Smith Kline & French Laboratories (Australia) Limited v The Secretary to the Department of Community Services and Health; v The Secretary to the Department of Community Services and Health

[1991] HCATrans 216

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4

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S43 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 SECRETARY TO THE DEPARTMENT
OF COMMUNITY SERVICES AND

HEALTH

Respondent

Office of the Registry

Sydney No S44 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

Smith Kline(2) 1 9/8/91

Applicants

and

THE SECRETARY TO THE

DEPARTMENT OF COMMUNITY SERVICES AND HEALTH and ALPHAPHARM PTY LIMITED

Respondents

Applications for special leave

to appeal

BRENNAN J
DAWSON J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 9 AUGUST 1991, AT 4.34 PM

Copyright in the High Court of Australia

MR R.J. ELLICOTT, OC: If the Court pleases, I appear with

MR M.R.J. ELLICOTT and MR L.V. GYLES for the

appellants. (instructed by Minter Ellison)

MR P.G. HELY, QC: If the Court pleases, I appear with

MR D.K. CATTERNS for the first respondent.

(instructed by the Australian Government Solicitor)

MR J.J. GARNSEY, QC: If the Court pleases, I appear with my

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

(instructed by Mallesons Stephen Jaques)

MR ELLICOTT:  Your Honours, could I just mention this to

Your Honour Mr Justice Brennan, that my friend has indicated to me that he is prepared to give an

undertaking to preserve the status quo until

Tuesday next and I thought I should mention that.

My learned friend might indicate that and then it

may be helpful to further proceedings here today.

I do not know.

MR HELY:  I am prepared to indicate to the Court and, if

necessary, to undertake that no further steps will

be taken up to and including Tuesday next further

to process the Alphapharm application.

BRENNAN J: Yes.

MR ELLICOTT"":  Your Honours have before you an application

for special leave. Your Honours will also know

that the appellants have taken proceedings in this

Court to have section 33(3) of the Federal Court

Act declared invalid. In other words that

obviously challenges the jurisdiction of the Court

to stand in the way of a right of appeal to the

Court and my first use of "the Court" is, perhaps,

a little bit different from the second in the sense

Smith Kline(2) 2 9/8/91

that it does raise the question whether

Your Honours are sitting as the Court or whether

Your Honours are sitting as the repositories of a statutory discretion and also whether the Court can

sit with three if it needs seven.

Now, I mention those matters because it seemed

to us, Your Honours, that the appropriate course,

because there is an application for interlocutory

relief which is part heard before Your Honour

Mr Justice Brennan, would be either to stand this

application for special leave over until the

hearing of the action which has just been

instituted, because in the ordinary course that

would be the appropriate thing to do - that is to

say, to determine the question of whether we have a

right of appeal first - - -

GAUDRON J:  Why should we not put you to your election,

Mr Ellicott?

MR ELLICOTT:  In the sense we cannot be put to an election.

I mean, if we are required to deal with an

application for special leave today, we could - - -

GAUDRON J:  Why should we not put you to your election to

choose whether to pursue your constitutional

position or your application for special leave?

MR ELLICOTT: That, we would say, would not be a judicial

thing to do.

DAWSON J: Except that you are raising

MR ELLICOTT:  It might be judicious to do it, but not

judicial.

DAWSON J: Except that you are raising those matters now in

this application, are you not, Mr Ellicott?

MR ELLICOTT:  No; I am informing the Court that we have

taken out proceedings before the High Court.

DAWSON J:  We know that. What is the purpose of informing

the Court of that?

MR ELLICOTT:  So that I may ground an application for an

adjournment, because - - -

DAWSON J: Because you are now saying we have no

jurisdiction to hear this particular application.

MR ELLICOTT: Yes, and therefore the Court - - -

DAWSON J:  And you are saying that as part of this

application, are you? What, you are making an

Smith Kline(2) 9/8/91

application on the one hand and saying we have no

jurisdiction to hear it?

MR ELLICOTT:  No, I am saying that we have challenged the

right of the Court, sitting as it is now - perhaps

if I start at the beginning. Our pleading in the

action asserts that section 33(3) of the Federal

Court Act and section 35(3) of the Judiciary Act are invalid, and that is, first of all, on the

ground that section 73 does not allow the

Parliament - and it is not this Court's fault, it

is the Parliament's fault - to prescribe as an

exception the complete exclusion of the right of

appeal from any of the courts mentioned in

section 73. That would include the Federal Court,

it would include the Court of Appeal, it would

include the Supreme Court of Victoria et cetera,

any court mentioned in section 73. That is on the

ground that section 33(3) and 35(3) of the Federal

Court Act and Judiciary Act respectively are not
exceptions or regulations within section 73 of the

Constitution.

We also say in those proceedings as

alternatives or further that those sections are

invalid because they do not vest the judicial power

of the Commonwealth and that therefore we would

submit in those proceedings it would be necessary,

because they do not vest the judicial power of the reason, because we say it is only judicial power

that can be given to this Court.

DAWSON J: But do you submit that in these proceedings?

That seems to be the point. I mean there is no

reason why you should not submit that in these
proceedings and say, in the alternative, if I am
wrong about that, then we deserve special leave,

but I am just seeking to find out what you say.

MR ELLICOTT:  I appreciate that, Your Honour, and I am not seeking to avoid that. What the Court itself has

said about these proceedings is that they are not

proceedings inter partes, and Your Honour would be

aware of that. And that is the point. And we say

that if they are not proceedings inter partes, they

are not part of the judicial power of the

Coffi!Uonwealth; that therefore the power that is

ve·sted in the High Court in section 33 ( 3) of the

Federal Court Act is a very wide statutory

discretion.

Now, we would submit that the preferable

course is that this Court, now, adjourn that

special leave application - and I look at the

clock, not in terrorem, but simply because that may

or may not be a factor - - -

Smith Kline(2) 4 9/8/91

BRENNAN J:  The terror will not operate.

MR ELLICOTT: It is not intended that way, Your Honour, but

we would submit that the appropriate proper course

in the interests of our client is to, first,

determine whether its assertion that it has a right

of appeal is correct and, if it is incorrect about

that, then it can pursue its application for

special leave.	Why should it not go ahead now?
That is one reason.	The other reason is, we would

submit, that if we are right that the Court must

entertain our appeal, if we are right about that in

those proceedings, then it is unfair to our client,

if we pursue this application and it is refused,

that not only the Chief Justice should have become

involved and formed a view about it, but that

Your Honours should have become involved and form a

view. In other words, if we pursue a right of

appeal before the Court, then we would submit that

we are entitled to have as many minds as

practicable unaffected by it.

DAWSON J: That aside, really what you are saying is it is

appropriate to deal with first things first, and

you are attacking the whole basis on which this

application is made and that should be dealt with

and got out of the way before you turn to this, if

it is necessary to do so.

MR ELLICOTT: That is what we are saying, yes. That is it,

and we would submit that is the appropriate thing

to do. I do not think I can put it any further

than that, Your Honours.

BRENNAN J: There is a practical implication of it, is there

not, and that is that under the undertaking that

was given before the Chief Justice, that is to

expire on the refusal of special leave or if

special leave is granted, on the hearing of the

appeal. If this application is adjourned you would

have the benefit of an extended period of an

undertaking in the event of the contingency of

either no special leave being granted or, one

imagines, no special leave being possible to be

granted. If then the application for adjournment

which you now make is going to have that practical

implication, should you be put on terms with regard

to ~he release from the undertaking.

MR ELLICOTT:  Your Honour, there is an undertaking as to a

sample product and I do not believe it to be in

dispute that that should not be used in any event,

that there is no debate - I may be wrong about
this, but that is my understanding and instruction,

that there is really no debate about whether that

should be used. In other words, the undertaking is

not one that is holding anything up, because the

Smith Kline(2) 9/8/91

Department acknowledges that it does not want to

use it.

BRENNAN J: Then in practical terms, if today's application

is adjourned, come Tuesday, your protection in

respect of the Alphapharm application will rest

completely upon the decision then made, that is on

Tuesday.

MR ELLICOTT: Yes.

BRENNAN J:	And you are content with that?
MR ELLICOTT:	I have to be content with that, yes.

BRENNAN J: Yes, I see. I understand that. Mr Hely, what

do you have to say about the adjournment, in the

light of those circumstances?

MR HELY: Firstly, we oppose it, and secondly, can I put our

reasons as briefly as possible. Firstly, my friend
does not submit that his application is
incompetent. Secondly, there is a reasonable

chance, depending upon what happens, that the

special leave application would have to be dealt

with sooner or later in any event. Thirdly, if the

Court were minded to grant the special leave application, it would perhaps render irrelevant the

collateral challenge to the jurisdiction of the

Court to grant special leave. We would submit that

simply no reason has been shown for adjourning the

matter except, perhaps, that upon one contingency

it might prove to be unnecessary.

DAWSON J:	What do you say about the last matter that was mentioned, the present protection being confined only to a sample, and really the protection being a
matter for decision on Tuesday?

MR HELY:  I have nothing to say about that. That, with

respect, seems to be a sensible course.

BRENNAN J:	What do you have to say, Mr Garnsey?
MR GARNSEY:	If the Court pleases, we adopt what my learned

friend, Mr Hely, said but we also oppose the

adjournment because of the uncertainty which, of

nec~ssity, hangs over our client in relation to the

marketing of this drug that has been going on since

1988 when, a year after the Department consented to

the first injunction, it told us that it had so

consented and we became aware of the inhibitions on

the processing of our application.

BRENNAN J: That I could understand if it were not for the

material that was placed before me when I was

sitting alone this morning, which was that the

Smith Kline(2) 6 9/8/91

processing, as I understand it, has been completed,

the assessment.

MR GARNSEY:	Yes.
BRENNAN J:	In other words, the Bl material has been used by

the external evaluator and so you are ready either
to go or to stop, according to that assessment, I

take it.

MR GARNSEY: That is so, if Your Honour pleases, but with

respect, my learned friend, Mr Ellicott, has

inserted into this special leave application a

constitutional question which may take a relatively

short time to resolve or a relatively long time. I

understand there are other cases pending in this

Court in which the same points have, in substance,

been raised. We do not know procedurally how long

it will take to have those matters resolved,

particularly if the Court decides that they should
be dealt with in a particular order, given that

they are raised in a number of cases.

BRENNAN J: Well, putting it another way, unless the

Commonwealth were restrained from granting approval

to your client in respect of its generic

manufactured drug, what interest do you have in the

litigation?

MR GARNSEY:  Your Honour, the litigation seeks to obtain an

appeal as of right to this Court for my friend's

clients to overturn the decision of the Federal

Court pursuant to which the Department has

processed our application. If that decision is

overturned, then we presume we will not be able to

market that particular drug or, indeed, for

practical purposes, a large number of other drugs.

We are made a party to my friend's action in this

Court raising the constitutional matters and our

interest is to have the Federal Court judgment

upheld on appeal, should the matter go so far as

appeal. The proceedings commenced by my friend

seek to establish that appeal as of right.

BRENNAN J: Perhaps I do not understand precisely the state

at which your application has progressed but if, on

a particular day hereafter, your application were

approved by the Department, there is nothing in the

existing litigation, is there, which would seek to

have that approval revoked?

MR GARNSEY:	No, Your Honour, but one of the relevant facts in the existing litigation is that of the attitude
of the Department.  The Department takes the view
that it cannot avoid using confidential information
in the assessment of our application because its
evaluators cannot segregate the information in
Smith Kline(2)	9/8/91

their heads. That view has been unchanged. If the

decision of the Full Federal Court were subject to
appeal to this Court and the risk of being

reversed, one would not imagine the Department

issuing a formal approval for the marketing of our

drug because the Department might subsequently be

found to have acted in breach of confidential

information and there is a claim for damages

against the Department in the litigation.

BRENNAN J:  The prospects of the relief that might be sought

on either side, in that event, is obviously yet to

be explored~

MR GARNSEY:  Yes, Your Honour. If Your Honour pleases, that

is our interest and that is the Department's

attitude. The other matter is - - -

BRENNAN J: Mr Garnsey, what it comes to is this: your

position is not going to be greatly changed if this

application stood adjourned until immediately after

the constitutional challenge were entertained, so

that if the constitutional challenge failed, this

matter would then come on for hearing as an

application for special leave.

MR GARNSEY:  Your Honour, I do not have any evidence to say

when precisely a formal approval is likely to

issue.	I do not know whether or not my client's
position will be materially affected by that.	One
factor is, of course, I do not know when the
constitutional challenge will be heard.

GAUDRON J: But while ever there is a prospect of an appeal,

it does not matter from what source, your position

is the same, is it not? It is the prospect of the

appeal, not the source of that prospect, that

affects your position, is that not right?

MR GARNSEY: That is so, and I appreciate if the

constitutional challenge succeeds, special leave

having been refused, there will be an appeal as of

the Court, if Your Honours please, and I hand to	right. The only other matter I would put before	the Court four copies of the Therapeutic Goods Act
1989 and, in particular, section 61. It is not the
whole Act but four copies of a relevant regulation
referred to in the relevant section. The Act now,
we-would say, clearly empowers the Department to
use and, in certain circumstances, disclose this
information, the information the subject of this
suit, and that would make the special leave
application, we would say, certain to failure.

BRENNAN J: Mr Garnsey, I am concerned, I confess, about the

extent of our appreciation of the implications of

either course that is now being considered in terms

Smith Kline(2) 8 9/8/91

of the processing of your application. As I have understood the attitude of the applicants in this

matter thus far, it has been to ensure that no step

is taken without there being protected in a way

which would preclude your product gaining approval

to their market disadvantage. Now, is there no

implication in relation to that in the course which

is proposed now by the applicant for you?

MR GARNSEY:  Your Honour, the only implication is, as I have

said, delay, but as Justice Gaudron observed, that

may occur anyway, in whichever order matters are

taken.

GAUDRON J: If it is going to occur, it will occur,

regardless of the course we take today.

MR GARNSEY:  I think I would be forced to that position,

yes, if Your Honour pleases.

BRENNAN J: If it is going to occur?

MR GARNSEY:  It seems fairly certain it is going to occur,

if Your Honour pleases.

BRENNAN J:  I do not know that that is so, because if the

Department processes your application and there is

no protection in respect of the applicant in regard

to the Department processing it, a question which will fall for consideration next Tuesday, then of course your application may be processed.

MR GARNSEY: Yes, Your Honour.

BRENNAN J: Notwithstanding the fact that there is a

possibility of appeal.

MR GARNSEY:  Yes, Your Honour. I have not got much to say

to Your Honour in relation to the period between

now and Tuesday. The other matters about the

Department's attitude would require a more

extensive reference to evidence which has already been considered, Your Honour, but it would not be appropriate to do it now.

BRENNAN J:  I mean so long as this Court does not reach its

present conclusion and adjourn with a defective

understanding of the implications.	You have
nothing further to say anyhow?

MR GARNSEY:	I have nothing further to say, Your Honour.
BRENNAN J: Very well.	Mr Ellicott, have you anything

further that you wish to say?

MR ELLICOTT:  No, Your Honour. The delay is going to occur

anyhow, that is clear, and Your Hono~r is going to

Smith Kline(2) 9 9/8/91

deal with the question next week as to whether we

are going to be entitled to an injunction in

relation to the use of the Bl data. If Your Honour

finds in our favour, well that is an entitlement we

have; if Your Honour does not, then the Department

will decide what it is going to do. It always has

the sword of damages hanging over it and possibly

Alphapharm has the sword of damages hanging over it, and they will act accordingly. But there will

not be any injunction to stop them except, as I

would understand it, the Department's continuing

attitude would be that it will not use that sample.

That is not a matter of debate.

BRENNAN J:	And that is not a real problem.
MR ELLICOTT:	No, that is not a real problem, and the Court

always has charge of the special leave application
and that could be brought on immediately a

constitutional challenge, in the unfortunate event

that it failed, Your Honour.

BRENNAN J:  Yes. The Court will adjourn this application to

a date to be fixed. As to the date on which the

matter will be relisted for hearing, if such a

necessity should arise, it will be a matter for

application but, having regard to the discussion

that has happened in the course of these

proceedings, the parties will be aware that the

Court notes the importance of having a resolution

finally in the matter, either by way of

constitutional challenge and subsequent appeal or

by way of hearing the application for special leave

and any subsequent appeal to that. It does not

necessarily follow that the two matters will be

listed sequentially but the Court is appreciative

of the problems of the parties and is aware of the
desirability of having those matters heard in rapid

succession.

MR GARNSEY:  I would ask for the costs of today, if

Your Honours please.

BRENNAN J:  Do you have any application to make, Mr Hely?

MR HELY:  Yes, Your Honour. I would follow suit.

MR ELLICOTT:_ I would simply ask Your Honours to reserve the

costs. I can understand at some stage my friends

might have an argument, but I would submit that the

costs of today be reserved because we have done no

more than we were entitled to do and if we had a

right of appeal, well so be it. We bought an

application. If we need this application, well the

question of costs in relation to it can be dealt

with on that occasion.

Smith Kline(2) 10 9/8/91

BRENNAN J:  The application will be adjourned; costs will be

reserved.

Do you wish me to sit to take a further

undertaking formally?

MR ELLICOTT:  If my friend gives that undertaking as he has,

I will accept it, Your Honour.

BRENNAN J: Very well.

AT 5.05 PM THE MATTER WAS ADJOURNED

TO A DATE TO BE FIXED

Smith Kline(2) 11 9/8/91