Trendlen Pty Ltd v Mobil Oil Australia Pty Ltd

[2005] NSWSC 741

CITATION:	Trendlen v Mobil Oil [2005] NSWSC 741
HEARING DATE(S):	29 June 2005
JUDGMENT DATE :	27 July 2005
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	McDougall J at [1]
DECISION:	See paras [91] and [92] of judgment

CATCHWORDS:	CIVIL PROCEDURE - where representative proceedings brought for recovery of petrol licence fees - whether proceedings ought to continue as representative proceedings - whether proceedings ought to be dismissed, struck out or stayed - whether the proceedings statute barred by Recovery of Imposts Act 1963 (NSW) - whether no cause of action disclosed - whether proceedings "trafficking in litigation" - whether proceedings abuse of process - whether plaintiff entitled to order for discovery to ascertain details of members of represented class
LEGISLATION CITED:	Business Franchise Licences (Petroleum Products) Act 1987 (NSW) Business Franchise Licences (Tobacco) Act 1987 (NSW) Evidence Act 1995 (NSW) Limitation Act 1969 (NSW) Recovery of Imposts Act 1963 (NSW)
CASES CITED:	Agar v Hyde (2000) 201 CLR 552 Fostif Pty Ltd v Campbells Cash and Carry Pty Ltd [2005] NSWCA 83 Ha v State of New South Wales (1997) 189 CLR 465 Jago v The District Court of New South Wales (1989) 168 CLR 23 Kang v Kwan [2001] NSWSC 698 Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd [2003] NSWSC 816 Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 Roxborough and Ors v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 Walton v Gardiner (1993) 177 CLR 378 Wickstead v Browne (1992) 30 NSWLR 1 Wickstead v Browne (1993) 10 Leg. Rep. SL 2
PARTIES:	Trendlen Pty Limited (Plaintiff) Mobil Oil Australia Pty Limited (Defendant)
FILE NUMBER(S):	SC 50092/03
COUNSEL:	S J Gageler SC/R A Dick (Plaintiff) J T Gleeson SC/J K Kirk (Defendant)
SOLICITORS:	Robert Richards (Plaintiff) Blake Dawson Waldron (Defendant)

LOWER COURT JURISDICTION:

Trendlen v Mobil Oil [2005] NSWSC 741

Index to Judgment

Para

Issues on Mobil’s application	4
Background	5
The pleaded case	9
Is a cause of action disclosed?	36
Trafficking in litigation	53
Firmstones’ conduct in these proceedings	69
Firmstones’ settlement offer	80
Conclusions on this issue	87
Trendlen’s application	88
Conclusion and orders	91

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

Wednesday 27 July 2005

50092/03 TRENDLEN PTY LIMITED v MOBIL OIL AUSTRALIA PTY LIMITED (formerly Mobil Oil Australia Limited)

JUDGMENT

1 HIS HONOUR: The plaintiff (Trendlen) and the defendant (Mobil) were in August 1997 respectively a retailer and a wholesaler of petroleum products. They were required to hold, respectively, a retailer’s and a wholesaler’s licence under the Business Franchise Licences (Petroleum Products) Act 1987 (NSW) (the NSW Petroleum Act) until, on 5 August 1997, the High Court of Australia stuck down equivalent licence provisions (under the Business Franchise Licences (Tobacco) Act 1987 (NSW) (the NSW Tobacco Act)): Ha v State of New South Wales (1997) 189 CLR 465. Whilst the licensing scheme was in force, Mobil paid to the State of New South Wales licence fees referable to the value of petroleum products sold by it from month to month. Mobil passed that fee on to retailers, including Trendlen, as part of the purchase price of petroleum products. It did so for the first five days of August 1997. The decision in Ha meant that Mobil was not liable to pay, and did not pay, licence fees for the month of August 1997. Trendlen sues to recover that part of the price paid by it to Mobil for petroleum products that, it says, is the amount referable to those unpaid licence fees. It sues on its own behalf and on behalf of other retailers, both in New South Wales and in other States and Territories where there was in force equivalent legislation (the Petroleum Acts). Mobil has not filed a defence.

2 By notice of motion filed on 13 May 2005, Trendlen sought, relevantly, either discovery from Mobil or that Mobil answer interrogatories, in each case directed at ascertaining other members of the represented class; and directions for the notification of those class members to enable them, should they wish, to “opt in”: ie, on the basis that at some stage the class would be closed, to become members of the class of represented persons.

3 By notice of motion filed on 7 October 2003, Mobil sought, relevantly, orders that the proceedings not continue as a representative action; that the whole of the proceedings be dismissed, stuck out or stayed; or that the proceedings be dismissed, struck out or stayed insofar as they purport to plead (Mobil’s word) a representative action. The notice of motion sought other relief, but the argument before me (on Mobil’s notice of motion) was confined to the points that I have summarised.

Issues on Mobil’s application

4 Mobil raised the following issues:

(1) That the claims of the plaintiff and any class members were statute barred, by the Recovery of Imposts Act 1963 (NSW), and equivalent legislation in other jurisdictions. That Act establishes a twelve month limitation period for claims coming within its terms. Mobil submitted that the present case was caught by it.

(2) That the proceedings did not disclose a cause of action, because the material facts alleged could not support an action for money had and received based on a total failure of consideration.

(3) That the proceedings were tainted by “trafficking in litigation”, amounting to an abuse of process, by reason of the involvement of two litigation funders.

(4) That the conduct of the funders in this case evidenced actual abuse of process.

Background

5 The summons was filed on 11 July 2003. It was part of a suite of actions filed in this Court, many of which related to the Tobacco Act and its equivalents in other States and Territories. This action, and the others, has been promoted, and is being funded, by a company known as A J Firmstone Pty Limited, trading as Firmstone and Feil (Firmstones). The principal of that company is Mr A J Firmstone. It will be necessary to consider further the details of Firmstones’ role in considering the arguments relating to abuse of process.

6 There were disputes similar to those that I have heard in what I will call for convenience the tobacco litigation. They were heard by Einstein J. His Honour gave judgment on 11 September 2003: Keelhall Pty Ltd t/as “Foodtown Dalmeny” v IGA Distribution Pty Ltd [2003] NSWSC 816. He held that the proceedings did not fall within SCR Pt 8 r 13 (the relevant rule in this State permitting representative proceedings); that the litigation funding arrangement was against public policy; and that the proceedings, for this reason and in their representative capacity, were an abuse of process. Consequently, his Honour made orders that the proceedings not continue as representative actions.

7 A number of the plaintiffs then settled their claims. Others appealed. Those appeals were decided, under the name Fostif Pty Ltd v Campbells Cash and Carry Pty Ltd ([2005] NSWCA 83), on 31 March 2005. The Court of Appeal allowed the appeals, set aside the relevant orders of Einstein J, and ordered that the proceedings continue as representative actions, remitting them to the Equity Division for further directions in accordance with the Court’s reasons.

8 It would appear that these proceedings had been in hibernation pending a decision on those appeals.

The pleaded case

9 The proceedings were commenced by summons, containing a statement of the nature of the dispute, the issues likely to arise, and Trendlen’s contentions. Mobil’s submissions refer to the “pleadings“: a misnomer, but one that I shall, for convenience, adopt.

10 The class sought to be represented is described in para [2] of the contentions as follows:

“2 The plaintiff brings these proceedings on behalf of itself and all other persons (the “represented petroleum retailers”) who:
(a) during the whole or some part of the Relevant Period:
(i) were retailers of petroleum products carrying on business in one or more of New South Wales, Victoria, South Australia, Western Australia, Australian Capital Territory and Tasmania;
(ii) purchased petroleum products sold to them by the defendant;
(iii) paid to the defendant the amount of the licence fee referable to the sales in (a)(ii) as separately identifiable and several parts of the consideration payable in respect of each sale;
(b) have not recovered from the defendant an amount or amounts referable to the licence fees paid to the defendant as referred to in (a)(iii) or otherwise released or agreed to release the defendant from any liability or alleged liability to make payment to them of the amount in (a)(iii);”.

11 The relevant provisions of the NSW Petroleum Act are set out in para [5] of the contentions, and the relevant provisions of the equivalent legislation in other States and Territories are set out in paras [6] to [10].

12 The decision in Ha, and effect, are set out in paras [11] and [12].

13 Paragraphs [13] to [21] allege the facts that Trendlen says give rise to its restitutionary claim. The heart of the case is alleged in paras [19] to [20], which read as follows:

“19. In the circumstances set out in paragraphs 3 – 10 and 12 – 18 (inclusive) above, it was the agreement, or alternatively the common intention, of the plaintiffs and the defendant that:
(a) the amount identified in each invoice or invoice-receipt (as is relevant) as the total amount payable in respect of the petroleum products sold included the amount of the licence fee payable under the Petroleum Acts referable to the sale;
(b) the amount of the licence fee was to be paid by the plaintiffs to the defendant in consideration and for the purpose of the defendant paying the said amount by way of licence fee under the Petroleum Acts; and
(c) the amount of the licence fee was a separate and severable consideration payable by the plaintiffs to the defendant.
20. The plaintiffs paid to the defendant the amount identified in each invoice or invoice-receipt as a total amount payable in respect of the petroleum products sold including the amount of the licence fee under the Petroleum Acts referable to the sale.”

14 It had been alleged, in para [18], that “[t]he amount of the licence fees under the Petroleum Acts referable to the sales by the defendant was ascertainable from” a number of matters that are “pleaded” and particularised. (“The Petroleum Acts” are the NSW Petroleum Act and its equivalent in other States and Territories.)

15 The issues likely to arise are stated as follows:

“1 Whether these proceedings are distinguishable in any material respect from the facts in Roxborough and Ors of Pall Mall Australia Ltd (2001 ) 208 CLR 516 in which the High Court determined that the retailers in those proceedings were entitled to recover from their wholesale tobacco supplier, amounts paid by way of tobacco licence fees in analogous circumstances to those in these proceedings.
2 Whether the provisions and operation of the Petroleum Acts differ or are substantively similar to the provisions and operation of the NSW Tobacco Act.
3 Whether the High Court decision in Ha v State of New South Wales (1997) 189 CLR 465 had the effect that the licence fees imposed under the Petroleum Acts and related licensing provisions were invalid.”

16 Although, as I have said, Mobil has filed no defence, it is apparent that at least the first and second of those will be real issues. One suggested point of distinction between the Petroleum Acts and the tobacco legislation is the absence, in the former, of an equivalent to s 41(3) of the NSW Tobacco Act. That Act imposed on retailers a liability to pay the ad valorem fee, but relieved them of that liability where the tobacco was bought from a licensed wholesaler who actually paid a licence fee that was, or included, the amount of the ad valorem fee. Under the Petroleum Acts, there was variously either no liability to pay an ad valorem fee if petrol were bought from a licensed supplier, or no obligation to pay an ad valorem fee at all, or no requirement to be licensed.

17 If the relevant period of limitation is that contained in the Limitation Act 1969 (NSW), or its equivalent in other States and Territories, the relevant limitation period is six years: see s 14(1)(a) of the Limitation Act. On that basis, the proceedings would have been commenced in time.

18 A different limitation period is provided for certain actions by s 2(1) of the Recovery of Imposts Act:

“ 2 Limitation on time for the bringing of proceedings to recover taxes
(1) No proceedings shall be brought to recover from the Crown or the Government or the State of New South Wales or any Minister of the Crown, or from any corporation, officer or person or out of any fund to whom or which it was paid, the amount or any part of the amount paid by way of tax or purported tax and recoverable on restitutionary grounds (including but not limited to mistake of law or fact):

(a) in the case of a payment made before the commencement of this Act, after the expiration of the time within which such proceedings but for the enactment of this Act might have been brought or the expiration of twelve months after the date of the commencement of this Act, whichever period first expires, or

(b) in the case of a payment made subsequent to the commencement of this Act, after the expiration of twelve months after the date of payment.”

19 By s 5 of that Act, the cause of action is extinguished once, by operation of s2(1), the right of recovery is barred.

20 By s 1A of the Act, a tax is defined to include “a fee, charge or other impost”.

21 Mobil submitted that the words “any corporation, officer or person” should be construed according to their natural meaning, which should not be limited by the preceding references to the Crown, the Government or the State of New South Wales, or any Minister of the Crown. Thus, it submitted that s 2(1) of the Recovery of Imposts Act applied to any payment as long as it was one “paid by way of tax or purported tax and recoverable on restitutionary grounds”. I do not propose to decide this point, but shall proceed on the assumption that Mobil ‘s submission is correct.

22 That, then, focuses attention on the question, whether the payments by Trendlen and the other retailers to Mobil during the relevant period were “by way of tax or purported tax”. Mobil submits that this question is one of law only, which can therefore be dealt with at this stage in the proceedings: presumably, by reference only to the matters alleged in Trendlen’s statement of contentions. I do not agree. The question is one of the application of the statute, on its proper construction, to the relevant facts.

23 In Agar v Hyde (2000) 201 CLR 552, Gaudron, McHugh, Gummow and Hayne JJ at 577-578 [64] said, of a duty of care, that “any finding … will often depend upon the evidence which is given at trial. Questions of reliance or knowledge of risk are two obvious examples of the kinds of questions in which the evidence given at trial may take on considerable importance in determining whether a defendant owed the plaintiff a duty of care”.

24 I think that the same approach can be taken to the issue under s 2(1) of the Recovery of Imposts Act. I do not know what admissible evidence will be led (let alone accepted as persuasive) by reference to the relevant paragraphs of Trendlen’s contentions. Nor do I know what, if any, issues Mobil will raise in its defence; or what admissible evidence will be led (and accepted) in relation to those issues.

25 Mr J T Gleeson SC, who appeared with Mr J E Kirk of Counsel for Mobil, submitted that this issue could be resolved by reference to the pleadings and that the pleadings required it to be answered in Mobil’s favour. I do not agree with the approach indicated in the first part of this submission; and even if I were to take that approach, I would not accept that it leads to the result for which Mr Gleeson contended.

26 It may that, adapting the words of Callinan J in Agar at 599 [122], there is no reason to assume that Trendlen has not put its case as high as it could in its contentions. However, a summons in the Commercial List does not have the formality of pleadings – even of Judicature Act pleadings, under which there is no necessity to identify a legal category of action or suit which the pleaded facts may demonstrate (see Barwick CJ in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457, 473). The relevant obligations of Trendlen under Practice Note 100 were to set out in its summons, “in summary form”, the nature of the dispute, the issues which it believed were likely to arise and its contentions.

27 As to the first limb of the submission: in Wickstead v Browne (1992) 30 NSWLR 1, Kirby P said at 5, of a cause of action in negligence, “that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence”. His Honour said at 6 that “[t]he evaluation of the claim would be greatly assisted, to say the least, by the consideration of the full detail of the evidence concerning the relationship between the appellant and the respondent.” Although his Honour dissented in that case, his reasons were generally approved by the High Court of Australia in granting special leave and allowing the appeal: Wickstead v Browne (1993) 10 Leg. Rep. SL 2.

28 As to the second limb: Trendlen’s contentions assert that sales of petroleum products (under either the “freehold plan” or the “meter wholesale plan”) were made by reference to invoices (or delivery dockets and invoices) that identified, for each sale, the type and quantity of petroleum product sold and delivered; the rate (presumably, price per unit of volume) for each petroleum product sold and delivered; and that the sale was by a licensed petroleum wholesaler (paras 15 and 17 of the statement of contentions). It is then alleged that the amount of the licence fees referable to the sales was ascertainable from a number of details including the fact that (as the invoices stated) the sale was by a licensed wholesaler, and from matters to be gathered by reference to the Petroleum Acts and determinations made thereunder (para 18). Paragraph 19 then alleges the agreement or common intention of the plaintiffs (ie, Trendlen and those whom it represents) and Mobil: see para [13] above.

29 It is apparent from the documents that were tendered on the applications, and is in any event common ground, that the invoices pursuant to which sales of petroleum products were made did not (unlike some invoices for the sale of tobacco products) identify separately any amount payable by way of licence fee. It appeared to be common ground that a retailer inspired by the desire to do so could calculate the amount of the licence fee referable to any sale by using the details set out on the invoice and the methodology for charging licence fees set out in the Petroleum Acts or in determinations made thereunder, although there was some difference between the parties as to the ease with which such a calculation could be made. But all of this does no more than raise the framework within which the relevant question, namely whether any part of the price was “paid by way of tax or purported tax”, is to be answered. I do not think that it follows as a matter of language, let alone logic or necessity, that payment pursuant to a scheme described in Trendlen’s summary of contentions is necessarily a payment that must be so characterised.

30 In the present case, I think, a resolution of the question, whether the amounts in question were paid by way of tax or purported tax, will be assisted by a consideration of the full detail of the evidence concerning the relationship between Trendlen and represented retailers on the one hand and Mobil on the other.

31 Mobil’s case was that there were similar provisions to s 2(1) of the Recovery of Imposts Act in each other relevant State and Territory, with irrelevant differences in some cases as to the duration of the limitation period. It did not submit that any of those other Acts raised special or separate questions, such that the general view that I have expressed – that their operation should be determined by reference to facts found and not on the basis of a statement of contentions under Practice Note 100 – would be inapplicable.

32 Accordingly, I decline to order summary dismissal of the proceedings on this point.

33 Mobil, perhaps foreseeing this outcome, sought in the alternative that there should be the formulation and determination of a separate question raising the operation of the Recovery of Imposts Act and its equivalents. That was not fully argued before me and accordingly I express no concluded view. However, my tentative view is that it would not be an appropriate procedure. No formal application under SCR Pt 31 r 2 has been made; and any such application would be premature, given that Mobil has not filed a defence and that the issues at present remain undefined.

34 Further, the evidence bearing on this question would be in substance the evidence on the key issue raised by, in particular, paras 19 to 24 of Trendlen’s contentions: whether, in the words of para 24, there was a total failure of a severable part of the consideration paid by the retailers to Mobil. My present and tentative view is that it would not be an appropriate exercise of the power to order separate determination of questions to do so where the evidence on the suggested separate question overlaps so much with evidence on other issues in the proceedings: especially if there might be questions of credibility.

35 The view to which I have come makes it unnecessary for me to consider many of the submissions directed to this issue – in particular, to the proper construction of the words “any corporation, officer or person”. Those submissions have been set out in detailed written submissions which will remain with the papers. They were addressed at length orally, and the oral submissions were recorded and have been transcribed. If it becomes necessary for them to be considered, because it is concluded that the approach that I have taken is wrong, there is a more than adequate record of each side’s position.

Is a cause of action disclosed?

36 Mobil acknowledged that paragraph 25 of Practice Note 100 stood in its way. Nonetheless, it submitted, this was an exceptional case because of the nature of the proceedings, the substantial amounts involved, and the “circumstances where the plaintiff is seeking to subject the defendant to an extensive and intrusive process of discovery and/or interrogatories in advance of any hearing on the merits … “ (written submissions dated 21 June 2005, para 26).

37 Mobil’s submissions focussed on the identification of the elements of the restitutionary cause of action in Roxborough and in Fostif, and on what it submitted were essential differences between the elements so identified and the case that Trendlen seeks to bring in these proceedings on its own behalf and on behalf of members of the class of represented retailers.

38 In Roxborough, Gleeson CJ, Gaudron and Hayne JJ said at 525 [16] that, for the purposes of a restitutionary action, failure of consideration could include non performance of a contractual obligation and payment for a purpose which had failed. This latter aspect might arise where a condition had not been fulfilled, or where a contemplated state of affairs had disappeared.

39 At 526 [17], their Honours discussed the ways in which it might be said that there had been a total failure of a severable part of the consideration even where the purchase price was not divided into components. In some cases it might not be possible to separate out the components; but in other cases, it might be possible both to do this and to conclude that a failure on the part of the vendor to incur that separate component results in a failure of a severable part of the consideration. Their Honours said:

“In a contract for the sale of goods, the total amount which the buyer is required to pay to the seller may be expressed as one indivisible sum, even though it is possible to identify components which were taken into account by the parties in arriving at a final agreed figure. The final figure itself may have been the result of negotiation, making it impossible to relate a cost component to any particular part of that figure. Or there may be other factors which prevent even a notional apportionment. But there are cases, of which the present is an example, where it is possible, both to identify that part of the final agreed sum which is attributable to a cost component, and to conclude that an alteration in circumstances, perhaps involving a failure to incur an expense, has resulted in a failure of a severable part of the consideration. Here, the buyers, the retailers, were required to bear, as a component of the total cost to them of the tobacco products, a part of the licence fees which the seller, the wholesaler, was expected to incur at a future time, and which was referable to the products being sold. It was in the common interests of the parties that the fees, when so incurred, would be paid to the revenue authorities by the seller, and it was the common intention of the parties (and the revenue authorities) that the cost of the goods would include the fees. In the events that happened, the anticipated licence fees were not incurred by the seller. The state of affairs, which was within the contemplation of the parties as the basis of their dealings, concerning tax liability, altered. And it did so in circumstances which permitted, and required, severance of part of the total amount paid for the goods.”

40 In Roxborough, the evidence was that both invoices given by the respondent to the appellants and wholesale price lists from time to time published by the respondent showed a wholesale cost made up of separate components, namely the cost net of licence fees and the licence fees from time to time payable. I do not think that this circumstance was of itself conclusive in their Honours’ analysis. What it did was make possible the apportionment whereby their Honours identified “that part of the final agreed sum which is attributable to” the licence fee. It was that, coupled with the conclusion that payment of the licence fee so (but not necessarily so) identified was the basis of the parties’ dealings, that enabled their Honours to conclude that destruction of the obligation to pay the licence fee altered, in a relevant respect, the basis on which the parties dealt.

41 On that analysis, it is necessary to show that:

(1) That part of the total wholesale price that is attributable to licence fees can be identified; and

(2) The parties dealt on the basis that:

· the cost of the goods would include those licence fees; and

· the vendor (Mobil) would remit those licence fees to the State.

42 The separate identification, or itemisation, of the licence fees may go to both matters. Clearly, it will at least facilitate proof of the apportionment; and it may well go to demonstrating the basis of dealing. But it does not seem to me to be essential, in either respect, to the cause of action as analysed by their Honours, that the licence fee be separately stated. It may be that the absence of separate itemisation of the licence fee will make it difficult for Trendlen to establish either (or both) of the matters to which I referred. But it does not mean that Mobil should have summary judgment in its favour, or that the proceedings should be struck out.

43 In the same case, Gummow J analysed the operation of s 41 of the NSW Tobacco Act at 535 [48] to 537 [54]. That analysis enabled his Honour to conclude at 537 [54] that payments by the appellants to the respondent of the amount specified for licence fees “funded the [respondent] to meet a cost of continuing in business … to the mutual benefit of both [itself] and the retailer”. Thus, s 41(3), and the separate itemisation of the licence fee, were important in his Honour’s characterisation of the licence fee as a severable part of the consideration. But again, it does not appear from his Honour’s reasons that it was essential to the appellants’ success. It was also important to his Honour’s conclusion at 557 [104] that the relevant failure of consideration was “the failure to sustain itself of the state of affairs contemplated as a basis for the payments the appellants seek to recover”. But again, I think, it was not essential to that conclusion. His Honour had, earlier in the same paragraph, stated the relevant question as being “[i]s it unconscionable for Rothmans to enjoy the payments in respect of the tobacco licence fee, in circumstances in which it was not specifically intended or specifically provided that Rothmans should so enjoy them?” That directs attention to be focussed, relevantly for present purposes, on facts that may show that the payments can be characterised as being made “in respect of” the fee. That is a question of fact, and it is one sufficiently raised by Trendlen’s statement of contentions.

44 Gummow J did say at 558 [109] that “the very form of the transactions [between the appellants and the respondent] indicates that the payments made by the appellants can be “broken up” … . “ That, however, seems to me to be a conclusion of fact: again, a conclusion in which the form of the invoices and price lists, and the effect of s 41(3) may have been important (perhaps even dominant) factors, but not a conclusion that could not be drawn, as between other wholesalers and retailers, on facts not including those elements of form.

45 Even if I am wrong in my analysis of the reasons of Gummow J, the consequence is at best (from Mobil’s perspective) some difference between the approach of his Honour and the approach of Gleeson CJ, Gaudron and Hayne JJ. That does not mean that Trendlen’s case should be disposed of summarily, or struck out.

46 Callinan J likewise reasoned that the facts (including the form of the documents and the statutory scheme) led to the conclusion “that the appellants have made out a case for the recovery of the money paid on the basis that relevantly there has been a total failure of consideration, that is to say, a failure in respect of a discrete, readily identified component of the consideration.” (589 [199]). Again, whilst recognising the importance of the form of the documentation and the statutory scheme in the conclusion that his Honour reached, I do not understand him to be expressing anything more than a conclusion of ultimate fact. In other words, I do not understand his Honour to have suggested that the primary factual elements leading to that ultimate conclusion were themselves necessary ingredients of the cause of action, and that without them any such cause of action, as between wholesaler and retailer, must fail. Again, if I am wrong in that analysis, then there is a difference between his Honour’s approach and that of Gleeson CJ, Gaudron and Hayne JJ, which is for others to resolve.

47 In Fostif, Mason P pointed out at para [9] that some wholesalers asserted that they did not separately itemise licence fees in their invoices to some retailers. Nonetheless, his Honour said, “[t]he sums involved were … readily ascertainable by reference to published price lists and known methods for determining the value of the applicable licence fees.” (It would seem that the licence fees passed on by Mobil to Trendlen and others are as equally readily ascertainable in this case.) His Honour noted the appellants’ submission that the separate itemisation was not an essential aspect of the decision on Roxborough. It is apparent, from his Honour’s conclusion that the appeal should be allowed, that he accepted this submission.

48 At para [215], Mason P noted that s 41(3) of the NSW Tobacco Act “was unique to the licensing schemes of New South Wales and the Australian Capital Territory”. The respondents submitted that it was of critical importance, and it appears that Einstein J upheld this view (see Mason P at paras [216] and [217]). However, it is clear from what Mason P said at para [218] that there was a genuine contest between the appellants and the respondents as to the significance of s 41(3). In those circumstances, his Honour thought that there was a substantial common issue of law that attracted the operation of Pt 8 r 13. In my view, that issue of law is one that exists in this case. It is an issue that should not be resolved on a summary basis, but should go to trial.

49 Again, Mason P noted at para [221], that some invoices did not separately identify the licence fees. His Honour said at para [223] that this and other matters pointed “to factual and legal issues that [the relevant respondent] will be at liberty to raise”, and (para [224]) did not mean that “otherwise valid representative proceedings [should] be blocked at the outset merely because of the possibility that some class members will fail by reason of matters peculiar to themselves.” In this case, I think, the equivalent dispute is one that should be resolved after a trial of the issues.

50 In any event, para 19 of Trendlen’s statement of contentions alleges that it was the agreement or alternatively the common intention of the plaintiffs (meaning thereby, it and those whom it seeks to represent) and Mobil that:

(1) The total payable by retailers to Mobil included the amount of the relevant licence fee referable to the sale;

(2) That amount was paid by retailers to Mobil in consideration and for the purpose of Mobil’s paying it to the revenue authorities; and

(3) It was a separate and severable consideration payable by retailers to Mobil.

51 The facts adduced at trial may or may not make good those contentions. If they are made good then, prima facie, this aspect of the plaintiffs’ case will be made out. If they are not made good then, prima facie, this aspect of the plaintiffs’ case (and, indeed, the whole of the case) will fail. But whether this aspect of the case succeeds or fails depends not on the matters summarised in the statement of contentions but on the evidence that is adduced relating to the issue thus propounded. As with the limitation argument, I think, a determination of the underlying question is one to be made after the relevant evidence has been led and tested.

52 Accordingly, I would not order summary dismissal, or a stay, on this ground.

Trafficking in litigation

53 Mobil made a formal submission “that the judgment of the Court of Appeal in Fostif … was in error in relation to the issues of the approach to champerty, the doctrine of abuse of process, and the approach to be taken to Pt 8 r 13 of the Supreme Court Rules” and “that the approach taken by the trial judge in that matter … is to be preferred” (written submissions dated 21 June 2005, para 64). It submitted further that, even accepting what the Court of Appeal had said, there were still arguments open to it. Some of those arguments relate to the alternative formulation of its abuse of process argument – the fourth issue identified in para [4] above; and I shall consider them in that context. Others, however, related to the alleged trafficking in litigation.

54 Mason P in Fostif held at para [122] that the funder’s “lack of independent interest in the proceedings and the profit motive driving [its] endeavours … do not establish champerty in the modern law, let alone abuse of process arming the respondents with a right to stay viable proceedings”. At para [123], his Honour considered “the elusive notion of ‘trafficking’.”. He said that it appeared “to involve the funder taking some rule akin to that of an assignee in relation to claims that are incapable of assignment because they are bare causes of action for damages.” He contrasted that with the present cause of action, saying that “[b]y contrast, the retailers’ causes of action are for money had and received, historically a claim in debt. Debts are readily assignable, even to those who hope to recover more than they pay the assignor, without apparently engaging the principles about trafficking.”

55 Although his Honour said that those views were “necessarily tentative”, I think that I should take them as resolving the issue before me, and leave it to Mobil (should it wish to do so) to seek to persuade the Court of Appeal that his Honour’s tentative views were incorrect.

56 In this context, I note that Mason P in Fostif at para [132] stated that “the court’s basal inquiry should be whether the role of the particular funder has corrupted or is likely to corrupt the process of the court to a degree that attracts the extraordinary jurisdiction to dismiss or stay permanently for abuse of process.” His Honour said that “[t]he standard of proof is high where (as here) the plaintiff has a genuine and viable cause of action.” It follows, his Honour said, that the court would “lean in favour of moulding its remedy so as to eliminate the abuse, resorting to dismissal only as a last resort where this is impossible.”

57 Mobil submitted “that this is too restrictive an approach, at least in circumstances where Federal jurisdiction is being exercised” (written submissions dated 21 June 2005, para 83). It submitted that this was a case within Federal jurisdiction; and that, in any event, the restrictive approach was satisfied.

58 Mobil’s submissions on this point extended beyond trafficking in litigation to what it called “officiously stirring up conflicts”. It submitted that those matters “are inconsistent with the due exercise of the judicial power of the Commonwealth in accordance with judicial process” (written submissions dated 21 June 2005, para 93). That was because the function of judicial power is “to quell controversies about rights, duties or liabilities which are susceptible to the application of judicial power”. Thus, it submitted, it was oppressive for Firmstones to seek to engage Federal judicial power by stirring up controversy between retailers and Mobil.

59 In the light of the approach taken by Mason P in Fostif (and bearing in mind that Fostif was as much, or as little, a case within Federal jurisdiction as this case), I do not think that it is open to me to accept those submissions. I will therefore set out my findings on the facts relied upon by Mobil, and, as I have indicated, leave it to others to decide whether I am wrong in my conclusion that the point is settled by what Mason P said in Fostif.

60 It was agreed that neither Trendlen nor Firmstones had in their possession evidence of any demand made by Trendlen or any represented retailer on Mobil on or prior to 11 July 2003, relating to the payments that were the subject of these proceedings. It was further agreed that neither Trendlen nor any represented retailer had retained either Firmstones or Robert Richards and Associates (the solicitors on the record for Trendlen in these proceedings) prior to that date with respect to those claims.

61 Mr Firmstone (or his company – the distinction is of no present relevance) is behind the tobacco litigation. He initiated the tobacco cases, and then a number of petrol cases, of which this is one. He had no written authorisation from Trendlen before instituting these proceedings, but oral instructions had been given by Trendlen’s principal, Mr Bradstreet, to Mr Proud, an employee of Firmstones. It is apparent that Mr Proud obtained some details from Mr Bradstreet of the way in which his company had dealt with Mobil, and ascertained that Trendlen did not have much (if anything) in the way of relevant documentation. Although Mobil criticised the instructions given by Mr Bradstreet to Mr Proud as “sparse”, there is no reason to think that they were insufficient to enable Firmstones, having been given those instructions, properly to institute these proceedings on behalf of Trendlen as a representative action.

62 When these proceedings were instituted, Mr Firmstone himself had not spoken to anyone who might fall within the represented class, and it appears that the only retailer within the class that had given instructions to bring a claim was Trendlen. Against that background, it is not difficult to understand that, as Mr Firmstone frankly admitted, his dominant purpose in initiating the proceedings was his company’s own profit (T 33.55); and that he was stirring up controversy where none existed (T 34.25), and using the Court’s process for that purpose (T 34.30).

63 There was a dispute between the parties as to whether Mr Firmstone had control of the running of these proceedings. In reality, I think, he does. But it does not follow, and I do not find, that his degree of control is any way improper, let alone such as to lead to a real possibility that the Court’s processes will be corrupted.

64 Firmstones enters into written agreements with each retailer who wishes to be represented. Those agreements set out clearly enough the rights that Firmstones has, as well as the benefits it will receive if the litigation is concluded successfully. Firmstones has retained Robert Richards and Associates in writing, whereby Mr Richards of that firm acts as the solicitor on the record for the plaintiffs (using this in the extended sense to encompass not only Trendlen but members of the represented class – or at least those who may “opt in”). As Mason P said in Fostif at para [137], “a measure of control is essential if the funder is to manage group litigation and also protect its own legitimate interests.” In the present case, I do not think that the degree of control shown is improper, or more than is necessary and appropriate to enable Firmstones “to make the forensic decisions necessary to deal with determined and well-informed opponents” (ibid).

65 Mr Firmstone conceded that he sought to find the names of other retailers who had not evidenced any sign of controversy, so that he could obtain a profit (T 34.35), and that these proceedings will continue even if discovery or interrogatories is not ordered (T 34.40). It may be said, as to this latter point, that it is clearly in the interests of Trendlen and the more than 80 retailers who have so far opted in that the proceedings should continue.

66 Mobil submitted that in those circumstances there was no existing controversy between Mobil and the relevant retailers, and that the legal controversy was manufactured by Firmstones for its own profit. There is certainly no evidence of existing controversy, and I think the better view is that it is unlikely that there would have been any legal controversy apart from Mr Firmstone’s actions. I think also that Mr Firmstone was not acting altruistically, and that he was motivated by a desire for profit. But even allowing for those matters, the reality is that if the litigation succeeds, it will succeed for the benefit of the plaintiffs (in the extended sense referred to above). Mr Firmstone has undertaken to meet the costs incurred, and to indemnify the plaintiffs against any adverse costs orders. There is no basis in the evidence for concluding that he or his company are unable to meet those undertakings. In the circumstances, and notwithstanding the very significant potential profit to Mr Firmstone, it cannot be said that the litigation has no potential benefit to others.

67 Thinking, as I do, that the approach that I should take to this issue is that indicated by Mason P in Fostif (notwithstanding its “tentative” character), I do not think that the facts as I have outlined them are sufficient to find that there is an abuse of process by reason of trafficking in litigation. I therefore conclude that the proceedings should not be struck out or stayed on this ground.

68 Mobil sought further factual findings in relation to Mr Firmstone’s role and activities. I discuss those in the next section of these reasons.

Firmstones’ conduct in these proceedings

69 I take the starting point from what Mason P said in Fostif at para [114]:

“ … In my opinion, a conclusion about abuse of process must stem from a finding directed at the actual or likely conduct of the party in whose name the litigation is brought (or its agents). The court is not concerned with balancing the interests of the funder and its clients. Indeed, it is not concerned with the arrangements, fiduciary or otherwise, between the plaintiff and the funder except so far as they have corrupted or have a tendency to corrupt the process of the court in the particular litigation. It is only when they have that quality that the defendant has standing to complain about them … “.

70 At para [115], Mason P commented that representative proceedings, as well as ordinary proceedings, might be funded; and that where representative proceedings were funded, “the court has power to enquire into and mould orders and conditions protective of the arrangements with the funder”. In that context, his Honour suggested, “matters additional to concerns for the processes of the court may be taken into account”; but that it was “an elision for these matters to intrude into an abuse of process enquiry.”

71 Having considered at para [117] the possibility that arrangements between funder and party might be “harsh and exploitative”, and at paras [116] and [118] the possibility that the funder might be tempted to stray from the paths of rectitude by reason of a large success fee, his Honour said at para [119] that “it is simply no business of a defendant to be taking up the cudgels on behalf of the funded litigants who are either parties or representative persons, invoking interlocutory processes ostensibly on behalf of the funded litigants but in reality in its own interest.”

72 At para [126], his Honour pointed out that the court had power “for ensuring that matters proceed fairly as regards all members of the group, that its processes are not abused and that the risk of abuse is minimised”. At para [137], his Honour indicated concern at “judicial paternalism” in relation to conflicts of interest between the funder and the class.

73 The concept of abuse of process involves the institution of proceedings for an improper purpose (Jago v The District Court of New South Wales (1989) 168 CLR 23, 71 (Toohey J)), or for a purpose that, in the eye of the law, the court’s processes are not intended to serve (Jago at 47 (Brennan J)). As Mason CJ and Deane and Dawson JJ said in Walton v Gardiner (1993) 177 CLR 378 at 393, the concept of abuse of process extends to cases “in which the processes and procedures of the Court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness”. In the same case, Brennan J at 410 spoke of the invocation of “the jurisdiction vested in a court or tribunal for a purpose alien to that which its exercise is intended to serve” as amounting to an abuse of process.

74 Thus, as Mason CJ, Deane and Dawson JJ said in Walton at 393, and as Brennan J said in the same case at 411-412, there will be an abuse of process where the proceedings are “foredoomed to fail” or “will inevitably and manifestly fail”; or where they duplicate proceedings already determined (even though no estoppel may arise). The joint judgment added the instance of proceedings instituted in a court in circumstances where, although the court has jurisdiction in the technical sense, it is a clearly inappropriate forum. And Brennan J instanced proceedings that duplicate others already pending.

75 Both the concept and the examples focus attention on two things. One is the purpose for which proceedings are instituted. The other is the impact of those proceedings on the person against whom they are brought. In the present case, I think that the judgment in Fostif clearly establishes that no improper purpose exists simply because the person who is responsible for bringing the proceedings (even though not a party) will stand to make a profit if they succeed. One purpose of the proceedings – even if not, in Mr Firmstone’s mind the dominant one – is to produce an outcome beneficial to the plaintiffs (in the extended sense). Thus, I think, a consideration of the purpose for which these proceedings are brought does not of itself indicate that they are an abuse of process.

76 Nor do I think that the proceedings are oppressive, so as to amount to abuse of process, simply because of their impact on Mobil. On Trendlen’s case, Mobil has received money to which in justice and equity it is not entitled. The case cannot be dismissed as hopeless; indeed, if the analogy with Roxborough holds up, it is likely to succeed. The proceedings can only be oppressive to Mobil in the sense that any proceedings brought against any wrongdoer, for civil rectification of or recompense for the wrong, are oppressive. I do not think that the law goes so far as to recognise that it is oppressive to call upon a wrongdoer to rectify a wrong. Nor do I think, in the circumstances of this case, that it can be oppressive for Mobil to be called to account for its retention of the money in question.

77 To the extent that it may be appropriate to consider both aspects together, I do not think that, combined, they are to be characterised as an indicator of abuse of process. The whole, in this respect, is no more than the sum of its parts.

78 Thus, on general grounds, I do not think that the manner of institution or form of the proceedings, including in that Firmstones’ role as instigator, often sells lead to oppression.

79 I turn now to consider a particular complaint relating to one aspect of Firmstones’ conduct.

Firmstones’ settlement offer

80 This complaint relates to a settlement offer made by Firmstones to Mobil. That offer was made after the decision of Einstein J in the tobacco litigation, and before the Court of Appeal allowed the appeal from his Honour’s decision. There was a controversy between the parties as to whether evidence of that offer was admissible (Evidence Act 1995, s 131) and as to whether Mr Firmstone could be cross-examined on it. With the concurrence of the parties, I admitted both evidence of the settlement offer and Mr Firmstone’s cross-examination of it on the voir dire, and indicated that I would rule on the question of admissibility in these reasons. Before I turn to that controversy, I will indicate (if it is not apparent from what I have said already) that, but for it, there is nothing in this case that would warrant any different conclusion to that indicated, on the equivalent arguments, by the Court of Appeal in Fostif.

81 Mobil submitted that evidence of the offer, and Mr Firmstone’s cross-examination in relation to it, should be admitted pursuant to s 131(2)(k) of the Evidence Act, by which the “without prejudice” privilege established by s 131(1) does not apply to, relevantly, a document prepared in furtherance of a deliberate abuse of a power. By s 131(6), the “power” referred to is one conferred by or under an Australian law. Santow J has held, in relation to the equivalent proviso relating to client legal privilege (s 125(1)(b)), that the bringing of legal proceedings is the exercise of a power conferred by or under an Australian law: Kang v Kwan [2001] NSWSC 698 at para [37 (12)]. Thus, his Honour said in the same sub paragraph, “a dishonest communication to the Court, in furtherance of a purpose standing outside the (legitimate) scope of the relevant legal process so as to amount to an abuse of process, would invoke s 125(1)(b)” because it would be “a deliberate abuse of a power”.

82 In the present case, the relevant communication – Mr Firmstone’s settlement offer – was not made to the Court. It therefore falls outside the category recognised by Santow J in Kang. But I do not think that his Honour intended to lay down an exhaustive definition of this aspect of abuse of power (ie, bringing or defending proceedings in abuse of the process of the Court). Nonetheless, in the present case, if the proviso is to be invoked, two things must be demonstrated:

(1) That the bringing or continuance of the proceedings is an abuse of the power of the Court; and

(2) That the communication is in furtherance of that abuse of process.

83 In the present case, it may be – I express no concluded view – that the settlement offer breached some fiduciary duty that Firmstones may have owed to the members of the class of represented person who had not “signed up” – ie, elected to participate as represented persons – at the time the offer was made. But even if it were, that would not make it an act in furtherance of an abuse of process.

84 I do not think that it is possible, in light of the decision in Fostif, to conclude that the institution of the proceedings was an abuse of process. Nor do I think that it is possible to regard the settlement offer as in some way relating back to the institution of this litigation, so as retrospectively to require that it be characterised as an abuse of process.

85 I therefore conclude that the tender of the settlement offer, and the cross-examination of Mr Firmstone on it, should be rejected.

86 Having come to that conclusion, I do not think that it is appropriate that I should set out in the alternative, and in case my conclusion is wrong, the findings of fact that I would have made on the basis of that material had it been necessary for me to so. The relevant evidence falls within a narrow compass, and the parties’ submissions as to the findings that should be made, and the conclusions that should be drawn from those findings, have been made in writing and will be kept with the papers.

Conclusion on this issue

87 Accordingly, I conclude that the proceedings should not be struck out or stayed on this ground.

Trendlen’s application

88 Trendlen was content at this stage to ask only for a verified list of the names and last known business addresses of relevant retailers. It accepted that any such order should be stayed until the later of the outcome of any appeal from my orders pursuant to these reasons, or the outcome of the special leave application (including, if special leave were granted, the outcome of any appeal) brought from the decision in Fostif.

89 Such argument as was put in relation to Trendlen’s motion addressed the form of the notice to be given to class members. Since Trendlen did not press its motion in so far as that motion dealt with the form of the “opt in” notice and consequent directions, it is unnecessary to consider that argument.

90 The decision in Fostif makes it plain that discovery may be ordered to identify members of the class sought to be represented: see Mason P at paras [269] to [271] and Hodgson JA (who, with a presently irrelevant exception, agreed with the reasons of Mason P) at para [299]. The order presently sought by Trendlen is in substance an order for discovery. Mobil did not criticise the particular form of the proposed order. Accordingly, I think, I should make it.

Conclusion and orders

91 Each ground advanced by Mobil in support of its notice of motion filed 7 October 2003 has been rejected, and it follows that this notice of motion must be dismissed. Trendlen is entitled to the relief that it presently seeks (limited in the way that I have just indicated).

92 I make the following orders:

(1) Order the defendant within 28 days of today’s date to provide to the plaintiff a verified list of the names and last known business addresses of the petrol retailers to whom the defendant supplied petroleum products in any of New South Wales, Victoria, South Australia, Tasmania, Western Australia and the Australian Capital Territory during the period 1 July 1997 to 5 August 1997.

(2) Order that order (1) be stayed until 14 days after the later of:

(i) the outcome of any application for leave to appeal (including, if leave be granted, the outcome of any appeal) brought to the Court of Appeal from these orders; or

(ii) the outcome of the application for special leave to appeal (including, if special leave be granted, the outcome of any appeal) brought to the High Court of Australia from the decision of the Court of Appeal in Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83.


(3) Reserve further consideration of the further relief sought by the plaintiff by its notice of motion filed on 13 May 2005.

(4) Order that the defendant’s notice of motion filed on 7 October 2003 be dismissed.

(5) Subject to the next order, order the defendant to pay the plaintiff’s costs to date of the plaintiff’s notice of motion filed on 13 May 2005 and the plaintiff’s costs of the defendant’s notice of motion filed on 7 October 2003.

(6) Reserve liberty to either party to move within 14 days to discharge or vary order (5).

(7) Order that the exhibits on the notices of motion be retained for 28 days and thereafter held or disposed of in accordance with the Rules.