South Sydney District Rugby League Football Club Ltd v News Ltd - [2000] FCA 1541

FEDERAL COURT OF AUSTRALIA
South Sydney District Rugby League Football Club Ltd v News Ltd
[2000] FCA 1541
TRADE PRACTICES – exclusionary provision – rival sporting competition organisers making and giving effect to understanding or arrangement to form a single competition – fundamental term of arrangement that new competition involve fourteen teams achieved through mergers, joint ventures or an admission criteria process – whether a substantial purpose of parties in making or giving effect to arrangement was to prevent, restrict or limit supply or acquisition of various services to or from particular persons or classes of person for purposes of sections 45(2) and 4D of Trade Practices Act 1974 (Cth) – whether in competition in relation to services – whether services were “services” for purposes of section 4 of Trade Practices Act – time at which parties are required to be in competition in relation to services subject of arrangement – consideration of nature of exclusionary provisions – whether fourteen team term aimed at “particular classes of persons” – whether relevant class constituted in the circumstances – statutory defences – whether available in circumstances.
TRADE PRACTICES – exclusionary provisions – relief – appropriate relief in circumstances – considerations.
AGENCY – existence of relationship – whether relationship with independent contractor was that of principal and agent – significance of control – effect of express disclaimer of agency – weight to disclaimer in circumstances.
PARTNERSHIP – formation – whether conduct of parties was carrying on business of partnership or acts in anticipation of partnership – later formal formation of partnership – retrospective commencement date in formal partnership agreement – effect – evidential value for purposes of actual commencement date.
CONTRACT – implication of terms – informal contract – test for implication – distinction between implication in fact and in law – whether terms necessary for reasonable or effective operation of contract in circumstances – implied duty of good faith and fair dealing – whether a legal incident of contract or particular classes of contract – whether qualifies conduct reasonably taken to promote legitimate business interests – content of alleged terms – whether possible to imply objective standard of fairness in circumstances.
CONTRACT – relief – whether breach of contract would found relief in circumstances – considerations.
TRADE PRACTICES – misleading and deceptive conduct – representations – express and implied – as to future matter – sections 52 and 51A of Trade Practices Act 1974 (Cth) – whether properly characterised as aims – whether reasonable grounds for making representations.
TRADE PRACTICES – misleading and deceptive conduct – relief – whether injunctive relief appropriate in circumstances – factors
Trade Practices Act 1974 (Cth), ss 2, 4D, 4F, 45, 47, 51A, 52, 84
Uniform Partnership Act 1997 (US), §308
Partnership Act 1892 (NSW), s 1
Corporations Law (1996 Reprint), s 183
Sale of Goods (Vienna Convention) Act 1986 (NSW)
South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120 considered
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 applied
International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644 referred to
Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130 referred to
Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552 referred to
Board of Trade v Hammond Elevator Co 198 US 424 (1905) referred to
Colbron v St Bees Island Pty Ltd (1995) 56 FCR 303 referred to
Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385 referred to
Ex parte Delhasse; In re Megevand (1878) 7 Ch D 511 referred to
Salomon v Salomon & Co [1897] AC 22 referred to
Gramophone and Typewriter Ltd v Stanley [1908] 2 KB 89 referred to
Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549 referred to
CFTO-TV Ltd v Mr Submarine Ltd (1994) 108 DLR (4^th) 517 referred to
Lower Hutt City v Attorney-General [1965] 2 NZLR 65 referred to
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 referred to
Northern v McGraw-Edison Co 542 F 2d 1336 (1976) referred to
Condus v Howard Savings Bank 986 F Supp 914 (1997) referred to
Royal Securities Corp Ltd v Montreal Trust Co (1966) 59 DLR (2d) 666 referred to
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 referred to
Roberts v Murlar Pty Ltd (1986) 68 ALR 62 referred to
Queensland Aggregates Pty Ltd v Trade Practices Commission (1981) 57 FLR 314 referred to
Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 referred to
Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) 30 FCR 385 referred to
ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 applied
Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 referred to
Trade Practices Commission v Garden City Cabs Co-Operative Ltd (1995) ATPR §41-410 referred to
Jewel Food Stores Pty Ltd v Amalgamated Milk Vendors Association Inc (1989) 24 FCR 127 referred to
SA Brewing Holdings Ltd v Baxt (1989) 87 ALR 134 referred to
Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 referred to
Health Services for Men Pty Ltd v D'Souza (2000) 48 NSWLR 448 referred to
Waddington v O'Callaghan (1931) 16 TC 187 referred to
Saywell v Pope [1979] STC 824 referred to
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 referred to
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 referred to
Byrne v Australian Airlines Ltd (1995) 185 CLR 410 applied
Breen v Williams (1996) 186 CLR 71 applied
Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 referred to
Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 referred to
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 referred to
Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 referred to
Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 referred to
Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 referred to
Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999) ATPR §41-703 referred to
Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 236 referred to
Asia Television Ltd v Tau's Entertainment Pty Ltd [2000] FCA 254 referred to
Advance Fitness Corporation Pty Ltd v Bondi Diggers Memorial & Sporting Club Ltd [1999] NSWSC 264 referred to
Far Horizons Pty Ltd v McDonald's Australia Ltd [2000] VSC 310 referred to
Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 referred to
NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68 referred to
MJB Enterprises Ltd v Defence Construction (1951)Ltd (1999) 170 DLR (4^th) 577 referred to
Tymshare Inc v Covell 727 F2d 1145 (1984) referred to
Willow Grange Pty Ltd v Yarra City Council, (SC of Vic, Byrne J, 1 December 1997, unreported) referred to
Zusman v Royal Western Australian Bowling Association (Inc) [1999] WASC 86 referred to
Sykes v Reserve Bank of Australia (1998) 88 FCR 511 referred to
Bowler v Hilda (1998) 80 FCR 191 referred to
Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR §40-940 referred to
Ting v Blanche (1993) 118 ALR 543 referred to
Miba Pty Ltd v Nescor Industries Group Pty Ltd (1996) 141 ALR 525 referred to
James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 referred to
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 referred to
Marks v GIO Holdings Ltd (1998) 196 CLR 494 referred to
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 referred to
Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 referred to
Bowstead & Reynolds on Agency, (16^th Ed, 1996)
Restatement, Third, Agency, Tentative Draft No 1
3 Am Jur 2d, "Agency"
Restatement, Second, Agency
2A Corpus Iuris Secundum "Agency"
Fisher, Agency Law, (2000)
10 Halsbury's Laws of England, 1^st Ed, (1909)
Norton on Deeds, (2^nd Ed, 1928)
Clarke & Corones, Competition Law & Policy, (1999)
Lindley & Banks on Partnership, (17^th Ed, 1995)
59A Am Jur 2d "Partnership"
Cheshire & Fifoot, Law of Contract (7^th Aust Ed, 1997)
Restatement, Second, Contracts
Finn (ed), Essays on Contract, (1987)
Fried, Contract as Promise, (1981)
Farnsworth, Contracts, (2^nd Ed, 1990)
SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED v NEWS LIMITED & ORS
N 1295 of 1999
FINN J
3 NOVEMBER 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1295 OF 1999

BETWEEN:

SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 487 390)
APPLICANT

AND:

NEWS LIMITED (ACN 007 871 178)
FIRST RESPONDENT

NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED (ACN 081 778 538)
SECOND RESPONDENT

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED
THIRD RESPONDENT (ACN 003 107 292)

NATIONAL RUGBY LEAGUE LIMITED (ACN 082 088 962)
FOURTH RESPONDENT

AND the Fifth to Twenty-third Respondents set out in the Schedule

JUDGE:

FINN J

DATE OF ORDER:

3 NOVEMBER 2000

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The application be dismissed.
2.The matter be set down for further directions on the issue of costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1295 OF 1999

BETWEEN:

SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 487 390)
APPLICANT

AND:

NEWS LIMITED (ACN 007 871 178)
FIRST RESPONDENT

NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED (ACN 081 778 538)
SECOND RESPONDENT

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED
THIRD RESPONDENT (ACN 003 107 292)

NATIONAL RUGBY LEAGUE LIMITED (ACN 082 088 962)
FOURTH RESPONDENT

AND the Fifth to Twenty-third Respondents set out in the Schedule

JUDGE:

FINN J

DATE:

3 NOVEMBER 2000

PLACE:

SYDNEY

REASONS FOR JUDGMENT
INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 3
PART I:   PRELIMINARY MATTERS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 5
1.    PRINCIPAL WITNESSES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 5
2.    GENERAL CHRONOLOGY........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 7
PART II: THE SECTION 45 CLAIMS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 25
1.    THE STATUTE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 25
2. SOUTHS' VARIOUS S 45 CLAIMS........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 28
3.    THE FOURTEEN TEAM TERM........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 28
4.    THE CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS........ ........ ........ ... 29
5.    AGENCY AND NRL........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 35
(a) Additional Factual Material........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 36
(b) Applicable Principles........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 48
(c) Submissions and Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 50

6. SERVICES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 58
(i) and (ii) Competition Organising Services and Team Services........ ........ ........ ........ . 59
(iii) Funding Services........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 60
(iv) Entertainment Services and the Fourteen Team Term........ ........ ........ ........ ........ . 63

7. COMPETITION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 63
8. PURPOSES AND THEIR OBJECTS........ ........ ........ ........ ........ ........ ........ ........ ........ .... 67
(a) Applicable Principles and Statutory Provisions........ ........ ........ ........ ........ ........ ...... 67
(b) Additional Factual Material........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 71
(c) Submissions and Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 83

9.    THE “CEASE ALTOGETHER” TERM........ ........ ........ ........ ........ ........ ........ ........ ........ .. 96
10. THE SERVICES AGREEMENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 97
11. DEFENCES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 97
(a)   The exclusive dealing defence........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 97
(b)   The merger of assets defence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 99

12. RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 100
13. CONCLUSION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 101
PART III: THE CONTRACT CLAIMS........ ........ ........ ........ ........ ........ ........ ........ ........ .... 101
1. WAS THERE A CONTRACT WITH THE NRL PARTNERS?........ ........ ........ ........ .... 102
(a) Additional Factual material........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 103
(b) Applicable principles and statutory provisions........ ........ ........ ........ ........ ........ ..... 113
(c) Was there a partnership as at 24 March 1998? Submissions and Conclusions... 115
(d) Did ARL Contract for the Partnership? Submissions and Conclusions........ ....... 117

2.    THE TERMS OF THE CONTRACT........ ........ ........ ........ ........ ........ ........ ........ ........ ... 120
3.    OTHER POSSIBILITIES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 130
4.    OTHER MATTERS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 136
5.    RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 136
PART IV: THE S 52 CLAIMS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 137
Applicable Principles and Statutory Provisions........ ........ ........ ........ ........ ........ ........ . 138

1. THE FIRST REPRESENTATION: 28 APRIL 1998........ ........ ........ ........ ........ ....... 139
2. THE SECOND REPRESENTATION: 8 MAY 1998........ ........ ........ ........ ........ ....... 145
(a) Additional Factual Material........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 146
(b) Submissions and Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 156

3. THE THIRD REPRESENTATION: 8 SEPTEMBER 1998 (I)........ ........ ........ ....... 160
(a) Additional Factual Material........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 161
(b) Submissions and Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 164

4. THE FOURTH REPRESENTATION: 8 SEPTEMBER 1998 (II)........ ........ ........ .. 167
(a) Additional Factual Material........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 168
(b) Submissions and Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 174
Other matters........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 178

5. RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 178
6. CONCLUSIONS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 179
SCHEDULE: GLOSSARY OF TERMS ETC........ ........ ........ ........ ........ ........ ........ ........ ........ .....
INTRODUCTION

On 19 December 1997 both Australian Rugby Football League Ltd ("ARL") and News Ltd ("News") issued media releases announcing their intentions to enter into a partnership that would unite their respective rugby league competitions in 1998 so bringing to an end what had become known as the "Super League war". Fundamental to the competition proposed was that by the year 2000 it would be reduced to one of fourteen teams. This "fourteen team term", as it has been called, is at the centre of the dispute in this proceeding.
The applicant, South Sydney District Rugby League Football Club Ltd ("Souths"), was a foundation club in the premiership rugby league competition that began in Sydney in 1908. Thereafter it was a constant participator in premier competitions until the end of the 1999 competition when it was unsuccessful in securing admission to the fourteen team National Rugby League competition ("the NRL competition") for the year 2000. This proceeding is concerned with Souths' objections both to the fact of its exclusion from the NRL competition and to the manner of it.
The respondents to the proceeding are many. All of the football clubs and entities either that participated in the selection process for the NRL competition in 2000 or that were licensed to participate in that competition have been joined. Theirs has been a passive role in the litigation, Souths having made plain that it does not seek by its claim to have any team excluded from the NRL competition that was successful in being selected for the competition in 2000. Souths' principal targets are ARL, News, and two other companies. One of these is National Rugby League Investments Pty Ltd ("NRLI"), a News subsidiary, that became ARL's partner in the partnership ("the NRL partnership") that was envisaged in the 19 December 1997 announcements. The other company, National Rugby League Ltd ("NRL"), is jointly owned and controlled by ARL and NRLI and was appointed by them as the NRL partners to conduct the NRL competition. I should note that in these reasons the acronyms NRL and NRLC Co are used to refer to the same entity. The relief sought in the proceeding whether by way of declarations, injunctions or damages is limited to that against News, NRLI, ARL and NRL. I should note that the practical defence of this proceeding has been conducted by News, NRLI and NRL. ARL has not sought actively to advance a defence independent of those put by these other respondents.
Souths' claims fall into three general categories. The first (which I will call "the s 45 claims") is that it was unlawful for ARL, News, NRLI and NRL to make or give effect to the agreement for a fourteen team term in 2000, as also for a related term for the funding of the teams in 2000, as those terms were exclusionary provisions within the meaning of s 4D and s 45 of the Trade Practices Act 1974 (Cth) ("the TP Act"). There is an additional, alternate s 45 claim to which it is unnecessary to refer at this point. The second category of claims ("the contract claims") is based on breaches of an alleged contract Souths made with the NRL partners on 24 March 1998. The various breaches complained of relate to implied terms which (compendiously described) obliged the partners to adopt and to apply fairly and reasonably, criteria for selection for the 2000 competition that were themselves fair and reasonable. The essence of Souths' various grievances is that it was unfairly dealt with by the partners. The third category ("the s 52 claims") involves alleged contraventions of s 52 of the TP Act, it being contended that various representations made as to the formulation and application of the selection criteria for the 2000 competition were misleading or deceptive or were likely to mislead or deceive. There is considerable overlap in the substance of the contract and the s 52 claims. It will be necessary later to refer to the pleadings in some detail. As I will indicate, for certain purposes it will be as important to emphasise what has not been pleaded as what has been pleaded.

Turning to the structure of my reasons, the proceeding raises a range of issues of factual and legal complexity. The format of these reasons will reflect this. Necessarily they are of some length. To assist understanding I have included a schedule that contains a glossary of terms, acronyms and proper names. Likewise, before dealing with the three distinct categories of claim made by Souths, I have provided both a description of the principal witnesses who gave evidence in the proceedings and a general chronology of events so as to provide the setting of the various claims made. As each particular claim in each separate category is considered, the additional factual material relevant to it will be separately outlined.
I should also indicate at the outset that, given the conclusions at which I have arrived on some number of matters, I have not always gone on to consider claims founded on contrary conclusions. In consequence there is a range of very detailed factual issues to which I have not referred. I have taken this course in the interests of time. It has been clear to all concerned, myself included, that a speedy resolution of this proceeding is required if such opportunity as Souths may have to secure admission to the 2001 competition is not rendered illusory by the passage of time.
PART I: PRELIMINARY MATTERS
1. PRINCIPAL WITNESSES
This alphabetical list is of those persons who gave evidence whose positions made them significant actors in the events that gave rise to this proceeding. Frequent reference will be made to them. I should indicate that, where their evidence (oral or affidavit) is recounted in these reasons, I accept that evidence save where I indicate to the contrary.
1. Edwin Farish. Mr Farish is a chartered accountant. He was Finance Manager of NRL from October 1998 to January 2000. He was a member of the Admission Criteria Committee ("the ACC").
2. Richard Fisher. Mr Fisher is a partner in the firm of chartered accountants, Ernst & Young. He has employment experience in, amongst other things, auditing and business strategy advice, and an expertise that focussed on major sports, events and venues. He led a team that advised NRL on the application of the Admission Criteria that determined the selection of clubs to participate in the NRL competition in 2000.
3. Ian Frykberg. Mr Frykberg has had a long career in both the print and television media particularly in relation to sport. From late 1996 until 1998 he was News' Executive Director of Sport, a position that made him directly responsible for the operation of Super League in 1997. With Mr Macourt (below) he was responsible from mid-1997 for the negotiations with ARL that led to the formal establishment of the NRL competition in May 1998 and the formal end to what was known as the "Super League war" between News and ARL. He was an NRLI appointee to both the board of NRL and to the Partnership Executive Committee ("the PEC") of the NRL partnership.
4. Peter Jourdain. Mr Jourdain was chief operating officer of Super League Pty Ltd ("Super League") from 1996 until early 1998 when he became General Manager of NRL. He remained in that position until November 1998. He is an accountant. He was responsible for integrating the Super League interests into the NRL competition. He led the team that developed the Admission Criteria for the 2000 competition.
5. Peter Macourt. Mr Macourt is a director of News and of NRLI. He has been the Chief Financial Officer of News since 21 July 1994 and its Deputy Chief Executive Officer since 1 September 1998. He was appointed by NRLI to the NRL Partnership Executive Committee. With Mr Frykberg he was responsible for negotiations with ARL to merge the ARL and Super League competitions.
6. Ian Philip. Mr Philip has been Chief General Counsel of News since 1997. He was an NRLI appointee to the NRL Partnership Executive Committee. He was involved from the beginning of 1998 in negotiating and settling the documentation that effected the formal merger of the ARL and Super League competitions in May 1998.
7. George Piggins. Mr Piggins was appointed Chairman of the board of directors of Souths in August 1990. He has had a long association with the club both as a first grade player and as a coach. He was an opponent of the in principle peace deal agreed to by most of the ARL clubs on 19 December 1997. Since 1998 he has asserted Souths' right to challenge the fourteen team term.
8. Neil Whittaker. From late 1996 until mid-1998 Mr Whittaker was Chief Executive Officer ("CEO") of ARL and General Manager of NSWRL. In January 1998 he was nominated CEO of NRL. He relinquished that position in October 1999. He was a first grade player for Balmain and a director on Balmain's board for two periods. He was one of ARL's negotiators with News from July 1997.
2. GENERAL CHRONOLOGY
Background: 1907-1997
Souths was formed at a meeting held in Redfern, Sydney, on 17 January 1908. It was the third of nine clubs formed that year and won the first premiership competition conducted by NSWRL in the same year. NSWRL was established in 1907. Both it and the clubs of that time were unincorporated associations. The clubs constituting NSWRL changed over time, some withdrawing, others joining. Of note for present purposes, Canberra and Illawarra joined NSWRL's competition in 1982. Brisbane, Newcastle and Gold Coast joined in 1988.
In 1982 Souths, in common with the other clubs, incorporated using the form of a company limited by guarantee. NSWRL took the same step on 21 December 1983. Early in December 1983 the General Committee of NSWRL passed a resolution to amend NSWRL's constitution to make it plain that the clubs were not entitled to participate in its competition as of right. This resolution was later reflected in NSWRL's articles of association on its incorporation. From 1984 until at least 1995, the clubs were required formally to apply on a year by year basis for admission to the NSWRL competition. At the time of the "Super League war" litigation between News, and ARL and NSWRL in 1995/1996, Rule 40 of the NSWRL rules provided that a club which had entered a team in one season would not be entered as of right in the following season, the board of NSWRL being entitled to refuse the application of any club to enter a team in any of NSWRL's competitions.
On 23 May 1986, ARL was incorporated. In 1992 an organisational review of ARL was conducted by a Dr G Bradley, apparently, for NSWRL. At the time of the Bradley Report there were sixteen teams in the competition. The Report will be referred to in a little detail later in these reasons. Here I would note that it recommended that, to enable the competition to become a national one, NSWRL's competition should be run by it on behalf of ARL. It likewise proposed, in the long term, a reduction in the number of clubs in that national competition to fourteen thus allowing the clubs to play two complete ("home and away") rounds.
In 1995, the number of participating teams had grown to twenty, with the competition by then being conducted by NSWRL on behalf of ARL. This was the year when the Super League war began. News, through its subsidiary Super League, moved to establish its own premier rugby league competition. Its ten teams were in part newly created clubs and in part, former ARL clubs that had changed their allegiance. After protracted litigation, culminating in the decision of the Full Court of this Court in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, the Super League competition commenced in 1997. Its teams were, to abbreviate, Brisbane, Cronulla, Canberra, Penrith, Canterbury, Auckland, Perth, North Queensland, Adelaide and Hunter.
The ARL competition continued from 1995 but with now twelve teams. These were, again to abbreviate, Balmain, Manly, Norths, Parramatta, St George, Souths, Sydney City, Wests, Newcastle, Illawarra, Gold Coast and South Queensland. I would emphasise in passing the distinctly higher proportion of Sydney based teams in the ARL competition than in Super League's.
In March 1996, ARL and Optus Vision Pty Ltd ("Optus") entered into a sponsorship arrangement that resulted in the ARL competition being named the "Optus Cup". Optus in turn was to make significant financial provision for the participating clubs in 1997 ($2 million per club) and 1998 ($1.8 million per club). As from August 1995 ARL had as well a comprehensive funding agreement with Nine Network Australia Pty Ltd ("Nine").
In December 1996 Mr Whittaker was appointed General Manager of NSWRL and CEO of ARL. He relinquished both positions in mid-1998.
Souths continued to participate in the ARL competition, though still on the basis of annual applications to participate. By countersigned letter dated 18 July 1997, Souths contracted with ARL and NSWRL for the 1998 and 1999 seasons. The letter stated in part:
"Subject to the Club receiving the agreed funding of $1,800,000 not later than 30 October 1997 and $1,600,000 not later than 30 October 1998, the Club will:-
(a)continue to support the ARL and the NSWRL in both the 1998 and 1999 seasons; and
(b) participate in the Optus Cup Competition in those years.
The Club also authorises the ARL/NSWRL to negotiate with Optus Vision with a view to, if possible, accelerate the timing of payment of funding for each of the 1998 and 1999 seasons.
The Club continues to support the efforts of the ARL/NSWRL to seek a united competition."
This agreement was prompted by a letter from Optus to ARL of 18 July 1997 that stated, inter alia, that subject to confirmation of club loyalty for the 1998 and 1999 seasons (in the form loyalty agreements executed by the ARL clubs), Optus would continue to fund the 1998 and 1999 ARL seasons in the amount of $1.8 million per club per season. There were certain conditions attached to the funding that need not be recounted. Additionally, Optus agreed to continue to negotiate funding for the 2000 season and beyond. The letter also stated that ARL/NSWRL and Optus would continue to work together for a united competition and to minimise Optus' funding requirement under such a competition. It was noted that "there will be benefits from having one competition".
It is common ground between the parties that the ARL and Super League competitions were of similar standard and were the two premier rugby league competitions in Australia in 1997.
Between 1908 and 1997 Souths won twenty premierships (the last in 1971) and was the runner-up in thirteen finals and grand finals. It has won more premierships than any other club in the history of top grade rugby league and has produced more international players than any other club.
Factual Setting 1997-2000
The principal events from the commencement of negotiations for a peace deal in July 1997 until the formal merger of the two competitions in May 1998 are recounted in some detail in the various "Additional Factual Material" sections of Part II and Part III of these reasons. Reference to them here will be relatively brief.
By May 1997 Mr Whittaker and the Chairmen of ARL and NSWRL (Mr McDonald and Mr Lockwood) had concluded that the conduct of rival rugby league competitions had caused substantial damage to the game. On 20 June Mr Whittaker made a presentation to the NSWRL board on the future of rugby league in Australia. The written report he provided contained three possible ways forward - do nothing; reduce the national competition to a Sydney competition; or negotiate a solution with News, Optus, Nine and others to rebuild the game. It advocated the last of these and proposed a particular model for the merged competition. It was to comprise twelve licensees, licensed by ARL on a tender basis, of which five were to be from Sydney, three from Queensland and four from other regional areas. It considered other options as well (fourteen, sixteen/eighteen and twenty team competitions).
The NSWRL board agreed in principle to a fourteen team competition in 1998 - this was subsequently changed to "a sustainable number of teams" reflecting a later ARL board resolution - and that there be only one competition in place. At an adjourned meeting on 24 June 1997 it was resolved that:
"The league continue discussions with Super League and television companies to achieve an acceptable outcome in the interests of rugby league in Australia."
From the commencement of the 1997 season, meetings of Mr Macourt, Mr Frykberg and Mr Lachlan Murdoch were held by News at which the future of the Super League competition was raised. At a June meeting, and as a result of his becoming aware that Mr Whittaker was prepared to discuss with News a possible merger of the competitions, Mr Frykberg obtained Mr Murdoch's authorisation to have discussions with ARL, News' position being that:
".        the competition would be called Super League;
.         the ARL would run representative and other football;
.         there would be 12 teams in the domestic competition; and
.         the competition would be jointly funded by News and the ARL."
Discussions began in late June 1997. The ARL/NSWRL representatives were Mr Whittaker, Mr Lockwood and Mr McDonald. News' were Mr Frykberg, Mr Macourt and, for a time, Mr Cowley. The competition structure and number of teams were the subject of much consideration. News had proposed a twelve team competition; ARL, a sixteen team one. Mr Whittaker proposed as a compromise a fourteen team, home and away, competition phased in over three years. This was agreed to by News provided the phasing in was over two years.
Negotiations broke down in late August and did not resume until the beginning of October 1997. In the interim ARL and NSWRL continued to develop their proposals for a National Rugby League Competition ("NRLC"). Those proposals were based on two documents prepared by Mr Whittaker - the "ARL/Super League Terms Sheet" of 31 July 1997 and "ARL/Super League Issues Paper" of 17 August. What these documents envisaged was a national competition conducted and managed by ARL through a joint venture company (NRLC Co) owned by ARL and News that would licence teams to participate in the competition. The transitional arrangements to achieve a fourteen team competition were, as stated in the Terms Sheet, that:
"3.1     It is proposed that 16 licensees participate in the 1998 NRLC.
3.2      The reduction in the number of teams for the 1998 NRLC would be determined by the ARL clubs and the Super League clubs each contributing 5 'stand alone' teams ie existing clubs that will be a licensee in its own right [sic] in the 1998 NRLC.
3.3      If clubs enter into joint ventures to form a licensee to participate in the NRLC, those licensees will be granted a five year licence and guaranteed funding for five years (1998-2002 inclusive). This provides an incentive to clubs to undertake joint ventures.
3.4      In 1999 the NRLC will be reduced to 14 teams. At least 2 'stand alone' clubs in 1998 will not be entitled to participate as a 'stand alone' club in the 1999 NRLC, based on financial and other performance benchmarks set out in the licences."
After the resumption of negotiations, the parties were by early December able to contemplate the preparation of a draft Memorandum of Understanding ("MoU"). ARL sought to revisit the fourteen team compromise. It was told that News' position was that this was no longer negotiable. By 10 December 1997 documentation entitled "Proposal for Competition Structure" had been prepared. It used a twenty team (1998), sixteen team (1999) and fourteen team (2000) formula. It provided positive incentives to merger. It provided that in the fourteen team competition there should be no less than six and no more than eight teams from Sydney and conversely no less than six and no more than eight from outside of Sydney ("the 8-6/6-8 split"). It prescribed the regions outside of Sydney until 2001. And it set out the priority order for licences in the event of too many teams meeting the criteria. This was (i) merged clubs (ii) regional clubs and (iii) stand alone clubs. The only change of significance that was to occur in the competition structure thereafter was that, at ARL's request, the 1999 sixteen team provision was varied to allow up to twenty teams.
On 11 December Mr Whittaker presented to meetings of the boards of NSWRL and ARL a draft MoU which, with the boards' approvals, would be put to News. That MoU confirmed the intention of the parties to negotiate and finalise all necessary agreements to implement a merger of the two competitions. It proposed (i) a 50/50 partnership between ARL and Super League to operate the NRLC competition, the partnership to be managed by an executive committee comprising three Super League and three ARL nominees; (ii) the partnership would appoint a management company, NRLC Co (later to become NRL), to operate the competition on a day to day basis; (iii) each of ARL and Super League would use their best efforts to ensure that their respective clubs participated in the unified 1998 competition; (iv) NRLC Co would be a joint venture company equally owned by ALR and Super League and they would have equal representation on the board; (v) reflecting the earlier Competition Structure document, a competition structure leading to a fourteen team term in 2000, incentives for Sydney clubs to merge, an 8-6/6-8 split, and a priority order for the grant of licences in the event that the number of applicants exceeded the number of available licences; and (vi) each licensee would receive an annual grant of $2 million. Both boards resolved to meet again the following week to finalise decisions in relation to the merger proposals and to meet with the clubs.
On 17 December Mr Whittaker sent a memorandum to each of the clubs advising that a meeting of the CEOs and Chairmen of the clubs would be held on 19 December 1997. It would be followed by a meeting of the board of each of the clubs, and then by a meeting of the General Committee of NSWRL. The memorandum stated that:
"[t]he purpose of these meetings is to consider recommendations from the Boards of the NSWRL and the ARL on the terms and conditions of a proposed merger of the ARL and Super League Competitions, and if thought fit, to approve those terms and conditions."
Early in the morning of 19 December at a NSWRL board meeting Mr Whittaker again presented a report on the merger proposals. They were similar to what was outlined above in the draft MoU. Subject to certain conditions that are not relevant for present purposes, the board adopted the recommendation that:
".The terms and conditions of the proposed ARL/Super League merger, as presented on 19 December 1997, when considered as a package, be agreed by ARL/NSWRL provided that
…
.The ARL's negotiation team be authorised to continue further negotiations with Super League …
.The ARL's negotiation team be authorised to enter into a Memorandum of Understanding substantially on these terms and conditions."
A like meeting with a like outcome was held by the ARL board.
At the meeting later that day of the club CEOs and Chairmen, Mr Whittaker distributed an "Executive Summary" of the merger proposals. The detail of the summary will be referred to later in these reasons. Here I would note it provided (inter alia):
".        All clubs given opportunity to participate in rationalisation process
.          50/50 ownership and control of NRLC competition."
In like dot-point format it described, inter alia, (a) the National Rugby League Partnership, (b) NRLC Co that would be appointed "to operate the NRLC competition", (c) television and broadcasting rights, (d) the competition structure in terms reflecting the earlier "Competition Structure" document (including the incentives to merger, the 8-6/6-8 split and the priority order), (e) that "no deadlock provisions to apply" and (f) under the heading "Transparency":
".        All arrangements will be transparent
.Super League to disclose all interests which Super League or News has in any of the Super League clubs."

At the subsequent meeting of its board of directors, Souths resolved to vote against the merger proposals. In the afternoon of 19 December the meeting of the General Committee of NSWRL took place. It approved the proposals in terms recommended by the NSWRL and ARL boards. Souths and Balmain were the only dissenters.
Both ARL and News issued media releases later the same day. The ARL release announced "in principle" agreement to a partnership with News for a united competition with a new jointly owned company to be formed to administer the National Rugby League Competition. Mr Whittaker was recorded as stating that had the "war" not ended the game of rugby league would "continue to suffer enormous and perhaps irreparable damage"; that the clubs would have the ability and responsibility of deciding their own futures and would be given incentives to reduce overall numbers of teams to sixteen in 1999 which was "a year later than the ARL's original target set back when expansion was announced in 1992"; and that "by the year 2000 the competition will trim to 14 teams". The News announcement was to the same effect, noting that it had been agreed that Super League and ARL would reach agreement with (and make arrangements for) their respective clubs on financial matters. The Super League clubs, which were meeting elsewhere on that day, were informed of the agreement.
I would note in passing that the events and the documentation of 19 December 1997 are relied upon by Souths to establish the "understanding" which is the foundation of a number of its claims under s 45 of the TP Act.
Consequent upon a meeting of representatives of ARL, NSWRL, News, Super League, Optus and Nine on 22 December to consider the formation of NRLC Co and the funding necessary to achieve its establishment, Nine consented on 23 December 1997 to the formation of the company provided it entered into an agreement with Nine for free-to-air television rights. It also indicated it would provide additional funding to ARL that was provisional on both Optus and News making corresponding commitments. The following day News and Optus confirmed their preparedness to make funding available to ARL. This funding resulted in the ARL clubs each obtaining $1.5 million in addition to the $2 million to be provided to them as licencees of NRLC Co.
On 24 December 1997, ARL issued a media release announcing that ARL had secured the funding necessary to pave the way for the reunification of the game in 1998 in a single competition. Mr Whittaker was reported as saying:
"We could not send our clubs into what will be a testing two years without the resources to compete."
On 23 December 1997 a version of the draft MoU considered by the boards of ARL and NSWRL on 11 December was sent to News. This was considered at a meeting between representatives of News and ARL/NSWRL on 24 December. Though subject to considerable alteration in detail, agreement was reached on the substance of the matters dealt with in the MoU though an agreed document was not then prepared and signed. I will in these reasons refer to the 11 and 24 December draft MoUs as "the December MoUs".
It would appear that at the end of 1997 two Super League clubs, Perth and Hunter, ceased to exist.
From the beginning of 1998 developments began to occur on a number of fronts. Those employees of Super League and of ARL who were to join NRLC Co began work on preparing for the new competition including preparation of selection criteria for the 1999 and 2000 competitions. News began the process of securing the agreement of the Super League clubs to terms that would result in the release of its contractual obligations to them severally.
On 19 January 1998 a meeting of the proposed NRL partnership's PEC was held that determined that Mr Whittaker was to be the CEO of NRLC Co and Mr Jourdain its General Manager. On 22 January, a meeting of the "National Rugby League (NRL) Club Chief Executives" was held where it was made known that the Selection Criteria were being drawn up and were expected to be complete by the end of February. At some point before the end of February 1998 it was decided that clubs would not be subject to a selection process for the 1999 season. The seventeen clubs then still in existence would all participate in that season.
On 18 February 1998 ARL, NSWRL, News and Super League formally executed an MoU ("the 18 February MoU"). It carried forward with some alteration what was proposed in the December MoUs. Reference in some detail will be made to various provisions of this MoU later in these reasons. I would note in passing the MoU is one of the arrangements impugned in Souths' claims under s 45 of the TP Act.
From at least February 1998 onwards the negotiation and preparation of the voluminous documentation necessary formally to merge the two competitions was put in train.
On 23 February 1998 a match schedule of the first five rounds of competition commencing on 13 March 1998 was distributed to the media and to NRL club CEOs, who met on 25 February. On that day the "Proposed PEC" also met. It was updated on the formation of the partnership and NRL and on the process for determination of criteria for club licenses. It also was presented with a draft ten year Business Plan for NRL.
The 18 February MoU envisaged that the NRL partners would be ARL and Super League or a "wholly owned subsidiary of either of them". NRLI was incorporated on 25 February 1998. It was a wholly owned subsidiary of Super League. It formally became ARL's partner on the execution of the Partnership Agreement on 14 May 1998. I would note in passing there is an issue between the parties in this proceeding as to whether a partnership between ARL and NRLI was in fact formed at an earlier date.
On 6 March 1998 ARL wrote to Souths "confirm[ing] the opportunity to participate in the NRL Competition in 1998". That letter was the prelude to an exchange of correspondence between ARL and Souths and communications between Mr Piggins and Mr Whittaker which gave rise to the alleged contract of 24 March 1998 upon which Souths' contract claims are based. The correspondence and the surrounding circumstances are set out in detail in Part III of these reasons. Here I need merely note that the rights Souths alleges it has in relation both to the 2000 competition and to the Admission Criteria and the selection process stem, it is said, from this contract.
On 11 March Super League sent to each of the Super League clubs a letter for execution confirming the club's participation in the 1998 NRL competition. The club, and its franchisee entity, would be offered participation in the 1999 season provided they were solvent and had abided by the rules of NRL which were being promulgated, and provided that the Super League arrangements had been terminated. The letter contained an acknowledgment that the NRL competition would have "no more than fourteen participating clubs in 2000 or thereafter". A similar letter-agreement was also sent to Melbourne (a new club) to enable it to confirm its agreement to participate in 1998.
On 13 March 1998 the football competition commenced. Souths (an"ARL club") played Auckland (a "Super League club") in Auckland. I note in passing that there is an issue in this proceeding as to what, and whose, competition was being conducted on that day.
On or about 20 March, NRLI, ARL and two nominees of each of them executed the Members Agreement. This was in effect a shareholders' agreement for the NRL company that was about to be formed. On 25 March NRL was incorporated as a company limited by guarantee. Its articles of association were made subject to the Members Agreement. The substance of that agreement is set out in detail in Part II of these reasons.
In early April 1998 Mr Jourdain, who led the team that developed the Admission Criteria, circulated to NRL management a first draft of the criteria. These were substantially different in a number of respects from those later adopted by NRL.
On 22 April the NRL club CEOs met and were presented with a paper entitled "Timetable in relation to NRL Competition Structure Documentation". Comment on the Timetable was to be received by 24 April. On 28 April 1998 NRL circulated a revised version of the Timetable. The accompanying memorandum indicated that "in essence we have allowed for a longer period of consultation with the Clubs … the Clubs will now have essentially two months for proper consideration". Under the heading "Background", the Timetable stated (i) that NRL "must create and sustain a vigorous and sustainable competition"; (ii) that all clubs would be dealt with equally and in a consistent manner; and (iii) that although NRL would consult with each club, "ultimately the NRL will make the final decision on the basis of what is best for the NRL competition". The Competition Structure Documentation ("CSD") was to include the criteria for admission to the competition in 2000, the Franchise Agreement and the NRL rules. Again I would note in passing that the statements made in the 28 April paper under the heading "Background" found the first of Souths' claims under s 52 of the TP Act.
On 8 May 1998 NRL published the draft Admission Criteria in accordance with the Timetable, along with an accompanying explanatory statement for the media. The stated "Aims" of the draft criteria were to "create and maintain a viable national competition" and to "set and apply criteria for inclusion in the competition in a fair and reasonable manner". The heading "Method" provided for the provision of the criteria to "stakeholders" followed by a consultative period to "objectively evaluate suggestions from stakeholders". The criteria were set out in three phases: Basic Criteria (playing facilities, administration, solvency and development), Qualifying Criteria and Selection Criteria. It was noted in the introduction that the Selection Criteria outlined a mechanism to differentiate between competing tenderers, and was "intended to provide an objective basis for ranking tenderers through a calculation of measurable criteria, appropriately weighted". The statement of "Aims" in the draft criteria founds Souths' second claim under s 52 of the TP Act.
The consultative processes foreshadowed in the draft proposals were undertaken. Explanation to the clubs was offered and comments were received from them. A consultant statistician was engaged for advice on the draft criteria and a number of reports were provided to NRL. Those reports dealt with such topics as how the criteria interacted, what risk there was of perceived bias in the weighting system proposed for the Selection Criteria, the transparency and integrity of the Selection Criteria, sponsorship and merger options. The report of 20 May 1998 noted that:
"The vastly different histories of the competing clubs together with the different existing facilities, locations etc. means that the playing field starts out being far from level with respect to all of the suggested draft criteria.
If the selection criteria are a genuine attempt to end up with a fair result, then it is important that they be easily audited and difficult to manipulate.
The draft criteria are not independent and in some cases difficult to audit.
Actual performance on the field is least likely to be manipulated and has the benefit of being readily identifiable by the supporter base who are the essential stakeholders and who in many cases have been burned by the recent history and are already suspicious."
The NSWRL Boundaries Committee provided a report to NRL on "Future of the National Rugby League Competition" that aimed in part "to … dissect and discuss the draft criteria". The consultative process did result in some changes being made to the draft criteria.
It should be noted of the consultative process that on 17 June 1998 Mr Bampton, Souths' CEO, sent a response to NRL in the form of a commentary document entitled "NRL Draft Criteria Document" expressing its reservations with aspects of the criteria. In summary it stated:
"South Sydney District Rugby League Football Club Ltd is opposed to the reduction of teams from twenty as at present constituting the National Rugby League. If the theory is that Sydney cannot support its traditional teams its not necessarily that there are to [sic] many teams rather than the game is fundamentally unhealthy.
The Club has made its position abundantly clear it will if necessary seek relief in the courts to prevent its exclusion from and [sic] future competition conducted by the National Rugby League Ltd. The Club made its position clear on the 19^th December 1997 and at various times thereafter.
The Club has commented on the draft criteria without prejudice to its rights to pursue relief in the Courts and in an endeavour to avoid protracted litigation which would by its nature and content prove damaging not only to certain persons but also to the game of Rugby League. In our view Rugby League is an icon to be preserved for the people who love and support it, not a product to be carved up to the media for their own financial gratification."
On 14 May 1998 the various News companies, ARL and NSWRL, NRL and Nine and Optus executed, as appropriate, what counsel has aptly referred to as a suite of documents which formally effected the merger of the competition and put in place a range of consequential arrangements. The centrepiece was the Merger Agreement that superseded the 18 February MoU. Its recitals stated that it was the parties' wish to merge the two existing competitions so that "there is one premier rugby league competition in Australia, called the NRL Competition, on and from the 1998 rugby league playing season". The Agreement stated the parties' objectives to be (cl 2):
"to implement the Merger so that:
(a) public interest and support for the game of rugby league is maximised;
(b)the viability and sustainability of the game of rugby league is protected; and
(c)sponsors and media companies obtain access to an enhanced sports entertainment product."
Clause 7 provided the definitive version of the competition structure. It is set out in full in Part II of these reasons. I would again note in passing that the fourteen team term in this agreement is impugned in Souths' claims under s 45 of the TP Act.
The other 14 May agreements to which reference should be made are the Partnership Agreement that formally established the NRL partnership and the NRL Services Agreement ("the Services Agreement"). The latter was executed by NRLI, ARL and NRL and appointed NRL to provide designated services to the partnership. These included (Sched 1) "conducting the NRL Competition in accordance with the Business Plan" approved by the partners. Clause 2.2 of the Services Agreement provided:
"In providing the Services, NRL will act solely as an independent contractor. Nothing in this Agreement will constitute, or be construed to be or create, the relationship of employer and employee, principal and agent, trustee and beneficiary, joint venturers or partnership between the Partners and NRL."
The legal effect of this provision is in contention in this proceeding.
After further consideration of the Admission Criteria in July and August, NRL published its finalised version on 8 September 1998. There were three classes of criteria: (i) Basic Criteria, to be satisfied by all clubs, that dealt with playing facilities, club administration, club solvency and input into development of the game; (ii) Qualifying Criteria, that were to be applied only to Brisbane, Auckland and Newcastle, which required, inter alia, that each demonstrate it had minimum revenue of $8 million made up of a number of specific minimum revenue targets; and (iii) Selection Criteria, that were to be applied to all teams that had participated in the "relevant years" (these were specified by individual criteria) save for teams that had merged early enough for the newly merged entity to participate in the 1999 competition. Only St George and Illawarra effected an "early enough" merger.
Some considerable part of the Selection Criteria warrants quotation:
"C. SELECTION CRITERIA
The purpose of this matrix included in this section is to rank Clubs that have not obtained a licence to participate in the NRL Competition in 2000 as at 1 October 1999.
Subject always to the overriding objective (previously advised to Clubs) of having no more than 14 teams in the NRL Competition in 2000, with no more than 8 and no less than 6 Sydney teams, and no more than 8 and no less than 6 Regional teams, selection of Clubs for admission in 2000 will be based on Club rankings after the application of these Selection Criteria.
All teams that have participated in the relevant years will be included for the purpose of the matrix calculation and therefore the relevant ranking.
(NB. Refer separate paragraph relating to joint ventures occurring before 1999 season.)

Criteria Note Weighting Measurement to Obtain Initial Points

1 Crowd Numbers
(Home Games) (a) 1 Ranked on a scale of 1-20, 20 being the Club with the highest aggregate crowd at home games.

2 Crowd Numbers
(Away Games) (b) 1 Ranked on a scale of 1-20, 20 being the Club with the highest relative aggregate crowds at away games.

3 Competition
Points (c) 1 Ranked on scale of 1-20, 20 being the Club with the best results over the past 5 years.

4 Gate Receipts
(Home Games) (d) 1.25 Ranked on a scale of 1-20, 20 being the Club with the highest gate receipts in dollar value from home games.

5 Sponsorship
and Other Income (e) 2 Ranked on a scale of 1-20, 20 being the Club with the highest total.

6 Profitability (f) 1 Ranked on a scale of 1-20, 20 being the Club with the highest overall profitability.
NOTES:
(a)Crowd numbers (home games) are measured as the total aggregate crowd (paying or complimentary) for the highest attended 16 games in 1998 and 1999 (does not include finals series).
(b)Each visiting team at a venue will be ranked on the basis of relative attendance.
The away team with the biggest crowd that year at the venue will be awarded twelve points, the away team with the second biggest attendance eleven, and so on.
Relative points at each venue will be added together to give an overall rank.

Ranks will be calculated for each season and then aggregated over 1998 and 1999 for a final score, ie the highest team in this category will score twenty points (refer to calculation section).
(c)The 1997 season will be excluded in the calculation of the rankings in this category.
The position earned by a team at the end of the premiership rounds will be ranked, with minor premiers in a given year awarded 20 points to the last placed team 1. The annual points will then be weighted on the following basis:

1995               a weighting of            1
1996               a weighting of            2
1998               a weighting of            3
1999               a weighting of            4
           In the case of Gold Coast, Melbourne and Adelaide, the 1998 season will be given a weighting of four and 1999 a weighting of six.

(d)      Gate receipts will be measured in accordance with the definition used for the Qualifying Criteria measurement and will be aggregated for 1998 and 1999 for the highest 16 gates over 1998 and 1999.
(e)       Sponsorship and Other Income will be measured in accordance with the definition used for the Qualifying Criteria measurement and will be aggregated for 1998 and 1999.
(f)       Profitability will be measured on the aggregate of profit and loss accounts for each Club for the 1998 and 1999 seasons as follows:
(i)        For 1998, the Profit and Loss Account prepared under current Australian Accounting Standards.

(ii) For 1999, the forecast Profit and Loss Account (prepared under the principles of current Australian Accounting Standards) taking into account actual results to 31 August 1999 and the forecast to 31 October 1999. The estimate for the remaining two months must be agreed by NRL.

(iii) Any revenue or expense item properly attributable to the football clubs, must be included in the Profit and Loss for this calculation irrespective of which entity it is recorded [sic].

NRL reserves the right to verify and challenge the validity of any amounts to be included (or excluded) in any of the revenue/cost items for this purpose. This extends to both the quantum and the source of the item. NRL shall have the discretion to obtain an independent opinion, at its cost. The final decision on the application of the Selection Criteria rests with NRL.
Any change in venue, where requested by NRL, will be done in consultation with the two teams to ensure the possible effects on the Selection Criteria are appropriately dealt with."

The criteria went on to provide a method of allocation of points to a team's ranking as against each criteria.

The significance of the "note (e)" reference to the definition of "Sponsorship and Other Income" in the Qualifying Criteria was that those criteria set a $2.25 million maximum on "News Ltd/ARL/Leagues club funding" for sponsorship and other income. As was indicated in the Qualifying Criteria:
"[t]he maximum of $2.25 million allowed by News Ltd/ARL/Leagues Club funding is a total from all categories. None of this can be taken into account in determining either the Net Gate receipts or the Net Sponsorship and other income (unless proved to NRL that it is valid)."
I would note that one of Souths' contract claims is that $3 million funding it received from South Sydney Junior Rugby League Club Ltd ("Souths Juniors") was improperly excluded from its "sponsorship and other income" figure as it was treated as equivalent to benefits derived from a Leagues club. I would also note that the contract claims generally relate to the setting, content and application of the Admission Criteria. The third and fourth claims under s 52 of the TP Act relate to alleged representations made in or in consequence of, the publication of the Admission Criteria.
At the end of the 1998 season two clubs that had participated in the NRL competition, Gold Coast and Adelaide, reached agreement with NRL that they would no longer participate in the competition. On 10 November 1998 NRL approved a joint venture between the St George and Illawarra clubs.
The 1999 season commenced on 13 March with seventeen teams participating. Though it had received a Club Agreement for that season from NRL, Souths (as also several other clubs) did not sign it.
On 21 April 1999 NRL distributed a document, "NRL Admission Criteria Process", to the clubs. It set in train the processes that would, according to the timetable it specified, lead to an announcement on 15 October 1999 of the fourteen teams selected for participation in the 2000 competition. This document will be referred to later in these reasons in some detail.
On 30 April 1999 NRL issued an Invitation to Tender to the firm of chartered accountants, Ernst & Young. The tender document envisaged the tenderer would undertake a "data verification exercise" in relation to data provided by the clubs for the purposes of the Selection Criteria, though not the Basic Criteria and the Qualifying Criteria. In common with the "NRL Admission Criteria Process" document, the tender outlined a three stage process in which the tenderer would be involved. It is unnecessary to outline it here. Ernst & Young's tender was successful. A team led by one of its partners, Mr Fisher, was formed to perform the consultancy. It should be noted that on 6 August 1999, the consultancy was extended to assist in determining the solvency of clubs for the purposes of the Basic Criteria. Among Souths' contract claims is the allegation that, in the selection process, the solvency criterion was not applied according to its terms. NRL also engaged the services of Minter Ellison, solicitors, to provide legal advice in the implementation of the admission process.
In June 1999 an independent marketing consultant prepared a business plan, the "Millennium Management Plan", for Souths. Though there is no evidence of its having been approved by Souths' board (which was at that time in a process of reconstitution), it was submitted to NRL on 31 July as the five year business plan required of Souths under the Admission Criteria timetable. The Plan's executive summary indicated:
"[The Plan] has been written and the strategies and actions within predicated on the Club standing alone as a member Club of the NRL in 2000. The Club has resolved to take all necessary actions including "legal recourse" to ensure its continued participation in the competition."
In late July 1999, Balmain and Wests obtained NRL approval to form a joint venture for the 2000 competition.
NRL established an Admission Criteria Committee comprised of Mr Powell, Mr Farish and Mr Gallop to ensure that the Admission Criteria had been applied consistently and that a clear documentary trail was established to provide evidence of the decisions made in applying the Admissions Criteria and the reasons for those decisions. The first ACC meeting was on 6 August 1999.
Throughout August, September and early October 1999 exchanges occurred between NRL, Souths and Mr Fisher concerning the provision of information, issues to be dealt with, etc. The proper treatment of Souths Juniors funding was raised in these exchanges. On 1 October 1999 Souths was informed that it was one of the clubs that had met the Basic Criteria and would thus be subject to the Selection Criteria. Norths failed for solvency reasons to meet the Basic Criteria. Ten clubs were applying under the Selection Criteria for nine licences, the remaining five licences having gone to Brisbane, Auckland and Newcastle and the two joint venture entities, St George-Illawarra and Wests-Balmain.
On 14 October 1999 the ACC presented its final report to Mr Whittaker recommending the fourteen teams to be invited to participate in the 2000 competition. Souths did not receive such a recommendation. On 15 October Mr Whittaker then took his own recommendations to the NRL board. They were based on the ACC recommendation. The board resolved to adopt the ACC recommendation.
Souths had failed to secure admission to the 2000 competition and was notified of this by letter on 15 October. On the same day NRL Club Agreements were sent to the successful clubs for signing.
On 27 October NRL approved a joint venture of Manly and Norths. Souths commenced this proceeding on 12 November 1999. In interlocutory proceedings before Hely J in late November and early December 1999, Souths was unsuccessful in obtaining interlocutory relief that would in substance have required ARL and News to allow it to participate in the 2000 competition: South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120.
PART II: THE SECTION 45 CLAIMS
1. THE STATUTE
Before considering the factual material that Souths contends brings its claims within the scope of s 45 of the TP Act, it is necessary first to explain what is comprehended by the term "an exclusionary provision" for the purposes of s 45. It is by no means without its curiosities.
Souths' claim is sourced in s 45(2) which provides:
"A corporation shall not:
(a)make a contract or arrangement, or arrive at an understanding, if:
(i)the proposed contract, arrangement or understanding contains an exclusionary provision; or
(ii)a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or
(b)give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:
(i) is an exclusionary provision; or
(ii)has the purpose, or has or is likely to have the effect, of substantially lessening competition."
Though not directly in issue in the present proceeding, I have referred to subsections (2)(a)(ii) and (2)(b)(ii) so as to indicate that the composite forms in which they are expressed (ie "purpose" or "effect") embody the legislative recognition that the purpose of a provision and the effect of a provision are not necessarily the same. More generally I would note for present purposes that the subsection proscribes not only the making of a contract, etc, containing an exclusionary provision but also the giving effect to such a provision. By virtue of s 4 of the TP Act the formula "give effect to":
"includes do an act or thing in pursuance of or in accordance with or enforce or purport to enforce."
Turning to the meaning of "exclusionary provision" itself, it is defined in s 4D(1) in the following way:
"A provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:
(a)the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and
(b)the provision has the purpose of preventing, restricting or limiting:
(i)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or
(ii)the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;
by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate."
The five matters to which I would draw attention in this provision are:
(i)an understanding or an arrangement, no less so than a legally binding contract, can contain an exclusionary provision;
(ii)two or more parties (but not necessarily all of the parties) to the contract, etc, must be competitive with each other (I return below to the deemed meaning of "competitive" in this context);
(iii)it is not the actual or likely effect of the provision as such that the TP Act proscribes: cf s 45(2)(a)(ii); but rather the purpose of the provision (the meaning of "purpose", as noted below, is the subject of a deeming provision);
(iv)the proscribed purpose must itself be related to "particular persons or classes of persons"; and
(v)the contract, etc, may envisage that only one party to it will effectuate the proscribed purpose.
As I have foreshadowed, the two terms whose meanings require elaboration are "competitive" and "purpose". First, "competitive". Section 4D(2) of the TP Act provides:
"A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates."
The matter I would emphasise is that this provision envisages a number of different contingencies that can result in parties being deemed competitive. Later in these reasons when considering how the subsection impacts on Souths' claim I will provide a recast version of s 4D(2) that highlights the differences between the contingencies.
Secondly, "purpose". Section 4F(1) provides, for present purposes, that:
"
(a)a provision of a contract, arrangement or understanding shall be deemed to have had, or to have, a particular purpose if:
(i)the provision was included in the contract, arrangement or understanding … for that purpose or for purposes that included or include that purpose; and
(ii) that purpose was or is a substantial purpose."
It will be necessary when considering particular defences raised to the s 45 claims to refer to other provisions of the TP Act. I defer exposition of these to avoid the need for repetition.
2. SOUTHS' VARIOUS S 45 CLAIMS
It is Souths' case that between 19 December 1997 and 14 May 1998 ARL and News (or a News subsidiary) entered into a sequence of agreements (I use this as a neutral term) that individually either contained or else gave effect to an exclusionary provision. The agreements relied upon in Souths' pleading are, first, what I will call the 19 December Understanding, secondly, the 18 February MoU, thirdly, the 14 May 1998 Merger Agreement and, fourthly, the 14 May 1998 the Services Agreement. Insofar as presently relevant I will outline briefly below the nature and purpose of these various agreements under the heading "The Contracts, Arrangements or Understandings". As a matter of convenience following consideration of the various agreements, I will refer to the distinctive position NRL occupied in the matter. It is Souths' contention that NRL acted as agent of the NRL partnership in giving effect to the exclusionary provision. This is denied by the respondents. The issue will be considered under the heading "Agency and NRL".
The exclusionary provision said to be contained, or given effect to, in these agreements is pleaded in the alternative. The first, and principally relied upon, alternative is the "fourteen team term" and its related "funding term". The second is a provision that ARL and News will “cease altogether” to supply or acquire various services. This alternative responds to a defence raised by NRL and is aimed at meeting a particular contingency which, as a matter of convenience, I will consider separately: see "the cease altogether term" below. I will confine myself here to the various claims arising out of the fourteen team term.
3. THE FOURTEEN TEAM TERM
I would note at the outset that, as pleaded by Souths, the fourteen team term was that:
"[i]n the 2000 season and thereafter the number of teams to participate in the NRL competition would be restricted to 14, with no more than eight and no fewer than six teams from Sydney."
The definitive documentary version of the term is set out later in these reasons. There are two matters I should emphasise about the term as pleaded. The first is that it embodied two ceilings - one on the number of teams to participate in 2000; the other, on the number of Sydney teams that could participate. The second is that it is claimed that the fourteen team restriction was intended to apply in and after 2000. This is contested by some of the respondents.
The purpose of the fourteen team term is said to have been to prevent, restrict or limit variously the supply or acquisition of four discrete types of service. Put shortly those services were (i) organising and running top level rugby league competitions; (ii) acquiring the services of rugby league teams; (iii) supplying entertainment services (ie top level rugby league matches); and (iv) providing funding to clubs participating in the top level rugby league competitions. Each of these is considered separately below under the heading "Services".
Consistent with the requirements of s 4D(2) of the TP Act, Souths alleges that at the times of the various agreements in the sequence said to contain the exclusionary provision, ARL and News (or a related body corporate) were, or (but for the provisions of an earlier agreement in the sequence) would have been, in competition with each other in relation to the supply or acquisition of the four types of service I have mentioned. The complexities in this allegation are considered under the heading "Competition". There is a real question between the parties as to the time at which the parties to the agreement need to be shown to be, or to be likely to be, competitive for the purposes of s 4D(2).
In respect of each of the four types of service I have mentioned, and again reflecting the provisions of s 4D of the TP Act, it is claimed that the purpose of the fourteen team term was to prevent, limit or restrict their supply to or acquisition from "particular persons or classes of persons". In respect of each such service a variety of classes and persons are designated in the pleading. These will be considered severally under the heading "Purposes and their Objects".
There is a number of specific TP Act defences raised by the respondents that need separate consideration: see "Defences" below. I will then comment briefly on the issue of relief: see "Relief" below.
4. THE CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS
It is a matter of concession by News, NRLI and NRL that at or about 19 December 1997 there was an understanding between ARL and News as to their future conduct of a single premier rugby league competition, and it was a part of that understanding that the competition would be limited to fourteen teams in the year 2000. That concession was properly made. From (a) the News and ARL media releases of 19 December, (b) the Executive Summary provided to the Chief Executive Officers ("the CEOs") and Chairmen of the twelve "loyal" ARL clubs at the 19 December meetings (a document Mr Frykberg said in evidence seemed to contain the "fundamental agreement" negotiated by the representatives of News and ARL), and (c) documents exchanged by ARL and News immediately before and after 19 December (eg the "Competition Structure" document provided by Mr Whittaker to News on 17 December, as also the draft MoU supplied to News on 23 December), one can discern readily enough the central elements both of the proposed unified arrangement and of the fourteen team term as these were understood on 19 December. Given the concession, it is unnecessary to set out the above documentation and evidence in any detail.
The premise of the understanding was that ARL and News (via Super League) would cease to conduct their existing competitions and would form a 50/50 partnership to own and control the proposed competition; that competition would be operated by a 50/50 joint venture company (then referred to as "NRLC" or "NRLC Co" but later as "NRL"); and, to quote the Executive Summary in part, the "Competition Structure" would involve (inter alia):
".        NRLC will grant licences to participate in the NRLC competition.
…
.20 teams will be licensed to play in 1998 on a 1 year licence, but Brisbane, Newcastle and Auckland are assessed against criteria for 5 year licences.
.          16 teams will be licensed to play in 1999.
.          14 teams will be licensed to play in 2000.
…
.In a 14 team competition there will no less than 6 teams, and a maximum of 8 teams, from Sydney.
.Conversely, there will be no less than 6 teams, and a maximum of 8 teams, from regions outside Sydney, being:
*Adelaide  *         North Queensland
*Melbourne  *         Newcastle
*Auckland  *         Gold Coast
*Canberra  *         Central Coast
*         Brisbane"
It also was understood at the time, as stated in the News media release, that "[the] teams that will compete in the streamlined competition will be determined by strict criteria, to be agreed on by February 28, 1998". Clause 1.2 of the "Competition Structure" document provided to News by Mr Whittaker on 17 December 1997 was to like effect. This theme of selection by reference to criteria is common both to the pre-19 December documentation as also to that culminating in the 14 May 1998 documentation that finally gave formal effect to the "peace deal".

Whatever may have been the case had NRL either (a) bound itself by contract at or after 8 September 1999 to apply those criteria; or (b) invited reliance upon them (hence representing that they would be applied according to their terms) by setting in train the admission process, I am not satisfied that, as at the date of publication, NRL represented more than what was stated in Principle 1. On the evidence before me, the actual representation that the criteria would be applied according to their terms (unless a change of intention was notified: cf Hughes Aircraft Systems International, above, at 198ff) was probably made at the time of circulation of the 21 April 1999 "NRL Admission Criteria Process" document or of Mr Gallop's minuted statement to the 22 April 1999 meeting of NRL club CEOs. It is not necessary that I express a concluded view on that matter. No s 52 claim has been made based on the 21 April document or the 22 April representation.
My conclusion above is sufficient to dispose of this claim. But even if the publication of the criteria document had such a "future element" as to contain an implied representation as to the future application of the document according to its terms, the claim would still fail.
NRL has submitted that, if there was such a representation, it would include the reservation stated in Principle 1. In consequence, the non-application of the criteria at a later date would not mean that the criteria document had not been applied according to its terms because of the liberty reserved by Principle 1.
I cannot accept this submission in the broad form in which it is put. Whatever may have been NRL's right to change the criteria prior to its initiation of, and the consequential participation of the clubs in, the selection process based on the Admission Criteria, there is a very real question as to whether Principle 1 would justify any departure from the criteria after the process has begun - at least without disclosure of that departure: see Hughes Aircraft Systems International, above. As I have not been addressed directly on this, I refrain from expressing a concluded view on this submission of NRL.
Secondly, NRL has submitted that there were reasonable grounds in any event for the implied representation. I entirely agree with that submission.
The intent to "determine by strict criteria" the teams that would participate in the 2000 competition was publicly expressed as early as News' media release of 19 December 1997. The protracted processes engaged in from January until August, involving not only in-house discussions but also the engagement and use of consultants and the involvement of the clubs in providing input, are consistent with the prosecution of a purpose of setting criteria that could be used to determine participation in the 2000 competition. The particular character that Mr Jourdain said he sought to give to the categories in the Selection Criteria (ie they were "capable of being measured objectively"), likewise pointed to the criteria being able to be used effectively to discriminate between clubs.
There is nothing in the evidence to suggest that those in NRL who were responsible for setting the criteria apprehended that the criteria settled upon could not be applied according to their terms. The "input" from clubs and consultants did not reasonably suggest otherwise. Even the most detailed comments, which came from Canterbury, may well have improved the criterion if adopted but they did not suggest they could not be applied according to their terms. The criteria document itself reserved to NRL the right to obtain an "independent opinion … on … the application of the Admission Criteria", a right that was availed of in the engagement not only of Ernst & Young (acknowledging the significance of accounting expertise to the application of the criteria) but also of legal advisers.
There was, likewise, no question of there not being access available both to sufficient staff and consultants and to adequate resources to enable NRL to apply the criteria. Given that the implied representation was one of declared intention, and given the matters to which I have referred, I am satisfied that the respondents have made out that they had reasonable grounds for their representation. In these circumstances it is unnecessary for me to determine whether either the solvency criterion or the profitability criterion were not applied according to their terms. My conclusion, I would note, is also an answer to the second aspect of the representation made on 8 May 1998 consideration of which I there deferred
In reaching this conclusion I have taken account of the evidence of both Mr Farish and Mr Fisher on the solvency criterion. Even if it be accepted that para (b) of the solvency criterion would be difficult to apply (I do not interpret Mr Fisher's reference to "impossible" as signifying more than that it would involve a costly, difficult and possibly unproductive process given the primary concern was with solvency), this provides no basis for inferring there could not be reasonable grounds for intending it would be applied. There was, furthermore, the facility reserved to obtain advice on it. And even if it transpired that the advice obtained was that para (b) should not be applied and that advice was acted upon, that would not have the consequence that there could not have been reasonable grounds for the representation at the time it was made.
Other matters
I have indicated that, though the representations in question were made by NRL, it is claimed that the NRL partnership engaged in conduct in contravention of s 52 as NRL was its agent: see TP Act, s 84. I have already made such an agency finding. The one additional matter to which I would again refer is that while, under the Services Agreement, the PEC could have exercised considerable control over the setting and application of the criteria, the evidence is that it refrained from so doing. At least in relation to the setting of the criteria, the view apparently taken was that the relevant experts were the NRL officers. And it was represented to the clubs from 19 December 1999 that NRL would set the criteria (as it subsequently did). It was not envisaged that the PEC would be engaged in the selection process itself. That was to be NRL's function.
5. RELIEF
The injunction sought under s 80(1) of the TP Act, in the event of my finding a contravention or contraventions of s 52, is one restraining NRLI, ARL and NRL from "proceeding to exclude [Souths] from the NRL competition". Though it is strictly unnecessary for me to consider the matter, I would indicate that even if I had found contravening conduct I would not have made an order in the terms sought.
Souths' submission (in paraphrase) was that s 80(1) allows the Court "to grant an injunction in such terms as [it] determines to be appropriate". In an appropriate case it is within the scope and purpose of Part V of the TP Act to grant an injunction to restrain a representor from acting inconsistently with the representation made: see Marks v GIO Holdings Ltd (1998) 196 CLR 494 at 525. The fourteen team term was not a defining characteristic of the NRL competition and this is reinforced by the 24 March reservation of rights to challenge the make up of the fourteen team competition. Hence the order sought is appropriate in the circumstances.
The terms of the order go far beyond what I would grant - and probably would have power to grant: see ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 264-268. The fourteen team limit was absolutely fundamental to the NRL competition for 2000. Several years had been spent in bringing it to fruition. It was, contrary to Souths' submission, very much a defining characteristic of the competition. To make the order sought would significantly exceed giving full effect to the representations in question. It would require, not the conduct of the fourteen team competition being restrained until the representations were made good, but rather that the partnership and NRL conduct a competition that was never proposed and to which the partners had never agreed inter se - nor NRL to conduct. Souths understood that to be the true state of affairs, even though it did not consent to it. Furthermore by casting the injunction sought in the terms it has, Souths has in substance sought relief for its unsuccessful s 45 claims under the guise of relief for its s 52 claims: Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197.
Even if the above obstacles were not insuperable, there would be a very real question (which I need not here explore but which is the burden of the Club respondents' submission) whether such injunctive relief ought be refused because of its adverse effects upon the clubs currently participating in the NRL competition.
6. CONCLUSIONS
There are two matters to which it is appropriate to refer. First, I have decided this application on the basis of the case that has been pleaded. On a number of occasions in these reasons I have referred to claims that have not been made. I imply no criticism in that. One consequence of the conclusions I have reached on the pleaded case is that it has been unnecessary to consider a significant range of matters going particularly to the application of the Admission Criteria. What I would emphasise is that my failure to refer to those matters does not imply a rejection of them. They simply have not been considered.
Secondly, it probably is the case that the real matter of contention between the parties as perceived by Souths existed at some distance from the specific subject matter of this proceeding. As I apprehend it, that matter was whether commercial interests should be permitted to commodify something that Souths considers is valued in a section of the community. Souths’ view as put in correspondence with NRL was that:
"[i]n our view Rugby League is an icon to be preserved for the people who love and support it, not a product to be carved up to the media for their own financial gratification."
It usually is only fortuitous that some legal principle can be found that could provide such preservation as is sought. Often enough such a principle will not even have been designed for so basic a purpose. I have not been able to arrive at the conclusion in the present proceeding that such a principle is available to Souths. This is not one of the fortuitous cases.
The order of the Court will be that the application be dismissed. I will set the matter down for further directions on the issue of costs.

I certify that the preceding five hundred and sixty-five (565) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.
Associate:
Dated:             3 November 2000

Counsel for the Applicant: Mr T E F Hughes QC with Mr R W White SC, Mr M G Scheib and Ms A Silink

Solicitor for the Applicant: Nicholas G Pappas & Company

Counsel for the First and Second Respondents: Mr N C Hutley SC with Ms S J Goddard

Solicitor for the First and Second Respondents: Allen Allen & Hemsley

Counsel for the Third Respondent: Mr D Campbell with Mr S Hughes

Solicitor for the Third Respondent: Colin W Love & Co

Counsel for the Fourth Respondent: Mr A J Meagher SC with Mr J E Marshall and Mr P J Brereton

Solicitor for the Fourth Respondent: Minter Ellison

Counsel for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents. Mr A Coleman

Solicitor for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents. Henry Davis York

Date of Hearing: 16, 19-23, 26-30 June; 3-6, 10-13, 24-28 July; 3-4, 7-11, 29-31 August; 1, 4-8 September 2000.

Date of Judgment: 3 November 2000

SCHEDULE
Terms, Acronyms and Abbreviations
ACCAdmission Criteria Committee. An NRL committee formed for the purpose of applying the Admission Criteria.
AdelaideFormer Super League club.
Admission Criteria                  Criteria comprising Basic Criteria, Qualifying Criteria and Selection Criteria for determining which clubs would be granted licences by NRL for 2000.
ARLAustralian Rugby Football League Limited. In partnership with NRLI. The third respondent.
AucklandFormer Super League club.
BalmainFormer loyal ARL club. Entered a joint venture arrangement with Wests to form an NRL club.
Basic Criteria  Criteria required to be met by all clubs and concerned with, inter alia, solvency.
Boundaries Committee            A committee of NSWRL that offered to provide informal comment on the competition rationalisation process and the proposed competition structure.
Bradley Report  Report of an organisation review of ARL prepared for NSWRL in 1991 and distributed to clubs in 1992.
BrisbaneFormer Super League club.
CanberraFormer Super League club.
Canterbury  Former Super League club.
CEO Chief Executive Officer.
Club Agreement  Standard form document drawn up for the purposes of establishing contractual relationships between participating clubs and NRL.
Competition Organising           A subject of the alleged exclusionary provision, these services
Servicesinvolved the organising and running of top level rugby league competitions and were services in relation to which ARL and Super League were allegedly in competition at the relevant times.
CronullaFormer Super League club.
CSDCompetition Structure Documentation being the Admission Criteria, the Franchise Agreement and the NRL rules.
December MoU  Draft MoU document the substance of the terms of which were agreed to on 24 December 1997.
December MoUs  Collective term for draft MoUs of 11 and 24 December 1997.
19 December Understanding    The understanding reached on this date between ARL/NSWRL and News/Super League for the in principle merger of the two rugby league competitions.
8-6/6-8 split  Term of proposed competition structure relating to distribution of participation licenses as between Sydney based and regional clubs.
Entertainment Services            A subject of the alleged exclusionary provision, these services involved the provision of the entertainment spectacle of top level rugby league matches and were services in relation to which ARL and Super League were allegedly in competition at the relevant times.
Ernst & Young  Accountancy and consulting firm; appointed by NRL in 1999 to assist with the verification of information provided by clubs as evidence of their fulfilment of certain of the Admission Criteria.
Executive Summary                 Summary of competition merger proposals presented to ARL club leadership at a meeting in Sydney on 19 December 1997.
Fourteen team term                 A fundamental provision agreed upon by the relevant parties relating to the maximum size of the new competition from the 2000 season.
Franchise Agreement              Document intended to be sent to each participating club defining its relationship with NRL. Later catered for by the Club Agreement.
Funding Services  A subject of the alleged exclusionary provision, these services involved the provision of funding to rugby league clubs and were services in relation to which ARL and Super League were allegedly in competition at the relevant times.
Gold CoastFormer loyal ARL club. Withdrew before the 1998 season.
HunterFormer Super League club. Dissolved in late 1997.
IllawarraFormer loyal ARL club. Entered a joint venture arrangement with St George to form an NRL club.
Issues Paper  ARL/Super League Issues Paper. A negotiating document produced in August 1997 shortly before the breakdown in negotiations.
June Report  Report dated 20 June 1997 made to NSWRL on the future of rugby league in Australia.
Key Points paper  News negotiating document of December 1997.
Loyal clubsName generally given to ARL clubs during the Super League war.
ManlyFormer ARL club. Entered a joint venture arrangement with Norths to form an NRL club.
24 March contract                  Contract between ARL and Souths formed on 24 March 1998.
March letters  Correspondence between ARL and Souths in March 1998 said to give rise to contractual relations.
14 May documentation           Documents, including the Merger Agreement, the Partnership Agreement and the Services Agreement, executed on 14 May 1998 by various parties.
MelbourneNewly formed club. First participated in premier rugby league competitions in 1998.
Members Agreement              Document executed about 20 March 1998 by ARL and NRLI and nominees, relating to NRL.
Merger Agreement                  Document executed on 14 May 1998 by ARL, NSWRL, News, NRLI and Super League.
Millennium Management          Business plan prepared for Souths and provided to NRL
Plan on 31 July 1999.
Minter Ellison  Legal firm appointed to advise NRL during admission process.
MoUMemorandum of Understanding. Document executed on 18 February 1998 by ARL, NSWRL, News and Super League. Also described as “18 February MoU”. Various drafts of the executed form existed after at least 11 December 1997, see “December MoUs”.
NewcastleFormer loyal ARL club.
NewsNews Limited. The first respondent.
News meetings  Series of in-house meetings of News personnel in 1997 where the possibility of merging the competitions was discussed.
NineNine Network Australia Pty Limited. At one time a corporate sponsor of the ARL competition.
North Queensland                   Former Super League club.
NorthsFormer loyal ARL club. Entered a joint venture arrangement with Manly to form an NRL club.
NRLNational Rugby League Limited. The fourth respondent.
NRL competition  The premier rugby league competition that commenced in 1998 run by NRL for the NRL partners.
NRL partnership  Partnership between NRLI and ARL formally entered into on 14 May 1998.
NRL partners  NRLI and ARL.
NRL Services Agreement       See “Services Agreement”.
NRLC CoEarly name of the envisaged entity that became NRL. As used in negotiations and draft documents.
NRLCNational Rugby League Competition. The title used in negotiations towards the proposed new competition.
NRLINational Rugby League Investments Pty Limited. A wholly owned subsidiary of Super League. In partnership with ARL. The second respondent.
NSWRLNew South Wales Rugby League Limited. Conducted a premier rugby league competition in New South Wales from 1908 and, after 1995, conducted a competition for ARL.
OptusOptus Vision Pty Limited. A one time corporate sponsor of the ARL competition.
Optus Cup Name given to ARL rugby league premiership competition from 1996.
ParramattaFormer loyal ARL club.
Partnership Agreement            Document executed on 14 May 1998 between ARL and NRLI.
Peace dealSee 19 December Understanding; descriptive term for the 19 December Understanding as bringing about a resolution of the Super League war.
PECPartnership Executive Committee. Comprises three members from each partner of the NRL partnership.
PenrithFormer Super League club.
PerthFormer Super league club. Closed at the end of 1997.
Profitability criterion                One of the Selection Criteria.
Qualifying Criteria                   Criteria which, if met by Auckland, Brisbane or Newcastle, would entitle them to a licence to compete in 2000.
Selection Criteria  Criteria applied to clubs to produce a ranking for the purposes of determining which would be granted remaining licences for 2000.
Services Agreement                NRL Services Agreement. Document executed on 14 May 1998 by ARL, NRLI and NRL.

Solvency criterion                   One of the Basic Criteria required to be met by all clubs.
South Queensland                   Former loyal ARL club.
SouthsSouth Sydney District Rugby League Football Club Limited. The applicant.
Souths Juniors  South Sydney Junior Rugby League Club Limited. Junior rugby league club associated with Souths.
St GeorgeFormer loyal ARL club. Entered a joint venture arrangement with Illawarra to form an NRL club.
Super League  Super League Pty Limited. Wholly owned subsidiary of News. Also, the name of a rival professional rugby league competition to the competition formerly conducted by or on behalf of ARL.
Super League war                   The name (also the popular / media name) given generally to the period during which two premier rugby league competitions, those of ARL and Super League, came into being and operated.
Sydney City  Former loyal ARL club.
Team Services  A subject of the alleged exclusionary provision, these services related to the acquisition of the services of rugby league teams to participate in top level rugby league competitions and were services in relation to which ARL and Super League were allegedly in competition at the relevant times.
Terms Sheet  ARL/Super League Terms Sheet. A document produced in mid 1997 the purpose of which was to outline proposals for a united game and to operate as an agenda to assist in discussions with News.
Timetable Document distributed to club CEOs in April 1998 relating to timetable for completion of Competition Structure Documentation.
TP ActTrade Practices Act 1974 (Cth).
Tribal loyalists  Groups of supporters whose interests in rugby league relate to a particular club only.
WestsFormer loyal ARL club. Entered a joint venture arrangement with Balmain to form an NRL club.

THE SCHEDULE
CANBERRA DISTRICT RUGBY LEAGUE
FOOTBALL CLUB LIMITED (ACN 008 568 634)
Fifth Respondent

CANTERBURY-BANKSTOWN RUGBY
LEAGUE CLUB LTD (ACN 001 869 405)
Sixth Respondent

CRONULLA-SUTHERLAND DISTRICT RUGBY
LEAGUE FOOTBALL CLUB LIMITED (ACN 002 692 186)
Seventh Respondent

NEWCASTLE KNIGHTS LIMITED (ACN 003 363 228)
Eighth Respondent
ST GEORGE ILLAWARRA RUGBY LEAGUE

FOOTBALL CLUB PTY LIMITED (ACN 085 008 340)
Ninth Respondent

BRISBANE BRONCOS RUGBY LEAGUE
CLUB LIMITED (ACN 010 769 025)
Tenth Respondent

COWBOYS RUGBY LEAGUE

FOOTBALL LIMITED (ACN 060 382 961)
Eleventh Respondent

MELBOURNE STORM RUGBY

LEAGUE CLUB LIMITED (ACN 081 369 468)
Twelfth Respondent

MANLY WARRINGAH DISTRICT RUGBY LEAGUE
FOOTBALL CLUB LIMITED (ACN 003 348 436)
Thirteenth Respondent

NORTH SYDNEY DISTRICT RUGBY LEAGUE
FOOTBALL CLUB LIMITED (ACN 003 009 158)
Fourteenth Respondent

EASTERN SUBURBS DISTRICT RUGBY LEAGUE
FOOTBALL CLUB LIMITED (ACN 002 687 416)
Fifteenth Respondent

PENRITH DISTRICT RUGBY LEAGUE FOOTBALL
CLUB LIMITED (ACN 003 908 583)
Sixteenth Respondent

PARRAMATTA DISTRICT RUGBY LEAGUE
CLUB LTD (ACN 002 254 980)
Seventeenth Respondent

WESTS TIGERS RUGBY LEAGUE FOOTBALL
PTY LIMITED (ACN 090 076 403)
Eighteenth Respondent

AUCKLAND WARRIORS RUGBY

LEAGUE LIMITED (Registered in NZ No. 508 646)
Nineteenth Respondent

MANLY-NORTHS RUGBY LEAGUE FOOTBALL CLUB PTY LTD
(ACN 090 093 833)

Twentieth Respondent
VALIMANDA PTY LTD (ACN 002 639 778)
Twenty-first Respondent

AH CB PTY LIMITED (ACN 068 819 152)
Twenty-second Respondent

BRISBANE BRONCOS CORPORATION PTY LTD (ACN 057 607 208)
Twenty-third Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1295 OF 1999

BETWEEN:	SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 487 390) APPLICANT
AND:	NEWS LIMITED (ACN 007 871 178) FIRST RESPONDENT NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED (ACN 081 778 538) SECOND RESPONDENT AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED THIRD RESPONDENT (ACN 003 107 292) NATIONAL RUGBY LEAGUE LIMITED (ACN 082 088 962) FOURTH RESPONDENT AND the Fifth to Twenty-third Respondents set out in the Schedule
JUDGE:	FINN J
DATE OF ORDER:	3 NOVEMBER 2000
WHERE MADE:	SYDNEY

Criteria	Note	Weighting	Measurement to Obtain Initial Points
1 Crowd Numbers (Home Games)	(a)	1	Ranked on a scale of 1-20, 20 being the Club with the highest aggregate crowd at home games.
2 Crowd Numbers (Away Games)	(b)	1	Ranked on a scale of 1-20, 20 being the Club with the highest relative aggregate crowds at away games.
3 Competition Points	(c)	1	Ranked on scale of 1-20, 20 being the Club with the best results over the past 5 years.
4 Gate Receipts (Home Games)	(d)	1.25	Ranked on a scale of 1-20, 20 being the Club with the highest gate receipts in dollar value from home games.
5 Sponsorship and Other Income	(e)	2	Ranked on a scale of 1-20, 20 being the Club with the highest total.
6 Profitability	(f)	1	Ranked on a scale of 1-20, 20 being the Club with the highest overall profitability.

Counsel for the Applicant:	Mr T E F Hughes QC with Mr R W White SC, Mr M G Scheib and Ms A Silink
Solicitor for the Applicant:	Nicholas G Pappas & Company
Counsel for the First and Second Respondents:	Mr N C Hutley SC with Ms S J Goddard
Solicitor for the First and Second Respondents:	Allen Allen & Hemsley
Counsel for the Third Respondent:	Mr D Campbell with Mr S Hughes
Solicitor for the Third Respondent:	Colin W Love & Co
Counsel for the Fourth Respondent:	Mr A J Meagher SC with Mr J E Marshall and Mr P J Brereton
Solicitor for the Fourth Respondent:	Minter Ellison
Counsel for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents.	Mr A Coleman
Solicitor for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents.	Henry Davis York
Date of Hearing:	16, 19-23, 26-30 June; 3-6, 10-13, 24-28 July; 3-4, 7-11, 29-31 August; 1, 4-8 September 2000.
Date of Judgment:	3 November 2000