JT International SA v Commonwealth of Australia; British American Tobacco Australasia Limited & Ors v The Commonwealth of Australia
[2012] HCATrans 92
[2012] HCATrans 092
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S409 of 2011
B e t w e e n -
JT INTERNATIONAL SA
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Sydney No S389 of 2011
B e t w e e n -
BRITISH AMERICAN TOBACCO
AUSTRALASIA LIMITED
ACN 002 717 160First Plaintiff
BRITISH AMERICAN TOBACCO
(INVESTMENTS) LIMITED
BCN 00074974
Second Plaintiff
BRITISH AMERICAN TOBACCO
AUSTRALIA LIMITED
ACN 000 151 100Third Plaintiff
and
THE COMMONWEALTH OF AUSTRALIA
Defendant
FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON WEDNESDAY, 18 APRIL 2012, AT 10.15 AM
(Continued from 17/4/12)
Copyright in the High Court of Australia
__________________
FRENCH CJ: Yes, Mr Walker.
MR WALKER: Your Honours, may I resume to complete the remarks under the heading of proposition 2 in our speaking notes and to continue and attempt to answer, in particular, questions including one from Justice Hayne in relation to a distinction between the kind of unexceptionable, non‑acquisitive requirement to carry health warnings – we have no problem with health warnings – or safety instructions, such as the poisonous medicine or the Ratsak.
Having no problem with health warnings, any more than the Ratsak manufacturer would have problems with the warnings about careful handling, as your Honours heard yesterday we do say this is a question of extent and it is physical in this case, not just conceptual, because it is very much the physical occupation, first by the removal of virtually everything which is distinctive of the manufacturer from the pack and then the occupation on the pack, not only of health warnings in themselves unexceptionable, but also of other material of a kind that could have been the subject of board advertising on buses or taxis or magazines or television - Quitline, obviously enough.
It is the domination of that space. It is the inclusion of what might be called the “anti‑advertising” which both demonstrates extent – in this case conceptual as well as physical – as well as demonstrating that reversal of control which, if we are correct in the basic principle, can contribute towards the movement along a continuum, eventually passing from one zone into the next from merely regulation, which may be regarded as drastic, depending upon one’s point of view, from regulation unexceptionable and attracting no application of 51(xxxi) to an acquisition which gives rise to the question whether just terms have been provided.
We say in particular that the difference between unexceptionable warnings – keep away from children, et cetera, and do not buy - is a difference which shows a distinct shift from something which, being a warning, corresponds to the nature of the article offered for sale, and again I stress this all in the context where sale itself is not being prohibited. So a warning or safe use for a medicine or a household product, that has a correspondence to the article offered for sale. On the other hand, an attempt to dissuade would‑be purchasers, readers or viewers of the packet from buying at all does not correspond to the article. It is antithetical to its sale and use.
When the government has decided to take to the field of using persuasion rather than compulsion in relation to buying or not, it needs the means of conveying the messages which it has chosen to persuade or perhaps more accurately to dissuade. The means of persuasion are obviously – every day they surround us – the object of purchase or payment or exchange value being given for the access to somebody’s property or their use of their right to exclude by way of a price to give their permission.
GUMMOW J: Now, do you understand anything about Australian Capital Television, the “free time” case?
MR WALKER: Yes. Your Honour, those are cases where the licensing regime may ‑ ‑ ‑
GUMMOW J: That is in 177 CLR 106 in the judgments of Justices Brennan, Dawson and McHugh.
MR WALKER: Yes. One is reminded, your Honours, of the approach to licences and conditionality which underlies, for example, the explanation given by Justice Gummow in Newcrest 190 CLR 635 of the earlier Davey and Bienke decisions in the Federal Court that where there is a prohibition and a licence and conditions may be imposed then there may be great difficulty in imposing an analysis that says there is a property interest being acquired by a condition being imposed which itself is integral to or to which the licence is inherently or explicitly susceptible. So, there will not be an acquisition in that sense.
Certainly, there is nothing physical involved as there is in the access taken to and the use made of BAT’s physical cigarette packs. The passage, in particular, in Justice Brennan’s reasons at 166 of 177 CLR refers to the acquisition of a statutory right to have broadcasts transmitted. It is a right to services. It is not a proprietary right and the passage immediately above that at about point 5 of the page declared the immateriality of the fact that the property of the broadcasters must be used “to provide election broadcasts”:
for neither of these effects creates, extinguishes or transfers property.
We would add the conditionality of licence in any event.
GUMMOW J: And Australian Tape Manufacturers 176 CLR 480?
MR WALKER: There is the public interest and the Copyright Act principles involved. There is a passage that we were about to draw to attention in Phonographic [2012] HCA 8 at paragraph 111 in the reasons of Justices Crennan and Kiefel. In relation to Australian Tape Manufacturers, there are those two points there concerning what flowed from what is there described as the theoretical underpinnings of copyright law. First, there was the public interest analogous to fair dealing.
GUMMOW J: What paragraph are you reading from?
MR WALKER: Paragraph 111, your Honour. Second, there was what might be described as the policing problem, that is, the unrealistic prospect of a copyright owner controlling or, in practical terms, licensing that household use. In that paragraph, the very next sentence, one sees the use, with respect, not for the first time in the jurisprudence, on 51(xxxi) of the critical expression “degree of impairment” and it is, in our submission, a very important indication that one looks at all the circumstances, to the nature and degree, from a point of view of the matter of substance, of the interference or regulation of the use of property when there has not been an outright, overt proprietary transfer and asks the question whether along a continuum one has moved from the unexceptionable only regulatory zone to the zone where there may still be regulation. Indeed, it is because it is regulation of a particular extent and degree that the question of acquisition arises.
In our submission, there is nothing in Tape Manufacturers either which is contrary to the proposition we put concerning the capacity to say even of a law described as regulatory, in a sense more precise than the sense in which all laws are regulatory, regulatory in the sense that it dictates modes of conduct – in this case in commerce – that even those laws can become acquisitive without frank acquisition of title in a conveyancing sense depending upon an examination in context which will include the statutory setting, the commercial setting and other relevant circumstances, here the physical setting of the pack, and finally asking the questions of extent.
Now, can we make that more concrete in this case? We submit that in relation to physical extent, this is a case that presents at one extreme of the spectrum. We say at one extreme because that which has been preserved or reserved, namely, the word element, cannot practically be understood or imagined as itself also being eliminated, that is, packets which do not permit the viewer, be they the merchant, the shop assistant or the customer, to know what cigarettes are inside. So unless one was de facto to abolish differences between products from different manufacturers, or at least abolish the capacity of consumers to know it, you have got to have what can fairly be said from the provisions you were taken to in detail yesterday to be the most exiguous or the barest possible survival of the distinguishing mark, the name. I say barest possible or exiguous because of what you have already observed concerning font size and type face and placement for that matter.
So in terms of physical extent and in terms of questions of degree, relatively speaking, you could not have more. It is called plain packaging colloquially. It is not plain at all obviously because having cleared away that which was, I will call it, decorative or distinctive from the manufacturers and imposed a standardised colour, layout, font, et cetera, then in what must to the ordinary eye not at all be plain, there are of course the collocation of features to which attention has been drawn yesterday which include both pictures and words.
I stress, as to health warnings, that no difficulty with that from the company’s point of view, content to have them on, but when one combines the whole and looks at the whole of the extent, virtually completely cleared of anything emanating from the manufacturer and then wholly occupied by material which very prominently includes advertising for the Quitline service, in our submission, one can say you have moved from purely regulatory through to the regulatory amounting tantamount to acquisition zone.
It is because it is being done by means which familiarly and commonly involve the payment of money to induce the owner of a packet to advertise on the back of the cornflakes that there is a movie coming up that will appeal to the same kind of children who eat that kind of confection, that, in our submission, means that it could never be said in accordance with our principles that such a law is a law that does not permit of just terms, because what it requires is the familiar access to and use of for the purpose of conveying a message in a way which lends itself, most naturally, to payment. Commandeering someone’s package surfaces rather than paying, for example, for press or broadcasting space is what, therefore, in our submission, amounts to the acquisition by an obviously regulatory scheme, the acquisition of the definitional aspect of that person’s ownership of their packaging.
KIEFEL J: Mr Walker, the degree of regulation may be extremely restrictive and yet there be no acquisition.
MR WALKER: Yes, quite.
KIEFEL J: If it is unduly restrictive, it may be said that it has gone too far in pursuit of a legislative purpose, and here there are underpinnings of this in the arguments that it has gone too far by not acknowledging the property and the use necessary of the trademark and at the same time pursuing the public health messages or warnings, but no one, apart from the Commonwealth, as I have mentioned earlier, has raised a proportionality argument, but, in any event, a proportionality argument is a long way from degrees of regulation tipping over into acquisition. I still have difficulty knowing how, even if regulation is extreme, that it necessarily converts into an acquisition because it has gone too far. I do not know how one gets to that point
MR WALKER: The first thing is, yes, it is correct that we embrace what I will call the “gone too far” or “extent” or “degree” argument, that is clear. Second, we do distinguish it conceptually and utterly from what we have attributed to the Commonwealth as a novel proportionality argument. Third, we of course are not advancing any freestanding – what will I call it – merits review of an extreme quasi Wednesbury kind by this Court of regulatory statutes, if the Court could imagine ‑ ‑ ‑
KIEFEL J: I do not think anyone has suggested that there is a freestanding principle of proportionality as yet.
MR WALKER: So we are certainly not engaged in any activity of that kind. We are arguing that in this Court it is well established that questions of degree and, in particular, degree of impairment of the enjoyment of the rights of ownership is at the heart of the 51(xxxi) jurisprudence. If I may just give your Honours references. These are passages –I think some of them actually have already been read to you, I am not going to take you back to them, but it may be convenient to have those which make good my last answer to Justice Kiefel. In Tooth 142 CLR 397 at 414 to 415 there is the expression in the well‑known passage of Justice Stephen of question of degree and his Honour is pointing out the difficulty of drawing precise lines in advance. My offering of the moving from one zone to another is intended to recognise that a bright line might not be described in abstract terms in advance but one can still know that you have moved from one zone to the other.
KIEFEL J: His Honour was talking, of course, about a taking in the United States law.
MR WALKER: Quite so, and that is the next point I wanted to make about that passage. Then his Honour talked about the usefulness that might be obtained from the US experience in that regard. That notion was also taken up in a way I do not need to quote in Tasmanian Dams 158 CLR 1 at 284 per Justice Deane. I have already given the reference in Newcrest earlier today. In Smith 204 CLR 493 at 504 to 505, paragraphs 22 to 23, per Justices Gaudron and Gummow. The expression there you will find is questions of substance and degree and again the expression “degree of impairment”. In Wurridjal 237 CLR 309 at 440, paragraph 365, per Justice Crennan, the same expression is used and I have just drawn to attention paragraph 111 in Phonographic. There is no question that this is a matter that turns contextually examining the position of the complainant and the operation of the law upon the rights of property in question.
GUMMOW J: Now, you keep using this expression “rights of property” and “rights of ownership” in relation to this chattel which is what, a blank box?
MR WALKER: Never blank but, yes, your Honour. It is a box. It is a packet.
GUMMOW J: What is the particular right of ownership or property?
MR WALKER: As we have put in our written submission and as proposition one of our speaking notes tries to point out, the definitional character of the right to exclude ‑ ‑ ‑
GUMMOW J: I am talking about common law, property and chattel.
MR WALKER: At common law you have the right, enforceable by action, to prevent somebody from taking your box and using it for their purposes.
GUMMOW J: That would be an action in conversion.
MR WALKER: Or it could be trespass to goods.
GUMMOW J: No question of that here.
MR WALKER: I am sorry, your Honour?
GUMMOW J: No question of that here.
MR WALKER: Well, no, there is no ‑ ‑ ‑
CRENNAN J: Do you not have to deal with this box point on the basis that the box is used for the purposes of offering products for sale and selling them in the course of trade?
MR WALKER: Yes, your Honour, that is the central question. That is the central question, yes.
GUMMOW J: And with compliance of the relevant law.
MR WALKER: Quite so.
GUMMOW J: It could never be the case that you could put into trade a package with obscenities on it, for example ‑ ‑ ‑
MR WALKER: Quite so.
GUMMOW J: ‑ ‑ ‑ and ignore the criminal law.
MR WALKER: Quite so. It has got to be lawful use. No one suggests that you can deploy any of your chattels, in trade or otherwise, unlawfully. This use is compelled and we must do it if the law be valid. The only question is, that is – as I said yesterday, the premise of 51(xxxi) applying is that the Commonwealth can enact this form of regulation. The only question is, has it been of such ‑ ‑ ‑
GUMMOW J: The first question is what is the nature of this bundle of rights said to constitute ownership of this chattel?
MR WALKER: In the one that I am concentrating on for the purposes of my address, the nature of the right is, as Mr Archibald put it, the common law control within the bounds of the law of the use to which my cardboard box can be put. That includes, of course ‑ ‑ ‑
GUMMOW J: I cannot see any right that inheres at common law which sounds in any remedy which would be relevant in this present field of discourse you were trying to draw us into.
MR WALKER: Of course there is a right, your Honour, with respect, to prevent other people from using ‑ ‑ ‑
GUMMOW J: Depends means by prevent.
MR WALKER: The owner of the box can say to the person who comes along and says, “I wish to put this sticker on it to advertise my concert”, and say, “No, that is my box. I will sell you that right, if it is a right – I will sell you that if I am pleased to do so and the price can be agreed”, the law will support the owner in resistance to ‑ ‑ ‑
GUMMOW J: There is no Commonwealth bureaucrat who knocks at the door of your client and says, “I have got these stickers, I am going to put them on.”
MR WALKER: It is a right of ownership ‑ ‑ ‑
GUMMOW J: What is being said is you cannot do certain things unless you comply with this.
MR WALKER: I understand that, your Honour. So the form of the legislation partakes and derives its impetus obviously towards validity from the fact that it resembles the well‑established, unexceptionable regulatory provisions concerning, for example, warnings on bottles of medicine. That is the starting point, everyone acknowledges that. We submit that there comes a point – I should not use the word “point” because it suggests exactness – but as one moves along the continuum of impairing what began as a liberty to use the box as you will, and it has been fenced in and controlled properly and unremarkably by all sorts of provisions, in our submission ‑ ‑ ‑
GUMMOW J: You have to turn the liberty into an immunity, I think, in Hohfeldian terms, do you not?
MR WALKER: The word “liberty” is appropriate because it captures the fact that the owner of a chattel has the choice, that is, is free to choose what to do with it, subject to lawful regulation. If the regulation in this case be lawful, that is the end of the question, but the question is, is this, though it is regulatory and obviously within heads of power as has been conceded over and over, whether it has gone too far – to use Justice Holmes’ expression, described I think by Justice O’Connor as storied but cryptic – as to whether or not by removing all the liberty, to use the company’s own livery and get‑up, by occupying all the space by messages dictated by statute and, in particular, by advertising a service which – but manifests the degree of abolition of owner’s right to exclude by requiring included what surely money could not have bought, that is what I call the aversive message, the anti‑advertising.
FRENCH CJ: But we are not talking in this context about the ownership of the box or the cardboard. We are talking about the rights asserted as property of the plaintiff said to have been acquired invalidly.
MR WALKER: It is the use of the box.
FRENCH CJ: The closest thing to what you are talking about is the packaging rights, I suppose.
MR WALKER: Yes.
HAYNE J: You say it is use of the space by the Commonwealth, do you not?
MR WALKER: Yes, your Honour, I have to, your Honour, and I do.
HAYNE J: Well, yes, you have to, but who is using the box? Not the Commonwealth, the vendor of the box is using it. The vendor of the box is using it and using it in that fashion because that is what the law requires of the vendor of a box containing this particular product. How is the Commonwealth using it?
MR WALKER: That would be a complete end to the constitutional inquiry but for the issue of degree, which is the heart of the matter. In other words, one does not start with the proposition that no governmental control of the use of property by a person can ever amount to an acquisition because everyone’s use of property has to comply with the law. That is a circularity that leaves out of account 51(xxxi) so that, as a general proposition, yes, we must all comply with the law; as a general proposition, yes, all of our property is one way or the other liable to be controlled by statutory regulation. Those two propositions do not remove the possible application of 51(xxxi).
HAYNE J: But you enter the debate at a level of abstraction where you have a notional manufacturer sitting there with a piece of cardboard saying, “How will I use this?” What is the utility of entering the debate at that point?
MR WALKER: Your Honour, we know from the historical sequence that decisions have been made, some private and commercial and some in obedience to the public law, as to the get‑up of these packets. We know, for example, that the last iteration of regulation imposes, or requires, the physical structure of the packet to be in accordance with requirements of a kind that formerly were a matter for commercial choice; design and design choices.
Now, in itself, that is unexceptionable. It is not for the Court to decide about the wisdom or justice of whether there can or cannot be bevelled edges or fancy pleats on a cardboard box. That is of no constitutional import. We accept that. But I stress it cannot simply be said that because this is a law whose validity we are raising, and because all conduct must comply with the law, therefore we cannot complain there has been acquisition by removal to the ultimate degree of any display of the trader’s choice of livery, et cetera, and rather this space being used in a way that one could not imagine, but for the compulsion, would ever be the subject of an owner’s choice, that is, an owner’s exercise of what flows from the right to exclude.
One does not imagine that without statutory compulsion the Ford Motor Company could be induced to display on the back window of every new car, “You would rather be driving a Holden”. In our submission, of course it is a benefit in relation to property, that is, the property in the motorcar, if a legislation gave Holden the capacity to insist upon that on every Ford.
It is for those reasons, in our submission, that the case cannot simply be answered by saying, “But all trade is preternaturally susceptible to legal regulation and is regulated and, whether it is heavy or light, is not to the point, is of no constitutional moment”. We accept all of those propositions and say, but nonetheless the question still is, under 51(xxxi), have you suffered a degree of impairment which answers the question positively concerning the need for just terms?
The authorities in this Court emphatically require attention to degree of impairment. It is in that area that one comes to the possible advantage or illumination to be gained from the comparative law in the United States. Enough has already been said about the well‑known differences, but there are also, with respect, well‑known similarities, in particular, the similarity of an inquiry about degree or extent of impairment. Justice Brennan in Tasmanian Dams, in a passage I think drawn to attention yesterday, 158 CLR 247 to 248, having drawn to attention some of the well‑known differences, in our submission one can conclude from that passage that ‑ ‑ ‑
GUMMOW J: A bit more than that.
MR WALKER: Certainly, your Honour, and I named, I think, all of the ‑ ‑ ‑
GUMMOW J: Smith Kline & French 22 FCR lists nine.
MR WALKER: Your Honours, there are well‑known reasons why this jurisprudence does not admit of straightforward transfer, but to the extent that it contains consideration of how one might go about this evaluation of degree of impairment then, in our submission, it would be unfortunate not to seek that assistance. In our submission, one thing that one gets ‑ ‑ ‑
GUMMOW J: This is going to taking, is it?
MR WALKER: It goes to the point at which regulation becomes a taking. Now, that is different from our question, which is ‑ ‑ ‑
GUMMOW J: Assume there is a taking, the question for us is: is there an acquisition? You will not find the answer to that in the United States.
MR WALKER: Your Honour, I think I have said that already. I accept that entirely. That is my argument about this is not just warnings; this is also the anti‑advertising. I do not want to repeat that. But I do have to make good the fact that it is taking and that is where the US jurisprudence to which we have made reference does help. Justice Brennan makes the point at the passage I have noted, in effect, that to say that a law or a scheme of legislation is regulatory does not conclude the inquiry, as we would put it, as to whether an acquisition has been effected. They are not mutually exclusive categories, regulation and acquisition.
Your Honours, bearing in mind the time, may I rather briefly then draw to attention what it is we say may be useful for the Court from the United States experience. Enough has been written about this, particularly in the exchange between us and the Commonwealth, for me to be able to do it, I hope, in short form. Pumpelly, of course, was not a physical invasion by the government taker as such, but rather a physical invasion by the water and effluvia which the government’s actions, in carrying on the waterworks downstream, had on the complainant’s land, the complainant’s land, of course, remaining in his ownership, but it was so substantially impaired in its enjoyment – he was, after all, a farmer rather than an aquaculturist – that he was held to have suffered a taking.
GUMMOW J: Are any of these cases about intangibles? A lot of the American cases are about land, are they not?
MR WALKER: In a sense Mugler is because that is the enterprise of a brewery. I am bound to point out, though, that the argument in Mugler certainly included the notion of its sounding in a diminution in the value of the real estate which is a way, of course, of moving from an intangible to a tangible but it really only says that the valuation of the loss of an enterprise may include the ‑ ‑ ‑
GUMMOW J: The reason why I mention that is the United States doctrine comes out of notions of eminent domain ‑ ‑ ‑
MR WALKER: It does, yes.
GUMMOW J: ‑ ‑ ‑which was particularly concerned with land and the absence in the United States of a congressional direct power. There is some implication of assumption of eminent domain and there ‑ ‑ ‑
MR WALKER: It has to be recalled though, of course ‑ ‑ ‑
GUMMOW J: I know there were notions of the war prerogative and so on and so forth, but basically it was about land.
MR WALKER: Your Honour, the fact that there is not a direct power of course evokes the observations that have been made from time to time in this court over many years that without 51(xxxi), if you can imagine the Constitution without it, it is not as if the Constitution would lack legislative competence for the Commonwealth to exercise what the Americans call eminent domain, that is, to take in the interests of government private property. That was exactly the debate that was settled in the manner that we have drawn to attention from the convention debates for our Constitution. The judges have noted thereafter, even without 51(xxxi), there would have been implied powers for obvious reasons. The defence power is an obvious one.
GUMMOW J: I am unconvinced of that. It is some executive power, is it, or a implied constitutional grant to the Parliament?
MR WALKER: But, your Honour, in a sense the hypothesis is an impossible one because it was drawn to attention and actually dealt with by a quite explicit requirement that there be a requirement for just terms or anything which was an acquisition. Your Honours, Northern Transportation Company v Chicago is significant for showing that there may be, of course, a deal of, in that case, relatively temporary effect and that it obviously was not enough simply to it point out, to complain about the diminution in usefulness. It represents a pole opposite to Pumpelly between which a deal of the subsequent jurisprudence can be seen to oscillate. Mugler v Kansas I have already referred to. That is the effects on the property of the brewer.
GUMMOW J: You can take us to these Supreme Court cases in the 1870s in the United States, but we need to know what their current standing is.
MR WALKER: I am going to take your Honours to that in just one moment.
GUMMOW J: Things tend to move in that country.
MR WALKER: Yes, but there has not been an abandonment of all of this. There have been self‑professed difficulties in expressing the doctrine in a completely coherent or satisfying way. The justices themselves have drawn that to attention more than once, but there has not been a wholesale abrogation of this jurisprudence. The passage in Mugler to which I particularly wanted to draw to attention – the citation is 123 US 623 at 668. The end of that passage which commences with the discussion of Pumpelly is a sentence which, in our submission, is evocative of the kind of inquiry which may guide, usefully, the investigation of quantum or degree, namely:
His property was, in effect, required to be devoted to the use of the public –
and that, we say, is what has happened by the two‑step exercise of clearing the package and then filling the package.
GUMMOW J: When you look at the third line on 669 you have this expression “lawful purposes” so we start going around in circles, you would say?
MR WALKER: Yes, but I think I have said what I need to say about the need to avoid going round in circles, but yes that is something that has been noticed before. Now, Mahon that your Honours have already had drawn to attention, that is 250 US 393, could I add a reference there, apropos Mr Justice Holmes’ famous passage, which was read to you yesterday? We have given you the decision of Lingle v Chevron 544 US 528 (2005). Could I take you first – at 530 ‑ ‑ ‑
GUMMOW J: I am not sure we have this decision?
MR WALKER: You should, your Honour, Lingle. It is on our list, I understand, your Honours.
GUMMOW J: What is the name of it again?
MR WALKER: I am so sorry.
HEYDON J: I think you were to provide it.
FRENCH CJ: Yes, that is what I have been told. Counsel was to hand it up.
MR WALKER: I am so sorry, your Honours. Can I just give you the references and I apologise. It is Lingle v Chevron 544 US 528 (2005). Perhaps if I could go first to 537 - and this is reviewing the jurisprudence, including the 19th and early 20th century decisions - and there you see the opinion of the court by Justice O’Connor, referring to Mahon at the foot of that page, 537. We draw to attention this mode of reasoning, whether the regulation:
may, in some instances, be so onerous that its effect is tantamount to –
and then there is the reference to –
Justice Holmes’ storied but cryptic formulation –
which has provided the label for our argument, as Justice Kiefel has noted, the “too far”. At the top of the next page a sentence with which we, at least, can be sympathetic –
The rub, of course, has been––and remains––how to discern how far is “too far”.
Then there are familiar considerations of the nature of regulation and including the nature of judicial deference. At 539, about point 7 on that page, in relation to what her Honour had reviewed at that point – Loretto, Lucas, Penn Central, et cetera – she says:
Accordingly, each of these tests focuses directly upon the severity of the burden –
Again, it is a question of magnitude. At 540, that very word, I think, is used.
HEYDON J: Line 2.
MR WALKER: Yes, thank you, your Honour. The Penn Central inquiry. Penn Central, you will recall, had to do with deprivation of the right to by, among other things, demolition, replace Grand Central with a Marcel Breuer building, and one sees there the reference to:
magnitude of a regulation’s economic impact and the degree to which it interferes with legitimate property interests.
Finally, we have drawn to attention the decision in 2010 of the Supreme Court in Stop the Beach Renourishment v Florida Department of Environmental Protection 560 US, and I just, without taking you to it, draw to attention in the slip opinion, page 10, in the opinion of the court of Justice Scalia a reference again to the matter depending upon nature and extent.
FRENCH CJ: None of these cases and none of the cases to which you have taken us involve somebody putting into the marketplace a substance which places at risk of serious and fatal disease – I am looking at 19 and 20 of the questions reserved – all who use it. Does that not really put it into a different category in terms of – I mean, we are not talking about rent caps which was one of the American cases to which you took us, but we are talking about something in quite a different category, are we not?
MR WALKER: This may be against myself, but I need to say this. Mugler certainly shows in relation to the so‑called police power a deference to a legislative judgment about the dangers of liquor. So I cannot say that the jurisprudence does not contain precedent and, of course, Mugler was upheld. No, your Honour, I do not have a case that says that. Neither is there an authority that says there is an area of regulation where the policy may fairly be seen, within the limits of a judicial scrutiny of legislative policy, to be inspired by a concern for health or safety, by which I suppose I mean the physical integrity of people rather than making them better physically. There is no case that says that that is a reason for the conceptual impossibility of 51(xxxi) applying to regulation – I am not talking about prohibition – to regulation of what people may do with their property in relation to selling such goods.
HAYNE J: Because none of these cases concerns the regulation, or all of these cases concern the regulation of use of property capable of application to other and different uses, commonly land.
MR WALKER: To a broad range of multifarious uses, yes. Commonly land, yes.
HAYNE J: We are in the realm, true it is, of a piece of cardboard for which one can no doubt postulate many uses.
MR WALKER: I do not wish to do that though, your Honour. That would be idle. We have to start our inquiry at cigarette pack.
HAYNE J: This is a package for the sale of cigarettes.
MR WALKER: Yes, I accept that entirely. Your Honours, in light of the time, may I simply correct an error in relation to our proposition four on the second page of our outline. In line 2, of course, that reference is not page 1 in 225 CLR, it is page 101 and the particular reference I want to draw to attention is at 126, paragraph 60 and 128, paragraph 69 to 71. I think references may already have been made to that in relation to proportionality. It has otherwise been sufficiently covered in our written submission. The same thing, with respect, may be said about propositions five and six, and that is ‑ ‑ ‑
FRENCH CJ: Now, can I just say about that, Mr Walker, that we are of the view that the questions reserved should not be varied as they would raise a distinct question which is not part of the case.
MR WALKER: I trust, your Honours, we have not misunderstood the direction that had been made. We tried to respond by raising the matter, but I have nothing further to say about it. May it please the Court.
FRENCH CJ: Thank you. Yes, Mr Solicitor.
MR SOFRONOFF: Thank you, your Honours. Your Honours, we would wish to deal with two matters; the first concerns the identification of the property in this case and the second concerns a matter raised by the Commonwealth in its submissions. Could I deal with that second aspect first and very briefly. I have had discussions with my learned friend, Mr Gageler. Would your Honours go please to the submissions of the Commonwealth at paragraphs 83 and 84? Paragraph 83 states a proposition in a broad form, you can see that from the first line, and paragraph 84 states it in a narrower form, that appears on the second line.
The Commonwealth, I understand, will not press the proposition advanced in paragraph 83 and therefore I do not need to deal with that. That was the only matter with which we were concerned on behalf of the Attorney‑General of Queensland. As to paragraph 84, in the way in which the Commonwealth proposes to articulate the propositions contained within it – having regard to the way in which the Commonwealth proposes to articulate the proposition in it, we have nothing to say. So the only matter that I wish to deal with as succinctly as I can is the question of the identification of the right of property in this case.
In relation to that it would be useful to begin, in our respectful submission, to take as an example, with the oral outline of propositions of British American Tobacco handed up by our learned friend, Mr Myers, yesterday. If your Honours go to that document, paragraph 4 identifies the property with which the plaintiffs are concerned, or at least those plaintiffs, trademarks, copyright, design and patent, and then in paragraph 5 goodwill and reputation and then physical property in retail packaging. Could I deal with trademarks as an analogue of copyright design and patent because the Commonwealth statutes which create rights of property in respect of each of those matters are very similar and it would be sufficient to base my submission upon the Trade Marks Act alone.
Could I ask your Honours then to go to the Trade Marks Act and the relevant section is section 20. It is useful in this discourse about acquisition of property constituted by rights, in our respectful submission, to have regard to the taxonomy put forward by Professor Hohfeld and our learned friends yesterday handed up his classic article in that respect. It is useful, in our submission, for these reasons. First, Professor Hohfeld pointed out that when we speak about property in this context, we are speaking about legal relationships between persons. We are not speaking about things. Secondly, when we speak about legal relationships between persons and use the word “right”, we often mean different things when we use that expression.
Professor Hohfeld identified four ways in which that expression is used. First, a right, strictly so called, a right to do something, which has with it a corresponding duty in another person or persons or the world at large to do something or to refrain from doing something. Secondly, a privilege to do or to refrain from doing something. That privilege has as its correlative in another person or the world what he called no right, that is, no right to stop the person exercising the privilege. There being no existing English word to cover it, he called it “no right”.
Thirdly, when we speak of right, sometimes we mean power, by which he meant the ability to alter legal relations with another person. A trustee power obviously would be such a power, but even if I make an offer capable of acceptance to you, then you have the power to alter our legal relations by accepting it. I therefore confer a power upon you and you have that power. The corresponding feature is that another person or all persons have a liability to have legal relations altered. The fourth and final one is immunity, that is to say, immunity from having one’s legal position altered, and the corresponding concept is a disability in another person or the whole world to alter one’s legal position. Bearing those in mind then, and turning one’s attention to section 20 ‑ ‑ ‑
FRENCH CJ: Then there are freedoms. Sometimes we see in rights discourse rights and freedoms being rather confused in the human rights field, I think. In fact, one sees expressions such as “rights to freedoms”.
MR SOFRONOFF: Yes, rights to freedoms, that is right. There is a redundancy there. When one looks at section 20 then, what section 20 does is to confer upon a registered owner of trademark what are called rights, the exclusive right to use the trademark and, secondly, the exclusive right to authorise another person to use the trademark. It is important, in our respectful submission, to remember that absent some legal prohibition somewhere in the common law or in a statute, anybody can use a word or a picture in any way they choose, that is to say, there is a privilege to do that and nobody can interfere with that absent common law or statute. The Trade Marks Act does not alter that general privilege except that by registration ‑ ‑ ‑
GUMMOW J: So taking this phrase “exclusive rights” in 20(1), how do you fit that in the Hohfeldian structure?
MR SOFRONOFF: I was just about to come to that, your Honour. If one accepts that everybody has a privilege to use a mark in any way they choose absent legal regulation in some form, what this Act does is to cause the registered owner alone in the whole world to continue to retain that privilege and confers upon the registered owner a right to prevent others from using it. There is then a corresponding duty in the rest of the world to refrain from using the mark. Consequently, we would submit that section 20(1)(a) ‑ ‑ ‑
FRENCH CJ: Anybody is free to use a mark unless prevented by law from doing so.
MR SOFRONOFF: Exactly.
FRENCH CJ: This constrains the freedom of anybody other than the registered trademark owner.
MR SOFRONOFF: Yes, and there are pertinent rights and powers which the Act affects, but this is central.
CRENNAN J: Well, do you give some importance to the words “in relation to goods and/or services” in this context?
MR SOFRONOFF: That is irrelevant for the present case because what that does is to constrain the exercise of the exclusive right, that is to say, it constrains the right to stop others using marks other than in relation to goods and services. So if we can find some ‑ ‑ ‑
CRENNAN J: In relation to the same goods and services. Someone might use – like the Granada Case – a trademark for totally different goods and services. So the exclusive use is tied to the particular goods and services in respect of which the trademark is registered.
MR SOFRONOFF: Yes, but the scope of that right in that respect is not material for the present case. For example, section 20 does not prevent me using the word “Winfield” as much as I like, and as people do use trademark words freely ‑ ‑ ‑
CRENNAN J: That is right, the trademark legislation does not give a monopoly on the trademark.
MR SOFRONOFF: No.
CRENNAN J: Someone can write it down on a piece of paper even in the course of trade and that would not be an infringement.
MR SOFRONOFF: Yes, exactly. Then the second provision, 20(1)(b), confers a power in Hohfeldian terms upon the trademark owner to alter the legal relationship between the owner and another person or persons by anointing that other person as someone else who recovers the privilege to use the trademark and the trademark owner can do that without the consent of the other person. So 20(1)(a) confers, in our submission, a Hohfeldian right; 20(1)(b) confers, in our submission, a Hohfeldian power, and that is all it does Then, that is backed up, the exclusive right to use is backed up by section 120 which defines an infringement, which takes up the point your Honour Justice Crennan was raising as to the narrowness of the right.
GUMMOW J: That is true of subsection (1), but subsections (2) and (3) go a bit wider, do they not?
MR SOFRONOFF: Go wider, quite, they do. None of that, in our submission, matters for the present case, but the important part is that 120 defines an infringement and then 126 confers jurisdiction upon a court so that, where there is an infringement, relief can be obtained from the court. So the exclusive right to prevent others from using it is backed up by sections 120 and 126 and other ancillary provisions.
Section 22 of the Act confers another power upon the registered owner. It speaks in conveyancing terms, in terms of dealings and absolute ownership, but what it means in strict legal terms, in our submission, is that the registered owner who has the right to prevent others using the mark can deal by conferring that right upon another person and cease to have that right himself or herself or in any other way. So it is a power to alter legal relations with other persons. If one then asks the question, what is the property that the Act speaks of, 21(1) provides that, “A registered trade mark is personal property.”
Section 17 defines a trademark, other than a registered one, a trademark is a sign used for a particular purpose. “A trademark is a sign”; obviously one cannot own an idea of a sign or a word. One can own a thing upon which that appears, but one cannot own the mark as a mark. Section 21, however, does not speak about marks, it speaks about a registered trademark and, having regard to the effect of section 20, what it speaks about is that the rights and powers and, if they be there, privileges and immunities constitute personal property.
FRENCH CJ: But while a trademark may have a role to play in get‑up and the generation of goodwill, the statutory concept is one of distinction.
MR SOFRONOFF: Yes. I am only speaking about the statute. I will come to the get‑up. Therefore, one can see, in our submission, that what one gains by registration is a right to prevent others, a chose in action, if one wishes, from using the mark, a right, a power to authorise others to use the mark who thereby gain the right – the privilege, regain the privilege to use the mark. The question then is, what effect do the Tobacco Acts, as I will call them, have upon these?
Could I ask your Honours to go to the Tobacco Plain Packaging Act and section 20 is of course the key provision. There are others relating the cigarettes themselves, but we can look at section 20. It, in subsection (2), prohibits the use of any mark except permitted marks. Subsection (1) specifies that trademarks are prohibited also to appear on packaging.
GUMMOW J: Registered or unregistered, I suppose?
MR SOFRONOFF: Quite, your Honour, registered or unregistered, yes, and “trademark” is not, I think, defined in the definition section. Consequently, what is affected is the privilege that the whole world possesses to use trademarks or marks on packaging of cigarettes or tobacco products and registered trademark owners are not singled out. Nobody can use a mark or a trademark except that which is permitted, the privilege is gone. So what is affected is the privilege to use marks of any kind upon retail packaging of tobacco products.
Without going through all of the sections of the Act, one then goes back to the Act itself and its purpose. It is an agreed fact between the parties in this case that smoking causes lung cancer. That is admitted in paragraphs 19 and 20, and it causes other diseases. There are analogous allegations in the defence of the Commonwealth in the demurer proceedings. Consequently, for as long as we can remember, back to the late 1960s, I think, certainly the early 1970s, it has been a condition of sale under legislation, which only applies to people who choose to engage in the sale of tobacco, to apply a health warning to the package, external package of cigarettes. It only applies to persons who choose to engage in sale and it only applies to the privilege to use trademarks or marks to the extent that a person chooses to engage in sale.
For present purposes the matter, in our submission, to note is that the privilege to use a mark, the privilege to use a trademark, and the privilege to use a registered trademark is not sourced in the Trade Marks Act. It is sourced in the general liberty of persons to do as they please unless prohibited by common law or statute.
FRENCH CJ: Well, it is a freedom.
MR SOFRONOFF: It is a freedom. I use the word “privilege”, your Honour, only because Professor Hohfeld uses it, but he also put up the word “freedom” and the word “liberty” to apply to the same concept and in this context it means the same thing.
That privilege, in our submission, is not property. It is not a chose in action. It is a mere liberty to act unless regulated by law. It is relevant here to notice the dictum of Justice Dawson in Australian Capital Television Pty Ltd v Commonwealth – your Honours need not get the book – 177 CLR 106 at 198 to 199. At the foot of the page his Honour was dealing with the broadcasting licence and observed that:
While the licence may be in the nature of property, what is done under the licence is not.
His Honour did not go on in that passage to examine what is the property and the licence, but when one considers this case, the property in the trademark we have analysed and consists of identifiable rights, powers and perhaps other matters, but the Trade Marks Act does not guarantee freedom, continuing freedom, to use a registered trademark, in all circumstances.
FRENCH CJ: So the prohibition is directed to and constrains the freedom to use a trademark and thereby affects the right conferred – because of the generality of the prohibition – the right conferred by the Trade Marks Act section 20?
MR SOFRONOFF: No, your Honour. It constrains the freedom to use the trademark, but it in no way impinges upon the right of the registered trademark owner to prevent others using it.
FRENCH CJ: The exclusivity element.
MR SOFRONOFF: It in no way impinges upon the right of the trademark, the power of the trademark owner to authorise others to use it or to appeal to a court in relation to an infringement or to transfer it or, indeed, to use it for any other purpose other than ‑ ‑ ‑
GUMMOW J: The phrase “exclusive right” may indicate it is a right to exclude.
MR SOFRONOFF: That is my submission, your Honour, that it is a right to exclude others from the privilege which would otherwise exist to use a mark. Upon registration the universal right to use is now concentrated in one person in the universe, namely, the registered owner. We would put it that way exactly, that it is a right to exclude others from the use, that is to say, it extinguishes the privilege that, until the moment of registration, was enjoyed by the world.
FRENCH CJ: Well, I suppose another way of putting it is that the registered trademark owner has always had the freedom to use the trademark. He gets a statutory right. What is affected by this legislation is the freedom that he has and which anybody else would have to use a trademark.
MR SOFRONOFF: Yes, and not the statutory right that is conferred, which remains in tact. It remains perfectly in tact.
BELL J: I think the husk argument would suggest it remains in tact, but it has lost some value.
MR SOFRONOFF: Could I say two things about that. Quite right, your Honour, and it will have lost value. As to loss of value, as Justice Brennan observed in Australian Capital Television at page 166 that there is a loss in value does not mean that there is an acquisition.
GUMMOW J: What page was that?
MR SOFRONOFF: Page 166, your Honour. Secondly, that there is a loss in value does not mean that you have lost a piece of property. There are lots of reasons why one can lose value in a piece of property without losing it or having anybody else acquire a piece of it. In this particular case there can be no doubt that the market value ascribed to the Winfield brand as a registered trademark would be based in part upon the propensity of people to continue to resort to cigarettes with the word “Winfield” on them. That propensity of people to do those things is not property, it is just a fact of life. The piece of property to which we can ascribe a value is the registration of the trademark which protects the owner of the trademark from anybody else exploiting that propensity, but that is a different thing. So when one asks, will there be a reduction of people resorting to cigarettes with the word “Winfield” on them if this legislation passes, and if the answer is in the affirmative, that does not answer the question whether there has been any tinkering with the right that protects that propensity.
There is, in our respectful submission, an important distinction to be made, which the plaintiffs do not make, between an acquisition of a right, or even a reduction of the right, and interference with the right in any way and what they truly complain about, which is a fear that they will lose the likelihood of people in the future resorting to their product because the brand will not be evident. Could I deal then briefly with goodwill?
As was pointed out in Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 616 to 617, and your Honours need not look at it, there are many facets to what we call goodwill and although it is convenient to speak about goodwill for many purposes and although accountants can treat it as an actual intangible asset and ascribe a value to it, in a discourse like the present it is, in our submission, important to remember that there is no such thing as goodwill. That is a term that describes a lot of different things.
In this particular case, in the BAT statement of claim, what is alleged as property in this respect is called – just for your Honours’ reference, it is at page 21 of the book and it is paragraph 60 – what is called goodwill is substantial reputation and goodwill arising from the use of trademarks, copyright works and get‑up. Substantial reputation and goodwill, we can put reputation aside because it is not property. Goodwill, in this connection, in our submission, means nothing more than the propensity of smokers to continue to buy cigarettes which bear a particular word or mark upon the packaging and that is not property. It is just a fact of life that people will continue to do things. It is a fact of life which returns money to the person who has the benefit of the privilege to use that mark.
Now, the right to prevent others to use the mark is of value because it protects for the exclusive use of the registered trademark owner that propensity. That is property and whether that right is founded in the Trade Marks Act or in the common law in the tort of passing off or in the Trade Practices Act, whatever it is called now, section 52, that chose in action is property. The right to prevent others using the mark, whether because it is misleading or deceptive or because the Trade Marks Act confers a statutory monopoly, that is property. But something called reputation and goodwill without further analysis is not property and nothing is gained from attacking this case form the perspective of goodwill that is not gained from attacking it from the perspective of the Trade Marks Act because it leads back to the
same place. What is your right, the right in question, whether common law in passing off or misleading and deceptive conduct or the Trade Marks Act and is that right a piece of property? Grant that it is, has that been interfered with and the answer, in our submission, is in the negative.
GUMMOW J: Why in the negative?
MR SOFRONOFF: Why in the negative, because the right to prevent others using the mark is not affected by the legislation.
HEYDON J: No one is going to use the mark because it is a criminal offence.
MR SOFRONOFF: Nobody is going to use the mark because it is a criminal offence but nobody is – if anybody used the mark then the Trade Marks Act would continue to operate so that it would be an infringement, and if a person used the mark “Winfield” in the way permitted by the legislation, the Trade Marks Act would continue to operate so that that would be an infringement, and so would the common law of passing off and so would the Trade Practices Act. Those are our submissions, your Honours.
FRENCH CJ: Thank you, Mr Solicitor.
MR GAGELER: There are two bedrock propositions that are established by the cases and anchored ultimately firmly in the text of section 51(xxxi). The first proposition is that there can be no acquisition of property from any person within the meaning of section 51(xxxi) unless a Commonwealth law in its legal or practical operation produces the result that in substance, if not in form, some interest in the nature of property is taken from some person and some corresponding interest in the nature of property is given to so as to be acquired by some other person.
The protection afforded by the condition of just terms in section 51(xxxi) is protection to property within the broadest conception of that term understood by reference to, and I quote, “the concepts of the general law” – the quote is from Chaffey at paragraph 23 – and the protection afforded by the condition of just terms is protection against acquisition in the sense of expropriation or, and again I quote, “requisition” - the word “requisition” I take from Peverill 179 CLR at page 245.
The protection is not to conduct involving the use or exploitation of a thing in which property exists but unless and to the extent that two conditions are satisfied. One is that the ability to engage in the conduct is itself an interest in the nature of property and the second is that such extinction or diminution of that interest as may be effected by a Commonwealth law is accompanied by a corresponding creation or accretion of some other interest in the nature of property in some other person.
The occasional references in the cases to an acquisition lying in the attaining of an identifiable benefit or advantage relating to the ownership or use of property – language your Honours heard repeatedly yesterday – need to be put in context. Those words were first uttered on 9 March 1994 in the joint judgment of Justices Deane and Gaudron in Mutual Pools 179 CLR 155 at page 185 towards the top of the page in the sentence immediately following footnote (90).
On the same day the same judges in the joint judgment in Georgiadis – the same volume, at pages 304 to 305, with Chief Justice Mason – said, at the bottom of page 304, adopting the language of Justice Mason in the Tasmanian Dam Case, in the last half-sentence in the last full paragraph on that page:
there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be”
It is then said in the last two lines on that page and over to the top of the next page that the word:
“acquisition” directs attention to whether something is or will be received.
The word “correspond” is used in the following sentence and towards the bottom of page 305 in the penultimate full sentence on that page there is a reference to the need for the extinguishment to be related directly, or at least if not the need then the explanation of the result in that case – being that the extinguishment resulted directly in a benefit of a proprietary nature to the Commonwealth.
The more precise identification of the proprietary nature of the benefit in that case one sees at page 311 in the judgment of Justice Brennan in the first paragraph. It was, in effect, a release of a chose in action which had, he said, the same nature as the chose that was extinguished.
So, your Honours, the short, straightforward and entirely orthodox answer to the whole of the tobacco companies’ case is that there is upon a proper analysis of the property to which they point and the legal operation of the provisions that they say acquire the property in fact and in law, no extinction or diminution of any interest in the nature of property. There is no creation or accretion of property or any interest in the nature of property, that is, direct and corresponding or indeed at all. There is, for reasons substantially given by the Solicitor‑General for Queensland, nothing more than a prospective regulation of conduct in the course of trade. I want to go to the detail in a moment and your Honours will see where I am going in the outline of argument.
The second proposition which I simply want to state and say something a little about at the end is this, that there can be no acquisition of property within the meaning of section 51(xxxi) unless that acquisition of property is an acquisition that is capable of meeting the compound description of an acquisition on just terms. That is to say it must be an acquisition of property that is consistent with or congruent with a quid pro quo of compensation or rehabilitation so as to meet a standard of fair dealing between the property owner and the Australian community. That is the way in which just terms have been translated in the cases.
HEYDON J: Can I just try and understand this a bit better? Let us say there was a mark for cigarettes called Capstan and in some versions it had a bearded sailor with ropes and anchors and in other versions it was just “Capstan”. If an unlawful trader, after this legislation was in operation, began to trade under the name “Capstan”, do you say the Commonwealth is the only person who could sue that infringer?
MR ARCHIBALD: No, the Commonwealth would no doubt prosecute.
HEYDON J: Under its ‑ ‑ ‑
MR ARCHIBALD: Under Chapter 3, Part 2, or the other way round.
HEYDON J: What crime would it have ‑ ‑ ‑
MR ARCHIBALD: The offence, I think it is section 30 or 31.
HEYDON J: Yes, but if it is just sold under the name Capstan – I see, your point is that the pirate, as it were, the infringer, has no entitlement and therefore it is not, as it were ‑ ‑ ‑
MR ARCHIBALD: Has no entitlement in any event. By virtue of the prohibition imposed by section 20(1), when married with the sanctions under the ‑ ‑ ‑
HEYDON J: It is not the brand, business or company ‑ ‑ ‑
MR ARCHIBALD: No.
HEYDON J: Is it not the brand? It is just a parallel brand. It is an illegitimate brand.
MR ARCHIBALD: In one of your Honour’s postulations it was more than the word component.
HEYDON J: I am assuming just using the work ‑ ‑ ‑
MR ARCHIBALD: Just Capstan?
HEYDON J: Obviously if it is the word, plus the sailor, then no one could do that because of section 20(1) and (3) together. But if it is just the word ‑ ‑ ‑
MR ARCHIBALD: Yes, if it is the word, then it may be in conformity with section 20(1). The Commonwealth in that respect would not have a foundation for prosecution and it is true that in that circumstance the owner of the mark may have what I think we have described as the vestigial rights to control access to that component of the mark. So we are not submitting for a moment that there is entire obliteration of the right to exclude, but certainly it ceases to be exclusive and in greater part it is eroded to the extent to which that which remains is no more than vestigial.
That really exposes the other way in which there is an acquisition in respect of the right to exclude. That which is left is bereft of the substantive content that hitherto existed in that right and it, therefore, answers the description of a taking of the effective benefit or the reality of proprietorship in that component of the mark.
CRENNAN J: But is it really vestigial? You would be entitled, would you not, as an owner to get injunctive relief, including interlocutory relief, in relation to that conduct?
MR ARCHIBALD: If it is confined to the word you would, yes, but it is only as to the word and, of course, the starting point for all of this is the nature of the mark, and the examples before the Court are composite marks, of which the word is a component. Whether it is a critical component or not one cannot say. It may or may not be according to the circumstances. It may be some other features of the mark are the definitive ones in the marketplace and so the role that the word plays may vary according to the case. But even if the word itself is a significant portion of the mark that is taken, that which remains in respect of which the owner has concerning its right to exclude is bereft of substantive content because of the general arrogation of control by the Commonwealth in respect of the features of the mark as a whole, but including the right to exclude. These submissions are directed only to the right to exclude.
CRENNAN J: Do the Philip Morris parties have – are there registrations of the words which form part of the composite marks about which you are speaking, words alone?
MR ARCHIBALD: I think the material in the BAT Case shows only the composite marks. I think that is right. Yes, Mr Myers confirms that what I have answered is correct. But yesterday I alluded to the circumstances of Philip Morris where there are some marks that are entirely bereft of a word component.
CRENNAN J: The chevron.
MR ARCHIBALD: Yes, the chevron. So those are the submissions we would make about the right to exclude. May we then make some submissions in relation to the contentions on behalf of the Commonwealth that the circumstances here involve no more than regulation of conduct where a trader chooses to participate in a regulated industry. Our submission is that that circumstance does not displace or provide any foundation for denial of the circumstance that what is otherwise effected by the legislation is an acquisition and that the legislation bears the character of acquisition.
Nothing, in our submission, in the BMA Case, for example, yields the conclusion that, in circumstances of the kind addressed by the Commonwealth, there is no room for the engagement of section 51(xxxi). The point that was made by Sir Owen Dixon in the BMA Case in 79 CLR 201 at point 9 on the page was that the provision in question there did not impugn the property interest of the party or parties concerned, but was addressed to the general commercial and economic position occupied by the party or parties concerned.
Here, we say, the provisions which are the subject of the present litigation do not address the general commercial and economic position occupied by tobacco manufacturers and distributors, rather, the legislation squarely and explicitly addresses their property interest. Of course, there may be a consequence from the provisions of the legislation which address the property interests which are economic in character, but BMA does not stand, in our submission, for any proposition that simply because you choose to engage in commercial activity you are subject to all manner of provisions which the law may seek to impose upon the engaging in that trading activity including acquisition of your property.
So our submission here is that no different conclusion is to be reached simply from the circumstance that the provisions of the plain packaging legislation are engaged at the point at which an article is put into the channels of commerce. The acquisition of property occurs at that point and for that reason, but there is no immunisation of laws which have that effect simply because they engage in that point. I see it is quarter past 4.00. Should we deal with our third point in the morning, if the Court pleases?
FRENCH CJ: Yes, all right. The Court will adjourn until 10.15 am tomorrow.
AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 19 APRIL 2012
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