Farrell v Royal King's Park Tennis Club (Inc)

[2006] WASC 51

FARRELL -v- ROYAL KING'S PARK TENNIS CLUB (INC) [2006] WASC 51

Link to Appeal :

[2007] WASCA 173 [2007] WASCA 193 [2007] WASCA 173 [2007] WASCA 280

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2006] WASC 51
Case No:	CIV:2147/2000	Heard:	16-20 FEBRUARY 2004
Coram:	JOHNSON J	Delivered:	17/03/06
No of pages:	45	Judgment Part:	1 of 1
Result:	Plaintiff's claim dismissed
Category:	B
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Parties:	CAROL FARRELL ROYAL KING'S PARK TENNIS CLUB (INC)
Catchwords:	Incorporated associations ­ Sporting clubs ­ Implied term of fairness to members in selection for teams ­ Implying terms into constitution ­ Implication as an incident of the Corporations Act ­ Implication by common law principles
Legislation:	Associations Incorporation Act 1987 (WA) Corporations Act 2001 (Cth)
Case References:	Astley v Austrust Ltd (1999) 197 CLR 1 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Cameron v Hogan (1934) 51 CLR 358 Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 Dixon v Australian Society of Accountants (1989) 95 FLR 231 Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159 Gambotto v WCP Ltd (1995) 182 CLR 432 Hawick v Flegg (1958) 75 WN (NSW) 255 Hawkins v Clayton & Ors (1988) 164 CLR 539 Henderson v Kane & Anor [1924] NZLR 1073 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 Hickman v Kent or Romney Marsh Sheep Breeders' Association [1915] 1 Ch 881 Hospital Products Limited v United States Surgical Corporation & Ors (1984) 156 CLR 41 King v Foxton Racing Club (Inc) [1953] NZLR 852 Lamphier v Phipos (1838) 173 ER 581 Luxor (Eastbourne) Ltd v Cooper (1941) AC 108 McNab v Auburn Soccer Sports Club Ltd [1975] 1 NSWLR 54 Nurses Memorial Centre of SA Inc v Beaumont [1987] 44 SASR 454 O'Neill & Anor v Phillips & Ors [1999] 2 All ER 961 Peters American Delicacy Co Ltd v Champion (1928) 41 CLR 316 Rush v WA Amateur Football Club League Inc [2001] WASC 154 Ryan v Kings Cross RSL Club Ltd [1972] 2 NSWLR 79 Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596 Shirlaw v Southern Foundaries [1939] 2 KB 206 Terkol Rederierne v Petroleo Brasileiro SA (The Badagry) [1985] 1 Lloyd's Rep 395 Zusman v Royal Western Australian Bowling Association (Inc) [1999] WASC 86 Baltic Shipping Company v Dillon (1993) 176 CLR 344 Central Exchange Ltd v Anaconda Nickel Ltd (2002) 26 WAR 33 De Pasquale v Australian Chess Federation [2000] ACTSC 94 Fink v Fink (1947) 74 CLR 127 Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION : FARRELL -v- ROYAL KING'S PARK TENNIS CLUB (INC) [2006] WASC 51 CORAM : JOHNSON J HEARD : 16-20 FEBRUARY 2004 DELIVERED : 17 MARCH 2006 FILE NO/S : CIV 2147 of 2000 BETWEEN : CAROL FARRELL

Plaintiff

AND

ROYAL KING'S PARK TENNIS CLUB (INC)
Defendant

Catchwords:

Incorporated associations ­ Sporting clubs ­ Implied term of fairness to members in selection for teams ­ Implying terms into constitution ­ Implication as an incident of the Corporations Act ­ Implication by common law principles

Legislation:

Associations Incorporation Act 1987 (WA)

Corporations Act 2001 (Cth)

Result:

Plaintiff's claim dismissed

(Page 2)

Category: B

Representation:

Counsel:

Plaintiff : Mr J R Ludlow
Defendant : Mr J D Allanson

Solicitors:

Plaintiff : Dibbs Barker Gosling
Defendant : Phillips Fox

Case(s) referred to in judgment(s):

Astley v Austrust Ltd (1999) 197 CLR 1
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Cameron v Hogan (1934) 51 CLR 358
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
Dixon v Australian Society of Accountants (1989) 95 FLR 231
Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159
Gambotto v WCP Ltd (1995) 182 CLR 432
Hawick v Flegg (1958) 75 WN (NSW) 255
Hawkins v Clayton & Ors (1988) 164 CLR 539
Henderson v Kane & Anor [1924] NZLR 1073
Henderson v Merrett Syndicates Ltd [1995] 2 AC 145
Hickman v Kent or Romney Marsh Sheep Breeders' Association [1915] 1 Ch 881
Hospital Products Limited v United States Surgical Corporation & Ors (1984) 156 CLR 41
King v Foxton Racing Club (Inc) [1953] NZLR 852
Lamphier v Phipos (1838) 173 ER 581
Luxor (Eastbourne) Ltd v Cooper (1941) AC 108
McNab v Auburn Soccer Sports Club Ltd [1975] 1 NSWLR 54
Nurses Memorial Centre of SA Inc v Beaumont [1987] 44 SASR 454
O'Neill & Anor v Phillips & Ors [1999] 2 All ER 961
Peters American Delicacy Co Ltd v Champion (1928) 41 CLR 316
Rush v WA Amateur Football Club League Inc [2001] WASC 154


(Page 3)

Ryan v Kings Cross RSL Club Ltd [1972] 2 NSWLR 79
Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596
Shirlaw v Southern Foundaries [1939] 2 KB 206
Terkol Rederierne v Petroleo Brasileiro SA (The Badagry) [1985] 1 Lloyd's Rep 395
Zusman v Royal Western Australian Bowling Association (Inc) [1999] WASC 86

Case(s) also cited:

Baltic Shipping Company v Dillon (1993) 176 CLR 344
Central Exchange Ltd v Anaconda Nickel Ltd (2002) 26 WAR 33
De Pasquale v Australian Chess Federation [2000] ACTSC 94
Fink v Fink (1947) 74 CLR 127
Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691


(Page 4)

1 JOHNSON J: The plaintiff, Carol Farrell, seeks declaratory and injunctive relief and an order requiring the defendant, the Royal King's Park Tennis Club (Inc) ("the Club"), to perform the contract alleged to exist between them. The contract came into effect on or about 2 December 1998, when the plaintiff became a member of the Club in the category of squash member ("the Contract") and agreed to abide by the Club's rules and to pay all annual subscriptions levied by the Club. The plaintiff also seeks damages.

2 The plaintiff alleges that the provisions of the Constitution under which the Club operates, and any rules, or by-laws made by the Club's committee, were express, or alternatively implied, terms of the Contract. However, in practical terms, the plaintiff's claim in contract is based on implying into the Contract the following terms:

"4.1 The Defendant would abide by, and act in accordance with, its Constitution and any rules or by-laws made by the committee;

4.2 The Defendant would act in accordance with, and in furtherance of its objects;

4.3 The Defendant would consider for selection any member who wished to be considered for, and who was eligible for, selection as a player in tournaments and competitions between the Defendant and other clubs and associations;

4.4 The Defendant would select players for tournaments and competitions between the Defendant and other clubs or associations in accordance with a process or method which:


4.4.1 was conducted fairly;

4.4.2 was exercised in good faith;

4.4.3 had regard, inter alia, to the ability of the member as a squash player;

4.4.4 did not have regard to considerations which were irrelevant to a selection process which was conducted fairly and in good faith."

3 The declarations sought by the plaintiff relate to the existence of the Contract including the implied terms, and also to the breach of the

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Contract. The breaches of contract alleged are the failure by the Club to consider the plaintiff for selection and the failure to consider the plaintiff as a representative of the Club in ladies tournaments and competitions between the Club and other clubs or associations. The injunction sought is to require the Club to perform its obligations under the terms of the Contract, including the implied terms. In addition, the plaintiff claims damages. In the amended statement of claim the loss and damage alleged to have been suffered by the plaintiff is particularised as follows:

"The Plaintiff, being a squash member of the Defendant, has been denied the privileges and benefits associated with membership of the Defendant, which includes the right to be considered for selection to represent the Defendant. In addition, the Plaintiff paid membership fees to the Defendant for the years 1999 and 2000 in the sum of $960, for which she did not receive the full benefits to which she was entitled, by reason of the Defendant's breaches aforesaid."

4 At the request of the defendant, the plaintiff further particularised her loss and damage in the following terms:

"(a) Loss of enjoyment of being able to play in squash pennants competitions and squash tournaments;

(b) Distress due to the Plaintiff's being ostracised within the Defendant club;

(c) Creation of a feeling of embarrassment whilst on the Defendant's premises;

(d) Loss of confidence as a squash player;

(e) Creation of the need for the Plaintiff to pay weekly match fees of approximately $14 per game for playing pennants squash whilst on release to the Hilton Squash Club (these fees are not separately charged by the Defendant to its pennants players, and are regarded by the Plaintiff as being covered by the Defendant's annual membership fees payable by those players)."

5 The defendant admits that a contract came into existence on or about 2 December 1998 when the plaintiff became a member of the Club. However, the defendant denies that all of the implied terms alleged by the plaintiff are terms of the Contract between them. The defendant admits

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that observance by the plaintiff of the terms of the Constitution and related rules or by-laws is an implied term of the Contract. The defendant also admits that it was required to act in accordance with, and in furtherance of, the objects set out in the Constitution.

6 The balance of the implied terms alleged by the plaintiff are denied. It is said that, if the terms relating to the selection of players were to be implied into the Contract, they would only apply in the following circumstances: Firstly, where the member was seeking a place in a team in which there was then a vacancy. Secondly, when considering for selection any member who wishes to be included in a sporting team, the defendant is entitled to have regard to the following considerations:

1. Whether any members of the team had any objection to the other member being given a place in the team.

2. Whether the inclusion of the member in the team would or might lead to:


(a) one or more of the existing team members leaving the team and the defendant;

(b) other members of the defendant not being prepared to join the team, so that the defendant no longer had a team to participate in the relevant competition.


This is said to be because the defendant is a sporting club whose objects include the participation by its members in various sporting teams playing in competitions with teams from other clubs for their social enjoyment.

7 With respect to the plaintiff's allegation that the defendant unfairly failed to select her, the defendant alleges that the plaintiff was considered for selection to play in a competition, and that in 1999 she was selected as a member of a mixed men's and ladies team. However, it is said by the defendant that, apart from participating in one or two matches, the plaintiff did not play in any other matches or otherwise participate in the team. It is also alleged by the defendant that, on each occasion that the plaintiff sought inclusion in the women's A grade pennant squash team, the defendant took into account, amongst other considerations, the following:

1. The fact that there was no vacancy in the team.

2. All of the then members of the team informed the Club Captain that they did not want to have the plaintiff as a member with them in the team.

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3. Most of the then members informed the Club Captain that they would not continue to play in the team if the plaintiff was included as a member, and would resign from membership of the defendant and instead would seek to join another sporting club where they could seek membership in a women's A grade pennant team.

8 Finally, the defendant refutes the plaintiff's entitlement to any of the relief claimed.

The Evidence

9 The defendant is a private club which has a primary object of promoting and encouraging the playing of lawn tennis, squash and other sports. The Club provides to its members the necessary sporting facilities to fulfil that object. As I understand the position, the defendant is not part of or affiliated to a national organisation for competitive squash or tennis such that, if a member is not selected to play in one of the Club's teams, he or she will be precluded from participating in the sport in a representative capacity at the highest level. The defendant also provides more than mere access to courts and related facilities, as is the case with public courts. The defendant also provides substantial social facilities for its members. Indeed, not every member of the defendant is a playing member. The defendant's Constitution provides for non-playing members.

10 The plaintiff became a member of the defendant Club on 4 January 1999. She began playing squash in 1979 and progressed to an A grade level in 1980. In 1985 the plaintiff went to live in the United Kingdom and continued to play squash at a competitive level both in the United Kingdom and other countries. The plaintiff commenced playing masters squash when she turned 35 years of age, which was the requirement age. She continued living in the United Kingdom until 1989. During the time the plaintiff was overseas she was involved in the women's squash professional circuit and competed in the British Squash Open. She also worked as a professional squash coach and played for a club in London in the women's first division. The plaintiff returned to Australia towards the end of 1989.

11 In approximately 1987 the plaintiff purchased the freehold title to a squash centre in Bassendean. A manager ran the centre while she lived overseas. When she returned to Australia, the manager continued in that role while the plaintiff coached and played in the centre's ladies team. The plaintiff also was involved in selecting teams for pennants and sending them to the WA Squash Association. She sold the squash court in 1993. Between 1989 and 1998, the plaintiff played pennants squash at

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various clubs in Perth. Although of an A grade standard, the plaintiff did not always play at that level.

12 In the 1990's the plaintiff had competed in over 35 master squash championships. In 1991 she played in the Australian Women's Over-35 Masters Squash Championships in Darwin, winning the title and becoming the Australian champion for her age group. The plaintiff also came third in the World Women's Over-35 Masters Squash Championships in 1991. In 1992 she coached a team of juniors which started off in B1 grade but, under her coaching, progressed to A grade level.

13 In 1998 the plaintiff competed in a tournament called the City of Perth Silver Bowl Tournament which was staged by the defendant. The plaintiff was not a member of the defendant Club at this time. The plaintiff recalled that the winner of that tournament was ranked the number one player in the world. In August of 1988 the plaintiff won the WA Open Mixed Doubles Squash Tournament with her partner, Danny Zande. The plaintiff also competed in the Australian Masters Squash Championships in Canberra in October of that year. In 1998, the plaintiff also joined the Committee of the Squash Premier League. The committee was to oversee the making of a premier competition with the best women and men in the State competing at the one centre in teams on the one night. The plaintiff's role was the referee liaison officer and the assistant media coordinator.

14 This summary of the plaintiff's sporting achievements is not disputed. The Court was provided with a copy of the plaintiff's player history which had been compiled for an unrelated purpose by Greg Johnson who is the squash representative of the Club. In so far as it is necessary for the purposes of this action, based on the plaintiff's tournament history and the player history, I find that the plaintiff had been a world class master's squash player and, at the relevant time, on ability alone, would have been suitable for selection in an A grade pennant team.

15 The plaintiff assisted the Court by explaining some matters relating to competition squash. Competitions are seasonal: there is an autumn season and a spring season. There are day competitions and night competitions. The competitions are divided as to gender with ladies competitions and men's competitions. The exception is a mixed competition. There are also ladies and men's doubles competitions. The position with respect to the applicable grades played was not quite so clear, as there is apparently a different format relied upon. There is a

(Page 9)

ladies State grade the reference to which is S1 which reflects the highest grade. However, according to the plaintiff, the ladies day format is 01, 02, 03 and 01 being the highest grade. The men's and mixed grades are referred to as A1 reflecting the highest grade. The plaintiff also explained that a pennants team normally consists of at least six players who are numbered in order of merit with number one being the best player in the team. In regard to the end of season ranking, the plaintiff explained that the higher the number the better the ranking. The plaintiff also gave evidence of the process with respect to a player moving from one club to another. There are two possibilities, transfer and release. A transfer, which is initiated by an application, involves a player giving up his or her membership of one club and becoming a member of another club. A player release allows a player to remain a member of his or her club whilst playing for another club.

16 The plaintiff also gave evidence about playing, training and coaching with a number of these women with a view to establishing that they had on other occasions no objection to playing with her. No doubt this evidence was in response to the allegation that various members of the defendant's ladies A grade pennants team objected to playing with her, I do not propose to address this evidence in any detail. Even if I accept that these women had played with the plaintiff and had not previously voiced to her any dislike of playing with her or being in her company, that would not lead to a conclusion that, in this context and at another time, they expressed the desire not to play with her. It is always difficult to accept being disliked by another, particularly when there appears to be no reason or catalyst for that view. Similarly, it is difficult to understand why people who have played with you before, object to playing with you now. In my view, it does not assist to determine why the existing members of the relevant team expressed the view that they did not wish to play with the plaintiff. Further, the evidence adduced does not, in my view, lead to a conclusion that the members had not expressed such a view.

17 There was a considerable amount of evidence before the Court that the plaintiff was polite and well mannered, was well liked, was a controlled player and was generally well regarded by a broad section of people in the squash community.

18 The plaintiff said in her evidence that, after she competed in the City of Perth Silver Bowl tournament, she was contacted by Stephen Kobelke, who was the manager of the defendant, and asked to join the defendant. Mr Kobelke telephoned her on a number of occasions asking if she would like to join. At the time, the plaintiff was playing ladies A grade pennant

(Page 10)

squash at the Hilton Club and could not transfer to another club in the middle of a season. The plaintiff said that Mr Kobelke told her about all the benefits of joining the Club including their restaurant facilities and he made it obvious to the plaintiff that he wanted her to play pennants. Ultimately, the plaintiff did decide to join the defendant. The plaintiff received a letter from Stephen Kobelke on the 2 December 1998 in which he expressed his delight that she was interested in becoming a member. The letter refers the Club's squash facilities for members' exclusive use and expressed confidence that the plaintiff would enjoy the friendly and social atmosphere. The letter makes no reference to playing pennants squash.

19 The plaintiff requested permission from the Hilton Squash Club to transfer to the defendant by filling out a document entitled "Application for Pennant Transfer". The content of that document is more consistent with a player release rather than a player transfer, although perhaps the completion of a release form is required in both situations. It states that the player applies for permission to play pennant competition squash for the defendant. The form includes a note to the following effect:

"Approval of a transfer is not automatic entitlement to play. Once a transfer has been approved, it is then the Club Captain's responsibility to apply for the player involved to be nominated in the appropriate team at the start of or during the course of the season."

20 The membership application that the plaintiff filled in to join the defendant had to be signed by two people that knew the plaintiff and who were already members of the Club and believed that the applicant is in all respects a fit and proper person to be elected to the squash club membership. Rob Casey, the tennis professional at the defendant Club, and Jennifer Jowett who coached at the Club, signed the plaintiff's membership application. The plaintiff paid her membership fee to become a squash playing member of the Club on 7 December 1998. The plaintiff stated that she was not a social member of the Club and that, for the amount of money that she paid, she was entitled to play pennants for the Club. She was firm in her evidence that, if she was not considered to be good enough to play pennants, she would have paid the less expensive social (or non-playing) membership.

21 The plaintiff identified a letter from the defendant which she received after joining the Club sometime around 4 January 1999. The purpose of the letter was to encourage squash members of the Club to play

(Page 11)

pennants again or to introduce a friend or acquaintance to play pennants squash. She also received correspondence calling for donations for public works and a letter advising that a levy had been placed on members.

22 In approximately February 1999, the plaintiff was approached by the Ladies Club Captain, Ann Bradley. According to the plaintiff, Ms Bradley said to her "there's no place for people like you at Royal Kings Park and I think that you should go and join another club". The plaintiff met with Mr Kobelke and advised him of the words spoken to her by Ms Bradley. She also told him that she could not understand why Ms Bradley was hostile towards her. On the plaintiff's evidence Mr Kobelke said he would speak to the Ladies Club Captain and investigate why the plaintiff had not been put in a ladies pennant team. Ms Farrell followed the meeting up with a letter. The plaintiff was not aware of anything happening after she sent the letter to Mr Kobelke and believed the matter was not investigated. The plaintiff received no further communication from Mr Kobelke about the matter. She was not placed in a team for the whole of the first season.

23 Ann Bradley denied that she had on any occasion told the plaintiff that she would not be selected in an A grade ladies team. There was conflicting evidence before the Court as to whether Ms Bradley was the Club Captain at the time. The relevance of this issue is that the Club Captain had the responsibility for selecting members of the pennants team. However, Ms Bradley was quite sure that she was the Ladies Club Captain for the period 1997 to 2001. She gave evidence that she was asked to do the position by the previous Ladies Captain but could not recall the name of that person. She recalled that in August 2000 she had a hip replacement and knew that she would not be playing regular squash again, so she then asked if Sue Volzke would take over as Club Captain, which she did.

24 Ms Bradley confirmed that, as Ladies Squash Club Captain, she had a role in the selection of teams. She said this was done by people letting her know whether they wanted to play pennants. Once she knew who wanted to play she would select the team. She added that most of the defendant's teams tend to stay together and it would be just a matter of confirming with them whether they were going to play that season. Ms Bradley was asked what happens if a player wants to play in a team and cannot find a position in a team. She answered: "Well, it hasn't occurred". It would appear that the plaintiff's inability to obtain a position was not of sufficient significance to Ms Bradley to even recall it to mind.

(Page 12)

25 Ms Bradley was aware that the plaintiff had applied to join the Club in December 1998, but said that she was not aware that she wanted to play pennants for the Club. After the plaintiff became a member of the Club, the plaintiff told Ms Bradley that she wanted to play pennants. Ms Bradley said that she told the plaintiff: "I'm sorry Carol, there's no position for you in the A grade, we already have six ladies." The plaintiff denied that this conversation took place.

26 In cross-examination, Ms Bradley was asked if she would have been prepared to play in a team with Ms Farrell. She was evasive in her response, saying "I don't play A grade, so the occasion wouldn't have arisen". When it was put hypothetically to the witness on the basis that such an opportunity had occurred, Ms Bradley replied "I would have to think about it".

27 I was not impressed by the evidence of Ms Bradley. She was evasive when questioned and gave the impression of complete disinterest in the proceedings and Ms Farrell's situation.

28 The evidence of Daniel Zande, supports the plaintiff's account of Ms Bradley's attitude towards her playing in a pennants team. He said that Ms Bradley and the squash chairman, Gene Stephen had a clear objection to the plaintiff being selected in an A grade women's pennant team. He said that, on one occasion, he overheard Ms Bradley telling the plaintiff that, as long as she was Ladies Captain, the plaintiff would not be selected in an A grade ladies team.

29 In my view, Mr Zande was a credible witness. In all respects I prefer his evidence to that of Ms Bradley and I accept that Ms Bradley made it clear to the plaintiff that she would not allow her to play A grade pennant squash.

30 On the 8 June 1999 the plaintiff and Mr Zande wrote a letter to Mr Kobelke responding in writing to the defendant's invitation to play in the spring pennant squash season. Mr Zande was immediately selected into the men's A grade pennant squash team, the plaintiff was not selected in the ladies team. The plaintiff stated that:

"On 30 June 99, I received a received a telephone call from Mrs Simmons, who told me that I would never be chosen to play in a Royal Kings Park Tennis club's women's squash pennant team, not now and not in the future. She suggested that I join another club.

(Page 13)

Simmons was especially protective of the club women's A grade pennant squash team. She told me that all women in the A grade team hated and despised me and would leave the club if I was ever to be put in their team."

31 Gene Stephen was the Captain of the A grade team. She had no recollection of having played with the plaintiff as the plaintiff had alleged in her evidence. Ms Stephen maintained that, prior to the plaintiff obtaining membership, she had been asked by the plaintiff whether there was any prospect of using her in a team, and she replied that they had a team which had played together for a significant number of years, that it was full, and already had an additional player to fill in when needed but she was rarely needed. Ms Farrell denied that this conversation took place.

32 Ms Stephen qualified the proposition put to her that it was the responsibility of the Captain to select the team. She said that it depended on individual teams. She considered that, when you are dealing with slightly better players you speak to the people affected. She explained that when she was Captain she canvassed the opinion of people in the team because ultimately they play squash for social reasons.

"But I've always canvassed that with my team and then gone to the club captain, who ultimately takes responsibility for the administration of the different women's teams, and run my idea past them, more as a means of consulting with them and advising them as to what is occurring within that team."

She was unaware of any policy on the issue. Ms Stephan also gave evidence that the teams tended to remain static. The witness ran through each individual player in the team.

33 It was apparent from Ms Stephan's evidence that she was not impressed with the way the plaintiff dealt with not being selected. She alleged that, instead of continuing to communicate with the Team Captain or with the Ladies Club Captain, she started communicating with the Men's Captain or with the Club President or the General Manager who would then contact Ms Stephen and tell her to consider the plaintiff. It was at this point that Ms Stephan obtained the plaintiff's playing record so that she had a sound basis for evaluating her performance. The information she received was that the plaintiff had won only five out of 48 matches played. Ms Stephen still maintained that the primary consideration for her was whether the plaintiff would fit in the team and the impact on the team of replacing one of its members with the plaintiff.

(Page 14)

However, based on the player record, Ms Stephen considered that the plaintiff's playing standard was not such as to justify replacing a member of the team. She then communicated that view to those who had contacted her about the plaintiff.

34 Ms Stephen gave her evidence in a precise and credible manner. I found her account of the way in which she dealt with the approaches from senior male members of the Club to the plaintiff's failure to be selected in a pennant team. I also accept that the plaintiff was warned, prior to joining, that there was no vacancy for her in the A grade team.

35 The plaintiff's situation at the Club did not improve with time. In July 1999, it was suggested to her that she join the men's Monday night B grade pennant squash team. Her response was that, although she had no objection to playing, she was not ranked amongst the top eight women in the State and therefore could not play with the men's B grade team.

36 As the plaintiff was not selected to play pennants, she signed a player release in July 1999 to allow her to play for Hilton Squash Club for the following season.

37 On 3 August 1999, the plaintiff wrote to Mr Kobelke expressing her disappointment that once again she had not been selected to play in the women's pennants squash team and alleged that she was being discriminated against. Mr Kobelke acknowledged the plaintiff's letter by facsimile on 5 August 1999, in which he suggested she arrange to meet with him.

38 On the 5 January 2000 the plaintiff and Mr Zande wrote to Kenneth Todd, the Squash Club Captain, advising him that they both wished to play pennant squash for the Club in the upcoming season. A copy was also sent to Stewart Robinson, the President of the Club. The plaintiff was not concerned with grade and did not stipulate one. Despite the plaintiff's repeated request to Mr Kobelke and the Club's committee to address the plaintiff's concern, on the plaintiff's evidence, they failed to do so. The plaintiff then engaged solicitors on her behalf.

39 On the 23 March 2000 the plaintiff met with Mr Kobelke and was told that the Club had decided, for the third season in a row, that the plaintiff would not be considered for selection to play pennant for the Club. The plaintiff wrote to Mr Kobelke on 24 March 2000, to confirm in writing what he had told her. The plaintiff requested that the selection committee review its decision but the plaintiff was not advised of the result of any review.

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40 The plaintiff tried to arrange a player release to Hilton Squash Club for the remainder of the season but was unsuccessful. The plaintiff explained that this was so, because you had to be a player in a team of the club of which you were a member. As she was not in a team she could not be released. As a result, the plaintiff was forced to miss the season and her ranking eroded further because if a player is not playing, he or she receives no points.

41 The plaintiff gave evidence that there is more than one pennant squash team at the Club and that she had always been prepared to play in lower teams and never stipulated that she would only play in the women's A grade pennant squash team.

42 On the 5 June 2000, the plaintiff wrote to Mr Robinson indicating her desire to play women's pennant squash in the forthcoming spring season 2000. A letter dated 7 July 2000 was sent to members generally advising that the top ladies and men's team will be exempt from fees and the seconds teams would be getting a 20 per cent reduction in their fees. The plaintiff was overlooked to play in any of the Club's women's pennant squash teams. She was also overlooked to play in the spring 2000 season.

43 On the 8 July 2002, the plaintiff was threatened with expulsion from the Club for complaining about her non-selection. On the 4 March 2003, the A grade team 1 forfeited their fixture due to insufficient players.

44 The plaintiff stated that her unfair treatment had caused her to suffer in a number of ways. She has not been able to pay pennant squash except on player release to Hilton on one occasion and therefore not able to play in most squash tournaments. This has also added to the plaintiff suffering loss of confidence as a squash player. She has suffered distress because she has been ostracised within the Club.

45 It was apparent that the plaintiff has suffered, and continues to suffer great distress about her failure to be selected to play pennants squash for the Club and the failure of the Club to rectify that situation. However, it is apparent from her evidence and from her demeanour that Ms Farrell has become rather obsessive about the situation which arose with the defendant. She was at times argumentative in her response to questions and, more significantly, she was also evasive in some of her responses. I formed the view that she believed unreservedly in the truth of her evidence, but the level of her emotional reaction to the situation may have affected her recollection of events.

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46 On behalf of the defendant evidence was given by Mr Todd that there were other attributes of membership other than sporting competitions. The Club had a particularly attractive location and good facilities, such as the bar and clubrooms. He recognized the existence of a dispute between him and the plaintiff about her transfer to the Club. He said that he tried to contact members such as Ms Bradley before he signed the plaintiff's transfer but was unable to make contact so he signed the form. He maintained that he ran a line through that part of the form supporting her application to play pennants because he could not guarantee that she could play pennants.

47 I was not impressed with Mr Todd's evidence in this regard. He was defensive in his responses and his manner did not inspire confidence in the accuracy of his evidence. I do not accept that an attempt was made to make it known to the plaintiff that she would not necessarily be entitled to play pennants. Further, I believe that the Club could have handled the plaintiff's complaint in a more open manner. If the Club did not consider that it had an obligation to select the plaintiff in a team, they should have said so. Further, if they had no intention of selecting her, or requiring that she be selected, that too should have been communicated to the plaintiff.

48 Other witnesses gave evidence that pennants squash teams did have a social flavour to them and that personalities were important to at least some of the members. One witness spoke of some disruptive behaviour on the plaintiff's part which would affect her selection in a team.

49 Overall, I accept that Ms Farrell was approached to join the defendant for the purpose, amongst others, of playing pennants squash and that the reason for the approach was her ability as a player. However, it does not follow that there was any obligation to allow her to play pennants because of the way in which her membership arose. In any event, no such obligation is pleaded on behalf of the plaintiff. It is not disputed that, over a number of years and many seasons, there was no occasion on which the plaintiff was selected to play for the Club in a pennants team. I find that the primary reason for her failure to be selected was that Ms Bradley did not want her in the A grade team. However, I do accept that there were other reasons which would have justified her omission from the team. In particular, I accept the evidence that the pennants teams, though competitive, were also considered to be a social event and the teams were often formed on the basis of relationships, often of longstanding, between the existing players. I also accept that at many stages through the relevant period, there were no vacancies in the pennants team.

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50 However, these findings of fact have no bearing on the outcome of the claim in the absence of any contractual obligation on the part of the defendant to select the teams on the basis of merit alone, which I understand to be the practical consequence of the "fairness" obligation which the plaintiff seeks to imply into the contract between the plaintiff and the defendant.

Relevant Legal Framework

51 There is, in this case, a threshold legal requirement. At one point in the course of the hearing, counsel for the plaintiff submitted that the main issue in this case is whether the plaintiff was fairly treated in relation to selection in the past and whether the Court can reasonably expect the defendant to treat her fairly in relation to selection in the future. Whether a breach of a contractual obligation might recur is certainly relevant to the relief granted by the Court. However, it is inaccurate to state that whether the plaintiff was treated fairly in relation to selection is the main issue in this case. To be fair to counsel for the plaintiff, his comment may have been directed to the factual, rather than the legal issue in the case. Nevertheless, the main issue is whether there existed a contractual obligation on the defendant to treat the plaintiff fairly in relation to selection. Counsel for the defendant properly draws the distinction between whether the plaintiff was treated fairly, and whether there existed a contractual obligation of fairness as pleaded. The distinction is significant because the evidence of the conduct of others towards the plaintiff, which is said to be unfair, must be put to one side when determining the issue of whether there existed a contractual obligation of fairness. Further, if the determination is that no such obligation exists, there is then no need to consider or draw conclusions about that additional pool of evidence, because an adverse determination is fatal to the plaintiff's claim.

52 The plaintiff submits that the true jurisprudential basis for the existence of the contractual relationship between the plaintiff and the defendant is the fact of the defendant's incorporation under the Associations Incorporation Act 1987 (WA) ("the AI Act") combined with the plaintiff's payment of a membership fee. It is also said that the contractual nature of the relationship is made clear by cl 25 of the Constitution, which provides that membership of the Club implies agreement to comply with the rules of the Club, and by the statement in the application for membership that the applicant agrees to abide by, and conform to, the Club's rules. I accept the submission that both of these matters evidence an intention to create legal relations between the parties.

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53 In Zusman v Royal Western Australian Bowling Association (Inc) [1999] WASC 86 at [7] McKechnie J held that an incorporated body stands in a contractual relationship with its members. In reaching that conclusion McKechnie J considered the case of Hickman v Kent or Romney Marsh Sheep Breeders'Association [1915] 1 Ch 881 where Astbury J, after an extensive review of the authority for and against the proposition concluded (at 900) that articles regulating the rights and obligations of the members generally do create rights and obligations between them and the company respectively. Astbury J also concluded (at 903) that general articles dealing with rights of members should be treated as a statutory agreement between them and the company as well as between themselves inter se.

54 Reliance was also placed on Nurses Memorial Centre of SA Inc v Beaumont [1987] 44 SASR 454 in which von Doussa J held (at 466) that the association, being an incorporated body, is a legal entity distinct from its members. Every person who is a member of the association stands in a contractual relationship with it.

55 It was also said by McKechnie J in Zusman (at [9]) that in Ryan v Kings Cross RSL Club Ltd [1972] 2 NSWLR 79 and in McNab v Auburn Soccer Sports Club Ltd [1975] 1 NSWLR 54 the New South Wales Supreme Court affirmed the principle; so did the Supreme Court of the Australian Capital Territory in Dixon v Australian Society of Accountants (1989) 95 FLR 231.

56 Counsel for the plaintiff notes that the NSW, SA and ACT cases cited in Zusman in support of that proposition are not necessarily applicable in Western Australia because the equivalent to the AI Act in those jurisdictions expressly provide that the constitution of an association is a contract between the association and its members. However, that is not a precise summary of the terms of the relevant provisions. For example, s 23(1) of the Associations Incorporation Act 1985 (SA) provides that the rules of an incorporated association bind the association and all members of the association. Similarly, s 11(2) of the Associations Incorporation Act 1984 (NSW) states that the rules of an incorporated association bind the association and the members of the association to the same extent as if the rules had been signed and sealed by each member and contained covenants on the part of each member to observe all the provisions of the rules. This section is in relevantly identical in terms to s 14(1) of the Companies Act 1862 (UK) which was considered by Astbury J in Hickman, another case relied upon by McKechnie J in Zusman. In Hickman, the issue for consideration was whether the

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articles of association created rights between the shareholders and the company, or simply between the shareholders inter se in respect of their rights as shareholders. The statutory provision was seen as creating the latter, but not necessarily the former. After a review of the conflicting authorities on the point, Astbury J concluded (at 903), that general articles dealing with the rights of members should be treated as a statutory agreement between them and the company. It was this statement of principle which was adopted by McKechnie J and, in my view, the principle is not undermined by the absence of a statutory provision equivalent to those to which I have just referred.

57 Counsel for the plaintiff submits that the better authority for the principle identified in Zusman can be found in the New Zealand cases: See, for example, Henderson v Kane & Anor [1924] NZLR 1073; King v Foxton Racing Club (Inc) [1953] NZLR 852 (CA) and Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159 (CA) (at 177). It is said that these cases represent the common law position applicable in Western Australia because, as is the position under the AI Act, the relevant New Zealand legislation does not expressly provide that the constitution of an association is a contract. As I have already indicated, none of the legislation relevant to the decisions referred to by McKechnie J in Zusman contains such a provision.

58 The decision in Henderson v Kane was described by counsel for the plaintiff as the starting point of the New Zealand authorities which deal with the nature of the relationship between a member of an incorporated association and the association itself. In Henderson v Kane the club in question was a ladies social club incorporated under the New Zealand equivalent of the AI Act. The executive committee of the club expelled the plaintiff, a member of the club, from the membership of the club. At the trial of the action Salmond J held that there was no justification for the acts of the committee, and of a general meeting of the members of the club, in purporting to expel the plaintiff. Those acts were illegal and invalid and the plaintiff's status as a member remained unaffected. Consequently, the plaintiff was granted the declaration she sought and awarded costs.

59 However, Salmond J reserved his opinion on the issue of the plaintiff's claim for damages. His concern was whether the plaintiff's wrongful exclusion from the club's premises and her resulting loss during that period was a good cause of action and whether damages could be recoverable from the club or the individual members. His Honour concluded that, in the case of an incorporated association, the premises

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and property of the club are invested in the body corporate of the members themselves and that the precise nature of the legal relationship between the individual members and the incorporated body, and between one individual member and another, depended, at least to some extent, on the provisions of the particular statute under which the incorporation had taken place: (at 1075). In this context, Salmond J drew a clear distinction between clubs incorporated under the Companies Act and those incorporated under the Incorporated Societies Act (NZ) and observed that he had dealt with the latter of these acts alone which made it clear that membership of a society does not confer upon the members any right, title or interest, either legal or equitable, in the property of the society: (at 1075). Neither did the rules of the club qualify this general principle. However, in concluding that the plaintiff had a right to damages, Salmond J relied on a construction of the relationship between the club and the plaintiff as being one based on contract giving rise to damages for breach of the contract. The breach of contract identified by his Honour was the club's wrongful repudiation of its obligations towards a member by excluding the plaintiff from the use of the club's premises and the social and other advantages incidental thereto. He said (at 1076):

"The plaintiff in the present action, on becoming a member of the Pioneer Club, entered into a contract with the body corporate of that club by virtue of which she became entitled to the use of the club premises and the enjoyment of the other advantages of club membership in accordance with the rules of the club and in consideration of an agreed annual contribution to the assets of the body corporate. The rules of the club, so far as they purport to define the rights and privileges, obligations and liabilities which are incident to club-membership, constitute of their true legal nature and operation the terms of a binding contract between each individual member and the incorporated club itself."

60 It seems to me that Henderson v Kane stands as authority for the proposition that a contractual relationship exists between an incorporated association and a member of that association and that the rules of the club operate as the terms of the contract. It is also authority, if one should be necessary, for the proposition that expelling a member from the club or otherwise excluding a member from the premises of the club and hence the use of the club and the enjoyment of club membership, constitutes a breach of that contract.
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61 The plaintiff also relied upon the case of Rush v WA Amateur Football Club League Inc [2001] WASC 154. In Rush, the plaintiff, a player, coach and member of the Bayswater Amateur Football Club (an unincorporated association), was suspended for a period of 10 years from acting as a player, coach or official within the Western Australian Amateur Football League (Inc). The Bayswater Amateur Football Club was a member of the League as was the plaintiff himself as a result of joining the League early in his career. The decision taken by the management committee of the Football League resulted from an incident where the team coached by the plaintiff played a disqualified player under a different name. The application before Templeman J was for an interlocutory injunction restraining the Football League until trial from giving effect to the decision to suspend the plaintiff.

62 On behalf of the defendant in that case, it was submitted that the plaintiff was not a member of the League and that, in any event, he had no "civil right of a proprietary nature" as a result of his involvement with the League. However, Templeman J considered that it was clear from the tenor of the application form and the statutory declaration required with the application, that registration as a player with the League was no mere formality. It required the applicant to make a serious commitment which is reinforced by his agreement to abide by the constitution and by-laws of the League. Templeman J, relying on Hawick v Flegg (1958) 75 WN (NSW) 255 (at 259), concluded that the registered players and the league contemplated the creation of legal relations between them so as to be outside the general principle stated by the majority of the High Court in Cameron v Hogan (1934) 51 CLR 358. He therefore considered there was merit in the submission by counsel for the plaintiff that registered players, who had bound themselves to agree to abide by the constitution and by-laws of the League, would be astonished to learn that they would have no redress against the League if it chose not to abide by its constitution and by-laws in dealing with them. In short, Templeman J considered it arguable that a contract should be implied between the plaintiff and the League to the effect that the League will abide by its constitution and by-laws in dealing with him: (at 10), [31].

63 In this case, the true jurisprudential basis for the conclusion that a contractual relationship exists between an incorporated association and its members, is of academic interest only. That is because the defendant does not dispute that the relationship which exists is contractual and the terms of the contract are to be found in the constitution. For that reason, I do not propose to consider the basis for that position to any greater extent than I have already done.

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64 I propose to explore the legal framework under which the defendant organisation was created, and now operates, before determining whether the legal relationship between the plaintiff and the defendant includes an obligation of fairness, as alleged.

(i) The Associations Incorporation Act 1987

65 As indicated, the Club is an association incorporated pursuant to the AI Act and is governed by a constitution ("the Constitution"). The AI Act provides a simple and inexpensive method under which various bodies, including sporting bodies and social clubs, can limit the liability of their general members and committee members by incorporation.

66 Under the AI Act an association formed for the purpose of sport, recreation or amusement is eligible to be incorporated if it has more than five members: s 4(1)(c). For the purposes of the AI Act an association includes a society, club, institution or body: s 3(1). The application for incorporation must be accompanied by a copy of the rules of the association confirming to the requirements of the AI Act: s 5(2)(a). In this case, the rules of the association are set out in the Constitution. It follows from the fact that the defendant was incorporated as an association under the AI Act that the Constitution complied with the requirements of the AI Act: s 9(1). The consequences of incorporation relevant to this claim are that:

(i) the association becomes a body corporate: s 10(a);

(ii) that all rights and liabilities (whether certain or contingent) exercisable against members or officers of the association immediately before the incorporation of the association, become rights and liabilities of and exercisable against the incorporated association: s 10(c);

(iii) the association may sue or be sued in its corporate name: s 10(d).

67 The powers of an incorporated association relevant to this claim are that it may enter into any contract it considers necessary or desirable: s 13(1)(g). Section 14 of the AI Act identifies the manner in which contracts may be made by an incorporated association. Essentially, the section identifies a number of requirements relating to the recording of contracts between natural persons and applies them, with appropriate variations, to incorporated association. The AI Act is silent on the implication of terms into contracts involving incorporated associations and hence the common law requirements apply. However, as has been agreed by both parties, the Constitution which represents the rules of the

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incorporated association are also the terms of any membership contract. Consequently, when considering the implication of terms into a membership contract, it must be kept in mind that the terms of the Contract are set out in the Constitution which are also the rules of the association which the AI Act regulates. The rules of an association must include provision in respect of each of the matters that are specified in Sch 1: s 16. None of the matters mentioned in Sch 1 affect the resolution of this issue. However, I note in passing that there is no obligation under the AI Act to include in the rules of the association, which, in this and in other cases, become the terms of the membership contract, a requirement of fairness to members with respect to any activity of the association. The AI Act allows for altering the rules of the association. Section 17(1) requires that any alteration must be by special resolution. Section 17(2) requires that, within one month of the passing of the special resolution, notice must be given to the Commissioner, as defined in the Consumer Affairs Act 1971 s 3(1), of the terms of the special resolution together with a certificate certifying that the rules of the association as altered by the special resolution, conform to the requirements of the AI Act.

68 Part V of the AI Act identifies the powers and obligations on the management of incorporated associations. Section 20 provides that the persons who under the rules of the association have the power to manage the affairs of the association constitute the committee of the association. The remaining provisions of Pt V:

(i) require the members of the committee to disclose pecuniary interests: s 21(1);

(ii) provide that contracts are not avoided nor is a member required to account for profits derived from a contract with respect to which a member has a pecuniary interest: s 21(3);

(iii) regulate voting on a contract in which a committee member has an interest: s 22;

(iv) require the association to hold an annual general meeting within a specified time frame: s 23;

(v) define a special resolution and sets out the requirements with respect to voting on the resolution and holding and conducting the meeting at which a special resolution is to be heard: s 24;

(vi) require an association to keep true and fair accounting records which are to be submitted to members at an annual general meeting: s 25 and 26;

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(vii) require an association to keep a register of members and make it available for inspection and for copying by members without removal of the register: s 27;

(viii) require an association to keep and maintain in an up to date condition the rules of the association and to make the rules available to members on request for the purpose of inspection and for copying all or a portion of the rules without removal of the rules: s 29;

(ix) require an association to maintain a record of specified details pertaining to the office bearers or trustees of the association and to make the record available to members on request for inspection and for copying all or a portion of the rules without removal of the rules: s 29.

69 It can be seen from this summary that the AI Act includes no express requirement for the management of an incorporated association, whether a sport club or other organisation, to act fairly, either at all or in relation to selection or other processes. I confess to having some difficulty in implying any term into a set of rules constituting the terms of a contract which, as in this case, are controlled by statutory provisions as to content and which are effectively fixed until approval to amend is granted. However, because the nature of the term to be implied does not offend any of the provisions of the AI Act and because the failure to do so has the potential to operate unfairly against members of an association, I have reached the conclusion that the AI Act does not preclude the implication of a term in the contract between an incorporated association and a member of the association.

70 Further, as plaintiff's counsel also relies on the inclusion of the opposite of a term of fairness, a term allowing a member of the organisation to be treated unfairly, to support its argument, I should also add that I consider that such a term, however unfortunate and inappropriate, is not in conflict with the provisions of the AI Act.

(ii) The Constitution

71 I turn now to consider the terms of the Constitution which, as I have indicated, are both the rules of the association and the terms of the Contract between the Club and its members. The Constitution has as its object the encouragement and promotion of the playing of lawn tennis, squash and other sports and for those purposes, inter alia, to promote, hold or enter into tournaments and other competitions and matches, either alone or jointly with any other club or association, and to provide or

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contribute towards trophies and other awards: cl 3(1)(c). The Constitution identifies various categories of membership including squash members and defines the rights and privileges arising from the various categories of membership.

72 The precise terms of the object of the Constitution referred to in the pleadings, cl 3(1)(c), are as follows:

"The objects for which the Club is established are to promote and encourage the playing of lawn tennis, squash and other sports, and for those purposes … to promote, hold, or enter into tournaments and other competitions and matches, either alone or jointly with any other club or association, and to provide or contribute towards trophies and other awards."

73 The rules in relation to membership are set out in Pt 2 of the Constitution. Clause 4 of the Constitution identifies the categories of membership available under the Constitution. I note in passing that the Constitution provides for membership which does not involve participation in sporting activities. Clauses 4(d) and 8 create a category of membership, called "non-playing members", where the member is not entitled to use the tennis courts or the squash courts.

74 The membership category of "squash members" is included in par (c) of cl 4. Clause 7 provides that squash membership entitles a person to use the squash courts but not the tennis courts. Under cl 8, non-playing membership does not entitle a person to use the tennis court or the squash courts. Implicit in that provision is that the only difference between a squash member and a non-playing member is the use of the squash courts. All other attributes of membership are equally available to both types of membership.

75 Significantly, other than the reference to tournaments and other competitions in the objects, the Constitution provides no procedures or processes in relation to selection of players who wish to participate in the tournaments and competitions. Neither is the Club an association with the sole or shared responsibility for selecting players of a particular sport to participate in various competitions, including competitions at the highest level, or for selecting players to participate in a sport in a representative capacity, be it amateur or professional and where failing to act fairly might prohibit a person from pursuing his or her sporting career. Thus, the obligation which the plaintiff contends exists by implication in the contract; that is, to consider for selection in competitions any member

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who wished to be considered for selection and to select members fairly and in good faith and with regard to ability, is an obligation with respect to a process which is not even addressed in the Constitution, the selection process.

76 Management of the Club is provided for in Pt 3 of the Constitution. A committee which is responsible for the management of the Club is created under cl 26. The committee's powers are set out in cl 33. Clause 37 provides for the appointment of a person to hold the position of manager of the Club. The manager's duties can be found in cl 37(4). Although there is no provision in the Constitution for the recruitment of new members, there can be no prohibition on any member of the Club or any Club official from recruiting new members providing there is compliance with the membership requirements in cl 17. The committee is also entitled to make by-laws, including by-laws providing generally for the good conduct of the affairs of the Club: cl 64. I am advised that, at the relevant time, no by-laws had been made by the committee.

77 The process of obtaining membership is initiated by a proposal for admission to membership: cl 17. Any member may propose that a person be admitted to membership: cl 17(1). The proposal is to be in writing in the form approved by the committee and has to be seconded by another member. Each of the proposer, the seconder and the prospective member must sign the membership application form: cl 17(2). Both the proposer and the seconder must know the prospective member personally and state that the prospective member is a fit and proper person to be a member of the Club: cl 17(3). The Constitution also requires the proposal to include the name, residential address and occupation of the prospective member and to include particulars of other tennis clubs of which the prospective member is or has been a member: cl 17(4).

78 After giving notice of the proposal for at least 14 days in accordance with cl 18, the manager is required to submit the proposal to the committee: cl 19(1). It is interesting to note, in view of the defence raised in this matter, that the requirement under cl 19(1)(a) to submit the proposal to the committee at its first meeting after notice of the proposal has been given, is dependant on there being an existing vacancy for membership. If no vacancy is available by the time of the first meeting after notice is given, then the proposal is to be submitted to the committee at its first meeting after a vacancy becomes available: cl 19(1)(b). Clause 19(2) empowers the committee to require the proposer or seconder to provide it with such information concerning the prospective member as it sees fit and to postpone consideration of the admission of the

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prospective member until it is satisfied that it has all appropriate information. If the committee admits a person to membership the manager is required to forthwith notify the person. However, the privileges of membership do not commence until the applicable membership fee is paid. The Constitution provides that membership of the Club implies agreement by the member to comply with the rules of the Club: cl 25.

79 Membership of the Club confers the right to use the Club premises as, under the Constitution, a person who is not a member is not entitled to enter upon, use, or occupy the Club premises: cl 60. An exception is made for persons attending a tournament, event or function: cl 60(1). It is clear then, that the right to enjoy the Club's facilities, including the very basic right to enter and remain on the premises, is restricted to members, other than in the circumstances covered by cl 60(1).

80 There is, in my view, no other provision of the Constitution which bears on the issues in this case and no provision which contains, approximates or relates to, the terms alleged by the plaintiff to be implied terms of the Contract between the parties.

(iii) Implication of contractual terms

81 The plaintiff relies on two bases for the implication of the contractual terms pleaded. The first is implication as an incident of the law relating to corporations and the second is implication by operation of common law principles. In the course of the hearing and in closing submissions the term sought to be implied was broadly described as one of fairness. However, it is important to remember that, in fact, the plaintiff seeks to imply four terms. The first term obliges the defendant to abide by its Constitution. The second term creates an obligation for the defendant to act in accordance with, and in furtherance of, its objects. The defendant does not dispute that it is bound by both obligations, irrespective of the circumstances in which the obligations arise.

82 Also, when considering the various authorities in which terms have been implied into contracts between the parties, it is import to keep in mind that the defendant is a private member's club. One must view with caution authorities which imply terms into contracts to which incorporated associations of an entirely different type are a party.

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(a) Implication as an incident of the Corporations Law

83 The plaintiff relies on the fact that the plaintiff is a corporation as the basis for implying the remaining terms. The argument put to the Court is that it is a fundamental principle of the law relating to corporations that a minority of the members of a corporation is not to be subjected to oppression by other members or by or on behalf of the company. Further, it is said that there is a traditional role for the courts in supervising the activities of corporations. Consequently, the Court is empowered to make a wide variety of orders to prevent oppression. The oppression in this case is said to be exclusion of the plaintiff from playing competitive squash in one of the Club's teams.

84 The Corporations Act 2001 (Cth) provides, inter alia, for the registration of companies. In s 9 the term "company" is defined as a company registered under the Act. The definition also defines the term for the purposes of specific chapters and parts of the Act. For example, in Pt 5.7B and Pt 5.8 of the Act, the term includes a Pt 5.7 body. Part 5.7 of the Corporations Act relates to the winding up of bodies other than companies and has no relevant application in this case. The definition also addresses the meaning of the term for the purposes of Pt 5B.1 of the Corporations Act which is said to include unincorporated registrable bodies. Pt 5B1 provides for registering a body corporate as a company. Section 601BA provides that a body corporate that is not a company or corporation sole may be registered as certain specified types of companies. To register a body corporate as a company under this part, a person must lodge an application with the Australian Securities and Investments Commission ("ASIC") which has responsibility for the general administration of the Corporations Act: s 601BC. If an incorporated association is to carry on business in a state or territory outside the state or territory of its incorporation, it must register with ASIC under cl Pt 5B.2 Div 1 or Pt 5B.1.

85 It can be seen that, although the Corporations Act provides for the registration of an incorporated association, an incorporated association is not created by registration with ASIC and, therefore, is not a company bound by the provisions of the Corporations Act, other than in limited situations which are not relevant to this case. The incorporation of an association, and the activities of the association once incorporated, are both regulated by a commissioner of the consumer affairs authority, rather than ASIC.

86 In summary, a company differs from an incorporated association in that:

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• it is created under the Corporations Act and is subject to that Act as to its formation, constitution, management, winding up and dissolution;

• the regulatory requirements for a company are more extensive;

• a company can do business anywhere in Australia without further registration because companies operate under a nation system of administration under the Corporations Act;

• it is a structure available whether the group purpose is the gaining of profit or not.

87 "Ford's Principles of Corporations Law" (12th ed) by H.A.J Ford and I.M Ramsay (at 1.300).

88 The prohibition on oppression on which the plaintiff relies can be found in Pt 2F.1 of the Corporations Act which deals with oppressive conduct of affairs of the company. It creates a power in members of the company to, inter alia, apply to the court for relief from oppressive conduct by directors or other members of a company registered under the Act: s 233 and s 234(a). The grounds for a court order are set out in s 232 which provides that the Court may make an order under s 233 if the conduct of the company's affairs, or an actual or proposed act or omission on behalf of the company, or a resolution or proposed resolution of members, is either contrary to the interests of the members as a whole, or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members, whether in that capacity or in any other capacity: s 232(e). The proviso to s 232 states that, for the purposes of Pt 2F.1, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company. The effect of Pt 2F is to require a company and its members not to act contrary to the interests of the company as a whole and not to engage in conduct oppressive to, unfairly prejudicial to, or unfairly discriminatory against, any other members of the company.

89 Section 9 of the Corporations Act defines the term "member" in relation to a company to mean a person who is a member under s 231. In s 231 a person is said to be a member of a company if they are a member of the company on its registration; or agree to become a member after its registration or become a member under s 167 when a company converts from one limited by guarantee to one limited by shares. Again, it can be sent that the term "member" has a precise meaning and, when s 231 is read together with the definition of company in s 9, it is apparent that the term "member" as used in Pt 2F of the Corporations Act does not include

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a member of an unincorporated association. Consequently, as the plaintiff is a member of an incorporated association rather than a company registered under the Corporations Act, she has no statutory protection from oppressive conduct of the association or its other members.

90 The argument put to the Court (that it is a fundamental principle of the law relating to corporations that a minority of the members of a corporation is not to be subjected to oppression by other members or by or on behalf of the company) must be considered in the context of the statutory provisions referred to above. The AI Act does not confer on members of an incorporated association protection from oppressive conduct. The Corporations Act does, but the defendant is not an organisation registered under that Act and hence the plaintiff is not a "member" entitled to apply for relief from oppressive conduct under the Corporations Act. A protection against oppressive conduct cannot be implied into the rules applying to an incorporated body simply because it is conferred by statute on another type of body incorporated under different legislation.

91 However, that is not a complete answer to the plaintiff's argument. As I understand it, the argument on behalf of the plaintiff is that the protection from oppressive conduct was included in the Corporations Act because it is a fundamental principle of the law relating to corporations and should, therefore, be implied into the agreement between any corporate body and its members. Presumably, the inclusion of the right to apply to the court for relief arises from the traditional role of the courts in supervising the activities of corporations.

92 Counsel for the plaintiff refers to Gambotto v WCP Ltd (1995) 182 CLR 432 in which a limited liability company, registered under the then Corporations Law, passed a special resolution for the amendment of its articles of association, the effect of which was to enable a shareholder holding 90 per cent or more of the issued shares to acquire compulsorily shares held by minority shareholders for a stipulated price per share. On an application brought by two minority shareholders, the High Court held that the amendment was invalid and an alteration of that type would be lawful only if the power was being exercised for a proper purpose and its exercise would not operate oppressively in relation to minority shareholders: (at 445). It was held that an alteration to articles of association permitting the expropriation of shares would not be valid merely because it was made for a proper purpose; it must also be fair in the circumstances: (at 446).

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93 It can be seen that Gambotto is indeed a case supporting the proposition that certain actions of a corporation, albeit lawful, must not operate unfairly to a minority of members. However, it must be acknowledged that Gambotto was a case under s 260(1) of the Corporations Law which conferred on every member an express power to apply to the Court for relief from oppressive conduct of a company's affairs.

94 Counsel for the plaintiff also submits that Henderson v Kane is an acknowledgment that a member does not simply have a right to be supplied with specific services that might be supplied to a customer, a member has a status that goes beyond that. The plaintiff's case is that, as a member of a club, a person is not merely contracting for specific services, he or she is acquiring the status of a member, which means more than a mere entitlement to specific rights under the rules under which the club operates. It is said that it means more because members of corporations are entitled to freedom from oppression by other members and by the corporation as a whole. It is that entitlement to be treated fairly which differentiates between a member and a customer. There is a certain circularity to that proposition: A right to be treated fairly should be implied into the contract by which the plaintiff becomes a member because the status as a member confers an entitlement to freedom from oppression. The right to be implied into the contract is said to arise by reason of the contract.

95 It is clear to me that the conduct in breach of the contract identified in Henderson v Kane was a failure to provide or allow access to the services contracted for by the member. That conduct may well have been unfair, however, in determining that a breach of contract had occurred, there was no reliance on issues of fairness or on implied terms requiring that the club act fairly in all or any specific aspect of its obligations. The club simply did not supply the services for which the plaintiff had contracted. A failure to supply the services contracted for would constitute a breach of that contract, whether it related to a "member" or to a "customer".

96 It is said by counsel for the plaintiff that the theoretical foundation for implying a term of fairness is that persons who become members of a corporation must expect the law to protect them from oppression. Consequently, it is said, a term along the lines of the one contended for is simply one of those terms that the law attaches as an incident of contracts of that class.

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97 In my view, that submission equates a general equitable principle with a specific contractual term and elevates it into a legal requirement. In O'Neill & Anor v Phillips & Ors [1999] 2 All ER 961 the House of Lords was called on to deal with a petition claiming that a company's affairs were being conducted in a manner unfairly prejudicial to the petitioning shareholder. The petition was brought under s 459(1) of the Companies Act 1985 (UK) which conferred on a member of a company a right to apply to the court by petition for an order on the ground that the company's affairs were being conducted in a manner which was unfairly prejudicial to the interests of its members or some group of its members. This provision is in substantially similar terms to s 232 of the Corporations Act.

98 At first instance the petition was dismissed on the basis that no agreement or representation had been breached. On appeal, the Court of Appeal held that the shareholder had a legitimate expectation and the company's denial of that expectation had unfairly prejudiced the petitioning shareholder and forced him out of the company. The House of Lords held that, although a member of a company would not ordinarily be entitled to complain of unfairness unless there had been some breach of the terms on which he had agreed that the company's affairs should be conducted, equitable considerations might make it unfair for those conducting the affairs of the company to rely on their strict legal powers: (at 962). As Lord Hoffmann stated (at 966):

"In s 459 Parliament has chosen fairness as the criterion by which the court must decide whether it has jurisdiction to grant relief. It is clear from the legislative history … that it chose this concept to free the court from technical considerations of legal right and to confer a wide power to do what appeared to be just and equitable."

99 His Honour noted that one of the traditional roles of equity, as a separate jurisdiction, was to restrain the exercise of strict legal rights in certain relationships in which it considered that this would be contrary to good faith. That legal principle has, with appropriate modification, been carried over into company law: (at 967). Of course, the fact that the genesis of equitable intervention was to restrain the exercise of a legal right to prevent unfairness or a breach of good faith did not limit equitable intervention to such cases.

100 It can be seen that the expectation of protection from injustice, unfairness or oppression was an expectation based in equity. In my view,

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if persons who become members of a corporation expect the law to protect them from oppression there is no basis for concluding that such protection will lie in the implication of a contractual term.

101 In support of the plaintiff's position, and presumably by way of analogy, the Court was referred to the decision in Astley v Austrust Ltd (1999) 197 CLR 1 (at 22 – 33) [47] - [48]. In that case the High Court addressed the issue of contributory negligence in the context of concurrent liability in tort and contract for breach of the duty of care owed by a professional person to a person hiring professional services. The professional person was a solicitor and the entity hiring the solicitor's services was a public trustee company. The advice provided failed to deal with the trustee company's liability to creditors of the trust and omitted to mention the advisability of the trustee company making provision to confine liability to the amount for which it was entitled to be indemnified from the trust assets. In the majority judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ, reference was made to the decision of the House of Lords in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 where it was held that the law implied into contracts for services a promise to exercise reasonable care and skill in the performance of the relevant service and an action could be brought for professional negligence against underwriting agents both in tort and in contract where such a term was implied. In adopting the conclusion of the House of Lords as the correct view, the High Court observed (at 22):

"The implied term of reasonable care in a contract of professional services arises by operation of law. It is one of those terms that the law attaches as an incident of contracts of that class. It is part of the consideration that the promisor pays in return for the express or implied agreement of the promisee, to pay for the services of the person giving the promises. Unlike the duty of care arising under the law of tort, the promisee in contract always gives consideration for the implied term. And it is a term that the parties can, and often do, bargain away or limit as they choose … "

102 I fail to see any analogy between Astley v Austrust and the present case. It is certainly an example of the implication of a term but such cases rarely assist in determining whether specific terms should be implied in other circumstances, particularly where the nature of the contract is significantly different. Further, I fail to see the connection between the significant issue of the giving of professional advice, which can be relied on to the considerable detriment of others, and fairness in the selection

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process for sports played by members of a private sporting and social club. There is certainly an extensive body of authority on the implication of a duty to use reasonable care in contracts arising from engaging the services of professional persons, as there is on the related question of professional duties of care being the subject of action only in contract. See Lamphier v Phipos (1838) 173 ER 581 (at 583) where Tindal CJ said:

"Every person who enters into a learned profession undertakes to bring to the exercise of it a reasonable degree of care and skill."

103 However, I am unaware of any authority which implies into a contract of the type being considered in this case, an obligation to be fair and/or reasonable. Even if an implied obligation to exercise a power fairly and equitably were to exist, there is, in my view, no basis in the Corporations Law for taking a step further back and implying the existence of the power itself.

104 In my view, Astley v Austrust cannot be relied upon in support of submissions, based on the Corporations Law, of implying terms of fairness or on the validity of terms denying fair treatment, in the context of sports clubs operating as incorporated associations. The basis of the suggested invalidity of terms denying fair treatment is said to be the terms of the AI Act. However, it is said that an express term purportedly denying all of the defendant's members the right to be treated fairly in relation to selection, would be of no force or validity on the grounds that, on the ordinary principles of the law relating to corporations, it is not a term of a nature that would be authorised by the Act. As I have indicated above, there is no provision of the AI Act which would be offended by the implication of such a term. It would only be where the operation of such a general term might mean that the matters in Sch 1 of the AI Act are not effectively provided for, or that the provisions in Pt V are not complied with, that some conflict with the AI Act might arise. I am presently unable to think of any situation where the inclusion of such a term in the rules of a sporting club would have that effect.

105 Further, it is abundantly clear that the defendant corporation is not a company registered under the Corporations Act and is not bound by the provisions of that Act. The corollary is that the plaintiff is not a member as that term is defined in the Corporations Act and cannot rely on the remedies set out in the Corporations Act to protect her interests. Finally, in my view, the fact that such provisions apply in the context of the

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Corporations Act provides no support for the implication of a term of fairness in relation to a specific aspect of the activities of a sporting club.




(b) Implication of contractual terms at common law

106 The law with respect to the implication of contractual terms is well settled. However, clear identification of the circumstances in which terms may be implied does not necessarily result in ease of application to every circumstance. As Deane J observed in Hawkins v Clayton & Ors (1988) 164 CLR 539 (at 572):

"… there are sound reasons for resisting the temptation to attempt to formulate a precise mechanical test for determining what terms, if any, should be implied in a case where the parties have not sought to spell them out. Such a precise mechanical test would introduce an element of inflexibility which would be likely to lead to injustice in the circumstances of particular cases … "

107 Consistent with the need for some degree of flexibility, Deane J concluded (at 573) that where parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties only if it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. His Honour qualified that general statement of principle by stating that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties. Clearly none of the qualifications to the general principle apply in this case.

108 In other authorities it has been held that a term is not implied in a contract if the contract is effective without it: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (at 283). To my mind, that proposition is simply another version of the necessity test.

109 The importance of the criteria of necessity was also emphasised in Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337. Mason J concluded (at 346) that it was not enough that it is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract.

"For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be

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prepared to take his chance in relation to an eventuality for which no provision is made."

His Honour also referred to the difficulty of identifying, with any degree of certainty, the term which the parties would have settled upon had they considered the question. I consider that observation to be particularly apt in this case.

110 The authoritative statement of the conditions necessary to ground the implication of contractual terms, as identified by Mason J in Codelfa (at 347), can be found in the reasons of Lord Simon, delivering the advice of the majority of the Privy Council, in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (at 283). He said:

"Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be established: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."

111 The High Court has repeatedly indicated that this statement can be regarded as authoritative: see for example Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596 (at 605 - 606). However, the application of the conditions identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings are, to my mind, best understood in the context of the nature of an implied term as identified by Mason J in Codelfa (at 346):

"The implication of a term is to be compared, and at the same time contrasted, with rectification of the contract. In each case the problem is caused by a deficiency in the expression of the consensual agreement. A term which should have been included has been omitted. The difference is that with rectification the term which has been omitted and should have been included was actually agreed upon; with implication the term is one which it is presumed that the parties would have agreed upon had they turned their minds to it – it is not a term that they have actually agreed upon. Thus, in the case of an

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implied term the deficiency in the expression of the consensual agreement is caused by the failure of the parties to direct their minds to a particular eventuality and to make explicit provision for it. Rectification ensures that the contract gives effect to the parties' actual intention; the implication of a term is designed to give effect to the parties' presumed intention."

112 The point that the term to be implied must reflect the actual intentions of the parties had been emphasised by the House of Lords in Luxor (Eastbourne) Ltd v Cooper (1941) AC 108. Lord Wright said (at 137):

"The expression 'implied term' is used in different sense. Sometimes it denotes some term which does not depend on the actual intention of the parties but on a rule of law, such as the terms, warranties or conditions which, if not expressly excluded, the law imports … The law also, in some circumstances, implies that a contract is to be dissolved if there is a vital change of conditions. However, a case like the present is different, because what it is sought to imply is based on an intention imputed to the parties from their actual circumstances."

113 I propose to deal with each of the conditions noted above, with the exception of the last, which deals with the contradiction of express terms. That condition is not an issue in the circumstances of this case. In dealing separately with the conditions there will inevitably be some degree of overlap.

1. The term must be reasonable and equitable

114 It is said on behalf of the plaintiff that the implied term is reasonable because nothing could be more reasonable than an obligation to be fair. That trite observation reflects a lack of understanding of the meaning of the condition and ignores the fact that the term sought to be implied extends beyond a general obligation to act fairly with respect to the express terms of the Constitution.

115 It is an insufficient justification for the implication of a term that the term, in isolation, is reasonable, as indeed a requirement to be fair would be. It must, in all the circumstances and in the context of the Contract as a whole, be reasonable to imply the term, which is the way the condition is expressed in Hospital Products Limited v United States Surgical Corporation & Ors(1984) 156 CLR 41 (at 139). It is essential that any

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terms sought to be implied operate reasonably and equitably between the parties and are of such a nature that it was in the reasonable contemplation of the parties and would have been reasonable for the parties to agree to it: Hospital Products Limited (at 95) per Mason J; see also Codelfa per Mason J (at 346) quoted above.

116 In Peters American Delicacy Co Ltd v Champion (1928) 41 CLR 316 the High Court was called upon to imply into a contract for the purchase of goods, which included a clause to the effect that prices were subject to alteration on giving customers seven days notice in writing, a requirement that the altered prices were to be reasonable. Having identified the then relevant authorities, the Court identified the question to be determined as follows: "What provision is the Court compelled or necessarily driven to presume that the parties would have made?": (at 322 - 323). The majority concluded (at 324) per Knox CJ, Isaacs and Gavan Duffy JJ:

"It would be both unfair and unreasonable, from the supplier's standpoint, if it notified a rise of (say) 10s. a gross or 1s. a gallon to compel him by litigation, if necessary with every retailer, to enter into a full examination of his manufacturing costs and expenses to prove that the rise was reasonable, with the alternative of continuing supply at a loss."

117 Of course, in that case, the contract was construed so as to bring an end to the contract if the price rise was not agreeable to the purchaser (at 325). In the instant case, a contractual requirement of fairness could have significant consequences for the Club. Such a requirement might be construed in the context of selection for sporting teams to include; obtaining all relevant information, giving each applicant an opportunity to be heard, checking information provided, maintaining awareness of changes in performance, identifying and justifying the basis of the decisions with respect to every person in every team. The likelihood of litigation would increase markedly, not to mention complaints to management. It is difficult to accept that the management of a voluntary organisation, established to promote and encourage the playing of certain sports at an amateur and social level, would envisage such an obligation. I maintain that view despite the fact that members of the Club sometimes play competitively against other clubs and organisations. I have even greater difficulty in accepting that such an organisation would agree to it. The selection of teams could lead to litigation even where the people involved are only playing for exercise and fun. It might also prove to be particularly difficult to find a member who would be willing to accept the

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responsibility of managing or coordinating the management process. Further, it would be easy to envisage the ramifications where, although members are playing in a competition, they are doing so for social purposes as members of a private club and wish to play with others whose company they enjoy.

118 It must also be considered that the terms the plaintiff alleges should be implied into the Constitution include the following:

"4.3 The Defendant would consider for selection any member who wished to be considered for, and who was eligible for, selection as a player in tournaments and competitions between the Defendant and other clubs and associations;

4.4 The Defendant would select players for tournaments and competitions between the Defendant and other clubs or associations in accordance with a process or method which:


4.4.1 was conducted fairly;

4.4.2 was exercised in good faith;

4.4.3 had regard, inter alia, to the ability of the member as a squash player."

119 As I have already noted, the Club's Constitution does not create a system for selection of teams to play in competitions and tournaments. It is entirely silent on this issue except to state that one of the Club's purposes is to promote and encourage the playing of certain sports and to promote, hold, or enter into competitions and to provide or contribute towards trophies. The evidence is that the management are content for members to form their own team if they wish.

120 When one considers the nature and purpose of the Club and the potential consequences, I am not persuaded that it would be reasonable to imply into the Constitution that legally binds it, a framework for selection including precise obligations with respect to the selection process.

2. The term must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it

121 As is apparent from the authorities to which I have already referred, a term should only be implied into a contract if it is necessary to make the contract effective in a business sense: Hospital Products Limited (at 66);

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Codelfa per Mason J (at 346); Refinery (Westernport) Pty Ltd v Shire of Hastings (at 283); Hawkins v Clayton per Deane J (at 573).

122 On behalf of the plaintiff it is said that the implied term is necessary to protect all individual members from majority oppression. This submission misunderstands the meaning of the condition as identified in the relevant authorities. Where the condition refers to "necessity", it does not mean that the term is necessary to prevent a nominated consequence, it means that the term is necessary in order to make the contract effective.

123 The defendant's position is that the proposed implied term is not necessary to give the Contract business efficacy. The Constitution defines the membership category by reference to the entitlement to use certain facilities, not by reference to pennant competition. Further, it is said that the evidence shows that while membership is necessary to enable a player to play pennant squash for the Club, the converse is not true. A member need not play pennants and, in fact, the majority do not. Significantly, a member can play pennants for someone else without losing the entitlements of membership. I accept each of these statements of fact. Further, counsel for the defendant notes that the position might be different if the defendant were a body which was constituted for the purpose of playing pennant squash so that the Contract of membership for all its members were solely referable to that purpose. In that case it could well be arguable that the Contract lacked business efficacy if it did not include a process for selection. I accept the proposition that the test of necessity for business efficacy is more easily met with respect to the implication identified in this case, where the Club is constituted for the purpose of playing a particular sport. I would add that the argument that there is an obvious need for a selection process to be conducted fairly in order for the Contract to have business efficacy, is strengthened considerably where, as in Zusman, the club is the State association for a particular sport and carries out selection for membership of a State team.

124 In the circumstances of this case, in particular in view of the nature of the defendant organisation, I do not accept that the term nominated is "necessary" to give business efficacy to the agreement. I consider the Contract to be workable and commercially effective without the implication of the proposed term as indeed it has been for many years. Further, the full expression of the condition is that the term not expressed must be necessary to give the transaction business efficacy "as the parties must have intended": Luxor (Eastbourne) Ltd v Cooper (at 137) per Lord Wright. I am unable to conclude on the facts of this case that the proposed term was of a nature that the parties must have intended it be

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included in the agreement between them. Indeed, I consider it more likely that the defendant, and any club of that nature, would have resisted it strenuously.

3. The term must be so obvious that "it goes without saying"
125 In Shirlaw v Southern Foundaries [1939] 2 KB 206 Mackinnon LJ said (at 227): "Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying … ". In Luxor (Eastbourne) Ltd v Cooper Lord Wright's description of the circumstances in which a term should be implied can be construed as treating the proposition that the term must "go without saying", as being equivalent to the condition of necessity. He states (at 137):

"But it is well recognized that there may be cases where obviously some term must be implied if the intention of the parties is not to be defeated, some term of which it can be predicated that 'it goes without saying', some term not expressed but necessary to give to the transaction such business efficacy as the parties must have intended."

126 If the two criteria are not the same, there is certainly a substantial amount of overlap between them.

127 In support of the proposition that the proposed term is so obvious it goes without saying, the plaintiff referred to Zusman (at [31] - [33]) and also to Rush. The first observation that can be made about Zusman is that it was anapplication for an interlocutory injunction to restrain the respondent from proceeding to participate in a competition. Consequently, the only requirement was for McKechnie J to be satisfied that there was a serious question to be tried. The basis of the application considered in Zusman was that the plaintiff was treated unfairly in the course of the selection process and, as a result, was not selected in the state bowling team to play in a national competition. The respondent disputed the allegation that the plaintiff was treated unfairly and further disputed that there existed any obligation to be fair to the plaintiff or other members of the association who sought selection.

128 McKechnie J considered that, in order to examine the question of whether there is to be implied into the contract an obligation of fairness, it was necessary to look at the management structure and the selection committee. In that case, the constitution specifically provided for the election of selectors in a manner which was said to be arguably more

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rigorous than the method of selection of other office bearers. Further, there was no express power in the constitution for the executive to make selections. The conclusion drawn was that the selectors had a distinct constitutional role.

129 In determining whether there was to be implied into the agreement between the members and the association a term that the selectors would act fairly, his Honour referred to the cases on the implication of contractual terms (at 12), in particular, to the classic statement in Codelfa (at 346) per Mason J and also to Shirlaw v Southern Foundries Ltd (at 227) and the often quoted expression of McKinnon LJ prima facie, that which in any contract is left to be implied and need not be expressed, is something so obvious that it goes without them saying. McKechnie J concluded (at 13):

"In my opinion there is a serious question to be tried as to whether there is to be implied ad hoc into the contract between the plaintiff and the Association a condition that the selection process would be fair.

… A term may be implied into a contract if it is so obvious that anybody if asked would have said in effect, 'That goes without saying'."

130 However, I consider that the decision in Zusman is not authority for the proposition that a term of fairness in a selection process meets the criteria for implication in the contract between an organization such as the defendant and its members. As I have mentioned, the decision in Zusman can be distinguished because it deals only with an application for an interlocutory injunction on which the test is only that the plaintiff has established that there is a serious question to be tried. However, I consider the principal basis on which Zusman can be distinguished is that the defendant party was the State organisation for the particular sport and had the responsibility for selection of the State team. A failure to act fairly would have grave consequences for those seeking selection in the State team.

131 As I have already noted in the context of other criteria, the term must be so obvious it goes without saying that it must have been a matter on which both parties would have agreed if they had turned their minds to it. When one considers the nature of the Club and the services it provides to its members, it is not obvious to me that both the plaintiff and, in particular, the Club, would have agreed that it went without saying.

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Indeed, I can think of no reason why a club of the defendant's type, with no responsibility for selection of teams necessary for players to pursue their sporting careers, would even contemplate accepting such an onerous obligation. Counsel for the plaintiff notes that the term benefits the defendant as well as its members, because fairness in the selection of teams is likely to be conducive to success in competitions. Success in competitions is not an object of the Club. Further, ensuring that a team includes the very best players does not necessarily make the team more successful. It is often noted in the sporting world that there is a difference between a team of winners and a winning team. However, perhaps that saying does not apply in the sport of squash. In any event, I sincerely doubt the defendant Club would accept quite an onerous obligation for so little benefit, particularly where success in competition is not an object of the Club and there is no indication that success in sporting competitions is necessary or useful to its continued existence.

132 On considering the facts of this case, in particular the matters to which I have referred with respect to the "necessity condition", I am not persuaded that the proposed term "goes without saying". I am unable to accept that the members of a voluntary, private club, which has as an object of promoting and encouraging the playing of lawn tennis, squash and other sports, and the Club itself, must have intended to include in the Constitution which confers on members rights with respect to access and enjoyment of the premises and the relevant sporting facilities, a formal selection process for membership of sporting teams with obligations including fairness. Further, I have the greatest difficulty in concluding that "it goes without saying" that there would be a requirement of fairness in relation to that aspect of the Club's activities and not to others.

4. The term must be capable of clear expression

133 For a term to be implied it must be capable of clear expression and reasonably certain in its operation: Terkol Rederierne v Petroleo Brasileiro SA (The Badagry) [1985] 1 Lloyd's Rep 395 (at 401).

134 Counsel for the plaintiff argues that the proposed term, being clearly understandable, satisfies this test. However, the test is not whether the proposed term may be clearly understood. The test is whether the term, which is reasonable, necessary, obvious and which goes without saying and would have been agreed between the parties if they had turned their mind to it, is capable of clear expression. It is that term which must be capable of clear expression, not the proposed term. Counsel for the defendant submits that the proposed term is indicative of the difficulty in giving the term clear expression. It is said that the proposed term

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addresses only some aspects of an obligation to conduct a select ion process fairly. I believe that to be a valid criticism for, as the learned authors of "Contract Law of Australia" (4th ed), Butterworths 2002, by J.W Carter and D.J Harland note (at [629]):

"It is probably true to say that if the court can see, for example from the arguments of counsel, that various terms could be implied, it will be reluctant to reach the conclusion that one particular formulation was a necessary implication."

135 In Codelfa, the High Court declined to imply a term into a construction contract because it was impossible to say, with any degree of certainty, what the term would have said. In this case, it is by no means clear that it is the proposed term which the parties would have agreed on, in the event that they agreed to there being a fair selection process. Counsel for the plaintiff submits that, if the Court considers the proposed term to lack clarity, it may substitute a term that does. With respect, it is the lack of clarity which itself which prevents the proposed term or any other term differently express, from being implied into the contract. Because the terms of an agreement to conduct a fair selection process may take innumerable forms, and hence lack the necessary clarity, the only term which is capable of clear expression is a general term of fairness in complying with the defendant's obligations under the Constitution. However, the problem with taking that approach is twofold. First, it would be necessary to also imply a selection process for one type or all types of members before the implication of a general requirement of fairness would have a sphere of operation which would assist the plaintiff in her claim. Secondly, both a general requirement of fairness and a selection process would not, in my opinion, meet the other criteria for the implication of a contractual term.

136 I remain unpersuaded that the term to be implied is capable of clear expression. The proposed term is no more than one of many ways to describe a fair selection process. As Aicken J observed in Codelfa (at 375), the different ways in which a term of this nature can be expressed are a matter of speculation and "are not a matter about which I can feel sufficient certainty to warrant the implication of a term".

Conclusion

137 For the reasons to which I have referred, I consider that the plaintiff has failed to establish the contractual term essential to her claim and the action must fail. It is, therefore, unnecessary for me to make findings on whether the defendant did indeed treat the plaintiff unfairly in failing to

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select her in a women's pennants team or in failing to ensure that she was given the opportunity to play in such a team.

138 Finally, I would like to briefly refer to the time taken to deliver these reasons. Unfortunately, as a result of a lengthy illness I have had an extended absence from the Court which has led to a considerable delay between the hearing of the claim and delivering judgment. I acknowledge that such a delay is undesirable and, despite the fact that the circumstances were beyond my control, I sincerely regret the impact of that delay on the parties to the action. I am well aware that delay increases the stress on parties involved in litigation. However, in order to allay, as far as possible, the concerns of the parties in relation to whether the delay has impeded my ability to determine any factual matters, I would like to advise the parties that it is my practice on hearing an action to record, in some detail, my observations of the witnesses and, as far as possible, to draw some preliminary conclusions on the evidence of each witness. In addition to having a full transcript, the record that I made at the time has assisted me to make findings on the credibility of each witness and to draw conclusions on the accuracy of the evidence of each witness.