Wor NUDGMENT No. Be 1e— CATCHWORDS TRADE PRACTICES - Judicial Review — Federal Consumer Affairs Minister's notification of proposal to declare smokeless tobacco products and snuffs unsafe ~- carcinogenic and other medical and pathological consequences - application for judicial review and interlocutory injunction to stay conference held by Trade Practices Commission on request of applicant - whether serious questions to be tried - "decision" or "conduct" within meaning of Judicial Review Act — balance of convenience - injury to the public. Trade Practices Act 1974 - ss 65C, 65J, 65K, 65L, 65P Administrative Decisions (Judicial Revew) Act 1977: ss 3(1), 5, 6 United States Tobacco Company - v -— Applicant The Minister for Consumer Affairs First Respondent Trade Practices Commission Second Respondent G 158 of 1988 CORAM: Einfeld J. DATE: 28 March 1988 PLACE: Sydney IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION No. G 158 of 1988 ee ee ee ee NEW SOUTH WALES DISTRICT REGISTRY Between: UNITED STATES TOBACCO COMPANY Applicant . And: THE MINISTER FOR CONSUMER AFFAIRS First Respondent THE TRADE PRACTICES COMMISSION Second Respondent CORAM: Etinfeld J. DATE: 28 March 1988 PLACE: Sydney MINUTE OF ORDERS 1. Notice of Motion is dismissed 2. Costs reserved. NOTE: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAI COURT OF AUSTRALIA ) GENERAL DIVISION No. G 158 of 1988 NEW SOUTH WALES DISTRICT REGISTRY Between: UNITED STATES TOBACCO COMPANY Applicant And: THE MINISTER FOR CONSUMER AFFAIRS First Respondent THE TRADE PRACTICES COMMISSION Second Respondent CORAM: Einfeld J. DATE: 28 March 1988 PLACE: Sydney REASONS FOR JUDGMENT On 13 January 1988, the Federal Minister for Consumer Affairs (the Minister) gave notification in the Gazette (the notification), pursuant to section 65J(1) of the Trade Practices Act 1974 (the Act) that he was proposing to use his powers under section 65C(5) of the Act to declare certain smokeless tobacco products and snuffs to be unsafe goods on the grounds that they cause oral cancers, throat tumours and other medical or pathological consequences for their users. Section 65C(5) provides: "Subject to section 65J, where it appears to the Minister that goods of a particular kind will or may cause injury to any person, the Minister may, by notice in writing published in the Gazette, declare the goods to be unsafe goods." Section 65J(1) provides: "Subject to section 65L, where the Minister proposes to publish a notice under sub-section 65C(5) or (7) or 65F(1) in relation to goods of a particular kind, the Minister shall prepare - (a) a draft of the notice proposed to be published; and (b) a summary of the reasons for the proposed publication of the notice, and shall, by notice in writing published in the Gazette, invite any person (in this section referred to as a "supplier") who supplied or proposes to supply goods of that kind to notify the Commission, within the period (in this section referred to as the "relevant period") of 10 days commencing on the day specified in the Jast-mentioned notice, being not earlier than the day on which that notice is published in the Gazette, whether the supplier wishes the Camnission to hold a conference in relation to the proposed publication of the first-mentioned notice." In accordance with the terms of section 65J(1), the notification set out a draft of the proposed declaration and invited any actual or proposed suppliers of the relevant goods to notify the Trade Practices Commission {the Commission) within 10 days whether it was desired that the Commission hold a conference in relation to the intended declaration. United States Tobacco Company (the applicant) was granted an extension of the 10 day period, as permitted by sub-section (3) of section 65J, to 8 February 1988. On that date the applicant gave notice of its wish for such a conference by letter to the Commission. The letter disputed both the validity and the applicability of section 65C and expressed the application for the conference as being without prejudice and as not constituting a waiver of any rights to advance those disputations in appropriate proceedings. A statement of claim on behalf of the applicant followed two days later, on 10 February 1988. It was accompanied by the usual application for the relief sought, filed jointly with an application for judicial review of the Minister's action in giving the notification. The statement of claim makes two separate allegations. Assuming that the Minister's action was otherwise valid, and assuming further that the medical bases for the Minister's proposed declaration were true, the statement of claim firstly alleges that the pathological conditions concerned were not within the concept of "injury" as required by section 65C(5). The statement of claim secondly claims that the whole of Division 1A of the Act (in which section 65C appears), or at least those parts of it which purport to empower the Minister to protect consumers from injurious goods and their effects, are ultra vires section 51 (xx) of the Constitution. The Commission convened the conference on 18 February 1988. The applicant's representatives at the conference disputed its validity and sought its adjournment until the Federal Court proceedings had been heard. In the event, the conference was only adjourned until after the first directions hearing of the proceedings on 3 March 1988. It reconvened on 9 March 1988 and resulted in a request by the Commission to the parties to make submissions in writing as to whether the conference should continue notwithstanding the Federal Court proceedings. Following extensive written submissions by the Minister and the applicant, the Commission decided to continue with the conference. I am informed that it is now scheduled to reconvene in Canberra at 2.00 pm today, albeit for the purpose only of fixing a timetable for its future conduct. Following upon a request from the applicant on 2 March 1988, the Minister on 16 March 1988 supplied a statement of his reasons for the proposed declaration, pursuant to section 13 of the Administrative Decisions (Judicial Review) Act 1977 (the Judicial Review Act). Thereupon, on 22 March 1988, the applicant filed a notice of motion seeking an order under section 23 of the Federal Court Act 1976 restraining the Commission from proceeding with the section 653 conference, or alternatively, an order under section 15(1)(b) of the Judicial Review Act, staying the conference until the determination of the proceedings in this Court. On the same day, the applicant also filed a second application under the Judicial Review Act seeking the setting aside of the Commission's decision to proceed with the conference and an accompanying notice of motion asking the Court to suspend the operation of its decision to do so, pursuant to section 15(1)(a) of the Judicial Review Act. This application and notice of motion is matter G 769 of 1988. It was agreed at the hearing before me that a decision was only necessary now in respect of the first notice of motion, namely the one filed in matter G 158 of 1988. When the case was called, the Australian Federation of Consumer Organisations Inc. (the Federation) applied under section 12 of the Judicial Review Act to be made a party to matter G 769 of 1988. When that matter was deferred as indicated, it applied to become a party to G 158 of 1988. The application for injunctive relief had been brought on urgently on 25 March 1988, so as to permit a determination before the section 65J conference reconvened on 28 March 1988. The Federation had appeared at the two previous sittings of the conference and was planning to be present whenever it reconvened. The applicant, the Minister and the Me Commission consented to the Federation's becoming a party. For these reasons, and notwithstanding its lack of any affidavit or other evidence on which I could exercise the discretion provided for in section 12(2), I granted the application conditional upon the Federation's filing an affidavit setting out its status and interest in the two decisions or sets of conduct alleged (that is, the Minister's in notifying the "intention to declare the goods unsafe and the Commission's to continue with the conference). If this takes place, the Federation will become the third respondent in both sets of proceedings. The question of the Federation's costs will be determined later, the applicant having limited its consent to joinder on the basis that no costs would be occasioned to the applicant. Before turning to the matters argued before me, it is appropriate to consider the application for judicial review in support of which the restraining order is at least partly sought. This seeks a review of the Minister's action in publishing what amounts to an advance notice of a proposed declaration and an invitation to suppliers to seek a conference with the Commission, presumably to try to obtain a recommendation that the Minister not proceed with this proposal, at least in the draft form set out in the gazettal. (By sections 65K and P, the Minister is not bound to accept the Commission's recommendations but must have regard to them.) The request for the section 13 statement of reasons followed the words of the section quite closely but the reasons themselves seek to justify an actual declaration, rather than the action actually taken to give advance notice of intention to declare and invite applications for a conference. The application for review seeks inter alia a quashing of this so-called "decision" or "conduct", and could only do so because if it is in truth either, it is the only "decision" so far made or "conduct" engaged in by the Minister. I am not at all sure that this is a "decision to which the Act applies" (see section 3(1) of the Judicial Review Act) or "conduct" (section 6). If it is neither a "decision" nor "conduct", judicial review is not the appropriate procedure for the immediate circumstances. In addition, I am not yet persuaded that the applicant is "aggrieved" by any "decision" or "conduct" as required by sections 5 and 6 of the Judicial Review Act. These doubts may not apply in G 769 of 1988. Notwithstanding its apparent technicality, the distinction between an actual decision to declare and a statutorily required notice that a declaration will, or will probably, or will more than likely, or may, be made unless a conference recommends otherwise (I use these alternatives because section 65C(5) only permits and does not require a declaration of unsafety, and section 65P leaves every option open), appears to me to have possible consequences for the application to review. The applicant's counsel indicated at the hearittg that in the judicial review cases, the applicant will be relying, and only relying, upon the same two arguments which form the basis of its statement of claim, namely, constitutional invalidity and the proper construction of "injury" in section 65C(5). In other words, the judicial review application and the application based on the statement of claim appear to raise precisely the same issues. By itself this may not be fatal (although no good reason presently appears to pursue both proceedings), but because it is not clear whether there is a relevant decision or conduct of which to seek judicial review, and because the statement of claim raises fully and adequately the matters sought to be advanced, I am uninclined to pronounce injunctive relief in aid of the judicial review application, at least until further argument has been addressed on this aspect. I therefore turn to consider the application to restrain the holding of the conference in aid of the application supporting the statement of claim. The only orders sought in this regard are against the Commission. It is fundamentally common ground that I can stay the conference if the applicant's arguments raise at least one serious issue or question to be tried. In Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 at 153, Mason ACJ, as he then was, said: "The principles governing the grant or refusal of interlocutory injunctions in private law litigation have been applied in public law cases, including constitutional cases, notwithstanding that different factors arise for consideration. In order to secure such an injunction the plaintiff mist show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate conpensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction. Recently two members of this Court have held that the plaintiff must establish that there is "a serious question to be tried", to use the expression favoured in American Cyanamig v Ethicon Ltd. (1975) AC 396 at 407, in preference to the "prima facie case" test which was adopted in Beecham Group Ltd. v Bristol Laboratories Pty. Ltd. (1968) 118 CIR 618 at 622: Australian Coarse Grain Pool ou Ltd. v Barley Marketi ° ens 982) 5 425, 46 ALR 398 Gibbs ; anuts Pty. Ltd. v Peanut Marketi Board (1984) ALJR 283 at 284, 52 tx 651 at 653 (Brennan J). In my opinion that is the correct test to be applied at least in the majority of cases." This was also the test applied by a Full Court of this Court in Aboriginal Development Commission v Ralkon (1987) 74 ALR 505 and ina number of other cases therein mentioned. At 509, line 47, the Full Court said that whether there is a serious question to be tried must be answered with reference to the circumstances of the case. It went on: "There may be cases in which the facts are so clearly and comprehensively established at the time of the application for the interim order that the court would conclude that the applicant had no arguable case. At the opposite extreme there may be cases in which the applicant has had little Opportunity to ascertain the facts and to adduce evidence but there is same material to suggest an entitlement to relief. Upon further investigation that material may turn out to be capable of ready refutation or explanation but, in the meantime, it may be appropriate for the court to intervene. Everything must depend upon the circumstances of the case, including the extent to which the applicant has had an opportunity to present the facts to the court and the consequences of granting or of refusing relief. This is what was meant by Woodward J when, in Bullock (5 FCR 464 at 472) and in J t v Hurford "(21 August 1985, unreported) he spoke of considering together the two tests of "serious question" and "balance of convenience". The overriding principle is that referred to by Dawson J in Hayden (56 AIR 73 at 79) "that a court ought not to be misl by an overstrict application of verbal formulae to depart from its primary duty to do complete justice in the cause." This decision must be viewed in the light of its emphasis on the state of the evidence on the substantive issue. It may not be particularly relevant to a case where, as here, it is not so much an evidentiary lack as an inadequacy in the qualitative substance of the case sought to be advanced. In Dallikavak v Minister for Immigration and Ethnic Affairs (1985) 9 FCR 98; 61 ALR 471, where the Full Court had also followed the "serious question" test, Jenkinson J underlined this limitation (FCR at 108; ALR at 481) when he said: "There will be occasions when the exercise of the power is sought at a time when the refusal (or the grant) of a stay will have grave consequences, but it is impossible to fom any view as to whether there is such a question to he tried There will be cases in which the prejudicial consequences for the applicant of refusal of a stay (or for the commmity of grant of a stay) are of a kind or degree outside the contemplation of those who framed the criteria governing the grant of interlocutory injunction relief in litigation concerning proprietary and contractual interests." Keely J, in Perkins v Cuthill (1981) 334 ALR 669, expressed the even more positive view that orders under section 15(1)(a) (and I assume section 15(1)(b)) of the Judicial Review Act should not be the principles applicable to interlocutory injunctions at all. Honour was of the view that section 15(1) (a) governed by His "requires an applicant to satisfy the court that reasons or circumstances exist which make it just that the court should make the order sought, but it is not necessary for the applicant to show that those reasons or circumstances are in any sense "special" or "exceptional". Of course the discretion must be exercised judicially and not arbitrarily." commenting on Keely J's formulation, sought to bridge these "... 1t will be difficult for an applicant to show that reasons or circumstances exist which make it just that the court should make the order sought unless it is demonstrated that. the applicant has a point of substance to argue which, if successful, will result in judgment in his favour. In this respect it does not appear to us that the two tests are, in practical terms, very different." In Faingold v Zammit (1984) 1 FCR 87, a Full Court of this Court, in concepts: (See also Snow v Deputy Commissioner of Taxation (1986) 70 ALR 672 and the cases there cited.) With respect, none of these cases in this Court actually define or explain the respective terms used or the required degree of satisfaction of the relevant criteria. The applicant says that both the issues raised qualify under all those "tests, at least sufficiently to call for interlocutory intervention. Put simply, its first argument, viz. that oral cancers and throat tumours do not fall into the category of "injury" within section 65C(5), is that "injury™ is intended to mean physical injury and not disease. Notwithstanding the danger of imputing all-pervading logic to Parliament and its decision-making at all times, it is difficult to conceive of the reasoning which would give birth to legislation permitting a Minister to protect consumers from bruised fingers, contused or grazed legs, and broken teeth, but not from death by cancer, cardiac arrest or AIDS. In addition, section 65L implies quite the contrary of this argument. It permits a Minister to act peremptorily in the case of goods which create "an imminent risk of death, serious illness or serious injury". Such urgency excludes the goods from the conference procedure or permits the section 65C declaration regardless of any conference outcome or other circumstances. I cannot see at the moment how this argument can accommodate section 65L. The argument undoubtedly raises a serious social question. It would be serious indeed if, for example, citizens could be protected from foodstuffs and children from toys which might block their throats and cause them to choke, perhaps to death, but not from carcinogens or other substances which might cause them to contract and perhaps die from cancer or other serious diseases. Although in the short time available, I have not been able to remind myself of all of them, it seems that the workers' compensation cases in which the meaning of "injury" is discussed are not decisive of this issue because of their context and the statutory expansion of "injury" in most of the Acts to include diseases. In the days when this was not the case, or in cases when it was necessary to deal with the words separately, different opinions or expressions were pronounced, none of them especially definitive of this case: see, for example, Hume Steel Ltd. v Peart (1947) 75 CLR 242 (apparently overruled by the Privy Council in Slazengers (Australia) Pty. Ltd. v Burnett (1951) AC 13; Darling Island Stevedoring & Lighterage Co. Ltd. v Hussey (1959) 102 CLR 482; Favelle Mort Ltd. v Murray (1976) 133 CLR 580 (where at least three members of the High Court appear to have expressed views supportive of the inclusion in "injury" of at least externally induced diseases); and Hockey v Yelland 59 ALJR 66. Notwithstanding the distinctions drawn in Dunn v Birds Eye Foods (1959) 2 QB 265 at 275, I find it difficult to conclude that this serious social matter raises a real issue to be tried. Every serious matter does not create a good or possible cause of action; nor is an argument "serious" because it will have significant consequences if upheld by a Court. What is really being spoken of here is whether the argument has real, as opposed to slight or illusory, chances of success. I think this case is in the latter category. On the constitutional point, the applicant seeks to argue that Division 1A of the Act is a law about product safety and consumer protection and not about trading corporations. Not every constitutional matter will raise a serious issue to be tried, still less a point of true substance. Unless it has a real chance of success and will determine or significantly affect the matter in issue, an argument called "constitutional" will not become a refuge within which central issues will be permitted to be hidden. This argument of the applicant seems to be quite at odds with the views expressed on the extent and reach of the corporations power by several members of the High Court in the Tasmanian Dams case (1983) 158 CLR 1 (see Mason J at 146, 148 and especially 153, Murphy J at 179-80, Brennan J at 240-1, Deane J at 269- 71). %In the light of these expressions and of what was said in Actors and Announcers Equity Association of Australia v Fontana Films (1982) 150 CLR 169 (especially by Mason J at 201-2), Strickland v Rocla Concrete Pipes (1971) 124 CLR 468 and Fairfax v Federal Commissioner of Taxation (1965) 114 CLR 1 (especially by Kitto J at 7), I am of opinion that this does not raise a point of true substance in the sense that it has a real chance of success. The question is, however, whether my preliminary qualitative views are sufficient to determine the issue for present purposes. In Ralkon, the Full Court of this Court said that one ground for refusal of interim relief would be that the applicant had "no arguable case". This is not the position here. However weak they appear to be, these arguments are not hopeless. The applicant's points are no doubt arguable, although in my opinion barely so. However, Ralkon did not express the test exhaustively, and as I have pointed out, must be read against the background of evidentiary considerations. In Faingold, the Court talked of a "point of substance" which if upheld would result in success. The key word here is "substance", because there is no doubt that if either argument of this applicant is successful, its products clearly cannot be declared unsafe under the current legislation. This is not a case of insufficient or incomplete evidence. Although the Federal Court cases referred to are therefore largely not in point, it seems on my reading of the authorities that this matter is to be resolved on the basis of my assessment of the case and of the arguments advanced in its support. If therefore the appropriate test for this case is that the applicant must establish a concept such as "a serious question to be tried", as explained in Castlemaine Tooheys, or "a point of substance to be argued", I believe it has failed. If the more general composite formulations of the Full Court in Faingold, of Keely J in Perkins v Cuthill, or of Jenkinson J in Dallikavak, are to be followed, or if the expression of Dawson J in Hayden quoted above from Ralkon (the Court's primary duty is "to do complete justice in the cause") is the appropriate test here, I must then embrace the balance of convenience. The applicant's arguments on this subject were that: (a) the Minister has taken over two years to take action; (b) the States could act and could at any time have acted to ban the sale of these goods; (ec) the Commonwealth could have moved to ban the import of the goods; (d) the conference will require considerable expense to prepare (in excess of one year's gross takings from Australian sales); le) a declaration of wunsafety would result in serious trading and financial suffering for the applicant; (f) (g) ~14- because it would take place in the absence of an authoritative definition of "injury", the conference may be completely abortive; a stay of the conference now is not final, so that if there were undue Court delays, the stay/injunction can be reviewed. The respondents put the view that this application was premature. They argued: (a) (b) (ce) (da) (e) (f) there is far from any certainty that the goods will be declared; there was and is every opportunity for the applicant to seek expedition of the court proceedings; if the goods were not declared, the court proceedings would be a fruitless expense; in this event, because the conference would presumably proceed expeditiously, the applicant would suffer little or no injury because it would save all or much of the court costs; if the Commission recommended against the applicant and the declaration was to go ahead, the applicant could seek orders then 1f the legal proceedings had not yet been completed; if the Minister's information is correct, the risk to the public was considerable; (g) even if the applicant failed everywhere, it had only suffered from the risks it had voluntarily undertaken to develop or preserve its Australian commercial enterprise. My view is that the respondents' arguments are to be preferred. I have some difficulty in determining in favour of the applicant a balance of "convenience in relation to an application to stay a conference called at its request, albeit without prejudice and waiver of rights. Notwithstanding the applicant's earnest entreaties, I am not persuaded that the steps it took concerning the conference and ensuing court proceedings were the only avenues open to it at the time. However, assuming resolution of these doubts in favour of the applicant, I must engage in a weighing up of the possible net cost to the applicant against the net cost to the public. In Castlemaine Tooheys (above) at 154, Mason ACJ said: . 1t may be that in some cases where the public interest would be adversely affected by the grant of an injunction the plaintiff may need to show a probability, even a distinct probability of success, in order to obtain an interlocutory injunction. The degree of likelihood of success in the action is a factor that is related to the balance of convenience in a way shortly to be mentioned." His Honour pointed out that in most cases where interlocutory injunctions have been granted in aid of a constitutional challenge, there was no significant detriment to the public interest - or the terms of the injunction preserved the public interests involved. He went on at 155: "It is a different matter where it is suggested that the proposed restraint on enforcement of the statute would occasion a significant detriment to the public interest by preventing the defendant from enforcing a legislative scheme which 1s designed to protect the environment from pollution by litter. Then the need to protect the private interests of the plaintiff must be weighed against the public interest in avoiding injury to the environment ............... .... In arriving at a balance of convenience the Court will take into account the seriousness of the conduct enjoined by the statute and the damage to the public interest that may be caused by restraining its enforcement. And in some cases the balance of convenience may be affected by the Court's perception or evaluation of the strength of the plaintiff's case for invalidity." It seems to me that protection of the public from unsafe goods is sufficiently akin to protection of the environment from pollution by litter to suggest that a stmilar approach in principle is appropriate here. On the issue of interlocutory injunctions in aid of alleged constitutional invalidity, Mason ACJ quoted at 155 a view expressed in Canada that "'... the balance of convenience normally dictates that those who challenge the consitutional validity of laws must obey those laws pending the court's decision. If the law is eventually proclaimed unconstitutional, then it need no longer be complied with, but until that time, it must be respected and this court will not enjoin its enforcement. Such a course of action seems to be the best method of ensuring that our society will continue to respect the law at the same time as it is being challenged in an orderly way in the courts. This does not mean, however, that in exceptional circumstances this court is precluded from granting an interim injunction to prevent grave injustice, but that will be rare indeed.'" Morgentaler v Ackroyd (1983) 42 OR (2d) 659 at 668. Although Mason ACJ thought that the last sentence of that passage might put the position too highly for Australia, his Honour accepted the general thrust of the Canadian view and said that unless there were what he described as "compelling grounds", the Court should presume validity until it was held otherwise. In my view, there are no sufficiently compelling grounds' to doubt the validity of the relevant provisions of the Act which should therefore be presumed to be and be treated as valid. Unless therefore section 65C(5) might reasonably be thought not to apply to these goods, or probably does not apply, the balance of convenience in my opinion falls heavily on the side of proceeding with the conference. I have already said that I do not believe the applicant has shown a probability, still less a distinct probability, of success. Nor has it demonstrated that it will suffer irreparable loss outside the bounds of reasonable commercial risk and expense. On the other hand, I think this is a case where the public interest would be adversely affected by the grant of an injunction or a stay. Despite the fact, as is agreed, that the goods concerned have been marketed in Australia for very many years - and this fact may operate both ways - I believe that the overwhelming public interest is to have the substantive matter of safety determined so that unless prevented by court order on legal grounds, the Minister can finally decide on the action he should take. It is no answer to this reality that there have been official delays in reaching this stage or that there were or are other ways for the Government to achieve the same result. For these reasons, I refuse the orders sought in the notice of motion and the motion is dismissed. Costs may be argued at a convenient time. | certify that this and the Ho Preceding pages are a true copy of the Reascns for Judgment here i n of his Mr. Justice Einteld © Honour Sve OO Associate Dated: 3) ~ MAgcH 19«3 Counsel for the Counsel for the counsel for the Date of Date of and solicitors applicant and solicitors first respondent and solicitors second respondent hearing judgment Mr. R. Gyles, QC with Mr. B.W. Walker instructed by Baker & McKenzie solicitors Mr. R.B. MacFarlan, QC with Mr. J. Allsop instructed by the Australian Government Solicitor Mr. J. Allsop instructed by the Australian Government Solicitor 25 March 1988 28 March 1988