Re Trade Practices Commission v Arnotts Limited; Arnott'S Biscuits Limited; Fledspac Pty Limited and the Dickens Corporation Pty Limited [1990] FCA 11 (31 January 1990)

FEDERAL COURT OF AUSTRALIA

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
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.

DECISION

(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.

2. 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.

3. 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')."

4. 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)."

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

6. 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.

7. 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.

8. The general principles in this area were considered by the High Court in Paric v. John Holland (Constructions) Pty. Ltd. [1985] HCA 58; (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] HCA 65; (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'."

9. 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."

10. 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."

11. 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.

12. 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."

13. 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.

14. 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.

15. 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."

16. 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."

17. 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.

18. (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).)

19. 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.

20. 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.

21. 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] FCA 21; (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).

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

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

24. 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.

25. 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.

26. 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.

27. 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.

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