Australian Rugby Football League Ltd & Ors v News Limited & Ors S182/1996 [1996] HCATrans 454 (15 November 1996)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S182 of 1996

B e t w e e n -

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED

First Applicant

NEW SOUTH WALES RUGBY LEAGUE LIMITED

Second Applicant

SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

EASTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

ST. GEORGE DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

SYDNEY TIGERS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

WESTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

MANLY WARRINGAH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

PARRAMATTA DISTRICT RUGBY LEAGUE CLUB LTD,

GOLD COAST SEAGULLS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

ILLAWARRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

NORTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

SOUTH QUEENSLAND CRUSHERS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

NEWCASTLE KNIGHTS LIMITED

Third to Fourteenth Applicants

and

NEWS LIMITED

First Respondent

SUPER LEAGUE PTY LIMITED

Second Respondent

AH IL PTY LIMITED,

AH GC PTY LIMITED,

AH EA PTY LIMITED,

AH CR PTY LIMITED,

AH CT PTY LIMITED,

AH CB PTY LIMITED,

AH BR PTY LIMITED,

AH BA PTY LIMITED,

AH MN PTY LIMITED,

AH NE PTY LIMITED,

AH NO PTY LIMITED,

AH NQ PTY LIMITED,

AH WR PTY LIMITED,

AH WE PTY LIMITED,

AH SG PTY LIMITED,

AH SQ PTY LIMITED,

AH SO PTY LIMITED,

AH PE PTY LIMITED,

AH PA PTY LIMITED,

AH AU PTY LIMITED

Third to Twenty-Second Respondents

Office of the Registry

Sydney No S183 of 1996

B e t w e e n -

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED

First Applicant

NEW SOUTH WALES RUGBY LEAGUE LIMITED

Second Applicant

SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

EASTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

ST. GEORGE DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

SYDNEY TIGERS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

WESTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

MANLY WARRINGAH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

PARRAMATTA DISTRICT RUGBY LEAGUE CLUB LTD,

GOLD COAST SEAGULLS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

ILLAWARRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

NORTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

SOUTH QUEENSLAND CRUSHERS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

NEWCASTLE KNIGHTS LIMITED

Third to Fourteenth Applicants

and

BRISBANE BRONCOS RUGBY LEAGUE CLUB LIMITED,

CANBERRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

CANTERBURY-BANKSTOWN RUGBY LEAGUE CLUB LIMITED,

CRONULLA-SUTHERLAND DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

WESTERN REDS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

PENRITH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

SYDNEY BULLDOGS LIMITED,

AUCKLAND WARRIORS RUGBY LEAGUE LIMITED

First to Eighth Respondents

Office of the Registry

Sydney No S184 of 1996

B e t w e e n -

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED

First Applicant

NEW SOUTH WALES RUGBY LEAGUE LIMITED

Second Applicant

SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

EASTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

ST. GEORGE DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

SYDNEY TIGERS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

WESTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

MANLY WARRINGAH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

PARRAMATTA DISTRICT RUGBY LEAGUE CLUB LTD,

GOLD COAST SEAGULLS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

ILLAWARRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

NORTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED,

SOUTH QUEENSLAND CRUSHERS RUGBY LEAGUE FOOTBALL CLUB LIMITED,

NEWCASTLE KNIGHTS LIMITED

Third to Fourteenth Applicants

and

COWBOYS RUGBY LEAGUE FOOTBALL CLUB LIMITED

Respondent

Application for special leave to appeal

TOOHEY J

GAUDRON J

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 15 NOVEMBER 1996, AT 9.02 AM

Copyright in the High Court of Australia

MR R.J. ELLICOTT, QC: Your Honours, I appear with MR A.J.L. BANNON, SC and MR D.M. YATES for the two Leagues. (instructed by Gilbert & Tobin)

MR J.J. SPIGELMAN, QC: I appear for the third to fourteenth applicants. We will be adopting the submissions of Mr Ellicott and will not be seeking to make any of our own. (instructed by Gilbert & Tobin)

MR T.E.F.HUGHES, QC: May it please the Court, I appear with my learned friends, MR J.D. HEYDON, QC, MR C.P.COMANS, MR J. T. GLEESON and MR T.D. CASTLE, for the respondents to the application who what I might describe as are the News Parties. (instructed by Atanaskovic Hartnell)

MR C.A. SWEENEY, QC: Your Honours, I appear with MR J.J. GARNSEY, QC and MR P.J. DOWDY for the Club respondent parties. (instructed by Phillips Fox and instructed by Suthers & Taylor)

TOOHEY J: And you, I think, are sharing the allotted time with Mr Hughes, are you, Mr Sweeney?

MR SWEENEY: So it seems, your Honour.

TOOHEY J: Well, that is how it does seem, yes.

MR J.R. SACKAR, QC: I appear with MS P.P. WINES for those persons seeking leave to intervene. (instructed by Gadens Ridgway)

TOOHEY J: Mr Ellicott, do you have anything to say about the application to intervene?

MR ELLICOTT: We would oppose that, your Honour. We will leave it to the Court. I do not want to take up time.

TOOHEY J: What is your approach, Mr Hughes?

MR HUGHES: We would support it, your Honour.

TOOHEY J: Mr Spigelman?

MR SPIGELMAN: We oppose it also, your Honour.

TOOHEY J: Yes, Mr Sackar, what do you want to say about the application to intervene?

MR SACKAR: If the Court pleases, we have put our submissions in writing. We do not wish to say any more than this: there are any number of reasons why we should be given leave to intervene, not just because we were given leave to intervene below, without opposition, as I recall it, but because the orders we have identified, many of which directly affect players and coaches, most of which we have identified, indirectly affect us. We have a clear interest in making submissions in respect of, certainly, the remedies, that is the orders that may ultimately be made by the Court. My learned friends seek to reinstate all of them and, for those reasons and for the reasons set out in our submission, we respectfully seek leave to intervene.

TOOHEY J: Do I understand you to say that if leave to intervene is granted, you would not wish to speak to the written submissions?

MR SACKAR: No, we would be content to rely upon our written outline.

TOOHEY J: Yes, thank you. Mr Ellicott, you are the one in opposition?

MR ELLICOTT: I will leave it to the Court, your Honour. If they are not going to take up time, that is important to the Court. Your Honours have read the submissions. Intellectually, it is not a problem.

TOOHEY J: There will be leave to intervene. Yes, Mr Ellicott.

MR ELLICOTT: Your Honours, every case has its own importance, especially to the litigants, but this case is unique. It is of special interest to literally millions of Australians of all ages who have been participants in and followers and supporters of the game of rugby league for years. They have been confronted and probably bewildered by two decisions of the Federal Court which are totally opposed. Because the case involves important questions of law, they can, we submit, properly look to this, their highest Court, to resolve those issues. As Justice Davies said, on the application for a stay, "the issues are of very great importance from the public's point of view."

The game of rugby league, unless this Court intervenes, will face division and all that that entails. It can only lead to the weakening, if not the destruction, of the game as a major sport. We say that that is most important, not only to the sport itself, not only to sport generally, but to those millions of Australians who are interested in the game of rugby league.

By reason of its public importance alone, it justifies the intervention of this Court on the points of law involved. Indeed, where large public interest is involved, confidence in the administration of justice justifies and, indeed, requires the intervention of this Court. There must be cases, we would submit, which are of such importance, publicly, that the Court will readily entertain it. We say that this is such a case.

I just want to say something about the facts. The respondents, in their written submissions, have attempted, we say, to confuse the Court into a belief that all that is involved are questions of fact. Now, this is far from the truth. As to the facts, there is no dispute as to the primary facts found by the trial judge. They cover, it is true, a lengthy period but they are not complex; they are easily comprehended; they relate to the running of a highly popular sport and are of a type which are, we would submit, within the ordinary experience of most of us and, indeed, they are set out in the judgment of the trial judge.

There will be an attempt by my friend, no doubt, to suggest that this appeal is futile. If I can say in the limited time I have, because I do not have time to develop it, but without throwing doubt on any argument we would put on an appeal, if we do not succeed in getting orders against the players, we would still be entitled to powerful orders against News Limited and the Clubs. The aim of these proceedings has been to put the League together again. It have been riven asunder. If we are successful, we will welcome the Clubs back and any players that want to come back because the whole aim is to have this sport in Australia run together, as it has been for the last 86 years. Players, if free, of course, will need money and we would see it that this Court, should it agree with us on appeal, would be able to make appropriate orders which would cut them off from the financial power of News Limited which the trial judge found had corrupted targeted individuals. So, there is no futility in these proceedings. The orders that the Clubs would come back, the orders that News Limited, even if it was confined to Australia, should not engage in the game of rugby league in Australia would be most significant.

I want to address the question of fiduciary obligations. The true nature of the legal relationship existing between team sporting clubs themselves, between them and the central body needed to administer and control a team sport such as rugby league has never been the subject of consideration by this Court. Those relationships are aptly described as collaborative. The decision in this case has a potentially wide application not only to sports but also collaborative arrangements involving traditional commercial activity.

It is true that the Court in UDC v Brian did consider questions of fiduciary relationships but that case, on its facts, was in a very narrow sphere and of limited significance compared with this. The Full Court's decision on fiduciary obligations is based almost wholly on its interpretation of the articles of the League which it said acknowledged the freedom of the Clubs not to enter a competition and the League's control over the entry of Clubs into the competition. It concluded that these two factors pointed heavily against the existence of fiduciary obligations. In doing so, we say it applied wrong principles because it apparently had the view that the existence of that freedom and that power of control established the non-existence of fiduciary duties and it did so notwithstanding it had earlier noted that an entitlement to pursue one's own interests is not inconsistent with some fiduciary obligation existing to act in the interests of others.

TOOHEY J: When you say that the court below applied wrong principles, what do you mean? I say that because one of the arguments that is raised against you in the written material is that principles were accepted by the parties and that it was the application of established principle to the facts of the case that led the Full Court to the conclusion that it reached.

MR ELLICOTT: It ignored the principle that there could be situations where parties could act in their own interests but nevertheless there could be a fiduciary obligation existing and it went wrong in law and in that respect in an important way. It never undertook, for instance, an analysis of the total relationship to see if such an obligation existed and their failure caused them to go wrong. Nor did they consider each of the special duties pleaded separately. For instance, if I can take your Honours very quickly to the application book at pages 22 and 23.

At those pages there is set out the various obligations that we pleaded and they are limited in character. It was never said that all the assets of these Clubs were, in a beneficial sense, held upon trust for all the other Clubs in the League. That was never said. These were the duties which we say the Clubs and the League owed to the joint venture:

(a) to act in good faith and loyalty -

et cetera:

(b) not to do or permit to be done any act or thing which might adversely affect or derogate from the standards -

et cetera:

(c) to make full and proper disclosure.....

(d) not to place itself in a position where its duties to the other participants in the League Joint Venture conflict with its own interests;

(e) not to acquire a private advantage at the expense of the League Joint Venture;

(f) not to utilise its capacity and reputation referred to in paragraph 26 hereof otherwise than for the benefit of the League Joint Venture; and

(g) to apply its property towards the fulfilment and achievement of the objects of the League Joint Venture.

TOOHEY J: But you can say that about a whole range of commercial joint ventures which would not be thought to attract a fiduciary relationship.

MR ELLICOTT: Your Honour, those obligations are not found anywhere in the sense that they are not written down, but when one considers the conduct of the League and the Clubs for, after all, the League history shows that these Clubs came into existence after the League was established in 1908. They were the creature of the League but they were essential to the sport and all was set up to pursue the common object of promoting and controlling rugby league and that is what they have been doing for 88 years. Up until the incorporation all the individual members of the Clubs ultimately were the members of the League. On incorporation, the Clubs, through their representatives, we say, were members of the League. I know there is a debate about that and that is a separate issue of law which happens to be important in this case.

GAUDRON J: Is it really separate? I mean, would your fiduciary relationships argument hold up if they were not members of the League? Is it not a first step?

MR ELLICOTT: No. It is an important argument. They were members of the League and the trial judge so found and there is a real question of law involved, and we want to establish that point. When you come to look at the analysis of the articles by the Full Court you find that they will get definitions. For instance, they will say, "What does `Club' mean? `Club' means those who have been admitted to the League." "What does `League' mean? It means the New South Wales Rugby League." "How did they construe it?" They said that that means those who have been admitted to the competition. Now, there is a real question of interpretation there. We say that that is one of the threshold points that one would address on an appeal.

There are two possible views of that. One is that they are the representatives - are as agents and the Clubs are bound by the memorandum and articles as such, as a statutory contract or, alternatively, they are representatives of members and the members are the individuals, that the Clubs are represented by them but, as a matter of substance, the Clubs are part of the League and in that sense it is true to say that whether or not they are members may not matter ultimately. It may not matter because, in substance, they are and the substance is that they, and the League, have been pursuing this common object in the incorporated sense for 12 years or, in the unincorporated sense, for 88 years. All of their memo and articles have common objects and their are common object has been to promote and control the game of rugby league.

TOOHEY J: When you put it that way, it seems to amount to asking this Court to grant special leave in order to review a whole range of circumstances and documents and evidence with a view to reaching a different conclusion to the Full Court which does not really sound much like a special leave point.

MR ELLICOTT: Your Honour, if the Full Court has simply said - and I have addressed the importance of this case and I do submit that the Court will not push that aside and treat this as just another case. We would submit that in this case the relationships between clubs and a controlling body is a significant matter for sport generally, in all team sports, and that is important, but secondly, we are not asking for the Court to do other than look at the question as a basic question of relationships not dependent solely on what the Full Court decided which was simply, "Oh well, the Clubs don't have to join the competition", and "Oh well, the League controls the Clubs". The fact is that that control has been for the benefit of the sport. Those two indicia that the Full Court adopted were reasons, actually, why there ought to be a fiduciary obligation. That is where they went wrong and that is were, we say, an important question of principle arises.

Where is it that a line is drawn between the fiduciary duty or the non-fiduciary duty in situations where persons or clubs or companies or whatever it may be, in a collaborative arrangement, have the capacity to act in their own interests? Well, that is the point. It can be put another way: that the League and the Clubs were vulnerable. These two indicia made them vulnerable. Vulnerability is one of the basic propositions relating to the existence of fiduciary relationships. It is the capacity to do harm. If the Clubs with a good team stayed out of the League and offered that Club to another League, then obviously that is the capacity to do harm. They were all committed to the common object.

This brings me to another point. They were all entitled to expect that the other Clubs and the League would pursue the common object. If it happened to be the fact that a Club did not want to put in a team, which has not happened actually - it just has not happened, they have all wanted to do it. They have all been pursuing the common object for time immemorial almost, but it never happened. If they did not or if they could not - for instance, Newtown could not, but Newtown looked at its position and it is now in a minor competition. If a Club said, "We want to get out of football altogether", they would have to look at their objects. The memorandum says if they do not want to do it any more then they have got to go to the Equity Court or they have to give their money to the League or their property elsewhere. Now, the likelihood of that happening is remote. Their area of activity has been the promotion of the League.

The Full Court is so wrong, we would submit, that this Court will intervene to correct that error, even if I were wrong on all the other matters, and I submit I am not, these are the questions which we say would arise, "What are the correct principles to apply in a case such as this involving collaborative conduct?", or, as the categories of fiduciary relationships are not closed, "Is this another category?" "By what principle does one determine whether a party's freedom to withdraw from the collaborative venture prevents or inhibits the existence of fiduciary obligations?" "Is a power such as the League's power to control the admission to the competition inconsistent with the existence of fiduciary obligations?" "Is the reasonable expectation of parties that none will engage in conduct inimical to the attainment of the object of the venture an appropriate test?" That has never been considered by this Court.

It was considered by the Full Court including Justice Gummow in Commonwealth Bank v Smith and there are passages in Finn which are set at out at 730 and 731 in our submissions which deal with this question of expectation. Again, "What is the nature and extent of fiduciary obligations in a situation where parties' own assets which are acquired from" - and this is the fact - "used in and necessary for their involvement in the pursuit of the collaborative conduct and there is a mutual assumption of continuance?" Now, that is the finding of fact, that there would be a mutual presumption of continuance. "What is the extent of any trust in relation to assets?", and I repeat again, we are not saying and have never said that the assets were held upon trust in the beneficial sense. The trust that we are concerned about is that they be applied to the common object and not to some other object.

"What restrictions are there on parties' conduct outside the venture where the only reason for their existence is to be involved in the venture?" and, again, "What is the meaning of goodwill?" Your Honours, we say, with great respect, that there are real questions of law involved in this important case relating to fiduciary obligations.

In relation to trade practices - and time is passing - there are a number of questions of law which arise. The Court has never previously considered section 4D. It is a most important provision. Our analysis of these questions are contained in our statement in support and your Honours have obviously read them. There are some basic findings of fact, however, not challenged on appeal, which the Full Court accepted but ignored, or regarded as of little relevance but which we submit are critical to the proper application of section 4D in this case.

Now, before I go on to indicate those, may I just say this, that the section 4D case is not dependent on the fiduciary obligation case. If we are able to show that section 4D applies, then we have the commitment agreements and we have those to enforce.

TOOHEY J: And if you do not make that good?

MR ELLICOTT: If we do not make what good?

TOOHEY J: If you do not make good the argument in relation to the Trade Practice Act 1974 , what impact, if any, does that - - -

MR ELLICOTT: If we do not make that good but make good the other point, we can still succeed. If we make good or hold the view of the court below that there was a breach, an inducement to breach even the one-year contract, on the "headstart" principle, we would want to say that the Full Court was in error in saying that just one year was enough, on a "headstart" principle. They have misconstrued the "headstart" principle.

But let me just refer to these facts which we say were either ignored or treated as marginally relevant. First of all, there was room for only one national competition. Secondly, the Clubs only had the capacity to be involved in one top-level competition. Super League was a national competition involving the best of the best. They actually wanted to exclude the competitor, and that appears in the judgment of the Full Court. They wanted to exclude competition altogether. Then there were those statements which are replete in the judgment that they said they will never set up a rebel league. That meant that they would not be a competition organiser. They said it in November at the critical meeting; they said it later at another critical meeting in February 1995. One asks, "How many times do they have to say it to be believed?" The fact is that they told the Clubs, "We are not going to be a competition organiser" and, in that sense, people thought they were dead in the water.

Now, News' conduct, we have referred to that in our statement, as to being objectively dishonest; it involves secrecy, suddenness, and the use of its financial power to corrupt individuals and was well outside the norms of proper acceptable commercial conduct. The Full Court said that was irrelevant but actually what it was showing was that all that News was interested in was forced entry or a forced takeover. That is exactly what happened. They hoped - and this was fact: they expected that as a result of doing that the League would fall over and join with them. Now, these are facts which were either treated as marginally relevant or irrelevant.

TOOHEY J: You were faced, initially, with, what, a claim under section 45(2) of the Trade Practices Act relying on the exclusionary contract provision which took you back to section 4D and then section 45(2)(ii). Section 45(2)(ii) seems to have been, in the end, found unnecessary by the Full Court to deal with because of their finding of purpose. Is that the way that it emerged from the judgment of the Full Court?

MR ELLICOTT: Yes, that is right. But on a number of grounds, we say section 4D cannot apply. Indeed, it is amazing, having regard to those facts, that you could ever think of applying it, where the person who is seeking protection from the court, is saying, "We don't want to compete." That may sound like an emotive statement but it is a fact. They did not want to compete. It was a forced takeover. They hoped that the League would collapse. Those are all accepted facts. In our submission, that left 4D incapable of being applied. It is a primary boycott provision as opposed to section 45D. It is there to stop people who are competitive with each other from agreeing to exclusionary provisions, to exclude others.

There was no possibility of having such an agreement because News Limited did not want to come in. They wanted to take the League. They wanted to take whatever they could get of it, or take the whole of it and then reduce it to a certain number of teams. That is what this case was about.

TOOHEY J: I am not sure how that bears upon the exclusionary provision argument which focuses on the commitment and the loyalty agreement, does it not?

MR ELLICOTT: Yes, but the question of purpose is vital. Can I just take your Honours to some of those points that are involved and answer your Honour. First of all, there is a real question as to market. They said - and this is an important question of law - that market has no relevance to section 4D but, as your Honour pointed out, 4D comes out of 45 and 45 is replete with - it has a definition of "competition" which relates to market.

TOOHEY J: Yes, but that is tied in with the (ii) provisions. It is not tied in with the exclusionary provisions.

MR ELLICOTT: Yes, and the exclusionary provisions are a part of (ii). How can people, in the context of the Trade Practices Act, be competitive with each other except in a market situation? Now, I do not have time to develop that but I say that that is a real question. They have to be providing their services in trade or commerce. Now, what were they doing, the Clubs and the League? What they were doing was - and that comes out of the definition of "services"; the services have to be in trade or commerce. Now, the League and the Clubs were simply putting together a competition so that they could then engage in commercial activities which may well be trade or commerce. But the actual activity which surrounded these two agreements, that activity, was putting together the competition for five years. That is not in trade or commerce, that is internal management. Again, I do not have time to develop that, but that is a real issue and it will decide the case in our favour. Market will decide the case in our favour.

The question of exclusionary purpose: that raises a very important issue, as to whether a Full Court was entitled to overturn a trial judge's finding on subjective purpose and, if so, in what circumstances? Now, the Full Court's judgment is authority that it can, but here there was no evidence from rebel club witnesses as to their subjective purpose. My friend will try and suggest otherwise, but the evidence is about their subjective purpose. That had to be the evidence. They gave general evidence about what the purpose of the agreement was but they gave no evidence about their own subjective purpose. They claimed they executed it under duress and that is completely inconsistent with the notion that they did it openly and for an exclusionary purpose.

The oral testimony given by loyal Clubs contradicting exclusionary purpose was accepted and there was no cross-examination, virtually, on that. Mr Quayle and Mr Arthurson's evidence denying the purpose was accepted. Now, we say that that is a finding of primary fact by the judge. The Full Court, for some reason, has decided that that matter can be seen as a matter of inference. My friends refer to a case but that was a case where the judge below had got no help from the witnesses but here the trial judge had seen the witnesses and formed a view.

Now, there are other issues and likely to be. We say they have taken a theoretical test and if your Honours look at the reasons your Honours will see that what they picked up is the word, it was likely that there "could" be. Now, that is a theoretical possibility. The test of Justice Deane in Tillmanns' Case, would be it is likely that there "would" be. Now, they never accepted that test. That is another issue of law as to the meaning, "competitive with each other". The effect of the Full Court's judgment is that it held that an exclusionary provision need not relate to the area of competition between parties to the arrangement. That, again, is a critical point.

Mr Justice Wilcox in Eastern Suburbs said the two have to relate to one another. The Full Court has said they do not. Now, section 4D is a very basic provision and if these matters are to be left then, of course, it is a precedent to others to go wrong, we would submit, and they should not be left in that situation.

There is a question about competition for players' services. The players' services, their services are not services because it was a contract of service, not a contract for service, but the Full Court speculated about whether or not at some future date there might be some rearrangement and, obviously, we would say that was a mere theoretical possibility. But at the same time, we are saying that competition for the League services was never a question. There was never any competition. What they were doing was putting the competition together.

There are other serious issues relating to the arrangement or agreement. A question whether vertical agreements between the Club and the League - those agreements by themselves are unexceptionable. Now, there had to be some other agreement which was a horizontal agreement and that agreement was never established, we submit, so that the horizontal agreements gave rise to the vertical agreements. For instance, by 14 November, most of those agreements had in fact been entered into. Those are the vertical agreements. Any horizontal agreement - we say there was not one - came later. That is an important point.

TOOHEY J: That is about it, Mr Ellicott.

MR ELLICOTT: Your Honours, I notice the time has finish and there are other important questions.

TOOHEY J: Could I just ask you this before you sit down. In relation to the argument about cost claims, that really depends upon the loyalty and commitment agreements surviving and not being struck down by exclusionary provision, does it?

MR ELLICOTT: No.

TOOHEY J: No?

MR ELLICOTT: We pleaded the fiduciary obligation and - I did not quite follow what your Honour was putting to me but I do now.

TOOHEY J: Perhaps I put it very badly.

MR ELLICOTT: We pleaded the fiduciary obligation but that exists quite separately and we say that is not attacked - - -

TOOHEY J: No, I am sorry. We were speaking about - at least, I was intending to speak about the breach of contract argument which depends upon the loyalty and commitment agreements surviving and not being struck down by the exclusionary provision in section 4D. Is that the position?

MR ELLICOTT: Yes, your Honour.

TOOHEY J: Yes. Thank you, Mr Ellicott. Mr Spigelman.

MR SPIGELMAN: I have nothing, your Honour.

TOOHEY J: Yes, thank you. Mr Hughes.

MR HUGHES: Your Honours, the first point to be made is that there is no disagreement in this case about the appropriate principles. The questions relate to their application, that is, in the area of fiduciary duty.

The applicants' summary of argument, your Honours, lists at least 28 questions each of which in itself is said to be a question warranting the grant of special leave. Now, when one comes to look at those questions - they are stated in the opening pages of the summary - many of them - and we would itemise, for example, questions 1(a), 1(c) and 1(m) as really questions of fact dressed up or disguised as questions of law; others - and we instance question 1(e) - as being immaterial in the sense that however answered, they would not produce a result different from that reached by the Full Court. One of the questions propounded was expressly abandoned at trial and that is question 1(s), and its abandonment was noted by the learned trial judge at volume 2, page 316 of the application book.

Now, while the applicants complain - and my learned friend has addressed this point this morning - about the Full Court's construction of the word "likely" in section 4D(2) as meaning a real chance or possibility - that is question 1(g) - and paragraph 30(i) in their argument, they, the applicants, urged that very test on the Full Court in these terms, and I quote from page 51 of the League's submissions on section 4D:

In this context -

they said -

the reference to "likelihood" in relation to competition is a reference to a real or not remote chance or possibility, regardless of whether it is less or more than 50 per cent.

And the submission cited Tillmanns Butcheries and Global Sportsman.

GUMMOW J: I think it is said, Mr Hughes, that in the application of that, "would" became "could". I think that is what Mr Ellicott said.

MR HUGHES: That is not a correct analysis of the Full Court's reasoning, with very great respect. The court accepted the test, the Tillmanns' test, at volume 3, 645 and 646. Now, other points - and I have not got time to develop them all - are outlined in paragraph 1.5 of our summary of argument.

Your Honours, the lack of any real special leave questions is, in our respectful submission, demonstrated by the applicants' failure to itemise in their draft notice of appeal any grounds specifically related to the evidence and the findings of fact of the courts below. Rather, the applicants have propounded three omnibus questions - this appears from page 760 of the application book - three omnibus and non-specific grounds which tends to suggest, we say, that the various special leave questions stated in the applicants' summary of argument, also unrelated to evidence and findings, may really be moot questions of a hypothetical nature.

The trial judge, your Honours, saw the activities of the Clubs within the League framework as essentially non-competitive. There was one big, more or less, happy family permanently bonded together. A Club could not leave the League or, at least, could not leave it without leaving all its property behind. It could never play in a rival competition. That was an express adoption by the learned trial judge of the arguments put to his Honour.

One heard this morning my learned friend say it was never suggested that the Club assets are held on trust for the League. One only has to go to the pleadings, and I instance volume 1, page 22, and volume 1, page 125, to see that that statement is ill-founded, with great respect to my learned friend. The property that was bonded to the League included the players, the player contracts. Your Honours will have had the opportunity of observing how, in the orders propounded by the learned trial judge, without reasons ever being delivered for them, the player contracts, that is contracts between a Club and the player, to which the League was not a party, were declared to be trust assets and ordered to be handed over to the League.

In that frame of reference, that is the frame of reference in which the learned trial judge regarded the relationship of the Clubs with the League and with each other, the theory of fiduciary obligation took root, even though one of the by-products was that professional footballers became a species of property, a status redolent of a bygone age. The Full Court, your Honours, looked at the matter from a different perspective but on the same canvas of fact. The Full Court's approach was not, as my learned friend suggested, to concentrate entirely on the provisions in the articles and rules of the League, Article 60 and Rules 38 to 42. If one looks at the judgment of the Full Court - and I will give the page references - their Honours in the Full Court, from page 614 of volume 3, through to about page 624, itemised six factors, circumstances, carefully analysed, carefully examined, as causing them to differ from the view of the facts taken by the learned trial judge.

The Full Court's perspective depended on the drawing of inferences from incontrovertible documentary evidence and from oral evidence of unimpeachable and unimpeached credibility. In the result - and I speak without disrespect to the learned trial judge - the fiduciary duty concept was consigned to dissent. This reversal of the trial judge was, we say, the only proper legal conclusion. I emphasise: there was no difference about principles, it was about their application.

The fiduciary duty joint venture point, we submit, gives rise to no special leave question with any prospects of success. The trial judge's views, your Honours, on the topic of fiduciary duty had a significant influence on his approach to the questions arising under section 4D. That is noted by the Full Court at volume 3, page 646. From there, it was for the trial judge but a short and almost inevitable step to hold that the Clubs were not competitive with each other for the supply of teams to a competition organiser or for the acquisition of the services of players or the acquisition of the services by an organiser, a competition organiser. That question was one of fact.

If, as the present applicants submitted to the Full Court, it was a question of fact for the purposes of the appeal to that court, it can hardly change its character for the purposes of the present application to this Court. Rather, the difference of approach, the transmogrification from fact to law, rather reminds one of Cinderella: the pumpkin turns into a coach.

Other questions of fact represented as such to the Full Court have undergone a similar sort of transmutation. We have circulated to your Honours, and reminded my learned friends by giving them a copy, a copy of the summary of my learned friend Mr Spigelman's submissions on the exclusionary provisions part of the case. I will not read it.

TOOHEY J: But what do you ask us to draw from that, Mr Hughes?

MR HUGHES: What we ask your Honours to draw from that is that, really, this is a question about fact, not about disputed principles. It is about the application of principles to facts. The Full Court, without disregarding credible evidence accepted by the trial judge, decided the case in a different way but on questions of fact. Your Honours, I will not read that but it demonstrates the sea change that has undergone the presentation of the present applicants' case as between the Full Court and this Court.

Now, your Honours, next, we say that if the applicants are correct in saying that the word "competitive" in section 4D(2) is a concept involving the need to define a market - we would say otherwise, and clearly otherwise, in our respectful submission - then that point is not ripe for decision. It is not ripe for decision because neither the trial judge nor the Full Court have defined the market. The learned trial judge held that the market or markets propounded by the News parties and the rebel Clubs were not established but his Honour did not make a finding as to what the market was. He did not have to. The Full Court regards that question as one that it was not necessary for it to decide and as still open. So that whatever the decision on the meaning of the word "competitive" in section 4D(2), the question is moot.

Now, let me say something about the Abalos principle because it is said that the Full Court disregarded that principle. That submission is, in our respectful suggestion, misconceived. The submission centres upon the question of purpose in the context of section 4D. The Full Court set aside no finding of primary fact, based on the testimony of the principal witnesses for the League, namely Messrs Arthurson and Quayle. Their Honours expressly adopted the trial judge's acceptance of their reliability. That appears from volume 2, page 458, and volume 3, page 663. But their Honours in the Full Court analysed what those witnesses said in parts of their evidence not mentioned by the trial judge and their Honours in the Full Court analysed the other parts of their evidence to reach a conclusion that the purpose of preserving the integrity of the ARL competition was expressly and impliedly accompanied by an exclusionary purpose, properly held on the whole of the evidence to be a substantial purpose. That holding appears in volume 3, pages 663 to 665, your Honours.

In this connection, we submit it is relevant that the trial judge did not exclude the existence of an exclusionary purpose within the meaning of section 4D. Rather, what he did or said was to hold that if there was such a purpose it was not a substantial one. This was a matter of fact and degree upon which the Full Court was entitled to differ from his Honour, provided it respected his Honour's finding as to the reliability of the witnesses, and the Full Court did so, your Honours. In that connection, I give your Honours a reference to volume 3, page 642, line 34, to page 643, line 5, to page 651, lines 5 to 30, to page 662, line 35, over to page 665, line 31.

Now, "headstart" is another topic raised by my learned friend in the papers and in his submission this morning. It is not raised as a ground of appeal.

GUMMOW J: It does not sound like a special leave point.

MR HUGHES: Well, it is not, in our respectful submission. I do not wish to be wearisome but can I just say shortly why we say it is not a special leave point. The "headstart" or "springboard" principle is not applicable to claims for common law damages for breach of contract or of wrongful procurement of breach. To impose injunctive relief extending to 31 December 1990, in the absence of any breach of fiduciary duty, would be punitive, not compensatory. Your Honours will recall what Sir Anthony Mason said about the unavailability of punishment as a weapon for a Court of Equity in Hospital Products. In essence, the Full Court's decision refusing "headstart" injunctive relief for a prolonged period was based on factual conclusions. The period of clandestine conduct was brief. The advantage derived from it was, in substance, cancelled out by the operation for one year of the orders made by the trial judge.

In so far as the proposed appeal is based on the supposed applicability of the "headstart" principle, it would be an appeal from a discretionary judgment well within the province of the Full Court, and that judgment is not vitiated by any error rendering it vulnerable, according to well-established principles.

Let me say something about one particular submission put by my learned friend this morning. I think I have just enough time. The light has gone out?

TOOHEY J: Well, mine has not. I would be a bit concerned if I were you, Mr Hughes. Only your light appears to have gone out.

MR HUGHES: I am sorry, your Honours, I did not mean any reflection on the Court. I hope it still burns brightly in other respects. I had meant to leave some time for Mr Sweeney but I - - -

TOOHEY J: I think you will have to. I am not sure how you divided it up between you.

MR HUGHES: The only point I wanted to make was about my learned friend's reference to the vulnerability of the League and the other Clubs as giving rise to the application of fiduciary duty principles. The vulnerability, if any, arose from the very rules that the League adopted in its constitutive documents, the rules that gave the Clubs the rights, if they wanted to, to leave the League and not play in the competition. Those are the only submissions I want to make.

TOOHEY J: Thank you, Mr Hughes. Mr Sweeney.

MR SWEENEY: Your Honours, may we make three short points. First of all, may we address the submissions that Mr Ellicott made that News never wanted to compete and that what it was about, whatever it was did not involve the concept essential to section 4D that it was a competitive competition organiser. Your Honours will discern, not only from the submissions today but from the way in which the judgment deals with the argument, that that contention lies at the heart of the defence of Mr Ellicott's clients to the 4D argument.

The argument never gets off the ground, your Honours, for this reason, that if one goes back to the judgment of the trial judge and looks at his Honour's findings, at the very outset of the relevant dispute, where his Honour at page 153 of the application book, under the heading "THE GENESIS OF THE DISPUTE", makes three points which are fatal to this contention. The three points are these: at page 153 about line 50 and thereabouts the trial judge recites the evidence that Mr John Ribot from the Brisbane Broncos went to see News and put to them the concept of "an elite competition between 12 privately owned Clubs". It is very different from the League competition. Then over on page 154 the original proposal was, line 21, "that most of the Clubs would be new", your Honours. Finally, to finish off the point, Justice Burchett says at 155, the very top of the page, that was "the very scheme that was ultimately adopted".

Now, in those circumstances, your Honours, the one thing that Mr Ellicott, with respect, cannot say is that the proposal of News, which was the effective cause of the coming into existence of the commitment and loyalty agreement, was simply a proposal to take over the League lock, stock and barrel. Here we have, in the findings of the trial judge, reciting the very genesis of this dispute, emphatic denial of that proposition.

The second aspect of section 4D that Mr Ellicott complained of was that he said that their Honours in the Full Court had not made a finding on market and how could one make a finding that the Clubs were in competition with each other without making a finding on market. It is, of course, true that their Honours in the Full Court did not have to make a finding on market because the finding on 4D meant that our argument that the market definition - the approach to market definition which the trial judge had adopted left very little work for the main provisions of Part IV, apart from 4D. But just addressing specifically Mr Ellicott's point, in our submission the point never arises for two reasons: the first is that although 4D requires that two or more of the participants be competitors, all - - -

GUMMOW J: Be in competition, I think.

MR SWEENEY: Be in competition, your Honour, I accept the correction. All that the Court needs to be satisfied about to conclude that that condition is met is that two or more of the parties are in competition. May I put the point this way. Market definition would only be relevant if it were conceivable that on one viable market definition the two would-be competitors stood on different sides of the boundary. Now, the point never arises in this case because what we are examining here is the question of whether the Clubs were in competition. There is no possible market definition which would leave the Clubs on different sides of any market boundary. Mr Ellicott has not suggested one for the very good reason that there is not one that could possibly be articulated. Hence, your Honours, the point never arises. Hence that complaint about the 4D finding falls away.

Now, the final thing that I wanted to put to your Honours was this: Mr Ellicott said today, to the great surprise of everybody on this side of the bar table, that he was not contending - I think he said that he had never contended that the property of the Club was held in trust for the League. That statement is not only a disavowal of his claim at first instance, which he persuaded the trial judge to accept - - -

GUMMOW J: There seems to be mention of it in the pleading at page 81 paragraph 14.

MR SWEENEY: Yes. It is not only a disavowal of the case he put to the trial judge so successfully at first instance, more relevantly, your Honours, it is a disavowal of a great many of the orders that the trial judge made. It amounts to this, not to put too fine a point on it: Mr Ellicott is seeking special leave to appeal on a case which is entirely different from the case he succeeded on at first instance. If the Court pleases.

TOOHEY J: Thank you, Mr Sweeney. Mr Sackar.

MR SACKAR: If your Honours please, I shall rely upon the written submissions.

TOOHEY J: Thank you. Mr Ellicott, in reply.

MR ELLICOTT: Your Honours, my friend Mr Hughes has said that we have dressed up questions of law when they are really questions of fact. That is a matter for your Honours. There are very significant issues in relation to both fiduciary obligations, and I have addressed your Honours in relation to the points that arise under 4D and if we win on any one of those points, then we are entitled to succeed in any appeal.

We do not press 1(k) that my friend referred to. As to "likely to be", your Honour Justice Gummow, I think, noted the point that we are making, that the Full Court changed the word "would" to "could" and that made theeoretical possibility the test and not a real chance of something happening. That is a very important point because they made their finding in terms of "could" and not "would".

Yes, there is a draft notice of appeal, but that is there simply to cover a situation. This is an application for special leave. We do not have to go into all the issues that would be relevant to an appeal. We are entitled to put on a proper notice of appeal and that will depend, obviously, on whether the Court grants special leave or whether the Court confines our argument in some way to some particular point.

They say, again, that we have said it was held on trust. Your Honours, that order was a constructive trust order which was consequential, seeking relief, but the nature of the fiduciary obligation that we assert is not that the Clubs own their property beneficially, that is in the sense that it is held jointly for everybody in the League, we are not saying that at all. That is what I meant when I said we never said that. What we are saying is that the property cannot be used for a purpose foreign to the common object and it is held in trust in that sense. I can only repeat that.

So far as the players' contracts are concerned, it is not serfdom. I have not got time, obviously, but the players' contracts allowed them to play for the League and that is a different matter. Competititve with each other, that may ultimately be a question of fact, but along the path we say that the Full Court has made errors of law. My friend says market is not ripe for decision. It was up to my friends to establish market. There is abundant evidence that they produced to establish the three markets that they alleged. They did not allege any other market. We did not have the labouring law so that there is abundant evidence to deal with market and the markets, if my friend is able to get them up and show that they were competitive within that market, that will be a matter for them.

We did not say that the Full Court had ignored Abalos. What we are saying is that the Full Court in its decision had, in effect, treated what was primary fact as something that they could regard as an inference from fact. That is the basis upon which we did deal with that. I do not want to say any more about headstart. As to vulnerability, I have made the point that the two matters that the Full Court relied upon were matters which showed the need, in the context of something that has been going on for 88 years, for fiduciary obligations to fill in the gap. And the gap was what obligations, if any, confined that freedom to withdraw or that right to control. This Court said in Wayde's Case that those powers - that is the League's power to control - had to be used for the benefit of all the members and they treated the Clubs as the members - this Court did - in Wayde's Case 180 CLR.

We would ask your Honours to grant special leave in this case.

TOOHEY J: Thank you, Mr Ellicott. The Court will adjourn for a few minutes to consider this application.

AT 10.05 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.15 AM:

TOOHEY J: At the outset of its judgment the Full Court said that, with some significant exceptions, the parties were not in substantial disagreement as to the legal principles to be applied and that the contest centred on the way in which the principles should be applied to the facts and the inferences that should be drawn from the primary facts found by the trial judge. On its face, then, this is not a case likely to attract a grant of special leave to appeal.

While the written and oral arguments in support of the applications range over a number of matters, the applications raise three main issues. The first, whether the commitment and loyalty agreements contain exclusionary provisions, depends very much upon factual issues. Some aspects of section 4D of the Trade Practices Act (Cth) which the applicants wish to raise on appeal do not truly arise, having regard to the findings made by the Full Court. Other aspects amount to an attack on inferences drawn by the Full Court. This issue does not give rise to any important question of principle.

The second issue, that the Clubs who participated in the League joint venture owed fiduciary duties to the League and the ARL is inconsistent with the conclusions of the Full Court as to the circumstances surrounding the venture. There was no real dispute as to the principles to be applied and this branch of the law would not be advanced by a reconsideration of a range of factual matters.

The final matter is an alleged failure to find breach of contracts as alleged in cross-claims filed by the applicants. This is a reference to the commitment and loyalty agreements and to the statutory contract said to arise from the memorandum and articles of the League. But the commitment and loyalty agreements were struck down by the Full Court and there was nothing in the argument in support of the statutory contract that would support a grant of special leave to appeal.

The applications for special leave to appeal must be refused.

MR HUGHES: With costs, your Honour?

TOOHEY J: Mr Ellicott? Is yours the only application for costs?

MR SWEENEY: We make a similar application, your Honour.

MR SACKAR: So, would we, if the Court pleases.

TOOHEY J: Yes, very well. The applications for special leave to appeal are refused with costs.

AT 10.18 AM THE MATTER WAS CONCLUDED