Trade Practices Commission v Arnotts Ltd

[1990] FCA 6

Re: TRADE PRACTICES COMMISSION
And: ARNOTTS LIMITED; ARNOTT'S BISCUITS LIMITED; FLEDSPAC PTY. LIMITED
and THE DICKENS CORPORATION PTY. LIMITED
No. G1316 of 1988
FED No. 6
Evidence

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.(1)

CATCHWORDS

Evidence - expert opinion evidence - whether expert must expressly state the premises upon which opinion based - whether permissible, in a complex case, to put the whole of the transcript and documentary evidence to the expert en bloc.

HEARING

SYDNEY

#DATE 31:1:1990

Counsel and Solicitors Mr. B. C. Oslington Q.C.,
for Applicant: Mr. D. Staelhi and Mr. M.R.J.

Ellicott instructed by the Australian Government Solicitor

Counsel and Solicitors Mr. C.A. Sweeney Q.C. and
for Respondents: Mr. P. Comans instructed by

Clayton Utz

ORDER

Rule that the evidence of Dr. Williams is inadmissible.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

(Ruling on the admissibility of evidence of Dr. P.L. Williams)

Arnotts called Dr. P.L. Williams, an economist, in its case. The Commission accepted the expert qualifications of Dr. Williams but objected to the reception of his evidence on grounds which will be stated shortly. Because the point was a complex one, Dr. Williams' evidence was allowed to be given but was received subject to the ultimate determination of the Commission's objection.

1. When Dr. Williams was called, he was examined in chief to the effect that he had been present in court "for a great deal of time". At that stage, the hearing had taken 55 days, the transcript of the proceedings consisting of several thousands of pages. Dr. Williams gave evidence that, on the occasions when he could not be in court, he had read the transcript of the proceedings. He gave evidence that he had also read the amended statement of claim and "paid particular attention" to the transcript of the Commission's opening. He said that he had read all the documentary exhibits, which, at that stage, consisted of many thousands of pages of documents.

2. In his examination in chief, Dr. Williams was first taken to para. l2A of the amended statement of claim which is as follows:
   

"12A.

(a) Each of the Second Respondent, Nabisco and Westons and the other suppliers of biscuits referred to in paragraph 12 above supply biscuits to wholesalers and retailers in Australia.

(b) In so supplying biscuits to wholesalers and retailers in Australia the Second Respondent, Nabisco and Westons and the other suppliers of biscuits referred to in paragraph 12 above are in close competition with each other.

(c) In so supplying biscuits to wholesalers and retailers in Australia the Second Respondent, Nabisco and Westons and the other suppliers of biscuits referred to in paragraph 12 above are not in close competition with any other companies or firms being suppliers or potential suppliers of biscuits or any other products.

(d) The approximate dollar value of biscuits supplied annually by the Second Respondent, Nabisco, Westons and the other suppliers of biscuits referred to in paragraph 12 above to wholesalers and retailers in Australia is in the vicinity of $6OO million.

(e) By reason of the matters referred to in sub-paragraphs (a) - (d) above there is a market in Australia, being a substantial market, for the supply of biscuits to wholesalers and retailers ('the market')."

1. Dr. Williams was then asked by counsel for Arnotts the following question and gave the following answer:
   

"Can I take you to paragraph 12A of the statement of claim. You will see, Dr. Williams, that paragraph 12A finishes with the summation in sub-paragraph (e) on page 4 that, by reason of the matters referred to in the preceding sub-paragraphs, there is a market in Australia for the supply of biscuits to wholesalers and retailers. Could I ask you please to comment upon each of the preceding sub-paragraphs of paragraph 12A of the amended statement of claim from the point of view of economic principle?---Yes. 12A merely - 12A sub (a), merely says that certain mentioned suppliers of biscuits, supply biscuits to wholesalers and retailers. Sub-paragraph (b) says that these firms are in close competition with each other. (c) says that they are not in competition with any other companies being suppliers or potential suppliers of biscuits. Now, I can comment from a couple of points of view. The first point of view is that sub-paragraph (c) is a paragraph that on the basis of the evidence that I have seen, I would not like to agree with because to my - in my impression there is some evidence that goes to deny paragraph (c). The evidence is of a number of kinds, but to my mind the most persuasive evidence is the evidence of the ways in which the biscuit manufacturers responded to the change in the tax regime in September

1985. As I understand the evidence was that prior to September 1985, chocolate confectionery attracted a tax of 20 per cent, whereas biscuits, including chocolate biscuits, attracted a tax of zero per cent, whereas in September 1985 the tax on chocolate confectionery was changed to 10 per cent, decreased to 10 per cent and the tax on chocolate biscuits was increased from zero to 10 per cent. And this led to a number of companies changing the ways in which they marketed particular products. So there is evidence of that kind and there is evidence of the kind contained in the marketing reports commissioned by companies to the effect that, at least to some extent, producers of biscuits take into account policies of companies who are not producing biscuits. So, on the basis of that evidence I would not like to agree with the proposition in paragraph 12 sub (c).

The other point on which I would like to comment is paragraph sub (e) and this is really a matter of, like, economic logic. It seems to me that even if the propositions in subparagraph (a) through to (d) are established that would not establish the proposition in paragraph sub (e) and for the following reason: even if it is established that the manufacturers of biscuits are in close competition with each other, that is sub-paragraph (b) and not in close competition with any producers of non-biscuit products, it still would not establish a market for biscuits because those propositions would be consistent with a series of markets that were much smaller than the whole market for biscuits. Indeed it would be consistent with the definition of market that would make every, if you like, B.I.S. category of biscuits a separate market so on the basis of evidence and of logic I cannot agree with sub-paragraphs (c) and (e)."

1. Dr. Williams then gave evidence, in similar form, of other allegations made in the amended statement of claim.

2. Dr. Williams was next examined in chief with respect to aspects of the Commission's opening. Particular matters opened were put to Dr. Williams. For instance, he was asked to comment, and did comment, on the use of "Biscuit Industry Statistics" as a market definition device.

3. As has been said, the Commission objected to the reception of the opinions expressed by Dr. Williams in the course of his evidence. The principal ground of the objection is that facts said to have been assumed by Dr. Williams in expressing his opinions were not identified, or at least, were not sufficiently identified, when he was examined in chief.

4. The general principles in this area were considered by the High Court in Paric v. John Holland (Constructions) Pty. Ltd. (1985) 62 ALR 85. Mason ACJ., Wilson, Brennan, Deane and Dawson JJ. said (at pp 87-8):
   

"It is trite law that for an expert medical opinion to be of any value the facts upon which it is based must be proved by admissible evidence (Ramsay v. Watson

(1961) 108 CLR 642). But that does not mean that the facts so proved must correspond with complete precision to the proposition on which the opinion is based. The passages from Wigmore on Evidence cited by Samuels JA in the Court of Appeal (Wigmore on Evidence, (1940) 3rd. ed, vol II, para. 680, p 800; 2 Wigmore, Evidence para. 680 (Chadbourn rev 1979), p 942) to the effect that it is a question of fact whether the case supposed is sufficiently like the one under consideration to render the opinion of the expert of any value are in accordance with both principle and common sense. As Wigmore states (at pp 941-1, Chadbourn rev), 'the failure which justifies rejection must be a failure in some one or more important data, not merely in a trifling respect'."

1. In the New South Wales Supreme Court of Appeal in Paric (1984) 2 NSWLR 505, Samuels J.A. cited a reference in Wigmore to this passage in a Wyoming case and added the comments which follow (at pp 509-10):
   

"(In Wigmore there) is a reference to a Wyoming case, Culver v. Sekulich (1959) 80 Wyoming 437 at 458. It is in these terms:

'From our analysis of the record it appears to us that there was some evidence to support every hypothetical question to which objection was made. Such evidence was not always complete, was sometimes hazy as to time, distance and other vital words, but in general, furnished a fair climate for the consideration of the views of the expert witnesses.'

I would respectfully adopt that last statement as exactly in point and its application disposes of both aspects of the problem to which I have earlier referred. It is a question of whether the hypothetical material put to the expert witnesses represents a fair climate for the opinions they expressed. I do not think there is any requirement that the matter put is precisely consonant with the material provided; and certainly it cannot be contended that there was no evidence upon which the opinions could be based. Discrepancies may be fatal; in some cases even slight discrepancies may be fatal; in other cases even broad departures are not likely to affect the force of the expert opinion. Moreover, it is for the tribunal of fact to assess this factual basis."

1. The specific question which now arises is discussed in Wigmore, Ch. rev. (1979) (at pp 933-4) in the context of "hypothetical questions" as follows:
   

"1. Testimony in the shape of inferences or conclusions always rests on certain premises of fact. That which has been called observation, serving as the basis of belief in matters directly cognizable by the senses - as, the facts of an affray, a conversation, a trespass, and the like - is here replaced by what may be called a consideration of the premise. If the witness has not considered or had in mind these premises, his inference or opinion is good for nothing. 2. These premises, a consideration of which is essential to the formation of the conclusion or opinion, must somehow be supplied to the jury by testimony. The same witness may supply both premises or conclusion; or one witness may supply the premises and another the conclusion. The two are not necessarily connected. 3. If the latter method is chosen, and a witness is put forward to testify to the conclusion, the premises considered by him must be expressly stated, as the basis of his conclusion; otherwise, since his conclusion rests for its validity upon a consideration of the premises, if those premises are not made to accompany the conclusion, the tribunal might be accepting a conclusion for which the witness had considered premises found by the tribunal not to be true. 4. Hence, the premises must be stated hypothetically in connection with the conclusion; then, by other testimony, the material for determining the truth of the assumed premises may be furnished to the tribunal.

The key to the situation, in short, is that there may be two distinct subjects of testimony - premises, and inferences or conclusions; that the latter involves necessarily a consideration of the former; and that the tribunal must be furnished with the means of rejecting the latter if upon consultation they determine to reject the former, i.e. of distinguishing conclusions properly founded from conclusions improperly founded."

1. Phipson, "The Law of Evidence", 13th ed. says of expert evidence (at p 561):
   

"(a) Where the issue involves other elements besides the purely scientific, the expert must confine himself to the latter, and must not give his opinion upon the legal or general merits of the case; (b) Where the issue is substantially one of science or skill merely, the expert may, if he has himself observed the facts, be asked the very question which the jury have to decide. If, however, his opinion is based merely upon facts proved by others, such a question is improper, for it practically asks him to determine the truth of their testimony, as well as to give an opinion upon it; the correct course is to put such facts to him hypothetically, but not en bloc, asking him to assume one or more of them to be true, and to state his opinion thereon. Where, however, the facts are not in dispute, it has been said that the former question may be put as a matter of convenience, though not as of right."

See also at pp 588-9.

1. The present question was discussed by Gordon J. Samuels in Seminars on Evidence (Glass, Editor) (1970) (at p 144):
   

"The difficulty encountered in presenting much expert evidence is that the witness is usually required to pass upon facts which he has not himself perceived. Moreover, when the witness is called, the whole of the relevant facts may not have been presented, and many of those which have may be in dispute. The expert cannot be asked to express a view upon the veracity of the lay witnesses, or upon the existence of any disputed fact, or the validity of competing inferences. The attempted solution of the problem lies in the device of the hypothetical question.

The theoretical basis of this practice is clear enough, and (but only in the context of our present forensic techniques) so is its necessity. Manifestly, the premises supplied by personal observation when that is lacking must be furnished by other means. If the witness cannot supply them himself they must be provided for him. It is the form and scope of the hypothetical question which presents the difficulty, and upon this question there is considerable diversity of opinion. The controversy is most violent in the United States of America, where the use of this device seems to have been greatly abused."

1. After referring to the position in the United States, Mr. Samuels said (at p 145):
   

"Clearly, the facts which the witness is assuming must be made clear to the jury. They must know upon what premises the conclusion is based. This is necessary not only to render the conclusion useful but to impeach it if the premises be not established. In what form then may the premises be conveyed to the witness? First, may the witness be asked - 'Upon all the evidence in the case what is your opinion as to X?'. A question in this form is, it is suggested, clearly objectionable. First, because it renders it impossible for a jury to determine whether the opinion is based upon facts which have been proved, or indeed to determine at all upon what facts it is based. Second, it permits and encourages the witness to select for himself which of the evidence he accepts and which he rejects. The evidence of one witness whose testimony is furnished to the expert as part of his data may itself be internally conflicting, and this apart from the discrepancies between the evidence of witnesses called in the same interest."

See also Mr. Justice Glass "Expert Evidence" (1987) 3 Aust. Bar Rev. 43 at p 46.

1. In Daniel M'Naghten's Case (1843) 8 ER 718, referred to by Phipson, Tindal C.J. said (at p 723):
   

"The question lastly proposed by your Lordships is:- 'Can a medical man conversant with the disease of insanity, who never saw the prisoner previously to the trial, but who was present during the whole trial and the examination of all the witnesses, be asked his opinion as to the state of the prisoner's mind at the time of the commission of the alleged crime, or his opinion whether the prisoner was conscious at the time of doing the act that he was acting contrary to law, or whether he was labouring under any and what delusion at the time?' In answer thereto, we state to your Lordships, that we think the medical man, under the circumstances supposed, cannot in strictness be asked his opinion in the terms above stated, because each of those questions involves the determination of the truth of the facts deposed to, which it is for the jury to decide, and the questions are not mere questions upon a matter of science, in which case such evidence is admissible. But where the facts are admitted or not disputed, and the question becomes substantially one of science only, it may be convenient to allow the question to be put in that general form, though the same cannot be insisted on as a matter of right."

See also Maule J. at p 721.

1. In Regina v. Turner (1975) 1 QB 834, Lawton L.J. said (at p 840):
   

"Before a court can assess the value of an opinion it must know the facts upon which it is based. If the expert has been misinformed about the facts or has taken irrelevant facts into consideration or has omitted to consider relevant ones, the opinion is likely to be valueless. In our judgment, counsel calling an expert should in examination in chief ask his witness to state the facts upon which his opinion is based. It is wrong to leave the other side to elicit the facts by cross-examination."

1. In Harmony Shipping Co. S.A. v. Saudi Europe Line Ltd. (1979) 1 WLR 1380, Lord Denning M.R. said (at p 1385):
   

"Subject to that qualification (i.e. the circumstance that many communications between a solicitor and an expert witness will be privileged), it seems to me that an expert witness falls into the same position as a witness of fact. The court is entitled, in order to ascertain the truth, to have the actual facts which he has observed adduced before it and to have his independent opinion on those facts."

1. In The Queen v. Fowler (1985) 39 SASR 440, King C.J. said (at p 443):
   

"The course which was sought to be adopted in the present case of asking the opinion of the witness as to the possible mental condition of the accused at the time of the alleged crime, based not upon assumed facts, but upon a reading of the whole of the evidence and the accused's account of his drug ingestion, is not acceptable and such evidence cannot be admissible. It involves the expert in making his own unstated findings of fact and his own interpretation of them. The jury might arrive at different conclusions of fact and a different interpretation of the facts. Clearly a witness cannot be permitted to express his findings and interpretations of fact, and there would therefore be no way by which the jury could know whether the opinion could stand in the light of the jury's view of the facts.

If, therefore, evidence of opinion is to be adduced at the new trial as to the accused's mental condition at the time of the killing deduced from his behaviour and ingestion of drugs, it is of the utmost importance that the assumptions of fact upon which the opinion is arrived at be clearly stated and that the evidence be confined to opinions expressed upon those stated assumed facts."

See also Mr. Justice Von Doussa (1987) 61 ALJ 615, "Difficulties of Assessing Expert Evidence" at p 618.

1. (The common law rule has been changed in some United States jurisdictions so as to give the court a discretion in this area (see now Rule 705 of the Federal Rules of Evidence discussed in Moore's Federal Practice at para. 705.01 to para. 705.10).)

2. In my opinion, these authorities establish that there is a rule of evidence at common law that, except in a straight-forward, uncomplicated case, where the facts are admitted and readily identified, the opinion of an expert is admissible only where the premises, that is to say, the facts, upon which his or her opinion is based, are expressly stated. It follows that, in a complex case, where facts are not readily identifiable, it is not permissible to put the whole of the transcript and documentary evidence to the witness en bloc.

3. This is complex litigation and the facts in respect of which Dr. Williams purported to express his opinion were not admitted by the respondents. Indeed, the facts, and the proper inferences or conclusions to be drawn from the facts contended for by the Commission, were vigorously disputed by the respondents over the many months of this litigation. In those circumstances, it is impossible for the court to know what facts Dr. Williams had in mind when expressing his views.

4. This objection to his evidence is not a mere technicality nor is it only a rule to be applied in jury trials. True, some of the authorities refer to the jury, but the rule is of general application. In complicated litigation, there are sound reasons of policy which support a rule that the premises considered by the expert should be expressly stated rather than left to speculation. It is preferable that these matters be clarified when the witness is examined in chief rather than leave room for argument later as to exactly what matters the expert had in his mind when expressing his conclusions (cf. Trade Practices Commission v. Ansett Transport Industries (Operations) Pty. Ltd. (1978) 32 FLR 305 per Northrop J. at p 329; Trade Practices Commission v. T.N.T. Management Pty. ltd. (1985) 6 FCR 1 per Franki J. at pp 80-2).

5. It follows, in my view, that the evidence of Dr. Williams is inadmissible.

6. For completeness, it should be noted that three other points were argued here.

7. First, the Commission also submitted that Dr. Williams' evidence purported to resolve questions, essentially of fact, which were matters for the court to resolve (see Trade Practices Commission v. Australia Meat Holdings Pty. Ltd. (1988) 83 ALR 299 per Wilcox J. at p 316). In the circumstances, it is unnecessary to consider this argument.

8. Secondly, the Commission submitted that, even if Dr. Williams' evidence were admissible, it was of no, or little, weight because the premises on which it was based are not known. I agree, although, in strictness, the point does not arise.

9. Thirdly, it was suggested on behalf of Arnotts that it is possible to extract from Dr. Williams' evidence opinions of an abstract or general character, which opinions, it is said, do not depend upon Dr. Williams' views of the facts of the case.

10. It is true that, if read in isolation, some passages from Dr. Williams' evidence in chief could, arguably, be so interpreted. However, once his evidence in chief is read as a whole, it appears that Dr. Williams intended, and counsel examining him intended, that his opinions were to be considered in the context of his views of the facts of the case as established during the course of the hearing. His evidence was led in that form. It must follow that it is not now open to Arnotts to seek to divorce his answers from their proper, and intended, context.

11. I rule that the evidence of Dr. Williams is inadmissible.