By a 4:1 majority the High Court today upheld the Australian Competition and Consumer Commission's appeal and held that through stories broadcast on Today Tonight, Channel Seven broadcasters engaged in misleading and deceptive conduct in contravention of section 52 of the Trade Practices Act 1974.
The High Court case turned on whether Channel Seven was able to rely on the so called publisher’s defence (Section 65A) in relation to stories broadcast on Today Tonight in late 2003 and early 2004 about a property investment training program known as 'the Wildly Wealthy Women'.
The ACCC had alleged that in these broadcasts, Channel Seven broadcasters and the WWW principals made misleading representations that one of the WWW principals was a millionaire and the other owned in excess of 60 properties when this was not the case.
The majority of the High Court held today that in circumstances where the broadcaster had entered an arrangement or understanding with a third party and endorsed or adopted the misleading representations of that third party in its publication it was liable for any misrepresentations made.
Section 65A of the Act provides a general exemption to most of the media as publishers of news and current affairs from liability for publishing misleading or deceptive material. This exemption is designed to ensure that news and current affairs programs are generally free and not unduly restrained on reporting the events of the day. However the exemption is not absolute.
Section 65A also provides exceptions to this exemption including:
- publishing advertisements which the media know or should know are misleading or deceptive, and
- media self promotion where this is misleading or deceptive.
In their joint decision, Chief Justice French and Justice Keifel held that: "The purpose of the exemption in s65A… was to maintain a vigorous free press as well as to maintain an effective and enforceable TPA. That purpose is served by releasing… [information providers]… from undesirable inhibitions on the provision, by them, of news, information, opinion and comment. Consistently with that purpose information providers are free as part of the function of an independent free press to praise or criticise the providers of goods or services and the quality of what they provide. Where, however, the information provider publishes matter in connection with goods or services which itself provides, or publishes an advertisement for its own or someone else’s goods or services, the rationale of maintaining a free and vigorous press does not require its exemption from the prohibition of misleading or deceptive conduct. The same is true where the information provider promotes the goods or services of a third party pursuant to a contract, arrangement or understanding with that party."
The High Court ordered that the declarations relating to the Channel Seven licensees made by Justice Bennet be reinstated and that Channel Seven pay the ACCC's costs of the Full Court and High court appeals.
"The ACCC welcomes the High Court decision," ACCC Chairman, Mr Graeme Samuel, said today. "Where publishers enter into arrangements with others and adopt their representations they risk breaching the Act and like every business must check their facts."
The area which was the subject of this appeal is the circumstance where the media organisation publishes misleading or deceptive material about goods or services which is not an advertisement but is nonetheless subject to some other arrangement or understanding between the media and the subject of the story.
Case chronology
The High Court appeal followed on from a decision in 2007 by Justice Bennett who found that Channel Seven had made misleading representations that one of the principals of the WWW mentoring program was a millionaire and the other owned in excess of 60 properties when in fact this was not the case. Justice Bennett also found that the Channel Seven broadcasters were unable to rely on s65A of the Act.
Justice Bennett held that Today Tonight "embraced and advanced the proposition that Ms Boholt and Ms Forster were millionaires and had achieved that status through investing in property" which was untrue and misleading and deceptive."
Channel Seven appealed Justice Bennett's decision. In June 2008 the Full Federal Court agreed that Justice Bennett was entitled to find that there was an arrangement or understanding between Today Tonight and the Wildly Wealthy Women and that representations were made by the Channel Seven broadcasters which were misleading. However, the Full Court did not agree with Justice Bennett's construction of s65A and found that section did exempt Channel Seven's conduct from s52.
The ACCC appealed this aspect of the decision to the High Court.