Myriam Cauvin v Philip Morris Limited (ACN 004 694 428) and Philip Morris (Australia) Limited (ACN 004 316 901) - [2003] NSWSC 1225

No judgment structure available for this case.

CITATION: Myriam CAUVIN v PHILIP MORRIS LIMITED (ACN 004 694 428) and PHILIP MORRIS (AUSTRALIA) LIMITED (ACN 004 316 901) & Ors [2003] NSWSC 1225

HEARING DATE(S): 7/11/03

JUDGMENT DATE:
19 December 2003

JUDGMENT OF: Bell J at 1

DECISION: Dismiss each of the first and second defendants', third and fourth defendants' and fifth and sixth defendants' motions claiming security for costs; The defendants are to pay the plaintiff's costs of the motion

LEGISLATION CITED: Environmental Planning and Assessment Act 1979
Federal Court Act 1976 (Cth)
Land and Environment Court Act 1979
Legal Profession Act 1987
Supreme Court Rules 1970

CASES CITED: Bray v F Hoffmann-La Roche Ltd (2003) 200 ALR 607
Bryan E Fencott and Associates v Eretta Pty Ltd (1987) 16 FCR 497
Cowell v Taylor (1885) 31 Ch D 34
Haller v Worman (1861) 3 LT 741
Melville v Craig Nowlan & Associates Pty Ltd [2002] NSWCA 32; 54 NSWLR 82
Neale v Lady Gordon Lennox [1902] 1 KB 838
Rajski v Computer Manufacturer & Design Pty Ltd [1983] 2 NSWLR 122
Sykes v Sykes (1989) LR 4 CP 645 at 647
Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited [2000] HCA 11; 200 CLR 591
Yonge v Toynbee [1910] 1 KB 215

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)

FILE NUMBER(S): SC 11301/02

COUNSEL:
Plaintiff: N. Francey
1st & 2nd Def: Sackar QC/ S. O'Meara
3rd & 4th Def: D. Beach SC / M. Wheelahan
5th & 6th Def: I. Jackman / S. Goodman

SOLICITORS:
Plaintiff: Maurice May & Co
1st & 2nd Def: Allens Arthur Robinson
3rd & 4th Def: Corrs Chambers Westgarth
5th & 6th Def: Baker & McKenzie

OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Friday 19 December 2003

11301/02 Myriam CAUVIN v PHILIP MORRIS LIMITED (ACN 004 694 428) and PHILIP MORRIS (AUSTRALIA) LIMITED (ACN 004 316 901) & Ors
JUDGMENT – Motions for security for costs

1 BELL J: The first and second defendants (the Philip Morris defendants), the third and fourth defendants (the Wills defendants) and the fifth and sixth defendants (the Rothmans defendants) moved on motions filed on 7 August 2002 claiming orders for security for costs and, in the event that the plaintiff fails to provide such security, that the proceeding stand dismissed. I will refer to the respondent to each of the motions as the plaintiff and to the applicants as the Philip Morris defendants, the Wills defendants, and the Rothmans defendants respectively.

2 On 1 August 2003 I struck out parts of the plaintiff’s amended statement of claim (the ASC). By notice of motion filed on 3 September 2003 the plaintiff applies for leave to deliver a second amended statement of claim (the 2ASC) in the form of the draft that is exhibited to the affidavit of Rebecca Dimaridis that was sworn on 3 September 2003.

3 The Philip Morris defendants read the affidavit of Peter Mitchell Hobday sworn on 6 August 2002 and the affidavit of Peter O’Donahoo sworn on 2 October 2003. Mr Hobday is a partner in the firm having the carriage of the matter on behalf of the Philip Morris defendants. He sets out the results of inquiries concerning the plaintiff’s financial position. It is unnecessary to refer to it. The plaintiff acknowledges that she is impecunious. She is resident within the jurisdiction.

4 Exhibited to Mr Hobday’s affidavit is a copy of a letter received by him from the plaintiff’s solicitors, Maurice May & Co in response to a request for information with respect to the proposed application. The writer states that Maurice May & Co has a costs agreement with the plaintiff that conforms to the requirements of the Legal Profession Act 1987 and that counsel has been retained on a basis conformable with the requirements of that Act. The letter concludes:

“No funds have been provided to this firm and/or the plaintiff from any source other than the plaintiff. To date the plaintiff has not been required, and does not have the resources, to even defray disbursements. In the circumstances we anticipate that services will be employed, including services of expert witnesses, without funding from the plaintiff. This may or may not necessitate requesting that those services be provided on some deferred payment basis. It also may be necessary to obtain funds from third parties for the purpose of conducting the litigation but no such arrangement currently exists.”

5 Mr Hobday set out details of the costs incurred by the Philip Morris defendants as at 6 August 2002 and his estimate as to the likely amount of the those costs that would be allowed on assessment. In his affidavit Mr O’Donohoo sets out details of the costs incurred by the Philip Morris defendants in defence of the proceedings in the period 6 August 2002 to 3 October 2003 together with his estimate as to the amount that would be allowed on assessment. It is not necessary to refer to this evidence. It was not submitted that the sums sought by any of the defendants by way of security were not supported by the evidence.

6 The Wills defendants relied on two affidavits sworn by Brian James Whittaker on 19 August 2002 and 3 October 2002 and two affidavits sworn by Roland Patrick Matters on 19 August 2003 and 3 October 2003.

7 The Rothmans defendants relied on the affidavits of Andrew John Christopher sworn on 13 August 2002 and 3 October 2003. Mr Christopher annexed correspondence with Maurice May & Co to the latter affidavit demonstrating that continued professional costs were incurred on behalf of the Rothmans defendants after judgment was reserved on the earlier, pleading, motion.

8 Mr Francey, who appeared on behalf of the plaintiff, read a number of affidavits sworn by her, together with the affidavits of his instructing solicitor Maurice May, and Ms Dimaridis, a solicitor in Mr May’s employ and two affidavits sworn by Simon Chapman on 10 May 2002 (referred to as SC1 and SC2 respectively).

9 Mr Sackar QC, who appeared with Mr O’Meara on the Philip Morris defendants’ behalf, in a submission that was adopted by the Wills defendants and the Rothmans defendants, invited me for the purpose of determining the application for security orders, to proceed upon the following assumptions:

· The proceeding has been regularly commenced,

· the proceeding is not vexatious,

· the proceeding is not an abuse of the process of the Court,

· the proceeding is not doomed to failure.

10 Part 53 r 2 of the Supreme Court Rules 1970 (the SCR) provides:

“2(1) Where, in any proceedings, it appears to the Court on the application of a defendant -

(a) that a plaintiff is ordinarily resident outside the State;

(b) that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so;

(c) subject to subrule (2), that the address of a plaintiff is not stated or is mis-stated in his originating process;

(d) that a plaintiff has changed his address after the commencement of the proceedings with a view to avoiding the consequences of the proceedings; or

(e) that there is reason to believe that a plaintiff being a body corporate will be unable to pay the costs of the defendant if ordered to do so,

the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of an incidental to the proceedings and that the proceedings stayed until the security is given.

(2) The Court shall not order a plaintiff to give security by reason only of subrule (1)(c) if it appears to the Court that the failure to state his address or the misstatement of his address was made without intention to deceive.

11 It is not submitted that the defendants’ applications for security orders come within the provisions of the SCR. I am invited to make the orders sought in the exercise of the Court’s inherent power to regulate its own proceedings: Rajski v Computer Manufacturer & Design Pty Ltd [1983] 2 NSWLR 122. In order to understand the basis of the defendants’ applications it is necessary to describe the nature of the claim that the plaintiff brings in some detail.

12 By the ASC the plaintiff pleads causes of action under Pts IVA and V of the Trade Practices Act 1974 (the TPA) and the equivalent provisions of the Fair Trading Acts of each State and Territory (the FTA). She alleges that the defendants conspired to engage in misleading or deceptive conduct, or in conduct that was likely to mislead or deceive, contrary to s 52 of the TPA (and the FTA equivalent provisions). In the alternative she contends that the defendants’ conduct was unconscionable contrary to the provisions of s 51AA or 51AB of the TPA (and the equivalent provisions of the FTA). Her claim in unconscionability is dependent upon the same facts and circumstances as are pleaded in support of the claim brought under s 52 of the TPA.

13 Generally, the plaintiff pleads a case that the defendants agreed to engage in conduct to promote the benefits and pleasures of smoking and to deny or minimise the risks associated with smoking, including the likelihood of contracting smoking-related disease, and the risk of becoming addicted to nicotine. The conduct that the plaintiff pleads the defendants engaged in comprised the following elements:

(1) Advertising, marketing and promoting cigarettes as enhancing the life and enjoyment of consumers,

(2) promoting certain brands of cigarettes, described as menthol, mild, light or low tar (the ‘less hazardous’ cigarettes) representing them to be healthier than other cigarettes or safer to smoke than other cigarettes,

(3) making public statements of various including denying the existence of reliable evidence concerning smoking and risks to health and of the effect of nicotine,

(4) lobbying, including by making representations to the Federal and State Governments to desist from taking actions likely to be effective in reducing smoking related disease,

(5) intentionally concealing knowledge of the association between smoking and nicotine addiction and smoking and disease, and

(6) conduct relating to the uptake of smoking.

14 It is the plaintiff’s case that conduct falling within these categories was misleading or deceptive, or likely to mislead or deceive, in that:

(i) Smoking cigarettes does not enhance life and the enjoyment of life of consumers of cigarettes but rather it detracts from life and the enjoyment of it,

(ii) cigarettes marketed as ‘less hazardous’ cigarettes are not healthy or healthier than other cigarettes nor safe to smoke or safer to smoke than other cigarettes,

(iii) reliable evidence existed making a causal link between cigarette smoking and increased risk to health and between nicotine and addiction,

(iv) the defendants did not have reasonable grounds for making the recommendations or representations to governments in connection with tobacco control measures,

(v) the defendants were under an obligation to disclose their knowledge of the association between cigarette smoking and addiction to nicotine and cigarette smoking and the risk of contracting smoking related disease,

(vi) the defendants should not have taken steps to maximum the occasions on which, and the likelihood that, persons would be induced to commence or continue or fail to quit cigarette smoking.

15 In the ASC the plaintiff pleaded her case by reference to a period commencing in January 1960. By the 2ASC she proposes to confine her claim to the period from 1 October 1974. The latter being the date on which the TPA commenced.

16 The claim that the plaintiff makes is one of considerable breadth. She pleads that she and “other persons” have smoked, or may smoke, cigarettes and as a consequence be exposed to the likelihood of contracting smoking-related disease (paragraph 2.13 of the ASC and the 2ASC). As a consequence of smoking the cigarettes she and “other persons” are said to have inhaled and/or ingested nicotine or that they may inhale and/or ingest nicotine (paragraph 2.14 of the ASC and of the 2ASC). As a further consequence of the inhalation or ingestion of nicotine the plaintiff pleads that she and “other persons” have been, or may be, subjected to the effect of nicotine (paragraph 2.15 ASC and paragraph 2.15 2ASC).

17 The plaintiff claims that she and “other persons” were influenced by the defendants’ conduct directly in that they saw and/or heard and/or were aware of the defendants’ conduct and/or indirectly in that they were influenced by others who saw and/or heard and/or were aware of the defendants’ conduct and/or were influenced by others who were so influenced (paragraph 2.17 of the ASC and of the 2ASC). The plaintiff contends that the defendants’ conduct had the effect of causing and/or contributing to her and “other persons” commencing to smoke, continuing to smoke, recommencing to smoke and/or not ceasing or quitting to smoke (paragraph 2.21 of the ASC and of the 2ASC). In addition, the plaintiff pleads that by reason of the influence of the defendants’ conduct members of the general public, including herself 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, and the effect of nicotine (paragraph 2.22 of the ASC and of the 2ASC).

18 As a result of the defendants’ conduct the plaintiff pleads that a greater number of persons, including herself and “other persons”, commenced smoking cigarettes and/or continued to smoke cigarettes and/or failed to quit smoking cigarettes than otherwise would be the case (paragraph 2.23(g) of the ASC and paragraph 2.23(d) of the 2ASC). She claims that she and “other persons” have suffered or are likely to suffer loss and damage by reason of the defendants’ conduct (paragraph 2.24 of the ASC and of the 2ASC).

19 The particulars of loss or damage pleaded include that the plaintiff contracted emphysema necessitating lung replacement surgery, with consequent pain and suffering, and financial and/or economic loss (paragraph 2.24(b) of the ASC and of the 2ASC).

20 In addition to the particulars of her own loss and damage the plaintiff particularises the claim in this way:

“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” (paragraph 2.24(a) of the ASC and of the 2ASC).

21 The relief claimed includes declarations that the defendants have engaged in conduct that was misleading or deceptive and/or unconscionable and that the plaintiff and/or “other persons” have suffered, or are likely to suffer, loss or damage by that conduct (paragraph 3.9(d) of the ASC and paragraph 3.2(d) of the 2ASC).

22 The plaintiff claims injunctive relief pursuant to s 80 of the TPA (and the equivalent provisions of the FTA). The orders that she claims include orders that each of the defendants disclose to the plaintiff and “other persons”, and such public health or regulatory authorities as the Court may select, certain documents as described. Orders are also sought that each of the defendants issue corrective statements concerning the health risks of cigarette smoking and the addictive properties of nicotine and that they fund public education programs and programs to assist people to stop smoking.

23 The plaintiff also claims relief pursuant to s 87(1) of the TPA (and the equivalent provision of the FTA) to compensate her and “other persons” in whole or in part for any loss or damage that has been suffered by them and to prevent or reduce any loss or damage that is likely to be suffered by the them caused by the defendants’ conduct. The orders sought pursuant to s 87(1) of the TPA include orders that an amount of money be paid that is sufficient to compensate the plaintiff and “other persons” for loss or damage suffered by them together with an order that an amount of money be paid sufficient to provide compensation to the plaintiff and “other persons” for loss or damage likely to be suffered by them as the result of the defendants’ conduct. These amounts are to include the reasonable cost of hospital, medical, surgical and dental care and treatment for persons suffering from, and who may suffer from, smoking related disease as a result of the defendants’ conduct and to reimburse health care providers for the their treatment costs (paragraph 3.12 of the ASC and paragraph 3.4 of the 2ASC).

24 Issues raised by the plaintiff’s claim concern the conduct of the defendants over a period of almost thirty years. The claim embraces every item of advertising or other promotional material published by the defendants over this period together with every public statement made by, or on behalf of, them.

25 No particulars are given of the “other persons” who are said to have been directly or indirectly influenced by the conduct of the defendants and on whose behalf claims for compensation under s 87(1) are made. Mr Francey in outlining the plaintiff’s case on the earlier, pleading, motion submitted that it would be open to the plaintiff to lead evidence of a survey nature in support of the contention that the defendants’ contravening conduct caused and/or contributed to “other persons” commencing to smoke, continuing to smoke, recommencing to smoke or not ceasing or quitting to smoke cigarettes. It would seem that the plaintiff contemplates leading sample or epidemiological evidence in support of the contention that “other persons” have suffered, or are likely to suffer loss and damage.

26 The Philip Morris defendants filed a motion on 11 July 2002 claiming orders including, in prayer 2, a declaration that the plaintiff does not have the standing to bring a claim on behalf of “other persons”. As I understand it the Wills defendants also challenge the ability of the plaintiff to bring such a claim. The Philip Morris defendants’ motion together with motions filed by the Wills defendants and the Rothmans defendants were listed for hearing on 31 March 2003. On that occasion the parties were agreed that the convenient course was to address only those issues raised by prayer 1 of the Phillip Morris defendants’ motion (the pleading challenge) and the like challenges brought by the other defendants. The challenge articulated in prayer 2 of the Phillip Morris defendants’ motion was stood over together with the other defendants’ motions. Any issue as to the plaintiff’s ability to bring proceedings under the provisions of the TPA, not being a representative proceeding, claiming compensation in respect of an unparticularised group of “other persons” has not been determined. The present application is to be approached upon the basis that the plaintiff’s claim is an arguable one.

27 The defendants acknowledge that to the extent that the plaintiff brings a claim for personal injuries, whether at common law or pursuant to the provisions of the TPA, they cannot be heard to contend that a security order should be made. However, in their submission the structure of the present proceeding is such as to overwhelm the plaintiff’s personal claim. I am invited to infer from statements made by Mr Francey during the hearing of the earlier motion that the plaintiff has had no choice in the way that the claim has been framed. In this respect my attention was drawn to the following passages the transcript:

“Francey: In this case we are proceeding from this mammoth, giant, joint plan that Spender J talked about (a reference to the judgment in Philip Morris (Australia) Ltd v Nixon [2000]. Which in fact we have uncovered and pleaded, and we are progressing along the way to advancing the case. (T 153)

…

That is probably a convenient time for me to deal with that aspect of the matter before coming to the way in which we’ve tried to structure the claim, because another factor we would want your Honour to take into account in deciding what level of specificity is required at this point as opposed to an acceptable degree of generality is to take into account what happens if this claim cannot go ahead.

I can assure your Honour that this is probably the last opportunity for this to be dealt with in any comprehensive way. You might have a few individual cases like in the McCabe (a reference to the McCabe v British American Tobacco AustraliaServices Ltd [2002] VSC 73; British American Tobacco Australia Services Ltd v Cowell [2002] VSCA 197) case last year with document destruction. But my attitude was when Maurice May came to see me, if I’m going to be doing this for nothing or on spec I’m not going to be doing it for one person. It’s just not worth my time. If you want to expose the entirety of the conduct and try to achieve comprehensive relief and do what Myriam Cauvin wants to do is to stop the people ending up in the same situation that she ended up in, she doesn’t even want full compensation. Mr Sher generously put it back at $500,000 or 1 m. Now, if that is an offer, I will take instructions and she will probably take it. The fact is that you will see from her affidavit that what she said is she wants to be independent of the disability pension, she wants to have her medical expenses and future medicals covered, she wants to provide for her son and she wants to have centres set up to help other people who are addicted to help them become un-addicted for a variety of reasons … “ (T 161-162).

…

So, for example, the Court could constitute these proceedings as representative proceedings under the Federal Court Act , since we comply with the requirements of the broad canvas and the giant, joint plan, in which case under the Trade Practices Act the Court could make orders on behalf of any person, if we worked out an acceptable definition of group members, but that is a procedural thing far down the track if that’s the way the case got conducted, and the Court was interested in providing comprehensive relief for everyone, given that the statement of claim is framed in a way that eliminates time limit problems for everyone. So anybody who has a smoking related disease, however long ago, is eligible to make a claim. If they get a disease in the future, they can make a claim. The Court can order that a fund be established to make provision for people who suffer harm in the future, and the Court can make orders that remedy the effects of the conduct and prevent or reduce harm.

That is the scope of result that the Court is able to achieve, if we get there, and it has the benefit, as I say, of time limits being overcome and people not having to commence their own proceedings, but there has to be some manageable way of conducting the litigation and we don’t know who else wants to make claims. That is what we are trying to get around, and that’s why the pleading has been framed in the way that it is, because it has to be at a level of generality that gives all these other people an opportunity to participate.

So we can’t deal with Myriam Cauvin bought a packet of cigarettes off Y company at X shop reading such and such a sign, because it defeats the whole purpose of the exercise and wastes my time, so that’s why we’ve done it the way we’ve done it (T 176-177).

We have sought to invoke to provide the broadest possible scope of liability. (T 205).

Is our statement of claim seriously to be struck out with potentially millions of people able to be compensated or harm prevented because we replicate a section from the Act (T 207).

We are prepared to meet any language problem in the document and we have gone through their objections, we will go through every argument that your Honour upholds and ensure that this statement of claim is as good as it can possibly be, as long as it is understood that what it is directed to is a particular goal. (T 130).

So we took those into account when we amended the statement of claim. That is reflected in both the first and second defendants’ written submissions and revised attachment “A”, and Mr Beach’s revised schedules, because we have taken into account their criticisms. But, your Honour, we are not going to amend the statement of claim to delete the reference to ‘others’ and we are not going to amend the statement of claim to delete references to way in which the defendants and those represented by them conspired together and engaged in particular forms of conduct or as part of a giant plan (T 206-207).

So that raises problems in terms of quantification of harm and the effect of the conduct. The extent to which harm from smoking is attributable to the conduct pleaded, that’s going to be a problem for us. We’re going to have to work out how to deal with that. We’ve got to be able to establish that at least certain people have suffered harm.

Your Honour, then what we say is – say we produce 1,000 people from various States and Territories, all of whom are able to demonstrate harm to the same extent, for example, that Ms Cauvin can. Then the Court is faced with this situation: do you give those 1,000 people $1m or $ 2m each or whatever it is? Or do you say, ‘hold on, if there is 1,000 people like that and there’s 1.6 million who are going to get smoking-related disease, maybe some funds should be set up with a scheme that provides compensation for everyone, because it’s going to be fairer and more equitable.

…

Ms Cauvin, as I said, at the moment all she wants is to be off the pension, have her medical expenses covered, to provide for her son and prevent harm to other people so they don’t end up in the same situation as her. She’s not going to make too great an inroad. Other people may want to make claims, but it seems to me that if that is the level of potential claimants, it’s pointless of them all tripping along to the Supreme Court. (T 186)

28 In the defendants’ submission the plaintiff is bound by the statements and concessions made by Mr Francey during the course of the hearing; Haller v Worman (1861) 3 LT 741, Yonge v Toynbee [1910] 1 KB 215 at 233-234 and Neale v Lady Gordon Lennox [1902] 1 KB 838 at 843.

29 The defendants also point to the terms of the letter from Maurice May &Co to which I have referred at [4] above:

“Moreover, that conduct has caused, and has the potential to cause, wide spread loss or damage to numerous other persons. In these circumstances, to seek wide-ranging declaratory and injunctive relief to expose the conduct and remedy the effect of the conduct is surprising given the Trade Practices Act specially provides for such relief. The fact that it is sought to establish an unprecedented regime for compensatory relief is also simply a consequence of the conduct of your clients and the other parties to the conspiracy.”

30 The question raised by the present application is whether the ordinary principles that tell against the making of a security order in respect of an impecunious litigant who is resident within the jurisdiction have application to the “broad canvas” case that the plaintiff pleads. She concedes her impecuniosity and yet seeks to pursue a case that is vast in scope and is likely to involve discovery on a massive scale in circumstances in which there exist no prospects for her to pay costs should an order be made against her.

31 The defendants submitted that it is relevant to take into account that the litigation brought by the plaintiff raises issues concerning their conduct over nearly thirty years. The scope of interlocutory proceedings, including discovery, is likely to be great. It is reasonable to consider that legal costs of a most substantial order will be incurred by each of them in defence of the proceedings. Mr Francey observed that the plaintiff has access to a very large number of documents said to bear on the issues raised by her pleading. In this respect he took me the affidavits of Professor Chapman. Mr Francey submitted that it was conceivable that the case could be run without the plaintiff requiring discovery from the defendants. This aspect of the future conduct of the proceedings was not further developed. It is a stance that was at odds with the stance adopted on the earlier occasion. During submissions on the pleading challenge on a number of occasions reference was made to the plaintiff’s ability to furnish fuller particulars of her claim after discovery:

“Mr Francey: One needs to accept that there is going to be interlocutory processes and case management, and orders for statements and witnesses, or expert witnesses, or whatever else is involved, plus discovery and the interrogatories and the like. Say, for example, are the pleadings, once the defences are on, of a kind that will enable the categories of documents to be defined that the defendant should be required to discovery? That is something we would have to undertake to present, and the Court would probably need to approve it given the scale of discovery that is involved and things like that” (T 220-221).

32 It was accepted by all parties that a consideration of the merits of a plaintiff’s claim is a relevant factor when determining whether to make a security order. In this respect Mr Francey took me to the affidavits of Professor Chapman, SC1 and SC2. In his submission having regard to this material and in light of the failure of the defendants to adduce evidence that it was their intention to defend the claims made against them I should determine the matter upon an assessment that it is highly likely that the plaintiff will be able to establish the contraventions of the TPA (and the FTA equivalent provisions) that she pleads and that some remedial injunctive relief will be ordered by the Court.

33 Mr Francey’s submission there was no evidence that the claim was to be defended did not impress me as one of substance. The defendants enjoyed a substantial measure of success on their applications to strike out parts of the ASC. The present position is that the plaintiff’s motion for leave to deliver the 2ASC is yet to be heard and, thus, no defence has been filed. Mr Sackar informed me that the proceedings would be defended and that the allegations of conspiracy are in issue. I deal with the present application upon the basis that the proceedings will be defended and that they will be lengthy and involve substantial cost. In this respect I do not attach weight to the suggestion that I have noted above that it was “conceivable” that the litigation might be conducted without the plaintiff obtaining discovery.

34 It is difficult in a proceeding such as this one to arrive at a realistic assessment of the plaintiff’s prospects of success. The litigation is on a grand scale and both the ASC and the 2ASC are possessed of novel features. It seemed to me, on occasions, that Mr Francey was inclined to underestimate the difficulties that may present themselves in seeking to establish the plaintiff’s case. The bald assertion that there are in the public domain a large number of documents that are said to establish the case may be to put the matter rather too high. That point seemed to me to be well illustrated by Mr Sackar’s submission concerning a document titled “Position Paper”, which is annexed to Professor Chapman’s affidavit. The “Position Paper” was particularised in paragraph 2.4 of the ASC in support of the plaintiff’s assertion that between mid-1976 and late 1977 the companies represented by the defendants and others met and conspired to engage in conduct that was misleading or deceptive or likely to mislead or deceive, amongst other things by procuring their subsidiary companies, including the defendants, to engage in such conduct. I struck out paragraph 2.4 of the ASC. The plaintiff in the 2ASC seeks to plead a case relying upon the same conspiracy and she particularises the “Position Paper” in paragraph 2.4. I make no comment on the pleading in this respect beyond noting that the “Position Paper” continues to have prominence to the case that the plaintiff seeks to make (that each of the defendants was a party to a conspiracy to generate and maintain a false medical controversy concerning smoking and addiction and smoking and smoking-related disease). It may be that the plaintiff can establish that the “Position Paper” is a disingenuous document created in furtherance of the conspiracy that she pleads. But the document alone does not seem to me to prove that fact.

35 In Melville v Craig Nowlan & Associates Pty Ltd [2002] NSWCA 32; 54 NSWLR 82 the claimant relied on Bryan E Fencott and Associates v Eretta Pty Ltd (1987) 16 FCR 497 at 514 in which French J said:

“Where there is a claim prima facie regular and disclosing a cause of action, I see no reason why the Court would, in the absence of evidence, proceed on the basis that the claim was other than bona fide with a reasonable prospect of success”.

“But it does not follow from the fact that a claim discloses a cause of action that it has a reasonable prospect of success. To state a cause of action which can survive a strike out application is to comply with formal and legal requirements; whether the cause of action so stated will succeed depends on other legal matters and evidentiary matters.”

36 I approach this application upon the footing that the plaintiff’s claim is arguable.

37 In supplementary written submissions the Philip Morris defendants contended:

Cunningham v Olliver

Woodhouse v McPhee

Ryan v Great Lakes Council

Bray v F Hoffmann-La Roche Ltd

Federal Court Act

Melville v Craig Nowlan & Associates

Melville

Carriage v Stockland (Constructors) Pty Ltd (No. 2)

38 While the cases upon which the defendants rely are concerned with the exercise of the discretion to order security pursuant to the provisions of the Federal Court Act 1976 (Cth) or the Land and Environment Court Act 1979 (NSW) in their submission the reasoning of these decisions has application to the circumstances of this case. In particular it is submitted that it may be appropriate to order an impecunious plaintiff to provide security for costs where she prosecutes proceedings not only on her own behalf but on behalf of a vast number of “other persons”.

39 Principal reliance was placed by the defendants on the judgment of Heydon JA (with whom Young CJ in Eq agreed) in Melville. In this respect Mr Sackar drew attention to his Honour’s remarks at [102]:

Boyce v Paddington Borough Council

Australian Conservation Foundation Inc v Commonwealth of Australia

Trade Practices Act

Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd

Sydney City Council v Building Owners and Managers Association of Australia Ltd

Trade Practices Act

Environmental Planning and Assessment Act

Environmental and Planning and Assessment Act

“[L]itigation under s 123(1) is still of a totally different kind from the type of litigation in which the courts worked out the general rule that poverty did not bar access to the court.”

40 Important to Heydon JA’s reasoning in Melville was the consideration that even if an order for security operated to bring the proceedings to an end in so far as the applicant was concerned, a person capable of providing security might institute similar proceedings within the relevant time. In this sense it was not apt to see the litigation, in the sense of the merits of the dispute, being stifled by the making of the order.

41 In this proceeding the defendants contend that the “general rule” (that an impecunious personal litigant within the jurisdiction not be made subject to a security order) should not apply since the plaintiff is seeking to enforce the rights of potentially millions of people. Any one or more of this substantial number of persons, including public health authorities, regulatory authorities and health care providers might bring the same, or a substantially similar, proceeding. It could not be said that an order for security against the present plaintiff would “prevent the merits of the controversy from being determined”.

42 In the defendants’ submission the plaintiff bears the onus of establishing that a security order would prevent her from advancing the claim. In their submission she has not adduced evidence of the circumstances in which proceedings of this breadth came to be brought and maintained or in support of the proposition that a security order would stifle them. There was no evidence that that plaintiff has sought to raise funds to meet the costs of the litigation or of any inquiries made by her to identify from among the “others persons” those who might be able to provide security.

43 In support of the above submission the defendants relied on the observations of Heydon JA in Melville at [126] and on the decision of the Full Federal Court in Bray v F Hoffmann-La Roche Ltd (2003) 200 ALR 607. In the latter respect they point to the observations of Carr J at [142]:

“Much would depend upon the number of group members involved, their financial circumstances and in particular whether an order for security for costs might stifle the proceedings. In that regard, in my opinion, it was for the applicant to adduce evidence about the likely effect of any order for security for costs. She chose not to do so and in my view, the discretion having been miscarried [by the trial judge], it should be exercised again.”

44 Mr Francey submitted that Melville was not of application to the present proceeding since it concerned the power to make an order for security under the Land and Environment Court Act in relation to a claim brought to vindicate the provisions of the Land and Environment Act. He noted that among the factors bearing on the exercise of the discretion to make a security order pursuant to the provisions of s 69(3) of the Land and Environment Court Act in Melville that the Court took into account was the means of the defendant.

45 The defendants were content for me to approach the matter upon the basis that each of them is a corporation of substance. The discretionary consideration to which Heydon JA referred in Melville relating to the circumstances of the true respondent in that case is not raised by the present proceedings.

46 Heydon JA’s observations in Melville that I have set out at [39] above, concerning the considerations raised by litigants bringing claims under legislation that allows open standing were expressed to be applicable to litigation under s 80(1) of the TPA as much as to litigation pursuant to

s 123(1) of the Environmental Planning and Assessment Act 1979. However, his Honour was concerned with the construction of s 69(3) of the Land and Environment Court Act 1979. The claimant in Melville sought to contend that the general words of s 69(3) were to be read down so as to incorporate the general rule that a natural impecunious litigant resident within the jurisdiction would not be required to provide security for costs. At paragraph [99] and following his Honour set out the history of the “general rule”. He cited Sykes v Sykes (1989) LR 4 CP 645 at 647 per Bovill CJ:

“By the law of this country a party is not precluded from enforcing his rights in a Court of law by reason of his poverty. In many cases, no doubt, the inability of an unsuccessful litigant to pay costs to his successful adversary works hardship; but it is for the legislature to provide a remedy, not for us.”

Melville

Cowell v Taylor

‘The rule is that anyone may sue without giving security, in any but excepted cases’.

Morris v Hanley

47 Heydon JA concluded that the claimant’s arguments that words of s 69(3) should be read down (so as to incorporate the general rule) were to be rejected. In this respect he said at [110]:

“While the general law rule is of a kind which would call for clear language if it were to be abolished, it is hard to see how language much clearer than that used in s 69(3) could have been employed.”

48 There has been no statutory change to the “general rule” with respect to proceedings in this Court. Heydon JA was content to deal with the submissions in Melville upon an assumption that the “general rule”, to which Bowen LJ referred in Cowell v Taylor, was a strict one, though subject to specific exceptions. His Honour noted that it was possible that the “rule” was less absolute than the formulations in Cowell v Taylor would suggest. In this respect he cited the judgment of Young J in Morris v Hanley. Young J in concurring with the reasons of Heydon JA in Melville added some comments of his own adhering to the views that he had expressed in Morris v Hanley. The decision in that case was reversed in the Court of Appeal, but not for reasons that called into question his Honour’s statement of the general principles.

49 In Morris v Hanley Young J considered the nature of this Court’s inherent power to make an order for security for costs in a case involving a natural litigant. After reviewing the history, his Honour said:

“[18] The fundamental reason that the so-called ‘poverty rule’ is really just one of the factors that a Court looks at to consider the basic question of whether it would be vexatious to allow the proceedings to continue without security. It is seldom correct to limit the Court’s jurisdiction and discretion under such a general proposition by honing down too finely a sub-rule or guideline.

Rajski v Computer Manufacture and Design Pty Ltd

…

[21] It is quite clear that when one is considering the general matter of vexatious conduct warranting security for costs under the inherent power, one of the matters that the Court takes into account is the question of the non-availability of funds on the part of the plaintiff. …

…

[23] The leading cases show that the factors a Court must take into account when considering the general question as to whether the inherent power should be exercised to order security for costs include:

(a) Whether the plaintiff’s claim is bona fide and not a sham;

(b) whether the plaintiff has a reasonably good prospect of obtaining the orders he or she seeks;

(c) whether an order for security would bring the proceedings to an end;

(d) whether the plaintiff has a want of assets and how this was brought about;

(e) whether there is anyone standing behind the plaintiff who might benefit from the action but who is unwilling to contribute to the risk involved in the action; and

(f) the question of delay.

Security for Costs

50 The plaintiff’s claim is a bona fide one and not a sham.

51 The plaintiff acknowledges that she is impecunious. This is a not a case in which it is suggested that the plaintiff has divested herself of assets with a view to immunising herself from the consequences of the litigation. There is nothing to suggest that absent her medical condition she would have been in a position to fund litigation as ambitious as the present.

52 There is no evidence that the plaintiff has persons standing behind her in the sense of any identified individual or group of individuals who might benefit from the action, but who is unwilling to contribute to the risk involved in it.

53 Mr Beach drew attention to the manner in which the litigation has been conducted to date. In particular he pointed to the circumstance that paragraphs in the ASC that had been struck out are repleaded in the 2ASC. I understood Mr Beach to invite me to approach the matter upon the basis that the future conduct of the litigation was likely to unnecessarily drawn out by reason of the reluctance on the part of the plaintiff’s legal representatives to conduct it in an orderly way. I have not heard from Mr Francey on the issues raised by the proposed 2ASC. Whatever the validity of the criticisms that are made of the 2ASC it does not seem to me appropriate to view the plaintiff’s claim as analogous to the cases that Young J had in mind in paragraph [19] of his judgment in Morris v Hanley.

54 The plaintiff has a personal claim that she brings against each of the defendants. She seeks to make a case that by reason of the defendants’ agreement to engage in conduct that was false and misleading and/or unconscionable she was influenced so as to continue smoking and/or not to stop smoking cigarettes. This claim brought under the provisions of the TPA (and the equivalent provisions of the FTA) is said to have forensic advantages in that she overcomes causation difficulties that might attend a common law claim for damages for personal injuries brought against one or more of the defendants. Mr Francey notes that she is, in any event, time barred in respect of such a claim. The plaintiff’s personal TPA case raises the broad conspiracy allegations. She has a right to bring proceedings to enforce the TPA: Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited [2000] HCA 11; 200 CLR 591.

55 In Rajski v Computer Manufacturer and Design Pty Ltd [1982] 2 NSWLR 443 Holland J observed at 448:

‘In my opinion, the inherent jurisdiction to award security for costs cannot validly be said to be restricted to Halsbury’s examples or other examples in the decided cases in the sense of denying the existence of the power for any other cases.”

In that case his Honour had earlier referred to the Court’s inherent power to regulate its own practice and procedure to procure “proper and effective administration of justice and prevent abuse of process” (at 447). As I have noted, Young J referred to the “basic question” being whether it would be vexatious to allow proceedings to continue without security. If it is to be said that to allow the present proceeding to continue without security would be vexatious it seems to me it would be because of a view that it is not open to a litigant to plead a claim pursuant to the TPA (and its FTA equivalent provisions) with respect to an unparticularised group of “other persons” claiming relief under s 87 of the TPA including in the way of compensation for the loss and damage occasioned to these “other persons”. As I have noted, such a challenge has not been determined.

56 I have concluded, upon the assumptions that I was invited to make, that I should not impose an order for security upon the plaintiff. The observations of the majority in Melville, while of application to claims under the TPA as well as to claims under the Environmental Planning and Assessment Act, concerned the powers conferred on the court by the Land and Environment Court Act. I am not persuaded that the defendants have established that the Court’s inherent jurisdiction should be invoked to make a security order in a case that is regularly commenced, arguable, not vexatious and brought by a natural impecunious litigant resident within the jurisdiction.

ORDERS

(i) Dismiss each of the first and second defendants’, third and fourth defendants’ and fifth and sixth defendants’ motions claiming security for costs.

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Last Modified: 12/22/2003

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Citations

Myriam Cauvin v Philip Morris Limited (ACN 004 694 428) and Philip Morris (Australia) Limited (ACN 004 316 901) [2003] NSWSC 1225

Most Recent Citation

Lindsey v Philip Morris Limited [2004] FCA 9

Cases Citing This Decision

1

Lindsey v Philip Morris Limited [2004] FCA 9

Cases Cited

16

Statutory Material Cited

5

Melville v Craig Nowlan & Associates Pty Ltd [2002] NSWCA 32

Li v State of New South Wales [2013] NSWCA 165

CITATION:	Myriam CAUVIN v PHILIP MORRIS LIMITED (ACN 004 694 428) and PHILIP MORRIS (AUSTRALIA) LIMITED (ACN 004 316 901) & Ors [2003] NSWSC 1225
HEARING DATE(S):	7/11/03
JUDGMENT DATE:	19 December 2003
JUDGMENT OF:	Bell J at 1
DECISION:	Dismiss each of the first and second defendants', third and fourth defendants' and fifth and sixth defendants' motions claiming security for costs; The defendants are to pay the plaintiff's costs of the motion
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Federal Court Act 1976 (Cth) Land and Environment Court Act 1979 Legal Profession Act 1987 Supreme Court Rules 1970
CASES CITED:	Bray v F Hoffmann-La Roche Ltd (2003) 200 ALR 607 Bryan E Fencott and Associates v Eretta Pty Ltd (1987) 16 FCR 497 Cowell v Taylor (1885) 31 Ch D 34 Haller v Worman (1861) 3 LT 741 Melville v Craig Nowlan & Associates Pty Ltd [2002] NSWCA 32; 54 NSWLR 82 Neale v Lady Gordon Lennox [1902] 1 KB 838 Rajski v Computer Manufacturer & Design Pty Ltd [1983] 2 NSWLR 122 Sykes v Sykes (1989) LR 4 CP 645 at 647 Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited [2000] HCA 11; 200 CLR 591 Yonge v Toynbee [1910] 1 KB 215
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)
FILE NUMBER(S):	SC 11301/02
COUNSEL:	Plaintiff: N. Francey 1st & 2nd Def: Sackar QC/ S. O'Meara 3rd & 4th Def: D. Beach SC / M. Wheelahan 5th & 6th Def: I. Jackman / S. Goodman
SOLICITORS:	Plaintiff: Maurice May & Co 1st & 2nd Def: Allens Arthur Robinson 3rd & 4th Def: Corrs Chambers Westgarth 5th & 6th Def: Baker & McKenzie