G and M Borg P/L v NSW Dairy Corp
[2003] NSWSC 382
•8 May 2003
CITATION: G & M Borg P/L v NSW Dairy Corp & Anor [2003] NSWSC 382 HEARING DATE(S): 20 February 2003 JUDGMENT DATE:
8 May 2003JURISDICTION:
Common LawJUDGMENT OF: Master Harrison DECISION: (1) The decision of Reiss LCM dated 16 July 2002 is affirmed; (2) The appeal is dismissed; (3) The summons is dimissed; (4) The plaintiff is to pay the defendants' costs as agreed or assessed. CATCHWORDS: Appeal decision of Local Court Magistrate - distribution of milk LEGISLATION CITED: Dairy Industry Act 1979 (NSW)
Fair Trading Act 1987 (NSW) - s 42
Local Courts (Civil Claims) Act 1970 (NSW) - s 69
Trade Practices Act 1974 - ss 52 & 82CASES CITED: Allen v Kerr & Anor (1995) Aust Torts Reports 81-354
Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833
Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139
Bayview Gardens POty Ltd v The Shire of Mulgrave [1989] Qd R 1
Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) NSWLR 298
Janssen-Cilag v Pfizer Pty Limited (1992) 109 ALR 638
Lam v Ausintel Investments Australia Pty Ltd (1989) FLR 458
Mason v New South Wales (1995) 102 CLR 108
Rockdale Municipal Council v Tandel Corporation Pty Ltd (1975) 34 LGRA 196
Pioneer Homes Pty Ltd v Liverpool City Council (1992) 77 LGRA 237
Vantage Navigation Corp v Suhail & Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd's Rep 138PARTIES :
G & M Borg Pty Ltd
(Plaintiff)New South Wales Dairy Corporation
Amalgamated Milk Vendors Association Inc
(First Defendant)
(Second Defendant)FILE NUMBER(S): SC 12416/2002 COUNSEL: Mr J E Armfield
Mr J D Hislop QC with
(Plaintiff)
Mr E G Romaniuk
(Defendants)SOLICITORS: Mr Paul Mulally of
Moray & Agnew
Mulally Mylott
(Plaintiff)
(Defendants)
LOWER COURTJURISDICTION: Local Court LOWER COURT FILE NUMBER(S): 68/1998 LOWER COURT
JUDICIAL OFFICER :Reiss LCM
IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
MASTER HARRISON
12416/2002 - G & M BORG PTY LIMITED vTHURSDAY, 8 MAY 2003
- NEW SOUTH WALES DAIRY CORPORATION & ANOR
1 MASTER: By summons filed 3 September 2002 the plaintiff seeks firstly, an order that the judgment entered by LCM Reiss in favour of the defendant on 16 July 2002 be set aside; secondly, an order that the order made by LCM Reiss on 12 August 2002 ordering that the plaintiff pay the defendants’ costs of the action be set aside; thirdly, an order that judgment be entered in favour of the plaintiff against both defendants in the sum of $30,671.32 plus interest; and fourthly, an order that the defendants pay the plaintiff’s costs of the proceedings in the Local Court and the costs of the appeal in this court. The plaintiff relied on the affidavit of Paul Leo Mulally sworn 22 October 2002. On 6 February 2003, Kirby J referred this matter to a Master for hearing.
2 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the appellant/defendant. Section 69(2) of the Local Courts (Civil Claims) Act 1970 (NSW) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the appellant to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 and Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156.
3 The plaintiff alleges that the Magistrate erred in law on two issues: firstly, whether the payment was made on a voluntary basis; and secondly, whether the defendants were in breach of s 42 of the Fair Trading Act 1987 (NSW) (“the Act”).
4 On the “voluntary” issue, the grounds of appeal are:
(1) The learned Magistrate erred in law by misapplying the principles laid down in Mason v New South Wales (1995) 102 CLR 108 with the consequence that he erroneously held that the payment of moneys by the plaintiff to the second defendant was voluntary in the relevant legal sense.
(3) The learned Magistrate erred in law in that there was no evidence before him to support the finding he made at p 14.5 of his judgment that the payment made by the plaintiff was voluntary in the relevant legal sense.(2) A proper application of the finding at p 9.4 of the Magistrate’s judgment that the first defendant’s “use of temporary certificates and requiring payments via a third party the Corporation was acting outside its powers”, Mason’s case and the general law relating to restitution should have led the learned Magistrate to hold that the plaintiff was entitled to recover the sum of $30,671.32 from the second defendant.
5 On 16 July 2002, Reiss LCM delivered judgment in favour of the defendants.
6 The uncontroversial facts are as follows.
7 The plaintiff is a milk vendor company that carried on the business of delivering diary products to retailers that in turn sell those products to the public. The New South Wales Dairy Corporation (“the Corporation”), the first defendant, was charged with the responsibility of regulating the delivery and distribution of milk pursuant to the Dairy Industry Act 1979 (NSW). The industry was subsequently deregulated effective from 1 July 1988 and the Act was repealed and replaced in 2001. The Amalgamated Milk Vendors Association Inc, the second defendant, is a voluntary association that represents milk vendors.
8 In or about December 1986, following a meeting of the New South Wales Dairy Industry Conference established under the Act, the Corporation adopted a policy called the “New Wholesale Trade Policy” (“the NWT policy”). A Distribution Advisory Council (“the DAC”), comprising members of the Association and the Corporation, was established under the NWT policy. The DAC determined the amount of trade generated by changes in retail outlets and the impact that this had on affected vendors. The DAC would make recommendations to the Corporation on which vendor should be offered new trade and how much trade would need to be foregone or the amount of monetary compensation paid in the light of the new trade generated. The Association established a trust fund into which trade compensation payments were made and it facilitated payments to those milk vendors being compensated with monetary payments.
9 In or about May 1987, the principals of the plaintiff company, Mr Gejtu Borg and his wife Mary Borg, obtained authority from the Corporation to deliver dairy products to “Franklins, Mount Druitt Square” (“Franklins”). On 4 April 1995, the Corporation issued the plaintiff company with a “Certificate of Registration as a Dairy Produce Merchant” pursuant to the provisions of the Act (“the 1995 certificate”). The certificate was expressed to remain in force until 30 March 1997 unless sooner cancelled or surrendered. The schedule to the plaintiff’s 1995 certificate was expressed as permitting deliveries to “Franklins, Mount Druitt Square, Mt Druitt”.
10 In August 1995, Franklins closed the shop from which it had been operating at the Mount Druitt Shopping Centre. On 8 August, a “Franklins Big Fresh” store (“Franklins Big Fresh”) commenced operation from a different location to the Franklins store but still within the Mount Druitt Square Shopping Centre. The Corporation and the Association took the view that the above changes meant that the Franklins Big Fresh store constituted new wholesale trade within the meaning of the NWT policy and that the plaintiff was not authorised to deliver milk to it under its existing certificate of registration as a dairy produce merchant. The Magistrate agreed with the defendants’ submissions. The Magistrate was not satisfied that the “Franklins Big Fresh” store is, or should be considered to be, the same “Franklins” store referred to in the plaintiff’s 1995 certificate. That finding is not challenged in this appeal.
11 At page 9, Reiss LCM made findings significant to this appeal where he stated:
- “As the plaintiff has not challenged the legality of the NWT Policy in toto I make no finding in that regard. In the pleadings and in submissions the Plaintiff has challenged the Corporation’s power in respect to issuing temporary certificates and to requiring payment of compensation to a third party. There are certainly no specific powers under the Act providing for temporary certificates or allowing payments to be levied payment through a third party. I am not persuaded that such significants aspect (sic) can be implied as incidental to the specific powers under the Act. It therefore appears that in that in (sic) terms of the use of temporary certificates and requiring payments via a third party the Corporation was acting outside its powers.”
12 Hence, the Magistrate held that there were no powers under the Act to issue temporary certificates nor to require payment through a third party and if the Corporation did so it was acting ultra vires.
13 The Magistrate then gave consideration as to whether the plaintiff was entitled to the restitution it seeks. The Magistrate concluded:
- “Certainly the ultimate “threat” by the Corporation was to withdraw the temporary certificate and an indication that a certificate for the work would be issued to another vendor. At that point there was action and threatened action by the Corporation which would have significantly damaged the Plaintiff’s business. But this has to be looked at in the context of the overall dealings between the parties concerning the work in question. At an early stage the Plaintiff had options presented to it by the NWT Policy and the Corporation by which it could have opted to keep the status quo level of business without payment of any money. If it had made that choice it could have continued in business without any difficulty. It deliberately chose not to do so as it wished to increase its business.
- In applying the principles from Mason’s case to the facts of this case canvassed above I conclude that the payment made by the Plaintiff whilst under protest and unwillingly made was “voluntary” in the relevant legal sense. The principles in Mason’s case therefore provide no basis for the Plaintiff’s claim for restitution. I am not persuaded that an order for restitution is warranted against either of the Defendants.”
14 Both the plaintiff and defendant referred extensively to passages from the High Court decision of Mason v New south Wales (1959) 102 CLR 108. The plaintiff submitted that the Magistrate was wrong to hold that an application of the principles relating to the recovery of money paid under compulsion, as explained in Mason, led to a conclusion that the payment of money by the plaintiff to the second defendant was “voluntary” in the relevant sense.
15 In Mason, Dixon CJ, at 117, stated:
- “But English authority seems now to say that moneys paid to the Crown as and for taxes cannot be recovered upon its turning out that the moneys were not exigible notwithstanding that they were demanded by the Crown, unless the circumstances were such that they would be recoverable as between subject and subject, exempli gratia as involuntary payments...We are dealing with the assumed possession by the officers of government of what turned out to be a void authority. The moneys were paid over by the plaintiffs to avoid the apprehended consequence of a refusal to submit to the authority. It is enough if there be just and reasonable grounds for apprehending that unless payment be made an unlawful and injurious course will be taken by the defendant in violation of the plaintiffs’ actual rights.”
16 The above statement represents the relevant law to be applied in Australia where a party alleges that it has made an unlawful payment to a government or other public body. Hence, if the payment was made involuntarily the payer is entitled to recover it. Windeyer J at 139 defined involuntariness as a result of some extortion, coercion or compulsion in the legal sense. Windeyer J went on to say at 142-144:
- “…the plaintiffs cannot succeed simply because of the superior position of the defendant. They must go further and establish that there was, in a legal sense, compulsion by something actually done or threatened, something beyond the implication of duress arising from a demand by persons in authority …Further the plaintiffs must establish that they actually paid because of this compulsion, and not voluntarily despite it…In my view a payment may be said to be voluntary, in this context and for present purposes, when the payer makes it deliberately with a knowledge of all relevant facts, and either being indifferent to whether or not he be liable in law, or knowing, or having reason to think himself not liable, yet intending finally to close the transaction...A protest at the time of payment may of course ‘afford some evidence, when accompanied by other circumstances, that the payment was not voluntarily made to end the matter’, (ibid at p 143, quoting from Maskell v Horner [1915] 3 KB 106, at p 120)... It is…necessary for the plaintiffs to do more than point to the provisions of the statute. They must show that the Crown by its servants was exercising, or threatening to exercise, powers under the statute in such a way as to constitute compulsion in law.”
17 The plaintiff submitted that the Magistrate erred in reasoning that its payment to the defendant was voluntary because it opted to make the payment rather than surrender an equivalent amount of trade. It submitted that just as the first defendant was not lawfully entitled to require the payment of money as a price for issuing the certificate it was not entitled to require trade to be surrendered. The plaintiff also referred this Court to a statement made by Kitto J in Mason. There His Honour said at 128:
- “It is all very well to say in such a case that there was an alternative to payment... But the critical question is not whether there was an alternative. It is whether the choice made between the alternatives was made freely or under pressure.”
18 The plaintiff submitted that, in accordance with this proposition, the Magistrate wrongfully applied the principles laid down in Mason. This was because in a case such as the present it is not a question of whether there was merely an alternative to payment but whether the plaintiff had been compelled between the alternatives available to make the payment.
19 In recent times, the reasoning of, and extent to which, Justice Kitto’s proposition in Mason can be applied have been questioned. In Bayview Gardens Pty Ltd v The Shire of Mulgrave [1989] Qd R 1 Connolly J (with whom Kelly SPJ and Moynihan J agreed) referred to it, at 6, and said:
“It is true that in Mason’s case at 128 Kitto J said that the critical question is whether the choice made between alternatives was made freely or under pressure. Whether this proposition, literally understood, can be supported is, as it seems to me, with great respect, open to question. The demands of those in authority with power to deny a privilege will, more frequently than not, involve pressure. But if the response to this pressure be a deliberate decision to acquiesce lest, for perfectly valid reasons, the privilege be altogether lost, the payment cannot, in my judgment, be described as involuntary...Although the reasons for judgment of Kitto J. were agreed in by both Barwick CJ. and Menzies J., I venture to doubt, with the greatest respect, whether they are of general application. Voluntariness is, after all, a question of fact.”
20 In Mason, as Menzies J said, at 136:
- “The question whether any particular payment was made voluntarily or under compulsion is a question of fact...”
21 And Windeyer J also said at 142-3:
“In most jurisdictions in the United States the difficulties of the question whether a payment is compulsory or voluntary have led to its being decided by the judge and not left to the jury...Yet it is, I think, ultimately a question of fact...”
22 When the plaintiff was cross-examined about the expansion of his trade after the first defendant granted him a temporary licence to supply milk to the Franklins Big Fresh, his answers were unclear. The plaintiff acknowledged that he sold more milk to the Franklins Big Fresh store. According to the plaintiff, prior to his selling milk to the Franklins Big Fresh store his trade was roughly 7,000 litres per week. When he started selling to the Franklins Big Fresh store his trade rose to 14,500 litres per week. This, according to the plaintiff, was not quite as big an increase in sales as it appears. He stated that prior to losing the trade in the original Franklins store and some other trade in Woolworths, he had sold some12,000 litres per week (t 15. 55-16.51). Nevertheless, the plaintiff had benefited by the increase and he accepted that the Franklins Big Fresh was a bigger store and that he wanted more trade to keep him and his family “going and going ahead” (t 20.5).
23 The Magistrate stated that the plaintiff had a range of options available to it, namely, to have paid the money requested, or forfeit an amount of trade. The plaintiff believed that the second defendant had no power to demand the payment (Ex 1, Annexure Q). The Magistrate found that the plaintiff had alternative courses open to it and took them into consideration in determining whether the plaintiff elected voluntarily to pay the money requested.
24 In Bayview Gardens Connolly J, in finding against the plaintiff in that case, said at 7:
- “In this case the evidence makes it quite clear that the appellants made a deliberate decision to make the disputed payments and to seek to recover them at a later date in the type of proceedings which they ultimately brought. The only conclusion to which one can come is that this was a commercial decision and that the pressures under which they found themselves were those of the market place.”
25 Connolly J thereby held that the payments of the appellants in Bayview Gardens were voluntary, see also Rockdale Municipal Council v Tandel Corporation Pty Ltd (1975) 34 LGRA 196; Pioneer Homes Pty Ltd v Liverpool City Council (1992) 77 LGRA 237.
26 As the Magistrate found, in this case the plaintiff would not have been literally put out of business by a failure on its part to pay the requested sum. The plaintiff’s position was therefore unlike that of the plaintiff in Mason and in other, similar cases, see: Vantage Navigation Corp v Suhail & Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd’s Rep 138; Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 2 NSWLR 298.
27 Like the appellants in Bayview Gardens, the plaintiff stood to increase its profits by the trade. The Franklins Big Fresh Store, as is conceded by the plaintiff in these proceedings, was not within the area of trade granted to the plaintiff under its 1995 certificate. As the Magistrate found, however, the plaintiff wished to secure and retain the Franklins Big Fresh store because it was to its advantage commercially to do so. The Magistrate made factual findings as to whether the payment was voluntary. The Magistrate found that the plaintiff had “options presented to it” and concluded by stating that he believed that the plaintiff had “deliberately” chosen to pay the compensation “because it wished to increase its business”. On these findings the Magistrate was entitled to hold the payment was “voluntary”. There is no error of law.
28 Accordingly, the plaintiff’s appeal on grounds 1-3 fails.
Section 42 of the Fair Trading Act
29 The grounds of appeal are:
(1) The learned Magistrate erred in law in failing to hold on the evidence before him, and in particular having regard to his finding at p 9.4 that the first defendant’s “use of temporary certificates and requiring payments via a third party” was “outside its powers”, that the conduct of the first defendant in representing that the plaintiff was obliged to pay the sum of $30,671.72 to the second defendant was false and misleading conduct that breached s 42 of the Act.
(3) The learned Magistrate erred in law in holding that the plaintiff had not suffered any loss which would have entitled it to receive compensation pursuant to the Act.(2) The learned Magistrate erred in law in holding that the circumstances of the relationship between the parties and their previous dealings as noted by him at p 16 of his judgment was relevant to the question of whether the first defendant’s conduct was misleading and deceptive.
30 In relation to the first ground of appeal, at p16 of his judgment the Magistrate stated:
Even if the conduct could be classified as being in contravention of s.42 of the Fair Trading Act and that the Plaintiff acted on that conduct there has been no relevant loss which would entitle the plaintiff to compensation under s 104 of the Fair Trading Act as the Plaintiff intentionally opted to make the payment and in return received additional trade.”
Further there was no specific evidence from the principals of the Plaintiff company that they were in fact mislead or deceived by the Corporation as to the power of Corporation to require or direct compensation. The evidence is that the issue of the Corporation’s powers or lack thereof was raised by solicitors representing the Plaintiff at a late stage in the debate between the parties in its letter to the Corporation dated 11 October 1996. It was after that letter that the payment was made by the Plaintiff to the Association. In these circumstances it cannot be said that (sic) the Plaintiff that it was in fact deceived or mislead into making the payment.
31 The plaintiff takes issue with the Magistrate’s statement that there was no specific evidence from the plaintiff that they were mislead or deceived. The plaintiff submitted that it amounted to an error of law because under s 42, like s 52 of the Trade Practices Act 1974, there is no requirement to prove that the plaintiff was actually deceived. In Janssen-Cilag v Pfizer Pty Limited (1992) 109 ALR 638 Lockhart J at 643 held that while the applicant’s loss or damage must be caused by the respondent’s misleading or deceptive conduct, there was nothing in the language of the Act or its purpose to warrant the suggestion that the right of the applicant for damages under s 82 of the Trade Practices Act is confined to the case where he or she has relied upon or personally been influenced by the conduct of the respondent.
32 However, in the same terms with which he rejected the plaintiff’s claim for restitution based upon the principles enunciated in Mason, the Magistrate’s statements reveal that he also rejected the plaintiff’s s 42 claim on the grounds that the plaintiff deliberately opted to make the payment to receive additional trade in return.
33 As the Magistrate pointed out, the plaintiff made its payment after its solicitors stated in unequivocal terms in a letter dated 11 October 1996 (Ex 1 Annexure Q) that they believed the first defendant had no power to demand it. In that letter the plaintiff’s solicitors went on to comment that the plaintiff’s decision to make the payment had been made:
- “on the understanding that their (the plaintiff’s) Certificate of Registration will be amended to permit them to continue delivering milk to Franklins Big Fresh at Mount Druitt Square on a permanent basis.”
34 Thus the plaintiff indicated that it was aware that the first defendant did not have the power to demand the payment. Therefore, the plaintiff did not rely on the defendant’s representations or conduct in making the payment. Rather, it elected to do so in order to secure the certificate of registration permitting it to serve Franklins Big Fresh. To use the words of Glesson CJ in Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 at 476, the decision by the plaintiff to make the payment to the defendant was not:
- “the consequence of any reliance on his part upon what was being represented to him. Rather it was because he took the view that it was in his own commercial interests”
35 Thus the plaintiff cannot say that it relied upon the first defendant’s representations to make the payment. The Magistrate was correct at law and it is unnecessary to consider additional grounds of appeal as they fail if there was no reliance placed on the representation. The plaintiff’s claim pursuant to the Act fails. The appeal is dismissed. The decision of Reiss LCM dated 16 September 2002 is affirmed. The summons is dismissed.
36 Costs are discretionary. Normally, costs follow the event. The plaintiff is ordered to pay costs as agreed or assessed.
37 The court orders:
(1) The decision of Reiss LCM dated 16 July 2002 is affirmed.
(2) The appeal is dismissed.
(4) The plaintiff is to pay the defendants’ costs as agreed or assessed.(3) The summons is dismissed.
Last Modified: 05/12/2003
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