3180
THE NEW ZEALAND GAZETTE
No. 156

Television Network Ltd.), the agreement entered into proved
to be in breach of the Act or the warrant conditions, there
were remedies under the Act which could be pursued when
an actual broadcast had taken place.”

(Decision 7/82 at page 4).

The Tribunal took the view that the question before it was whether
or not the Corporation should be permitted advertising programmes
on Fridays during the period in question (Decision 7/82 at page 4).
The Tribunal granted the application approving the inclusion
of advertisements on Fridays between 1100 and 1200 hours from 25
June to 17 December 1982 inclusive, subject to 2 conditions:

1. The advertising programmes in each hour shall not exceed 11
   minutes.
2. Each broadcast shall take place only if, during the preceding
   period of 1 week the applicant has desisted from
   broadcasting advertising programmes for a period of 1 hour
   on Network 1 at a time when advertising programmes have
   normally been broadcast.

The Allegation

On 5 July 1982 the New Zealand Public Service Association Inc.
(“the PSA”) in a letter to the Secretary of the Corporation
complained about various aspects of the Good Morning programme
and raised the question of whether the arrangement was in breach
of section 82 of the Broadcasting Act 1976. The PSA submitted
that, by drawing direct advertising revenue from the programme,
Northern was participating in the benefit of the Corporation’s
warrant. If this arrangement amounted to allowing Northern to
participate in the benefit of the Corporation’s warrant, section 82 (1)
would require the Tribunal’s consent in writing. This was not a ground
for complaint under section 25. The Tribunal therefore treated the
formal complaint of September 1982 in this respect as an allegation
of breach of warrant. The other matters of complaint were dealt
with under the complaints procedure (Decision 31/82).

The allegation which the Corporation was required to answer is
annexed to this decision.

The Hearing

The contract was produced to the Tribunal. With the deletion
only of the percentage of revenue to be retained by Northern in
clause 24 it was made available to the PSA on a confidential basis.

The Tribunal had the benefit of detailed submissions from Mr
Bartlett for the PSA and Mr Nicholson for the Corporation. Mr
Bartlett’s first submission related to the meaning of the word
“benefit”. He drew attention to the wide meaning given in the
Shorter Oxford Dictionary of “advantage, profit, good”. He
submitted that the contract provided for the supply of programme
by microwave and by pre-recorded video tapes and that this
amounted to participation by Northern in the operation of the
Corporation’s television station. He argued that this view was
supported by the fact that the contract made Northern responsible
for the technical standards of the programme. He further submitted
that, by becoming bound to transmit the Good Morning programme,
the Corporation had bargained away the freedom which it would
otherwise have enjoyed to broadcast programmes of its own choice.

Mr Nicholson invited the Tribunal to view the arrangement as a
normal contract for the supply of programme, that being a function
and power specifically granted to the Corporation under sections
22 (c) and 34 (a) Broadcasting Act 1976. He submitted that in
acquiring the Good Morning programme the Corporation was in
fact exercising the choice which Mr Bartlett argued it had bargained
away. The consideration in return for the supply of programme was
that the supplier could retain a proportion of the advertising revenue.
Mr Nicholson argued that not only should the word “benefit” be
considered; the phrase in section 82 (1) is “participate in the benefit”
and the meaning of “participate” is “to partake, to share in
common”. It would be an unduly restrictive interpretation, he said,
to hold that the Corporation could not contract for the supply of
1 hour’s programme per day without being held to have allowed
another to have participated in the benefit of its warrant.

In his submission the Corporation had not bargained away its
right to choose programmes; it had exercised its choice. The
agreement was for a programme in a particular format. The idea
was not substantially different from, for example, taking a
programme live from an overseas broadcasting organisation.

The Tribunal accepts Mr Nicholson’s submission as to the nature of
the arrangement. It is satisfied that sections 22 and 34 of the
Broadcasting Act 1976 empower the Corporation to acquire the rights
to broadcast programmes from outside producers and suppliers. (The
significance of those sections is referred to later). The arrangement
with Northern was within the scope of these sections. “To purchase
or otherwise acquire programmes” includes the power to obtain
broadcasting rights without necessarily obtaining outright ownership
of the programmes.

The contract shows that the Corporation gave away none of its
responsibilities as a warrant holder. The programme was to be within
an agreed format, normal technical standards were to be maintained,
the Corporation had the right to order changes in the programmes,
the supplier was under a duty to have stand-by material available
in case of faults, the normal complaints procedure was to apply and
Northern was prohibited from assigning the benefit of the contract
without the Corporation’s consent. Even a substantial transfer of
shareholding in Northern without the Corporation’s consent would
be expressly in breach of the contract.

Mr Bartlett’s second submission was that the sharing of advertising
revenue was a participation by Northern in the benefit of the warrant.
He argued that section 73 made it clear that the right to advertise
arose from a condition of the warrant. The sharing of such revenue
constituted participation in the warrant. Mr Nicholson on the other
hand submitted that the division of the advertising revenue was
nothing more or less than a method of paying Northern for the
programme which it supplied.

Mr Nicholson invited the Tribunal to find that, construing the
contract as a whole, it was essentially one for the supply of a
programme to be paid for by the division of advertising revenue,
as the simplest and most convenient method of payment. He
submitted that in construing the words as used in section 82 (1)
they should be given no wider application than is consistent with
the statutory intention of prohibiting the establishment or operation
of a broadcasting station by an unauthorised person. Section 82 was
intended to stop people getting around the need for specific
authorisation by trafficking, partnership or “straw man” devices.
The interpret the provision “permit any person to participate in
the benefit of his warrant” as prohibiting the production and supply
of programmes for a warrant holder would be to impose a restriction
not intended by the legislature.

Mr Nicholson was unable to say at what stage a contract for the
supply of programmes on this basis would drift into the realm of
“trafficking, partnership or straw man devices.” Nor is the Tribunal
able to lay down a clear boundary line. For the purpose of
determining the question before it, the Tribunal holds that on these
facts, the obtaining of 1 hour’s programme per day in the manner
provided for in the contract between the Corporation and Northern
did not constitute participation by Northern in the benefit of the
Corporation’s warrant. The stage at which section 82 (1) would apply
is a question of degree which the Tribunal will refrain from
attempting to define in this decision. Although the Corporation was
to receive only a small percentage of the revenue this was not
particularly significant, having regard to the time of day the
programme was to be broadcast.

Having decided that the Corporation was not in breach of section
82 (1) it is not necessary to go on to consider Mr Nicholson’s
alternative defence, namely that the Corporation is not subject to
that section. However the Tribunal considers it is desirable to express
a view on this submission, in the interests of clarifying the matter.

Mr Nicholson drew our attention to sections 22 (e) and 34 (a) and
also to section 17 which lists the general functions and powers of
the Corporation. He submitted that, in the overall scheme of the
Act, the Corporation was given a special status, with an entire part
of the Act dedicated to its general functions, powers, and obligations.
He said it was at least arguable that these powers and functions
should be read as particular powers and functions and should
therefore override the general provisions of the Act. In support of
this he cited the maxim that generalities do not derogate from
particular provisions.

The Tribunal does not accept that the Corporation’s empowering
provisions exempt it from the provisions of section 82. That section
was adopted without substantial change from section 27 Broadcasting
Authority Act 1968. That Act established for the first time a
regulatory body independent of the (then) New Zealand Broadcasting
Corporation.

Section 70 was adopted from section 16 of the 1968 Act and
provides:

“(1) Before a person (including the Corporation) is granted a
licence under the Post Office Act 1959 to establish and
operate a broadcasting station (not being a short-wave
station or a relay station) he shall obtain a warrant under
this part of this Act.

(2) Subject to this Act, no person shall establish or operate a
broadcasting station otherwise than in conformity with the
terms and conditions of a warrant or authorisation issued
by the Tribunal under this Act and for the time being in
force.”

Thus it is clear that the Corporation, like any other broadcasting
organisation, is to operate only within the terms of its warrant or
authorisation.

Further, as Mr Bartlett pointed out, section 83 (5) of the 1976
Act clearly contemplates that the Corporation could be penalised
for being in breach of the terms of its warrants.