Supreme Court dismisses appeal against refusal to quash Broadcasting Commission's award of radio contract to Dublin Rock Radio.

[2006] IESC 24

THE SUPREME COURT

[S.C. No: 405 of 2005]

Denham J.

McCracken J.

Kearns J.

Between/

Scrollside Limited Trading as “Zed FM”

Applicant/Appellant

v.

Broadcasting Commission of Ireland

Respondent

Judgment delivered the 6th day of April 2006 by Denham J.

1. In this appeal Scrollside Limited, trading as “Zed FM”, the applicant/appellant, hereinafter referred to as “the applicant”, seeks an

order determining that the High Court erred in refusing to quash the decision of the Broadcasting Commission of Ireland, the

respondent, hereinafter referred to as “the respondent”, granting a sound broadcasting contract for the operation of an alternative

rock music broadcasting service, on the FM band in Dublin, to Dublin Rock Radio Limited trading as “Phantom Rock”, and referred to

hereinafter as “Dublin Rock”.

2. The applicant submits that the decision of the respondent is flawed on a number of grounds, especially in relation to the illegal

broadcasting operations carried out by various members of the Dublin Rock consortium under the name “Phantom Rock”. The applicant

submits that the respondent failed to give proper consideration to the character of the members of the Dublin Rock Consortium as

required by s.6 of the Radio and Television Act, 1988. The applicant submits that the decision was unreasonable in that the

respondent failed to give proper consideration to the character of Dublin Rock, in that it erred in conferring a benefit on Dublin Rock

as a result of the illegal broadcasting. Further, that the respondent erred in conferring a benefit on Dublin Rock as a result of illegal

broadcasting by a former pirate radio station “Phantom FM”, that it prejudged the issue of the award of the sound broadcasting

contract in favour of the Dublin Rock Consortium, and that it erred in having regard to the previous provision and operation by two

distinct entities, Wireless Media Limited and Coxstone Limited, of services under temporary sound broadcasting contracts under the

name “Phantom FM”. It is obvious that these issues are all interrelated and that in essence they refer to previous pirate operations.

3. The respondent, on the otherhand, submits that the applicant has entirely failed to show that the decision of the respondent is null

and void or vitiated by bias, as alleged, or at all.

4. On the 1st November, 2005, the High Court (O’Sullivan J.) gave a reserved judgment in this matter and ordered that the applicant’s

application be refused.

The applicant had sought:

(i) an order of certiorari by way of an application for judicial review to quash the respondent’s decision of the 8th

November, 2004, to award a sound broadcasting contract for the operation of an alternative rock music sound

broadcasting service on the FM band in Dublin City and Country to Dublin Rock Radio Limited trading as “Phantom FM”;

and,

(ii) A declaration that the said decision was ultra vires and void.

The decision of the respondent was challenged by the applicant on four grounds, namely:

(a) that the respondent failed to consider the ‘character’ of Dublin Rock as required to do so by statute;

(b) that the respondent erred in law in conferring a benefit on Dublin Rock as a result of the illegal broadcasting by a

number of individuals who formed part of the consortium comprising Dublin Rock;

(c) that the respondent prejudged the issue of the award of the contract and at all times intended to grant the contract

to any applicant including “Phantom FM”; and,

(d) that the respondent had regard to broadcasting services under the name of “Phantom FM” provided by two distinct

entities.

The High Court found against the applicant on each of the grounds advanced.

5. Background

5.1 The learned trial judge pointed out that underlying the four grounds, advanced on behalf of the applicant, was the applicant’s

disquiet at the fact that 25% (or more) of the membership comprising Dublin Rock had been engaged in pirate broadcasting for a

number of years up to eighteen months prior to the award of the contract and that the respondents had given credit for the

experience and expertise gained during the illegal broadcasting, and erroneously took into account their track record under two

separate temporary broadcasting contracts.

5.2 The respondent was established under the Radio and Television Act, 1988 to, amongst other activities, enter into contracts with

providers of sound broadcasting services. The procedure is that the respondent first invites expressions of interest in the proposed

contract, and in this case it received five, which were summarised by the executive of the respondent, and considered by it at a

meeting where two of the bidders were short listed. Then these two were invited to an oral hearing at which each of them made a

twenty minute submission followed by a twenty five minute question and answer session. After that questionnaires were sent out and

the answers and all the material were considered at a final meeting where the decision was made. Subsequently the unsuccessful

bidders were given feed-back reports explaining the decision.

6. High Court judgment

These judicial review proceedings were grounded on affidavits, principally the affidavit of Dermot O’Hanrahan for the applicant and

Michael O’Keeffe on behalf of the respondent. Michael O’Keeffe was cross-examined at length.

6.1 The High Court held:

“The applicant asserts that the respondent had made its mind up effectively from the beginning to award a license to

Dublin Rock because they were associated with Phantom FM. In this context it is instructive to consider, in part, the

minutes of the initial meeting of the respondent on 6th September, 2004, when they were considering the five applicants

for the contract. In relation to Zed FM (the applicant) this, in part, is what the minutes record:-

‘In general terms, the contents of the executive evaluation were endorsed. Zed FM was considered to have a

credible and relevant mix in the ownership and control structures of the company. Specifically, the mix included well

established and leading rock and radio industry figures in the Dublin market. In addition to contributing funds, the

shareholders could also significantly contribute to the programme content.

The aim of the station to target a community of interest of alternative rock listeners, beyond the narrow focus of

other applicant groups also appeals to a number of the members, including the proposal to target women. While

some of the members welcomed the wider target group identified for this service, others said it was unclear as to

how this might be achieved. This would require further clarification with the group.

The station’s proposed low cost base was considered prudent, in view of the niche nature of the audience to be

served and the need to establish a revenue base for this type of service. However, some members were concerned

that this might impact on the quality of the service proposed and were of the view that this would require some

further clarification with the group in the context of an oral hearing.

The applicant group’s research proposals were considered to be well presented with an adequate sample size. In

general terms, the applicant group’s programming proposals were considered to be satisfactory and reflected the

knowledge and commitment of members of the applicant group to serving the target audience. Some questions were

raised regarding the staffing levels for the service and whether or not the service could be successfully operated on

the levels proposed. This would require further consideration…the proposed management team for the service was

considered to be appropriate and very experienced…in summary, this application was considered to be of a high

standard and the programming ethos of the proposed service was considered to be relevant and appropriate to the

Dublin market and the target audience in particular.’

The applicant, as already stated, was short listed. At the final meeting on 8th November, 2004, the following appears in

the minutes:-

‘Zed FM’s ownership and control proposals were considered in general terms to be satisfactory by the Commission.

The company was considered to have a good mix of radio and music industry experience, as well as financial and

business backing… the track record of individuals involved was also considered to be satisfactory.

The company’s management structure was considered to be adequate for a niche service. Aspects of the station’s

staffing proposals were considered satisfactory. However, members were not convinced that the group could deliver

the proposed service with the staffing levels outlined. The members also questioned the adequacy of the resources

being committed to staff training.

In respect of the applicant group’s programming proposals, the members considered that the station’s music offering

was not as focussed in respect of alternative Rock as that of Phantom FM…the Commission was not convinced

about the ability of the station to attract the wider audience being targeted.

The company structure included good financial backing. However, the company’s revenue and cost projections were

not considered to be as realistic as those of the Phantom FM group.’

So far from indicating a prejudgment or bias, let alone mala fides, on behalf of the respondent these excerpts in my view

demonstrate an objective, impartial and indeed appreciative recognition of the merit of the applicant’s bid together with a

careful and balanced appraisal of its relative strengths and weaknesses when compared with that of Phantom FM. At its

strongest the applicant’s allegation in this regard amounts to no more than the construction of a series of questions

indicating a suspicion of the respondent’s attitude but they do not come anywhere near establishing the level of coherent

evidence required to make out an allegation of a fraudulent nature such as bias. When placed against the extracts, which

I have cited at some length, from the minutes of the two relevant decision making meetings of the respondent these

questions in my opinion are met with a complete and satisfactory answer and as soon as these documents were made

available to the applicant in my view that should have been an end of this particular allegation.

At a more technical level the applicant has not been able to identify a factor external to the process itself by reference

to which the Commission could be said to have been guilty of bias as is required under the more recent jurisprudence in

relation to bias.”

6.2 The learned trial judge referred to the fact that the respondent permitted Dublin Rock to mend its hand by reference to its

advertising agency - which was contrary to the arrangements that the application could not be changed, and without reference to

the applicant. He held that this was a valid point against the respondent, but not in the context of an allegation of bias. However, he

held that this was a departure from the highest standards of procedural fairness and the learned trial judge hoped it would not occur

again. He held that in the overall context it was not of such significance nor of such a departure from the proper standards as would

justify intervention by the courts other than to make the observations he had made.

I agree with this approach on this issue. It was not best practice to enable Dublin Rock alter its application as it did, however I would

affirm the decision that in the context it was not such an action as to warrant an intervention by this Court in the case. It is an

approach which I expect will not be repeated.

6.3 As to the two temporary contracts - the High Court pointed out that in the statement grounding the application for judicial review

it was stated that the respondent was not entitled to have regard to the cumulative experience gained by Phantom FM through the

operation of two temporary contracts. Counsel for the respondent had pointed out to the High Court that technically there was no

breach of the Act because the two contracts were in fact held by two different companies but this, clearly, was against the

background already indicated that the respondent considered that the holding by the same people of two temporary contracts within

a single twelve month period was contrary to the spirit of the Act and as a result the respondent changed their guidelines

notwithstanding the fact that they felt obliged to grant the contracts in the present case because the applications were technically

correct and complied with the then existing guidelines. Counsel also pointed out that there were in fact different directors of the two

companies.

Reference was also made to s. 6 of the Act and that the Commission was obliged to:-

“Have regard to the overall quality of the performance of the applicant with respect to the provision by him of a sound

broadcasting service under any sound broadcasting contract held by him at, or before, the date of the making of the

application.”

Counsel submitted that this authorised the Commission to consider Dublin Rock’s performance under any contract and to the extent

that 25% of Dublin Rock was owned by Wireless Media Limited, the holder of one of the temporary contracts whose landlord was, in

fact, the holder of the other temporary contract, and both traded as Phantom FM, there was an obligation under s. 6 to consider the

sound broadcasting service provided by Phantom FM under both contracts, and this the respondent did.

The High Court held:

“This ground of challenge was not pressed by the applicant. A defence, as indicated above, was advanced on behalf of

the respondent and whilst it can be said on the one hand that the awarding of the two temporary contracts in effect to

the same group of individuals was contrary to the spirit of the Act (and the respondent has since made arrangements to

avoid its repetition), on the other hand it appears to me to be in accordance with the principle of the Act of 2001 that

the provision of services under those two temporary contracts once it had occurred should have been considered as was

done in the instant case. In the result I am not satisfied that this ground of challenge has been made out by the

applicant”.

7. The applicant filed the following grounds of appeal to this Court:-

(i) That the learned High Court judge erred in law and in fact in refusing the reliefs sought by the applicant;

(ii) That the learned High Court judge erred in law and in fact in finding that the respondent properly considered the

character of Dublin Rock Radio Limited, trading as Phantom FM in accordance with Section 6 of the Radio and Television

Act, 1988, as amended;

(iii) That the learned High Court judge erred in law and in fact in finding that the applicant had not established that the

respondent gave an advantage to Dublin Rock Radio Limited, trading as Phantom FM arising out of its illegal broadcasting

experience;

(iv) That the learned High Court judge erred in law and in fact in finding that the respondent did not prejudge the issue of

the award of the contract the subject of this application and/or that the respondent did not at all times intend to grant

the contract to an applicant involving “Phantom FM”;

(v) That the learned High Court judge erred in law and in fact in holding that the applicant was required to identify a

factor external to the process of the award of the contract in order to show bias or prejudgement on the part of the

respondent;

(vi) That the learned High Court judge erred in law and in fact in finding that the fact that the respondent permitted

Dublin Rock Radio Limited, trading as Phantom FM, to alter its advertising sales representative, at a time when applicants

for the contract had been informed that no alterations to their applications would be permitted, was one which did not

justify any kind of intervention by the Court and/or the granting of the reliefs sought by the applicant;

(vii) That the learned High Court judge erred in law and in fact in finding that the respondent did not erroneously have

regard to the broadcasting services under the name of “Phantom FM” provided by two distinct entities.

8. Law

This is an application by way of judicial review requesting the courts to intervene in the decision making process of the respondent,

essentially on the ground that it considered matters which it should not (the experience obtained by way of pirate radio), that it was

unreasonable to have considered this illegal activity, that it did not properly consider the character of Dublin Rock pursuant to s.6 of

the Radio and Television Act, 1988, as amended, that in essence it gave an advantage to Dublin Rock for illegal broadcasting.

To succeed on such an application the applicant has to achieve a high bar, meet a significant burden of proof, to show that the

decision of the specialist decision maker, in this case the respondent, should be declared void by the courts.

The courts approach with caution the review of a specialist body. Such a body has particular expertise to apply to decision-making in

their arena. That specialist knowledge is not held by the courts. The process of review by way of judicial review is not a full appeal,

but rather a review of the process and fair procedures. In this case it is in essence a review of the inclusion in a decision by the

respondent of the factor that members of Dublin Rock had gained experience and expertise in pirate radio.

9. Character

The respondent is required to consider all applications for a sound broadcasting contact, to determine the most suitable applicant.

The Radio and Television Act,1988 sets out the criteria for such consideration. In s. 6 (2)(a) provision is made for consideration of:

“The character of the applicant, or, if the applicant is a body corporate, the character of the body and its directors,

manager, secretary, or similar officer and its members, and the persons entitled to the beneficial ownership of its shares.”

Also relevant is s. 6(2)(b), which states:

“The adequacy of the expertise and experience of the financial resources that will be available to each applicant and the

extent to which the applicant accords with good economic principles.”

In this case the issue of character is at the core of the case, and whether the respondent acted appropriately.

9.1 The learned High Court judge referred to the established policy of the respondent to encourage cessation of illegal broadcasting

by accepting applications from them, provided they have ceased illegal broadcasting prior to the application being made. This policy

was authorised by the distinguished first Chairman of the respondent and the High Court found, and I would endorse, that it is entirely

consistent with the objectives of the Act. There is no doubt that some individuals of Dublin Rock were involved previously with illegal

broadcasting and this was known to the respondent. The High Court held:

“It is well established that it is a matter for the [respondent] and not for the courts as to what weight they would attach

to this element in their consideration of the character of that particular bidder. It is not for me or, with respect, for the

applicant in these proceedings, to assert what weight should have been assigned to this element of the evidence before

the respondent or what should have been the out come of their deliberation, once it is clear, as it is, that the several

elements that comprise “character” were considered by the respondent.”

The learned High Court judge found that the issue of ‘character’ having been before the respondent, and the decision not being

utterly irrational, the challenge fell.

9.2 In assessing the word ‘character’ the High Court took a broad approach and did not confine itself to a narrow approach, to ‘moral

fibre’. In this I consider the learned High Court judge was correct.

I would distinguish the decision in Spin Communications Ltd. v. IRTC [2001] 4 I.R. 411. First, I have no doubt that the attitude of a

member of a body applying for a radio licence to issues of drug abuse is relevant to ‘character’. However, they are of a different order

to the policy adopted by the respondent to bringing into the legal fold those who have previously been broadcasting illegally. Whereas

such a policy would have more impact when the respondent first commenced, I am satisfied that it remains a policy which is not

irrational.

10. Policy on pirate radio broadcasting in relation to functions of the respondent

There is no doubt that the factor of pirate radio exists in the broadcasting arena. The Act of 1988 could have stated that no licences

could be granted to former pirates, but the Oireachtas chose not to. It has been a policy of the respondent to bring pirate radios into

the legal fold. The respondent’s policy in relation to piracy dates back to 1988, when the first board of the respondent adopted the

policy of accepting applications for sound broadcasting contracts from pirates, provided they went off the air. The respondent’s policy

in relation to piracy is generally known in the industry and is communicated to any person who telephones in connection with any

round of licensing. The rationale behind this policy is to encourage the cessation of illegal activity and to encourage such persons into

the statutory regime through the licensing of services. The respondent submits that this rationale is entirely consistent with the

policy of the Act of 1988 and with the functions of the respondent.

The factor of piracy was considered by the respondent - this is not in issue. Each party submits that a different approach should be

taken to the factor. This means that what is at issue is the weight to be applied to that factor. It appears to me that that is

quintessentially a matter for the specialist body, in this case the respondent. Consequently, the applicant seeks to quash a decision

of a specialist body essentially on the issue of the weight to be applied to a factor in the decision making process. It hardly needs to

be pointed out that this is a heavy burden for the applicant.

11. Fact of illegal broadcasting

The fact of illegal broadcasting was considered by the respondent, as it was a policy of the respondent to permit and to consider

applications from persons who had broadcast illegally previously. This policy is not irrational, it is a type of decision that a specialist

body might arrive at in light of all the circumstances in the industry. Indeed, a policy of enticing persons who have been acting

outside the law into legal processes is not unknown in other aspects of Irish life.

There is no evidence of a favouring of Dublin Rock. On this matter Michael O’Keeffe, chief executive of the Broadcasting Commission

of Ireland, in his affidavit dated 28th day of April, 2005, deposed:

“I beg to refer to paragraph 24 of Mr. Hanrahan’s Affidavit and in particular the allegation that the advantages of Dublin

Rock in receiving the licence arose from the “fruits” of the experience which it received as an illegal broadcaster. As

appears from the foregoing and in particular the minutes of the Commission’s decision to award the licence set out at

paragraph 8 above, this is patently incorrect. In passing, I note that one prominent member of the Applicant consortium

was, in fact, involved in another licensing bid in conjunction with a former pirate operator.

I beg to refer to paragraph 25 of Mr. Hanrahan’s Affidavit. The Commission did take into account and consider the

character of each of the final two applicants in this process as required by law. However, as Mr. Hanrahan and the

Applicant group are well aware, the Commission’s policy in relation to pirates was to permit applications for radio licences

from companies or individuals who were previously involved in pirate broadcasting. As indicated above, this policy was well

known and was reaffirmed in February 2004. Mr. Hanrahan was also aware that the Commission’s policy required that any

existing pirate operator wishing to apply for a radio licence should cease operations from the time an advertisement for

the service was placed. The fact that Wireless Media Limited t/a Phantom FM had operated a pirate station was known to

the Commission and was drawn to its attention in the course of the licensing process. In this respect, Phantom FM had

publicly announced that it would cease broadcasting in May 2003 and had remained off the air from the time of that

announcement up to and throughout the licensing process. Therefore, at the time of the decision, the subject matter of

these proceedings, Phantom FM had ceased illegal broadcasting for in excess of eighteen months.”

Then, on cross-examination, Mr. O’Keefe stated:

“34. Q: But I am asking you a more general question. I do not want to trap you or trick you in any way. The Commissions

did not take into account the history of unlawful broadcasting that the group had. This is what you said. What I am

asking you is is that true of the entirety of the approach of the Commission on every aspect of the licence?

A: No, it is not

[Transcript, 11th October, 2005, Question 34]

And the matter was also the subject of Question 35:

“35. Q: So it did, in fact, take it into account for one purpose but not for another?

A: As I say there was a consideration, the Commission considered the application. The Commission was aware of the fact

and in considering the application the make-up of the Applicant included persons who were involved in the operation of an

illegal service. So it was aware of that fact and took that into account.

36. Q: But not to the benefit of Phantom FM?

A: Absolutely not.”

Consequently, I am satisfied that the learned trial judge was entitled to find, as he did, that the applicant had not established that

the respondent gave an advantage to Dublin Rock arising out of its illegal broadcasting experience.

12. Policy re ComReg

The policy of the respondent as to broadcasting piracy was not to support such activity. Of course the duty of terminating illegal

broadcasts lies not with the respondent but with ComReg. Mr. O’Keeffe, on behalf of the respondent, stated in a letter dated 17th

October, 2003,

“We have continually urged ComReg and it’s predecessors to initiate actions to close unauthorised studios and

transmitters of illegal broadcasters. We have also provided information on ‘pirate’ activities in different parts of the

country to ComReg officials. Please be assured that the [respondent] will continue with this policy into the future.”

I see no inconsistency with a policy to support ComReg in its regulation of broadcasts and at the same time having a policy to enable

illegal broadcasters, who have ceased the illegal activity, into the legal fold.

13. Prejudgment

On the prejudgment issue, the High Court referred to the minutes of the meetings of the respondent on the 6th September, 2004, and

the 8th November, 2004, which has been set out previously. On that evidence the learned High Court judge stated that it

demonstrated an objective and impartial approach with recognition of the merit of the applicant’s bid. Further, that there then was a

balanced appraisal of the bids.

I am satisfied that there was credible evidence upon which the learned High Court judge could arrive at this view. Bearing in mind the

jurisprudence of this Court, as stated by McCarthy J. in Hay v. O’Grady [1992] 1 I.R. 210, I would not intervene in the decision. There

is no necessity to analyse this ground further as the determination on the facts was the basis for the decision. I am satisfied that the

statement by the learned trial judge as to the lack of the identification of a factor external to the process was not the essence of his

decision, rather it was an afterthought. I would simply uphold the decision as made on the facts proved before the High Court.

14. As to the ground of appeal relating to the alteration of the advertising sales representative, for the reasons stated in paragraph

6.2 above I would not allow this ground of appeal.

15. As to the ground of appeal submitting that the High Court erred in finding that the respondent erroneously had regard to the

broadcasting services provided by the two distinct entities: I would affirm the judgment of the High Court. This is referred to in

paragraph 6.3 above and I am satisfied that it was a well reasoned judgment with which I would not interfere.

16. Conclusion

For the reasons given I would dismiss all grounds of appeal and affirm the order of the High Court.