News Limited & Ors v South Sydney District Rugby League Football Club Limited & Ors S164/2001 [2002] HCATrans 39 (15 February 2002)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S164 of 2001

B e t w e e n -

NEWS LIMITED

First Applicant

NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED

Second Applicant

AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED

Third Applicant

NATIONAL RUGBY LEAGUE LIMITED

Fourth Applicant

and

SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

First Respondent

CANBERRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Second Respondent

CANTERBURY-BANKSTOWN RUGBY LEAGUE CLUB LTD

Third Respondent

CRONULLA-SUTHERLAND DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Fourth Respondent

NEWCASTLE KNIGHTS LIMITED

Fifth Respondent

ST GEORGE ILLAWARRA RUGBY LEAGUE FOOTBALL CLUB PTY LIMITED

Sixth Respondent

BRISBANE BRONCOS RUGBY LEAGUE CLUB LIMITED

Seventh Respondent

COWBOYS RUGBY LEAGUE FOOTBALL LIMITED

Eighth Respondent

MELBOURNE STORM RUGBY LEAGUE CLUB LIMITED

Ninth Respondent

MANLY WARRINGAH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Tenth Respondent

NORTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Eleventh Respondent

EASTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED

Twelfth Respondent

PENRITH RUGBY LEAGUE CLUB LTD

Thirteenth Respondent

PARRAMATTA DISTRICT RUGBY LEAGUE CLUB LTD

Fourteenth Respondent

WESTS TIGERS RUGBY LEAGUE FOOTBALL PTY LIMITED

Fifteenth Respondent

AUCKLAND WARRIORS RUGBY LEAGUE LIMITED

Sixteenth Respondent

MANLY-NORTHS RUGBY LEAGUE FOOTBALL CLUB PTY LIMITED

Seventeenth Respondent

VALIMANDA PTY LIMITED

Eighteenth Respondent

AH CB PTY LIMITED

Nineteenth Respondent

BRISBANE BRONCOS CORPORATION PTY LTD

Twentieth Respondent

Application for special leave to appeal

GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 FEBRUARY 2002, AT 9.30 AM

Copyright in the High Court of Australia

__________________

MR A.J. MEAGHER, SC: May it please the Court, I appear for the applicants with my learned friend, MR M.J. LEEMING. (instructed by Allens Arthur Robinson)

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MS A.J. SILINK, for the first respondent. (instructed by Nicholas G. Pappas & Company)

GAUDRON J: I hold the certificate from the Deputy Registrar who certifies that she has been informed by the solicitor for the second to twentieth respondents that those respondents do not wish to be represented at the hearing of this application and will submit to the order of the Court save as to costs.

We think we might be best assisted if we were to hear first from you, Mr Jackson.

MR JACKSON: Your Honours, the first reason, in our submission, why special leave should be refused is that the issue does not now have significance beyond the events of 2000 and in relation to this club only. Your Honour, could I say a number of things in that regard. The first is that in the first place, as a matter of law, the hearing will not affect future decisions in relation to the NRL competition and it will not do

that because section 4D, as is apparent from the words of section 4D(1)(a), only applies to arrangements, et cetera, between competitors. The applicants are no longer competitors and the issue cannot arise in the future in relation to the competition.

The second thing, your Honours, is this, that the result will not affect past decisions in relation to the competition. As is apparent from Mr Pappas's affidavit, since the decision of the Full Court an arrangement has been arrived at between this respondent and the applicants. We are in the competition for the next five years. The first competition game is next month. The third thing is that there is no evidence to suggest that there is actual or potential litigation by any other club. None of the other clubs, being the second to twentieth respondents, show any inclination and the material does not otherwise identify any other likely starter.

The fourth feature, your Honours, is that the case is not one where even the question of costs is at issue. The costs of these proceedings - by that I mean the proceedings in this Court - have been agreed to be paid by the applicants in any event and the applicants do not seek to enforce any earlier costs orders in the event that they are successful.

McHUGH J: What about the question of damages?

MR JACKSON: May I say that, your Honours, it is the next and last point I am going to come to on this issue. If the claim for damages be pursued and is successful, that is the time at which the application would be, certainly it would be right to say, less academic than it is at present. Your Honours, those are the points I wanted to make in relation to the - - -

GAUDRON J: But does that mean that the damages claim is not pursued?

MR JACKSON: Well, your Honour, I am not in a position to say that it is not pursued. However, no doubt it is a question of whether it will or will not be pursued but at the end of the day - - -

GAUDRON J: Well, there is a judgment, is there not?

MR JACKSON: Yes, your Honour.

GAUDRON J: There is a judgment and there are court proceedings at least possible, one would assume, and there is a question of law, is there not?

MR JACKSON: Your Honour, there is a question - that is the issue I was going to come on to next, but the first thing I would seek to make about it is it is not a question of general application for the reasons I have suggested. The second thing in relation to the question of damages is that there is not a claim for economic loss, so that any claim would be in respect of other possible heads of damage.

McHUGH J: What if the partnership in the future wanted to impose the 14-team term on some other team in the competition?

MR JACKSON: Well, your Honour, the difficulty would be that the 14-team term, one would have to see whether at the time it was sought to be enforced was something to which section 4D applied, in the sense, was there a competition between those persons, and the competition is gone.

GAUDRON J: No, but would not the validity of the term depend upon what was done at the time the arrangement was made?

MR JACKSON: Well, your Honour, there are two aspects to it, because section 45 picks up two things. One is making a contract containing a provision which is an exclusionary provision; the other is to deal with a situation where the provision is sought to be given effect to. But, your Honour, so far as the 14-team term is concerned, the position would be that what would be sought to be done would be to give effect to it and the issue in those circumstances would be: is there a relevant competition; secondly, does the issue arise between those persons and the two companies?

McHUGH J: But, remind me, what was the duration of the original contract?

MR JACKSON: Your Honour, I think it says "and beyond".

McHUGH J: Yes, well, that is right. Would one not look at the effect of 4D as at the time of the making of that contract, which appears to be the way that it was looked at by the Full Court in the present case?

MR JACKSON: Well, your Honour, if that be so, one would have to look to see whether there was any contest between a person seeking to raise the issue at that time and those parties. Could I say that a fresh decision by, for example, the NRL as a single entity is not an arrangement between competitors.

McHUGH J: No.

MR JACKSON: The point I am seeking to make about it is that the only people who have litigation with the applicants are ourselves. Your Honours have seen the other respondents, so far as they are relevant, have no active interest in the matter and they are, if I may say so with respect, hypothetical possibilities that the Court is putting to me.

Your Honours, that is what I wanted to say about the question of utility. May I move then to the questions that are sought to be raised. Could I take your Honours to the first special leave question, which appears in volume 2 at page 328. Your Honours will see the expression that is used in the question:

foreseen but which are neither expected nor desired.

That is not an expression which is a term of art or which derives really from the cases about these provisions. It is a term which seems to have derived from one of the written submissions on behalf of the News applicant in the Full Court, their written submissions at paragraph 18.

The first thing we would seek to say about it is that the issue there sought to be raised does not, in reality, arise. Your Honours, the fact that more than 14 teams might apply was not so unexpected that the applicants did not plan for it; it was the provision to apply if they did. If the 14-team competition that was desired did not happen through encouraged mergers or other means as a kind of carrot, as it were, the applicants intended it to be achieved by the means of the impugned provision, the - - -

McHUGH J: Yes, but was there not a finding of fact by the trial judge that there was no intension by the relevant personnel to exclude Souths, or any other team, although it was foreseen that that was a possibility that could occur?

MR JACKSON: Yes, but, your Honour, that was done - if I may say two things about it, one was that he was speaking in general terms, that they wanted to end up with 14 teams in the competition. They hoped that would be achieved. If it were not to be achieved, however, that was when the provision - and in terms of section 45 one has to look at the provision - came into being.

McHUGH J: But does that not itself raise a very important question about the construction of these provisions of the Trade Practices Act?

MR JACKSON: Well, may I say, your Honour, if one does go to the terms of the provisions of the Trade Practices Act - and perhaps I could move directly to that because that really lies at the heart of the matter. What we would seek to say is that the result arrived at by the Full Court really is not attended by sufficient doubt.

McHUGH J: Well, that is hard to say when you have a judge dissenting and the majority reversed the trial judge, so it is 2:2.

MR JACKSON: Your Honour, I appreciate the numbers that one is looking at; that is why I say the result. What I am seeking to say is that if one does, as the majority of the Full Court did, stand back really and look and see what the provisions say, bearing in mind that - - -

McHUGH J: And they do not agree among themselves either in their reasoning.

MR JACKSON: Your Honour, the difference between them is really a difference of what part of the provision is the most relevant one; in fact the provisions really seem to involve pretty simple concepts. Could I seek to say this about it. If one looks at the words of the provisions, they are being applied to a very simple set of facts. Your Honours will see section 45(2). Section 45(2) is concerned with making or giving effect to provisions of contracts which are exclusionary provisions and the emphasis is on the provision, not the contract as a whole. That is really where the primary judge, in our submission, was in error. He really looked at the purpose of the contract rather than the provision.

An exclusionary provision, your Honours, is an arrangement between competitors - your Honours will see that from section 4D(1)(a), such as persons conducting two competing competitions. Competitors, of course, seek to cut costs and to make and maximise profits. They describe that usually as rationalisation, orderly marketing, those sorts of things. Often, your Honours, the provision - and this is what is recognised by section 4D - will exclude or squeeze persons with whom they have dealt or might deal, as here. It is absolutely prohibited subject to authorisation, and authorisation is dependent on showing public benefit in the provision. Your Honours will see that from section 88(1), which allows the Commission to give the relevant authorisation, and section 90(8) makes giving it dependent upon showing that the public interest merits the grant of such authorisation.

Your Honours, in circumstances where there is provision for authorisation in particular circumstances, our submission is that the provisions of section 4D should be given their ordinary meaning. Could I give your Honours a reference in that regard to the passages from Chief Justice Mason in Devenish v Jewel Food Stores, quoted by Justice Moore in volume 2 at pages 269 to 270. The passage goes from about line 32 on page 269 through to line 40 on page 270.

McHUGH J: I am sorry, did you say Devenish?

MR JACKSON: Yes, your Honour. What I am doing is that at page 269, to save your Honour going to the case itself, I am going to the relevant passage; it has been extracted at page 269. It is in paragraph 198 and there is a reference then in paragraph 199 to its adoption by Justices Lockhart and Gummow in the Full Court of the Federal Court.

McHUGH J: Well, Pont itself may need to be examined in this Court.

MR JACKSON: Well, your Honour, the point I would seek to make about that really is that if one is going to have a look at Pont, then the time to have a look at it is in a case where there has been a decision of the Full Court of the Federal Court which itself has considered the issue and in this case what was done by all sides was to accept that Pont represented the law and did not itself require consideration.

McHUGH J: Well, that is understandable that in the Full Court parties would accept a decision of the Full Court of the Federal Court - stated the law, but it does not mean it is not up for examination in this Court.

MR JACKSON: No, your Honour, I appreciate that is so. However, the practice, albeit not invariable, is that if the decision is to be reconsidered, that should first of all be flagged and, bearing in mind one is speaking about a court that had the ability to reconsider it, the issue was one that was not raised. Indeed, Pont was accepted as being right in that court. Now, your Honours, no doubt this Court can, if it chooses, reconsider it. However, it would be appropriate in a case where it has not been agitated before the Full Court - or it has been less appropriate to do so in a case where it has not been agitated before the Full Court.

Your Honour, could I just go back to what I was saying on this issue. One really has a relatively simple situation. You have two bodies in competition; each supplies and acquires services to and from an identified group of persons; they agree to cease competing and, as part of the agreement, to supply only to and acquire services from some of those persons. They do not seek authorisation. To do so would require them to show that their agreement, their new provision, was in the public, not just their private, interest, and that, in our submission, is really a very clear case falling within the provision.

Your Honours, I spoke really about the first special leave question. Could I, in the light of those submissions, go very quickly to the others. If one goes to the second question which appears at page 328, it does seem, we would submit, very much related to particular facts, very much lacking in general applications, concerned only with the - - -

GAUDRON J: But that will be true of every such case involving section 4D, will it not? It is in the nature of that sort of case.

MR JACKSON: Your Honour, the nature of section 4D is that it deals with prior competitors and the way they are going to deal in the future. However, your Honour will see that what it does raise is really a very particular question, the way in which it is put. Now, undoubtedly, the questions always arise in context, but this is a particularly unusual one, and the point I was going to make was that, even if it did have a wider application, the fact, which is really the core of this ground, that some of the entities which were offered supply of services under the 14-team competition were mergers of old clubs, is not really to the point. The question was: on whom was the restriction of supply as a restriction or limitation of supply of services imposed? In our submission, it was quite right to say that it was imposed on the 20 1997 clubs before mergers when it became apparent that pursuant to the term, only 14 clubs, original or merged, could be offered competition services. Your Honours, one of those clubs was not supplied at all; others merged as they were "encouraged" to do and the merged entity was supplied, but the restriction for the purposes of section 4D occurred when the 20 clubs were told, as Justice Moore put it, that they could not do what they had previously done: field a separate team.

McHUGH J: But the decision, if it is right, has far-reaching consequences throughout Australian society. If two race clubs say, "We want to merge, and we will only race on 120 days a year", arguably, having regard to this decision, there is a breach of the Trade Practices Act.

MR JACKSON: Your Honour, could I say this in relation to that first: if one assumes all else, the way in which that is disposed of is because they have to demonstrate in the public interest and get an authorisation under section 88; the way is there.

McHUGH J: Well, I know, but it comes to this, that what they can each do individually, they could each, in the illustration I gave if they did not merge, run 60 meetings each, but if they get together and enter for efficiency reasons, they cannot limit it to 120.

MR JACKSON: Well, with respect, your Honour, that is not right. I appreciate there will be cases one side of the line or the other, but what your Honour will see is that cases of that kind would probably fall the other side of the line and one reason why that would be so was that if one looked at the provision one would say that it did not have the purpose, the purpose of preventing, restricting or limiting supply to particular persons, but rather just the supply of goods or services, because one would be speaking of, in those circumstances, all the persons who might possibly seek, for example, to enter horses. This is a case where there is an identified group of people one is talking about to start with. Your Honour, the fact that there may be cases one side of the line or the other does not really take - - -

McHUGH J: Are not racehorse owners classed as a person?

MR JACKSON: What your Honour has put to me has a number of levels and is a matter in which I would rather not get engaged on except on the strictly legal one. Your Honours, in relation to that, for some purposes, yes. If there were particular groups, and if the supply of horses for races was limited to identified people, for example, then it may well be that it applies to it and maybe authorisation is needed.

Could I just say finally in relation to the third special leave question, that is the issue in relation to which the authority of Pont Data was accepted in the Full Court and, in our submission, it is not an appropriate case to review that.

GAUDRON J: That innocence though, notwithstanding the decision in Pont Data, it is a simple question of statutory construction, is it not?

MR JACKSON: Yes.

GAUDRON J: So if Pont Data is wrong, Pont Data is wrong and it can be easily so ascertained.

MR JACKSON: Your Honour, that may be so. All I am saying is that in relation to it, it is not the case where the correctness of that case has been considered. The Court does not have the advantage of the views of the Full Court on it. May I say, however, I do not say it is decisive; I say it is a factor. Could we just say finally in relation to the case that if in the end one looks at what the very simple basic facts were and what the result was, our submission is it is a case where the result that was achieved was one that was correct.

GAUDRON J: We need not trouble you, Mr Meagher.

There will be a grant of special leave in this case. I take it there is no need to formalise anything about the costs arrangements that the parties have entered into?

MR JACKSON: It is recognised, as we understand it, that our costs would be paid at any event.

GAUDRON J: And I take it the case would not take more than a day?

MR MEAGHER: No, that should be right, your Honour.

GAUDRON J: Thank you very much.

AT 9.51 AM THE MATTER WAS CONCLUDED