conclusions that a particular person contravened the law. If civil or criminal proceedings were commenced following the conclusion of the Commission’s inquiries the evidence adduced may be very different: some evidence may be inadmissible; some witnesses may not give evidence; some witnesses may give different evidence; some witnesses who did not give evidence to the Commission may choose to give evidence in a court. … At the end of the day the public interest in a full and unfettered inquiry and report must be weighed alongside the need for fairness to persons who are or may be affected by the content of a report".

Of course, given the High Court’s subsequent overturning of the Full Federal Court’s decision in Today FM, it remains to be seen whether a similar approach will be taken in this and future Royal Commissions.

Broader implications of the Today FM and Cunneen cases

The Today FM and Cunneen cases have the potential to give rise to further repercussions for the scope of regulators’ investigatory and enforcement powers.

As ICAC now grapples with the immediate implications of the Cunneen case in determining the scope of its own functions, there are various other regulatory provisions that are broadly similar to those considered in the Today FM case and may therefore give rise to their own issues (although, of course, it will be necessary to analyse them carefully within their distinct legislative frameworks).16

The decisions in Today FM and Cunneen confirm the importance of scrutinising the ambit of a regulator’s powers by those companies and individuals subject to investigatory and enforcement action.  However, they also highlight the difficulties in doing so, particularly given the many challenges of statutory interpretation.

In navigating this process, there are a range of issues that may be relevant to consider, such as:

  • What is the legal source of the regulator’s power to take the action?
  • If the source is a particular provision, does the language of that provision, read in the context of the statute as a whole, provide clear and unambiguous power to undertake the action?
  • Does the exercise of the power in a particular instance affect an established common law right or immunity, such that the principle of legality might be engaged by a court reviewing the exercise of power?
  • If so, what restrictions might a court be likely to imply to protect that established right or immunity? For example:
  • Are there procedural that steps must be undertaken before a decision is made, so that the person affected by the regulator’s action is at least afforded procedural fairness?
  • Are there particular considerations the regulator is required to take into account before making the decision?
  • Could an alternative decision be made which achieves a similar result without affecting a person’s established right or immunity?