International Management Group of America Pty Ltd v Media Niugini Limited t/as EMTV (No 3)

In these proceedings the plaintiff, International Management Group of America Pty Ltd (IMG Australia), claims damages for what is said to have been the wrongful repudiation by the defendant, Media Niugini Limited trading as EMTV (EMTV), of an agreement by which IMG Australia agreed to license to EMTV certain television broadcasting rights to rugby league matches played as part of the Queensland Cup for a period of five years commencing on 1 January 2018. IMG Australia advances alternative claims based on conventional estoppel and misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL).

EMTV denies that it reached any concluded agreement with IMG Australia for the acquisition of the rights. For similar reasons, it contends that the case based on conventional estoppel and s 18 of the ACL must fail. In the alternative, it alleges that, if there was an agreement, it was induced to enter into it by IMG Australia’s own misleading and deceptive conduct in falsely representing that it (IMG Australia) had received a superior offer for the rights, which caused EMTV to increase its offer. EMTV seeks a declaration that it has validly rescinded the agreement for misrepresentation. Alternatively, it seeks orders under ss 237 and 243 of the ACL declaring the whole of the agreement void.

International Management Group (IMG) is a global business concerned with, among other things, the acquisition and licensing of entertainment and sporting media rights. It carries on business through a number of corporate entities, one of which is IMG Australia.

EMTV operates a commercial television station in Papua New Guinea. It is a wholly owned subsidiary of Telikom PNG Limited, a state-owned company in Papua New Guinea (PNG). At all relevant times, the Chief Executive Officer of EMTV was Mr Matthew Park.

Rugby league football is the national sport in PNG. The Australian Rugby League Commission (ARLC) is the governing body of rugby league football in Australia. It runs a 16 team rugby league competition known as “National Rugby League” (NRL), consisting of 15 Australian based teams and one New Zealand based team. The Queensland Rugby Football League is the governing body of rugby league football in Queensland. It runs a 14 team rugby league competition known as the “QRL” or the “Queensland Cup”. Twelve of the teams participating in the Queensland Cup are Queensland based, one is New South Wales based and one is based in PNG. The PNG based team is known as the “Hunters” or the “SP Hunters”. It plays its home matches at the National Football Stadium in Port Moresby.

EMTV has traditionally broadcast the NRL in PNG. However, in 2015 it had lost those rights to Digicel, a telecommunications company in PNG that had recently established TVWan, a free to air television channel that is broadcast using digital technology. According to Mr Park, EMTV’s loss of the rights had caused great public controversy in PNG at the time because, although the Digicel channel was free, it could only be accessed through a set-top box which had to be purchased. EMTV’s advertising and sponsorship rights had decreased substantially following the loss of the NRL rights.

On 11 August 2017, EMTV and IMG Australia entered into a Mutual Confidentiality and Exclusive Negotiation Agreement by which the parties agreed to negotiate exclusively and in good faith for a period of seven days for an agreement by which EMTV would become the licensee of the NRL broadcast rights in PNG during 2018 to 2022. The agreement was entered into apparently in anticipation of an agreement ultimately entered into on 6 October 2017 between Fox Sports Australia Pty Limited (Fox Sports) and IMG UK Ltd (IMG UK) by which Fox Sports licensed certain rights to the NRL to IMG UK. That agreement itself was conditional on Fox Sports obtaining those rights.

The negotiations contemplated by the agreement were conducted by Mr Sam Stitcher, who at the time was employed by IMG Australia as a sales and business development manager for IMG Australia, one of the business divisions of IMG, and Mr Park.

The exclusivity period was extended until 23 August 2017 and negotiations continued during August and September 2017 between Mr Park and Mr Stitcher. However, they did not result in an agreement.

On 5 October 2017, Mr Stitcher sent Mr Park an email that relevantly said:

On 11 October 2017, Mr Stitcher sent Mr Park an email. The email was headed “Confidential – Subject to Contract”. Relevantly it said:

Under the heading “Introduction” the Briefing Document stated:

The Briefing Document divided the rights into two packages referred to “Package A” and “Package B”. Package A listed various rights, principally relating to the broadcast rights to the NRL. Package B was described in the following terms:

The term was expressed to be for a period of five years from 1 January 2018 to 31 December 2022. The “Territories” was defined to be various nations in the Pacific, including PNG.

Under the heading “Grant of Rights”, the Briefing Document stated:

The “Reserved Rights” were described in some detail. They included the following:

Under the heading “Minimum Broadcast Obligations” the Briefing Document relevantly stated:

Under the heading “Production of Matches” the Briefing Document relevantly stated:

The Bidding Form relevantly stated:

The Bidding Form then contained boxes to be completed by the bidder. Section 1 required information about the bidder. Section 2 required information about the rights to be acquired and whether the rights that were sought were to be exclusive or non-exclusive. Section 3 required the bidder to set out (in US dollars) the proposed license fees for each year for each package. Section 4 required the bidder to identify the television channels, services and platforms that would be used to broadcast the rights. Section 5 provided for the bidder to set out how it intended to promote its broadcast of the rights. Section 6 made provision for additional comments. Relevantly it stated “[i]f the Bidder is proposing any deviation from the terms set out in the Briefing Document it should list and describe such deviations together with a justification for the proposal”.

The Bidding Form made provision for the document to be signed on behalf of the bidder. Above the place for signature, it relevantly stated:

Copies of the Briefing Document and Bidding Form were also sent to NBC, which also operated a free-to-air television station in PNG, and Digicel.

On 12 October 2017, Mr Park sent Mr Stitcher an email attaching EMTV’s bid. The covering email stated:

The Bidding Form recorded that EMTV offered USD7,800,000 for Package A and USD2,000,000 for Package B. In section 6, EMTV’s bid stated:

NBC made a bid of USD7,500,000 for Package A and USD3,500,000 for Package B.

On 17 October 2017, Mr Stitcher sent NBC an email which relevantly said:

Included with the email was a new Bidding Form for Package A. The form relevantly stated:

Mr Stitcher sent Mr Park a similar email and second round Bidding Form on 18 October 2017.

On 19 October 2017, Ms Susan McRae, the NBC representative, sent Mr Stitcher an email on in which she said:

Mr Stitcher replied to that email later that day stating:

Following some correspondence between them, on 20 October 2017 Ms McRae sent an email to Mr Stitcher saying:

On the same day, Mr Park sent Mr Stitcher an email attaching a second bid for Package A raising its price to USD8,400,000. In section 6 Additional Comments, the bid stated:

Later that day, NBC submitted a revised bid purportedly for Package A and Package B. The price for Package B was the same as its previous bid. The price for Package A had been increased. In section 6 Additional Comments the offer stated:

According to Mr Park, on 24 October 2017, he received a telephone call from Mr Stitcher in which Mr Stitcher said words to the following effect:

Mr Stitcher says he cannot recall having a conversation with Mr Park on 24 October 2017 and he denies that he would have mentioned the names of any bidding party.

Following that conversation, Mr Park sent an email to the board of EMTV recommending that it offer USD2,500,000 for the QRL rights. The board accepted that recommendation and Mr Park made the offer on the afternoon of 24 October 2017 by a WhatsApp message.

Following an exchange of WhatsApp messages, Mr Stitcher and Mr Park spoke on 27 October 2017. They give different accounts of the conversation. It seems plain that Mr Stitcher told Mr Park that the rights to Package A had been sold and that he would not accept less than USD2,800,000 for the rights for Package B. Mr Park said that he would need board approval to increase the offer to USD2,800,000. Mr Park sent an email to members of the Board seeking that approval at 3.45pm on 27 October 2017. He obtained that approval a short time later and at 4.48pm he sent a WhatsApp message to Mr Stitcher saying “okay, we can close at us$2.8”. Mr Stitcher responded:

According to Mr Stitcher, on or about 30 October 2017, he sold the NRL rights the subject of Package A to Digicel. On the same day he sent an email to Mr Park that relevantly said:

Although he gave somewhat equivocal evidence on the subject, Mr Park says that on multiple occasions during the telephone conversations he had with Mr Stitcher he said words to the effect “this is all subject to contract” and “I know you know but I need to see the contract to finalise this”. He also says that on one occasion he said “I need to get legal clearance and the board’s final sign-off”. Mr Stitcher denies that those words were said.

On 30 October 2017 at 12.27pm, Mr Park responded to Mr Stitcher’s email giving an annual breakdown of the proposed fee of USD2,800,000.

On 7 November 2017, Mr Park sent an email to the EMTV board in which he said:

On 8 December 2017, Mr Stitcher sent Mr Park a draft contract for the Package B rights. The contract was expressed to be between IMG UK and EMTV. The draft contract included a number of special conditions relating to, among other things, sublicensing, minimum broadcast obligations and the production of matches.

On 23 December 2017, Mr Park sent Mr Stitcher an email in which he said:

On 8 January 2018, Mr Stitcher responded saying that “[i]t goes without saying that this is a huge issue that needs to be resolved as a priority”.

On 6 February 2018, Mr Park sent Mr Stitcher an email stating “[w]e will NOT be taking the QRL rights”.

On 28 February 2018, IMG terminated the agreement. It subsequently sold the QRL rights for USD314,000.

It is common ground that the question whether the parties reached a binding contract is to be determined objectively and, in circumstances where it is plain that the parties contemplated entry into a formal contract, is to be considered bearing in mind the analysis of the High Court in Masters v Cameron (1954) 91 CLR 353. In that case, the Court said (at 360):

As the Court explained, in the first two classes of case, there is a binding contract. In the third, there is not. It is now often said that to the three classes identified by the High Court a fourth should be added — that is, where the parties agreed (objectively) to be bound immediately and exclusively by the terms they had agreed whilst expecting to make a further contract in substitution for the first contract containing additional terms: see Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 per McLelland J (affirmed on appeal 40 NSWLR 631).

In my opinion, the evidence points strongly to the conclusion that this case falls into the first or fourth of these categories.

The structure of IMG Australia’s invitation was a competitive tender to acquire the rights identified in the Briefing Document. It was important from the point of view of IMG Australia that any offer it accepted would give rise to a binding contract immediately to avoid a situation in which it might later be seeking to sell those rights without that competitive tension because subsequent negotiations with the preferred bidder did not result in a contract. Similarly, it was important from the point of view of bidders to know whether or not they had secured the rights for which they had lodged a bid because until they had done so, they were not in a position to promote a successful acquisition of the rights to sponsors and advertisers. The need to know whether it had been successful or not was a point that EMTV stressed during the bidding process.

The language of the Briefing Document and Bidding Form indicate that the parties intended that the offers that would be made in response to the invitation to lodge a bid would be capable of acceptance by IMG. The Briefing Document stated that IMG (to use a neutral term) was inviting bids “with a view [to] closing deals in the territory on or by Friday 20th October 2017” (emphasis added). The Bidding Form stated that IMG had the right, among other things, “to accept” a bid. The person who signed the Bidding Form was required to warrant and represent that the person had “been duly authorised by the board of directors … of the Bidder to submit this Bid and to be bound by it …” (emphasis added). Mr Park gave that warranty without qualification. In that respect, EMTV’s offer for both sets of rights contrasted with its later offer for Package A which was expressed to be ‘subject to contract”. Contrary to a submission made by EMTV, the terms of the later offer cannot affect the terms of the earlier one. After Mr Stitcher rejected Mr Park’s offer of USD2,500,000, Mr Park, having obtained board approval, sent a WhatsApp message saying that “we can close at us$2.8” (emphasis added). In response, Mr Stitcher said “[d]eal done” and “[r]eally good to get this deal done with you” (emphasis added). Mr Stitcher said that he would send a follow up email. That email was sent on 30 October 2017. In that email, Mr Stitcher said “I would like to formally accept EMTV’s offer of US$2,800,000 for Package B as outlined in the Briefing Document …” (emphasis added). The language of each of these documents, particularly the language highlighted, is the language of offer and acceptance in the contractual sense. It indicated that the parties expected to be bound once an offer was accepted.

Mr Stitcher did not send Mr Park a formal contract until 8 December 2017. The fact that both parties appear to have been content with that delay supports the conclusion that they intended (objectively) to be bound by the arrangements that were agreed on 27 October 2017.

EMTV advances two principal reasons why no contract was made on 27 October 2017 when Mr Stitcher accepted the offer contained in the Briefing Document and Bidding Form as amended. First, it points to the fact that Mr Stitcher’s email dated 11 October 2017 enclosing the Briefing Document and Bidding Form to be completed by EMTV was expressed to be “Subject to Contract”. That was consistent with what Mr Park had, on occasions, said to Mr Stitcher. Second, EMTV submits that the Briefing Document did not contain important terms that needed to be agreed between the parties.

In my opinion, nothing turns on the fact that Mr Stitcher’s email was expressed to be “Subject to Contract”. In context, all that was meant by those words was that any offer made by EMTV was subject to acceptance by IMG. The expression “Subject to Contract” was a short-hand way of repeating the terms of the tender set out in the Bidding Form, which made it clear that IMG was not bound to accept any bid.

As I have indicated, Mr Park largely resiled from his evidence that on a number of occasions he stated that the discussions were “subject to contract”. I do not accept that he said those words in the context of the bid for the Package B rights. There was nothing in the Bidding Form to that effect, as might be expected if that is a qualification that EMTV wished to place on its bid for Package B or its initial bid for Package A. Similarly, there is nothing in Mr Park’s correspondence with Mr Stitcher about a revised price for Package B that suggests that that was a qualification on EMTV’s bid. On the contrary, as I have explained, the language used by Mr Park is the language of acceptance of an offer. The likelihood is that Mr Park has confused EMTV’s bid for Package B with its revised bid for Package A.

As to EMTV’s second point, I do not accept that important terms were left out of the Briefing Document. It is true that the precise nature of the rights is not described in that document. But that does not mean that they were inadequately described to form the basis of a contract. Plainly, they were sufficiently described for EMTV to put a price on them. The precise nature of the rights would ultimately depend on the draws for particular matches and when and where those matches were to be played. There is no evidence that that was known at the time.

In its final submissions, EMTV identifies three matters that needed to be agreed:

It is not easy to understand EMTV’s first point. The description of Package B states that it includes “1 match per week currently produced as part of Australian domestic deal”. The Briefing Document contains a section dealing with the production of matches which, among other things, makes it clear “[a]ll matches outlined in packages A and B will be produced …” but that the licensee must produce, or procure that a sub-licensee produce, audio-visual coverage of QLD Cup matches involving the PNG Hunters in PNG, and must produce matches involving the PNG Hunters played in Australia. It also states that IMG could provide a quote to produce matches played in Australia. EMTV does not explain why what was described was inadequate to form the basis of a contract.

As to EMTV’s second point, the Briefing Document states that the grant of rights included mobile rights but did not include audio only rights. EMTV does not explain why that description is not sufficiently clear to enable a bidder to understand the rights for which they were bidding.

In relation to the third point, the Briefing Document contains a section that describes in some detail the “Reserved Rights”. In its submissions, EMTV points out exclusivity in the transmission of clips was recognised as limited by the reservation in favour of the ARLC. It goes on to state that “there would obviously need to be negotiation about any limitations on that form of exploitation, and other forms of exploitation such as use in highlights programs …” However, the Reserved Rights section identifies the nature of the highlights reserved by the ARLC. They include clips of up to 15 seconds provided that the aggregate of all clips does not exceed five minutes and no more than five clips are available at any one time. EMTV does not explain why the relevant section of the Briefing Document is inadequate to identify the limitations on the rights. On the face of the document, the limitations appear to be clear.

In view of those conclusions, it is unnecessary to consider IMG Australia’s alternative case based on conventional estoppel. As I have said, IMG Australia also advanced an alternative case based on a contravention of s 18 of the ACL. That case was that it had been misled by EMTV into believing that EMTV’s offer was capable of acceptance and, but for that misleading conduct, it would have accepted NBC’s higher offer. However, IMG Australia said that it did not press that case, if it succeeded on its contract case. Consequently, it is unnecessary to address that case either.

EMTV submits that if there was a contract, it was with IMG UK, not IMG Australia. That is said to be so for three reasons. First, it was IMG UK that acquired the rights from Fox Sports. Second, the Briefing Document stated that “International Management Group of America Ltd” had been granted the relevant media rights. The reference to that entity should be understood as a reference to IMG UK, since it was IMG UK that had been granted the rights. Third, the draft contract Mr Stitcher sent Mr Park on 8 December nominated IMG UK as the relevant contracting party.

I do not accept EMTV’s submissions. The Mutual Confidentiality and Exclusive Negotiation Agreement was between IMG Australia and EMTV. Mr Stitcher was employed by IMG Australia. He did nothing to suggest that he was acting for a different company when he sent Mr Park the Briefing Document. The parties must have assumed that he continued to act for IMG Australia. It is not suggested that a company called “International Management Group of America Ltd” exists. It is apparent from the similarity in the names that “International Management Group of America Ltd” was simply a misdescription of IMG Australia. That misdescription was a clear error that could be corrected by construction: see, for example, James Adam Pty Ltd v Fobeza Pty Ltd [2020] NSWCA 311. It was plainly within the power of IMG to control which IMG entity held the relevant rights. Consequently, the assertion in the Briefing Document that “IMG” had been granted the rights did not necessarily mean that any contract for the licensing of the rights had to be with IMG UK. It could not seriously be suggested that any rights originally obtained by IMG UK could not be granted to IMG Australia for the purposes of that entity licensing the rights to a broadcaster such as EMTV. The fact that IMG nominated IMG UK as the contracting party in the long-form agreement says nothing about which IMG company was a party to the contract formed as a result of the negotiations between Mr Stitcher and Mr Park.

EMTV alleges that Mr Stitcher made a misrepresentation or engaged in misleading and deceptive conduct when he said to Mr Park on 24 October 2017 that “NBC are currently leading the bids” for the QRL rights. That representation is said to have been false because the price NBC offered was on condition that it was also granted the Package A rights.

That submission must be rejected. Before NBC lodged its second bid for the Package A rights, Ms McRae sought to make acceptance of NBC’s bid for Package B conditional on acceptance of its bid for Package A. Mr Stitcher pointed out in his email dated 19 October 2017 that NBC could not do so, and that a term of the bid was that IMG retained the right to accept one or both of the bids at its discretion. Ms McRae resiled from her position the following day. In an email she sent on that day she said “obviously we are seeking to ensure that there is no risk of non-compliance [with the bid conditions] by the NBC” and that “[y]ou have advised us Package B cannot be altered which is understood”. In the context, Ms McRae must be understood as saying that NBC accepted that IMG had a right to accept its bid for Package B alone.

In its revised bid document NBC stated in the Additional Comments section that “the substantial investment for Package B is impossible to justify unless it is attached to the Package A submission, which has been reviewed, updated and increased following consultation with IMG”. In the context, that statement must be taken as advancing a reason why IMG should accept NBC’s bid for both sets of rights. It cannot be taken as a qualification on NBC’s offer for Package B given the correspondence between Mr Stitcher and Ms McRae.

Consequently, Mr Stitcher was correct when he told Mr Park that NBC had offered more for Package B than EMTV had.

It follows from what has been said that there was a binding agreement by which EMTV agreed to acquire the Package B rights for USD2,800,000. EMTV repudiated that agreement. IMG Australia accepted that repudiation, terminated the agreement and re-sold the rights for USD314,000. It was common ground that IMG Australia’s damages should be calculated as the difference it was entitled to receive under the contract for the rights and the amount that it will receive for those rights. That amount is USD2,486,000. Since all amounts were to be paid or are payable in US dollars, it is appropriate that the judgment be expressed in US dollars.

Accordingly, the orders of the Court are: