SYDNEY ORGANISING COMMITTEE FOR THE OLYMPIC GAMES v ZHU

SHELLER JA : Introduction

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

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

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

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

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

Clause 5 constituted a Club Committee which comprised two representatives of each of SOCOG, AOC and Synthesis. At relevant times the members of the committee included Paul Reading (Reading) and John Moore (Moore) of SOCOG, Craig McLatchey (McLatchey) and Alan Grover (Grover) of the AOC, William David Sherbon (Sherbon) and Stefan Wisniowski (Wisniowski) of Synthesis and Wyness. The members of the Club Committee were to have a role and duties, in respect of the Club and the trust, similar to those of a board of directors, and the members of a board of directors in respect of a company (cl 5(e)). Clause 5(d) of the Establishment Agreement described the functions of the Club Committee and relevantly cl 5 (g) provided: “If all the AOC and SOCOG representatives are reasonably of the opinion that an activity of the Trustee is likely to affect the goodwill or reputation of the Olympic movement adversely, they may direct the Trustee to cease that activity. The Trustee must comply with such a direction.”

Clause 25 of the Establishment Agreement, headed “No endorsements, publicity or use of Olympic Insignia” was relevantly as follow: (a) Except as permitted in this agreement or in a Transaction Document, the Trustee and Synthesis will not, without the prior written permission of SOCOG, which SOCOG may withhold in its absolute discretion, represent, hold out, market, promote or advertise in any way that it has any connection or association with SOCOG, the IOC, the Games, or the 1988 or 2000 Australian Olympic teams (Teams). [“Transaction Documents” were defined in the Establishment Agreement and other relevant documents as the agreement itself ‘the Loan Agreement, the Management Agreement, the Trust Deed, the Licence Agreement and any other agreement to which all the parties were party expressed to be a Transaction Document’. Nothing turns on this.] (b) Except as expressly permitted in this agreement or in a Transaction Document, the Trustee and Synthesis acknowledge that they have no right to use any intellectual property belonging to SOCOG, the IOC and the AOC, including but not limited to any Olympic logo, mark or design. (c) Except as permitted in this agreement or in a Transaction Document, the Trustee and Synthesis agree that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, it (sic) has no right to use and it will not use for any purpose, including but not limited to for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which, in SOCOG’s opinion, suggest any connection or association between the Trustee or Synthesis and SOCOG, the IOC and the AOC, the Games or any of the Teams. The Trustee and Synthesis further agree that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, in any marketing, promotion or advertisement it will not: (1) refer to SOCOG, the IOC and the AOC, the Games or any of the Teams; or (2) use the words ‘Olympic’, ‘Games’, ‘Sydney 2000’; or (3) use any other words, phrases, symbols or images which refer to, directly or indirectly, SOCOG, the IOC and the AOC, the Games or any of the Teams; or (4) use any ‘Sydney 2000 Games images’ or ‘Sydney 2000 Games indicia’ (as those terms are defined in the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth). (d) The Trustee and Synthesis must ensure that its directors, contractors, employees and agents or any person involved in or associated with the operations of the Club do not give interviews, appear in any promotion or advertisement or render any assistance to the media in relation to any story concerning the affairs of SOCOG, the IOC, the AOC or the Games, without the prior consent of SOCOG and must not make any statements which are, in SOCOG’s reasonable opinion, contrary or prejudicial to the aims and objectives of SOCOG, the AOC, the IOC or the Olympic Movement. The Trustee and Synthesis must not make or permit the making of any statement or announcement of its involvement or association with the Club without the prior written consent of SOCOG. (e) Each of the Trustee and Synthesis will procure to the satisfaction of SOCOG that each person with whom it deals in relation to the Club observes the provisions of this clause 25, by entering into a deed of confidentiality in the form required by SOCOG.”

Clause 27 of the Establishment Agreement was as follows: “(a) The Trustee will procure that each person with whom it deals in the course of carrying out its functions in relation to the Club (other than Members and such other persons or persons in such classes as are notified by SOCOG to the Trustee for the purpose of this clause from time to time) executes a deed in the form of the document comprised in Annexure F (Marketing Restriction Deed) in favour of SOCOG under which the person agrees, amongst other things, not to represent, hold out, promote or advertise its connection with SOCOG, the AOC or the Games without SOCOG’s prior written permission. (b) SOCOG and the Trustee agree to negotiate in good faith the persons and classes of persons with whom the Trustee may deal to whom this obligation does not apply.” The Olympic Club Licence Agreement

On 14 May 1998 SOCOG and TOC, as trustee of the Olympic Club Trust, entered into the Olympic Club Licence Agreement (the Licence Agreement) which recited · that the AOC had appointed SOCOG as the exclusive entity for the purposes of organising and staging the Olympic Games in Sydney, that SOCOG, in its own right and/or on behalf of the AOC, had the authority to grant to TOC as trustee certain rights and opportunities relating to the Games, to SOCOG, to the 1998 and 2000 Australian Olympic Teams and to the AOC, · that pursuant to the Establishment Agreement, SOCOG and the AOC had granted certain rights to use intellectual property in connection with the Club subject to the terms of a long form licence agreement entered into in respect of that property, · that it was important that the rights and opportunities granted to TOC as trustee pursuant to the Licence Agreement be used in a manner which maintained and enhanced the nature of the Olympic movement and furthered the achievement of its aims, and · that the parties had agreed to enter into the Licence Agreement to govern the terms of the grant of the rights under the Establishment Agreement and such further rights and licences as were set out in the Licence Agreement.

The Licence Agreement defined “Club Logo” as having the meaning given it in the Establishment Agreement and included the logo in Appendix D. The Club Logo in Appendix D incorporated the Games Logo with the five Olympic rings and the phrase “Sydney 2000”. The expressions “Olympic marks”, “SOCOG designations”, “SOCOG emblems” and “SOCOG marks” were also defined. TOC was referred to as “the Trustee”. Clause 2 of the Licence Agreement provided as follows: “ 2 Olympic Charter 2.1 All provisions of this Agreement shall be subject to the Olympic Charter and, if any inconsistency between the provisions of this Agreement and the Olympic Charter arises, the provisions of the Olympic Charter shall prevail, unless contrary to Australian law. The Trustee acknowledges receipt of a copy of the Olympic Charter and agrees to abide by all requirements applicable to the Trustee. Subject to clause 2.2, the terms of this Agreement shall not be affected by any amendment to the Olympic Charter which occur after the date of this Agreement but prior to the Games, unless by mutual agreement of SOCOG and the Trustee. 2.2 Notwithstanding clause 2.1, during the Games, the Trustee shall abide by all requirements in the Charter which is current at the time of the Games and which are: (a) applicable to the Trustee or the operations of the Olympic Club; or (b) notified to the Trustee under clause 3.8. SOCOG will provide to the Trustee a copy of that Charter when it becomes available.”

Clause 3 was headed “Grant of Rights”. The following sub-clause is particularly important: “3.1 Subject to the terms and conditions of this Agreement, SOCOG: (a) confirms that the following rights and approvals have been granted to the Trustee under, and subject to, the Establishment Agreement: (i) the exclusive right to establish and operate the Olympic Club in accordance with the provisions of the Establishment Agreement; (ii) approval for the exclusive use of the Business Name; (iii) approval for the exclusive use of any Club Logo; (iv) the exclusive right to use SOCOG Designations; (v) the non-exclusive right to use the Olympic Marks; and (b) grants to the Trustee during the Term solely with respect to the Olympic Club, the rights and opportunities set out in Appendices A1 and A2, to be exercised in and only in Australia from the date of execution of this Agreement to 31 December 2000.”

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

By cl 3.2 in relation to the business name, TOC as trustee agreed: “(e) The Trustee must at all times carry on the Olympic Club only under the Business Name and not use the Business Name except in carrying on the Olympic Club;”

Clause 3.3 enabled the trustee to develop a Club logo in relation to the Club in consultation with SOCOG. “Subject to the provisions of this Agreement and any Transaction Document, the Trustee agrees that: …. (f) the Trustee must not use the Club Logo except in carrying on the Olympic Club; (g) the Trustee must not allow any other person to use the Club Logo or otherwise deal with it without first obtaining SOCOG’s written consent, and the Trustee agrees that it will not assist, permit or condone the use of the Club Logo by any other person except as permitted by the Management Agreement or any other Transaction Document or as may otherwise be approved by SOCOG and the AOC; (h) the Trustee may, notwithstanding paragraph (g), authorise its employees, agents and contractors to use the Club Logo in relation to the Olympic Club and in a manner consistent with this Agreement; ….”

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

Clause 3.5 provided, relevantly: “3.5 For the avoidance of doubt, the Trustee shall not, except to the extent expressly permitted by this Agreement or a Transaction Document: (a) use or authorise the use of any or all of the Olympic Marks on or in relation to any goods or services of the Trustee or any third person, except as expressly permitted in this Agreement; ….”

Clause 3.7 provided: “The Trustee shall exercise the right and opportunities granted under this Agreement: (a) in a manner consistent with the good name, goodwill, reputation and image of the IOC, SOCOG, the AOC, the Olympic Movement and the Olympic Marks and in compliance with the Olympic Charter and all applicable laws and regulations; and (b) strictly in accordance with any direction given by SOCOG or the Club Committee under this Agreement or any Transaction Document.”

Clauses 3.10 and 3.11 provided: “3.10 The Trustee shall not: (a) enter into any agreement or arrangements with third parties or take any other action which is or may be inconsistent with its obligations under this Agreement; or (b) do any act which would, or is likely to cause SOCOG to breach any agreement between SOCOG and a Games Sponsor. 3.11 All rights not expressly granted to the Trustee in this Agreement or pursuant to the Establishment Agreement or any other Transaction Document are reserved by SOCOG and may be exploited by SOCOG in its absolute discretion subject to the terms of this Agreement and any other Transaction Document. All rights granted to the Trustee may be exercised only by the Trustee and not by any other person including, without limitation, any related body corporate as defined in Section 50 of the Corporations Law.”

Clause 9 was headed “Material Obligations and Termination”. Clause 9.1 provided: “9.1 The Trustee agrees that the occurrence of any of the following events will constitute the breach of a material obligation under this Agreement entitling the Club Committee to remove the Trustee from its position as trustee of the Trust pursuant to clause 5(i) of the Establishment Agreement: (a) the Trustee commits a material breach of this Agreement which, in the opinion of SOCOG, is incapable of remedy; (b) the Trustee commits a material breach of this Agreement which, if capable of remedy, is not remedied within 30 days (or such further period as SOCOG allows) of receipt of a notice from SOCOG to rectify the default; (c) the Trustee uses the Olympic Marks otherwise than in accordance with this Agreement, uses a ‘protected design’ (as that phrase is defined in the Olympic Insignia Protection Act 1987), otherwise than in accordance with this Agreement or that Act, or claims interests adverse to the rights of SOCOG, the AOC or the IOC, and such use not being remedied or adverse claim withdrawn as soon as possible but in any event no later than 30 days after receipt of written notice of such misuse or adverse claim; or (d) the Trustee engages in conduct which in the reasonable opinion of SOCOG reflects unfavourably on the good name, goodwill, reputation or image of the IOC, SOCOG, the AOC, the Games or the Olympic Movement, or which is in any manner inconsistent with the Olympic Charter and such conduct is not remedied as soon as possible but in any event no later than 30 days after receipt of written notice from SOCOG of such conduct.”

In cl 13 “Miscellaneous” was sub-cl 13.1 which provided as follows: “Assignment Neither this Agreement nor any of the Trustee’s rights or obligations under this Agreement may be assigned, sub-licensed, transferred, mortgaged, charged, sub-contracted or otherwise dealt with by the Trustee without the prior written consent of SOCOG. Any attempted dealing by the Trustee with its rights or obligations without SOCOG’s consent shall be void and considered a material breach of this Agreement. The provisions of this clause do not limit the Trustee’s rights to permit employees, agents, contractors and consultants of the Trustee to use the Club Logo for the purposes described in clause 3.3(h).”

Clause 13.4 provided that any waiver by either party of a breach of any provision of the Agreement should be in writing and should not operate as or be construed to be a waiver of any other breach of such provision or any other provision of the Agreement. “Failure by either party to insist upon strict adherence to any provision of this Agreement on one or more occasions shall not be considered a waiver or deprive such party of the right thereafter to insist upon strict adherence to that provision or any other provision of this Agreement.” The Agency Agreement

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

In the Agency Agreement the word “Services” was defined in cl 1.1 as “the activities to be conducted or supervised by the Agent set out in Schedule 1 or any part thereof”. Schedule 1 provided: “ Services (Clause 1.1) During the Initial Term the Agent shall sell 2,000 International Memberships in the Territory to Mainland Chinese visiting Australia for the Sydney 2000 Olympic Games and during the Further Term 8,000 International Memberships.” “Standards” was defined to mean the standards of performance of the Services set out in Schedule 3 which provided: “1. All activities are to be undertaken in a professional and workmanlike manner and in accordance with the procedure prescribed by the Company from time to time. 2. To the extent it is within the Agent’s control, all activities are to be undertaken within the time frame set by the Company for the completion of any given task. 3. Reporting timetables nominated by the Company are to be adhered to, subject to this not being precluded by factors beyond the control of the Agent. 4. All statutory requirements, to the extent they are within the Agent’s control, are to be complied with.”

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

Relevantly the Agency Agreement provided: “2. Agency 2.1 The Company hereby appoints the Agent exclusively and the Agent agrees to accept the exclusive appointment to provide the services to the company upon the terms and subject to the conditions set out in this Agreement for the initial term and (if applicable) the further term.” Clauses 3, 4 and 5 of the Agency Agreement were as follows: “3. Term of Agency 3.1 The Agency shall commence on the Commencement Date and shall terminate on the Initial Termination Date (the ‘Initial Term’) unless earlier terminated by the Company in accordance with clause 15.2, or extended by the exercise of the Option. 4. The Option 4.1 Subject to the Conditions Precedent set out in Clause 5, the Company grants to the Agent an Option for the Further Term on the terms and conditions of this Agreement. 5. Conditions Precedent to The Exercise of The Option 5.1 The Parties acknowledge and agree that the following duties and responsibilities are Conditions Precedent to the exercise of the Option granted in Clause 4: (a) The Agent shall sell, by no later than 30 June 1999, a minimum of 2000 International Memberships in the Territory. (b) The Agent shall pay to the Company all and any Membership Fees due and owing including the minimum sum of AUD$700,000 in respect of this clause 5.1(a). (c) The Agent shall not be in any breach of this Agreement.” In consideration of TOC appointing Zhu its agents for the term, Zhu was to pay TOC an Agency Fee of $30,000 (cl 6.1). Zhu arranged for the payment of this fee to the Club on 8 March 1999. TOC acknowledged receipt in Schedule 4 of the Agency Agreement.

By cl 7.1 TOC covenanted and agreed with the Agent that the appointment of the Agent was exclusive within the Territory and that upon execution of the Agency Agreement TOC would provide to the Agent a letter introducing the Agent as the exclusive authorised Agent of the company and the Club to sell International Memberships to the people of the Mainland of The Peoples Republic of China. A copy of the letter of introduction was said to be annexed to the Agency Agreement and marked “A”. Annexure A includes no more than a heading “Letter of Introduction (cl 7.1(b))”. Bergin J thought this indicative of the sense of urgency with which the Agency Agreement was entered into (para 136). The plaintiff’s evidence was that on 11 March 1999, shortly after the Agency Agreement had been signed, Noble handed him a document dated 8 March 1999 which was as follows: “TO WHOM IT MAY CONCERN MR PETER T ZHU IS AN AUTHORISED AGENT OF THE OLYMPIC CLUB AND IS HEREBY AUTHORISED ON AN EXCLUSIVE BASIS IN THE TERRITORY OF THE PEOPLES REPUBLIC OF CHINA TO SELL OLYMPIC CLUB INTERNATIONAL MEMBERSHIPS TO CHINESE RESIDENTS TRAVELLING TO AUSTRALIA FOR THE SYDNEY 2000 OLYMPIC GAMES AS A COMPONENT OF A TRAVEL AND ACCOMMODATION PACKAGE FOR THE PERIOD 1 APRIL 1999 TO 30 JUNE 1999. YOURS FAITHFULLY (signature) Keith Wyness Managing Director (TOC’s Common Seal)”

Clause 9.1 of the Agency Agreement was as follows: “The Agent covenants and agrees with the Company that he shall: (a) Do all things and sign all documents reasonably necessary to obtain the appropriate and required approvals and authorisations from the Government of the Peoples Republic of China and the Chinese Olympic Committee. (b) Refrain from, in any way, utilising the Sydney 2000 Olympic Club Logo or this Agency generally for the purpose of promoting, marketing or selling any services other than the International Memberships and the Agent agrees to execute the Marketing Restriction Deed Poll presented to him at the time of executing this Agreement. For the sake of clarity, the Marketing Restriction is to extend to, but not be limited to, the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and all and any merchandising by the Agent or all and any of his associated or related entities, individuals or bodies corporate. (c) To obtain the written approval of the Company prior to utilising the Sydney 2000 Olympic Club Logo or any variation thereon in any print or electronic media or marketing or sales material.”

Clauses 10 and 11 of the Agency Agreement were as follows: “10 Consultation 10.1 The Company and the Agent will discuss, as necessary, any action which needs to be taken to ensure the Standards are maintained. 11 Unsatisfactory Services 11.1 If, in the reasonable opinion of the Company, the Services or any of them are at any time not being satisfactorily performed, the Company will so notify the Agent and the Company and the Agent will consult together in good faith as to the best method of rectifying the problem. 11.2 The Agent will use its best endeavours to remedy unsatisfactory performance of the services as soon as possible including, without limitation, by performing the unsatisfactory Services again, and by taking appropriate measures to ensure that the problem does not recur. 11.3 If, in the opinion of the Company, the Agent fails to use its best endeavours to remedy any unsatisfactory performance or other breach of this Agreement, the Company may, in its absolute discretion, terminate this Agency on fourteen (14) days within notice of its intention so to do.”

Clause 12 of the Agency Agreement was as follows: “12 Agent Not to Pledge Company’s Credit 12.1 Except where specifically authorised by the Company, the Agent shall not: (a) Pledge the credit of the Company; (b) Receive or pay monies on behalf of the Company save and except for the Membership Fee; (c) Represent to any person that he has the authority of the Company to pledge the Company’s credit or receive or pay moneys on behalf of the Company otherwise than in accordance with this clause 12(b).”

Clause 15 of the Agency Agreement dealt with termination of the Agency. The following sub-clauses are relevant: “15.2 The Company may terminate the Agency at any time by giving fourteen (14) days written notice to the Agent (the ‘Termination Notice’) if the Agent is in breach of his duties as specified in clause 8 provided that a Rectification Notice has earlier been given by the Company to the Agent and the Breach(es) specified therein have not been rectified; … 15.4 Nothing in this clause 15 shall be taken to or is intended to affect or restrict the Company’s right to terminate the Agency if the Agent is guilty of conduct justifying summary dismissal.” Marketing Restriction Deed Poll

In accordance with cl 27(a) of the Establishment Agreement and pursuant to the Agency Agreement, the plaintiff as Covenantor signed a Marketing Restriction Deed Poll (the Deed Poll) directed to SOCOG. The relevant terms were as follows: “In order to protect the rights of SOCOG, the Australian Olympic Committee Incorporated, the International Olympic Committee, the Olympic movement and the official sponsors, suppliers and others who are from time to time authorised to use those rights (Olympic Bodies), the Covenantor is required to execute this deed in favour of SOCOG. 1. The Covenantor will not, without the prior written permission of SOCOG, which SOCOG may withhold in its absolute discretion, represent, hold out, market, promote or advertise in any way that it has any connection or association with the Olympic Bodies, the Sydney 2000 Olympic Games (the Olympic Games) or the 1998 or 2000 Australian Olympic teams (the Teams). 2. The Covenantor acknowledges that it has no right to use any intellectual property belonging to any Olympic Body, including but not limited to, any Olympic logo, mark or design. 3. The Covenantor agrees that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, it has no right to use and it will not use for any purpose, including, but limited [sic – not limited] to, for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which, in SOCOG’s opinion, suggest any connection or association between the Covenantor and any Olympic Body, the Olympic Games or any of the Teams. The Covenantor further agrees that, without the prior written consent of SOCOG (which SOCOG may withhold in its absolute discretion), in any marketing, promotion or advertisement it will not: (a) refer to any Olympic Body, the Olympic Games or any of the Teams; or (b) use the words ‘Olympic’, ‘Games’, ‘Sydney 2000’; or (c) use any other words, phrases, symbols or images which refer to, directly or indirectly, any Olympic Body, the Olympic Games or any of the Teams; or (d) use any ‘Sydney 2000 Games images’ or ‘Sydney 2000 Games indicia’ (as those terms are defined in the Sydney 2000 (Indicia and Images) Protection Act 1996 (Cth). 4. The obligations of the Covenantor imposed by this deed shall survive notwithstanding the expiry or termination of any agreement to which it is a party. 5. The obligations of the Covenantor imposed by this deed are subject to any rights granted to the Covenantor by any Olympic Body, any rights granted to the Covenantor by operation of law (including without limitation under the Corporations Law and the rules of the Australian Stock Exchange Limited). 6. This deed is irrevocable and the obligations of the Covenantor under this deed terminate on 31 December 2000 but termination will not prejudice any antecedent rights of SOCOG against the Covenantor.” Olympic Movement’s Intellectual Property

As the Deed Poll mentioned, valuable intellectual property was owned on behalf of the Olympic Movement, a loose collective description of International Federations, National Olympic Committees (NOC’s), Organising Committees of the Olympic Games (OCOG’s), National Associations, Clubs, and persons belonging to them, particularly athletes, judges/referees, coaches and other sports technicians together with other organisations and institutions recognised by the International Olympic Committee (IOC). To understand how this property was protected and exploited by its owner, the following documents and statutes need to be examined: · the Olympic Charter, · the Host City Contract for the Sydney 2000 Games entered into by the City of Sydney and the AOC, · the statutory constitution of SOCOG, and · the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth) ( Indicia and Images Protection Act ). I set out the relevant parts of these. The Olympic Charter

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

Rule 11 of Chapter 1 was headed “Rights over the Olympic Games” and provided: “The Olympic Games are the exclusive property of the IOC which owns all rights relating thereto, in particular, and without limitation, the rights relating to their organisation, exploitation, broadcasting and reproduction by any means whatsoever. All profits derived from the celebration of the Olympic Games shall be applied to the development of the Olympic Movement and of sport.”

Chapter 1, rules 12-16 described and defined the Olympic Symbol, the Olympic Flag, the Olympic Motto, the Olympic Emblem and the Olympic Anthem. Rule 17, which was headed “Rights to the Olympic Symbol, Flag, Motto and Anthem” provided as follows: “All rights to the Olympic symbol, the Olympic flag, the Olympic motto and the Olympic anthem belong exclusively to the IOC.” A bye-law to rules 12, 13, 14, 15, 16 and 17, parts of which are set out below, followed rule 17. Paragraphs 9, 10 and 11 of the bye-law are important to this appeal. “1. 1.1 The IOC may take all appropriate steps to obtain the legal protection, both on a national and international basis, of the Olympic symbol, flag, motto and anthem. 1.2 Even if the national law or a trademark registration grants to an NOC the protection of the Olympic symbol, such NOC may only use the ensuing rights in accordance with instructions received from the IOC Executive Board. 2. Each NOC is responsible to the IOC for the observance, in its country, of Rules 12, 13, 14, 15, 16 and 17 and of their Bye-law. It shall take steps to prohibit any use of the Olympic symbol, flag, motto or anthem which would be contrary to these Rules or their Bye-law. It shall also endeavour to obtain protection of the designations ‘Olympic’ and ‘Olympiad’ for the benefit of the IOC. 3. An NOC may at any time call upon the IOC for its assistance in obtaining protection, as envisaged above, for the Olympic symbol, flag, motto or anthem and for the settlement of any differences which may arise with third parties in such matters. 4. The NOCs may only use the Olympic symbol, flag, motto and anthem within the framework of their non-profit-making activities, provided such use contributes to the development of the Olympic Movement and does not detract from its dignity and provided the NOCs concerned have obtained the prior approval of the IOC Executive Board. 5. The IOC encourages, in collaboration with the NOCs of the countries concerned, the use of the Olympic symbol on postage stamps issued in liaison with the IOC by the competent national authorities; to that effect, it may authorize the use of the Olympic symbol subject to the conditions set forth by the IOC Executive Board. … 7. … 7.7 Whenever and wherever possible, the Olympic emblem of an NOC must be susceptible of registration (ie of legal protection) by the NOC in its country. The NOC must carry out such registration within six months of such emblem’s approval by the IOC Executive Board and provide the IOC with proof of registration. IOC Executive Board approval of Olympic emblems may be withdrawn unless the NOCs concerned take all possible steps to protect their Olympic emblems and inform the IOC of such protection. Similarly, the OCOGs must protect their Olympic emblems, in the manner described above, in their countries as well as in other countries as decided in consultation with the IOC Executive Board. Any protection obtained by the NOCs and the OCOGs cannot be put forward against the IOC. … 8. The use of the Olympic symbol, flag, motto and anthem for any advertising, commercial or profit-making purposes whatsoever is strictly reserved for the IOC. 9. The use of an Olympic emblem for any advertising, commercial or profit-making purposes whatsoever must be in accordance with the conditions laid down in paragraphs 10 and 11 below. 10. Any NOC or OCOG wishing to use its Olympic emblem for any advertising, commercial or profit-making purposes whatsoever, either directly or through third parties, must comply with this Bye-law and ensure its observance by such third parties. 11. All contracts or arrangements, including those concluded by an OCOG, shall be signed or approved by the NOC concerned and shall be governed by the following principles: 11.1 The use of an NOC Olympic emblem shall only be valid within the country of the said NOC; such emblem, as well as any other Olympic-related symbols, emblems, marks or designations of an NOC, may not be used for any advertising, commercial or profit-making purposes whatsoever in the country of another NOC without the latter’s prior written approval; 11.2 similarly, the Olympic emblem of an OCOG as well as any other Olympic-related symbols, emblems, marks or designations of an OCOG, may not be used for any advertising, commercial or profit-making purposes whatsoever in the country of an NOC without the prior written approval of such NOC; 11.3 in all cases, the period of validity of any contract concluded by an OCOG must not extend beyond December 31st of the year of the Olympic Games concerned; 11.4 the use of an Olympic emblem must contribute to the development of the Olympic Movement and must not detract from its dignity; any association whatsoever between an Olympic emblem and products or services is prohibited if such association is incompatible with the fundamental principles of the Olympic Charter or the role of the IOC as set out therein. 11.5 upon request by the IOC, any NOC or OCOG shall provide a copy of any contract to which it is a party. 12. The Olympic symbol and the Olympic emblems of the IOC may be exploited by it or by a person authorized by it, in the country of an NOC, provided that the following conditions are respectively fulfilled: 12.1 For all sponsorship and suppliership agreements and for all marketing initiatives other than those referred to in paragraph 12.2 below, the condition shall be that such exploitation does not cause serious damage to the interests of the NOC concerned and that the decision be taken by the IOC Executive Board in consultation with such NOC, which shall receive part of the net proceeds deriving from such exploitation. 12.2 For all licensing agreements, the condition shall be that the NOC shall receive half of all net income from such exploitation, after the deduction of all taxes and out-of-pocket costs relating thereto. The NOC will be informed in advance of any such exploitation.” Paragraph 12 of the bye-law contemplated exploitation for advertising, commercial or profit making purposes of the Olympic Symbol and the Olympic Emblems outside Australia (the country of AOC and SOCOG) by an authorised person in the country of a National Olympic Organisation provided this did not cause serious damage to the interests of the NOC concerned and the NOC received part of the net proceeds derived from such exploitation. Host City Contract

On 23 September 1993 the IOC entered into the Host City Contract with the City of Sydney and the AOC. Clause 48 of that contract entitled the IOC Executive Board to terminate the contract and to withdraw the Games from Sydney if, inter alia, “(iii) there is a violation by the City, the NOC or the OCOG of any material obligation set forth in this Contract, the Olympic Charter or the applicable law.” SOCOG’s Constitution

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

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

In Part 3, “Protection”, Division 1, “Regulation of Use”, was found s12 which, so far as presently relevant, provided as follows: “12. Regulation of use of Sydney 2000 Games indicia and images (1) A person, other than: (a) SOCOG; … (c) a licensed user; must not use Sydney 2000 Games indicia and images for commercial purposes. (2) SOCOG may only use the following Sydney 2000 Games indicia and images for commercial purposes: (a) common Sydney 2000 Games indicia; (b) Sydney 2000 Olympic Games indicia; (c) common Sydney 2000 Games images; (d) Sydney 2000 Olympic Games images. … (4) A licensed user may only use for commercial purposes the Sydney 2000 Games indicia and images that the person is licensed to use, and may only use those indicia and images in accordance with the licence.” Section 13A provided for the purposes of the Act that a person was taken to have contravened s12 if that person had attempted to contravene the section, had aided, abetted, counselled or procured a contravention, had induced, or attempted to induce a person to contravene it, had been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention of the section or had conspired with others to contravene it.

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

Section 43 in Division 3 “Remedies” provided: “ 43. Injunction (1) If a person has engaged, is engaging, or is proposing to engage, in conduct in contravention of section 12, a prescribed court may grant an injunction restraining the person from engaging in the conduct. … (3) An injunction under this section may only be granted on the application of SOCOG, SPOC or a licensed user. (4) An injunction granted under this section on the application of SOCOG may only relate to conduct constituting use of Sydney 2000 Games indicia or images referred to in one or more of the following paragraphs: (a) common Sydney 2000 Games indicia; (b) Sydney 2000 Olympic Games indicia; (c) common Sydney 2000 Games images; (d) Sydney 2000 Olympic Games images.”

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

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

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

The plaintiff and Noble continued to meet on other occasions in February 1999. During one of their meetings Noble told the plaintiff that he had the “go ahead” for the plaintiff’s idea. Noble requested a copy of the plaintiff’s resume and two reference letters as “we will need to check you out”. By late February the plaintiff had worked out the elements of the basic travel and accommodation package incorporating Club memberships which he intended to sell. At a meeting with Noble in late February the following conversation took place: “Noble: You can probably sell as many memberships in China as you like. There will be no real limit. However, we can only provide you a maximum 10,000 at the Opening Ceremony Dress Rehearsal. Accordingly, our contract in the first place will have to be limited to that number because of the restriction on those tickets. It won’t be a problem however if you want to sell more than that if demand for memberships is great, then you could sell more, but we’ll have to discuss that and you must understand that any extra memberships over the 10,000 would be sold without tickets to the Opening Ceremony Dress Rehearsal being guaranteed. For the time being therefore, we will leave it at 10,000 and see how your sales go. The plaintiff: I would be prepared to pay a $350 fee for each Club membership, if that includes one ticket to the Opening Ceremony Dress Rehearsal. Can you and SOCOG guarantee that I can get 10,000 tickets to the Opening Ceremony Dress Rehearsal? Noble: Oh, sure. We can guarantee 10,000 to the Dress Rehearsal guaranteed.”

The plaintiff told Noble he would need a letter of introduction that he could use as authority to act on behalf of the Club and a letter of introduction to the Chinese Olympic Committee. Noble told the plaintiff there would be no problem in providing such letters and advised him that “we will need a simple form of Agency Agreement”. He also told the plaintiff that “you have our full support, we really like the idea and are planning to establish agencies in other countries”. The following conversation took place: “The plaintiff: Do I need to notify the names of members as they are sold? How will it work? Noble: You can buy memberships in bulk and on-sell them as part of your travel packages. Then you provide us with the member’s name and mailing address we can then send out the welcome kit and enter the details in the database.”

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

On 10 March Noble supplied the plaintiff with a letter of that date signed by him as Commercial Director introducing the plaintiff to the Chairman of the Chinese Olympic Committee in the following terms: “Chairman Chinese Olympic Committee Dear Sir The Olympic Club of the Sydney 2000 Olympic Games is pleased to advise that Mr Peter Tao Zhu has been chosen as the Exclusive Authorised Agent of the Club to market International Memberships to residents of the Peoples’ Republic of China in China. The Olympic Club has chosen Mr Zhu as its first Exclusive Authorised Agent for Overseas Memberships after lengthy consultations, discussions and investigation. We are therefore pleased to introduce Mr Zhu to your Committee. We respectfully request you provide such assistance as your Committee deems appropriate to Mr Zhu in his work of enlisting Peoples’ Republic of China residents to join the Club via these International Memberships.”

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

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

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

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

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

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

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

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

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

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

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

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

On 18 May 1999 Noble wrote to the plaintiff as Chairman of ACSC confirming that it was the responsibility of the individual travelling to Australia to obtain visas to Australia but saying “we are happy to assist to ensure that the individuals that purchase International Olympic Club memberships are made fully aware of the Australian Government immigration requirements and guarantee that members will be provided with a full refund for any membership fees if they are unsuccessful in obtaining a Visa subject to the return in original condition of any Olympic Club merchandise such as the Welcome kit.”

About two days later the plaintiff telephoned Wyness and asked about his request for an extension of the contract. Wyness said he had not made up his mind yet but he thought it was a reasonable request. Some days later during a conversation between the plaintiff and Noble on the telephone, Noble said: “..we’ve agreed that we will give you an extension and waive the requirement that you sell 2,000 by 30 June, but in return you’ll have to pay us at least $200,000 by 30 June. If you can pay $200,000 to the Club by 30 June, we will give you exclusive rights up to the end of December 2000 and waive any conditions for minimum sales of membership.”

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

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

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

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

In late May or early June 1999 the plaintiff told a friend of his, Frank Yang Hu (Hu), that he needed assistance to meet with some people in China to help him perform his obligations under the Agency Agreement. Hu was a personal friend of the Minister and Vice Minister of Sport in the Government, Yuan Wei Min (Yuan) and Yu Zai Qing (Yu). On 5 July 1999 the plaintiff and Hu met with Yu and a representative of Yuan’s office at the Government Offices in Beijing. He told them of his appointment as the exclusive agent by the Olympic Club in Sydney to sell International Memberships in China and that he would be selling those memberships as part of a tour package for Chinese citizens to travel to Sydney to support the Chinese athletes at the Sydney Games. He asked what the Government requirements were for him to carry out his tasks in China.

Yu told him the project was a good one both for China and the Chinese people giving them the opportunity to attend the Games and to share the experience and support their athletes. “We will, therefore, give you whatever support you need. How can we assist you?” Yu told him he did not need any Government approval and was free to do what he liked. It would be difficult to give him an official letter. It would even be a problem for him as the Vice Chairman of the Chinese Olympic Committee to say that he supported the proposal in that capacity. After the meeting the plaintiff, Hu, Yu and others dined together.

In early June 1999 the plaintiff and Zhang again met with Noble at the Club’s Chatswood premises. Zhang told Noble that he and the plaintiff would need to translate the Club’s Information Sheets and other documents into Chinese with some information about International Memberships. He told Noble that they would need to distribute those in China as part of the marketing program. Zhang raised the problem of the Olympic Club website being printed in English and suggested that the website should have a Chinese translation. Noble said that if the plaintiff and Zhang wanted a Chinese language website they would have to do it themselves. Zhang said that he would arrange to get that done and Noble said it was a good idea and they could go ahead with the plan. Zhang had the website set up under the domain name “TOCMS” which was registered with the Department of Fair Trading on 20 July 1999 under the name of his company Haggerso Holdings Pty Ltd. On 22 July 1999 he changed the proprietor of the business name from that company into his own name.

Zhang and the plaintiff travelled back and forth from China making an assessment of what had to be done to market the International Memberships and the package. Zhang subsequently became a director of ACSC and a 40 percent shareholder. Between March and June 1999 the plaintiff and Zhang appointed another ten sub-agents.

A board meeting of TOC on 7 June 1999 revealed concern about the “financial position, cash, creditors, budget and payments” of TOC. On 9 June 1999 Sherbon wrote to Reading asking that SOCOG “breathe deeply for a bit until cash becomes available to get back on line with payment.” Reference was made to moneys from International Memberships. On 11 June 1999 Reading asked Wyness to arrange for payment of $65,126 to SOCOG and noted that a further $153,166 would be due at the end of June. On 2 July 1999 at the Club Committee meeting McLatchey asked for an external and independent review of the financial position of the Club and on 5 July Wyness wrote to Ernst & Young advising that SOCOG had requested the review. Later that day Ernst & Young met with the Club Committee and the directors of TOC and on 8 July provided its report recommending that the Club Committee “consider whether the Club is a going concern and whether it will be able to meet its debts as and when they fall due.” Thereafter several proposals were put forward.

On 10 June 1999 a meeting was held between representatives of the Australian Customs Services (ACS), the Australian Federal Police (AFP) and the OI Centre “regarding the matter of” the plaintiff. Discussed was the accreditation given by the Olympic Club to the plaintiff and his company to sell Club Memberships in China. Various concerns were expressed. The AFP and ACS stated the view that there were not enough grounds to launch an investigation and they were not willing to progress the matter further. The meeting agreed that the accreditation/contract signed between the Club and the plaintiff should be reconsidered. It was noted that Fergus had indicated that the plaintiff’s contract would be revoked or not renewed after 30 June 1999.

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

On 17 June 1999 Wyness gave the plaintiff at his request a letter in relation to visas and sub-agents in the following terms: “1. Visa for Chinese International Members The Olympic Club has been in touch and will be in regular contact with the Australian Immigration Department on this matter. The goal of the Visa program is to screen visitors for any criminal or undesirable element. Provided the Member does not fall into these categories then the Olympic Club will do its upmost to assist you in getting Visas for the Chinese Members 2. Appointment of Sub agents We will be happy to allow you to appoint sub agents provided they are referred to us first for investigation and for our approval. Such approval will not be unreasonably withheld.”

On 25 June 1999 McLatchey wrote to Moore and asked whether Moore had received any response from Wyness to his letter of 16 June 1999. There is nothing to suggest that Wyness replied to that letter. However at the Club Committee meeting held on 2 July 1999 at which McLatchey and Wyness were present, the International Memberships were discussed. There was no protest made about these memberships at the meeting and the minutes recorded that Wyness was to “clarify the information” McLatchey “is to include in a letter to” the National Olympic Committees with “regard to the International Olympic Club”.

At the meeting of the Club Committee on 2 July 1999 Wyness had been asked about letterhead being provided to the plaintiff or his company. Wyness gave evidence that Reading had said there had been some “dodgy Chinese letters floating around”. The minutes of that meeting record that Wyness “assured the meeting that TOC had not provided letterhead to the Chinese company purporting to represent the Club, and suggested it may have been computer generated.”

On 6 July 1999 Noble met with Fergus and two other officers of the OI Centre, Lesley Honeyman and John Valastro. A record of the outcomes indicated that preliminary discussions with Noble determined that it was not necessary at that stage to contemplate the cancellation of any contract between the plaintiff and the Australian Olympic Club. Various strategies were discussed effectively to manage the risk associated with the arrival of Chinese residents to Australia.

Zhang claimed he met with Wyness in July 1999 at the Club’s premises and that Vera Lau who worked at the TOC office at Chatswood during 1999 was also present, as Manager of the International Department of the Club. Part of Lau’s role was to translate English/Chinese conversations, both on the telephone and in person. Zhang claimed to have told Wyness that he had set up the Chinese language version of the Club’s website and requested Wyness to open an account which could be used on the website so that overseas members could pay their money into the account. Zhang suggested that Wyness could then take out the membership fees and pay the rest of the money to Zhang.

Zhang claimed that Wyness said that he did not want to do that. He told Zhang that he was the official agent of the Club so that he could open the account himself and pay “us” the membership fees as they are due. Zhang opened an account at the Chatswood Westside Branch of the Westpac Bank in the name of “TOCMS”.

On 21 July 1999 there was a meeting at the offices of the Department of Immigration and Multicultural Affairs (DIMA). Present were Noble and DIMA officers. Noble had been referred to DIMA by the OI Centre to discuss in particular “the entry of Club members from PRC, Bangladesh, Pakistan, India and Indonesia”. By this time TOC had appointed a number of other agents in these areas, including Go as the agent for the territory of Indonesia. Noble told the meeting that TOC saw a market for itself and “agents and sub-agents who sub-contract the rights to sell packages” in those territories. DIMA suggested to TOC that a disclaimer be included in the membership application form that personal details might be passed on to DIMA and that membership of the Club did not entitle the holder to a visa for Australia.

On 22 July 1999 Sherbon advised the President of SOCOG and Minister for the Olympics (Michael Knight), the President of the AOC (John Coates), the Chief Executive Officer of SOCG (Sandy Hollway), and the Club committee that the Trustee had been advised by the designated administrator that it must put the Trustee Company into administration. Sherbon stressed his grave concerns that such “regrettable action” would create public controversy and have a significant and negative impact on the Club members. He suggested it would further seriously erode “the general public’s perception of SOCOG and the Olympic Movement” and that it would “reflect poorly on the Government”. He requested an urgent meeting to resolve the issue.

On 30 July 1999 a mediation took place. At the conclusion a document was signed by McLatchey for AOC, Reading for SOCOG, Wyness for TOC and the representative of Synthesis which noted that the parties had agreed to work together to terminate the current arrangements and that TOCMS, Synthesis and the AOC agreed that ownership of the Club concept and all know-how in relation to the operation of the Club would be transferred to or shared with SOCOG. SOCOG would be responsible for the payment of all operating costs of the Club incurred after 30 July 1999. “In any announcement of public statement concerning the Club the position of all parties is that SOCOG can better run the Club in house to deliver benefits and reduce costs.” The agreement was intended to create legal relations upon execution and the parties agreed to execute such further documents as were necessary to give effect to the agreement.

On 3 August 1999 a news release was issued with the headline “SOCOG to Assume Ownership of the Olympic Club: Members Entitlements Remain Unchanged” which reported that SOCOG was to “assume sole control of the Olympic Club” and that all parties recognised the “synergistic benefits of bringing the Club directly into SOCOG.”

On 5 August 1999 the PRC Cultural Consul from the Consulate General’s staff in Sydney, Wang Zhiang, attended the Club’s offices at Chatswood with the plaintiff, Zhang, a sub-Agent Mr Lin and Hu and met with Wyness. Consul Wang asked Wyness whether the Club was genuine and an official SOCOG organisation. He also asked whether it was “genuine” that the plaintiff had an agency to sell memberships in China. Wyness said “Yes it is, I can show you some documents which will prove the Olympic Club is a genuine SOCOG body and yes, Zhu is our Olympic Club agent for China.”

He showed some documents to Consul Wang and was asked questions about visas for people travelling from China to Australia to attend the Games. Wyness said “We, in conjunction with SOCOG, are in a position to assist people get Visas who wish to travel to the Games. The Australian Government will be making sure genuine Games attendees can get Visas.” Consul Wang asked about accommodation and tickets and was told accommodation would be no problem and SOCOG had a scheme to ensure there would be plenty of accommodation. So far as tickets went the membership packages for China included one ticket to the opening ceremony dress rehearsal. In relation to other events “we cannot guarantee any tickets, but we can help with dealings with SOCOG to get tickets.”

During August 1999 information and documentation held by the Club was transferred to SOCOG, in particular to Reading. Michael Brann (Brann), a lawyer with SOCOG was contacted by another SOCOG employee, Elizabeth Langdon, on 18 August 1999 advising that she had been contacted by Consul Wang who requested a meeting to discuss the Club and an offer to 10,000 Chinese tourists to visit Australia and to introduce a new cultural attaché to SOCOG.

On 24 August 1999 Reading had a conversation with Wyness in which Reading said to Wyness “Who is Peter Zhu – I have seen some documents in which you refer to him as being an agent of the Olympic Club?” Wyness said words to the effect “Some sort of arrangement has been reached with Peter Zhu regarding the Olympic Club in China.” The documents to which Reading referred were the letter of authorisation for the plaintiff for the period 1 April 1999 to 31 December 2000 and the letter of 8 March 1999 signed by Wyness.

Towards the end of this conversation Reading said to Wyness: “Well it’s a bit of a worry, I don’t want loose canons [sic] running around – I know we want to try to make this thing work but you know the position regarding getting approvals – the Police are looking at this fellow – my advice to you is that you protect yourself by reining him in – if you had plans for China I suggest that you better do what you can to stop them.” Reading informed Wyness that he did not want TOC or SOCOG to be exposed.

On 25 August 1999, in the absence of the plaintiff, Consul Wang met with officers of SOCOG at SOCOG’s premises. He met with John Bowen (Bowen), the Manager of International Relations with SOCOG, and Margaret McLennan (McLennan), the Program Manager IOC International Relations and Protocol. The Consul informed the SOCOG officers that he was concerned to ensure that the Club was genuine and capable of performing its obligations to the Chinese members. The Consul was informed that the Club was “real” and that it was “genuine”. The officers told Consul Wang that they were not directly concerned with the Club. However they believed that the Club had been taken over by SOCOG and that SOCOG would be running it from now on. They advised Consul Wang they did not have direct information about the Club but would be happy to arrange for someone to meet with the Consul and answer any questions so that he could be satisfied that “it is genuine”.

Bowen reported to Reading: “He said he looked forward to making contact with you. What he wished to explore were reports he was getting that people in the Chinese community, through the Olympic Club, had access to 10,000 tickets and were proposing to bring that many tourists from China to the Games on arrangements which included travel, accommodation and visas. The deal included access to the Rehearsal for the Opening Ceremony. He wondered whether it was possible that such large numbers of people from China could be looked after on such an arrangement. We said that we could not comment but that you would be happy to discuss it with him in a few days. It actually sounds quite fishy and we think Wang thinks so too. It would be worth talking to him as soon as we conveniently can. I will leave his contact details with Lyn.” On this message Reading wrote “please tell Wang that no deal is in place.” That message was not communicated to Consul Wang.

On 30 August 1999 Zhang wrote to Wyness enclosing “printed material” for the International Members of the Olympic Club in China. These materials included the Olympic Club folder, an application form for International Membership, a document relating to Membership Privileges and Benefits, a Membership Card and a Fact Sheet in Chinese. The letter concluded “we are looking forward to having the approval of the Club and SOCOG.”

Wyness said in evidence that he had received a package of documents in Chinese which included the TOC logo. He understood them to have been printed for or on behalf of the plaintiff who sought the approval of the Olympic Club and SOCOG to print multiple copies of the documents. The request caused him concern because the plaintiff appeared to be in breach of provisions in the Agency Agreement which prohibited him from utilising the Sydney 2000 Olympic Club logo. Further, the documents appeared to disclose a breach of the Deed Poll.

In evidence he said he received the letter, placed it on his desk and there it remained for several months. Initially he looked at the documents and he recalled glancing at the letter. He said that events overtook the letter as Reading asked him to terminate the relationship “with the group”. He said that he asked for a translation of the document from a Chinese friend. “She was a person I visited for therapeutic massage on different occasions. Perhaps a friend is the wrong term, but she was the only Chinese person I knew well enough to ask to assist me on that occasion. I don’t remember her name.” Termination of Olympic Club Trust

On 13 September 1999 TOC as Trustee, SOCOG, AOC, Synthesis and TOC in its personal capacity (TOCMS) executed a Deed of Release and Termination. The Deed recited that TOC had entered into contracts with members of the Olympic Club and that SOCOG had agreed to assume and perform the obligations of TOC pursuant to the member contract. In consideration of covenants contained in the Deed the parties had agreed to terminate the Olympic Club Trust, the Establishment Agreement and other agreements relating to the Olympic Club.

SOCOG agreed that from 30 July 1999 it would provide the Member Benefits in accordance with the Member Contracts and otherwise assume all the obligations of TOC as Trustee to the members. From 20 September 1999 the Member Contracts were assigned to SOCOG. During the period from 31 July 1999 until the winding up of the Trust, TOC as trustee agreed to provide all reasonable assistance to SOCOG to enable it to assume responsibility for provision of the Member Benefits. The Trust was terminated effective from 20 September 1999. By cl11.1 of the Deed the parties agreed that in any announcement or public statement concerning the Club, the sole position of all parties in respect of the transfer of control of the Club to SOCOG was that SOCOG could better run the Club in house to deliver benefits to Members and reduce costs. The parties agreed not to make any announcement or statement which was inconsistent with that position.

After June 1999 the plaintiff and Zhang had appointed more sub-agents. As from 30 August 1999 SOCOG employed Moiya Roberta Ford (Ford) as the Program Manager of the Club. At her initial briefings, Ford was not told of the existence of the Agency Agreement with the plaintiff or the appointment of the plaintiff as the exclusive agent in China to 31 December 2000. She claimed to be totally ignorant of any concept of International Memberships of the Club until it was raised some weeks later. Until 31 October 1999 Wyness continued in employment working out “his notice”. In mid-September 1999, probably about 10 September 1999, Reading telephoned Wyness and asked him to “terminate the relationship with the group”.

In early October 1999 an officer from DIMA contacted Ford about enquiries being made in China in relation to visas. An officer of the OI Centre told Ford that there had been several meetings between the OI Centre and Noble in relation to the plaintiff and that Noble had been informed that the plaintiff had not been charged with any offences “nor were any of his sellers”. Ford was also told that this information was provided to Reading just before the contract was “taken over by SOCOG”. Ford said she was unable to contact the plaintiff.

On 14 October 1999 the ownership of the business name “the Olympic Club” was transferred from TOC to SOCOG.

On 21 October 1999 the plaintiff returned from China and went to the Club’s premises and met with Wyness. The plaintiff told Wyness that he was just back from China and that things were going very well. There was a lot of interest in the program. Wyness told him that the Olympic Club had been taken over by SOCOG “as you know” and that SOCOG had said they did not want the International Members to continue. The plaintiff said they could not do that. “I have a contract. I paid all this money and I have put all this work and effort in. How can SOCOG just break my contract, I won’t let them.” Wyness said that he was trying to do what he could to help the plaintiff and to make sure that the agreements kept going. Wyness said: “As you say things are going so well with your planning in China, I’ll tell SOCOG that and I’ll see what we can do about letting the contract continue.” The plaintiff thanked him. He said that he could not have the contract terminated. He had put too much time and money and effort into it. “My face will be ruined in China if this contract is terminated. I have dealt with so many big officials and told publicly everyone what we are doing and how good it is. It will ruin my face in China if you do not stop SOCOG from doing this, please help me.” Termination of Agency Agreement

On 26 October 1999 the plaintiff wrote to Wyness confirming an understanding that the Club “may have new policies and arrangements”. He asked for an “official document affirming the relationship between SOCOG, the Olympic Club and the International Members’ Department”. He asked other questions about who was responsible for the Chinese International membership and when the Welcome kits would be delivered. (“…we are looking forward to receiving 742 welcome kits for our payment of about $260,000.”) On 29 October 1999 Wyness replied stating amongst other things that instructions from SOCOG were clear that the agreement should be terminated. He went on to deal with other matters raised reiterating that he was happy to help the plaintiff in any way he could.

On the same day Wyness wrote to Ford telling her that the plaintiff had purchased up to $260,000 of International Memberships and had now asked for information about when he could start to receive them. A copy of his letter went to Brann and Reading.

At a meeting on 2 November 1999 Ford expressed concerns to officers of OI Centre in relation to the Club and the possible continual involvement of Wyness in the development and marketing of the Club and its activities. She probably also expressed concern about Chinese documentation and copies of invoices and cheques totalling $230,006. Despite these discussions on 3 November 1999 Ford wrote to Wyness saying that the “Peter Zhu issue is new to me, I wasn’t aware that we had any International Memberships.” She asked for a copy of the agreement together with details of what it was TOCMS agreed to provide.

On 5 November 1999 Wyness wrote to the plaintiff in the following terms: “Re Agency Appointment We refer to the agency agreement executed in March 1999, for the Territory of the Peoples’ Republic of China (the agreement). We further refer to our meeting of Tuesday October 19 1999 at which time we notified you that your appointment as an agent of the Olympic Club had terminated on the following grounds: 1. The term of appointment was stated in the agreement to terminate on 30 June 1999 subject to you exercising your option to extend that term, and you failed to exercise your option. 2. In any event, you failed to perform the preconditions to exercising your option which are set out in clause 5 of the agreement, in that you (a) only sold 743 memberships as at October 19 1999 in breach of our agreement to sell 2000 memberships. (b) you failed to pay AUD$700,000 by 30 June 1999 or at all. At our meeting you agreed your appointment had been terminated. The Olympic Club will of course fulfil its contractual obligations with respect to the memberships sold by you and we await notification from you as to when you require delivery of the membership kits. We otherwise call upon you to return all property which belongs to or was supplied to you by the Olympic Club and you should cease to associate yourself with or represent yourself as having any form of association with the Olympic Club. We thank you for your assistance and cooperation.”

In terms this letter assumed that the Agency Agreement was a legitimate grant of authority to the plaintiff to sell in Mainland China membership of the Club as a component of a travel and accommodation package; see the letter dated 8 March 1999 handed over in accordance with cl 7.1(b) of the Agency Agreement. Moreover it was written at a time when according to the news release SOCOG had assumed sole control of the Club. The Club, controlled by SOCOG, proposed to fulfil its obligations under the contracts to the members of the Club.

On the same day Wyness forwarded a copy of the letter to Ford. He suggested that the options were to return the $260,000 or to supply the 743 membership kits which the plaintiff had paid for. SOCOG was aware of the terms of the letter. The letter contained no suggestion that the plaintiff had wrongfully exploited the Olympic Movement’s intellectual property.

On 15 November 1999 Fergus wrote to Ford referring to recent dealings with her and her concerns about possible breaches of law relating to the Club’s contract. Fergus recommended that a full audit of the financial transactions of the Club be undertaken “to ascertain if any criminal acts might have occurred”. He also recommended that a professional legal opinion be sought. A contemporary draft letter revealed “no prima facie evidence to suggest any criminal acts have occurred”.

On 18 November 1999 the plaintiff replied to Wyness’ letter of 5 November denying that any meeting took place on 19 October 1999. He did not agree with Wyness’ claim that he had admitted that the Agreement was terminated. He denied ever having made such a statement. He further stated that the purported termination was invalid because the conditions referred to had been satisfied “and waived by the Club.”

On 29 November 1999 Wyness faxed Ford as follows: “Following our conversation this morning I wanted to give you my reading of the situation. In early 1999 we were approached by Tim Goh (sic) who was working with Salesforce regarding a possible corporate purchase. The concept we were offered was that of an Olympic Club merchandise package being made available to international visitors who were to be visiting during the Olympics. The purchase of these memberships was to be made by an Australian based company and delivered to the visitors when they arrived in Australia. There was to be no entry into the ticket ballot and we were advised that our merchandise package would have a high perceived value for these visitors. An Agency Agreement would be formed for each country who would be sending visitors. Initially I had been asked by John Moore to contact overseas travel agents who were sending official groups to see if they would buy into the concept and John provided me details of certain companies such as Sportsworld and Jetset etc. I asked Gus Noble to meet with Olympic Intelligence and Immigration and he was advised that there was no strong objection to us working with Peter Zhu (note attached). They paid approx. $260,000 in advance memberships but did not fulfil the full conditions to maintain their status with the Club as an agent. On further advice from Paul Reading in approximately September I was asked to wind down the relationship. I met with Mr Zhu at the first opportunity after his return from China and informed him that we were terminating his agreement due to unfulfilled clauses in the agreement. All payments from Mr Zhu and his company were processed through the normal bank accounts and are available to be audited by any outside party with our prior agreement. Gus Noble was in charge of this International program on behalf of the club and would be the person who would advise on any of the finer details that may be required.”

From 22 November 1999 Go attempted to make contact with Ford. After “fobbing him off” she advised Reading that she intended to explain to Go that the Club was seeking legal advice on the “whole issue” and that the plaintiff had paid $260,000 approximately for around 730 memberships. She intended to advise Go that the “Zhu Contract was terminated by TOCMS in September and that SOCOG had no arrangement with Mr Zhu and would not be entering into any in the future”. She also intended to tell Go that SOCOG would not be offering “any International Memberships or engaging any other agents in the future” and that SOCOG was currently exploring whether to refund the plaintiff money or fulfil obligations to provide the kits.

Ford advised Williams and Reading that it would be “far cheaper to put together some kits than to refund the money” and that if they decided to provide the kits “it may close the matter once and for all which would be a really good thing”. This indifference to the position of those who bona fide had paid their money for the benefit of the Olympic Movement is breathtaking. Arrests

By May 1999 Ya Fa Wang (YF Wang), a man with business interests in several companies in Australia and China had learnt of the existence of the Club. He had been asked by a group of companies in China (the Group) to look at opportunities for sending some of their employees to the Games. On 28 August 1999 YF Wang returned to Sydney and on or about 16 September, with his wife, met with a sub-agent Shao Qiang Liao (Liao) and his wife at a Parramatta restaurant. They discussed the Club. Two or three days later Liao took YF Wang to meet Zhang who gave him Wyness’ letter of 17 June in relation to visas and sub-agents, a copy of a Facts Sheet in both Chinese and English and a sample of a Membership Certificate.

YF Wang prepared a contract between the Group and the “International Division of the Olympic Club” in which the Group agreed to pay $8,700 per package and after signing the agreement to provide a list of 25 members to attend the Games. It was agreed that after paying what was described as the initial payment the Group would be provided with Membership Certificates and that Olympic Club officers would attend Shanghai where Olympic Club Membership Cards would be issued to the 25 members at a press conference which the Group would organise and pay for apart from the airfares of the Club’s representatives to Shanghai. One hundred and twenty five tickets to such events as table tennis, badminton, volleyball and “female soccer” were agreed to be provided to the Group.

The initial payment was $72,500, one-third of the total purchase price for the 25 packages. YF Wang met with Zhang and Liao on 22 September 1999 and paid that amount by way of cheque. He was provided with a receipt on the Olympic Club with compliments slip with the details of the bank, branch, BSB, account number and name “TOCMS” and address of the bank. On 23 September 1999 Zhang and Liao provided an executed copy of the contract YF Wang had drafted. The next day YF Wang returned to China.

On 12 October 1999 Liao faxed YF Wang in China requesting the list of the 25 people so that Membership Certificates could be provided. On 15 October 1999 YF Wang sent to Zhang and Liao the list that had been requested. Further information was sought as to the date of birth, occupation and address of the 25 people so that details could be entered into the computer when their applications could be examined and approved. Liao informed YF Wang that after the certificates were faxed and confirmed, the balance of the amount for the packages would have to be paid. The details were forwarded and Liao advised that he expected to be able to fax the certificates by 20 October 1999.

On 26 October 1999 YF Wang returned to Australia and on 4 November met with Zhang who handed him the Membership Certificates with the names of the 25 persons thereon and a number. YF Wang also met with Zhang about three or four days before Zhang left to go to China. At this meeting Zhang informed YF Wang that he was returning to China to attend the press conference for the presentation to the 25 members and informed him that he also had 25 club packs to be given to them at the presentation. Zhang asked YF Wang to return to China and said that he could take 15 of the packs and Zhang could take the other 10 packs.

YF Wang asked Zhang if the Certificates were genuine. Zhang assured him they were. Zhang asked YF Wang to get the 25 people to fill out the forms that he gave him which were headed “The Olympic Club International Membership Application (the China Region)”.

Sometime after 23 November 1999 Francis Lee, the Chairman of the Asia Media Council, a friend of and at the behest of YF Wang, contacted the Club and spoke with Reg Roberts (Roberts), a person under the supervision of Ford. Lee advised Roberts that YF Wang had purchased 25 packages at a total cost of $72,500. Lee advised the Olympic Club Membership Certificates were provided with membership numbers and provided a copy of a certificate. Subsequently YF Wang made contact with the Club to ascertain the genuineness of the Certificates and the authority of Liao and Zhang. As a result of that contact the Club forwarded this information, including copies of the Certificates, to the OI Centre.

The Strike Force was brought into the matter and DS Nicholls (Nicholls) interviewed YF Wang on 30 November 1999. YF Wang agreed to assist the police who were to engage in surveillance of a meeting that YF Wang set up with Liao at the airport on 1 December 1999 at which he was handing over a photocopy of a cheque for $145,000 for the balance owing for the 25 packages. Liao was arrested and charged with obtaining a benefit by deception and attempting to obtain a benefit by deception.

At a meeting on 3 December 1999 Reading asked Nicholls “what should we do” and was informed that the problem had to be “tackled as a team”. The Shanghai conference should be stopped and the OI Centre would contact Chinese law enforcement, the Australian Consulate, DFAT and the Shanghai Public Security Bureau. A note made at the meeting stated that “cops also advised that the crims were establishing a website in the name of TOCM”. When Nicholls prepared his statement for the proposed prosecution he did not make mention of any meeting on 3 December with SOCOG or Ford.

The mindset of the SOCOG representatives by this stage was that the Certificates were not genuine. There was deep suspicion that the plaintiff and his sub-agents were operating without any authority and fraudulently. There were also suspicions about the bona fides of Wyness and Noble. Meanwhile Ernst & Young advised that the “International Sales” was not a secretive initiative but a strategy well known to TOC and referred to the fact that their 8 July 1999 report had made specific reference to such sales with the estimate of revenues from that program. This did not quell the rising tide of suspicion in SOCOG about the plaintiff’s conduct.

After Liao was arrested a search warrant was executed at Zhang’s business premises in Sussex Street, Sydney. On 2 December 1999 Nicholls met with Ford and Roberts. Seized items were inspected and Nicholls was provided with what he described as “certain information”. The items included stationery, application forms, booklets and an official seal.

Ford informed Nicholls that Liao had no connection with the Club and had no authority to sell Club memberships. She also informed him that the Certificates that YF Wang had been given contained numbers that were not on the Club database. She informed Nicholls that the information on the Certificates was “not genuine”.

On 4 December 1999 YF Wang telephoned Liao. Liao informed him that the Certificates were genuine and provided Zhang’s phone number in China. YF Wang telephoned Zhang that evening in China and was assured by Zhang that the Olympic was genuine and that “if it wasn’t he would return the money” to YF Wang.

When the plaintiff heard of Liao’s arrest in Sydney he cancelled the media conference planned for 6 December 1999 and immediately returned to Australia from China. On his return to Australia on 6 December he was arrested at Sydney airport. His home was subsequently searched. All documents relevant to the conduct of his agency were seized.

On 12 December 1999 SOCOG issued a news release in which it stated that the CEO of SOCOG, Hollway, had said “he wanted any allegation of fraud to be vigorously pursued” and that “SOCOG has authorised no agents or sub-agents to sell Olympic Club material overseas. To the best of our knowledge, any arrangement that may have been in place prior to SOCOG assuming control of the Olympic Club in August was terminated by the previous management of the Olympic Club”.

On 26 April 2000 the plaintiff was charged with obtaining money by deception and attempting to obtain money by deception. Nearly seven months later on 16 October 2000 the Director of Public Prosecutions advised the plaintiff’s solicitor that the Director had decided that all charges against him, Liao and Zhang, would be withdrawn. The Director also recommended that the matter be referred to the Police Integrity Commission for possible investigation. Pleadings

Zhu began his proceedings in the Equity Division, Commercial List. Amongst other relief, Zhu sought: “4. A declaration that by its conduct on or about 5 November 1999 [TOC] wrongfully repudiated the Agency Agreement. 5. A declaration that the wrongful repudiation of the Agency Agreement by [TOC] on or about 5 November 1999 was procured by [SOCOG]. 6. Damages against [SOCOG] for intentional interference with contractual relations between the plaintiff and [TOC], including aggravated and exemplary damages.”

Under the heading “Nature of Dispute” Zhu claimed as follows: “1. This dispute arises out of the events which occurred after [SOCOG] took over ‘The Olympic Club’, of which [TOC] was trustee in or about September 1999. 2. In particular, on or about 5 November 1999 [SOCOG] caused [TOC] to repudiate an Agency Agreement which had been made between the plaintiff and [TOC] on or about 11 March 1999 in respect of the sale of International Memberships of The Olympic Club in The People’s Republic of China and, on or about 6 December 1999, [SOCOG] caused the plaintiff to be arrested and suffer the humiliation of allegations that he was not an authorised agent of The Olympic Club and was carrying on his agency without lawful authority. 3. The indicia of authority upon which the plaintiff relies includes an instrument under the seal of [TOC], dated 4 June 1999 and signed by its Managing Director, [Wyness], which in terms states that the plaintiff is an authorised agent of The Olympic Club and is authorised on an exclusive basis in the territory of the People’s Republic of China to sell Olympic Club International memberships to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games as a component of a travel and accommodation package for the period 1 April 1999 to 31 December 2000.”

Zhu claimed that by filing and service of the summons he “now” accepted the wrongful repudiation of the Agency Agreement by TOC subject to his entitlement to damages. He claimed further that in or about October 1999 SOCOG instructed TOC to terminate the Agency Agreement “23. The conduct of [SOCOG] in instructing [TOC] to terminate the Agency Agreement was conduct by [SOCOG], with knowledge of the Agency Agreement, intending to interfere with the contractual relations between the plaintiff and [TOC] under the Agency Agreement. 24. In furtherance of its said conduct, [SOCOG] caused the plaintiff to be arrested at Sydney Airport on 6 December 1999 upon the basis that the plaintiff was alleged to be carrying on his agency without lawful authority. 25. By reason of the international interference by [SOCOG] in the contractual relations between the plaintiff and [TOC] the plaintiff has suffered loss and damage.”

SOCOG filed a further amended defence to the amended summons in which it denied that TOC wrongfully repudiated the Agency Agreement but admitted that in or about mid-September 1999 SOCOG, by its officer Reading, in a telephone conversation with Wyness requested that TOC terminate its arrangements with regard to Zhu. SOCOG further admitted that by at least about mid-September 1999 it knew that TOC had appointed Zhu as its agent to sell international memberships of the Olympic Club to residents of Mainland China. It further admitted that TOC received the sum of $230,006. SOCOG claimed that the termination of the contract between Zhu and TOC was lawful and that TOC’s conduct caused no breach of that contract because the termination was valid by reason, inter alia, of the plaintiff’s obligations under the Agency Agreement, Deed Poll and Indicia and Images Protection Act as follows: “10 The Plaintiff owed the following essential obligations: (a) express and implied obligations pursuant to the Agency Agreement Particulars (i) the express obligation, pursuant to cl9.1(a), to do all things and to sign all documents reasonably necessary to obtain the appropriate and required approvals and authorisations from the Government of the People’s Republic of China and the Chinese Olympic Committee: such approvals and authorisations being the express approval of those two bodies for the Plaintiff to exercise his right pursuant to cl2.1 and Schedules 1, 2 and 4 of the Agreement to sell International Memberships (including by the use of the Olympic Club logo) of the Olympic Club in the Mainland of the Government of the People’s Republic of China to Mainland Chinese; (ii) the implied obligation not to exercise the Plaintiff’s right to sell International Memberships to the Mainland of the Government of the People’s Republic of China to Mainland Chinese unless the Plaintiff had obtained approval and authorisation as particularised in sub-paragraph (i) above from the Government of the People’s Republic of China and the Chinese Olympic Committee to do so; (iii) the implied obligation not to misrepresent the benefits and privileges attaching to International Memberships; (iv) the express obligation, pursuant to cl9.1(b), to refrain from using the Sydney 2000 Olympic Club Logo or the agency generally for the purpose of promoting, marketing or selling any services (including the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and any merchandising by the Agent or any of his associated or related entities, individuals or bodies corporate) other than the International Memberships (as defined in cl1.1) themselves; (v) the express obligation, arising from cl 9.1(b), to execute and abide by the terms of the Marketing Restriction Deed Poll in respect of services including, but not limited to, the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and any merchandising by the Agent or any of his associated or related entities, individuals or bodies corporate (which terms are particularised at paragraph 9(c) below); (vi) the express obligation, arising from cl 9.1(c), to obtain the written approval of [TOC] prior to utilising the Sydney 2000 Olympic Club Logo or any variation thereon in any print or electronic media or marketing or sales material; … (b) a fiduciary obligation to act honestly and faithfully and with full frankness towards [TOC] in or about the performance of his obligations pursuant to the Agency Agreement, the Marketing Restriction Deed Poll and the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth). (c) express obligations pursuant to the Marketing Restriction Deed Poll, subject to such rights as were validly granted to the Plaintiff by [TOC] pursuant to the Agency Agreement which rights related only to the promotion, marketing and sale of ‘International Memberships’ as defined therein. Particulars (i) the express obligation pursuant to cl1 not, without the prior written permission of [SOCOG], to represent, hold out, market, promote or advertise in any way that he had any connection or association with any of the Olympic Bodies (as defined in the preamble to the Deed) or with the Sydney 2000 Olympic Games; (ii) the express obligation pursuant to cl3 not, without the prior written consent of [SOCOG], to use for any purpose, including, but not limited to, for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which, in [SOCOG’s] opinion, suggested any connection or association between the Plaintiff and any Olympic Body or the Sydney 2000 Olympic Games; (iii) the express obligation pursuant to cl3 not, without the prior written consent of [SOCOG], in any marketing, promotion or advertisement, to: (A) refer to any Olympic Body or to the Olympic Games; (B) use the words ‘Olympic’, ‘Games’, ‘Sydney 2000’; (C) use any other words, phrases, symbols or images which refer to, directly or indirectly, any Olympic Body or the Olympic Games; (D) use any ‘Sydney 2000 Games images’ or ‘Sydney 2000 Games indicia’ (as those terms are defined in the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth). (d) express obligations pursuant to the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth); Particulars Subject to any licence validly granted to the Plaintiff by [SOCOG] pursuant to s14, the obligation pursuant to ss12 and 13A not to use: (i) any of the phrases ‘Sydney Games’, ‘Sydney 2000’, ‘Olympic’ (whether in English or any other language) (‘Sydney 2000 Games indicia’: ss7 and 9); or (ii) any visual or aural representation that, to a reasonable person, in the circumstances, would suggest a connection with the Sydney 2000 Olympic Games (‘Sydney 2000 Olympic Games images’: ss7 and 8); for commercial purposes as defined in s11.”

SOCOG claimed (para 11 of its defence) that Zhu was in breach of these obligations, inter alia, · by failing to obtain or attempt to obtain the approval of the Government of the People’s Republic of China or the Chinese Olympic Committee; · by purporting to exercise his right to sell International Memberships without obtaining such approvals; · by causing to be created and distributed itemised documents such as fact sheets; · by not confining his use of the Sydney 2000 logo or the agency generally to the sale of “International Memberships” as defined in the Agency Agreement or so confining his representations as to his connection with the Sydney 2000 Olympic Games, SOCOG and the Olympic Club and his use of various words, phrases, symbols or images; · by distributing documents without obtaining the written approval of TOC to do so; · by breach of a fiduciary obligation owed to TOC and other obligations in the Deed Poll; and · in breach of his obligation pursuant to the Indicia and Images Protection Act , without obtaining any licence from SOCOG, promoting, marketing, and selling travel packages. SOCOG alleged breaches of fiduciary obligations (para 12), breaches of obligations set out in para 10(c) (para 13) and breaches of obligations alleged in para 10(d) (para 14). By reason of these matters which were particularised in SOCOG’s defence in detail it was alleged that TOC was entitled to terminate its contract (para 15).

Of particular relevance to this appeal was the following paragraph of SOCOG’s defence: “17 Alternatively to paragraphs 9 to 16, even if the Agency Agreement was valid and subsisting, the termination was unlawful and the conduct of [SOCOG] is held to have thereby caused a breach of that conduct [sic contract], [SOCOG’s] conduct was, in the circumstances, justified: Particulars (i) Pursuant to the Indicia and Images Act [SOCOG] enjoyed statutory rights and bore statutory responsibilities in respect of the Sydney 2000 Games indicia and images. Those obligations included the obligation to maintain a register of licensed uses [sic] of the indicia and images (s16) and the responsibility to exercise its statutory rights of standing pursuant to s43(3) to obtain injunctive relief in respect of contraventions of s12 in respect of the indicia and images. (ii) By reason of the Plaintiff’s breaches alleged at paragraph 14 above, [SOCOG] was entitled to obtain an injunction to restrain the Plaintiff from using any of the indicia or images in respect of the promotion, marketing or sale of the travel packages which the Plaintiff was purporting to promote, market and sell in the Government of the People’s Republic of China. (iii) By reason of: (A) the nature of [SOCOG’s] status and function as the Organising Committee for the Sydney 2000 Games; (B) the obligation owed by [SOCOG] with respect to The Olympic Club pursuant to the Deed of Termination and Release; (C) the principle embodied in clause 5(g) of the Establishment Agreement; [SOCOG] had a responsibility to protect the reputation and goodwill of the Olympic Movement, The Olympic Club and the Sydney 2000 Games. (iv) [SOCOG] repeats the Plaintiff’s breaches alleged in paragraphs 11, 12, 13 and 14 above.”

Zhu filed a reply dealing with the various breaches relied upon of the Agency Agreement, the Deed Poll and the Act. Paragraph 18 of the reply was as follows: “ No Justification for the conduct of the First Defendant 18 Further and in the alternative: a. The plaintiff denies paragraph 17 of the Further Amended Defence. b. Further and in the alternative, to the extent that the conduct of [SOCOG] included direct interference with the contractual rights of the plaintiff, when [SOCOG] caused the plaintiff to be arrested on 6 December 1999, that conduct is, as a matter of law, incapable of being justified. c. Further and in the alternative, to any extent that [SOCOG] had available to it a right to move for an injunction to restrain any breach of the Act, breach of covenant under the Deed Poll or other conduct on the part of the plaintiff upon which [SOCOG] now claims to be entitled to rely to justify its conduct, [SOCOG] elected not to exercise that right and chose instead to directly or indirectly interfere with the plaintiff’s contractual relations.”

In the alternative, Zhu pleaded that, if TOC was entitled to terminate the Agency Agreement, Zhu was entitled to recover a loss which was referable to 743 International Memberships from SOCOG. Finally, Zhu relied upon a claim of unjust enrichment. Hearing before Bergin J

Bergin J heard these proceedings over 20 hearing days between 30 July and 11 September 2001. As already explained neither TOC not Wyness took any part as parties to the proceedings. From her Honour’s reasons for judgment it appears clear that most attention was directed to whether or not TOC had wrongly repudiated the Agency Agreement which in turn depended upon whether or not Zhu was in breach of the terms and conditions of the Agency Agreement and Deed Poll. Bergin J held that TOC had wrongfully repudiated the Agency Agreement and that SOCOG was not justified in procuring the termination of the Agreement. The connection, in her Honour’s reasons, between these conclusions is significant.

Bergin J described SOCOG’s defences as follows: “170 SOCOG concedes that TOC remained legally bound to the plaintiff to perform the Agency Agreement until the purported termination on 5 November 1999. SOCOG also conceded that it instructed TOC to terminate the Agency Agreement and that the other ingredients of the tort of interference were present. It was submitted that the plaintiff may only succeed if he is able to prove that the termination of the Agency Agreement on 5 November 1999 was a wrongful repudiation by TOC. It is submitted the tort is not committed if the interference results, not in any breach of the contract, but merely in the exercise of a lawful right to terminate the contract: Greig & Ors v Insole & Ors [1978] 1 WLR 302 at 333. 171 SOCOG claims that the termination was valid by reason of circumstances that existed at the time of the termination, which justified (emphasis added) the termination. It claims that the plaintiff has misconducted himself personally and through his sub-agents and that such misconduct was unknown or not fully apprehended at the time the letter of 5 November 1999 was sent to the plaintiff: Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; Byrne v Australian Airlines Ltd (1995) 185 CLR 410; Concut Pty Ltd v Worrell (2000) 75 ALJR 312 Pars [27], [29] and [42]. 172 SOCOG concedes that the grounds for termination stated in the letter of 5 November 1999 were not available grounds for the termination of the Agency Agreement but that the reliance on those grounds does not matter in the circumstances of this case. It was submitted that the plaintiff’s conduct exemplified by a number and variety of serious breaches of contractual and fiduciary duty owed by him to TOC justifies (emphasis added) the termination. It is submitted that such conduct was inconsistent with the terms of the Agency Agreement in fundamental respects and incompatible with the trust and confidence which TOC was entitled to expect to have in its agent. 173 It was submitted that the agency relationship is a fiduciary relationship which gave rise to three primary equitable obligations (a) that the plaintiff was required to act strictly in accordance with the agency agreement and not to exceed the authority given to him, (b) that the plaintiff was required to obey the instructions of TOC and (c) that the plaintiff was required to act with good faith and loyalty towards TOC and not prefer his own interests to those of TOC.”

Bergin J was satisfied that SOCOG was aware or constructively aware of the contractual obligations TOC owed to the plaintiff and was aware that the entry into the deed of release and termination would cause TOC to breach the Agency Agreement. In her Honour’s opinion this was an inducement by SOCOG of TOC to breach its contract with the plaintiff.

Under the heading “Justification?” Bergin J said: “222 As I have already said, SOCOG conceded that the elements necessary for the tort of interference with the contractual relationship between TOC and the plaintiff were present and that the grounds relied upon in the letter of 5 November 1999 from Wyness to the plaintiff purporting to terminate the Agency Agreement were not grounds available to TOC to terminate the agreement. However SOCOG submitted that the termination is valid because there were repudiatory breaches by the plaintiff, of which TOC was unaware as at 5 November 1999, of which SOCOG is now aware, entitling summary dismissal pursuant to cl 15.4 of the Agency Agreement: Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359. 223 Clause 15.4 entitled TOC to terminate the Agreement if the plaintiff was ‘guilty of conduct justifying (emphasis added) summary dismissal’. Such conduct would have to ‘strike at the root’ of the agreement and be ‘wholly inconsistent with the continuance of confidence between the parties’ to the agreement: Shepherd v Felt and Textiles (per Starke J at 372). In Shepherd the alternative ground for dismissing the agent was that he breached his duty of faithful and loyal discharge of duty towards his employer by positively working to impede or defeat the employer (per Dixon J at 378). An actual repugnance between the employee’s acts and his relationship must be found. Uneasiness as to the future conduct of the Agency would not be enough to warrant or justify (emphasis added) summary dismissal: Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 per Dixon & McTiernan JJ at 82. 224 Mr Pembroke SC submitted that although the alleged breaches when viewed individually may not be so characterised, which was not conceded, when viewed cumulatively, they do strike at the root of the agreement and would lead to the lack of confidence such as would justify (emphasis added) summary dismissal. Mr Pembroke SC also submitted that it is irrelevant to the interests of SOCOG that TOC either waived, or alternatively downplayed the significance of the plaintiff’s conduct which it alleges amounted to repudiatory breaches. 225 Mr Pembroke used the example of a contract between two parties, A and B, through the wrongful performance of which caused damage to X. It was submitted that there may be a host of reasons why A and B may be content for the contract to remain on foot. It was submitted that it would be entirely inconsistent with the notions of justification (emphasis added) if the attitude of A or B could be determinative as to whether X’s interference was able to be justified (emphasis added). Reliance was placed on another example used in Smithies v National Association of Operative Plasterers [1909] 1 KB 310. Buckley LJ said at 337 ‘no doubt there are circumstances in which A is entitled to induce B to break a contract entered into by B with C. Thus, for instance, if the contract between B and C is one in which B could not make consistently with his preceding contractual obligations towards A, A may not only induce him to break it, but may invoke the assistance of a Court of Justice to make him break it’. 226 It was submitted that the Court must analyse the circumstances relied upon as justification (emphasis added) by assessing the objective facts and not from the perspective of the parties to the contract, the plaintiff and TOC. Such an approach is submitted to be consistent with the fact that the issue of repudiation turns upon objective facts and omissions and the question to be determined is what effect the plaintiff’s actions would be reasonably calculated to have upon a reasonable person: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623. 227 It is important when considering the objective facts to review the circumstances and facts which gave rise to the objective facts the subject of the allegations of repudiatory breaches. This is particularly so where the basis for the justification (emphasis added) is reliant upon the principles enunciated in Shepherd a significant feature of which is that the alleged breaches are not known of at the time of the dismissal or termination. It seems to me that it is also relevant that SOCOG were represented on the Club Committee and took over the operations and management of the Club in August 1999. 228 This case is different from the examples used or relied upon by Mr Pembroke. SOCOG was not a party without control over or a say in the way in which TOC conducted its activities as Trustee. Indeed SOCOG accepted the plaintiff’s covenants in the Deed Poll signed on 11 March 1999. I intend to look at all relevant facts in assessing whether the conduct, the subject of complaint, would justify (emphasis added) summary termination of the Agency pursuant to clause 15.4 instead of requiring notice to the plaintiff pursuant to clause 15.2 of the Agency Agreement. 229 Although the plaintiff submitted that SOCOG could not rely upon the principles in Shepherd I intend to decide the case on the basis that it can. No judicial definition of ‘ justification ’ (emphasis added) has been developed. Whether conduct justifies (emphasis added) summary dismissal has been left to the ‘good sense’ of the Court in deciding ‘on which side of the line’ such conduct falls: Ranger Uranium Mines Pty Ltd & Anor v Federated Miscellaneous Worker’s Union of Australia & Ors (1987) 54 NTR 6. In this case I have to decide whether the conduct complained of strikes at the root of the Agency Agreement or justifies (emphasis added) a loss of trust and confidence in the agency relationship. There are a number of repudiatory breaches alleged with which I will now deal.”

Bergin J reviewed the conduct of the plaintiff which SOCOG claimed warranted summary dismissal under twelve heads and in each case rejected the claim that the conduct entitled TOC to terminate the Agency Agreement. For instance, Zhu made representations to the effect that Chinese persons who became International Members of the Club would be guaranteed a visa to enter Australia. Bergin J was satisfied that this fell into the category of conduct that should have been notified to Zhu, discussed with him, suggestions for changes made and then if he or his sub-Agents did not comply action could have been taken; see cl 11 of the Agency Agreement. Her Honour’s conclusion was the same even if all or some of the alleged breaches were to be treated cumulatively. Amongst these heads was breach of the terms of the Deed Poll about which Bergin J said: “352 SOCOG alleged that the plaintiff had breached the terms of the Deed Poll by the use of documents and items that included the Olympic symbol and the Club logo. It also alleged that this conduct was in breach of the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth) (the Act). 353 The plaintiff acknowledged in the Deed Poll that he had no right to use any intellectual property belonging to any Olympic Body including but not limited to any Olympic logo, mark or design (clause 2). Clause 5 of the Deed provides that the obligations imposed by it are ‘subject to any rights granted to the Covenantor by any Olympic Body’. Olympic Bodies are defined in the Deed as ‘SOCOG, the Australian Olympic Committee Inc, the International Olympic Committee, the Olympic movement and the official sponsors, suppliers and others who are from time to time authorised to use those rights’. The rights referred to include the intellectual property and words, phrases, symbols or images which suggest a connection or association with an Olympic Body, the Games or any of the Olympic Teams. 354 It was submitted that TOC was a body that was from time to time authorised to use the rights of SOCOG and the AOC and was therefore an Olympic Body. It was further submitted that TOC granted the plaintiff the right to represent, hold out and promote himself as having a connection or association with an Olympic Body, namely, that he was an authorised agent of the Club for the sale of International Memberships of the Club as a component part of the package. Additionally it was submitted that TOC granted the plaintiff the right to use the intellectual property belonging to an Olympic Body when it provided the plaintiff with the authorities dated 8 March 1999 and 4 June 1999 containing the logo and when it provided the plaintiff with letterhead of the Club and approximately 100 Welcome Kits containing satchels and other merchandising material for use in the Agency. 355 In all the circumstances I am satisfied that the exception to covenants 1, 2 and 3 of the Deed contained in clause 5 applies and that there was no breach of the Deed Poll. There was no breach of the Act for the same reason. In any event I agree with the plaintiff’s submission that if there had been a breach of the Deed in the circumstances of this case it would have been necessary to notify the plaintiff and request return of the materials or some other action to remedy the conduct, the subject of any complaint. It could not justify (emphasis added) summary dismissal.”

After saying she was not satisfied that any breaches by Zhu of his fiduciary duty had been established, Bergin J stated the following conclusions on justification: “359 In reviewing the plaintiff’s conduct in relation to the alleged breaches I should return to Mr Pembroke’s submission that conduct in isolation may not warrant summary termination but when viewed cumulatively may warrant such summary termination of the Agency Agreement. Having regard to my findings that in some instances the plaintiff’s conduct would warrant notice being given to him it is important to look at those instances to see if viewed cumulatively they would justify (emphasis added) summary termination. 360 The areas in which I am satisfied that the plaintiff’s conduct would have warranted notice for either discussion or rectification are the documents in which there appeared to be a blurring of the roles of TOC and the plaintiff. Viewing those matters cumulatively and taking SOCOG’s submissions in relation to the plaintiff’s evidence into account I am still satisfied that the conduct does not warrant summary dismissal. SOCOG’s justification (emphasis added) case fails.”

Because the plaintiff’s conduct did not, in Bergin J’s opinion, warrant summary termination of the Agency Agreement that part of SOCOG’s justification case failed. Her Honour said: “361 The failure of SOCOG’s case on justification (emphasis added) means that the Agency Agreement was not validly terminated on 5 November 1999. It is therefore necessary to consider the next claim made by the plaintiff that SOCOG interfered with his contractual relationship by causing him to be arrested on 6 November 1999. I will now consider this claim but before doing so I should return to the nature of the relationship between SOCOG and TOC.”

Bergin J described that relationship as in some respects antagonistic. She referred to the parlous state of TOC’s finances and the controversy surrounding SOCOG during 1999 in relation to what became known as the provision of tickets on a “rich list”. Any public revelation of TOC’s financial state was avoided by the terms of the transfer of the Club to SOCOG. Bergin J observed that it was in this setting that Reading became nervous about SOCOG’s and TOC’s “exposure” to further criticism of the presence of what he described as “loose canons” (sic) such as the plaintiff and his sub-agents. Bergin J said: “365 Reading had received information that enabled him, when discussing the plaintiff with Wyness, to inform Wyness that the police are ‘looking at this fellow’. The fact that the police were ‘looking’ at the plaintiff and his operations was always envisaged. Noble informed the plaintiff prior to the execution of the Agency Agreement that the plaintiff would have to be ‘checked out’. The continuing process of the provision of the details in relation to the sub-agents was consistent with a further ‘checking out’ of the sub-agents. It was a process to give TOC the opportunity to require the plaintiff to refrain from using the services of any particular sub-agent.”

Paragraph 5 of the Establishment Agreement enabled SOCOG, through its representation on the Club Committee, to direct TOC to cease activities regarded as likely adversely to affect the goodwill or reputation of the Olympic movement. There was no evidence that the AOC or SOCOG representatives took that view of the plaintiff’s conduct at any time. Reading was not called to give evidence and McLatchey who was called did not give such evidence. This brought Bergin J to consider the cause of the plaintiff’s arrest.

The plaintiff submitted that but for the erroneous information provided to W F Wang and Nicholls by Ford and the failure of SOCOG to provide other obviously relevant information the plaintiff’s arrest would not have occurred. The plaintiff submitted the provision of the information that the certificates of membership were not genuine and the failure to inform Nicholls of the arrangement between TOC and the plaintiff and the dispute that had arisen in November 1999 was a wrongful and unlawful act resulting in the exercise of discretion by Nicholls to arrest the plaintiff.

No one had told Nicholls that the plaintiff had at least 657 memberships in the data base and had paid nearly a quarter of a million dollars to TOC. No one informed Nicholls that in June 1999 the Agency Agreement had been extended to December 2000 or that the purported termination of the Agency Agreement on 5 November 1999 was being challenged by the plaintiff.

Begin J considered that SOCOG had taken the view that not only was the plaintiff involved in a fraudulent conspiracy but Wyness and Noble were also involved in some way. Ford knew that the plaintiff had paid nearly a quarter of a million dollars to TOC and hoped that the “whole thing would go away” if the kits and paraphernalia were given to the plaintiff: “372 … It is my view that her failure to inform DS Nicholls of the payment by the plaintiff and the existence of at least six hundred and fifty seven memberships in the database was a significant omission by her and thus by SOCOG. Reading’s failure to disclose that he had sighted the letter extending the plaintiff’s agency to December 2000 and that there was a dispute as to whether the Agency Agreement had been terminated on 5 November 1999 was also a serious omission.”

Nicholls conceded that if he had been informed by Reading that the Chinese Consul with responsibility for cultural matters and the Olympics had attended SOCOG’s office in August 1999 seeking and receiving assurances from SOCOG that the Club and the plaintiff’s agency were genuine, he would have taken those matters into account in determining what he did next. This information he was not given. He also agreed that he would have been most concerned to ascertain the correct position in relation to the plaintiff’s authority before moving to arrest him, if only to avoid the embarrassment of an inappropriate arrest.

Bergin J said: “376 … After the plaintiff’s arrest DS Nicholls informed him that the Strike Force was investigating a complaint that he had been representing himself as a person who was entitled to sell memberships of the Club in China without having authority to do so. The plaintiff informed DS Nicholls that he was an authorised agent and he was the exclusive agent for the Club in China. DS Nicholls said ‘that is not what I have been told. What authority have you got?’. The plaintiff informed him that he had an Agency Agreement and an authority in writing under seal. He was asked where the authority was and, after looking through the documents he had with him, the plaintiff produced the letter of 4 June 1999. 377 DS Nicholls went away for a period and on his return said to the plaintiff ‘I have been told that this is a forgery. It must have been put together by photocopying other documents’. The plaintiff then informed DS Nicholls that such allegation was ‘not true’ and that he had paid the Club $260,000 and that he was an authorised agent. DS Nicholls asked who could confirm this claim and the plaintiff informed him that either Wyness or Noble could do so. DS Nicholls then said that he had been told that the agency had been terminated on 5 November 1999. The plaintiff informed him that it was not and that he had written to Wyness disputing such purported termination. 378 If DS Nicholls had already seen the correspondence purporting to terminate the plaintiff’s agency on 5 November 1999 and the subsequent correspondence, it seems to me that he would not have had to debate the matter with the plaintiff in the manner that he did. It seems to me from the evidence that after the plaintiff produced the 4 June letter DS Nicholls made some inquiries from some person, more probably than not within SOCOG, and was informed that the agency had been terminated on 5 November 1999. Even then it was left to the arrested plaintiff to inform DS Nicholls that there was a dispute about the purported termination.”

Bergin J was satisfied that had Nicholls been told about this dispute he would not have gone ahead and arrested the plaintiff on 6 December 1999 without a further investigation. Bergin J said: “380 On 6 December 1999 the plaintiff was returning to Australia to investigate what had happened in relation to the arrest of his sub-agent. Charges were not brought against the plaintiff until 26 April 2000. The DPP’s withdrawal of the charges and referral of the matter to the Police Integrity Commission for possible investigation is a step from which I am able to infer that there was no reasonable prospect of conviction. If there had been a careful, open and commercially sensible assessment of the matter in December 1999 with the provision of accurate information to DS Nicholls there would have been no arrest of the plaintiff on 6 December 1999. 381 In October 1999 Reading told Ford that he understood that there had been some ‘negotiations’ with the plaintiff and that after he had received the briefing from OI Centre he had advised Wyness to terminate those ‘negotiations’. From the intelligence report I am satisfied that it is more probable than not that Reading informed Ford that his instructions appeared to have been ignored in relation to the termination of those ‘negotiations’. Ford saw the facsimile from Wyness of 29 October 1999 on Olympic Club letterhead and I am satisfied reported to the OI Centre that Wyness had used such letterhead and was not ‘authorised’ to do so. A further inference available from the intelligence report is that Ford expressed her concerns in relation to the ‘on-selling’ of the packages. On 5 November 1999 Ford was provided with the plaintiff’s telephone number and was informed again by Wyness that the plaintiff had paid for 743 memberships. 382 DS Nicholls arrested the plaintiff on the basis of the information provided by YF Wang, which was itself reliant on the information provided by Ford, and the information conveyed to him by Ford on 2 December 1999 that the twenty five membership certificates provided to YF Wang were ‘not genuine’. On the same day, 2 December 1999, the CEO of SOCOG, Hollway, advised Reading and Ford that there was to be a ‘continuation of full cooperation with police’.”

The plaintiff submitted that his arrest and the manner of causation of it was analogous to that in Dickenson v Waters Ltd [1931] 31 SR (NSW) 593. It was submitted that SOCOG made an allegation of dishonesty against the plaintiff when Ford told Nicholls and YF Wang that the certificates were not genuine. That allegation was said to have been made with reckless indifference to the truth bearing in mind that Ford knew of the 657 or 743 memberships which the plaintiff was entitled to allocate. It was also submitted that Reading knew the true position because he had seen copies of the correspondence between Wyness and Ford and had discussed with Ford the alternatives of repaying the plaintiff $260,006 or providing the Welcome Kits and the paraphernalia and was seeking legal advice on the matter.

Bergin J said: “386 The question posed in Dickenson ‘do you want to proceed against these people’ was not put in express terms to SOCOG. However the consultation between SOCOG and the OI Centre and the Strike Force on 3 December 1999 was to the same effect. The information that the Certificates were not genuine provided by SOCOG was pivotal to the exercise of DS Nicholls’s discretion to arrest the plaintiff. In my view to suggest that the complaint was from a third party and not SOCOG does not accurately reflect the reality of the situation. This was a complaint that the plaintiff was acting criminally and at no stage prior to the arrest of the plaintiff did SOCOG withdraw or qualify that information in any way. It had that opportunity on 3 December 1999. It did not inform DS Nicholls that many blank certificates had been issued to the plaintiff and that these were part of a Kit of paraphernalia that the plaintiff was entitled to issue or have issued. 387 Far from withdrawing the allegation on that day SOCOG went further and as part of the ‘team’ consented to the stopping of the press conference in Shanghai and the notification internationally to policing agencies in respect of the plaintiff and his sub-agents. I am satisfied that but for the information provided by SOCOG that the Certificates were not genuine and the failure to provide the information in relation to the civil dispute that had arisen the plaintiff would not have been arrested on 6 December 1999. I am satisfied that SOCOG’s conduct caused the plaintiff’s arrest and the subsequent seizure of all his documents relevant to the conduct of his agency. 388 SOCOG’s inducement of DS Nicholls in the circumstances of the existence of the plaintiff’s Agency Agreement was therefore unlawful and an intentional infliction of harm to the plaintiff. It amounted to an indirect interference with the contractual relationship. The plaintiff’s Agency Agreement remained on foot until he accepted the wrongful repudiation of it by the commencement of these proceedings on 22 December 1999.”

In the course of dealing with Zhu’s claim based on unjust enrichment Bergin J referred to the $30,000 agency fee paid on 8 March 1999 and the $230,006 paid by June 1999. She said: “389 …. It was not until this trial commenced before me that SOCOG made an offer to repay the plaintiff this money together with interest. That was not an unconditional offer and the letter stated that SOCOG was only willing to pay that amount together with interest if the plaintiff would agree to the proceedings being otherwise dismissed with no order as to costs. That offer was made on 3 August 2001 and was open until 10.00am on 6 August 2001. No money has been paid into Court and there is absolutely no basis, and none has been argued, upon which SOCOG is entitled to retain the amount of $260,006. 390 The plaintiff is entitled to the amount of $260,006 with interest upon which I will hear submissions.”

Bergin J went on to deal with damages under the heading “Loss of Opportunity” for which she awarded a total of $3 million, “Out of Pocket Expenses which was subsumed by the loss of opportunity damages, “Exemplary damages” for which she awarded $200,000 and “Aggravated damages” for which she awarded $95,000. In the result, the plaintiff recovered judgment against SOCOG in the sum of $4,234,319 plus costs. SOCOG did not challenge the right to such damages or their assessment if the tort alleged against it was made out. Appeal

Apparently at the trial before Bergin J SOCOG emphasised both in evidence and in argument the alleged breaches or series of breaches of the Agency Agreement and the Deed Poll which it claimed entitled TOC to terminate the Agency Agreement. Bergin J rejected this claim and SOCOG did not seek to revive it on the appeal.

Before Bergin J no great attention was directed to the effect of the Indicia and Images Protection Act which rated no mention in Bergin J’s careful judgment until para 352 which I earlier set out. Bergin J did not quote the relevant parts of the legislation or summarise their effect. In para 355 her Honour found no breach of the Deed Poll and, for the same reason, no breach of the Act. Nor did Bergin J mention the Licence Agreement or its terms. Importantly that agreement granted to TOC as trustee the rights relevant in these proceedings “only in Australia” (cl 3.1 and Appendices A1 and A2). Furthermore, “for the avoidance of doubt” it denied to TOC “except to the extent expressly permitted by this agreement or a Transaction Document” the right to use or authorise the use of any or all of the Olympic marks on or in relation to any goods or services of the trustee or any third person, except as expressly permitted in the agreement (cl 3.5(a)).

Of SOCOG’s grounds of appeal I need quote only one, ground 10: “ Justification 10 The judge erred in failing to hold that by reason of: (a) the appellant’s responsibility to protect the reputation and goodwill of The Olympic Movement, the Olympic Club and the Sydney 2000 Games; and (b) the breaches of the Agency Agreement referred to in paragraphs 1-5 above; [of these paragraphs I need refer only to para 2: “Breach of Clause 9.1(b)” of the Agency Agreement by the plaintiff’s conduct in utilising his exclusive agency to advance and promote his own travel and accommodation packages] (c) the breach of the Deed Poll; (d) the respondent’s failure to obtain a licence from the appellant pursuant to the Indicia and Images Protection Act; the appellant’s conduct was in all the circumstances justified, so as to constitute a complete defence to the respondent’s claim for inducing a breach of contract.”

Mr Walker SC, who appeared for SOCOG on the appeal, though not at the hearing before Bergin J, and whose frank and skilful approach to the appeal must be commended, did not challenge Bergin J’s conclusions that TOC had no grounds for terminating the Agency Agreement with Zhu and, by purporting to do so, had wrongfully repudiated it. Moreover, counsel conceded there was a continuation of that repudiatory conduct which entitled Zhu to accept the repudiation by beginning the proceedings and to claim damages for repudiation against TOC. Of course, a liquidator of TOC was appointed and there was nothing to be gained by Zhu pursuing damages against TOC for its repudiation of the contract. Mr Walker also conceded that SOCOG, to use the terms by which the tort is described, knowingly induced TOC to break its contract with Zhu. If rightly found to have committed the tort, SOCOG did not challenge the amount of damages awarded and accepted that, even if it succeeded, judgment to the extent of $260,006 plus interest should stand against it. The question on appeal was whether or not the inducement was without lawful justification. Mr Walker submitted that the claim in tort was not made out if the inducement was justified because of SOCOG’s equal or superior right.

Justification as an element in the tort of wrongful interference with a contract has not been, and probably cannot be, defined. It has been said that whether justification in a particular case exists or not should be left to the good sense of the tribunal having regard to considerations which have been discussed in the cases. These are helpfully reviewed in Building Workers’ Industrial Union of Australia & Ors v Odco Pty Ltd (1991) 29 FCR 104 at 140 and following.

In a frequently cited passage in Read v The Friendly Society of Operative Stonemasons of England, Ireland and Wales & 2 Ors [1902] 2 KB 88, Darling J, in upholding an appeal from a decision determined in the defendants’ favour because of their honesty and absence of improper motives, said at 95: “The plaintiff had entered into a contract by which he became entitled to demand of Wigg & Wright that they should teach him the trade of a stonemason. That was his contractual right. To interfere with that right may give a cause of action against him who does so. For this proposition there is much unquestionable authority; but it is enough to cite these words from the judgment of Lord Macnaghten in Quinn v Leathem [1901] AC 495 at 510: ‘A violation of legal right committed knowingly is a cause of action, and … it is a violation of legal right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference.’ It was argued before us on behalf of the defendants that they had here such a sufficient justification, because they had themselves entered into a contract with Wigg & Wright, the terms of which were inconsistent with the contract between Wigg & Wright and the plaintiff. It may well be that a person, or many persons acting in concert, would have a right to demand the fulfilment of a contract entered into with him or them, even though such fulfilment involved him who performed it in breaking a contract made by him with another person. Many examples may be put – for instance, a man who had affected to sell the same article to two separate purchasers could not possibly perform one contract without breaking the other, if both insisted on their rights, yet it could not render the purchaser, who insisted on his contractual rights, liable at the suit of the other purchaser.”

About justification, Darling J said at 96-7: “To resume, I think the plaintiff has a cause of action against the defendants, unless the Court is satisfied that, when they interfered with the contractual rights of plaintiff, the defendants had a sufficient justification for their interference – to use Lord Macnaghten’s words. This sufficient justification they may have had, and they may prove it; but the facts found by the county court judge and relied on by him as enough do not amount to one; for it is not a justification that ‘they acted bona fide in the best interests of the society of masons’, ie, in their own interests. Nor is it enough that ‘they were not actuated by improper motives’. I think their sufficient justification for interference with plaintiff’s rights must be an equal or superior right in themselves, and that no one can legally excuse himself to a man, of whose contract he has procured the breach, on the ground that he has acted on a wrong understanding of his own rights, or without malice, or bona fide, or in the best interests of himself, or even that he acted as an altruist, seeking only the good of another and careless of his own advantage.”

In Glamorgan Coal Company Limited & Ors v South Wales Miners’ Federation & Ors [1903] 2 KB 545 at 574, Romer LJ said that he agreed with what Bowen LJ had said in Mogul Steamship Co Ltd v McGregor, Gow & Co (1889) 23 QBD 598 at 618 when considering the difficulty that may arise whether there is sufficient justification or not. “The good sense of the tribunal which had to decide would have to analyze the circumstances and to discover on which side of the line each case fell.” Romer LJ said: “I will only add that, in analyzing or considering the circumstances, I think that regard might be had to the nature of the contract broken; the position of the parties to the contract; the grounds for the breach; the means employed to procure the breach; the relation of the person procuring the breach to the person who breaks the contract; and I think also to the object of the person in procuring the breach. But, though I deprecate the attempt to define justification, I think it right to express my opinion on certain points in connection with breaches of contract procured where the contract is one of master and servant. In my opinion, a defendant sued for knowingly procuring such a breach is not justified of necessity merely by his shewing that he had no personal animus against the employer, or that it was to the advantage or interest of both the defendant and the workman that the contract should be broken.”

In James v The Commonwealth (1939) 62 CLR 339, a claim against the Commonwealth for damages for loss suffered in consequence of the administration and enforcement of invalid legislation, at 370-371, Dixon J dealt with the principle upon which the tort of procuring the breach by a common carrier of his duty of service is founded and acknowledged the difficulty in determining what constituted lawful justification: “The principle to which Lumley v Gye (1853) 2 E & B 216; 118 ER 749 is now referred is no doubt wide enough to include within its protection civil rights which exist independently of contract. It may be at once conceded that for a third party, without justification or excuse, knowingly to procure a common carrier to refuse in breach of his duty goods tendered to him for carriage would amount to an actionable wrong. In Lumley v Gye itself Erle J adopted the view that, just as the procurement of a tort was itself a tort, so it was wrongful to procure the breach of a contractual duty, and that the liability involved a principle of which liability for procuring a breach of contract of hiring was only an example or illustration; a class of cases which he said ‘rests upon the principle that the procurement of the violation of the right is a cause of action’ at 232; 755. In Mogul Steamship Co v MacGregor Gow & Co (1889) 23 QBD at 614 Bowen LJ included among the things forbidden ‘the intentional procurement of a violation of individual rights, contractual or other, assuming always that there is no just cause for it’. Lord Macnaghten in Quinn v Leathem [1901] AC 495 at 510 placed Lumley v Gye upon ‘the ground that a violation of legal right committed knowingly is a cause of action.’ In more than one respect, however, the elements of the cause of action are ill defined. Sometimes malice is said to be an ingredient; but this seems to mean no more than that the defendant must have knowledge of the existence of the civil right or of the facts from which it arises and must act without lawful justification. What constitutes a lawful justification is a matter of some difficulty: See Glamorogan Coal Co v South Wales Miners’ Federation [1903] 2 KB 545 particularly at 573, 575; [1905] AC 239; Brimelow v Casson [1924] 1 Ch 302; Winfield, Law of Tort (1937) p624; Salmond, Law of Torts , 7th ed (1928), by Stallybrass, sec 159(4), p634; Harvard Law Review , vol 36, p663, particularly at 677-686 , 702; Harvard Law Review , vol 39, p749; Jenks, Digest of English Civil Law , 3rd ed (1938), sec 983, note b. The question which appears to me to arise in the present case under the head of justification or excuse is whether the bona-fide execution of a law for the time being upheld as valid by the competent judicial power amounts to just cause or excuse notwithstanding that the law is afterwards found to be invalid.”

The ground upon which Dixon J decided this part of the case against the plaintiff was that the Commonwealth incurred no liability for tort merely because (373) “A is induced to refuse performance of what turns out to be in fact a civil duty to B by an intimation made to A by the officers of the Commonwealth that, under the law of the Commonwealth, A is not merely absolved from the performance of the duty but is forbidden under penalties to do what would amount to performance and, by doing it, would expose himself to prosecution; provided that the officers act honestly in the purported execution of their duty to maintain and enforce the laws of the Commonwealth and, perhaps reasonably, as, for instance, on the faith of a statute not yet held to be invalid. Even if the plaintiff overcame the other difficulties I have mentioned, this ground would be fatal to his claim for wrongful procurement of breaches of duty by common carriers. I do not think that a bona fide assertion as to the state of the law and an intention to resort to the courts made known to the third party can be considered a wrongful inducement or procurement.” SOCOG in justification relied upon its duty to maintain the law.

In Edwin Hill & Partners v First National Finance Corporation Plc [1989] 1 WLR 225 the defendant bankers held a first legal charge on freehold property as security for the indebtedness of a developer who was unable either to repay the loan or raise finance for carrying out on the land development for which the plaintiffs had been appointed as architects. The bankers agreed to provide the necessary finance on condition that the plaintiffs were replaced by other architects. The developer therefore dismissed the plaintiffs, who claimed damages against the defendants for procuring a breach of their contract with the developer.

At first instance the claim was dismissed. The appeal to the English Court of Appeal was also dismissed. Stuart-Smith LJ at 229-230 quoted from the judgment of Romer LJ in Glamorgan Coal Co Ltd v South Wales Miners’ Federation and listed some matters which had been held not to amount to justification: (1) absence of malice or ill-will or intention to injure the person whose contract is broken: (2) the commercial or other best interests of the interferer or the contract breaker. On the other hand justification had been held to exist where there was a moral duty to intervene or the contract interfered with was inconsistent with a previous contract with the interferer. At 233 his Lordship said: “Justification for interference with the plaintiff’s contractual right based upon an equal or superior right in the defendant must clearly be a legal right. Such right may derive from property, real or personal, or from contractual rights. Property rights may simply involve the use and enjoyment of land or personal property. To give an example put in argument by Sir Nicolas Browne-Wilkinson VC, if X carries on building operations on his land, they may to the knowledge of X interfere with a contract between A and B to carry out recording work on adjoining land occupied by A. But unless X’s activity amounts to a nuisance, he is justified in doing what he did. Alternatively, the law may grant legal remedies to the owner of property to act in defence or protection of his property; if in the exercise of these remedies he interferes with a contract between A and B of which he knows, he will be justified. If, instead of exercising those remedies, he reaches an accommodation with A, which has a similar effect of interfering with A’s contract with B, he is still justified notwithstanding that the accommodation may be to the commercial advantage of himself or A or both. The position is the same if the defendant’s right is to a contractual as opposed to a property right, provided it is equal or superior to the plaintiff’s rights.” Both the Vice Chancellor and Nourse LJ agreed with Stuart-Smith LJ.

By contrast in the BWIU case at 146 the Federal Court held that in the circumstances of that case and in the light of the authorities it would be impossible to regard the appellants as justified upon any of the bases suggested. Their Honours said: “The matter was quite susceptible of determination by other means involving no unlawfulness, and the evidence shows a solution was in fact obtained through arbitration in one particular instance. The court is not required, in the circumstances, to consider what the position might have been at common law had the contracts between the respondent and the builders in truth involved the carrying out of the building work in question by employees working under conditions which breached industrial awards.”

Mr Walker submitted that Bergin J erred in linking justification with breach of the Agency Agreement. He acknowledged that at the trial a good deal of the argument and evidence was directed to whether there had been a breach of the Agency Agreement which “justified” its termination and a good deal less to whether, if there had not been such a breach, the tort of interference could be “justified”. In some of the passages from her judgment which I have quoted Bergin J, with due respect, seemed to equate justification in the sense of whether TOC was justified in terminating the Agency Agreement with the different question of whether SOCOG was justified in interfering even if TOC had no grounds for termination.

In the judgment less attention was directed to Mr Walker’s principal argument on the appeal that SOCOG’s interference was justified by superior right. This proceeded on the premise that if there had been a valid termination by TOC of the Agency Agreement no justification for interference was required. What was not addressed or sufficiently addressed were breaches of the Indicia and Images Protection Act . In para 360 of her judgment Bergin J said that, viewing the matters of complaint about the plaintiff’s conduct cumulatively and taking SOCOG’s submissions in relation to the plaintiff’s evidence into account, she was still satisfied that the conduct did not warrant summary dismissal. Her Honour said: “SOCOG’s justification case fails”. Left unresolved was the separate argument particularly about breach of the statute. SOCOG’s justification case based solely on statutory rights and responsibilities was not dealt with. According to this case although TOC’s termination of the Agency Agreement was unlawful SOCOG’s interference to procure its termination was justified.

But also among the circumstances claimed to justify procuring the breach of the Agency Agreement SOCOG relied upon the breach by Zhu of the terms of the Deed Poll. By the Deed Poll Zhu covenanted not, without the prior written permission of SOCOG, to represent, hold out, market, promote, or advertise in any way that he had any connection or association with the Olympic bodies, the Sydney 2000 Olympic Games or the 1998 or 2000 Australian Olympic teams and acknowledged that he had no right to use any intellectual property belonging to the Olympic body, including but not limited to, any Olympic logo, mark or design. By the Deed Poll Zhu agreed that, without the prior written consent of SOCOG, he had no right to use and would not use for any purpose including any marketing, promotion or advertising purpose any words, phrases, symbols or images which, in SOCOG’s opinion, suggested any connection or association between the plaintiff and any Olympic body, the Olympic Games or any of the teams. Standing alone these covenants would be extraordinary ones when combined with an agreement enabling the covenantor to sell to people in Mainland China International Memberships of a club with a logo which incorporated Sydney 2000 Games indicia, and thereby, to provide Olympic benefits including tickets to the Olympic Games, Olympic Arts Festival events, access to the Official Dress Rehearsal of the Opening Ceremony, Club member recognition on a special memorial, privilege rights to become a volunteer and involvement rights in the torch relay.

On the other hand, cl 5 of the Deed Poll provided that Zhu’s obligations imposed by the Deed were subject to any rights granted to him by any Olympic body or by operation of law. The terms of the Agency Agreement contemplated execution by Zhu of the Deed Poll. Under cl 9.1(b) of the Agency Agreement the plaintiff covenanted and agreed with TOC that he would refrain from in any way, utilising the Sydney 2000 Olympic Club logo or this agency generally for the purpose of promoting, marketing or selling any services other than the International Memberships and he agreed to execute the Deed Poll. That paragraph went on to say that for the sake of clarity, the marketing restriction was to extend to, but not be limited to, the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and all and any merchandising by the Agent or all and any of his associated or related entities, individuals or bodies.

But the marketing agreement by cl 7.1(b) also required TOC to provide to Zhu a letter introducing him as the exclusive agent of the company and the Olympic Club to sell International Memberships to the people of the Mainland of the Peoples Republic of China. A copy of that letter was to be annexed and marked “A”, though in fact it was not.

In fulfilment of that obligation, Noble gave Zhu the letter dated 8 March 1999 and signed by Wyness over the Common Seal of TOC authorising him in Mainland China “to sell Olympic Club International Memberships to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games as a component of a travel and accommodation package”. It is plain enough that the Deed Poll must be read as an integral part of the contract between Zhu and TOC. It would be absurd to read it as intended to contradict and defeat the Agency Agreement. While courts should give the words of a written agreement the natural meaning that they bear, in giving meaning to the words of an agreement between commercial parties, courts will endeavour to avoid a construction which makes commercial nonsense. Courts will infer that commercial parties would not themselves normally agree in such a way; Hyde & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-4 per Kirby P. One can assume that the form of the Deed Poll was approved by SOCOG to be used as it was. It was a requirement of the Establishment Agreement that TOC procure a marketing restriction deed in that form (cl 27(a) of the Establishment Agreement).

In my opinion, if Zhu operated within the limits imposed by the Agency Agreement including the letter handed to him in compliance with cl 7.1(b) of the Agency Agreement, there could be no breach of the Deed Poll. The Club and the management of it were under the control of a committee which included two SOCOG members. At no stage up until the time when Zhu began his proceedings against SOCOG did SOCOG suggest such a breach or, as her Honour found, did such a breach excite the AOC and SOCOG representatives on the Olympic Club Committee to give any directions to TOC to cease the activities required by the Agency Agreement. On 4 June 1999 the period of the agency was extended to 31 December 2000.

SOCOG relied upon the evidence of McLatchey which I have read. McLatchey was vigorously cross-examined. However, Bergin J did not indicate whether she accepted those parts of McLatchey’s evidence which were contested, notably those dealing with the time and extent to which SOCOG became aware that Zhu proposed through sub-agents to market international membership of the Club in Mainland China as a component of a travel and accommodation package. Zhu’s authority to do so was acknowledged by the letter dated 8 March 1999 from Wyness over TOC’s common seal.

Before Bergin J Zhu’s written submissions relied upon the following evidence to support a finding that as at 30 September 1999 when the Deed of Release and Termination was made SOCOG had knowledge of the agency between TOC and the plaintiff: “a. the April Club Committee Report, which records that in addition to door to door sales ‘The only other acquisition channel included in the budget is 3300 international sales with a net contribution of $265 per member, accounting for $875K profit sales commencing in October 1999’; b. the document entitled The Olympic Club Incremental Revenue Opportunities, including the handwritten note ‘A$350’ by Paul Reading and the reference to ‘Commitments from China’; c. the unchallenged evidence of the Commercial Director of [TOC], Angus Noble, about what was said at the April Club Committee meeting about the international membership scheme, including Wyness saying words to the effect ‘We have a marketing initiative to sell International Memberships of The Olympic Club as part of a travel and accommodation package and we have included an estimate of $3 million in our revenue projections on that account’; d. the minutes of the April Club Committee Meeting, including the reference in paragraph 3.11 to ‘International Olympic Club Membership (travel and accommodation packages for non Australian residents); the words, ‘Local agents to sell the International Olympic Club’, in paragraph 3.11.7; and ‘Potentially very good revenue generating mechanism’ in paragraph 3.11.8; e. the letter dated 24 May 1999 from the Director of The Olympic Intelligence Centre to Reading, including the reference to ‘persons of interest involved in the sale of Olympic Club International memberships as a part of a travel and accommodation package to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games’; the comment in the enclosed Intelligence Summary that ‘According to Gus Noble, Manager of TOC, Mr Peter Zhu does indeed have an authority to sell Olympic Club memberships in China. Similarly, Zhu also has the authority to appoint other agents who may obtain Olympic Club memberships from Chinese residents on behalf of Zhu. Nevertheless, the nature of the contract between Zhu and TOC …’; and the recommendation that ‘The Australian Official 2000 Olympic Club consider revoking the contracts of Peter Zhu and his associates’; f. the conversation about the international membership scheme recorded in the minutes of the 2 July 1999 Club Committee meeting; g. the report of Ernst & Young dated 8 July 1999, including the 1999 and 2000 budget entries against ‘International Membership’; h. the conversation which took place on 19 August 1999 between Noble and Christine Hogg, when Noble was handing over the management of the Olympic Club to [SOCOG], including the note of Ms Hogg; i. the several emails passing between Michael Brann and Paul Reading; Elizabeth Langdon and Michael Brann; and the various notes on those emails in the handwriting of Reading, between 20 and 24 August 1999; j. the facsimile from an unidentified person to Mr Reading dated 17 August 1999, containing a copy of the authority dated 4 June 1999 and the letter dated 8 March 1999, and Reading’s notes on that document; k. the unchallenged terms of the conversation between Consul Wang Zhigang and Mr John Bowen, Ms Margaret McLennan and Elizabeth Langdon 25 August 1999, in which the Consul said words to the effect, ‘I have been told the Olympic Club has appointed an agent for the sale of memberships on behalf of the Olympic Club in China. I am concerned to check into this agreement to ensure everything is genuine. I am told there will be up to 10,000 people from China joining the Club who will then wish to travel to Sydney to attend the Olympic Games’; l. the terms of the conversation between Reading and Wyness on or about 25 August 1999 in which Reading said words to the effect ‘Who is Peter Zhu – I’ve seen documents in which you refer to him as being an agent of The Olympic Club?’ and was told ‘Some sort of arrangement has been reached with Peter Zhu regarding The Olympic Club in China’; m. the file note of Elizabeth Langdon dated 26 August 2000 recording the meeting with the Consul, including the reference to agents and tickets to the Opening Ceremony Dress Rehearsal; n. the terms of the conversation between Reading and Wyness in mid September 1999, in which Reading said words to the effect, ‘Keith, you know this Chinese group, these are people we do not want to deal with. Can you work out a way for us to get out of the arrangement?; o. the admissions made on behalf of [SOCOG] that it had the requisite knowledge by mid-September 1999; and p. the failure to call Reading, Hogg, Brann, Langdon, Bowen and McLennan justifies an inference that nothing they could say would assist [SOCOG]: Jones v Dunkel (1959) 101 CLR 298; Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (1983) 1 NSWLR 1.”

In his submissions to this Court, Mr John Kelly SC, who appeared for the plaintiff both here and at the trial and whose careful attention to the complexities of the case was of great assistance, submitted that the only complaint about any of the Olympic indicia or marks was a complaint about the Olympic Club Logo which incorporated “Sydney 2000” and the Olympic rings. Mr Kelly took us to what he described as the head of power under which TOC was authorised to grant Zhu the right to use this logo found in the Licence Agreement particularly cl 3.3. This focus on the authority of TOC as trustee immediately highlighted the limitations of that licensed authority, namely, “to use” only in Australia and “not to use” on or in relation to goods or services except as expressly permitted in that agreement.

Pursuant to the Indicia and Images Protection Act relevantly no person other than SOCOG or a licensed user was permitted to use Sydney 2000 Games indicia or images. Mr Kelly argued that SOCOG had failed to produce documents in its possession which would have proved whether or not Zhu was licensed. But on the evidence the only conclusion open was that he was not a licensed user within the meaning of the Act. Pursuant to the December 1997 Establishment Agreement, TOC and Synthesis acknowledged they had no right to use any intellectual property belonging to SOCOG, the IOC and the AOC.

The terms of SOCOG’s defence are important. Bergin J found no breaches of the Agency Agreement or Deed Poll which entitled TOC to terminate the Agency Agreement. Those findings were not challenged. In its defence SOCOG referred to its statutory rights and statutory responsibilities under the Indicia and Images Protection Act particularly its obligation to maintain a register of licensed users and its responsibility to exercise its statutory rights of standing pursuant to s43(3) to obtain injunctive relief for contravention of s12 in respect of indicia and images. This right is not clear cut and was not tested. But no argument was put that Zhu could compel SOCOG to license a use which accorded with his entitlements under the Agency Agreement. An immediate difficulty would have been cl 12 of the bye-law to the Olympic Charter which protected NOCs where the Olympic symbol and the Olympic emblems were to be exploited in the country of that NOC.

Alternatively, SOCOG claimed that, by reason of its status and function as the organising committee for the Sydney 2000 Games, the obligation owed by it with respect to the Club pursuant to the deed of termination and release and the principle embodied in cl 5(g) of the Establishment Agreement, it had a responsibility to protect the reputation and goodwill of the Olympic Movement, the Club and the Sydney 2000 Games. I put aside the question of how SOCOG’s behaviour to Zhu culminating in his arrest on unfounded charges as described in Bergin J’s judgment could be thought to protect the reputation and goodwill of the Olympic Movement, to deal with the defence as it was pleaded. Clause 5(g) of the Establishment Agreement provided that if the AOC and SOCOG representatives on the Club Committee were reasonably of the opinion that an activity of TOC as trustee was likely to affect the goodwill or reputation of the Olympic Movement adversely they might direct the trustee to cease that activity. But SOCOG’s failure by its representatives or otherwise to take that course, a failure which is unexplained, is no basis for saying that it was not justified in inducing TOC to terminate the Agency Agreement.

Mr Walker criticised Bergin J for misdirecting herself on what was the issue on justification. He argued that she erroneously proceeded on the basis that in order for the defence to be made out SOCOG was required to demonstrate that Zhu had conducted himself in such a fashion as to justify his summary dismissal by TOC. In effect SOCOG was required to establish that the unlawful termination it sought to justify was not unlawful at all. Mr Walker submitted that that was fundamentally wrong and was not the way the defence was pleaded or put in submissions. But with due respect, in part at least, the justification defence was presented before Bergin J as being linked to conduct said to justify summary dismissal by TOC of the plaintiff.

In its written submissions before Bergin J SOCOG claimed justification on three bases: (a) the breach by Zhu of the terms of the Deed Poll, being independent contractual obligations owed to SOCOG; (b) the breaches by Zhu of the terms of the Indicia and Images Protection Act ; and (c) the serious breaches of the contractual and fiduciary duties owed by Zhu to TOC.

The complaint was that while Bergin J rejected (c) she did not deal with (a) or (b). As I have said, properly understood Zhu was not in breach of the Deed Poll in the context in which it was executed, that is to say, in conjunction with the Agency Agreement. Equal or Superior Right

The language of s12 of the Indicia and Images Protection Act is unequivocal. Subsection (1) prohibits a person, not a licensed user, using Sydney 2000 Games indicia and images for commercial purposes. Not only was Zhu acting contrary to this dictate so too were his sub-agents. Clause 48 of the Host City Contract entitled the IOC Executive Board to terminate that contract and to withdraw the Games from Sydney if there was a violation by SOCOG of any material obligation set forth in the Olympic Charter or the applicable law. The legislation under which SOCOG was constituted required SOCOG to take into account “to the fullest extent practicable” the Olympic Charter, (s11). There is no doubt that officers of TOC misled Zhu and encouraged him, at great expense to himself and others, to engage in conduct which flouted the Olympic Charter and the Australian statute. The material referred to strongly supports the conclusion that some officers of SOCOG and of other Olympic organisations were aware of what was happening and did nothing to prevent it until TOC ran into financial trouble. It is also true that when Zhu sought damages for breach of the Agency Agreement, damages to which SOCOG concedes he was entitled against TOC, SOCOG fought a lengthy contrary case and suffered total defeat. The circumstances in which Zhu came to be arrested as described by Bergin J reveal an ill-considered infringement of his basic rights as an Australian citizen.

All that said, I am of opinion that SOCOG was justified in procuring the termination of the Agency Agreement. That agreement if allowed to remain in place required continued illegal conduct not only by Zhu but by others. The agreement permitted Zhu commercially to exploit intellectual property owned by the IOC on behalf of the Olympic Movement in a country outside Australia, the Peoples Republic of China, without the consents of any of the Olympic bodies who were required to consent and in particular by the relevant Chinese bodies. Unfortunately Zhu was denied, by the demise of TOC, the damages to which he was clearly entitled from TOC. But none of those factors in principle could deny SOCOG’s right to bring this otherwise illegal conduct to a stop. As SOCOG claimed, it was its duty and responsibility as the organising committee of the Sydney Games to do so. Zhu’s contractual rights to exploit Olympic intellectual property in Mainland China under the terms of the Agency Agreement derived from TOC. The License Agreement made it plain that TOC had no authority to grant such rights. The superior right SOCOG calls in aid is an absolute one based on its constitution and statute. Moreover those who aided and abetted or were directly or indirectly knowingly concerned in or a party to the contravention by a person of s12 of the Indicia and Images Protection Act were taken themselves to have contravened s12: s13A. SOCOG’s responsibility also required it to ensure compliance with the Olympic Charter and the Host City Contract. These were not responsibilities and duties which SOCOG could barter away. Nor was there any way so long as the Agency Agreement continued that the illegality of Zhu’s activities and those of the sub-Agents could be escaped.

Even if it be accepted that Zhu’s arrest interfered with the Agency Agreement by inhibiting his ability to perform it, that had no relevance to SOCOG’s entitlement to rely upon its statutory responsibilities and duties to procure termination of the Agency Agreement. Conclusion

In my opinion, the appeal must succeed. However, the point upon which SOCOG succeeds is one which should have stood in the forefront of its argument at trial. I am quite certain that, but for the diversions of a lengthy and what was shown to be an unmeritorious investigation of alleged breaches of the Agency Agreement, SOCOG would have succeeded before Bergin J. The way in which the case was run by SOCOG at trial, as it turned out, wasted a considerable amount of judicial time and resulted in considerable expense being unnecessarily incurred by Zhu. Zhu was entitled to recover the sum of $326,904, the amount that he had paid the Club plus interest. That part of his claim should not have been contested. Otherwise the proceedings before Bergin J should have been dismissed. Her Honour’s order that SOCOG pay Zhu’s costs should however for the above reasons be confirmed.

The appeal succeeded on the basis of submissions filed late. Bearing in mind my opinion that the point in issue could have been dealt with quite shortly at the trial if proper emphasis had been placed upon it by SOCOG, I would not make any order for the costs of the appeal. Orders

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

GILES JA: I agree with Sheller JA and with the additional comments of Hodgson JA.

HODGSON JA: : I agree with the orders proposed by Sheller JA and with his reasons. I would add a few comments of my own, in relation to three areas.

The first area concerns the question whether SOCOG proved justification for interference with Zhu’s contact on the basis of contravention by Zhu of the Sydney 2000 Games (Indicia & Images) Protection Act 1996 (Cwth) (the Indicia & Images Act). This involves two sub-issues, the first relating to the failure of SOCOG to produce the register kept under the Act at the hearing below, and the second relating to a question of ostensible authority or estoppel binding on SOCOG.

In order to consider these matters it is necessary first to set out some of the pleadings. Paragraph 10 of SOCOG’s Defence alleged that Zhu owed certain essential obligations, including: (d) express obligations pursuant to the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth); Particulars Subject to any licence validly granted to the Plaintiff by the First Defendant pursuant to s. 14, the obligation pursuant to ss. 12 and 13A not to use: (i) any of the phrases "Sydney Games", "Sydney 2000”, "Olympic" (whether in English or any other language) ("Sydney 2000 Games indicia": ss.7 and 9); or (ii) any visual or aural representation that, to a reasonable person, in the circumstances, would suggest a connection with the Sydney 2000 Olympic Games ("Sydney 2000 Olympic Games images": ss.7 and 8); for commercial purposes as defined in s.11.

Paragraph 13 of the Defence alleged inter alia that Zhu, without the prior written permission of SOCOG, used indicia associated with the Sydney 2000 Olympic Games “in order to market an Olympic travel package”. Paragraph 14 of the Defence was in the following terms: In breach of the obligations alleged in paragraph 10(d), the Plaintiff, without obtaining any licence from the First Defendant, at all times after 11 March 1999 promoted, marketed and sold travel packages in the manner alleged in paragraph 12 and 13 above.

Finally, par.17 of the Defence was in the following terms: 17 Alternatively to paragraphs 9 to 16, even if the Agency Agreement was valid and subsisting, the termination was unlawful and the conduct of the First Defendant is held to have thereby caused a breach of that conduct, the First Defendant's conduct was, in the circumstances, justified: Particulars (i) Pursuant to the Indicia and Images Act the First Defendant enjoyed statutory rights and bore statutory responsibilities in respect of the Sydney 2000 Games indicia and images. Those obligations included the obligation to maintain a register of licensed uses of the indicia and images (s 16) and the responsibility to exercise its statutory rights of standing pursuant to s 43(3) to obtain injunctive relief in respect of contraventions of s 12 in respect of the indicia and images. (ii) By reason of the Plaintiffs breaches alleged at paragraph 14 above, the First Defendant was entitled to obtain an injunction to restrain the Plaintiff from using any of the indicia or images in respect of the promotion, marketing or sale of the travel packages which the Plaintiff was purporting to promote, market and sell in the Government of the People's Republic of China. (iii) By reason of: (A) the nature of the First Defendant's status and function as the Organising Committee for the Sydney 2000 Games; (B) the obligation owed by the First Defendant with respect to The Olympic Club pursuant to the Deed of Termination and Release; (C) the principle embodied in clause 5(g) of the Establishment Agreement; the First Defendant had a responsibility to protect the reputation and goodwill of the Olympic movement, The Olympic Club and the Sydney 2000 Games. (iv) The First Defendant repeats the Plaintiff’s breaches alleged in paragraphs 11, 12, 13 and 14 above.

Zhu in his Reply dealt with par.10(d) and par.14 of the Defence as follows (the reference in what follows to par.10(c) and 13 appears to be in error): 15. In further and alternative answer to the allegations in paragraph 10(c) and 13 of the Further Amended Defence, the plaintiff says: a. At all material times, the second defendant, in its capacity as the trustee of The Olympic Club Trust, was a licensed user of the symbols within the meaning of section 7 of the Act and, by its servants and agents, including the plaintiff was entitled to use the symbols for commercial purposes. b. In the premises, there was no breach of sections 12 or 13A of the Act. c. Further and in the alternative, if there was a breach of section 12 or 13A of the Act which is not admitted, any such breach was required to be dealt with by the second defendant under the provisions of clause 11 of the Agency Agreement; was not dealt with by the second defendant under those provisions prior to 22 December 1999 or at all; and did not entitle the second defendant to terminate its contract with the plaintiff. d. Further and in the alternative, the second defendant has elected not to assert any right to terminate on the basis of any alleged breach of the Act, as alleged by the first defendant, and it is not open for the first defendant to make any election on behalf of the second defendant for the purpose of absolving itself from responsibility for its tortious interference with the plaintiffs right to enjoy his agency.

Zhu’s response to par.17 of the Defence was as follows: 18. Further and in the alternative: a. The plaintiff denies paragraph 17 of the Further Amended Defence. b. Further and in the alternative, to the extent that the conduct of the first defendant included direct interference with the contractual rights of the plaintiff when the first defendant caused the plaintiff to be arrested on 6 December 1999, that conduct is, as a matter law, incapable of being justified. c. Further and in the alternative, to any extent that the first defendant had available to it a right to move for an injunction to restrain any breach of the Act, breach of covenant under the Deed Poll or other conduct on the part of the plaintiff upon which the first defendant now claims to be entitled to rely to justify its conduct; the first defendant elected not to exercise that right and chose instead to directly or indirectly interfere with the plaintiffs contractual relations.

It is necessary also to set out some of the provisions of the Indicia & Images Act. Section 12 of that Act contains the following provisions: 12(1) A person, other than: (a) SOCOG; or … (c) a licensed user, must not use Sydney 2000 Games indicia or images for commercial purposes. (2) SOCOG may only use the following Sydney 2000 Games indicia and images for commercial purposes: (a) common Sydney 2000 Games indicia; (b) Sydney 2000 Olympic Games indicia; (c) common Sydney 2000 Games images; (d) Sydney 2000 Olympic Games images. … (4) A licensed user may only use for commercial purposes the Sydney 2000 Games indicia or images that the person is licensed to use, and may only use those indicia or images in accordance with the licence. …

Section 13A of the Act is in the following terms: 13A For the purposes of this Act a person is taken to have contravened section 12 if the person: (a) has attempted to contravene section 12; or (b) has aided, abetted, counselled or procured a person to contravene section 12; or (c) has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene section 12; or (d) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of section 12; or (e) has conspired with others to contravene section 12.

Section 14 contains the following relevant provisions: 14(1) For the purposes of this Act, SOCOG may license a person to use all, or any one or more, of the following Sydney 2000 Games indicia and images for commercial purposes: (a) common Sydney 2000 Games indicia; (b) Sydney 2000 Olympic Games indicia; (c) common Sydney 2000 Games images; (d) Sydney 2000 Olympic Games images; in all circumstances or in specified circumstances, for a specified time or until this Act ceases to have effect. … (3) Nothing in this section is intended to affect the capacity of SOCOG … to determine the terms and conditions on which a person is licensed, including terms and conditions relating to the payment of money.

Sections 15-19 of the Act deal with registration of licences, and are in the following terms: 15(1) Where SOCOG or SPOC licenses a person to use Sydney 2000 Games indicia or images, SOCOG or SPOC (as the case may be) must make an entry in the register of licensed users. (2) Licensing takes effect when the entry is made in the register, and ceases on the day on which the licence ceases to be in force. 16(1) SOCOG must establish and maintain a register of licensed users. (2) The register must: (a) be kept by SOCOG at the principal place of business of SOCOG; and (b) be open for inspection without charge by any person during the normal business hours of SOCOG. (3) If the register is kept by the use of a computer, paragraph (2)(b) is satisfied: (a) by arranging for inspection of a written copy of the particulars in the register; or (b) by providing for access to a computer terminal from which the particulars in the register can be read. (4) SOCOG must give a person a copy of the register (or part of the register) within 5 working days if the person: (a) asks SOCOG for a copy; and (b) pays any fee (up to the prescribed amount) required by SOCOG. If the register is kept by the use of a computer and the person asks for the copy on a floppy disk, SOCOG must give the copy to the person on a floppy disk. The person is not, however, entitled to have the floppy disk formatted for an operating system preferred by the person. 17(1) An entry in the register must contain the following particulars in relation to a licensed user: (a) the name and principal place of business of the person; (b) the Sydney 2000 Games indicia or images the person may use for commercial purposes, and the circumstances in which the person may use those indicia or images; (c) if the licence is for a specified time-the date on which the licence ceases to be in force; (d) the date on which the entry is made; (e) any prescribed matters. (2) If a licence is revoked, SOCOG or SPOC (as the case may be) must include in the entry in the register relating to the licence a note of the revocation of the license and of the date of effect of the revocation. 18(1) If a person asks SOCOG to give the person a certified copy of the particulars contained in an entry in the register, SOCOG must within 5 working days, give the person: (a) if the register is kept by the use of a computer - a document certified to be a reproduction in writing of the particulars contained in the entry in the register, or (b) in any other case - a document certified to be a copy of the particulars contained in the entry in the register. (2) If the person referred to in subsection (1) is not the licensed user to whom the entry relates, the person must pay any fee (up to the prescribed amount) required by SOCOG. (3) The reference in subsection (1) to a document certified to be a reproduction in writing or a copy of the particulars contained in an entry in the register is a reference to a document so certified by the Chief Executive Officer of SOCOG or by a person authorised in writing by the Chief Executive Officer for the purposes of subsection (1). 19(1) Subject to subsections (2) and (3), a person whose name appears in an entry in the register is to be taken to be a licensed user, for the purposes of this Act, of the Sydney 2000 Games indicia or images specified in the entry. (2) If the entry includes a date specified for the purpose of paragraph 17(1)(c), the person is to be taken to be, or to have been, a licensed user until that date. (3) If the entry includes a note for the purpose of subsection 17(2), the person is to be taken to be, or to have been, a licensed user until the date specified in the note as the date of effect of the revocation. (4) A document certified in accordance with section 18 to be a reproduction in writing or a copy of the particulars contained in an entry in the register is evidence that the particulars set out in the document are contained in an entry in the register. (SPOC was the body charged with running the Sydney 2000 Paralympic Games).

Zhu claimed his rights in relation to the use of Sydney 2000 indicia and images through transactions he had with TOC; and TOC’s rights in turn were derived from the Olympic Club Licence Agreement dated 14 May 1998. That agreement authorised the use of a Club Logo which itself incorporated certain of the Sydney 2000 indicia and images, but imposed certain restrictions on TOC’s right to use the Club Logo and authorise others to use it. In particular, cl.3.3(g) and (h) made the following provisions (TOC being referred to as the Trustee): 3.3. The Trustee may develop a Club Logo in relation to the Olympic Club in consultation with SOCOG. Subject to the provisions of this Agreement and any Transaction Document, the Trustee agrees that: … (g) the Trustee must not allow any other person to use the Club Logo or otherwise, deal with it without first obtaining SOCOG's written consent, and the Trustee agrees that it will not assist, permit or condone the use of the Club Logo by any other person except as permitted by the Management Agreement or any other Transaction Document or as may otherwise be approved by SOCOG and the AOC; (h) the Trustee may, notwithstanding paragraph (9), 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.

Clause 3.4 provided that SOCOG approved the use by the Trustee of certain Sydney 2000 indicia and images in Australia on terms set out in the agreement. Clause 3.5(a) and (c) provided as follows: 3.5. For the avoidance of doubt the Trustee shall not, except to the extent expressly permitted by this Agreement or a Transaction Document: (a) use or authorise the use of any or all of the Olympic marks on or in relation to any goods or services of the Trustee or any third Person, except as expressly permitted in this Agreement; … (c) endorse or otherwise promote any goods or services or cause or participate in any advertisements or other promotions concerning SOCOG, the AOC, the Games, the Paralympic Games or the Olympic Movement; …

Zhu’s Agency Agreement with TOC and the associated Deed Poll, consistently with s.12 of the Indicia & Images Act and cl.3.5(a) and (c), prohibited the marketing of goods and services in connection with the use of the Olympic Club Logo. Clause 9.1(b) of the Agency Agreement provided as follows (Zhu being referred to as the Agent and TOC being referred to as the Company): 9.1 The Agents covenants and agrees with the Company that he shall: … (b) Refrain from, in any way, utilising the Sydney 2000 Olympic Club Logo or this Agency generally for the purpose of promoting, marketing or selling any services other than the International Memberships and the Agent agrees to execute the Marketing Restriction Deed Poll presented to him at the time of executing this Agreement. For the sake of clarity, the Marketing Restriction is to extend to but not be limited to the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and all and any merchandising by the Agent or all and any of his associated or related entities, individuals or bodies corporate. …

Clause 3 of the Deed Poll contained the following provisions (Zhu being referred to as the Covenantor): The Covenantor agrees that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, it has no right to use and it will not use for any purpose, including, but not limited to, for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which, in SOCOG's opinion, suggest any connection or association between the Covenantor and any Olympic Body, the Olympic Games or any of the Teams. The Covenantor further agrees that, without the prior written consent of SOCOG (which SOCOG may withhold in its absolute discretion, in any marketing, promotion or advertisement it will not: (a) refer to any Olympic Body, the 0lympic Games or any of the Teams; or (b) use the words "Olympic”, "Games", "Sydney 2000”; or (c) use any others words, phrases, symbols or images which refer to, directly or indirectly, any Olympic Body, the Olympic Games or any of the Teams; or (d) use any "Sydney 2000 Games images" or "Sydney 2000 Games indicia" (as those terms are defined in the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth).

However, that provision was to some extent qualified by cl.5: 5. The obligations of the Covenantor imposed by this deed are subject to any rights granted to the Covenantor by any Olympic Body, any rights granted to the Covenantor by operation of law (including without limitation under the Corporations Law and the rules of the Australian Stock Exchange Limited). Furthermore, a letter provided by TOC to Mr. Zhu purported to authorise him to sell Olympic Club memberships to Chinese residents “as a component of a travel and accommodation package”; and as pointed out by Sheller JA, this effectively prevented TOC from insisting on compliance with cl.9(1)(b) of the Agency Agreement, and 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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