7-Eleven Stores Pty Limited v Caltex Australia Petroleum Pty Limited [2004] NSWSC 457

New South Wales Supreme Court

CITATION : 7-Eleven Stores Pty Limited v Caltex Australia Petroleum Pty Limited [2004] NSWSC 457 HEARING DATE(S) : 19/05/04 JUDGMENT DATE : 19 May 2004

JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Motion dismissed.

CATCHWORDS : Separate Question Orders LEGISLATION CITED : Business Franchise Licences (Petroleum Products) Act 1987 (NSW) Business Franchise Licences (Petroleum Products) Act 1979 (Vic) PARTIES : 7-Eleven Stores Pty Limited (Plaintiff) Caltex Australia Petroleum Pty Limited (Defendant) FILE NUMBER(S) : SC 50068/02 COUNSEL : Mr A Gee (Plaintiff) Mr TGR Parker (Defendant) SOLICITORS : Glashen & Quilty (Plaintiff) Acuiti Legal (Defendant)

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

Einstein J

Wednesday 19 May 2004 ex tempore Revised 27 May 2004

50068/02 7-Eleven Stores Pty Limited v Caltex Australia Petroleum Pty Limited

JUDGMENT 1 By it's notice of motion filed on 3 May 2004 the defendant seeks a separate determination order in terms of the issues defined by paragraph 9 of the amended points of defence filed on 6 April 2004. 2 It is unnecessary to repeat the record. 3 The position taken by the defendant is to contend that the plaintiff is not entitled to the relief which it claims in the summons. However, its stance is that if it would otherwise have an obligation to make restitution to the plaintiff in respect of part of the amounts paid by the plaintiff for petroleum products sold during the relevant period, that obligation does not accrue or falls away, by reason of particular arrangements which are said to have required the re-organisation of the defendant's billing and administrative systems, which re-organisation is said to have resulted in substantial costs to the defendant. 4 The proposition contended for is that in reliance upon the understanding that it would not have to make restitution to retailers who purchased petroleum products from the defendant, the defendant failed to pursue a claim with the New South Wales or Victorian governments to recover these re-organisation costs and instead absorbed those costs itself. That understanding is apparently said to be underpinned by the allegation that retailers - here, the plaintiff - who purchased petroleum products from the defendant, failed to foreshadow any claim for restitution until about 2002 and that the plaintiff failed to institute these proceedings until mid-2003. 5 The gravamen of the instant application of the defendant is the proposition, as I understand it, that the just, quick and cheap approach to this litigation [as dictated by the overriding-purpose rule] mandates the separate determination order here sought. This is said to be by reason of the fact that determination of the quantum of the costs and losses incurred by the defendant in putting the above-described arrangements into place is likely to be a time-consuming exercise involving collection and analysis of a substantial amount of documentation and probably expert opinion. The proposition put forward is that it is clear that the defence in paragraph 9 of the amended points of defence will only arise if the plaintiff's claim is otherwise successful and if the other defences to the whole of the claim are unsuccessful. 6 Mr Parker, of counsel, who appears for the defendant, has carefully taken the Court through the issues of centrality in terms of the current pleadings. As I have understood the position, the burden of the plaintiff's claim is for restitution for total failure of consideration, and the question which arises is whether or not the Court will be able to discern any severable or separately identifiable consideration. That question, as I have understood Mr Parker, is intended to be litigated by the defendant, in terms of essentially objective materials, namely, there will be a number of written documents which will presumably be tendered going to the contract issue. If there were any oral dealings, then there will have to be evidence as to those matters [an example being what were the terms of relevant trade]. An issue will arise as to the nature of the payments made by way of the petroleum tax. 7 The questions, generally being objective, will be, as I have understood Mr Parker, litigation of how the parties externally manifested their dealings - that is to say, what passed between the parties and what was said. Apparently other parameters may include what was said on a telephone price line, which I understand was apparently in place. Other matters will concern, as I understand it, the nature of relevant stationery. Mr Parker's central submission was that it was highly likely, as I understood him, that in the main the materials to which I have just referred going to the objective question of whether or not there was any severable and separately identifiable consideration. 8 The second of the issues currently raised by the pleadings includes the proper identification of the defendant. The submission of the defendant, I understand, will be, and its case will be, that the proper arrangements were, in fact, made with a different company to the defendant and that the defendant supplied the petroleum as agent for this other entity. 9 Next there will apparently be limitation issues. 10 Next there are some other aspects of liability. Apparently the defendant will be relying, for example, upon fuel card arrangements, including arrangements for rebates and the like, which the defendant may contend are antithetic to the notion of a tax here being a severable consideration. Those questions will also apparently go as having some relevance to quantum. 11 As I have understood Mr Parker, the defence in paragraph 9 which is sought to be separately determined after determination of all other issues in the proceedings, should that become necessary, assumes the success of the plaintiff on the question of the ability to prove restitution for total failure of consideration and involves the defendant then contending that, as I have said, it spent particular funds on reorganisation. That issue is said to involve substantial factual issues as to what was done, at what cost and, in terms of a reliance issue, what relationship, as it were, can be proven as between what was done and the defendants not having received at the material time, any claim to have repayment of the tax. 12 In relation to the separate paragraph 9 issues, the defendant has put forward a case for the separation order based upon the proposition that the timeline can essentially be bifurcated - the period up to 6 August 1997 and the period thereafter. Apparently on the paragraph 9 issue, expert evidence may be called including evidence involving management personnel at Caltex, line management personnel as to what the defendant actually did to upgrade its systems. 13 It is fair to say that both counsel in the course of the application made the point that it will be important for various reasons to ascertain what are the moneys the subject of the relevant claims. Is the Court dealing with 37 days of moneys or six days of moneys? In a fashion which the Court expects of counsel, bearing in mind their obligation to the Court on applications such as this, Mr Parker has used the term "never say never" in terms of the defendant's central contention that it is unlikely that there will be an overlap on any issues or a significant overlap on any issues. 14 The plaintiff has put forward a number of factors which, on its submissions, mandate the dismissal of the motion. These include the submission that there is a strong interrelationship or overlap between the change-of-position defence pleaded in paragraph 9 of the points of defence and the defendant's other defences, which are said to make a separate determination inappropriate. Other matters put forward have included the following: · that the defendant's change of position defence has a relevance to questions in issue of the amounts paid by the plaintiff (including amounts referable to licence fees) to the defendant during the relevant period and what amounts of petroleum licence fees were passed by the defendant to the relevant State governments with respect to sales for that period; · in that regard, paragraph 6(a) of the amended points of defence is referred to, which pleads that until approximately the end of July 1997 the defendant paid licence fees in respect of petroleum products sold purportedly imposed by the Business Franchise Licences (Petroleum Products) Act 1987 (NSW) and the Business Franchise Licences (Petroleum Products) Act 1979 (Vic); · the submission is then that questions of whether the defendant has actually remitted to the relevant State governments licence fees with respect to petroleum products sold to the plaintiff in July 1997, as apparently claimed, or whether it has, in fact, retained amounts of licence fees with respect to sales during both July 1997 and the first five days of August 1997, remain questions in issue. 15 It is then put that there is a question of the direct relevance to the change-of-position defence, namely, as to how much of the moneys paid by the plaintiff to the defendant were, in fact, absorbed by re-organisation costs, as contended for by the defendant: · the submission is that with respect to that issue it is not clear whether the defendant contends that all amounts referable to licence fees paid by the plaintiff to the defendant with respect to sales of petroleum products during the whole of the relevant period were absorbed by re-organisation costs or only those paid with respect to the first five days of August. That is said to be related to the question of reliance or interrelated to the question of reliance pleaded in paragraph 9(d); · the submission is that paragraphs 9(c) and (d) of the amended points of defence raise the issue also of the question of whether the defendant believed it was receiving amounts referable to licence fees which might be the subject of a claim. That question is said to be relevant to the plaintiff's contentions, which the defendant denies, that: