Sydney Organising Committee for the Olympic Games v Zhu - [2002] NSWCA 380

No judgment structure available for this case.

CITATION: SYDNEY ORGANISING COMMITTEE FOR THE OLYMPIC GAMES v ZHU [2002] NSWCA 380

FILE NUMBER(S): CA 40973/01

HEARING DATE(S): 29 October 2002, 30 October 2002

JUDGMENT DATE:
20 December 2002

PARTIES :

Sydney Organising Committee for the Olympic Games - Appellant
Peter Tao Zhu - Respondent

JUDGMENT OF: Sheller JA at 1; Giles JA at 190; Hodgson JA at 191

LOWER COURT JURISDICTION : Supreme Court - Equity Division

LOWER COURT
FILE NUMBER(S) : 50167/99

LOWER COURT
JUDICIAL OFFICER : Bergin J

COUNSEL: BW Walker SC/MBJ Lee - Appellant
JC Kelly SC/MF Galvin - Respondent

SOLICITORS: Corrs Chambers Westgarth, Sydney
Walker, Hedges & Co, Forestville

CATCHWORDS: TORT - induce breach of contract - Sydney 2000 Olympic Games - Agency Agreement to sell International Memberships in the Olympic Club to residents of Mainland China - Olympic indicia and images - Sydney 2000 Games (Indicia and Images) Protection Act 1996 (NSW) - justification for inducement to breach contract - estoppel - no order for costs due to defendant's delay

LEGISLATION CITED: Sydney Organising Committee for the Olympic Games Act 1993 (NSW)
Olympic Co-ordination Authority Dissolution Act 2002 (NSW)
Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth)

CASES CITED:
Dickenson v Waters Ltd [1931] 31 SR (NSW) 593
Building Workers' Industrial Union of Australia & Ors v Odco Pty Ltd (1991) 29 FCR 104
Read v The Friendly Society of Operative Stonemasons of England, Ireland and Wales & 2 Ors [1902] 2 KB 88
Glamorgan Coal Company Limited & Ors v South Wales Miners' Federation & Ors [1903] 2 KB 545
Mogul Steamship Co Ltd v McGregor, Gow & Co (1889) 23 QBD 598
James v The Commonwealth (1939) 62 CLR 339
Edwin Hill & Partners v First National Finance Corporation Plc [1989] 1 WLR 225
Hyde & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359

DECISION: 1 Pursuant to Pt 8 r10 (2) of the Supreme Court Rules, substitute The Treasurer of the State of New South Wales as the appellant in this appeal; 2 Appeal allowed; 3 Set aside the verdict and judgment of Bergin J for the plaintiff against the first defendant; 4 In lieu thereof, judgment for the plaintiff against the first defendant in the sum of $326,904 to take effect from 23 November 2001; 5 Bergin J's costs order confirmed; 6 No order for the costs of the appeal, save that the plaintiff is to have a certificate under the Suitors' Fund Act 1951 in respect of his own costs of the appeal if otherwise entitled.

CA 40973/01
EQ 50167/99

SHELLER JA
GILES JA
HODGSON JA

OLYMPIC CO-ORDINATION AUTHORITY v ZHU

The appeal was from a decision of Bergin J given on 6 November 2001. The plaintiff had instituted proceedings against SOCOG (the defendant) and claimed that SOCOG had wrongfully induced TOC Management Services Pty Limited (TOC) to terminate an agreement whereby TOC had appointed the plaintiff an agent to market in Mainland China International Memberships in the Olympic Club which was established in preparation for the Sydney 2000 Olympic Games. SOCOG was the body established to organise and stage the Sydney 2000 Olympic Games.

The Olympic Charter contemplated exploitation for advertising, commercial or profit making purposes of the Olympic symbol and the Olympic emblems outside of Australia but only with the consent of the relevant National Olympic Committee (in this case, the Chinese National Olympic Committee) and only if a certain proportion of profits were distributed to that Committee. These requirements were not adhered to in this case. Clause 48 of the Host City Contract with the City of Sydney and the Australian Olympic Committee entitled the International Olympic Committee to terminate the contract and to withdraw the Games from Sydney if there was a violation of the Host City Contract, the Olympic Charter or any applicable law. The relevant legislation was the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (the Act).

TOC was the trustee of the Olympic Club Trust. SOCOG and TOC, as trustee, entered into the Olympic Club Licence Agreement which recited that SOCOG was the exclusive entity for the purpose of organising and staging the Olympic Games and had the authority to grant to TOC as trustee certain rights and opportunities relating to the Games. Rights were granted to use intellectual property in connection with the Club, however the rights and opportunities granted were to be exercised in and only in Australia.

TOC entered into an Agency Agreement and a Marketing Restriction Deed Poll (the Deed Poll) (executed in favour of SOCOG) with the plaintiff. The Deed Poll provided that the plaintiff could not use any words, phrases, symbols or images which suggested any connection between the plaintiff and the Olympic Movement without the prior written consent of SOCOG. In consideration of TOC appointing the plaintiff its agent for the term, the plaintiff paid TOC an Agency Fee of $30,000. The Agency Agreement was subsequently extended on the payment of a further $230,000 by the plaintiff to the Olympic Club.

TOC covenanted with the plaintiff that his appointment as agent was exclusive within Mainland China and, upon the execution of the Agency Agreement, TOC provided to the plaintiff a letter introducing him as the exclusive authorised agent of the Olympic Club to sell International Memberships in China. The letter authorised the plaintiff to sell the Memberships as a component of travel and accommodation packages.

The plaintiff had frequent contact with employees of TOC, reporting back to them about what he had done in developing the project, including meeting with Chinese Government officials. The plaintiff obtained permission to appoint a number of sub-agents. The plaintiff was also informed that TOC would do whatever it could to get SOCOG to assist in the arrangement of visas for Chinese residents who purchased Memberships. The "guarantee" to help Members obtain visas drew the attention of the Criminal Intelligence Unit of the Olympic Intelligence Centre.

On 30 July 1999, due to financial difficulties, the ownership of the Olympic Club concept and all know-how in relation to the operation of the Club was transferred to SOCOG. In October 1999 the plaintiff was informed that SOCOG no longer wanted the International Memberships to continue.

Subsequently, SOCOG's representatives communicated with the Olympic Intelligence Centre their suspicions that the plaintiff and his sub-agents were operating without any authority and fraudulently – particularly with regard to the issue of Membership certificates which were "not genuine". On the plaintiff's return to Australia from China in early December he was arrested at Sydney airport. The plaintiff was charged but those charges were subsequently withdrawn. The trial Judge was satisfied that SOCOG's conduct caused the plaintiff's arrest.

During the hearing most attention was directed to whether or not TOC had wrongly repudiated the Agency Agreement which in turn depended upon whether or not the plaintiff was in breach of the terms and conditions of the Agency Agreement and Deed Poll. The trial Judge held that TOC had wrongfully repudiated the Agency Agreement and that SOCOG was not justified in procuring the termination of the Agreement. Further, it was found that the conduct of the plaintiff which SOCOG complained of – such as, the representations made by the plaintiff that SOCOG would assist in obtaining visas for Members – did not warrant summary dismissal and rejected the claim that the conduct entitled TOC to terminate the Agency Agreement.

The plaintiff recovered approximately $4,230,000 plus costs. On appeal SOCOG did not challenge the right to such damages or their assessment if the tort alleged against it was made out.

The principal ground of appeal was based on the defence of justification. SOCOG claimed justification as a complete defence to the plaintiff's claim for inducing a breach of contract on three bases:

- the breach by the plaintiff of the terms of the Deed Poll, being independent contractual obligations owed to SOCOG;

- the equal or superior right of SOCOG derived from its responsibility to protect the reputation and goodwill of the Olympic Movement and from statutory regulation of the use of Olympic indicia and images. The plaintiff breached terms of the Act; and

- the serious breaches of the contractual and fiduciary duties owed by the plaintiff to TOC.

SOCOG acknowledged that it knowingly induced TOC to break its contract with the plaintiff. The question on appeal was whether or not the inducement was without lawful justification.

HELD (per Sheller JA, Giles JA and Hodgson JA agreeing):

1. To sell or market Olympic Club International Memberships to residents in the Peoples' Republic of China in China was a breach of paragraphs 11 and 12 of the bye-law to rule 17 of the Olympic Charter and s12 of the Act unless the plaintiff was, within the meaning of that Act, a licensed user and some part of the proceeds of exploitation in Mainland China were to go to the Chinese National Olympic Committee. Such a breach was a ground for termination of the Host City Contract under cl 48(iii).

2. Pursuant to the Act relevantly no person other than SOCOG or a licensed user was permitted to use Sydney 2000 Games indicia or images. No evidence was produced which proved whether or not the plaintiff was a licensed user. On the evidence the only conclusion open was that he was not a licensed user within the meaning of the Act.

3. Justification as an element in the tort of wrongful interference with a contract has not been, and probably cannot be, defined. Whether justification in a particular case exists or not should be left to the good sense of the tribunal having regard to established considerations: see Building Workers’ Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104; Readv Friendly Society of Operative Stonemasons of England [1902] 2 KB 88 at 96-7; James v The Commonwealth (1939) 62 CLR 339.

4. The trial Judge seemed to equate justification in the sense of whether TOC was justified in terminating the Agency Agreement with the different question of whether SOCOG was justified in interfering even if TOC had no grounds for termination. SOCOG's justification case based solely on statutory rights and responsibilities was not dealt with by the trial Judge.

5. The terms of the Agency Agreement contemplated execution by the plaintiff of the Deed Poll. It was plain enough that the Deed Poll must be read as an integral part of the contract between the plaintiff and TOC. It would be absurd to read it as intended to contradict and defeat the Agency Agreement. In giving meaning to the words of an agreement between commercial parties, courts will endeavour to avoid a construction which makes commercial nonsense: see Hyde & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-4. If the plaintiff operated within the limits imposed by the Agency Agreement including the letter handed to him in compliance with the Agency Agreement, there could be no breach of the Deed Poll.

6. The language of s12 of the Act was unequivocal. Subsection (1) prohibited a person, not a licensed user, using Sydney 2000 Games indicia and images for commercial purposes. SOCOG was justified in procuring the termination of the Agency Agreement. That agreement if allowed to stay in place required continued illegal conduct not only by the plaintiff but by others. The Agreement erroneously permitted the plaintiff commercially to exploit intellectual property owned by the IOC on behalf of the Olympic Movement in a country outside Australia without the consents of any of the Olympic bodies who were required to consent and in particular by the relevant Chinese bodies.

7. The plaintiff's contractual rights to exploit Olympic intellectual property in Mainland China under the terms of the Agency Agreement derived from TOC. The Licence Agreement made it clear that TOC had no authority to grant such rights. The superior right SOCOG called in aid was an absolute one based on its constitution and the Act. While SOCOG knowingly induced the breach of contract, the inducement was justified.

8. The costs orders made by the trial Judge were confirmed. The way in which the case was run by SOCOG at trial wasted a considerable amount of judicial time and resulted in considerable expense being unnecessarily incurred by the plaintiff. No order for the costs of the appeal were made as the appeal succeeded on the basis of submissions filed late. Also, the point in issue could have been dealt with quite shortly at the trial if proper emphasis had been placed on it by SOCOG.

Per Hodgson JA (Giles JA agreeing):

9. The non-production by SOCOG of the register of licences did not advance the plaintiff's case because registration did no more than provide evidence of the grant of a licence: it was not itself a source of rights. The case was conducted on the basis that TOC's rights and the plaintiff's rights were those granted by the stipulated agreements and there was no suggestion that there were rights granted otherwise.

10. The plaintiff argued on appeal that SOCOG knew that TOC had purported to grant the plaintiff authority to use Sydney 2000 indicia and images but did not tell the plaintiff that this was without authority, whereupon the plaintiff acted to his detriment, giving rise to an estoppel. However, no such estoppel was pleaded. In any event, such an estoppel would not operate against the requirements of a statute.

11. The award of damages referable to the plaintiff's arrest cannot be upheld. The arrest was alleged in the Statement of Claim only as one of the means of bringing about the wrongful interference with the plaintiff's contract.

Legislation cited:

Sydney Organising Committee for the Olympic Games Act

1993 (NSW)

Olympic Co-ordination Authority Dissolution Act

2002 (NSW)

Sydney 2000 Games (Indicia and Images) Protection Act

1996 (Cth)

Cases cited:

(1991) 29 FCR 104

[1931] 31 SR (NSW) 593

[1989] 1 WLR 225

[1903] 2 KB 545

(1990) 20 NSWLR 310

(1939) 62 CLR 339

(1889) 23 QBD 598

[1902] 2 KB 88

(1931) 45 CLR 359

(1950) 81 CLR 418

ORDERS

Supreme Court Rules

2. Appeal allowed;

3. Set aside the verdict and judgment of Bergin J for the plaintiff against the first defendant;

4. In lieu thereof, judgment for the plaintiff against the first defendant in the sum of $326,904 to take effect from 23 November 2001;

5. Bergin J’s costs order confirmed;

Suitors’ Fund Act

*********

CA 40973/01
EQ 50167/99

SHELLER JA
GILES JA
HODGSON JA

Friday, 20 December 2002

OLYMPIC CO-ORDINATION AUTHORITY v ZHU

Judgment

1 SHELLER JA:

Introduction

2 This is an appeal from a decision of Bergin J given on 6 November 2001. The proceedings were begun by summons filed on behalf of the plaintiff and respondent, Peter Tao Zhu (Zhu), on 22 December 1999. The plaintiff sought declaratory relief and orders against three parties, the Sydney Organising Committee for the Olympic Games (SOCOG), TOC Management Services Pty Limited (TOC) and Keith Wyness (Wyness). The proceedings against Wyness were settled and the proceedings against TOC stayed by operation of law when a liquidator to TOC was appointed in August 2000. The parties in the proceedings before Bergin J were Zhu and SOCOG. In the context of the preparation for the XXVII Olympiad to be held in Sydney in 2000 (the Sydney 2000 Games) Zhu claimed that SOCOG had wrongfully induced TOC to terminate an agreement whereby TOC had appointed Zhu an agent to market in Mainland China International Memberships of the Olympic Club which was established in the preparation for the Sydney 2000 Games. SOCOG admitted that it induced the breach of contract but claimed that it was justified by the plaintiff’s breaches of the Agency Agreement and covenants in favour of SOCOG in a separate contemporaneous Deed Poll and by an equal or superior right derived from its responsibility to protect the reputation and goodwill of the Olympic Movement and from statutory regulation of the use of Olympic indicia and images.

3 Since then SOCOG has been dissolved by operation of s54 of the Sydney Organising Committee for the Olympic Games Act 1993 (NSW) (the SOCOG Act). Section 55 of the SOCOG Act provided for SOCOG’s assets to vest in and its rights and liabilities to become the rights and liabilities of the Olympic Co-ordination Authority (OCA). On 1 July 2002 the Olympic Co-ordination Authority Dissolution Act 2002 (NSW) (the DissolutionAct) commenced. Section 4 of that Act provided that OCA was dissolved. Section 6 of the Dissolution Act provided, relevantly, that the assets, rights and liabilities of OCA comprising obligations and entitlements of SOCOG existing immediately before 31 October 2001 and not finally disposed of or recoverable before 1 July 2002 be transferred to the Treasurer. No party’s Counsel has suggested that these provisions affect the resolution and outcome of this appeal beyond requiring amendment to substitute as a party The Treasurer of the State of New South Wales for SOCOG. To avoid confusion I shall continue to refer to the remaining defendant in the proceedings as SOCOG.

The Olympic Club

4 On 26 September 1997 the Olympic Club Trust was established by a trust deed. The unit holders of the trust were the Australian Olympic Committee (AOC), SOCOG and a company called Synthesis Consulting Pty Limited (Synthesis). TOC was the trustee of the trust and provided management and other services to the Olympic Club (the Club).

5 TOC was set up in July 1997. The company had previously been known by other names. On 17 September 1997 Wyness was appointed managing director of TOC in which position he remained until late 1999. In December 1997 Angus Roderick Noble (Noble) began employment with TOC and became known as the commercial director. Noble had responsibilities to establish and manage the Club and report to Wyness.

6 The Club was established pursuant to The Olympic Club Establishment Agreement (the Establishment Agreement) made on 5 December 1997 between TOC as trustee, SOCOG, AOC, Synthesis and TOC in its personal capacity (TOCMS). In the Establishment Agreement TOC was referred to as the Trustee and the International Olympic Committee as IOC. In cl 2 of the Establishment Agreement the parties acknowledged that they intended that the Club would be established as an affinity programme by contract between the Trustee and each member. The parties also acknowledged that the purpose for which the trust had been established was the encouragement or promotion of sport through the programmes offered by the Club and that members of the Club would benefit from the Club through, amongst other things, the provision of the Olympic Benefits and other privileges (cl 2(a)-(c)). Olympic Benefits included tickets to Olympic Games, test events, Paralympic Games and Olympic Arts Festival events, access to the Official Dress Rehearsal of the Opening Ceremony, Club Member recognition on a special memorial, privilege rights to become a volunteer and involvement rights in the torch relay (cl 1(a); sch 1).

7 Clause 5 constituted a Club Committee which comprised two representatives of each of SOCOG, AOC and Synthesis. At relevant times the members of the committee included Paul Reading (Reading) and John Moore (Moore) of SOCOG, Craig McLatchey (McLatchey) and Alan Grover (Grover) of the AOC, William David Sherbon (Sherbon) and Stefan Wisniowski (Wisniowski) of Synthesis and Wyness. The members of the Club Committee were to have a role and duties, in respect of the Club and the trust, similar to those of a board of directors, and the members of a board of directors in respect of a company (cl 5(e)). Clause 5(d) of the Establishment Agreement described the functions of the Club Committee and relevantly cl 5 (g) provided:

“If all the AOC and SOCOG representatives are reasonably of the opinion that an activity of the Trustee is likely to affect the goodwill or reputation of the Olympic movement adversely, they may direct the Trustee to cease that activity. The Trustee must comply with such a direction.”

8 Clause 25 of the Establishment Agreement, headed “No endorsements, publicity or use of Olympic Insignia” was relevantly as follow:

(a) Except as permitted in this agreement or in a Transaction Document, the Trustee and Synthesis will not, without the prior written permission of SOCOG, which SOCOG may withhold in its absolute discretion, represent, hold out, market, promote or advertise in any way that it has any connection or association with SOCOG, the IOC, the Games, or the 1988 or 2000 Australian Olympic teams (Teams).

[“Transaction Documents” were defined in the Establishment Agreement and other relevant documents as the agreement itself ‘the Loan Agreement, the Management Agreement, the Trust Deed, the Licence Agreement and any other agreement to which all the parties were party expressed to be a Transaction Document’. Nothing turns on this.]

(b) Except as expressly permitted in this agreement or in a Transaction Document, the Trustee and Synthesis acknowledge that they have no right to use any intellectual property belonging to SOCOG, the IOC and the AOC, including but not limited to any Olympic logo, mark or design.

(c) Except as permitted in this agreement or in a Transaction Document, the Trustee and Synthesis agree that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, it (sic) has no right to use and it will not use for any purpose, including but not limited to for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which, in SOCOG’s opinion, suggest any connection or association between the Trustee or Synthesis and SOCOG, the IOC and the AOC, the Games or any of the Teams. The Trustee and Synthesis further agree that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, in any marketing, promotion or advertisement it will not:

(1) refer to SOCOG, the IOC and the AOC, the Games or any of the Teams; or

(2) use the words ‘Olympic’, ‘Games’, ‘Sydney 2000’; or

(3) use any other words, phrases, symbols or images which refer to, directly or indirectly, SOCOG, the IOC and the AOC, the Games or any of the Teams; or

Sydney 2000 Games (Indicia and Images) Protection Act

1996 (Cth).

(d) The Trustee and Synthesis must ensure that its directors, contractors, employees and agents or any person involved in or associated with the operations of the Club do not give interviews, appear in any promotion or advertisement or render any assistance to the media in relation to any story concerning the affairs of SOCOG, the IOC, the AOC or the Games, without the prior consent of SOCOG and must not make any statements which are, in SOCOG’s reasonable opinion, contrary or prejudicial to the aims and objectives of SOCOG, the AOC, the IOC or the Olympic Movement. The Trustee and Synthesis must not make or permit the making of any statement or announcement of its involvement or association with the Club without the prior written consent of SOCOG.

(e) Each of the Trustee and Synthesis will procure to the satisfaction of SOCOG that each person with whom it deals in relation to the Club observes the provisions of this clause 25, by entering into a deed of confidentiality in the form required by SOCOG.”

9 Clause 27 of the Establishment Agreement was as follows:

“(a) The Trustee will procure that each person with whom it deals in the course of carrying out its functions in relation to the Club (other than Members and such other persons or persons in such classes as are notified by SOCOG to the Trustee for the purpose of this clause from time to time) executes a deed in the form of the document comprised in Annexure F (Marketing Restriction Deed) in favour of SOCOG under which the person agrees, amongst other things, not to represent, hold out, promote or advertise its connection with SOCOG, the AOC or the Games without SOCOG’s prior written permission.

(b) SOCOG and the Trustee agree to negotiate in good faith the persons and classes of persons with whom the Trustee may deal to whom this obligation does not apply.”

The Olympic Club Licence Agreement

10 On 14 May 1998 SOCOG and TOC, as trustee of the Olympic Club Trust, entered into the Olympic Club Licence Agreement (the Licence Agreement) which recited

· that the AOC had appointed SOCOG as the exclusive entity for the purposes of organising and staging the Olympic Games in Sydney, that SOCOG, in its own right and/or on behalf of the AOC, had the authority to grant to TOC as trustee certain rights and opportunities relating to the Games, to SOCOG, to the 1998 and 2000 Australian Olympic Teams and to the AOC,

· that pursuant to the Establishment Agreement, SOCOG and the AOC had granted certain rights to use intellectual property in connection with the Club subject to the terms of a long form licence agreement entered into in respect of that property,

· that it was important that the rights and opportunities granted to TOC as trustee pursuant to the Licence Agreement be used in a manner which maintained and enhanced the nature of the Olympic movement and furthered the achievement of its aims, and

· that the parties had agreed to enter into the Licence Agreement to govern the terms of the grant of the rights under the Establishment Agreement and such further rights and licences as were set out in the Licence Agreement.

11 The Licence Agreement defined “Club Logo” as having the meaning given it in the Establishment Agreement and included the logo in Appendix D. The Club Logo in Appendix D incorporated the Games Logo with the five Olympic rings and the phrase “Sydney 2000”. The expressions “Olympic marks”, “SOCOG designations”, “SOCOG emblems” and “SOCOG marks” were also defined. TOC was referred to as “the Trustee”. Clause 2 of the Licence Agreement provided as follows:

2

Olympic Charter

2.1 All provisions of this Agreement shall be subject to the Olympic Charter and, if any inconsistency between the provisions of this Agreement and the Olympic Charter arises, the provisions of the Olympic Charter shall prevail, unless contrary to Australian law. The Trustee acknowledges receipt of a copy of the Olympic Charter and agrees to abide by all requirements applicable to the Trustee. Subject to clause 2.2, the terms of this Agreement shall not be affected by any amendment to the Olympic Charter which occur after the date of this Agreement but prior to the Games, unless by mutual agreement of SOCOG and the Trustee.

2.2 Notwithstanding clause 2.1, during the Games, the Trustee shall abide by all requirements in the Charter which is current at the time of the Games and which are:

(a) applicable to the Trustee or the operations of the Olympic Club; or

(b) notified to the Trustee under clause 3.8.

SOCOG will provide to the Trustee a copy of that Charter when it becomes available.”

12 Clause 3 was headed “Grant of Rights”. The following sub-clause is particularly important:

“3.1 Subject to the terms and conditions of this Agreement, SOCOG:

(a) confirms that the following rights and approvals have been granted to the Trustee under, and subject to, the Establishment Agreement:

(i) the exclusive right to establish and operate the Olympic Club in accordance with the provisions of the Establishment Agreement;

(ii) approval for the exclusive use of the Business Name;

(iii) approval for the exclusive use of any Club Logo;

(iv) the exclusive right to use SOCOG Designations;

(v) the non-exclusive right to use the Olympic Marks; and

(b) grants to the Trustee during the Term solely with respect to the Olympic Club, the rights and opportunities set out in Appendices A1 and A2, to be exercised in and only in Australia from the date of execution of this Agreement to 31 December 2000.”

13 It is important to note that the rights and opportunities granted were to be exercised in and only in Australia. The SOCOG and AOC rights were described in the Appendices A1 and A2, in so far as they were connected with the promotion and advertising of the Club to indicate a relationship or association with the Games or SOCOG or the AOC, as the “right in Australia”.

14 By cl 3.2 in relation to the business name, TOC as trustee agreed:

“(e) The Trustee must at all times carry on the Olympic Club only under the Business Name and not use the Business Name except in carrying on the Olympic Club;”

15 Clause 3.3 enabled the trustee to develop a Club logo in relation to the Club in consultation with SOCOG.

“Subject to the provisions of this Agreement and any Transaction Document, the Trustee agrees that:

….

(f) the Trustee must not use the Club Logo except in carrying on the Olympic Club;

(g) the Trustee must not allow any other person to use the Club Logo or otherwise deal with it without first obtaining SOCOG’s written consent, and the Trustee agrees that it will not assist, permit or condone the use of the Club Logo by any other person except as permitted by the Management Agreement or any other Transaction Document or as may otherwise be approved by SOCOG and the AOC;

(h) the Trustee may, notwithstanding paragraph (g), authorise its employees, agents and contractors to use the Club Logo in relation to the Olympic Club and in a manner consistent with this Agreement; ….”

16 Clause 3.4 provided that SOCOG, on behalf of the AOC and pursuant to the Olympic Charter, “approves the use by the Trustee of the Olympic Marks in Australia with respect to the Olympic Club on the terms set out in this Agreement.”

17 Clause 3.5 provided, relevantly:

“3.5 For the avoidance of doubt, the Trustee shall not, except to the extent expressly permitted by this Agreement or a Transaction Document:

(a) use or authorise the use of any or all of the Olympic Marks on or in relation to any goods or services of the Trustee or any third person, except as expressly permitted in this Agreement; ….”

18 Clause 3.7 provided:

“The Trustee shall exercise the right and opportunities granted under this Agreement:

(a) in a manner consistent with the good name, goodwill, reputation and image of the IOC, SOCOG, the AOC, the Olympic Movement and the Olympic Marks and in compliance with the Olympic Charter and all applicable laws and regulations; and

(b) strictly in accordance with any direction given by SOCOG or the Club Committee under this Agreement or any Transaction Document.”

19 Clauses 3.10 and 3.11 provided:

“3.10 The Trustee shall not:

(a) enter into any agreement or arrangements with third parties or take any other action which is or may be inconsistent with its obligations under this Agreement; or

(b) do any act which would, or is likely to cause SOCOG to breach any agreement between SOCOG and a Games Sponsor.

3.11 All rights not expressly granted to the Trustee in this Agreement or pursuant to the Establishment Agreement or any other Transaction Document are reserved by SOCOG and may be exploited by SOCOG in its absolute discretion subject to the terms of this Agreement and any other Transaction Document. All rights granted to the Trustee may be exercised only by the Trustee and not by any other person including, without limitation, any related body corporate as defined in Section 50 of the Corporations Law.”

20 Clause 9 was headed “Material Obligations and Termination”. Clause 9.1 provided:

“9.1 The Trustee agrees that the occurrence of any of the following events will constitute the breach of a material obligation under this Agreement entitling the Club Committee to remove the Trustee from its position as trustee of the Trust pursuant to clause 5(i) of the Establishment Agreement:

(a) the Trustee commits a material breach of this Agreement which, in the opinion of SOCOG, is incapable of remedy;

(b) the Trustee commits a material breach of this Agreement which, if capable of remedy, is not remedied within 30 days (or such further period as SOCOG allows) of receipt of a notice from SOCOG to rectify the default;

Olympic Insignia Protection Act

(d) the Trustee engages in conduct which in the reasonable opinion of SOCOG reflects unfavourably on the good name, goodwill, reputation or image of the IOC, SOCOG, the AOC, the Games or the Olympic Movement, or which is in any manner inconsistent with the Olympic Charter and such conduct is not remedied as soon as possible but in any event no later than 30 days after receipt of written notice from SOCOG of such conduct.”

21 In cl 13 “Miscellaneous” was sub-cl 13.1 which provided as follows:

“Assignment

Neither this Agreement nor any of the Trustee’s rights or obligations under this Agreement may be assigned, sub-licensed, transferred, mortgaged, charged, sub-contracted or otherwise dealt with by the Trustee without the prior written consent of SOCOG. Any attempted dealing by the Trustee with its rights or obligations without SOCOG’s consent shall be void and considered a material breach of this Agreement. The provisions of this clause do not limit the Trustee’s rights to permit employees, agents, contractors and consultants of the Trustee to use the Club Logo for the purposes described in clause 3.3(h).”

22 Clause 13.4 provided that any waiver by either party of a breach of any provision of the Agreement should be in writing and should not operate as or be construed to be a waiver of any other breach of such provision or any other provision of the Agreement.

“Failure by either party to insist upon strict adherence to any provision of this Agreement on one or more occasions shall not be considered a waiver or deprive such party of the right thereafter to insist upon strict adherence to that provision or any other provision of this Agreement.”

The Agency Agreement

23 On 11 March 1999 the plaintiff and TOC signed an Agency Agreement to commence on 1 April 1999 (the commencement date) with an initial termination date defined as 30 June 1999. The further term was defined as the period 1 July 1999 to 30 September 2000. Zhu’s evidence was that on 11 March 1999 he attended by prior arrangement at the office of the solicitors for the Club, Kaufmann Peters, at Loftus Street, Sydney to sign the Agency Agreement and a document headed partly in print and partly in hand-print “Marketing Restriction Deed Poll” (the Deed Poll). His own solicitor was present and witnessed his signature. Noble was also present. In the Agency Agreement TOC was referred to as “the Company”.

24 In the Agency Agreement the word “Services” was defined in cl 1.1 as “the activities to be conducted or supervised by the Agent set out in Schedule 1 or any part thereof”. Schedule 1 provided:

Services (Clause 1.1)

During the Initial Term the Agent shall sell 2,000 International Memberships in the Territory to Mainland Chinese visiting Australia for the Sydney 2000 Olympic Games and during the Further Term 8,000 International Memberships.”

“1. All activities are to be undertaken in a professional and workmanlike manner and in accordance with the procedure prescribed by the Company from time to time.

2. To the extent it is within the Agent’s control, all activities are to be undertaken within the time frame set by the Company for the completion of any given task.

3. Reporting timetables nominated by the Company are to be adhered to, subject to this not being precluded by factors beyond the control of the Agent.

4. All statutory requirements, to the extent they are within the Agent’s control, are to be complied with.”

25 The “Territory” was defined as the Mainland of The Peoples Republic of China (excluding Hong Kong), in which “the Agent will perform the Services”. “International Memberships” were defined as “International Membership of The Olympic Club of the Sydney 2000 Olympic Games as endorsed by the Sydney and Australia Olympic Committees”.

26 Relevantly the Agency Agreement provided:

Agency

2.1 The Company hereby appoints the Agent exclusively and the Agent agrees to accept the exclusive appointment to provide the services to the company upon the terms and subject to the conditions set out in this Agreement for the initial term and (if applicable) the further term.”

Term of Agency

3.1 The Agency shall commence on the Commencement Date and shall terminate on the Initial Termination Date (the ‘Initial Term’) unless earlier terminated by the Company in accordance with clause 15.2, or extended by the exercise of the Option.

The Option

4.1 Subject to the Conditions Precedent set out in Clause 5, the Company grants to the Agent an Option for the Further Term on the terms and conditions of this Agreement.

Conditions Precedent to The Exercise of The Option

5.1 The Parties acknowledge and agree that the following duties and responsibilities are Conditions Precedent to the exercise of the Option granted in Clause 4:

(a) The Agent shall sell, by no later than 30 June 1999, a minimum of 2000 International Memberships in the Territory.

(b) The Agent shall pay to the Company all and any Membership Fees due and owing including the minimum sum of AUD$700,000 in respect of this clause 5.1(a).

(c) The Agent shall not be in any breach of this Agreement.”

27 By cl 7.1 TOC covenanted and agreed with the Agent that the appointment of the Agent was exclusive within the Territory and that upon execution of the Agency Agreement TOC would provide to the Agent a letter introducing the Agent as the exclusive authorised Agent of the company and the Club to sell International Memberships to the people of the Mainland of The Peoples Republic of China. A copy of the letter of introduction was said to be annexed to the Agency Agreement and marked “A”. Annexure A includes no more than a heading “Letter of Introduction (cl 7.1(b))”. Bergin J thought this indicative of the sense of urgency with which the Agency Agreement was entered into (para 136). The plaintiff’s evidence was that on 11 March 1999, shortly after the Agency Agreement had been signed, Noble handed him a document dated 8 March 1999 which was as follows:

“TO WHOM IT MAY CONCERN

MR PETER T ZHU IS AN AUTHORISED AGENT OF THE OLYMPIC CLUB AND IS HEREBY AUTHORISED ON AN EXCLUSIVE BASIS IN THE TERRITORY OF THE PEOPLES REPUBLIC OF CHINA TO SELL OLYMPIC CLUB INTERNATIONAL MEMBERSHIPS TO CHINESE RESIDENTS TRAVELLING TO AUSTRALIA FOR THE SYDNEY 2000 OLYMPIC GAMES AS A COMPONENT OF A TRAVEL AND ACCOMMODATION PACKAGE FOR THE PERIOD 1 APRIL 1999 TO 30 JUNE 1999.

(signature)

(TOC’s Common Seal)”

28 Clause 9.1 of the Agency Agreement was as follows:

“The Agent covenants and agrees with the Company that he shall:

(a) Do all things and sign all documents reasonably necessary to obtain the appropriate and required approvals and authorisations from the Government of the Peoples Republic of China and the Chinese Olympic Committee.

(b) Refrain from, in any way, utilising the Sydney 2000 Olympic Club Logo or this Agency generally for the purpose of promoting, marketing or selling any services other than the International Memberships and the Agent agrees to execute the Marketing Restriction Deed Poll presented to him at the time of executing this Agreement. For the sake of clarity, the Marketing Restriction is to extend to, but not be limited to, the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and all and any merchandising by the Agent or all and any of his associated or related entities, individuals or bodies corporate.

(c) To obtain the written approval of the Company prior to utilising the Sydney 2000 Olympic Club Logo or any variation thereon in any print or electronic media or marketing or sales material.”

29 Clauses 10 and 11 of the Agency Agreement were as follows:

Consultation

10.1 The Company and the Agent will discuss, as necessary, any action which needs to be taken to ensure the Standards are maintained.

Unsatisfactory Services

11.1 If, in the reasonable opinion of the Company, the Services or any of them are at any time not being satisfactorily performed, the Company will so notify the Agent and the Company and the Agent will consult together in good faith as to the best method of rectifying the problem.

11.2 The Agent will use its best endeavours to remedy unsatisfactory performance of the services as soon as possible including, without limitation, by performing the unsatisfactory Services again, and by taking appropriate measures to ensure that the problem does not recur.

11.3 If, in the opinion of the Company, the Agent fails to use its best endeavours to remedy any unsatisfactory performance or other breach of this Agreement, the Company may, in its absolute discretion, terminate this Agency on fourteen (14) days within notice of its intention so to do.”

30 Clause 12 of the Agency Agreement was as follows:

Agent Not to Pledge Company’s Credit

12.1 Except where specifically authorised by the Company, the Agent shall not:

(a) Pledge the credit of the Company;

(b) Receive or pay monies on behalf of the Company save and except for the Membership Fee;

(c) Represent to any person that he has the authority of the Company to pledge the Company’s credit or receive or pay moneys on behalf of the Company otherwise than in accordance with this clause 12(b).”

31 Clause 15 of the Agency Agreement dealt with termination of the Agency. The following sub-clauses are relevant:

“15.2 The Company may terminate the Agency at any time by giving fourteen (14) days written notice to the Agent (the ‘Termination Notice’) if the Agent is in breach of his duties as specified in clause 8 provided that a Rectification Notice has earlier been given by the Company to the Agent and the Breach(es) specified therein have not been rectified;

…

15.4 Nothing in this clause 15 shall be taken to or is intended to affect or restrict the Company’s right to terminate the Agency if the Agent is guilty of conduct justifying summary dismissal.”

Marketing Restriction Deed Poll

32 In accordance with cl 27(a) of the Establishment Agreement and pursuant to the Agency Agreement, the plaintiff as Covenantor signed a Marketing Restriction Deed Poll (the Deed Poll) directed to SOCOG. The relevant terms were as follows:

“In order to protect the rights of SOCOG, the Australian Olympic Committee Incorporated, the International Olympic Committee, the Olympic movement and the official sponsors, suppliers and others who are from time to time authorised to use those rights (Olympic Bodies), the Covenantor is required to execute this deed in favour of SOCOG.

1. The Covenantor will not, without the prior written permission of SOCOG, which SOCOG may withhold in its absolute discretion, represent, hold out, market, promote or advertise in any way that it has any connection or association with the Olympic Bodies, the Sydney 2000 Olympic Games (the Olympic Games) or the 1998 or 2000 Australian Olympic teams (the Teams).

2. The Covenantor acknowledges that it has no right to use any intellectual property belonging to any Olympic Body, including but not limited to, any Olympic logo, mark or design.

3. The Covenantor agrees that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, it has no right to use and it will not use for any purpose, including, but limited [sic – not limited] to, for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which, in SOCOG’s opinion, suggest any connection or association between the Covenantor and any Olympic Body, the Olympic Games or any of the Teams. The Covenantor further agrees that, without the prior written consent of SOCOG (which SOCOG may withhold in its absolute discretion), in any marketing, promotion or advertisement it will not:

(a) refer to any Olympic Body, the Olympic Games or any of the Teams; or

(b) use the words ‘Olympic’, ‘Games’, ‘Sydney 2000’; or

(c) use any other words, phrases, symbols or images which refer to, directly or indirectly, any Olympic Body, the Olympic Games or any of the Teams; or

Sydney 2000 (Indicia and Images) Protection Act

4. The obligations of the Covenantor imposed by this deed shall survive notwithstanding the expiry or termination of any agreement to which it is a party.

5. The obligations of the Covenantor imposed by this deed are subject to any rights granted to the Covenantor by any Olympic Body, any rights granted to the Covenantor by operation of law (including without limitation under the Corporations Law and the rules of the Australian Stock Exchange Limited).

6. This deed is irrevocable and the obligations of the Covenantor under this deed terminate on 31 December 2000 but termination will not prejudice any antecedent rights of SOCOG against the Covenantor.”

Olympic Movement’s Intellectual Property

33 As the Deed Poll mentioned, valuable intellectual property was owned on behalf of the Olympic Movement, a loose collective description of International Federations, National Olympic Committees (NOC’s), Organising Committees of the Olympic Games (OCOG’s), National Associations, Clubs, and persons belonging to them, particularly athletes, judges/referees, coaches and other sports technicians together with other organisations and institutions recognised by the International Olympic Committee (IOC). To understand how this property was protected and exploited by its owner, the following documents and statutes need to be examined:

· the Olympic Charter,

· the Host City Contract for the Sydney 2000 Games entered into by the City of Sydney and the AOC,

· the statutory constitution of SOCOG, and

· the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth) (Indicia and Images Protection Act).

I set out the relevant parts of these.

The Olympic Charter

34 The Olympic Charter which was expressed to be in force from 3 September 1997, began with paragraphs headed “Fundamental Principles”. These referred to “the supreme Authority” of the IOC. The goal of the Olympic Movement was to contribute to building a peaceful and better world “in the Olympic spirit, which [required] mutual understanding with a spirit of friendship, solidarity and fair play”. Chapter 1 of the Charter was headed “The Olympic Movement”. Clause 1 stated that any person or organisation belonging in any capacity whatsoever to the Olympic Movement was bound by the provisions of the Olympic Charter and should abide by the decisions of the IOC.

35 Rule 11 of Chapter 1 was headed “Rights over the Olympic Games” and provided:

“The Olympic Games are the exclusive property of the IOC which owns all rights relating thereto, in particular, and without limitation, the rights relating to their organisation, exploitation, broadcasting and reproduction by any means whatsoever.

All profits derived from the celebration of the Olympic Games shall be applied to the development of the Olympic Movement and of sport.”

36 Chapter 1, rules 12-16 described and defined the Olympic Symbol, the Olympic Flag, the Olympic Motto, the Olympic Emblem and the Olympic Anthem. Rule 17, which was headed “Rights to the Olympic Symbol, Flag, Motto and Anthem” provided as follows:

“All rights to the Olympic symbol, the Olympic flag, the Olympic motto and the Olympic anthem belong exclusively to the IOC.”

“1. 1.1 The IOC may take all appropriate steps to obtain the legal protection, both on a national and international basis, of the Olympic symbol, flag, motto and anthem.

1.2 Even if the national law or a trademark registration grants to an NOC the protection of the Olympic symbol, such NOC may only use the ensuing rights in accordance with instructions received from the IOC Executive Board.

2. Each NOC is responsible to the IOC for the observance, in its country, of Rules 12, 13, 14, 15, 16 and 17 and of their Bye-law. It shall take steps to prohibit any use of the Olympic symbol, flag, motto or anthem which would be contrary to these Rules or their Bye-law. It shall also endeavour to obtain protection of the designations ‘Olympic’ and ‘Olympiad’ for the benefit of the IOC.

3. An NOC may at any time call upon the IOC for its assistance in obtaining protection, as envisaged above, for the Olympic symbol, flag, motto or anthem and for the settlement of any differences which may arise with third parties in such matters.

4. The NOCs may only use the Olympic symbol, flag, motto and anthem within the framework of their non-profit-making activities, provided such use contributes to the development of the Olympic Movement and does not detract from its dignity and provided the NOCs concerned have obtained the prior approval of the IOC Executive Board.

5. The IOC encourages, in collaboration with the NOCs of the countries concerned, the use of the Olympic symbol on postage stamps issued in liaison with the IOC by the competent national authorities; to that effect, it may authorize the use of the Olympic symbol subject to the conditions set forth by the IOC Executive Board.

…

7.7 Whenever and wherever possible, the Olympic emblem of an NOC must be susceptible of registration (ie of legal protection) by the NOC in its country. The NOC must carry out such registration within six months of such emblem’s approval by the IOC Executive Board and provide the IOC with proof of registration. IOC Executive Board approval of Olympic emblems may be withdrawn unless the NOCs concerned take all possible steps to protect their Olympic emblems and inform the IOC of such protection. Similarly, the OCOGs must protect their Olympic emblems, in the manner described above, in their countries as well as in other countries as decided in consultation with the IOC Executive Board. Any protection obtained by the NOCs and the OCOGs cannot be put forward against the IOC.

8. The use of the Olympic symbol, flag, motto and anthem for any advertising, commercial or profit-making purposes whatsoever is strictly reserved for the IOC.

9. The use of an Olympic emblem for any advertising, commercial or profit-making purposes whatsoever must be in accordance with the conditions laid down in paragraphs 10 and 11 below.

10. Any NOC or OCOG wishing to use its Olympic emblem for any advertising, commercial or profit-making purposes whatsoever, either directly or through third parties, must comply with this Bye-law and ensure its observance by such third parties.

11. All contracts or arrangements, including those concluded by an OCOG, shall be signed or approved by the NOC concerned and shall be governed by the following principles:

11.1 The use of an NOC Olympic emblem shall only be valid within the country of the said NOC; such emblem, as well as any other Olympic-related symbols, emblems, marks or designations of an NOC, may not be used for any advertising, commercial or profit-making purposes whatsoever in the country of another NOC without the latter’s prior written approval;

11.2 similarly, the Olympic emblem of an OCOG as well as any other Olympic-related symbols, emblems, marks or designations of an OCOG, may not be used for any advertising, commercial or profit-making purposes whatsoever in the country of an NOC without the prior written approval of such NOC;

11.3 in all cases, the period of validity of any contract concluded by an OCOG must not extend beyond December 31st of the year of the Olympic Games concerned;

11.4 the use of an Olympic emblem must contribute to the development of the Olympic Movement and must not detract from its dignity; any association whatsoever between an Olympic emblem and products or services is prohibited if such association is incompatible with the fundamental principles of the Olympic Charter or the role of the IOC as set out therein.

11.5 upon request by the IOC, any NOC or OCOG shall provide a copy of any contract to which it is a party.

12. The Olympic symbol and the Olympic emblems of the IOC may be exploited by it or by a person authorized by it, in the country of an NOC, provided that the following conditions are respectively fulfilled:

12.1 For all sponsorship and suppliership agreements and for all marketing initiatives other than those referred to in paragraph 12.2 below, the condition shall be that such exploitation does not cause serious damage to the interests of the NOC concerned and that the decision be taken by the IOC Executive Board in consultation with such NOC, which shall receive part of the net proceeds deriving from such exploitation.

12.2 For all licensing agreements, the condition shall be that the NOC shall receive half of all net income from such exploitation, after the deduction of all taxes and out-of-pocket costs relating thereto. The NOC will be informed in advance of any such exploitation.”

Paragraph 12 of the bye-law contemplated exploitation for advertising, commercial or profit making purposes of the Olympic Symbol and the Olympic Emblems outside Australia (the country of AOC and SOCOG) by an authorised person in the country of a National Olympic Organisation provided this did not cause serious damage to the interests of the NOC concerned and the NOC received part of the net proceeds derived from such exploitation.

Host City Contract

37 On 23 September 1993 the IOC entered into the Host City Contract with the City of Sydney and the AOC. Clause 48 of that contract entitled the IOC Executive Board to terminate the contract and to withdraw the Games from Sydney if, inter alia,

“(iii) there is a violation by the City, the NOC or the OCOG of any material obligation set forth in this Contract, the Olympic Charter or the applicable law.”

SOCOG’s Constitution

38 In 1993 SOCOG was constituted by the Sydney Organising Committee forthe Olympic GamesAct. It had the same legal capacity and powers as a company under the Corporations Law. The primary objective of SOCOG was to organise and stage the Sydney Games in the year 2000 in accordance with the rights and obligations conferred and imposed under the Host City Contract (s9(1)). A specific function was to become a party to the Host City Contract and perform its obligations under that Contract (s10(1)). In relation to the Games, the functions of SOCOG included establishing a marketing programme in consultation with the IOC and the AOC (s10(2)(d)). In exercising its functions SOCOG was required to take into account “to the fullest extent practicable” the Olympic Charter, the host city contract, any instructions given to it by the Executive Board of the IOC as contemplated by the host city contract and commitments made by the AOC, the Council of the City of Sydney or Sydney Olympics 2000 Bid Limited to the IOC unless agreed otherwise in writing by the Executive Board of the IOC (s11).

The Indicia and Images Protection Act

39 The Indicia and Images Protection Act had amongst its objects “to protect, and to further, the position of Australia as a participant in, and a supporter of, the world Olympic and Paralympic movements” and “to the extent that it is within the power of the Parliament, to assist in protecting the relations, and in ensuring the performance of the obligations, of the Sydney 2000 Games bodies with and to the world Olympic and Paralympic movements” in relation to the holding of the Sydney 2000 Games (s3(1)). The expression “Sydney 2000 Games bodies” included SOCOG (s3(3)). Section 8 defined the meaning of “common Sydney 2000 Games indicia” to include the phrases “Sydney 2000” and “Sydney 2000 Olympic Games indicia” and to include the word “Olympic”. Section 9 defined “common Sydney 2000 Games images” and “Sydney 2000 Olympic Games images”. Section 11 described what was meant by “use for commercial purposes”. A person was said to use Sydney 2000 Games indicia or images for commercial purposes, relevantly, if (a) the person applied the indicia or images to goods or services of the person and (b) the application was for advertising or promotional purposes, or was likely to enhance the demand for the goods or services and (c) the application, to a reasonable person, would suggest that the first mentioned person was or was a sponsor of, or was the provider of other support for the Sydney 2000 Olympic Games.

40 In Part 3, “Protection”, Division 1, “Regulation of Use”, was found s12 which, so far as presently relevant, provided as follows:

“12. Regulation of use of Sydney 2000 Games indicia and images

(1) A person, other than:

(a) SOCOG;

…

(c) a licensed user;

must not use Sydney 2000 Games indicia and images for commercial purposes.

(2) SOCOG may only use the following Sydney 2000 Games indicia and images for commercial purposes:

(a) common Sydney 2000 Games indicia;

(b) Sydney 2000 Olympic Games indicia;

(c) common Sydney 2000 Games images;

(d) Sydney 2000 Olympic Games images.

…

(4) A licensed user may only use for commercial purposes the Sydney 2000 Games indicia and images that the person is licensed to use, and may only use those indicia and images in accordance with the licence.”

41 Section 7 of the Indicia and Images Protection Act defined a licensed user to mean a person in relation to whom a licence under s14 was in force. Section 14 provided that for the purposes of the Act SOCOG might license a person to use all, or any one or more, of the common Sydney 2000 Games indicia, Sydney 2000 Olympic Games indicia, common Sydney 2000 Games images and Sydney 2000 Olympic Games images in all circumstances or in specified circumstances, for a specified time or until the Act ceased to have effect. Section 15 provided that where SOCOG licensed a person to use Sydney 2000 Games indicia or images it must make an entry in the register of licensed users. Licensing took effect when the entry was made in the register. Section 16 required SOCOG to establish and maintain a register of licensed users. Section 17 provided that an entry in the register must contain in relation to the licence user, inter alia, the Sydney 2000 Games indicia or images the person might use for commercial purposes, and the circumstances in which the person might use those indicia or images. Section 19(1) provided subject to matters therein material that a person whose name appeared in an entry in the register was to be taken to be a licensed user, for the purposes of the Act, of the Sydney 2000 Games indicia or images specified in the entry.

42 Section 43 in Division 3 “Remedies” provided:

43. Injunction

(1) If a person has engaged, is engaging, or is proposing to engage, in conduct in contravention of section 12, a prescribed court may grant an injunction restraining the person from engaging in the conduct.

…

(3) An injunction under this section may only be granted on the application of SOCOG, SPOC or a licensed user.

(4) An injunction granted under this section on the application of SOCOG may only relate to conduct constituting use of Sydney 2000 Games indicia or images referred to in one or more of the following paragraphs:

(a) common Sydney 2000 Games indicia;

(b) Sydney 2000 Olympic Games indicia;

(c) common Sydney 2000 Games images;

(d) Sydney 2000 Olympic Games images.”

43 Section 44 provided for the granting of interim injunctions. “Prescribed courts” included the Federal Court and the Supreme Court of a State; s50.

Background material

44 The following account is based upon Bergin J’s findings which were not challenged. Before January 1999 TOC engaged a company known as Salesforce Australia Pty Limited (Salesforce) to provide services for direct sales of Club memberships to the general public. Salesforce arranged for a team of sales representatives to sell memberships of the Club by way of a door knock approach. Noble was responsible for the supervision of the Salesforce personnel, one of whom was Tim Go (Go). In January 1999 Go informed Noble that he knew the plaintiff and that the plaintiff thought that there was a market for selling Club memberships to residents of mainland China as part of an accommodation and travel package for the Games. Noble asked Go to arrange for the plaintiff to visit him.

45 Early in February 1999 a meeting took place in the TOC offices at Chatswood between the plaintiff, Noble and Go. The plaintiff told Noble that he saw a big market in China for people to come to the Games. Noble told the plaintiff that the Club did have some ideas for taking the Club internationally beyond the Games and that his idea could work in well with the Club’s “long term plan”. Noble informed the plaintiff that he would speak to his directors and then they would speak to SOCOG because “everything had to be approved by SOCOG”. The plaintiff also told Noble that he would need to provide tickets to the Games in his accommodation package. The Chinese interest in such sports as badminton, table tennis and soccer was discussed and the plaintiff asked whether it would be possible to buy tickets for such events and include them in the package. Noble told the plaintiff that he could not guarantee it and said “but with our connections with SOCOG, I would be able to provide you with assistance with your negotiations with SOCOG” and “it is likely that there will be tickets available for the less popular sports”.

46 The plaintiff and Noble continued to meet on other occasions in February 1999. During one of their meetings Noble told the plaintiff that he had the “go ahead” for the plaintiff’s idea. Noble requested a copy of the plaintiff’s resume and two reference letters as “we will need to check you out”. By late February the plaintiff had worked out the elements of the basic travel and accommodation package incorporating Club memberships which he intended to sell. At a meeting with Noble in late February the following conversation took place:

“Noble: You can probably sell as many memberships in China as you like. There will be no real limit. However, we can only provide you a maximum 10,000 at the Opening Ceremony Dress Rehearsal. Accordingly, our contract in the first place will have to be limited to that number because of the restriction on those tickets. It won’t be a problem however if you want to sell more than that if demand for memberships is great, then you could sell more, but we’ll have to discuss that and you must understand that any extra memberships over the 10,000 would be sold without tickets to the Opening Ceremony Dress Rehearsal being guaranteed. For the time being therefore, we will leave it at 10,000 and see how your sales go.

The plaintiff: I would be prepared to pay a $350 fee for each Club membership, if that includes one ticket to the Opening Ceremony Dress Rehearsal. Can you and SOCOG guarantee that I can get 10,000 tickets to the Opening Ceremony Dress Rehearsal?

Noble: Oh, sure. We can guarantee 10,000 to the Dress Rehearsal guaranteed.”

47 The plaintiff told Noble he would need a letter of introduction that he could use as authority to act on behalf of the Club and a letter of introduction to the Chinese Olympic Committee. Noble told the plaintiff there would be no problem in providing such letters and advised him that “we will need a simple form of Agency Agreement”. He also told the plaintiff that “you have our full support, we really like the idea and are planning to establish agencies in other countries”. The following conversation took place:

“The plaintiff: Do I need to notify the names of members as they are sold? How will it work?

Noble: You can buy memberships in bulk and on-sell them as part of your travel packages. Then you provide us with the member’s name and mailing address we can then send out the welcome kit and enter the details in the database.”

48 On 3 March 1999 Noble faxed to the plaintiff a draft Letter of Understanding and Introduction Letter for discussion. After the plaintiff replied to that letter on 4 March 1999 Noble signed the terms of a letter dated 8 March 1999 which was also signed by the plaintiff as Chairman of Australian Chinese Sports Connections Pty Ltd (ACSC). In discussions in February the plaintiff told Noble that he had purchased this company for use in the sale of the packages. Noble told the plaintiff that he could use a company but that the Agency Agreement needed to be in the plaintiff’s name because the Club wanted him to be personally responsible for the Agency.

49 On 10 March Noble supplied the plaintiff with a letter of that date signed by him as Commercial Director introducing the plaintiff to the Chairman of the Chinese Olympic Committee in the following terms:

Dear Sir

The Olympic Club of the Sydney 2000 Olympic Games is pleased to advise that Mr Peter Tao Zhu has been chosen as the Exclusive Authorised Agent of the Club to market International Memberships to residents of the Peoples’ Republic of China in China.

The Olympic Club has chosen Mr Zhu as its first Exclusive Authorised Agent for Overseas Memberships after lengthy consultations, discussions and investigation. We are therefore pleased to introduce Mr Zhu to your Committee.

We respectfully request you provide such assistance as your Committee deems appropriate to Mr Zhu in his work of enlisting Peoples’ Republic of China residents to join the Club via these International Memberships.”

50 I interpolate here that this may have been intended to achieve some compliance with the bye-law to rule 17 para 12 of the Olympic Charter by informing the Mainland Chinese NOC about the sale in that country of Olympic Club International Memberships. In fact, to sell or market Olympic Club International memberships to “Chinese residents” or “residents of the Peoples’ Republic of China in China” was in breach of paras 11 and 12 of the bye-law in the Olympic Charter and s12 of the Indicia and Images Protection Act unless Zhu was, within the meaning of that Act, a licensed user and some part of the proceeds of exploitation in Mainland China were to go to the Chinese NOC. Such a breach was a ground for termination of the Host City Contract under cl48(iii).

51 On 10 March 1999 the plaintiff met with Mr Keming Wu, the Consul General of the Peoples Republic of China in Sydney, at the Consulate General’s Office in Elizabeth Street, Surry Hills. The Consul General informed the plaintiff that he would do everything he could to assist him and arrange for him to meet with the “top sports administrators in China”. He informed the plaintiff he would arrange for him to meet with Mr Tu Mingde (Tu), the Director of the Liaison Department of the State Sports General Administration and Chief Secretary of the Chinese Olympic Committee and also Mr Shaozu Wu (Wu), the Minister for Sport in China. For this purpose the Consul General provided a letter to the plaintiff directed to the State Sports General Administration of China for assistance in the activities he would be undertaking.

52 On 11 March 1999 the plaintiff and TOC signed the Agency Agreement in the circumstances already described and the plaintiff received from Noble the letter dated 8 March 1999 signed by Wyness.

53 On 23 March 1999 the plaintiff met with Tu in China. They spoke of his plans for arranging travel to Sydney for the supporters of the Chinese Olympic Team during the Games. Tu said that the Chinese Olympic Committee did not have any right to grant approvals and it was not interested in participating in that type of commercial activity. The plaintiff raised with Tu the possibility of receiving a letter of support. Tu said: “I cannot issue a letter of support because your activity has not yet commenced. When you have concrete plans, let me know and our Olympic Committee will consider them and provide its assistance”. The plaintiff told Tu that he would donate “nearly half of the profit” generated from the project, which he advised was US$1 million, to support “Chinese Sports”.

54 After the meeting with Tu, the plaintiff wrote to the Consul General in Sydney on 29 March 1999 telling him about his activities in China in the previous three weeks, including his meeting with Tu. He also told the Consul General about his meeting with the Vice President of the Tianjin Municipal Sports Committee and Government departments and companies in Shanghai.

55 From March until June 1999 the plaintiff made trips to and from China and was away from Australia for most of that time setting up the marketing of his project. He appointed several sub-agents, one of whom was Zhang Zhao Ming (Zhang). While he was away Go acted on the plaintiff’s behalf in communicating with Noble and the Club.

56 On 29 March 1999 Wyness wrote to McLatchley, the Secretary-General of the AOC advising “we have been approached by individuals wishing to develop travel and accommodation packages to the Sydney 2000 Olympic Games with International Australian Olympic Club Memberships attached for the Territories China, Turkey, Macedonia, Bangladesh, India and Sri Lanka.” He asked McLatchley to advise those National Olympic committees that the Australian Olympic Club was an initiative of SOCOG and the AOC and was fully supported by the AOC. His letter made no mention of the Agency Agreement of 11 March with the plaintiff or the letter of 8 March whereby Wyness under seal had authorised the plaintiff to act as TOC’s exclusive agent in the Peoples’ Republic of China.

57 On 15 April 1999 the Club Committee met. Reading, McLatchley and Wyness with Noble were in attendance. The minutes showed that Noble provided the Committee with a document outlining the Club’s then current financial position, some key budget assumptions and contingency plans. Also produced was a document Wyness prepared with the assistance of his staff entitled “Incremental Revenue Opportunities” which included a section entitled “International Olympic Club Membership”.

58 The section dealing with International Memberships recorded that memberships were to be sold “via agents” and that the membership “consists of Welcome kit containing: Satchel, Magazine, Video, CD, Membership Certificate, Member Pin, Australian Souvenir”. The status was recorded as “commitments from China; agents ready to be appointed; costing for kit components being finalised”. Dealing with membership fees the document recorded that after door to door direct sales revenue and revenue from corporate purchases “the only other acquisition channel included in the budget is 3,300 international sales with a net contribution of $265 per member, accounting for $875,000 profit sales commencing in October 1999.” The minutes recorded that McLatchey inquired as to how the membership acquisition actual numbers compare with budget, and whether the forecast revenue was on budget. The minutes also recorded that in respect of “International Olympic Club Membership (travel and accommodation packages for non-Australian residents)” TOC had discussed the matter with AOC, McLatchley, who was to write to the relevant NOCs. It was recorded that “no international activity is to be undertaken unless approved by SOCOG, AOC, NOC and IOC.” The minutes recorded that Noble had held “full, in depth discussion” with McLatchley and that local agents would sell the International Olympic Club. It was noted that it was a “potentially very good revenue generating mechanism.”

59 On 27 April 1999 one of the plaintiff’s sub-agents, Zhang, arrived at Sydney International Airport from Hong Kong and was selected by Australian Customs Officers for a baggage examination. Documents found in his possession included documents “authorising him to enrol international memberships” of the Club. Zhang advised the Customs Officers he was a sub-contractor to the plaintiff who was an agent of TOC to sell international memberships in China. The documents included a copy of a letter from the Consulate General and the March letter from Wyness to the plaintiff appointing the plaintiff as exclusive agent in China for the period 1 April to 30 June 1999. The Australian Customs Service advised the Olympic Intelligence Centre (OI Centre) of the search and the documents found and a translation of the Consul General’s letter. The OI Centre provided details of the documents to TOC and SOCOG. The OI Centre spoke to Noble and was told by him that the plaintiff “does indeed have an authority to sell Olympic Club memberships in China and authority to appoint other agents who may obtain Olympic Club memberships from Chinese residents” on the plaintiff’s behalf. Noble was told that the Consulate General’s letter contained a claim by the plaintiff that “once Chinese residents obtain the Olympic Club membership, they will then be provided with a visa from the Department of Immigration”. Noble advised the OI Centre that he had informed the plaintiff that TOC could not guarantee visas for club members but that TOC would “assist if required”.

60 In May 1999 the plaintiff was in Sydney and attended a meeting with Noble in the presence of Go. The plaintiff reported on what he had done so far in meeting with Chinese Government officials both in China and in the Consulate in Sydney for the purpose of getting the necessary government approval for establishing the business in China. It was important that correct channels be followed and the right government approvals obtained. It was even more important to ensure that everything was seen to be proper, correct and legal. The plaintiff told Noble of his meeting with travel authorities and the concern expressed in relation to the obtaining of visas. He asked Noble whether SOCOG could give assistance in obtaining visas. Noble said that the SOCOG people “tell us” anybody that does not have a criminal history and therefore would be classed as an undesirable person should be able to get a visa provided they can prove they have tickets and some sort of accommodation/travel package to come to Sydney for the Games. “Obviously we can’t guarantee anything, but we will do whatever we can to get SOCOG to assist you with these people getting visas.”

61 The plaintiff said that he was having “a bit of a problem in selling 2,000 memberships before 30 June” that is to say the 2000 International Memberships to be sold in Mainland China. He explained the problems and said that he did not think he would be able to sell all 2,000 memberships by 30 June. He wanted to know whether he could get the condition to sell 2,000 memberships before 30 June waived. Noble thought this was reasonable but said that he would have to discuss the issue with the board and if agreed the Club would require payment of some additional money in return for waiving that condition. Asked how much, Noble said it would need to be a reasonably substantial sum on top of the $30,000 already paid “probably at least another $150,000”. He would get back to him.

62 On 18 May 1999 Noble wrote to the plaintiff as Chairman of ACSC confirming that it was the responsibility of the individual travelling to Australia to obtain visas to Australia but saying

“we are happy to assist to ensure that the individuals that purchase International Olympic Club memberships are made fully aware of the Australian Government immigration requirements and guarantee that members will be provided with a full refund for any membership fees if they are unsuccessful in obtaining a Visa subject to the return in original condition of any Olympic Club merchandise such as the Welcome kit.”

63 About two days later the plaintiff telephoned Wyness and asked about his request for an extension of the contract. Wyness said he had not made up his mind yet but he thought it was a reasonable request. Some days later during a conversation between the plaintiff and Noble on the telephone, Noble said:

“..we’ve agreed that we will give you an extension and waive the requirement that you sell 2,000 by 30 June, but in return you’ll have to pay us at least $200,000 by 30 June. If you can pay $200,000 to the Club by 30 June, we will give you exclusive rights up to the end of December 2000 and waive any conditions for minimum sales of membership.”

64 Told that the $200,000 would be credited towards the cost of future memberships the plaintiff said he could arrange to have $200,000 paid by 30 June. An extension was agreed. In addition to the Agency Fee of $30,000 paid on 8 March 1999, Zhu paid the Club a total of $230,006.

65 On 19 May 1999 Zhang attended the Club’s offices at Chatswood with the plaintiff and met Noble. Noble told them that the International Members from China must have tickets to the Games, return tickets and hotel accommodation before they would be able to obtain a visa. He also advised that the Club was making contact with the relevant government bodies.

66 On 24 May 1999 the Director of the Criminal Intelligence Unit of the OI Centre, Neil Fergus (Fergus) wrote to Reading at SOCOG with a copy of an intelligence report about “persons of interest involved in the sale of Olympic Club International memberships as part of a travel and accommodation package to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games.” The intelligence summary referred to the translation of documents in Zhang’s possession which indicated that as part of the contractual arrangements between the plaintiff and TOC, the latter had agreed to “guarantee to help members to obtain visas” to Australia. The summary recorded that although the plaintiff was not “currently involved in either activity” he “had appeared on a range of Australian criminal indices in relation to unlawful immigration activity and false documentation violations”. It also stated that he had been “recorded as being associated with persons who are currently the subject of investigations involving Asian organised crime”. The summary recommended that the Club consider revoking the plaintiff’s contract and passing the information on to the Olympic Investigation Strike Force. Fergus advised Reading that there were a number of “vulnerabilities” that had been identified in the Olympic commercial framework which could be exploited by criminal enterprise” and that “the investigations into the persons of interest will continue with” the Strike Force.

67 On 31 May and 1 June 1999 the plaintiff paid a total of $230,006 required pursuant to his discussions with Noble and Wyness and on 4 June 1999 was issued with a letter signed by Wyness in identical terms to that issued in March save that the period 1 April 1999 to 30 June 1999 was replaced by the period 1 April 1999 to 31 December 2000.

196 Zhu in his Reply dealt with par.10(d) and par.14 of the Defence as follows (the reference in what follows to par.10(c) and 13 appears to be in error):

197 Zhu’s response to par.17 of the Defence was as follows:

198 It is necessary also to set out some of the provisions of the Indicia & Images Act. Section 12 of that Act contains the following provisions:

12(1) A person, other than:
(a) SOCOG; or
…
(c) a licensed user,
must not use Sydney 2000 Games indicia or images for commercial purposes.

199 Section 13A of the Act is in the following terms:

200 Section 14 contains the following relevant provisions:

201 Sections 15-19 of the Act deal with registration of licences, and are in the following terms:

15(1) Where SOCOG or SPOC licenses a person to use Sydney 2000 Games indicia or images, SOCOG or SPOC (as the case may be) must make an entry in the register of licensed users.
(2) Licensing takes effect when the entry is made in the register, and ceases on the day on which the licence ceases to be in force.

16(1) SOCOG must establish and maintain a register of licensed users.
(2) The register must:
(a) be kept by SOCOG at the principal place of business of SOCOG; and
(b) be open for inspection without charge by any person during the normal business hours of SOCOG.
(3) If the register is kept by the use of a computer, paragraph (2)(b) is satisfied:
(a) by arranging for inspection of a written copy of the particulars in the register; or
(b) by providing for access to a computer terminal from which the particulars in the register can be read.
(4) SOCOG must give a person a copy of the register (or part of the register) within 5 working days if the person:
(a) asks SOCOG for a copy; and
(b) pays any fee (up to the prescribed amount) required by SOCOG. If the register is kept by the use of a computer and the person asks for the copy on a floppy disk, SOCOG must give the copy to the person on a floppy disk. The person is not, however, entitled to have the floppy disk formatted for an operating system preferred by the person.

17(1) An entry in the register must contain the following particulars in relation to a licensed user:
(a) the name and principal place of business of the person;
(b) the Sydney 2000 Games indicia or images the person may use for commercial purposes, and the circumstances in which the person may use those indicia or images;
(c) if the licence is for a specified time-the date on which the licence ceases to be in force;
(d) the date on which the entry is made;
(e) any prescribed matters.
(2) If a licence is revoked, SOCOG or SPOC (as the case may be) must include in the entry in the register relating to the licence a note of the revocation of the license and of the date of effect of the revocation.

18(1) If a person asks SOCOG to give the person a certified copy of the particulars contained in an entry in the register, SOCOG must within 5 working days, give the person:
(a) if the register is kept by the use of a computer - a document certified to be a reproduction in writing of the particulars contained in the entry in the register, or
(b) in any other case - a document certified to be a copy of the particulars contained in the entry in the register.
(2) If the person referred to in subsection (1) is not the licensed user to whom the entry relates, the person must pay any fee (up to the prescribed amount) required by SOCOG.
(3) The reference in subsection (1) to a document certified to be a reproduction in writing or a copy of the particulars contained in an entry in the register is a reference to a document so certified by the Chief Executive Officer of SOCOG or by a person authorised in writing by the Chief Executive Officer for the purposes of subsection (1).

202 Zhu claimed his rights in relation to the use of Sydney 2000 indicia and images through transactions he had with TOC; and TOC’s rights in turn were derived from the Olympic Club Licence Agreement dated 14 May 1998. That agreement authorised the use of a Club Logo which itself incorporated certain of the Sydney 2000 indicia and images, but imposed certain restrictions on TOC’s right to use the Club Logo and authorise others to use it. In particular, cl.3.3(g) and (h) made the following provisions (TOC being referred to as the Trustee):

203 Clause 3.4 provided that SOCOG approved the use by the Trustee of certain Sydney 2000 indicia and images in Australia on terms set out in the agreement. Clause 3.5(a) and (c) provided as follows:

204 Zhu’s Agency Agreement with TOC and the associated Deed Poll, consistently with s.12 of the Indicia & Images Act and cl.3.5(a) and (c), prohibited the marketing of goods and services in connection with the use of the Olympic Club Logo. Clause 9.1(b) of the Agency Agreement provided as follows (Zhu being referred to as the Agent and TOC being referred to as the Company):

205 Clause 3 of the Deed Poll contained the following provisions (Zhu being referred to as the Covenantor):

206 However, that provision was to some extent qualified by cl.5:

5. The obligations of the Covenantor imposed by this deed are subject to any rights granted to the Covenantor by any Olympic Body, any rights granted to the Covenantor by operation of law (including without limitation under the Corporations Law and the rules of the Australian Stock Exchange Limited).

207 However, any rights which Zhu had to use Sydney 2000 indicia and images in connection with marketing of travel arrangements were rights purportedly granted by TOC; and it is clear from the Olympic Club Licence Agreement that TOC was not authorised to grant such rights. Furthermore, it is clear from that same agreement that such rights as TOC could grant were rights limited to Australia.

208 In those circumstances, it seems clear that Zhu’s activities in relation to the sale of club memberships in China in conjunction with the marketing of travel arrangements were in contravention of s.12 of the Indicia & Images Act, since the documents purportedly giving him such rights were not capable of doing so, having regard to the terms of the Act and of the Olympic Club Licence Agreement. It was of the essence of Zhu’s activities pursuant to his contract with TOC that he market club memberships along with the travel arrangements, and it is clear that there could be no commercial advantage to Zhu in his contract with TOC if he was not able to combine the marketing of club membership with the sale of travel arrangements.

209 In those circumstances, subject to two matters to which I come, SOCOG, as a statutory body having the responsibility of ensuring compliance with the Indicia & Images Act, was entitled to say to TOC that it should break its contract with Zhu because that contract both was in breach of TOC’s contract with SOCOG and also involved unlawful conduct by Zhu, in breach of the Act which SOCOG was required to uphold.

210 Mr. Kelly SC for Zhu sought to advance two answers to that proposition: First, that SOCOG had not proved that TOC and/or Zhu did not have a licence appropriate to authorise the relevant activities of Zhu; and second that SOCOG was estopped by its conduct from relying on this contention.

211 On the first matter, Mr. Kelly submitted that the onus was squarely on SOCOG to prove its justification, and relevantly to prove that there was in existence no licence under the Indicia & Images Act authorising the relevant conduct by Mr. Zhu. Mr. Kelly submitted that SOCOG had the responsibility for maintaining the register of licences, that a Notice to Produce the register had been properly served on SOCOG, that production of the register was called for, and the register was not produced. No explanation for this non-production was put into evidence before the primary judge, so the inference was available and indeed inevitable that the contents of the register would not have assisted SOCOG. In those circumstances, SOCOG had not proved the absence of the relevant licence.

212 The only pleading relevant to this submission was the allegation in par.15(a) of the Reply that TOC was a licensed user of the relevant symbols and that Zhu as an agent of TOC was entitled to use the symbols for commercial purposes. It is clear from the provisions of the Act that registration does no more than provide evidence of the grant of a licence: it is not itself a source of rights. The case was conducted below on the basis that TOC’s rights and Zhu’s rights were those granted by the agreements to which I have referred, and there was no suggestion that there were rights granted otherwise. Had there been such a suggestion, and had there been a clear submission below that an inference should be drawn against SOCOG that some other licence existed, because of its failure to produce the register, there would have been force in Mr. Kelly’s submission. However, had that happened, there is every likelihood that SOCOG would have led further evidence about the register, at least to the extent of explaining its non-production. In all the circumstances, in my opinion Mr. Kelly’s submission really does no more than invite speculation, in circumstances where the case was previously conducted on the basis that the relevant documents creating any relevant licence were before the Court.

213 As regards estoppel, Mr. Kelly submitted that SOCOG knew TOC had purported to grant Zhu authority to use the Sydney 2000 indicia and images in connection with the marketing of travel arrangements, but did not tell Zhu that this was without authority, whereupon Zhu acted to his detriment, giving rise to an estoppel.

214 However, no such estoppel was pleaded; and the questions of precisely what various personnel of SOCOG knew about TOC’s arrangements with Zhu, when they knew it, when SOCOG should have told Zhu of the lack of authority, what action to his detriment Zhu took thereafter and what remedy that detriment made appropriate, were not considered below; and it is not possible on appeal to make any findings on those matters. In my opinion, this is not a matter which can be pursued on appeal, particularly having regard to the principle stated in Suttor v. Gundowda Pty. Limited (1950) 81 CLR 418. In any event, in my opinion such an estoppel would not operate against the requirements of a statute; or against a statutory authority having a duty to uphold the provisions of a statute.

215 The other two areas on which I wish to comment can be dealt with more briefly.

216 The first matter is whether SOCOG must have actually acted in reliance on the contravention of the Indicia & Images Act and for the purpose of discharging its duty to uphold the provisions of the Act if its interference with Zhu’s contract is to be considered justified; and if so, whether it did so. Mr. Kelly in fact submitted that SOCOG’s purpose was to get rid of Zhu, not to uphold the provisions of the Act.

217 In my opinion, it is not necessary to investigate the actual motives of SOCOG in taking the action it did. In my opinion, just as termination of a contract may be justified on grounds not known at the time (Shepherd v. Felt & Textiles of Australia Limited (1931) 45 CLR 359), interference with contractual relations can be justified on grounds not necessarily present to the mind of the defendant at the time of the interference. A contrary view would make the question whether a plaintiff recovers or not depend in complex cases such as this on difficult and doubtful questions concerning the understanding and motives of a number of persons concerned in the activities of a body such as SOCOG. There is the additional consideration in this case that, if justification was denied because the grounds of justification were not present to the mind of the relevant people or else did not constitute the motives on which they acted, Zhu would be getting damages on the basis that he would have continued with unlawful conduct.

218 The second matter is whether SOCOG could be liable for damages caused by the arrest of Zhu, as distinct from the actual interference with his contract. It is certainly arguable that the arrest did cause damage to Zhu additional to the damage caused by the interference with the contract.

219 However, the arrest was alleged in the Statement of Claim only as one of the means of bringing about the wrongful interference with Zhu’s contract: there was no pleading of the elements for a tort of malicious prosecution or wrongful arrest, and no pleading of any damages resulting from the arrest itself, except as an element of aggravation of the damages for interference with the contract. The primary judge did refer to the arrest as unlawful, but the question whether or not the arrest itself was unlawful and actionable as against SOCOG was not an issue in the case; and in my opinion it cannot now be made the basis for an award of damages in circumstances where there was justification for the interference with the contract.

220 Finally I would note that, in my opinion, it is understandable that the ground on which SOCOG has succeeded on appeal was not squarely addressed by the primary judge. The case was complex both factually and legally, and it appears that the defence based on the allegation that TOC was entitled to terminate Zhu’s contract was not kept clearly distinct from the defence which admitted wrongful repudiation by TOC but claimed justification for SOCOG by reason of its equal or superior right. I agree with the costs orders proposed by Sheller JA.

**********

Citations

Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380

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CITATION:	SYDNEY ORGANISING COMMITTEE FOR THE OLYMPIC GAMES v ZHU [2002] NSWCA 380
FILE NUMBER(S):	CA 40973/01
HEARING DATE(S):	29 October 2002, 30 October 2002
JUDGMENT DATE:	20 December 2002
PARTIES :	Sydney Organising Committee for the Olympic Games - Appellant Peter Tao Zhu - Respondent
JUDGMENT OF:	Sheller JA at 1; Giles JA at 190; Hodgson JA at 191

LOWER COURT JURISDICTION :	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S) :	50167/99
LOWER COURT JUDICIAL OFFICER :	Bergin J

COUNSEL:	BW Walker SC/MBJ Lee - Appellant JC Kelly SC/MF Galvin - Respondent
SOLICITORS:	Corrs Chambers Westgarth, Sydney Walker, Hedges & Co, Forestville
CATCHWORDS:	TORT - induce breach of contract - Sydney 2000 Olympic Games - Agency Agreement to sell International Memberships in the Olympic Club to residents of Mainland China - Olympic indicia and images - Sydney 2000 Games (Indicia and Images) Protection Act 1996 (NSW) - justification for inducement to breach contract - estoppel - no order for costs due to defendant's delay
LEGISLATION CITED:	Sydney Organising Committee for the Olympic Games Act 1993 (NSW) Olympic Co-ordination Authority Dissolution Act 2002 (NSW) Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth)
CASES CITED:	Dickenson v Waters Ltd [1931] 31 SR (NSW) 593 Building Workers' Industrial Union of Australia & Ors v Odco Pty Ltd (1991) 29 FCR 104 Read v The Friendly Society of Operative Stonemasons of England, Ireland and Wales & 2 Ors [1902] 2 KB 88 Glamorgan Coal Company Limited & Ors v South Wales Miners' Federation & Ors [1903] 2 KB 545 Mogul Steamship Co Ltd v McGregor, Gow & Co (1889) 23 QBD 598 James v The Commonwealth (1939) 62 CLR 339 Edwin Hill & Partners v First National Finance Corporation Plc [1989] 1 WLR 225 Hyde & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359
DECISION:	1 Pursuant to Pt 8 r10 (2) of the Supreme Court Rules, substitute The Treasurer of the State of New South Wales as the appellant in this appeal; 2 Appeal allowed; 3 Set aside the verdict and judgment of Bergin J for the plaintiff against the first defendant; 4 In lieu thereof, judgment for the plaintiff against the first defendant in the sum of $326,904 to take effect from 23 November 2001; 5 Bergin J's costs order confirmed; 6 No order for the costs of the appeal, save that the plaintiff is to have a certificate under the Suitors' Fund Act 1951 in respect of his own costs of the appeal if otherwise entitled.