The State of Western Australia v Rothmans of Pall Mall (Australia) Ltd - [2001] WASCA 25

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: THE STATE OF WESTERN AUSTRALIA & ANOR -v- ROTHMANS OF PALL MALL (AUSTRALIA) LTD [2001] WASCA 25

CORAM: MALCOLM CJ
WALLWORK J
STEIN AJ

HEARD: 1 FEBRUARY 2001

DELIVERED : 13 FEBRUARY 2001

FILE NO/S: FUL 150 of 2000

BETWEEN: THE STATE OF WESTERN AUSTRALIA
First Appellant
THE COMMISSIONER OF STATE TAXATION (WESTERN AUSTRALIA)
Second Appellant
AND
ROTHMANS OF PALL MALL (AUSTRALIA) LTD
Respondent

Catchwords:

Appeal - Leave to appeal - Requirements to give notice - Whether notice of proceedings was given "as soon as practicable" after the cause of action accrues - What are relevant circumstances to be considered - Claims statute barred - Summary judgment

Legislation:

Business Franchise (Tobacco) Act 1975 (WA)

Business Franchise (Tobacco) Act 1987 (NSW)
Crown Suits Act 1947, s 6(1), s 6(1)(a), s 6(3)

Limitation Act 1935, s 47A(1)

Result:

Appeal allowed
Set aside orders
CIV 1153 of 1998 and CIV 1383 of 1998 be dismissed
Judgment entered for appellants for each case

Representation:

Counsel:

First Appellant               :     Mr R M Mitchell
Second Appellant          :     Mr R M Mitchell
Respondent:     Mr N W McKerracher QC & Mr D J Bishop

Solicitors:

First Appellant               :     State Crown Solicitor
Second Appellant          :     State Crown Solicitor
Respondent:     Clayton Utz

Case(s) referred to in judgment(s):

Ha v The State of New South Wales (1997) 189 CLR 465
Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408
Riches v The DPP (1973) 2 All ER 935
Ronex Properties Ltd v John Laing Construction Ltd [1983] QB 398
Roxborough v Rothmans of Pall Mall Australia Ltd [1999] FCA 107
Royal Society for the Prevention of Cruelty to Animals (Vic) Inc v Marson Constructions Pty Ltd [2000] VSCA 38
Western Australia v Bond Corporation (1991) 5 WAR 40
Wills v Whiteside, ex parte Wills (1987) 2 Qd R 284

Case(s) also cited:

Alcoa of Australia Ltd v State Energy Commission (WA) (1995) 17 WAR 112
Baker v Shire of Albany (1994) 14 WAR 46
Biljabu v Western Australia (1993) 11 WAR 372
Bingham v England (1996) 17 WAR 226
Hayward v Westleigh Colliery Company [1915] AC 540
HIH Casualty & General Insurance Ltd v Territory Insurance Office (1998) 143 FLR 142
Maddalozzo v Maddick (1992) 108 FLR 159
Marshall v Western Australian Government Railways Commission (1994) 11 SR (WA) 148
Martin v The Commonwealth (1975) 7 ACTR 1
McMillan v Territory Insurance Office (1998) 57 NTR 24
Pilbara Iron Ltd v Bonotto (1994) 11 WAR 348
Stanko v Canning City Council (1992) 7 WAR 542
Tampion v Chiller [1970] VR 361
Williams v The Queen [1986] 161 CLR 278

MALCOLM CJ: In my opinion, leave to appeal should be granted and the appeal allowed; the orders made by the learned Master set aside; and in lieu thereof there should be judgment dismissing actions CIV 1153 of 1998 and CIV 1383 of 1998. I have reached this conclusion for the reasons to be published by Stein AJ with which I am in entire agreement.
WALLWORK J: I agree with the reasons for judgment of Stein AJ. There is nothing I wish to add.
STEIN AJ: The State of Western Australia and the Commissioner of State Taxation seek leave to appeal from an order of a Master dismissing an application they made for summary judgment against the respondent, Rothmans of Pall Mall (Australia) Ltd.
In refusing the application, the Master said:
"The question for determination is whether or not the notice of proceedings was given as soon as practicable within the meaning of the section. It seems to me that that provision requires a determination of a question of fact. I don't think in the circumstances that the phrase can be read to mean as soon as possible. I think once that is the position, then the question of whether or not notice was given as soon as practicable is a question of fact which could only be determined after all of the issues have been canvassed at trial."
The Master was referring to the giving of the notice required by s 6(1) of the Crown Suits Act 1947 and s 47A(1) of the Limitation Act 1935.
Before setting forth these provisions, it is necessary to refer to the context of the litigation.
The respondent made payments to the appellants under the Business Franchise (Tobacco) Act 1975 (WA). These tobacco licence fees were very substantial totalling many millions of dollars each month.
On 5 August 1997, the High Court delivered judgment in Ha v The State of New South Wales (1997) 189 CLR 465. Certain provisions of the Business Franchise (Tobacco) Act 1987 (NSW) were declared invalid on the basis that they imposed duties of excise within the meaning of s 90 of the Australian Constitution. The Ha decision meant that similar legislation in other states and territories was likely to be invalid. This

included the Western Australian legislation under which the respondent made licence payments.

As a response to Ha, the Commonwealth enacted a package of legislation which received assent on 19 September 1997. The scheme was to the effect that the Commonwealth would increase the rate of excise it imposed on tobacco by an amount commensurate with the licence fees previously imposed by the States on tobacco wholesalers and retailers. It subjected an amount repayable by the States to the tobacco wholesalers and retailers, by reason of the invalidity of the tax under s 90, to a windfall gains tax of 100 per cent.
The States also responded to the Ha decision by amending their legislation. There was no uniform approach. In Western Australia, the Acts Amendment (Franchise Fees) Bill was introduced into the parliament on 12 November 1997. It continued the requirement that sellers of tobacco be licensed and required payment of monthly licence fees. Assent was given on 12 December 1997.
The Ha decision and the legislative response obviously had significant implications for companies such as the respondent. The respondent also faced claims from retailers seeking to recover amounts paid by them to it which had been retained and not paid on to the Crown. Action was commenced against the respondent and others in the Federal Court on 1 May 1998. The action failed on 18 February 1999 (Roxborough v Rothmans of Pall Mall Australia Ltd [1999] FCA 107). An appeal to the Full Federal Court was dismissed on 11 November 1999, [1999] FCA 1535. In August 2000, the High Court granted special leave to appeal. The Court was informed that the appeal is likely to be heard in the first half of this year.
Besides facing litigation from retailers, the respondent entered into discussions with the Government of Western Australia. It also moved, on 13 February 1998, to protect its position by issuing a writ of summons in the Supreme Court against the appellants (CIV 1153 of 1998). The writ sought repayment of sums paid under the legislation and declarations that certain provisions in the Business Franchise (Tobacco) Act 1975 were invalid as contrary to s 90. However, the writ was not served until February 2000 and prior to that no notice of the writ had been given to the appellants. The stated reason for this was a concern on the part of the respondent not to inflame the ongoing discussions with the Government. The respondent discontinued this action on 14 March 2000.
On 14 April 1998, the respondent caused a second writ of summons to issue out of the Court (CIV 1383 of 1998). The Statement of Claim annexed to the writ was identical to that caused to be issued on 13 February 1998. As before, it sought certain declarations of invalidity and an order for repayment of licence fees paid in circumstances where the State of Western Australia lacked power to impose such fees or which were invalidly imposed.
On or about the same day, Messrs Clayton Utz, acting on behalf of the respondent, gave the Crown Solicitor purported notice of intended action against the appellants. The notice was, according to the Crown Solicitor's Office, received on 15 April 1998 but no point is taken on that.
Omitting formal parts, the letter is as follows:
"Pursuant to Section 6 of the Crown Suits Act 1947 (WA) our client hereby gives notice that it proposes to commence action in the Supreme Court of Western Australia against the State of Western Australia ("the State") and the Commissioner of State Taxation ("the Commissioner") seeking, inter alia, declarations relating to, and an order for repayment of, payments it made upon renewal of its Wholesale Tobacco Merchant's Licence ("the Licence").
The circumstances upon which the proposed action will be based are:
1.As the holder of the Licence under the Business Franchise (Tobacco) Act 1975 (WA) RPMA from time to time paid licence fees to the State and the Commissioner payable on, and as a condition of renewal of the Licence. The licence fees comprised a fixed fee plus a percentage of the value of the tobacco sold by RPMA in the course of tobacco wholesaling in the preceding licence period.
2.RPMA contends that the percentage component of the licence fee was a duty of excise within the meaning of s90 of the Commonwealth Constitution and was invalidly imposed."
In correspondence, the Crown Solicitor disputed the sufficiency of the notice, principally on the ground that it was not given as soon as practicable after the cause of the action accrued, as required by s 6(1) of the Crown Suits Act. I interpolate to record that it is common ground between the parties that the cause of action accrued on 5 August 1997 when the Ha judgment was delivered by the High Court. However, the respondent joined issue on the sufficiency of the notice.
On 13 July 1998, the respondent's solicitors wrote to the Crown Solicitor again. While maintaining that the 14 April 1998 notice complied with the requirements of the Crown Suits Act, they advised that, for abundant caution, a further writ would be issued by 14 July 1998 to avoid any possibility that the claim might be statute barred under s 37A of the Limitation Act because the last payment of fees by the respondent had been made on 15 July 1997.
The letter then purported to give notice under s 6 of the Crown Suits Act of its proposal to commence action. The notice included reference to a payment of close to $7 million on 15 July 1997. A further writ (the third) was issued on 14 July 1998 (CIV 1759 of 1998) but was not served until 28 April 2000. Apart from the calculation of the liquidated claim, the Statement of Claim was in the same terms as the earlier writs. The second writ, 1383 of 1998, was served on or about 12 April 2000.
On 3 May 2000, the appellants took out a chambers summons for summary judgment and to strike out the respondent's Statement of Claim in 1383 of 1998 and also 1759 of 1998. It was alleged that no notice had been given to comply with s 6(1) of the Crown Suits Act or with s 47A(1) of the Limitation Act as regards the second appellant. The summons was supported by an affidavit of Robert Mitchell, assistant crown counsel, sworn 3 May 2000. The respondent filed an affidavit of Kimberley Pei Yi Chan, sworn 28 June 2000. The deponent is a solicitor employed by Clayton Utz. The affidavit, besides responding to the appellants' evidence, supported an application to consolidate CIV 1383 of 1998 and CIV 1759 of 1998. Apparently the actions were consolidated. Neither deponent was cross‑examined before the Master.
Before the Master the appellants argued that if the respondent was able to actually commence an action on 13 February 1998 (the first writ), it must have been practicable for it to have given the notice by that time. According to the submission, it was apparent that the respondent had made a deliberate decision not to give the notice, or serve the writ, so as not to disturb the ongoing negotiations with the Government. Counsel pointed out that no leave under s 6(3) of the Crown Suits Act had been sought. Counsel for the appellants was at pains to inform the Master that there was no dispute as to the facts.
In addition to giving the brief reasons quoted earlier, the Master added that after Ha, the respondent had found itself in a legislative and political quagmire. To determine whether the respondent acted as soon as practicable in giving the required notice was beyond the scope of a summary judgment application and should await trial.
Section 6(1)(a) of the Crown Suits Act provides that no right of action lies against the Crown unless the party proposing to take action gives notice in writing to the Crown Solicitor "as soon as practicable … after the cause of action accrues". The notice must provide reasonable information as to the circumstances upon which the "proposed" action will be based. Section 6(1)(b) provides that, in addition to the giving of the notice, the action must be commenced before the expiration of one year from the date of accrual of the cause of action.
Section 47A(1) of the Limitation Act is in similar terms and applies to the second appellant. No action shall be brought for any act done in pursuance of any Act or public duty or authority unless the prospective plaintiff gives "as soon as practicable after the cause of action accrues" notice in writing giving reasonable information of the circumstances upon which the "proposed" action will be based. In addition, s 47A(1)(b) provides that the action must be commenced before the expiration of one year from the date on which the action accrued.
Leading counsel for the respondent submits that "as soon as practicable" in each provision should be read "as soon as reasonably practicable". It seems to me that this submission is correct and it is appropriate to read in the qualification of reasonableness, although it is probably inherent in the phrase in any event. The phrase does not say, as pointed out, "as soon as possible". The distinction was referred to recently by Ormiston JA in Royal Society for the Prevention of Cruelty to Animals (Vic) Inc v Marson Constructions Pty Ltd [2000] VSCA 38. His Honour said that the meaning of "as soon as reasonably practicable", in an arbitration clause, was sufficiently clear if one bears in mind the distinction between "possible" and "practicable". See also the discussion of the distinction by Andrews CJ in Wills v Whiteside, ex parte Wills (1987) 2 Qd R 284 at 288.
The question at issue here is whether the notice given on 14 April 1998 concerning a cause of action which accrued on 5 August 1997, some eight months earlier, was given as soon as practicable after the cause of action accrued.
To determine the issue, all relevant circumstances must be taken into consideration, but these circumstances must relate to the giving of a notice of proposed action with respect to the cause of action which had accrued. I do not see that "political" considerations, such as a wish not to upset or inflame continuing discussions or negotiations with the Government, are a relevant circumstance.
On behalf of the appellants, Mr Mitchell submitted that to be a relevant circumstance, the matter must impact on the ability of the respondent to give the notice required by the provision. In my opinion, this submission is correct. The negotiations with the Government clearly did not impact on the ability of the respondent to give the notice. By February 1998, the respondent had all of the information (including legal advice) that it needed to include in a notice. It knew of the circumstances upon which the proposed action would be based.
What shines like a beacon is that the respondent consciously chose to actually institute an action with regard to the payments of licence fees in February 1998, around six months after the cause of action accrued, without giving the Crown any notice or serving the writ. It was able to formulate its Statement of Claim without any apparent difficulty. The respondent must have been able to serve the required notice immediately before the action was commenced, bearing in mind the content of the Statement of Claim appended to the writ of summons. Plainly, the respondent decided that it did not then want to give the notice (as well as serve the writ) because it might disturb the ongoing negotiations with the Government. It did not wish to provoke the Government. So much is obvious from Mr Chan's affidavit.
In par 30 Mr Chan deposes that the discussions with the government, which commenced in the latter part of 1997, concerned "the implications and changes to the structure of the new tobacco taxation system". Subparagraph (i) explains that the writ issued on 13 February 1998 was not served, nor was any notice given under the Crown Suits Act and Limitation Act because the respondent "was concerned that to do so may affect its ongoing discussions with the Government representatives in relation to the new tobacco taxation system".
In my opinion, this was not a relevant consideration in the determination of whether the notice had been given as soon as practicable.
It must follow that if the respondent could have given the required notice on 13 February 1998, as it must have been, it could not be said that the giving of notice on 14 April 1998 was "as soon as practicable" after the cause of action arose.
I should mention that the respondent relies on other circumstances as relevant; for example, the impact of the changes to legislation, both Commonwealth and State, and the claims by retailers. However, the former were completed by the end of 1997 and the latter is not relevant to the fees paid to the Government which are claimed in the subject writs. The retailers were seeking recovery of moneys paid to the tobacco companies and not passed onto the Government.
The purpose of the requirement to give a notice of proposed action against the Crown is clear. It is to acquaint the Government with a prospective plaintiff's intentions at a reasonably early point of time after the cause of action accrues and also to acquaint it with the nature and circumstances of the proposed action. The notice, of course, must precede the commencement of the action. One must follow the other although, it seems, that the two may be almost simultaneous so long as the notice is served prior to the action is filed.
Accepting that the respondent must have been well and truly in a position to give the required notice by 13 February 1998, it is unnecessary to further consider the matters set out in the respondent's evidence. No further inquiry or evaluation of the facts is required.
Questions of lack of prejudice to the appellants do not arise, relevant as they may be to an application for leave under s 6(3) of the Crown Suits Act, which was never made.
It follows from what I have said that the Master was wrong to dismiss the application. Summary judgment should have run.
On behalf of the respondent, Mr McKerracher submits that s 47A(1) of the Limitation Act is a procedural provision and non‑compliance with it can be cured by the enabling provisions in s 47(3). However, no application for leave was made. Seaman Civil Procedure p 5570 [20.19.13] notes that an application may be made to strike out a claim under Pt 20 r 19(1)(d) as an abuse of process of the court where it is prima facie barred by a statute of limitation. The learned author cites Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408. Therein, Vincent J referred to Riches v The DPP (1973) 2 All ER 935 and Ronex Properties Ltd v John Laing Construction Ltd [1983] QB 398. In particular, he quoted from Stephenson LJ in Ronex. His Lordship there said:
"There are many cases in which the expiry of the limitation period makes it a waste of time and money to let a plaintiff go on with his action . … The right course is therefore for a defendant to apply to strike out the plaintiff's claim as frivolous and vexatious and an abuse of process of the court, on the ground that it is statute barred."
In any event, Mr Mitchell has another string to his bow. He submits that under s 12B(1) of the Business Franchise (Tobacco) Act, fees payable for licences are debts due to the Crown and payable to the commissioner. The debt is due and paid to the Crown, to which the Crown Suits Act applies and the second appellant, Commissioner of Taxation, is merely the administrative conduit through which the payment is made. I accept this submission.

One final matter should be mentioned. The respondent submits that leave to appeal should be refused because the appellants cannot demonstrate compliance with the test for leave enunciated in Western Australia v Bond Corporation (1991) 5 WAR 40. I do not agree with this submission. It seems to me that the decision appealed against is wrong and a substantial injustice would be done by leaving the decision unreversed. Success in the appeal will finally dispose of the proceedings, unlike most applications for leave which arise out of the interlocutory proceedings. The proper course in the instant situation is to grant leave and uphold the appeal. To refuse leave will mean that, on the issue of the notice, a trial will have to take place on facts which are undisputed and were fully before the Master.
I would propose that leave be granted to appeal; allow the appeal; set aside the orders made by the learned Master and, in lieu thereof, order that the two actions CIV 1381 of 1998 and CIV 1759 of 1998 be dismissed and judgment entered for the appellants in each case.