Tobacco Documents Online

996 461 i0 15 20 25 Me BAKER: In the course of several sessions before Your Lordship, beginning mid-December, nineteen eighty-eight (1988), if I heard it once, I heard it several times that I was getting documents from my friends prior to discovery and prior to trial, simply by leave of their largesse, as it were. My friend is quite wrong, there isn't necessarily a time for a certain kind of document as opposed to a time for another kind of document. This is a trial. He has opened the door wide by the introduction of this document showing some of their expenses going back an eleven (Ii) year period, and my friend is quite wrong in his inference that I suspect that there is something amiss or wrong or perhaps even dishonest about the document that has been filed. all. That's not the case at As I told you this morning, My Lord, all I want to do is be able to verify the figures that have been presented to the Court and the only way to do that is by a serious certified, audited financial statement, which this is not. This has come out of a computer printout on the twenty-fourth (24th) of April, nineteen eighty-nine (1989) for this case and only for this case. That is not the best evidence of what was spent by this company in an eleven (II) year period for their AUDIOTRANSCRIPT, Division de Pierre Vilalre & Associ4s Ll4e

997 462 i0 15 20 25 advertising. It is incorrect to say, my friend wants to argue the point that it is not in issue whether advertising expenses trigger an increasing consumption. Maybe they do, maybe they don't, but I certainly don't have their figures, and it is in issue, because it is in the Crown's contestation of this case. So, a) it is relevant, b) they have opened the door wide for the request, and it doesn't necessarily mean that the record is going to be encumbered by eleven (ii) years of financial statements. We may not deal with them at all. THE COURT: Yes, but what you're trying to get by those statements is just a verification of a testimony. That's not a document pertaining to the issue. You only want to verify something. Me BAKER: My Lord, they have filed a document. I'm not satisfied with the document that they have filed. This came out of a computer. I have no way to know whether this document is accurate, whether the computer person made an error, whether things were left out of this document deliberately or inadvertently, and I cast no aspersions on any person. This is a document produced only for the AUDIOTRANSCRIPT, Division de Pierre Viloire 8. A,SocJ~s L,~e

998 463 i0 15 20 25 record of this trial. But they have documents that go back eleven (ll) years that are certified financial statements that are the real documents of the company, as it were, and I think we're entitled to see those documents to put them to the proof. That is the best evidence of what was actually spent on advertising and marketing and promotion over an eleven (ii) year period. Me IRVING: Well, My Lord, my friend says, he has no way of verifying. If he would trouble to read the exhibits which have already been filed, he'd find many of these figures are in those exhibits. He should ask Mr. Hoult, perhaps, whether the certified financial statements will show the figure he was looking at this morning, which was the research figure for nineteen eighty-seven (1987). I say to Mr. Baker, I say to the Court, the certified financial statements won't show that kind of detail, and we would be producing it for nothing. So, if my friend has doubts about the accuracy of what has been produced, he should ask the witness, but... THE COURT: Well, certainly a preliminary question is whether or not you're going to find those figures in the financial statements. Me IRVING: AUDIOTRANSCRIPT, D~,~oo ~ Pierre ViJaire & As,o¢i~s Ll~e

999 464 5 I0 15 2O 25 Yes. THE COURT: Mr. Hoult, would you stand up, please. Q- The information contained in the Exhibit RJR-3, relating to advertising and promotion spending, where did you get those figures from? A- Those figures on the Exhibit, My Lord, were produced at the request of counsel, and as has been suggested by RJR's counsel, the figures from audited data would not be in the same detail as this is. There would be a total figure for marketing. So the research element would be within a total figure. Q- But where did you get those specific figures for various headings of the spendings? A- These figures, My Lord, were from the record of our company, which we keep over a large number of years, and they were simply pulled out for this purpose. These are from the audited figures, and the total at the bottom, which is the total, would correspond with the audited figures. We have broken them down for this exercise. Me IRVING: They were also produced at the discovery, My Lord. Baker has the discovery Exhibit in front of him. Me BAKER: Perhaps the Court may want to have a look at that and Mr. AUDIOTRANSCRIPT, Division de Pierre Vilaire & As, soci~s L,4e

i000 465 5 I0 15 20 25 judge for himself whether that's an audited financial statement. Me IRVING: Well, I didn't say it was an audited financial statement, I simply said that most of those numbers were provided on discovery. THE COURT: Where does that come from? Me IRVING: That was a document which was -- I'm speaking now from memory -- I think this was prepared as a result of a conversation between Mr. Baker and I to... THE COURT: No, that's not what I'm asking. Where do the numbers come from? Me IRVING: Oh, they're -- Mr. Hoult can answer that. A- They come from our financial records, My Lord, and at the request of Mr. Baker who asked for the breakdown of, as I recall, at discoveries, of marketing expenditure. THE COURT: What I want to know is what you're going to find in the financial and in the audited financial statements? Are we going to find the detail of all of those items or are we going to find just the one number? AUDIOTRANSCRIPT, Division de P~erre Vilalre & Associ~, Lt~e

I001 466 i0 15 20 25 We are going to find one or two numbers, which would be a summary of those numbers you have before you. Do you have something to add, Maitre Baker? Me BAKER: I'm sorry, My Lord, I didn't hear you. THE COURT: Did you have something to add? Me BAKER: No, My Lord. THE COURT: I will allow the question under reserve. Me BAKER: Thank you, My Lord. Q- Mr. Hoult, it would appear unlikely that your examination is going to terminate this afternoon, so would you be so kind, given the Court's ruling, to instruct somebody from your company to telephone Toronto to have these financial statements forwarded to us so we can have them available tomorrow morning. A- And you require the audited financial statements of our company? That is correct. For the past ten (i0) years? Track any years and the document that you have produced that you just had in front of you from nineteen AUDIOTRANSCRIPT, D~vi,loo ae Pierre Vilaire & Associ~s Lt4e

1002 467 i0 15 2O 25 seventy-six (1976) through nineteen eighty-seven (1987). The audited financial results. Yes, I will. Statements and all. I will. That's what I asked for. The entire statements, sir. Thank you. Mr. Hoult, is the Court to understand from your previous testimony that your advertising is only directed to or targeted at existing smokers? It is. Can you define for the Court what you mean by "smoker"? A smoker is an adult, that is over the age of eighteen (18)~ who is currently smoking. Currently smoking how many a day? that you can qualify a person as a smoker, Mr. Hoult? Well, I suppose the technical minimum would have to be one (i) cigarette, in terms of our research: "Do you smoke". One (i) cigarette per day is the convention, as I recall, for market research studies. On some studies, we would ask for a higher consumption than that, but as a smoker, the definition would be purchasing cigarettes, smoking one (1) cigarette a day or more, aged over eighteen (18). So any person who smokes, who's over the age that you seem to feel is the appropriate age for a person to be smoking at all, which is over seventeen (17), who smokes Is there a minimum so AUDIOTRANSCRIPT, Div;s;on de Pierre Vilaire & Associ~, L~'~e

1003 468 15 A- Q- A- 2O Q- A- 25 Q- one (i) cigarette a day, in your view and in your company's view, it's fair game to advertise to that person as a smoker? Yes. And any advertising directed to such a person, you don't think could be an enticement to that person to smoke and smoke more and really get into the habit? No, absolutely not. We are trying to entice that individual to smoke our brands or -- rather than the competition's -- or to continue to smoke our brands. Hm, hm. You make no distinction then between a person who smokes one (I) cigarette a day, a person who smokes ten (10) cigarettes a day, forty (40) or fifty (50) or sixty (60) or seventy (70), I take it? No, we do not. Does RJR-Macdonald advertise to new smokers? According to the definition I've just given, yes, providing that person smokes. Whether he's been smoking one (i) month or one (i) year, he would be a new smoker. And in the jargon of your company or the expressions used by your company in its advertising documents, does RJR-Macdonald advertise to first-time smokers? First-time smokers would be smokers who had a brand, and we would certainly advertise to those people. Does your company want non-smoking adults to start AUDIOTRANSCRIPT, Division de Pierre Viloire & Associ~s Ll4e

1004 469 i0 15 2O 25 buying and using cigarettes, Mr. Hoult? Well, obviously if -- if the continuing -- if the decline in the industry continued, at some stage we will be out of business, so obviously we would be pleased if our market continued to grow by new smokers coming into the market. You need replacement smokers for those who are dying and quitting, don't you? If our industry is to continue, yes, we need replacement smokers. So on an annual basis, your company and the industry generally in Canada adds a significant number ofsmokers to its client lists, as it were? Yes. The replacement smokers? Yes. Is it fair to say that on an annual basis in Canada, for the last years, at least fifty (50,000) to seventy-five thousand (75,000) new smokers joined the smokers' ranks on an annual basis? I can't -- I don't have the number but obviously, there is a significant -- there are a significant number of people entering the market every year to replace those who are leaving. Well, I think you know, Mr. Hoult, that approximately AUDIOTRANSCRIPT, Division de Pierre Viloire & Associ~s Lt~e

1005 470 5 i0 15 2O 25 one percent (1%) of the market, on an annual basis, constitutes new smokers, correct? More or less? A- As I recall, it's approximately... Q- Approximately... A- Yes. Q- ... one percent (1%). And you know that there are approximately seven million (7,000,000) smokers in Canada, more or less? A- Yes. Q- Something like that. THE COURT: Well, give me time. More or less one percent (1%) of what? The smoking people? Me BAKER: Therefore... THE COURT: And more or less how many smokers? Me BAKER: Seven million (7,000,000), My Lord. THE COURT: In Canada? Me BAKER: That's correct. Q- So therefore you would agree with me, I take it, that somewhere between fifty (50,000) to seventy-five AUDIOTRANSCRIPT, Division de Pierre Viloire & A,soci4s