Myriam Cauvin v Philip Morris Limited (ACN 004 694 428)

[2004] NSWSC 644

CITATION:	Myriam Cauvin v Philip Morris Limited (ACN 004 694 428) & Ors [2004] NSWSC 644
HEARING DATE(S):	17/5/04, 18/5/04, 19/5/04
JUDGMENT DATE:	24 September 2004
JUDGMENT OF:	Bell J at 1
DECISION:	1. Strike out the references to "other persons" in 2.7(b), 2.8(b), 2.12(a)(ii), 2.13, 2.14, 2.15, 2.16, 2.16(C)(d), 2.16(C)(e), 2.17, 2.19(C)(d), 2.19(C)(e), 2.21, 2.22, 2.23(g), 2.24, 2.24(a), 2.24(c) in the amended statement of claim; 2. Strike out the claim for relief on behalf of "other persons" in paragraph 3.9 (d) of the amended statement of claim; 3. Strike out the references to "other persons" in the claims for relief in paragraphs 3.11(d) and 3.11(f); 4. Strike out paragraph 3.12; 5. Stand over the plaintiff's motion for leave to deliver a second amended statement of claim for directions to 9.15am on Friday 8 October 2004
LEGISLATION CITED:	Commonwealth Constitution Consumer Affairs Fair Trading Act 1990 (NT) Fair Trading Act 1992 (ACT) Fair Trading Act 1987 (NSW) Fair Trading Act 1989 (Qld) Fair Trading Act 1987 (SA) Fair Trading Act 1990 (Tas) Fair Trading Act 1985 (Vic) Fair Trading Act 1999 (Vic) Fair Trading Act 1987 (WA) Federal Court of Australia Act 1976 (Cth) Supreme Court Rules 1970 Trade Practices Act 1974 (Cth) Trade Practices Amendment Act 1977
CASES CITED:	Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Attorney-General for Australia v The Queen and the Boiler Makers' Society of Australia [1957] AC 288 Australian Competition and Consumer Commission v Giraffe World Pty Ltd (1998) 84 FCR 512 Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18 Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1993) 113 ALR 257 Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334 Fencott v Muller (1982) 152 CLR 570 ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) ATPR 41-185 Kable v The Director of Public Prosecutions for the State of NSW (1995-1996) 189 CLR 51 Medibank Private Ltd v Cassidy [2002] FCAFC 290; 124 FCR 40 Poignand v NZI Securities Australia Ltd (1992) 37 FCR 363 R v Trade Practices Tribunal; Ex Parte Tasmanian Breweries Pty Ltd (1969-1970) 123 CLR 361 Re Wakim; Ex Parte McNally (1999) 198 CLR 511 The Queen v Kirby; Ex parte Boiler Makers' Society of Australia (1955) 94 CLR 254 Tobacco Control Coalition Inc v Philip Morris (Australia) Ltd [2000] FCA 1004 University of New South Wales v Moorhouse (1975) 133 CLR 1
PARTIES :	Plaintiff - MYRIAM CAUVIN 1st Defendant - PHILIP MORRIS LIMITED (ACN 004694428) 2nd Defendant - PHILIP MORRIS (AUSTRALIA) LIMITED (ACN 004 316 901) 3rd Defendant - BRITISH AMERICAN TOBACCO AUSTRALIA SERVICES LIMITED - (FORMERLY KNOWN AS WD & HO WILLS (AUST) LTD) 4th Defendant - WD & HO WILLS HOLDINGS LIMITED (ACN 003 763 291 5th Defendant - BRITISH AMERICAN TOBACCO AUSTRALASIA LIMITED (FORMERLY KNOWN, AS ROTHMANS HOLDINGS LTD) 6th Defendant - BRITISH AMERICAN TOBACCO AUSTRALIA LTD (FORMERLY KNOWN AS ROTHMANS OF PALL MALL (AUST) LTD) 7th Defendant - IMPERIAL TOBACCO AUSTRALIA LTD (ACN 046 148 681)
FILE NUMBER(S):	SC 11301/02
COUNSEL:	Plaintiff: N. Francey 1st & 2nd Def: J. Sackar QC/ S. O'Meara 3rd & 4th Def: D. Beach SC / M. Wheelahan 5th & 6th Def: I. Jackman / S. Goodman 7th Def: L. Foster SC / I. Pike
SOLICITORS:	Plaintiff: Maurice May & Co 1st & 2nd Def: Allens Arthur Robinson 3rd & 4th Def: Corrs Chambers Westgarth 5th & 6th Def: Baker & McKenzie 7th Def: Gilbert & Tobin

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Friday 24 September 2004

11301/02 Myriam CAUVIN v PHILIP MORRIS LIMITED (ACN 004 694 428) & Ors

JUDGMENT

1 BELL J: By notice of motion filed on 11 July 2002 (the first motion) the first defendant and second defendants, Philip Morris Limited and Philip Morris (Australia) Limited respectively (the Philip Morris defendants) claimed orders:

“(i) Pursuant to Part 15 rule 26 of the Supreme Court Rules, the whole of the statement of claim be struck out.
(ii) Further, or alternatively, a declaration that the plaintiff lacks standing to bring this proceeding on behalf of ‘other persons’.
(iii) Further, or alternatively, a declaration that paragraphs 2.16D, 2.19D, 2.22(b) and 2.23(a)—(f) inclusive of the statement of claim are not justiciable.”

2 The first motion, together with a number of motions filed on behalf of the other defendants, was listed for hearing first on 31 March 2003. On that occasion the Philip Morris defendants moved on paragraph 1 of the first motion. The parties were agreed that it was convenient to deal with those challenges to the pleading that did not include the issue of her ability to claim relief on behalf of “other persons”. I struck out those parts of the plaintiff’s amended statement of claim as are set out in the schedule annexed to my judgment Cauvin v Philip Morris Limited & Ors [2003] NSWSC 631.

3 On 17 May 2004 the balance of the first motion was listed for hearing. A second motion filed by the Phillip Morris defendants on 7 August 2002 claimed orders dismissing the proceedings or staying them as an abuse of the process of the Court (the abuse motion). The abuse motion was listed for directions on 17 May 2004.

4 At the commencement of the hearing on that date Mr Sackar QC, who with Mr O’Meara appeared on behalf of the Philip Morris defendants, stated that any claim sought to be agitated by the abuse motion that the proceedings had been brought for a collateral purpose was abandoned. This left two bases to the abuse motion. The first related to the pleading of conduct involving lobbying governments (the lobbying allegations) and the second related to pleading facts and making claims for relief with respect to “other persons”.

5 Mr Francey, who appeared on behalf of the plaintiff, informed the Court that it was not proposed to proceed on the lobbying allegations. By consent, paragraphs 2.16D, 2.19D, 2.22(b) and 2.23(a) – (c) were struck out of the amended statement of claim that had been filed pursuant to leave granted on 1 April 2003.

6 The abandonment of the lobbying allegations left as the only issue to be determined by the abuse motion the pleading of facts and claims for relief with respect to “other persons”. This issue is common to the matters raised by the first motion. The parties agreed that it was convenient to hear the abuse motion together with the balance of the first motion.

7 Also listed for hearing on 17 May 2004 were the balance of motions filed by the third and fourth defendants, British American Tobacco Australia Services Limited and WD&HO Wills Holdings Limited respectively (the Wills defendants) on 11 July 2002 and by the seventh defendant, Imperial Tobacco Australia Limited (ITA) on 7 August 2002. Each claimed orders striking out the pleading. The Wills defendants and ITA had agreed to the course taken on the earlier occasion that the challenge that each made to the plaintiff’s ability to propound a claim relating to “other persons” should not be dealt with on that occasion.

8 The Wills defendants, ITA and the fifth and sixth defendants, British American Tobacco Australasia Limited and British American Tobacco Australia Limited respectively (the Rothmans defendants) adopted the submissions advanced by Mr Sackar on behalf of the Philip Morris defendants. Mr Beach SC, who with Mr Wheelahan appeared on behalf of the Wills defendants, also relied on paragraphs 42–50 of written submissions filed on their behalf on 3 September 2002 and paragraphs 5 and 6 of written submissions in reply filed on 3 October 2002. Mr Foster SC, who with Mr Pike appeared on behalf of ITA, also relied on written submissions filed on its behalf on 7 May 2004.

9 The scheme of the plaintiff’s amended statement of claim is outlined in Cauvin v Philip Morris Limited & Ors [2003] NSWSC 631. Relevant for present purposes is that the plaintiff pleads the following facts:

2.7(b) the defendants, or one or more of them, distributed for sale to consumers within Australia, including the plaintiff and other persons, cigarettes.
2.8(b) people who smoked the cigarettes, including herself and other persons, had as a consequence of such smoking an increased likelihood of contracting smoking related disease.

2.12(a)(ii) the defendants knew that people who smoked the cigarettes, including herself and other persons, had as a consequence of such smoking an increased likelihood of contracting smoking related disease.

2.13 the plaintiff and other persons have smoked, or may smoke, the cigarettes, and as a consequence be exposed to the likelihood of contracting smoking related disease.

2.14 as a consequence of smoking the cigarettes the plaintiff and other persons have inhaled and/or ingested nicotine and may inhale and/or ingest nicotine.

2.15 as a consequence of the inhalation or ingestion of nicotine, the plaintiff and other persons have been, or may be, subjected to the effect of nicotine.

2.16 the defendants engaged in conduct promoting the benefits and pleasures of smoking and denying or minimising the risks associated with smoking for the purpose of inducing and/or encouraging consumers including the plaintiff and other persons to commence, continue, recommence and/or not cease or quit to smoke.

2.16(C)(d) the defendants made and/or caused to be made public statements representing that smoking, continuing to smoke or taking up smoking was and would be no more likely than other genetic, lifestyle or environmental factors to expose persons who smoke, including the plaintiff and other persons, to any significant increased risk to health or likelihood of contracting smoking related disease.

2.16(C)(e) the making of public statements by the defendants representing that smoking, continuing to smoke or taking up smoking would not expose persons who smoke, including the plaintiff and other persons, to any significant increased risk of addiction to nicotine or smoking.

2.17 persons, including the plaintiff and other persons, were influenced by the defendants’ conduct both directly and indirectly.

2.19(C)(d) the conduct earlier pleaded was misleading or deceptive or likely to mislead or deceive because there was no reasonable basis for representing that smoking, continuing to smoke or taking up smoking was no more likely than other genetic, lifestyle or environmental factors to expose persons who smoke, including the plaintiff and other persons, to any significant increased risk to health or likelihood of contracting smoking related disease.

2.19(C)(e) there was no reasonable basis for representing that smoking, continuing to smoke or taking up smoking would not expose persons who smoke, including the plaintiff and other persons, to any significant risk of addiction to nicotine or smoking.

2.21 the contravening conduct had the effect by reason of the influence of the defendants’ conduct as set out earlier in the pleading of causing and/or contributing to the plaintiff and other persons commencing to smoke the cigarettes, and/or continuing to smoke and/or recommencing to smoke and/or not ceasing or quitting to smoke.

2.22 the contravening conduct had the effect that members of the general public, including the plaintiff and other persons, had an inaccurate or distorted belief, impression or understanding of the relationship between smoking and disease, the likelihood of contracting smoking related disease, the relationship between smoking and addiction, the effect of nicotine and the expressed policy of the defendants in relation to the supply of the cigarettes to minors or persons under the age of 18 years or such other relevant legal limit pertaining to the supply of cigarettes.

2.23(g) as a result of the contravening conduct a greater number of persons, including the plaintiff and other persons, commenced smoking the cigarettes and/or continued to smoke the cigarettes and/or failed to quit smoking the cigarettes than otherwise would be the case.

2.24 the plaintiff and other persons have suffered or are likely to suffer loss and damage as particularised in subparagraphs:
(a) the plaintiff and other persons have contracted and/or are likely to contract smoking related disease, with all the attendant consequences thereof, including but not limited to: pain and suffering, medical and hospital expenses, loss of income and loss of enjoyment and amenity of life;
(c) further and better particulars of loss or damage, including loss or damage suffered or likely to be suffered by the plaintiff and other persons will be provided in due course.

10 The plaintiff’s claims for declaratory relief are contained in paragraph 3.9. She seeks a declaration in sub-paragraph 3.9(d) that she and/or other persons have suffered, or are likely to suffer, loss or damage by the conduct of the defendants that was engaged in, in contravention of s 52, s 51A, s 51AB and/or s 52A of the Trade Practices Act 1974 (Cth) (the TPA) and/or the equivalent provisions of the Fair Trading Act 1987 (NSW) and relevant Fair Trading legislation in each State or Territory (the FTA).

11 The plaintiff’s claims for injunctive relief under s 80 of the TPA and/or the equivalent provisions of the FTA are set out in paragraph 3.11. The claims include in subparagraph 3.11(d) an order, inter alia, that each of the defendants disclose, disseminate, and make available to herself and other persons, and such public health and regulatory authorities as the court may select, all documents relating to research previously conducted directly or indirectly by themselves that relate to the health consequences of cigarette smoking and nicotine addiction and the ability to develop less hazardous cigarettes. In sub-paragraph 3.11(f) the plaintiff claims an order that each of the defendants disclose, disseminate and make available to her and other persons, and such public health and regulatory authorities as the court may select all documents relating to marketing or advertising campaigns that target and/or encourage persons under the age of 18 years to purchase and consume cigarettes, to refrain from engaging in any such campaigns in the future and to provide mechanisms to ensure compliance.

12 Provision is made in Pt 8 r 13 of the SCR for the commencement of proceedings as representative proceedings. The plaintiff does not bring these proceedings as representative proceedings under the SCR with respect to the “other persons” for whom declaratory, injunctive and compensatory relief is claimed. She disavowed any intention of bringing representative proceedings in a letter, dated 18 June 2002, sent by her solicitors to the solicitors acting for the Philip Morris defendants. In that letter it was said:

“The plaintiff does not make a claim as representative of any other person and we do not intend to amend the statement of claim to plead the claim as a representative proceeding. It is unnecessary to do so having regard to the terms of s 87(1) of the Trade Practices Act and equivalent provisions in State and Territory Fair Trading legislation” (Exhibit C).
The relief sought under s 87 of the TPA and its FTA equivalents

13 It is convenient to deal firstly with the claims made in paragraph 3.12 of the amended statement of claim by which the plaintiff claims orders under s 87 of the TPA and its FTA equivalents compensating her and “other persons” for loss or damage suffered by them, or as will prevent or reduce loss or damage likely to be suffered by them, as the result of the defendants’ conduct which is alleged to have contravened the provisions of Pt IVA and Pt V of the TPA and the equivalent provisions of the FTA.

14 The defendants submit that s 87 of the TPA and its FTA equivalents do not authorise the Court to make compensatory orders benefiting any person other than a party to the proceedings (or a person deemed to be a party). To the extent that the provisions of s 87 of the TPA and its FTA equivalents purport to authorise the Court to grant compensatory relief to non-parties they are submitted to be beyond power.

15 The plaintiff’s written submissions were filed on 23 September 2002. This was very shortly after the delivery of the judgment in Medibank Private Ltd v Cassidy [2002] FCAFC 290; 124 FCR 40 and the decision was not referred to in the submissions. In Medibank Private, after reviewing the legislative history, the Court concluded that s 87 does not admit of making a compensatory order in favour of a non-party.

16 The decision in Medibank Private is a considered decision of the Full Court of the Federal Court and deals with the construction of Commonwealth legislation. On the hearing of the motion Mr Francey did not contend otherwise than that I would follow it. He acknowledged that I would find that s 87 of the TPA does not confer power to make a compensatory order with respect to “other persons” (T 534.15).

17 The focus of the plaintiff’s submissions on the hearing with respect to her claims for compensatory relief on behalf of “other persons” was on the claims pleaded under the equivalent provisions of the Fair Trading legislation of each of the States and Territories.

18 The pleading defines certain terms. A reference to “FTA” is defined as a reference to the Fair Trading Act 1987 (NSW) and relevant Fair Trading legislation in each State or Territory as set out in the Table of Comparative Legislative Provisions contained in Schedule 5. Schedule 5 lists comparative provisions to each of ss 51AB, 51A, 52, 52A, 75B, 80, 83, 84 and 87 of the TPA that are found in the Fair Trading Act 1987 (NSW); the Fair Trading Act 1985 (Vic); the Fair Trading Act 1999 (Vic); the Fair Trading Act 1989 (Qld); the Fair Trading Act 1987 (SA); the Fair Trading Act 1987 (WA); the Fair Trading Act 1990 (Tas); the Consumer Affairs Fair Trading Act 1990 (NT); and the Fair Trading Act 1992 (ACT).

19 To understand the plaintiff’s argument it is necessary to return to the terms of s 87(1) of the TPA. As originally enacted the subsection provided:

“Where in a proceeding instituted under or for an offence against this Part the Court finds that there has been a contravention of a provision of Part IV or V, the Court may, in addition to imposing a penalty under section 77 or 79, granting an injunction under section 80 or making an order under section 82 in an action for the recovery of the amount of any loss or damage, make such other orders as it thinks fit to redress injury to persons caused by any conduct to which the proceeding relates or any like conduct engaged in by the defendant”.

20 The Trade Practices Amendment Act 1977 introduced a number of changes to the TPA. Relevantly sub-section (1) was omitted and a new sub-section (1) was inserted into section 87. The new sub-section (1) was in these terms:

“Where, in a proceeding instituted under, or for an offence against, 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 (whether before or after the commencement of this sub-section) in contravention of a provision of Part IV or V, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 80A or 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 (including all or any of the orders mentioned in sub-section (2) of this section) 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.” ( emphasis added)

It was common ground in the way the matter was developed before me that the amendment to s 87 of the TPA introduced in 1977 was intended to address a perceived constitutional difficulty arising out of the broad terms of sub-section (1) as originally enacted. The history in this respect is set out in Medibank Private (see too Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 per Lindgren J at 525-526).

21 The equivalent provisions of the Fair Trading Act 1989 (Qld), the Fair Trading Act 1990 (Tas) and the Fair Trading Act 1992 (ACT) adopt the language of s 87(1) of the TPA in that each requires the Court to find (or be satisfied) that a person who is a party to the proceeding has suffered or is likely to suffer loss or damage.

22 The Fair Trading legislation of New South Wales, Victoria, South Australia, Western Australia and the Northern Territory does not incorporate words in the equivalent provisions to s 87(1) of the TPA that require the Court to find (or be satisfied) that “a person who is a party to the proceeding” has suffered or is likely to suffer loss or damage.

23 As noted, the plaintiff pleads her claim by reference to the provisions of the TPA and to the Fair Trading legislation of every State and Territory in the Commonwealth. Part 74 r 9 of the SCR requires a party who wishes to contend that the Court should apply the written law of another State or Territory to file a notice of the contention, specifying the law and stating the grounds relied upon in support of the contention as soon as practicable. No notice under Pt 74 r 9 has been filed. The question of the plaintiff’s ability to plead her case by reference to the provisions of the Fair Trading legislation of the States and Territories other than New South Wales was not explored.

24 The plaintiff’s point is raised by the provisions of s 72(1) of the Fair Trading Act 1987 (NSW) which states:

“Without limiting the generality of section 65, if, in a proceeding instituted under this Part, or for an offence against Part 3, 4, 5, 5B or 8, the Supreme Court finds that a person has sustained, or is likely to sustain, loss or damage by conduct of another person that contravened a provision of Part 3, 4, 5, 5B or 8, the Court may, whether or not it grants an injunction under section 65 or makes an order under section 67 or 68, 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 (including all or any of the orders specified in subsection (5)) if the Court considers that the order or orders concerned will compensate the first-mentioned person wholly or in part for the loss or damage or will prevent or reduce the loss or damage.”

25 The plaintiff contends that the omission of the words “who is a party” after the word “person” when first appearing in sub-section (1) evidences the legislature’s intention that the Court’s power to make compensatory orders not be confined to orders compensating parties to the proceedings.

26 In Mr Francey’s submission the Court might make a finding for the purposes of s 72(1) of the FTA that persons (not being parties) had suffered loss or damage or were likely to suffer loss or damage on the basis of statistical or epidemiological evidence and, if it considered it appropriate, craft orders compensating those persons. In support of this submission he referred to the observations of Wilcox J in Tobacco Control Coalition Inc v Philip Morris (Australia) Ltd [2000] FCA 1004 at [98]–[114]. In particular, at [106] and [107] his Honour observed:

“There is an interesting question whether it would be possible to establish a case such as this on the basis of sample evidence, or whether it would be essential to adduce evidence about the smoking history of each individual in relation to whom the applicant claimed to recover incurred expenditure. Supposing a health fund made a claim under s 87 against cigarette manufacturers and established:

(i) its total expenditure, over a particular period, in relation to smoking caused diseases suffered by a particular cohort of persons, perhaps to find by reference to birth within a particular span of years;

(ii) by epidemiological and statistical evidence, that a random sample of a particular size, and having other particular characteristics, was likely fairly to reflect the range and incidents of smoking experiences throughout the whole of that cohort, and fairly reflect the average per capita expenditure of the whole cohort; and
(iii) by evidence from each individual in the sample group, that x% of them had been caused to commence smoking, or to fail to quit smoking early enough to avoid suffering a smoking related disease, by the conduct of one or particular respondents.
Would that evidence suffice to make out a claim against the particular respondent or respondents for x% of the total expenditure?
[107] As the Court would be concerned to determine probabilities, not certainties, my tentative view is that it may be possible to establish a s 87 claim in that way. However, it would be necessary to ensure the sample group was sufficiently large, and its members truly selected on a random basis.”

27 His Honour’s observations with respect to the means by which a claim under s 87 might be established were made before the decision of the Full Court in Medibank Private. More to the point, having regard to the reliance that is sought to be placed on them with respect to a claim made under s 72(1) of the FTA, is the fact that they were made in the context of a proceeding brought under Pt IVA of the Federal Court of Australia Act 1976 (the FCA). In that case the plaintiff brought proceedings on its own behalf and as a representative party on behalf of the group members identified in the Schedules to the statement of claim. I do not read his Honour’s remarks as lending support to the plaintiff’s assertion that this Court might make compensatory orders under s 72(1) in favour of an undefined group of “other persons” who are not parties nor group members in a properly constituted representative proceeding.

28 The plaintiff claims compensatory orders on behalf of a group that potentially includes every member of the Australian population in a proceeding that is not a representative proceeding under the SCR. There is no means of identifying the persons on whose behalf compensatory orders are sought nor of binding the persons benefited by any such order should the Court be persuaded to make one.

29 In Mr Francey’s submission the broad terms of s 72(1) admit of orders of the character that the plaintiff seeks; the Parliament of New South Wales is said not to be subject to any constitutional impediment in legislating a scheme of consumer protection that includes authorising this Court to frame remedial compensatory orders for the benefit of non-parties. The defendants submit that s 72(1) of the FTA (and the equivalent provisions of the Fair Trading legislation of South Australia, Western Australia and the Northern Territory) cannot be given this scope and that to authorise this Court to make compensatory orders in favour of non-parties (in proceedings that are not constituted as representative proceedings) would exceed the legislative power of the Parliament of New South Wales. In their submission in making orders of this character the Court would not be exercising judicial power: R v Trade Practices Tribunal; Ex Parte Tasmanian Breweries Pty Ltd (1969–1970) 123 CLR 361 per Kitto J at 375. While it is acknowledged that the Parliament may confer non-judicial functions upon the Court in non-federal matters, the defendants submit that the power to award “compensation” to non-parties on the basis of statistical or epidemiological evidence involves the exercise of an executive function incompatible with the maintenance of the integrity and independence of the Court as a repository for the exercise of the judicial power of the Commonwealth: Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51.

30 The principles enunciated in Kable as to the limitations on the power of a parliament of a State to confer non-judicial functions on a State Supreme Court in respect of non-federal matters was not central to the defendants’ constitutional challenge. In their submission this Court is subject to the constitutional imperative that it not exercise non-judicial power since it is in these proceedings exercising the judicial power of the Commonwealth.

31 The Court is invested with federal jurisdiction with respect to the claim that the plaintiff brings under Parts IVA and V of the TPA pursuant to s 86(2) of the TPA.

32 Section 71 of the Constitution provides that the judicial power of the Commonwealth shall be vested, inter alia, in such courts as are invested with federal jurisdiction. The plaintiff’s claim pleaded under the equivalent provisions of the FTA arises out of common transactions and facts to the claims pleaded under the TPA. It would seem that federal judicial power is attracted to the whole of the controversy: Fencott v Muller (1982-1983) 152 CLR 570 per Mason, Murphy, Brennan and Deane JJ at 607 – 609; Re Wakim; Ex Parte McNally (1999) 198 CLR 511 per Gummow and Hayne JJ at 585. It follows that the Court is subject to the imperative of Ch III of the Constitution that in exercising the judicial power of the commonwealth it not exercise non-judicial powers: The Queen v Kirby; Ex Parte Boiler Makers’ Society of Australia (1955) 19 CLR 254 and on appeal Attorney-General for Australia v The Queen and the Boiler Makers’ Society of Australia [1957] AC 288.

33 If it were necessary to decide I would accept that the award of compensation to persons who are not parties to the proceedings (nor persons with same interest in the proceedings who are represented by the plaintiff in proceedings brought under Pt 8 r 13 of the SCR) would involve the Court in the exercise of non-judicial power. However, to my mind the question does not arise because I am not persuaded that s 72(1) of the FTA authorises the Court to make compensatory orders in favour of non-parties in proceedings that are not representative proceedings.

34 The plaintiff has standing to bring proceedings under s 65(1) of the FTA in respect of an alleged contravention (or proposed contravention) of the fair trading provisions of Pt 5. She may seek to vindicate her own interest and/or the public interest in so doing. It does not follow from the fact that she has standing to bring proceedings that s 72(1) admits of her claiming compensatory orders on behalf of “other persons”. Section 72(1) requires as a condition of the making of an order for compensation that the Court find that a person has sustained or is likely to sustain loss or damage by the conduct of another that contravenes a relevant provision of the FTA. The defendants submit, and I accept, that the Court cannot make findings with respect to unidentified “other persons” in terms that one or more of them has suffered loss or damage or is likely to suffer loss or damage and that a compensatory order will compensate that person or persons in whole or in part for the loss or damage sustained or will serve to prevent or reduce the loss or damage.

35 In the defendants’ submission to construe s 72(1) of the FTA as conferring jurisdiction on the Court to make compensatory orders in favour of non-parties in proceedings that are not representative proceedings and which have no mechanism to bind the persons compensated would produce a result that is manifestly absurd or unreasonable. In written submissions filed on the plaintiff’s behalf Mr Francey sought to deal with this difficulty in this way:

“The scope to benefit persons who are not parties to the proceedings could create, if not an issue estoppel, then a discretionary bar to relief in subsequent claims or make subsequent claims amenable to being struck out as an abuse of process” (Paragraph 2.15(a)).

The submission that there be a discretionary bar to relief in subsequent claims, or that subsequent claims may be struck out as an abuse of process, in a case in which a compensatory under s 72(1) of the FTA has been made in favour of the claimant, in circumstances in which he or she had no opportunity to opt out of the litigation, is to my mind untenable.

36 It is necessary to read s 72(1) in its context. Sub-section (2) makes provision for the Director-General of the Department of Fair Trading (the Director-General) to apply to the Court in accordance with subs (4), on behalf of one or more persons who have sustained or who are likely to sustain loss or damage by the conduct of another in contravention of certain of the provisions of the FTA, for compensatory orders. Sub-section (4) provides that such an application shall not be made without the written consent of the person (or each of the persons) on whose behalf the application is made. The construction of s 72(1) for which the plaintiff contends, if correct, means that she might obtain compensatory orders on behalf of unidentified persons who have not consented to the bringing of the application whereas the Director-General is subject to the limitation to which I have referred. It does not seem to me that s 72(1) is to be construed as authorising such a result.

37 In my opinion the observations of Lindgren J in Giraffe World with respect to orders under s 87 of the TPA apply with equal force to compensatory orders under s 72(1) of the FTA. Referring to the former, his Honour said at 526:

“Clearly, the legislative policy was that compensatory orders should be available only for the benefit of loss sufferers who were willing to be identified as, either by being parties, or by consenting in writing to have the TPC apply for a compensatory order on their behalf.”

38 It is to be noted that a like scheme, admitting of the Commissioner making application on behalf of persons who have consented in writing thereto, applies under s 85 of the FTA (SA); s 77 of the FTA (WA); s 50 of the FTA (ACT) and s 95 of the FTA (NT).

39 I am persuaded that the Court is without power to make orders compensating “other persons” for loss or damage that has been suffered or that is likely to be suffered by them under the TPA and the equivalent provisions of the FTA. Paragraph 3.12 of the amended statement of claim will be struck out. Subject to the grant of leave to deliver a further amended pleading, it is open to the plaintiff to replead paragraph 3.12 to claim compensatory orders on her own behalf.

Declaratory relief

40 I turn now to the plaintiff’s claim, pleaded in par 3.9(d), for a declaration that she and/or “other persons” have suffered, or are likely to suffer, loss or damage by the conduct of the defendants said to have been engaged in, in contravention of various provisions of the TPA and/or the FTA.

41 In written submissions the plaintiff contended:

“ 2.30 In so far as SOC paragraph 3.9(d) seeks a declaration to the effect that ‘the plaintiff and/or other persons have suffered, or are likely to suffer, loss or damage by the said conduct of the defendants …’, if those other persons become parties to the litigation, or become deemed parties to the litigation, then there is no question of there being a hypothetical question or one not authorised by Commonwealth statutory provision.
2.31 In so far as the ‘other persons’ are not parties but fall within the relevant provisions of FTA legislation where the requirement to be a party doesn’t exist, the declaration is an exercise of power conferred by NSW SCA s 75 together with the relevant FTA ’s and CVA . The exercise of power could not be said to be constrained in the way in which the judicial power of the Commonwealth may be restricted.
2.32 In any event, in so far as there is a claim for a declaration in respect of persons who ‘are likely to suffer’ loss or damage by alleged contravening conduct, this does not involve giving hypothetical declaratory relief. The circumstances that persons ‘are likely to suffer’ loss or damage is an existing fact which is capable of being ascertained with a high degree or probability, and Wilcox J contemplated the possibility that such a determination could be made in TCC at paras. 106 and 107.
2.33 Furthermore, in so far as the declaration is sought as a preliminary to obtaining orders ‘to prevent or reduce’ loss or damage then the declaration simply goes to the finding which is a necessary preliminary to trigger the operation of that limb of s 87(1). Since there is considerable benefit in preventing or reducing loss or damage, and various Parliaments have seen fit to empower the Court to make orders to prevent or reduce loss or damage which is likely to be incurred it would emasculate the operation of the harm prevention and reduction objective of the legislation to characterise the preliminary finding as being ‘hypothetical’.”

42 It is not clear how the plaintiff’s case is advanced by the assertion in paragraph 2.30 that no question of the declaratory relief that is claimed being hypothetical would arise if the other persons were parties to the proceedings or deemed to be parties. The relief claimed includes declarations relating to “other persons” who are neither parties nor deemed parties. The power of this Court to engage the provisions of Pt IVA of the FCA which makes provision for representative proceedings and for deeming group members to be parties to the proceedings is doubtful: Poignand v NZI Securities Australia Ltd (1992) 37 FCR 363. In any event the plaintiff has not sought to do so.

43 Mr Francey relied on the decision in Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1993) 113 ALR 257 as supporting the Court’s power to grant the plaintiff declaratory relief with respect to “other persons”. The discussion in Tobacco Institute of Australia concerning the power of the Federal Court to make a declaration of right under s 21 of the FCA in a case in which a person has brought proceedings under s 80 of the TPA does not address the challenge that the defendants make to the relief claimed in paragraph 3.9(d). The defendants do not contend that the plaintiff is without standing to seek declaratory relief under the TPA and its FTA equivalents. The challenge is as to her ability to seek a declaration that an undefined group of “other persons” have suffered, or will suffer loss or damage by reason of alleged contraventions by the defendants of the TPA and its FTA equivalents. To the extent that the Court is being asked to make a declaration with respect to “other persons”, who are unidentified and unidentifiable, it seems to me to be inescapable that it is being asked to deal with a hypothetical, as distinct from a real, question: Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334 per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ at 354 – 357, [43] to [49] and Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 per Mason CJ, Dawson, Toohey, and Gaudron JJ at 582.

44 Mr Francey submitted that it was premature at this interlocutory stage in the proceedings to determine that the Court would not in the exercise of discretion make declaratory orders in the terms that are sought with respect to “other persons”. I am not persuaded that is so. The claims for relief in this respect seem to me to be clearly hopeless: University of New South Wales v Moorhouse (1975) 133 CLR 1 per Gibbs CJ at 9-10; Bass; Ainsworth.

45 The words “and/or other persons” in paragraph 3.9(d) of the pleading is struck out.

The claims for injunctive relief under s 80 of the TPA

46 In paragraph 3.11 the plaintiff claims injunctions pursuant to s 80 of the TPA and/or the equivalent provisions of the FTA. The orders that she seeks include:

“(d) Order each of the defendants to disclose, disseminate, and make available to the plaintiff and other persons and such public health and regulatory authorities as the Court may select, all documents relating to research previously conducted directly or indirectly by themselves and their respective agents, affiliates, servants, officers, directors, employees, and all persons acting in concert with them, that relate to the health consequences of cigarette smoking and nicotine addiction, and the ability to develop less hazardous cigarettes.

(e) Order each of the defendants to fund, but have no part of or influence over the control of or decision-making relating to, a legitimate and sustained corrective public education campaign, administered and controlled by an independent third party, relating to the public health issues of cigarette smoking and nicotine addiction.
(f) Order each of the defendants to disclose, disseminate, and make available to the plaintiff and other persons, and such public health and regulatory authorities as the Court may select, all documents relating to marketing or advertising campaigns that target and/or encourage persons under the age of eighteen years to purchase and consume cigarettes; to refrain from engaging in any such campaigns in the future; and to provide mechanisms to ensure compliance.
(h) Order each of the defendants to fund, but have no part of or influence over the control of or decision-making relating, sustained cessation programs including the provision of medically approved nicotine replacement therapy for dependant smokers.
(i) Order each of the defendants to fund, but have no part of or influence over the control of or decision-making relating to, a sustained educational campaign devoted to the prevention of smoking by under the age of eighteen years.

47 The defendants submit that each of these claims for relief is untenable and should be struck out. The plaintiff submits that it is premature to deal with the scope of the relief at this interlocutory stage in the proceedings. Mr Francey relies on the breadth of the terms of s 80(1) which empowers the court upon proof of a contravention (or that a contravention is proposed) to grant an injunction in such terms as it determines to be appropriate.

48 In Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 Merkel J discussed the scope of the power to grant injunctive relief under s 80 of the TPA. At 203–204 his Honour said this:

“In summary, in determining whether an injunction under s 80 is ‘appropriate’ there are, at least, three limitations on the court’s power.
First the power is confined by reference to the scope and purpose of the TPA and in particular s 80. It is within the scope and purpose of s 80 to grant injunctive relief which is designed to prevent a repetition of the conduct for which the relief is sought.
Secondly there is a contextual limitation within s 80 itself. As the jurisdiction to grant an injunction is enlivened by an alleged or actual contravention of a provision of Pt IV, IVA or V of the TPA, there must be a sufficient nexus or relationship between the contravention and the injunction granted. It is that nexus or relationship that enables determination by the court of whether the injunction sought is ‘appropriate’.
Thirdly, there is the constitutional limitation which requires that the injunction granted be related to the case or controversy the subject of the proceeding.”

49 In Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18; 161 ALR 79 (REIWA), French J discussing the power conferred by s 80 of the TPA observed at 87, [26]:

“In addition to the question of power and the question of the public interest there are practical issues to be considered in the formulation of undertakings or consent injunctions. Once an undertaking is accepted by the court or a consent order made, their breach is enforceable by proceedings for contempt. The undertakings and orders must therefore be formulated with precision so they are capable of being readily obeyed. Undertakings or orders which are likely to involve vague evaluative judgments or significant debates on their interpretation are not likely to be given the court’s sanction. Similarly, undertakings or orders which are likely to require the court to be concerned with the ongoing supervision of the conduct of the parties to them will also raise serious questions as to their appropriateness. So in this case the requirement of compliance with the Australian Standards Association standard for compliance programs imposes standards which are aspirational in their expression and not readily measured in application.”

50 The defendants submit that the Court cannot grant mandatory injunctive relief in favour of “other persons”. As I have noted, the “other persons” for whose benefit the orders are sought are unidentified and unidentifiable. The references to “other persons” in sub-paragraphs 3.11(d) and (f) will be struck out.

51 More generally the defendants challenge the plaintiff’s ability to claim relief of the novel character of that sought in sub-paragraphs (d), (f), (e), (h) and (i).

52 The complaint with respect to sub-paragraphs (e), (h) and (i) is that the plaintiff seeks to provide an independent third party, who is not amenable to the orders of the court, with the power to determine privately the means by which the orders are to be implemented. The relief is characterised as “aspirational”. How the defendants ask is it to be determined that a “legitimate and sustained corrective public education campaign” or “sustained cessation programs” have been implemented. It is submitted that orders of this character require the Court to engage in constant supervision of the parties and, it may be, the third party administering the fund. In the defendants’ submission relief of this description is not within the scope of the power conferred under s 80. Alternatively it is submitted that mandatory orders such as those claimed could not be characterised as “appropriate” in the exercise of the Court’s discretion.

53 I am mindful of the observations of French J in REIWA that orders likely to require the court to be concerned with the ongoing supervision of the conduct of the parties are such as to raise serious questions as to their appropriateness (at 89). In ICIAustralia Operations Pty Ltd v Trade Practices Commission (1992) ATPR 41-185 the Full Court considered the scope of the power conferred by s 80 of the TPA. In that case Lockhart J, after noting that wide powers devoid of traditional constraints are conferred by s 80, commented on the need for the power to be exercised “judicially and sensibly” (at 56). His Honour went on to observe that, “Plainly injunctions should be granted in clear and unambiguous terms which leave no room for the persons to whom they are directed to wonder whether or not their future conduct falls within the scope or boundaries of the injunction”.

54 The scope of the wide power to make mandatory orders under s 80 of the TPA is not clear. While I acknowledge the force of the defendants’ contentions with respect to the relief claimed in paragraphs 3.11(d), (f), (e), (g) and (i), I have concluded that I should not determine on a strike-out application that the orders that are sought could not represent an appropriate exercise of the Court’s discretion.

Pleading facts concerning “other persons”

55 The plaintiff pleads facts concerning “other persons” throughout the amended statement of claim as noted in [9] above. Her capacity to bring proceedings under s 80(1) of the TPA and its FTA equivalents seeking to vindicate the statutory norm created by the legislation is not in issue. The defendants’ objection to the pleading of facts relating to “other persons” is that they are not material to her cause of action. I accept that is so and it follows that the inclusion of the reference to “other persons” is in each instance embarrassing.

56 I propose to order that the references wherever appearing to “other persons” contained in the amended statement of claim be struck out, together with so much of the claims for relief as are pleaded with respect to “other persons” in paragraphs 3.9(d), 3.11(d), 3.11(f). Paragraph 3.12 will be struck out. Subject to the plaintiff obtaining leave to deliver a second amended statement of claim, it is open to her to replead paragraph 3.12 so as to confine the claim to an order to compensate her for loss or damage suffered by her or so as to prevent or reduce loss or damage likely to be suffered by her.

57 The plaintiff has filed a motion seeking leave to deliver a second amended statement of claim. The proceedings will be listed before me at 9.15 on Friday 8 October 2004 for directions including with respect to fixing a date for submissions on costs in the event that there is any issue as to the appropriate order.

ORDERS

1. Strike out the references to “other persons” in 2.7(b), 2.8(b), 2.12(a)(ii), 2.13, 2.14, 2.15, 2.16, 2.16(C)(d), 2.16(C)(e), 2.17, 2.19(C)(d), 2.19(C)(e), 2.21, 2.22, 2.23(g), 2.24, 2.24(a) and 2.24(c) in the amended statement of claim.

2. Strike out the claim for relief on behalf of “other persons” in paragraph 3.9 (d) of the amended statement of claim.

3. Strike out the references to “other persons” in the claims for relief in paragraphs 3.11(d) and 3.11(f).

4. Strike out paragraph 3.12.

5. Stand over the plaintiff’s motion for leave to deliver a second amended statement of claim for directions to 9.15am on Friday 8 October 2004.

*******

Last Modified: 09/24/2004