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Readers of the list may be interested in the recent decision of Emmett J in the Federal Court of Australia in Roxborough v Rothmans of Pall Mall Australia Ltd [1999] FCA 107 (18 February 1999)

‹http://www.austlii.edu.au/au/cases/cth/ federal_ct/1999/ 107.html›.

Simplifying somewhat -

The applicants were tobacco retailers; the respondent was their supplier. Under New South Wales legislation, retailers and wholesalers were obliged to hold licences to sell tobacco by retail or wholesale. The licence fee was calculated by reference to the value of tobacco sold in a relevant period. If the wholesaler held a wholesale licence and paid the licence fee in relation to tobacco, the retailer did not have to pay a retail licence fee in relation to that tobacco. In this case, the wholesaler did hold such a licence and did pay the wholesale licence fee in relation to the tobacco. But it invoiced the retailers for the amount of the licence fee as a separate item on the invoice for the tobacco.

The High Court held that the licensing legislation was invalid. (Simplifying somewhat and omitting the long history that lead to this point - under the Constitution, the States cannot levy duties of excise; the Court held that the licence fees were in substance duties of excise and therefore the legislation imposing them was invalid.)

The retailers sought to recover from their supplier, the wholesaler, the amount they had paid (as they saw it) on account of the invalid licence fee.

Emmett J dealt separately with arguments based on:

"* Breach of an implied promise to refund the amounts if Rothmans did not subsequently pay a licence fee.

* Restitution for total failure of consideration by reason of failure by Rothmans to perform an implied promise to pay a licence fee.

* Restitution of payments made under invalid legislation giving rise to unjust enrichment of Rothmans.

* Constructive trust in respect of the amounts in question. [based on Mason CJ's observations in Commissioner of State Revenue (Vic) v Royal Insurance Australia Limited (1994) 182 CLR 51 referring to the dissenting judgment of Judge Learned Hand in 123 East Fifty-Fourth Street v United States (1946) 157 F Rep (2d) 68]

* Restitution for payments made under a mistake.

* Contravention of section 52 of the Trade Practices Act. "Emmett J rejected all the claims. One significant problem for the retailers was that the source of their obligation to pay an amount referable to the licence fee was their contract with the supplier, not the invalid legislation. Another was that they would have paid the invoiced amount to obtain a supply of tobacco irrespective of the validity of the legislation.

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Simon Evans, +61 3 9344 4751