Cauvin v Philip Morris Limited

[2005] NSWSC 640

CITATION:	Cauvin v Philip Morris Limited & Ors [2005] NSWSC 640
HEARING DATE(S):	4/4/05, 5/4/05
JUDGMENT DATE :	26 August 2005
JUDGMENT OF:	Bell J at 1
DECISION:	1. The plaintiff has leave to file and serve her second amended statement of claim in conformity with these reasons within four weeks of today's date; 2. The plaintiff is to pay the defendants' costs of the motion as agreed or assessed

LEGISLATION CITED:	Civil Procedure Act 2005 Supreme Court Rules 1970 Trade Practices Act 1974 Trade Practices Amendment Act 1977 Trade Practices Revision Act 1986 Uniform Civil Procedure Rules 2005
CASES CITED:	Bray v F Hoffman-La Roche Ltd [2002] FCA 243; 118 FCR 1 Bray v F Hoffman La Roche Ltd [2003] FCAFC 153; 200 ALR 607 Cauvin v Philip Morris Limited [2003] NSWSC 631 Cauvin v Philip Morris Ltd [2004] NSWSC 644 International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644 Gould v National Provincial Bank [1960] Ch 337 Janssen & Cilag Pty Ltd v Pfizer Pty Ltd (1992) 109 ALR 638 McKellar v Container Terminal Management Services Ltd [1999] FCA 1101165 ALR 409 March v Stramare (E & M H) Pty Ltd 50 (1991) 171 CLR 506 Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34 Smith, Stone & Knight Ltd v Birmingham Corporation [1939] 4 All ER 116 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 Yorke v Lucas (1985) 158 CLR 661
PARTIES:	Myriam Cauvin (Plaintiff) Philip Morris Limited (ACN 004 694 428) (1st Defendant) Philip Morris (Australia) Limited (ACN 004 316 901) (2nd Defendant) British American Tobacco Australia Services Limited (ACN 004 069 649) (3rd Defendant) W.D. & H.O. Wills Holdings Limited (ACN 003 763 291) (4th Defendant) British American Tobacco Australasia Limited (ACN 002 717 160) (5th Defendant) British American Tobaco Australia Limited (ACN 000 151 100) (6th Defendant) Imperial Tobacco Australia Limited (ACN 046 148 681) (7th Defendant)
FILE NUMBER(S):	SC 11301/02
COUNSEL:	N. Francey (Plaintiff) J.R. Sackar QC / S. O'Meara (1st and 2nd Defendants) D. Beach SC / M. Wheelahan SC (3rd and 4th Defendants) I. Jackman / S.A. Goodman (5th and 6th Defendants) L.G. Foster SC / I. R. Pike (7th Defendant)
SOLICITORS:	Maurice May & Co (Plaintiff) Allens Arthur Robinson (1st and 2nd Defendant) Corrs Chambers Westgarth (3rd and 4th Defendants) Baker & McKenzie (5th and 6th Defendants) Gilbert & Tobin (7th Defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Friday 26 August 2005

11301/02 Myriam Linda Cauvin v Philip Morris Limited (ACN 004 694 428)

JUDGMENT

1 BELL J: The plaintiff moved on notice filed on 3 September 2003 for orders, including:

“1. That leave be granted to the Plaintiff to join as additional parties the companies listed as Defendants Eight to Sixteen in the Proposed Second Amended Statement of Claim forming Exhibit RD1 to the Affidavit of Rebecca Dimaridis sworn 3 September 2003 and filed and served herewith.
2. That leave be granted to the Plaintiff to amend the statement of claim in the form of the Proposed Second Amended Statement of Claim or in such modified form as the Court will permit.”

2 After the motion was filed, the plaintiff’s solicitor, Ms Dimaridis, in an affidavit affirmed on 18 March 2005, annexed a further amended version of the proposed second amended statement of claim (the PSASC).

3 Each of the defendants opposes the grant of leave to file and serve the PSASC.

4 The plaintiff sought to amend the PSASC in one further respect of which the defendants were notified shortly before the hearing. The amendment is to the Note, which contains a number of definitions. Subparagraphs (d), (e) and (f) of the Note refer to the period from 1 July 1977. The plaintiff sought to amend the reference in each case to refer to the period from 1 October 1974. Subject to their further amendment, the motion was argued on the basis that the leave sought was to file the PSASC in the form that is annexed to the affidavit of Ms Dimaridis affirmed 18 March 2005.

5 The present proceedings have a lengthy history. On 1 August 2003 I struck-out parts of the amended statement of claim: Cauvin v Philip Morris Limited [2003] NSWSC 631 (the pleading judgment). Subsequently I dealt with a challenge to the power to grant the relief that was claimed in respect of “other persons”: Cauvin v Philip Morris Ltd [2004] NSWSC 644 (the power judgment).

6 In the pleading judgment I ordered that those paragraphs by which the plaintiff sought to plead a case pursuant to Pt 8 r 13 of the Supreme Court Rules 1970 (the SCR) against each of the defendants as representing a number of overseas companies were to be struck out. The plaintiff now seeks to join nine overseas corporations as defendants to the proceedings. The defendants oppose the joinder contending both that no arguable case is pleaded against the proposed eighth to sixteenth defendants and that their joinder is not necessary.

The case against the proposed secondary defendants

7 The plaintiff pleads the following facts concerning the proposed secondary defendants (paragraphs 1.5 – 1.27):

“1.5 ALTRIA GROUP, INC. (formerly known as PHILIP MORRIS COMPANIES, INC.) (“ PMC ”) and Philip Morris International, Inc (“ PMI ”) are Virginia corporations with their principal place of business located at 120 Park Avenue, New York, New York 10017.
1.6 PMI is a subsidiary of PMC.
1.7 PHILIP MORRIS USA, INC. (“ PM ”) is a Virginia corporation whose principal place of business is located at 120 Park Avenue, New York, New York 10017.
1.8 PMC is the parent corporation of PM and PMI, and has at all relevant times participated in the manufacture and distribution of cigarettes and tobacco products both individually and through its subsidiaries PML and PMA [the Philip Morris defendants].
1.12 At all relevant times PMC and/or PMI and/or PM have placed cigarettes into the stream of commerce for the sale of cigarettes including directly or indirectly in Australia through PML and/or PMA [the Philip Morris defendants].
1.13 BRITISH AMERICAN TOBACCO, P.L.C. (“ BAT ”) is a British corporation with its principal place of business at Globe House, 4 Temple Place, London WC2R 2PG, England and BAT is the successor to B.A.T. INDUSTRIES, P.L.C. (“ B.A.T. Industries ”).
1.14 BRITISH AMERICAN TOBACCO (INVESTMENTS) LTD (“ BAT Investments ”) is a British corporation whose registered office is at Millbank, Knowle Green, Staines, Middlesex, TW18 1DY, England and is the successor to BRITISH AMERICAN TOBACCO COMPANY, LTD (“ BAT Co ”).

1.15 BAT is the parent corporation of BATAS, Wills Holdings, [the Wills defendants] BATA’a and BATA [the Rothmans defendants] and has at all relevant times participated in the manufacture and distribution of cigarettes and tobacco products both individually and through its subsidiaries BATAS and Wills Holdings [the Wills defendants] and has since mid-1999 participated in the manufacture and distribution of cigarettes and tobacco products both individually and through its subsidiaries BATA’a and BATA [the Rothmans defendants].
1.19 At all relevant times BAT has placed cigarettes into the stream of commerce for the sale of cigarettes including directly or indirectly in Australia through BATAS and Wills Holdings [the Wills defendants].
1.20 RJ REYNOLDS TOBACCO INC (“ RJR ”) and RJ REYNOLDS TOBACCO HOLDINGS INC (“ RJR Holdings ”) are New Jersey corporations with their principal place of business at 401 North Main Street, Winston-Salem, North Carolina.
1.21 RJR Holdings is the parent corporation of RJR, and has participated in the manufacture and distribution of cigarettes and tobacco products both individually and through its subsidiary RJR.
1.22 At all relevant times, RJR and/or RJR Holdings has manufactured, advertised, and sold cigarettes, including Best Value, Bright Rite, Camel, Century, Doral, Magna, Monarch, More, Now, Salem, Sterling, Vantage and Winston brand cigarettes throughout the United States and elsewhere, including directly or indirectly in Australia amongst other things through an arrangement with the Rothmans companies.
1.23 IMPERIAL TOBACCO LIMITED (“ Imperial ”) and IMPERIAL TOBACCO GROUP, P.L.C. (“ Imperial Group ”) are British corporations with their principal place of business at Upton Road, Bristol, UK BS99 7UJ.
1.27 Since mid-1999 Imperial and/or Imperial Group have placed cigarettes into the stream of commerce for the sale of cigarettes including directly or indirectly in Australia through ITA.”

8 Broadly the case that the plaintiff seeks to make is that the Philip Morris, Wills and Rothmans defendants who carry on business in Australia as the manufacturers and/or distributors of cigarettes (the case against ITA, which was incorporated in mid 1999, raises different considerations) have since January 1975, conspired together to engage in conduct that is misleading and deceptive or likely to mislead or deceive and/or is unconscionable contrary to the provisions of the Trade Practices Act 1974 (TPA) (paragraph 2.3). Between mid 1976 and late 1977 certain of the proposed secondary defendants are alleged to have conspired to procure their subsidiary companies, including the Philip Morris, Wills and Rothmans defendants, to engage in conduct that contravenes the TPA. Among the objectives of the conduct procured is the promotion of a false controversy over the relationship between smoking and disease (paragraph 2.4.1).

9 The case against the foreign corporations who are the proposed secondary defendants is pleaded in this way:

“ Q. Liability for the contravening conduct
I. Direct Liability of Defendants for Contravening Conduct
2.26 The Defendants, and each of them, have a liability for the contravening conduct insofar as that conduct was engaged in by the Defendants or on their behalf in accordance with section 84(2) of the TPA and/or the equivalent provisions in State and/or Territory Fair Trading legislation.
…
III. Secondary Defendants Liability for the Contravening Conduct of the Primary Defendants
2.29 The conduct referred to in paragraph 2.16 was engaged in by the Primary Defendants as and from July 1977 pursuant to and in accordance with the objectives of the International Conspiracy referred to in paragraph 2.4, and for the common purpose of implementing the objectives of the International Conspiracy, and accordingly each of the Secondary Defendants have a liability for the conduct of the Primary Defendants as and from 1 July 1977 pursuant to section 75B of the TPA and equivalent provisions of the FTA as and from the date those provisions came into effect in that the Secondary Defendants conspired with each other to effect the contravening conduct referred to in paragraph 2.19 and/or 2.20.
PARTICULARS
(a) The first six Defendants, or some combination of them, in or about 1978, joined together to create a body known as the Tobacco Institute of Australia Limited (“ TIA ”), which was funded and controlled by the first six Defendants, the purposes of which included engaging in, cooperatively, conduct of the kind referred to in paragraph 2.16 in accordance with the objectives and means of implementation of the International Conspiracy set out in paragraphs 2.4.1 and 2.4.2 above.
(b) Further particulars are contained in Schedules C and D hereto.
(c) Additional particulars will be provided following discovery.
2.30 By reason of the matters pleaded in the preceding paragraph, the Secondary Defendants have, and each of them has, aided, abetted, counselled or procured the contravening conduct, induced the contravening conduct, been directly or indirectly knowingly concerned in, or party to the contravening conduct of the Primary Defendants.”

10 The “contravening conduct” that forms the basis of the plaintiff’s claim, being conduct that is misleading or deceptive or likely to mislead or deceive and/or unconscionable, is confined to conduct within Australia (Note (m)). The plaintiff seeks to attach liability to the overseas companies for the contravening conduct by invoking the provisions of s 84(2) of the TPA and she seeks to establish that the proposed secondary defendants were involved in the contravening conduct within the meaning of s 75B of the TPA (and the equivalent provisions of the FTA) so as to render them liable to compensate her under s 87(1) for the loss and damage that she has suffered or is likely to suffer.

11 As originally enacted s 84(2) provided:

“Any conduct engaged in on behalf of a body corporate by a director, agent or servant of the body corporate or by any other person at the direction or with the consent or agreement … of a director, agent or servant of the body corporate, shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.”

12 Section 84 was amended by the Trade Practices Revision Act 1986. In its present form subs (2) provides:

“Any conduct engaged in on behalf of a body corporate;

(a) by a director, servant or agent of the body corporate within the scope of the person’s actual or apparent authority; or

(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;

shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.”

13 It is the plaintiff’s case that the proposed secondary defendants directed the primary defendants to engage in the contravening conduct and that liability attaches to them under s 84(2)(b) (04/04/05 T 23.37-42). The conduct of the primary defendants (being conduct within Australia) is deemed to have been the conduct of the proposed secondary defendants to the extent that it was carried out by the primary defendants at the direction or with the consent or agreement (whether express or implied) of the proposed secondary defendants.

14 The facts pleaded as the basis for the s 84(2)(b) liability against the proposed secondary defendants are contained in section 1C of the PSASC - “Relationship between the Primary Defendants and the Secondary Defendants”:

“1.28 The Secondary Defendants have at all relevant times been involved in the affairs and activities of one or other or more than one of the Primary Defendants.
PARTICULARS
(a) PMC is and has been for several years, directly or indirectly, a shareholder in one or other or both of the Philip Morris companies (including by reason of the fact that in or about March 1986, PMA [the second defendant] became a wholly owned subsidiary of PMC) – further particulars of which will be provided following discovery.
(b) The Philip Morris companies have, in effect, distributed for sale within Australia, including to the Plaintiff and other persons, cigarettes manufactured by or for PMC and or manufactured cigarettes under brand names of PMC and or PM at various times, presumably pursuant to some licence agreement or other arrangement or understanding between the respective companies – further particulars of which will be provided following discovery.
(c) BAT and/or BAT Investments is and has been at all relevant times, directly or indirectly, including from time to time through BATA, a shareholder in one or other or both of the Wills companies – further particulars of which will be provided following discovery.
(d) One or other or both of the Wills companies have distributed for sale to consumers within Australia, including the Plaintiff and other persons, cigarettes manufactured by or for B.A.T. and/or BAT Investments and/or manufactured cigarettes under brand names of B.A.T. and/or BAT Investments, at all relevant times, pursuant to a licence agreement or other arrangement or understanding between the respective companies – further particulars of which will be provided following discovery.
(e) One or other or both of the Rothmans companies have distributed for sale to consumers within Australia, cigarettes manufactured by RJR or RJR Holdings, and or manufactured cigarettes under brand names or RJR or RJR Holdings at various times, presumably pursuant to some licence agreement or other arrangement or understanding between the respective companies – further particulars of which will be provided following discovery.
(f) Imperial and/or Imperial Group are and have been for several years, directly or indirectly, a shareholder in the Seventh Defendant – further particulars of which will be provided following discovery.

1.29 By reason of the matters set out in paragraph 1.5 – 1.28 inclusive, and by reason of the control exercised and exercisable on that account, the acts, actions, activities and conduct of the Primary Defendants as alleged herein, were acts done, actions performed, or activities or conduct engaged in at the direction of and or with the consent of the Secondary Defendants.

1.30 By reason of the matters set out in the preceding paragraph, the said acts, actions, activities and conduct of the Primary Defendants were acts done, actions performed, or activities or conduct engaged in or on behalf of the Secondary Defendants.
1.31 In addition to the foregoing both the Rothmans companies had as their parent or ultimate holding company Rothmans International, UK and/or Compagnie Financière Richemont A G and those companies controlled and directed the activities of the Rothmans companies in Australia until the merger between the parent companies of the Wills companies and the Rothmans companies in or about 1999 and thereafter the Rothmans companies activities in Australia were controlled and directed by BAT as set out above.”

15 Paragraph 1.28 is in terms that are similar to paragraph 1.24 of the amended statement of claim, which was struck out. It suffers the same defects of breadth and imprecision. It is unclear what “involvement in the affairs and activities of the one or other or more than one of the primary defendants” means. The particulars of the “involvement” by the proposed secondary defendants in the affairs and activities of one or other or more than one of the primary defendants are of shareholding by certain of the proposed secondary defendants in certain of the primary defendants and of the distribution by certain of the primary defendants of cigarettes manufactured by or for certain of the proposed secondary defendants (paragraph 1.28 (a) to (f)).

16 The assertion that the proposed secondary defendants controlled the primary defendants and, hence, that the actions of the latter were carried out at the direction of the former is based on no more than the facts pleaded in paragraphs 1.5 to 1.27 and the assertion of “involvement” in the affairs and activities of the primary defendants in paragraph 1.28.

17 The Philip Morris, the Wills and, since mid-1999, the Rothmans defendants are said to be subsidiaries of certain of the proposed secondary defendants.

18 Certain of the proposed secondary defendants are alleged to have “placed cigarettes into the stream of commerce for the sale of cigarettes, including directly or indirectly in Australia” through the Philip Morris and Wills defendants.

19 Prior to mid-1999 the Rothmans defendants are not said to have had any relationship with any of the proposed secondary defendants beyond the fact that they distributed certain brands of cigarettes manufactured, advertised and sold by RJR and/or RJR Holdings through an arrangement.

20 The only basis upon which the plaintiff alleges that ITA was subject to the control and hence acted as the agent of the proposed fifteenth and sixteenth secondary defendants is that the latter two corporations are and have been for several years shareholders in ITA.

21 In oral submissions Mr Francey contended that the proposed secondary defendants’ control over, and direction of, the activities of the primary defendants can be seen from the pleading to depend on more than the mere assertion of shareholding and distribution arrangements. In paragraph 2.4, the plaintiff pleads that the proposed secondary defendants procured their subsidiaries, including the Philip Morris, Wills and Rothmans defendants, to engage in misleading or deceptive conduct. In paragraph 2.5 she pleads that the conspiracy earlier entered into by the primary defendants was expanded and continued in accordance with the objectives and means of implementation that the proposed secondary defendants had agreed upon. The inference that the plaintiff contends is to be drawn from proof of these facts is of control and direction.

22 In Bray v F Hoffman-La Roche Ltd [2002] FCA 243; 118 FCR 1 Merkel J considered whether a number of foreign companies were carrying on business within Australia for the purpose of s 5(1) of the TPA which confers limited extra-territorial operation to the TPA. This was in the context of a claim alleging a contravention of s 45 of the TPA. His Honour observed (at 21, [72]):

“[72] … The difficulty with the sweeping assertion that the Australian subsidiaries, being directed and controlled by an overseas parent as part of the parent’s global enterprise, carried on the business of the parent, is that that alone is not sufficient to pierce the corporate veil. Factors of the kind adverted to in Smith, Stone [ Smith, Stone & Knight Ltd v Birmingham City [1939] 4 All ER 116] and Adams v Cape [ Adams v Cape Industries Plc [1990] 1 Ch 433] would usually be considered before a conclusion is arrived at that the subsidiary’s business, assets and contracts are those of the parent. In Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 at 577 Rogers AJA observed that a proposition similar to that put forward by the applicant and the ACCC is “too simplistic”.
…
[77] In the present matter the Australia subsidiaries, in conducting their business activities in Australia, held their assets (including bank accounts) in their own names and employed employees and purchased and sold products in their own names. Their businesses were not confined to the class vitamins or to products supplied by other companies in the respective groups. The accounts of each of the subsidiaries were included in the Consolidated group accounts but that is commonplace with subsidiaries and accords with established accounting and regulatory requirements: see for example Industrial Equity v Blackburn (1977) 137 CLR 567 at 577. There may be some overlapping board appointments in respect of the subsidiaries and the regional or parent companies in the three groups but, for the most part, the subsidiaries had different boards to the European or regional parent. The evidence does not suggest that the Australian subsidiaries were not maintained as distinct or separate entities or that the parents have disregarded corporate boundaries.
[78] The European and regional parents did not appear to hold assets in Australia save for intellectual property rights and shares in the Australian subsidiaries, had no premises, offices or employees in Australia and, in general, did not purport to engage in business activities in Australia. Of course, as I later explain in some detail, the European or regional parents were extensively involved in the implementation of the cartel arrangement in Australia. That involvement, however, related to the cartel arrangement and not to the manner in which the Australian subsidiaries generally carried on their businesses. It follows that subject to the question of foreign direction and control, the applicant has little to point to in respect of the matters suggested in Adams v Cape or Smith, Stone in relation to piercing the corporate veil or agency that assist her s 5(1) case.
…
[80] In my view something more than the indirect legal and commercial capacity of the parent companies to control and direct the subsidiaries, plus the parent’s involvement in implementing the cartel arrangement, is required to lift the corporate veil between the subsidiaries and their parents or to find that each of the subsidiaries is carrying on its business as agent for the parent. That is particularly so where it is contended (as it is in the present case) that the parent, rather than the subsidiary, is carrying on business in Australia or, put another way, the subsidiary is engaging in all of its commercial activities on behalf of, and therefore as agent for, the parent.”

23 His Honour’s remarks are of assistance in considering the facts and circumstances that may be relevant to the determination of whether conduct has been engaged in on behalf of a body corporate at the direction or with the consent or agreement of the body corporate for the purposes of s 84(2)(b).

24 In Smith, Stone & Knight Ltd v Birmingham Corporation [1939] 4 All ER 116 Atkinson J discussed the factors that bear on the determination of whether a subsidiary is carrying on business as the agent of its parent. After reviewing a number of cases to ascertain what the courts had regarded as important considerations, his Honour said this (at 121):

“The first point was: Were the profits treated as the profits of the company? – when I say “the company” I mean the parent company - secondly, were the persons conducting the business appointed by the parent company? Thirdly, was the company the head and brain of the trading venture? Fourthly, did the company govern the adventure, decide what should be done and what capital should be embarked on the venture? Fifthly, did the company make the profits by its skill and direction? Sixthly, was the company in effectual and constant control?”

25 The paucity of pleaded facts to support the s 84(2)(b) case is acutely raised in relation to the Rothmans defendants in the period before mid-1999. The only facts said to give rise to them acting subject to the control and at the direction of the R J Reynolds companies is that they distributed cigarettes pursuant to a distribution arrangement. As the Rothmans defendants note in their written submissions, the distributor of goods for a manufacturer is not by reason of that fact an agent of the manufacturer: International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Co (1958) 100 CLR 644 at 652-3. A further difficulty that they point to relates to the international conspiracy that is pleaded in paragraph 2.4 to the extent that it includes the RJ Reynolds companies. The plaintiff pleads that certain of the proposed secondary defendants procured “their subsidiary companies, including the first six defendants” to engage in the contravening conduct. It is not asserted that the RJ Reynolds companies have or had Australian subsidiaries.

26 The allegation that ITA was subject to the control of and acted at the direction of the proposed fifteenth and sixteenth secondary defendants is based on no more than that the latter are and have been for several years a shareholder in it.

27 There is a further difficulty with the pleading of paragraphs 1.29 and 1.30. The assertion that the primary defendants acted at the direction of and/or with the consent of the secondary defendants and that their acts were performed on behalf of the secondary defendants arises out of the matters pleaded in paragraphs 1.5 to 1.28. The Philip Morris defendants rightly ask how the facts pleaded in those paragraphs with respect to shareholding and distribution arrangements could support a finding that they were acting at the direction or on behalf of the proposed eleventh to sixteenth secondary defendants. The same question arises with respect to how the facts pleaded in paragraphs 1.5 to 1.28 could sustain a finding that the Wills defendants acted at the direction or on behalf of the proposed eighth, ninth, tenth, thirteenth, fourteenth, fifteenth and sixteenth secondary defendants. The same point is made with respect to the Rothmans defendants and ITA. The submission that since the primary defendants conspired to engage in the contravening conduct, they were all jointly and severally liable for the totality of the conduct pleaded and that as a consequence each of the proposed secondary defendants bore liability for the totality of the contravening conduct (WS 18/3/05 [3.4]), does not overcome the difficulty.

28 Paragraph 2.26 invokes the provisions of s 84(2) without pleading facts that support it. Again, it is to be noted in the way paragraph 2.26 is framed that the Philip Morris defendants are alleged to have engaged in conduct as the agents or authorised by the eleventh to sixteenth proposed secondary defendants (the BAT, Reynolds and Imperial overseas companies). The Wills defendants are said to have acted as the agents or been authorised by the eighth, ninth, tenth, thirteenth, fourteenth, fifteenth and sixteenth defendants (the Philip Morris, Reynolds and Imperial overseas companies). The Rothmans defendants are said to have been the agents or authorised by the eighth, ninth, tenth, fifteenth and sixteenth defendants, and by the eleventh and twelfth proposed secondary defendants in the period prior to mid-1999 (the Philip Morris, BAT and Imperial overseas companies). ITA is said to have been the agent or authorised by the eighth to fourteenth proposed secondary defendants (the Philip Morris, BAT and Reynolds overseas companies).

29 In order to sustain a case that the primary defendants were acting as the agents of the proposed secondary defendants it seems to me that it is necessary for the plaintiff to plead facts in addition to (i) a defendant is a subsidiary of a proposed secondary defendant and (ii) it has distributed cigarettes manufactured by a proposed secondary defendant pursuant to some licence agreement or other arrangement. The PASAC does not identify facts sufficient to sustain the requirement of s 82(2)(b) of acting at the direction, or with the consent or agreement of the principal. The bald assertion that certain of the proposed secondary defendants procured their subsidiaries to engage in the contravening conduct does not cure the deficiency.

30 In paragraph 2.29 the plaintiff seeks to plead a case that the proposed secondary defendants were involved in the contraventions by invoking

s 75B of the TPA (and the equivalent FTA provisions) from 1 July 1977.

31 Under s 75B(1)(d) a person who has conspired with others to effect a contravention of s 52 (misleading or deceptive conduct) or s 51AB (unconscionable conduct) is also taken to be a person involved in the contravention. It is necessary to establish that the person intentionally participated in the contravention: Yorke v Lucas (1985) 158 CLR 661.

32 Section 5(1) of the TPA provides that certain of its provisions have extra-territorial operation. Part VI which deals with enforcement and remedies is not a Part to which s 5(1) applies. In written submissions the plaintiff contended (WS 18 March 2005 at 3.2-3.3):

“The main contention by PM & Wills in opposition to joinder on the basis of the Secondary Defendants being “involved” in contraventions by the Primary Defendants pursuant to s.75B of the TPA and s.51 of the FTA is that those provisions are asserted not to have extraterritorial operation. This submission ignores the fact that these provisions are procedural only and extraterritorial operation of accessorial liability for conspiring to engage in conduct has long been held to exist under the common law ( Director of Public Prosecutions v Doot [1973 AC 807]; Fan v R (1991) 103 ALR 485). This applies all the more so in the Commonwealth of Australia where State legislation could otherwise easily be circumvented by conspiring outside a State to engage in conduct in a State ( Lipohar v R [1999] HCA 65; 74 ALJR 282). See generally Gillies “ The Law of Criminal Conspiracy ” 2nd Edition 227 – 237 and Goode “ Criminal Conspiracy in Canada ” 155- 169.

Section 79B of the TPA, and s.61 of the FTA which is modelled on it, effectively codifies the common law in so far as accessorial liability for damages or compensation is concerned under the TPA, and FTA. (Note TPA s.80 / FTA s.65 are self-contained). Prior to the enactment of s 75B, effective from 1 July 1977, reliance had to be placed on the then Commonwealth Crimes Act ( Wells v John R Lewis (International) Pty Ltd ; Wells v Spanton (1975) ATPR 40-007) (or common law conspiracy) to implicate individuals with aiding and abetting contraventions or conspiring to procure them. The traditional common law approach to extraterritoriality applied to mechanism pre-existing the introduction of s.75B and there is no reason in principle not to apply extraterritorial operation applicable under the common law to s.75B of the TPA (and to s.61 of the FTA), as well as TPA s.80 (and FTA s.65).”

33 The question of whether s 75B is confined to conduct within Australia was raised in Bray and is discussed at 14 - 17, [45] – [57]. Merkel J observed (at 16, [54] and [55]):

“Pt VI is not a Part of the TPA to which the extended application of the TPA provided for in s.5(1) applies. Although the Court may make orders under s.80 and 82 against persons contravening s 45, and against persons involved in the contravention as set out in s.75B, s.45 and s 75B are not to be regarded as equivalent ‘types’ of provision. As was explained by Fisher J in Yorke v Ross Lucas Pty Ltd (1983) 46 ALR 319 at 321:

“...neither s75B nor s82 deem the accessor to have committed a contravention, but rather proceed on the basis that in one or other of the specified ways he was ‘involved’ in the commission of the primary offence. Section 75B it can be said is procedural in the sense that it merely purports to indicate the various ways in which one person can be involved in the commission of a contravention by another to such an extent as to render it just that he contribute to recoupment of the loss suffered by others in consequence of the contravention.”

[55] Thus, a person involved in a contravention, although liable under Pt VI to pay damages (s 82) or to an injunction (s 80) does not contravene the Act. In those circumstances, the extended operation of the Act under s 5(1) only relates to persons who have contravened or are bound by a provision of the Parts referred to in s 5(1). Accordingly, as the extended application of the Act under s 5 does not apply to Pt VI, for the reasons set out above, s 75B is to be construed as only being applicable to conduct in Australia. In Australia Meat Holdings [ Trade Practices Commission v Australia Meat Holdings Pty Ltd (1988) 83 ALR 299 at 355) Wilcox J arrived at a similar conclusion.”


His Honour’s judgment on this aspect was not disturbed on appeal: Bray v F Hoffman La Roche Ltd [2003] FCAFC 153; 200 ALR 607.

34 I consider his Honour’s reasoning in Bray to be persuasive. The scheme of the TPA makes plain that its extra-territorial reach is as provided in

s 5(1). Section 75B (1)(d) covers the field with respect to conspiring to contravene the provisions of the TPA: McKellar v Container Terminal Management Services Ltd [1999] FCA 1101165 ALR 409 per Weinberg J at 446, [197]. The legislature chose to exclude the extra-territorial conduct of foreign persons from the ambit of s 75B. The plaintiff does not plead any allegation of conduct by any of the proposed secondary defendants in Australia. The pleading of the proposed secondary defendants’ liability for the contravening conduct by reference to s 75B in paragraph 2.29 cannot stand.

35 I do not consider that the plaintiff has articulated a tenable case so as to attach liability to the foreign companies identified as the proposed eighth to sixteenth defendants. Paragraphs 1.5 – 1.31 are to be struck out. The pleading of the overseas conspiracy in paragraph 2.4 cannot stand. The pleading of the implementation of the international conspiracy in Australia in paragraph 2.5 is in the same terms as the pleading of this material in paragraph 2.5 of the amended statement of claim, which was struck out. It cannot stand in the PSASC. Paragraph 2.6 depends on paragraphs 2.4 and 2.5. The liability of the secondary defendants that is pleaded in paragraph 2.29 and 2.30 cannot stand. Paragraphs 2.4, 2.5, 2.6 and 2.29 and 2.30 are to be struck out.

36 The plaintiff does not articulate what “relationships” are relied upon in paragraph 2.2. The paragraph is embarrassing and is to be struck out.

The joinder of the proposed secondary defendants

37 In light of my view that the PSASC does not plead an arguable case against the proposed secondary defendants there is no occasion to make an order joining them as parties to the proceedings. However, it is appropriate to refer to the submissions that were advanced on the question of joinder since if the plaintiff were to overcome the deficiencies in her pleading to which I have referred there would remain the question of whether the joinder of the foreign corporations is necessary.

38 The SCR were in force at the date the motion was heard. On 15 August 2005 the Uniform Civil Procedure Rules 2005 came into force. It is to be noted that the provisions of the latter with respect to the joinder of parties contained in Pt 6 r 6.24(1) correspond with the provisions of Pt 8 r 8(1) of the SCR to which the parties’ submissions were directed and it is appropriate to determine the matter by reference to the SCR: Sched 6 cl 10 of the Civil Procedure Act 2005.

39 Part 8 r 8(1) of the SCR provides:

“Where a person who is not a party -


(a) ought to have been joined as a party, or

(b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon,
the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceedings.”

40 In the defendants’ submission the plaintiff failed to adduce evidence that the joinder is necessary to ensure that all matters in dispute are effectually and completely determined: Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34 at 38 per Glass JA (with whom Samuels JA agreed).

41 The plaintiff seeks to join the foreign corporations because the aggregate net worth of the primary defendants is contended to be insufficient to meet their potential liability in these proceedings. It is necessary for the proposed secondary defendants to be joined so that any judgment might be fully satisfied. The plaintiff read the affidavit of Nikolas Hatzistergos, which was sworn on 9 September 2002. Mr Hatzistergos is the Managing Partner of a firm of chartered accountants. He examined the financial statements and reports lodged on behalf of the second defendant, Philip Morris (Australia) Limited and concluded that its net worth as at 31 December 2001 was $AUD278,253,000. Mr Hatzistergos was also said to have examined the balance sheet of Philip Morris Limited (US). It may be that this is a reference to the proposed tenth secondary defendant. Mr Hatzistergos concluded that as at 31 December 2001 the net worth of this entity was $AUD155,510,816,600. Mr Hatzistergos also examined the financial reports of the seventh defendant and concluded that as at 29 September 2001 it had a net worth of $AUD35,257,000.

42 Mr Hatzistergos examined the balance sheets of a number of companies but the relevance of his evidence in relation to them is not apparent since it is not clear that the corporations to which he refers are primary or secondary defendants.

43 The plaintiff’s case is that she has contracted emphysema necessitating lung replacement surgery by reason of the defendants’ contravening conduct and she claims an order under s 87(1) of the TPA (and the equivalent FTA provision) to compensate her for her loss and damage. It is conceded that the defendants would be able to satisfy any judgment with respect to her s 87(1) claim. The plaintiff claims also claims orders under

s 80 of the TPA including that each of the defendants fund public educational campaigns, sustained cessation programs and sustained educational campaigns devoted to the prevention of smoking by persons under the age of eighteen. Accepting, for present purposes, that the Court may grant relief of this character, there is no evidence to establish the likely cost of such programs.

44 The defendants submitted and I accept that there is no basis for me to conclude that they could not satisfy any verdict.

45 After the hearing of the plaintiff’s motion and judgment was reserved the plaintiff sought to have the matter re-listed in order to advance a further submission on the joinder issue, which had been overlooked. This was objected to by the Wills and Rothmans defendants and by ITA. I permitted the plaintiff to rely on her supplementary submission and supplementary submissions were received from the defendants.

46 The plaintiff’s supplementary submission was:

“In amplification of the Plaintiff’s submissions supporting joinder of the proposed Secondary Defendants, the Plaintiff places reliance on the additional scope for discovery in circumstances in which at least the Third Defendant has implemented a “document retention” policy which has resulted in the destruction of documents: British American Tobacco Services Limited v Cowell [2002] VSCA 197.”

47 The defendants submit that the joinder of additional parties in order to obtain discovery against them is not a proper exercise of the power: Gould v National Provincial Bank [1960] Ch 337 at 341, 345:

“… If the second defendant be not a proper party to the proceedings, the question is should discovery be ordered against him because in fact he has remained a party. If he is not a proper party, I am clearly of the opinion that discovery should not be ordered since it would mean this, that he would be being retained as a party for no purpose other than discovery. I consider that the second defendant in this case is not a proper party. …
… I find support for my decision to decline to order discovery of documents having regard to the fact that the second defendant, in my view, is not a proper party and, therefore, cannot be retained as a party for the purpose only of discovery, in the judgment of Lush LJ in Heatley v Newton ((1881) 19 Ch D 326) where he said (at 337):
‘I quite agree that you cannot claim to retain parties as defendants in a suit merely because you want to interrogate them.’”

48 The plaintiff merely asserts that joinder would provide “additional scope for discovery”. This does not seem to me to be a matter properly to be taken into account in determining whether joinder is necessary in order to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon.

49 Were the deficiencies in the pleading as to direction and control addressed, by the plaintiff, it remains that none of the proposed secondary defendants are persons whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon.

50 I decline to make the order sought in prayer 1 of the motion.

The pleading issues

51 A number of challenges were advanced by the defendants to the form of the PSASC. The principles of pleading that are to be applied in dealing with these challenges are those set out in the pleading judgment at paragraphs [10] and [11]. I will not repeat them here.

The relevant period and at all relevant times

52 A number of expressions are defined for the purposes of the PSASC in the Note at the commencement of the pleading. The expression “at all relevant times” is a reference to the period from 1 October 1974 in respect of s 52A and/or s 51AB of the TPA or the FTA, from the commencement of that legislation (Note, (d)).

53 A reference to the “relevant period” is a reference to the period from 1 October 1974 (Note, (e)).

54 Where a defendant was incorporated after 1 October 1974 a reference to the conduct of that defendant during the “relevant period” is a reference to its conduct since the date of its incorporation and a reference to “at all relevant times” is a reference from that date (Note, (f)).

55 The defendants complain that the pleading of the terms “at all relevant times” and the “relevant period” is embarrassing. They pointed to the concession made by Mr Francey on an earlier occasion that the plaintiff claim is confined to the period from 1 July 1977 and to the fact that the expression “at all relevant times” (which in the amended statement of claim was defined to refer to the period from 1 October 1974) was struck out in the pleading judgment (see paragraphs [48] and [51]).

56 On the hearing of the motion counsel withdrew the concession. He said that it had been made in the context that in her amended statement of claim the plaintiff sought to invoke s 75B so as to sustain a finding that each of the defendants was involved in the whole of the contravening conduct such that each would be liable to compensatory orders under

s 87(1). Section 75B was introduced into the TPA by the Trade Practices Amendment Act 1977 and commenced on 1 July 1977. The plaintiff’s claim for compensation under s 87(1) is now more circumscribed. She seeks to make a case that since at least January 1975 each of the defendants (with the exception of ITA) has conspired with the other defendants to contravene the provisions of Pts IVA and V of the TPA and to obtain remedial injunctive relief under s 80. Mr Francey acknowledged that the definitions of “the relevant period” and “at all relevant times” import a period that pre-dates the earliest material fact pleaded against the defendants. To this extent I understood him to accept that the Note should be amended so as to define the expressions “at all relevant times” and “the relevant period” as the period from January 1975 instead of the period from 1 October 1974. Subject to this minor amendment he submits that he should not be bound by the earlier concession in light of the further consideration that has been given to the way the plaintiff puts her case.

57 The pleading does not entirely accord with the way Mr Francey put the matter in submissions. The plaintiff pleads the liability of the primary defendants for the conduct of the other primary defendants as and from 1 July 1977 pursuant to s 75B of the TPA (and the equivalent FTA provision) in paragraphs 2.27 and 2.28. It will be necessary for the plaintiff to delete the references to “primary” defendants in the PSASC. Paragraph 2.27 cannot stand in its present form since it refers to the “objectives of the Australian conspiracy” without articulating what those are and incorporates reference to paragraph 2.5, which is struck out.

58 The reason that the expressions the “relevant period” and “at all relevant times” in the amended statement of claim that were struck out are stated at paragraphs [48] to [51] of the pleading judgment. The use of the expressions “the relevant period” and “at all relevant times” to refer to the period commencing from the date of the first facts pleaded against the first six defendants does not involve an attempt to re-introduce material that was struck out of the earlier pleading. Subject to the amendment that I refer to in paragraph [56] above I see no reason why these two definitions should not be allowed to stand.

Persons including the plaintiff

59 In paragraphs 2.17, 2.22(a) and 2.23(a) the plaintiff pleads material facts relating to “persons, including the plaintiff”. In the amended statement of claim she pleaded facts with respect to “other persons”, which were struck out. The defendants contend that the pleading of “persons” in these three paragraphs amounts to an attempt to re-litigate issues determined by the power judgment.

60 Mr Francey submitted that the plaintiff was not canvassing the determination in the earlier judgment, which was that claims for compensation under s 87(1) of the TPA (and the equivalent FTA provisions) could only be brought on behalf of a person who is a party to the proceedings (WS 18/3/05). He pointed to the plaintiff’s claims for remedial injunctive relief under s 80 and submitted that it is open to the plaintiff to establish that the contravening conduct influenced or affected persons other than the plaintiff.

61 Although the plaintiff no longer seeks to obtain compensation on behalf of an unidentified group of persons, in these paragraphs of the PSASC she invites the court to make factual findings concerning the impact of the defendants’ alleged contravening conduct on an unidentified and unidentifiable group of persons. The defendants cannot meet such a case. It is open to the plaintiff to seek to establish that the misleading or deceptive conduct of which she complains was communicated to the public at large. However, pleading that an unidentified, and unidentifiable, group of persons were influenced by the defendants’ conduct (paragraph 2.17), or that an unidentified, and unidentifiable, group of persons had an inaccurate or distorted belief, impression or understanding of matters such as the relationship between smoking and disease and the relationship between smoking and addiction (paragraph 2.22(a)) or that because of the defendants’ contravening conduct a greater number of unidentified and unidentifiable persons commenced smoking cigarettes, continued to smoke cigarettes and/or failed to quit smoking cigarettes than would otherwise have been the case (paragraph 2.23(a)), cannot stand. The references to “persons, including” in paragraphs 2.17, 2.22(a) and 2.23(a) are to be struck out.

62 The words “and other persons” in the heading to paragraph 2.13 are embarrassing and are to be struck out.

The indirect influence of the defendants’ conduct

63 Paragraph 2.17 pleads the influence of the defendants’ conduct both directly and indirectly:

“2.17 Persons, including the Plaintiff, were influenced by the Defendants’ conduct:
(a) directly, in that they:
(i) saw and/or
(ii) heard and/or
(iii) were aware of
the Defendants’ conduct; and/or
(b) indirectly, in that they were influenced by others who saw and/or heard and/or were aware of the Defendants’ conduct and/or were influenced by others who were so influenced.”

64 The pleading of indirect influence, even if confined to the indirect influence of the defendants’ conduct on the plaintiff, is the subject of challenge. It is the plaintiff’s case that as a consequence of the matters pleaded in paragraphs 2.17 and 2.21 - 2.23 she has suffered or is likely to suffer loss and damage and she seeks compensatory and other orders under s 87 of the TPA (and s 72 of the FTA). The defendants’ submit that the pleading of indirect influence is not capable of sustaining the plaintiff’s claim for orders under s 87 of the TPA (and s 72 of the FTA).

65 Relevantly s 87(1) of the TPA provides:

“Without limiting the generality of section 80, where, in a proceeding instituted under this Part … the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in … in contravention of a provision of Part IV, IV(A), IV(B), V or VC the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82, … make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention … if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.”

66 The Court may make orders where it finds that a person who is a party to the proceeding has sustained, or is likely to sustain, loss or damage by the conduct of another person in contravention of a relevant provision.

67 In the defendants’ submission, for the plaintiff to obtain orders under s 87 of the TPA (or s 72 of the FTA) it is necessary that she establish that the loss or damage suffered (or likely to be suffered) is the direct consequence of contravening conduct by the defendants.

68 In Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 525 Mason CJ, Dawson, Gaudron and McHugh JJ observed, in the context of discussing the provisions of s 82(1), that the use of the word “by” expresses the notion of causation and should be understood as taking up the common law concept of causation explained by the High Court in March v Stramare (E & M H) Pty Ltd 50 (1991) 171 CLR 506.

69 The defendants also rely on the judgment of Lockhardt J in Janssen & Cilag Pty Ltd v Pfizer Pty Ltd (1992) 109 ALR 638 at 642:

“The use of the preposition “by” in s 82(1) is important; it indicates the requirement that there be a sufficient cause or link between the respondent’s conduct and the recoverable loss or damage … Loss or damage must directly result from or be caused by the respondent’s conduct. The respondent’s conduct must be the real or direct or effective cause of the applicant’s loss; it must have been “brought about by virtue of’ the conduct which is in contravention of s.52.”

70 In written submissions Mr Francey contended that the defendants’ analysis of the operation of s 87 of the TPA (and s 72 of the FTA) is misconceived in that it assumes that loss or damage may not be directly related even though contravening conduct had an indirect influence (WS 18/3/05, [6.2]). As I understand the defendants’ objection it is that the possible factual combinations of the pleading of the indirect influence of their conduct are without limit. How can the question of whether the defendant was influenced by persons who in turn were influenced by others be meaningfully addressed? The pleading of the indirect influence of the defendants’ conduct is of such breadth that it cannot stand. Paragraph 2.17(b) is to be struck out.

Schedule D

71 The defendants contended that the plaintiff, by the inclusion of Schedule D, has sought to reintroduce material that was abandoned from the earlier pleading. On 17 May 2004 Mr Francey informed the Court that the plaintiff abandoned her claims with respect to lobbying. By consent paragraphs 2.16(D), 2.19(D), 2.22(b) and 2.23(a)–(c) were struck out. Schedule D to the amended statement of claim recited the acts of lobbying relied upon in support of the lobbying allegations. Mr Francey stated:

“… we do not propose to rely on any conduct that concerns lobbying activities, in the sense of agitating with particular politicians and the like. … insofar as there are allegations of particular lobbying activities in schedule D, I will remove those” (17/5/04 T474.30-36).

Mr Francey indicated that some material in schedule D would be relied upon being that which went beyond “pure lobbying activities” (17/5/04 T475.20).

72 Schedule D is titled “Activities of the Primary Defendants” and sets out activities attributable to the first and/or second defendants, activities attributable to the third and/or fourth defendants and activities attributable to the first six defendants jointly. It is referred to in the particulars to paragraph 2.16(C), which pleads conduct relating to the public statements set out in subparagraphs (a) – (h). Schedule D reintroduces particulars previously relied upon as instances of lobbying. This would not be fatal if the documents were relevant to the pleading of public statements.

73 It was submitted by the defendants that all of the documents in schedule D relate to political processes or the regulation of smoking and raise the objection to the justiciability of lobbying previously conceded to by the plaintiff. In this respect it was submitted that the reintroduction of particulars in schedule D relied upon in the earlier pleading, is an abuse.

74 The two documents attributable to the first and second defendants in schedule D are an internal memorandum and a letter. The substantive pleading of which these are said to be particulars relates to public statements, although the paragraph is introduced by a heading: “Conduct Relating to Public Statements and other Activities”. The reference to “other activities” is unexplained. It is not part of the substantive pleading which is confined to public statements. The words “and other activities” in the heading are embarrassing. The items in schedule D, attributable to the activities of the first and second defendants, cannot stand as particulars of an allegation relating to the making of public statements.

75 The remaining documents particularised as attributable to the first six defendants jointly appear to be a letter of the Tobacco Institute of Australia, a report produced by the Tobacco Institute of Australia and a memorandum produced by the Tobacco Institute (US). None of these seem capable of being particulars of an allegation relating to the making of public statements. Schedule D cannot stand as providing particulars of the allegation pleaded in 2.16(C). Schedule D is to be struck out.

76 In paragraph 2.16 the plaintiff pleads that during the relevant period the defendants engaged in conduct “promoting the benefits and pleasures of smoking and denying or minimising the risks associated with smoking… amongst other things for the purpose of inducing and/or encouraging consumers including the plaintiff to commence, continue, recommence and/or not cease or quit to smoke”. The defendants complain that the inclusion of the words “amongst other things” is embarrassingly vague. I agree. The words “amongst other things” are to be struck out.

77 In paragraph 2.26 the plaintiff refers to the equivalent provisions in State and/or Territory Fair Trading legislation. This would appear to be an oversight, since in her PSASC she has abandoned the attempt to plead her claim by reference to the Fair Trading legislation in States and Territories other than New South Wales. The paragraph should identify the provision of the Fair Trading Act 1987 (NSW) on which reliance is placed.

Note (c)

78 The defendants submit that since the plaintiff has abandoned her claim to rely on any of the Fair Trading legislation other than the Fair Trading Act 1987 (NSW) there is no reason why she cannot plead with precision in the body of the pleading the particular provisions on which she relies. The table that set out the equivalent provisions of the Fair Trading legislation in each of the States and Territories in the earlier pleading has been omitted from the PSASC. There is merit to the criticism of note (c). Note (c) is struck out and the plaintiff will need to make consequential amendments to the body of the pleading where the equivalent provisions of the FTA are relied upon.

Note (h)
This note is incomprehensible and is to be struck out.

The effect of nicotine

79 In written submissions the Rothmans defendants made a discrete point concerning the expression “the effect of nicotine” as defined in paragraph 2.10. They point out that there is an internal contradiction in that the expression is defined by reference to the terms of 2.10(a) and (b) and also by incorporating the material in schedule E. The material in schedule E embraces publications on the topic of smoking and addiction over a number of years and includes material that does not assert the use of tobacco to be addictive. The internal contradictions make it difficult to plead to paragraph 2.10 and any other part of the pleading that uses the defined expression “the effect of nicotine”. Paragraph 2.10 should be amended such that the words “and identified in schedule E” are to be struck out.

The relief

80 In paragraph 3.2 of her PSASC the plaintiff claims declaratory relief, including declarations that the defendants and/or one or more of them, have engaged in conduct in contravention of the TPA. The defendants submit that the form of the declaratory relief is vague and ought not to be ordered (PM defendants WS [51]). In support of this submission reliance is placed on the judgment of Gummow, Hayne and Heydon JJ in Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; 78 ALJR 274 at 294 [89] and [90]. Their Honours were critical of the declarations made concerning the Rural Press parties in that case, which did not give an indication of the gist of the findings of the primary judge.

81 The defendants also rely on the observations of Gray J in Australian Competition and Consumer Commission v Francis [2004] FCA 487 at [92]–[113]. His Honour observed that from shortly after the commencement of the TPA a claim for relief in the form of a declaration that some alleged conduct amounted to a contravention of a particular provision of the TPA had become common. Declarations in these terms had been frequently granted without discussion as to the necessity for their making. His Honour noted the decision of the Full Court in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No. 2) (1993) 41 FCR 89, in which members of the Full Court differed in their views as to the nature of the contravention, but were agreed that it was an appropriate case in which to make a declaration. His Honour queried the utility of a declaration of a contravention of the TPA as a means of vindicating a public right. In this connection he observed at [108]:

“It is hard to see how it could be vindicated by the mere recording of the conclusion that a contravention had occurred. It is not clear why the expression of that conclusion in a summary form in a declaration should be considered to be more capable of vindicating the public right than the detailed findings expressed in public reasons for judgment.”

His Honour went on to observe that since the Tobacco Institute case, declarations have been made in a great number of cases involving contraventions of the provisions of the TPA and, in particular, the contravention of s 52. He noted the observations that the defendants rely on in the joint judgment in Rural Press Limited and that in that case Kirby J expressed a different view at [140]:

“I have previously expressed my hesitation over attempts to subject to the rigidities of traditional equity practice the scope of declaratory and injunctive orders of the Federal Court, made pursuant to broad powers in a remedial statute, in novel circumstances, to afford new protections for large and important social and economic purposes.”

82 Gray J concludes his consideration of this topic at [113]:

“The High Court, by a clear majority, has obviously taken the view that the mechanical process of making declaratory orders should not continue. At the same time, the High Court has also taken the view that, whatever might be the rationale behind the making of declaratory orders of the kind it made, there are circumstances in which it will be appropriate to declare that a contravention of a provision of the Trade Practices Act has occurred. Attention must be given to the form of the declaration, so that it is at least informative as to the basis on which the court declares that a contravention has occurred.”

83 The plaintiff claims relief including that the Court declare that the defendants have contravened the provisions of the TPA. To succeed on her claim she needs to establish this much. There can be no embarrassment to the defendants in meeting the plaintiff’s case on the basis that she claims declaratory relief of this description. It is premature to exclude that the relief that the Court may grant is a broadly framed declaration in the terms pleaded.

84 The defendants complain of the inclusion in the PSASC of the word “including” in paragraph 3.4, which deals with her claim for injunctive relief. The introduction of this term, they submit, does not assist in narrowing the issues in the proceedings. I accept that is so. The word “including” in paragraph 3.4 is to be struck out.

85 In the Schedule to their written submissions the Wills defendants submit that to the extent that the relief claimed in subparas 3.4 (h) and (i) involves compensating “other persons” for “loss or damage that has been suffered or is likely to be suffered by them” it is untenable. I note the submission but for the reasons given in the power judgment at paragraphs [46] – [54] I do not propose to determine this challenge on the present motion.

86 In the defendants’ submission, the time has come for the Court to review the pleading as a whole. It was submitted that the plaintiff appears unable to advance a statement of claim that is suitably constrained in its ambit and which takes into account previous rulings in the proceedings. The history of attempts to formulate causes of action against the overseas companies was said to point strongly to the conclusion that no such causes of action could be made out. In this respect, the Wills defendants drew attention to the judgment of Gleeson CJ in Trau v University of Sydney (1989) 34 IR 466at 475:

“Even under the modern system of pleading, considerations of form and substance are often closely intertwined. If one sees that a plaintiff’s lawyers are experiencing extreme difficulty in formulating with clarity and particularity their client’s cause of action then that is often a very good indication that there is no cause of action. The history of the present matter creates the strong impression that such a problem exists, compounded by an additional difficulty created by a need to manoeuvre around problems concerning periods of limitation.”

87 The defendants point to the circumstance that the plaintiff had now served eleven different statements of claim upon them. In their submission, the point is being reached where the Court should consider terminating the litigation. I acknowledge the force of this contention but I am not persuaded that that point has yet been reached. Shorn of the ambitious endeavour to plead her claim by reference to an unidentified group of persons and by reference to the acts of foreign companies engaging in an international conspiracy, the plaintiff seeks to articulate a case that the defendants have contravened the statutory norm provided by s 52 of the TPA and that she has suffered loss thereby for which she is entitled to compensation. She should be afforded a further opportunity to do so.

88 The plaintiff will be allowed four weeks from today’s date to file a further amended statement of claim in conformity with these reasons.

89 The defendants have enjoyed substantial success both with respect to the joinder of the proposed additional defendants and on their objections to the form of the PSASC. I consider that the plaintiff should pay the defendants’ costs of the motion.

ORDERS

1. The plaintiff has leave to file and serve the second amended statement of claim in conformity with these reasons within four weeks of today’s date;

2. The plaintiff is to pay the defendants’ costs of the motion as agreed or assessed.

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