Cox v National Association of Speedway Racing Pty Ltd

[2008] NSWSC 1384

CITATION:	Cox v National Association of Speedway Racing Pty Ltd [2008] NSWSC 1384
HEARING DATE(S):	10 December 2008
JURISDICTION:	Equity Division Duty List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	10 December 2008
DECISION:	Plaintiff has not established seriously arguable case for final relief. Notice of Motion dismissed.
CATCHWORDS:	TRADE PRACTICES – misleading and deceptive conduct –application for interlocutory injunction – whether plaintiff has established an arguable case for final relief on basis of misleading and deceptive conduct
LEGISLATION CITED:	(CTH) Trade Practices Act 1974, s 52
CATEGORY:	Principal judgment
PARTIES:	Michael Noel Cox (plaintiff) National Association of Speedway Racing Pty Ltd (defendant)
FILE NUMBER(S):	SC 6021/08
COUNSEL:	Mr D A Allen (plaintiff) Mr A I Tonking SC (defendant)
SOLICITORS:	Bilbie Dan (plaintiff) Kelly & Co Lawyers (defendant)

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

BRERETON J

Wednesday, 10 December 2008

6021/08 Michael Noel Cox v National Association Of Speedway Racing Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff Michael Noel Cox is the father of Brad Cox, a 14-year-old who has over the last seven years achieved conspicuous success in speedway racing both in Australia and the United States of America. At present, he has an almost unique opportunity to engage in speedway racing in the United States in the 2009 season, and with it a realistic opportunity of winning very substantial prize money. That opportunity, however, is conditional upon his racing during the Australian summer season in the meantime. In anticipation of pursuing the opportunity which awaits him in the United States, Brad and his father have made arrangements and preparations to move to the United States; to their potential detriment if he is unable to compete there.

2 Brad and his father are members of the Victorian Formula 500 Association, an affiliate of Formula 500 Australia Inc, which operates the sport of Formula 500 speedway racing in Australia. Brad holds a Formula 500 licence issued by the Victorian Association, which enables him to compete in Formula 500 events throughout Australia. There is only one division of Formula 500, with all licensed drivers, irrespective of their age, competing against each other. Brad's skill, competence, prowess and safety as a Formula 500 driver are not in issue. At least on the material before me, it can be concluded that his participation in a Formula 500 event would not be detrimental in any way to the safety of the event.

3 The defendant National Association of Speedway Racing Pty Ltd, is a corporate entity owned and operated by the National Association of Speedway Racing Incorporated (“NASR”), a not-for-profit incorporated association whose objects and purposes are to foster and encourage motor racing and speedway. NASR from time to time approves race meetings and sanctions tracks for race meetings, but not all tracks in Australia are sanctioned by NASR. NASR rules apply to NASR race meetings at NASR-sanctioned tracks, but not to the non-NASR sanctioned tracks, unless they are voluntarily adopted. NASR does not conduct Formula 500 racing and the Victorian Formula 500 and Australian Formula 500 Associations are not associated with NASR. However, from time to time the Formula 500 Associations hold race meetings at NASR-sanctioned tracks. Both NASR and the Formula 500 Associations have racing rules, a significant difference between them being that the Formula 500 Associations allow persons 14 years and over to compete in the senior category, while NASR rules allow persons 16 years and over to compete in the senior category.

4 NASR holds a Master Insurance Policy, underwritten by Marsh Ltd, for public and products liability and errors and omissions. The policy extends to cover NASR's affiliated and associated clubs and tracks and speedway or track owners. Where a NASR-sanctioned track operator wishes to hold a race meeting, it pays a fee to NASR in return for which NASR issues a permit entitling the track to NASR track insurance for that event. NASR issues such permits on certain terms and conditions, including that the track considers the insurer's best interests at all times, that the track adheres to the terms of the NASR track insurance policy at all times, and the track abides by directives given by NASR – including, but not limited to, requiring senior category drivers to be a minimum of 16 years of age.

5 Mr Cox has entered Brad in three main Formula 500 competitions in the Australian 2008/2009 summer season, namely the Jack Willsher Cup, which was to be conducted on 22 November but has been rescheduled for 20 December 2008 at Premier Speedway; the Oval Express Formula 500 Series; and the RTS Chassis Summer Stampede Series. The Victorian Formula 500 Association conducts each of these events. Each of them is to be conducted on tracks, the operators of which have insured with NASR.

6 On 10 November 2008, the General Manager of the Premier Speedway at Warrnambool, at which track the Jack Willsher Cup is to be conducted, wrote to the Victorian Formula 500 Association, relevantly as follows:

As discussed we have received correspondence from the public liability insurer in relation to permitting persons less than 16 years of age to race in senior divisions.
Consequently we are unable to permit persons aged less than 16 years to race in a senior division at Premier Speedway, Warrnambool.
Failure to adhere to this request would be grounds for the insurer to refuse a claim under the exclusion in relation to deliberate, conscious or intentional disregard of the insurer's interests.
In addition, the insurer would be in a position to either increase premiums to the track, or exclude the track from the scheme.
…

7 That letter was apparently sent as a consequence of a facsimile letter sent by NASR to Premier Speedway on 7 November 2008, entitled "Senior Age Requirements”, and relevantly as follows:

As discussed, please find the correspondence from the public liability insurer in relation to permitting persons less than 16 years of age to race in senior divisions.
Consequently we are unable to permit persons aged less than 16 years race in a senior division at any NASR – scheme insured track.
The failure to adhere to this request would be grounds for the insurer to refuse a claim under the exclusion in relation to deliberate, conscious or intentional disregard of the insurer's interests.
In addition, the insurer would be in a position to either increase premiums to the track, or exclude the track from the scheme.
…

8 Apparently enclosed with that letter was a letter dated 13 June 2007 from QBE to the General Manager of NASR, relevantly as follows:

Thank you for your letter requesting guidance on the issue of junior competitors (14 & 15 years of age) racing in senior divisions on an application by application basis.
QBE do not look favourably upon varying this policy from what NASR currently has in place. We believe that the current policy is sound and protects the interest of both NASR and QBE.
We also believe that a policy based upon a pre-requisite or application by application basis could expose us to discriminatory issues.
We are uncomfortable with the potential exposures that could develop at all levels and would not look favourably if the policy was to change
…

9 On 5 December 2008, Mr Cox filed a Statement of Claim and a Notice of Motion, the latter claiming the following relief:

1. An interim injunction pursuant to section 23 of the Supreme Court Act or section 80 of the Trade Practices Act enjoining National Association of Speedway Racing Pty Limited from representing that Brad Michael Cox is ineligible, not permitted or otherwise unable to participate in race meetings held, promoted or endorsed by the Formula 500’s Australia Incorporated, Victorian Formula 500 Association, Queensland Formula 500 Association or engaging in any other conduct preventing Brad Michael Cox from participating.
2 An interim injunction pursuant to section 23 of the Supreme Court Act or the [sic] section 80 of the Trade Practices Act ordering National Association of Speedway Racing Pty Limited to inform any speedway operator at which race meetings are being held, promoted or endorsed by the Formula 500’s Australia Incorporated, Victorian Formula 500 Association, Queensland Formula 500 Association that Brad Michael Cox is eligible, permitted and able to race.
3. Costs

10 On an application such as the present for an interlocutory injunction, the question is whether the plaintiff has established a sufficiently seriously arguable case for final relief that, having regard to the balance of convenience, the grant rather than the withholding of interlocutory relief, is appropriate. Although the Statement of Claim and some of the evidence initially suggested that a case was also to be propounded under (CTH) Trade Practices Act 1974, Pt IV, that was abandoned, at least for present purposes, in the course of the application. The case was put exclusively on the basis of alleged contravention of Trade Practices Act, s 52 – which prohibits a corporation in trade or commerce engaging in conduct which is misleading or deceptive or likely to mislead or deceive. The conduct complained of in this case is encapsulated in the letter from NASR to Premium Speedway of 7 November 2008, and in particular the statement:

Consequently we are unable to permit persons aged less than 16 years race in the senior division at any NASR - scheme insured track.

The failure to adhere to this request would be grounds for the insurer to refuse a claim under the exclusion in relation to deliberate, conscious or intentional disregard of insurer's interests.

11 Whether conduct is misleading or deceptive, at least ordinarily, although not necessarily exclusively, depends upon whether it contains, or conveys, a misrepresentation. The issue is usefully crystallised by posing the question: what misapprehension or erroneous state of mind is the conduct alleged to have produced in the mind of the recipient?

12 In this case, when asked, Mr Allen, who appeared for the plaintiff, articulated the alleged erroneous state of mind produced by the impugned conduct as a belief that the track operator would not be covered by the NASR insurance policy if it permitted Brad to race there. In my view, that correctly states the essence of the plaintiff’s complaint and it is on that basis that I proceed to deal with the matter.

13 The insurance policy lists as the insured the Chief Administrator, committees, members, volunteers and officials for the time being of NASR and various other listed bodies, together with their individual affiliated and associated clubs and tracks, and their respective committees, members, volunteers, officials, competitors, competitor groups and speedway track owners, landowners, and/or lessees of property. The insuring clause provides that the insurers will indemnify the insured against their liability to pay damages in accordance with the law of Australia, but only in respect of such liability as is defined by each insured section of the policy, arising within the territorial limits and out of the business specified in the schedule. The three insured sections are (A) public liability, (B) pollution liability, and (C) products liability.

14 In the operative (insuring) clause, paragraph 1.5 defines "Insured Events" to mean:

… any speedway or other motor sport meeting, race, practice, qualifying or demonstration which have been approved by the National Association of Speedway Racing, held at a track or venue approved by the National Association of Speedway Racing for the above purposes.

15 Clause 13, entitled “Extensions”, provides that subject to the terms, conditions and exclusions of the policy as a whole, the cover is extended to include:

13.3 Insured Events
This Policy provides indemnity for Claims arising out of or in any way connected with Insured Events but limited to such events of insured parties, declared clubs, tracks or venues for which a premium has been paid.
Any club or track which arranges cover under this Policy shall, by payment of the premiums for Insured Events be entitled to indemnity under this policy for all non-motor sport activities conducted by the club or track. This indemnity is provided notwithstanding the fact that motor sport activities have ceased at the end of the motor sport season.

16 Although it is probably of minor significance, reference might also be made to 14.10 which provides:

It is understood and agreed that in the event of a track, insured under this Policy, failing to declare a meeting or failing to pay the premium, the indemnity under this Policy is preserved for all insured parties other than the promoter, event organiser, track owner or club who failed to declare the meeting or pay the premium.

17 Nothing in the policy refers to any age limit or in particular to any requirement that drivers be at least 16 years of age. The application of any policy about age appears to arise under clause 1.5, whereby NASR will “approve” a meeting or race, or a track or venue, only upon the terms and conditions to which I have referred, including that the track abide by NASR directives and, in particular, that all senior category drivers be a minimum of 16 years of age.

18 That a track requires an approval of NASR to hold a race meeting is not only asserted in the letter of 9 December 2008 annexed to Mr McAvaney's affidavit, but is corroborated by the report (which Mr Cox annexed to his second affidavit of 5 December), of a conversation between Mr Chris Olsson, President of the Victorian Formula 500 Association, and Mr Jim Lock from Simpson Speedway, who is reported to have told Mr Olsson that NASR was stipulating that, as part of their permit issued in respect of their public liability insurance, there was a condition to the effect that Brad (or, more probably, anyone under 16) could not race in senior categories, and that he expected a permit in respect of the 6 December race meeting to be sent the following day.

19 If Premium Speedway were to make a claim under the Master Policy, it would have to establish, first, that it was an affiliated or associated club or track, or speedway or track owner (and for present purposes I am prepared to accept that it could do so), and secondly, that the loss in respect of which it claimed arose out of an insured event (for which purpose it would be necessary to establish that the relevant motor sport meeting or race had been approved by NASR, and that the track had been approved by NASR, for that purpose). NASR has plainly stated that it will not approve the meeting in question, or the track or venue in question, or that if it has approved it, it will revoke that approval, if a driver under 16 years of age is to participate in a senior event. If such an approval is not granted or is revoked, then the track will not be covered by the insurance policy if it permits Brad to race.

20 In that context, it seems to me that far from being misleading or deceptive, the representation is substantially correct, the state of mind which it would induce, as articulated by Mr Allen, and which I agree is the state of mind that it would induce, would be a correct one. In those circumstances, I cannot see how it can be said to be misleading or deceptive. Mr Allen argued that, even if the same result could be achieved by declining to issue a permit or revoking a permit, that was not the process or basis described in the 7 November letter, and for that reason the letter was nonetheless misleading and deceptive. However, the letter has to be considered in the context that it passed between lay-persons who (as I would infer) were familiar with NASR's processes for approving tracks, so that while they may have been imprecise from a legal perspective in how they described the concepts, they had a sound practical appreciation of what was involved.

21 Mr David Mills, General Manager of Premier Speedway in Warrnambool, apparently made an inquiry of NASR as to whether persons less than 16 years of age might be permitted to race in senior divisions, and NASR responded in the negative. In short, what took place is to be understood as an inquiry as to whether NASR would be prepared to issue a permit, notwithstanding that there would be a participant under 16 years of age; NASR, in substance, responded that it would not issue such a permit, that is, "we are unable to permit persons age less than 16 years race in a senior division ... ".

22 For those reasons, in my view, it is not seriously arguable that NASR has engaged in conduct that is misleading or deceptive or likely to mislead or deceive. On the present application at least, it was not argued that NASR's conduct was otherwise than in trade or commerce, but that need not be considered further in light of the conclusion I have already reached.

23 Had I reached a different view on this question, I would not have refused interlocutory relief on the basis that a final injunction would be declined since damages were a sufficient remedy; this is a sport in which exposure and ongoing exposure and reputation is vitally important, there would have been much to be said for the view that it could not be concluded at least at the interlocutory stage, that damages would be an adequate remedy. On the other hand, the balance of convenience would itself not have been straightforward given that substantially the same result could have been procured by NASR in any event, by indicating that it would not grant an approval for the purposes of insuring the event in question, there would be practically no utility in granting even the modified injunction sought, to the effect that NASR be restrained from representing that a track would not an covered by public liability insurance if it permitted Brad to race.

24 Had I had to reach a conclusion on the balance of convenience, I would have been unpersuaded that the balance of convenience favoured the grant rather than the withholding of interlocutory relief.

25 Accordingly, I order that the Notice of Motion filed on 5 December 2008 be dismissed with costs.

26 In that light, plaintiff’s counsel has invited me also to dismiss the Statement of claim, and I order that the Statement of Claim be dismissed with costs.

27 The exhibits may be returned.

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