News Limited & Ors v South Sydney District Rugby & Ors

[2002] HCATrans 282

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S34 of 2002

B e t w e e n -

NEWS LIMITED

First Appellant

NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED

Second Appellant

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED

Third Appellant

NATIONAL RUGBY LEAGUE LIMITED

Fourth Appellant

and

SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

First Respondent

CANBERRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Second Respondent

CANTERBURY-BANKSTOWN RUGBY LEAGUE CLUB LTD

Third Respondent

CRONULLA-SUTHERLAND DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Fourth Respondent

NEWCASTLE KNIGHTS LIMITED

Fifth Respondent

ST GEORGE ILLAWARRA RUGBY LEAGUE FOOTBALL CLUB PTY LIMITED

Sixth Respondent

BRISBANE BRONCOS RUGBY LEAGUE CLUB LIMITED

Seventh Respondent

COWBOYS RUGBY LEAGUE FOOTBALL LIMITED

Eighth Respondent

MELBOURNE STORM RUGBY LEAGUE CLUB LIMITED

Ninth Respondent

MANLY WARRINGAH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Tenth Respondent

NORTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Eleventh Respondent

EASTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Twelfth Respondent

PENRITH RUGBY LEAGUE CLUB LTD

Thirteenth Respondent

PARRAMATTA DISTRICT RUGBY LEAGUE CLUB LTD

Fourteenth Respondent

WESTS TIGERS RUGBY LEAGUE FOOTBALL PTY LIMITED

Fifteenth Respondent

AUCKLAND WARRIORS RUGBY LEAGUE LIMITED

Sixteenth Respondent

MANLY-NORTHS RUGBY LEAGUE FOOTBALL CLUB PTY LIMITED

Seventeenth Respondent

VALIMANDA PTY LIMITED

Eighteenth Respondent

AH CB PTY LIMITED

Nineteenth Respondent

BRISBANE BRONCOS CORPORATION PTY LTD

Twentieth Respondent

GLEESON CJ

McHUGH J
GUMMOW J
KIRBY J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 6 AUGUST 2002, AT 10.19 AM

Copyright in the High Court of Australia

__________________

MR A.J. MEAGHER, SC:   May it please the Court, I appear with MR M.J. LEEMING for the appellants.  (instructed by Allens Arthur Robinson)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR S.A. GLACKEN, for the first respondent.  (instructed by Nicholas G. Pappas & Company)

MR N.J. YOUNG, QC:   May it please the Court, I appear with my learned friend, MR M.H. O’BRYAN, seeking leave to intervene on behalf of the Australian Competition and Consumer Commission.  (instructed by the Australian Government Solicitor)

GLEESON CJ:   Now, just before we deal with that matter, Mr Young, could I mention that there is a certificate from the Deputy Registrar that she has been informed by the solicitor for the second to the twentieth respondents that the second to the twentieth respondents will submit to any order of the Court save as to costs.  What is the attitude of the parties to the application by Mr Young, Mr Meagher?

MR MEAGHER:   We do not oppose it, your Honour, on the basis indicated in our submissions in reply.

GLEESON CJ:   Mr Jackson?

MR JACKSON:   Your Honours, with two qualifications, we do not object to the intervention.  One is trivial; one is more substantial.  The trivial one is simply a question of the order of addresses.  We have discussed it amongst ourselves and assuming that leave to intervene were granted we would submit the appropriate time would be after our learned friend and before us.  The second matter, however, your Honours, concerns one aspect of the contentions on behalf of the ACCC, namely that which appears in paragraphs 30 to 37 of our written submissions.  It is the temporal aspect of competition, if I can put it shortly. 

Your Honours, that is an issue which we object to being raised by the intervener, for a number of reasons.  It was not the subject of an application for special leave.  It is an issue which is not raised by the appellants’ contentions and, in consequence, is not dealt with by ours.  It is an issue decided in our favour, both at first instance and on appeal by all the members of the court, and for the intervener to address submissions on the issue is to allow a matter not in issue between the parties to become the subject of dispute in this Court and, your Honours, without special leave.

GLEESON CJ:   Well, perhaps we can deal with that further when we hear what is involved in that submission and you can press that argument that you make at that stage.

MR JACKSON:   Yes.

GLEESON CJ:   There is another aspect that you have not mentioned, Mr Jackson, and that is the question of time.  We plan to finish this case today.  Do either you or Mr Meagher think it will be necessary to impose any time limit on Mr Young in order to achieve that result or are you prepared to take that risk yourselves?

MR JACKSON:   Your Honour, I am prepared to take the risk.  I expect the case will finish today.

GLEESON CJ:   Yes, you have that leave, Mr Young.  Yes, Mr Meagher.

CALLINAN J:   Could I just mention that I was retained by News Limited as chairman of a disciplinary body for some time before I was appointed to this Court.  I would not have thought that raised a problem, but I just mention it.  Is there any difficulty about that?

MR MEAGHER:   Certainly not for our part, your Honour.

MR JACKSON:   Your Honour, I would be very surprised.  I will have that checked, but I would not ask your Honour to stand it down at the moment.

McHUGH J:   I used to have a retainer for News Limited, but it was nearly 20 years ago, so I do not regard that as having any bearing.

MR JACKSON:   Statute barred, I think, your Honour.

GLEESON CJ:   Yes, Mr Meagher.

MR MEAGHER:   If it please your Honours.  The question in this appeal is whether the so-called 14‑team term was an exclusionary provision within the meaning of section 4D of the Trade Practices Act.

GLEESON CJ:   Where is the most convenient place to find that term in the papers?

MR MEAGHER:   It is set out in paragraph 21 of our written submissions.

GLEESON CJ:   Where do we find the term of the contract in the papers?  I want to see the term in the context of the contract.

MR MEAGHER:   It is volume 10 or 11, your Honour.

KIRBY J:   Some time I would like to see the letter that was sent to Souths that they had missed out.  That is referred to on 3434 paragraph 16 of Justice Heerey’s opinion.

MR MEAGHER:   Your Honour, the precise formulation of the term evolved over the period from December 1997 through to May 1998 when the final form of agreement, the merger agreement, was executed between the parties.  The merger agreement is set out in volume 12 of the appeal books.  It commences at page 2518.  The relevant clause is clause 7 which commences at page 2529.  Souths did not contend and, as we understand it, does not contend that the whole of that clause constituted the so‑called 14‑team term.  There were particulars provided of the ‑ ‑ ‑

GLEESON CJ:   If we could just stick with the language of the statute for a moment, what we need to identify is the provision.  Section 4B is about a provision of a contract.  What is the provision?  I presume the contract is that which you have just taken us to.

MR MEAGHER:   The provision which was pleaded is the provision in clause 7.9.  As I indicated to your Honours, we have set out in our written submission the references to the pleaded term.  But clause 7.8 provided that before 1 October 1999 there must be no more than 14 franchisees and then 7.9 provided that:

In a 14 team NRL Competition, there will be no less than six teams, and a maximum of eight teams, from Sydney.  Conversely, there will be no less than six teams, and a maximum of eight teams, from regions outside Sydney.

GLEESON CJ:   Now, the principal object of the contract, as distinct from the provision, was to implement a merger, is that right?

MR MEAGHER:   To implement a merger which had a particular result, namely a competition conducted by the merged entity which would be sustainable in the medium to long term.

GLEESON CJ:   And that is referred to in recital B on page 2521, is that right?

MR MEAGHER:   That is so.

GLEESON CJ:   Now, in terms of section 45 of the Act, did anyone contend at any stage that that fell within section 45(1)(b) of the Trade Practices Act?

MR MEAGHER:   No.

GLEESON CJ:   But the entire purpose of the merger was to get rid of the competition between the two competitors, was not it?

MR MEAGHER:   Yes, but in a context where both parties had formed the view that that competition – that is the competition between the two competitions – would not survive in the medium to long term.

McHUGH J:   Well, that is what happens in price wars, where if you get together to put an end to the price war you are likely to run foul of Part IV.

KIRBY J:   Justice Heerey mentions (b) but it is not then developed.  Could we ignore it in the way the matter proceeded below or not?

MR MEAGHER:   In my submission, yes.  The way this case was conducted below was solely by reference to an allegation that the 14‑team term was an exclusionary provision and thus ‑ ‑ ‑

GUMMOW J:   …..(2)(a)(i) all that was pleaded, was not it?

MR MEAGHER:   Yes.

GUMMOW J:   So it was the making ‑ ‑ ‑

MR MEAGHER:   It was the making of 45(2)(a) ‑ ‑ ‑

GUMMOW J:   Not the giving effect to?

MR MEAGHER:   Or the giving effect to under 45(2)(b)(i).  If I could just say this in further response to what your Honour put.  In an analysis involving an allegation under 45(2)(a)(ii) would necessarily involve a market analysis, and there was no market analysis undertaken.  The inquiries below were solely as to purpose for inclusion of the provision.

GUMMOW J:   Yes.  If you could bring yourself within the exclusionary provision, you are advanced, in a sense, that you do not have such a difficult case and you do not have to get into markets.

MR MEAGHER:   One does not have to engage in a market analysis at all and, indeed, there really might be more than one possible market analysis which would need to be undertaken in a context of the conduct of competitions which are designed in part to be sold to television to be viewed by spectators.

GLEESON CJ:   Now, the competitors who entered into this agreement were which of the parties referred to on page 2521?

MR MEAGHER:   The Australian Rugby Football League and, I think, strictly National Rugby League Investments Pty Limited, they were the two entities which were conducting the competitions.  The Australian Rugby Football League Competition was conducted on its behalf by the New South Wales Rugby League and the National Rugby League Investments was a subsidiary of News Limited.  Perhaps I should correct that.  I think, on reflection, that the party conducting the Super League Competition was Super League, itself.

KIRBY J:   Investments is not a party to the agreement that you have taken us to.

MR MEAGHER:   Yes, it is.  NRLI, your Honour, is a party to the merger agreement.

KIRBY J:   I see, yes.  It is the fourth, yes.  You said “Australian” and I was looking for Australian International.

MR MEAGHER:   So it is the ARL and either Super League or NRLI, as there indicated, who were the parties conducting the competitions.

GLEESON CJ:   So the provision that fell foul of section 4D and 45(1)(a) was the provision that there would be a maximum of eight teams in the new competition.

MR MEAGHER:   No.  If your Honour goes back to clause 7 – I should have included 7.5 – 7.5 stated that:

No more than 14 teams will participate in the 2000 NRL Competition on varying terms depending on the level of satisfaction of the franchise criteria –

and 7.9 said that in that competition there would be a split between regional and Sydney teams, essentially, 6:8 or 8:6.  Now, those two clauses, 7.5 and 7.9 ‑ ‑ ‑

GUMMOW J:   Plus 7.1 which gives you the covenantal parties ‑ ‑ ‑

MR MEAGHER:   Yes, but the formulation of the pleaded 14‑team term encompassed what is said by clause 7.5 and 7.9.

GLEESON CJ:   Now, in so far as that provision was going to operate to keep out, that is to exclude from the 2000 competition teams, presumably it would operate to exclude to any team that wanted to be in the competition?

MR MEAGHER:   Which was not selected?

GLEESON CJ:   Yes, so it would exclude, for example, a team of barristers.  If a group of enthusiastic barristers got together and formed a rugby league and called themselves the “Legal Eagles” and said, “We want to play in this competition”, that provision would exclude them.

MR MEAGHER:   Yes.

GLEESON CJ:   And the operation of that exclusion would be no different than the operation to exclude South Sydney or any other team that wanted to be in the competition and could not be.

MR MEAGHER:   Yes.

KIRBY J:   The only difference was that Souths was extant and was operating and had players and presumably facilities and – a running business and as a corporation.

MR MEAGHER:   That is so.  Could I just make one point, your Honour.  Your Honour uses the word “exclude”.  We would stress that the position between the various clubs who were participating in 1997, 1998 and 1999, was that none of them had a right to participate in the year 2000 so that in a sense the exclusion is more correctly described as a selection against them as an applicant to participate in 2000.

GLEESON CJ:   What I am endeavouring to understand is the legally relevant difference, if any, between keeping out a club that had previously been in the competition and keeping out, for example, a new club that wanted to be in it.  What is the legal difference?

MR MEAGHER:   In our submission there is no legal difference.

McHUGH J:   So, if Lakes United and Newcastle wanted to enter the competition they would be excluded by this?

MR MEAGHER:   If they sought to participate, they qualified to participate but were not included by some process which may have been a selection process, then they would be excluded by the operation of this clause in the same way that Souths was.

GLEESON CJ:   I can understand why keeping out a team that had previously been in the competition would be more likely to cause trouble, but what I cannot understand at the moment is the difference from the point of the Trade Practices Act between keeping out a team that had previously been in the competition and keeping out any team that wanted to join the competition.

MR MEAGHER:   Our case is, your Honour, that there is no difference.  In that context, section 4D is not attracted.  The distinction between the case your Honour puts and a case which Justice Finn considered below was where it was proposed that there would be selection criteria which would discriminate in a way to select against a particular club or a group of clubs, so that it might be said that the operation of the limit, together with the proposed operation of selection criteria, would produce the consequence that a club or a group of clubs would not be permitted to participate. 

McHUGH J:   But, Mr Meagher, this discussion only indicates, to my mind, the importance of the point made in paragraph 37 of the intervener’s submission.  You do not take any point about that, and one’s approach to the construction of certain parts of this section may depend upon how one works it out in respect of other parts.  On one view, you can give these provisions a very liberal construction – as contended for by Souths – but on the understanding that these two entities were not in competition, in any relevant sense, in the year 2000, and would not have been in competition because of the significance of the 14‑team term.  Now you argued that point twice below. 

MR MEAGHER:   Well, your Honour, with respect, the inquiry that section 4D(2) addresses is whether they would have been in competition in the absence of the relevant provision, so that the inquiry is whether, absent here the merger, these parties would have been in competition with respect to the same services.  Now, the argument which was put below was that one aspect of the characterisation of the services was that they were to be delivered in 2000, and that the reality was that neither of these two competitions would have survived – or, at least, that the ARL competition would not have survived to 2000 – so that the probability was that they would not have been in competition in any event.  We were unsuccessful ‑ ‑ ‑

McHUGH J:   But the argument that is put by the ACCC is, is it not, that the introduction of a 14-team term and the merger of the two competitions into a single competition made a fundamental change in the whole structure of what one was examining or one has to examine for the purpose of 4D?  Now, at the moment anyway, we have submissions from the ACCC on the record; Mr Jackson does not want us to deal with it; they are going to have to deal with it at some stage; but at some stage I would also like to know what you have to say about this.

MR MEAGHER:   Your Honour, we do not press the competition point before this Court.  We have not raised it as a ground of our appeal and we do not press it.

GLEESON CJ:   What do you mean?

McHUGH J:   So if I come to the conclusion that you should have won in the Full Court, nevertheless, I am entitled to dismiss your appeal?  That is to say, if I come to the conclusion that both Justice Finn in the Full Court got it wrong on the competition point and you should have won, nevertheless, I am entitled to dismiss this appeal, if I am against you ‑ ‑ ‑

MR MEAGHER:   If your Honour is against us on the other points, that would follow from the grounds that we have raised.

McHUGH J:   Thank you.

KIRBY J:   But you say it does not arise because of the clause but for the provision of any contract or at least you accept that now in this Court?

MR MEAGHER:   In the way that Justice McHugh put the point to me in argument, yes, your Honour.  It is not as simple as simply saying they would not have been in competition because the 14-team term would have resulted in the merger and the merger would have resulted in one competition rather than two.  The inquiry is as to whether in the absence of the 14-team term and, therefore, the merger, they would nevertheless have been in competition.  The point we raised below was one which turned on a consideration of what the position would have been in 2000 if the two competitions had proceeded, absent merger, and we failed on that point and we do not seek to agitate it here.

KIRBY J:   I asked, and it does not have to be done now, if you would direct me to the letter that was sent to Souths telling them, in the words of Justice Heerey, “they missed out”.  It is a sort of somewhat soft way of telling them that they were not successful but ‑ ‑ ‑

MR MEAGHER:   I will get the reference to that for your Honour, I do not have it immediately at hand.

KIRBY J:   Not necessarily now, but I would like to see how the news was broken to them.

MR MEAGHER:   Your Honours, before going to the provisions of the Act, could I just indicate briefly what our position is in relation to the issue on the appeal.

The inquiry called for by section 4D(1)(b) is one of fact.  It inquires as to the correctness or otherwise of a single, factual proposition, and in this case it is to be answered by reference to the uncontested findings of the trial judge.  If one was to paraphrase the question, it is whether a substantial purpose of News and ARL for including that 14‑team term in their arrangement was to prevent supply of what are described as “competition organising services” to Souths or to a class or group of clubs which included Souths critically, as distinct from any other club or group of clubs.  In that context the purpose of the provision which is what section 4D operates upon, we accept is the effect or result sought to be achieved by the inclusion of the provision in the arrangement.

KIRBY J:   What do you say was the purpose properly classified?

MR MEAGHER:   To produce a unified competition which would be sustainable in the long term in circumstances where the parties had separately arrived at the conclusion that the two competitions could not survive and that the existence of the two competitions was causing damage to what is described globally as the game of rugby league.

KIRBY J:   I can understand that but we had a case recently where a judge asked in respect of the jury, what is the magic in 12?  And the question remains what was the magic in 14 which was a non‑negotiable number, given that it came down from 16?

MR MEAGHER:   Each of the parties ‑ ‑ ‑

KIRBY J:   Was it related to the – it was probably a conflict.  As I read the material it was that they had to be home and away, they had to be of a certain quality, they had to reduce the Sydney teams, they had to be of a sufficient number for the media presentation of the competition.  But at some stage, given that you are propounding that the majority got wrong the purpose, I would like to know what you say was the real purpose properly classified under the Act?  Why did it have to be 14?  What was the magic in 14?

MR MEAGHER:   I will take your Honour at some stage in the near future to the relevant findings of the trial judge, but could I point out to your Honour that the findings of the so‑called majority in the Full Court, Justices Merkel and Moore, were as to different purposes.  Indeed, Justice Moore’s purpose was what might be described as an inclusive purpose and Justice Merkel’s is what might be described as an excluding purpose, and one analysis – the two purposes are inconsistent.  Justice Moore’s is closer to that which was found by the trial judge and agreed in by Justice Heerey.

Could I return again to our overall position.  The adjective “particular” identifies the person or class which is the object of the purpose of preventing supply so that if the term was included to prevent supply to that person or class rather than anyone else or the rest, then each is relevantly particular, so that in our submission that word has nothing to say about the specificity with which the members of a class are identified or identifiable.  It describes them as the objects of the purpose which is the prescribed section 4D purpose and it follows in our submission that whilst for analysis it assists to consider questions of purpose separately, ultimately, the question posed must be considered as a whole and there must be a personal class which is the object of the prescribed purpose.  That is the way that the matter was approached by Justice Finn and Justice Heerey and to some extent Justice Merkel, at least in stating the relevant principle, and it is also the way in which the question has been approached by the Full Court of the Federal Court in a recent decision in Rural Press v ACCC which we have included.

GUMMOW J:   Is there a special leave application in that?

MR MEAGHER:   As I understand it there is not at the moment but it is anticipated that there may be.

McHUGH J:   The intervener says that case was wrongly decided.

MR MEAGHER:   We see that, your Honour, and we also observe the position the intervener takes with respect to the question whether particular requires some notion of being aimed at or being the object of the purpose is a point which was conceded before the Full Court in the Rural Press decision but ACCC seems to want to agitate it further before this Court.

KIRBY J:   Could you help me because I am not entirely aware of all of the jurisprudence in the Federal Court.  The word “boycott” appears in the marginal note, does it not, or the heading?

MR MEAGHER:   Yes.

KIRBY J:   Under – my recollection of the Acts Interpretation Act says that that is not part of the Act.

MR MEAGHER:   That is so.

KIRBY J:   But Justice Heerey refers to “boycott” – indeed he refers rather unkindly, I thought, to “Captain Boycott” and I just do not know what the status of boycott is.  Is it part of the case.

MR MEAGHER:   It is not a word that is used in the legislation and in fact the question whether section 45 should be addressed by reference to notions of primary boycott or secondary boycott was considered by this Court in Devenish v Jewel Food Stores 172 CLR.  I will not take the Court to it.  We accept that the words have to be construed without regard to any preconceived notions of what a primary or secondary boycott is but we, nevertheless, say that the words make it clear that they focus upon conduct directed to specific people or groups of people who become particular.

Could I, before taking your Honours to the provisions of the legislation, just take your Honours briefly to some of the material which preceded the introduction of these sections.  The current form of section 45 and section 4D and section 4F was introduced following the Swanson Report in 1976.  In the previous form of section 45 prohibited the making or giving effect to of contracts in restraint of trade or commerce which was a similar prohibition to the prohibition in section 1 of the Sherman Act.

Your Honours may recall that the meaning of section 45 was considered again by this Court in Quadramain and views were expressed as to its relationship to the common law doctrine and as to the limitations of that doctrine.  There then followed the Swanson Report.  We have provided your Honours with a copy of that in tab 1 of the supplementary materials.  I would like to take your Honours to one paragraph of the report.

If I could ask your Honours to go to page 32.  In paragraph 4.115 the authors indicate that they outline in the following paragraphs their views on what should replace the current form of section 45.  Then, in paragraph 4.116 the report addresses what is described as:

a collective boycott, ie an agreement that has the purpose of or the effect of or is likely to have the effect of restricting the persons or classes of persons who may be dealt with –

and it is said that that:

should be prohibited if it has a substantial adverse effect –

Now, there are two respects in which the recommendation of the Swanson Report was not implemented in section 45 and section 4D.  The first is that section 4D operates only if the agreement has the purpose of restricting dealings.  It does not operate in terms in circumstances where the provision may have that effect.

Secondly, the qualification to the prohibition suggested by the Swanson Report, namely that it have a substantial adverse effect on competition, again was not implemented. 

KIRBY J:   The European Union also has effect, does it not?  I think that is mentioned in one of the judgments.  That is an important point of distinction for your case in our Act.

MR MEAGHER:   It is.  One finds when we go to the provisions that the notions of purpose and effect are used in the legislation.  In section 4D in the relevant part it is only the purpose of the provision to which attention is directed.  We have also given your Honours copies of the relevant reading speech and the explanatory memorandum.  The second reading speech is at tab 3.  I will not take your Honours to the terms of it.  The explanatory memorandum is at tab 5.  If I could just take your Honours to paragraph 10 of that.  It provides with respect to boycotts:

The Bill contains special provisions for the prohibition of collective boycotts.  Collective primary boycotts (where the boycott seeks to restrict the dealings of the parties with the target person) are prohibited as “exclusionary provisions” . . . Collective secondary boycotts (where the boycott seeks to restrict the dealings of persons, other than the parties, with the target person) are prohibited where they have or are likely to have a prescribed effect – new section 45D.

As I indicated to your Honours earlier, this Court in Devenish considered an argument that fixed upon the use of those expressions or the meaning of those notions of primary and secondary boycott as a basis for limiting the words of the statute.  That argument was rejected and we do not seek to put a similar argument here.  We accept that the legislation is remedial and that it should be given whatever fair meaning its language will allow, subject to two matters which we submit have to be taken into account.  The first is that a breach of these provisions exposes the parties to significant pecuniary penalties.  The relevant provision is section 76.  They are civil penalties but nevertheless significant.  Secondly, the provision should be construed in a way which produces certainty if it can.  That factor is recognised by this Court in the judgments in Melway in the judgment of the majority in paragraph 8 and in your Honour Justice Kirby’s judgment in paragraph 91.

GUMMOW J:   One of the things Mr Jackson says is that you have to look at this bearing in mind the authorisation provisions too.  How do they fit in?

MR MEAGHER:   The authorisation provisions plainly permit the entry into or giving effect to agreements containing exclusionary provisions if authorisation is sought and granted.

GUMMOW J:   But what are the criteria for the authorisation?

MR MEAGHER:   It is contained in section 90(8).  Section 88(1) provides for the Commission to grant an authorisation.  The relevant factors to be taken into account are set out in section 90(8).  The Commission has to be satisfied:

that the proposed provision or the proposed conduct would result, or be likely to result, in such a benefit to the public that the proposed contract or arrangement should be allowed to be made . . . as the case may be ‑ ‑ ‑

GUMMOW J:   The chances of you getting authorisation here look pretty slim.

MR MEAGHER:   I must say I have not considered whether those chances were or were not.

GUMMOW J:   It is all part of the one legislative scheme.  People come up here and they focus on two or three words.  I am not saying you are doing it but it happens all the time.  We never get taken to the whole legislative scheme.

MR MEAGHER:   Well, your Honour, we accept that there are authorisation provisions there, but that does not have the consequence that one reads the words of section 4D or 45 in a way that does not reflect their ordinary meaning.  We acknowledge that in commerce parties are going to want to enter into arrangements which contain exclusionary provisions and, in those circumstances, if they are advised of that result, then they apply for an authorisation.

CALLINAN J:   Mr Meagher, you might well get an authorisation if you have regard to the fact that you might not just look at Rugby League; you might look at all of the sports, particularly the winter sports, and they are all in competition with one another and, in consequence, it may be necessary and in the public interest to have a very high standard competition in one particular code.

MR MEAGHER:   Indeed, your Honour, but the factors which drove the parties to this merger were factors which, in a sense, were directed as much to the public benefits of the merger as to the benefits to the parties in the sense that it was perceived that the national competition would not proceed in the absence of a merger in the medium term.

CALLINAN J:   The most intense competition appears to be taking place, even to an ordinary observer, between all the codes, between Rugby Union and Rugby League and Australian Rules.  That is where the real fights probably are.

MR MEAGHER:   The competition that was, in part, the focus of inquiry below was the competition for what are described as competition organising services and the provision of team services rather than more broadly, although any authorisation would have had to look more broadly.

Could I take your Honours to the legislation and go first to section 45.  By subsection (2) it prohibits the making of contracts containing exclusionary provisions and the giving effect to such provisions.  Your Honours will see that in subsection (2)(a)(ii) it also prohibits the making of contracts if a provision of the contract:

has the purpose, or would have or be likely to have the effect, of substantially lessening competition;

and in subsection (2)(b) there is a similar distinction between purpose and effect.  Those words in those provisions are used in contrast and they bear different meanings.  The purpose means, not the motive, but the effect which it is sought to achieve by the provision, whereas the effect is the end in fact accomplished or achieved.  That distinction is referred to in the judgment of the Privy Council in Newton v Commissioner of Taxation, which is referred to by Justice Heerey at paragraph 66 of his judgment.

KIRBY J:   What is the principle that you get from the Privy Council decision?

GUMMOW J:   You get the construction of section 260 of the Tax Act.

MR MEAGHER:   It is a passage which describes, in our submission, correctly, the distinction between the meaning of purpose and effect.  One looks at the result; the other looks at the intended result.  Looking at the other provisions of section 45, subsection (3) identifies the market in which the provision must have the purpose or effect.  That, as I indicated earlier, was not the subject of debate in this case.  Then subsections (5) to (9) are just exceptions to the operation to the prohibition, and your Honours would be aware that the exception in subsection (6) is the subject of a case which is now before this Court, the ACCC v Visy Board or Visy Paper.

McHUGH J:   Has this Court ever held that for the purpose of 4D “purpose” refers to the subjective view of the makers of the arrangement as opposed to it encompassing an objective test which is imputed to the arrangement?

MR MEAGHER:   This Court has not, in relation to section 4D.  It has addressed a similar question in relation to section 46, and as to the use of the word “purpose” in section 46, and in Queensland Wire and Melway held that “purpose” carries with it the notion of an intent to achieve the result spoken of.  The passage is in a judgment in Queensland Wire, of Justice Toohey, which is cited by the majority in Melway. 

KIRBY J:   Could I explain a little difficulty I have with that.  I can see the point you are making, that we have to try to be consistent in the way the statute is construed, but the object of the Act is not the keeping of the consciences of corporate executives, it is the protection of competition.  That seems to run against the notion that your search is for the – as it were ‑ subjective intentions of the executives of the parties in this case, and takes you, rather, to what, objectively, their purpose is for the relevance to the objective of the statute, which is the protection of competition. 

MR MEAGHER:   With respect, your Honour, no, in relation to an exclusionary provision.  There is what might be described as an absolute prohibition in relation to the making or giving effect to an exclusionary provision, which does not turn on competitive purpose or effect.  As I pointed out, the Swanson Report suggested otherwise, but it does not turn on competitive purpose or effect, nor does it turn on ‑ ‑ ‑

KIRBY J:   I can see that point, but that is a point in your favour.

MR MEAGHER:   Nor does it turn on whether the object ‑ ‑ ‑

KIRBY J:   It is all this theory in the Federal Court that the search is for subjective motivations, wishes, desires, of corporate executives.  Now, the devil himself knoweth not those things, and therefore one would think that you would look at the word “purpose” in the context of a statute which is aiming at protecting competition.  Therefore you would look at the object, rather than what was going through the minds, at a particular time, of particular executives. 

MR MEAGHER:   There is another provision of the statute which has to be taken into account, and that is section 4F, which expressly addresses the meaning of purpose of a provision.  I was going to take the Court to that shortly.  I will take the Court to that now.  Section 4F(1) provides that: 

(a)a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, or a covenant or a proposed covenant, shall be deemed to have had, or to have, a particular purpose if –

it was, “included in the contract . . . for that purpose”. 

KIRBY J:   Well, that “is to be included” seems to be talking in objective terms – not if the parties intended to include it, but if, objectively, the court says that it was included for that purpose. 

MR MEAGHER:   It is focusing, in our submission, on the reasons why the provision was included by those who included it, and that is certainly how the expression – specifically having regard to what is said by section 4F – has been construed in a number of authorities, both at first instance and in the Full Federal Court, not in this Court. 

McHUGH J:   But it is the provision that must have the purpose ‑ ‑ ‑

GLEESON CJ:   Which is in contrast with section 46, which deals with the purpose of a corporation.  There is a difference, is there not, between the purpose of a corporation or an individual on the one hand, and the purpose of a provision of a contract? 

MR MEAGHER:   There is, your Honour, but ‑ ‑ ‑

McHUGH J:   And 4F itself makes the distinction, because 4F(1)(a) speaks about the purpose of the contract and so on, and 4F(1)(b) talks about a “person” who is deemed engaged in things for a particular purpose. 

MR MEAGHER:   It draws that distinction because the legislation in various sections draws distinctions between conduct engaged in for a purpose and provisions having a purpose.  But when one is looking to the question, “Why was a provision included?”, one, in our submission, does not merely answer that by reference to the effect of the provision.  One answers that by an inquiry as to what was it intended to achieve by its operation.  Now, in a context where, as I have submitted, the ‑ ‑ ‑

GUMMOW J:   Intended by all the contracting parties?  That is a problem.

MR MEAGHER:   That is a problem, your Honour, which was recognised by the Full Court in Pont Data.

GUMMOW J:   Yes.

MR MEAGHER:   But it is a problem which one does not directly face on the facts of this case and it may be that as we ‑ ‑ ‑

GUMMOW J:   That is no help to us, though.

MR MEAGHER:   There would be cases, your Honours, where the parties are ad idem about the way in which a provision is to operate and why it is included.  There will be other cases where one of the parties will have a view about it and the other will be indifferent or the other will adhere to the view of the first party.  In those circumstances, it may be difficult to identify the purpose of the provision, but nevertheless it is a task which is capable of arriving at a result and in Pont Data the court did arrive at a result.

GLEESON CJ:   But one well‑recognised distinction and one that was certainly applied in relation to section 260 of the Income Tax Assessment Act was distinguishing between purpose and motive.

MR MEAGHER:   Yes.

GLEESON CJ:   The motive of a person who entered into an agreement, arrangement or understanding to avoid tax might have been to increase his or her disposable income so that it could be given to charity – that was utterly beside the point – and I thought the Privy Council said that you find the purpose of a contract in its effect.

MR MEAGHER:   The Privy Council says in the context of section 260 that ultimately the search may be as to its effect, but the words of section 260 were very different, your Honour.  They talked in terms of an arrangement ‑ ‑ ‑

McHUGH J:   But you were citing Newton’s Case to us a while ago and what Justice Gummow said to you is that all it said was what those words meant in 260.

MR MEAGHER:   With respect, your Honour, I should take the Court then to the relevant passage. It is in 98 CLR 2. If your Honours go first of all to page 6, there is set out section 260 which fixes upon a:

contract, agreement or arrangement made or entered into, orally or in writing, whether before or after the commencement of this Act, shall so far as it has or purports to have the purpose or effect of in any way, directly or indirectly ‑ ‑ ‑

GLEESON CJ:   Yes, but the passage I had in mind is at the top of page 8, lines 6 and 7.

MR MEAGHER:   As I submitted to your Honour earlier, in section 4D one is concerned only with purpose and not with effect.  We accept that there may be a distinction between purpose and motive, but the distinction is satisfied by inquiring as to the effect which was sought to be achieved by the operation of the provision.  In that way one focuses on the purpose of the provision.  Was it intended to operate to produce a specific result?  The parties may or may not have had a number of different motives for having it operate in that way, but ultimately the inquiry is as to whether it was intended to operate in a particular way.  That is our submission as to how the purpose of a provision is to be arrived at, particularly having regard to what is said in section 4F.

If the position was otherwise, your Honours, and one was simply looking at effect, the distinction between purpose and effect would be put to nought.  It is a distinction which is made in the legislation with respect to conduct in section 45A, in section 45D, in section 45DA ‑ ‑ ‑

GLEESON CJ:   But if you are willing to put motive to one side, how does your approach to the concept of purpose apply to the facts of this case?

MR MEAGHER:   Justice Heerey found that the reason the parties fixed upon the number 14 as the limit to the number of teams in the competition in 2000 was to produce a number of related results concerned with a viable single competition.

GLEESON CJ:   But whatever number they fixed on was going to exclude somebody, was it not?

MR MEAGHER:   He found that in addition it was a foreseen consequence of the term that in certain circumstances some clubs may not be supplied but he found that that was not a reason that the clause was inserted, to produce, and indeed ‑ ‑ ‑

GLEESON CJ:   Am I not right in thinking, and correct me if I am wrong, if they had fixed on the number 24 that would have had a potential exclusionary effect?

MR MEAGHER:   That is so.

GLEESON CJ:   If they fixed on 34 it would had a potential exclusionary effect?

MR MEAGHER:   That is so.

GLEESON CJ:   What is the difference between the exclusionary effect of the number 14 and the exclusionary effect of the numbers 24 or 34?

MR MEAGHER:   In our submission, there is no difference and the that trial judge and Justice Heerey were of the same view, that the parties had to choose a number once they decided which would be the number of teams in the competition.  The competition had to have a number.

GUMMOW J:   What was to be the temporal duration of this arrangement?  For how long was it going to be?  I know it had to be got down to 14 but how long was it going to stay at 14?  Forever?

MR MEAGHER:   The agreement is, I think, so long as the arrangement between the parties subsists, so forever in the absence of further agreement.

GUMMOW J:   Yes, and the contract itself was not one that had expressed a term, was it, of length?

MR MEAGHER:   I am sorry, I did not hear what your Honour said.

GUMMOW J:   There is no provision for length of this arrangement in the contract?

MR MEAGHER:   I do not think there is, your Honour, I will check that.

GUMMOW J:   So it is terminable on reasonable notice between the contracting parties, is it?

MR MEAGHER:   It probably would be terminable on reasonable notice and the question of what would be a reasonable term may be difficult to discern.

CALLINAN J:   The franchises or licences were for limited periods, were they not?  Reviewable, in effect?

MR MEAGHER:   The arrangements between the clubs and the competition organiser are for periods of between one and five years.

GLEESON CJ:   The practical difference, as distinct from the legal difference, between fixing the number 14 and fixing the number 24 was that by fixing 14 you were going – if I can use a literal word – you were going to leave out at a future time, unless they had agreed to merge themselves in the meantime, some people who had previously been franchisees, some clubs who had previously been franchisees?

MR MEAGHER:   That is so.

GLEESON CJ:   What, in your submission, is the significance, if any, of that practical consideration?

MR MEAGHER:   The relevant inquiry is, accepting that as a possible outcome if clubs did not drop out or they did not merge that there would be some who were not be included, the inquiry was whether those who might ultimately not be included were in some way targeted by this provision when it was included.

GLEESON CJ:   I am not suggesting the answer is none but what is the difference, legally, between clubs that had previously been in the competition and clubs that never got in to these competitions, like the club in the Hunter River area that Justice McHugh referred to earlier or some completely newly‑formed club?

McHUGH J:   Melbourne was an illustration, was it not?

MR MEAGHER:   Yes, it was, although I am not sure if I can adopt what your Honour puts as fairly reflecting the facts of this case because in December 1997 the parties contemplated that in 1998 there would be 20 teams in the competition, one of which was Melbourne which was a new club, the others of which had participated in one or other of the other competitions, and the parties that contemplated that, in effect, those 20 teams would move forward in what was described by some of the witnesses as a rationalisation process, reducing to 14.

GLEESON CJ:   But in point of legal analysis the consequence of fixing any number, X, is going to be to keep out any clubs that are above that number.

MR MEAGHER:   That is so.

GLEESON CJ:   They may be old clubs, they may be new clubs, they may be clubs that have played in other competitions, they could be clubs of any kinds.  What I want to understand is in point of legal analysis, what is the difference between keeping out clubs that had previously been franchisees and other clubs, such as newly formed clubs.

MR MEAGHER:   In terms of legal analysis, there is no difference, your Honour.

CALLINAN J:   Well, Mr Meagher, is that right?  If you look at 4D(1)(a) of the Act, would you say that those teams that had never been in the competition before were competitive with each other in terms of paragraph (a)?  They would not have been, would they?  So do not you look at the actual teams that were competing in the same competition or competitions?

MR MEAGHER:   No, in this case, your Honour, the inquiry as to competition is as between ‑ ‑ ‑

McHUGH J:   ARL and NRLI, is it not?

MR MEAGHER:   And Super League, yes.

GLEESON CJ:   The two or more persons who are competitive with each other ‑ ‑ ‑

MR MEAGHER:   Yes, they are my clients.  So 4D has nothing to say about the objects of the purpose.  They could be competitors, they could not be competitors.  In other words, 4D, in a sense, does not fix upon any competitive consequence of the conduct.  It fixes merely upon conduct which is directed to prevent the flow of goods or services to particular persons or particular groups of people.

McHUGH J:   To or from?

MR MEAGHER:   To or from.  So that whether the clubs are clubs which were participating in earlier years or whether they were new clubs who were excluded – to use your Honour’s expression – by the operation of this term, the legal significance only arises if those who were excluded were intended to be excluded by the term or by the operation of the term.

Could I give your Honours an example of the distinction between purpose and effect in operation.  The decision of Justice Toohey in Hughes v Western Australian Cricket Association throws up the question usefully because there ‑ ‑ ‑

McHUGH J:   Yes, but what does it stand for?  I mean, counsel come along and tell us all the facts of a case and context verse details later.  What does it stand for?

MR MEAGHER:   It stands for the proposition that one directs attention to the reason why the provision was included and upon whom it was intended to operate because the provision in that case was a provision in general terms which was capable of operating on any players who played in non‑recognised games without consent.  But the reason the provision was altered in the way it was, was to specifically prevent Kim Hughes and three other cricketers from participating in district cricket.

So that if one had looked merely at the effect of the relevant provision which was a rule in some cricket by-laws, one might have come to the conclusion that it was to operate generally and it had no effect on a specific person or group of people, but the inquiry was addressed specifically to the reason why it was included and who it was intended to operate upon and the answer was, “The four cricketers.”

GLEESON CJ:   Well, now, that may provide part of the answer to my question.  It may be said against you by Mr Jackson or Mr Young that the difference between clubs who had previously been in the competition, or one of the competitions, and clubs that had never been in one of the competitions or clubs that have never yet been formed is that this provision was aimed at the existing clubs and at reducing their number.

MR MEAGHER:   Accepting that, the question then was – it was, in effect, therefore capable of operating upon at least the existing clubs with the consequence your Honour indicates.  The question is was it intended to operate in a way which discriminated in some way or was it capable of operating at the time it was included on all of them or any of them.  That, in a sense, is the critical distinction.

GLEESON CJ:   I may not have the figures right, and correct me if I am wrong, but what this provision did was to say, “There are 20 of them now and there is going to be only 14 in the future”?

MR MEAGHER:   That is so, in two years time, and it said that even at the early stage there was a complex arrangement which gave priorities to some clubs and gave priorities to merged clubs and then regional clubs and then Sydney clubs, and provisions which provided for incentives to clubs which merged, clubs which moved from Sydney to a region were given priority.  There were a host of different events which could have occurred between December 1997 and the end of 1999 when this limit was to come into effect.

GLEESON CJ:   But Mr Jackson then says the case against you is simple.  If two competitors get together and say, “We are now supplying services to 20 franchisees that is not good business.  We will agree between ourselves that we will restructure our operations and one of the things that we will do that in two years time we will reduce the number of people to whom we supply our services to 14.”

MR MEAGHER:   With the consequence that in two years time some clubs are supplied and some are not.  The question then is, was the clause included to prevent supply to a specific club or to a specific group of clubs having some characteristic which made them class.

McHUGH J:   But why?  Take what I would have thought was the paradigm case for 4D.  Suppose Qantas says to Virgin, “We have ten flights a day to Canberra.  You have three.  Let’s form a new company and we will only supply eight flights a day to Canberra.”  Surely that would be the paradigm case to the application of 4D, would it not?  You are not dealing with any particular people; you are talking to the passengers as a class in the future.

MR MEAGHER:   But there is no distinction in the example your Honour gives between the way in which the clause operates on one potential passenger rather than any other potential passenger.  That was the same with respect to this limit.  It was capable of operating, if you like, to have its consequence of preventing those in excess of 14 from receiving supply on at least any of the 20 clubs.

McHUGH J:   I know there is not much distinction, but it does seem to me that is the sort of case that 4D applies to.  The arguments that you should only have 14 teams, or in the Qantas/Virgin example, only eight flights, may be arguments that could be used in support of an authorisation application, but why are you not caught by 4D?

MR MEAGHER:   In this case?

McHUGH J:   Yes, in both cases.

MR MEAGHER:   Because there was no club or group of clubs to which there was an object of preventing supply which provided a or a substantial reason for including this term.

GLEESON CJ:   There was a group of 20 of them to whom the supply was going to be reduced.

MR MEAGHER:   In relation to the group of 20, your Honour, the true analysis was that in 1999 when the selection was made if it was necessary, there would as a result be some of them who were supplied and others who were not supplied at all.

GUMMOW J:   So?

MR MEAGHER:   That is the consequence of the term.  It is said against us that that is sufficient.  We submitted, and Justice Heerey held, that it is necessary to ask whether when it was inserted it was inserted with the intended result of excluding a particular club or a particular group.

GUMMOW J:   Does your construction depend upon this notion of intention?

MR MEAGHER:   It depends upon ‑ ‑ ‑

GUMMOW J:   In other words, if one looks at it objectively, are you in difficulties?

MR MEAGHER:   Not in this case, your Honour, because of the requirement ‑ ‑ ‑

GUMMOW J:   I just wondered why you used “intention”, that is all.

MR MEAGHER:   I was seeking to underline the meaning which we seek to give to “purpose”, but in this case 4D also requires that there be some group or person who can be said to be the object of the provision.

KIRBY J:   That is the second argument.  We are concentrating on the first argument at the moment.  My reading of the special leave transcript was that one of the reasons that got you up into this Court was to look at whether or not “purpose” had, as the Federal Court has held, the subjective element or had an objective element in this context.

MR MEAGHER:   Your Honour, as I put earlier, the argument we seek to make does not separate “purpose” and “particular”.  In our submission, one has to look at the whole expression.

McHUGH J:   One can accept that, but at some stage I would like to hear some submissions from you based on the major premise that the Federal Courts have it wrong when they talk about 4D having a subjective element as opposed to an objective element.  I have to tell you at the moment my thinking is that it is an objective test.

MR MEAGHER:   If it is an objective test, then one looks merely at the effect of the provision.

GLEESON CJ:   No, the effect might misfire.  You cannot defend yourself against an allegation that you have contravened the Act by saying the plan did not work.

MR MEAGHER:   That, in our submission, is why one is required to look at the reasons of the parties, the subjective reasons of the parties.

GLEESON CJ:   But the legislation refers to cause or effect partly because if it referred only to effect the legislation would not apply if the plan misfired.

MR MEAGHER:   That is in relation to the second of the provisions struck by section 45 but in relation to exclusionary provisions, your Honour, that is not the provision.  Section 4D does not say anything about effect, it is concerned only with purpose, so that the critical question is purpose, irrespective of whether the purpose miscarries or not.

GLEESON CJ:   If two competitors who are supplying services to 20 persons say to themselves, for whatever reason, “This has to stop.  In the future we will only supply those services to 14 persons”, have they not entered into an agreement that contains a provision that has the purpose of limiting supply of services to a particular class of persons, namely, the 20?

MR MEAGHER:   It limits supply to a class of persons, your Honour, but they are not particular because they cannot be distinguished from the rest.

McHUGH J:   But why does it particularly govern classes as opposed to persons?

MR MEAGHER:   It governs both.

McHUGH J:   But why?  Why is not the better reading of it “particular persons;  or classes of persons”?  Why would you talk about a “particular class” or “particular classes of persons”?

MR MEAGHER:   Because, as I have sought to put, “particular” tells you that the provision and its purpose is directed to those persons or those classes, as distinct from everybody or the rest.

GUMMOW J:   You might get some support from 4D(1)(b)(ii), I suppose, the reiteration of “particular” three times.  Maybe it is three phrases, as it were.

McHUGH J:   But why do you not read it as saying, “Well, the particular persons, BHP, Westpac, classes of persons, barristers, footballers”?

MR MEAGHER:   We submit the natural meaning of it is that you construe it distributively.  The adjective applies both to the persons or the classes of persons.

McHUGH J:   What is the difference between a particular class of person and a class of persons?

GUMMOW J:   That is your problem, is it not?

MR MEAGHER:   With respect, no.  The work which we say the word “particular” has is that it describes those persons or classes as the objective of the purpose.  Section 4D(b) provides that:

the provision has the purpose of preventing –

supply not at large to anybody but to particular ‑ ‑ ‑

McHUGH J:   To BHP or barristers.

MR MEAGHER:   If it is directed to preventing supply to BHP then BHP is a particular person within the meaning of 4D(1)(b).

GLEESON CJ:   But the focus not on preventing but on limiting.  Now, if you are supplying services to a class of persons that are 20 in number and you decide that it does not make sense to supply that many and that you want to limit the number of 14, why are you not limiting the supply of services to a class, namely, the original 20?

MR MEAGHER:   You may be.  If I could just take up this point with your Honour.  If a supplier supplies a fixed volume of services to 20 people and then decides to reduce the volume, leaves it to the 20 people to decide how the burden of the reduction is borne, then it may be that the provision has the purpose of limiting supply to that group or class and if they are treated differently from others, they may be a particular class.  But in this case the provision is not intended to operate immediately.  It is intended to operate in the year 2000 and it is intended to operate such that 14 will be supplied and others will not be supplied.

GLEESON CJ:   I understand the relevance of that to the argument that Mr Young raises in his submissions ‑ ‑ ‑

MR MEAGHER:   But it is also relevant to – when one looks at what the service is, relevantly here the service is to provide an organising service to a club in 2000 and these people are saying, “We won’t supply more than 14.  We won’t have a competition, and thereby supply those services to more than 14 in 2000.”

GLEESON CJ:   When you bear in mind the rather special nature of the services that were being provided in this case, from one point of view the limiting of the supply of services was the very essence of the purpose and, no doubt your clients would say, it was a very good and sensible purpose, but we are not concerned with that.

MR MEAGHER:   But the limiting of supply, as your Honour puts it, is really looked at in December 1997 in terms of an opportunity.  That is they were saying that in 2000 there will be a more limited opportunity to participate in this competition, but ultimately in 2000, 14 would be supplied.  It is not a question of limiting supply in 2000.  It is really a question of whether supply is given or not, a question of prevention.

GLEESON CJ:   But they decided – and they might have, for all I know, decided quite rightly – that it would be a better competition if it had fewer competitors.  That is not a strange conclusion to reach in relation to an athletic competition, but how does it relate to the legislation?

MR MEAGHER:   As I put, the question is whether they arrived at that limit for a purpose which included a purpose of not supplying a specific group, as distinct from arriving at a limit which was operating, or was capable of operating, on everybody or anybody.

KIRBY J:   What was the classes of persons propounded by Souths in the court below?  Was it the 20 or was it looking forward to 2000 any left over from the 14?  In other words, anyone who did not merge, did not voluntarily liquidate or disappear and was left over.  I thought it was the latter.  I may be wrong.

MR MEAGHER:   The class of persons was said to be the 1997 clubs, of which there were 19, if one did not include Melbourne, less those who were chosen to participate.  So that the class was, in effect, those who missed out, although it was said that ‑ ‑ ‑

GLEESON CJ:   That depends on whether you focus on the word “preventing” or the word “limiting”.  If you focus on the word “preventing”, I can understand why the class would be the ones who are left out, but if you focus on the word “limiting”, you might get a different result.

KIRBY J:   Which paragraphs are they?

MR MEAGHER:   Paragraphs 27 and 28.  We accepted that the parties were in competition in 1997 for the services of the existing clubs, but we argued that the relevant services to which 4D directed attention were the services which would be supplied in the year 2000, which was in brief form between the parties referred to as a timing characteristic of the services.  We then sought to argue that but for the provision, namely the 14-team term, there would not have been a merger, because the evidence was that there would have been no merger if the parties could not agree on the 14 teams, and that is a finding made by Justice Finn.  We argued that, but for the 14‑team term, applying the words of section 4D(2), there would have been no merger.  The question then was, would these two individual competitors have continued to exist through to the year 2000, which was a factual issue and the trial judge did not get to consider that factual issue, because he determined that the characteristic of the services, which we described as a timing characteristic ‑ ‑ ‑

McHUGH J:   But Mr Young’s point is that that just directs you to the wrong issue.  It was not a question of if there had not have been this agreement you would have been competing for clubs.  You may well have been, but the critical provision here is this 14 team.  For instance, Justice Merkel said the 16-team provision was not a breach of 4D.  So it was the 14 team that was critical, and that was the term.

MR MEAGHER:   Your Honour, just responding briefly, section 45 requires one to consider whether, but for the relevant provision, the parties would have been in competition.  The findings made by Justice Finn ‑ and I will give your Honours their reference ‑ specifically the finding at paragraph 285, but more generally findings at paragraphs 245, 269 and 439, were that, but for the 14-team term, there would have been no merger at all.

McHUGH J:   I know, but without this merger of agreement you would have been in competition until one of these organisations went into liquidation.

MR MEAGHER:   And that is the basis on which the matter was debated below ‑ ‑ ‑

McHUGH J:   But that still seems to me to be different from the point that Mr Young raises.  Anyway.

MR MEAGHER:   Mr Young’s submission, as we understood it, was that one simply asked, “What would the position have been but for the existence of the 14-team term?”  Answer:  “These parties would still have been merged and still providing the one competition”, which was described as the NRL competition.  The way the matter was dealt with below, on the findings of fact, was that absent the 14-team term there would not have been a merger.

GUMMOW J:   Well, it was all interdependent, you say.

MR MEAGHER:   Yes.

GUMMOW J:   All these.  The merger agreement, the members’ agreement, the partnership agreement, they are all linked into one another.

MR MEAGHER:   The whole thing turned on his Honour Justice Finn’s finding.

GUMMOW J:   The execution of one was dependent upon the execution of the other.  Is that so?

MR MEAGHER:   That is so and he found that if the parties had not agreed on the 14 ‑ ‑ ‑

GUMMOW J:   It is not a question of if they had agreed; they would not have decided. 

MR MEAGHER:   What your Honour says is right; no, your Honour may be right in respect of the merger agreement, but the original understanding was a 1997 December understanding, which was not recorded in writing in which the subsequent agreement was.

GUMMOW J:   I know.  The Chief Justice was investigating this with you this morning.  We were taken to this clause all the time, as written down. 

MR MEAGHER:   The other matter that I would wish to point out to the Court is that Schedule 1 to the merger agreement does not identify the 1997 clubs.  It identifies the 20 clubs who were going to participate in 1998, and it includes Melbourne. 

GUMMOW J:   Now, just tell me the nature of this understanding.  Was it an understanding that was to be reduced into writing? 

MR MEAGHER:   Yes. 

GUMMOW J:   Only then to be effective? 

MR MEAGHER:   No ‑ ‑ ‑

GUMMOW J:   Surely, it was – was it that species of masters of common law of understanding? 

MR MEAGHER:   No, it was not, your Honour.  It was an arrangement which the parties acted on immediately by making press announcements in December 1997, on the understanding ‑ ‑ ‑

GUMMOW J:   So it has been superseded in May, is it? 

MR MEAGHER:   It was superseded in May, and the merger agreement expressly refers to the fact that it supersedes a memorandum of understanding of February, which, in turn, replaced the earlier understanding of December 1997.  The reason we took the Court to clause 7 was that, in relevant respects, clause 7 reflected exactly what had been arranged and agreed in December 1997. 

One final matter:  with respect to the question of restrict or limit, as we said in our argument in-chief, the case which was put was “restrict or limit to individual persons” – namely, the 1997 clubs.  It was not “restrict or limit to a class”.  But let me deal with both arguments.  In relation to restrict or limit to persons ‑ ‑ ‑

KIRBY J:   That would not raise a procedural fairness question, because the identified subject is clear. 

MR MEAGHER:   That is probably so, your Honour.  In relation to restrict or limit to persons, looking at it from the point of view of the persons, some were to be supplied and some were not to be supplied at all.  There was in no relevant sense to be a restriction to any of them.  It is only when one looks at the thing collectively that one has this notion of a limiting.  The services were not being provided to them as a group, they were being provided to them individually, and the clubs which are identified in Schedule 1 of the merger agreement are individual clubs to whom it is said, “In 2000, we will only take 14 teams”.  That may have had a consequence that some of them would be supplied, either alone or by merged entities ‑ others would not be supplied at all.  In no sense were they to receive supply collectively or was there any restriction on, or limit on, their supply as a collection. 

GUMMOW J:   Now, what do you say about the point Mr Jackson was raising about the meaning of particularity?  The people left out, in other words.

MR MEAGHER:   I am not sure ‑ ‑ ‑

GUMMOW J:   We raised it with him about 20 minutes ago.

MR MEAGHER:   I understand, your Honour, and I did not precisely follow the point which was being put.

GLEESON CJ:   Well, you can be particular without having a name put to you.  If a number of recipients of services, or suppliers of services, is to be reduced from 20 to 14 without the six who will miss out being identified, nevertheless the six who ultimately miss out are particular persons.

MR MEAGHER:   Well, they are persons who miss out and to that extent share a characteristic, but the question of particular persons has to be answered at the time the arrangement is made, not after the event and after ‑ ‑ ‑

GLEESON CJ:   You do not have to be able to assign a name to them for them to be particular persons ‑ ‑ ‑

MR MEAGHER:   You do not have to assign a name to them, but you must be able to identify them by reference to some characteristic as the object of the purpose, otherwise they are not particular persons.

GLEESON CJ:   Well, could you identify them as losers?

CALLINAN J:   People without the ability to satisfy the criteria?

MR MEAGHER:   Dealing with your Honour the Chief Justice’s question first, if one simply identifies particular persons by reference to those who miss out, one in effect writes out of section 4D the words “particular persons or classes of persons” because if it has the effect of preventing supply, section 4D is satisfied.  In relation to your Honour Justice Callinan’s question about the selection criteria, the submission that we put in‑chief and referred your Honour to the passage of the judgment of Justice Heerey, indicates that to say that those who missed out, missed out by application of a selection criteria, really identifies no characteristic or common feature inherent in any class.  So that one could say at the outset that those clubs there, the 10 or so of those identified in Schedule 1, are the object of this purpose as distinct from the others.

The reality is to say that some of them miss out by application of a selection criteria in circumstances where the selection criteria was not to be biased or to discriminate is not to attribute any specific characteristic or any common feature.

GLEESON CJ:   But it would not have made any difference, would it, if they had had a relegation system?  While they could have done this – I am not suggesting it would have been sensible – but it would not have been legally different, would it - would have been to say the 14 teams who will be left in the competition in the year 2000 will be numbered 1 to 14 on the table and the ones who miss out will be numbers 15 to 20.

MR MEAGHER:   And if at the outset each of them had an equal opportunity to finish 1 to 14 on the table, then it could not be said at the outset when the arrangement was made, that this provision was inserted to operate on that club there or those group of clubs.  What one is really describing is the fact that they miss out.

McHUGH J:   Well, the submission seems to neuter the section, does it not?  I mean, if two cab companies agree that they will only provide taxi services between 9 am and 6 pm and a lot of people miss out why does not the provision have the effect of limiting the supply of services to particular persons?

MR MEAGHER:   It does not have that purpose at the time it is made in the sense that that is not a reason for including it; that it be directed to some rather than the rest and that is the work which we submit the word “particular” does in this section.

GLEESON CJ:   That is really the “boycott” argument, is it not?

MR MEAGHER:   Well, it can be called a “boycott” argument, but otherwise one asks, when the section was in the form it originally was without the words “or classes”, what was the adjective “particular” doing because it was prohibiting provisions which had the purpose of preventing supply to persons.  Why was there a need to say “particular persons”?

GLEESON CJ:   So you say “particular persons” never included people who did not leave work until after six at night?  You may be right about that, but that is the way you put it, as I understand it.

MR MEAGHER:   I think that is the result of the submission, your Honour.  All people could be people who leave work before or after six o’clock.  It may be an accident.  It is not a characteristic which permits one to say the person at the outset that that person is an object of this purpose.

GLEESON CJ:   Then if the taxi company said, “And we will no longer provide services to barristers.  We will only provide services to senior counsel”, that was to cover that situation that you needed to include the concept of classes of persons.

MR MEAGHER:   Yes.  In that case one could say it is directed to a class and one has described the class and for the purpose of 4D that class is a particular class.  Why?  Because the purpose pertains to that class, as distinct from others.  That is the meaning of “particular”.  In response to your Honour Justice McHugh’s taxi cab example, can I refer the Court to the decision in Trade Practices Commission v Garden City Cabs (1995) ATPR 41,410 in which I can address that very situation. Those are our submissions.

GLEESON CJ:   Thank you. 

KIRBY J:   There was a special provision relating to costs mentioned at the special leave hearing.  Could you remind me what that was?

MR MEAGHER:   Yes, your Honour.  It is recorded in our written submissions, I believe.

KIRBY J:   You do not seek costs from the respondent if you succeed on the appeal?

MR MEAGHER:   We do not, your Honour.  That is so.  It is recorded in paragraph 59 of our written submissions.

GLEESON CJ:   Thank you, Mr Meagher.  We will reserve our decision in this matter.

AT 4.19 PM THE MATTER WAS ADJOURNED