St George Soccer Football Association Inc v Soccer NSW Ltd

[2005] NSWSC 1288

CITATION:	St George Soccer Football Association Inc v Soccer NSW Ltd [2005] NSWSC 1288
HEARING DATE(S):	22/11/05, 23/11/05, 24/11/05, 25/11/05, 29/11/05, 30/11/05 Written submissions: 30/11/05, 01/12/05, 02/12/05
JUDGMENT DATE :	13 December 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Proceedings dismissed with costs

CATCHWORDS:	CONTRACTS - application by member clubs to football governing body to participate in new competition - whether "process contract" formed - CORPORATIONS - constitution of company as statutory contract - whether implied term of good faith performance and fair dealing where directors perform functions under constitution - CORPORATIONS - oppression and related conduct - whether directors performing functions under constitution acted otherwise than in good faith - whether decision such that no board acting reasonably could have made it - TRADE AND COMMERCE - statutes relating to misleading or deceptive conduct - whether football governing body engaged in trade or commerce - whether "12 teams representation" and "criteria representation" made - whether "criteria representation" misleading or deceptive - whether statement as to future matter - whether statutory injunction would be granted - whether club members to which representation was made suffered damage "by" such conduct - ESTOPPEL - whether applicant member clubs acted to their detriment on basis of "criteria representation"
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss.140(1), 232, 233 Fair Trading Act 1987, ss.41, 42, 65, 72 Trade Practices Act 1974 (Cth), ss.51A, 52, 80, 87
CASES CITED:	Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458 Australian Football League v Carlton Football Club Ltd [1998] 2 VR 546 Australian Metropolitan Life Assurance Co Ltd v Ure (1923) 33 CLR 199 Bailey v New South Wales Medical Defence Union Ltd (1995) 184 CLR 399 Bratton Seymour Service Co Ltd v Oxborough [1992] BCLC 693 Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187 Commonwealth v Verwayen (1990) 170 CLR 394 Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228 Fraser v NRMA Holdings Ltd (1995) 15 ACSR 590 Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 Lyndel Nominees Pty Ltd v Mobil Oil Australia Ltd (1997) 37 IPR 599 Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2003] 1 AC 649 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 Mitchell v Royal New South Wales Canine Council Ltd (2001) 52 NSWLR 242 Modahl v British Athletic Federation Ltd [2002] 1 WLR 1192 New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86 News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179 Pioneer Electronics Australia v Edge Technology Pty Ltd [1999] FCA 142 Pratt Contractors Ltd v Transit New Zealand [2005] 2 NZLR 433 Rush v WA Amateur Football League (Inc) [2003] WASC 70 Quancorp Pty Ltd v Macdonald (1999) 32 ACSR 50 Scott v Frank F Scott (London) Ltd [1940] Ch 794 Smith v South Australian Hockey Association Inc (1988) 48 SASR 263 Stanham v The National Trust of Australia (New South Wales) (1989) 15 ACLR 87 Sydney United Football Club Pty Ltd v Soccer NSW Ltd [2005] NSWSC 474 Thomas v H W Thomas Ltd [1984] 1 NZLR 686 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 Wayde v New South Wales Rugby League Ltd (1984) 9 ACLR 349
PARTIES:	St George Soccer Football Association Incorporated - First Plaintiff Bonnyrigg White Eagles Sports Club Limited - Second Plaintiff Soccer NSW Limited - Defendant
FILE NUMBER(S):	SC 5501/05
COUNSEL:	Mr P.M. Biscoe QC/Mr S.J. Philips - Plaintiffs Mr M. Walton SC/Mr M. Christie/Mr M.S. White - Defendant
SOLICITORS:	Levitt Robinson - Plaintiffs Minter Ellison - Defendant

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

TUESDAY, 13 DECEMBER 2005

5501/05 ST GEORGE SOCCER FOOTBALL ASSOCIATION INCORPORATED & ANOR v SOCCER NSW LIMITED

JUDGMENT

Background

1 The plaintiffs, St George Soccer Football Association Inc (“St George”) and Bonnyrigg White Eagles Sports Club Ltd (“Bonnyrigg”), are soccer football clubs based in different parts of Sydney. The defendant, Soccer NSW Limited (“Soccer NSW”), is the peak body in the State in the administration of soccer football. Its activities include the organisation and co-ordination of football competitions in Sydney. St George and Bonnyrigg have for some time been participants in Soccer NSW’s premier league or first division competition. Each was one of sixteen participants in the 2005 competition.

2 As a result of a decision made by the board of Soccer NSW on 12 October 2005, the first division competition commencing in February 2006 is to be a competition among ten clubs rather than sixteen. The decision of 12 October 2005 concerned not only the number of participating clubs but also their identities. St George and Bonnyrigg are not among the clubs chosen to participate. The chosen participants are Bankstown City Lions, Parramatta Eagles, Sydney Olympic, APIA Leichhardt, Sutherland Sharks, Wollongong Wolves, Blacktown City Demons, Manly United, Marconi Stallions and Sydney United.

3 Soccer NSW is a company registered under the Corporations Act 2001 (Cth) and limited by guarantee. St George and Bonnyrigg are both members of the company. Each is itself an incorporated body. Eighteen members of Soccer NSW applied for places in the 2006 competition, as did two other clubs which were not members at the time of lodging their applications (no doubt on the footing that they would become members, given a stipulation in the criteria for admission and in the application form that clubs would be required to adhere to the constitution and rules of Soccer NSW).

4 St George and Bonnyrigg sue Soccer NSW upon various causes of action said by them to be made available by the conduct of Soccer NSW in relation to the decision of 12 October 2005. Each says, in the first place, that there existed a contract between it and Soccer NSW as to the manner in which Soccer NSW would deal with applications for inclusion of clubs in the 2006 competition (including as to the criteria to be applied and the manner of applying them) and that Soccer NSW breached that contract. There is also a claim that the making of the decision and events associated with it entailed conduct of the affairs of Soccer NSW that was contrary to the interests of the members as a whole or oppressive and unfairly prejudicial to and unfairly discriminatory against St George and Bonnyrigg, so as to attract the operation of ss.232 and 233 of the Corporations Act. It is further claimed that, in relation to the subject matter of the decision, Soccer NSW made representations that were misleading or deceptive within the contemplation of s.52 of the Trade Practices Act or s.42 of the Fair Trading Act. There is also an estoppel claim.

5 The relief sought by St George and Bonnyrigg is as follows:

“In the premises, the Plaintiffs are entitled to, and claim, the following relief:
(a) A declaration that the decision was invalid or oppressive and was not reached in accordance with a fair and reasonable application of the competition criteria and that the Defendant is estopped from giving effect to the decision;
(b) A declaration that in making, the decision, the Defendant acted:
(i) contrary to the interests of the company as a whole; and/or
(ii) in a manner which is oppressive and unfairly prejudicial to and unfairly discriminatory against the Plaintiffs;

(iii) in breach of the agreement; and

(iv) contrary to the representations;
(c) An Order that the decision is void from its beginning and that it be set aside;
(d) An order preventing the Defendant from conducting the New Competition as constituted by the decision;
(e) Costs; and
(f) Such further or other relief as the Court sees fit (including an order for an inquiry into damages and interest).

6 The defendant says, with some justification, that the estoppel claim is defective as a matter of pleading in that the representations on which the alleged estoppel is based are not specifically pleaded and there is no identification of relevant unconscionability, reliance and detriment. I approach the matter on the basis that the estoppel claim is, in a sense, an adjunct to the statutory misconduct claim and is concerned with the same representations, being the “criteria representation” and the “12 teams representation” described at paragraph [27] below.

The events leading to the decision

7 In the first half of 2005, Soccer NSW developed plans to re-organise the Sydney first division competition. On 14 June 2005, its chief executive officer, Mr Quarmby, sent a memorandum to all premier league clubs attaching Soccer NSW’s Football Committee’s Recommendations for Premier League competitions 2005/2006, 2006/2007. The Football Committee was made up of both board members and staff members.

8 On 28 June 2005, there was a meeting of the Premier League Clubs Forum, a body having no separate legal existence and no formal role in the affairs of Soccer NSW, but made up of representatives of the clubs fielding teams in the first division competition. This meeting was convened by Soccer NSW to discuss the recommendations of the Football Committee. There are no minutes of the meeting of 28 June 2005. Accounts of what happened at it differ, but it is agreed that representatives of fourteen clubs attended. An issue which, on the plaintiff’s case, arises for determination is whether, at this meeting, the chairman of Soccer NSW, Mr Doumanis, made a representation that the number of clubs participating in the new competition would be twelve. A recurring theme in the proceedings was whether representations made at various times referred to exactly twelve clubs (or teams) or “up to” twelve clubs (or teams). It is not in dispute, I think, that the meeting of 28 June 2005, attended by representatives of fourteen clubs, was evenly divided on the question of the time at which the new competition arrangements should be brought into operation.

9 On 29 June 2005, there was a meeting of the board of directors of Soccer NSW. The board resolved that the existing premier league competition be discontinued forthwith; that clubs be notified that a new first division competition would be offered commencing in late January or early February 2006; that criteria for entry into the new competition would be available by 29 July 2005; and that successful applicants would be notified by 15 October 2005. Immediately after that meeting, Mr Culina, the Executive Manager, Football Services of Soccer NSW, wrote to the premier leagues club informing them of the decisions of the board.

10 A meeting of the Football Committee took place on 12 July 2005. The minutes of that meeting record a decision “that it will be a 12 team competition” and that there was discussion of criteria.

11 On 29 July 2005, the Football Committee’s “Report into the Structure of the New Premier League Competition” was produced. It had been adopted, with a few amendments, at a meeting of the board the previous day. The minutes of the board meeting show that a timetable had been determined, so that relevant documents would be sent to premier league clubs on 1 August; a meeting with those clubs would be held on 8 August; the documents would be placed on the Soccer NSW website on 8 August; and a letter would be sent to other clubs informing them that the documents would be available on the website. The meeting noted that the Football Committee was currently completing a business plan.

12 On 1 August 2005, Mr Quarmby notified the premier league clubs that the board of Soccer NSW had adopted the recommendations of the Football Committee. The clubs were informed that expressions of interest in participating in the new competition were required by 24 August and that, for clubs thus registering interest, documents necessary in connection with applications to participate would be made available and would be open for discussion at a meeting to be held on 8 August. The documents in question were entitled “New Competition Business Plan 2005 – 2008” and “New Competition Application Form 2006”. It will be necessary to say more about them in due course. I shall refer to them as “the Business Plan” and “the Application Form”.

13 A meeting of club representatives was held on 8 August as planned. Those clubs which had already lodged the necessary form of expression of interest (or did so at the meeting itself) were given a copy of the Business Plan and a copy of the Application Form. Fifteen of the premier league clubs were represented at the meeting. Several representatives of Soccer NSW, including Mr Doumanis and Mr Quarmby, were also in attendance.

14 On 22 August 2005, there was another meeting of the Premier League Clubs Forum. It was attended by representatives of thirteen of the sixteen premier league clubs. No representative of Soccer NSW was present. It was decided at the meeting that there was an urgent need for a meeting with the Soccer NSW board and that the clubs rejected the new competition as it then stood.

15 On 30 August 2005, another meeting of the Premier League Clubs Forum took place. Representatives of fifteen of the sixteen clubs were present, as were Mr Doumanis (the president of Soccer NSW) and two directors of Soccer NSW, Mr Jackson and Mr Ronis. There are in evidence both contemporaneous notes of the meeting taken by Mr Sivris (an official of St George, who acted as minute-taker) and handwritten minutes afterwards produced by Mr Sivris from his contemporaneous notes. A great deal of evidence was given about certain events at this meeting relevant to that part of the plaintiffs’ case based on alleged representations by Soccer NSW that twelve clubs would be admitted to the new competition.

16 A meeting of the board of Soccer NSW was held on 31 August 2005. It considered progress of the moves towards a new first division competition. Mr Doumanis says he reported to that meeting certain matters that had arisen at the meeting of the Premier League Clubs Forum on the previous evening.

17 On 9 September 2005, Soccer NSW sent letters to nine of the premier league clubs stating that the grounds they proposed as their home grounds for the new competition failed to meet the required criteria in specified respects. The criteria were spelled out in the Business Plan. Of those nine clubs, four were ultimately admitted to the new competition (Bankstown City Lions, APIA Leichhardt, Wollongong Wolves and Parramatta Eagles). Five the nine were ultimately unsuccessful (St George, Penrith, Rockdale, Belconnen and Central Coast United).

18 The closing date for applications for inclusion in the new competition was 30 September 2005. Four days earlier, on 26 September, there was a meeting of the Premier League Clubs Forum which was attended by two directors of Soccer NSW, Mr Kelly and Mr Jackson. Bonnyrigg was represented at the meeting, but St George was not. Evidence of Mr Ilijevski of Bonnyrigg referred to a discussion at that meeting about the question of “regions” that had been ventilated at the meeting of 30 August. The minutes of the meeting record:

“There has been no reply in regard to the Clubs’ concerns and questions asked [at the 30 August meeting]. Mr Ross Kelly informed the meeting that the criteria still stands as written in the Application form. He is not aware that the President, Mr Tom Doumanis at the above meeting, changed certain items.”

19 Following 30 September, when applications closed (and some twenty had been received), an assessment program began. This was undertaken by an Assessment Panel within Soccer NSW. The panel was made up of members of staff. As part of the process, question forms were emailed or faxed to each applicant by Soccer NSW on 4 October. On 10 October, Mr Quarmby sent an email to members of the Football Committee attaching copies of various documents relevant to the assessment of applications.

20 The Football Committee met on 10 October. That body proceeded to award points or marks to each applicant in respect of several criteria, on the basis of rankings of “poor” (1 point), “fair” (3 points) and “good” (5 points). The Football Committee had before it two documents prepared by the Assessment Panel, namely, the “New Competition Application Assessment” and the “New Competition Ground Criteria Check List”. It was the first of these that recorded gradings or rankings under various headings according to the points system. It was decided that the approach should be changed by deleting some of the headings and combining others so that the headings would reflect the criteria set out in the Application Form.

21 The next day, 11 October 2005, the Assessment Panel worked on re-assessing the applicant clubs under the revised headings. The Assessment Panel’s revised “New Competition Application Assessment” was presented to the Football Committee at its meeting on the evening of 11 October. It was amended slightly and the final version as amended was presented to the meeting of the board of Soccer NSW that took place the following evening, 12 October. At its meeting on 11 October, the Football Committee decided to recommend to the board that ten of the applicants be admitted to the new competition. The board ultimately accepted that recommendation at its 12 October meeting and the ten clubs were in due course informed that their applications had been successful.

22 Notifications to applicant clubs were made on 14 October. On the same day, there was a media release by Soccer NSW announcing the ten clubs that had been selected to participate in the new competition.

The central issues and the court’s approach to them

23 Two broad areas of factual inquiry require attention. The first relates to the conduct of Soccer NSW in the assessment of applications received and the way in which applicant clubs were compared with one another and evaluated against the criteria published in the Business Plan and the Application Form. The second concerns words and actions said to amount to representations giving rise to an estoppel or a contravention of s.52 of the Trade Practices Act (or s.42 of the Fair Trading Act) or both.

24 Events related to the assessment of applications and selection among applicants will have significance, for present purposes, only to the extent that a legal basis for the claims in which they play a part is seen to exist. The claims in question are the contract claims and the Corporations Act claims. For the moment, it is sufficient to refer briefly to the relevant events (or, at least, the plaintiffs’ contentions as to the relevant events) as a prelude to a consideration of the legal basis for the claims founded on them.

25 The Business Plan and the Application Form set out a number of criteria with which applicant clubs had to comply. St George and Bonnyrigg have, for the purposes of these proceedings, undertaken a thorough investigation of the processes by which Soccer NSW assessed each applicant against the published criteria. They say the court should reach, at a factual level, a number of conclusions about the ways in which particular applicant clubs measured up to the several criteria. One such conclusion for which the plaintiffs contend is that seven clubs admitted to the competition (APIA Leichhardt, Parramatta Eagles, Wollongong Wolves, Sutherland Sharks, Sydney Olympic, Bankstown City Lions and Manly United) did not comply with the “ground criteria” (relating to the home ground or stadium and its facilities), whereas St George did. Another is that that Bonnyrigg which, in the final assessment, was awarded only one point (“poor”) under the “coaching and development criteria”, was, in that respect, as good as or better than a number of teams awarded three points (“fair”) or five points (“good”). A third allegation is that Soccer NSW departed from the published criteria in carrying out its assessment, in that some members, but not all, were informed that the ground criteria would be applied not by reference to stadium condition at the time applications were considered but on the basis that improvements to be completed by 31 December 2005 would be taken into account.

26 Factual findings on these matters would, on the plaintiffs’ case, lead to a conclusion that Soccer NSW had acted in an unfair and discriminatory way in carrying out the assessment and making the decision of 12 October 2005; and that there had therefore been a breach of contract by Soccer NSW as against St George and Bonnyrigg, as well as conduct of the kind relevant to the statutory cause of action under ss.232 and 233 of the Corporations Act.

27 The second area of factual inquiry relates to the estoppel claim and the claim based on statutory misconduct under s.52 of the Trade Practices Act or s.42 of the Fair Trading Act. The question there is whether Soccer NSW made to St George and Bonnyrigg two particular representations called in the amended statement of claim “the criteria representation” and “the 12 teams representation”. According to the amended statement of claim, those representations were made during the period 8 August 2005 to 30 September 2005 by various representatives of Soccer NSW to St George and Bonnyrigg so as to be “continuing representations”. The terms of the representations, as pleaded, are, respectively, “that applicants were required to meet and comply with the criteria in the New Competition Business Plan” and “that the New Competition would comprise 12 teams”.

28 The desirable course in approaching the plaintiffs’ claims is to begin by examining the availability of the legal bases on which the claims in contract and under ss.232 and 233 of the Corporations Act are advanced. It will then be possible to address the question of the factual inquiry that needs to be made in relation to those claims. Thereafter, it will be appropriate to examine factual matters relevant to the statutory and estoppel claims relevant to the “criteria representation” and the “12 teams representation”.

The asserted bases for the contract claims

29 The contract-based claims of St George and Bonnyrigg are pleaded as follows:

“10. By inviting applications for inclusion in the New Competition, the Defendant agreed to consider and determine any such applications in accordance with the New Competition Business Plan and the competition criteria (‘ the Agreement ’).

11. The Agreement contained inter alia the following terms:

(a) the New Competition would comprise no more than 12 teams, with district/regional representation;
(b) nine identified district/regions were to be represented, with six of those districts/regions (namely the district/regions of North, East, Far West, South West, Central West and Far South) each being eligible for 2 positions in the New Competition and three of those districts/regions possibly being represented by 1 team;
(c) within the districts/regions of North, East, Far West, South West, Central West and Far South up to 2 clubs may be eligible for admission;
(d) the method of selecting clubs for the New Competition would include the following steps:
(i) applicants would be required to nominate the district/region they sought to represent and must base their operations within that district/region;
(ii) each application would be considered against other applications from within that district/region;
(iii) within each district/region, each applicant’s business plan would firstly be assessed and, having considered the business plan, the conformity of each applicant to meet the competition criteria would be assessed;
(iv) where there were only 1 or 2 applicants within a district/region, the Board of Directors of the Defendant would only approve such applications where the applicants’ Business Plans and their capacity to meet the necessary competition criteria were deemed to be in order;
(v) if an applicant in excess of the proposed eligible number of clubs within a district/region provided a compelling submission that warranted inclusion in the New Competition, the Board of Directors of the Defendant was empowered to include that club; and

(vi) the best applications would be granted admission into the New Competition up to a maximum of 12 clubs;

(e) the system of selecting clubs was designed to balance the requirement for district/regional representation and the responsibility to ensure that the best applications were successful;
(f) applicants were required to meet and comply with the competition criteria including the Ground Criteria (which were set out In Appendix C to the New Competition Business Plan) and would not be granted exemptions or concessions;
(g) clubs would be informed prior to applications being made whether their current playing venue remained eligible for use in the New Competition and the Defendant would identify suitable alternative playing venues for clubs whose existing venues did not meet the ground criteria and would assist clubs in ground leasing negotiations;
(h) applicant clubs’ compliance with the Defendant’s rules and regulations relating to matters of security and crowd behaviour would be considered in determining admittance to the New Competition.

12. The Agreement contained an implied term that the applications would be considered and assessed by the Defendant in good faith and in particular that:

(a) all applications for the New Competition would be considered and assessed in a consistent, fair and reasonable manner;
(b) in assessing the various applications, the Defendant would:
(i) fairly and consistently apply the competition criteria;
(ii) not select clubs which did not meet all relevant criteria, without exception; and
(iii) take into account all relevant considerations and would not take into account irrelevant considerations.
13. The Agreement contained an implied term that the clubs which had submitted the best applications would be included in the New Competition.”

30 The foundation of the contract claims brought by the plaintiffs are described in the written outline of submissions furnished to the court on their behalf by Mr Biscoe QC and Mr Philips as follows:

“The plaintiffs sue on the following causes of action:-
(a) a ‘process’ contract: Hughes Aircraft v Air Services Australia (1997) 76 FCR 151 (Finn J), Pratt Contractors v Transit New Zealand [2005] 2 NZLR 433 (PC).
(b) a contract between the plaintiffs as members of an incorporated body, SNSW Ltd: s.140 Corporations Act; McClelland v Burning Palms Surf Lifesaving Club (2002) 191 ALR 759 at 786-788 (paras 103-109); Smith v South Australian Hockey Association Inc (1988) 48 SASR 263 at 264-5; Cameron v Hogan (1934) 51 CLR 358, Rush v WA Amateur Football Club Inc [2001] WASC 154 at para 54, [2003] WASC 70 at [48].”

31 Disparate sources of contractual obligation are thus asserted. In basing their claims on a “process contract”, the plaintiffs are saying that events surrounding and following the request by Soccer NSW for applications from clubs desiring to be considered for the new competition and responses to the request gave rise to a contract – or, more precisely, I think, to several contracts, in that a separate contract arose between Soccer NSW and each club lodging an application. It is submitted in relation to the contracts thus said to have been made by Soccer NSW with St George and Bonnyrigg (and would no doubt also be said in relation to the equivalent contract with each other applicant) that the contract contained, expressly or by implication, promises by Soccer NSW, first, to assess applicants and applications strictly in accordance with the criteria Soccer NSW had laid down in the Business Plan and the Application Form and, second, to carry out the assessment of applications fairly and in good faith.

32 Both a finding of the existence of such a contract or series of contracts and a finding of terms to the effect I have outlined are said to be warranted by principles discussed in Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 and Pratt Contractors Ltd v Transit New Zealand [2005] 2 NZLR 433 (PC, 2003). Each of those cases involved an invitation to tender for the supply of services in a commercial setting, where the outcome would be that one tenderer only was successful, or the invitor decided to accept no tender. In the former case, Finn J said, at p.42, that the “process contract” between the invitor and a tenderer contained an implied term of good faith and fair dealing but:

“does not as such impose on [the invitor] under the guise of contract law, the obligation to avoid making its decision or otherwise conducting itself in ways which would render it amenable to judicial review of administrative action.”

33 In the Pratt Contractors case, Lord Hoffmann, speaking for the Privy Council, described, at paragraph [48], the standard of conduct required of the invitor (the TET) by the implied term:

“In Their Lordships’ opinion, the duty of good faith and fair dealing as applied to that particular function required that the evaluation ought to express the views honestly held by the members of the TET. The duty to act fairly meant that all the tenderers had to be treated equally. One tenderer could not be given a higher mark than another if their attributes were the same. But Transit was not obliged to give tenderers the same mark if it honestly thought that their attributes were different. Nor did the duty of fairness mean that Transit were obliged to appoint people who came to the task without any views about the tenderers, whether favourable or adverse. It would have been impossible to have a TET competent to perform its function unless it consisted of people with enough experience to have already formed opinions about the merits and demerits of roading contractors. The obligation of good faith and fair dealing also did not mean that the TET had to act judicially. It did not have to accord Mr Pratt a hearing or enter into debate with him about the rights and wrongs of, for example, the Pipiriki contract. It would no doubt have been bad faith for a member of the TET to take steps to avoid receiving information because he strongly suspected that it might show that his opinion on some point was wrong. But that is all.”

34 Their Lordships also quoted with apparent approval the statement of Finn J (at paragraph [32] above).

35 The other contract (or contractual matrix) relied upon by the plaintiffs is that created by s.140(1) of the Corporations Act by reference to the constitution of Soccer NSW:

“A company's constitution (if any) and any replaceable rules that apply to the company have effect as a contract:
(a) between the company and each member; and
(b) between the company and each director and company secretary; and
(c) between a member and each other member;
under which each person agrees to observe and perform the constitution and rules so far as they apply to that person.”

(It was not suggested that any replaceable rules are relevant in this case, with the result that the reference to replaceable rules in s.140(1) may be ignored.)

Assessment of the contract claims

36 The constitution of Soccer NSW sets out, in article 65, the objects for which the company has been established. The objects are expressed also to be powers. It is sufficient to quote two of them:

“(b) To foster and control the game of football including whatever competitions are deemed in the interests of the Company through the football state of New South Wales and/or inter state or territories and generally to implement such action and procedures as may be considered conducive to the company’s objects.”
“(h) To determine which Members shall be entitled to enter teams in the football competitions conducted by the Company and the terms and conditions upon which and the manner in which Members shall make and renew such applications.”

37 It is thus clear that the process upon which Soccer NSW embarked in the first half of 2005 and which culminated on 12 October, when ten of the approximately twenty applicant clubs were chosen for the new competition, was a process undertaken in pursuance of one of the expressed objects of the company and in exercise of one of its expressed powers.

38 The constitution makes provision for several classes of members. One such class is “Club members”. Article 3(a) of the constitution provides:

“Club members:
Shall be deemed to include Club members admitted in any of the Divisions or competitions referred to in Schedule ‘A’ together with any other members who from time to time are admitted to such Divisions or competitions.”

39 Under article 4(a), only incorporated bodies are eligible to be Club members. In addition, each Club member must have in its own constitution a provision saying that the club “shall at all times be bound by the Constitution, Rules and Regulations of Soccer NSW Limited” and “shall be bound by the lawful decisions of the Board of Soccer NSW Limited and shall do all things reasonably necessary to implement and enforce such decisions”.

40 Article 44 of the constitution is in these terms:

“The business of the Company shall be managed by the Board of Directors who may exercise all such powers of the company as are permitted from time to time by part 2(d) division 4 of the Act or are not by the Act or by this Constitution required to be exercised by the Company in General Meeting.”

41 Provisions with respect to voting at general meetings of members are contained in articles 21 to 26 and schedule A to the constitution. It is sufficient to record that specified proportions of total voting rights are vested in groups of Club members according to the division or competition to which they are “admitted”. Thus, for example, the Club members “admitted” in the first division are, between them, entitled to a particular percentage of total voting rights; the Club members “admitted” in the second division are together entitled to another percentage of total voting rights; and so forth. In this way, “admission” to a division or competition is something that goes to definition of member rights.

42 The structure and content of the constitution are such that the matter of determining “which Members shall be entitled to enter teams in the football competitions conducted by the Company”, as well as the matter of “the terms and conditions upon which and the manner in which Members shall make … such applications”, are placed firmly within the province of the board of directors. Within that framework, members’ rights, entitlements, obligations and duties with respect to the making of applications to participate in competitions and actual participation are clearly recognised as something to be determined by the board – subject, of course, to any particular provision which, under or through the constitution, has a bearing upon the matter. And the results of such determinations will, in cases of admission to divisions or competitions recognised by the provisions of the constitution as to members’ voting rights, play a part in defining rights derived from membership.

43 Each of the plaintiffs is a “Club member” of Soccer NSW. In these circumstances, I am not satisfied that there is a basis on which the “process contracts” for which the plaintiffs contend can be seen to have arisen between them and Soccer NSW. It is, of course, possible for membership rights under a company constitution to co-exist with separate contractual rights between member and company in relation to the form of activity the company exists to pursue. Co-operative marketing companies and mutual insurance companies provide good examples. In relation to the latter, the decision of the High Court in Bailey v New South Wales Medical Defence Union Ltd (1995) 184 CLR 399 is instructive. In the present case, however, the process under which clubs, being members of Soccer NSW, put themselves forward for selection as participants in the competition and the board of directors made a selection did not involve any extraneous dealing or transaction between an individual Club member and the company. It was a process expressly envisaged by the constitution as an object of the company – an object, moreover, which was recognised as involving action by the board in relation to members so as to affect the status and rights of those members within the membership community existing under the constitution. The process contemplated by the constitution is one under which there is a playing out of that constitution as it affects members, the performance of functions under that constitution as it affects members and the exercise of powers under that constitution as it affects members, all in a way producing consequences in terms of member rights under that constitution. No separate or parallel set of contractual rights and obligations came into being outside the constitution when Soccer NSW, through its board, set out to restructure the first division competition and to select the Club members that were to field teams in it.

44 It follows that, to the extent that a contractual claim may be sustainable at all, it may be advanced only by reference to one of the statutory contracts created by s.140(1) of the Corporations Act. Within that context, the only potentially relevant contract is that referred to in s.140(1)(a), that is, the contract “between the company and each member”. The claim in contract must accordingly be addressed as a claim by St George against Soccer NSW alleging breach by Soccer NSW of the contract between St George and Soccer NSW that is the constitution of Soccer NSW; and a corresponding claim by Bonnyrigg against Soccer NSW in relation to the contract between Bonnyrigg and Soccer NSW that is the constitution of Soccer NSW.

45 The constitution contains no express provision concerning standards of conduct to be observed or things actually to be done in the performance of the object of determining terms and conditions for admission to competitions and the members entitled to enter teams in competitions. Claims based on the relevant s.140(1)(a) contract would therefore be productive for those asserting them only if the constitution were found to contain implied terms of the kind said to be included by implication in a “process contract”.

46 The process of implication of terms is, in theory, available in relation to the constitution of a company. I say “in theory” because there is no abstract reason why the form of contract recognised by s.140 should be different, in that respect, from any other. And there are cases in which implied terms have been found. In Quancorp Pty Ltd v Macdonald (1999) 32 ACSR 50, for example, it was held that a stock exchange listed company was under an implied contractual obligation to its shareholders to observe the listing rules of the stock exchange. The only possibly relevant contract there was the s.140(1)(a) contract. The basis for the conclusion as to an implied term was not stated by the Full Court of the Supreme Court of Western Australia and may be considered elusive: see (1999) 73 ALJ 726.

47 Courts are, however, generally reluctant to find an implied term in a company constitution. In Stanham v The National Trust of Australia (New South Wales) (1989) 15 ACLR 87, Young J gave three reasons for this reluctance. First, it is more difficult to imply a term where parties have purportedly spelt out their rights and obligations in an extensive set of articles. Second, it is customary in corporations to set great store by the actual wording of each of the articles. Third, there is always power to amend the constitution by special resolution, so that it is always possible for any missing elements necessary for efficacy to be supplied with relative ease. The matter of implication of terms in company constitutions was also addressed by members of the English Court of Appeal in Bratton Seymour Service Co Ltd v Oxborough [1992] BCLC 693. Dillon LJ expressed the opinion (at p.697) that it would be wholly inconsistent with Scott v Frank F Scott (London) Ltd [1940] Ch 794 to imply into a company constitution a term said to be warranted by surrounding circumstances not apparent from the terms of the constitution itself. Steyn LJ (at p.698) accepted that a term might be implied from the language (what he called “a purely constructional implication”) but rejected the possibility of implication of a term from extrinsic circumstances. Sir Christopher Slade said (at pp.699-700):

“No authority has been cited to us which begins to support the proposition that extrinsic evidence is admissible for that wide purpose in construing the statutory contract created by the articles of association of a company. In my judgment, the admission of such evidence for such purpose would be quite contrary to the principles governing this type of statutory contract. If it were to be admissible, this would place the potential shareholders in a limited company, who wished to ascertain their potential obligations to the company, in an intolerable position. They are in my judgment entitled to rely on the meaning of the language of the memorandum and articles of association, as such meaning appears from the language used.”

48 Leaving to one side the process of implication of terms by statute, an implied term may be found in one of two ways. A term may be implied because of a need to give business efficacy to the contract. Alternatively, it may be implied from the nature of the contract or the obligations it creates. In the “process contract” context, the implication of a term of good faith performance and fair dealing is of the second kind. Whether such an implied term is an incident of commercial contracts generally is a question that does not arise in this case: see, for example Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187 and, more recently, Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228.

49 There is no need, as a matter of business efficacy, to imply a term of good faith performance and fair dealing into the contract between Soccer NSW and each of its members recognised in s.140(1)(a) of the Corporations Act; nor is such a contract one that, of its nature, should be found to be subject to such an implied term. This is because the statutory and general law context in which company constitutions operate and are to be construed in relation to decision making entrusted to directors provides a comprehensive – indeed, exhaustive – set of rules dealing with the relevant subject matter in a way that leaves no room for any implied term.

50 The directors of Soccer NSW, in exercising the powers reposed in them with respect to selection of clubs to compete in the new competition, were performing a function entrusted to them by the corporate constitution. They were therefore bound to proceed in the way dictated by the duties to which they are subject by reason of both statutory provisions and the general law. The duties of each director are principally duties to act in good faith, to act in the best interests of the company, to avoid conflicts between the interests of the director and his associates, to act honestly, to exercise care and diligence and to refrain from using his position as a director to gain an advantage for himself or any other person.

51 These duties are owed to the company. Corresponding or parallel duties (being duties of a fiduciary kind) may be owed by a director to an individual member only in exceptional circumstances where a special relationship has, in the particular fact situation, come into existence between the director and the shareholder. Brunninghausen v Glavanics (1999) 46 NSWLR 538 provides an example of such a special relationship. There was, in that case, a relationship of ascendancy and reliance between the relevant director and the relevant member which was a source of vulnerability giving rise to a fiduciary duty on the director’s part towards the member on the facts of the case. That duty was distinct from the duty owed by the director to the company. No such relationship of ascendancy and reliance is pleaded in the present case; nor is any such fiduciary duty towards any individual member. Soccer NSW has interests distinct from those of its member clubs and there is no reason to think that, within the boundaries of the constitution, it is not entitled to pursue them; also that each club is free to pursue its own interests. In neither case, is there any expectation that self-interest will be subordinated. The position here, in this respect, is the same as in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at p.551-2.

Conclusion on the contract claims

52 The plaintiffs contractual claims must, in my judgment, be determined solely by reference to the express terms of the s.140(1)(a) contract. A breach of contract could be found only if a right conferred by those express terms on the particular plaintiff member (as distinct from the form of right that may be said to be the concomitant of any duty owed by directors to the company, rather than any individual member) has been invaded. St George and Bonnyrigg do not point to any express term of the constitution as the source of any such right relevant to their contractual claims. Those claims therefore fail.

53 I should add, in conclusion and by way of explanation, that the circumstances of this case differ fundamentally from those considered by McDougall J in Sydney United Football Club Pty Ltd v Soccer NSW Ltd [2005] NSWSC 474. That case concerned the proceedings of a panel of inquiry established by Soccer NSW to investigate what his Honour described as “disgraceful” conduct at a premier league match in its premier league competition. It was accepted by the parties to that case that principles of natural justice applied in such a context: see, for example, Mitchell v Royal New South Wales Canine Council Ltd (2001) 52 NSWLR 242. The present case, by contrast, does not involve disciplinary or analogous proceedings. Its subject matter is, as I have said, the furtherance of a specific object of the company by the corporate processes provided for in the constitution. A number of the cases cited on behalf of the plaintiffs, including Smith v South Australian Hockey Association Inc (1988) 48 SASR 263, Australian Football League v Carlton Football Club Ltd [1998] 2 VR 546, Modahl v British Athletic Federation Ltd [2002] 1 WLR 1192 and Rush v WA Amateur Football League (Inc) [2003] WASC 70 are distinguishable on the same basis as the Sydney United case, that is, as involving disciplinary tribunals and questions of exclusion or expulsion.

54 Because of my conclusion on the bases on which the contract claims are advanced, it is unnecessary, in that connection, to go further into the factual aspects of the application assessment and comparison processes to which the plaintiffs take exception.

The plaintiffs’ Corporations Act claims

55 Because the selection of members of Soccer NSW to field teams in the new first division competition was a corporate decision made by the board of directors in furtherance of a specific object in the company’s constitution, St George and Bonnyrigg, as members of the company, assert statutory rights given to members to seek relief and redress in relation to matters adversely affecting them. They contend that, by reason of the board’s decision of 12 October 2005, Soccer NSW acted in a manner that was contrary to the interests of the members as a whole or oppressive and unfairly prejudicial to and unfairly discriminatory against St George and Bonnyrigg. This aspect of their claims is based on ss.232 and 233 of the Corporations Act, described by L S Sealy (“The Enforcement of Partnership Agreements, Articles of Association and Shareholder Agreements” in Finn “Equity and Commercial Relationships”, 1987) as providing for members a remedy supplemental to the limited remedies that may be available for breach of the s.140(1) contract. Sections 232 and 233 are in the following terms:

“232 Grounds for Court order

The Court may make an order under section 233 if:

(a) the conduct of a company's affairs; or
(b) an actual or proposed act or omission by or on behalf of a company; or
(c) a resolution, or a proposed resolution, of members or a class of members of a company;
is either:
(d) contrary to the interests of the members as a whole; or
(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company.

Note: For affairs , see section 53.

233 Orders the Court can make

(1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order:

(a) that the company be wound up;
(b) that the company's existing constitution be modified or repealed;
(c) regulating the conduct of the company's affairs in the future;
(d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law;
(e) for the purchase of shares with an appropriate reduction of the company's share capital;
(f) for the company to institute, prosecute, defend or discontinue specified proceedings;
(g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company;
(h) appointing a receiver or a receiver and manager of any or all of the company's property;
(i) restraining a person from engaging in specified conduct or from doing a specified act;
(j) requiring a person to do a specified act.


Order that the company be wound up

(2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply:

(a) as if the order were made under section 461; and
(b) with such changes as are necessary.


Order altering constitution

(3) If an order made under this section repeals or modifies a company's constitution, or requires the company to adopt a constitution, the company does not have the power under section 136 to change or repeal the constitution if that change or repeal would be inconsistent with the provisions of the order, unless:

(a) the order states that the company does have the power to make such a change or repeal; or
(b) the company first obtains the leave of the Court.”

56 In approaching this part of the plaintiffs’ case, I must go immediately to the course of litigation that culminated in the decision in Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459. The High Court there dismissed an appeal from the New South Wales Court of Appeal (New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86) which had allowed an appeal against a decision of Hodgson J that there should be an order under the then equivalent of s.233 restraining the New South Wales Rugby League from acting upon and implementing a decision to reduce the number of teams in its first grade competition and to exclude the Western Suburbs club (Wayde v New South Wales Rugby League Ltd (1984) 9 ACLR 349). There, as here, the power to select member clubs to participate in competitions was vested in the board of directors. That the proceedings were framed by reference to the equivalents of ss.232 and 233 represented recognition of the reality in company law that directors’ duties are not owed to individual members but to the company itself.

57 In Wayde, as in the present case, the complainant club was a member of the company that was the governing body for the sport. There, as here, the constitution of the company set out objects and powers which included the fostering and control of the relevant sport in New South Wales and determination of which member clubs should be entitled to enter teams in the relevant competition. The provisions of the constitution in those respects are strikingly similar to those applying in this case (see paragraphs [36] to [40] above). There was also a provision in generally the same terms as article 44 of the constitution of Soccer NSW (see paragraph [40] above). In Wayde, it was conceded by the excluded member that the relevant decision of the board had been made in good faith, also that there had been no failure to take relevant considerations into account and no attention paid to irrelevant considerations. The plaintiffs in the case before me make no corresponding concessions. The contention of the excluded club in Wayde (at p.467) was that:

“the exclusion of a viable club, such exclusion not being required to render the competition workable, would promote ‘purposes foreign to the company's operations, affairs and organizations’, adopting the meaning ascribed to the phrase ‘benefit of the company as a whole’ by Dixon J in Peters' American Delicacy Co Ltd v Heath (1939) 61 CLR 457, at p.512.”

58 The majority (Mason ACJ, Wilson J, Deane J and Dawson J) said (at pp.467-8):

“The answer to this contention is that no amount of sympathy for Wests can obscure the fact that the League was expressly constituted to promote the best interests of the sport and empowered to determine which clubs should be entitled to participate in competitions conducted by it. It was upon this basis that the clubs, including Wests, chose to incorporate. Indeed, the 1984 correspondence between Wests and the League which is in evidence plainly shows that Wests itself fully appreciated that it had no secure right to participate in the premiership competition. In truth, the Board was confronted with a conflict of immediate interest between Wests on the one hand and the League as a whole on the other and the exercise of the power conferred by Art 76 must necessarily be prejudicial to one or the other. Given the special expertise and experience of the Board, the bona fide and proper exercise of the power in pursuit of the purpose for which it was conferred and the caution which a court must exercise in determining an application under s 320 of the Code in order to avoid an unwarranted assumption of the responsibility for management of the company, the appellants faced a difficult task in seeking to prove that the decisions in question were unfairly prejudicial to Wests and therefore not in the overall interests of the members as a whole. It has not been shown that those decisions of the Board were such that no Board acting reasonably could have made them. The effect of those decisions on Wests was harsh indeed. It has not, however, been shown that they were oppressive or unfairly prejudicial or discriminatory or that their effect was such as to warrant the conclusion that the affairs of the League were or are being conducted in a manner that was or is oppressive or unfairly prejudicial. That being so, the appellants have failed to make good their second submission.”

59 The relevant question was therefore identified as being whether the decisions of the board as to the composition of the competition “were such that no Board acting reasonably could have made them”. In addressing that question, a court must bear in mind the warning sounded by the Court of Appeal (Street CJ, Kirby P and Hope JA) in Wayde ((1985) 1 NSWLR 86 at p.102):

“Courts may only interfere in the directors’ decisions, relevantly, where oppression or unfair prejudice is shown. Whilst it is true that the Code should be given a beneficial construction and not unduly narrowed by judicial decisions, the terms of s 320 must not lead courts into assuming the management of corporations, substituting their decisions and assessments for those of directors, who can be expected to have much greater knowledge and more time and expertise at their disposal to evaluate the best interests of the members of the corporation as a whole.”

60 The Court of Appeal then quoted with approval a passage from the judgment of Sir Thaddeus McCarthy in Thomas v H W Thomas Ltd [1984] 1 NZLR 686 (at p.697):

“[T]he powers given by s 209 are ones which in my view should not be lightly exercised, especially so when a lack of probity or want of good faith is not established. These powers can invade the traditional rights of the shareholders to determine the management of their company according to their shareholding, and while few would deny the necessity for such provisions as those of s 209 in the interests of minorities, the danger of allowing minority interests to inflict serious damage to a company’s structure can be quite real.”

61 I do not read anything in the majority judgment in the High Court’s decision as calling into question these observations by the Court of Appeal. The fifth member of the High Court, Brennan J, delivered a concurring judgment in the course of which he said that the operation of what is now s.232 may be attracted to a decision of directors “which is made in good faith for a purpose within the directors’ power but which reasonable directors would think to be unfair”. Brennan J continued (at pp.472-3):

“The test of unfairness is objective and it is necessary, though difficult, to postulate a standard of reasonable directors possessed of any special skill, knowledge or acumen possessed by the directors. The test assumes (whether it be the fact or not) that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden which their decision will impose, and address their minds to the question whether a proposed decision is unfair. The court must determine whether reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision.”

62 The plaintiffs emphasise in submissions that, in Wayde, it was conceded that the directors had acted in good faith and by reference to relevant considerations. There are no such concessions in the present case. Indeed, it is part of the plaintiffs’ pleaded case that:

“… the Defendant by its board of directors, representatives and football committee failed to act in good faith and reasonably in respectively making the decision [that is, the decision fixing the number of participating clubs at 10 and selecting those 10], assessing and supervising applications for admission into the New Competition and making a recommendation to the board.”

63 The particulars to this paragraph of the amended statement of claim refer to the alleged shortcomings summarised at paragraph [31] above. It is important to note, however, that the paragraph refers, in terms, to the claims in contract and to the postulated contractual obligation of good faith. The concept of good faith contractual performance is to be distinguished from the duty of good faith to which directors are subject in the performance of their functions and the exercise of their powers. It is, of course, to the latter obligation of good faith that the comments on the subject of good faith were directed in the judgments in Wayde, both in the High Court and in the Court of Appeal.

64 The duty of good faith to which directors are subject and which was the subject of the concession in Wayde is both a fiduciary duty incidental to the office of director of a company and a statutory duty imposed by s.181 of the Corporations Act. It is a duty with respect to the exercise of directors’ powers and, of course, a duty owed to the company.

65 The duty of good faith has existed in explicit statutory form only since 13 March 2000 when the Corporate Law Economic Reform Program Act 1999 (Cth) commenced. Section 181(1) now requires directors to exercise their powers and discharge their duties in good faith in the best interests of the corporation. It has been suggested that the statutory requirement of “good faith” will be found not to be satisfied where there is fraud, dishonesty, malice, an intentional breach of duty, recklessness or an improper purpose or where a director acts honestly but fails to make a real or genuine attempt to discharge his or her duty: E Kyrou, “Directors’ Duties, Defences, Indemnities, Access to Board papers and D&O Insurance Post CLERPA”, (2000) 18 C&SLJ 555 at pp.558-9. This analysis involves definition by exception: if all the negative elements are lacking, the positive requirement is satisfied. This approach has been taken to the definition of “good faith” in other contexts: see, for example, the observations of Lord Scott of Foscote in Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2003] 1 AC 649. As far as the “good faith” aspect of directors’ fiduciary duties is concerned, a definition employing both negative and positive elements is to be found in a description by Isaacs J in Australian Metropolitan Life Assurance Co Ltd v Ure (1923) 33 CLR 199 (at p.217):

157 The intention or policy of Soccer NSW changed at or about the time of the meeting of the Football Committee on 10 October 2005. The minutes of that meeting are set out at paragraph [140] above. They show that an intensive process of assessment and evaluation had been undertaken after the closing date for applications (30 September 2005). It was at that point that it became clear that, as the minutes record, “there would be a 5-6 team competition if the strict criteria of grounds ready by 20 September 2005 was applied”. There was then a decision to include in the assessment clubs that committed in writing to have their grounds ready by December 2005. It was at that point that Soccer NSW modified the intention expressed in “criteria representation”.

158 The situation was thus as described by Wilcox J in Lyndel Nominees (above). Soccer NSW did not honour the “criteria representation” because of a change in policy, not because it was not sincerely intended at the time made or because Soccer NSW lacked reasonable grounds for making it. The representation was not brought within s.52 (s.42) by operation of s.51A (s.41).

The statutory misconduct case - injunction

159 Before leaving the statutory misconduct case, I should refer to one other matter. Assume that, contrary to my findings, both the “criteria representation” and the “12 teams representation” were made and were of the misleading or deceptive quality with which the legislation is concerned. There then arises the question whether St George and Bonnyrigg would, in any event, have shown an entitlement to the relief they seek. As is made clear by the amended statement of claim, they rely on s.52 as a basis for, first, an injunction under s.80 of the Trade Practices Act (s.65 of the Fair Trading Act) restraining Soccer NSW from giving effect to its decision that the particular ten clubs should be the only clubs to participate in the new competition and, second, an order under s.87 of the Trade Practices Act (s.72 of the Fair Trading Act) “declaring the decision to be void from its beginning”.

160 The injunction sought under s.80 is a final injunction. Its effect would be to prevent Soccer NSW proceeding with a competition involving the ten selected clubs only. But that, it seems to me, would not be a result of the kind that the statutory injunctive jurisdiction is intended to produce. The court must, under s.80, decide what is “appropriate”, since the statutory power is a power only to grant an injunction “in such terms as the court determines to be appropriate”. The determinant of what is “appropriate” is the policy the legislation is intended to serve.

161 It is significant that s.80 (s.65) permits an injunction to be sought by the enforcement authority but also by “any other person”. This establishes the status of s.80 as a means by which compliance or rectification may be sought by a person who may have no interest in the subject matter. And that, in turn, emphasises the public aspect of the legislation with which the particular statutory remedy created by s.80 is concerned. The relationship between s.52 (s.42) and s.80 (s.65) was considered in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591. Gleeson CJ and McHugh J said, at p.602:

“As Bowen CJ observed in Phelps v Western Mining Corporation Ltd (1978) 33 FLR 327 at 330-331, the purpose of s 52 is to protect the public from being misled or deceived. An application for injunctive relief under s 80 is, in its nature, one for the protection of the public interest. The same may be said of s 163A. Any public protection of the applicant's own business or other interests is incidental or collateral. What is sought to be established by the determination of a court is a violation by the respondent of a statutory norm of conduct, and the existence of a duty or liability. The court is not invited ‘to make a declaration of the law divorced from any attempt to administer that law’: cf In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 266. Such a subject matter is justiciable in character. Parliament, by conferring standing upon any person to invoke the jurisdiction of the court has, at the one time, created the potential for a justiciable controversy and conferred jurisdiction to determine the controversy. This is a common feature of legislation.”

162 It is here made clear that the dominant consideration upon any application for an injunction based on contravention of s.52 (s.42) is the protection of the public interest; and that protection of the applicant’s own business or other interests can only be secondary. This is consistent with the following observation of French J in ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at p.268:

“The Trade Practices Act 1974 (Cth) is concerned primarily with the protection of the public interest in the prevention of anti-competitive conduct in markets within Australia (Pt IV) and the fair treatment of consumers (Pt V). Section 80 is a widely drawn remedial provision available to restrain conduct which may infringe upon that public interest by contraventions of provisions of the Act in Pts IV and V. The standing of persons, other than those whose proprietary interests may be affected by such conduct, to obtain injunctive relief is an indication of the regulatory function of this statutory remedy. The special standing of the Minister and the Commission lends emphasis to that characterisation.”

163 Assuming the representations on which the plaintiffs rely to have been made and to be of the misleading or deceptive quality with which the legislation is concerned, an injunction in the terms sought by St George and Bonnyrigg by reference to s.80 (s.65) would not, in my view, contribute to the attainment of the public interest in securing for the future the fair conduct with which s.52 (s.42) is concerned. There would be no remedial effect. The injunction would no doubt assist the private interests of St George and Bonnyrigg, at the same time prejudicing those of the ten selected clubs. From the perspective presently under discussion, therefore, it would promote exclusively or, at least, predominantly the matter that, according to Gleeson CJ and McHugh J, may be incidental or collateral only.

164 The effect of the injunction in assisting the private interests of St George and Bonnyrigg and prejudicing those of the ten selected clubs raises another matter for consideration, namely, the effect on the ten selected clubs. They were not made parties to the proceedings and have accordingly played no part. The plaintiffs point out that the ten were given notice of the proceedings and could have taken steps to involve themselves but obviously chose not to do so. That, however, does not make less relevant the observation Dr Spry at pp.402-3 of the sixth edition (2001) of “Equitable Remedies”:

“Regard must be had ‘not only to the dry strict rights of the plaintiff and defendant, but also to the surrounding circumstances, to the rights or interests of other persons which may be more or less involved’. So it is that where the plaintiff has prima facie a right to specific relief, the court will, in accordance with these principles, weigh the disadvantage or hardship that he would suffer if relief were refused against any hardship or disadvantage that might be caused to third persons or to the public generally if relief were granted, even though these latter considerations are only rarely found to be decisive. (Conversely, detriment that might be caused to third persons or to the public generally if an injunction were refused is taken into account.)

165 Even on the assumption that the plaintiffs had made out their claim that one or both of the “12 teams representation” and the “criteria representation” was caught by s.52 (s.42), the court would not have ordered the injunction they sought by reference to s.80 (s.65).

The statutory misconduct case – order declaring decision void

166 If the same assumption is made, the availability to St George and Bonnyrigg of an order declaring the decision to conduct the ten team competition “to be void from its beginning” would have depended on the availability, in the circumstances, of s.87 of the Trade Practices Act (s.72 of the Fair Trading Act). That section is available to a party who “has suffered [sustained], or is likely to suffer [sustain] loss or damage by conduct of another person that was engaged in … in contravention of” certain provisions including s.52 (s.42). (The words in square brackets are those of the Fair Trading Act).

167 A person is within the contemplation of s.87 (s.72) where loss or damage has resulted, or is likely to result, from the statutory contravention. As was pointed out by McHugh J, Hayne J and Callinan J in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at p.515:

“The central inquiry is what consequence has the contravention of the Act had on the party in question. That requires comparison between the position in fact of the party which alleges loss and the position that would have obtained had there been no contravention.”

168 Their Honours also said:

“A party that is misled suffers no prejudice or disadvantage unless it is shown that the party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted.”

169 These observations describe the findings that must be made to justify the conclusion required by the word “by” in the phrase “by conduct of another person” in s.87 (s.72).

170 St George and Bonnyrigg say that they could have taken steps to ensure that the criteria were applied in accordance with the “criteria representation” or otherwise to protect their position such as by lobbying other clubs and the directors of Soccer NSW or by negotiating to find another permanent venue in another region (this last possibility is presumably seen as relevant to the “12 teams representation”). They were, they said, denied that “valuable opportunity”.

171 In cases such as the present, a finding of the actual or likely loss or damage with which s.87 (s.72) is concerned depends on the plaintiff showing that he would not have entered into the relevant transaction, or would have entered into some different transaction, so that consequences of either inaction or different action can be compared with the consequences of what the plaintiff actually did. St George and Bonnyrigg do not say that they would have refrained from making an application to participate in the new competition had the two relevant representations not been made or had they known of the (presently postulated) misleading quality of them. All they say is that they would have engaged in lobbying activities or perhaps sought a different ground with a view to maximising their chances under the regions system. I do not accept that the opportunity to lobby was a “valuable opportunity” or that lobbying would have produced any different result. And the possibility of seeking a different home ground does not seem to me to be relevant in the particular context since the impact of the system of regions was not part of either the “criteria representation” or the “12 teams representation” as pleaded.

172 In summary, I am not satisfied that the plaintiffs would have crossed the threshold of s.87 (s.72). This is because they would not have shown that the misleading or deceptive conduct (postulated for this part of the discussion) was productive of actual or likely loss or damage. I would add that I am of the opinion that the order the plaintiffs seek by reference to s.87 (s.72), that is, an order declaring void the decision to admit to the competition the ten clubs not party to these proceedings, would, in any event, not be an order that the court would have considered it appropriate to make in the proceedings as now constituted, even if the plaintiffs had succeeded in crossing the threshold of s.87 (s.72) by showing relevant loss or damage. This is because an order making void the decision to admit the ten clubs to the competition would not, of its nature, produce any positive effect for the plaintiffs and would therefore not be of the kind s.87 (s.72) has in contemplation, that is, an order that will “compensate … in whole or in part for the loss or damage or will prevent or reduce the loss or damage”. In the absence of any order of the court, St George and Bonnyrigg would not be participants in the new competition. If the vitiating order they seek were made, they would be in exactly the same position, since there would then be no new competition and no participants in a new competition.

The estoppel case

173 This part of the plaintiffs’ case may be dealt with briefly. Central to it are the findings already made that the “criteria representation” was made through publication of the Business Plan but that the “12 teams representation” was not made.

174 To establish, in accordance with the principles in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and Commonwealth v Verwayen (1990) 170 CLR 394, an estoppel of the relevant kind – in this case, an estoppel precluding departure by Soccer NSW from the “criteria representation” - it would have to be shown that St George and Bonnyrigg, relying on the “criteria representation”, acted to their detriment.

175 The only action they took was to submit applications in the prescribed form. It may well be that they did so in reliance on the representations in the Business Plan, including the “criteria representation”. But it cannot be said that they thereby acted to their detriment. The alternative course of action would have been to refrain from submitting applications. Had they done that, their ultimate position would have been the same as that they in fact came to occupy, namely, non-participation in the new competition. The requirements for the creation of an estoppel are therefore not established.

Conclusion

176 St George and Bonnyrigg have not made out an entitlement to the relief they seek. The proceedings are accordingly dismissed with costs.

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