Smith Kline & French Laboratories (Australia) Limited & Ors v Commonwealth of Australia

[1991] HCATrans 212

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• "I

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S95 of 1991

B e t w e e n -

SMITH KLINE & FRENCH
LABORATORIES (AUSTRALIA)
LIMITED; SMITH KLINE & FRENCH
LABORATORIES LIMITED;
SMITHKLINE BEECHAM CORPORATION;
LABORATOIRE SMITH KLINE &
FRENCH SA and SMITH KLINE

DAUELSBERG GMBH

Applicants

and

THE COMMONWEALTH OF
AUSTRALIA, THE SECRETARY TO THE
DEPARTMENT OF COMMUNITY

SERVICES AND HEALTH

First and Second Respondents

and

ALPHAPHARM PTY LIMITED

Third Respondent

Application for a stay

Smith Kline 1 9/8/91

BRENNAN J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 9 AUGUST 1991, AT 9.00 AM

Copyright in the High Court of Australia

MR R.J. ELLICOTT, QC:  May it please Your Honour, I appear

with MR J.C. CAMPBELL, OC and MR M.R.J. ELLICOTT

for the plaintiffs and the applicants in the

motion. (instructed by Minter Ellison)

MR P.G. HELY, OC: If Your Honour pleases, I appear with

MR D.K. CATTERNS for the first and second

respondents. (instructed by the Australian

Government Solicitor)

MR J.J. GARNSEY, QC:  Your Honour, I appear with my learned

friend, MR P.J. DUNSTAN, for Alphapharm.

(instructed by Mallesons Stephen Jaques)

HIS HONOUR:	Yes, Mr Ellicott?
MR ELLICOTT:	Your Honour, this is an application for an

interlocutory injunction in a matter which was

started in the Court on Wednesday and in that

matter the plaintiffs are seeking to have declared

invalid section 33 of the Federal Court Act and

section 35 of the Judiciary Act in so far as those

provisions require a person who wants to appeal

from the Federal Court from a judgment or order to

obtain the special leave of the Court. The

assertion in those proceedings is that the

plaintiffs have a right to appeal.	Now, it
is - - -

HIS HONOUR:	And that is on the grounds of invalidity?
MR ELLICOTT:	And that is on the grounds of invalidity and

that invalidity is based on a number of grounds,

and I will perhaps mention those in a moment and

elaborate on them. In so far as that application
relates to section 35 of the Judiciary Act - and

might I say that I have knowledge of and may well

be briefed to appear in a matter which is the

subject of an application for special leave to this

Court, that matter being Carson v John Fairfax &

Sons - I think there are two matters - in which,

appeal from the Court of Appeal of New South Wales,	though there is an application for special leave to	a direct attack in that case is made on section 35
of the Judiciary Act.

Now we, of course, are faced with section 33

of the Federal Court Act but in our proceeding that

is now before Your Honour we have also claimed the

Judiciary
entitlement to attack section 35 of the before the Court. So there is a very serious issue

involved as to whether the special leave provisions

which govern appeals to this Court are valid.

Now, it may be that I should develop that a

little because basic to this application is - it is

Smith Kline 2 9/8/91

obviously an important point but basic to this

application is Your Honour's satisfaction that

there is a serious matter in issue, this seeking an

interlocutory injunction.

HIS HONOUR:  Have notices under section 78B been given?

MR ELLICOTT: Notices under section 78B have certainly been

given in this matter, yes, Your Honour.	They went
out on Wednesday.

HIS HONOUR:  No replies, of course?

MR ELLICOTT:  Tasmania has replied. They do not want to

intervene.	I do not know whether they have said at
this stage but they do not want to intervene.	So
that those steps have been taken.

Now, the main attack is based on the argument

that neither section 33 of the Federal Court Act

nor section 35 of the Judiciary Act, in their

relevant terms - I think in each case it is
subsection (3) - is an exception or regulation
which the Parliament can prescribe under section 73
of the Constitution.

The other issue which these proceedings will raise is whether section 33(3) or section 35(3) of

the respective Acts are valid; apart from that, if

that be not a good ground, are valid if, as would,

we would submit, appear to be the situation, the

vesting in this Court of a discretion to grant

special leave is not an exercise of judicial power.

If it is a statutory discretion and if it is to be

imposed on the High Court as it is by the section,

then does that require not only three Justices but
the whole Court to sit on special leave
applications?

Now, we know that under the Judiciary Act the Court's jurisdiction can be exercised by one or

more Justices but the Judiciary Act does, in fact,	relate only to the exercise of the judicial power
of the Commonwealth and part of the argument would
be that you cannot call in aid that section in
order to determine the question, "What is the High Court of Australia for the purposes of
section 33(3) or section 35(3) respectively?", and that one looks rather to the High Court Act itself
and the Acts Interpretation Act which says the High Court is the High Court of Australia. But when you
look at the High Court Act itself, it says that:

The High Court -

shall consist -

Smith Kline 3 9/8/91

of the Chief Justice and six other Justices

Now, the nature of that jurisdiction is in

question. Are the Justices officers of the

Commonwealth? If so, are they subject to

prohibition? Is it so that section 39B-would

enable that prohibition to go to the Federal Court
or the Full High Court? Those are questions that

we would say are serious questions involved in that

matter.

Now, Your Honour, there is a practical problem

facing us today and that is that the Court is going

to sit in special leave matters at 9.30. I would

not think we would finish before then because I

would want to take Your Honour to a number of cases and I also have to take Your Honour to evidence. I would also have to satisfy Your Honour that there
was sufficient argument in the judgments appealed

from to warrant Your Honour granting an injunction,

as well as looking at the balance of convenience.

HIS HONOUR:  Has there been any discussion at the bar table

as to the procedure that might be adopted?

MR ELLICOTT: There has not been, Your Honour, except that I

have mentioned the problem to my friend, Mr Hely.

But can I just indicate this:  we understand - and

my friend will provide this statement to

Your Honour - that since the Chief Justice declined

an injunction in the special leave matter in April

- perhaps it might be as well if my friend hands

those up.

MR HELY: Perhaps if I could tender a communication from the

Department of 8 August.

MR ELLICOTT:	Your Honour, I have no objection to that at this stage in that form but if it is going to be
contested at some stage I might require that to be
on affidavit but I have no objection to Your Honour
reading it.
HIS HONOUR:	What is it, a press statement of some sort?
MR ELLICOTT:	It is a statement by an Assistant Secretary of

Legal Services Branch, and I assume it has been don~ so that the Court might be informed of the

present position. I do not mind if it is a method

of communication for the purposes of - - -

HIS HONOUR:  Yes. Have you seen this, Mr Garnsey?

MR GARNSEY:  I think I have seen a draft of it but I have no

objection, if Your Honour pleases.

HIS HONOUR:  Yes.

Smith Kline 4 9/8/91

MR ELLICOTT: Well, Your Honour, what obviously - reading

that document, it does appear - Your Honour will no

doubt have read our summons and it seeks an

injunction restraining the use of information. It

does appear that it has already been used.

The interlocutory relief that we would seek is

an injunction but needless to say, being the Crown,

we would accept an undertaking that the approval

will not be given to the application by Alphapharm

pending the hearing of these proceedings and, if we

are successful, of any appeal therefrom or until

further order of the Court.

On the other hand, if Your Honour,

realistically, does not feel that Your Honour can

deal with this ultimately today, then we would

certainly seek an undertaking, or if they are not

prepared to give it, an injunction, restraining the

grant of the approval pending Your Honour's

determination of this interlocutory proceeding.

HIS HONOUR:	What is the course proposed to be taken with regard to the application for special leave today?
MR ELLICOTT:	Your Honour, we would, ourselves, have seen

those applications as applications which ought to
be adjourned pending the hearing of this matter,
that that was the proper course. Not only is it,
if I may say, logically the correct proceeding, but

it is undesirable in the long run that the matter

be considered by the Court in any depth. It has

already been considered to some extent by the

Chief Justice and we cannot avoid that. It may be

considered by Your Honour in these proceedings to
some extent, but it is undesirable that if the
application for special leave is heard and refused,

if that did happen, that the Court should have then

formed some views about the matter when ultimately

we may have a right of appeal in these proceedings

and that the proper course, in fairness, and in

that application for special leave to stand over	logic and in legal approach to the issues is for
pending the determination of these proceedings, by
that I mean the statement of claim proceeding.

HIS HONOUR:  The matter of urgency, I suppose, is to

determine what is to happen today until such

further time as I can continue and complete the

hearing of your present application.

MR ELLICOTT: Yes, Your Honour.

HIS HONOUR:  And perhaps I should hear what other counsel

have to say about that matter.

MR ELLICOTT: If Your Honour pleases.

Smith Kline	9/8/91
HIS HONOUR:	Mr Hely?
MR HELY:	I do not have any instructions to give any

undertakings. The first indication that we had

that there would be an application that the

approval not issue was when Mr Ellicott-mentioned

it to me as I came to Court this morning. So, I am

certainly not in a position to give any undertaking

to that effect. My instructions were to resist an

application for interlocutory relief if that

interlocutory relief was couched in terms of use of

the information and my instructions are to submit
that the special leave application should proceed

this afternoon and run its course. A matter which

we would submit is of particular importance is that

an application was made to the Chief Justice in

April of this year for an interlocutory injunction.

That application was refused essentially by

reference to considerations relating to the

strength of the appellants' case and to the balance

of convenience.

We would submit that nothing material has

changed since then except that five months have

passed and the appellants' legal advisers have had

a constitutional thought and apart from that, we

would submit that the considerations which induced

the Chief Justice to refuse interlocutory relief

should influence Your Honour in the same direction.

HIS HONOUR:  It appears from the report of the proceedings

undertaking given by your client in relation to the

before the Chief Justice in the Australian Law

use of a sample.

MR HELY: True.

HIS HONOUR:  Now, that then establishes, as it were, the present status quo.

MR HELY:	Yes.
HIS HONOUR:	And if this matter cannot proceed to a

conclusion today and if, by reason of the

proceedings in the Court today on the special leave

application, it were to proceed and if the

application were to fail, that status quo would

obviously be interfered with.

MR HELY:	Yes.
HIS HONOUR:	If then I were able to continue the hearing of

this matter, say, on Tuesday in Canberra, would you be in a position to give an undertaking which would

maintain that status quo until that time?

Smith Kline 6 9/8/91

MR HELY: Subject to instructions, my suspicion is that we

would be prepared to give an undertaking with

respect to the sample probably until the

determination of Mr Ellicott's proceedings.

HIS HONOUR: Perhaps while you are getting instructions on

that, I could hear what Mr Garnsey has to say.

MR HELY: Certainly.

MR GARNSEY:  If Your Honour pleases. We submit the

applications for special leave this afternoon

should proceed and in relation to my friend

Mr Ellicott's application, there is nothing shown

to justify any reconsideration of the matter beyond

what the Chief Justice has said. The

constitutional points are, with respect, quite

irrelevant to the merits of whether or not an

interlocutory injunction should be granted or

extended.

Alphapharm has been waiting many years for the

Health Department to process its application.

There is a unanimous judgment of the Federal Court

upholding a judgment of Mr Justice Guromow entirely

in Alphapharm's favour. No changes of

circumstances have been pointed to to justify any

further reconsideration of the matter.

Consequently, Your Honour, we submit that there should be an urgent hearing of the interlocutory

injunction, if my friend persists in it, but there

should be no interim relief forced on the parties.

There is another matter: four months have

gone by since the Chief Justice declined to grant
the interlocutory injunction. There is no

explanation of why a further application was not

made before.

There is one other matter which is most

relevant, and I should raise it now.	The
Therapeutic Goods Act 1989 of the Commonwealth

repealed the former Therapeutic Goods Act and was
expressed to come into force on the day after

Parliament approved regulations. Those

regulations, I am instructed, were approved by both

Houses on 14 February 1991. The Therapeutic Goods

Act_ 1989 would appear to be in force.

Section 61(8) of that Act provides expressly that the Department may use this information for its functions. There is nothing in the transitional provisions that I can see which qualify that

absolute enactment which would appear to have

de facto retrospective effect, if I could put it

like that. That would appear to be a complete

answer to any application which may be brought.	If
Your Honour pleases.

Smith Kline	7	9/8/91
HIS HONOUR:	Thank you, Mr Garnsey.	Mr Hely, are you in a

position now?

MR HELY:  Your Honour, I cannot give a firm undertaking with

respect of the sample. The existing undertaking

would continue until 2.15. In the meantime, I
would expect to get instructions to continue that

undertaking until Your Honour can determine the

interlocutory application.

HIS HONOUR:  Yes. Mr Ellicott?

MR ELLICOTT:  Your Honour, an undertaking in relation to the

sample, Your Honour will appreciate, is not - - -

HIS HONOUR:  I appreciate it does not go to the extent to

which you - - -

MR ELLICOTT:  It does not and it really does not solve our

problem. Our problem - and, in a sense, this is

what this case is about and that is whether our

information can be used for the benefit of a third

party and that is really why we are objecting. At

the end of the day the question that would be considered on an appeal or an application for

special leave would be what is the extent of that

obligation and, indeed, Your Honour would no doubt

have to consider it in this application. But what

we are saying at the end of the day is that it
cannot be used for the benefit of a competitor for
the commercial advantage and if it is used in the
course of the evaluation, in order to benefit a
competitor, then that is a wrongful use of the

information.

If it is only used in a negative sense - that

was all that the Director was saying - to say,

"Well, otherwise this application would be all

right, but looking at this information I am

satisfied that there could be a danger" - that is

our information, our what we call "Bl data" -

"looking at that, I'm satisfied that there could be

a danger to public health and therefore I won't

grant the application which I would otherwise have

granted but for my knowledge of this Smith Kline &

French information - I will not grant it." That

would not be for their benefit but the way it is

being used in the course of evaluation must

inevitably lead to a commercial benefit to them and

that is what, at the end of the day, we are

objecting to.

Now, that has probably happened since the

Chief Justice gave his judgment in April. Now,

that judgment was given against a background of

His Honour's view as to whether we were likely to

get special leave to appeal. There is a vast

Smith Kline 9/8/91

difference between a person's rights on an

application for special leave and a person's rights

in a full appeal. There are many cases that might

come to this Court on an application for special

leave where, if the parties had time enough, they

may be able to convince the Court that the judgment

below was wrong if it went on full appeal or,

alternatively, if it did not have to be a matter of

public importance, they would nevertheless succeed
because the Court would otherwise, apart from that

issue, have felt that the court below was wrong.

So that the two proceedings are quite distinct

and dispirit and difference, and the

Chief Justice's decision was given in the current

context of an application for special leave.

Now, there are a number of decisions of this

Court - two, in particular - from past benches but benches which this Court would respect, I am

absolutely sure - - -

HIS HONOUR: This Court would respect past benches however

constituted, Mr Ellicott.

MR ELLICOTT: That is probably so, Your Honour, but this one

is an - - -

HIS HONOUR: It is certainly so.

MR ELLICOTT:  - - - extremely - it is a fairly strong bench.

But in Cockle v Isaksen and Collins v Marshall this

Court indicated its view of the parameters of

section 73 and implicit in what Their Honours said

was that section 73 cannot be used to take away

completely the right of appeal to any of the courts

nominated in section 73 of the Constitution.

HIS HONOUR: Well, there is no need for you to develop the

argument at this stage. The point, as I say, is that we have to consider what is the appropriate

thing to do between now and, I might indicate,

Tuesday.

MR ELLICOTT:  Your Honour, I would have thought, with great

respect to my friends, that it would do nobody any

harm, on the balance of convenience, if

Your Honour - if they are not prepared to give an undertaking, the Crown should, we would submit,

normally not be injuncted. I think I have learned

that. But if they will not give an undertaking,

the Court may have no alternative, but I would ask

Your Honour to injunct them until further order of

the Court from granting the application on

Alphapharm's application.

Smith Kline 9 9/8/91

Mr friend, Mr Garnsey, says he has been

waiting since 1987. Well, he can wait a few more

days, surely. The probabilities, based on the last

paragraph of this document that was handed up to

Your Honour, is that the evaluater is not going to

hand his valuation in for a few days at least, and

maybe weeks or months, who knows? So, the

probabilities are that they are not going to be in

a position to grant the application. And

Your Honour could, without any prejudice to them or

without them making any admissions, properly make

an order directing them not to grant the Alphapharm

application pending Your Honour's determination of

these proceedings.

HIS HONOUR:  Mr Ellicott, it seems to me that there will be

much more knowledge held of this application after

we hear the applications for special leave or the

applications for adjournment of the applications

for special leave at 2.15. In the meantime, it

will be open to Mr Hely to obtain such instructions

as he may and be in a position finally to give any

and particular undertakings at that time or shortly

afterwards.

In those circumstances, I think that I should

adjourn this application until a time to be fixed

this afternoon not earlier than the hearing of the

special leave application.

I take it that the undertaking, Mr Hely, can

continue at least until I adjourn the matter

further this afternoon?

MR HELY:  Yes, Your Honour.

MR ELLICOTT: That is an undertaking in relation to

information as well as the - - -

MR HELY:	No, it is - - -
HIS HONOUR:	As I understood it, it is the undertaking that

had already been recorded in the decision of the

Chief Justice.

MR HELY: That is so.

MR ELLICOTT: Well, one would hope that the Crown will do

not~ing about the application in the interim,

Your Honour.

HIS HONOUR:  In that short interregnum? I would expect that

nothing would be done in that short interregnum,

Mr Ellicott. If you have any grounds for

conceiving that there is any risk of that kind and

if the application for special leave should proceed

to a hearing and if the application for special

Smith Kline 10 9/8/91

leave should be unsuccessful you will be at liberty

to move instanter for such relief as you may be

advised.

MR ELLICOTT: If Your Honour pleases.

HIS HONOUR: This matter then stands adjourned until this

afternoon not earlier than 2.15 pm.

AT 9.28 AM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

Smith Kline 11 9/8/91