In the Matter of ARL Gold Coast Football Club Ltd

[1999] QSC 325

SUPREME COURT OF QUEENSLAND

REGISTRY:     BRISBANE       
NUMBER:    S 9039 of 1999

Before Justice Wilson

[In the matter of ARL Gold Coast Football Club Ltd]

IN THE MATTER OF THE CORPORATIONS LAW

AND

IN THE MATTER OF AUSTRALIAN RUGBY LEAGUE

GOLD COAST FOOTBALL CLUB LIMITED ACN 0722 882 083

REASONS FOR JUDGMENT – WILSON J

Delivered the 26th day of October 1999

1. This is an application pursuant to s 459G of the Corporations Law to set aside a statutory  demand.  The demand is for $13,500.

1. The applicant is a rugby league club.  The respondent is a professional rugby league player.  The applicant engaged the respondent for the 1998 season pursuant to a playing contract dated 20 February 1998.  It provides for a playing fee for the season of $40,000 together with incentive fees to be paid per game according to whether the result was a win, a loss or a draw for the club.  Those fees were set out in the first schedule to the contract which so far as relevant was expressed as follows:-

“(1)Where the Player was a member of the first grade team when play           began or a fresh reserve who participates in the game and the team:

(a)       won the Game             $1500
(b)       lost the Game                $750

(c)       drew the Game   $Nil”

In the 1998 season the club lost 18 of its 24 games, and the claim is for $750 x 18.

1. The season extended from February to October.  The claim was made on 11 November.  It was immediately rejected, the applicant asserting a typographical error in the contract such that the incentive fees should have been:-

(a)       won the Game  $1500
(b)       lost the Game  $Nil

(c)       drew the Game            $750.

Under s 459G the court may set aside a demand if it is satisfied, inter alia:

“(1)   …

(a)that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;

(b)      …”.

To be genuine the dispute must be bona fide and truly exist in fact, and the grounds for alleging its existence must be real and not spurious, hypothetical, illusory or misconceived:  Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 at 464.

1. In the present case there is a factual dispute as to whether there was a prior oral agreement between the parties.  Mr Armstrong, the applicant’s chief executive officer, says that the applicant’s offer of $40,000 playing fee plus incentives of $1,500 for a win, $750 for a draw and nil for a loss was rejected by the respondent who wanted more money.  Subsequently there was a side agreement between the respondent and the Australian Rugby League for additional payment.  Mr Armstrong says that there was then a meeting in his office at which an oral agreement was reached pursuant to which the applicant would pay a playing fee of $40,000 and incentive fees of $1,500 for a win, $750 for a draw and nil for a loss; he says that the respondent accepted this unconditionally and that they agreed a contract should be drawn up in those terms.  He says that the contract was signed at a meeting on 20 February 1998.  So far as he can remember Mr Teevan did not read the contract and he did not do so.

1. Mr Teevan agrees with the essential purport of the initial meeting, and agrees that there was a subsequent side agreement between him and the Australian Rugby League.  However, he says that then he had a telephone conversation with Mr Armstrong in which he said he would accept the $40,000 playing fee provided something were done about the incentives.  He says that at the meeting on 20 February the contract was signed.  He says that Mr Armstrong pointed to the $40,000 indicating that amount would not be increased.  The respondent says he perused the contract, and saw the incentives as $1,500 for a win, nil for a draw and $750 for a loss, which he considered an improvement on the earlier offer. Therefore he signed the contract.

1. The applicant’s counsel put his case on three bases:

(a)        that the error in the contract was so obvious that it could be corrected by a process of statutory construction without the necessity to resort to the remedy of rectification: Fitzgerald v Masters (1956) 95 CLR 420;

(b)        rectification: that the parties had intended to record their antecedent oral agreement, and that by common mistake there was a disconformity between the oral bargain and the writing: Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 349;

(c)        that the respondent had been aware that the applicant entered the contract under a serious mistake or misapprehension about the incentive fees and had deliberately set out to ensure that it had not become aware of the existence of that mistake or misapprehension; Taylor v Johnson (1982-83) 151 CLR 422 at 432.

1. It is not for me to resolve the factual dispute.  Both Mr Armstrong and Mr Livermore of the Australian Rugby League were cross-examined briefly.  Suffice it to say that I am satisfied that the dispute is a genuine one, and that the grounds for alleging its existence are real.

1. The respondent’s counsel submitted that the applicant’s case was “shadowy” and that if I determined to set aside the statutory demand I should order the moneys to be paid into court pending the resolution of the dispute.  He relied on the facts that the company is not trading, and that it had failed to take the initiative in invoking the dispute resolution procedure in the contract or commencing proceedings for rectification.  He submitted that any recovery proceedings by the respondent could be expected to be in a Magistrates Court if in Queensland or in a Local Court if in New South Wales (the parties having agreed that this contract should be subject to New South Wales law: contract clause 18), and that such courts lack jurisdiction to grant rectification.  Be that as it may, I do not accept that it was incumbent on the applicant to commence rectification proceedings.  A party who believes that a claim asserted against it is baseless is entitled to wait and see if the party making the claim takes action to enforce it.  In short, I do not regard the applicant’s case as “shadowy”. 

1. I order that the statutory demand be set aside.

1. The applicant has sought costs on an indemnity basis.   I shall hear counsel on this issue.