Zhu v Treasurer of New South Wales

[2004] HCATrans 202

[2004] HCATrans 202

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S616 of 2003

B e t w e e n -

PETER TAO ZHU

Appellant

and

THE TREASURER OF THE STATE OF NEW SOUTH WALES

Respondent

GLEESON CJ
GUMMOW J
KIRBY J
CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 16 JUNE 2004, AT 10.21 AM

(Continued from 15/6/04)

Copyright in the High Court of Australia

GLEESON CJ:   Yes, Mr Walker.

MR WALKER:   May it please your Honours.  Your Honours, yesterday, in answer to some questions from Justice Gummow, I retreated or introduced the metaphor of balance in terms of the technique involved in assessing a claim for justification.  Your Honours will recall that that is an expression that was used by this Court in its reasons in what it regarded as an analogous case in relation to statutory justification.  We have referred to it in our written submissions; it is R v Archdall and Roskruge; Ex parte Carrigan (1928) 41 CLR 128.

The passage in question is found on pages 136 and 137, in the joint reasons of Chief Justice Knox and Justices Isaacs, Gavan Duffy and Powers.  At the foot of 136, their Honours perform the analogy between the statutory justification contemplated by Parliament in that case, concerning a boycott of a ship which was to maintain lighthouses for industrial purposes.  On page 137, the much‑quoted passage from Lord Justice Romer in the Glamorgan Case ‑ ‑ ‑

GUMMOW J:   They were construing the Crimes Act, were they not?

MR WALKER:   Yes.

GUMMOW J:   The phrase “reasonable cause” or “excuse”.

MR WALKER:   Yes.  What they have done, admittedly without over elaborate explanation, is that they have immediately analogised that with this tort doctrine immediately by the citation of Lord Justice Romer’s famous words, up to the top of page 137.  One sees the way in which they perform that by the substitution of the statutory provision for contract that they refer to immediately after the quotation, and then a little Delphically they refer “(See also Brimelow v Casson)”.  Now, as it happens, of course ‑ ‑ ‑

GUMMOW J:   That is the showgirl case, is it not?

MR WALKER:   That is the chorus girl case.  That is the one case that Sir Frederick Jordan singled out for disapproval in the Shell Case, to which attention was drawn yesterday.

GUMMOW J:   And Lord Simonds in 1940.

MR WALKER:   Yes.

GUMMOW J:   He said it was an ex turpi causa case.

MR WALKER:   Brimelow v Casson cannot be read without noting two things in particular:  first, the what I will call motive of competitive conduct by those who asked the theatre owners not to allow the rival impresario to get the benefit of the bookings does not seem to figure at all in the reasoning; second, the reasons are infused, very expressly, with horror at the plight of one particular chorus girl, and it appears to be not merely prostitution but the fact that the man for whom she was the concubine was a dwarf, much dwelled upon in the reasons. 

There was more than a frisson of horror about the plight of this poor girl, from which it could only be gathered that Brimelow v Casson would stand, if good law, for the notion that some kind of private moralistic or quasi‑political social agenda stance by the person claiming justification will itself supply justification, as opposed to simply explain why the person did what they did.

That has not been taken up and it may well be, of course, that that is because if one is to indulge in sentiments of that kind, that is if you really are trying to rescue someone from something like that, then perhaps it is appropriate that you accept that the price will be to pay whatever is necessary for your interference with subsisting legal relations by reason of the breach.

However, we draw to attention that in this Court, though very elliptically, Brimelow v Casson appeared to have been called in aid in terms of the general principle.  In the passage that then follows in Archdall at 137, one sees the notion of a balance just after halfway and the things that are put in the balance do bear some consideration, again by this loose analogy.

On one scale of the balance there are all the personal interests of the seamen under the rule, that is the union policy that they had adopted and then in the other scale all the public interests of government, that is of the general community, all the peril to life and property possible from a disorganisation of the lighthouse system and then they say, with no hesitation, they assert where the balance is struck.  That would appear to be a balancing exercise that values the interests of more numerous people and of organised society and of safety over and above the enhancement of industrial relations which were sought to be advanced by the boycott.  It may be, if that is the correct balancing approach, that is an emphatically clear example of an easy balancing exercise. 

When one comes to the way in which Sir Frederick Jordan dealt with the matter in Independent Oil Industries Ltd v The Shell Co of Australia 37 SR (NSW) 394 at 415 to 418, there is first of all to be noticed the express doubt concerning Brimelow, but we wanted to draw to attention in particular the way in which his Honour gives his second example at the foot of page 415.  Having introduced the matter by saying that:  

there may be lawful justification for the wilful procuring of the breach of a subsisting contract –

there is then a sentence which seems to be the climax statement of the principle:

it is to be observed that an act ‑ ‑ ‑

GUMMOW J:   It has to be understood with what is said earlier in the paragraph, does it not?

MR WALKER:   Yes, certainly.

GUMMOW J:   “In this connection”. 

MR WALKER:   Yes, “In this connection”, and that seems to be in relation to a lawful justification of wilful procuring of breach: 

it is to be observed that an act which would in itself be wrongful as infringing some legal right of another person may be justified if shown to be no more than reasonably necessary –

that picks up the reasonableness that the High Court talked about in Archdall –

for the protection of some actually existing superior legal right in the doer of the act. 

Then one immediately goes to a contest involving property, prior property right, occupier of land.  Next, when he turns to the question of procuring breach, the first example is ‑ ‑ ‑

GUMMOW J:   That next sentence is Cowell v Rosehill, is it not?

MR WALKER:   Yes, and so the example immediately following Glamorgan is the first example he gives of procuring breach:

If one person without authority employs another to sell the land or goods of a third party, neither of them can complain if the third party procures the other not to perform a contract which cannot be performed without violating his superior legal right –

That is not a contest of a kind that we directly have here, particularly as the example has been chosen so that one has land or goods, tangible property, and the proprietary right in that property being offended by the unauthorised sale in breach of nemo dat.  Over the page at 416, Brimelow v Casson is an exception specifically noted to the proposition that it does not appear to have yet been authoritatively decided that anything short of the protection of the ‑ ‑ ‑

GUMMOW J:   What is the nature of the further example at the top of 416?

MR WALKER:   That also is the protection of actually existing property rights (a) to determine who comes on to land, and (b) to determine who may take trees, so it is property again against contract.  Then, of course, the passage starting halfway down 417 and continuing over the page, which I will not dwell on, simply emphasises that in the determination of whether the act is lawful or unlawful, it is a matter of fact and one must look at the whole composite. 

In our submission, there is little else from those examples that one can derive for a case of the present kind.  We, of course, as I tried to put it yesterday, rely upon the interest which includes both rights and obligations of SOCOG to be gathered from the combination of the SOCOG Act and the Olympic Charter, the SOCOG Act and the host city contract, the host city contract itself, the establishment agreement, the licensing agreement, and your Honours will recall that the licence agreement as required by that chain of title has its approval by the AOC and the IOC, signified by the execution of the documents:  see 6 appeal book 1164.  It is in each of those cases that the following factors strike the balance in our favour.  First, that they are prior in time; second, that they ‑ ‑ ‑

GUMMOW J:   You are going straight to balancing, which you seem to like, where do you get your superior legal right from?

MR WALKER:   The superior ‑ ‑ ‑

GUMMOW J:   You cannot get the superior legal right by balancing.  You have to get the superior legal right and then you balance.

MR WALKER:   I accept that.

GUMMOW J:   If that is what is going on.

MR WALKER:   What I am putting into the balance, which we say is superior to what the other side of the scale has, namely the interests of Mr Zhu in having the benefit of his contract with the club, is our interests which include our rights and obligations or comprise our rights and obligations under the list of instruments that I have just ‑ ‑ ‑

GUMMOW J:   That is what I am putting to you.  You do not isolate the superior right by a balancing process.

MR WALKER:   No, I am not.  I am identifying what I put in the balance and I am asserting, not that they are superior because they are in the balance, but when they are in the balance these characteristics ‑ ‑ ‑

GUMMOW J:   The question is whether they ever get in the balance.

MR WALKER:   Quite.  They go into the balance because they are the sources of our rights and obligations in relation to the commercialising of the Games including associated intellectual property.  They are, the SOCOG Act, the Olympic Charter, the host city contract, the establishment agreement and the licensing ‑ ‑ ‑

GUMMOW J:   You do not say – I mean you can keep saying it, Mr Walker – but you do not say, do you, that the federal Indicia Protection Act is itself the source of some ‑ ‑ ‑

MR WALKER:   I do.  That is the last in the list I am about to come to, your Honour.

GUMMOW J:   Is the source of the superior legal rights here?

MR WALKER:   I do.  I am coming to that.  All of those other matters have to do with ‑ ‑ ‑

GUMMOW J:   But they are enforceable in a particular fashion?

MR WALKER:   Yes.

GUMMOW J:   You cannot divorce those rights from the remedies that are given in their creation.  They are of a piece.

MR WALKER:   Yes.  They do not, as it were, supply a more broad or diffuse interest than the remedy ‑ ‑ ‑

GUMMOW J:   That is why I asked you yesterday whether you sought to get out of this statute any Fitzgerald v Leonhardt type proposition and you said no.

MR WALKER:   No.  That is why in my list it comes last.  Do I claim it as an equal or superior right?  Yes, I do, I do claim it is a superior right ‑ ‑ ‑

GUMMOW J:   What is the right?

MR WALKER:   The right under that statute ‑ ‑ ‑

GUMMOW J:   Is to sue someone for these infringements.

MR WALKER:   Is to seek the statutory injunction.

GUMMOW J:   Yes.

MR WALKER:   The justification comes because the action we took had an effect which out of court was equivalent to what would have occurred in court with an injunction.  That is the highest I can call in aid the Commonwealth Act.  I call it in aid in one other way as well, bearing in mind that section 12, as the Court of Appeal points out, prohibits some things that Mr Zhu did and I am about to come to that factually in a further and better answer to questions asked of me yesterday by Justice Heydon.

So we call it in aid in this attenuated fashion, that is, the termination of the contract was tantamount to the effect that an injunction would have had, in terms of our rights or obligations under it, rights under it, and we call it in aid as a balancing factor weighing against Mr Zhu because the contract in which he claims to have the interest to be balanced against our rights under our contracts, our preceding contracts, happens to be a contract under which he was claiming to perform, but in breach of section 12 and I try and make that last proposition good as follows.

I was asked yesterday for a clear example of conduct in Australia, because of the territoriality matters earlier argued, where there was a breach of section 12.  The statutory setting, of course, as we put yesterday, is as follows.  We have paragraph 6(b)(i) for the international commerce extension; we have paragraph 10(1)(b)(ii) defining what it means to apply indicia, relevantly, to brochures and marketing material in that subparagraph.  We have that being fed into the definition of what it means to use for commercial purposes, and we rely in particular upon section 11(c)(ii).  Section 11(c)(ii) describes conduct which, in our submission, your Honours will see from the evidence to which I am about to take you, and that then leads to the breach of either subsections 12(1) or 12(4), upon which the Court of Appeal relied. 

The material can be found in the extracts from exhibits 35 and  36 together with findings as follows.  Can I start with the findings.  In appeal book 14, page 3061, could I take your Honours to the passage under the heading, “Ya Fa Wang”, starting at paragraph 137.  He was described as a person “based generally in China”, his business involving doing work for Chinese businesses in Sydney.  He is in international commerce.  He was asked by companies in China to look at opportunities for sending a number of their employees to the Games.  

Paragraph 138 describes conduct in Sydney, in Parramatta.  He comes to Sydney, meets with Mr Liao – see paragraph 67 to describe him, he is a sub‑agent at Parramatta – the Club is talked about.  Liao is acting for Zhu.  They are taken to meet Zhang, still in Sydney.  Zhang is acting for Zhu.  Zhang hands over letters from the Club and what is called a copy of the “Facts Sheet” in both Chinese and English – that is why I am going to take you to exhibit 35 – and a sample of the membership certificate.  This is conduct for promotional purposes in order to make a deal, and it is being carried out in Sydney.  It is highly significant, it is being carried out in relation to canvassing for memberships in China, it is conduct in Australia, it is aimed at China.  The Indicia Act will not operate in China, but it does operate in Australia for this conduct. 

One finds then the deal proceeding, paragraph 139, conduct in Sydney, paragraph 140, the material, the indicia, all being deployed in and about that making of a deal in Sydney, at paragraph 142, the membership certificates being handed over in Australia.  This is international commerce, but it is also lots of conduct involving the indicia and the claim of connection which is in breach of the requirements of the contracts we had with the Club, both the establishment and the licensing agreements, and it is all occurring in Australia.  There was no licence for that granted by SOCOG whereby section 12 was engaged. 

GUMMOW J:   Now, what is the significance of taking us to section 10 of the Act, Mr Walker?

MR WALKER:   Section 10(1)(b)(ii) describes what it means to apply indicia.

GUMMOW J:   Yes, and that is important, is it not, for Part 4 Division 2?

MR WALKER:   It is also important because “applied” is used in the definition of “used”.

GUMMOW J:   Where do we see that, 11(i)?

MR WALKER:   Yes.  In section 11, starting with paragraph (a), your Honours will see the word “applied”, and that has the meaning given by section 10.  That is why I refer to section 10.  Your Honours see, for example, that subsection (2) concludes if, if, if, if, if, then the application is used by the first person for commercial purposes, and the use that one sees in these findings of fact by the trial judge, to which I have just drawn attention, is clearly for advertising or promotional purposes.  It has been used to persuade the deal to be done.  It “is likely to enhance the demand for the goods or services” - in fact it was critical – and would to a reasonable person suggest that the person “was a sponsor of, or is or was the provider of other support for” et cetera.  In our submission that is why sections 10 and 11 matter.

Then, however, we have a freestanding application of section 12 and, in our submission, there is quite plainly conduct by use of this material.  Now, some of the actual material can be gauged from the extracts from exhibit 35, which we have managed to obtain and handed up to your Honours.  The first is ‑ ‑ ‑

GUMMOW J:   What are these goods or services being talked about?

MR WALKER:   The goods include the documentation to be given to members.

GUMMOW J:   Letterhead.

MR WALKER:   The services include all the benefits of membership.  They also include the organisation of travel and accommodation.

GUMMOW J:   Is there a definition of “goods”?

MR WALKER:   No.

GUMMOW J:   There is not, is there?

MR WALKER:   No.

GUMMOW J:   I would not ordinarily have thought if I put it on my letterhead it was applying it to my goods.  I do not trade in my letterhead.

MR WALKER:   No.  That is one of the reasons why I have referred to 10(1)(b)(ii), “in the case of goods or services”.  Now, I am not identifying stationery as stationery, as the goods in question.  Certainly, membership packs are goods, but the services involve the provision of all membership benefits, including, of course, the associated travel and accommodation which was the commercial driver of this whole deal.

Could I take your Honours first of all to some material in exhibit 35, page 10, which is seized from Mr Zhang pursuant to the police investigation, for which SOCOG is not responsible, as opposed to the arrest where the finding is that but for SOCOG’s silence and speech the arrest of Mr Zhu would not have occurred.  It is not said that SOCOG put in train the concern which, in fact, was communicated to SOCOG, not by SOCOG, by the police.

HEYDON J:   Your submission is that SOCOG was responsible for the arrest ‑ ‑ ‑

MR WALKER:   Of Mr Zhu.

HEYDON J:   ‑ ‑ ‑ of Mr Zhu, but not for the seizure by the police of Mr Zhu’s documents which took place ‑ ‑ ‑

MR WALKER:   This is Mr Zhang?

HEYDON J:   Mr Zhang.  So this was from Mr Zhang.

MR WALKER:   Yes.  There is also Mr Liao from whom documents were seized as well as Mr Zhu.  There is, in fact, no evidence that getting documents from Mr Zhu was an integral part of him being arrested, that is it cannot be said that police who had already got warrants to get material from Mr Zhang and Mr Liao would not also have got that from Mr Zhu even without an arrest.  You do not have to be arrested obviously to have your papers seized when the police are investigating a suspected fraud.

Now, I do not want to dwell on this.  It suffices to say that the Olympic Club fact sheet with which one starts you can tell from its appearance that it is a process by which club material is being literally cut and pasted together in order to produce the draft, the material.  One finds on page 13 in the process of turning this into Chinese promotional material the Latin letters there are the bank account that Mr Zhu opened in TOCMS’ name, so this is international commerce involving a bank account in Australia.

Then we have the translation of that 13a and following.  It can be seen that it is full of Olympic indicia and it is talking in Australia about what is proposed in China.  The same thing can be said for the next one, which starts at page 15.  That was seized from Mr Zhu.  Again there is the reference to the bank account that one will find in English at 17.  On page 18, see from Mr Zhang one of Mr Zhu’s agents, you have the Olympic club logo and the Sydney 2000 logo all being used.  This is then put together being used for promotional purposes in Australia for marketing in China.  One sees that it was actually all designed and paid for in Australia.  One sees the printing, for example, at 45 and following.

Now, that is material which, in our submission, does show that there was in Australia breach of section 12 with or without the extenders in section 6.  In exhibit 36 one sees a document prepared with a seal applied in Australia by Mr Zhu’s company, of which Mr Zhang was a 40 per cent shareholder.  One sees that it is actually on letterhead – see page 21 – attributed to the club trustee, TOCMS.

KIRBY J:   They assert in the fact sheet, which is 10, that the tickets were purchased from SOCOG.  If that was so, that would not be a breach of the Act.

MR WALKER:   I am sorry, your Honour.

KIRBY J:   They assert that TOC is purchasing tickets from SOCOG for a mixture of events, so that would create no offence under the Act.

MR WALKER:   I have not identified the purchase of tickets as in itself an offence, although the word “offence” is – the contravention of section 12, your Honour means?  No, I have not asserted that.

KIRBY J:   SOCOG was present at the meetings of the board of the Olympic Club, was it not, TOC?

MR WALKER:   The club committee meetings?

KIRBY J:   Yes.

MR WALKER:   Yes. 

KIRBY J:   We were told, I thought, that SOCOG was present at those meetings.

MR WALKER:   At the club committee meetings, yes, your Honour.

KIRBY J:   I am just trying to consider whether or not the allegation of the offence against the Act, the SOCOG Act, was made out if SOCOG was so intimately involved and these people are asserting they are buying the tickets from SOCOG.

MR WALKER:   Your Honour should not assume that there had been any tickets – does your Honour means tickets to events?  Then that is ‑ ‑ ‑

KIRBY J:   That would be the major attraction of this club from the point of view of the Chinese.

MR WALKER:   Ticket allocation is not something that was accomplished simply by becoming a member of the club at all.  The Chinese were very interested in getting tickets to certain events, yes.  But, your Honour, the Act is about the use of indicia and it is a public Act and SOCOG has either licensed material to be used or not.  It was not within SOCOG’s power to permit conduct in China, for example.  Nor was it within the club’s power to permit the use of indicia outside Australia.  It was not within the club’s power to sublicense without the approval of SOCOG. 

SOCOG was not entitled to enter into transactions in relation to indicia without the approval of AOC and IOC, so nothing can be spelled out which would attenuate or diminish or even eliminate the effect of the public statute by reference to SOCOG’s representative sitting on a club committee, a club committee which never became seized of the detail of this agency agreement or the actions of Mr Zhu, purportedly pursuant to it.

GLEESON CJ:   These activities of Mr Zhu and others that were going on in Australia were aimed at setting up an organisational structure to do certain things in China, were they not?

MR WALKER:   Yes, and also aimed at receiving money in Australia.  Now, I have misled the Court.  It was not Mr Zhu directly who set up a bank account; it was his agent Mr Zhang.  The reference is – and my friend reminds me, and with the agreement of the club.  That, of course, strengthens rather than weakens the point I am making about it.  This is the club and Mr Zhu setting up for activities in Australia in relation to commerce concerning international memberships and associated benefits where the money will be coming from China to Australia.

GLEESON CJ:   But the activities in Australia are organisational or administrative activities preparatory to what is going to be done in China, are they not?  The use of the indicia that is going on in Parramatta, for example, is Mr Zhu saying to some other people, “When we get to China we are going to sell these tickets”.

MR WALKER:   No, there is actually a deal done in Parramatta.  Someone is persuaded to part with their money in Parramatta and in Sydney.  There is a transaction done.   That is what the material – 138 and following, 138, 140, 142 – records. 

GLEESON CJ:   What is the consideration for the money that they are parting with?

MR WALKER:   Membership, signified by certificate. 

KIRBY J:   It is a lot of money to pay for a certificate. 

MR WALKER:   It is a certificate which recorded that you were going to be treated as a member of the club.  Some may think it was a lot of money for what membership of the club imported.  Your Honours have seen what it imports.  It does not involve sitting in prime seats for lots of events at all.

KIRBY J:   Anyway, your present purpose is merely to show that so far as the use of the indicia were concerned, there was plenty of intra‑Australian activity. 

MR WALKER:   Up‑front, promotional and transactional use made of it, a deal done.  

KIRBY J:   Which attracted the application of the Australian Act.

MR WALKER:   That is right.

KIRBY J:   To activity in Australia.

MR WALKER:   That is right, and had Mr Zhu, claiming – and still claims – to be acting under his contract with the club, cooperatively with the club, to do something which he knew, because of his marketing restriction deed poll, he knew, because of the obligations in his agency agreement, required SOCOG’s approval – he had not had SOCOG’s prior written approval at all. 

GUMMOW J:   Do you rely on this at the Shepherd v Felt & Textile stage?

MR WALKER:   Yes.

GUMMOW J:   Or at the later stage of the balancing, or both?

MR WALKER:   I was about to say I rely upon it to show the superiority of our interests.  I also rely on it to show that in truth things were happening which were irregular – to use a general expression – so far as the standards to be observed by us were concerned ‑ ‑ ‑

KIRBY J:   Yes, but they were not in your mind, were they, at the earlier stage – certainly, at the time Mr Zhu was arrested. 

MR WALKER:   That is my point.  It cannot be a reward to the plaintiff that we had not, for example, been apprised of this by the expected, the stipulated request for our prior written approval.  That cannot redound to the plaintiff’s benefit.  It is clear from the material I took your Honours to yesterday that there had from a very early period been real, explicit concern about the loose cannons, being the unauthorised commercialising in another territory.  That had been made pretty clear. 

In our submission, whatever may be said as a matter of doctrine in relation to Shepherd v Felt, when we gave the order for termination, which has been held to have procured a breach because the termination was, as it were, premature – Mr Zhu should have been given his contractual notices to get his house in order – when we gave that direction, we gave it, as the narrative I took the Court through yesterday shows, because we did not want loose cannons doing things abroad that we were not authorised to permit.  That casts a very different light on the case, different from the one depicted by the appellant whereby we had, as it were, one set of motives in our mind when we acted and a totally different artificial lawyer’s point dreamed up long afterwards to justify, that is, to vindicate our position.  In fact, the motive for us wanting this arrangement to be at an end ‑ ‑ ‑

KIRBY J:   But if it was so much in your mind, why did Mr Wyness not refer to it?  Why did he give this completely false, irrelevant and factually incorrect excuse?

MR WALKER:   If your Honour is asking me about Mr Wyness personally, we do not know.  As your Honours have read in the narrative, Mr Wyness continued to deal with Mr Zhu after he had been told to stop.  He was not, how shall I say, a docile creature even after, in effect, we had taken the club into SOCOG.  Mr Wyness’ letter is everything that your Honour has described.  However, Mr Wyness is not us and we are sued for telling them to ‑ ‑ ‑

HEYDON J:   Mr Wyness was you, was he not, after 30 August?

MR WALKER:   No, your Honour.

HEYDON J:   Mr Wyness was de facto SOCOG after that date, was he not?  SOCOG had taken over the club.

MR WALKER:   That does not make Mr Wyness de facto SOCOG.  We have certainly never been sued on the basis that everything that Mr Wyness said after that takeover date was to be attributable to us.  He had certain authorities to act in certain ways.  When he acts contrary to that, in our submission, he certainly is not to be treated as a SOCOG staff member.

HEYDON J:   He was not a TOC staff member.

MR WALKER:   With respect, that seems to be exactly what he was.

HEYDON J:   He called himself a consultant to SOCOG, did he not?

MR WALKER:   Yes.

HEYDON J:   He may be wrong about that.  You resist the suggestion that there was some change in his status after the decision in July that SOCOG would take over.

MR WALKER:   I resist the suggestion that his status became that of a servant or agent of SOCOG, all of whose conduct is attributed to SOCOG and is the conduct of SOCOG, yes.  It is not to be forgotten that Wyness, after all, took the view, which is contrary to the view taken in SOCOG, that he was able to authorise these things to be done not only in Australia but in China.  This was a contrary position from the position that SOCOG took with him. 

In our submission, it would be ironic indeed if we were then, for the first time in this Court, to have all his sins, by act or omission, visited upon us as being SOCOG.  We were not sued for what Wyness did; we were sued for getting Wyness, in the name of the club, to terminate a contract.  We were sued for procuring, for interfering in that contractual relation, which is one reason why the analysis of us as a de facto director has its obvious difficulties for the case.  We do not call in aid the fact that that would exculpate us from the tort because it would be astonishing if O’Brien v Dawson doctrine designed to reflect the fact that members of a board at a board meeting constitute an organ of the company and thus their conduct at the board meeting does not procure the company to do something, it is the company do something, it would be extraordinary if that document were to defend us.  We were certainly acting as an outsider.  Notwithstanding, I accept everything that was put to me yesterday in relation to a degree of control otherwise importing de facto directorship. 

It is that separateness between us and the club whose management clearly we deplored.  All the suspicion – her Honour uses the expression antagonistic – was not just directed at Mr Zhu; far from it.  It was directed at Mr Wyness, Mr Noble, the club management, and it was very definitely a matter of disapproval, suspicion, antagonism between SOCOG and the club trustee.

GUMMOW J:   Mr Walker, can I just be quite clear about the Shepherd side of the complaint.  The agreement itself with Mr Zhu recognised that although there were these specific provisions for dismissal, the general law right of summary dismissal, if you like, was preserved.  It would have to be I suppose.  It has never been the case, has it, argued here that these materials as to the Parramatta activities you have been taking us through would have justified summary dismissal?

MR WALKER:   No, I have lost that as an issue.  I cannot revive it in any shape or form.  That is why I keep saying there was a breach.  In here it seems to be constituted by a premature termination that is summarily dismissing where the contract had provisions for notice of default and the like.  That may lead to chagrin out of court, that slightly slower steps would have produced a more effective outcome, but that is of no moment to the issues before this Court given the way which we fought it at trial.

Can I then complete what I wanted to take your Honours to in relation to the findings of fact germane to the question of arrest so that I can finish then what I wanted to say about the role of the arrest.  I have already taken your Honours to 137 and following in the trial judge’s reasons.  Your Honours are familiar that that passage continues, for example, page 3063 in volume 14, paragraph 145, Mr Wang.  This is not inspired by SOCOG, nothing to do with SOCOG, concerned about the “genuineness of the Certificates” and that leads to an interview with Mr Wang which leads in turn to the arrest of subagent Liao - paragraph 146.

That, in our submission, is not something which can be laid at our feet and is not in the case laid at our feet.  We are not sued for that.  It is important to note the dates.  This is 1 December.  Then there is the search warrant including at Zhang’s business premises, 148 and following, and your Honours have seen some of the fruits of that.

Then SOCOG comes into the position in terms of the beginning of what I will call “the misinformation” which is the basis of her Honour’s finding against my client in relation to the arrest, ultimately, of Mr Zhu.  Paragraph 149 and following there is the beginning of what I call “half‑truths” and perhaps they did not even rise to the status of half‑truths in some cases.

In relation to the Shanghai matter, it was Detective Sergeant Nicholls at paragraph 152 who brings that to attention and in paragraph 154 it is SOCOG asking the police what should be done – “Reading asked ‘what should we do’”.  The police said we have to tackle it as a team, “the Shanghai conference should be stopped” - paragraph 154.  In our submission, this is not SOCOG treating the police as a cat’s paw at all and her Honour does not find that.  Her Honour simply finds that it was SOCOG’s misinformation that caused the arrest of Mr Zhu in a sense that but for that it would not have happened.

KIRBY J:   It sounds awfully like you are trying to reopen the question that was determined against you about the independent discretion of police officers.

MR WALKER:   No, not at all, your Honour.  I have just accepted the clear finding - your Honours have been taken to the passages - that we caused the arrest, but we did not cause the investigation of which that arrest was a later part at all.

The same story is then seen in paragraph 158 and following, and paragraph 159 has Mr Hollway for SOCOG in a news release saying that which was correct:

SOCOG has authorised no agents or sub-agents to sell Olympic Club material overseas.

Now, that is the background against which one is to measure both for the Shepherd v Felt argument and also for the superiority of right point, the so‑called balance point, what were the motivations, the position of SOCOG at that time.  Of course, the ‑ ‑ ‑

KIRBY J:   So essentially the picture you are pointing is that though they went about it the wrong way, though they ought to have been candid and frank, though they ought to have called him in and had a talk with him; in fact, they had a good reason to be concerned about loose cannons, they had no desire to have Mr Zhu or anyone else going up to China, they had no control over what happened in China and they wanted to keep a more rigorous check on it and though they went about it the wrong way they had a statutory basis for doing what they did.  It was their duty to do it and they did it.

MR WALKER:   That is right.  Paragraph 158, your Honours will notice that the media conference that was planned in Shanghai was cancelled by Mr Zhu after he had heard of Mr Liao’s arrest.  Now, if one then goes forward to a passage that your Honours are familiar with but for the reference, paragraphs 362 through to 388 is the story that I have just referred to in relation to the finding of causation of the arrest.  It includes in 362 some of the aspects of the antagonism between the club and SOCOG. 

It is in that context, in our submission, looking at the whole composite, that one then finally comes to assess for the purposes of a justification argument what it was that was castigated by her Honour as being therefore unlawful in 388 in relation to the arrest.  The “therefore” can only be explained by her careful finding of fact in relation to causation of arrest.  It does not involve the attribution of malign motive.  There is no cunning plot alleged.  Bumbling yes, suspicion yes ‑ ‑ ‑

KIRBY J:   Getting people arrested sounds a little bit malign.

MR WALKER:   Well, when your Honour says getting, we caused the arrest in the sense that but for what we said it would not have happened, but we did not seek for it to happen in the sense of ‑ ‑ ‑

KIRBY J:   Now, come on.

MR WALKER:   Your Honour, there is no finding that we ever said, “Please have this man arrested”.

KIRBY J:   A little bit of help from downstairs.

MR WALKER:   Your Honour, there had already been an arrest of someone else not at our behest.  There was no behest involved at all.  We caused it by giving incorrect and incomplete information, but for which the policeman would not have done it.  That is very far from seeking to have it done or it being done at our behest.  That concludes what I wanted to say about the nature of the arrest. 

In the context of the concerns which had been excited, which had involved the police, your Honours will recall there were misrepresentations about what the club could do with respect to getting visas, for example, so serious matters of immigration control were involved as well.  In our submission, the whole picture adds up to conduct which, within the meaning of these words that one can collect from the exiguous authorities, was reasonable to protect and advance the interests or position that I have sought to explain as deriving from the fact of our rights and obligations under the various documents which I have now catalogued more than once.

Your Honours, we have handed up and do seek leave to file and rely upon an amended form of notice of contention with which I can deal very briefly as follows.  This is aimed at answering some of the criticisms my learned friend expressed yesterday.  It picks up the matters raised by the Chief Justice and Justice Heydon yesterday concerning paragraph 185 in Justice Sheller’s reasons.  One should add as well a reference to the reasoning found in Justice Hodgson’s reasons, paragraphs 202 to 209. 

May I take you in particular in Justice Hodgson’s reasons to a passage in paragraph 206, 14 appeal book 3269.  This is the nub of, and all I wanted to say, about the deed poll point, upon which we failed in the Court of Appeal, which we seek leave to rely upon in this Court.

Clause 5 of that deed poll – that is in a standard form deed poll, stipulated by clause 27 of the licence agreement to be given in favour of SOCOG by anyone with whom the club dealt, a standard form which you will find in 5 appeal book 1043.  The actual deed poll is found at 5 appeal book 1074, that is the one actually executed by Mr Zhu.  Now, clause 27 is 5 appeal book 964.

With somewhat less enthusiasm or clarity than Mr Justice Sheller, Justice Hodgson says of that clause 5 which uses the expression “Olympic Body”, which is defined slightly oddly as including someone in the position of the club, says that 5 “was arguably a right”, that what had happened – I am sorry, with the letter provided by the club to Mr Zhu:

was arguably a right granted to Zhu in terms of cl.5 of the Deed Poll which cut down the effect of cl.3 of the Deed Poll.

Clause 3 was an absolute stopper in terms of SOCOG’s prior written consent, the failure to seek which, of course, meant that, among other things, we were never advised of what was going on.  In our submission, error is shown there because 5 can do no such thing.  That is a bootstrap’s argument.  There are not rights granted by the club to do something which it was never authorised to do, it was never authorised to permit and it therefore could not grant.  There could be no right in China granted by the club – see the licence agreement provisions to which I referred yesterday.  For those reasons, a purely legal argument, the deed poll point we raised below was correct and it is therefore to be added to the list, in which it is unnecessary, as your Honours will have gathered – it should be added to the list of the superior rights upon which we rely for our justification.

HEYDON J:   Just one question about the structure of the notice of contention.  Ground 1 is the same as the former notice of contention.  Those particulars on page 2, are they particulars of it?

MR WALKER:   Of 2, your Honour.

HEYDON J:   They are particulars of paragraph 2?

MR WALKER:   Yes.

HEYDON J:   And paragraph 2 is, as it were, saying “Mr Justice Sheller is not correct but this is what we argued to him and what he should have found”.

MR WALKER:   That is right, yes, that the deed poll had been breached because clause 5 did not have the dispensing effect.  That is the point upon which their Honours found against us.  Clause 5 had the effect that, lo and behold, the club had granted rights and those rights were to do the very thing that clause 3 said you could not do without SOCOG’s prior written permission.  Now, that is not how clause 27 described the effect of the deed, but putting that to one side, it is not what clause 5 means anyhow – “rights granted”, they must be rights and they have to be granted.  Neither existed in this case. 

Your Honours, it is not the case that by reason of the statutory remedy being all of apiece with the statutory prohibition in the Commonwealth Act that we were forbidden to act with the capacity given by our New South Wales Act and, as a party to the various contracts to which we have already made reference, that we were thereby prevented from acting out of court as anybody could act out of court, for example, in a course which is justified for the purposes of the tort of procuring breach of contract or interfering with contractual relations.

GUMMOW J:   Well, that becomes circular, does it not?

MR WALKER:   It is not circular, your Honour, to note that as well as section 12 and its statutory remedy we also had independently contractual rights, that we also had independently contractual obligations.  That is not circular; that is to note that we had several bases upon which we could act.  One of the bases upon which we could act required going to court because that is all the law gave us.

GUMMOW J:   We being whom?

MR WALKER:   SOCOG.

GUMMOW J:   Contractual rights against whom?

MR WALKER:   We had contractual rights against the club, in particular.

GUMMOW J:   This is a tort case.

MR WALKER:   But, by definition, a defendant in one of these tort cases does not have contractual rights against the plaintiff, by definition.  That does not mean that you cannot justify because you do not have ‑ ‑ ‑

GUMMOW J:   Well, that is what we have been debating.

MR WALKER:   Yes.  It would, in fact, destroy the whole concept of the possibility of justifying, that is just cause, if you needed to have contractual rights against the person whose contract you have destroyed and, in our submission, there is no call in principle to do without a doctrine of justification altogether.  Finally, the decision of the Privy Council from The Gambia, SOS Kinderdorf v Bittaye [1996] 1 WLR 987 in the passage from 993 to the top of 994 is, in our submission, not persuasive reasoning. Having referred to the Boston Deep Sea v Ansell authority which, of course, itself is referred to in Shepherd v Felt & Textiles, the reasoning simply immediately proceeds, fourth‑last line on 993:

that principle cannot reasonably be applied to one who interferes with contractual relations between employer and employee -

to which the immediate query is why not?  That person is much less likely to know, for example, of matters germane to those dealings or private to those contracting parties than the parties would be.  That is one comment.  There is simply an assertion, rather than demonstration in the next sentence:

The interference must be capable of justification as at the time it takes place.

That appears to be meant by their Lordships as being must have been subjectively a matter of consciousness of the actor as they acted.  However, another reading of that sentence is that it is exactly what Sir George Rich was talking about.  It was capable of justification.  Now, we then call in aid the fact that the evidence in this case shows that we were concerned about overseas trading without all the approvals.

Finally, the last sentence of the passage relied upon by our learned friends contains the following unfinished business:

In any event circumstances such as to justify an employer in dismissing an employee cannot, except perhaps in exceptional circumstances –

leaving that entirely open –

constitute justification for a third party interfering with the contract.

Well, that will depend, of course, entirely upon what interest the interferer may have in the conduct which is impugned or otherwise between the parties to the contract.  Ours is a case where conduct which may well have been properly regulated by the agency agreement was of direct interest to us because it was conduct by somebody who purported to be a sub‑licensee of the very things that we had ourselves licensed to one of the contracting parties. 

A matter I need to correct is that when answering your Honour Justice Gummow concerning the absence of contractual nexus between SOCOG and Mr Zhu, I should have contrasted that with the fact that he did owe us obligations under the deed poll.  The deed poll is expressly in favour of SOCOG.  Not contractual, but all the more reason, in our submission, to demonstrate the superiority of the right or the obligation owed to us.  The deed poll is in favour of SOCOG.  May it please your Honours.

GLEESON CJ:   Thank you, Mr Walker.  Yes, Mr Kelly.

MR KELLY:   May I first correct a rather substantial factual error that my learned friend has made by directing your Honours’ attention to volume 5 of the appeal books.  There your Honours will see a copy of the statement of Mr Wyness.

GLEESON CJ:   Page?

MR KELLY:   At page 1111, volume 5.  Mr Wyness was a witness called by SOCOG.  This matter was part of my learned friend’s own case before Justice Bergin, and your Honours will see commencing at paragraph 32 the effect of the evidence is that throughout the period from 31 July 1999 to 31 October 1999, Mr Wyness was under the immediate instructions of SCOG and reporting to them.  Your Honours will that in paragraph 32 Mr Wyness says that although he remained at the Chatswood office:

The remaining three TOCMS staff were relocated to SOCOG’s offices at Broadway, where they worked under the direction of Ms Ford.  Ms Ford provided me with directions in relation to administrative matters related to the winding up of The Olympic Club Trust including payments to creditors.  I understood that she reported to Paul Reading of SOCOG.  My involvement with The Olympic Club in that period was limited, however, and confined principally to resolving issues concerning creditors of TOCMS.  I met with Ms Ford on only one occasion during that period to obtain instructions in relation to payments to some creditors.

Starting with that material, one goes over the page to 1113, under the heading “Termination of Agency Agreement”, the commencement of paragraph 38:

In about mid September 1999 Paul Reading of SOCOG telephoned me –

The balance of that sentence was objected to and rejected, but your Honours then see in paragraph 40:

On or about 21 October 1999, I attended a meeting with the plaintiff.  That meeting followed a request that I meet with the plaintiff when I spoke to him on his mobile telephone . . . I said to the plaintiff words to the following effect:

“SOCOG has asked me to terminate the arrangement.  I would be happy to introduce you to SOCOG to discuss the arrangements” –

et cetera.  Then over the page on 1114, paragraph 44:

Following the direction I had received from Paul Reading of SOCOG that TOCMS terminate its arrangements with regard to the plaintiff, at about the end of October 1999 I instructed Kauffman & Peters, solicitors, to prepare a draft letter for me to forward to the plaintiff confirming the termination of the Agency Agreement. 

Then there is a copy of the draft, and that is the document which became 5 November.  So, throughout that period, Mr Wyness is relevantly acting at the direction of SOCOG.

KIRBY J:   Yes, but we cannot ignore the fact that he had been an officer of the club. 

MR KELLY:   Quite so.

KIRBY J:   He had been, on one view, acting in some rather odd ways, getting the Chinese translation in the way he did.  Indeed, on one view, he was part of the very problem of the loose cannons that SOCOG was determined – and under the Indicia Act had certain powers – to respond to. 

MR KELLY:   Not so, your Honour, because ‑ ‑ ‑

KIRBY J:   Though he was after the date an officer – or under the control of SOCOG, he was part of the problem.  Therefore, it is a little bit rich to be blaming SOCOG for the actions of Mr Wyness, which were all of a kind with the sort of problem that had led to SOCOG’s intervention with the club.

MR KELLY:   Not so, your Honour, because firstly the suggestion that Mr Zhu was a loose cannon is totally unsupported in the evidence.  There is no finding to that effect.  Her Honour found precisely the opposite, that throughout his period of engagement Mr Zhu was attending to the agency and discharge of his responsibilities with the utmost enthusiasm.  He devoted a huge amount of time and money, made some 54‑odd trips around China, but there are specific findings to the effect that ‑ ‑ ‑

KIRBY J:   Yes, but this was all at the behest of the club, without, at that stage, the consent of SOCOG under the statute of the Australian Parliament.

MR KELLY:   I will come to that in a moment for that is another error in my learned friend’s chain of title, where I will, if I may, show your Honour that relevantly Mr Zhu was authorised.  But, for present purposes, it is important to recall that within that period, 31 July to 31 October 1999 one has the important event, which occurred on 30 August, when all of the Chinese translations were forwarded to Mr Wyness for approval, and the letter seeking approval seeks approval of the club and SOCOG.

GUMMOW J:   What is the reference to that letter?

MR KELLY:   Just while we are digging that out, your Honours, the act of leaving the documents on the corner of the desk was part of the act of Mr Wyness acting on instructions of SOCOG to bring the agency to an end.  It was SOCOG’s – the club’s conduct, relevantly part of the process of inducement of breach, not anything which can be sheeted home to Mr Zhu.  The documents, of course, were put together by the printer using copies of the fax sheet.  That was the precise purpose of them being prepared, so that they would be faithful copies of the club’s material in the Chinese language for use in China, and they were presented on this occasion for the exact purpose of them being checked and approved.  Now, my learned friend turns to those documents and puts them forward as some form of breach, when they are precisely the opposite.  They are conduct in compliance with Mr Zhu’s obligations, not in breach of them.  We will have that reference in a minute, your Honours.

May I take your Honours in the meantime to the chain of title, to which my learned friend draws attention.  Upon closer examination your Honours will see that the chain of causation does not suffer from the vice of which my learned friend complains.  Taking it step by step, one recalls, of course, that we are focusing on the exception in clause 5 to the deed poll.

GUMMOW J:   Page? 

MR KELLY:   That is at page 1444.  Justice Bergin found that TOC was an Olympic body and that TOC relevantly granted rights.  The only relevant right is any right in relation to the use of the Olympic‑related indicia and images.  The question really is, was there any such grant?  And, of course, there was.  If one turns one’s attention to volume 4 – well, before I get to that, perhaps volume 6 is the first volume to which I should take your Honours, the Olympic Club licence agreement.  The starting point for analysis is at page 1146.

KIRBY J:   We have already been taken to that page.

MR KELLY:   I do not think your Honours have been taken to the relevant elements, therefore I will accelerate through.  Your Honours will see that 3.1(a) and (b) contain confirmations: 

(a)      confirms that the following rights and approvals have been granted to the Trustee . . . 

(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. 

We then go to A1 and A2; A1 is at page 1166.  Your Honours see that the right in paragraph 1 is:

The right in Australia from 26 February 1998 until 31 December 2000 to use the SOCOG Marks on Consumer Communication Vehicles in connection with the promotion and advertising of the Olympic Club to indicate a relationship or association with the Games or SOCOG –

One sees at 1167 the same form of words, the same grant of the right in relation to AOC rights, but the critical concept is “Consumer Communication Vehicles”.  That, of course, is not a reference to a motor vehicle, that is a reference to the defined term which one sees at page 1142.  At page 1142 we see:

“Consumer Communication Vehicles” means letterheads, stationery, display materials and other advertising, promotional and public relations materials approved by SOCOG to promote the Olympic Club pursuant to Appendices A1 and A2.

So that one has a grant to TOC of the right to use those consumer communication vehicles in Australia.  Now, the gap which my learned friend has not filled is that proof in relation to approval by SOCOG.  We take, for example, the letterhead of TOC.  That is the single piece of ‑ ‑ ‑

GUMMOW J:   Is there anything about sublicensing in this instrument?  There is not, is there?

MR KELLY:   There is in relation to - the grant of agency, subagency, no, but ‑ ‑ ‑

GUMMOW J:   Of the consumer communication vehicles?

MR KELLY:   Not that I have discerned your Honour, but I have not looked for that and I will endeavour to do so.

GUMMOW J:   It is a question of construction as to whether there will ordinarily be letters including sub-licences.

MR KELLY:   Yes, your Honour.  Your Honour has already seen that all of my learned friend’s complaints when it comes to indicia and the like all relate to letterheads and bits and pieces of stationery and other advertising promotional and public relations material.  He has not set about to prove that the material in question, for example, the letterhead of TOC, The Olympic Club, that was not approved by SOCOG.  It is inherently unlikely that something as elementary as the letterhead of the Olympic Club failed to get approval by SOCOG.

There was a gap in his evidence.  He has not called Mr Reading or any other senior officer or anybody from SOCOG to give evidence one way or the other as to whether the subject matter of the consumer communication vehicles was approved or not approved, and absent any such witness there is no reason to think that any of them could have said anything which would have assisted my learned friend’s case from which one should conclude that all of the letterhead, stationery, display materials and other matter on which the offending marks are supposedly to be attached, was approved by SOCOG, and that there is no basis, when one focuses on that as the subject matter of the grant of the right and these operative provisions as the grant, there is no conclusion to which one can come other than that TOC did grant the relevant right to use the relevant intellectual property of the Olympic movement, at least in Australia.

GUMMOW J:   SOCOG?

MR KELLY:   SOCOG granted it to TOC and I will now take your Honour to the provision in this agreement which entitles TOC to then grant it to Mr Zhu.  That provision, of course, is to be found ‑ ‑ ‑

KIRBY J:   Is that authorised by the statute of the Parliament?  I mean it is one thing for SOCOG to do things which maybe are within the implication of the Parliament, but in delegatus.

MR KELLY:   I think it is, your Honour.  I will turn to it in a moment, but my recollection is that the words are “granted by SOCOG or any authorised user” and once again the burden of proof is on SOCOG to prove, for example, that TOC was not an authorised user ‑ ‑ ‑

KIRBY J:   Yes, but we look at the statute.  I keep saying that if it is in the statute it is in the higher law and it will have to be obeyed.

MR KELLY:   Certainly, your Honour, but for the purposes of proving a case in justification, if the statute empowers SOCOG or authorised users to grant the relevant licence ‑ ‑ ‑

KIRBY J:   Well, that would be relevant, yes.

MR KELLY:   Then it is a matter for my learned friend to show ‑ ‑ ‑

GUMMOW J:   Section 12(1)(c) talks about “a licensed user”.

MR KELLY:   Yes, your Honour.  It is up to my learned friend to adduce evidence, to prove that there was no grant by SOCOG or any other authorised user of these consumables and it led no evidence at all.

The point at which TOC becomes authorised to grant these relevant rights to Mr Zhu is in clause 3.3(h) of the licence agreement at page 1148.  I think your Honours have had attention drawn to 3.3(g) at line 30, which provides that:

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;

But clause (h) goes on to say that:

the Trustee [TOC] 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;

So that is sufficient ‑ ‑ ‑

KIRBY J:Is Mr Zhu to be taken as a contractor or what?

MR KELLY:   Mr Zhu is an agent.  Mr Zhu was appointed as an agent of the trustee.  So far as the relevant subject matter, the use of the indicia and the like, is concerned, there was a grant to Mr Zhu by TOC, there was a grant by SOCOG to TOC and all of those facts satisfy the requirements of paragraph 5 of the deed poll and lead inexorably to the conclusion that Justice Bergin was entirely correct to find that therefore there was no breach of the deed poll and her Honour also found that there was, for the same reason, no breach of the Act, because TOC is the authorised user.

GUMMOW J:   Now, wait a minute.  The club logo appears at 1178.  That is what we have just been talking about in clause 3.3, is it not?

MR KELLY:   Yes, your Honour, that is the club logo.

GUMMOW J:   Now, was the club logo a Games indicia within the meaning of the statute, the federal statute?  I am not sure it was.

MR KELLY:   Yes, I believe so.  Its constituent elements are.  We would need to check that to be absolutely certain.

GUMMOW J:   Well, it has the word “Olympic” in it.

MR KELLY:   It does and it has ‑ ‑ ‑

HEYDON J:   Sydney 2000 and the rings.

GUMMOW J:   And it has the rings.

MR KELLY:   And the boomerang.  I would not like to suggest to your Honour that it is not covered by the Act in that regard.  I believe it is, but one would check.  One also sees at 1177 the AOC emblem, not that there has been any suggestion of its use.

GUMMOW J:   What was being used in the materials Mr Walker showed us was at 1178, was it not?

MR KELLY:   Yes.  The club logo, where we used the letterhead that was provided to us for the purpose of the agency, it included naturally enough ‑ ‑ ‑

GUMMOW J:   And it was those materials that were put to Mr Wyness for his approval.

MR KELLY:   Yes, in Chinese.  My learned junior has found the correct page.  Page 1683, volume 8, one sees a copy of the letter of 30 August 1999, during the period when Mr Wyness is in there acting on instructions from SOCOG:

Dear Keith

We have designed a set of printed material for the International Members of the Olympic Club in China.  They are:-

1.        The Olympic Club folder –

as one would expect, it is necessary to have material in the Chinese language if one wishes to sell in China –

2.        The Olympic Club International Membership Privileges and Benefits

3.        The Olympic Club International Membership Application Form . . . 

4.        The Olympic Club International Membership Card

5.        The Fact Sheet in Chinese –

that is the fact sheet that my learned friend has made reference to –

We are looking forward to having the approval of the Club and SOCOG.  Please feel free to contact me –

and a phone number is given, and that is Mr James Chang, otherwise James Zhang, the printer from whom various early drafts were picked up by the police and now put into evidence as suggesting something other than the entirely proper discharge of the responsibilities of an agent. 

All of this material is marked with, where it is on letterhead, the very indicia about which my learned friend seeks to complain.  My learned friend has pointed to paragraph 3 of the marketing restriction deed poll, in particular, the covenant not to refer to any Olympic body or use the word “Olympic” or the word “Games” or the words “Sydney 2000” or anything else in that lengthy list, but that is the very thing on these consumable vehicles.  That is the very thing in which the relevant rights were granted, and there is no suggestion that there was any other form of use of symbols or marks.  One did not go around putting symbols and marks on walls or billboards or anything like that.  It is entirely limited to this very same subject matter. 

The net result is that for the purposes of use in Australia the authority is complete and perfect, but what about China?  The simple proposition is, your Honour, that this agency agreement, in the form of 9.1(a), expressly provided that Mr Zhu should obtain all – I will get the exact words:

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. 

Now, those words “appropriate and required approvals and authorisations” are wide enough to cover whatever needs to be obtained in China.  So, far from this agency purporting to authorise Mr Zhu to make use of Olympic indicia and images in China, it did not give any such authority at all.  To the opposite, it required him to do all things necessary and sign all documents, et cetera, reasonably necessary to obtain those things, whatever they may be.  Indeed, what are they?  My learned friend boldly asserts that they must be something special.  They must comply to some unstated standard.  Your Honours will not see any evidence of precisely what it was in China that was appropriate and required. 

There is no reason to read “appropriate” and “required” as requiring anything special at all.  Having attended upon Mr Tu, the secretary‑general, and Mr Yu, the vice‑president, the gravamen of that is that Mr Zhu was not required by them to do anything in particular.  He was told, effectively, that what he was doing was appropriate, hence the offers of support; that nothing was specifically required; the market was open and he could go for it.  If it were the case that under some law of China a particular thing was required, for example, a travel agent’s licence, then it behoves SOCOG to prove as a matter of Chinese law what that requirement was if it is to suggest that there was a breach of clause 9.1 or a breach of any other requirement of law or otherwise by Mr Zhu.  It did not even ‑ ‑ ‑

GUMMOW J:   Could SOCOG have obtained against Mr Zhu injunctive relief based on the deed of covenant, or would it be limited to damages?

MR KELLY:   One would very much doubt if its chances of success in obtaining an injunction would be very high.

GUMMOW J:   Assuming a breach of that deed.

MR KELLY:   Assuming a breach?

GUMMOW J:   Yes.  What would flow?

MR KELLY:   If the breach was in the nature of a conversation at Parramatta with Mr Ya Fa Wang in the weeks leading up to this press conference in Shanghai in which one of the early drafts of – one of the translated Chinese documents was in hand and shown to Mr Ya Fa Wang, and that was the beginning and the end of it with no threat of any continuing such conduct, there would be no prospect of an injunction, and one would have thought little prospect of damages, for what has it led to, other than a transaction, the net result of which would be a flow of funds to SOCOG.

KIRBY J:   It arguably possibly is the very haemorrhage which the Australian Indicia Act is designed to stop.  Just imagine if the whole world just goes on people with loose cannons running around the world using the symbols and so on.  It would make the Australian Games look very like a group of hicks trying to run the thing.  SOCOG had the responsibility under the Act of the Australian Parliament to make sure that haemorrhage did not happen.

MR KELLY:   But your Honour is assuming that there was a haemorrhage.  Your Honour is assuming a breach.  If there was a breach ‑ ‑ ‑

KIRBY J:   I accept the force of what you have said.  You say there is a chain of title, it has all been done above board, it is all traceable in the documents and it has all conformed to the Act.  If that so, end of problem.

MR KELLY:   Yes, your Honour, but the problem does not really arise because SOCOG has not proved the threshold elements.  It has not proved, for example, that TOC was not a licensed and authorised user.

KIRBY J:   You would have thought Mr Reading, who was the source of the suspicion that seems to have set in train the events that ultimately led to the arrest of your client, would have braved the witness box.

MR KELLY:   Absolutely, your Honour.  Mr Reading is on one view the answer to all of SOCOG’s problems.

KIRBY J:   If he thought there were loose cannons, why did he not come along to Justice Bergin and tell her Honour about the loose cannons? 

MR KELLY:   Quite so, your Honour.  If it was seriously to be contended on SOCOG’s behalf that there was any concern about misuse of the intellectual property of the Olympic movement, why did he not, in the days leading up to the arrest, instead of, to use her Honour’s words, shuffling between the option of repaying the $260,000 or giving Mr Zhu 742 kits, why was he even contemplating giving over these kits if he had the slightest concern?

GLEESON CJ:   Those kits would have all made use of indicia, would they not?

MR KELLY:   Absolutely.  We speak of 742 kits perhaps rather too rapidly.  Her Honour found, for the purposes of the damages calculation, the probability was that Mr Zhu would have sold 2,500 kits.  The 742 is about a third of that number.  It is inconceivable that SOCOG could have contemplated that Mr Zhu himself would be wanting 742 plastic bags or 742 invitations to the dress rehearsal for the opening ceremony.  He would cut a particularly lonely figure sitting there in the middle of a block of 742 seats.  The contemplation of the provision of the kits showed quite plainly, in our respectful submission, that what SOCOG was contemplating was permitting Mr Zhu to go ahead and use and allocate those 742 kits to his customers, unless he has got 742 friends, and one could go on.

My learned friend commenced to take your Honours trawling through some of the more ancient history, but he did not deal with the important fact that at the critical moment that was the option which her Honour found was being actively considered by SOCOG, and with that finding, how can it be said otherwise that there was any concern at all about loose cannons.  Why would you give 742 kits to a loose cannon?  The whole concept is an exaggeration.

My learned friend still cannot resist the temptation to treat Mr Zhu as though he was anything other than a person worthy of suspicion.  Mr Zhu provided the single largest amount of revenue for this club in the last year of its life.  Mr Zhu, on her Honour’s findings, exerted himself with unequalled zeal to discharge his duties as an agent.  In the meantime, back at the ranch, you have Reading and others shuffling about, misleading the consul of the People’s Republic of China when he attended upon SOCOG, not telling the consul who came for the purposes of satisfying himself that with the prospect of 10,000 citizens of the People’s Republic of China coming to Sydney that they were coming - something real, something genuine.  He was not told by any officer of SOCOG that it had already decided that Mr Zhu was a loose cannon and operations in China should be stopped.

GUMMOW J:   What do you say about Mr Walker’s submissions on this question of justification?  It still appeared pretty critical.

MR KELLY:   If the starting point is establishing an equal or superior legal right, that has no legal right.  No relevant legal right has been established at all, let alone a legal right which is equal or superior.

GUMMOW J:   Well, there is the deed of covenant he says, amongst other things.  Apart from the statute, he says there is the covenant.

MR KELLY:   But the covenant, your Honour, has no effect by reason of the exception.  Once one sees that Justice Bergin was entirely correct in her finding that TOC as an Olympic body granted relevant ‑ ‑ ‑

GUMMOW J:   Granting that then, do you also say the Commonwealth Indicia Act had no relevant breach?

MR KELLY:   Correct, as her Honour found, it had no application because the TOC - there is no basis for saying that TOC is not an authorised user.

HEYDON J:   Let us say you are wrong on that, then the question of justification and the search for an equal or superior right becomes a live question.

MR KELLY:   That takes us to the point where we need to deal with a number of elements.  Firstly, we must distinguish clearly between the position in China and the position in Australia.  So far as China is concerned, we rely upon our submission, in terms of section 11 of the SOCOG Act and the operation of the charter, that SOCOG had a positive duty not to interfere with the agency agreement because, under the charter, which as a matter of law, by operation of section 11, had to be given effect so far as practicable, any step taken by it to terminate the agency agreement would have the effect of pre‑empting the rights of the Chinese Olympic Committee to make all relevant decisions in relation to approval in the People’s Republic of China. 

That is a positive legal duty that we contend on SOCOG, and with that as a starting point, it is impossible for SOCOG to justify.  So far from having a duty or a right to interfere, it had a positive legal obligation not to interfere, but to leave it to the Chinese.  The evidence is that the relevant Chinese people were already seized of the project.  They had it in hand, they were managing it in their own way.  There was no basis for any suggestion that they were not doing their duty in accordance with Chinese law and the Olympic Charter, from their point of view.  If one accepts that submission, then one does not get to any balancing act at all ‑ ‑ ‑

GUMMOW J:   I want to know what your submission is on the pre‑existence of this notion of balancing act, and do you conceive that this doctrine of justification has any role to play at all where what one has is an anterior right which is purely contractual? 

MR KELLY:   It has no role to play at all, none whatever.  Once my learned friends fell away from the pivotal element in the reasoning of the Court of Appeal, a finding that the contract required illegal conduct or permitted, in effect, exploitation of intellectual property in another place without relevant authority, once they fell away from that, all that is left is the barest of contractual rights, being a holder of, at the highest, a discretion.  Nothing even enters the equation of justification, it being well and truly held that the commercial or best interests of an interferer, or people with whom the interferer is associated, is not justification.  The cases are gathered in Edwin Hill.

A party standing in the position of SOCOG, with its grab bag of discretions, if logically we reach that position, is in no better position than a union official who is about to decide whether he will call a meeting of members and then call the members out on strike.  There is no difference in substance between the interests of organised labour and labour organisers and the interests of organised games, including the Olympic Games.  The Olympic Charter and its structure, although decorated with high sporting ideals, is a commercial or business event in which the interests which are variously asserted are purely commercial, whether they be interests of the party itself or other members of the movement. 

In a case such as the present, if one is left with the bare contract, as described by your Honour, and an unfettered discretion in exercising or not exercising that discretion one way or the other, SOCOG simply has no call at all on justification.  That subject matter just is not available.

Of course, we contend that the discretion is not unfettered, and hence our submission that there is a positive duty not to interfere.  Of course, we put the positive duty not to interfere not only on section 11 and the charter, but also on the charter itself as a contract to which the COC and SOCOG are each parties and there would be, in that context, without any difficulty, an implied undertaking on the part of SOCOG that it would not conduct itself in any manner so as to deprive the COC of its rights and benefits under the contract which would include the right to decide for itself.  Now, what use would be made of intellectual property in its jurisdiction.  So I think that is the way we would put it, your Honour.

GUMMOW J:   Thank you.

MR KELLY:   I think I did promise Justice Heydon a number of things, one of which was to indicate when it was that this defence of justification was first raised and the fact of the matter is that early in February 2001 the proceedings were fixed for hearing before Justice Brownie.  On 8 December the previous year, in effect, a few working weeks before the trial, a defence was filed which raised for the first time justification, but that defence was bare of any particulars.  It merely asserted that any interference was justified.

At the hearing before Justice Brownie, during the first two or three days, there was an argument about what, by then, had been put forward as an enhanced draft amended defence which gave particulars which had hitherto been missing from the defence of justification.  After several days, by reason of the grant of leave to make those amendments, the hearing was vacated and I think leave was granted on 12 February to amend and by a document dated 25 February, an amended defence went on.  I think we have forwarded to your Honours copies of the two ‑ ‑ ‑

HEYDON J:   It says “FILED:  25 February”, but there is a stamp on it that says filed 22 February.  That is the one you were talking about.

MR KELLY:   Yes, your Honour.  Does your Honour have one dated, I think, 8 December, a shorter one?

HEYDON J:   Yes.

MR KELLY:   To which your Honours see at the end, the word “justification”.

GUMMOW J:   Yes, it is on page 2, paragraph 8(c), and then the second one we have ‑ ‑ ‑

MR KELLY:   Yes, and one can imagine a howl went up when that was received and ‑ ‑ ‑

GUMMOW J:   It has a file stamp on it.  It is filed in court on 8 December.

MR KELLY:   I think it may have been filed at a directions hearing.

GUMMOW J:   Yes, and then the other one, as had filed in the registry by the look of it, 22 February in the clause – the paragraph is 17, justification.

MR KELLY:   Yes, your Honour.  I think the history is shortly recorded at page 3253, in paragraphs 173 and 174 of the judgment of Justice Sheller.  In that context, his Honour notes that at no stage up until the time when Mr Zhu began his proceedings against SOCOG did SOCOG suggest such a breach, this is of the deed poll, or, as her Honour found, did such a breach excite the AOC or SOCOG representatives on the Olympic Club Committee to give any directions to TOC to cease the activities required by the agency agreement.  In that context, one indeed could then go on and add that the matter remained completely dead until the hearing was in it.

GUMMOW J:   You referred to Justice Sheller at what paragraphs?

MR KELLY:   That was paragraphs 173 and 174, in particular at 174.  At 173 his Honour sets out his reasoning to the effect that the deed poll must be read as an integral part of the contract between Zhu and TOC, and it would be absurd to read it as intended to contradict or defeat the agency agreement.  Your Honours recall it was brought into existence at the same time, and in relying on Justice Kirby’s reasoning in Hyde & Skin Trading v Oceanic Meat Traders, his Honour reasoned to the conclusion that there was no basis for a breach of the deed poll. 

We also undertook to provide to your Honours a note setting out references to the evidence and findings in relation to COC support for Mr Zhu’s project.  I think we have forwarded a short document in that regard.  We also undertook to check the legislative history.  We have done that and we confirm that the Federal Act expired on 31 December 2000 by reason of the operation of section 55 of that Act.  They are my submissions.

KIRBY J:   But the rights of the parties are preserved by the common law doctrine and the Acts Interpretation Act, I assume. 

MR KELLY:   Yes, your Honour.

GUMMOW J:   There is a special section in the Acts Interpretation Act, 8A I think.

MR KELLY:   Yes, your Honour.  They are my submissions, if it please, your Honour.

GLEESON CJ:   Thank you, Mr Kelly.  We will reserve our decision in this matter and we will adjourn for a couple of minutes to reconstitute for the next appeal.

AT 12.07 PM THE MATTER WAS ADJOURNED