Zhu v Sydney Organising Committee for the Olympic Games

[2001] NSWSC 989

CITATION:	Peter Tao Zhu v Sydney Organising Committee for the Olympic Games & Ors [2001] NSWSC 989 revised - 7/11/2001
CURRENT JURISDICTION:	Equity Division Commercial List
FILE NUMBER(S):	SC 50167/99
HEARING DATE(S):	30 and 31 July 2001, 1, 2, 3, 6, 7, 8, 9, 10, 13, 14, 15, 16, 17, 20, 21and 22 August 2001, 10 and 11 September 2001.
JUDGMENT DATE:	6 November 2001
PARTIES :	Peter Tao Zhu (Plaintiff) Sydney Organising Committee for the Olympic Games (First Defendant) TOC Management Services Pty Limited (Second Defendant) Keith Wyness (Third Defendant)
JUDGMENT OF:	Bergin J

COUNSEL :	J.C Kelly SC leading M.F Galvin (Plaintiff) M Pembroke SC leading R McHugh (Defendant)
SOLICITORS:	Walker Hedges & Co (Plaintiff) Corrs Chambers Westgarth (Defendant)
CATCHWORDS:	[CONTRACT] Admission that grounds relied upon for purported termination of the plaintiff's Agency Agreement not valid or available - Whether the plaintiff otherwise in breach of the Agency Agreement of which contracting party unaware such as would justify termination. - [TORT] Interference with contractual relations - inconsistent dealing - direct interference - indirect interference. - [DAMAGES] Loss of opportunity - aggravated and exemplary damages.
LEGISLATION CITED:	Evidence Act 1995 (NSW) Sydney Organising Committee for the Olympic Games Act 1993 (NSW) Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth)
CASES CITED:	Addis v Gramophone Co. Ltd [1909] AC 488 AllState Life Insurance Co v Australian and New Zealand Banking Group Ltd & Ors (1995) 130 ALR 469 Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots & Ors (1991) 2 VR 636 Australian Rugby Union Ltd v Hospitality Group Pty Ltd & Ors (2000) 173 ALR 702 Biggin & Co. Ltd v Permanite [1951] 1 KB 422 Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Concut Pty Ltd v Worrell (2000) 75 ALJR 312 Creamoata Ltd v The Rice Equalization Association Ltd (1953) 89 CLR 286 D.C. Thomson & Co Ltd v Deakin [1952] 1 Ch 646 Dickenson v Waters Ltd [1931] 31 SR(NSW) 593 Gray v Motor Accident Commission (1998) 196 CLR 1 Greig & Ors v Insole & Ors [1978] 1 WLR 302 Groom v Crocker [1939] 1 KB 194 Heywood v Wellers [1976] QB 446 Jones v Dunkel (1959) 101 CLR 298 Joyce v Sengupta [1993] 1 WLR 337 JLT Scaffolding International Pty Ltd (in Liq) v Silva Unreported, 30 March 1994, NSWCA JLW (Vic.) Pty Ltd v Tsiloglou (1994) 1 VR 237 Lamb v Cotogno (1987) 164 CLR 1 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Lonrho PLC & Ors v Fayed & Ors (No.5) [1993] 1 WLR 1489 Poseidon Ltd & Sellars v Adelaide Petroleum N.L. (1994) 179 CLR 332 Pratt v British Medical Association & Ors [1919] 1 KB 244 Ranger Uranium Mines Pty Ltd & Anor v Federation Miscellaneous Worker's Union of Australia & Ors (1987) 54 NTR 6 Ryan v Health Administration Corporation, unreported, 23 May 1995, NSWCA Sanders v Snell (1997) 143 ALR 426 Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 Shove v Downs Surgical plc [1984] 1 All ER 7 Smithies v National Association of Operative Plasterers [1909] 1 KB 310 Tszyu v Fightvision Pty Ltd (1999) 47 NSWLR 473 Whitfeld v De Lauret & Co. Ltd (1920) 26 CLR 71 XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 [J.W.Carter. Breach of Contract. The Law Book Company, Edn, 1991. The Hon. Justice R.D.Giles, The Assessment of Reliability and Credibility, The Judicial Review (1996) Vol.2 No.4 p.281. P.D Finn, Fiduciary Obligations, The Law Book Company 1977. Fleming, The Law of Torts, 9th Edn. RP Meagher and WMC Gummow, Jacobs Law of Trusts in Australia, 6th Edn]
DECISION:	See para 460.

BERGIN J

JUDGMENT

INDEX

Introduction 3
The Plaintiff 4
SOCOG 4
The Olympic Intelligence Centre/TOC 5
The Olympic Club Trust and the Olympic Club 6
The Club Committee 7
The Plaintiff meets with TOC 9
The Plaintiff appointed as agent 11
The Agency Agreement 12
The Marketing Restriction Deed Poll 19
Plaintiff meets with Chinese Authorities 20
Wyness writes to the AOC 22
Club Committee Meeting 15 April 1999 23
Baggage Search 24
May meetings with Noble 25
The OI Centre advises SOCOG and Strike Force 28
Agency Agreement extended 29

Appointment of Sub-Agents 29
Intelligence Meeting 10 June 1999 30
SOCOG asks some questions 31
Intelligence meeting 6 July 1999 32
Olympic Club Documents and Website 32
Zhang opens Bank Account 33
Plaintiff’s 5 July 1999 meeting with the Chinese Ministry 34
of Sport
Noble meeting with Immigration 21 July 1999 36
The Club’s Financial Difficulties 38
Transfer to SOCOG 39
The Consul and SOCOG 5 August 1999 40
Readings “Advice” to Wyness 24 August 1999 41
The Consul returns to SOCOG 41
Zhang seeks Approval 42
Deed of Release and Termination 46
Further Sub-Agents appointed 47
Reading directs Wyness to terminate Plaintiff’s 47
Agency
SOCOG’s Management of the Club 47
The Plaintiff Meets with Wyness 48
Ford’s meeting with the OI Centre of 2 November 1999 51
Purported termination of the Agency Agreement 52
Ya Fa Wang 56
Sub-Agent Liao arrested 58
Strike Force briefs SOCOG on 3 December 1999 59
The Plaintiff and Sub -Agents are arrested 61
Proceedings are commenced 62
The Plaintiff’s claims 62
SOCOG’s defences 64
The Agency Relationship 66
Plaintiff’s Evidence 70
Inconsistent Dealing 76
Justification? 79
Visa Representations 81
TOCMS Bank Account 84
Use of TOCMS generally 88
Membership Certificates 89
Sub Agents 92
Obtaining approvals 97
Alleged breaches of Clause 12.1(b) & (c) 100
Alleged false statements and misrepresentations 103
Other alleged misrepresentations 104
Use of Agency Generally 111
The Club Logo 114
The Deed Poll 114
Alleged Breaches of Fiduciary Duty 115
Conclusion on Justification 116
SOCOG and TOC 117
Cause of Plaintiff’s Arrest 119
Unjust enrichment 126
Loss of Opportunity 127
Out of Pocket Expenses 135
Exemplary Damages 136
Aggravated Damages 143
Conclusion 148

Introduction

1 This litigation arises out of a dispute between the plaintiff, Peter Tao Zhu, and the first defendant, Sydney Organising Committee for the Olympic Games (SOCOG) in relation to an Agency Agreement entered into by the plaintiff and the second defendant, TOC Management Services Pty Limited (TOC) in March 1999 whereby the plaintiff was authorised to sell to Mainland Chinese in Mainland China International Memberships of the Olympic Club (the Club).

The Plaintiff

2 The plaintiff was born in the People’s Republic of China in 1962. He migrated to Australia in 1989 and was granted Australian citizenship on 16 April 1997.

3 Since arriving in Australia in 1989 the plaintiff has carried on a number of businesses including an import/export, travel consultancy and migration business in the name “K & Z Consultants” which was incorporated into a company in December 1992 known as “K & Z Marketing Pty Limited”.

4 The plaintiff is a licensed migration agent having obtained his licence in 1997. He has also worked as an education consultant for the Chinese community providing services to overseas students who wish to study in Australia. He has also been involved in real estate and mining investment, including a property development project in Northern China.

SOCOG

5 SOCOG was constituted by the Sydney Organising Committee for the Olympic Games Act 1993 (NSW) (the SOCOG Act) and operated from its headquarters at Ultimo, Sydney. SOCOG has the same legal capacity and powers as a company under the Corporations Law (s.6(1)).

6 The primary objective of SOCOG was to organise and stage the Games of the XXVII Olympiad in Sydney in the year 2000 (the Games) (s 9(1)). It was required to (a) act in a financially sound and responsible manner, (b) have regard to the limits of the available financial resources, (c) use its best endeavours to avoid the creation of debts and liabilities that would extend beyond the winding up date in March 2002 and (d) use its best endeavours to ensure that preference was given to the use of Australian goods, services and materials (s 9(2)).

7 SOCOG’s functions included establishing a marketing program in consultation with the International Olympic Committee (the IOC) and the Australian Olympic Committee (the AOC) (s 10(2)(d)). SOCOG had the power to enter into an agreement, including a contract, arrangement or understanding, relating to the distribution, marketing or sale of goods or services associated with the Games (s10 (2A)).

8 During the period the subject of this litigation the affairs of SOCOG were managed and controlled by the Board of Directors constituted under the SOCOG Act (s 15). The Board included the President of SOCOG, the Minister for the Olympics, Mr Michael Knight (Mr Knight), the President of the AOC, Mr John Coates (Mr Coates) and the Chief Executive Officer of SOCOG, Mr Sandy Hollway (Hollway).

The Olympic Intelligence Centre

9 The Olympic Intelligence Centre (the OI Centre) was constituted by members of the New South Wales Police Service (the Police Service) and was located in the same building as, but on a separate floor from, SOCOG in Ultimo. The Police Service also established the Olympics Investigation Strike Force (the Strike Force) to carry out specialised investigations into criminal offences and threats that related to the safety and/or conduct of the Games. The Commander of the Strike Force was Detective Superintendent Nick Kaldas (DSI Kaldas) and the Team Leader was Detective Sergeant Leslie Warren Nicholls (DS Nicholls). The Strike Force was located elsewhere from the OI Centre.

TOC

10 TOC was established in July 1997, having been previously known as Electronic Financial Systems Pty Limited and prior to that Emphatic Productions Pty Ltd. The Directors of TOC as at July 1997 included William David Sherbon (Sherbon) and Stefan Wisniowski (Wisniowski). The shareholders included companies associated with Sherbon and Wisniowski, Sherbon and Associates Pty Limited and Bipolar Group Pty Limited.

11 Synthesis Consulting Pty Limited (Synthesis), previously known as Communication Initiatives Pty Limited and Critical Decisions Pty Limited, and Synthesis Group, previously known as Sherbon Greenlaw Pty Limited, provided consulting services in relation to international business strategies and marketing strategies. The directors of Synthesis included Sherbon and Wisniowski. The shareholders of Synthesis included Sherbon and Bipolar Group Pty Limited .

12 Keith Wyness (Wyness) was appointed as the Managing Director of TOC on 17 September 1997 and remained in that position until the latter part of 1999 although he is recorded on ASIC records as a director until 4 January 2000. Angus Roderick Noble (Noble), a chartered accountant, commenced employment with Synthesis in September 1997. His employment was “transferred” to TOC in December 1997 when he became known as the Commercial Director.

13 Synthesis and Synthesis Group Pty Limited developed the concept of the Club and TOC was incorporated for the purpose of being appointed Trustee of the Olympic Club Trust

The Olympic Club Trust and the Olympic Club

14 A Trust Deed establishing the Olympic Club Trust was executed on 26 September 1997. The unit holders of the Trust were the AOC, SOCOG and Synthesis. TOC was the Trustee of the Trust and provided management and other services to the Club. Wyness was the Managing Director of TOC at all relevant times. Noble’s responsibilities were to establish and manage the Club reporting to Wyness.

15 The Club was established pursuant to The Olympic Club Establishment Agreement (the Establishment Agreement) executed on 5 December 1997. Under the Establishment Agreement the parties, TOC as Trustee and for itself, SOCOG, the AOC and Synthesis acknowledged that they intended that the Club was to be established as an affinity program by Contract between the Trustee and each member. They also acknowledged that the purpose for which the Trust had been established was the encouragement or promotion of sport through the programs offered by the Club and that the 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)).

16 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).

17 In the Establishment Agreement TOC, when referred to in its role as trustee was referred to as “the Trustee” and when referred to in its personal capacity was referred to as “TOCMS”. The Recitals to the Establishment Agreement included:

B Synthesis has been integrally involved in the development with SOCOG and the AOC of the concept for the Club (to be called the Olympic Club) and has established TOCMS for the express purpose of acting as trustee of the Trust.
C The parties have established the Trust in connection with the Club with the Trustee as the trustee. The Trust Deed contemplates that the parties will enter into this agreement.
D The parties have agreed to establish the Club and that the Trust will be the vehicle through which the Club will be operated.
E SOCOG and AOC will make certain contributions to the establishment and operation of the Club. The parties have agreed to establish the Club Committee to oversee the operation of the Club.
F The Trustee’s rights and obligations are outlined in this Agreement and the Trust Deed and will be set out in full in the other transaction documents.
G SOCOG will make funds available to the Trust under the Loan Agreement. Synthesis has agreed to arrange a letter of credit in favour of SOCOG to ensure the repayment of these funds.

The Club Committee

18 The Club Committee was constituted under the Establishment Agreement and comprised two representatives of each of SOCOG, the AOC and Synthesis as notified to the Trustee from time to time, the chief executive officer of the Trustee who was to be regarded as the Trustee’s representative and any person appointed as chairman who was not prior to the appointment one of the members of the Club Committee (Cl 5(b)). During the period, the subject of this litigation, the members of the Committee included Paul Reading (Reading) and John Moore (Moore) of SOCOG, Craig McLatchey (McLatchey) and Alan Grover of the AOC, Sherbon and Wisniowski of Synthesis and Wyness.

19 Relevant provisions of the Establishment Agreement in relation to the Club Committee included the following:

5(d) The functions of the Club Committee shall be:
(1) generally to oversee the operations and management of the Club;
(2) to give directions to the Trustee which are consistent with its role as expressed in Clause 5(e) or otherwise in the express circumstances set out in and manner permitted by a transaction document; and
(3) to negotiate and to agree the Budgets and any variations thereto.
(e) The Club Committee, and the members of the Club Committee, will have a similar role and similar duties in respect of the Club and the Trust to those of a board of directors, and the members of a board of directors, in respect of a company, without affecting the Trustee’s rights and duties under Clause 4(a) as to the day to day management of the Trust and the Club. Each of the AOC, SOCOG and Synthesis will ensure that their respective representatives on the Club Committee enter into a Deed with the Trustee accepting this role and these duties as a condition of their appointment and holding office.
(g) 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.

The Plaintiff meets with TOC

20 Prior to January 1999 TOC engaged a company known as Salesforce Australia Pty Limited (Salesforce) to provide services for direct sales of the 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 Mr Tim Go (Go).

21 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.

22 Early in February 1999 a meeting was arranged in TOC offices at Chatswood between the plaintiff, Noble and Go (the initial meeting). At the initial meeting the plaintiff informed Noble that he saw a big market in China for people to come to the Games. Noble informed 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”.

23 At the initial meeting the plaintiff also informed 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 informed 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.”

24 The plaintiff and Noble met on a number of other occasions in February 1999 and during one of their meetings Noble informed 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”.

25 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 1999 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.

26 The plaintiff informed Noble that 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 informed the plaintiff there would be no problem in providing such letters and advised him that “we will need a simple form of Agency Agreement”. Noble also informed 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 also 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.

27 On 3 March 1999 Noble faxed a draft Letter of Understanding and Introduction Letter for discussion to the plaintiff. After the plaintiff responded 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 the discussions in February the plaintiff had informed Noble that he had purchased this company for use in the sale of the packages. Noble informed 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.

The Plaintiff appointed as Agent

28 The Letter signed by Wyness as Managing Director on 8 March 1999 was in the following terms:

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.

29 On 10 March 1999 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:

Chairman
Chinese Olympic Committee
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.

The Agency Agreement

30 On 11 March 1999 the plaintiff and TOC signed the Agency Agreement in which TOC was referred to as “the Company” and the plaintiff was referred to as “the Agent”. The “Commencement Date” was 1 April 1999 and the “Initial Termination Date” was defined as 30 June 1999. The “Further Term” was defined as 1 July 1999 to 30 September 2000. The Agreement provided:

2 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.

31 “Services” was defined as “the activities to be conducted or supervised by the Agent set out in Schedule 1 or any part thereof” (Cl.1.1). 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.

The “Territory” was defined as the Mainland of the Peoples Republic of China (excluding Hong Kong), in which “the Agent will provide the Services”.

32 “International Membership” was defined as “International Membership of the Olympic Club of the Sydney 2000 Olympic Games as endorsed by the Sydney and Australia Olympic Committees” (Cl.1.1). Other relevant terms of the Agency Agreement were:

3. 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.
4. 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.
5. Conditions 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 2,000 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.
6 Remuneration
6.1 In consideration of the Company appointing the Agent for the Term, the agent shall pay to the Company the Agency Fee set out in Schedule 4.
6.2 The Agent shall pay to the Company, the Membership Fee set out in Schedule 4, in accordance with clause 7.1(c).
7 The Company’s Duties
7.1 The Company Covenants and agrees with the Agent that:
(a) The appointment of the Agent is exclusive within the Territory.
(b) Upon execution of this Agreement, the Company shall provide to the Agent a letter introducing the Agent as the exclusive agent of the Company and The Olympic Club to sell International Memberships to the people of the Mainland of the Peoples Republic of China, and a copy of the letter of introduction is annexed hereto and marked “A”.
(c) Within no more than eight (8) weeks of receiving notification from the Agent of his enlisting and/or signing, not less than 500 new International Memberships, and subject to payment of the Membership Fee, the Company shall supply to the Agent’s nominated Sydney postal address an International Membership Welcome Kit for each and every new International Membership.
(d) It shall publish and deliver to the Agent’s nominated Sydney postal address every four calendar months from the time of enlisting a Chinese International Member, an International Membership Mailer for each and every nominated International Membership.
(e) In the event the Agent exercises the Option, the Company shall provide to the Agent every three (3) calendar months with further letters in accordance with Clause 7.1 (b), authorising the Agent for the following three (3) months until the Completion of the further term provided that the Agent is not in breach of this Agreement.
(f) It shall do all things reasonable to assist the Agent in his negotiations with the Sydney Olympic Committee to obtain ticket allocations to the Sydney 2000 Olympic Games.
(g) It shall do all things reasonable to assist the agent in making applications for Chinese International member visas to enter Australia for the Sydney Olympic Games.
(h) It shall do all things reasonable to assist in introducing the Agent to the Chinese Olympic Committee
8. Illness or Incapacity
8.1 If the Agent is unable to attend to his duties as set out in clause 9 due to illness or incapacity the Company for a period of more than two (2) months the Company may terminate the Agency on fourteen (14) days written notice of its intention so to do.
9. The Agent’s Duties
9.1 The agent convenants 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.
(d) To do all things reasonably necessary and expeditious to sell up to 10,000 International memberships in the Territory.
(e) Within no more than fourteen days of selling an International Membership provide to the Company the names, addresses and Passport or Identification Card details of all new International Memberships.
(f) Unless prevented by illness or incapacity carry out his duties as an agent and do all in his power to promote, develop and extend the sale of International Memberships in the Territory.
(g) Conform to, observe, obey and comply with the reasonable directions and regulations made by the Company and with such directions as may be given to him by any authorised employee of the Company from time to time;
(h) Exercise that reasonable degree of skill, care and diligence that is to be expected of a suitably experienced person engaged in the performance of comparable duties and in accordance with generally accepted practices in Australia appropriate to the kind of duties being performed under this Agreement;
(i) Arrange for the destruction and disposal of all material of a confidential or draft nature in accordance with the Company’s directions;
(j) Act in the best interest of and endeavour to protect and preserve the interests of and the Business and the Company and not engage in other activities which would adversely affect his ability to perform his duties and fulfil his obligations under this Agreement.

10 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.
11. 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 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.
12. 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).
14. Injunction Relief
14.1 The Agent acknowledges that the Confidential Information is of a unique and special nature, the loss of which may not be reasonably or adequately compensated for in damages or in an action at law and agrees that any failure on his part to observe and perform his obligations under this Agreement shall entitle the company to institute proceedings for an injunction to restrain the Agent from committing or continuing any breach of this Agreement.
15. Termination of the Agency
15.1 The Agency shall terminate on the Initial Termination Date subject to the exercise of the Option and the fulfilment of the Conditions Precedent set out in this Agreement and in the event of the exercise of the Option the Agency shall terminate no later than the Completion of the Further Term.
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;
15.3 On the date being fourteen (14) days after the service of the Termination Notice upon the Agent, the Agency shall be terminated;
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.
16. Obligations on Termination of Agency
16.1 On the Termination Date the Agent shall forthwith:
(a) Deliver to the Company all documents whether original or copies in the possession or under the control of the Agent which relate to or concern the Business;
(b) At the Company’s expense, do all things and execute all documents reasonably necessary to effectively terminate the Agency; and
(c) From further representing himself as an agent of the Company, the Business or of The Olympic Club.

33 The Standards referred to in the Agency Agreement, for instance in Clause 10.1, were set out in Schedule 3 as follows:

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.

34 The Remuneration referred to in Clause 6 was set out in Schedule 4 as follows:

The Agency Fee means: the sum of AUD$30,000 by bank cheque and the company acknowledges its receipt
Membership Fee means the sum of AUD$350 for and upon the sale of each and every International Membership to The Olympic Club for the Sydney 2000 Olympic Games, payable to the Company in accordance with the Terms and Conditions of this Agreement.
The Marketing Restriction Deed Poll

35 Pursuant to the Agency Agreement the plaintiff as Covenantor also signed the Marketing Restriction Deed Poll directed to SOCOG, the terms of which were as follows:

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 the 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 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 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
(d) use of “Sydney 2000 Games images” or “Sydney 2000 Games indicia” (as these terms are defined in the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth))
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.

36 On 8 March 1999 the plaintiff arranged for the payment of $30,000 by way of bank cheque payable to “The Olympic Club” of which TOC acknowledged receipt in Schedule 4 of the Agreement.

Plaintiff meets with Chinese Authorities

37 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 that he would arrange for him to meet with Mr Tu Mingde (Mr 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 (Mr Wu), the Minister for Sport in China.

38 The Consul General provided a letter to the plaintiff directed to the State Sports General Administration of China. It stated:

The 2000 Olympic Games will be held in Sydney. The Australian Chinese in Sydney are willing to do something to help Chinese athletics complete the Games and win more gold medals. Mr Tao Zhu (Mr Peter T Zhu) the Chairman of Australian Chinese Sports Connections, is the exclusive agent authorised by the Australian Government to recruit international members in China region for the Sydney Olympic Club. Mr Lin Jian Guo (Mr Jack Lin) the Vice Chairman and Secretary General of Australian Chinese Sports Connections, is the senior adviser for China region. Mr Zhu and Mr Lin will go back to China shortly to promote membership cards for the Sydney Olympic Club. Chinese citizens who obtain the membership cards will be granted Australian visa by DIMA to watch the Dress Rehearsal of Olympic Opening Ceremony and a match and to bolster Chinese athletics’ morale. Mr Zhu and Mr Lin have promised to sponsor China’s sports and award gold-medal winners. Please assist them in the activities they are undertaking.

39 The plaintiff, with Mr Lin, met with Mr Tu on 23 March 1999 in China. At the meeting the plaintiff informed Mr Tu that he had been appointed as the Exclusive Agent by the Olympic Club in Australia to sell International Memberships of that Club in China and that he was planning to organise travel and accommodation packages for Chinese citizens to go to Sydney to watch the Games.

40 The plaintiff asked Mr Tu whether the Chinese Government had plans to organise people to go to the Olympics. Mr Tu informed the plaintiff that the Government did not have such a plan “at the moment” and that “we will need to ensure that the Government Travel Agency co-operates with you so we can work together”.

41 The plaintiff gave evidence that he and Mr Tu spoke at length about the plaintiff’s personal background and his plans for arranging travel to Sydney for the supporters of the Chinese Olympic Team during the Games. Mr 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.

42 The plaintiff said he raised with Mr Tu the possibility of receiving a letter of support. Mr Tu responded that it “usually takes time to issue an urgent letter, maybe the Olympic Games will have finished before the letter is issued”. Towards the end of the conversation Mr 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 also advised Mr Tu that he would donate “nearly half of the profit” generated from the project which he advised was $US1 million to support “Chinese Sports”.

43 After the meeting with Mr Tu the plaintiff wrote to the Consul General in Sydney on 29 March 1999 advising him of his activities in China in the previous three weeks. He informed him of his meeting with Mr Tu describing it as a “friendly and soft meeting”. He advised that:

State Sport General Administration of China supports and encourages us in conducting our activities in China, assisting Chinese Athletic Team in the 2000 Sydney Olympic Games, sponsoring China’s sports and awarding gold-medal winners. Moreover they reminded us that we should find out reliable partners while doing our job in China and congratulated our success beforehand.

44 The plaintiff also advised the Consul General of his meeting with the Vice President of the Tianjin Municipal Sports Committee and the Government departments and companies in Shanghai. He informed the Consul General that everything had been going well and it would not have happened without his support.

45 During the period from March until June 1999 the plaintiff made trips to and from China and was away from Australia most of the time in that period setting up the marketing of his project. He appointed a number of sub-agents one of whom was Zhang Zhao Ming (Zhang). Whilst he was away Go acted on the plaintiff’s behalf in communicating with Noble and the Club. The plaintiff rang Go every few days whilst he was away.

Wyness writes to the AOC

46 On 29 March 1999 Wyness wrote to McClatchy, the Secretary-General of the AOC, and advised:

Currently 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.
We would greatly appreciate if you could advise those National Olympic Committees that the Australian Olympic Club is an initiative of Sydney Organising Committee of the Olympic Games and the Australian Olympic Committee and is fully supported by the Australian Olympic Committee.

47 Wyness’ letter made no mention of the Agency Agreement of 11 March 1999 with the plaintiff or the letter of 8 March 1999 Wyness had signed under seal which authorised the plaintiff to act as TOC’s exclusive agent in the PRC for the period 1 April 1999 to 30 June 1999 to sell International Memberships as a component of a travel and accommodation package.

Club Committee Meeting 15 April 1999

48 The Club Committee met on 15 April 1999. Those present at the meeting included Reading, McLatchey and Wyness with Noble in attendance. Noble provided to the Committee a document in which he outlined the Club’s then current financial position, some key budget assumptions and contingency plans. Also produced at the meeting was a document prepared by Wyness with the assistance of his staff entitled “Incremental Revenue Opportunities” which included a section entitled “International Olympic Club Membership”.

49 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” (Ex A.292).

50 Noble’s document dealt with membership fees and 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 $875K profit sales commencing in October 1999 (Ex A. 289). The Minutes of the meeting recorded that McLatchey inquired as to how the membership acquisition actual numbers compared with budget, and whether the forecast revenue was on budget (Ex. A. 793).

51 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 the AOC, McLatchey, who was to write to the relevant National Olympic Committees (NOCs). It was recorded that “no international activity is to be undertaken unless approved by SOCOG, AOC, NOC, and IOC” (Ex A. 794). The Minutes also recorded that Noble had held “full, in depth discussion” with McLatchey and that local agents would sell the International Olympic Club. It was also noted that it was a “potentially very good revenue generating mechanism” (Ex A 794-795).

Baggage Search

52 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 the letter from the Consulate General and the March letter from Wyness to the plaintiff appointing the plaintiff as the exclusive agent in China for the period 1 April to 30 June 1999.

53 It is apparent that the Australian Customs Service advised the OI Centre of the Zhang search and the documents found in his possession. The Consulate General’s letter was translated and provided to the OI Centre. The OI Centre provided details of the contents of the documents to TOC and SOCOG. It is clear that the OI Centre consulted with Noble in respect of this incident and was informed 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 (Ex A 328).

54 Noble was informed that the Consulate General’s letter contained a claim by the plaintiff that “once Chinese residents obtain their 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”.

May Meetings with Noble

55 In May 1999 the plaintiff was in Sydney and attended a meeting with Noble in the presence of Go. The plaintiff said:

What we have done so far is meet with the Chinese Government Officials both in China and in the Consulate here in Sydney, for the purpose of getting the necessary government approval to establishing this business in China. In China it is very important because of the political system, that you follow the correct channels and have the approval of the right government department. In addition, because this is dealing with the Chinese Olympic Team, it is even more important to ensure that everything is seen to be proper, correct and legal.

56 The plaintiff advised Noble of his activities in China including his meetings with travel authorities and the concern expressed in relation to the obtaining of Visas. The plaintiff asked Noble whether SOCOG could give assistance in obtaining Visas. Noble responded:

We have had discussions before with people with SOCOG about Visas. This is of course a Federal Government responsibility not State Government, but SOCOG people tell us anybody that doesn’t 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.

57 The following conversation then took place:

The plaintiff: Look, we have a bit of a problem in selling 2,000 memberships before 30 June. As you know, the publicity for the Olympics because of Salt Lake City, is not that good. In addition, outside of Australia because it is so long away from the Olympics, interest in the Olympics in other countries is not as strong as it is in Australia at the moment. On top of that, China is a huge market and a very large country and it will take some time to get everything set up. I want to make sure this is done properly and that it is not slip-shod. I therefore don’t want to race into selling things without being sure that everything is in place to be done properly. I therefore don’t think I will be able to sell all 2,000 memberships by 30 June – it’s just too soon. If I try to sell them by that date, then with things not being done properly, it could damage the program. What I want to know is can I get the condition to sell 2,000 memberships before the 30 June, waived.

Noble: Peter, I can see what you are saying and I also appreciate now that there is a lot of work to be done. Because you have been working so hard we can see that you are genuine and that you are putting a lot of time, effort and money into this. I think it is reasonable, therefore that we remove this condition, however, I will have to discuss this with the Board and if agreed, the Club would require payment of some additional moneys in return for waiving that condition.

The plaintiff: How much money?

Noble: I don’t know for sure, I will have to discuss that with the Board, but it would need to be a reasonably substantial sum on top of the $30,000 you have already paid. I would think probably at least another $150,000 but I will get back to you.

The plaintiff: If we pay extra money in advance that would not just be a further fee to the Club, it would have to be credited towards membership payments due in the future.

Noble: Oh, that would be okay. That would be understood. We wouldn’t take your money without giving you something for it.

The plaintiff: Fine, can you let me know how much money it would cost to get the extension.

58 On 18 May 1999 Noble wrote to the plaintiff as Chairman of ACSC in he following terms;

Following our recent conversation, I confirm that it is the responsibility of the individual travelling to Australia to obtain visas to Australia which are issued at the discretion of the Australian Government.
However as discussed 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.

59 Approximately 2 days after the meeting the plaintiff telephoned Wyness and the following conversation took place:

The plaintiff: Has Gus discussed with you my request for the extension of the contract as it will not be possible for me to have 2000 memberships sold by 30 June and I asked him for an extension. Gus said he thought that it would be okay, but he needed to speak to the Board. Have you made a decision yet?

Wyness: Yes, Gus and I discussed it. I haven’t made up my mind yet, but I think it is a reasonable request. Gus has given me a report of what you have been doing and it seems to me it is best for everyone that we give you the extension but we will have to decide on how much money will need to be paid for the extension. We will get back to you shortly with our decision on that.

60 Some days later the plaintiff and Noble had a conversation on the telephone in the following terms:

Noble: Peter we’ve agreed that we will give you an extension and waive the requirement that you sell 2,000 memberships 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.

The plaintiff: Would that $200,000 be credited towards the cost of future memberships?

Noble: Oh yes as I said before we would not be taking the money for nothing.

The plaintiff: That is okay. I can arrange to have $200,000 paid by 30 June, will you give me the extension if I do.

Noble: Yes that’s agreed.

The OI Centre advises SOCOG and Strike Force

61 On 24 May 1999 the Director of the Criminal Intelligence Unit of the OI Centre, Neil Fergus (Fergus), wrote to Reading at SOCOG and provided him with a copy of an intelligence report which identified the “Subject” as:

Summary of intelligence obtained re: persons of interest involved in the sale of Olympic Club International memberships as a part of a travel and accommodation package to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games. (Ex A 328)

62 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 the he had been “recorded as being associated with persons who are currently the subject of investigations involving Asian organised crime” (Ex A 329).

63 The Summary recommended that the Club consider revoking the plaintiff’s contract and passing the information on to the Strike Force (Ex A 329). 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 (Ex A 327).

64 The information was passed on to the Strike Force at a meeting with DS Nicholls on 27 May 1999 who subsequently recorded the briefing “for intelligence purposes only” as no action was required from the Strike Force. His note stated - “intelligence received from the Olympic Intelligence Centre is that Chinese Nationals recorded on criminal indices – re drugs are involved in the sale of Olympic Club Memberships to Chinese residents travelling to Australia”.

Agency Agreement extended

65 On 31 May and 1 June 1999 the plaintiff paid the further amounts 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.

Appointment of Sub Agents

66 Zhang, who was also known as James Chang, and the plaintiff travelled back and forth from China making an assessment of what had to be done to market the International Memberships and the package. Zhang was subsequently appointed as a Director of ACSC and became a 40% shareholder of that company.

67 Between March and June 1999 the plaintiff and Zhang appointed another ten sub-agents. In March Linhong Hay was appointed for the Province of Guangdong and Sichuan. In April Jun Hu (Shandong), Sun Tao (Guangix) and Xian Zhang Min (Heilongjiang) were appointed. In May Frank Yang Hu (Beijing), Weiping Ke (Chongqing), William Peng (Shanghai), Liping Yuan (Shaanxi/Gansu), Lin Ho (Wendy) Cheung (Jiangmen) and Shao Qiang Liao (Zhuhai) were appointed as Sub Agents.

Intelligence Meeting 10 June 1999

68 On 10 June 1999 a meeting was held at which were present representatives of the Australian Customs Services (ACS), the Australian Federal Police (AFP) and the OI Centre “regarding the matter of” the plaintiff. An internal immigration document noted:

The meeting discussed the issue of the accreditation given by the Olympic Club to Peter Zhu and his company to sell Club Memberships in China in the lead up to the Olympics. This issue was of concern to the meeting in view of the material held with the sub-contractors signed by Mr Zhu to represent him in the PRC and also given the concerns that exist with the participants regarding the activities of Mr Zhu himself.

69 The note went on to record that the AFP and the ACS were of the view that there were “not enough grounds” to launch an investigation and they were not willing to progress the matter further. It was noted that the meeting agreed that the accreditation/contract signed between the Club and the plaintiff should be reconsidered. It also noted that Fergus had indicated that the plaintiff’s contract would be revoked or not renewed after 30 June 1999. By this time TOC had already extended the plaintiff’s Agency Agreement to 31 December 2000.

SOCOG asks some questions

70 On 16 June 1999 Moore of SOCOG wrote to Wyness advising that he was “disturbed” to hear that the Club may have appointed a company AIT International to “sell TOC in Singapore”. In fact, by this time, TOCMS had appointed Michael Liew as its agent in Singapore. Moore’s letter advised Wyness that the Club had “no rights offshore unless they have been signed off by the IOC, SOCOG, and the National Olympic Committee of the relevant country” and that to Moore’s knowledge there had been no request of SOCOG “nor have we given you the right to sell TOC in Singapore or other offshore territories”.

71 On 17 June 1999 Wyness issued a letter to the plaintiff at his request in relation to Visas and Sub Agents. That letter was in the following terms:

1 Visa for Chinese International Members
The Olympic Club has been in touch and will be in regular contact with the Australian Immigration Department on this matter. The goal of the Visa program is to screen visitors for any criminal or undesirable element. Provided the Member does not fall into these categories then the Olympic Club will do its upmost to assist you in getting Visas for the Chinese Members.
2 Appointment of Sub agents
We will be happy to allow you to appoint sub agents provided they are referred to us first for investigation and for our approval. Such approval will not be unreasonably withheld.

72 On 25 June 1999 McLatchey wrote to Moore and asked whether Moore had received any response from Wyness to his letter of 16 June 1999. There is no evidence that Wyness responded to this letter, however at the Club Committee meeting on 2 July 1999 at which McLatchey and Wyness were present there was discussion about the International Memberships. There was certainly no protest made about these memberships at the meeting (tr.641) and the Minutes record that Wyness was to “clarify the information” McLatchey “is to include in a letter to” the National Olympic Committees with “regard to the International Olympic Club”.

449 Brooking J. referred to Pratt v British Medical Association [1919] 1 KB 244 and concluded that that the damages awarded by McCardie J in that case included “aggravated or exemplary damages”. This was based on the fact that McCardie J had taken into account the long period during which the plaintiffs had suffered “humiliation and menace”. McCardie J did not refer to either aggravated damages or exemplary damages. He fixed a figure for “damages” on the conspiracy claim after referring to the fact that he had taken the period of humiliation and menace into account. There is another feature to Pratt that in my view makes it difficult to rely upon for the purpose of establishing that aggravated damages rather than exemplary or merely compensatory damages were awarded. It included actions for libel and slander that were also the subject of an award of damages but the portion of the judgment in relation to those actions or damages, but for mention of their existence and the way the defendant approached the defence of the claims (at 274), is not included in the Report.

450 In Lonrho Dillon L.J. referred (at 1495) to Sir Michael Kerr’s reference in Joyce v Sengupta [1993] 1 W.L.R. 337 at 384 to cases that supported the conclusion that in claims other than for defamation, damages for distress and injury to feelings were not recoverable as a separate head of damages but only in an appropriate case as an ingredient of aggravated damages. The tort of wrongful imprisonment is one example.

451 In Addis v Gramophone Co. Ltd. [1909] AC 488 the House of Lords held that damages for the wrongful dismissal of the servant could not include compensation for his injured feelings even if the circumstances of his dismissal were harsh and humiliating. Such damages were also refused by the Court of Appeal in Groom v Crocker [1939] 1 KB 194 in which the plaintiff’s solicitor breached his contract by wrongly admitting negligence of the plaintiff in an action brought against the plaintiff in respect of a motor vehicle accident. However in Heywood v Wellers [1976] Q.B. 446 the Court of Appeal allowed the plaintiff damages for the resulting mental distress and upset that she suffered when her solicitors failed to effectively bring proceedings to stop a man from molesting her. In this case Bridge L.J. drew the distinction between mental distress that was an incidental consequence to the plaintiff by reason of the solicitors misconduct and mental distress that was the direct and inevitable consequence of the solicitor’s negligent failure to obtain the relief that was the sole purpose of the litigation to secure (at 463-464). Bridge LJ concluded that only the latter sounded in damages. However in Shove v Downs Surgicalplc [1984] 1 All E. R. 7 Addis was applied so as to preclude a company chairman and managing director from such damages for an abrupt wrongful dismissal lacking in humanity, sympathy or tolerance.

452 I have found that SOCOG wrongfully interfered with the plaintiff’s contractual rights by causing his arrest. It is the manner of interference that the plaintiff claims entitles him to the award of aggravated damages. The wrongful repudiation on 5 November 1999 is not relied upon in this claim. It is the shock and hurt feelings caused by the arrest that is relied upon as a basis for this claim. This case is different from Addis and Shove in that neither case involved a claim for wrongful interference.

453 In Gray v Motor Accident Commission the High Court refused the application for aggravated damages because it had not been claimed at the trial and did not make a finding as to whether the applicant would have been entitled to such an award (at 36). The majority (Gleeson CJ, McHugh, Gummow and Hayne JJ) stated that the reaction of the party who is wronged to high-handed and deliberate conduct may well be a reason for awarding aggravated damages in further compensation for the wrong done (at 7). Kirby J analysed the nature of aggravated damages and referred to the confusion that has existed in distinguishing between aggravated and exemplary damages. His Honour expressed the view that the lack of “complete clarity of the differentiating features of aggravated damages and doubts as to what they involve” was “doubtless” the reason for the proposal to replace the “misleading phrase”, aggravated damages, by a specific component of damages for mental distress (at 35).

454 Kirby J also said “Aggravated damages are given for conduct which shocks the plaintiff. Exemplary damages are awarded for conduct which shocks the tribunal of fact, representing the community. Obviously the two affronts will often coincide and overlap. But in awarding an additional element in the plaintiffs compensatory damages as aggravated damages for such affront, the attention of the decision-maker must be concentrated upon the impact which the wrong has on the plaintiff and the particular injury done to his or her feelings” (at 35).

455 This claim is distinguishable from a defamation case in which the plaintiff claims hurt to feelings as a result of published material that conveys an imputation defamatory of the plaintiff’s reputation. It is in my view distinguishable from the facts in Lonrho. This is a case in which the plaintiff’s distress and hurt to feelings was the direct and inevitable consequence of SOCOG causing him to be arrested for allegedly holding himself out, as was put to him by the arresting officer, as an authorised agent when he was not so authorised, when the fact was that he was so authorised. I am not satisfied that the law in Australia precludes an award of aggravated damages in this case.

456 I am satisfied that as a matter of principle an award for aggravated damages is available. SOCOG submitted that as it was not responsible, or did not cause, the plaintiff’s arrest, it matters not how humiliated or hurt the plaintiff was by his arrest. SOCOG emphasised that it was “merely” cooperating with the police. I accept that it was co-operating with the police. That is exactly what the CEO directed the staff to do. However the fact that one co-operates with the police does not remove a requirement to act responsibly, indeed, the need for clarity of approach and the provision of accurate information is heightened by the involvement of the police because of a foreseeable and probable consequence that a person against whom a complaint is made may well be arrested.

457 I disagree with SOCOG’s submissions that it “merely” co-operated with police. YF Wang gave evidence that if he had not been told the Membership Certificates were not genuine he would have proceeded with the purchase of the packages from the plaintiff’s sub-agents. DS Nicholls was also reliant upon information from SOCOG about (1) whether the plaintiff was an authorised agent and (2) whether the certificates were genuine. Had he been informed of the civil dispute that had arisen he would not have arrested the plaintiff on 6 December 1999 without further investigation. The fact that the plaintiff was charged at a later time in April 2000 is not relevant to this consideration. I am satisfied for the reasons I have given earlier that SOCOG’s conduct caused the plaintiff’s arrest.

458 The plaintiff gave evidence of the hurt to his feelings. He said that he was deeply shocked and humiliated by his arrest. I accept his evidence that he felt he had never had such a horrifying or humiliating experience in his life. SOCOG attempted to suggest that he did not feel hurt by his arrest but I am of the view that such a suggestion was wholly unwarranted. The plaintiff also impressed me as a resilient man with the fortitude to argue for what he believed to be his entitlements. This is evidenced in his conversations with Wyness and his dealings with the arresting officer. That is not to say he was not hurt or did not feel humiliated. It is however a factor I have taken into account in deciding on the quantum by which his damages should be increased by way of this award.

459 In fixing an amount it is important to ensure that there is no double counting or overlapping with the award of exemplary damages I have made. I have focused only on the plaintiff’s hurt to feelings and humiliation and have excluded any element of punishment or deterrence or expression of curial disapprobation. I am satisfied that the plaintiff is entitled to an additional amount by way of an award of aggravated damages in the amount of $95,000.

460

Conclusion

461 SOCOG procured TOC to wrongfully repudiate the plaintiff’s Agency Agreement and unlawfully interfered with the plaintiff’s Agency Agreement. The plaintiff is entitled to damages in the amount of $3,555,006 comprising the conceded amount of $260,006 plus interest that is yet to be calculated, $3 million for the loss of opportunity, $95,000 in aggravated damages and $200,000 in exemplary damages. The parties are to bring in Short Minutes of Order and I will hear argument in relation to interest and costs at that time.

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Last Modified: 11/07/2001