Cauvin v Philip Morris Limited - [2002] NSWSC 736

No judgment structure available for this case.

CITATION: Cauvin v Philip Morris Limited [2002] NSWSC 736 revised - 04/09/2002

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 2625 of 2002

HEARING DATE(S): 18 and 19 July 2002

JUDGMENT DATE: 22 August 2002

PARTIES :

Myrian Cauvin on her own behalf and as representative of the persons described in Schedule A to the amended statement of claim filed 2 July 2002 (Plaintiff)
Philip Morris Limited (First Defendant)
Philip Morris (Australia) Limited (Second Defendant)
British American Tobacco Australia Services Limited (formerly known as W.D. & H.O. Wills (Australia) Limited) (Third Defendant)
W.D. & H.O. Wills Holdings Limited (Fourth Defendant)
British American Tobacco Australasia Limited (formerly known as Rothmans Holdings Ltd) (Fifth Defendant)
British American Tobacco Australia Limited (former known as Rothmans of Pall Mall (Australia) Limited) (Sixth Defendant)
Coles Supermarkets Pty Limited including as representative of the persons described in Schedule B (Seventh Defendant)
Coles Myer Ltd including as representative of the persons described in Schedule B (Eighth Defendant)
Darren Johnston Barker (Ninth Defendant)
Gina Joanne Barker (Tenth Defendant)

JUDGMENT OF: Windeyer J at 1

COUNSEL : Mr N Francey (Plaintiff)
Mr J Sackar QC with him Mr J Hall (First and Second Defendants)
Mr N Hutley SC with him Mr S Goodman (Third, Fourth, Fifth and Sixth Defendants)
Mr R Weber SC with him Ms K Williams (Seventh and Eighth Defendants)
Mr S J Gageler SC with him Mr J Clarke (Ninth and Tenth Defendants)

SOLICITORS: Maurice May & Co (Plaintiff)
Allens Arthur Robinson (First and Second Defendants)
Clayton Utz (Third, Fourth, Fifth and Sixth Defendants)
Minter Ellison (Seventh and Eighth Defendants)
Maurice Blackburn Cashman (Ninth and Tenth Defendants)

CATCHWORDS: RESTITUTION - money had and received - failure of consideration - subrogation - unjust enrichment - whether the plaintiff/consumer can recover a component of purchase price paid to the retailer, which relates to an invalid licence fee paid by the retailer to the wholesaler where the amount of the licence fee is not specified - TRUSTS - whether the money relating to the licence fee should be subject to a constructive trust in favour of consumer - CONSUMER PROTECTION - trade practices - unconscionability - whether the retention of the money refunded by the wholesaler to the retailer is unconscionable - extent of relief available under s87 of Trade Practices Act 1975 (Cth) - PRACTICE AND PROCEDURE - representative action - difficulties in establishing membership of class of plaintiffs and defendants - whether should proceed as a representative action - PRACTICE AND PROCEDURE - whether causes of action or any of them could be made out, whether proceedings should be dismissed

LEGISLATION CITED: Business Franchise Licence (Tobacco) Act 1987 (NSW)
Fair Trading Act 1987 (SA) s51AA;
Federal Court of Australia Act 1976 s33Z, s33ZA, s33C
Jurisdiction of Courts (Cross-vesting) Act 1987 s11
Supreme Court Rules Pt8 r13, Pt15, r26
Trade Practices Act 1975 (Cth) s51AA, s51AB, s80, s87, Pt IVA
Newburg on Class Actions 3rd Edition, Ch. 10

CASES CITED: Carnie v Esanda Finance Corporation Limited (1995) 182 CLR 398
CG Berbatis Holdings Pty Limited v Australian Competition and Consumer Commission (2001) ATPR 41-826
Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR 51
Fifty-Fourth Street Inc v United States [1946] 157 (F2d) 68
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Limited (2001) 40 ACSR 252
Ha v New South Wales (1997) 189 CLR 465
Pavey & Matthews Pty Limited v Paul (1987) 162 CLR 221
Roxborough v Rothmans of Pall Mall Australia Limited (2001) 76 ALJR 203
Ryan v Great Lakes Council (1997) 78 FCR 309
Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591
Winterton Constructions Pty Ltd v Hambros Australia Limited (1991) 101 ALR 363

DECISION: See paragraph 39

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

THURSDAY 22 AUGUST 2002

2625/02 MYRIAM CAUVIN V PHILIP MORRIS LIMITED & 9 ORS

JUDGMENT

1 This action is brought by the plaintiff, Myriam Cauvin, on her own behalf and as representative of a particular class of persons against certain companies which were wholesalers of tobacco products and against certain other companies, which were retailers of tobacco products, in the case of retailers as against them personally and as representatives of all tobacco retailers of a particular kind or description.

2 This action is a follow on from the decisions of the High Court of Australia in Ha v New South Wales (1997) 189 CLR 465 and Roxborough v Rothmans of Pall Mall Australia Limited (2001) 76 ALJR 203. In the former case it was held that the Business Franchise Licence (Tobacco) Act 1987 of the State of New South Wales was invalid in that the tax it purported to impose was a duty of excise. In Roxborough it was held that where the plaintiff companies, which were retailers of tobacco products, remitted the tax which was subsequently declared invalid to wholesalers, and that amount could be separately identified, the amount of such taxes not paid by the wholesalers to the state in satisfaction of the tax, was repayable by the wholesaler to the retail companies.

3 The plaintiff is a cigarette smoker. In her amended statement of claim she sues the first to sixth defendants as wholesalers of tobacco products. The first and second defendants are Philip Morris companies. The third to sixth defendants are British Tobacco companies encompassing the W.D. & H.O. Wills companies and the Rothmans companies. The seventh and eighth defendants are sued as retailers of tobacco products and as representatives of all retailers of tobacco products within a particular class and at a particular time other than the ninth and tenth defendants. The Coles companies are chosen because the plaintiff purchased cigarettes from a Coles store at Katoomba. The ninth and tenth defendants are retailers of tobacco products in South Australia and were so at the relevant time. They applied to be joined as defendants not represented by the seventh and eighth defendants.

4 The legislation of the various states and territories prior to the decision in Ha was similar in form. In New South Wales the Business Franchise Licences (Tobacco) Act 1987 provided for tax to be paid by 27th day of each month on the amount of tobacco products sold in the preceding calendar month. For instance, in respect of tobacco products sold in March 1997 a licence fee was payable by 27 April 1997 and if paid the licence was renewed for a further period from 28 April until 27 May 1997. It can be assumed for the purposes of this decision that the same general requirements for payment of monthly licence fees applied in each state. Generally, but not always, the legislation provided that if tax was paid by the wholesalers on sales to retailers, the retailers were not obliged to pay tax on their sales to consumers - thus avoiding any suggestion of a tax on a tax.

5 The decision in Ha was handed down on 5 August 1997. The licence fee which would have been payable on 27 August 1997 for sales during the period from 1 July 1997 to 31 July 1997, which had been paid to the wholesalers by the retailers was not paid to the state government and no licence fee was paid for sales in respect of the period of 1 August 1997 to 5 August 1997. After that the Commonwealth amended its legislation so that the licence fee was in effect reinstated as an excise duty imposed by the Commonwealth although subsequently remitted to the various states and territories.

6 Roxborough held that the moneys paid by retailer plaintiffs to wholesaler defendants in that case in respect of tobacco products purchased by retailers from wholesalers during the period in question, namely from 1 July 1997 until 5 August 1997 in respect of the licence fees which had not been paid as licence fees to the state were payable or repayable by the wholesalers to the relevant retailers who were the plaintiffs in the action. The grounds upon which judgment was entered are perfectly clear even if they would not amount to an estoppel in respect of claims by other retailers against wholesalers. The plaintiff’s claim in Roxborough was for restitution of money paid on a consideration which had failed and thus money had and received by the wholesalers to the use of the retailer. A fact essential to the decision was that the amount of the tax was clearly identified as a separate component of the price paid by retailer to wholesaler. Invoices showed three figures, one for the tobacco product, one for the tax and one for the total.

7 In contrast to this the evidence in the present case, which is not and really could not be challenged, is that consumers purchasing a packet of cigarettes, paid one sum, not in any way identifiable as composed of several components, which may often have been the wholesalers’ recommended retail price, but which was not necessarily that price. Any variations by way of discount or increase were variations of a selling price not of components of a selling price. As cigarettes are sold over a period neither retailer nor consumer would know whether tax had been paid to the government in respect of the tobacco item purchased or whether the tobacco was part of a parcel on which the wholesaler had received the tax thought payable to government but had not been obliged to pass on as a result of the decision in Ha.

Statement of claim

8 By the amended statement of claim paragraph 1.1 states “the plaintiff sues on her own behalf and as representative of the persons described in Schedule A, pursuant to Pt8 r13 of the Supreme Court Rules, as persons who purchased cigarettes and other tobacco products from the retailers in or about mid 1997. Schedule A to the statement of claim is in the following terms:

SCHEDULE A

Business Franchise Licences (Tobacco) Act 1987

Ha v New South Wales

Roxborough v Rothmans of Pall Mall Australia Limited

9 For convenience I will refer to Myriam Cauvin as “the plaintiff” and the plaintiff with the Schedule A persons as “the consumers”

10 The retailers are defined in the statement of claim as being the seventh, eighth, ninth and tenth defendants and those represented by the seventh and eighth defendants. Those persons said to be represented are described in Schedule B to the statement of claim as follows:

SCHEDULE B

11 There is some question as to whether all of the first to sixth defendants were in fact engaged in the wholesaling of tobacco products. There is however no doubt that the first defendant was and I think so were the third and sixth defendants. If it is clearly established that the second, fourth and fifth defendants were not so engaged, then presumably the action can be dismissed against them, but there is no need to decide that at the present time. There is no doubt that the seventh and eighth defendants are retailers of tobacco products but according to the evidence they did not purchase those products direct from a wholesaler, but rather from another company within the Coles group which onsold those products to various other companies within the Coles group for onsale to consumers. Each of the Philip Morris group, the British Tobacco group, the Coles retail group and the Barker defendants, by four separate notices of motion have sought orders under Pt13 r5 of the Supreme Court Rules that the proceedings be dismissed or under Pt15 r26 that the statement of claim be struck out. They all also seek orders in the alternative that an order be made pursuant to Pt8 r13 of the Supreme Court Rules that the action not proceed as a representative action either by the plaintiff representing the persons she claims to represent or as against the retail defendants who are represented by the seventh and eighth defendants so far as the statement of claim is concerned. The plaintiff also seeks certain interlocutory orders.

12 The amended statement of claim in paragraph 2 pleads the conduct said to give rise to the action. The relevant pleaded facts are that the wholesaler defendants included in the price at which they sold tobacco to retailers an amount to reflect the licence fee they were required to pay under the Tobacco Franchise legislation of the various states; that the amount was generally charged and paid in advance during the relevant period, namely the period from 1 July to 5 August 1997; that the retailers in the course of carrying on their business also included in the price at which they sold cigarettes to the plaintiff and persons represented by her “an amount reflecting the amount required to be paid by the retailers to the wholesalers in order to satisfy the licence fee required to be paid by the wholesalers to satisfy requirements of the Tobacco Franchise legislation”; that the retailers collected an amount by way of a price increase from customers so as to enable them to make the payments and that the retailers or some of them paid moneys “by way of prepayment of licence fees” to the wholesalers. The statement of claim refers to “the fund” which is defined as moneys which the wholesalers were notionally liable to pay under the legislation in respect of the period from 1 July to 5 August 1997, being a sum comprising approximately $230 million. “Notionally liable to pay” means would have been obliged to pay if the state Acts had been valid.

13 The claims by the plaintiff are brought under various heads as follows:

(a) Money had and received - this claim is that the fund constitutes moneys had and received by the wholesalers to the use of the plaintiff and/or the consumers or to the use of the retailers “subject to right of subrogation in favour of the consumers” or were moneys had and received by the retailers for the use of the consumers.

(b) A claim against wholesalers and retailers for unjust enrichment at the expense of the plaintiff based upon the same facts.

(c) Subrogation - namely a claim that the consumers are subrogated to the rights of the retailers against the wholesalers and thus entitled to recover from the wholesalers the amount of the fund instead of the wholesalers paying that amount to the retailers. The factual basis for this claim is not pleaded, but I overlook that for present purposes. I also overlook the fact that this claim would need to be made in the name of the retailers but for the benefit of the consumers.

(d) Failure of consideration - this is a claim based on the Roxborough decision that there was included in the price paid by the consumers for cigarettes, an amount by way of price increase which was expressly or impliedly included to cover a liability to satisfy the requirements of the Tobacco Licence legislation and that there was no consideration or a total failure of consideration in respect of that price increase so that “the moneys paid should be repaid, directly or indirectly to or for the benefit of the consumers. This is a restatement of the claim in 12(a). In other words it is a restitution claim which appears to acknowledge the impossibility of compensating the plaintiff directly for unjust enrichment of the retailers at her expense.

(e) Trust or equitable charge - this is a claim that as a result of the facts which I have set out, the fund should be subject to an equitable charge in favour of the consumers or that a constructive trust should be imposed in some way on that fund.

Payments by wholesalers to retailers

As far as I can see, this is no different from the earlier claims as to unjust enrichment and trust or equitable charge and can, I think, be disregarded.

(g) Claims under the Trade Practices Act 1975 (Cth) or the equivalent Fair Trading legislation of each state or territory. There are claims that the retention of the moneys comprising the fund by the wholesalers and/or the retailers is unconscionable in accordance with the provisions of s51AA of the Trade Practices Act or s51AB of that Act or the equivalent state and territory Acts.

14 Relief claimed

(a) Declaratory relief for declarations that the wholesaler defendants are not entitled to retain the moneys comprising the fund as against the retailer defendants; that the retailer defendants are not entitled to retain the fund as against the consumers; that to the extent the wholesalers or retailers hold the fund they have been unjustly enriched; that the moneys should be paid to or for the benefit of the consumers; that the consumers are subrogated to the rights of the retailers against the wholesalers; that the retailers have received and hold the moneys on trust for the consumers and that the moneys should be returned; and other declarations relevant to the various pleaded claims including a declaration that the moneys constituting the fund should be paid into court to abide further order of the court; that there should be an inquiry into the precise amount of money that constitutes the fund and that the fund or the amount of money equivalent to the fund should be paid to the consumers by the wholesalers and retailers and that the fund or its amount should be held for the benefit of the consumers in a manner determined by the court.

Injunctive relief

(i) an order restraining the defendants, and any of them, from dissipating the fund held by them, and/or requiring that the fund, or an amount equivalent to the fund be held in such manner as the court determines to be appropriate;

Other orders

Trade Practices Act

15 There are certain problems with the amended statement of claim as presently pleaded. I do not think that it is necessary to go into these in detail. It is accepted that repleading could cure some of the defects. For instance it is not clearly pleaded that the plaintiff is a person who purchased cigarette products for a price which included a component for tax, which component was paid to the retailer by the plaintiff and was remitted by the retailer to the wholesaler but was not paid by the wholesaler to the government. Paragraphs 1 and 2.18 of the statement of claim in no way plead the relevant facts, although that pleading may not be necessary for the claim for injunction. It is unlikely that the plaintiff could prove such facts if pleaded, but for the purpose of a dismissal motion, I proceed on the assumption the facts could be proved as to some extent they are asserted in an affidavit of the plaintiff sworn 11 June 2002.

16 In addition the evidence is that in general, cigarettes purchased by retailers from wholesalers are onsold to consumers within a twelve-month period. Thus, as I understand the evidence, it follows that it is possible that cigarettes purchased from retailers at any time up to about 5 August 1998 might have included cigarettes upon which retailers had paid tax to wholesalers which had not been remitted to state governments. It is that fund which the plaintiff seeks to secure for the benefit of consumers, but if that is the position then the description in Schedule A of consumers the plaintiff wishes to represent is not a proper description of the persons who might have contributed to the fund. In the same way the description of persons represented by the retail defendants as set out in Schedule B is defective. These are matters which might be cured but which go some way to pointing out the difficulties in the plaintiff’s path in her endeavours to bring this action.

Should the claim be dismissed?

17 This is not a trial on a preliminary issue. There is no issue joined. The question is not whether the plaintiff’s case is strong or weak. The question is whether, assuming the pleaded facts could be made out, and even making allowance for some obvious amendments, the case of the plaintiff is doomed to fail so that to allow it to proceed would involve useless expense: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.

Claim against the wholesalers

Roxborough

Claim against the retailers

Roxborough

Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited

123 East Fifty-Fourth Street Inc v United States

123 East Fifty-Fourth Street

Royal Insurance Case

The majority considered that this was no bar to recovery by the restaurant owner because the money, when paid to the government, belonged to and was the property of the restaurant owner. However, Learned Hand J. was prepared to infer that the owner had added the tax as a separate item to the bills and described it as a tax which it must pay and was collecting it from patrons in order to pay it to the Treasury. His Honour regarded as crucial the distinction between passing on the tax in this form and merely including in the bills the amount of the tax without saying anything about it.

"If it said nothing, I should agree ... that the guests had no legally recognizable interest in the money collected, which gave them any claim to it superior to the plaintiff's ... On the other hand, if the plaintiff collected the money under what the guests must have understood to be a statement that it was obliged to pay it as a tax, and that it meant to do so, the money was charged with a constructive trust certainly so long as it remained in the plaintiff's hands."

According to his Honour, the constructive trust attached to the claim for recovery of the money so that if the plaintiff recovered the payments it would hold as trustee for the patrons. That would be no answer to the claim if the plaintiff could and would distribute the recovery to the patrons. But that did not appear to be the case so that in the result, the equities being equal, the legal title should prevail.

I would accept so much of Learned Hand J.'s analysis in 123 East Fifth-Fourth Street as leads to the conclusion that the restaurant owner was a constructive trustee of the amount of the tax received from its patrons if the owner charged the separate amount of the tax to its patrons. The tax so received was received by the owner as a fiduciary on the footing that it would apply the money in payment of the tax. If that purpose failed or could not be effected because the tax was not payable then the owner held the moneys for the benefit of the patrons who paid the moneys. The same result would ensue if the owner recovered payments from the revenue authority made as and for tax which was not payable. And, in my view, the patrons who paid the tax to the owner would have a right of recovery, as Learned Hand J. makes clear, against the revenue authority so long as it retained the payments which it was not entitled to retain.

…

In the present case, that reasoning leads me to the conclusion that the Commissioner would have no defence to a restitutionary claim by Royal to recover the mistaken payments of duty. Even if it had been established that Royal charged the tax as a separate item to its policy holders so that it was a constructive trustee of the moneys representing that separate charge when it made the payments to the Commissioner, it would have been entitled to recover from the Commissioner, provided that it satisfied the court that it will account to its policy holders. The Courts below, unlike Learned Hand J. in 123 East Fifty-Fourth Street, did not draw an inference that the tax was charged as a separate item to the policy holders. And, in any event, it has not been suggested that the Court should draw such an inference.

Failure of consideration

19 This claim could only be against the retailers. The plaintiff paid no consideration to the wholesalers. For reasons I have set out in considering the claim for money had and received this claim is not maintainable in the absence of separation and identification of any portions of the price paid for a cigarette as attributable to tax. The claim should be dismissed.

Subrogation

20 This claim is not properly pleaded which makes it difficult to deal with in a dismissal action. However, it is proper to deal with it on the written submissions of the plaintiff and to see whether or not it is an arguable case against the wholesalers on the basis of entitlement to be subrogated to the claim of the retailers against the wholesalers.

21 I consider it clear this claim must fail. That is because it is impossible to say that some particular part of the purchase price paid by a consumer represents the tax component which it was expected would be paid to government on that particular component of tobacco. Payment for a cigarette does not discharge an obligation to pay a tax. That payment of the tax component by the retailer has already been made on acquiring the cigarettes from the wholesaler. Whether one speaks of the prevention of double payment, or the keeping alive of a third party claim, or an assumed assignment of a claim, there is a requirement for identification of a particular sum, the receipt of which twice instead of once will result in an identifiable unconscionable windfall to the recipient. This is not such a case. I understand, of course, that a party “C” can be subrogated to part of a claim of party “A” against a wrong doer “B”. This is often the case in insurance claims. But the claim of “C” is fixed or identifiable which is not the case here. This claim should be dismissed.

Trust and/or equitable charge

22 The pleading is quite inadequate. There is no express trust. For the reasons given by Mason CJ in Royal Insurance there is no constructive trust. There is no basis for a charge. This claim should be dismissed.

Paragraph 2I of the amended statement of claim

23 This is an incomprehensible paragraph which appears to roll up all the other claims somehow resulting in an allegation that retention of the fund amounts to unconscionable conduct. It may be encompassed by the Trade Practices claim. As it stands it is really meaningless and should be dismissed.

Unjust enrichment

24 (a) As against the wholesalers - for the reasons stated in paragraph 18 this claim could not succeed and should be dismissed.

(b) As against the retailers – on any basis this claim would have to be repleaded. The essential elements to such a pleading are:

(i) The defendant has been – or perhaps in this case will be – enriched:

(ii) at the expense of the plaintiff;

(iii) which enrichment is unjust.

in a variety of distinct category of cases

Pavey & Matthews Pty Limited v Paul

25 The question is whether this is so clear that the position is unarguable. I deal with this on the basis the claim is not within a recognized category of non-voluntary payments so that if recognized it will require recognition of a “general nominative principle of unjust enrichment” as explained by Gummow J in Winterton Constructions Pty Ltd v Hambros Australia Limited (1991) 101 ALR 363 at 374-5. In that action Gummow J refused to dismiss the cause of action based on unjust enrichment. While I think it unlikely such a claim could be maintained, I do not think it absolutely certain that the plaintiff, if she pleaded and proved the necessary facts of purchase of untaxed cigarettes, could not establish some claim to some part – albeit not capable of precise identification in a monetary sum - of the purchase price paid by her. She should, I think, be entitled to go to trial on this cause of action against the relevant retailers if she wishes, although it seems that in an individual claim not more than $100 would be at stake. The defence may raise an issue of law as well as traversing the facts and that issue might be decided as a separate issue. With considerable doubt I conclude the plaintiff is entitled to a trial on this claim.

Trade Practices Act s51AA and s51AB

26 The plaintiff’s claim is that the retention of the moneys comprising the fund by the wholesalers or retailers is or would be conduct which is unconscionable under s51AA or would be conduct in trade or commerce in connection with the supply of goods to a person that is in all the circumstances unconscionable under s51AB. So far as the s51AA claim is concerned the clear position is that for such a claim to succeed there needs to be a taking of advantage of a person subject to a disadvantage or disability by another person, in this case the supplier. CG Berbatis Holdings Pty Limited v Australian Competition and Consumer Commission (2001) ATPR 41-826; GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Limited (2001) 40 ACSR 252; and other cases to the same effect. On no possible basis could the retention of the fund amount to such conduct. Nor I think, if the pleading were amended, could the sale of tobacco at a price some part of which could be said to comprise the tax or part of it, amount to such conduct. Apart from anything else if the sale took place within the five-week period the retailer could not have been expected to forecast the result of Ha. That is the pleaded claim, although it could be amended to encompass some claim for sale of non-taxed cigarettes over a twelve-month period. But even in that case the retailers had paid the tax and did not know they might be entitled to recover it. In those circumstances onselling tobacco at a price which might encompass or bring about a greater profit than usual could not be unconscionable. As there was no relationship between wholesaler and customer, no question of unconscionability between wholesaler and customer under s51AA could arise.

27 So far as s51AB is concerned it is, it seems to me, impossible for this section to give ground for any relief against a wholesaler. There are two reasons for this. The first is that the wording of the section seems to require a transaction with a consumer. The second is that s51AB(6) means that as between wholesaler and retailer the section has no operation. Finally so far as the transaction between retailer and customer is concerned I am unable to see how it could possibly be maintained that, in the event of a retailer recovering the amount of tax paid from a wholesaler pursuant to the principles in Roxborough, the retention of those moneys could be said to be unconscionable conduct in connection with the supply of goods to a consumer, that supply having taken place many years previously. In any event the fact that no identified amount was paid for tax is as relevant here as it is to the other causes of action.

28 It is, however, necessary to consider this matter in more depth as counsel for the plaintiff placed most reliance upon those sections together with ss 80 and 87 of the Trade Practices Act. In some ways he even suggested that unconscionable conduct could be seen to have taken place because all other pleaded causes of action were unsustainable, yet it was unconscionable for the wholesalers or retailers to retain the funds.

29 The argument proceeded as follows: (a) the wholesalers and retailers have engaged in conduct in trade or commerce which is unconscionable pursuant to s51AA in retaining the fund moneys; (b) that s80 gives status to the plaintiff as “any other person” Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591 to make application for an injunction in respect of conduct contrary to a provision of Pt IVA of the Trade Practices Act thus bringing about the ability for the court to make other orders under s87(1) of the Trade Practices Act. Thus, in the prayers for relief, the plaintiff claims the following declarations:

I. Declaratory Relief

3.3 A declaration or declarations in such terms the Court thinks fit, to the following effect:
…

(l) That the retention of the Fund, or an amount of money equivalent to the Fund, by the Defendants, or any one of them, or any of the persons described in Schedule B is and/or would be conduct that is and/or would be, in all the circumstances, unconscionable, including in contravention of s.5AA and/or s.51AB of the Trade Practices Act 1974 (Cth) and/or equivalent provisions in State and/or Territory Fair Trading Legislation.

Trade Practices Act

(n) That there ought to be an inquiry into the precise amount of money that constitutes, or constituted the Fund.
(o) That the Fund, or an amount of money equivalent to the Fund, should be paid to the Consumers by the Wholesalers and/or the Retailers and/or some combination of the Wholesalers and/or Retailers.
(p) That the Fund, or any amount of money equivalent to the Fund, should be held for the benefit of the Plaintiff and the persons described in Schedule A, in a manner to be determined by the Court.
II Injunctive Relief

In terms I have set out earlier.

III Other Orders

…

30 Counsel for the plaintiff accepted that if the pleading were amended so as to set out facts which, if proved, would establish the plaintiff purchased cigarettes on which tax was not remitted to government it is unlikely she would be able to prove those facts, although it is possible she might be able to do so on the balance of probabilities. The second matter is that it is accepted that the identity of all those persons the plaintiff purports to represent could not be established. Apart from anything else some would have died.

31 Counsel for the plaintiff while accepting these matters, argued that it is within the powers of the court to order that the fund be applied in some way for the benefit of consumers of tobacco products. Whether this was to reduce the cost of cigarettes over a period or for purposes such as “Quit for Life” would be left to the court to decide.

32 It is necessary to consider the claims in terms of s87(1). It is difficult to see how the plaintiff or the representative persons have suffered loss as a result of the wholesaler or retailer having acquired a windfall. After all, the plaintiff got what she purchased, as did the other consumers at a price that she and they were presumably ready to pay. The plaintiff’s real case is not for an amount but for a fund, not to compensate purchasers, because it is accepted that they cannot be identified, but for some other good purpose for community welfare or consumer benefit. It has not been explained on what basis the court has any such power, even though some such orders might have been made in some jurisdiction in the United States of America, apparently based upon r23 relating to class actions in respect of practice in Federal Courts in that country.

33 Counsel for the plaintiff called in aid s11(1)(c) of the Jurisdiction of Courts (Cross-vesting) Act 1987. His purpose in doing so was to call up ss33Z(1)(f) and (2) and 33ZA of the Federal Court of Australia Act 1976. Those sections are not rules of evidence or procedure applied in a superior court. They are statutory provisions giving statutory powers and therefore s11(1)(c) of the Jurisdiction of Courts (Cross-Vesting) Act does not assist. In any event, the Federal Court of Australia Act sections apply only to representative proceedings under s33C of that Act and the present proceedings are not claims of seven or more persons against the same person. Section 33C(i)(a) Ryan v Great Lakes Council (1997) 78 FCR 309.

34 It is proper to say that the relief sought in the amended statement of claim does not in terms seek some court-administered fund unless paragraph 3.7 encompasses this. I have dealt with this only because of the earnest arguments presented by counsel for the plaintiff which were drawn in the most part from the discussions on available relief which appear in Newburg on Class Actions 3rd Edition, in particular Ch 10. Whatever may be the position in the United States of America there is no power in this Court to make orders for disposition of a fund other than to persons who establish an entitlement to compensation out of such fund. Notions based on cy-près analogies, escheat, fluid recovery and deterrent distribution are just that. On no basis are they within the remedies available under s87 of the Trade Practices Act.

Injunctive Relief

35 The plaintiffs’ claim for an interim injunction up to the date of the hearing before me was dismissed by Palmer J. The plaintiffs filed a further motion returnable on 18 July with the defendants’ motions seeking slightly wider relief. Insofar as the claim has been expanded this gives no ground for interim relief. The only claim left standing will be that of unjust enrichment as against the retailers. The undertaking of the wholesalers as to payment has expired. There is no basis for the separate determination sought in paragraph 2 of the plaintiffs’ notice of motion.

Result

36 It follows that the claims in paragraphs 2D, 2F, 2G, 2H, 2I and 2K of the amended statement of claim should be dismissed. Paragraph 2E should be struck out with leave to replead against particular retailers.

Representative proceedings – should they continue as such?

37 The only claim remaining will be that for unjust enrichment. Nevertheless at the outset I deal with this question on the assumption my dismissal orders are incorrect. As I have explained the persons the plaintiff seeks to represent as at present defined would not necessarily encompass those persons whom I think it can be taken the plaintiff seeks to benefit. Those persons she seeks to benefit would, I consider, be persons with the same interests. The problem is that it is accepted that it would not be possible to identify the members of the class because no purchaser or retailer would know whether the tobacco purchased was tobacco upon which it was thought a tax was payable so that in a general way the purchase price reflected the tax which was not paid. It is accepted in Carnie v Esanda Finance Corporation Limited (1995) 182 CLR 398 that problems of identification do not of themselves prevent a representative action being brought. In addition, the fact that few if any purchasers would be able to establish some entitlement to a particular part of the fund, namely the part contributed by a particular retailer would not necessarily prevent the proceedings continuing as representative proceedings. Nevertheless, it has to be accepted there is no way that those class members could be notified because if an advertisement was published the consumer would not know whether he or she fell within the class description. If an “opt out” or “opt in” procedure were thought appropriate no consumer would know what to do. In addition no consumer, if able to prove on the balance of probabilities that some relevant purchase was made, would be able to establish entitlement to a particular sum. In most representative actions identification is not a problem. Purchasers of a particular financial product can easily provide proof that they are purchasers; persons who have been prescribed and used a particular drug can generally establish that fact; purchasers of a particular model of motorcar are readily identifiable. The issue in such cases is generally what damage a particular person has suffered as a result and the issue of whether or not a product is defective is the same for all the class. The fact that all members of a group described may not be identified or come forward is not a decisive matter because some may be able to be identified, but the fact that the consumers in this case do not know whether or not they fall within a description is, I consider, a factor which weighs heavily in considering the exercise of discretion.

38 I turn to the question of representative defendants. I accept that if the class of plaintiffs can be properly described – though not identified – then the class of retailers could be described but one relies on the other. However, different factual circumstances might apply to different retailers. For example there is no equivalent of s51AA in the South Australian Fair Trading Act 1987; claims by some retailers against wholesalers may be subject to particular defences by wholesalers by way of set off or otherwise; particular pricing arrangements, such as engaging in a discount war, may give rise to different considerations.

39 The claim of the plaintiff in all its manifestations before dismissal of most claims is based upon unjust enrichment, coupled with unconscionability. As I have explained the chances of particular persons being able to establish that five years ago they purchased tobacco from a particular retailer, which particular tobacco was not taxed, although the purchase price assumed it would be, is not great. A defendant ought not be expected to contribute to a fund unless there is a reasonably certain prospect of an individual claim against that particular contribution being brought forward and succeeding. Obviously representative orders relating to defendants ought not to be restricted to persons having joint or concurrent liability for the same claim but a claim for unjust enrichment requires that enrichment to be achieved at the expense of a particular person or persons. The plaintiff accepts that this is impossible to show. A defendant should not be required to contribute moneys to satisfy the claim of a representative plaintiff having no relationship with a particular representative defendant. The difficulty and, I think, the near impossibility of making and establishing particular claims makes it inappropriate to allow the action to proceed by or against represented parties. It follows that had I not considered most of the claims doomed to fail, I would have ordered that the action not proceed as a representative action. For the same reasons the claim remaining should not so proceed. It follows that the claims against the ninth and tenth defendants should be dismissed.

40 Orders

1. The notice of motion of the plaintiff filed 14 June 2002 be dismissed with costs.

2. The claims in paragraphs 2D, 2F, 2G, 2H, 2I, and 2K of the amended statement of claim be dismissed.

3. The claim against all defendants other than the seventh and eighth defendants be dismissed.

4. That the action not proceed as a representative action.

5. The balance of the amended statement of claim be struck out with liberty to replead by further amended statement of claim limited to a claim against the seventh and eighth defendants based on unjust enrichment per se with relief limited to such claim.

6. That any such amendment be filed within twenty-eight days and in default thereof the proceedings stand dismissed.

7. That the plaintiff pay the costs of the first and second defendants of the proceedings and their notice of motion of 14 June 2002.

8. That the plaintiff pay the costs of the third to sixth defendants of the proceedings and their notice of motion filed 13 June 2002.

9. That the plaintiff pay the costs of the seventh and eighth defendants of their notice of motion dated 10 July 2002.

10. That the plaintiff pay the costs of the ninth and tenth defendants of the proceedings and their notice of motion filed 13 June 2002.

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Last Modified: 09/04/2002

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Citations

Cauvin v Philip Morris Limited [2002] NSWSC 736

Most Recent Citation

Thistle Investments Pty Limited v British American Tobacco Australia Limited and British American Tobacco Australia Services Limited [2003] ACTSC 76

Cases Citing This Decision

3

Commissioner for Fair Trading v Rowland Thomas [2004] NSWSC 479

Karl Suleman Enterprizes v George [2003] NSWSC 544

Thistle Investments Pty Limited v British American Tobacco Australia Limited and British American Tobacco Australia Services Limited [2003] ACTSC 76

Cases Cited

12

Statutory Material Cited

7

Ha v New South Wales [1997] HCA 34

Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68

Ha v New South Wales [1997] HCA 34

CITATION:	Cauvin v Philip Morris Limited [2002] NSWSC 736 revised - 04/09/2002
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 2625 of 2002
HEARING DATE(S):	18 and 19 July 2002
JUDGMENT DATE:	22 August 2002
PARTIES :	Myrian Cauvin on her own behalf and as representative of the persons described in Schedule A to the amended statement of claim filed 2 July 2002 (Plaintiff) Philip Morris Limited (First Defendant) Philip Morris (Australia) Limited (Second Defendant) British American Tobacco Australia Services Limited (formerly known as W.D. & H.O. Wills (Australia) Limited) (Third Defendant) W.D. & H.O. Wills Holdings Limited (Fourth Defendant) British American Tobacco Australasia Limited (formerly known as Rothmans Holdings Ltd) (Fifth Defendant) British American Tobacco Australia Limited (former known as Rothmans of Pall Mall (Australia) Limited) (Sixth Defendant) Coles Supermarkets Pty Limited including as representative of the persons described in Schedule B (Seventh Defendant) Coles Myer Ltd including as representative of the persons described in Schedule B (Eighth Defendant) Darren Johnston Barker (Ninth Defendant) Gina Joanne Barker (Tenth Defendant)
JUDGMENT OF:	Windeyer J at 1

COUNSEL :	Mr N Francey (Plaintiff) Mr J Sackar QC with him Mr J Hall (First and Second Defendants) Mr N Hutley SC with him Mr S Goodman (Third, Fourth, Fifth and Sixth Defendants) Mr R Weber SC with him Ms K Williams (Seventh and Eighth Defendants) Mr S J Gageler SC with him Mr J Clarke (Ninth and Tenth Defendants)
SOLICITORS:	Maurice May & Co (Plaintiff) Allens Arthur Robinson (First and Second Defendants) Clayton Utz (Third, Fourth, Fifth and Sixth Defendants) Minter Ellison (Seventh and Eighth Defendants) Maurice Blackburn Cashman (Ninth and Tenth Defendants)
CATCHWORDS:	RESTITUTION - money had and received - failure of consideration - subrogation - unjust enrichment - whether the plaintiff/consumer can recover a component of purchase price paid to the retailer, which relates to an invalid licence fee paid by the retailer to the wholesaler where the amount of the licence fee is not specified - TRUSTS - whether the money relating to the licence fee should be subject to a constructive trust in favour of consumer - CONSUMER PROTECTION - trade practices - unconscionability - whether the retention of the money refunded by the wholesaler to the retailer is unconscionable - extent of relief available under s87 of Trade Practices Act 1975 (Cth) - PRACTICE AND PROCEDURE - representative action - difficulties in establishing membership of class of plaintiffs and defendants - whether should proceed as a representative action - PRACTICE AND PROCEDURE - whether causes of action or any of them could be made out, whether proceedings should be dismissed
LEGISLATION CITED:	Business Franchise Licence (Tobacco) Act 1987 (NSW) Fair Trading Act 1987 (SA) s51AA; Federal Court of Australia Act 1976 s33Z, s33ZA, s33C Jurisdiction of Courts (Cross-vesting) Act 1987 s11 Supreme Court Rules Pt8 r13, Pt15, r26 Trade Practices Act 1975 (Cth) s51AA, s51AB, s80, s87, Pt IVA Newburg on Class Actions 3rd Edition, Ch. 10
CASES CITED:	Carnie v Esanda Finance Corporation Limited (1995) 182 CLR 398 CG Berbatis Holdings Pty Limited v Australian Competition and Consumer Commission (2001) ATPR 41-826 Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR 51 Fifty-Fourth Street Inc v United States [1946] 157 (F2d) 68 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Limited (2001) 40 ACSR 252 Ha v New South Wales (1997) 189 CLR 465 Pavey & Matthews Pty Limited v Paul (1987) 162 CLR 221 Roxborough v Rothmans of Pall Mall Australia Limited (2001) 76 ALJR 203 Ryan v Great Lakes Council (1997) 78 FCR 309 Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591 Winterton Constructions Pty Ltd v Hambros Australia Limited (1991) 101 ALR 363
DECISION:	See paragraph 39