Philip Morris Limited v Commonwealth of Australiaz M55/1994 [1996] HCATrans 413 (15 October 1996)

TRANSCRIPT

OF PROCEEDINGS

AUSCRIPT

Victoria

Level 7

451 Little Bourke St

Melbourne VIC 3000

GPO Box 1114J

Melbourne VIC 3001

Phone [phone]

Fax [phone]

O/N 4642

A 18.10.96

A 21.10.96

IN THE HIGH COURT OF AUSTRALIA

MELBOURNE OFFICE OF THE REGISTRY

No. M55 of 1994

BETWEEN: PHILIP MORRIS LIMITED

Plaintiff

- and -

THE COMMONWEALTH OF

AUSTRALIA

Defendants

DAWSON J

AT MELBOURNE, TUESDAY THE 15TH DAY OF OCTOBER 1996

AT 9.30 AM

MR R.A. FINKELSTEIN QC: I appear on behalf of the plaintiff (instructed by Arthur Robinson & Hedderwicks).

DR G. GRIFFITH QC: I appear with MR M. MOSHINSKY for the Commonwealth (instructed by the Australian Government Solicitor).

MR FINKELSTEIN: Your Honour, there are two applications before the Court. The first is the plaintiff's summons seeking leave to add two further plaintiffs to the proceeding; Philip Morris Australia Limited and Philip Morris Information Services Limited; that is the order sought in paragraph (1) of the summons, and application is also made to amend the statement of claim, amendments required necessary by reason of the joinder of the two additional plaintiffs.

HIS HONOUR: Yes. Is there any argument about this?

MR FINKELSTEIN: No, there is none.

HIS HONOUR: Is that right, Mr Solicitor?

DR GRIFFITH: Yes, your Honour, we have consented, well, for months.

HIS HONOUR: Not even about costs?

DR GRIFFITH: No, I assume my friend is offering costs thrown away, your Honour.

MR FINKELSTEIN: I am offering costs thrown away, your Honour.

HIS HONOUR: Yes, very well.

DR GRIFFITH: Your Honour, perhaps I can indicate there is a dispute about what is the content of that, but that is not in issue - - -

HIS HONOUR: Now.

DR GRIFFITH: - - - absent consent to be determined by your Honour.

HIS HONOUR: No.

DR GRIFFITH: So we will not trouble your Honour with that.

HIS HONOUR: Thank you. Well, very well, I can make those orders, - - -

MR FINKELSTEIN: Thank you, your Honour.

HIS HONOUR: - - - and order that the plaintiffs bear the costs thrown away?

MR FINKELSTEIN: Yes, your Honour.

HIS HONOUR: That the plaintiffs bear the costs thrown away. Very well.

MR FINKELSTEIN: Thank you, your Honour. Now there is a second summons before the Court which is the defendant's application to remit, - - -

HIS HONOUR: Yes.

MR FINKELSTEIN: - - - and the application is to remit to the Federal Court.

HIS HONOUR: Well, now that is not your application?

MR FINKELSTEIN: That is not my application, your Honour.

HIS HONOUR: So I should hear the Solicitor-General.

DR GRIFFITH: Your Honour, that is our application, your Honour. This matter issued in June 1994, your Honour, a defence was filed within time, 11 July 1994, and a reply was filed within time, so the pleadings went according to the rules. Your Honour, since then in essence two things have happened that there have been protracted negotiations, particularly between counsel, your Honour, with a view to seeing whether there can be agreement on the facts. It is clear from those negotiations they produced a result, your Honour, namely that there cannot be.

HIS HONOUR: Well, what sort of facts are there that are involved?

DR GRIFFITH: Well, your Honour, there are two facts, your Honour. The first group of facts are those which would be involved in the plaintiff of proving its allegations in the statement of claim, which on its face, your Honour, look closer to being objective facts that one would expect the plaintiff would need to prove to establish, your Honour, in essence the categories of communication which it relies upon, particularly on page 7 of the amended statement of claim, as constituting various sorts of communications. Your Honour, the plaintiffs have their own descriptive expression to each category; political communications; public interest communications; individual rights communications; corporate image communications; business communications; brand advertising; and computer related communications. Now, your Honour, it would be necessary for the plaintiff to give content to those particulars, - - -

HIS HONOUR: Yes.

DR GRIFFITH: - - - and indicate one would suppose with some evidentiary proof precisely what these categories of communications are from which basis it could argue, your Honour, that whatever might be at the time of trial the correct constitutional principles to apply could become to apply to these categories. It would seem, your Honour, there is an ascending or descending order of category. Now, your Honour, it may well be that such matters could be proved by producing considerable numbers of documents perhaps verified by statements of those explaining what the documents are. It may be that there be some further evidence required as to how these documents fit into the aspects of communication, which are the matters pleaded by the plaintiffs. Now, that is one category, your Honour. The - - -

HIS HONOUR: I ...(indistinct)... the results agreed there. The finding of facts by this Court, at all events by a Full Court, would be a very perilous sort of exercise, would it not?

DR GRIFFITH: Your Honour, that is our point, your Honour, in that your Honour could take it that two years have shown in the result, your Honour, that those facts cannot be agreed by the parties, and that is the reason why we have taken the occasion of this summons having been brought on by the plaintiffs to say that in the Commonwealth, your Honour, it is inevitable that the matter must be remitted and it may as well happen now if for no other reason than to save a Justice of the High Court being bothered by what essentially must be pleading issues to a matter which must go to trial.

Whether it, your Honour, I mean, it could have got remitted next month or last month or six months ago, but we just take advantage of this opportunity to say, your Honour may as well acquit it of the High Court list now to save your Honour sitting here when your Honour might be writing judgments.

HIS HONOUR: Doing something more useful.

DR GRIFFITH: Yes, well, I would not make a - it is all useful for the parties, but, your Honour, we say there are other Judges available who can look at the answer to the question which your Honour posed to me. Now, - - -

HIS HONOUR: Yes.

DR GRIFFITH: - - - your Honour, there is a second category of - - -

HIS HONOUR: Well, it would not be long trial, one would imagine in the Federal Court, if that were the Court to which it was remitted.

DR GRIFFITH: Your Honour, with appropriate directions given on a summons for directions one would suppose that much of the evidence could be prepared in documentary form, and then on that aspect it might only be a few days on that aspect. Your Honour, the second aspect arises from the defendant's defence. Your Honour, I do not think your Honour has made an order for an amended defence to be filed, but that is not necessary, we will file one in accordance with the rules to the amended statement of claim. But, your Honour, the defence will be in the same form as the defence which was delivered to the original statement of claim on 11 July 1994 and in essence, your Honour, there are denials of the freedoms and the denials of the pleading.

Your Honour, then obviously enough, the pleading insofar as there is a claim under section 92 and a claim in respect of implied constitutional freedoms relies upon the defence of proportionality if that is necessary something to go to as a second level to - - -

HIS HONOUR: Proportionality does have an application in the context of section 92, does it not?

DR GRIFFITH: Yes, your Honour. So, that, your Honour, on those issues, well then, your Honour, there is a different situation because it is accepted that there then is an onus on the defendant to bring forward evidence, your Honour, as to the issues. That is where one gets in a particularly difficult and open textured area, your Honour, and it is clear if nothing else from the tobacco litigation in Canada that there can be a wide ranging evidentiary inquiry in matters which are hotly contested, your Honour, at all levels if they put as facts, opinion, political debate, health debate, or whatever.

So, that, your Honour, both parties are aware that those issues as will be pleaded in the amended defence are wide ranging issues which must go to trial, your Honour. It is clear from our negotiations that that cannot be avoided, and your Honour, it is the sort of issues where one might expect hot dispute, your Honour, as how a trial could run endlessly, your Honour, but not the sort of trial the High Court would want to be involved with. So, your Honour, to this point matters are proceeded on the basis that the trial would need to cover both those aspects, and there would probably then be ancillary issues of discovery which here might have issues of international discovery and that sort of example.

So, at that stage, your Honour, it must be that it is a heavy case for a Federal Court Justice to control, but it will be a long and complicated and probably some controversial dispute as to the facts relevant on that aspect. Now, your Honour, I think my learned friend will permit me to say that we have had some discussions as to these two issues, and it may be, your Honour, that there is some scope for discussion even after two years of discussions to consider whether or not there maybe some split on these issues. Now, I think, your Honour, my learned friend and I are on common ground that the case could not come to any particular result even at the level of a trial judge until the foreshadowed hearing and judgment is given in the Levy and Lange cases set down for hearing in March.

So, perhaps one is then thinking of a time frame towards the end of next year at the earliest for even a primary judgment in this matter. But, your Honour, in that context it may well be that if the parties can agree or if it is ordered that there be a split of these issues so that one might find firstly, that there is a definition of the applicable principle arising from these High Court judgments in these two matters which would come available to a primary judge; and secondly, that there could be something either closer to agreement or a short trial on the fact to issues that I have referred to arising from the plaintiffs statement of claim, that a primary judge might resolve those matters which might resolve the case without the need to have what might be a trial of many months and determination of subjective issues proportionality which would not arise if there was one view either taken of the principle, or if the principle is applied to the primary facts. Now, your Honour, those are not matters which are agreed, but we have flagged it for consideration.

HIS HONOUR: Now, is your application contested?

DR GRIFFITH: Yes, it is, your Honour. Perhaps my learned friend could say why, but, your Honour, our point, and it is just a one liner point is, your Honour, this is all very useful indication of the course of the case, but we just say it is appropriate for a Federal Court Justice to deal with these matters. Now, your Honour, perhaps to anticipate if my learned friend suggests well, perhaps it should be remitted to find facts we would refer to nothing beyond the Mabo remitter where Justice - might your Honour remember was - - - -

HIS HONOUR: That is not a - - -

DR GRIFFITH: - - - reported to this Court, your Honour, that he found it a very difficult - - -

HIS HONOUR: Not a conspicuously successful - - -

DR GRIFFITH: No, your Honour, - - -

HIS HONOUR: - - - exercise.

DR GRIFFITH: - - - and, your Honour, we say, your Honour, it is better for the trial judge to have control, and your Honour there are two ways to look at it, your Honour. If the facts can be found by the trial judge, well he should find the facts, and your Honour, there is no reason why he could not then have a shot at applying whatever is the document of the High Court on the basis that - - -

HIS HONOUR: The Federal Court perhaps could do more than have a shot.

[9.45am]

DR GRIFFITH: Your Honour, perhaps to put it boldly, that if we took the Wik case as an example, your Honour. All we wanted in Wik was a decision from Drummond J so we could take it to your Court.

HIS HONOUR: Yes, I understand what you are saying.

DR GRIFFITH: So that, your Honour, we would not see a particular delay for it to be remitted in toto rather than - and we see, your Honour, the greater complication would be, as happened in ...(indistinct)... to merely define facts when the judge might say well, this is very difficult. I do not know by reference to what, but if the judge has control of the full matter well then he determines it.

Finding sufficient facts, your Honour, so that if he is wrong on legal principle one can still apply the correct principle to the facts so that - your Honour, we say it is self evident that the trial judge should have control of these matters, and if then, your Honour, it is convenient for the judge to find the facts and state questions for a full Court that course could be taken at the Federal Court, or if it was clear that it was in order that it could be removed to the High Court, the High Court could determine whether or not that was appropriate, your Honour.

One would have thought it would be more convenient to have a decision, your Honour, and then that can be made the subject matter for appeal. So, your Honour, in effect, our summons today is a protected one to say it is inevitable that this case must be remitted, and for the convenience of this Court we suggest that it may as well be now than next time. If your Honour pleases.

HIS HONOUR: Thank you, Dr Griffith. Mr Finkelstein.

MR FINKELSTEIN: Thank you, your Honour. In ordinary circumstances we might agree that a case that involves issues of fact - complicated issues of fact as a precondition for raising the legal issues should be remitted for fact finding, but, your Honour, in our respectful submission, as my learned friend, Dr Griffith, the learned Solicitor-General said, there are two discrete areas of fact. The first concerns on the one hand the nature of the business activities and other activities undertaken by each plaintiff, and the type of publications of one sort or another that are dealt with in the particulars that occur from time to time: both in the course of business and outside the course of business.

So far as those facts are concerned, which are set out in the particulars on page 7 of the new pleading, we do not really - - -

HIS HONOUR: The new pleading - I think I have got the old one here. The new pleading is somewhere down the track is it?

MR FINKELSTEIN: That is exhibit 2 to the affidavit of Mr O'Donoghue of 26 September, POD2. Can I hand up a spare copy on it?

HIS HONOUR: Yes, a copy would be - thank you, that is much better than hunting through that. Thank you.

MR FINKELSTEIN: Perhaps just to make it clearer, if your Honour goes to the first page of the new pleading, in paragraph 2 - these are the areas of fact. Paragraph 2 contends for a particular type of business activity being carried on by the first plaintiff. Similarly, paragraphs 3 and 4 deal with the businesses conducted by the other two plaintiffs. Now, we would imagine that proving the business activities of those plaintiffs will be both relatively straightforward, and more importantly will not raise any contentious issue of fact. Then the publications are dealt with at least with particulars on page 7.

Now, so far as the pleading is concerned, your Honour will see that at the conclusion of each subparagraph the pleading gives the type of publications a particular character for definitional purposes. But again, proving the type of communications will involve no more than either producing a lot or samples of particular classes of documents. The plaintiffs will have to gather them together in particular classes, but it will be this is what we call political communications, and the question of their true character will be ascertained from just reading the documents themselves. However, again, and more importantly, it will not involve any contested question of fact. Not so far as we presently anticipate. In all likelihood- - -

HIS HONOUR: You say that, Mr Finkelstein, but if that was so I would have expected by this time there to be an agreed statement of fact.

MR FINKELSTEIN: Well, can I just - - -

HIS HONOUR: Yes.

MR FINKELSTEIN: I will come to that in a moment. I just want to say something about the other area of fact.

HIS HONOUR: Yes.

MR FINKELSTEIN: That is on the question of proportionality, it is clear enough that that issue will raise complicated issues of fact where there will be genuine dispute between the plaintiffs and the Commonwealth. There is just no question about that, and more importantly if one has regard to the course of litigation in other jurisdictions on similar issues, the contested questions of fact on the proportionality question are - - -

HIS HONOUR: Proportionality arises in relation to section 92.

MR FINKELSTEIN: Yes.

HIS HONOUR: And, I suppose, in relation to the implied freedom of speech, yes.

MR FINKELSTEIN: And the defence, as it currently stands. My learned Solicitor said his new defence will mirror the current one - deals with in that way. The next point I want to make by asking your Honour to look at the defence that has been filed.

HIS HONOUR: Which is exhibit what?

MR FINKELSTEIN: I do not think the defence has been exhibited. It should just be with the Court file, although I think I can provide your Honour with a copy.

HIS HONOUR: Yes, that will be quicker, thank you.

MR FINKELSTEIN: Apart from non-admissions and some denials, the two substantive paragraphs that I want to draw your Honour's attention to are 9 and 10. Paragraph 9 of the defence deals with the section 92 claim, and deals with it in two ways: it first contends in the first line and a half that the Act - putting the negative there, differently to the pleader:

The Act does not affect freedom of intercourse among the states -

but then goes on to say -

if it does, then it is proportional.

Likewise with paragraph 10, which deals with the freedoms contended for by implication from the constitution. In the first instance in 10(1), it is alleged that:

None of the freedoms exist by way of implication.

Secondly, in 10(2) it is alleged that if they do then:

The legislation is sufficiently proportional to take them away.

Now, what I was going to invite the Court to do is not remit the proceeding at this stage, but have the Court consider and deal with the first part of 9, the line and a half, and 10(1). It is probably fair to say that, and we would ask the Court to deal with - - -

HIS HONOUR: Well, by that you mean whether there is, under section 92, an infringement of - apart from proportionality, an infringement of the freedom of intercourse, which it guarantees, and under 10 whether there is an implied constitutional guarantee of freedom of the sort alleged?

MR FINKELSTEIN: Exactly right, but I invite the Court to take that course with one qualification. What I thought would be the proper way to proceed is after pleadings have closed, and presumably that will not take too long, the plaintiffs would bring in their evidence, put it on either by statement or affidavit or in some form. So, on the question whether the case would or would not be remitted to the Federal Court, at least the Court can see how it is the plaintiff proposes to prove the primary facts upon which it relies, and at that stage there will be an indication, no doubt, from the Commonwealth whether any, and if so which, of the facts which the plaintiffs will seek to prove are in dispute.

If it turns out that no facts are truly in dispute, and I have made the assumption so far that it is unlikely. The reason why I make that assumption is I mention that we can put on our evidence, in a pretty non-contentious fashion to prove what seems to us to be relatively straightforward and uncontroversial allegations of fact about the nature of the businesses carried on and the type of publications that are engaged in in the course of business, and in the course of other activities.

If the Court, at the point where we have our evidence on, forms the view that it is truly non-contentious in the real sense, and the questions that are raised in the first part of paragraph 9 of the defence, and 10(1) of the defence can be answered by reference to the facts that we bring on, then we would urge the Court to adopt that course, if for no other reason than it would plainly avoid a very, very lengthy and complicated hearing of facts on the proportionality question.

HIS HONOUR: It still strikes me as curious if the exercise is as easy as that, that the parties have not been able to produce something by way of a fait accompli, to enable the Court simply to address those matters which are appropriate for it.

MR FINKELSTEIN: I think, your Honour, it is probably fair to say that thus far there has not been much discussion between the parties about, as it were splitting the case along the lines that I have suggested. We have tried to agree on facts that will cover every issue raised, including the proportionality questions. Now, it is clear we cannot do that.

HIS HONOUR: But splitting cases is fraught with difficulty, is it not? One finds that one has split it in the wrong way, or that those matters which are before the Court do involve factual - determination of factual matters and the Court is not in a position to determine them.

MR FINKELSTEIN: That is true, but the proposal that I am putting forward to the Court at least reserves the position to this extent: I might be able to demonstrate, by reference to the material, that those problems do not arise, or will not arise.

HIS HONOUR: You might and you might not.

MR FINKELSTEIN: I agree, and if I do not then it might be - - -

HIS HONOUR: The position remains that there are outstanding questions of fact to which the parties have not been able to agree. There has been a considerable time during which they could have agreed and they have not, and it is not contested that the determination of those questions of fact is not appropriate for this Court, and that the only way, as you put it, in which you can eliminate those questions of fact, is to attempt to split the case. To extract out, as it were, those matters which do not involve contentious questions of fact.

MR FINKELSTEIN: That is not the sole purpose for - - -

HIS HONOUR: Well, that is what you are putting to me at the moment.

MR FINKELSTEIN: Your Honour, the reason for doing that is if the Commonwealth is correct in the first part of its allegations in 9 and 10, then it is wholly unnecessary to deal with the remainder of the case. For example, 10 contends that none of the implications exist. Now, if that is right as a matter of law, then it is wholly irrelevant and unproductive to look at the issues that would be raised by paragraph 10(2).

HIS HONOUR: Yes.

MR FINKELSTEIN: And likewise with paragraph 9. The first contention depends on the plaintiff showing the relevant facts just about the nature of its activities, and then looking at the impact of section 92 and the legislation. It does not depend on proportionality at all, so that if the plaintiff fails at that level - - -

HIS HONOUR: Yes, but take the section 92 point: whether or not there has been an interference with freedom of intercourse. Now, that is very difficult to deal with outside a factual matrix, is it not?

MR FINKELSTEIN: I am not suggesting there will not be facts which bear on it, and the facts which will bear on it will be the nature of one or other plaintiffs' interstate trading activities, or other activities, and will - - -

HIS HONOUR: But those are facts I do not know about at the moment, and there has been no agreement on those.

[10.00am]

MR FINKELSTEIN: No, your Honour. Again I agree with that, but what I am proposing is that if the plaintiff is in a position where it brings on that evidence, by affidavit or statement verified in someway, and it if becomes clear from that point of time that the facts as alleged or asserted or deposed by the plaintiffs are not contested, then the Court can deal immediately with the legal issues. I mean immediately - not in point of time, but without being concerned about any other factual matter. They are our submissions, if the court pleases.

HIS HONOUR: Yes, Mr Solicitor.

DR GRIFFITH: Your Honour, I have been doing a little bit of arithmetic while my learned friend has addressed you. Your Honour, he took you to the paragraph - if I can go to the original statement of claim, your Honour - paragraph 3, or 2 is the representative, your Honour, but pleading to all sorts of business, five sorts of business, and then three sorts of trading intercourse, etcetera.

Your Honour, I did a multiplication of that and then the eight paragraphs of the particulars, and I got to 1080 categories that are pleaded of various sorts of activity by various of the plaintiffs. I think there is probably more now there are additional plaintiffs. And when one goes to the particulars one sees that, if, for example, I take paragraph (a) on page 7 of the original statement of claim, though in effect they are the particulars they are not dealing with objective facts.

They are dealing with various documents which they say - allege are merely for the purpose of political communications. Now, your Honour, one cay say it must be self evident that those sort of documents might be asserted by the Commonwealth as dealing with falling under category F being brand advertising, the promotion of smoking products. So that, your Honour, there are obvious issues of fact which must arise. And your Honour's comment that one would have expected to have agreed by now is a very apt one, because it is not that nothing has happened for the last two years.

There have been extensive attempts to prepare documents to form the basis of agreement of facts, your Honour. And as I indicate to your Honour, without going to the detail, what has emerged from that is that there will not be agreement on these issues. So that whatever my learned friend might produce in this court or the other court, the facts are going to remain in dispute on the plaintiff's pleading, and also on the - no doubt my learned friend will not agree to facts of the sort that we might allege such as smoking kills or nicotine is addictive. That is not the sort of thing that we can expect to have any agreement on.

HIS HONOUR: I do not think I need trouble you further, Mr Solicitor. I propose to grant the application by the Commonwealth to remit this matter to the Federal Court. It sufficiently appears that issues of fact arise which it would be inappropriate for this Court to attempt to determine. And I do not think it would be convenient or even possible to separate those issues which involve no contested facts. In the end it seems to me that the most efficient way to put this litigation on a course which will bring it to an ultimate conclusion is to remit it for trial to the Federal Court. Which Federal Court, gentlemen?

DR GRIFFITH: Victoria, your Honour.

HIS HONOUR: To the Federal Court of Australia in Victoria. And I will make the usual order for remitter. And costs - reserve costs?

DR GRIFFITH: No, your Honour. When your Honour says the ordinary order for remitter, is that in the form of our summons? I understand that is usual.

HIS HONOUR: That the steps taken in this court be steps taken in the other court, and so on?

DR GRIFFITH: Yes, your Honour. Your Honour, on the questions of costs, it is clear from the correspondence exhibited to Mr O'Donoghue's affidavit the Commonwealth at all times has indicated that it would agree to these amendments being made on the usual order for costs. The correspondence also reveals that we attempted to agree what those costs were, but that was not agreed, your Honour. So that insofar as the plaintiff has proceeded by summons on those matters, your Honour, it is unnecessary. Our agreement has always been forthcoming. On the issue of our summons - - -

HIS HONOUR: I am sorry, which costs are you talking about now?

DR GRIFFITH: Sorry, the costs of the plaintiff's summons today.

HIS HONOUR: Yes. You are asking for an order for costs on - - -

DR GRIFFITH: On the plaintiff's summons.

HIS HONOUR: I thought that was agreed, was it not?

DR GRIFFITH: Well, it is part of the costs thrown away, but - - -

HIS HONOUR: I am sorry?

DR GRIFFITH: Your Honour, my learned friends might say that costs thrown away do not include the costs on the summons. So I ask for them, or ask for my friend to indicate that they are included in the costs thrown away.

HIS HONOUR: You do include them, do you not, Mr Finkelstein?

DR GRIFFITH: I hear noises on the left, your Honour. Perhaps my learned friend can indicate. Well, my learned friend, does, anyway. I do not know what is happening on the other side of the table.

HIS HONOUR: Well, I think that is enough for your purposes, is it not?

DR GRIFFITH: That is right. Now, your Honour, on our summons, as the correspondence also reveals, we have been saying like a mantra, your Honour, that this order should be made. So we would ask for costs on our summons to remit.

HIS HONOUR: But you can hardly say that the plaintiffs have been at fault in relation to that, can you?

DR GRIFFITH: No, your Honour. We could say we have been successful, though.

HIS HONOUR: I reserve the costs on that application. Is there anything else, gentlemen?

DR GRIFFITH: No, your Honour.

AT 10.06 AM THE MATTER WAS ADJOURNED

INDEFINITELY