Genova International Soccer Academy v Suranyi Holdings - [2022] FCA 1580

Federal Court of Australia
Genova International Soccer Academy v Suranyi Holdings [2022] FCA 1580

File number(s): NSD 1372 of 2020

Judgment of: THAWLEY J

Date of judgment: 23 December 2022

Catchwords:
CONTRACTS – breach of contract – failed business venture between applicant and first respondent to run youth soccer training camps in China – construction of contract – ascertainment of parties to the contract – whether contract contained a term that the first respondent “ensure” participants at camps paid fees –– whether contract contained a term that the first respondent was required to make “reasonable efforts” to arrange two further sets of soccer camps in the first year of the contract – applicant alleged the contract erroneously omitted a reference to 3 sets of camps in the first year – held that, even if rectification had been pleaded, there was no mistake – no breach of contract established

CONSUMER LAW – misleading and deceptive conduct – where applicant paid upfront “Service Fee” to respondents for a number of matters including a five year exclusive arrangement pursuant to which the ’brand “GISS” or “Genova” would be promoted in China – whether the respondents represented the Service Fee would be recouped in the first year of contract – held that no such representation was made – held that respondents represented the Service Fee would more likely than not be recouped – held that there was a reasonable basis for making representation at the time it was made – in any event, the applicant did not enter into the contract because of the representation – whether first and second respondents represented they would promote ’“”GISS as the “central brand” of the business venture – whether first and second respondents represented GISS would become the “sole focus” of the business venture - respondents did promote applicant’s brand as the “central brand” and this was the sole focus in the sense in which that representation was made– representations not misleading nor deceptive

UNJUST ENRICHMENT – whether respondents were “unjustly enriched” by receiving the “Service Fee” under the contract – where applicant pleaded that it had not received any benefit under the contract – where applicant changed its case in opening submissions to an allegation that there was a total failure of a severable part of consideration – leave to amend not sought – whether vitiating factor existed in the form of a total failure of a severable part of the consideration – where contract was automatically terminated upon breach by the applicant or an associate of the applicant reaching an informal agreement for a third party to promote the GISS or Genova brand – where applicant had in any event abandoned any requirement for the first respondent to continue to perform the contract and failed to co-operate such that the first respondent could not properly perform its obligations under the contract – no total failure of a severable part of the consideration – application dismissed

Legislation:
Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 2, 4, 18, 236

Federal Court of Australia Act1976 (Cth) s 37M

Federal Court Rules2011 (Cth) rr 1.34, 4.01, 11.02

Cases cited:
Commissioner of Taxation v Bogiatto [2020] FCA 1139

David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471

Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498

Fitzgerald v Masters [1956] HCA 53; 95 CLR 420

Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138; 280 FCR 479

HDI Global Specialty SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296; 104 NSWLR 634

Kewside Pty Ltd v Warman International Ltd (1990) ASC 55-964

Mann v Paterson Constructions Pty Ltd [2019] HCA 32; 267 CLR 560

Nea Pty Ltd v Magenta Mining Pty Ltd [2007] WASCA 70

Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154

RP Data Pty Limited v Hardingham [2022] HCA 39

Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603

Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949

Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720; 369 ALR 299

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165

Watson v Foxman (1995) 49 NSWLR 315

Yorke v Lucas [1985] HCA 65; 158 CLR 661

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Number of paragraphs: 216

Date of hearing: 14 – 16 December 2022

Counsel for the First Applicant: Mr James McLeod

ORDERS

NSD 1372 of 2020

BETWEEN:
GENOVA INTERNATIONAL SOCCER ACADEMY PTY LTD

Applicant

AND:
SURANYI HOLDINGS PTY LTD

First Respondent

JULIANNA SURANYI

Second Respondent

SALVATORE SOTTILE

Third Respondent

order made by:

THAWLEY J

DATE OF ORDER:

23 DECEMBER 2022

THE COURT ORDERS THAT:
1.Pursuant to r 1.34 of the Federal Court Rules 2011 (Cth) compliance with the requirements of r 4.01(2) be dispensed with.
2.Leave is granted for Ms Julianna Suranyi to appear in the proceedings on behalf of the first respondent from 18 February 2022.
3.The proceedings be dismissed.
4.The applicant pay the respondents’ costs of the proceedings.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
THAWLEY J:
INTRODUCTION

The Genova International School of Soccer (GISS) is a soccer academy in Spain. In August 2018, it was wholly owned by Mr Maurizio (“Morris”) Pagniello. Mr Phillip Gorman was living in Spain, whilst his son attended GISS and played for a local team. Mr Gorman had been lending money to Mr Pagniello since January 2018 when the two began a business relationship. This proceeding concerns a failed business venture intended to run youth soccer training camps in China, branded GISS or Genova. The applicant is Genova International Soccer Academy Pty Ltd (GISA) which was incorporated in Australia on 4 February 2019 as the vehicle through which Mr Gorman and Mr Pagniello would conduct the venture. Mr Gorman was and remains the sole director and shareholder of GISA.
The first respondent is Suranyi Holdings Pty Ltd as trustee for the Cantara Global Australia New Zealand Trust. Suranyi Holdings Pty Ltd (CGANZ) was incorporated in Australia on 9 September 2016. The second respondent is Ms Julianna Suranyi. Ms Suranyi was at the relevant time the sole director and secretary of CGANZ. Ms Suranyi holds a 72% shareholding in CGANZ. The third respondent is Mr Salvatore Sottile, Mr Suranyi’s de facto partner. He was an employee of CGANZ, being its Director of Football.
GISA and CGANZ entered into a “Consulting Agreement” on 5 February 2019. The Consulting Agreement contemplated that soccer camps would be held in China under the GISS or Genova brand and provided for the respective responsibilities of GISA and CGANZ. The Consulting Agreement also contemplated the involvement of Cantara Global International (CGI) in the venture, but CGI was not a party to the Consulting Agreement. CGI was incorporated in Hong Kong and owned Cantara Football. CGI’s director was Mr Chau “Charlie” Wu.
On 18 February 2019, GISA paid CGANZ a “Service Fee” of US$280,000 plus GST (US$308,000) as required by the Consulting Agreement. No point was made about the amount being paid late. Mr Gorman funded the Service Fee.
The GISS or Genova brand or concept was launched in China on 30 April 2019 at a press conference arranged and promoted by Cantara Football (CGI) and CGANZ.
Soccer camps were held at 5 locations in China between 25 May 2019 and 2 June 2019. A total of 750 participants attended the camps. In terms of the quality of the training provided, and the attendance by participants, the camps were successful.
The Consulting Agreement contemplated that each participant at a soccer camp would be charged US$150 and that the gross revenue would be split between GISA (60%) and CGANZ (40%). Mr Gorman anticipated recouping the Service Fee out of this revenue. The Consulting Agreement provided for an increase in profit split to 70% to GISA if this was not achieved in Year 1 or Year 2. In fact, no fees were apparently collected from any of the 750 participants.
Relationships, some of which had already been strained by earlier events, began to deteriorate.
Ultimately, although CGANZ worked towards organising further camps, no such camps were held. In December 2019, Mr Gorman and Mr Pagniello were in China pursuing business opportunities with Mr Wu and others for soccer services under the GISS or Genova brand. CGANZ’s position in the proceeding was that an agreement was reached between Mr Gorman, Mr Pagniello and Mr Wu (and others) in breach of the Consulting Agreement and that it automatically terminated in accordance with the terms of the agreement. GISA’s position in the proceeding was that the Consulting Agreement had been “abandoned” by the parties during Year 1 of its operation. GISA has never purported to terminate the Consulting Agreement or asserted that CGANZ repudiated the Consulting Agreement.
GISA commenced this proceeding on 22 December 2020. The final form of the applicant’s pleadings are an amended originating application and an amended statement of claim (ASOC). The applicant’s case was narrowed during oral opening submissions.
GISA put its case in three ways. First, in contract:
(1)GISA claims that CGANZ breached a term of the Consulting Agreement that CGANZ “would ensure that each participant in any football camp paid an amount of US$150”: [12] of the ASOC. GISA claims 60% of the gross fees which should have been collected and distributed in relation to the first set of camps held between 25 May 2019 and 2 June 2019 which was in fact held at 5 locations;
(2)GISA claims that CGANZ breached a terms that CGANZ “would use all reasonable efforts to arrange” two more sets of camps at 5 locations in Year 1: [15] of the ASOC. GISA claims 60% of the gross fees which, on GISA’s case, should have been collected and distributed in relation to these two further sets of camps.
During its oral opening, GISA abandoned its previous claim for 60% of all fees in respect of all of the camps which the Consulting Agreement contemplated over the five year term, because it accepted that the COVID-19 pandemic restrictions introduced in China made performance impossible after Year 1.
The Consulting Agreement referred to 5 locations, but did not refer to 3 sets of camps. GISA asserted that the lack of reference to 3 sets of camps was a “mistake”: [14] of the ASOC. GISA did not seek rectification. CGANZ asserted the lack of reference to 3 sets of camps was intentional.
Secondly, GISA claimed that CGANZ engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL), being sch 2 to the Competition and Consumer Act 2010 (Cth). GISA initially relied on five representations made by CGANZ which it contended were misleading. In oral opening, GISA narrowed its case to only two of those representations, namely the fourth and fifth representations pleaded in the ASOC. GISA claims damages from CGANZ under s 236 of the ACL in respect of CGANZ’s contravention of s 18. GISA also claims that Ms Suranyi and Mr Sottile were liable in relation to the fourth representation because each was “involved” in the contravention resulting from the representation within the meaning of s 2 of the ACL. GISA claims that Ms Suranyi is liable in relation to the fifth representation because she was “involved” in the relevant contravention resulting from that representation.
Thirdly, GISA contended that CGANZ was unjustly enriched in the amount of four fifths of the Service Fee that GISA paid to CGANZ under the Consulting Agreement. At the time of payment, the GST inclusive amount of the Service Fee, being US$308,000, was equivalent to AU$434,864.05. The unjust enrichment claim was said to arise because the services which CGANZ were required to provide to GISA over the five year term of the Consulting Agreement were not provided in Years 2 to 5, because – GISA contended – the parties had mutually abandoned the Consulting Agreement in December 2019. It was contended that there had been “a total failure of a severable part of the consideration”, referring to Mann v Paterson Constructions Pty Ltd [2019] HCA 32; 267 CLR 560 at [168] and David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353 at 382-3.
The respondents were not represented at the hearing. They had been represented for a time during the course of the proceedings by Razor Legal. The respondents’ joint defence was prepared by their previous counsel and certified by their previous solicitor. A number of the affidavits were evidently prepared by and executed before the respondents’ previous solicitor.
The respondents’ joint amended defence, which built on the existing defence, was signed by Ms Suranyi, purportedly on behalf of each of the respondents. At the commencement of the hearing, the Court raised with the parties the fact that CGANZ could not proceed without a lawyer unless an order was made dispensing with r 4.01(2) of the Federal Court Rules2011 (Cth) and that Ms Suranyi would require leave to represent either of the other respondents.
Razor Legal had been the solicitors on record for the respondents between 21 January 2021 and 11 February 2022. On 11 February 2022, the respondents filed a “Notice of ceasing to act” which stated that Razor Legal had ceased to act as a lawyer for the respondents. On 18 February 2022, the respondents filed a “Notice of address for service” dated 11 February 2022 purportedly in accordance with r 4.03 of the Rules. It provided an address for service, being the address of Ms Suranyi as it appeared on her affidavit affirmed on 5 August 2021. Rule 4.03 did not in fact apply to the respondents’ circumstances. It only applies where a party is unrepresented when proceedings commence and later appoints a lawyer. The notice filed by the respondents on 18 February 2022 also does not comply with r 11.02 of the Rules which provides that only a lawyer may file a notice of address for service on behalf of a corporation.
Rule 4.01 of the Rules provides:
4.01     Proceeding by lawyer or in person
(1)A person may be represented in the Court by a lawyer or may be unrepresented.
(2) A corporation must not proceed in the Court other than by a lawyer.
Note 1:    Corporation and lawyer are defined in the Dictionary.
Note 2:    A notice of address for service for a corporation must be filed by a lawyer--see rule 11.02.
Note 3:    The Court may dispense with compliance with this rule--see rule 1.34.
Rule 1.34 confers a discretionary power to dispense with compliance with any of the rules, including r 4.01(2). It is a “broad [discretion] to be exercised judicially depending upon the existence of a sufficient cause”: Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949 at [4], cited with approval in Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138; 280 FCR 479 (Markovic, Derrington and Anastassiou JJ) at [23].
The Court is cautious in permitting a non-lawyer to appear and represent a corporation, but the guiding principle is the attainment of justice having regard to the particular circumstances: Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720; 369 ALR 299 at [82] (Beach J). Beach J identified the following as relevant at [82] and [83]:
·the financial capacity of the company and those standing behind it; in this respect, the identity of the shareholders and the spread of the shareholding is relevant;
·the capacity of the proposed representative to conduct the case effectively having regard to the skills, qualifications and experience of that representative;
·in assessing the capacity of the proposed representative, whether they have any real understanding of Court processes and whether they have any language difficulties which may impede their effective conduct of the case;
·the complexities of the case, for example, if the proceeding involves difficult questions of law, leave may not be granted;
·whether the overarching purpose prescribed by s 37M of the Federal Court of Australia Act1976 (Cth) would be promoted by the grant of dispensation;
·whether a lack of disciplinary measures available against the proposed representative may affect the administration of justice;
·the manner in which the case has progressed to date and the manner in which it may progress without the company having legal representation; and
·whether the proposed representative is also a witness and, if so, whether they will properly be able to conduct the case of the company whilst also being a witness.
·whether the company is a respondent as opposed to being an applicant or a cross-claimant, such that a more liberal approach to dispensation may be warranted concerning the grant of dispensation.
Ultimately, the Court must exercise the power in r 1.34 to dispense with the requirement in r 4.01 in the way that best promotes the overarching purpose: s 37M(3) of the Federal Court of Australia Act 1976 (Cth).
At the hearing, with the consent of all of the parties, the Court dispensed with compliance with r 4.01(2) from 18 February 2020 and the Court granted leave to Ms Suranyi to represent CGANZ. GISA consented to this course. Counsel for GISA agreed that GISA had not had any difficulties to date in conducting the proceedings with the respondents being unrepresented or informally represented by Ms Suranyi. Although it would have been preferable for there to have been evidence on the point, it appeared that CGANZ was unable to fund legal representation. The Court took the view that the orders would facilitate the just resolution of the dispute between the parties as quickly, inexpensively and efficiently as possible. Leave was not granted for Ms Suranyi to represent Mr Sottile.
In setting out the written and oral communications between the parties, and the content of documents, I have extracted verbatim what was written and said, including errors and formatting.
BACKGROUND FACTS
Early dealings
In August 2018, Mr Gorman was living in Spain where his son was attending the GISS soccer academy and playing for a local team. Mr Gorman had been lending money to Mr Pagniello since at least January 2018. Mr Gorman and Mr Pagniello set up a company in Spain, named Genova International School of Soccer Spain. Mr Gorman was a director for a time, but resigned when he came to understand that he could not hold that position if his son was playing soccer in Spain.
By August 2018, Mr Gorman and Mr Pagniello were discussing the idea of setting up a soccer academy in China. On about 25 August 2018, Mr Sottile visited Mr Gorman and Mr Pagniello in Spain. Mr Sottile and Mr Pagniello had been (and remain) friends. Mr Gorman and Mr Sottile discussed the possibility of working together on a venture in China. Mr Gorman probably also spoke with Ms Suranyi in telephone conversations around this time.
After Mr Sottile’s visit, Mr Gorman and Mr Pagniello agreed that Mr Gorman would “invest” (to use Mr Gorman’s word) in the project. They agreed that Mr Pagniello would reimburse Mr Gorman for half of the initial investment and that, once he had done so, they would share equally in the profits. Mr Pagniello told Mr Gorman that he considered the venture would make a lot of money.

Mr Sottile visited Madrid between 11 and 21 January 2019. He had a number of conversations with Mr Gorman and Mr Pagniello. Mr Gorman gave the following account of a conversation between him and Mr Sottile on 19 January 2019:
[Mr Sottile]:      I have been working with Julianna and the owner of Cantara, Charlie, to set up Talent ID camps in China. Eventually we want to set up a Football academy in Zibo.
[Mr Gorman]: Oh yeah, that sounds like a good opportunity. How would that work?
[Mr Sottile]:      Charlie has family and political connections in Zibo, so we would use those connections. Marketing would be sorted by our marketing team in China who will use WeChat.
[Mr Gorman]: Sounds good to me. I’m interested.
[Mr Sottile]:      There is a need for this type of business and we think it will be profitable immediately. We do not think it will be difficult to get into the market, but we want it to be a long-term venture and market it as such. If you are interested we will have to enter into an exclusive arrangement.
[Mr Gorman]: I’m fine with that. I also wanted to see what you thought about me taking some players to go over to GISS in Spain.
[Mr Sottile]:      We will have talk about that later. Let’s focus on China for the time being.
Mr Gorman says he had a telephone conversation with Ms Suranyi at some stage in January 2019, during which the following was said:
[Ms Suranyi]:   You will need to pay $280,000US to secure marketing and player fees. Then any revenue that is earned at the camps will be divided 60% to you and 40% to Cantara,
[Mr Sottile]:     It’s a very large upfront fee. I would be more comfortable if we could put some of the money in trust and after the first year we can release the balance of the monies.
[Ms Suranyi]:   Our board has already compromised. We are going to promote Genova exclusively and not Cantara so that is all they are prepared to do. There is an Italian Academy that wants to take our offer but Cantara would prefer to do the deal with you. We can be a little negotiable but not to that extent. You should be confident that this is a long-term, profitable venture for us.
At [23] of his first affidavit, Mr Gorman gave the following evidence:
[23] At around the same time [January 2019], in the foyer at Hotel Tryp in Leganes, Madrid, Salvo and I had a conversation to the following effect:
Me:I’m really concerned about paying the whole consultancy fee upfront. How long is it going to take to be repaid?
Salvo: Let me call Julianna and ask.
Salvo then called Julianna. At this time, I was sitting across from Salvo. I heard Salvo said words to the following effect: “Phil is worried about the upfront fee.” He then laughed and then said to me, whilst still on the phone: “Julianna says that the fee would be recouped in the first year.”
Mr Sottile flatly denied that this conversation occurred in the way reported by Mr Gorman. He denied that he ever promised that the Service Fee would be recouped in the first year.
At [24] and [25] of his first affidavit, Mr Gorman gave the following evidence:
[24] Following this discussion, I had subsequent telephone conversations with Julianna during which words to the following effect were spoken:
Me:I am still a little nervous about the size of the Service Fee. It is a lot of money.
Julianna:I understand, but returns will be immediate - you will get back the fee in the first year. This is going to be a long-term, profitable venture for us all.
Me:So it is definite that as I am going to be paying such a large amount of money will Cantara be exclusively promoting GISS?
Julianna:Yes, that is the plan. We will be focusing on the branding and development of GISS, not Cantara.
[25] Because it was such a large investment for me and I was redrawing the loan on my home, it was critical that the Service Fee would be recouped in the first year of the Agreement. Without the assurances made by Salvo in paragraphs 23 and 24 above I would not have entered into the Agreement.
Ms Suranyi denied that there were conversations which occurred in the way reported by Mr Gorman. In particular, she denied that she promised Mr Gorman that he would get the Service Fee back in the first year. She agreed that she stated she would be focusing on the branding and development of GISS.
On 22 January 2019, Ms Suranyi sent Mr Gorman an email discussing the draft contract and attaching a spreadsheet entitled (the Forecast):
“CANTARA COOPERATION FORECASTE 2019-2024 for CHINA ONLY”.
The Forecast, or parts of it, were used to form Addendum B to the Consulting Agreement which sets out key performance indicators (KPIs).
Mr Gorman responded to this email on 23 and 29 January 2019, which included him inserting annotations to Ms Suranyi’s email of 22 January 2019. Ms Suranyi’s email (with Mr Gorman’s annotations underlined) included:
I have presented working with GISS exclusively for an indefinite period of time to our Board.
As such I have outlined the feedback and what we will want to achieve within the next month so we power into the marketplace with the right foot forward.
Salvo has expressed his opinion that this a powerful, long term and stable connection. As such it means we would, as Cantara Global, slightly but significantly, shift our push into China.
Currently our push into China was based off the connections of our Stakeholders in the mother company, and some national team players (one whom you met) but with this Cooperation Exclusive Agreement (JV in our worlds) it would mean that our sole focus will be on branding, building, executing and growing GISS not Cantara Football (CF) as the central Brand. CF would become the engine room as such. Due to this shift, and the commitment and exposure should GISS not provide (which to me is a very minimal risk but still there) the Board has determined the following to ensure we are all safe, content and able to grow this long term;
•The fee of $280,000 USD is a paid in full position to execute the Agreement.
•We will amend the contract terms to state a 5 year plus 5 year option without a fee renewal for the option. This in essence means that GISS would not have to pay the $100,00 USD/ year or any such amounts for the renewable period.
•An up front fee of $140,000 USD will be paid to Cantara Global on signing of the agreement between GISS and Cantara Global. The additional $140,000 USD will be paid to Cantara Global within 5 months of the signed agreement between GISS and Cantara.
•The share split will be increased by 10% to our Cooperation partner (GISS) 60% from 50%. I have attached the Cooperation Agreement Budget we would be running so you understand we need full time staffing and marketing etc to keep this relevant and in the forefront of thinking. We cannot drop below this 40% or it will not be a long term sustainable position to grow, as opposed to simply a grab for cash at each Camp.
…
•On signing of contract and execution of the fee will will immediately ( within 3 weeks as we will need to issue you and Morris-if he is attending- with Letters of Invitations so you can get work Visas for China) move our strategic team to Beijing to establish a 5 day ( be prepared for 5-7 days) strategy debrief and workshop. This is out of respect for the acceptance of terms as it usually a cost additional to relationships. We will cover the following;
1.The brand image
2.The brand core messaging
3.The brand digital strategy
4.The brand media strategy
5.The brand PR strategy
6.The Y-frame (skeleton) of the GISS global website and this will then be executed in China- in full Chinese- to drive the marketing and point of sale
7.Upon closure of each block of Camps CF will give the full financials of the camps income to GISS and GISS will present CF with an invoice for the agreed costs and settlement will occur within 7 working days.
It is our understanding that Cantara Global will be responsible for the costs associated with running the camps in China.
The Forecast attached to the email set out forecast income for Years 1 to 6 and referred at Year 7 to the “Opening of Club”. In relation to Year 1, the Forecast referred to 300 attendees, paying US$150 each, at 5 locations, for 3 sets of camps. This was predicted to yield US$675,000 which would be split 50% to “Cantara” and 50% to “Cooperation”, namely US$337,500 each. It was common ground that these figures were in US$. The amount of US$675,000 is derived in the following way: 300 participants x US$150 participation fee x 5 locations x 3 sets of camps (per location). Forecasts were given for each of Years 1 to 6.
At some time between 22 and 29 January 2019, Mr Gorman and Ms Suranyi discussed the KPIs which had been used in the Forecast. Ms Suranyi left an audio message for Mr Gorman on WhatsApp stating:
Hey no problems at all I’m just putting in those KPIs. The first year I’ve halved it because I think we should be conservative whilst still aiming for the 300 and year 2 onward is not an issue so I’ve left it exactly as is. Okay so I’ll get that sorted and get it to you.
The audio recording of this WhatsApp message was tendered in evidence when Ms Suranyi gave evidence at the hearing.
On 29 or 30 January 2019, Ms Suranyi sent Mr Gorman an email stating:
As discussed and I have been more conservative year 1 - we are aiming for 300 maximum though.
It is also very important to remember that Morris stated we would have a high profile brand attend so we can leverage. This person must be recognizable internationally not just in the Spanish domestic league.
Attached to this email was a draft Consulting Agreement, with Addendum A and B. The draft contemplated that the parties would be CGANZ and GISS. Addendum B was evidently prepared from the Forecast. Addendum B was, however, different to the Forecast in a number of respects. It began with the opening words:
Addendum B
KPI Agreement
It is agreed the service is to be measured against the following KPI for Years 1 and Years 2 of the Consulting Agreement and are also subject to Section 21 Agreed Terms point 1; GISS providing a high profile Chinese recognised branded Player or Coach. Should the KPI not be met due to the Cantara positioning or execution only, a reimbursable increase in the gross revenue share will come into effect.
GISS gross revenue share will increase an additional 10% for Years 1 and Years 2 should the KPI faulter to recover the initial outlay of the Service Fee amount having been paid upfront.
The following is the KPI schedule…
In respect of Year 1, Addendum B referred to 150 attendees at US$150 at 5 locations. Although there was a column for the number of camps, the column was not populated. Unlike the Forecast, there was no estimate of gross fees or the split of those fees.
Mr Gorman stated in his first affidavit that he considered the reference to 300 in Ms Suranyi’s email to be a reference to US$300,000. At the time his affidavit was made, Ms Suranyi’s WhatsApp audio message was not in evidence. For reasons given below, I do not accept that Mr Gorman understood the reference to 300 as a reference to US$300,000.
On 3 February 2019, Mr Gorman sent Ms Suranyi an email raising a few issues in relation to the Consulting Agreement, one of which was changing the contracting party from GISS to GISA. No changes were requested by Mr Gorman to Addendum B.
Ms Suranyi responded on 4 February 2019 attaching a further draft of the Consulting Agreement implementing the various alterations which Mr Gorman had requested. Her email also raised a concern about whether Mr Gorman and Mr Pagniello were the major shareholders of GISA.
As noted earlier, GISA was incorporated on 4 February 2019.
The contract
The contract was executed on 5 February 2019 by Mr Gorman and Mr Sottile. It was signed at a dinner at which Mr Pagniello and others were present. Mr Sottile gave evidence to the effect that he looked through the contract carefully and that it had been “discuss[ed] during the whole day”: T186.28.
Clause 1 provided:
Services Provided
1.The Client hereby agrees to engage the Consultant to provide the Client with the following consulting services (the “Services”):
•GISA will be engaged by CGANZ under the umbrella of Cantara Global International a China Based Company for a Cooperative Agreement (Consulting Agreement) for the period of 5 years from the signing of this document. Upon completion of the five-year exclusivity period a new Agreement may be entered into with a new set of ‘proposed terms without exclusivity fees’ between each party.
•This may be updated to either 21(9) or 21(11) at timeframe appropriateness.
•GISA will enter into an exclusive agreement with CGF to deliver Football Services and Products into Mainland China all Chinese provinces and Queensland Australia.
•GISA will enter into an exclusive agreement with CGANZ for CGF to be the sole provider of their services from the regions of; Mainland China and all Chinese Provinces and conversely back into their Spanish based Academy and Activities.
•Any existing relationships and interest CF have from Spain – and any regions GISA already have formalised Agreements and/or networks that can be leveraged will become exclusive to GISA and create grounds for a further extension to the current Agreement between both parties. These documents will be prepared separately and then be formalised in due course.
•GISA confirm they will enter into no other Agreements either formal or informal that will state any other entity will trade in China with the GISA main company or associated companies, shareholders or office bearers or investors from or know to be with GISA. Employed staff are exempted from this inclusion and term. Should this be breached the Agreement is immediately terminated.
The last bullet point is of some significance in the unjust enrichment claim. It is referred to below as “the sixth bullet point in cl 1”. All of the parties agreed that the reference to “CGF” should be read as a reference to “CF”, namely Cantara Football, which the Consulting Agreement identified was owned by CGI.
Clause 21 provided:
21. Agreement Terms
The option for GISA and CGANZ to enter into a mutually exclusive agreement of trade. This being that;
GISA will deliver into CGANZ and CGF exclusively for the agreed territories and countries of China Mainland and all Chinese Provinces and Queensland Australia the associated networks and Football Clubs the following:
1.   GISA will provide high level Branded names for Coaching workshops and PR assistance. This person must be able to be a high-profile Chinese recognised branded Player or Coach. This selection must be approved by both parties in order to confirm the marketability and to move to execution stages of the contract. This is critical as it is the point of difference in the Branding.
2.   GISA will provide Football Products as need to support the brand GISA during the Talent Camps; jerseys, training kits or collateral as agreed on.
3.   GISA will provide Football camps and deliverable for Football development
4.   GISA will provide UEFA qualified and recognized Coaching level staff for all activities.
5.   GISA will pay all Coaching staff; fees/wages, airfare, transit fees
6.   CF will pay for the on-ground costs; venue hire, marketing platform marketing running fees and coaching staff accommodation.
7.   Provide talent scholarships via the GISA European contracted Clubs and networks.
8.   Provide talent opportunities via the GISA European contracted Clubs and networks.
9.   Provide talent agent and management services
10.   A total Service Fee of $USD 280,000 plus GST for the five years exclusive period from date of Agreement is paid to; confirm terms, execute and secure CGF networks and exclusivity. If not paid in full to secure the five years exclusivity plus 5 year option; the total Service Fee of $USD 100,000 plus GST will be payable per year on written agreement and terminable by CGF with one-month notice. This Service Fee is in relevance to the KPI in the Addendum B (attached)
11.   Upon completion of the five-year exclusivity period a new Agreement may be entered into with a new set of ‘proposed terms without exclusivity fees’ between each party.
12.   The share split will be increased by 10% Gross to our Cooperation partner (GISA) to 60% Gross from 50% of Gross revenue. CF will hold a 40% Gross revenue position.
13.   There will be an option at any period of time should you wish to discuss Shareholdings. However, the initial $220,000 USD will be a separated amount and not form part of that buy-in should we move to shareholding.
14.   All GISS activities will be planned year in advance so that we build the brand to the point of closing off dates well in advance to demand and therefore paying out GISA so we build the model to carry limited upfront cost to both parties as of Year 2.
15.   CGF will manage and execute ALL and EVERY delivery into Club Presidential, Ownership and Technical level. There is NO direct communication between GISA Staff, Contractors, Owners or Associates other than through CGI and CGF Directorship.
16.   Brand Design, Management and Execution for GISA China will be the sole directive of CGI and CG due to content commerce legislations. As per Addendum A (1) ( attached)
17.   PR Design, Management and Execution for GISA China will be the sole directive of CGI and CG due to content commerce legislations. As per Addendum A(2) ( attached)
18.   Breach of this will immediate terminate the GISA provisions and all work to date, collateral and relationships shall remain the ownership and intellectual property rights of CGF.
Clause 27 provided:
Entire Agreement
27.It is agreed that there is no representation, warranty, collateral agreement or condition affecting this Agreement except as expressly provided in this Agreement.
Addendum B was in the same form as it was in the earlier draft.
Payment of Service Fee and payment to Mr Pagniello
Mr Gorman arranged for payment of the Service Fee and it was paid to CGANZ on 18 February 2019 in an amount totalling A$433,864.05. There was no dispute that this represented US$308,000 at the time it was paid.
CGANZ paid an amount of A$138,000 to Mr Pagniello on 19 February 2019. A significant amount of evidence was directed to the question whether Mr Gorman knew about this payment. Mr Gorman denied any such knowledge. Mr Pagniello’s evidence was to the effect that he had discussed it with, and it was agreed to by, Mr Gorman. Mr Pagniello stated that it was to be used for GISA’s expenses including the cash payments to be made to coaches who would conduct the camps in China. Mr Suranyi’s evidence in cross examination was that she discussed the payment with Mr Gorman in a conversation or conversations at which others were present. There was no clear suggestion of this in her affidavits.
The payment of A$138,000 was not relied upon as founding any cause of action or as being otherwise relevant to the establishment of the pleaded causes of action. The only reliance placed by GISA on the evidence on this topic was to support the contention that Mr Gorman’s evidence was more reliable than the evidence of Ms Suranyi and Mr Pagniello. Whilst I think Mr Gorman’s evidence on this topic is more likely to be accurate than the evidence given by Mr Suranyi and Mr Pagniello, I do not conclude that Mr Gorman’s evidence was uniformly more accurate. By way of example, Mr Gorman’s evidence about the reference to 300 in Ms Suranyi’s email of 29 January 2019 being a reference to US$300,000 was not reliable. Each of the witnesses gave evidence which is unlikely to be accurate in all respects.
I accept Mr Gorman’s evidence that he was not aware of the payment of A$138,000 by CGANZ to Mr Pagniello at the time it was made. Mr Gorman first found out about the payment during the course of this proceeding. There was no contemporaneous document which suggested that Mr Gorman was told about the payment. It is unlikely that it would not have been mentioned in any of the contemporaneous documents if it had in fact been discussed with Mr Gorman.
The workshop on 4 March 2019

Mr Wu sent an email to Mr Gorman, Mr Pagniello, Ms Suranyi and Mr Sottile on 23 February 2019. This email referred to a planned “workshop day” to be held on 5 March 2019 at which the attendees would go through several key areas. These were identified as follows:
•When will the Camps be held ( Confirmed)
•What specific venues will we choose
•Who will be the ‘celebrity/name’ who will guest Coach that camp so we can leverage the PR
•The above point will dictate finalizing alliances with potential venues, media, partners and collaborators. This decision on this person is critical to create the initial trust equity of the GISS brand into China. Essentially saying we can ‘deliver’ what the hype is about.
•How will the brand strategy go?
•How the camps will; look, feel and be delivered on
•How we will manage the internal Marketing and systems needed
•Protocols and such things needed to grow the brand strongly and
•Other items we will need to strategise on.
The email asked if there was an idea as to who the celebrity coach would be.
The workshop was held on 4 or 5 March 2019 at the Beijing Hotel as had been anticipated. The attendees were Nicole Fisher, Maddison Done, Mr Sottile, Mr Pagniello, Mr Gorman and Ms Suranyi. The discussions which occurred were reported to the China based marketing team which was to build the WeChat Mini App and other marketing material to be used in promoting GISS in China. Ms Suranyi and Mr Sottile stated that it was made clear that the WeChat Mini App would be run by Cantara Football and that the GISS name and logo would also appear on all of the information. It is likely this was discussed. The Mini App contained references to both Cantara Football and GISS. I consider it likely that there was discussion about the fact that CGI, which owned Cantara Football, would as the relevant Chinese entity, be the entity which would run the Mini App.
The respondents made much of an incident at the Beijing Hotel on 9 March 2019 when Mr Gorman had too much to drink and caused some damage to hotel property. Mr Gorman denied damaging property. I conclude it is more likely than not that he did, accidentally. It was principally as a consequence of this event that Ms Suranyi sent around a Code of Conduct which she asked Mr Gorman to sign. This event caused some tension in the personal relationships between the individuals.
On 3 April 2019, Mr Sottile sent an email to Mr Gorman attaching presentation slides. The subject of the email was:
GISS & CANTARA FOOTBALL CHINA ID CAMP presentation CHINA MAY 2019
The attached presentation opened with a slide entitled “CANTARA FOOTBALL & GISS – CHINA ID CAMP STRATEGY”. It included:
MARCH 30 - APRIL 12
BUILD – CANTARA ANZ & CHINA TEAMS
Website build, Chinese marketing design.
APRIL 13
EXECUTION – CANTARA ANZ & CHINA TEAMS
Website booking platform is live
Marketing activity begins driving online bookings
…
HONESTY & TRANSPARENCY
It’s important to the Chinese population that these camps don’t look like a money-making grab. We cannot organise our own additional events to try and further monetise the attendance of a famous coach / player. The Chinese people will think we do not care about training their children - just making money. We must be smart about the sponsorships associated with GISS and the famous coach / player.
The famous coach / player in attendance and GISS may be paid for private corporate events during this time, but only if there is no football industry conflict and if it is not organised by GISS to make money. Each sponsorship/event opportunity must be evaluated by the entire GISS/Cantara team on a case by case basis, to judge whether this is a positive choice for the brand.
…
LONG TERM STRATEGY
The focus on this Initial launch camp In May needs to be about building mass brand recognition and a strong brand for GISS in China. We must remember that this first camp will not be highly profitable (if we think this way it will not be successful), but rather as a first step to a more permanent and lucrative presence in China over a longer period of time. Once we launch and are respected here in China, the sky is the limit to the lucrative opportunity we can develop with GISS for ongoing camps and academies.
The launch on 30 April 2019
The press conference at which Cantara Football launched the GISS or Genova brand was held on 30 April 2019. It had been anticipated that Mr Fernando Morientes would attend the launch. Mr Morientes is a professional footballer of international repute who had, amongst other things, played for Real Madrid. His participation was seen by Mr Suranyi as an important means of distinguishing the GISS brand as something special. GISA had been responsible for arranging for Mr Morientes to be in China for the launch. At the airport however, Mr Morientes was not allowed to board the flight, it seems as a result of not having a visa or the correct visa. Mr Suranyi and Mr Sottile were informed about this about four hours before the launch. Mr Suranyi arranged for Mr Morientes to record a video which was ultimately played at the launch. Nevertheless, the fact that Mr Morientes did not attend the launch caused Mr Wu significant upset. It also had the result that some entities with whom CGANZ and CGI had been dealing lost trust and reconsidered whether to send participants to proposed camps.
There were two photos of the launch in evidence which showed the name Cantara Football and Genova. In cross-examination, Mr Gorman agreed that, in the photos of the event which were sent to him, all of the stakeholders were wearing GISS jerseys and the GISS jerseys were draped over all of the tables: T63. As is explained further below, I conclude that Cantara Football used its name to launch the GISS and Genova brand in China. It was the GISS or Genova brand which was the predominant brand on display and the sole focus of the launch.
On 8 May 2019, Ms Suranyi sent an email to Mr Gorman, Mr Pagniello, Mr Sottile and Mr Wu reporting on the launch. The email included:
Event
Launch Day for the announcement of GISS into China was held on the 30th April at 4.30 PM China Beijing time.
Launch Initiative
To inform the China broad stakeholders, media and associated football areas/clubs that GISS was launching exclusively through Cantara and would be bringing professional ID Camps into China. These camps would be the opening to have a permanent Academy style facility within China and would be a player pathway into Europe.
Feedback from Parent test pool in attendance
• 1000 RMB needs to be justified with more ‘bang for buck’ so the following was discussed; all jerseys signed by Coaches, a membership site attached where Salvo will develop weekly Tips and they can access to build our Football footprint and that we will work for the first ID camps directly with Football clubs to help support re GISS brand strength.
• There is an overall suspicion of whether GISS is capable to do what it says only in the context that this style of European football is new in China in general and not just a ‘franchised name’ such as Juvi or AC Milan.
Positives
• the event was produced, run and managed professionally
• Morris handed himself with the utmost of professionalism and charisma and earnt the local clubs respect
• Educational areas are interested in follow interviews with Cantara Executive for capacity to expand within their existing Academy systems.
Negatives
• Mr Fernando Morientes non attendance
• The lack of contact details from those attending from Spain
• A break in faith of some local partners due to the lack of attendance by Mr Morientes. The local Chinese are skeptical that GISS is any different to ‘franchised brands’ and thus the incident with Mr Morientes reinforced that maybe GISS doesn’t have the capabilities we have advertised. Please note one copy of just one feedback from a local agent who could feed attendees to the ID Camps as he has 2000 players at his current Academy. He is now skeptical to do this.
Overall
In summary the launch was a success in getting across to the media and local partners what it is that GISS is in actuality. The follow up dinner allowed for reach to further stakeholders within; Corporate and Educational structures went well and connections were made and in the process of being followed up.
Moving into a higher level of reach in China was never going top be an easy task- as we are seeking longevity not a simple snatch for cash mentality.
However there were core issues that we need to resolve to not happen in future.
The primary ones being;
• all attendees from GISS must have a current and valid business visa and NOT a transit visa or they will not be able to move around to each region due to transit visa restrictions
• all GISS attendees must be given to Cantara in writing 2 months out from each camp. GISS will need to supply their passports so that Cantara can issue them with a Letter of Invitation.
• all GISS Guests details must be issued to Cantara so if an issue occurs we may try to be of assistance so that a no show is eliminated and
• we must pay attention and adjust as needed- in advance- for any dates agreed too between GISS and Cantara for ID Campos or any other activities
The training camps
Mr Gorman booked flights and arranged for money to be paid to coaches who Mr Pagniello had arranged to attend the first set of training camps. The coaches were Mr Morientes, Mr Miguel Porlan Noguera and Mr Walter Pandiani. They were paid, respectively, A$34,088.97, A$17,905.87 and A$9,958.46, largely in cash. The total cost of flights was A$8,816.78. The total cost for visas was A$1,560.
The first ID camp commenced in Beijing on 25 May 2019. The camps were then conducted at four other locations over the ensuing days. The camps concluded on 2 June 2019.
In cross-examination, Mr Gorman agreed that all of the children who attended and all of the coaches wore GISS or Genova jerseys: T64. Mr Gorman did not attend the camps, but was sent a number of photographs.
Even before the first set of camps had concluded, Mr Gorman sent messages to Mr Sottile asking about the numbers of participants. On 31 May 2019, Mr Sottile responded to one such inquiry on WhatsApp stating that “Julianna [Suranyi] will be in China next week to organiser all the account with Charlie [Wu]”. Mr Gorman sent a WhatsApp message to Mr Sottile with his bank account details on 3 June 2019.
On 9 June 2019, Mr Sottile forwarded to Mr Gorman an email from Ms Suranyi to Mr Sottile, copied to Mr Wu. Ms Suranyi’s email stated:
As we have now completed the GISS ID Camp, and are all back in the various offices, both in China and Australia, on Monday (10-06-19), I thought I would send you this update so that you may inform Morris and Phil.
On Monday, we are emailing all the Clubs/Entities we collaborated with for the following;
• the full player attendee register. This will then allow us to reconcile it against the main Cantara register so that we will be able to reconcile this for the settlement.
What we know is that we reached the KPI for the 5 locations. This total number of attendees being 750.
Once we have this reconciliation we will be able to give you the settlement date.
Mr Gorman sent WhatsApp messages to Mr Sottile inquiring about the money from the camps on 18 and 26 June 2019.
On 19 June 2019 Mr Gorman sent a WhatsApp message to Ms Suranyi which stated:
Hi Julianna. I have sent messages to Salvo and would like to know when the money will be received into the account. When we where in China it was said money would be paid 7 days after it was received by Cantara, is their a problem? This is the Australian account [BSB and Account number].
On 20 June 2019, Mr Gorman and Mr Suranyi exchanged WhatsApp messages which stated:
Ms Suranyi:Morning- sorry I was asleep when your message came in. No problem we are simply waiting on the clubs reconciliation of players and costs to finalise it all. They should have had it to us already but it’s not. Until that is received China won’t settle out. I’m actively pushing this for us
Mr Gorman:Thanks, would be good to get it wrapped up. Is there any way for future payments to be made directly to us?
Ms Suranyi: No it doesn’t work like that. Same with all trades/services that are mini app based. Goes to App first. Then disperse to client ( China based company) bank account then we request transfer to client.
Mr Gorman:Ok
On 26 June 2019, Mr Gorman’s and Mr Sottile exchanged WhatsApp messages, some of which included:
Mr Gorman:Hi Salvo, is there any word on the money from camps yet, is there a problem?
Mr Sottile:Hi Phil there isn’t any problem it’s just the process of payments ! I just sent you a email with some information and request from China office
Mr Gorman:Thanks Salvo, when I get home I will send those details to you I obviously can’t send the invoice until I receive the exact amount to be invoiced.
Mr Sottile:Thank you phil , I will asking to China to send me the exactly amount to add on invoice
Mr Gorman:Cheers Salvo just keep me in the loop even if it’s to say you are still chasing them, I don’t like to bother you. Hope alls goes well with the camps in Australia
Mr Sottile:All good I will fix this I’m sure after we fix the process for the first payments then will be easy for the next one
On 3 July 2019 Mr Gorman sent a WhatsApp message to Mr Sottile inquiring about the money from the camps.
On 12 July 2019, Mr Gorman sent a WhatsApp message to Ms Suranyi which stated:
Hi Juliana, we need to have a chat, it’s been six weeks since the camps and we have not received any money back. We took great coaches and big names and stood by our half of the agreement and now have received nothing back. I have spoken to Salvo for several weeks and he has said for several weeks we would receive our share of the funds from the camps. Can we talk because clearly something is not right here
On 20 July 2019, Mr Sottile sent an email to Mr Gorman, copied to Ms Suranyi and Mr Pagniello, which included:
Hi Phil
we all know the agreement for the ID Camps
Charlie has since, for his personal reasons decided to not honor it.
Charlie has made the solo decision to dishonor our Agreements.
He has insisted that;
• GISS pay half the launch day costs
• Half of the set up an mini App costs etc etc.
• Basically half the costs that fall under the Agreed actions of Cantara not GISS
This is outrageous and unacceptable.
I have this last 4 days discovered:
• As we know we had the full quota of children attend the Camps. That Charlie ran the all the Camps for free in order to maximize the exposure of the Camps into the Clubs - with no consult with the team.
• Attached is the Expense sheet that Judy ( from 36 degree ) has compiled for us. I have since discovered that Judy was left holding all the costs as Charlie has not paid her out.
• That Charlie has not actioned the Memorandum of Understanding with the University Campus with GISS ( it was due in May/June)
•That Charlie has not actioned the Zibo Football School connection.
Due to the above, his back flipping and the disgusting position this has placed all concerned in I have immediately actioned the following;
• I have spoken to the Zibo Football School Principle to reassure him that we, not Charlie, can still action this Academy opportunity for them with GISS.
• I have spoken to the University Head of Sports to state the same.
• I have reached out to another connection to replace the current one with Charlie.
• Charlie has lied on several areas stating people- GISS and us have ‘stolen’ money by not paying for the launch etc- I cannot abide this. As a consequence I have openly shown these people our Contract to show them what is, and is not, covered. As a result- Charlie has now been removed form all connections and no one wants to deal with him.
• I have removed all his Influence and been open about our position and as such have gathered stronger connections.
I have attached the spreadsheet from Judy and also the one I have re-sent as this is the one that he should be honoring. Judy is noted as the China sheet and mine the Agreed sheet.
On 20 July 2019, Mr Gorman sent an email to Mr Sottile, copied to Ms Suranyi and Mr Pagniello, which stated:
Following on from our discussion on the 12-07-2019 and you informing myself that we had 758 registered players attend the camps I have attached the invoice for immediate payment.
The attached invoice from GISA to CGANZ was in an amount of $96,763.93, plus GST of $9,676.39.
It was put to Ms Suranyi in cross-examination that the decision not to charge fees was taken by her jointly with Mr Wu at a meeting between 30 April 2019 and 25 May 2019. Ms Suranyi accepted that there had been a discussion during which Mr Wu had suggested pushing out the start date for the camps by a week or two (T157.3) and that she had wanted to proceed with them: T157.32. It was put to Ms Suranyi that Mr Wu had suggested making the camps free if Ms Suranyi wanted to go ahead without postponing the camps. Ms Suranyi denied that Mr Wu had made that suggestion: T157.26. Ms Suranyi denied she had taken a decision not to charge fees: T157.37; T158.15. I accept Ms Suranyi’s evidence on this point.
GISA’s written opening submissions referred to affidavit evidence from Mr Wu which GISA had filed in the proceedings. Mr Wu had fallen out with Ms Suranyi and Mr Sottile in around July and August 2019 and (as discussed below) was later to consider business opportunities with Mr Gorman. He was evidently prepared to assist GISA in the proceedings at the point in time that his affidavits were signed. In oral opening submissions, counsel for GISA stated that a forensic decision had been taken not to call Mr Wu and submitted that his evidence was not significant to the proper resolution of the issues in the proceeding.
Discussions about moving forward
On 9 August 2919, Mr Gorman sent an email to Mr Sottile. Ms Suranyi responded using Mr Sottile’s email address on 14 August 2019, by annotating Mr Gorman’s email (shown in underline below). Mr Gorman then responded on 15 August 2019, by further annotating the email he had received (shown in italics below):
Hi Salvo
It is with much regret that I am going to have to dissolve our agreement that you and Juliana had with myself and Morris.
Myself and Morris acted in very good faith in paying a very large upfront fee (approximately $390,000 AUD less GST) to enable access to the Chinese Soccer market that was promoted by yourself and Juliana however it was ultimately organised by Charlie.
This fee is for managing the Agreement over a five year term. Not an upfront gift but an amount to mange the Agreement.
The agreement has not progressed through to a five year period so if it amortised over this period there is a lot of money outstanding. There is also the $100,000 AUD myself and Morris have payed additionally to have the coaches attend the ID camps. To which we did not receive one cent back as per our agreement. i.e 758 players at $150 USO (as per Salvo’s email)
Myself and Morris agreed to pay this fee due to Charlies access and friendship to many large clubs and officials in China including a former National player of China (which I had dinner with in Spain) and when in China we inspected his academy which was an example of what we will emulate both within China and Europe.
The fee was paid for the launch of the GISS ID Camps and the ongoing development of these Camps and not any development of Academies. The Academy structure, could with time be developed- but the Agreement is for the D Camps. There has been constant confusion in communications between this- but the Agreement clearly states the launch and roll out of the ID Camps .
The fee was paid for Cantara to provide consulting services to GISA to deliver ‘Football Services and Products’. This includes everything from camps to academies to one off games to apparel and everything in between hence the terms ‘Football Services and Products’. Camps and academies in China and Spain were always discussed.
Myself and Morris paid an additional large amount of money organising (3) three very well-known Spanish soccer players as per our agreement at our expense to have the ex-players attend the camps that were held in China.
Correct GISS did for the ID Camps do this. As per the Agreement.
I am personally very disappointed that it took over (6) weeks after the first identification camps to find out that you did not charge the players the agreed fee to participate in the camps that were organised. It is also some 9 weeks after the camps and we have not received any money in return for providing the ‘Big Names’ to give weight to the identification camps and then develop the GISS name within China.
“You’ is infact one persons decision. Cantara Global International CEO Charlie Wu made the decision on advice from the Clubs and media (this was flagged on the launch day as a potential issue) after considerable resources and time were put into the pre-launch media with Fernando Marentes all over the collateral. There were numerous exclusive interviews lined up that would not occur on the day as Morientes was a no show. This had dramatic, and detrimental effect, on our positioning and branding. GISS and Cantara were seen as less than reliable and potentially out and out liars in the marketplace as we did what others do (that we specifically sad we were worried this not happen to us) do by ‘showing names and images’ and then not having them turn up. Whilst I, personally, immediately organised an ‘apology’ video by Morientes for the launch the reality is that severe trust damage was created. I, and Salvo, were not informed until completion of number registration check - that the ID Camps were held for free due to the market mistrust. Once was informed- I immediately contacted Salvo and he immediately called you.
You was a term used to reference yourself, Salvo and Charlie i.e Cantara. We had Fernando Morientes booked on a flight and at the airport and he was unable to gain access to China so it is not like we did not do our upmost to get him to the press conference which actually cost myself and Morris more in appearance fee’s for him that were not in the contract we were simply trying to live up to our part of the agreement.
The payments for the camps were supposed to be online payments so I’d think there would have been some kind of questioning by Cantara that their was not any payments being received. As this was all evolving I’d also expect that the client who had just paid quite a considerable sum of money to get world class football professionals to the camps and abided by their part of the agreement would have been informed. This did not happen. Still several weeks after the camps I was being informed that we were awaiting payments to come through from China. This was untrue.
I am totally unsure now as to why the upfront fee was paid for as it was supposed to be for ‘exclusive’ promotion for GISS in China, however it was co-branded with Cantara Global Football, which was not agreed to.
It was not ‘co-branded’ by launched by Cantara . There is a significant structural difference in positioning here. Whilst I well understand GISS do not know the China marketplace to perhaps understand the difference -there is a significant difference. Whilst GISS is known out of China- GISS is not known in China and so Cantara launched it n this manner to garnish our media relationships in order to add context to the launch. This was successful from a media positioning as we got coverage in nearly every major online platform. However, the Clubs noted that that we didn’t deliver on the launch ‘Big Name’ and this affected our credibility to the determent. We discussed this in the March workshop- agreed together and this was then why the launch equipment cost was to be split 50/50.
The press conference WAS co-branded, anyone who looks at any pictures can see Cantara Football and GISS were basically shown to be partners at this launch. A full understanding of this co-branding was not explained to Morris or myself until I saw the pictures and could not believe what I was seeing.
You were fully aware that the identification camps were going ahead without any payments being made by the players however through your messages and emails yourself and Juliana ensured me that you were just awaiting on verification of the player numbers at each destination so that you could reconcile payments from the players and then payment would be passed on to us.
We were not fully aware at all. We were informed that one location only would be and that Charlie wold be compensating that one too. We found out a few days prior to you when we pushed for more information at the request of the logistics execution team run by Judy. Again, Salvo, Judy, myself and all other team members were informed by Charlie it wold still be covered off. Please note my attachments.
This is a cost that needs to be covered by Cantara as with all other costs that yourself, Salvo or Charlie decided not to pay for. If myself and Morris had of known these camps were going to be run for free we would not have entered into this agreement in anyway, shape or form. Cantara is yourself, Salvo and Charlie, if you three could not communicate firstly to each other and secondly to the client then we should have been informed. This does not mean that because of Cantara’s fallout with each other myself and Morris should bare the cost. If myself and Morris had a falling out over money we would not expect Cantara to pay for all our costs as it is an internal issue that we would have to resolve. Currently you are blaming each other and as such we are out of pocket quite substantially.
Morris and myself have just had a meeting to agree on the content of this email and have agreed that this whole experience has been a web of lies and deceit and we want our money returned in full along with the expenses that have been incurred. That’s a total of $500,000 AUD
There are no web of lies- we resent the term and will continue to move forward with eh ID Camps.
There will be no refund should you choose to remove from this Agreement.
The agreement had a KPI in it. We achieved the successful launch and numbers and intent on continuing to grow this successfully. It simply means, as per KP, that GISS will move to a 70/30 instead of 60/40 split for the next camp due to the financial need to recover faster- although KPI numbers were reached.
Whist we understand your frustration Phil what we need to be clear about is that this is a long term venture. From the day this was Agreed and settled you have fought us on every point and done nothing but harassed us on return. This is a big market and a bigger country. This was never a short term project- we all discussed this is in depth prior to moving on.
We will continue to work with our existing- minus Charlie, contacts and the new ones we have actively cultivated for this situation.
If you do not wish t continue with the Agreement- you may resign from it. There will be no refund issued.
The KPI’s will not be met in the first year and I am well aware of that however prior to the agreement being signed by myself and Salvo it was stated that this was a bargain to access the Chinese market and we would more than likely recoup our money within the first year. All that has happened is that myself and Morris are now in further debt due to Cantara not being able to communicate with each other.
Furthermore I have not ‘fought’ you on every point. I have seen many occasions as to what has been said in emails such as; GISA will be paid within 7 days of the camps completion and we will be given a twelve month program as to what trials will be scheduled and where.
We believe we have the right to be extremely concerned as to where our money has gone and to there being success with this program in China due to the breakdown of the team the myself and Morris were dealing with
Also in regard to the next camps we have not been told where they will be held and with whom. Additionally who will be organising paying for the coaches and there flights as we cannot continue to provide International Footballers to trial with young players in China for free. That was not the deal.

On 23 August 2019, Mr Sottile, Mr Pagniello and Mr Gorman met at Hotel Tryp in Leganes to discuss what had occurred and how the parties could move forward. On 27 August 2019, Mr Gorman sent an email to Mr Sottile, copied to Mr Pagniello. Mr Sottile responded on 2 September 2019 by annotating Mr Gorman’s email (shown in underline below):
Hi Phil I will answer under each sentence, sorry for the delay am working on the GISS camp here in Australia to help morris
Just recapping our meeting on the 23-8-2019
Following on from the May tour Charlie had made the decision on behalf of Cantara to not make the players pay for the ID camps and as a result no income was collected. This is correct.Charlie had promised to cover the costs of the players who took part in the camps which was 758 players. As of our meeting on the 23-8-2019 Charlie still has not payed GISA for the players and GISA has not received any funds from first camp. This is correct. We have screenshots of the WeChat discussion where he stated he would be paying and has not moved, or sorted any funds to date.
Salvatore stated that as a result of GISA not receiving any income from the first round of ID camps and should Charlie or Cantara not pay the revenue from the first camp that was expected by GISA, then all of the proceeds from the second ID camps will be paid to GISA._After cost are settled then GISA we will be able to receive the full remainder of income.
It was discussed that Salvatore will not be following up the camps and academy with Yung Chen and Zibo is still a location that GISA are interested in proceeding with however we were not sure if Charlie or Salvatore will be covering this location. We are currently working through agreements with other parties to host the ID Campd as they, unlike the two before mentioned, are wanting this to be a relaised commercial venture. As part of our discussions we have also discudssed if we do less loctaions but Ion ger academies. This way we can mazimise the Coaches PR and commerciality.
Salvatore will be providing a timetable of when the next round of ID camps will take place and when and where the academies will be starting up. Yes, once they have been confirmed.
Discussion was also had about focussing on four locations for the next round of ID camps and to have a morning and afternoon session and maximise numbers. NB: Number of locations will be required to be increased in the future to meet KPl’s. As mentioned above.
It was also noted that had I have been aware of the issues from the first camps that we would not have had the problems following the camp with chasing up money and not knowing what was happening with outstanding payments. Salvatore has made an undertaking to keep myself informed weekly of progress for the next camps and academies for locations in China, including the marketing that is being done, where it is being done and what has been involved. As we have schedules and confirmations of cooperations confirmned we will update this all and send to you and Morris.
As a whole I think the main thing that has been missing is communication, we must have better communication and reporting and if problems arise then they must be discussed immediately. We must also be more aggressive with our planning and roll out of the camps and academies as time is getting away fast and myself and Morris are now $500,000AUD out of pocket following the first round of camps and our initial investment. We agree on better, organised and consistent communication .
Salvo please feel free to comment and could you please provide a program of what our targets are over the next 12 months including numbers of expected player participation dates and locations for the camps and academies. We cannot give you a target other than that we are striving to meet the KPI’s that were in the originalagreement. There will be no academies as yet until the ID Camps have been bedded in and are working as this will grow the drive for the Academies.
I have included Julianna in this email for information and transparency.
On 5 October 2019, Mr Gorman sent an email to Mr Sottile which included:
As you did not reply to my whatsapp message I will send an email to the group.
How many camps are you looking at organising for November, how many cities. Also what and where are the academies starting in January.
I really need to start getting a good picture about what is happening and the money that will be made in to pay for the initial investment and also the payment for the coaches and flights etc for the first camps, it was not cheap.
I need details Salvo, from you and Juliana. I’m sure you appreciate that. There is a lot of money outstanding.
According to our agreement we should have had 4 camps by now. Still no income?
On 7 October 2019, Mr Sottile sent an email to Mr Gorman, copied to Ms Suranyi, which stated:
Phil, I am sorry for the delay been a crazy weeks
Here is a current update:
•We have communicated directly to both the Shanghai and Guangzhou Coaches from the previous ID Camp to see if they wish to accept and execute the winners Scholarships- they have both refused as they feel that the scholarships adds no real value to their Academies. I have since sent through more information to them on how this could, intact, be a valuable point of difference to their academies.
•Jiulianna [sic] and I are flying to Shanghai 19-24 October to meet with several interested parties to see how they would work with the ID Camps so that we can get the best possible scenario. One is an Academy with access to 60 primary schools and the other is a Government Representative we are seeing as part of other work we will be doing when there. Although both are specifically to do with Football.
•Regarding specifics for November we cannot give those yet until the meetings are in effect. We are also looking at rather than one day in different locations- a series of 4-5 workshops in the one region. Whilst I understand your frustration, so very understand, this is not a one year contract and so we are securing what will be in the best interest of the GISS overall. Regarding our Agreement in terms of camps. We actually started it via number of locations not camps. Year 1 being 5 number of locations. I explained this prior to signing it because sometimes one region can yield multiple locations. .
Phil - the constant feedback from Clubs is that the Camp is too expensive for the local numbers to attend. This is something we are strategizing around, and why we are looking at how to tie these into possible Government Football Pathway Initiatives.
I will keep you updated on the meetings and outcomes that are tabled in Shanghai via email.
I will be in Madrid at the end of October for a week
On 18 October 2019, Mr Sottile sent a message by WhatsApp to Mr Gorman which included various pictures. The messages stated:
Mr Sottile: I will see you next week in Madrid
Mr Sottile: Hi Phil we just present the GISS project here in China at sporting conference, tomorrow we fly to Shanghai to meet with the clubs to lock in the next ID camps
Mr Sottile: I will call you tomorrow [illegible] Sunday for a chat
At some point between 18 and 29 October 2019, there was an exchange on WhatsApp between Mr Sottile and Mr Gorman which included:
Mr Sottile: Was great to be part of this conference and talk about our project, the minister of sport was there to[o]
Mr Gorman: That’s great I look forward to hearing all about it and going to China with you to see what you have been working on
Mr Gorman agreed in cross-examination that he knew Mr Sottile was pursuing the setting up of further ID camps to be held in September, October and November of 2019: T73.31. He also agreed that he knew Mr Sottile went to the conference in October 2019 specifically to promote the GISS brand: T73.35.
Mr Gorman gave the following evidence in cross-examination:
So is it fair to say that, despite the communication with Mr Wu continuing to be conducted in the background [by Mr Gorman and Mr Pagniello], that both Mr Sottile and myself [Ms Suranyi] were continuing to use our relationships in China to promote the brand awareness of GIS as well as to look how we would establish the next lot of locations?---Yes. I knew you were doing that, yes.
Mr Gorman and Mr Pagniello ceased any real involvement or cooperation with CGANZ from early November 2019.
Discussions between Mr Gorman, Mr Pagniello and Mr Wu
Mr Gorman gave evidence in his affidavit that he and Mr Pagniello flew to China to meet with Mr Wu in December 2019 to see if he could assist in progressing camps in China. His evidence included:
During our visit, we met with the owner of Zibo Football Club - I cannot recall his name. The purpose of this meeting was to discuss opening a football academy in Zibo. The discussions were preliminary in nature, in that we discussed our ideas to coach youth from the Zibo Football Club and to conduct schools and football clubs around Zibo.
On 14 December 2019, Mr Pagniello posted a photo to his personal Instagram page with the following caption:
Very happy to announce the official partnership with Zibo City for Genova Academy China and to officially begin in February 2020.
The accompanying picture on the Instagram post was:
The post was accompanied by a photo of the owner of the Zibo Football Club, Mr Wu, Mr Pagniello and Mr Gorman holding a soccer jersey, onto which he had digitally superimposed a GISS logo: “Genova”. The logo was also superimposed as a watermark on the bottom left corner of the image. In his first affidavit, Mr Gorman stated:
131.I have no control over Morris’s Instagram page, and had nothing to do with the post. I do not know why Morris made the post as no agreement was entered into between GISA, GISS or myself and Mr Wu. I did not know about the post until my solicitor provided it to me during these proceedings.
132.After the visit to Zibo, Morris kept pushing the conversation between us to enter into an agreement with Charlie. I was fully aware that to enter into an Agreement of this nature would be in breach of the Agreement that GISA had entered into with Cantara so I did not agree to enter into such an agreement. However, in light of the failure by Cantara to perform its obligations under our contract, I wished to keep Charlie as a contact for future endeavours.
133. At no point did GISA or myself enter into an agreement with Charlie.
Mr Gorman’s evidence was that he refused to enter into any agreement with Mr Wu because he did not want to breach the Consulting Agreement. Mr Pagniello’s affidavit evidence was to the effect that Mr Gorman wanted to reach an agreement with Mr Wu and that an agreement was reached. In cross-examination, Mr Pagniello accepted that there was no signed agreement with Mr Wu. On the other hand, Mr Pagniello was insistent that there had been what he referred to as a “handshake deal” between the four people in his Instagram post: T193.4; T199, T205. Mr Pagniello stated that he and Mr Gorman travelled to China to “purposely to close a deal”: T199.32. He stated at T205.25:
The deal was a handshake deal. We just had to get out of that contract [the Consulting Agreement] and start a new contract with Charlie’s group.
His evidence included at T193.38:
You didn’t put pen to paper or Mr Gorman didn’t [put] pen to paper with Mr Wu or CGI; correct?---Not that last – not the last contract we did, because we already had an active contract and we couldn’t put a contract together without going through Salvatore and Julianna because they – or else they would have taken us to court. So I was playing it – we were trying to establish what we paid for. We’ve paid a Service Fee to establish our academies there, that’s all we did, and we were using Charlie or – or whoever was going to be help – to help us recuperate what we invested.
GISA’s position was that the parties had mutually abandoned the Consulting Agreement by December 2019 and that neither party had terminated the contract. GISA submitted that after the breakdown in relations “each party effectively went their separate ways and ceased to endeavour to perform the contract”: T14.8.
Ms Suranyi’s evidence was to the effect that, soon after seeing Mr Pagniello’s Instagram post she told Mr Pagniello and Mr Gorman that, now that Mr Pagniello had publicly stated that a new relationship would manage the GISS brand in China, she would cease work promoting GISS until Mr Pagniello and Mr Gorman sorted out what they were doing and ‘come back’ to Ms Suranyi: T119-120. She stated in her affidavit: “[w]e informed Morris and Phillip we were no longer going to work for GISS due to their new relationship and breach of contract”. Mr Gorman denied receiving correspondence from Mr Sottile or Ms Suranyi stating that they were ceasing work with GISS and denied that either of them raised with him that he was in breach of the exclusive representation clause in the Consulting Agreement – see: the sixth bullet point to cl 1 and cl 21(18).
In her evidence in chief, Ms Suranyi gave an account of her conversations with Mr Pagniello which did not include any assertion that she communicated an intention to terminate the Consulting Agreement. Her account also did not suggest she spoke directly with Mr Gorman. I consider it likely that Ms Suranyi conveyed to Mr Pagniello, soon after Mr Pagniello’s Instagram post, her position that: (a) Mr Pagniello and Mr Gorman had to “come back” to CGANZ after they had worked out what they were doing and CGANZ was not going to be promoting GISS in China in the meantime in circumstances where GISA had apparently formed and announced a new partnership to promote GISS or the Genova brand; and (b) she considered GISA was in breach of the Consulting Agreement: T119-120. I draw this conclusion on the basis of Mr Suranyi’s oral evidence, her affidavit evidence, Mr Paginello’s evidence and the subsequent conduct of the parties. This is a natural and likely reaction to Mr Pagniello’s Instagram post. I do not accept that Ms Suranyi communicated these same matters to Mr Gorman. Ms Suranyi stated in her affidavit that she had no direct communication with Mr Gorman from about October 2019. I do not accept that Ms Suranyi stated to Mr Pagniello (or Mr Gorman) that she was terminating the Consulting Agreement.
By a letter dated 18 June 2020 addressed to Ms Suranyi, solicitors representing GISA and Mr Gorman alleged, amongst other things, that the Consulting Agreement had been entered into as a result of misleading or deceptive conduct and that Ms Suranyi was involved in contraventions of s 18 of the ACL. There was no allegation made in the letter that CGANZ had repudiated the Consulting Agreement or that it had been terminated.
On 30 June 2020, Mr Gorman and Mr Pagniello left voice messages on each other’s WhatsApp account in the following terms:
[Mr Gorman]: We would just use the same company .... I did have a chat with Charlie. Give me a call and we can chat about this contract stuff and let you know my thoughts about what we should do.
[Mr Pagniello]: But what about Charlie’s percentage? How are we going to control with how are we going to go 65% or 35% or something like that or whatever it was? How are we going to control the money that that comes into it? We just have to trust him again?
[Mr Gorman]: That’s the difficulty about China we can’t just go and set up a company there ... its going to be a case of we’ve got the coaches and we’ve made this investment that was in Charlie so we‘re going to have to realistically as soon as the money goes into a Chinese bank we can have a signatory on it, I’ll be a signatory on it and transfer it into our Aussie account, that’s the way we have to do it and trust him ... with you me Salvo and Julianna its fine because we are all Australian I’ve just got to work it out and have a chat with Charlie. It would work the same as Julianna and Salvo except it would be just be Charlie which is how we were going to do it with them anyway.
[Mr Pagniello]: Ok that’s fine. The sooner the better. And what about the Zibo deal? How do we do that? If I’ve got an investor for Zibo Football Club what do I do? Who do they talk to because Charlie‘s got nothing to do with them right? Is it viable to buy a club there do you think?
[Mr Gorman]: I think with Zibo we are better off to start with the few schools, we met with the club owner if you recall, we do the schools for 6, 12 months and see what sort of appetite they have to go to Dubai and take our time with it because if we go too strong it could fuck the whole thing up because you’re putting the Middle Eastern people in China and we are all trying to work each other out and if you introduce that to Charlie too early he might take it and run and we are left out in the cold. I would just with the people in the Middle East and say, look we have good contacts and are starting this Academy and we are going to bring people over and then we will look at clubs to buy.
By a letter dated 3 July 2020, solicitors representing CGANZ responded to the letter which had been sent by GISA’s solicitors on 18 June 2020. This letter contained denials of the various matters which had been asserted by GISA and Mr Gorman. The letter stated that “the Service Fee paid by your client was to be used to establish and secure networks for your client which has been completed … [as] evidenced by your client now working with Mr Wu outside of the exclusive agreement with our client”. The letter asserted that GISA had breached the Consulting Agreement in two ways: first by Mr Gorman drunkenly causing damage to hotel property on 16 April 2019; and secondly, by Mr Gorman reaching an agreement with Mr Wu in breach of the exclusive arrangements under the Consulting Agreement. The letter did not assert that the Consulting Agreement had been terminated by CGANZ.
BREACH OF CONTRACT
The contended breaches of the Consulting Agreement
Although three breaches of the Consulting Agreement were pleaded in the ASOC, GISA ultimately only relied upon two.
Payments by participants
The first contended breach relied upon a term pleaded at [12] of the ASOC:
12.It was … a term of the Agreement that Cantara would ensure that each participant in any football camp paid an amount of $USD 150 per participant to attend in the first two years, and $USD 165 per participant to attend in the remaining years of the Agreement.
Particulars
The term arises on the proper construction of clauses 21(10), 21(12) and Addendum B of the Agreement, or is alternatively implied to give business efficacy because the purpose of the Agreement was for both parties to receive revenue, so that not charging participants would defeat the purpose of the Agreement.
GISA contended that CGANZ had not charged participants at the camps. GISA contended that the failure to charge participants constituted a breach by CGANZ of the contract: ASOC [36].
The respondents denied that CGANZ was contractually bound to ensure that each participant at a football camp would pay a registration fee, contending that this was an obligation of GISA and CGI: [14] of the Amended Defence. The respondents accepted that, as a matter of fact, CGANZ had not charged a registration fee to participants at the set of football camps held in five locations.
Reasonable endeavours for further camps
The second contended breach concerned a term pleaded at [15] of the ASOC. The particulars to [15] of the ASOC can only be understood by reference to [13] and [14] of the ASOC:
13. During the negotiations for the Agreement, the parties discussed that:
(a) In the first year of the Agreement, three camps would be held in five locations;
(b) In the second year of the Agreement, three camps would be held in five locations;
(c) In the third year of the Agreement, three camps would be held in six locations;
(d) In the fourth year of the Agreement, three camps would be held in eight locations;
(e) In the fifth year of the Agreement, three camps would be held in ten locations;
(f) In the sixth year of the Agreement, three camps would be held in twelve locations.
Particulars
Email of Ms Suranyi to Mr Gorman dated 22 January 2019 (including attachment).
14.The discussions referred to in paragraph 13 were reflected in Addendum B to the Agreement except that, by mistake, the table contained in Addendum B of to the final Agreement did not contain the column showing 3 camps per location per year (with it being the parties mutual intention at the time that it should have, consistently with the attachment to the email of Ms Suranyi to Mr Gorman dated 22 January 2019 referred to above at paragraph 9 above, a copy of which will be relied on for its terms and effect).
15.It was a term of the Agreement that in the first year of the Agreement, the parties would use all reasonable efforts to arrange three camps in five different locations in China.
Particulars
The term arises on the proper construction of Addendum B, in light of the matters in paragraph 14, or is alternatively implied to give business efficacy because the purpose of the Agreement was for both parties to receive revenue from football training camps, so that not taking steps to arrange those camps would defeat the purpose of the Agreement.
Email of Ms Suranyi to Mr Gorman dated 22 January 2019 (including attachment).

I do not infer from the fact that the name Cantara was used on the Mini App that it was not reasonable for Ms Suranyi to say what she did in her email of 22 January 2019 or in her conversations with Mr Gorman. The use of the reference to Cantara on the Mini App was consistent with GISS being the central brand which Cantara was seeking to promote and build.
Ms Suranyi’s representations were not misleading or deceptive and there was a reasonable basis for making them.
Clause 27 of the Consulting Agreement
The respondents denied that s 18 of the ACL had any application because cl 27 of the Consulting Agreement excluded its operation. It is not strictly necessary to determine this aspect of the defence given that the claim has not been made out. If there had been misleading or deceptive conduct, cl 27 could only have assisted the respondent if it deprived the representations of being misleading or deceptive or if it had the consequence that it could not be said that the loss was “because of” the contravening conduct (s 236 of the ACL).
The respondents also pleaded that cl 31 of the Consulting Agreement made the agreement subject to the laws of Queensland with the result that ss 4 and 18 of the ACL were excluded. Given that the claims are not made out it is unnecessary to consider this defence.
Accessorial liability
This question does not arise given that GISA has not established that it has suffered loss or damage because of conduct by CGANZ that was in contravention of s 18 of the ACL.
UNJUST ENRICHMENT
In its ASOC, GISA claimed that it was entitled to recover the Service Fee because CGANZ had been unjustly enriched by receiving the benefit of the Service Fee at the expense of GISA: [43] to [49] of the ASOC.
GISA claimed it would be unjust for CGANZ to retain the Service Fee “in circumstances where GISA has not received any benefit under the [Consulting] Agreement such that there has been a total failure of consideration by [CGANZ]”: [48] of the ASOC.
In its written opening submissions, GISA continued to rely on its pleaded case, but also sought to introduce an alternative claim. It submitted:
Presently, by paragraph 48 of the ASOC … GISA alleges a total failure of consideration and that GISA should receive a payment of the whole of the Service Fee ($433,864.05) on account of the unjust enrichment pleaded. In the alternative, GISA claims 80% of the Service Fee (so $347,091.24) in its restitutionary claim, on the basis that while it may be considered that some services were provided by CGANZ under the Consulting Agreement from around 5 February 2019 to December 2019, GISA received no services as recorded in that agreement for the remaining four years and one month of the term of the agreement. On that alternative case, there was a failure in respect of the fee referable to approximately 80% of the term of the agreement which makes it unjust or unconscionable that CGANZ retain that amount.
In its oral opening submissions, GISA abandoned reliance on the pleaded case and relied solely on the alternative case. The Court observed that the alternative case was not pleaded. GISA did not accept this proposition and did not seek leave to further amend the ASOC. GISA submitted that, in any event, the respondents had been on notice of the alternative case since receiving GISA’s written submissions which had been filed on 6 July 2022. The respondents did not have legal representation at the time GISA’s written submissions were filed.
In considering whether a remedy should be granted pursuant to the informing principle of unjust enrichment, it is generally necessary to: (a) identify a “qualifying or vitiating factor” in the circumstances which lead to the respondent’s enrichment, for example: mistake, duress, illegality or total failure of consideration; and (b) consider whether the prima facie liability to make restitution is displaced by circumstances which the law recognises would make an order for restitution unjust, for example whether a change of position “defence” is available: Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498 at [30].
The vitiating factor relied upon by GISA in the ASOC was a total failure of consideration in the sense that, according to GISA, it got absolutely nothing in return for the Service Fee. There was not a total failure of consideration in this sense as counsel for GISA observed in opening. CGANZ performed the contract by promoting GISS in China and participating in the organisation and conduct of the first set of camps in 5 locations in Year 1. It was presumably for that reason that GISA abandoned that case.
In relation to the alternative case, GISA submitted in its written opening submissions that there was “a total failure of a severable part of the consideration”, referring to Mann at [168] (Nettle, Gordon and Edelman JJ) and David Securities at 383 (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ). GISA submitted that the consideration could “be logically apportioned over the life of the Consulting Agreement, rendering the analysis of a ‘total failure of a severable part of the consideration’ appropriate”. GISA submitted that it was “rational” to apportion the Service Fee over the five years, equally or otherwise. It claimed 80% of the Service Fee.
The alternative case would have been rejected if it had been pleaded.
It is not sufficient for recovery in restitution simply to point to the non-receipt of consideration which had been anticipated under a contract. Where it is alleged that there is a “total failure of consideration” giving rise to a prima facie requirement for restitution, it is always necessary to consider the causes of the alleged failure of consideration. Whilst cases refer to the total failure of consideration as being the “vitiating factor”, the prima facie right to recovery in restitution where there is a total failure of consideration arises only when there exist sufficient circumstances giving rise to that failure as to ground that prima facie liability. Typical examples of cases where restitution has been granted in respect of a total failure of consideration is where the contract is avoided or discharged by frustration (Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32), mistake (David Securities) or termination (Mann). In these examples, the remedy lies in restitution because the contract does not provide for recovery. None of these events were pleaded or relied upon by GISA. The contract itself may expressly or impliedly provide for the consequences of a total failure of consideration, but then the remedy lies in contract not restitution.
The word “consideration” in the phrase “total failure of consideration” is not used in the technical contract sense. Failure of consideration is not limited to non-performance of a contractual promise and extends to payment for a purpose which has failed: Roxborough [2001] HCA 68; 208 CLR 516 at [16] (Gleeson, Gaudron and Hayne JJ) and [102] (Gummow J); see also: Fibrosa at 48. The notion of total failure of consideration looks to the benefit bargained for by the plaintiff rather than any benefit which might have been received in fact: David Securities at 382-3; Rowland v Divall [1923] 2 KB 500 (the purchaser of a car from a vendor who did not have title obtained no benefit under the contract by reason of having possession of the vehicle for a period of time).
As discussed further at [198] below, the failure of consideration must be total.
The total failure of consideration can be the total failure of a severable part of the consideration: Mann at [168] and David Securities at 383. In Roxborough at [17], Gleeson CJ, Gaudron and Hayne JJ gave an example of such a situation:
But there are cases, of which the present is an example, where it is possible, both to identify that part of the final agreed sum which is attributable to a cost component, and to conclude that an alteration in circumstances, perhaps involving a failure to incur an expense, has resulted in a failure of a severable part of the consideration.
That case involved a separately identifiable amount of tax which had been paid in the various transactions which made up the chain of supply of packets of cigarettes. The vitiating factor was supervening illegality (giving rise to a retrospective mistaken payment), the tax being held to be invalid.
GISA’s claim for restitution must fail for at least two reasons:
(1)First, there was no total failure of a severable part of the consideration.
(2)Secondly, any failure of consideration did not occur in circumstances which ground a prima facie right to recovery in restitution.
No total failure of a severable part of the consideration
Clause 21(10) of the Consulting Agreement provided:
GISA will deliver into CGANZ and CGF exclusively for the agreed territories and countries of China Mainland and all Chinese Provinces and Queensland Australia the associated networks and Football Clubs the following:
…
(10)A total Service Fee of $USD 280,000 plus GST for the five years exclusive period from date of Agreement is paid to; confirm terms, execute and secure CGF networks and exclusivity. If not paid in full to secure the five years exclusivity plus 5 year option; the total Service Fee of $USD 100,000 plus GST will be payable per year on written agreement and terminable by CGF with one-month notice. This Service Fee is in relevance to the KPI in the Addendum B (attached)
The Service Fee was paid predominantly for an exclusive arrangement for a period of five years pursuant to which CGANZ (and Cantara Football) would promote GISS and not some competing brand. Clause 21(10) recorded an alternative to paying the whole Service Fee upfront. On this alternative, GISS could secure a yearly arrangement at US$100,000 plus GST per year. Under this alternative, GISA was not guaranteed exclusivity for a full five years because the contract was terminable on one month’s notice.
As had been agreed during negotiations, GISA chose exclusivity for five years for US$280,000 plus GST, rather than paying US$100,000 plus GST each year for five years under an arrangement which could be terminated on one month’s notice.
It is to be recalled that, in addition to the upfront fee of US$280,000, CGANZ was to receive 40% of gross revenue from year to year. Each party had agreed that its costs of providing their respective services, required from year to year under the Consulting Agreement, would be taken out of the respective gross revenue to be distributed to each party as the camps were held. GISA was to receive 60% and CGANZ was to receive 40% of gross revenue. The parties had initially contemplated a 50% gross revenue split but this was increased to 60% in favour of GISA when the parties agreed an upfront fee. Ms Suranyi’s email of 22 January 2019 included (emphasis added):
[T]he Board has determined the following to ensure we are all safe, content and able to grow this long term:
•The fee of $280,000 USD is paid in full position to execute the Agreement.
•We will amend the contract terms to state a 5 year plus5 year option without a fee renewal for the option. This in essence means that GISS would not have to pay the $100,00 USD/ year or any such amounts for the renewable period.
•The share split will be increased by 10% to our Cooperation partner (GISS) 60% from 50%.
The consideration paid by GISA up front in the form of the Service Fee was not exclusively or even substantially consideration payable in advance for specific services to be provided each year for five years. The Service Fee is best seen as having been paid for CGANZ’s agreement to deal exclusively with GISA for five years and not some other competing soccer brand and for CGANZ to launch and promote GISS and to “execute and secure CGF [Cantara Football] networks”: cl 21(10). As the soccer camps were held, in respect of which both parties had to provide services at their own cost, the parties would share the gross revenue. GISA’s gross revenue split was higher than CGANZ’s because it had made an upfront payment in the form of the Service Fee.
Mr Pagniello acknowledged, consistently with the terms of the contract objectively construed, that the Service Fee was for getting GISS or Genova established in China: T205. A part of the “consideration” (in the broader sense of that word) was an introduction to the Chinese market through Cantara Football. GISA received this. GISA was introduced to CGI and the Cantara Football networks were used in launching GISA on 30 April 2019 and in conducting the first set of camps. GISA got a substantial part of what it wanted, both in terms of the contractual consideration and in the broader sense of the word “consideration”. As to the introduction to Mr Wu and Cantara Football, GISA (or its associates) continued a relationship with Mr Wu and CGI, which owned Cantara Football, albeit by ultimately pursuing that relationship independently from CGANZ inconsistently with what was contemplated by the Consulting Agreement. GISA has a continuing relationship with Mr Wu as is evidenced by Mr Wu’s preparedness to sign affidavits for GISA to file in these proceedings and Mr Gorman’s evidence that he continues to keep in touch with him.
It is not possible to say that the Service Fee was referable only to the services to be provided in Years 1 to 5 or that there was a total failure of a severable part of the consideration. It should also be noted that the Service Fee is not in any event reliably apportioned equally over the five years, both because the Service Fee was payable upfront for an exclusive 5 year arrangement and introduction to Cantara Football networks and because the services under the Consulting Agreement would not, in any event, be evenly distributed over the five years of the exclusive arrangement. It was anticipated that CGANZ’s work and costs would be higher in the first year. In her first affidavit, Ms Suranyi stated that she told Mr Gorman that the Service Fee had to be paid upfront “due to all the work that was required for set up including expenses”.
GISA has failed to establish that there was a total failure of a severable part of the consideration. In Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 350, Mason CJ observed (citations omitted, emphasis added):
When, however, an innocent party seeks to recover money paid in advance under a contract in expectation of the entire performance by the contract-breaker of its obligations under the contract and the contract-breaker renders an incomplete performance, in general, the innocent party cannot recover unless there has been a total failure of consideration. If the incomplete performance results in the innocent party receiving and retaining any substantial part of the benefit expected under the contract, there will not be a total failure of consideration.
It is to be observed that Mason CJ was dealing with the situation of an “innocent party” seeking restitution from a contract-breaker. That is not the situation in the present case for reasons addressed next. Notwithstanding, the point remains that GISA received a substantial part of the benefits under the contract.
No circumstances which ground a prima facie right to recovery in restitution
GISA contended that the parties mutually abandoned the Consulting Agreement in December 2019, before Year 2 started. This was not accepted by the respondents who contended that the Consulting Agreement terminated automatically because an agreement had been reached in breach of the sixth bullet point of cl 1: [27(e)] of the Amended Defence. As noted earlier, the sixth bullet point of cl 1 provided:
GISA confirm they will enter into no other Agreements either formal or informal that will state any other entity will trade in China with the GISA main company or associated companies, shareholders or office bearers or investors from or know to be with GISA. Employed staff are exempted from this inclusion and term. Should this be breached the Agreement is immediately terminated.
The better construction of the sixth bullet point of cl 1 is that the reference to an “informal” agreement is a reference to an agreement which is not legally binding. The reference to an “informal” agreement could be understood as a reference to an agreement which is legally binding, but not in writing. Against the background of this contract known to both parties, that is not what was meant.
For some time before December 2019, Mr Gorman and Mr Pagniello had been considering opportunities for soccer related activities in China with Mr Wu under the GISS or Genova brand. GISA or its associates were actively pursuing such opportunities in December 2019. GISA did not enter into a formal binding contract with Mr Wu. However, I am satisfied that there was an “informal” agreement with Mr Wu to commence soccer related activities with Mr Wu under the GISS or Genova brand. A “formal” agreement never came about, probably because of the COVID-19 pandemic, but its parameters were still being considered by Mr Gorman and Mr Pagniello in June 2020 – see: [101] above. Mr Wu and Mr Gorman are still in contact and COVID-19 restrictions in China have only recently started to ease.
The Consulting Agreement automatically terminated on the reaching of the informal agreement. GISA has no right of recovery in restitution. Restitutionary claims respect contractual regimes and the allocation of risks under those regimes: Mann. Whilst GISA did not get the services in Years 2 to 5 which the contract anticipated that is because GISA’s breach brought the contract to an end. On its proper construction, the contract did not contemplate recovery of the Service Fee or a portion of it if GISA caused the contract to terminate automatically because of GISA’s breach. So much was evident in the parties’ negotiations in relation to the sixth bullet point of cl 1. In his email of 3 February 2019, Mr Gorman wrote to Ms Suranyi in relation to this clause:
I also think that this paragraph is a little to[o] loose in regard to immediate termination of the Agreement if anyone related to Genova basically speaks to another party. For example if we take a coach over there and he decides to do something that we are not a part of then we cannot be held responsible for this and essentially you could cancel the agreement and the 280,000k would be forfeited. It is myself and Morris’ intention to only deal exclusively with CF so maybe we could just nominate ourselves. We just can’t be 100% responsible for everyone who we bring across there. I’m happy to discuss this with you.
This email resulted in the inclusion into the sixth bullet point of the sentence: “Employed staff are exempted from this inclusion and term”.
For the following reasons, even if the Consulting Agreement did not terminate automatically in December 2019, the claim in restitution would fail.
By December 2019, GISA had ceased to co-operate in any real or meaningful way with CGANZ in CGANZ’s endeavours to arrange further camps. For its part, CGANZ was continuing to promote GISA and seeking to arrange further camps.
On 14 December 2019, Mr Pagniello posted on his Instagram account a message which indicated that a partnership had been reached with Mr Wu. Mr Pagniello was GISA’s agent in the relevant dealings between GISA and CGANZ. Whether or not an informal agreement had been reached between Mr Gorman, Mr Pagniello and Mr Wu, the respondents reasonably believed that an agreement had been reached.
As noted at [98] above, Ms Suranyi conveyed to Mr Pagniello, soon after Mr Pagniello’s Instagram post, her position that: (a) Mr Pagniello and Mr Gorman had to “come back” to CGANZ after they had worked out what they were doing and CGANZ was not going to be promoting GISS in China in the meantime in circumstances where GISA had apparently formed and announced a new partnership to promote GISS or Genova; and (b) she considered GISA was in breach of the Consulting Agreement: T119-120.

GISA did not re-engage in any meaningful way with CGANZ in relation to performance of the Consulting Agreement after this time or require CGANZ to perform the Consulting Agreement. Rather, GISA continued to engage with Mr Wu and to pursue opportunities in China for GISS which did not involve CGANZ. GISA did not assert that CGANZ had repudiated the Consulting Agreement or claim that it had been terminated (other than by mutual abandonment).
If the Consulting Agreement did not automatically terminate in December 2019, it was the actions of GISA in ceasing by December 2019 to co-operate with CGANZ in arranging further camps, and in pursuing an agreement with Mr Wu in December 2019 and thereafter, which was the reason for CGANZ ultimately ceasing to perform the Consulting Agreement.
There was no abandonment by consent in this case, at least at or around December 2019 when GISA submits it abandoned the Consulting Agreement.
It is true that CGANZ ultimately ceased to perform the Consulting Agreement after GISA ceased to perform the Consulting Agreement, but the reason for that does not lie in any agreed (and therefore contractual) abandonment. CGANZ ceased to perform the Consulting Agreement because GISA: (a) ceased by December 2019 to co-operate in arranging further camps and ceased to perform the Consulting Agreement; (b) acted inconsistently with an intention to be bound by the Consulting Agreement; (c) was pursuing business opportunities with Mr Wu inconsistently with the exclusive arrangements between CGANZ and GISA; and (d) ceased to require or apparently desire the performance by CGANZ of the Consulting Agreement.
As Mason CJ stated in Baltic Shipping Company v Dillon (1993) 176 CLR 344 at 352:
There can, of course, be no … failure [of consideration] when the plaintiff’s unwillingness or refusal to perform the contract on his or her part is the cause of the defendant’s non-performance.
If the Consulting Agreement did not terminate automatically in December 2019 as concluded earlier, CGANZ may be seen as ultimately acquiescing in the abandoning of the Consulting Agreement, but any resulting mutual abandonment did not constitute an agreed termination on terms which required disgorgement of any part of the Service Fee. It may be possible that circumstances arise in which a mutual abandonment of a contract might give rise to a claim in restitution – see: Planché v Colburn (1831) 1 Moo & S 51; but see Mann at [185], [186]. However, the circumstances would need to be at least peculiar because if a contract is abandoned by consent the question of recovery is likely to revolve around the contractual terms (express, implied or inferred) of the consent abandonment rather than any question of restitution.
Conclusion on unjust enrichment
The Service Fee was paid upfront for a variety of matters including that CGANZ not promote any competing soccer brand in China for a five year period and that CGANZ “execute and secure CGF [Cantara Football] networks” in China. Ms Suranyi’s description of the upfront fee in her email of 22 January 2019 as an “execution fee” was not inapt. GISA received at the least a substantial part of that for which it paid the Service Fee. CGANZ was performing the Consulting Agreement when GISA either: (a) breached the Consulting Agreement in a way which resulted in its automatic termination; or (b) unilaterally abandoned performance of the Consulting Agreement in a way which substantially deprived CGANZ of the ability properly to perform its part of the agreement (which necessarily required the co-operation of GISA). There was no total failure of a severable part of the consideration or any “vitiating factor” giving rise to a prima facie right to restitution on the part of GISA.
CONCLUSION
The proceedings must be dismissed with costs.

I certify that the preceding two hundred and sixteen (216) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.
Associate:
Dated: 23 December 2022

File number(s):	NSD 1372 of 2020
Judgment of:	THAWLEY J
Date of judgment:	23 December 2022
Catchwords:	CONTRACTS – breach of contract – failed business venture between applicant and first respondent to run youth soccer training camps in China – construction of contract – ascertainment of parties to the contract – whether contract contained a term that the first respondent “ensure” participants at camps paid fees –– whether contract contained a term that the first respondent was required to make “reasonable efforts” to arrange two further sets of soccer camps in the first year of the contract – applicant alleged the contract erroneously omitted a reference to 3 sets of camps in the first year – held that, even if rectification had been pleaded, there was no mistake – no breach of contract established CONSUMER LAW – misleading and deceptive conduct – where applicant paid upfront “Service Fee” to respondents for a number of matters including a five year exclusive arrangement pursuant to which the ’brand “GISS” or “Genova” would be promoted in China – whether the respondents represented the Service Fee would be recouped in the first year of contract – held that no such representation was made – held that respondents represented the Service Fee would more likely than not be recouped – held that there was a reasonable basis for making representation at the time it was made – in any event, the applicant did not enter into the contract because of the representation – whether first and second respondents represented they would promote ’“”GISS as the “central brand” of the business venture – whether first and second respondents represented GISS would become the “sole focus” of the business venture - respondents did promote applicant’s brand as the “central brand” and this was the sole focus in the sense in which that representation was made– representations not misleading nor deceptive UNJUST ENRICHMENT – whether respondents were “unjustly enriched” by receiving the “Service Fee” under the contract – where applicant pleaded that it had not received any benefit under the contract – where applicant changed its case in opening submissions to an allegation that there was a total failure of a severable part of consideration – leave to amend not sought – whether vitiating factor existed in the form of a total failure of a severable part of the consideration – where contract was automatically terminated upon breach by the applicant or an associate of the applicant reaching an informal agreement for a third party to promote the GISS or Genova brand – where applicant had in any event abandoned any requirement for the first respondent to continue to perform the contract and failed to co-operate such that the first respondent could not properly perform its obligations under the contract – no total failure of a severable part of the consideration – application dismissed
Legislation:	Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 2, 4, 18, 236 Federal Court of Australia Act1976 (Cth) s 37M Federal Court Rules2011 (Cth) rr 1.34, 4.01, 11.02
Cases cited:	Commissioner of Taxation v Bogiatto [2020] FCA 1139 David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498 Fitzgerald v Masters [1956] HCA 53; 95 CLR 420 Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138; 280 FCR 479 HDI Global Specialty SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296; 104 NSWLR 634 Kewside Pty Ltd v Warman International Ltd (1990) ASC 55-964 Mann v Paterson Constructions Pty Ltd [2019] HCA 32; 267 CLR 560 Nea Pty Ltd v Magenta Mining Pty Ltd [2007] WASCA 70 Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 RP Data Pty Limited v Hardingham [2022] HCA 39 Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603 Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949 Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720; 369 ALR 299 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 Watson v Foxman (1995) 49 NSWLR 315 Yorke v Lucas [1985] HCA 65; 158 CLR 661
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs:	216
Date of hearing:	14 – 16 December 2022
Counsel for the First Applicant:	Mr James McLeod

order made by:	THAWLEY J
DATE OF ORDER:	23 DECEMBER 2022