Facebook Inc v Australian Information Commissioner & Anor [2023] HCATrans 22 (7 March 2023)

Last Updated: 7 March 2023

[2023] HCATrans 022

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S137 of 2022

B e t w e e n -

FACEBOOK INC

Appellant

and

AUSTRALIAN INFORMATION COMMISSIONER

First Respondent

FACEBOOK IRELAND LIMITED

Second Respondent

KIEFEL CJ
GAGELER J
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 7 MARCH 2023, AT 10.00 AM

Copyright in the High Court of Australia
MR N.C. HUTLEY, SC: If the Court pleases, I appear with my learned friends MR S.H. HARTFORD DAVIS and MR D.J. REYNOLDS for the appellant. (instructed by King & Wood Mallesons)

MR S.P. DONAGHUE, KC, Solicitor‑General of the Commonwealth: If the Court pleases, I appear with my learned friends MS R.C.A. HIGGINS, SC, MR. T.O. PRINCE and MS E. BATHURST for the first respondent. (instructed by Australian Government Solicitor)

KIEFEL CJ: There is a submitting appearance for the second respondent. Mr Solicitor, we will be dealing with the application for revocation of special leave in the first instance. It is your application.

MR DONAGHUE: Thank you, your Honour. Your Honours, I move on the application filed on 17 February 2023, and I read in support the affidavit of Katrina Mary Close sworn on 17 February 2023. Can I ask your Honours to go first to the core appeal book and the notice of appeal, which you will see at page 184. Your Honours will see there are two grounds of appeal identified as paragraphs 2 and 3 in that document. Ground 2, the Full Court erred in holding there was a prima facie case that the appellant carried on business in Australia pursuant to 5B(3)(b) of the Act; and paragraph 3, the Full Court erred in holding there was a prima facie case that the appellant collected information contrary to 5B(3)(c).

As to that second ground, in addition to the point I am about to make as to the repeal of the prima facie case requirement, which your Honours will see clearly appears in both of those grounds of appeal, 5B(3)(c) has been repealed with effect from 13 December last year. So, while that repeal does not affect the historical events with which this case is directly concerned in terms of the any ongoing significance of the matter, there is no longer a requirement of that kind found in the Act, so, of course, anything your Honours might say about it will have historical significance only.

Contrary to the impression that our friend’s submissions in resisting our revocation application give, the prima facie case requirement formerly found in the Federal Court Rules is equally relevant to their carrying on business argument as it is to the collection arguments. Therefore, the repeal of that requirement, we submit, has significance for the ongoing public importance of this case.

If your Honours would go to Ms Close’s affidavit and, using the page numbers at the bottom of the affidavit printed in blue, turn to page 12, you should see, hopefully, in the middle of that page item 13 dealing with Division 10.4, which repeals the Division, and substitutes a new Division 10.4 with a note under the heading:

This Division contains rules that have been harmonised in accordance with the advice of the Council of Chief Justices’ Rules Harmonisation Committee.

So, what has happened is the Federal Court framework has been brought into line with the framework that applies virtually everywhere else in Australia. I think the Northern Territory might be different, but generally speaking, the Federal Court alignment Rules as to service out now align. In place of the old Rule 10.42 there is a new Rule 10.42 that provides:

An originating application may be served outside Australia without leave in the following cases –

There is a long list of cases that includes, on page 14, paragraph (p):

if the proceeding relates to the construction, effect, or enforcement of a law of the Commonwealth, a State or a Territory –

clearly including this proceeding. So, there is no requirement for leave at all in relation to a case of this kind, let alone a requirement that requires one to jump a prima facie case hurdle. Even in the cases where leave outside Australia is required, under 10.43, the criteria are found in 10.43(4) and they again do not include a prima facie case requirement.

So, the meaning of that phrase, in connection with service out applications, is just of no ongoing relevance in the Federal Court or throughout most of country. The transitional provisions, while your Honours are here, is, relevantly, found on page 25 – again, using the numbers at the bottom in Rule 43.02 and it provides that the new division:

Division 10.4 of these Rules as substituted by the amending Rules, applies in relation to originating applications served –

served, not commenced:

on or after the commencement of the amending Rules.

KIEFEL CJ: The appellant says that should be read as “first served”.

MR DONAGHUE: Yes. Can I come to that in a moment, your Honour. Can I deal, first, just with ground 2. Ground 2 is identified by our friends in their written submissions – and your Honours probably do not need to turn it up – but in paragraph 2 of their submissions in-chief, they identify the issues, and 2(b) says the issue is:

Does the requirement of a “prima facie case” in r 10.43(4)(c) of the Federal Court Rules . . . require evidence that could itself support inferences sufficient to establish the cause of action, or is it enough to show only that there is a controversy –

So, they frame it as ground 2 as being about the effect of the meaning of the prima face case requirement in that Rule and that is an issue which, we submit, manifestly now lacks public importance. There is no reason why this Court should embark on a construction of a phrase that is not in the Rules going forward, particularly where that change was made to harmonise with other places.

In opposition to that submission, our friends in paragraph 18 of their revocation submissions make the – we submit – ambitious argument that because the phrase “prima facie case” is used in other legislation in completely different legislative contexts that that provides a reason why your Honours should still decide the point. We say to that, well, obviously, the meaning of the phrase prima facie has to be informed and be construed in the context of the legislative framework in which it is used. So, in our submission, there is no basis for your Honours to allow the case to continue on ground 2. Therefore, at least to the extent of ground 2 – which is our friend’s submissions from 27 through to 52 of their submissions – your Honours should revoke leave and not permit that argument to proceed.

The more substantive controversy is as to ground 1 and the carrying on business, and as to that your Honours will have seen our friends say there is still a point of general public importance to be resolved as to the meaning of that phrase. We make two points in response, and I will develop them both as briefly as I can. The first is that the phrase carries on business in Australia is – at least substantially, the meaning of that phrase is a question of fact or, at its best for our friend, it is sometimes described as a mixed question of law and fact.

For that reason, we submit that any guidance that this Court can give as to the meaning of that phrase, or the application of that phrase to a company like the applicant, is heavily qualified by reference to the fact that the Court would be giving that guidance in the framework of evidence that was only directed to the prima facie case requirement, and so is not very substantial. Your Honours do not have the benefit of the final findings of fact as to what the applicant actually does here, what its cookies do here, how those cookies facilitate its business of monetising personal information.

GORDON J: Are we to make anything of the fact that the Commissioner ran a case limited to two aspects of the evidence in order to support the prima facie case? As I read the judgments below, the Commissioner’s case itself was confined in order to meet the standard of prima facie case rather than the whole inquiry.

MR DONAGHUE: Indeed, and that was all we needed to do on an ex parte application on what has been said to be an undemanding standard. So, if special leave is revoked and this matter proceeds to trial, the Court could confidently expect the factual foundation for the question of whether the appellant carries on business in Australia to be completely different to the factual foundation that exists now. If your Honours are ultimately called upon to embark upon or decide the question does – or did – Facebook Inc carry on business in Australia, you would have that much better factual foundation for it. I say “did” because it was in evidence below that from 14 July 2018 Facebook restructured its business so that since that date Facebook Inc, now called Meta, is the business that carries on Facebook in Australia.

So, the factual controversy about was it Facebook Ireland or was it Facebook Inc is a factual controversy of historical importance for the alleged breach of the Privacy Act in this case, but at the moment Facebook Inc, or Meta, clearly carries on business in Australia and so again the public importance of any resolution of the factual controversy such that it could be on the prima facie case standard is of very doubtful utility.

STEWARD J: Is that through some form of permanent establishment of some kind?

MR DONAGHUE: I think they contract with the Australian customers.

STEWARD J: Direct, yes.

MR DONAGHUE: Yes, directly.

STEWARD J: So, they probably do have a permanent establishment.

MR DONAGHUE: Yes. There is also a Facebook Australia company somewhere in the corporate structure.

STEWARD J: It does the marketing?

MR DONAGHUE: I think I have read, your Honour, it does some of the marketing.

STEWARD J: Yes, I see. Thank you.

MR DONAGHUE: So, that also reduces the public importance, but we say the main point – or the point that I am seeking to develop here – is that the whole issue that is said to be of public importance about the meaning of the phrase “carries on business in Australia” is really a controversy about what has been repeatedly described as a question of fact because it is about the meaning of a phrase that uses words in their ordinary sense. So, to give your Honours three references, which I will not take you to, before one that I do – in Luckins v Highway Motel (Carnarvon) Pty Ltd [1975] HCA 50; (1975) 133 CLR 164, near the bottom of page 178, Justice Gibbs said that, subject to contrary statutory provision:

the question whether a company is carrying on business within the State is simply one of fact and must be decided by having regard to all the circumstances of the case.

It first instance in the Valve proceeding, where your Honour Justice Edelman was the primary judge, your Honour said at paragraph 195 that the cases about “carrying on business” in Australia say “little more” than that the concepts must be:

applied according to their ordinary meaning –

In Nygh’s Conflict of Laws in Australia, which our friends put in the bundle – it is in volume 6, tab 48, at paragraph 35.22 – it said:

Whether a company is carrying on business in Australia is a question of fact and degree. This issue will be determined in all the circumstances of the case, the context of the relevant statute and with reference to the particular nature of the enterprise conducted by the company.

That is, it is a highly factually intense enquiry, and your Honours do not have many facts, because your Honours have only what the Commissioner needed to clear the undemanding prima facie case standard. So, the guidance that your Honours can give is confined by the narrow factual record.

At its best for our friends, the question of the meaning of that statutory phrase is a question of mixed facts and of law. On that point, can I ask your Honours to look at Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1, which is in volume 3, tab 17 of the materials. The judgment is the judgment of Justice Mason, with whom the other members of the Court agreed. If your Honours, when you have the report, could go to page 6 at about point 6 on the page, you will see:

The appellant submitted (1) that the question whether the appellant’s activities as found answered the statutory description was a question of law –

The Court of Appeal, and you see this in the last lines on page 6, found – Justice of Appeal Samuels found that:

“business” is an ordinary English word, its meaning is not a question of law and, accordingly, whether the activities of the appellant constituted a business was a question of fact.

And Justice of Appeal Glass reasoned in a similar way, you see that at about point 1 or point 2 on page 7. Then Justice Mason – as we read to his Honour’s judgment, Justice Mason appears to have found that neither of those extremes is exactly right, because the meaning of the phrase is a mixed question of fact of law. And the analysis proceeds from pages 7 through to page 9, starting with, at about point 3 on page 7:

Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law.

And going down about five lines, citing Chief Justice Latham in Miller:

where all the material facts are fully found –

then whether those facts fall within the provision is a question of law. Of course, we would say here, all of the facts cannot be fully found; at most, all of the facts relevant to the prima facie case question can be fully found. But then his Honour qualifies that, in any event, in the passage just under the block quote, saying:

special considerations apply when we are confronted with a statute which on examination is found to use words according to their common understanding and the question is whether the facts as found fall within these words.

That, his Honour says, at about point 9, is a question of fact. And his Honour then says Justice Kitto’s analysis in the N.S.W. Associated Blue-Metal Quarries Case is “illuminating”. Justice Kitto was construing the phrase “mining operations upon a mining property”; and his Honour concluded it was a “mixed question of law and fact” and Justice Mason seems to have reached the same conclusion here. Justice Kitto’s analysis of that mixed question has four steps to it, which appear on the first half of page 8. So, step , “decide as a matter of law” whether the expression is used in a sense other than its expression in “ordinary speech”.

And that question, in the context of “carrying on business” is always answered in the negative. That is, that the phrase is – including in the references I have already given your Honours – said to be used as a matter of ordinary language. So, that is a question of law, but it is readily answered. Step 2, in the second half of the paragraph just above the quote:

Having answered this question in the negative, he noted that the “common understanding of the words has . . . to be determined” as “a question of fact”.

So, there is a question of law, then there is a question of fact, the meaning of the expression. That question of fact, we say, arises here. Then, as you see in the block quote, the third question, there is another question of law. Does:

the material before the Court reasonably admits of different conclusions as to whether the appellant’s operations fall within the meaning of the words . . . question of law.

Then the fourth and final question, second half of the block quote:

If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact –

And his Honour then applies that stepped analysis as we read his judgment to the carrying on of business in Australia. At the bottom of page 8, he finds that the words “carrying on business” are used with their ordinary popular meaning. So, that is answering question 1. You then need to decide what that meaning would be. But his Honour then, in the particular context of this case, which was about whether a rural land exemption was open, or whether a company was instead carrying on a grazing business on that land, his Honour said, this is the top of page 9, three lines down:

the critical issue for decision is whether the material before the Court reasonably admits of different conclusions on the question whether the appellant’s activities constitute a “business”.

And that was the way his Honour resolved it, so having stepped through. Our point is that in this case your Honours should not embark upon seeking to answer this question, even if it is a mixed question of law and fact, because the facts might inform the ordinary meaning of the word “carry on business” in the context of a business like Facebook. That is, facts about what cookies do in the Facebook business. How do they assist the targeting of advertising that allows Facebook, which provides a free service to its users, to make money? By targeting advertising that can then be sold.

Accepting that carrying on business is a question of fact, it is a question of fact that has to be answered in the context of the particular business in question, and facts about how that business works might inform the answer to that analysis. And those same facts might also inform the stage 3 question of whether different answers to that question are open.

Your Honours in granting special leave were alive to the possible significance of these facts. Your Honour Justice Steward asked multiple questions about how Facebook makes money. Your Honour Justice Edelman specifically asked about cookies and said, is there expert evidence about cookies? Our friends said no. Your Honour then said, well, given the centrality of cookies, are there not difficulties with this case as a vehicle of the prima facie case stage? Our friend Mr Hutley says no, because the point is that the activities are not commercial.

In our submission, that answer just highlights the problem, because to know the extent to which the activities are commercial, your Honours’ judgment in that regard might well be informed by an understanding of the business. And we respectfully adopt what Chief Justice Allsop said about this in our submission, very persuasively, at paragraphs 2, 3, 5, and 8 of his Honour’s reasons, which I will not take your Honours through. So, all of that is a complicated way ‑ ‑ ‑

GORDON J: Can I ask a question about the two pathways that were put by the Commissioner – am I right to read the reasons as only dealing with one of the pathways? That is, the way in which it was said that Facebook Inc carried on business in Australia.

MR DONAGHUE: The other pathways are the subject of the notice of contention, your Honour.

GORDON J: I understand that, but they did not deal with it.

MR DONAGHUE: No.

GORDON J: That is, they did not address it.

MR DONAGHUE: No.

GORDON J: So, we have no findings or inferences to be drawn about that analysis.

MR DONAGHUE: Ms Higgins is going to develop this part of the argument. I think we lost on one and they did not deal with the other, is my understanding.

GORDON J: Thank you.

MR DONAGHUE: So, in our submission – and this really takes me to the re‑service point and the question your Honour the Chief Justice asked me – but to try to isolate a question of public importance as to the meaning of section 5B(3)(b) in our submission just pays insufficient regard to the factual intensity of that question, which means that it is a question, obviously of significant public importance, save for the fact that we now know that Facebook carries on business here prospectively. But, leaving that aside, it would be an important question but one that your Honours should not, in our submission, answer unless you have a better factual picture, unless, of course, you need to answer it to determine the rights of the parties.

That brings us to re‑service, because our friends say that, despite the new Rules, they are entitled to an order from this Court dismissing this proceeding because if they can persuade your Honours that there was no prima facie case, then they cannot be re‑served and the limitations have expired so we could not commence new proceedings against them. So, they say that their rights are squarely in play.

As to that, I have already taken your Honours to the terms of the transitional provision. Its language, as I emphasised when I read the Rule, refers to “originating applications served on or after the commencement of the amending Rules”, which was 13 January 2023, as you see from Ms Close’s affidavit at paragraph 3. That language contemplates – because it does not say originating applications “commenced on or after” – it contemplates that it might be possible to serve under the new Rules an application that had been filed at some earlier date. If that had not been intended, then the Rule should have been drafted differently by referring to applications commenced after that date, and our friends seem to accept that.

Their point is that, even though the Rule can pick up applications that pre‑date the amendment, it cannot apply to them because they say, well, I have already been served. We have already been served. Well, as to that, we heartily agree. That is what the Federal Court found. That is what the Full Federal Court upheld on appeal and if that is right that they have already been served, then no question of re‑service arises.

But that, of course, is not what our friends mean. They are not accepting that they have been validly served. What they are trying to do is to say they have been served just enough to mean that they cannot be served under the new Rule, but not enough actually to constitute effective service. They are asking your Honours to create or recognise a kind of Goldilocks zone in which they can reside, having not been validly served, then never being able to be served again, so that they can move through that crack in the regime that they have thereby created.

GLEESON J: Mr Solicitor, in any event, does not Division 1.3, which sets out the various general powers of the Court, have something to say about this, for example, the power to make an order inconsistent with the Rules?

MR DONAGHUE: As I have been saying, in the sense that it could allow the Court to serve anyway, I respectfully adopt that, your Honour, yes. If we need that, then I certainly embrace that. But, in our submission, your Honours should not construe the plain language of the transitional provision in such a way as to create a gap of the kind that the appellant invites. If this Court sets aside the existing order for service and the Commissioner then seeks to re‑serve the originating application – which I am instructed that they would do, subject to anything in this Court’s judgment – then, that originating application will have been served on or after the commencement of the amending Rules and that is all that the language requires.

There is no reason to try to preserve the operation of the old Rule to the benefit of the appellant because it is, we submit, entirely unremarkable for procedural rules to apply prospectively – including to events that have occurred in the past – as your Honours recognised in Stevens v The Queen at paragraph 34, where your Honours, discussing the presumption against retrospectivity, said that it is common for rules of evidence and procedure to apply in that kind of way. So, the proposition that there is some substantive entitlement that the appellant would be losing by being subjected to the new service rule is not one that we submit your Honours should embrace and, indeed ‑ ‑ ‑

GORDON J: Is the six‑month limit for clarity?

MR DONAGHUE: In our submission, our friends seek to deploy that in their favour in some way. But, in our submission, a six‑month limit is just to avoid the Federal Court Rules being cluttered up by unnecessary transitional provisions. It is just for clarity. It makes it clear – it allows people to see, in the initial period after the new regime has been commenced, that they can go to the Rule and they can say, yes, this applies to anything that happens from this date forward and so to answer the questions that might arise in the period immediately after a change in the Rules of this kind and it is then removed.

If it was intended that the old Rules would apply to a potentially – what our friends say is a large category of cases, then it is very strange that the Rule would be repealed. One would have thought the transitional repeal
would stay there so that one could, over a prolonged period of time, ascertain, well, am I in the old class or am I in the new class, but the repeal of the Rule, we submit, rather confirms that the intention of the rule‑makers was that the new regime just bites on every act of service that occurs after the commencement date – 13 January. In our submission, the idea that we could fix the problem – if there is a problem – by re‑service is not in any way startling. The possibility of remedying in effect of service by serving again has been recognised in the authorities for decades, if not longer. That is why there are cases that recognise that usually an order setting aside service does not help the defendant very much unless there is a reason why they cannot be re‑served.

So, our friends here in their interlocutory application – which I do not need to show your Honours to, but it is quoted on page 41 of the core appeal book – but they sought both orders setting aside service and an order discharging the grant of leave to serve. They needed to do both of those things because if they just set aside the first – the service – they could have been re‑served pursuant to the order. What we submit has happened as a result of the amending laws is that now you do not need the order because there is no requirement for leave. But the whole structure of that interlocutory application and those two components to it recognises that, failing that, re‑service would be possible.

So, in our submission, the result of all of that is that, on the plain meaning of the transitional provision, even if your Honours decide this case and set aside service, in our submission, you would not finally dismiss this proceeding. And that means Facebook could just be re‑served and the rights of the parties would not have been determined by what your Honours do in resolving this appeal, and nor would your Honours have been able to give authoritative guidance as to a constructional question about 5B(3)(b) because there is not a constructional question that can be isolated from the question of fact that it is integrally tied up with that. So, for those reasons, in our submission, your Honours should revoke special leave on the entirety of the appeal. But if you are against me on that, you should at a minimum revoke special leave on ground 2, in our respectful submission.

If the Court pleases.

KIEFEL CJ: Yes, Mr Hutley.

MR HUTLEY: Thank you, your Honour. The Solicitor-General accepted that the question of carrying on business and what it means for the purposes of the Act is an important question. It is now the sole criterion for the Australian link because, as he observed, under the amending Act 2022 the requirement collection has been revoked. So, it is an important question.

Secondly and importantly, this case was preceded by a two-year inquiry by the Commissioner into the conduct of Facebook Inc in Australia and that is the subject of a finding in core appeal book page 47, paragraph 34, where it says:

The Commissioner’s application has been brought after her investigation of approximately two years –

and there was evidence at trial that there had been extensive requests for information and the like, of Facebook Inc, about its dealings in Australia. Now this case was conducted on the basis that there was not a jot of evidence of any commercial contract by Facebook Inc in Australia; not one. It was not said we have not inquired enough and they may well be, it was conducted on the basis that Facebook Inc had no commercial dealings which we say of the variety referred to in Hope v Bathurst – I am not going to take your Honours to the authorities, your Honours will have seen it from the written submissions – and we say that is a fundamental attribute of a finding that an organisation carries on business in, relevantly, Australia.

We say this case will determine that question, because that is the important question of law. And your Honours can see in the, in effect, controversy which has emerged from the written submissions; their reliance upon what the Full Court said in the Valve decision of ancillary activities; and our reliance, particularly on what was said in Bathurst. So that, in effect, is the crux of that dispute.

If that is determined, as we say your Honours can, that the proper meaning – ordinary meaning – of the words to “carry on business” carries with it what we say was said in Bathurst, and that is the true construction of this Act, then we will submit ‑ ‑ ‑

EDELMAN J: Mr Hutley, the Hope v Bathurst approach to what is a question of law and what is a question of fact has been significantly overtaken by Collector of Customs v Agfa‑Gevaert, has it not?

MR HUTLEY: Your Honour, we still say it has not been determined that if, on facts found – and I will come to what that means – the relevant event does not fall within the meaning of an ordinary term, that still involves a question of law. We say that is still a question of law; it is not a question of fact at that point. And that aspect of Bathurst, we say – although, perhaps the steps are not in the same, as it were, precise way in Bathurst – but that ultimate issue, we say, has never been doubted by this Court to involve the question of law.

EDELMAN J: I think that is pretty much what the Collector of Customs says.

MR HUTLEY: Yes. And we say in the circumstances for this case where there has been such an extent of investigation, I accept that in some cases – for example, in ground 2, because there was no investigation of the matter about cookies, there could be more evidence about what cookies do. But no one has suggested that the introduction of cookies creates any form of contractual relationship between Facebook Inc and a customer of Facebook Ireland. What they may ineffectually do might be able to be more expanded.

Our point is absent commerciality, as advanced by in Bathurst City Council and all the authorities to date, we say, when properly analysed, every case from Luckins and onwards have looked for the existence of commercial dealings. That was the point of distinction in Luckins – and I will take your Honours to it if the appeal goes on – between the Chief Justice and Justice Gibbs, with whom Justice Mason agreed. The Chief Justice said, true it is, there are commercial dealings by way of, as it were, inputs on the cost side, but there are not commercial dealings with customers, and therefore, there is no carrying on business. That was the point of distinction drawn with Sir Harry Gibbs. He said commercial dealings on the cost side was sufficient to carrying on business, because that established, you could say, that a commercial enterprise was being conducted.

If one does not have that criterion, we say, then all acts regularly done by a corporation will be part of their business, in one sense, because organisations do not do things regularly which are not part of their business. But if that is sufficient, to cite a business commercially within Australia, that means that, for internet purposes – and we do not shy away from this, it is going to be pretty hard to find any organisation that is not carrying on business. And that is why we said the United States authorities are informative, because they have realised that and have dealt with it. True, it is in a different context. That is why we say this case is the perfect vehicle to determine that question, and nothing our learned friends have said has really indicated the contrary. It is not to the point that you may hear something about cookies, because no one has suggested that any of these matters involve any commercial billings in Australia, and that is our point. Now, we are either right or wrong on that.

EDELMAN J: This case, really, is not about that question. This case is about whether or not you can be served.

MR HUTLEY: Well, your Honour, our ability to be served at the time of trial depended upon that question.

GORDON J: Well, it did not quite, did it? This is a matter I put to the Solicitor. We are looking at a prima facie test. We have observations by both the trial judge plus the judges on appeal saying at this stage we are not looking at these questions as questions of substance, we are looking at them in the context of assessing inferences to be drawn to meet this low bar. So, the inquiry is a very different form of inquiry. Then we have them identifying that they do not have all the commercial aspects. You have Chief Justice Allsop explaining this. I do not know what the commercial position of Facebook Inc is, because at this stage I do not have that information in front of me. They are the difficulties we face, are they not?

MR HUTLEY: Well, your Honour, I will be repeating myself. We say all organisations, almost by definition, have commercial interests. They cannot run – our case was to carry on a business in Australia. It is not to the point, we say – and we say with respect to the Chief Justice, his Honour’s observations missed the point, and he, in effect, assumed that Facebook Inc was the same as Facebook Ireland. As your Honour Justice Steward observed on the special leave, there was not that distinction drawn. What we say is the point is – and those sorts of observations obscure the question rather than elucidate the question, because the question is focused on a precise question, the parameters of which is that there needs to be such a conducting of business in Australia.

STEWARD J: Mr Hutley, would your case fail if you can conduct a business without commerciality?

MR HUTLEY: If your Honours were to take the view that you can conduct a business without any commercial aspects at all and, by that means, what would include ‑ ‑ ‑

STEWARD J: Or, perhaps, more accurately, without a profit motive.

MR HUTLEY: There have been authorities in other circumstances where one has charitable organisations who can conduct – whether they are conducting a business is, itself, a nice question. They can conduct their activities without a profit motive. But, as the authorities in this Court have made clear, to conduct a business also includes, in effect, commercial transactions on the cost side. But what they have never allowed of, until now – until the Full Court’s decision – is that what are described as repetitive acts within a jurisdiction, as his Honour found – Justice Perram found – with no commercial aspect.

STEWARD J: Did you put it as highly as this; namely, that Facebook Inc could not have been carrying on business in Australia because it did not have any right to do so, having given the right to Facebook Ireland?

MR HUTLEY: I did not put it in those terms, your Honour. I did not put it in the terms that they had to bar themselves ever from embarking on a business. The inquiry, as your Honours appreciate under the relevant section of the Act, is whether you are carrying on a business at the time of the alleged infringement of the relevant policy. So, my learned friend’s reference to what has happened at Facebook since is beside the point. The inquiry of carrying on business focuses on the moment to which the alleged contraventions of the various policies, and the like, apply and that is what the inquiry was.

Can I deal, if I may, your Honour, with one matter your Honour Justice Gordon raised with me. There were two points raised by way of notice of contention in the Full Court. One, which is the ground 1(b), here, was refused leave to be argued in the Full Court because it had not been argued at trial. Your Honours will see that from page 144 of the core appeal book at paragraph 106. So, our first point with respect to that ground, which is the ground that, in effect, Facebook Inc was carrying on business here because it was in its interests that these cookies operate, your Honours will see that the Full Court refused leave for that to be even raised by way of notice of contention because no such argument had been advanced the trial and, therefore, there had been no findings.

GORDON J: Does that not work against you?

MR HUTLEY: No, your Honour, because your Honours will come to the crisp and important question determinative in this case. It is not as if your Honours may be diverted in that regard. And the other points, we say, have no substance.

We say your Honours will have to determine the question. The question is, in effect, the full evidence on the question of whether there are any commercial contract, because none could be found in two years. So, we submit your Honours will determine it. Then, we get to the question: has it substantive effect for our purpose? Therefore, we have this construction issue about transitional rules. We say our construction is the preferable one. Otherwise, there is no point to subrule (4). It is not just a cleaning up exercise. We put our submissions in writing as to what we say its effect is. What it is saying is there shall not be in respect of all cases where in the past one would have struck out service and not necessarily dismiss the application.

One could, of course, bring a further application for re‑service under the old Rules, but it, of course, would be an abuse of process unless further material were advanced. You cannot, in effect, keep bringing the same application for leave to serve on the basis of the same material. Thus, without a transitional rule, any occasion in the Federal Court where the proceedings had been – service had been set aside but the step had not been taken – as we submit it often is – of not dismissing the application could, phoenix‑like, arise – no matter how old – and be re‑served under the new Rules, which was the object, we say, of the transitional rules to obviate – to prevent that transpiring.

The six‑month cut‑off is not that you could do it after the six months. That was the only time in which this circumstance would apply, otherwise the old Rules would apply. To take up ‑ ‑ ‑

EDELMAN J: What is the purpose of – if that is right, and that is the proper construction of the transitional provision, what would be the purpose of a transitional provision operating in that way other than to say, well, we want to protect people from service under the new regime and crystallise a right that they have not to be served if they did not fall within the old regime?

MR HUTLEY: What we say is what it is saying, if you had served under the old regime, you are bound under the old regime. We are not saying that by mere passage of this you can phoenix any old application where service was struck out and serve again. What they say in point of fact, if you are under the old regime but have not served, you can serve under the new regime. If you are under the old regime and have served, the old regime applies. That is what it is saying.

KIEFEL CJ: It is highly unlikely that the service would have been struck out and no orders finalising the matter be made. So, what you are talking about is a hypothetical which is really most unlikely to occur.

MR HUTLEY: Anyway, your Honour, in our respectful submission, the books speak in effect of usually setting aside service rather than dismissing the suit, and I defer to the collective experience ‑ ‑ ‑

GORDON J: Do you take issue with the proposition from the Commonwealth that you could be re‑served?

MR HUTLEY: We dispute that. We say that the effect of it is – we accept, under a given set of Rules, you can re‑serve, but that is only if there is a change of circumstance. Because otherwise, under the old Rules, to just continually re‑serve would have been abuse of process.

EDELMAN J: But why would not a new procedural provision have the effect of changing the territory?

MR HUTLEY: It does. But, as we say, it does not change the territory – I would be repeating myself –because the transitional ‑ ‑ ‑

EDELMAN J: Because the transitional provision operates to create a vested right?

MR HUTLEY: It is, in effect, focusing on to avoid, in effect, resuscitation of – I accept your Honour the Chief Justice’s observation, but there appears to have been, and the practice books indicate, that regularly suits are just – service is set aside and not necessarily one goes to the next step and dismisses the suit; one has to actually seek it.

We say this was to avoid that possibility, was the practical – I accept the observation of your Honour Justice Gleeson that there would be a discretion to set aside the Rules but that would be a discretion which, of course, would be informed by the presence of the Rule and good reason would need to be shown for its departure. That is not, in effect, a reason to construe the Rules adverse to our position but rather a reason to construe it in favour of our proposition. But of course, leave to the Court, as it always has, in respect of all Rules, the overarching discretion if it is in the interests of justice to depart from it.

Now, that is what we want to say about ground 1. So, we say it is both right, it is productive – and one last thing. Even if we are wrong on the re-service point, as my learned friend observed they intend to re‑serve, subject to observations by this Court. Now, if this Court were to determine we are correct in our construction and therefore you needed commercial contracts, it by no means follows that the Commissioner would serve again under the old Rules because it would – new Rules, because it would immediately be confronted by an application under the new Rules to set aside the service on the basis that it is an oppression under the new Rules to do so, and that would be Part 10, Rule 43A(2)(c):

the claim has insufficient prospects of success –

So, in effect, there is not by any means – even if we are wrong – a lack of utility in this regard, because if it is determined that we are correct, it would require a determination by the Commissioner to potentially expend unnecessary money on serving again, facing an inevitable application to set aside in circumstances where after two years of investigation they have not found one contract. So, it is by no means inutile to determine this question. We say the likelihood is, if the Court finds the point in our favour, this will be the end of the case.

As to ground 2, we accept that was just a prima facie evidence case which an effect – our point is the point was thought up on the run, and that is not disrespectful; just nothing was directed to determine what a cookie did and that is why we say no prima facie case. So, I accept, subject to the construction question about the transitional rules, there is no matter of public importance in relation to that question because it is purely about the prima facie case. It was not in any way involving the construction of the relevant provision.

Unless I can be of further assistance, your Honours, those are our submissions on the application.

KIEFEL CJ: Thank you Mr Hutley. Mr Solicitor, do you have anything in reply?

MR DONAGHUE: Really just one point, your Honours. What it seems to boil down to is that our friends say that the reason your Honours should permit ground 1 to proceed is that they will be able to persuade you that the only view of the facts reasonably open is that Facebook Inc did not carry on business in Australia. They ask your Honours to reach that conclusion in circumstances that were aptly captured by Chief Justice Allsop on page 113 of the core appeal book. His Honour said:

The nature of Facebook Inc’s business is fundamental to all enquiries that concern it, especially where it was being carried on.

That is the first sentence in paragraph 2. And then in paragraph 3, in the second half, he says Facebook’s business:

can be described as the collection, storage, analysis, organisation, distribution, deployment and monetisation of information about people and their lives. How that monetisation takes place in relation to the activities carried on by Facebook Inc is neither clear nor the subject of this proceeding. One can be sure, however, that the acts done to collect, store, analyse, organise, distribute and deploy the information about people and their lives are integral to the methods of monetisation or extracting commercial value from the information. The business is not about the simple sale of goods whether tangible or intangible. It is about extracting value from information about people.

With a business like that, the question that your Honours are being asked to answer, is there any view of the facts reasonably open that Facebook was carrying on business here, cannot be answered in the abstract because one needs to know if the enquiry is, as Mr Hutley puts it, about – was
commercial activity happening here? He kept saying, well, that means we have contracts made here. But that is not necessarily the only way of making money. And the way that money – now, Facebook Ireland was making money in particular ways with its dealings with Australian users. Facebook Inc was not conducting that business in Australia. The business it was found to be conducting was providing data processing services to Facebook Ireland. So, a different business.

But your Honours cannot exclude the idea that the activities that Facebook was found to have been carrying on in Australia were done as part of the way that it extracted commercial value from the information about people and their lives that form the substance of its business. And, in our submission, your Honours are being invited to embark upon setting the boundaries of the ordinary meaning of the phrase, in circumstances where those boundaries are much better determined after a trial when all the relevant evidence has been led, and subject to findings below.

If the Court pleases.

KIEFEL CJ: The Court will adjourn to consider the course that it will take.

AT 10.52 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.59 AM:

KIEFEL CJ: The Court is unanimously of the view that due to the change of rules relating to the requirements of service, the grounds of appeal are no longer of public importance. Special leave is revoked. The appellant is to pay the first respondent’s costs of the appeal.

The Court will now adjourn until 10.00 am tomorrow.

AT 11.00 AM THE MATTER WAS CONCLUDED