Muller & Ors v Australian Rugby Football League Ltd

[1996] QSC 14

IN THE SUPREME COURT

OF QUEENSLAND
  No.1140 of 1996

[Muller & Ors v. Australian Rugby Football League Ltd & Anor]

BETWEEN:
  JEFFREY MULLER
  First Plaintiff
AND:
  G.C.G. RUGBY LEAGUE LIMITED
  (A.C.N. 072 711 365)
  Second Plaintiff
AND:
  COASTVEST LIMITED
  (A.C.N. 072 590 875)

Second Respondent

AND:
  AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED
  (A.C.N.  003 713 933)
  First Defendant
AND:
  NEW SOUTH WALES RUGBY LEAGUE LIMITED
  Second Defendant

JUDGMENT  -  DERRINGTON J.

Delivered:29 February 1996

CATCHWORDS:     Interlocutory Injunction - Formation of contract - Claim for specific performance - Licence to field football team in Defendant's competition - Parties reached agreement - Refusal proceed prior to execution - Whether sufficient level assurance of binding contract to support injunction - Whether injunction suitable - Continuing relationship between parties - Whether adequate compensation in damages - Balance of convenience.

Counsel:Mr P. Morrison QC and Mr A. Crowe for the Applicants

Mr R. Chesterman QC and Mr G. Newton for the Respondents

Solicitors:McLaughlins for the Applicants

Deacons, Graham and James for the Respondents

Hearing date :   20, 21 February 1996
IN THE SUPREME COURT

OF QUEENSLAND
  No.1140 of 1996

[Muller & Ors v. Australian Rugby Football League Ltd & Anor]

BETWEEN:
  JEFFREY MULLER
  First Plaintiff
AND:
  G.C.G. RUGBY LEAGUE LIMITED
  (A.C.N. 072 711 365)
  Second Plaintiff
AND:
  COASTVEST LIMITED
  (A.C.N. 072 590 875)

Second Respondent

AND:

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED
  (A.C.N.  003 713 933)
  First Defendant
AND:
  NEW SOUTH WALES RUGBY LEAGUE LIMITED
  Second Defendant

JUDGMENT  -  DERRINGTON J.

Delivered 29 February 1996

This is an application for an interlocutory injunction by the plaintiffs, who are in  effect the owners of a rugby league club, against the defendants, which control the rugby league football competition in Australia.  The injunction is sought in support of a claim in the action for the specific performance by the defendants of an alleged agreement to permit the plaintiffs' team to participate in the defendants' Australian competition for the coming year.
           Denying the agreement, the defendants claim that the plaintiffs cannot make out a sufficiently clear case to support an interlocutory injunction of this kind; that because of the close ongoing personal relationships involved, this is not a suitable case for specific performance or an interlocutory injunction of a mandatory nature; and that in any case damages would be an adequate and just remedy if the plaintiffs are successful in the action.
           The essential history of the matter is fairly simple.  The parties came to a satisfactory accord on what may  be described as the broad heads of agreement on the terms of the grant of a licence to the plaintiffs' club.  Their solicitors were then to proceed with the negotiation of details, to be followed by suitable documentation.  This was pursued to the point where agreement was reached on all the details, and the spokesman for the defendants made a public announcement that in effect full agreement had been reached and that the plaintiffs had been granted the licence.  A few days later, and before the intended documents reflecting the agreed terms had been drafted, the plaintiff, Mr Muller, by inept interference in the club's affairs created such instability that its chief executive officer and some other important personnel associated with it resigned.
           Validly disturbed by these developments the defendants seem to have had second thoughts as to the wisdom of the contract and refused to proceed further with it, saying that there was no concluded agreement on the details that were the subject of the final negotiations.  They refuse to acknowledge the club's right to participate in the competition and began to move to take control of its team.   Its right to take the lastmentioned action in any event is obscure but no point is made of that so it will be ignored.
           In answer to the defendants' concern at Mr Muller's conduct in affairs outside his competence, the plaintiffs have appointed a new chief executive officer and other responsible staff who appear to be well qualified and attract no criticism.  They claim to be independent within their respective jurisdictions and Mr Muller will give an undertaking that he will interfere no more.  A similar undertaking given for the period of the interim injunction has apparently been honoured, but little weight should be given to that because of the special restraint that would be encouraged by the pendency of this hearing.  The defendants point to his conduct at a critical time as demonstrating his unreliability over a period of time when the restraint on him is not so immediate.  
           Their primary argument that there was no agreement has two legs, the first being that there was no final accord on some relevant detail; and the second is that in any case the contract was not to be binding until it was executed in written form.  As to the former, they attempt to explain away the statement of their spokesman by his present claim that he said something that was not quite correct for an advantage elsewhere.
           This unfortunate approach is compounded by the contradiction by their own solicitor's correspondence of their denial of agreement on the final details.  There had been three areas of detail to be resolved, one of which is now conceded to have been finalised.  Of the other two, one concerned the contents of a deed to contain the terms and conditions of the licence, and the other related to the nature and extent of the security to be provided by the plaintiffs for their performance of  their obligations under it.
           As for the former, the defendants' solicitor clearly acknowledged, correctly, that agreement as to its terms had been achieved.  It does not derogate from this that the description in the draft deed of the securities to be provided and its inclusion of a party who was to provide part of them did not reflect the later result of negotiations on those topics which were still in train.  The inclusion in the draft of these details was provisional only and subject to amendment upon the resolution of the negotiations.  Agreement on them was concluded shortly after and the adjustment to the draft deed was impliedly automatic.
           The defendants also argue now that as the identification of the party who was to hold the licence had been left as a blank in the draft deed, the omission indicates that there had been no agreement on this issue.  The implication from the negotiations was that the identity of this party, probably a nominee company, was to be at the choice of the plaintiffs.  Consequently it did not have any bearing on the finalisation of  the terms, though it may be relevant to the question whether the contract was to become binding before the final documents were executed.
           There is a strong implication from the correspondence, as confirmed by the statement of the defendants' spokesman, that agreement as to the securities  had been reached.  The former does not explicitly acknowledge agreement, but it clearly implies that the defendants were prepared to accept a modification proposed by the plaintiffs of the list requested by them. Though the negotiations were conducted with urgency, in the intervening period leading up to the rupture there was no suggestion from any source that further agreement on any  matter was necessary.  Nor has counsel for the defendants pointed to anything of substance that would counter the force of these factors.
           The various arguments otherwise advanced by the defendants to suggest that the plaintiffs are somehow in default are equally without merit.  Any interruption to the orderly progress of the transaction towards completion was due to the stand taken by themselves, which amounted  to a repudiation.  There is no evidence that the plaintiffs were not ready willing and able to proceed to completion within a reasonable time.  Moreover there is not the slightest indication of their repudiation.  On the contrary, they have always exhibited their willingness to proceed with the contract according to its tenor.
           In the result it seems reasonably clear that the parties had reached full agreement on all matters before the defendants first refused to proceed.  There is still the question as to whether a binding contract had been formed, and this depends on the category defined in Masters v Cameron (1954) 91 CLR 353, 360 into which the transaction falls. At first the plaintiffs contended that the parties intended to be immediately bound on entering into the original heads of agreement, but they wisely abandoned this in argument and have relied on the second category, that is, one where the parties have reached a full binding agreement conditional only on the execution of a written contract. The defendants say that the arrangement comes within the third category where the parties are not bound unless and until a written document is executed.
           Both cases are certainly arguable, but for the purposes of the present hearing the issue does not have to be decided finally.  In a matter such as this, however, it is necessary that the plaintiffs establish a high degree of assurance of success, for an injunction of the kind sought, though negative in form has a mandatory effect in substance: Redland Bricks Ltd v Morris (1970) AC 652; State of Queensland v Australian Telecommunications Commission (1985) 59 ALJR 562; Active Leisure (Sports) Pty Ltd v Sportsman's Australia Ltd (1991) 1 Qd R 301. It is couched in terms of prohibition but its effect is really to require the defendants to include the plaintiffs' team in its fixtures and to afford it all the benefits of the defendants' organisation and services in that regard. There are some further orders sought that are of a restraining nature, but these are purely ancillary to the principal relief.
           The defendants' case is not without some virtue.  Reference has already been made to one feature that might support the inference that the parties intended that the formality of documentation was essential to a binding result.  Further, despite the defendants' public announcement, which may well have been made prematurely out of urgency and in the reasonable expectation of a successful conclusion of the transaction, the nature and circumstances of the transaction itself would support a reasonable argument that the parties had that intention.
           To refrain from expressing a conclusion  will leave the trial unburdened by any interlocutory view formed on insufficient material; and if it becomes necessary on appeal to decide the point, as all the material is in written form the court will be equally as well placed to do so.  It should however be said that for present purposes there is serious doubt as to whether a sufficiently high level of assurance of the plaintiffs' success can be achieved on the available material to support an injunction.  However there are other issues that are more decisive.
           The factors most strongly adverse to the plaintiffs' success at an interlocutory stage are that there is no serious risk that their claim will not be adequately and justly compensated for in damages if they are successful, that there is a serious risk that the defendants will not be adequately compensated by the plaintiffs' undertaking as to damages if they are successful, and that this is not a suitable case for an injunction because of the nature of the continuing relationship between the parties that it would require.  Further, this dealing had not reached the stage where it could be said that there was an established status quo to be maintained.  These are elements of the balance of  convenience.
           That specific performance of an agreement in question may not have been granted in the end is not determinative of an application for a mandatory injunction: Sanderson Motors (Sales) Pty Ltd v Yorkstar Motors Pty Ltd (1983) 1 NSWLR 513, 516; State Transport Authority v Apex Quarries Ltd (1988) VR 187,192; but this does not mean that it is not to be taken into account: Kurt Keller Pty Ltd v BMW Australia Ltd (1984) 1 NSWLR 353, 371. In the present case, because of the limited period of the licence and because the trial will probably not be held before its natural effluxion, an interlocutory injunction would amount to specific performance. Its existence would impose on the defendant the problems which it is entitled to avoid if it is right, while a refusal would deny to the plaintiffs their exercise of the rights they would have if successful, except for their right to damages.
           Nothing has been advanced that would support the view that damages would not be a sufficient remedy if the plaintiffs are successful.  Though their proof may demand some effort and care, there should be no insuperable difficulty in that exercise.  Theoretically, if the agreement had been completed the plaintiffs would have been able to sell their interests flowing from it, as with any other similar commodity, and of course such a transaction is far from unknown.  Indeed, it is deposed to and not denied that after this dispute began Mr Muller offered to sell the plaintiffs' interest to the defendants  Further, there is nothing flowing from the alleged contract that is of unique personal value to them.  An argument that the reputation of Mr Muller will somehow be besmirched if he is only given damages rather than the licence is without foundation for the reasons for that result, if founded on the sufficiency of damages, would be explained in the judgement.  There is no convincing demonstration of irreparable harm to the plaintiffs by the refusal of the injunction.
           Nor is there any feature of their case that would carry their cause further if the test were formulated as: Is it just in all the circumstances that the plaintiffs should be confined to their remedy in damages?  See Evans Marshall & Co Ltd v Bertola S.A. (1973) 1 WLR 349, 379: State Transport Authority v Apex Quarries Ltd (supra).  In the circumstances of this case there is no practical difference between the tests.
           If the defendants finally succeed in the action but have been subjected to an interlocutory injunction, they will have much more difficulty in identifying, proving and evaluating their losses.  These would be of a less tangible kind.  The disruption of its organisation, the possible adverse effects of any difficulty engendered by the plaintiffs' presence in the fixtures that require continuous and undisturbed participation for the entire season, and the disturbance that could occur from personality differences, even within the terms of any undertakings by the plaintiffs, all would present serious problems for adequate compensation in money terms.
           The next factor in the balance of convenience is more telling. The difficulties inherent in maintaining a state of affairs where the parties are to be brought into a quasi-personal relationship such as this are large.  The situation here is to be distinguished from that found in some of the decided cases where there is already an established pattern of ordinary dealing between the parties that could be seen to be capable of reasonably comfortable preservation.  As it has been observed, there was no status quo to maintain other than arguably in a purely technical sense. 
           It is not to the point that the regime in the defendants' organisation was generally established and the rules regulating  the ordinary dealings of the parties inter se were set down.  The season had not begun and there had not been any dealings  under the alleged contract by way of performance of its terms.  At its highest, the plaintiffs' claim is that the contract had just been completed and they had  resumed their pre-contractual preparations to take advantage of it.  This is not analogous to the position in some of the precedents where there had been an established course of dealing over a period of time. 
           More important is the nature of the expected dealings between the parties under the contract.  This is not the type of case where there would be a simple uncomplicated range of rights and duties between them such as  in the provision of goods and services of a commercial kind.  Even where there is a degree of complexity in the contractual dealings, an injunction may be granted in suitable circumstances: Thomas Borthwick & Sons (Australasia) Ltd v South Otago Freezing Co Ltd (1978) 1 NZLR 538,551; but it is a matter of degree and where as here the range of interrelated activity is more extensive, the court will refuse to force the parties into a relationship that provides serious scope for conflict.
           In answer to this, the plaintiffs point to the defendants' set of rules forming part of the contract that generally control the affairs of the clubs in their dealings with the defendants.  This, they say, provides a clear and full regulation of the issues that could arise between them.  In addition, they offer a reformed domestic structure of their club and a number of supplementary undertakings as a means of avoiding the difficulties that they recognise as adverse to their present claim. 
           While this is a well conceived argument that strengthens their case in this critical area, the circumstances are too complex and the areas of possible conflict are too laden with questions of value judgment for these remedies to be suitable.  The opportunity for conflict is too open and proximate to allow any sound  comfort that the plaintiffs' proposals would be efficacious in avoiding trouble or facilitating the resolution of disputes.
           In this it is necessary to have some practical understanding of the potential for some form of disturbance by the intervention of Mr Muller after a licence is secured by an injunction.  This could happen in many ways that may arguably not in default of the undertakings.  If, without it being decided, his disposition is such as to cause the defendants to have genuine concern, then the potential for disturbance is too high to be acceptable in this context.  It is enough that his conduct to the present time, so far as it has been reasonably demonstrated, has been unsatisfactory and it is impossible to be satisfied that the reforms that have been put in place or offered would long survive  the granting of an injunction, other than sufficiently to keep up appearances.  If the complaints of him are true, he does not seem to have shown good sense in the past.
           It should be emphasised that no concluded view can be reached on many of these matters but this is a very sensitive area.  If the past conduct of a party seeking such an injunction has  caused the other reasonably to have a real and genuine concern that the close relationship necessary to the projected dealings between them cannot work, even with proposed safeguards, then the court will not force it against the will of the latter, particularly where the other factors of the balance of convenience do not indicate otherwise; cf. Atlas Steels (Australia) Pty Ltd v Atlas Steels Ltd (1948) 49 SR (NSW) 157, 160: Dataforce Pty Ltd v Brambles Holdings Ltd (1988) VR 771. While superficially this case is not analogous to one involving the performance of personal services, in principle the factors operating in such cases have logical force here also: cf. Atlas Steels (supra); Astor Electronics Pty Ltd v Japan Electron Optis Laboratory Co. Ltd (1966) 2 NSWR 419, 427.
           On an objective view of  it, Mr Muller's past conduct probably caused the defendants to have such concern, for closely following upon it they attempted to escape from the contract and there appears to have been no other reason to provoke such a reaction to a newly-formed agreement while such conduct might well do so.  In those circumstances it is impossible to adjudge the remedies advanced as sufficient.  That is not to say that they would not be sufficient, but because of the circumstances it is not possible to have the confidence in them that would justify an injunction without other strong supporting factors

           The defendants' case in this respect is enhanced by the absence of any established course of dealings under the alleged contract as referred to above on another point.  It cannot be seen from past experience that the relationship enforced by an injunction should work comfortably enough.  Nor are there any other features that could be used in this way to support a grant.  While the organisation of the club and its teams is advanced, since the contract was allegedly concluded the plaintiffs have not moved far in this direction beyond what was already there.  To the extent that they may have committed themselves to expense or liability as the result of any contract, these can readily be met by an award of damages if necessary.
           There is no substance in the defendants' argument that by a provision in the rules  incorporated into the alleged contract, they can move to cancel the licence if the league is of the opinion that the conduct of the club or its owners is harmful to the organisation.  For this proposition, the defendant relied on some statements in The Administrative and Clerical Officers Association v The Commonwealth (1979) 53 ALJR 588. But this power can be exercised only on the foundation of an honest opinion supported by reason, if not necessarily correct. It is not to be used for ulterior purposes and despite their questionable approach to the conduct of this action it should not be assumed, especially to their own advantage, that they would so use it. The only thing that can be said of the relevance of this rule is that it provides another avenue for conflict, even if both parties are honestly in dispute on some matter for which the rule is invoked.
           Something further should be said of the defendants' approach to this litigation, which might euphemistically be described as robust and overbearing, advancing every argument no matter how poor and failing to acknowledge what should have been acknowledged.  They may need to adopt a strong and authoritative attitude, within reason, in exercising discipline over clubs and players; but when they are answering the claims of others in a court, any contemptuous disrespect for their rights or for the need to behave properly as a litigant will be dealt with as it deserves.  However, conduct of that kind in the present proceedings does not affect the result, for that depends on other considerations.
           All of the factors discussed above, given their proper weight according to the circumstances of the case, should be brought into the equation.  While other cases are useful in defining the principles to be applied and in providing examples of their application, each case is different as to the existence and respective weights of the competing factors: Beltech Corporation Ltd v Wyborn (1988) 92 FLR 283, 288. In this case, in the totality the preponderance of convenience firmly favours the denial of these interlocutory remedies sought by the plaintiffs.
           The application is dismissed with costs, including reserved costs, to be taxed.