HIGH COURT OF AUSTRALIA
Roxborough and Ors v Rothmans of Pall Mall Australia Limited
[2001] HCA 68
Gleeson CJ, Gaudron, Gummow, Kirby, Hayne and Callinan JJ
6 December 2001 - Canberra
Gummow J. 32 At all material times, each of the 7 appellants was a retailer of tobacco products and the holder of a retailer ' s licence granted pursuant to the Business Franchise Licences (Tobacco) Act 1987 (NSW) and the respondent (Rothmans) was a wholesaler of tobacco products and the holder of either or both a wholesaler ' s licence or a group wholesaler ' s licence under the Business Franchise Licences (Tobacco) Act 1987 (NSW).
33 In the period 1 July 1997 to 5 August 1997 inclusive (the Dispute Period), Rothmans supplied tobacco products to each of the appellants. On 5 August 1997, the full court of this court answered questions respecting the validity of the Business Franchise Licences (Tobacco) Act 1987 (NSW) which had been submitted to it for determination on cases stated by Brennan CJ. [1] The full court had reserved its decision on 19 March 1997. The Business Franchise Licences (Tobacco) Act 1987 (NSW) imposed a licence fee in a nominal sum on the retail and wholesale sale of tobacco and an additional fee. This was ad valorem in nature and was calculated by reference to a prescribed percentage of the value of the tobacco sold in a period preceding the licence period. The prescribed percentage had been increased from time to time by legislative amendment from 30 % at the commencement of the operation of the Business Franchise Licences (Tobacco) Act 1987 (NSW) to 100 % as from 28 June 1995. [2] The Business Franchise Licences (Tobacco) Act 1987 (NSW) took its form in reliance upon the reasoning in Dennis Hotels Pty Ltd v Victoria [3] and later decisions of this court which denied to these imposts the character of duties of excise within the meaning of s 90 of the Constitution.
34 However, it was held in Ha v New South Wales [4] that the licence fees imposed by the Business Franchise Licences (Tobacco) Act 1987 (NSW) were duties of excise within s 90 of the Constitution. The result was that the legislation was invalid as beyond the competence of any State Parliament.
The litigation
35 The present litigation is a sequel to the decision in Ha. Any rights of recovery from the State of moneys paid to it under the invalid provisions of the Business Franchise Licences (Tobacco) Act 1987 (NSW) are regulated and curtailed by the Recovery of Imposts Act 1963 (NSW). This case is not concerned with any such claims. Nor are any claims made in this litigation by or on behalf of consumers who dealt with retailers. Rather, the issues concern the respective rights and liabilities under the general law of Rothmans as wholesaler and the appellants as retailers who dealt with Rothmans in the Dispute Period. There is no real conflict as to the primary facts, although the parties differ as to the inferences to be drawn from those facts.
36 In a proceeding instituted in the Federal Court on 1 May 1998, the appellants claimed from Rothmans certain amounts paid to it in respect of tobacco products supplied by Rothmans during the Dispute Period which covers some 5 weeks immediately preceding the handing down of the decision in Ha on 5 August 1997. Emmett J ordered that the application be dismissed. [5] An appeal to the full court was, by majority (Hill and Lehane JJ, Gyles J dissenting), dismissed. [6]
The Business Franchise Licences (Tobacco) Act 1987 (NSW)
37 For an appreciation of the nature of the claims made by the appellants and the issues which arise, it is necessary to return to a further consideration of the Business Franchise Licences (Tobacco) Act 1987 (NSW). The parties to this litigation were prohibited under penalty from selling tobacco (s 28 ), whether by wholesale (s 29 ) or retail (s 30 ), without a licence. Licences were issued on application (s 35 ), for periods of not more than a month, each month expiring on the 27th day of the month (s 39 ).
38 If on or before the expiry of a licence the licensee paid to the Chief Commissioner for Business Franchise Licences (Tobacco) (the Chief Comissioner) the fee payable for a further licence, the licensee was to be taken to have applied for a further such licence and to have been granted it (s 40 ). However, as Emmett J stated: [7]
His Honour went on: [8]Section 40 did not itself create any liability to pay a licence fee. It simply provided that, if the fee payable for a further licence was paid, the licensee was to be taken to have applied for and have been granted a further licence. If a licensee did not pay the licence fee, the relevant licence was simply not renewed and if the former licensee thereafter engaged in the relevant activity an offence was committed. The Business Franchise Licences (Tobacco) Act 1987 (NSW) imposed criminal sanctions for selling tobacco, carrying on tobacco wholesaling or carrying on tobacco retailing without being the holder of the appropriate licence.
However, under s 47(1) , if a person was required to hold a licence in respect of any period but did not do so, the person was required to pay to the Chief Commissioner an amount equal to the fee that would have been payable for the licence if the person had held one plus a penalty. Under s 47(2) , the Commissioner was authorised to assess the amount payable. The amount was to be paid within 14 days of service on the person of notice of demand for payment. Further, under s 46(1) , if, in the opinion of the Chief Commissioner, the fee assessed in respect of a licence was assessed incorrectly, the Commissioner was authorised to reassess the fee. Under s 46(3) , if on a reassessment the fee was increased, the additional amount was payable and was to be paid within 14 days after service of notice of the reassessment.
39 The fee payable by Rothmans for a wholesaler ' s licence was calculated pursuant to para (a) of s 41(1) . This read:
The expression "the relevant period" meant, in relation to a licence, "the month commencing 2 months before the commencement of the month in which the licence expires" (s 3(1) ). The fee to be paid by the appellants for retailer ' s licences was prescribed as follows in para (c) of s 41(1) :(1) The fees to be paid for licences are as follows:
- …
- (a) for a wholesaler ' s licence - a fee of $100 together with an amount equal to 100 % of the value of tobacco sold by the applicant in the course of tobacco wholesaling during the relevant period, other than tobacco sold to the holder of a wholesaler ' s licence or a group wholesaler ' s licence.
Paragraph (c) of s 41(1) was qualified by s 41(3) . This read:(1) The fees to be paid for licences are as follows:
- …
- (c) for a retailer ' s licence - a fee of $100 together with an amount equal to 100 % of the value of tobacco sold by the applicant in the course of tobacco retailing during the relevant period, disregarding any such tobacco purchased from a licensee.
For the purposes of subsection (1)(c) … the value of tobacco purchased from the holder of a wholesaler ' s licence or a group wholesaler ' s licence is to be disregarded only if the holder of the licence has paid or is liable to pay a licence fee in respect of that tobacco.
40 The interrelation between subs (3) and para (c) of subs (1) is a matter of some difficulty and produced differences of opinion in the various judgments in the Federal Court. It will be necessary to return to this matter later in these reasons.
41 Section 45 was a provision of central importance for the commercial relationship between wholesaler and retailer. It empowered the Minister from time to time to determine the basis upon which and the means by which a value was to be attributed to tobacco sold during any period. On 9 June 1988, the Minister determined the value of tobacco relevantly to be:
Emmett J pointed out that: [9]The wholesale list price for tobacco as published from time to time by tobacco manufacturers and importers, excluding … any amount included in the selling price in consideration of a licence fee.
It is significant that that determination (the minister ' s determination) contemplated that an amount might be "included" in "the selling price" , being an amount which was in some way related to a licence fee. In other words, the minister recognised that a manufacturer would add on to the published list price an amount representing a contribution to the licence fee which would be payable by the manufacturer as a wholesaler of tobacco by reason of that sale of tobacco if the manufacturer subsequently applied for renewal of its licence.
…
The minister ' s determination made it necessary for Rothmans to publish a wholesale list price for tobacco. Rothmans published a price list which it updated from time to time. The price list that was current during the dispute period consisted of a document comprising five columns. The first column was a description of each brand of cigarette. The second column specified the quantity of cigarettes of that brand in a carton. The third column specified the wholesale price per 1000 cigarettes. The fourth column specified the cost per carton at wholesale, including licence fees. The final column specified the recommended retail price per packet "including State licence fees 100 per cent" . … But for the provisions of the Business Franchise Licences (Tobacco) Act 1987 (NSW), Rothmans would not have published a price list in such a form.
The contracts
42 The Business Franchise Licences (Tobacco) Act 1987 (NSW) also required (s 66 ) Rothmans to issue invoices for the tobacco it supplied to the appellants and to keep copies thereof. The invoices issued to the appellants by Rothmans during the Dispute Period were in a standard form. This specified the name and address of the purchaser, the date of the sale and the quantity of each brand of tobacco sold. It also specified the wholesale price per 1000, being the sum specified in the third column of the price list in relation to the relevant product. A summary appeared at the foot of the form of invoice which specified an amount in respect of "tobacco licence fee" .
43 It may be convenient for some purposes to refer to "the contract" between the appellants and Rothmans. However, as was accepted in argument in this court, there was a new contract with each purchase in the Dispute Period and one question on this appeal concerns the terms of those contracts. Save as to quantity sold and moneys paid, those terms did not differ.
44 The contracts were evidenced partly by writing and partly by the acts of, and the course of the dealings between, the parties. Rothmans issued a price list as required by the Business Franchise Licences (Tobacco) Act 1987 (NSW). Each appellant had completed a document addressed to Rothmans and headed "Commercial Credit Application" . This stated that the applicant requested a trading account with Rothmans and agreed to comply with the accompanying Terms and Conditions. Clause 2 thereof ambitiously declared that the Conditions applied to all orders placed with Rothmans to the exclusion of all other terms or conditions "unless expressly agreed in writing" . Clause 10 contained a Romalpa clause and reserved to Rothmans property in the goods until full payment was made. Clause 6 stipulated payment within 7 days of delivery of the goods. No reference was made to the Business Franchise Licences (Tobacco) Act 1987 (NSW) or to licence fees payable thereunder. Clause 4 did state that Rothmans might without notice alter the prices as set out in its "applicable list" .
45 The course of trade involved sales representatives calling at the premises of each appellant, the oral placement of an order, followed by the supply of the goods from the delivery truck, with an invoice, on one copy of which the appellant confirmed receipt of the goods.
The appellants ' case
46 The appellants seek to recover from Rothmans sums equal to the amounts shown as "tobacco licence fee" in 74 identified invoices supplied to them by Rothmans in the Dispute Period. Payment of these sums was made within the Dispute Period, save for those in respect of 9 invoices which were paid on or shortly after 6 August 1997. The appellants pleaded their case in various ways. These include the assertion that Rothmans is accountable to them as a constructive trustee in respect of the amounts in question. However, in argument in this court it became clear that what the appellants pressed was not a claim to any beneficial entitlement in respect of any assets of Rothmans; rather, the equitable relief they sought would be that consequent upon a finding that Rothmans owed the sums in question as equitable debts. The failure to press any claim to specific proprietary relief against Rothmans no doubt reflects a point made by Gyles J in his dissenting judgment in the full court. His Honour observed: [10]
That statement should serve as a cautionary reminder against what, for some, appears to be a mesmeric fixation upon the (not always well understood) potential of equitable, particularly trust, remedies where what the common law offers will meet the case. [11][A]s [Rothmans] is solvent and retains the benefit of the moneys collected, there is no need to pursue equitable remedies for there to be effective recovery.
47 Accordingly, attention first should be directed to determining the legal claims made by the appellants. They assert that, in refusing to repay the moneys, Rothmans is in breach of contractual obligations owed to the appellants. However, they also claim that the moneys were had and received by Rothmans to the use of the appellants and are recoverable by reason of a total failure of consideration. The appellants accept that, following Baltic Shipping Co v Dillon, [12] if they are entitled to recover for moneys had and received, there applies "a pragmatic limitation" [13] whereby they cannot as well recover these amounts as components of a damages recovery on any successful claim they might sustain for breach of contract. It is convenient to consider in the first instance the claim for moneys had and received.
Section 41 of the Business Franchise Licences (Tobacco) Act 1987 (NSW)
48 Before doing so, however, it is necessary to return to a consideration of the proper construction of s 41 of the Business Franchise Licences (Tobacco) Act 1987 (NSW).
49 Paragraph (c) of s 41(1) required for the grant of a retailer ' s licence (say for the month commencing 28 April) payment of a fee including an ad valorem component in respect of the value of certain (not all) tobacco sold by the retailer in the "relevant period" . On this example that would be the month commencing 28 February. The tobacco whose value was to be taken into account in computing the fee payable by the retailer comprised (i) tobacco which the retailer had purchased from a party who was not a licensee and (ii) tobacco which, although purchased by the retailer from a licensee, was tobacco whose value, by reason of the operation of s 41(3) , was not to be disregarded. If either (i) or (ii) applied, the retailer carried the full burden of the ad valorem component in respect of that tobacco.
50 The reference in s 41(3) to the value of tobacco which is to be disregarded requires identification of particular tobacco sold by the retailer during the relevant period, here the month commencing 28 February, which is tobacco in respect of which the wholesaler "has paid" or "is liable to pay" a licence fee. The identification is to occur at the time when the retailer computes the fee it will pay for the licence period to begin 28 April.
51 Because the "relevant period" precedes the licence period, either of 2 possibilities apply. First, it may be possible to say whether tobacco sold by the retailer during the relevant period commencing 28 February is tobacco in respect of which, at some earlier time, the wholesaler has paid a licence fee. Second, if the retail and wholesale transactions both occurred in the same relevant period commencing 28 February, then, at the time (say 27 April) the retailer determines whether its licence fee includes an ad valorem element, the wholesaler "is liable to pay" its licence fee. In the phrase "is liable to pay" the word "liable" is used in the sense of exposure to a requirement of payment of the licence fee as the price for the grant of a wholesaler ' s licence for the period commencing 28 April.
52 If the wholesaler does not seek a licence for that period, the retailer bears the full burden of the ad valorem component in respect of that tobacco and also may be subject to reassessment under s 46 by the Chief Commissioner.
53 Where the wholesaler does not renew the licence, there may or may not have been a breach by the wholesaler of s 50A . That provision fixes an obligation by reference to the intention of the wholesaler at an earlier time. When paying the fee for the renewal of the licence for the relevant period commencing 28 February, the wholesaler had been obliged by s 50A to declare whether or not it intended to carry on business during either or both the 2 months beginning 28 March.
54 What is of particular importance for the present litigation is that when, in July 1997, during the Dispute Period, the appellants purchased tobacco at a price which specified a component for "tobacco licence fee" , they had an interest in ensuring that Rothmans as the wholesaler, along with the appellants, renewed its licence for the period beginning 28 August 1997. This also was true of the payments made immediately before 5 August 1997, in respect of the licence period to begin 28 September 1997. The payments funded the wholesaler to meet a cost of continuing in business for these future licence periods, to the mutual benefit of both wholesaler and retailer. [14]
The terms of the contracts
55 The first task is to consider the evidence and to find the relevant express terms. [15] The terms respecting the dealings between the appellants and Rothmans are to be deduced or inferred objectively from the documents to which reference has been made and from the course of conduct of the parties, all against the background of the operation of the Business Franchise Licences (Tobacco) Act 1987 (NSW). Rothmans emphasised in its submissions that each appellant knew and accepted that it would not receive the goods unless it undertook to pay the whole of the amount stipulated in the respective invoice. But that does not necessarily exclude the addition of a term respecting the payment of that element of this amount which was specified as "tobacco licence fee" .
56 The better conclusion from the evidence is that, in the contracts made during the Dispute Period, each appellant agreed to pay both the invoiced price of the goods and the licence fee component in exchange for the supply of the goods, but the payment of the licence fee component was the subject of a further term. This was that, if the appellant remained in business and renewed its licence for the periods beginning respectively 28 August and 28 September, Rothmans then would so act that the appellant would not, under ss 41(1)(c) and 41(3) of the Business Franchise Licences (Tobacco) Act 1987 (NSW), bear the ad valorem components of its renewed licence for those periods. The term ordinarily would be performed by Rothmans paying for the renewal of its licence for those further periods the equivalent amount to that received and identified as "tobacco licence fee" .
57 That is not to maintain that Rothmans failed to acquire ownership in specie of the funds it was paid; [16] nor does it mean that Rothmans was obliged to earmark and keep those funds separate or otherwise treat them as if they were impressed with trusts in favour of the appellants. [17] Nor, given what, it will appear, is the adequacy of the legal remedy available to the appellants, is there any occasion to consider whether, and, if so, when and on what terms, there arose in their favour a constructive trust of the species discerned by Judge Learned Hand in his dissenting judgment in 123 East Fifty-Fourth Street Inc v United States, [18] and to which Mason CJ gave qualified acceptance in observations made in Comr of State Revenue (Vic) v Royal Insurance Australia Ltd. [19]
58 The circumstance that at least some of the appellants were aware during the Dispute Period that a challenge to the validity of the Business Franchise Licences (Tobacco) Act 1987 (NSW) was on foot does not require any contrary conclusion to that reached above concerning the conditional nature of the licence fee payments. Nor does the circumstance that no express provision was made as to the future relationship between the parties if the pending challenge to the validity of the Business Franchise Licences (Tobacco) Act 1987 (NSW) were to succeed. Litigation asserting the invalidity of legislation based upon the Dennis Hotels model had been recurrent over many years and essentially unsuccessful. This is not a case where, from the existence and terms of a contract between the parties, it is proper to infer that the parties denied recourse by one of them to an obligation imposed by the general law. [20]
59 In this regard, Emmett J made the following important findings: [21]
Had the ad valorem element of the licence fee not been held invalid [on 5 August 1997], the value of tobacco products sold during July would have been taken into account in calculating the licence fee payable by Rothmans for the licence period commencing on 28 August 1997. That licence fee would ordinarily have been remitted on or just prior to 27 August 1997. The value of tobacco products sold from 1-5 August 1997 inclusive, together with the value of products sold during the balance of August, would have been taken into account in calculating the licence fee payable by Rothmans for the licence period commencing on 28 September 1997. That licence fee would ordinarily have been payable on or just prior to 27 September 1997.
However, by reason of the determination made in Ha ' s case, it was not necessary for any of the [appellants] or for Rothmans to obtain renewal of their respective licences under the Business Franchise Licences (Tobacco) Act 1987 (NSW) on 27 August 1997 in order to carry on tobacco retailing and tobacco wholesaling respectively after that date. In particular, it was not necessary for Rothmans to pay any fee for a wholesaler ' s licence on that date and Rothmans made no payment. For the same reason, it was not necessary for Rothmans to make any payment for licence fee on 27 September 1997 and Rothmans made no such payment.
60 The result was that the appellants had paid moneys on a basis that later became falsified; the state of affairs presented before 5 August 1997 by the operation of the Business Franchise Licences (Tobacco) Act 1987 (NSW) in respect of the future licence periods beginning 28 August and 28 September failed to sustain itself. That failure meant that there was no obligation imposed upon Rothmans by State statute to pay a licence fee and Rothmans was free to continue its business, as were the appellants, without doing so. It should be emphasised that there was no contractual obligation, of any variety, which obliged any of the relevant actors to remain in business. A further point is that between Rothmans and the appellants there was no contractual obligation to pay further licence fees and no such term could sensibly be implied. The term which dealt with the payments of the licence fee components postulated for its performance from time to time the continued need for both Rothmans and the appellants to renew their licences. That need disappeared after 5 August and the term then had no further work to do; this is not a case where one party asserts a right to performance of a contractual term and the other sets up discharge consequent upon frustration caused by a supervening event or state of affairs. Nor, contrary to a submission by the appellants, can it be said to have been "necessary" in the sense of the authorities [22] to imply a term in the contracts made in the Dispute Period that, if in law it became unnecessary to renew licences for the future periods, Rothmans would refund the moneys the appellants now seek to recover in this litigation.
61 However, that is not the end of the matter. The purpose upon which the moneys in question had been paid having failed, in the sense described above, does the common law impose upon Rothmans an obligation to restore the moneys to the appellants?
Money had and received
62 The appellants rely upon the principle encapsulated by Viscount Haldane LC in Royal Bank of Canada v The King. [23] In a passage later adopted by Lord Wright, [24] his Lordship said: [25]
It is a well - established principle of the English common law that when money has been received by one person which in justice and equity belongs to another, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff, the latter may recover as for money had and received to his use. The principle extends to cases where the money has been paid for a consideration that has failed.
63 The words used by the Lord Chancellor derive from the statements respecting the action for money had and received made by Lord Mansfield in Moses v Macferlan. [26] In speaking of the action for money had and received, Mason CJ said in Baltic Shipping: [27]
Earlier, in National Commercial Banking Corporation of Australia Ltd v Batty, [31] Gibbs CJ indicated that he found it unnecessary in that appeal to discuss the doctrinal basis for the action for money had and received, but continued: [32]The action was, as Lord Mansfield said in Moses v Macferlan, [28] "quasi ex contractu" and founded on an obligation imposed by law and accommodated within the system of formal pleading by means of the fictitious assumpsit or promise. It was necessary to plead the fictitious assumpsit until the enactment of s 3 of the Common Law Procedure Act 1852 (UK). And even then its influence continued. The abolition of the forms of action inspired an analysis of the sources of obligation in the common law in terms of a rigid dichotomy between contract and tort. In that context, there was little room for restitutionary obligation imposed by law except as a "quasi - contractual" appendix to the law of contract. As a result, until recently, restitutionary claims were disallowed when a promise could not be implied in fact. [29] However, since Pavey & Matthews Pty Ltd v Paul, [30] such an approach no longer represents the law in Australia.
The rejection of the implied contract theory, of which Mason CJ spoke in Baltic Shipping, should be taken as reflecting the settled position in Australia.Whether the action is based on an implied promise to pay, or on a principle designed to prevent unjust enrichment, the emphasis on justice and equity in both old and modern authority on this subject supports the view that the action will not lie unless the defendant in justice and equity ought to pay the money to the plaintiff. (Footnotes omitted.)
64 However, the identification of a satisfactory doctrinal basis for the action is a more difficult matter. The common money counts, particularly after the decisions of Lord Mansfield, have occupied an uneasy position in the legal system between the 3 great sources of obligation in private law, tort, contract and trust.
65 In Pan Ocean Shipping Co Ltd v Creditcorp Ltd, [33] Lord Goff of Chieveley stated as a general rule that the existence of a contractual regime for the recovery of overpayments made the imposition by law of a remedy for total failure of consideration "both unnecessary and inappropriate" . However, that is not to assert that an action for money had and received may not lie to recover payments made with a view to entry into a contract which never comes to pass. The contrary is the case. Recovery of a deposit made "subject to contract" , where the contract is not entered into [34] or is defeated by non - fulfilment of a condition, [35] is an example.
66 The action may lie in respect of the moneys improperly received by a fiduciary, in addition to purely equitable remedies. Boston Deep Sea Fishing and Ice Company v Ansell [36] and Reading v Attorney-General [37] are well known examples. In Lipkin Gorman v Karpnale Ltd, [38] the plaintiff firm of solicitors sued the defendant gambling club for moneys had and received which represented defalcations by a partner from its trust account; why no tracing remedy was sought does not appear. Presumably the plaintiff regarded the common law remedy as adequate.
67 With respect to express trusts it was settled by 1852, when Edwards v Lowndes [39] was decided, that it was only at the stage when there remains nothing to the trustee to execute except the payment over of money to the beneficiary, or the trustee admits the debt, that an action for money had and received might lie at the suit of the beneficiary against the trustee; in other respects, in the courts of law the trustee was treated as the absolute owner and the beneficiary ' s remedy was exclusively in a court of equity which might give effect to equitable set - offs and other equitable defences available to the trustee. The trust which had not been wholly performed was treated as analogous to the "open" contract, that is to say, one not discharged; [40] at that earlier stage, the action for money had and received did not lie.
68 Finally, unlike the general position in tort law, the action for money had and received is not concerned with recovery as compensation for loss or damage suffered by the plaintiff. It is settled in this court that, at least where the plaintiff is not asserting a trust in its favour or seeking other equitable relief, an action for money had and received is, as Mason CJ put it, not "defeated simply because the plaintiff has recouped the outgoing from others" . [41] This is important for the present litigation, given the dealings between the appellants as retailers and the consumers. Mason CJ observed in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd that: [42]
Further, his Honour added, why "as between the plaintiff and the defendant, the passing on of the tax to customers of the plaintiff results in conduct which should disentitle the plaintiff in equity from recovery is difficult to understand" . [43]it seems that there is no recorded instance of a court engaging in the daunting exercise of working out the actual loss sustained by the plaintiff and restricting the amount of an award to that measure.
69 The doctrinal reason which points against the "passing - on" defence is the unconscientious conduct of the defendant in refusing to account to the plaintiff. In Mason v New South Wales, [44] Windeyer J, in a passage approved by Mason CJ, Brennan, Toohey and McHugh JJ in Royal Insurance, [45] said:
The concept of impoverishment as a correlative of enrichment may have some place in some fields of continental law. It is foreign to our law. Even if there were any equity in favour of third parties attaching to the fruits of any judgment the plaintiffs might recover - and there is nothing proved at all remotely suggesting that there is - this circumstance would be quite irrelevant to the present proceedings.
Unjust enrichment theory
70 Writing extrajudicially, Justice Paul Finn has said of the concept of "unjust enrichment" that "[a]t a quite visceral level it provides an important catalyst to further legal inquiry" , particularly as "a unifying legal concept" [46] which "explains why the law recognises an obligation to make restitution in particular contexts" . [47] The conventional view is that it is the unjust enrichment which gives rise to the obligations of restitution. However, Justice Finn expresses concern that the concept of unjust enrichment may "contrive legal analysis" and continues (in a passage I would adopt): [48]
[T]o the extent that it directs attention to outcomes and to the character to be attributed to them, it is capable of concealing rather than revealing why the law would want to attribute a responsibility to one party to provide satisfaction to the other. This is particularly so where, as is so often the case, it is conduct in a relationship or dealing - an expectation created and relied upon; a mistake not corrected; etc - which provides the focus of legal attention and which generates the issue of legal policy for which resolution is required. This, I suspect, provides the reason why "unconscionable conduct" and not "unjust enrichment" (a possible effect of that conduct) has achieved the currency it has in Australian law.
71 However, in Baltic Shipping, Mason CJ said that, in cases of money had and received, the retention of the money in question: [49]
Nevertheless, reflection will demonstrate that the notion of unjust enrichment cannot be accepted as a modern synonym for a refusal "against conscience" to pay the money in question. This is because, as Rothmans emphasised in its submissions, the action for money had and received lies against defendants who fail to account but who, on any sensible understanding of the term, have not been enriched. A recent example [50] is the decision of the New Zealand Court of Appeal in Martin v Pont. [51] A principal who entrusted money to an agent for the purpose of investing it with a nominated finance company was entitled to recover from the agent when, by reason of a defalcation by an employee of the agent which did not benefit the agent, the purpose was not carried out.is regarded, in the language of Lord Mansfield, as "against conscience" or, in the modern terminology, as an unjust enrichment of the defendant because the condition upon which it was paid, namely, performance by the defendant may not have occurred. (Footnote omitted.)
72 Considerations such as these, together with practical experience, suggest caution in judicial acceptance of any all - embracing theory of restitutionary rights and remedies founded upon a notion of "unjust enrichment" . To the lawyer whose mind has been moulded by civilian influences, the theory may come first, and the source of the theory may be the writing of jurists not the decisions of judges. However, that is not the way in which a system based on case law develops; over time, general principle is derived from judicial decisions upon particular instances, not the other way around.
73 In McGinty v Western Australia, [52] McHugh J referred to Judge Posner ' s description of "top - down reasoning" by which a theory about an area of law is invented or adopted and then applied to existing decisions to make them conform to the theory and to dictate the outcome in new cases. Judge Posner spoke of the use of the theory by its adherents: [53]
As it happens, Lord Mansfield favoured the development of legal principle by a journey in the opposite direction. In Ringsted v Lady Lanesborough, his Lordship said: [54]to organize, criticize, accept or reject, explain or explain away, distinguish or amplify the existing decisions to make them conform to the theory and generate an outcome in each new case as it arises that will be consistent with the theory and with the canonical cases, that is, the cases accepted as authoritative within the theory.
General rules are, however, varied by change of circumstances. Cases arise within the letter, yet not within the reason, of the rule; and exceptions are introduced, which, grafted upon the rule, form a system of law.
74 Unless, as this court indicated in David Securities Pty Ltd v Commonwealth Bank of Australia, [55] unjust enrichment is seen as a concept rather than a definitive legal principle, substance and dynamism may be restricted by dogma. In turn, the dogma will tend to generate new fictions in order to retain support for its thesis. It also may distort well settled principles in other fields, including those respecting equitable doctrines and remedies, so that they answer the newly mandated order of things. Then various theories will compete, each to deny the others. There is support in Australasian legal scholarship for considerable scepticism respecting any all - embracing theory in this field, with the treatment of the disparate as no more than species of the one newly discovered genus. [56]
75 On the other hand, the action to recover the moneys sought by the appellants after the failure of the purpose of funding Rothmans to renew its licence may be illustrative of the gap - filling and auxiliary role of restitutionary remedies. [57] These remedies do not let matters lie where they would fall if the carriage of risk between the parties were left entirely within the limits of their contract. Hence there is some force in the statement by Laycock: [58]
The rules of restitution developed much like the rules of equity. Restitution arose to avoid unjust results in specific cases - as a series of innovations to fill gaps in the rest of the law.
The decision in Moses v Macferlan
76 That returns one to a consideration of the decision in Moses v Macferlan itself. What was decided in Moses v Macferlan? [59] Moses had owed Macferlan £ 26, did not pay him and Macferlan sued him. The claim went to arbitration and settlement was reached: Moses would pay £ 20 and indorse over to Macferlan 4 30s promissory notes made by one Jacob to Moses; Macferlan would seek to collect on the bills from Jacob and, if he recovered the entire value of the notes, he would pay one - half of the costs of Moses of the earlier collection action against Moses; by written instrument, Macferlan indemnified Moses against any liability on the notes as an indorser and gave Moses a release.
77 Macferlan was unable to collect on the notes and sued Moses in the local Court of Conscience, for the County of Middlesex, established by statute 23 Geo II c 33 (1750). [60] Macferlan sued Moses on the promissory notes. It would appear that Moses might have enjoined that action by a suit in Chancery to enforce the indemnity agreement made with Macferlan and thereby have avoided the multiplicity of litigation that ensued. Moses failed to take any such steps. Further, Moses might have sued in a common law court on a special assumpsit to recover the damage suffered by reason of the breach by Macferlan of that agreement. Presumably the failure of Moses to seek injunctive relief would have provided no defence to his action at law. However, Moses did not bring such an action.
78 Rather, in his defence in the Court of Conscience he sought to rely upon the agreement with Macferlan. However, that court refused to receive that evidence on the ground that the agreement raised issues collateral to the action on the bills; if pursued, the court might, to determine the defence upon the agreement, have gone beyond the monetary limits upon its jurisdiction. Accordingly, on the notes, Macferlan recovered judgment for the full £ 6. By statute, no writ of error or certiorari lay from the Court of Conscience to the Court of King ' s Bench or any other common law court. [61]
79 Moses did not seek from Chancery an injunction to restrain Macferlan proceeding on the judgment he had obtained. [62] Rather, Moses satisfied the judgment against him and then sued in the King ' s Bench to recover £ 6 in an action upon the case for money had and received by Macferlan to the use of Moses.
80 Contrary to what has been said by some writers, [63] the doctrine of res judicata had no application to this action in the King ' s Bench; there was no attempt by Moses to relitigate a cause of action that had merged into the judgment for Macferlan in the proceeding in the Court of Conscience. [64] Nor was there any issue estoppel, given the denial of jurisdiction in the Court of Conscience to deal with issues arising under the agreement. [65]
81 The action in the King ' s Bench was tried before Lord Mansfield and a jury and "there was no doubt but that, upon the merits, the plaintiff was intitled to the money" . [66] However, the Lord Chief Justice reserved for the opinion of the court in banc the question whether the action for money had and received was misconceived. Macferlan obviously had made no promise to repay the fruits of his judgment. Was it necessary for Moses to plead an agreement? If so, the only relevant agreement was the original indemnity agreement. [67] The central issue thus turned upon the appropriate form of the action. The court answered the question favourably to Moses who thus retained his verdict against Macferlan. [68]
82 The litigation conducted by Moses in the King ' s Bench was not to enforce by an award of damages a primary obligation imposed upon Macferlan by the original indemnity agreement. Macferlan had been bound thereby not to sue Moses on the notes. Moses now sued to recoup what had been obtained from him in breach of that contract and "kept from him iniquitously" . [69]
83 Lord Mansfield spoke of the action for money had and received as one which "lies in numberless instances" , as "founded in the equity of the plaintiff ' s case" , and as a "kind of equitable action, to recover back money, which ought not in justice to be kept" , the question being whether "the defendant may retain it with a safe conscience" . [70] Later, in Clarke v Shee, Lord Mansfield described the action as: [71]
a liberal action in the nature of a bill in equity; and if, under the circumstances of the case, it appears that the defendant cannot in conscience retain what is the subject - matter of it, the plaintiff may well support this action.
84 It has been suggested that the use by Lord Mansfield in his judgment of the phrase "ex aequo et bono" and his references to the ties of natural justice and equity bespeak the reception of Roman law. [72] However, it must be remembered that Lord Mansfield borrowed ideas from various sources. An example, recently considered by the House of Lords in Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd, [73] is the concept of good faith in relation to insurance law. Sir Anthony Mason has observed that Lord Mansfield ' s approach to good faith and to restitution reflects "the spirit of equity rather than what its admirers refer to as the genius of the common law" . [74] With varying degrees of success, Lord Mansfield sought to translate equitable principles, doctrines, and procedures into the trial of actions at law; [75] this reflected his appreciation of equitable doctrine for its flexibility and adaptability to modern needs, particularly in commercial law. [76] Then, as today, [77] "equity is the spur to new thought and further remedy, and … provides a means of introducing new policies" .
85 Whilst some have preferred to view Moses v Macferlan through the spectacles of the civilian, others have taken quite a different approach. In delivering the judgment of the United States Supreme Court in Myers v Hurley Motor Co, [78] Sutherland J, with much citation of 19th century American authority applying Moses v Macferlan, said of the action for money had and received:
Such an action, though brought at law, is in its nature a substitute for a suit in equity; and it is to be determined by the application of equitable principles. In other words, the rights of the parties are to be determined as they would be upon a bill in equity. The defendant may rely upon any defense which shows that the plaintiff, in equity and good conscience is not entitled to recover in whole or in part.
86 Shortly thereafter, in United States v Jefferson Electric Manufacturing Co, [79] the Supreme Court, with approval, set out the following passage from the judgment of the Massachusetts Supreme Judicial Court in Claflin v Godfrey: [80]
Finally, when giving the judgment of the Supreme Court in Atlantic Coast Line Railroad Co v Florida, [81] Cardozo J, with reference to Moses v Macferlan, described the action for money had and received as "equitable in origin and function" and continued: [82]The action is assumpsit for money had and received by the defendant to the plaintiff ' s use, and for money paid by the plaintiff for the defendant ' s benefit. This is often called an equitable action and is less restricted and fettered by technical rules and formalities than any other form of action. It aims at the abstract justice of the case, and looks solely to the inquiry, whether the defendant holds money, which ex aequo et bono belongs to the plaintiff. It was encouraged and, to a great extent, brought into use by that great and just judge, Lord Mansfield, and from his day to the present, has been constantly resorted to in all cases coming within its broad principles. It approaches nearer to a bill in equity than any other common law action.
The action in Wayne County Produce Co v Duffy-Mott Co [83] was for money had and received; the judgment of Cardozo CJ allowing recovery, upon which the present appellants properly relied, is to be read with an understanding of what in the United States was taken as the origin and function of that action.The claimant to prevail must show that the money was received in such circumstances that the possessor will give offense to equity and good conscience if permitted to retain it.
87 Professor Stoljar has pointed out [84] that the "really passionate" criticisms of Moses v Macferlan in the English cases did not begin until Baylis v Bishop of London [85] and Sinclair v Brougham. [86] The endorsement by Lord Sumner in the later case of the "notional or imputed promise to repay" , [87] since rejected in this court, [88] was followed by his Lordship ' s denial that Lord Mansfield had "imported a head of equity" . [89] On the other hand, Lord Parker, whose authority on a question of equity was said by Isaacs J to be "no light matter" , [90] considered that an action for money had and received was not one of "strict law" , being analogous to a claim for equitable relief. [91] Reference has already been made in these reasons to the views upon the subject of another considerable lawyer, and a contemporary of Lord Sumner and Lord Parker, Viscount Haldane LC.
88 The point made by Professor Stoljar respecting the earlier decisions in England is supported by a reading of the judgments of Lord Kenyon, [92] Lord Ellenborough, [93] Parke B [94] and Tindal CJ [95] in which the action for money had and received was described in the terms which had been used by Lord Mansfield. In Mayfair Trading Co Pty Ltd v Dreyer, [96] Dixon CJ referred to the distinction drawn by Tindal CJ, [97] between trover as "an action of strict law" and the action for money had and received. The 3rd edition of Bullen and Leake, published in 1868, echoed Lord Mansfield by saying of the indebitatus count for money had and received that: [98]
[t]his is the most comprehensive of all the common counts. It is applicable wherever the defendant has received money which in justice and equity belongs to the plaintiff, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff.
89 Recently, Hobhouse J said of the decisions respecting money had and received in the 19th century period: [99]
In this court, emphasis was placed by Dixon CJ, McTiernan, Williams, Webb and Taylor JJ upon unconscientious retention by the defendant of the sum claimed by the plaintiff as "the reason of the rule under which an action of money had received lies in cases of payment by mistake" . [100] Their Honours continued: [101]The reasoning of the common law judges expressly had regard to what was conscionable and by inference reflected the analogy between the common law "use" and the fiduciary concept recognised by equity.
Under that rule the action is available when the payee cannot justly retain the money paid to him because it would not have come to his hands if it had not been for a false supposition of fact on the part of the payer causing the latter to believe that he was compellable to make the payment or at all events that he ought to make it. It is to be noticed that Parke B in Kelly v Solari [102] defines the requisite mistake as "the supposition that a specific fact is true, which would entitle the other to the money, but which fact is untrue" . [103] (Emphasis added.)
The law in Australia
90 The significance of the decision in Pavey & Matthews Pty Ltd v Paul [104] for present purposes is that in Australia it removed Moses v Macferlan from the pikestaff of "implied contract" upon which in England it was treated as having been impaled firmly by the House of Lords in Sinclair v Brougham. [105] This has left Lord Mansfield ' s "insightful observations" [106] free to have their effect.
91 Two further points should be made. One concerns the attraction to Lord Mansfield of Chancery pleading and procedure over the restrictions placed by the common law pleading system as then understood; the other his conception of the common law as something which should adapt itself to the various situations of mankind, as "the usages of society alter" . [107] By referring to the action as one in the nature of a bill in equity, Lord Mansfield was inviting attention to what would be required in the plaintiff ' s declaration. In Moses v Macferlan his Lordship emphasised: [108]
On the general issue, the defendant at trial was, as it later was put by this court in David Securities: [109]One great benefit, which arises to suitors from the nature of this action, is, that the plaintiff needs not state the special circumstances from which he concludes "that, ex aequo & bono, the money received by the defendant, ought to be deemed as belonging to him:" he may declare generally, "that the money was received to his use;" and make out his case, at the trial.
entitled to raise by way of answer any matter or circumstance which [showed] that his or her receipt (or retention) of the payment [was] not unjust.
92 In this way, there was a movement away from the common law pleading of standard fictitious promises. Further, and in turn, this involved a shift in favour of the more substantive principles of legal liability adopted in the equity courts, and to a preference for substance over form.
93 Specific instances were given by Lord Mansfield, namely that the action lay: [110]
for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express, or implied;) or extortion; or oppression; or an undue advantage taken of the plaintiff ' s situation, contrary to laws made for the protection of persons under those circumstances.
94 It should be observed that the second of these, "failure of consideration" , has an affinity with the head of "accident" . This, Lord Wilberforce said (in a case concerning relief against forfeiture), was "always a ground for equity ' s intervention" ; [111] it was concerned with "unforeseen events, misfortunes, losses, acts, or omissions [which] are not the result of any negligence or misconduct in the party" . [112] The other examples given by Lord Mansfield were taken by Story as showing that, by this extension of the action for money had and received, "Courts of Law now entertain jurisdiction in many cases of this sort, where formerly the remedy was solely in equity" . [113]
95 Lord Mansfield emphasised that he had stated what were but examples of "the gist of this kind of action [namely] that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money" . [114] The particular examples which Lord Mansfield gave, of which failure of consideration is one (his Lordship did not add the qualification "total" ), each have developed their own body of authority in which their meaning and scope is expounded. Usually, recourse to that particular body of authority will be sufficient. However, the specific examples Lord Mansfield gave are not exhaustive of the scope of the action. The submission by Rothmans that, where the parties are in contractual relations, "the contractual allocation of risk" would be subverted if the action for money had and received were permitted in any case outside one of those categories should be rejected. The very circumstances respecting the dealings between the parties which were considered in Moses v Macferlan itself illustrated the point. Further, in deciding cases such as the present which question the boundaries of the established categories, recourse should be had to the general considerations referred to in Moses v Macferlan. As in the United States, there is a long tradition in the Supreme Court of New South Wales of proceeding in this manner. [115] If those general considerations resonate with equitable notions, then in a system in which equity prevails that cannot be a source of surprise.
96 No doubt, as Lord Sumner later affirmed in Sinclair v Brougham, [116] Pollock CB had been correct when he said that in modern practice (it then being 1849) the action for money had and received "is a perfectly legal action" and the theory that it was an equitable action was "exploded" . [117]
97 Well before Lord Sumner spoke, it had been settled in United States jurisdictions, for example by the New York Court of Appeals, [118] with reference to Moses v Macferlan that the fact:
Likewise, an action for damages for breach of certain terms implied in contracts of employment is an action to vindicate legal rights, notwithstanding that the terms in question are re - expressions of notions of fiduciary responsibility. [119] Again, certain equitable doctrines "crept into the law" respecting actions on guarantees. [120][t]hat an action is of an equitable nature does not make it an action in equity.
98 What these examples illustrate is the statement attributed to Lord Redesdale: [121]
A great part of what is now strict law was formerly considered as equity, and the equitable decisions of this age will unavoidably be ranked under the strict law of the next.
99 Other examples may be given of the absorption or adoption by the common law of equitable notions. One which merits some attention is the equitable doctrine considered in Baxter v Obacelo Pty Ltd [122] whereby a judgment creditor who already had satisfied a judgment held in respect of the same damage would be enjoined from enforcing a second judgment, against another wrongdoer, so as to prevent double satisfaction and unjust enrichment by recovery of more than what in truth was due to the judgment creditor. In Bird v Randall, [123] Lord Mansfield took some steps to introduce this principle as going to the "justice and conscience" of the plaintiff ' s action on the case.
100 In all of these areas, as in Moses v Macferlan, notions derived from equity have been worked into and in that sense have become part of the fabric of the common law. Hence the statement in Baltic Shipping by Deane and Dawson JJ where, after indicating that the indebitatus count for money had and received was framed in the traditional language of trust or use, their Honours continued: [124]
Earlier, in Muschinski v Dodds, [125] Deane J, after referring to Moses v Macferlan, and to "the general equitable notions which find expression in the common law count for money had and received" , identified the operation of most of the traditional doctrines of equity as operating upon "legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct" . One such instance then identified by his Honour [126] concerned the removal of the substratum of a joint relationship or endeavour:[I]n a modern context where common law and equity are fused with equity prevailing, the artificial constraints imposed by the old forms of action can, unless they reflect coherent principle, be disregarded where they impede the principled enunciation and development of the law. In particular, the notions of good conscience, which both the common law and equity recognized as the underlying rationale of the law of unjust enrichment, now dictate that, in applying the relevant doctrines of law and equity, regard be had to matters of substance rather than technical form.
Those observations are applicable to the class of case where, in Lord Mansfield ' s words, money has been paid "upon a consideration which happens to fail" . [127] This is such a case.without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it.
Failure of consideration
101 The term "failure of consideration" is used in the law to mean several things. The point was made as follows by Stoljar: [128]
First, a consideration fails because the defendant ' s promise is insufficient or illusory or formally void, the failure thus being an initial invalidity preventing a contract from being formed. Secondly, we say that the consideration fails where a promisor fails to perform; the failure is now simply a breach of contract, though usually a substantial or important breach. But, thirdly, failure of consideration has also a much older and specialised sense, one that describes a specific remedy when, upon the collapse of a bargain, the promisee seeks to recover money had and received by the promisor. Thus failure of consideration specifies not only a claim, but also the particular basis for that claim. (Footnotes omitted.)
102 It is the third meaning with which this litigation is concerned. But what is meant here by the term "consideration" ? It is important to appreciate that, although this often is the case, the "bargain" referred to in describing failure of consideration need not be contractual in nature. For example, in Martin v Andrews, [129] the Court of Queen ' s Bench upheld a declaration for money had and received to recover conduct money tendered with a subpoena ad test where the case was settled before trial. Lord Campbell CJ said: [130]
The references to "purpose" and to "general principles" are significant.The consideration has failed. The money is paid for the purpose of defraying the expences [sic] of the witness ' s journey: if there is no journey there is no expence [sic], and the consideration fails; and then an action lies for money had and received. There is indeed no express authority: but the general principles upon which that action is maintained are applicable.
103 In English law, the expression "consideration" has various possible meanings. One is found in the principle referred to by F W Maitland [131] which treats "valuable consideration" between members of the same family as a source of equitable rights of ownership. Another is the treatment in equity of a bare covenant by deed (where the presence of the seal would support an action at law for damages) [132] as insufficient to remove the covenants from the class of "volunteers" in whose favour equitable remedies (eg specific performance) are unavailable. [133] Three other meanings were identified by Robert Walker LJ in Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council. [134] His Lordship said of the expression "consideration" : [135]
This is not the occasion to pursue the linkage between the last and the first of these meanings. Windeyer J said that "[i]n a very general way causa in modern civil law does resemble valuable consideration in English law" . [139] However that may be, the earlier reference by Lord Campbell CJ in Martin v Andrews to the purpose of a non - contractual payment indicates that the later emphasis by Viscount Simon LC in Fibrosa to the performance of a promise is an unsatisfactory explanation of all the cases where repayment is made for failure of consideration.Its primary meaning is the "advantage conferred or detriment suffered" [136] which is necessary to turn a promise not under seal into a binding contract. In the context of failure of consideration, however, it is, in the very well known words of Viscount Simon LC in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd: [137] "generally speaking, not the promise which is referred to as the consideration, but the performance of the promise" . Then there is the older and looser, and potentially very confusing, usage of "consideration" as equivalent to the Roman law "causa" reflected in the traditional conveyancing expression, "in consideration of natural love and affection" . [138]
104 In the present case, there has been no failure in the performance by Rothmans of any promise it made. No question of repudiation by it of its contractual obligations arises. The question is that stated by Deane J in Muschinski set out earlier in these reasons. Is 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 specially provided that Rothmans should so enjoy them? The answer should be in the affirmative. Here, "failure of consideration" identifies the failure to sustain itself of the state of affairs contemplated as a basis for the payments the appellants seek to recover. [140]
105 At this stage attention is required to the notion that the failure relied upon be "total" . The general rule, exemplified in Baltic Shipping, is that where there has been a partial failure in performance of a contractual promise there is no right to recover back a proportionate part of the money paid on an action for money had and received. One reason for this requirement that the failure be "total" appears to be that, in cases in which the question has arisen, the plaintiff already will have a remedy in damages which will be governed by principles of compensation under which the plaintiff may recover no more than the loss sustained; to allow the plaintiff to claim restitution in respect of any breach, particularly where the plaintiff had made a bad bargain by paying the defendant more than the defendant ' s performance was worth, would cut across the compensatory principle. [141]
106 Another reason for the general rule reflects the law ' s difficulty with apportionment in respect of an entire obligation, namely one in which the consideration for the payment of money is entire and indivisible. The rule is that the action will not be maintainable where "the money payable is neither apportioned by the contract, nor capable of being apportioned by a jury" . [142] The 19th century cases whence that rule is derived were decided when fact finding was the function of juries not judges. They reflected an appreciation of the imperfections of that method of trial and also what today would be called a "default rule" that the allocation of such gains and losses was properly the exclusive function of the terms of the parties' contract. [143]
107 Sir Guenter Treitel [144] suggests that the requirement of a "total" failure of consideration should be restricted to those instances in which the reasons for it, indicated above, still have force. He continues: [145]
It should, in other words, no longer apply where the payor has no remedy, or no satisfactory remedy, for breach (eg by way of action for damages) [146] in respect of the part left unperformed by the payee, or where there is in fact no difficulty in apportioning that part to the whole in respect of which the payor ' s advance payment had been made. (Original emphasis.)
108 In the present case, the appellants have no contractual remedy in respect of the retention of the moneys in question after the removal of the need for licence renewals as necessary conditions for the continuation of their businesses and that of Rothmans.
109 The circumstance that it is necessary for the appellants to pay the total of the invoiced amounts in order to obtain delivery and passing of title to the tobacco products supplied by Rothmans does not inevitably point to the conclusion that the sum designated in respect of "tobacco licence fee" was referable solely to the delivery and transfer of property in the tobacco products sold by Rothmans. The parties contracted not only for the supply of the tobacco products but also, in the light of the provisions of s 41 of the Business Franchise Licences (Tobacco) Act 1987 (NSW), with respect to the renewal of the wholesaler ' s licence and the funding for that to take place. Whilst that is understood, the very form of the transactions indicates that the payments made by the appellants can be "broken up" . [147]
Result
110 The appeal to this court should be allowed with costs, the orders of the full court of the Federal Court set aside and in place thereof the appeal to that court should be allowed with costs, and the orders of Emmett J set aside. In the actions, judgment, with costs, should be entered in favour of each of the appellants in their respective total sums specified in the Schedule to the Amended Statement of Claim filed on 15 December 1998. This means that judgment will be entered for the first appellant in the sum of $14,377.33; for the second appellant for $11,017.12; for the third appellant for $18,521.99; for the fourth appellant for $31,716.32; for the fifth appellant for $15,622.98; for the sixth appellant for $35,877.19; and for the seventh appellant for $26,456.55. It will be necessary, in the absence of agreement, for the Federal Court to determine any application by the appellants for interest under s 51A of the Federal Court of Australia Act 1976 (Cth).
© Thomson Legal & Regulatory Limited ABN 64 058 914 668 trading as Australian Tax Practice
