Canwest Global Communications Corporation v Treasurer (Cth)

(1997) 147 ALR 509
(1997) 15 ACLC 1258
BC 9703452

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(Judgment by: HILL J) Court:

Judge:
HILL J

Subject References:
FOREIGN ACQUISITIONS AND TAKEOVERS
whether companies holding shares in company with television licences controlled by foreign persons
tests of control considered
whether judicial review available
whether rules of natural justice required a person who could be ordered to divest itself of shares be afforded an opportunity to make submissions to the contrary
whether Treasurer erred in law in making order under s18(4) of the Foreign Acquisitions and Takeovers Act 1975
need to exercise discretion under relevant head of power
Treasurer's decision set aside

Legislative References:
Foreign Acquisitions and Takeovers Act 1975 (Cth), ss5, 8, 9, 11, 18, 25, 26, 26A and 38A - 5; 8; 9; 11; 18; 25; 26; 26A; 38
Broadcasting Services Act 1992 (Cth) - 57(1)

Case References:
Save the Showground for Sydney Inc v The Minister for Urban Affairs and Planning - (NSW Court of Appeal, unreported, 16 June 1997), considered
Buck v Bavone - (1976) 135 CLR 110
Leisure & Entertainment Pty Ltd v Willis - (1996) 64 FCR 205
State of South Australia v O'Shea - (1987) 163 CLR 378
Waters v Acting Administrator for the Northern Territory - (1993) 46 FCR 483
Haoucher v Minister for Immigration and Ethnic Affairs - (1990) 169 CLR 648
Attorney- General for New South Wales v Quin - (1990) 170 CLR 1
Commissioner of Taxation v Cripps and Jones Holdings Pty Ltd - (1987) 17 FCR 55
Minister for Immigration and Ethnic Affairs v Wu Shan Liang - (1996) 185 CLR 259
WP Keighery Pty Ltd v Federal Commissioner of Taxation - (1957) 100 CLR 66
Mendes v Commissioner of Probate Duties (Vic) - (1967) 122 CLR 152
Equiticorp Industries Ltd v ACI International Ltd - (1987) VR 485
National Companies & Securities Commission v Brierley Investments Ltd - (1988) 14 NSWLR 273
Re Application of The News Corporation Ltd - (1987) 15 FCR 227
Public Service Board of New South Wales v Osmond - (1986) 159 CLR 656
Minister for Immigration & Ethnic Affairs v Teoh - (1995) 183 CLR 273
Minister for Immigration, Local Government and Ethnic Affairs v Gray - (1994) 50 FCR 198

Judgment date: 8 AUGUST 1997

SYDNEY

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Judgment by:
HILL J

INTRODUCTION

The expressions "foreign ownership", "foreign control" and "foreign investment" are apt to evoke great passion in the community. For many, all evils of society stem from foreign influence; for many the encouragement of foreign investment is the way forward for job growth and multicultural diversity.

Perhaps in 1975 there was a resurgence of xenophobia. But, whatever prompted it to act, Parliament in that year passed the Foreign Acquisition and Takeovers Act 1975, ("the Act") repealing the Companies (Foreign Take-overs) Act 1972-1974, and thereby established the present framework for regulating foreign investment or control in the national interest.

On 2 May 1997 the Treasurer, the Hon. Mr Peter Costello, signed four orders expressed to have been made under "Subsection 18(4)" of the Act, in respect of Selli Pty Limited ("Selli"), Numeration Pty Limited (`Numeration"), Turnand Pty Limited ("Turnand") and Donholken Pty Limited ("Donholken") requiring each of them to divest their holding of shares in The Ten Group Limited ("TGL"). TGL is the holder of television licenses which, for present purposes, may be sufficiently identified as the "Channel 10 licenses". Each order was, save as to names and corporate details, numbers of shares and details of the person from whom the shares were acquired, identical. The notice relating to Selli was in the following form:

" WHEREAS-

(A)

Selli Pty Limited ACN 076 163 703 (`Selli') is a foreign person and The Ten Group Limited ACN 057 564 708 (`TGL') is a corporation for the purposes of section 18 of the Foreign Acquisitions and Takeovers Act 1975 (`the Act');

(B)

Selli has acquired shares in TGL as described in the Schedule (`the Shares');

NOW THEREFORE I, Peter Costello, Treasurer, pursuant to subsection 18(4) of the Act, being satisfied that the acquisition of the Shares by Selli has resulted in TGL being controlled by foreign persons and that result is contrary to the national interest, direct Selli to dispose of the Shares by midnight (Canberra time) [30th September] 1997 to any person or person approved in writing by the Treasurer.

This order comes into operation on the day that is 30 days after it is published in the Gazette.

Dated this 2nd day of May 1997

P Costello (sgd)

Treasurer

SCHEDULE

On 8 November 1996 Selli acquired 4,360,418 TGL shares from Belshaw Pty Limited ACN 058 429 888

On 27 November 1996 Selli acquired 732,501 shares from Winston Capital Inc."

The Schedule to the Numeration notice referred to an acquisition of 375,000 TGL shares from Copplemere Pty Limited ("Copplemere"); that to the Turnand notice, 2,464,583 TGL shares from Leibler Media Holdings Pty Limited ("Leibler Media Holdings") and that to the Donholken notice, 4,550,000 TGL shares from Corom Pty Limited ("Corom") and 4,574,999 TGL shares from Audant Communications Pty Limited ("Audant").

The three proceedings for decision brought by the companies against whom the divestiture orders were sought to be made and by CanWest Global Communications Corporation ("CanWest") seek judicial review of the decisions to make the divestiture orders and consequential relief. Section 39B of the Judiciary Act 1903 is relied upon as conferring jurisdiction on the Court as the Treasurer is an officer of the Commonwealth.

THE BACKGROUND FACTS

In stating the facts I have drawn from the Minute dated 10 April 1997 prepared by an Executive Member of the Foreign Investment Review Board ("FIRB") which was submitted to the Treasurer at the time he made the decision to sign the four orders. No evidence was given in the proceedings before me of these matters, and appropriately so, as that would not have been material which was before the Treasurer at the time he made the decision. No challenge has been made to the facts as stated in this Minute.

During 1992 TGL experienced financial difficulties. A group of investors was organised to save TGL. A key player was a Canadian company CanWest. It acquired one share less than 15% of the TGL share capital; the remainder of that capital was held by Australian resident companies with resident shareholders as follows:

To enable TGL to acquire the Channel 10 licenses (they were held through another company the shares which TGL acquired) a CanWest subsidiary lent $45,955,000, on the security of 455,000 convertible debentures paid up to $45,000) and $45,500,000 subordinated debentures paid up in full. The convertible debentures were convertible into 45,500,000 shares, but could not be converted unless conversion would meet the requirements of the Act and broadcasting legislation. Interest was payable on the subordinated debenture at whatever was the lesser of 15 per cent and an amount equal to dividends payable on shares.

The writer of the FIRB Minute expresses the view that this structure was "probably" inconsistent with Australia's foreign investment policy which precluded foreign control of and limited foreign investment to 15% in free to air television. The matter was not, it would seem, considered by the Treasurer of the day in any detail. An inquiry was held by the Australian Broadcasting Authority ("the Authority") which concluded that the structure did not breach the provisions of the Broadcasting Services Act 1992 ("the Broadcasting Services Act"). In the result it is said that a "whole of Government" decision was taken not to "unscramble" the situation by requiring CanWest to divest itself of the shares. As the FIRB Minute discloses:

"The financial crisis for TGL at the time the ownership structure was established was a key consideration."

The shareholders participating in the rescue operation entered into an agreement between themselves granting preemptive rights to each other in the event that any one or more of them should desire to sell its or their shares. The preemptive right period was thirty days, following which the party desirous of selling was free to do so.

There was a substantial turn around in the financial position of TGL by 1996. In October of that year Belshaw, a company associated with Mr Singleton, gave notice that it desired to sell its shares. CanWest claimed that it had sought to involve an Australian financial institution in the purchase of the shares on offer, but to no avail. CanWest then discussed the share acquisition with Messrs Skala and Leibler, directors of TGL and the individuals behind Leibler Media Holdings and Copplemere respectively. Formal documentation was signed on 8 November 1996. On that day Selli, a company incorporated specially for the purpose, the shareholders of which were Leibler Media Holdings and Copplemere, as the corporation nominated by CanWest under the preemptive right agreement , took a transfer of 4,360,418 Belshaw shares in TGL at $13 a share. Belshaw also directly transferred to Leibler Media Holdings 189,583 shares at the same consideration. Thereupon Leibler Media Holdings transferred 375,000 TGL shares to Turnand and Copplemere sold 75% of its shareholding in TGL to Numeration. Messrs Leibler and Skala were directors of each of Selli, Numeration and Turnand. Voting control in Turnand is in Leibler Media Holdings; voting control in Numeration is in Copplemere.

On 27 November 1996, Winston Capital sold its total of 732,501 shares in TGL to Selli. This appears to have been completely independent of the Belshaw transaction, save that it took place temporally with it.

To finance these transactions Drie Sterren Kapitaal (Nederlands) BV ("DSK"), a CanWest subsidiary, advanced a total of $103,831,051 by way of issues of participating and convertible debentures. The Selli structure will be described in more detail later. Suffice it to say that the structure owed something to the TGL financing transaction which had taken place in 1992.

Subsequently on 26 November 1996 two further shareholders in TGL gave notice under the preemptive rights agreement, these being Audant and Corom, in respect of 4,574,999 and 4,550,000 shares respectively. CanWest again nominated Selli. TNQ alleged a breach of the shareholders' agreement and threatened litigation if a transfer to Selli went ahead. Sale agreements had been entered into with Selli; these were terminated and Selli was substituted for Donholken as the proposed transferee. According to the FIRB Minute the involvement of Donholken involved the following steps:

"

*

Mr Skala suggested that CanWest contact Ms Melda Donnelly to see if she was interested in what became the Donholken acquisition.

*

Mr David Asper, son of Mr Israel Asper, suggested that CanWest contact Mr Richard Kennett to see if he was interested in what became the Donholken transaction.

*

Mr Anthony Hollis was approached by CanWest directly to see if he was interested in what became the Donholken transaction. Mr Hollis was a previous employee and director of an Australian CanWest subsidiary, CanWest Pacific Communications Pty Limited. Mr Hollis ceased working as an employee in September 1996 and resigned as a director on 9 January 1997.

15. Donholken was incorporated on 9 January 1997 and on 10 January acquired all of Audant's and Corom's shares in TGL."

Mr Israel Asper was, at all relevant times, Chairman and Chief Executive of CanWest.

The funding for the Donholken transactions was again provided by DSK, to the extent of $137,726,235 on the security of participating and convertible debentures. The purchase price was now $15 per share.

The combined effect of the Selli and the Donholken transactions was that the economic interest of CanWest in TGL increased from 57.5% to 76%.

The Selli Structure

I have, for the purposes of other proceedings, heard together with the present proceedings, analysed the Selli structure. In order that the present judgment may be self contained I repeat that summary which was taken from the transaction documents which were held by FIRB and which formed the basis of the FIRB advice to the Treasurer.

The Memorandum and Articles of Association of Selli authorise the allotment of five classes of shares of which only three classes have been issued. First, there are two Class A voting shares, one held by Leibler Media Holdings and the other by Copplemere. The holders of these shares are not entitled to any dividends but they are entitled to vote. Second, there are four Class B limited voting, participating shares, only two of which are issued, one each to Leibler Media Holdings and Copplemere. The holders of the Class B shares are only entitled to vote on matters related to the Class B shares but are entitled to a preferential dividend of $300,000 and 5 per cent of the net distributable income of Selli after payment of expenses and interest to convertible and participating debenture holders. There are 200 million Class C full voting, participating shares and 200 million Class D limited voting, participating shares none of which have been issued. Finally, there are two Class E non-voting, non-participating shares to which Leibler Media Holdings and Copplemere have subscribed the amount of $1.00 each plus a premium of $24,999.00 each. These shares are redeemable and, on redemption, shareholders are to receive the par value and any premium paid. The Class E shares are non-voting and non- participating.

There are two classes of issued shares in Turnand that have been issued. Leibler Media Holdings holds two Class A voting shares. There are no other voting shares issued. Selli holds 32,247,825 Class B shares in Turnand. These are non-voting, participating shares.

The structure of Numeration mirrors that of Turnand. Copplemere holds two Class A voting shares and Selli holds 4,904,534 Class B shares which are non-voting but participating. In each company, Class B non-voting, participating shares and Class C voting, participating shares are authorised but unissued.

The capitalisation of Turnand and Numeration arose as a result of Selli borrowing from DSK to subscribe for the Class B shares. In turn, the monies paid on the shares were used by Numeration and Turnand to purchase TGL shares.

The Class B shares held by Selli in Numeration and Turnand are convertible into voting participating Class C shares. Such a conversion would enable Selli to control a majority of the votes in each of Numeration and Turnand. Conversion is, however, subject to a qualifying requirement that conversion would not breach the Broadcasting Services Act.

As has already been indicated, there are two types of debentures which have been issued by Selli to DSK, convertible debentures and participating debentures. Under the Convertible Debentures Deed, DSK by way of redemption of the convertible debentures, could convert all or any of those debentures into fully-paid Class C and Class D shares in Selli. The right to convert is made subject to "the qualifying requirement" having been satisfied and also subject to the following qualification:

"Notwithstanding anything to the contrary in these Conditions, the rights of a Noteholder under clause 10 to have any conversion shares issued to it or to its nominee should not arise and the issuers obligations under clause 10 to issue any conversion shares to a Noteholder or its nominee do not become binding on it, in each case unless and until the exercise of such rights by the Noteholder would not constitute a breach of Foreign Control and Ownership Legislation or any mandatory directive given thereunder."

The convertible debentures are partly- paid to one cent and attract a ten per cent per annum interest payment.

The "qualifying requirement" provision is expressed in the Convertible Debentures Deed as follows:

"`Qualifying requirement' means that either:

(a)

(i)

the Noteholder or its nominee is an Australian resident; and

(ii)

the conversion of the Notes under clause 10 is not in breach of and does not cause TGL, a shareholder of TGL, any Noteholder or any affiliate of a Noteholder to be in breach of Foreign Control and Ownership Legislation or any mandatory directive given thereunder; or

(b)

the Foreign Control and Ownership Legislation (including any mandatory directive given thereunder) at the relevant time and taking into account any approvals or authorisations given thereunder permits conversion of some or all of the Notes under clause 10 in favour of the Noteholder or its Nominee notwithstanding that such Noteholder or its Nominee is not an Australian Resident."

The Participating Debentures Deed secures participating debentures. These have been fully paid to $1.00 and attract an interest payment linked to the distribution which Selli may receive on its TGL shares. The interest is expressed to be 15 per cent but so as not to exceed an amount which is, in effect, 95 per cent of TGL dividends and distribution after expenses, Class B dividend payments and interest on convertible debentures. Subject to default or conversion of the convertible debentures, the participating debentures fall to be redeemed at the expiration of 75 years.

Clause 7 of the Participating Debentures Deed provides as follows:

" Notwithstanding any other Condition, no entitlement or benefit in relation to the Notes or the holder thereof shall arise or be permitted under clause 6 or under any other provision of the Conditions beyond that which would be permitted without contravention of the Act at the time such entitlement or benefit would or could otherwise arise and in the event of dispute as to this, the opinion of the Noteholder's lawyers (confirmed if required by either the Issue or Noteholder by independent Senior Counsel) shall be conclusive."

The Act so referred to is the present legislation. Should DSK convert under the Convertible Debentures Deeds and thus render the participating debentures payable, there is provision for set-off of obligations.

As part of the arrangements, each of Leibler Media Holdings and Copplemere, has granted to DSK call options over the A Class voting shares in Selli. There are similar call options granted by Leibler Media Holdings and Copplemere to Selli over the A Class voting shares in Turnand and Numeration. Each call option is subject to the "Qualifying Requirement" expressed as follows:

"`Qualifying Requirement' means that either:

(a)

(i)

The Grantee or its Nominee is an Australian Resident; and

(ii)

The exercise of the Call Option is not in breach of and does not cause TGL, shareholders of TGL, the Grantee or its affiliates to be in breach of the Foreign Control and Ownership Legislation or any mandatory directive, approvals or authorisations given thereunder; or

LI>

(b)

The Foreign Control Ownership Legislation (including any mandatory directive given thereunder) at the relevant time and taking into account any approvals or authorisations given thereunder permits exercise of the Call Options by the Grantee or its Nominee notwithstanding that the Grantee or its Nominee is not an Australian Resident."

Finally, it is necessary to refer to the specific constraints to be found in the Memorandum and Articles of Association of Selli. Under its Memorandum of Association, Selli is forbidden to carry on any business undertaking or activity other than the acquisition, holding, maintaining or disposing of TGL shares or other TGL securities, receipt and investment in call bank accounts or with other financial institutions, the payment of dividends in accordance with its Articles of Association or participating in legal proceedings. Selli It is specifically prohibited from borrowing money issuing shares or securities or guarantees except for the purposes of the DSK transaction. Neither the Memorandum nor Articles of Selli may be altered without the consent of the holders of the convertible debentures or participating debentures.

The Articles in many places refer to the convertible debentures issued under the "Convertible Debentures Deed". According to the Articles, that is a deed set out in Schedule 1 to the Articles. Schedule 1 to the Articles is, however, blank. The interpretation provision of the Articles stipulates that any Schedule is part of the Articles.

There are a number of provisions in the Articles which refer to the consent of the holders of the participating or convertible debentures. So the share capital of Selli is not to be altered without the consent of the participating debenture holders. Options may not be granted over unissued share capital without the consent of the participating debenture holders; resolutions to alter the capital of the company, inter alia, by consolidation, sub-division, cancellation or reduction, require the consent of participating debenture holders; participating debenture holders are entitled to receive notices of meetings and to attend them; participating debenture holders may appoint a director to the board and one person as a director of each subsidiary and may remove or replace the appointee; directors' remuneration requires the consent of the participating debenture holders; the director appointed by participating debenture holders counts in a quorum; participating debenture holders are entitled to nominate the person to be put forward to the members for appointment as auditor; a resolution to wind up the company requires the written consent of the participating debenture holders and vesting of property in trustees requires the consent of the participating debenture holders.

The Articles provide (Art 1.5(c)), however, that:

"Notwithstanding anything contained in these Articles, where the requirement for the written consent of the Participating Debenture Holders expressed to be required pursuant to these Articles will give rise to a breach of the BSA [Broadcast Services Act], the expressed requirement for such written consent will be deemed to be severed from these Articles."

By way of further precaution the Articles are to be construed so as not to result, inter alia, in a contravention of the Broadcasting Services Act (Art. 1.6).

The Articles provide that the A and B Class shares, that is to say, those shares held by Copplemere and Leibler Media Holdings, are not transferable. The mirror Articles of Association of Turnand and Numeration have somewhat similar constraints save that in place of the necessity of the consent of the participating debenture holders, there is substituted the prior written consent of Class B members.

Finally, some reference should be made to constraints to be found in the Debenture Stock Trust Deed entered into between Selli, Turnand, Numeration and a company called Lintondale Pty Ltd ("Lintondale") on 6 November 1996. This document secures the obligation of Selli under the debenture trust deeds creating a charge over the assets of Selli, Numeration and Turnand in favour of DSK held by Lintondale acting as trustee. Under this deed, further debenture stock can not be created without the consent of the trustee which is required also for alterations of the Memorandum and Articles of Association of Selli, Numeration and Turnand. In addition, none of Selli, Numeration and Turnand, whose assets are charged, may lease or hire any assets or create any encumbrance or sell any property without the trustee's consent. Further, the general character of the business of each company may not be changed or discontinued without the trustee's consent. If there is an event of default including an application to wind up a company, changes in shareholdings, reduction in capital and the like, the trustee can become the registered holder of the TGL shares. However, this is again subject to the "Qualifying Requirement" (cl 12.6) being satisfied, that being defined as meaning:

"that either:

(a)

the exercise of the relevant Power is not in breach of and does not cause the Trustee, any stockholder or its affiliates, or TGL or any of its shareholders to be in breach of the Foreign Control and Ownership Legislation (FATA and Broadcasting Services Act) or any mandatory directives given thereunder; or

(b)

the Foreign Control and Ownership Legislation (including any mandatory directive given thereunder) at the relevant time and taking into account any approvals or authorisations given thereunder permits the exercise of the relevant Power in favour of the Trustee notwithstanding that any stockholder is not an Australian Resident."

The Donholken structure

The Donholken structure was modelled on the Selli Structure. Again I repeat the analysis of the transaction documents which I have made for the purposes of the proceedings heard contemporaneously with the present proceedings.

The authorised capital of Donholken is as follows:

(a)

100 Class A voting, non-participating shares of $1.00 each; 17 of which are held by each of Murdon Business Pty Ltd ("Murdon"), Jacomo Pty Ltd ("Jacomo") and Rusalka Pty Ltd ("Rusalka"). These three companies are respectively companies controlled by Ms Donnelly, Mr Kennett and Mr Hollis.

(b)

51 Class B1 limited voting, participating shares of $1.00 each; 17 of which are held by each of Murdon, Jacomo and Rusalka.

(c)

49 Class B2 limited voting, participating shares of $1.00 each. None of these shares have been issued.

(d)

200,000,000 Class C voting shares of $1.00 each. None of these shares have been issued.

(e)

200,000,000 Class D limited voting, non- participating shares of $1.00 each. None of these shares have been issued.

(f)

1 Class E non-voting, non-participating share of $1.00 held by Murdon.

Holders of the A Class shares are not entitled to dividends. Holders of B Class shares are entitled only to vote on matters concerning Class B1 shareholders. By way of dividend, the Class B1 shareholders are entitled pro-rata among them to the difference between $300,000 and the remuneration in fact paid by Donholken to its directors. This ensures that each of Ms Donnelly, Mr Kennett and Mr Hollis share among themselves either by way of directors' fees or dividend, $300,000, that is to say, each is to receive $100,000. If the Class B1 shares are redeemed, the holders become entitled, pro-rata, to approximately five per cent of the net value of Donholken's assets.

There are again two types of debentures issued by Donholken to DSK to finance the acquisition of the TGL shares, convertible debentures and participating debentures.

The convertible debentures are partly paid to one cent and attract a 10 per cent per annum interest payment. They may be converted into fully paid Class C or Class D shares in Donholken. As indicated earlier, Class C shares carry votes; Class D shares carry votes only on resolutions affecting the privileges and conditions attaching to Class D shares. The right of conversion is, however, subject to the qualification in a qualifying clause which essentially provides that the result would not breach Foreign Control and Ownership Legislation or any mandatory directive given thereunder.

The participating debentures are fully paid to $1.00 and attract an interest payment being whichever is the lesser of 15 per cent or the amount of any TGL dividend less expenses and after taking account of the $300,000 director's fee or dividends to be paid to the directors or their companies.

There is an overriding provision in the DSK/Donholken Participating Debentures Deed (cl 7) in the following terms:

"Notwithstanding any other Condition, no entitlement or benefit in relation to the Notes or the holder thereof shall arise or be permitted under clause 6 or under any other provision of the Conditions beyond that which would be permitted without contravention of the Act at the time such entitlement or benefit would or could otherwise arise and in the event of dispute as to this, the opinion of the Noteholder's lawyers (confirmed if required by the Noteholder by independent Senior Counsel) shall be conclusive."

Redemption of the notes occurs if there is default, if the convertible debentures are converted, when there is a set-off or 75 years from the date of issue.

The substantial difference between the Selli structure on the one hand and the Donholken structure on the other, is that there is not in the Donholken structure a call option over the voting shares. There is, however, a call option in favour of a CanWest subsidiary over the E Class share held by Murdon. Since the Class E share is neither a voting or participating share, it is difficult to see the part which this call option plays in the structure. The same substantial result is brought about by the ability of DSK to convert debentures into voting shares, in essence an option over unissued voting shares.

The Memorandum and Articles of Association of Donholken mirror those of Selli save that the participating debentures deed is not a schedule to the Articles. I, thus, have no need to repeat the detailed provisions. The same matters require the consent of participating debenture holders in Donholken as require the consent of the Selli participating debenture holders.

As was the case with Selli so with Donholken, there are significant restraints on the activities of the company to be found in the Debenture Stock Trust D and, in the event of default under that deed, DSK can procure itself to become the registered holder of TGL shares but subject to the qualifying requirements. There are "qualifying requirements" to be found in the Articles of Association of Donholken and in the Donholken trust deed in terms similar to those to be found in the Selli documents.

The FIRB Advice

The FIRB has no statutory foundation. It seems that the government has appointed a body of persons to provide advice to the Treasurer. At least some of those persons are from the private sector. In determining matters under the Act the Treasurer receives advice from FIRB. He is, no doubt, free to act inconsistently with that advice should he choose so to do.

In the present case the Minute of advice recommending that he make the four divestiture orders with which the present case is concerned appears to have been accepted by the Treasurer. Absent any evidence to the contrary (and Mr Costello was not called), the inference that Mr Costello accepted the advice tendered to him; took into account what was in it; and did not depart from that advice can more confidently be made: Jones v Dunkel (1959) 101 CLR 298, Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33 FCR 87 at 93 and the cases there cited. A similar approach was taken by French J in Irving v Minister for Local Government and Ethnic Affairs (1993) 115 ALR 125 at 137 and see too Sing Wun Chu v Minister for Immigration Local Government and Ethnic Affairs (unreported, Nicholson J, 19 March 1997).

The advice is, essentially, in two parts. First there is an opinion obtained from the Attorney-General's department as to the operation of the Act. Privilege was waived, and, accordingly, the opinion was accepted into evidence. Second, there is the opinion of FIRB itself. The advice of the Attorney-General's Department is summarised in the Minute. For present purposes that summary suffices to indicate the nature of the advice given and the basis for it.

"25

In summary, AG's advised that the acquisition of shares in TGL by Selli, Turnand, Numeration and LMH resulted in CanWest, through its subsidiaries (by virtue of the operation of tracing of substantial interests provisions in section 12C), obtaining a substantial interest in TGL, taking into account the shares of its associates, even where those associates are not foreign persons. On 29 October 1996, LMH and Copplemere (the shareholders in Selli) granted to DSK a call option over the 2 issued Class A shares in Selli held by LMH and Copplemere. As there is a total of 6 issued shares in the capital of Selli, DSK, and ultimately CanWest, are regarded as holding a substantial interest in Selli (having an interest in 33 per cent of the issued shares in Selli). Also, because of these share linkages, A-G's regards Elli, Turnand Numeration and LMH as associates under section 6 of the FATA. Hence, A- G's are of the opinion that when the acquisitions of TGL shares were made by Selli, Numeration, Turnand and LMH they resulted in CanWest obtaining a substantial interest in TGL, taking into account the TGL shares already held by the CanWest subsidiary CGS Shareholding (Netherlands) BV (14.99 per cent). Therefore, the Treasurer would be entitled to draw the conclusion that as the 15 per cent threshold has been crossed, then CanWest holds a controlling interest in TGL unless his assessment of all relevant facts would rebut this view. A-G's has also advised that the question of control is a matter for the Treasurer to determine having regard to a number of factors, including voting rights attached to shareholdings, rights to Board representation, distribution of share ownership, agreements between shareholders and a corporation and a power to veto. A- G's conclude that the Treasurer therefore has the power, under section 18(4), if he considers that TGL is now controlled by CanWest and that result is contrary to the national interest, to issue an order directing the person who acquired the shares (in this case, Selli, Turnand, Numeration and LMH) to dispose of the shares within a specified time to any persons approved in writing g by the Treasurer. With respect to the acquisition of TGL shares by Donholken, A-G's takes the view that it is not open for the Treasurer to take action under sections 18 or 26 (section 26 is the compulsory notification provision). This is because CanWest has not breached the substantial shareholding provision in respect of Donholken.

"26.

A-G's also considered the possible application of section 38A - the anti-avoidance provision. Under section 38A, where a person enters into or carries out a scheme for sole or dominant purpose of avoiding the application of any provision of the FATA in relation to any person, and the purpose has been achieved, then the Treasurer may make any order under the FATA that he would have been able to make if the purpose had not been achieved. The definition of "scheme" is exceptionally wide and includes such terms as agreement, arrangement, understanding, promise or undertaking. The determination of the term "sole or dominant purpose" is to be determined by the Treasurer, having regard to a review of the surrounding circumstances. A-G's state that, should they be wrong about the application of sections 18 and 26 of the FATA to the share purchases in TGL by Selli, Turnand, Numeration and LMH, there is a good chance that a court would regard section 38A as being applicable to the actions involving the deliberate ordering of events so that the option shares (see Appendix D ) were purchased prior to the subsequent purchase of the TGL shares, with the intent of avoiding the application of the FATA. The importance of structuring these arrangements in this manner was specifically stated by CanWest Counsel's first opinion (see Appendix H ). A-G's consider that if the purpose of structuring the arrangements was not considered to be primarily adopted to avoid the control provisions of the FATA, then this would seriously handicap the effectiveness of those provisions and be inconsistent with the rationale of the FATA."

However, while FIRB received advice that the Treasurer had power to make an order under s18(4) with respect to the Selli, Turnand and Numeration transactions, the advice was different with respect to the Donholken transaction.

The advice continued by noting that there had been concern in FIRB at the use of "quasi-equity" to fund share acquisitions. It was inferred too, that there was an arrangement in place between CanWest on the one part and Selli or Donholken on the other. This inference is discussed in the following paragraph attacked in the course of argument:

"35.

It is moreover highly unlikely that by increasing their already large 57.5 per cent economic interest to approximately 76 per cent, CanWest would have assumed the bulk of the considerable financial exposure in TGL without reaching very firm understandings with Selli and Donholken to ensure that at the crunch CanWest would have the final say. Furthermore, TGL has two CanWest employees (Mr Asper and Mr Noble) and an associate (Mr Skala) on the five member Executive Committee where decisions must be unanimous. As detailed in Appendix B , should a unanimous decision not be reached then the issue is referred back to the TGL Board for determination - an 11 member Board of which currently six members are either CanWest employees, associates of CanWest or are directors of Donholken, which is 100 per cent reliant on funding provided by CanWest under the `quasi-equity' structure. CanWest's option to convert its convertible debentures to shares exceeding the existing total share issue of Selli and Donholken and its ability to sell all or part of these options to Australian interests is further evidence that CanWest has a large degree of leverage over Selli (and its associate companies) and Donholken. Also, the Chief Executive Officer of both NTL and TGL, Mr Viner, is an ex-CanWest employee.

36.

Given the above factors, there would appear to be overwhelming evidence that CanWest controls TGL."

The Minute then proceeded to a consideration of the application of s38A of the Act to the Donholken transaction. Legal advice from the Attorney-General's Department had been that s38A had no application to the Donholken transaction. With that conclusion the author of the Minute disagreed. As the advice was accepted by the Treasurer it is necessary to set out the reasons for this conclusion:

37.

As discussed previously (para 24), A-G's also considers that section 38A of the FATA would be applicable to the actions surrounding the purchase of TGL shares by Selli and its associates. It is also the judgement of the FIRB that this anti-avoidance provision also applies to the Donholken transaction. As stated in part B above (discussion of control), the FIRB is concerned that the utilisation of a particular company structure with associated "quasi-equity" financing is a means of avoiding the FATA. The use of "quasi- equity" has major implications for the credibility of Government policy not only in respect of the broadcasting media but also more generally. It has attracted considerable public criticism and the FIRB feels that there is a danger that such a structure or model could be adopted more widely to circumvent the basic satisfaction requirements of the FATA and to undermine the intent of policy. To this end, the then Government announced, by way of press release of 1 August 1995, that it would be Government policy to treat foreign quasi-equity as foreign direct investment (see Appendix K). The model could be used by companies to close deals quickly (as happened with the Selli and Donholken transactions), leaving the Government with the problem of then having to "unscramble the egg" on each occasion. As the Donholken transaction is reliant on this "quasi- equity" structure, the FIRB considers this transaction to be a scheme to avoid the application of the FATA.

38.

The FIRB also draws attention to the means by which Donholken was formed in order to acquire the TGL shares of Audant and Corom. At the time when the shares were offered to the Original Shareholders under the pre-emptive rights, Donholken did not exist. Instead, Donholken was formed the day before the shares were purchased as a direct result of CanWest or CanWest associates bringing together the three shareholders (Ms Donnelly, Mr Kennett and Mr Hollis - see para 13 to 15 of this Report). By creating Donholken, nominating it as the company which will acquire the shares on offer in TGL and then financing this purchase by way of debenture issue (quasi- equity), CanWest has sought to avoid the notification requirements of the FATA. Furthermore, Mr Hollis resigned as a director of a CanWest subsidiary (CanWest Pacific Communications Pty Ltd) the day Donholken was incorporated - or, more to the point, the day before Donholken acquired the shares in TGL. A- G's advise that Mr Hollis would not be regarded as an associate of CanWest for purposes of section 6 of the FATA as the associate provision only applies to current employees and directors. In the context of Senior Counsel opinion for the Selli transaction, which alludes to the importance of ordering events so as to avoid the application of the FATA, the FIRB is of the opinion that the timing of Mr Hollis's resignation is further evidence that the circumstances surrounding the Donholken transaction add up to a scheme to avoid the application of the FATA.

39.

As to the involvement of Ms Donnelly and Mr Kennett, the FIRB notes that they receive no return from the shares which they now legally own - all dividends go to CanWest in repayment of the finance provided (100 per cent) for the share purchase. The parties, in response to the Executive's request, have not disclosed any other financial arrangements. Ms Donnelly and Mr Kennett, therefore, have presumably participated for some other reason. They have been made board members of TGL/Network Ten and would draw directors fees. Section 6(h) of the FATA (the associate provision), which defines an associate as:

"any corporation whose directors are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person..."

would appear to be relevant to Donholken."

Finally, the Minute turned to discuss the national interest, having regard to the significance of that as a criterion under the Act. The only comment made was that because the transactions were in breach of s57(1) of the Broadcasting Services Act it followed that they were contrary to the national interest.

THE SCHEME OF THE ACT

The orders made by the Treasurer in the present case were made under s18(4). That subsection provides:

"(4)

Where a person has acquired shares in a corporation, and the Treasurer is satisfied that:

(a)

the acquisition has had the result that:

(i)

in the case of a corporation that, before the acquisition, was not controlled by foreign persons - the corporation is controlled by foreign persons; or

(ii)

in the case of a corporation that, before the acquisition, was controlled by foreign persons - the corporation continues to be controlled by foreign persons, but those persons include a person who is not, or do not include a person who is, one of the foreign persons first referred to in this subparagraph; and

(b)

that result is contrary to the national interest;

the Treasurer may make an order directing the person who acquired the shares to dispose of those shares within a specified time to any person or persons approved in writing by the Treasurer."

A person desiring to enter an agreement which might have the result of foreign control or increased foreign control may notify the Treasurer of the proposed agreement under s25 of the Act. If 30 days then pass without the Treasurer making an order in relation to the arrangement which is published in the Gazette, the transaction may proceed and the Treasurer may not make a divesting order thereafter: s25(2). If the Treasurer is of the view that the arrangement, if certain conditions were imposed, would not be contrary to the public interest, the arrangement may proceed, but there are substantial penalties if the conditions are not fulfilled: s25(1A). Alternatively, the Treasurer may within the thirty day period make an order which is published in the Gazette. In this event the 30 day period is effectively extended to 90 days from the publication of the order. Finally the Treasurer, if of the view that the result of the arrangement is contrary to the national interest, the Treasurer may make an order under s18(2) prohibiting the arrangement.

In certain circumstances, not presently relevant, notification of an arrangement will be compulsory: s26, 26A.

Relevant definitions are to be found in s5 of the Act. By the application of the definition of "foreign person", CanWest and its subsidiaries are "foreign persons". Subs 4 of that section provides:

"In this Act, a reference to entering into an arrangement is a reference to entering into any formal or informal scheme, arrangement or understanding, whether expressly or by implication, and, without limiting the generality of the foregoing, includes a reference to:

(a)

entering into an agreement, other than a moneylending agreement;

(b)

creating a trust, whether express or implied; and

(c)

entering into a transaction;

and references to an arrangement shall be construed accordingly."

Subs 5 provides:

"In this Act, a reference to entering into an agreement or arrangement includes a reference to altering or varying an agreement or arrangement."

Section 8 of the Act defines "control of voting power" in a corporation as being:

"a reference to control that is direct or indirect, including control that is exercisable as a result or by means of arrangements or practices, whether or not having legal or equitable force, and whether or not based on legal or equitable rights."

Section 9 is concerned with "substantial" and "controlling interests" it provides, relevantly:

"9(1)

For the purposes of this Act:

(a)

a person shall be taken to hold a substantial interest in a corporation if the person, alone or together with any associate or associates of the person, is in a position to control not less than 15 per centum of the voting power in the corporation or holds interests in not less than 15 per centum of the issued shares in the corporation; and

(b)

2 or more persons shall be taken to hold an aggregate substantial interest in a corporation if they, together with any associate or associates of any of them, are in a position to control not less than 40 per centum of the voting power in the corporation or hold interests in not less than 40 per centum of the issued shares in the corporation.

(2)

Where:

(a)

a person holds a substantial interest in a corporation; or

(b)

2 or more persons hold an aggregate substantial interest in a corporation;

that person shall be taken to hold a controlling interest in the corporation, or those persons shall be taken to hold an aggregate controlling interest in the corporation, as the case may be, unless the Treasurer is satisfied that, having regard to all the circumstances, that person together with the associate or associates (if any) of that person is not, or those persons together with the associate or associates (if any) of each of them are not, in a position to determine the policy of the corporation."

The test of who are "associates" is to be found in s 6 of the Act. For present purposes three only of the possible tests are relevant:

"(h)

any corporation whose directors are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person or, where the person is a corporation, of the directors of the person;

(i)

any corporation in accordance with the directions, instructions, or wishes of which, or of the directors of which, the person is accustomed or under an obligation, whether formal or informal, to act;

(j)

any corporation in which the person holds a substantial interest;"

The circumstances when persons are to be taken to hold an interest in a share are set out in s 11, which is in the following terms:

"(1)

Subject to this section, a person holds an interest in a share if he has any legal or equitable interest in that share.

(2)

Without limiting the generality of subsection (1), where a person:

(a)

has entered into a contract to purchase a share;

(b)

has a right, otherwise than by reason of having an interest under a trust, to have a share transferred to himself or to his order, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not;

(c)

has the right to acquire a share, or an interest in a share, under an option, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not; or

(d)

is entitled (otherwise than by reason of his having been appointed a proxy or representative to vote at a meeting of members of a corporation or of a class of its members) to exercise or control the exercise of a right attached to a share, not being a share of which he is the registered holder;

that person shall be deemed to hold an interest in that share."

Finally, reference should be made to the anti-avoidance provision, s38A which provides as follows:

"(1)

In this section, " scheme " means:

(a)

any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b)

any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

(2)

Where:

(a)

a person or persons enter into, commence to carry out or carry out a scheme (other than a scheme entered into before the commencement of this section);

(b)

it would be concluded that the person, or any of the persons, who entered into, commenced to carry out or carried out the scheme or any part of the scheme did so for the sole or dominant purpose of avoiding the application of any provision of this Act in relation to any person or persons (whether or not a person or persons who entered into, commenced to carry out or carried out the scheme or any part of the scheme); and

(c)

the scheme or the part of the scheme has achieved, or apart from this section, would achieve, that purpose;

the Treasurer may make any order under this Act that the Treasurer would have been able to make if the scheme or the part of the scheme had not achieved that purpose.

(3)

..."

THE SUBMISSIONS - A SUMMARY

Submissions were received from CanWest, Donholken and counsel representing Selli, Turnand and Numeration. Where the interests overlapped each counsel adopted the submissions of the others.

As is usual in cases of this kind the originating process adopted what might be called a "scatter-gun approach". The pleader had sought to plead every possible ground of judicial review, whether or not having particular relevance to the circumstances. In the result there were many grounds which were not the subject of oral argument. I made it clear to counsel that unless an argument was specifically dealt with in written or oral submissions, I would treat it as having been discarded. Hence, in these reasons, I deal only with matters which were so dealt with.

The submissions fell within four heads, as follows:

*

That the relevant party had been denied natural justice;

*

That the Treasurer erred in law in applying 18(4)(a)(i) of the Act, when in the circumstances he was required to direct his mind to s18 (4)(a)(ii), with the consequence that his decision was vitiated;

*

That to the extent the Treasurer applied s38A of the Act, that section could have no application, as it was an annihilating provision permitting no reconstruction;

*

That the Treasurer misapplied the law in a number of miscellaneous respects.

In addition to denying each of the applicants' submissions senior counsel for the Treasurer denied the jurisdiction of the Court to review at all the Treasurer's decisions. It is convenient to deal with this matter first and then to return to the applicants' submissions thereafter.

DOES THE COURT HAVE JURISDICTION TO REVIEW DECISIONS OF THE TREASURER?

The submission that the Court lacked jurisdiction to entertain judicial review of a decision of the Treasurer under s18 of the Act was not strongly pressed. As I understood it, the point that was made was that a decision on s18(4), involving as it does the application of a national interest criterion, was, in essence, a decision involving policy with which the courts would not , or could not, interfere. The submission was tied up with two other submissions advanced for the Treasurer in the course of argument, namely that the issues involved in s18(4) were not such as to raise legitimate expectations founding a right to be heard, and that the content of "national interest" within s18(4) was solely for the Treasurer to determine.

Senior counsel for the Treasurer relied upon the decision of the Court of Appeal of the Supreme Court of NSW in Save the Showground for Sydney Inc v The Minister for Urban Affairs and Planning (Gleeson CJ, Powell and Beazley JJA, unreported, 16 June 1997), where the distinction was drawn between policy, on the one hand and the application of policy on the other. Beazley JA (at p21) said:

"... it has often been held that matters within the area of policy or political decisions within the discretion of government do not attract a duty to observe natural justice... It is important in this area to draw a distinction between the making of a policy decision (including a change in policy) and the application of a policy to the circumstances of an individual. The courts have been astute to afford procedural fairness in the latter situation to safeguard the interests and legitimate expectations of individuals detrimentally affected by a policy or change in policy... However, except in circumstances as discussed earlier, the courts have given full reign to the right of the executive to make policy and political decisions without the constraints imposed by judicial review..."

The limits on judicial review where broad criteria are adopted are discussed in the judgment of Gibbs CJ in Buck v Bavone (1976) 135 CLR 110 at 118-9. His Honour there said:

"It is not uncommon for statutes to provide that a board or other authority shall or may take certain action if it is satisfied of the existence of certain matters specified in the statute. Whether the decision of the authority under such a statute can be effectively reviewed by the courts will often largely depend on the nature of the matters of which the authority is required to be satisfied. In all such cases the authority must act in good faith; it cannot act merely arbitrarily or capriciously. Moreover, a person affected will obtain relief from the courts if he can show that the authority has misdirected itself in law or that it has failed to consider matters that it was required to consider or has taken irrelevant matters into account. Even if none of these things can be established, the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it. However, where the matter of which the authority is required to be satisfied is a matter of opinion or policy or taste it may be very difficult to show that it has erred in one of these ways or that its decision could not reasonably have been reached. In such cases the authority will be left with a very wide discretion which cannot be effectively reviewed by the courts."

What is there said is precisely applicable to the present case. A court would be loathe to interfere with a discretion vested in the Treasurer on a matter such as national interest. A person affected by the decision could not get mandamus directed at the Treasurer requiring him to exercise the discretion in a particular way: Leisure & Entertainment Pty Ltd v Willis (1996) 64 FCR 205 at 220. Parliament has entrusted decisions on matters of national interest to the Treasurer; not to the courts. But that is not to say that the Court lacks jurisdiction altogether . If it can be shown that the Treasurer has not fulfilled a condition precedent to making an order under s18 (for example, because the Treasurer erred in law in coming to the conclusion that a person was a foreign corporation) the Court can intervene to set aside the decision. So too, if the Treasurer in forming a view about the national interest takes into account a matter which is clearly irrelevant to the national interest, the Court can intervene. So too, if the Treasurer has made a decision which no reasonable person acting in accordance with his authority could have made, the Court can intervene. But the area in which judicial challenge can succeed is clearly circumscribed by the breadth of the consideration of national interest entrusted to the Treasurer.

NATURAL JUSTICE.- THE CASE FOR THE SELLI AND DONHOLKEN INTERESTS

The submissions for the Selli interests (including Turnand and Numeration) and Donholken were identical. They complained that not only had there been findings made against them without their having had the opportunity to be heard, but the decisions had the consequence that they were forced to divest themselves of assets of substantial values and that at no time were they given by the Treasurer any real opportunity to put a case against divestiture.

Factually there had been a number of meetings or contacts between CanWest or the advisers of CanWest on the one hand and officers of FIRB or of Treasury, including one meeting with the Treasurer himself to which I will shortly return when considering the argument that that CanWest had not been given natural justice. However the fact is that the only meeting to which representatives of the Selli interests, or Donholken were invited was a meeting with the Treasurer which took place on 2 May 1997 that being the day on which the divestiture orders were made. That was not a meeting to consider whether the Treasurer should make adverse findings or orders against the Selli interests or Donholken. The decision to do so had by then been made. It was a meeting called to advise the parties of the proposed decision and the terms of it.

The Treasurer does not seek to rely on the meeting of 2 May as fulfilling any obligation to afford to Selli or Donholken procedural fairness. Rather, he says that there is no obligation at all under the legislation to afford to any person against whom a divestiture order is to be made an opportunity to be heard, or, in the alternative, if there is such an obligation it was satisfied in the present case by affording an opportunity to be heard to CanWest.

An order under s18(4) carries with it severe consequences. True, the order is not one of confiscation, although its effect in a particular case may be no less dramatic. In the present case, the shares in question are worth hundreds of millions of dollars. The Treasurer's order is that they be disposed of within a six month time frame. Given the significance of the assets and restrictions of foreign ownership which apply to the ownership of television licences, that time frame is short, although an application for an extension of time could be sought and granted. A divestiture order is a very serious matter. A forced sale may not realise the same amount as a sale where one of the parties does not have a gun at its head. The true value of the shares may not be realised. I say this only to emphasise that the consequences of a divesture order are indeed serious and prima facie it would be expected that before such an order was made a party affected might be given the chance of saying something against it, and particularly rebutting any adverse factual conclusions on foreignness and control which the Treasurer may have arrived at.

It may be accepted that there is no inflexible rule either that procedural fairness be given in all circumstances, or as to the content of the rules to be applied. What is involved, as Gibbs CJ pointed out in National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 at 312, is that natural justice "requires fairness in all the circumstances." Whether natural justice is required to be given and its content will depend upon the statute under which the issue arises, as well as the circumstances of a particular case.

Two matters in particular are relied upon here in support of the submission that the Act evinces an intention that natural justice need not be afforded to any person against whom a divestiture order is made. First, there is the fact that the ultimate criterion in s18 is "national interest". It is true that there will be circumstances where a decision is made by reference to government or ministerial policy and that in such circumstances the Court might well take the view that the decision making process is free of procedural constraint: State of South Australia v O'Shea (1987) 163 CLR 378 at 411, per Brennan J, and at 401-2 per Wilson and Toohey JJ, (recommendations to the governor on release of prisoners), Waters v Acting Administrator of the Northern Territory (1993) 46 FCR 483 at 476-9 (appointment of Queens Counsel). But that principle has in my view no relevance where there is a factual prerequisite to a political decision and the failure to accord procedural fairness relates to the factual prerequisite.

Second, the Treasurer relies upon the procedure for voluntary notification to be found in s25 of the Act as ousting the necessity for procedural fairness. If the Treasurer's first submission is accepted there would be no reason why the Treasurer would accord a person who has made a voluntary notification under s25 the ability to be heard as to the transaction. There is nothing in the language of s25 which specifically gives a person proposing to enter into a transaction any right to make submissions to the Treasurer or to be heard before the Treasurer makes an adverse finding.

Ultimately, the question whether procedural fairness is required is a question to be determined by reference to the Statute under which the question arises. There is not the slightest indication in the Act that natural justice was intended to be excluded. It is not as if there is some alternative procedure which the Statute requires a person to follow under which procedural fairness must be accorded. In my view the Treasurer is required, before reaching a conclusion that he is entitled to make an order under s18(4) to give a person affected the opportunity to be heard, at the very least, as to the result said to derive from the acquisition, if not also as to the question whether that result is contrary to the national interest. In so concluding I note the view taken by Deane J in Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 652 that:

"There is a strong presumption of such a legislative intent in any case where a statute confers on one person a power or authority adversely and indirectly to affect the rights, interests, status or legitimate expectations of a real or artificial person or entity in an individual capacity (as distinct from merely as a member of a section of the general public). The rationale of that strong presumption is to be found not so much in sophisticated principle as in ordinary notions of what is fair and just."

That presumption exists in the present case.

The rules of procedural fairness are not rigid. They may vary from case to case. Sometimes they may not require that a person affected be afforded a personal hearing. Sometimes it may be enough that the decision-maker adopt a procedure which is fair in the circumstances of the case: Attorney-General for New South Wales v Quin (1990) 170 CLR 1 So it is submitted for the Treasurer that because a hearing would only have resulted in the Selli interests and Donholken making the same points as were made by CanWest, it could not be necessary in the present case that they be heard specifically. That, like the related submission that there was nothing which Selli or Donholken could have said which would have made a difference, conceals a fallacy. It assumes its own conclusion. No doubt, if it were the case that in every respect CanWest controlled Selli and Donholken no submission which the two companies could make would make a difference. But that is to assume the very fact upon which their submissions are called for. It is no answer to a denial of natural justice to say that there is nothing that the person could have said. If it is possible that Selli or Donholken may have made submissions on the issue which could have affected the matter, then they must be given the chance. Neither the Court nor the Treasurer can know whether there is anything which Selli or Donholken could have said for the simple reason that they were not given the opportunity of doing so. It can not be known what they might have said during the course of the FIRB inquiry and that Selli and Donholken must have been aware of the inquiry. All these matters brought about the result, so it was submitted, that it was unnecessary that Selli and Donholken be separately heard.

At an early stage in the proceedings the then legal counsel for the Treasurer suggested that CanWest was an agent for Selli or Donholken or that there was some trustee/beneficiary relationship between these companies. This was not repeated in submissions. Mr Asper had no authority from any person to act for the Selli or Donholken interests; nor did Messrs Clayton Utz, solicitors for CanWest, have authority to act for the Selli or Donholken interests. What the Treasurer relies on is what his counsel refers to as a "commonality of interest", that in relation to the present matters the interests of CanWest, Selli and Donholken converge, does not mean that only one of them had the right to be heard. The submission pointed to the significance of CanWest's interest in the many hundreds of millions it had advanced as compared with the insignificant financial interest of Selli and Donholken in the transaction; the fact that all transaction documents originated from the solicitors of CanWest, the fact that litigation costs were met by an issue of debentures to CanWest (ie that the real cash came from CanWest) the fact that there was a real incentive for Selli and Donholken to do what CanWest wanted and the fact that CanWest had made numerous submissions to the Treasurer.

With respect, I do not agree. All that the submission amounts to is a submission that CanWest controlled Selli and Donholken. But that was the very matter on which Selli and Donholken were not given the opportunity to be heard. There is only before me the material which was before the Treasurer. It may well be that on that material only one result is possible on the question of control. But even if that were so, it would not mean that there was nothing which Selli or Donholken could contribute. It may well be, I do not and can not know, that had Selli or Donholken or either of them been given the opportunity to be heard the result would have led the Treasurer to a conclusion different from that which he reached. It is precisely for such reasons that the law requires a decision maker to give to a person affected by a decision a right to be heard where the legislative context does not suggest to the contrary.

I can only say that a sense of fair play dictates that before an order is made that a company divest itself of very substantial assets (even if the purchase price of those assets was the subject of a loan at security) the person must be given an opportunity to be heard and to answer any proposed adverse findings which may be made. That was not done here. In the result the orders must all be set aside.

WAS CANWEST DENIED NATURAL JUSTICE?

In my view CanWest was given an opportunity to be heard and not denied natural justice.

It is not in dispute that there were numerous contacts between FIRB and CanWest or its advisers between December 1996 and 2 May 1997. No less than three face to face meetings were held and there were numerous telephone conversations and much correspondence directed to the question of control.

However the CanWest case is put somewhat differently. It is said that as a result of a meeting between the Treasurer and representatives of CanWest on 11 February 1997 that there arose a legitimate expectation on the part of CanWest that it would be given the opportunity to make submissions and put matters to the Treasurer before any final conclusion was reached by him.

There is a factual dispute between the parties as to what happened at the meeting of 11 February. For CanWest, evidence was given by a solicitor, Mr Halstead, and by Mr Asper of the events of that meeting. For the Treasurer evidence was given by Mr Thorburn and Mr Ryan, Treasury employees who were also present at that meeting.. Others present at the meeting, particularly the Treasurer himself and a Mr Noble, an employee of CanWest, were not called.

The disputed conversation came at the end of the meeting. As the participants rose the following interchange took place, according to Mr Halstead, between the Treasurer and Mr Asper:

"Mr Asper: `Can you confirm that you will not take any action in relation to the matters presently being investigated by the FIRB without further discussing those matters with me?'

Mr Costello: `I will do that'. "

According to Mr Asper's affidavit, the conversation went as follows:

" Mr Asper : Q I do not want to wake up one morning and read in the paper that FIRB has rejected our deal and that the Treasurer is taking action against us.'

Mr Costello: `Once I have received the FIRB report I will get in touch with you to discuss its implications in order to reach a mutually acceptable agreement on what should be done'. "

Mr Asper says that he then recalls that Mr Halstead said:

"We will want to have the opportunity to make a submission to you if FIRB rules against the transaction."

Mr Thorburn's evidence was that his attention was distracted as, at the time, he was swapping cards with Mr Noble and had no recollection of the conversation in whatever version.

Mr Ryan had a different view of the conversation. According to his affidavit evidence the conversation proceeded as follows:

" Mr Asper : ` Will you get back to us before you do anything.''

Mr Costello: `Of course we will. We always advise people before making a public announcement on things like this'. "

Mr Ryan said that as soon as he returned to his office he wrote a note:

"PC agreed IA t.b.a. of decision"

Each of the witnesses was cross examined. Mr Ryan was nervous and gave the impression that he wished to advance the interests of his employer. This may, however, have been no more than a reflection of his nervousness. In any event, I am sure that he had no independent recollection of the conversation. Mr Thorburn's evidence clearly did not deny the possibility that the conversation proceeded along the lines suggested by Mr Halstead and Mr Asper, although it will be observed that their recollections also differed, the one from the other. Subsequent correspondence between Mr Halstead and the Treasurer's office or with Mr Asper makes it clear that Mr Halstead's clear understanding of the conversation was that CanWest was to be given an opportunity to make further submissions. I accept Mr Halstead's evidence, and that of Mr Asper, without hesitation. But I am inclined to the view that, on the balance of probabilities, there was a misunderstanding as to the effect of the conversation. It was more likely that Mr Ryan and, for that matter, the Treasurer understood that Mr Asper, when referring to not wanting to read about the order in the newspaper meant that he wanted to be advised in advance of any order being made so that he could be in a position to react to it, having regard to the effect an adverse order might have on foreign markets. So it might well be that those on the Treasury side of the conversation understood not that CanWest wanted yet another chance to make submissions after FIRB reported, but to be told of the order in advance, and perhaps have a chance to influence the language to be used.

If, as I find, the likelihood is that there was a genuine misunderstanding between the Treasurer on the one hand, and Mr Asper or Mr Halstead on the other, it is difficult to see that a misunderstanding could give rise to a legitimate expectation. It would give rise to an expectation that was not legitimate because based upon a misunderstanding. Be that as it may, I think that CanWest had ample opportunity to put all submissions which it wished to FIRB and through FIRB to the Treasurer. I do not think, even if the conversation had been, as Mr Asper or Mr Halstead narrated it, that the failure to permit CanWest a final opportunity to make submissions would in all the circumstances of the case have amounted to a denial of natural justice.

ERROR OF LAW - S18(4)((A) (I) OR (II)

I propose to consider this argument first in the context of the Donholken decision, for it is in this context that the argument can be most clearly understood. I will return later to consider the argument against the context of the Selli, Numeration and Turnand decisions.

The argument is simply put. The Treasurer's power to make an order under s18(4) depends upon his finding the existence of one of the two possible preconditions of s18(4)(a) and testing the result of that particular precondition against the national interest. The two conditions are mutually exclusive. The first postulates that the corporation (in this case TGL) is not at the time of the acquisition of shares by Donholken controlled by foreign persons and asks whether the result of the acquisition is that the corporation is so controlled. Having found this precondition the Treasurer is required to assess the result of foreign control for the first time to be contrary to the national interest. It is conceded on behalf of the Treasurer that the Treasurer could not properly have formed the view that s18(4)(a)(i) was satisfied in the case of the Donholken transaction.

The second precondition applies to the case of a corporation that was, before the acquisition, controlled by foreign persons. It is accepted by the Treasurer that this was the case. The precondition then asks whether the result of the acquisition (in this case by Donholken) was that foreign control continued but the persons having such control included a person who was not one of the persons originally with foreign control. If the Treasurer forms the view that this second precondition applies he is directed to weigh the result of the acquisition against the national interest.

The order made by the Treasurer on 2 May 1997 in relation to Donholken is quite unambiguous. It refers to the Treasurer being satisfied that the result of the Donholken acquisition was "TGL being controlled by foreign persons". The Treasurer further states that he is satisfied that that result, ie the result of Donholken being controlled by foreign persons, was contrary to the national interest. The language is not the language of s18(4)(a)(ii), but the language of s18 (4)(a)(i). So it is submitted that the Treasurer applied his mind to the wrong issue. Particularly, it is said, he did not apply his mind to the question whether the change in foreign owners was contrary to the national interest.

Senior counsel for the Treasurer seeks to answer the submission by saying that it is irrelevant whether the Treasurer applied s18(4)(a)(i) or (ii). In either case he had to consider the national interest. It was irrelevant that he misstated the head of power, if he did so or did not state it at all. All that mattered was that there was a power to make a decision. Reference was made to Lockwood v Commonwealth (1954) 90 CLR 177 and Australian Broadcasting Tribunal v Saatchi & Saatchi Pty Ltd (1985) 10 FCR 1. It is no doubt true that where a person has two alternative powers under which he or she may act, each authorising the same conduct, and that person purports to rely on one head of power the conduct taken may be supported by the other alternative head of power if that was otherwise applicable (Mercantile Mutual Life Insurance Company Ltd v Australian Securities Commission (1992) 40 FCR 409 and 435-7, Re Socket Saw v Fastener Distributors (NSW) Pty Limited (1994) 123 ALR 315 at 319-20 v Official Trustee in Bankruptcy v Byrne (1989) 94 FLR 465 at 480). Indeed a decision maker will not ordinarily be required to state the head of power under which he or she acted. But that principle will not save the Treasurer here. Because it is conceded that s18(4)(1)(i) could not have had any application the Treasurer has to form the view that TGL was before the Donholken transaction controlled by foreign corporations (presumably CanWest at the least) and that after the acquisition foreign control continued but a new foreign corporation entered the story, presumably DSK. Then he had to test the question of continuing foreign control and the addition of a new foreign owner in that control by reference to the national interest. From the order itself it can be inferred that the Treasurer did not address himself to the right issue. His failure to give evidence to the contrary enables the inference to be drawn more confidently.

If one can have regard to the reasons in the FIRB Minute (the Treasurer's submissions said that regard should not be had of it, for it was not part of the record) no different conclusion is reached. The Minute does not address the issue that arises for consideration under s18(4)(a)(ii) at all, and merely reinforces the conclusion that the Treasurer did not direct his mind to the correct question. It follows in my view that because the Treasurer was not satisfied of the matter to which s18(4)(a)(ii) referred, the decision was void and must be set aside cf Commissioner of Taxation v Cripps & Jones Holdings Pty Ltd (1987) 17 FCR 55.

I turn now to consider the Selli order. The question is different because it is not conceded by counsel for the Treasurer that the Treasurer could not have properly acted under s18(4)(a)(i). I have no evidence before me which would enable me to decide one way or the other whether prior to the Selli transaction TGL was controlled by foreign persons, including presumably CanWest.

The submission proceeds as follows. It is said that the Selli order makes it clear that the Treasurer relied upon 18(4)(a)(i). I agree. Then it is said that s18(4) does not permit the Treasurer to rely upon both s18(4)(a)(i) and (ii) in the alternative. With a qualification I would agree. The qualification is that the Treasurer could address himself to the question, be unable to conclude whether or not TGL was before the Selli acquisition controlled by foreign persons and then satisfy himself that whichever of s18(4)(a)(i) or (ii) applied, the national interest required divestiture. But there is no suggestion that that is what the Treasurer did. The submission stops at that point. It does not, I think, take Selli far enough. Unless Selli were to prove that TGL was foreign controlled before the Selli acquisition it could not show that the Treasurer had addressed the wrong issue under s18(4). The submission thus fails.

As I have found that the Treasurer denied to both Selli and Numeration natural justice it is strictly not necessary to discuss in detail whether in finding that as a result of the respective transactions DSK came to control Selli or Donholken the Treasurer erred in law.

The process of reasoning, as detailed in the written submissions filed on behalf of the Treasurer was brief. Taking first Selli, it was in essence that because DSK had a call option over the two issued A Class shares in Selli held by Copplemere and LMH, these being the only issued voting shares in that company, DSK had a "substantial interest" and a "controlling interest" in Selli. From this it followed that DSK was an "associate" of Selli. The Donholken transaction involved no such call option. However, it was said there were a number of indicators of actual control by DSK over Donholken and that these provided a basis for the application of s38A.

The Selli conclusion involved an error of law, it was said, because it ignored the fact that the exercise of the call option was subject to the "qualifying requirement". So it was said, if DSK was prohibited by section 57 of the Broadcasting Services Act from acquiring the shares, as it would be while DSK was foreign, the call option could not be exercised so as to bring about the situation that DSK held the Selli voting shares. So, it was argued, it could not be said that there was a right in DSK to acquire the shares.

Second, it was submitted that s11(2) (c) of the Act must be taken to refer to rights which are specifically enforceable. Here no court would enforce performance of the contract arising from the option as that would involve a breach of a statute.

Finally, it was submitted that the Treasurer had an obligation to consider the matters referred to in s9(2), namely, whether "having regard to all the circumstances... [DSK is] in a position to determine the policy of [Selli]."

If control is to exist for the purposes of s18(4) in the present case it is necessary that DSK have a "substantial interest" in Selli, that is to say that DSK be in a position to control not less than 15% of the voting power of Selli or hold interest in not less than 15 % of the issued shares: s9(1)(a). That control need not be direct. It may be indirect. And it may come about by means of arrangements or practices. And not necessarily stem from legally enforceable agreements.

I do not doubt that if the statutory question was whether DSK was entitled to have the Selli shares entered in its name in the event of the exercise of the option the answer would be no. The qualifying requirement ensures that. But that is not the end of the inquiry. It would be open to the Treasurer to find that as a practical matter the A Class shares were indirectly controlled by CanWest, because an arrangement may be inferred to exist between CanWest on the one hand and Messrs Leibler and Skala on the other. Alternatively the reality was that because DSK could exercise the options and require the shares to be transferred to a resident who might be expected to do CanWest's bidding, the requisite control should be taken to exist. A perusal of the FIRB Minute makes it clear that the advice to the Treasurer proceeded upon the inference of an arrangement to control, not merely the option to which reference is made above. Thus at para 35, the full text of which is earlier set out, it is said:

"It is moreover highly unlikely that by increasing their already large 57.5 per cent economic interest to approximately 76 per cent, CanWest would have assumed the bulk of the considerable financial exposure in TGL without reaching very firm understandings with Selli and Donholken to ensure that at the crunch Can West would have the final say."

This passage was, in oral submissions, treated rather dismissively by senior counsel as not being based upon any evidence. But there is overwhelming evidence in favour of such an inference, not only in the economic involvement of CanWest, but also in the structure and the circumstances whereby the structure came into existence. Of course, it can be argued that the structure enclosed Mr Leibler and Mr Skala in such a straitjacket that there was no need for there to be any arrangement or understanding with them. However, ultimately, the question whether the inference should be made is a matter for the Treasurer. It is not for the Court: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259.

"Control" is a slippery concept. In revenue contexts, control of a company is usually equated with immediate voting control: W P Keighery Pty Ltd v Federal Commissioner of Taxation (1957) 100 CLR 66, and control not merely of the votes cast at meetings to deal with some important matters, but votes on all matters at all general meetings: Mendes v Commissioner of Probate Duties (Vic) (1967) 122 CLR 152. Capacity to control will usually be taken to refer to an enforceable and immediate right to control: W P Keighery ante, Equiticorp Industries Ltd v A C I International Ltd [1987] VR 485.

I find the last mentioned case puzzling. It was decided under the present legislation. A submission was made that rather than looking at merely enforceable rights, regard should also be had to "commercial reality". The argument received scant attention. The Court seemed oblivious to the provisions of s8 of the Act. So far as the case decided that a person who had an option over unissued shares did not have an interest in any share, the case is unobjectionable. But so far as it holds that, there can be no capacity to control voting power for the purposes of the Act unless there is:

"an enforceable and immediately exercisable right to exercise control of the requisite voting power at the relevant time"

the case in my view can not stand. I would, as a matter of comity, follow the decision of a judge of the Supreme Court of Victoria, although not bound so to do, unless I was convinced that the decision was clearly wrong. a fortiori I would follow a decision of a full court of that court subject to that same proviso. But when the decision is contrary to the language of the statute I am bound to follow the statute. To the extent that I have indicated, Equiticorp was wrongly decided.

I am fortified in my view by reading the judgment of Hodgson J in National Companies & Securities Commission v Brierley Investments Ltd (1988) 14 NSWLR 273 where his Honour notes that the possibility of control based on understanding etc was put to one side in the Equiticorp case, perhaps because that had not been the subject of evidence.

In my view for the purposes of the Act control of voting may come about not merely where there is a legally enforceable immediate agreement but also where, as a result of understandings or arrangements, one person is de facto able to influence the votes capable of being cast by another. The control which s9 speaks of may be indirect. Section 9 was intended to operate in the real world, just as the control provisions in the Broadcasting Services Act are intended to act in the real world. The question whether A is in a position to control not less than 15% of the voting power in corporation B is not to be determined by legalistic tests applying fine distinctions and "refined" arguments. It is to be determined as Lockhart J said in Re Application of The News Corporation Ltd (1987) 15 FCR 227 at 246 by "practical and commercial considerations".

In my view it would have been open for the Treasurer to have found that DSK was in a position to control not less than 15% of the issued shares in Selli.

However, before DSK is found to have a "substantial interest" in Selli subs (2) of s9 falls for consideration. The short question is whether the Treasurer is required to consider the issue which arises for consideration under that subsection, namely whether DSK and persons who are associates of DSK are in a position to determine the policy of Selli. There is nothing in the advice given to the Treasurer which suggests that this question was considered and I would infer that it therefore was not a matter to which the Treasurer, as the ultimate decision maker, gave attention.

Senior counsel for the Treasurer answers that there is no obligation for the Treasurer to turn his mind to the question. With respect I do not agree. The Treasurer in my mind can not preclude challenge by refusing or neglecting to consider s9(2). The clear legislative intent was that a person who had a substantial interest or where there were two or more persons holding in aggregate a substantial interest those persons would only be treated by the legislation as being in control for the purposes of sections such as s18(4) if in a position to control policy. While 15% of voting power was treated as the prima facie gateway of control, it is obvious that in many companies, particularly private companies, 15% would not really permit a shareholder to have any real influence on company policy. In such a case foreign control was not in reality present.

Because the Treasurer failed to consider s9(2) his decision was flawed and for that reason too should be set aside.

I would comment briefly on s38A. It was the view of the Attorney-General's advisers that s38A could apply to the Selli transaction, but not the Donholken transaction. The basis for that section having operation was apparently that the option over the A Class shares in Selli granted to DSK was granted while the assets of Selli were less than $5,000,000 that is to say while Selli was an "exempt corporation" under s13A(4) of the Act. Subsequently Selli acquired assets. These facts, it was suggested constituted the scheme of which it would be concluded that the parties to it entered into it for the dominant purpose of avoiding the application of a Part of the Act.

Section 38A appears to have been imported into the Act from the provisions of Part IVA of the Income Tax Assessment Act 1936. It sits more easily in its original context than it does in the present Act. The primary submission of the applicants was that the section, were it to be applied, merely operated to enable the Treasurer to disregard the arrangement, it did not permit the arrangement to be reconstructed into some other arrangement. This was the argument which for some 40 years bedevilled the predecessor to Part IVA, s260. The argument was, however, in the context of s260 founded upon the language of the section which provided that the scheme to avoid tax be treated as absolutely void as between the Commissioner and the taxpayer. No comparable language is employed in s38A. Indeed to the contrary. The Treasurer is empowered to make any order that he would have been able to make if the scheme or part of the scheme had not " achieved its purpose ". The section does not say , if the scheme or part of the scheme had not " been entered into ", or words to that effect.

For a scheme to fall within s38A it will be necessary to predicate that there is some person involved in it (I use the word "involve" merely to paraphrase "entered into" etc) who had the dominant purpose of avoiding the application of some provision of the Act. It will be necessary to identify, with some care, the relevant provision. Clearly s26 and 26A are relevant provisions. They require, where they operate, compulsory notification. If a transaction is so structured as to avoid having to give notification, then clearly s38A may be attracted.

FIRB, but not the Attorney-General's department, took the view that to erect a structure in a complicated way so as not to bring about control by a foreign person within s18(4) was to avoid the application of a provision of the Act, ie s18(4). With respect, the argument to the contrary is strong. The difficulty lies with the expression "avoiding the application of any provision of this Act." The Act has nothing at all to say where there is an acquisition which, for example, has the result that a corporation is or continues to be controlled by persons who are not "foreign persons". The Act operates only where the result is control by foreign persons. In the former situation nothing is avoided at all.

MISCELLANEOUS ARGUMENTS OF LAW

There remain now to be considered a number of miscellaneous arguments dealt with in written submissions, but generally not the subject of oral argument.

National Interest

It was submitted that the Treasurer considered only one matter when directing his mind to the national interest, that being whether the acquisitions in each case contravened s57 of the Broadcasting Services Act. It was submitted that the acquisitions did not contravene that Act. The submissions made before me in proceedings to set aside orders made under the Broadcasting Act were taken to be repeated before me in these proceedings.

Since I am of the view , for the reasons set out in a separate judgment, that s57 was contravened by the Selli and Donholken transactions this submission must necessarily fail.

Failure to give reasons

The submission, as I understand it, was this. There is, at least in cases such as the present where the consequences to a person affected by the decision are severe, an obligation on the part of a decision maker to give reasons. If he does not, then it must be inferred that his process of reasoning was false and subject to error; otherwise the decision maker would have exposed it.

The applicants, as I understood it, reserved the right in an appeal to argue the correctness of the decision of the High Court in Public Service Board of New South Wales v Osmond (1986) 159 CLR 656. I am of course bound by that decision, but recognise that the changing composition of the High Court may see that case being reconsidered in the future.

However, some of the judgments in Osmond do envisage that there may be circumstances that are so special that natural justice would require that reasons be given see per Gibbs CJ at 670, and per Deane J at 676, and see per Beaumont J in Chapmans Ltd v Australian Stock Exchange Ltd (1995) 17 ACSR 524 at 529. That may be accepted, although the case law has not yet provided clear criteria for distinguishing between those circumstances where natural justice requires reasons and those where it does not. Compulsory divesture is so serious that it may well prove to be an exception to the necessity to give reasons.

After argument was completed, my attention was drawn to the decision of Sperling J of the Supreme Court of New South Wales in Kennedy Miller Television Pty Limited v S J Lancken (unreported, 1 August 1997) where Sperling J considered whether a costs assessor who had reduced on taxation a claim for costs in relation to a hearing and appeal was obliged to give reasons. His Honour held there was an obligation to give reasons in the circumstances of that case. In so holding, his Honour had particular regard to the fact that a party dissatisfied with a decision of a costs assessor had a statutory right to appeal and that the right to appeal would practically be frustrated unless reasons were provided.

I would say only two things covering this case. First, the relief sought was the provision of reasons (or a declaration that reasons were required to be supplied) not the setting aside of the decision for which no reasons were supplied. Secondly, there may be different considerations applicable to decisions which are quasi judicial; (the assessor was not an officer of the Court although he was exercising a function traditionally performed by Masters or Registrars).

The present decision is wholly administrative. The relief sought is the setting aside of the decision, not the provision of reasons. The case is thus not apposite.

It is one thing to say that natural justice requires reasons for a decision to be provided in aid of an application to compel the decision maker to disclose reasons and another to say that the decision may be set aside because no reasons are given. a fortiori , reasons are given after a decision has been made; how then can it be said that the failure to give reasons affects the logically anterior decision making process?

I was referred to R v Secretary of State for the Home Department; ex parte Doody (1994) 1 AC 531 in the judgment of Lord Mustill. However, no court in Australia has, as yet, taken the course of setting aside a decision for failure to give reasons. The law of Australia has not progressed so far.

Failure to consider Australia's international obligations

The submission was in short that Australia's international obligations, to be found in the OECD Declaration of International Investment and Multi-national Enterprises required that Australia should, consistent with international law, afford to nationals of other countries treatment no less favourable than that afforded to domestic enterprises. It is said that Australia's international obligations require that the Treasurer not act arbitrarily and that foreign policy rules be "transparent".

With respect the submission goes nowhere. Even if it be accepted that the Treasurer was bound to act in accordance with international law, albeit not incorporated in Australian municipal law, or even if every decision he made had to take international obligations into account: cf Minister for Immigration & Ethnic Affairs v Teoh (1995) 183 CLR 273, it has not been demonstrated that the Treasurer did otherwise. He did not act arbitrarily, even if the result of his decisions did not coincide with the wishes of CanWest. Nor can it be said that the foreign investment policy was not transparent. As material in evidence demonstrated, regular annual reports on Australia's policy on foreign investments are published. Ultimately, in any event, any transgression of the request of transparency must give way to the language of the Act and its reference to the national interest, a matter which is left for the Treasurer.

Misconstruction of Foreign Investment Policy

The submission proceeds upon the basis that the Treasurer had misconstrued or misapplied Australia's foreign investment policy which to that date had not regarded "quasi-equity" debt financing as the equivalent of equity. It is suggested that although there had been a discussion of quasi-equity financing in a press release dealing with Optus, arrangements such as those entered into by Selli and Donholken had not been regarded as transgressing the foreign ownership provisions and were not so regarded at the time the present transactions were carried out. It is said further that a change in Australia's policy post-dated the present application.

Again the submission proceeds nowhere. First, it must be said that FIRB in its Minute expressed itself to be applying government policy. Second, the question is not whether quasi equity should be treated as equity, the question is whether in a particular case an acquisition results in foreign control or a continuation of foreign control with the addition of a new foreign controller. That involves the Treasurer forming a view on a matter of fact, not policy. Finally, even if the Treasurer did misapply, or misconstrue policy that, of itself, would not be a ground of review unless it were a relevant fact which the Treasurer was bound to take into account or apply. That is not the present case; cf Minister for Immigration, Local Government and Ethnic Affairs v Gray (1994) 50 FCR 189 at 207-8.

Nor, in my view, was the Treasurer bound to advise CanWest that policy had changed and give that company a reasonable opportunity to consult and for two reasons. First, a machinery existed under s25 which, had CanWest followed it, would have revealed to CanWest before the transactions had been entered into that policy had changed. CanWest chose not to follow the path of voluntary disclosure. It can hardly now complain if the policy had changed but it had not become aware of it. Second, as I understand the matter, there was a press release relating to a transaction involving Optus which indicated that a particular financing structure had been regarded as foreign ownership or control so that any suggestion of legitimate expectation should have been negated. If, as appears to have been the case, the advisers of CanWest misunderstood the implications of the press release, that is not a ground for setting aside the Treasurer's decisions.

Requirement of statutory declaration and redetermination of issues by TGL Board

Finally a submission is made, (there are no reasons given as to why it should be accepted, and it is not self- evident,) that the Treasurer had no jurisdiction and/or power to require either:

(a)

CanWest to provide him with a statutory declaration to the effect that Can West has no linkages with any new shareholders who acquire shares consequential upon the Divestiture Orders; or

(b)

to require the TGL Board to reconsider any issues determined by the Board involving exercise by either or both of Selli and Donholken of their voting powers.

By force of s18 the Treasurer is empowered to make an order that shares be disposed of to a person or persons approved in writing by the Treasurer. It would be a relevant matter for the Treasurer, in considering whether to approve a person as a disponee of the shares, that there is no arrangement between that person and CanWest that may constitute "control". In my view no error of law is found merely because the Treasurer has imposed this condition. Nor could the imposition of this condition in any way vitiate the decision to order disposal of the shares. It logically comes after the decision.

The second order likewise does not go to the validity of the order made under s18(4). Accordingly, I find no need to determine whether it might be supported by some other provision of the Act.

Each application should be allowed. The Treasurer should pay the costs of each applicant.