FEDERAL COURT OF AUSTRALIA

 

Australian Rugby Union Ltd v Hospitality Group Pty Ltd

[2000] FCA 823

 

 

 

TRADE PRACTICES – definition of market – whether a market for the supply of corporate hospitality packages at international rugby union test matches exists in Australia for the purposes of Part IV of Trade Practices Act 1974 (Cth) – whether applicant, by supplying tickets subject to restrictive conditions as to transfer, breached Part IV of Trade Practices Act 1974 (Cth) – effect of economic evidence and failure of cross claimant to call evidence from its officers – where failure to establish the market pleaded defeats the defence and cross-claim of the respondent

CONTRACT – breach of contract – applicant sold tickets to certain rugby union test matches subject to condition that tickets cannot be resold at a premium or used for commercial purposes – where condition printed on ticket is a contractual promise that binds the bearer

TORT – inducing breach of condition of a transferable ticket – inducing breach of contract of agency agreement – agency agreement only allowed agent to sell tickets as part of “travel packages” – first and second respondents bought tickets from third respondent – first and second respondents sold tickets to public as part of “hospitality packages” – where context of contract must be taken into account – where constructive knowledge of the terms of the contract are sufficient in establishing breach of contract

TRADE PRACTICES – misleading and deceptive conduct – where representations made that tickets for seats to international rugby union test matches have been or will be acquired – whether representations made were as to future events – failure to provide reasonable basis for representations under s 51A of Trade Practices Act 1974 (Cth)

 

CONTRACT – common law restraint of trade – whether condition on tickets and restrictive clause in agency contract are void as being restraints of trade – where a legitimate commercial interest is protected and where the party has a legitimate interest in promoting the sport and providing cheap tickets to followers of the sport there is no common law restraint of trade

DAMAGES – assessment of damages – exemplary damages – exemplary damages awarded as a deterrent

PRACTICE & PROCEDURE – subpoenas – appropriateness of issuing subpoenas to third parties with no interest in the case

 

Trade Practices Act 1974 (Cth) ss 4E, 45(2)(a)(ii), 46(1)(c), 47(1), 47(7), 51(A), 52, 53(AA), 53(c), 53(d), 80

Restraints of Trade Act 1976 (NSW) s 4

Evidence Act 1995 (Cth) s 135

Federal Court Rules O27 r 2, O 27 r 6, O 27 r 9

 

Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Company Ltd (1989) 167 CLR 177 applied

Re Queensland Co-operative Milling Association (1976) 8 ALR 481, 25 FLR 169 applied

Re Tooth & Co Ltd (1979) 39 FLR 1 cited

NCAA v Board of Regents of University of Oklahoma (1984) 468 US 85 referred to

International Boxing Club of New York Inc v United States (1959) 358 US 242 referred to

Pauwels Travel BVBA (EC Commission Decision 92/521) OJ L326 12.11.92 referred to

Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 332 followed

Trade Practices Commission v Arnotts Ltd (1990) 93 ALR 657 followed

Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 cited

News Ltd v Australian Rugby Football League Ltd (1996) 135 ALR 33 distinguished

Boland v Yates (1999) 167 ALR 575 cited

Re Tooth (1979) ATPR 40-113 cited

Mark Lyons Pty Ltd v Bursill Sportsgear Pty Ltd (1987) 75 ALR 561 cited

Jones v Dunkel (1959) 101 CLR 298 applied

Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Ltd 16 FCR 50 cited

Buckley v Tutty (1971) 125 CLR 353 referred to

Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd (1968) AC 269 referred to

Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 referred to

Coulls v Bagot’s Executor & Trustee Co Ltd (1967) 119 CLR 460 referred to

FL Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 236 referred to

DC Thomson & Co Ltd v Deakin [1952] Ch 646 applied

Merkur Island Shipping Corp v Laughton [1983] 2 AC 570 applied

Daily Mirror Newspapers Ltd v Gardner [1968] 2 QB 762 applied

Northern Territory of Australia v Mengel (1995) 185 CLR 307 followed

JT Stratford & Son Ltd v Lindley [1965] AC 269 followed

Woolworths Ltd v Campbells Cash & Carry Pty Ltd (1996) 92 LGERA 244 (NSW CA) cited

Attorney General v Blake [1998] 2 WLR 805 referred to

Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 referred to

Lightly v Clouston (1808) 1 Taunt  112, 127 ER 774 referred to

Foster v Stewart (1814) 3 M&S 191, 105 ER 582 referred to

Phillips v Homfray (1883) 24 ChD 439 referred to

Federal Sugar Refining Co v United States Equalisation Board 268 F #575 (DC, NY, (1920) cited

Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 cited

10^th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 cited

Whitfeld v De Lauret & Co Ltd (1920) 29 CLR 71 cited

Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 cited

XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1984-5) 155 CLR 448 applied

Gray v Motor Accident Commission (1998) 196 CLR 1 applied

Sanders v Snell (1997) 143 ALR 426 cited

Rookes v Barnard [1964] AC 1129 cited

McKinley v McKinley (1960) 1 WLR 120 cited

Re Cordova v Philips Roxane Laboratories Inc;  Forsyth, Application of [1984] 2 NSWLR 327 cited

Witness v Marsden [2000] NSWCA 52 cited

Morgan v Morgan [1977] 2 All ER 515 referred to

In re Norway’s Application [1987] QB 433 cited

Yaramin Pty Ltd v Murphy (1987) 5 ACLC 300 cited

In Marriage of Lea (1990) 101 FLR 66 cited

White & Tulloch v White (1995) 19 Fam LR 696 cited

Kizon v Palmer (1997) 75 FCR 261 referred to

Diddams v Commonwealth Bank [1998] FCA 497 referred to

Heydon The Restraint of Trade Doctrine (2nd ed) (1999)

Halsbury’s Laws of Australia Vol 7

Meagher Gummow & Lehane Equity – Doctrines & Remedies 3^rd ed, 1992

Mason & Carter, Restitution Law in Australia, 1995

 

 

 

 

 

 

 

 

 

 

 

 

 

AUSTRALIAN RUGBY UNION LIMITED v HOSPITALITY GROUP PTY LIMITED, ICM (MARKETING) PTY LIMITED, AUSTRALIAN TOURS FOR SPORT PTY LIMITED and CAMERON JACKSON

N 324 OF 1999

 

 

GYLES J

SYDNEY

20 JUNE 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 324 OF 1999

 

BETWEEN:	AUSTRALIAN RUGBY UNION LIMITED ACN 002 898 544 Applicant/Cross-Respondent to the First and Second Cross-Claims
AND:	HOSPITALITY GROUP PTY LIMITED ACN 063 882 486 First Respondent/First Cross-Claimant on the First Cross-Claim   ICM (MARKETING) PTY LIMITED ACN 068 080 115 Second Respondent/Second Cross-Claimant on the First Cross-Claim   AUSTRALIAN TOURS FOR SPORT PTY LIMITED ACN 055 727 949 Third Respondent/Cross Claimant on the Second Cross-Claim   CAMERON JACKSON Fourth Respondent
JUDGE:	GYLES J
DATE OF ORDER:	20 JUNE 2000
WHERE MADE:	SYDNEY

 

THE COURT ORDERS THAT:

 

Proceedings stand over for the applicant to bring in short minutes of order.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

AUSTRALIAN RUGBY UNION LTD v HOSPITALITY GROUP PTY LTD

[2000] FCA 823

 

I N D E X

 

	Page	Paragraphs
Short Facts	2	3 –36
The Applicant’s Case	13	37 – 38
The Respondent’s Case	14	39 – 40
Evidence	14	41 – 44
Part IV, Trade Practices Act         Market	15	45 – 89
Common Law Restraint of Trade	42	90 – 92
Applicant’s Causes of Action	43	93
Contract	43	94 – 100
Inducement of breach	45	101
Ticket condition	45	102 – 107
ATFS Contract                 Applicant’s case	46	108 – 109
Respondents case	49	110 – 123
Decision	52	124 – 126
Account of profits	53	128 – 129
Exemplary damages	54	130 – 133
Section 52         Applicant’s contentions	55	134 – 145
Respondents contentions	59	146 – 150
Section 52 decision	59	151 – 154
Reasons for Interlocutory Orders	60	155 – 168

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 324 OF 1999

 

BETWEEN:	AUSTRALIAN RUGBY UNION LIMITED ACN 002 898 544 Applicant/Cross-Respondent to the First and Second Cross-Claims
AND:	HOSPITALITY GROUP PTY LIMITED ACN 063 882 486 First Respondent/First Cross-Claimant on the First Cross-Claim   ICM (MARKETING) PTY LIMITED ACN 068 080 115 Second Respondent/Second Cross-Claimant on the First Cross-Claim   AUSTRALIAN TOURS FOR SPORT PTY LIMITED ACN 055 727 949 Third Respondent/Cross Claimant on the Second Cross-Claim   CAMERON JACKSON Fourth Respondent

 

JUDGE:	GYLES J
DATE:	20 JUNE 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1                     This case concerns the ability of the applicant, Australian Rugby Union Limited (“ARU”), to prevent the resale at a premium, or the use for commercial purposes, of tickets to international rugby union test matches in Sydney without its consent.  As two such events take place in July of this year, the matter has been heard with some urgency, and it is desirable that judgment be given as soon as reasonably practicable.  In order to achieve this, I shall concentrate upon those issues of fact and law which are necessary to resolve, and will endeavour to deal with them without unnecessary elaboration and citation of authority.

2                     The proceedings against the third respondent were discontinued on the basis of certain orders and undertakings prior to hearing.  The fourth respondent took no part in the hearing, his solicitor having appeared as a matter of courtesy.

SHORT FACTS

3                     The ARU is a company limited by guarantee.  Its voting members are the eight “provincial” Rugby Unions of the States and Territories of Australia.  The ARU sits at the apex of the pyramid of the administration in Australia of the game known as rugby or rugby union.  Its objects include fostering the game throughout Australia.  It is a non-profit organisation, but, particularly over recent years, has derived substantial revenue from its activities, and has generated large surpluses which, to a considerable extent, are fed back down the pyramid by means of grants.  The game has become professional in relatively recent years.

4                     The ARU is affiliated through the International Rugby Board with organisations which administer rugby in many countries of the world.  One of the activities which the ARU directly administers is matches between Australian representative sides and representative sides from other nations.  This case concerns matches at home.  These matches are to be distinguished from matches between Australian, New Zealand and South African provincial sides making up what is known as the Super Twelve competition which are organised at provincial level.  There is no other organisation in Australia which competes with ARU in Australia or elsewhere in organising international representative rugby matches.  Indeed, there is no evidence of any competing organiser of rugby union in Australia at all.

5                     A limited number of international test matches are played each year in Australia.  Although rugby union is played in many countries, relatively few are strong enough to compete with the Australian team, and, amongst those that do, there are gradations in strength, although these, to some extent, vary from time to time.  The most popular of the international matches for some time has been the Bledisloe Cup match against New Zealand which is played in Australia, with another match each year played in New Zealand.  Apart from natural rivalry between neighbouring countries, the New Zealand All Black representative side has the reputation of being the most consistently successful team in the world, and is regarded as “the team to beat”. 

6                     International test matches have traditionally been played in Brisbane and Sydney, as Queensland and New South Wales are the States where rugby union has had its strongest following and strongest local and interstate competitions.  Over recent years, test matches have been held in Melbourne and Perth, and one is scheduled to be held in Canberra later this year.  International test matches in Sydney used to be played at the Sydney Cricket Ground, then at the Sydney Football Stadium, with some at Concord Oval.  Last year, two international test matches were played at the Sydney Olympic Stadium at Homebush (“Stadium Australia”), and test matches will continue to be played there up to and including 2004.  The move to Stadium Australia involves an increase in capacity from roughly 40,000 spectators to over 100,000 spectators until after the Olympic Games, when the capacity will be reduced to about 80,000.

7                     Over the last few years there has been considerable development in the field of what has been called “hospitality” in connection with rugby union.  The hiring of boxes at the venue by corporations which then invite clients, staff etc, to the match is familiar enough.  At Stadium Australia such boxes are let by the venue rather than by the ARU.  More recent developments have been described as on-site and off-site corporate hospitality packages.  A package is put together consisting of a number of premium tickets together with pre-match and post-match hospitality involving food and drink, often one or more speakers who have an association with rugby union, and perhaps transport to and from the ground.  The description “premium tickets” is rather imprecise – well-located is what is meant.  Such tickets are ideally in a block of seats.  The hospitality might be on-site or off-site.  The packages are sold to a business organisation, which then is able to invite the number of guests included in the package.  The package plays a function similar to the hiring of a corporate box.  This kind of corporate hospitality package is, of course, not limited to rugby union test matches in Sydney, but includes a wide variety of other sports or entertainment events, ranging from opera to one-day cricket.  There are a number of firms which offer such packages for sale.

8                     The respondent Hospitality Group Pty Limited (“THG”), and the respondent ICM (Marketing) Pty Limited (“ICM”), are part of a global group of companies which provide catering and corporate hospitality services at major sporting events in a number of countries.

9                     In May 1998 THG began to enter into contracts with clients for the provision of hospitality packages to the international rugby tests which were to be played during 1999 – namely, the Centenary Test against England and the Bledisloe Cup against New Zealand.  The packages were said to include premium seats.  The sales contracts describe the seats in slightly different ways.  Some of them contained the following:

“10 RESERVED GRANDSTAND SEATS GUARANTEED IN A BLOCK OF 10 BETWEEN THE 22 METRE LINES FOR THE 1999 BLEDISLOE CUP AT STADIUM AUSTRALIA”

Each of the agreements was in a standard printed form and included a term as follows (cl 4):

“Tickets, if applicable and included in the package, will be provided on the day unless otherwise stated.  Any tickets referenced are merely an accommodation and THG merely acts as an agent between Client and the original holder of the tickets …”

10                  At no time did THG have any contractual arrangements with ARU or anybody on its behalf which assured it of any seats at all to either test match.  Furthermore, all tickets which had been issued by the ARU for purchase by the public for the tests during 1998 contained the following term (“the 1998 ticket condition”):

“This ticket may not be resold at a premium or for commercial purposes without the prior written consent of the ARU.  If this ticket has been resold in contravention of the condition, the bearer of the ticket will be denied admission.”

11                  On 5 July 1998 an agreement (“the 1998 IMG agreement”) was entered into between the ARU and International Management Group of America Pty Limited (“IMG”) which refined and formalised arrangements which had existed since January 1995 whereby IMG acted as the ARU’s representative for the commercial exploitation of various rights owned or controlled by the ARU in return for commission.  Corporate hospitality was one of the rights involved.  This agreement was to expire in 1999.

12                  On 10 August 1998, the General Manager - Commercial Operations, of the ARU, Mr Brian Thorburn, advised the Board of the ARU by a memorandum entitled “‘Pirate’ Corporate Hospitality” that a number of non-authorised companies were offering corporate hospitality for events at Stadium Australia.  He reported that he had been discussing with Stadium Australia and the ARU’s lawyers the appropriate actions to take to both curtail their activities and establish the ARU’s presence in the market.

13                  In the memorandum he said, inter alia:

“On a broader view, the essential issue to control and minimise damage from these pirates is essentially related to ticketing.”

After discussing various matters related to that subject, the memorandum concluded:

“Although the above conditions may appear to be onerous, it is the only way that we can control pirate hospitality operations and ensure that the legitimate purpose of distributing tickets to these parties is maintained.  It is also the only way we have to ensure that profits from hospitality are corralled within “Rugby incorporated” rather than being diverted to “pirates”.”

14                  On 24 August 1998, the ARU’s solicitors wrote to Mr Thorburn recording that they had received instructions to consider:

“the legal means by which the ARU may prevent [unauthorised corporate hospitality providers including THG] from providing unauthorised hospitality in relation to the rugby test matches”

and giving some preliminary advice.

15                  On 27 November 1998, the board of directors of the ARU were presented by Mr John Winstanley, the Chairman of the Marketing and Operational Committee of the ARU, with “A Preliminary Report on Marketing and Operations in Australian Rugby”.  One of the topics addressed was corporate hospitality.  One key issue was identified as “Large shortfalls due to maverick organisations black-marketing test tickets (possible $1.5m per test)”.  Among the recommendations were:

·        “Control of tickets or events

·        Control of venues both on and off site.”

The substance of the board’s resolution in response was:

“After the presentation it was resolved to examine prioritising the recommendations as outlined in the report and to aim at concluding some of the easier tasks as outlined as soon as possible and then carry out further examination of the larger more difficult items and set timetables in place for their completion.

It was further resolved to inform all Unions of the report and to have the Unions sign off on the thrust of the report.  It was agreed that Mr Winstanley inform the participants in the Team to inform their respective Boards of the recommendations in the report.”

16                  On 2 December 1998 the agenda for a presentation by the ARU to the Sydney clubs included the following:

“PIRATE HOSPITALITY

 

ARU COMPETITORS

·        The Hospitality Group (THG)

·        Corporate Sports Australia

·        MBM

·        Becker Group

·        Others

HOW DO THEY OBTAIN TICKETS?

·        On-selling by various groups:-

·      SFS/SCG Members unused allocation

·      Travel Industry

·      NSWRU Life Members/Clubs/Suburban/Country

·      Employing people to line up at Ticketek Agencies on their behalf

END RESULT

·        Profits obtained from hospitality go to these companies not Rugby Union as a whole.

·        THG made $750K profit from 1998 Bledisloe Cup alone.

 

ACTION IN 1999

·        Tighter ticket control to be achieved by:-

·      New method of distribution to Clubs/Suburban and Country

·      Capture of all names where possible on a database

·      Revised entry procedures at venues.”

17                  On 17 December 1998, Australian Tours for Sport Pty Limited (“ATFS”) applied in writing to the ARU to become a retail licensee of the ARU.  The form was signed by Mr Whan, a director of ATFS, and indicated that ATFS wished to receive an allocation of 1,500 tickets to the Bledisloe Cup.  The ARU was in the practice of allocating a number of tickets to travel agents in order that they could be used to form part of a travel package for persons visiting Sydney for the match.

18                  In late 1998, with the consent of IMG, the ARU entered into an arrangement with David Campese Management Group to sell off-site hospitality at Homebush.  ASK Solutions was a sanctioned sub-licensee of IMG which provided off-site hospitality to its clients.

19                  On 24 December 1998, the ARU’s solicitors wrote to THG informing it of the terms of the condition then applicable to all tickets to test matches.  The letter asserted that THG had no entitlement to sell or offer to sell tickets for rugby test matches to members of the public.  The letter also asserted that THG was not entitled to make representations about its ability to provide premium seats at the matches.

20                  THG responded by a solicitors’ letter of 18 January 1999.  The letter stated that:

“THG offers to assist its clients’ purchase of tickets to the respective sporting events.  Clients are made fully aware that this aspect of the service is subject to ticket availability and the express terms and conditions attaching to any ticket.”

21                  In January and February 1999, THG continued to enter into sales contracts with clients for the provision of hospitality packages for the Bledisloe Cup.  Correspondence continued between the parties’ solicitors.  In consequence of that correspondence, the solicitors for THG apologised on its behalf to certain clients for having made false representations about its ability to provide reserved grandstand seats between the twenty-two metre lines at the lower level of Stadium Australia, since these were reserved for ARU members and Stadium Australia members.

22                  On 12 February 1999, THG requested ATFS’s assistance, among other things, in obtaining 450 tickets to the 1999 Bledisloe Cup at Stadium Australia in blocks of ten between the twenty-two metre lines.

23                  On 17 February 1999, the ARU Ticketing Manager gave instructions to ensure that a condition in the following form was printed on tickets for both 1999 tests:

“This ticket may not be re-sold at a premium for commercial purposes without the prior written consent of the ARU.  If this ticket has been re-sold in contravention of this condition, the bearer of the ticket will be denied admission.”

24                  On 18 February 1999, Mr Thorburn wrote a memorandum to the ARU board of directors on the topic of corporate hospitality, the introduction was as follows:

“Over recent weeks/months, a lot of activity has been taking place in the corporate hospitality market as our competitors, as well as ourselves, gear up and sell in corporate hospitality for 1999 Test Match Rugby.  I thought directors should be aware of some of the activities taking place and therefore outline below relevant comments.”

25                  On 2 March 1999, the ARU and ATFS executed the ATFS Licence Agreement.  This recorded (cl 2.1) “the concept” as being that the ARU would “grant a limited number of retail licenses [sic]” to retail travel agents operating in the domestic market, each of which would be entitled to an agreed allocation of tickets to the Wallabies test matches played domestically.  The ARU had the right to appoint an exclusive domestic wholesale travel agent, from which licensed retail travel agents could also purchase “travel packages” (cl 2.2, cl 2.3).  The agreement was to terminate at the completion of the last domestic test match played in 1999 (cl 2.4).  The travel agent had the right to promote itself as the ARU’s official agent and to use the Bledisloe Cup and Wallabies logos (cll 3.2, 3.3, 3.4).  The ARU agreed to promote the agent in specified ways (cll 3.5-3.9).  ATFS was entitled to 1,500 tickets to the Bledisloe Cup, but had an option to “release back” 50 per cent of these tickets to the ARU.  It in fact subsequently exercised that option.

26                  The ATFS Licence Agreement included the following provisions:

“3.10   Subject to availability, the travel agent is permitted to purchase ‘travel packages’, including domestic test match tickets from the wholesale travel agent.  If it is discovered that the travel agent proceeds to directly, or indirectly, source (or attempt to source) match tickets from any avenue other than this wholesale agent, that travel agent’s ticket allocation and license will be immediately revoked.

3.11     The travel agent is only permitted to sell ARU match tickets as part of a travel package (i.e. tickets are not permitted to be sold as a wholesale product) and only in Australia.  The travel agent cannot on sell the tickets through any other means.  Contravention of this clause may result in the cancellation of the license and a failure to allow entry to any ticketholders.

...

3.13     The travel agent will use its best endeavours to promote travel packages to all domestic test matches that have been taken by the travel agent.

...

4.3              The ARU will spread seat allocations equitably among its licensed retail travel agents.”

27                  On 4 March 1999, two days after the date of the ATFS Licence Agreement, ICM and ATFS entered into an agreement in writing for the provision of “travel packages” by ATFS to ICM.  The ATFS-ICM Agreement, so far as material, provided as follows:

“Upon payment to ATFS of $A114,000 from ICM Marketing, ATFSwill provide the following.

*450 travel packages to the Bledisloe Cup (Stadium Australia, Sydney 28th August 1999).  These packages include 450 premium seats for this event.

*200 travel packages to the Centenary Test (Stadium Australia, Sydney 26th June 1999).  These packages include 200 premium seats to this event.

The above packages and tickets will be delivered by ATFS to ICM Marketing six weeks prior to each event.

The Premium Seats are as per the seating plan on the enclosed map.  ATFS will attempt to block all the seats together but guarantee that there will be a minimum of 10 seats blocked together to make up the total seating allocation.

...

Should Australian Tours for Sport fail to deliver seating in the quantity and location as outlined above, ICM Marketing Pty Ltd will be entitled to a refund as follows: Bledisloe Cup $180 per package & Centenary Test $165 per package.”

28                  On 4 March 1999, the ARU solicitors provided advice which led to a revised form of condition for incorporation in the test ticket and other steps bringing the revised condition to the attention of purchasers.  The advice was prefaced by the following:

“We confirm that you have asked us to draft “terms and conditions” for block bookings to ARU matches for 1999 as part of the strategy of actively discouraging “pirate” hospitality providers by limiting the on-sale and use of tickets.”

29                  On 12 March 1999, the ARU’s solicitors informed the solicitors for THG that all tickets to rugby tests at Stadium Australia were then being sold on terms that included the following condition (“the 1999 ticket condition”):

“It is a condition of sale that any ticket may not be resold at a premium or used for advertising, promotion or other commercial purposes without the prior written consent of the ARU.  If a ticket is sold in contravention of this condition, the bearer of the ticket will be denied admission to Stadium Australia.”

The letter noted that the terms of the Condition were broader than those previously notified to THG.

30                  On 15 March 1999, the fourth respondent, Mr Cameron Jackson, purchased 48 tickets to the Bledisloe Cup, from Blinky’s Photographics at Kings Cross, which ultimately found their way to ICM.

31                  On 16 April 1999, the ARU commenced the present proceedings, naming THG as the only respondent.  ICM and ATFS were added as respondents to the proceedings on 17 June 1999, as was the fourth respondent, Cameron Jackson.  On 23 April 1999 THG gave certain undertakings to the Court.

32                  On 12 May 1999, what purported to be an agreement dated 10 May 1999 between THG and Wimbledon Tickets Limited, providing for the parties to swap tickets to certain events, including the 1999 test matches (“the Wimbledon Agreement”) was signed.  In point of fact, Wimbledon Tickets Limited had been dissolved by that time but the agreement was signed on its behalf by a Mr Burraway. The Wimbledon Agreement provided for a swap of tickets as follows:

“Wimbledon Tickets Limited will supply:

            104 tickets between the 22 metre lines for the Centenary Test to be played on 26 June 1999 and

            120 tickets between the 22 metre lines for the Bledisloe Cup to be played on 28 August 1999.

Tickets to be supplied will be in groups of ten or better.

In consideration for the above, The Hospitality Group Pty Limited will swap:

            104 tickets for the Centenary Test to be played on 26 June 1999 and 120 tickets between the 22 metre lines for the Bledisloe Cup to be played on 28 August 1999 together with the sum of A$10,000.

The swap will take place at an address to be confirmed by the two parties.”

33                  During 1999, negotiations took place between the ARU and IMG as to renewal of its five-year agreement for the period 2000-2004.  A special meeting of the board of directors of the ARU took place on 17 July 1999 to consider the issue, which agreed to re-appoint IMG for a further five-year term (“the 1999 IMG agreement”).  IMG had assessed the net profit the ARU would receive from corporate hospitality during the initial five-year period expiring in 1999 as nearly $5m starting from a low base.  The new appointment (as with the old) was said to be as agent for the ARU in relation to provision of the services for commission.  No copy of the 1999 IMG agreement was produced in evidence.

34                  On 19 August 1999 Sackville J delivered judgment on various interlocutory motions brought by the parties, which resulted in orders being made which established an interim regime to cover the Bledisloe Cup.

35                  On or about 15 October 1999 the ARU invited 18 companies (including THG) to tender to provide non-exclusive off-site corporate hospitality in connection with  international rugby test matches organised by the ARU.  The invitation included the following:

“2.9     Ticket availability

The ARU does not intend to supply tickets to Rugby Test Matches for use in connection with corporate hospitality except through on-site corporate hospitality managed by IMG and through off-site corporate hospitality managed by tenderers appointed pursuant to the process described in this request for EOIs.

All tickets to Rugby Test Matches are sold subject to the following term:

            “This ticket may not be resold at a premium or used for advertising, promotion or other commercial purposes without the prior written consent of the ARU.  If this ticket has been resold or used in contravention of the condition, the bearer of the ticket will be denied admission.”

The ARU will take action, through the courts if necessary, to restrain a breach of this term by purchasers of tickets or conduct by third parties (eg. organisers of corporate hospitality) to induce purchasers of tickets to breach this term.”

36                  Six companies were so appointed.  THG did not tender.  The essence of the arrangement is captured by the following part of the letter of appointment:

“Appointment and term

2.                  The Agent is appointed a non-exclusive manager and agent to provide services in connection with Off-site Hospitality Events (the “Services”) to the ARU during the Term.  The Services include:

(a)               event design, organisation and management services;

(b)               advertising, marketing and promotion services;

(c)                sales and distribution services;  and

(d)               customer relations and feedback-gathering services.

The nature of the Off-site Hospitality Events in relation to which the Agent will provide the Services is described in part A of schedule 1.”

That part which deals with tickets is as follows:

“Tickets

11.              The ARU will provide tickets for:

(a)               the Australia-Argentina Test Matches in 2000;  and

(b)               the Australia-New Zealand and Australia-South Africa Test Matches in 2000,

in respect of Off-site Hospitality Events organised by the Agent in the ticket numbers, locations, quality and prices set out in schedule 2 to this agreement.

12.              The Agent may on each of the dates set out in schedule 2 return to the ARU tickets to rugby test matches which have not as at those dates been sold as part of Packages for the relevant Off-site Hospitality Event.

13.              It is a condition of this agreement that the Agent must not sell tickets to rugby test matches other than as part of a Package.

14.              All tickets to rugby test matches are sold by the ARU, and the Agent must ensure that all tickets sold by the Agent on behalf of the ARU are sold, subject to the following condition:

                                    “It is a condition of sale that this ticket may not, without the prior written consent of the ARU, be resold at a premium nor used for advertising, promotion or other commercial purposes (including competitions or trade promotions) or to enhance the demand for other goods or services.  If a ticket is sold or used in breach of this condition, the bearer of the ticket will be denied admission.”

The Agent acknowledges:

(a)                that the ARU will take all action which the ARU considers necessary to restrain a breach of the condition referred to above by purchasers of tickets or conduct by third parties to induce purchasers of tickets to breach this term;  and

(b)                that in respect of any conduct by the Agent to induce purchasers of tickets to breach the term referred to above, damages alone are an inadequate remedy to compensate the ARU.

15.              Where practicable, the ARU will provide the Agent with a map of each stadium in which the rugby test matches referred to in clause 11 are to be played.  Subject to this clause, the maps will show the stadium seating areas from which tickets for Packages will be allocated.

The ARU may, in its absolute discretion, allocate tickets for Packages which are, in the opinion of the ARU, better than the tickets shown in the maps referred to above.

The Agent must not offer for sale or sell a Package unless, prior to or at the time of the offering or sale of the Package, the Agent:

(a)               has shown to the purchaser the map (if any) of the relevant stadium provided by the ARU in respect of the rugby test match to which the Package relates;  and

(b)               has informed the purchaser that the tickets to be included in the Package will be allocated from the seating areas shown on the map or will be tickets which are, in the opinion of the ARU, better than such tickets.”

THE APPLICANT’S CASE

37                  The applicant says that, in relation to the tickets acquired from ATFS, Wimbledon and Cameron Jackson, ICM and THG were plainly on notice of the 1999 ticket condition in relation to the tickets and were on notice of cl 3.11 of the ATFS contract at the time it offered to acquire the tickets, and each was so inducing breach of contract or interfering with contractual relations.  It also says that having acquired the tickets, as the holder of them, THG was bound by the ticket condition in the same way as the purchaser had been bound.  It further claims that any tickets which THG acquires in the future to rugby test matches will be subject to the 1999 ticket condition and that THG is plainly on notice of this, with the consequence that by offering packages it is implicitly threatening to induce further breaches of contract when it acquires the tickets to form part of such packages. 

38                  The applicant contends that THG has made the following representations:

 “(a)    it could provide, procure or arrange the provision of:

(1)               “premium seats in a block of 10 between the 22 metre lines in lower level (guaranteed in writing)”;

(2)               “10 RESERVED GRANDSTAND SEATS GUARANTEED IN A BLOCK OF 10 BETWEEN THE 22 METRE LINES FOR THE 1999 CENTENARY TEST AT STADIUM AUSTRALIA”;

(3)               “Reserved Grandstand Seats”;

(4)               “Seating at Stadium Australia”;

(5)               “Corporate Level Tickets”;

(6)               “Executive level Seating”;

(7)               any seating;

for the Centenary Test and the Bledisloe Cup;

(b)        that it is associated with or has the imprimatur, authority, endorsement or other approval of the Applicant;

(c)        its products and/or services are associated with or have the imprimatur, authority, endorsement or other approval of the products and/or services of the Applicant;

(d)        it is associated with the Bledisloe Cup, the Centenary Test, the Applicant or each or all of them.”

The applicant claims that each of the representations is false or, alternatively, misleading or deceptive or likely to mislead or deceive, and so are breaches of s 52 and s 53(aa) and (c) and (d) of the Trade Practices Act 1974 (Cth). 

THE RESPONDENT’S CASE

39                  THG and ICM deny that they are in contractual relations with ARU, say that any contracts entered into by them are on behalf of the purchasers of the packages (their own clients), deny that they are bound by the 1999 ticket condition if they do purchase tickets, and deny that purchasing tickets with terms such as the 1999 ticket condition and cl 3.11 of the ATFS agreement is inducing breach of contract or interfering with contractual relations.  In answer to the Trade Practices Act claim, THG said that any representations which were made were as to future events, and that it had the ability and intention to fulfil its representations and contracts.  Furthermore, it says that the 1999 ticket condition and cl 3.11 of the ATFS agreement are void as a restraint of trade under the common law and the Restraints of Trade Act 1976 (NSW) and by reason of matters pleaded in the cross-claim.

40                  By the further amended cross-claim, THG, ICM and ATFS claim that the 1999 ticket condition and the term of the ATFS agreement is a breach of s 45(2)(a)(ii), s 46(1)(c), s 47(1) and s 47(7) of the Trade Practices Act 1974. 

Evidence

41                  Leaving aside evidence to prove the formalities, the ARU called:

1.                  Its Managing Director, its General Manager – Commercial Operations and its Ticketing Manager.

2.                  A director of ATFS.

3.                  Representatives of IMG and of MBM Corporate Event Management Pty Limited (“MBM”), another company involved in the marketing of corporate hospitality.

4.                  Persons involved in marketing of other sports, namely, golf, cricket and Australian rules football.

5.                  Representatives of  SOCOG and of the company which manages Stadium Australia.

6.                  A professor of marketing to comment upon the respondent’s hospitality survey and a professor of economics to comment on the evidence of the respondent’s expert economist on market issues.

42                  The respondent did not call any evidence from its own officers or its customers.  It called:

1.                  A market research consultant to prove surveys, and a professor of econometrics to give evidence as to the market issues.

2.                  Four representatives of companies which had purchased corporate hospitality packages.

43                  Each side tendered a considerable volume of documentary material, including surveys and other analyses made in the ordinary course of events rather than for the purposes of the case.  Some of the evidence was directed to establishing or denying a ticketing market, an endeavour which ultimately was not pursued. 

44                  This is not a case in which there are sharp conflicts of fact as to particular events which require resolution.  I did not gain the impression that any of the witnesses who were cross-examined were guilty of any knowing untruths.  Mr Thorburn, as the principal witness of fact for the applicant, was somewhat reluctant to accept the obvious on occasion, and none of the experts was to be lightly moved from his position.   On the other hand, I cannot simply uncritically accept at face value each statement made by a witness in a carefully prepared affidavit, particularly where the statement relates to a previous state of mind, for example, in relation to purpose and some other market issues.  Full weight must be given to the contemporaneous documents and commercial realities in assessing this evidence.

PART IV, TRADE PRACTICES ACT

MARKET

45                  It is convenient to deal with the Pt IV Trade Practices Act claims first as much of the evidence related to them, if established, has a profound influence upon other aspects of the case.  Each of the breaches relied upon involves a consideration of the market, and it is useful to consider that issue first, although bearing in mind that it is only ultimately a means to an end.

46                  The market contended for by the first and second respondents is:

7.         At all material times there was and is a market within Australia for the supply to business organisations of corporate hospitality packages in conjunction with national representative level rugby matches organised by the Cross Respondent and to be played in NSW (the “Hospitality Market”).

Particulars

(a)        The services sold in the market were and are packages entitling the purchaser to

(i)                 beverages before and/or after the match;

(ii)               food before and/or after the match;

(iii)             entertainment before and/or after the match;

(iv)             transportation in relation to the match;  and

(v)               the procurement of tickets to the match,

in each case for a group of persons.

(a)               The geographic area of the market was

(i)         within Australia;  or alternatively

(ii)               within New South Wales;  or alternatively

(iii)             within metropolitan Sydney

(b)               Competitors in the market include the Cross Respondent, International Management Group of America Pty Limited (“IMG”), ASK Promotional Solutions Pty Limited (”ASK”), David Campese Management Group Limited (“DCM”), Corporate Hosts (“CH”) (together the “Official Suppliers”), the Cross Claimants and Stirling House (Guildford) Pty Limited trading as Corporate Sports Australia (“CSA”) (together the “Competitive Suppliers”).

47                  There is undoubtedly what may be described as a commercial market for corporate hospitality.  The direct participants in that market from whom evidence was called were IMG and MBM, although the applicant did call representatives involved in other sports and Stadium Australia who are suppliers to that market.  Four primary consumers (those actually purchasing a package) were called, and there was hearsay evidence given as to the attitude of other such consumers by various witnesses.  No evidence was called from any ultimate (or secondary) consumer or guest.  The evidence in relation to that category was given by survey, both designed for the purposes of the case and otherwise, and anecdotal hearsay accounts in the documentary and oral evidence, including the evidence of the primary consumers who invited guests.

48                  As noted previously, corporate hospitality packages are not limited to rugby union test matches in Sydney, but include a wide variety of other sports and entertainment events.  The brochures of THG, as well as a body of other evidence, establish that a retailer of packages is likely to offer a range of different events as the centrepiece of different hospitality packages.  The events, in addition to being different in substance, are offered at different times and locations.  There are a number of competing retailers offering similar, but not identical, portfolios of events.  The ARU is not the only event organiser that confers “authorised” status upon a supplier or suppliers.  The evidence is that this confers a marketing advantage.  It is also clear that it is commercially desirable for a retailer to be able to offer packages to as wide a field of events as they may wish to include.

49                  One feature of the “product” is that the price for the ticket to the event is only a relatively small proportion of the price paid for the whole package.  Furthermore, I conclude from the evidence that the primary consumers are not particularly price sensitive.  The purpose of purchasing a hospitality package is to achieve important commercial objectives by, for example, cementing relationships with existing customers, creating new customers or rewarding key staff.  Whilst, of course, not oblivious to cost or value for money, the most important consideration is to have a successful outing.  The prestige and quality of the event is an important factor, but the hospitality provided, and general smooth organisation, is also important.  The primary consumers are, by and large, substantial commercial entities, with expenditure on corporate hospitality being part of much larger marketing budgets.

50                  The evidence establishes that the primary consumer is interested in a prestige event, as that makes the client, or employee, feel special, and will endeavour to match the interests of those invited to the event in question.  There is no doubt that international rugby tests in Sydney and elsewhere are presently regarded as prestige events for this purpose. 

51                  On the evidence, there is a good correlation between those who are likely to be invited to corporate hospitality and those with an interest in rugby.  Indeed, it is fair to say that the evidence supports the conclusion that, whilst many people interested in rugby may also be interested in, say, horse racing, golf or opera, there is a substantial body of people with an interest in rugby to the exclusion of, or which is greater than, other sports and entertainment.  In other words, there is a substantial hard core of  fans of international rugby matches.  The characteristics of many of them means that they are in the target audience for invitation to corporate hospitality.  The “demographic” of the rugby fan (to use a marketing term) taking into account gender, age, education, occupation and the like, indicates a likely secondary consumer of (or invitee to) corporate hospitality.  This conclusion is drawn from my consideration of much of the evidence, including the ARU internal material and the oral evidence of primary consumers, but I particularly found the results of a survey of persons attending the 1999 Bledisloe Cup commissioned by the ARU to be persuasive.

52                  It is contended for THG that these findings of fact as to the evidence and nature of the hard core fans establish that there is a market for the purposes of Pt IV for hospitality packages to international rugby matches in Sydney.  It is contended for the ARU, whilst denying any obligation to assert or establish any market, that the market for Pt IV purposes encompasses a great range of sports and entertainments over a wide geographical area.  It is said that the brochure of THG graphically makes this point.  The response on behalf of THG is that offering different packages in the one brochure is similar to offering different products in a supermarket, and does not establish a market for relevant purposes. 

53                  This simplified summary of contentions requires particular attention to be paid to the principles that are to be applied.  The law on the topic was authoritatively settled by the High Court in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Company Ltd (1989) 167 CLR 177.

54                  The starting point is s 4E of the Trade Practices Act:

“4E.  Market

For the purposes of this Act, unless the contrary intention appears, “market” means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services.”

55                  In Queensland Wire (supra) Mason CJ and Wilson J said, at 188 (omitting citations):

“Section 4E directs that a market is to be described to include not just the defendant’s product but also those which are “substitutable for, or otherwise competitive with”, the defendant’s product.  This process of defining a market by substitution involves both including products which compete with the defendant’s and excluding those which because of differentiating characteristics do not compete.  In Hoffmann-La Roche v Commission (“Roche”) the Court of Justice of the European Communities said:

            “The concept of the relevant market … implies that there can be effective competition between the products which form part of it and this presupposes that there is a sufficient degree of  interchangeability between all the products forming part of the same market in so far as a specific use of such products is concerned.”

Conversely, in determining in United Brands v Commission (“United Brands”) whether other fruits should be excluded from the market which bananas served, the European Court said:

            “For the banana to be regarded as forming a market which is sufficiently differentiated from other fruit markets it must be possible for it to be singled out by such special features distinguishing it from other fruits that it is only to a limited extent interchangeable with them and is only exposed to their competition in a way that is hardly perceptible.”

See also Re Queensland Co-operative Milling Association Ltd (explaining that the defining feature of a market in substitution).

Deane J said, at 195-6:

“The Act does not otherwise seek to define what is meant by the word “market”.  That is not surprising since the word is not susceptible of  precise comprehensive definition when used as an abstract noun in an economic context.  The most that can be said is that “market” should, in the context of the Act, be understood in the sense of an area of potential close competition in particular goods and/or services and their substitutes (cf Re G & M Stephens Cartage Contractors Pty Ltd).

The identification of relevant markets and the definition of market structures and boundaries for the purposes of determining whether BHP’s refusal to supply Y-bar to QWI contravened s 46(1) involves value judgments about which there is some room for legitimate differences of opinion.  The economy is not divided into an identifiable number of discrete markets into one or other of which all trading activities can be neatly fitted.  One overall market may overlap other markets and contain more narrowly defined markets which may, in their turn, overlap, the one with one or more others.  The outer limits (including geographic confines) of a particular market are likely to be blurred:  their definition will commonly involve assessment of the relative weight to be given to competing considerations in relation to questions such as the extent of product substitutability and the significance of competition between traders at different stages of distribution.  While actual competition must exist and be assessed in the context of a market, a market can exist if there be the potential for close competition even though none in fact exists.  A market will continue to exist even though dealings in it be temporarily dormant or suspended.  Indeed, for the purposes of the Act, a market may exist for particular existing goods at a particular level if there exists a demand for (and the potential for competition between traders in) such goods at that level, notwithstanding that there is no supplier of, nor trade in, those goods at a given time – because, for example, one party is unwilling to enter any transaction at the price or on the conditions set by the other.”

Dawson J said, at 199-200:

“A market is an area in which the exchange of goods or services between buyer and seller is negotiated.  It is sometimes referred to as the sphere within which price is determined and that serves to focus attention upon the way in which the market facilitates exchange by employing price as the mechanism to reconcile competing demands for resources:  see Stigler and Sherwin, “The Extent of the Market”, Journal of Law and Economics, vol 28 (1985) 555, at p 555.  In setting the limits of a market the emphasis has historically been placed upon what is referred to as the “demand side”, but more recently the “supply side” has also come to be regarded as significant.  The basic test involves the ascertainment of the cross-elasticities of both supply and demand, that is to say, the extent to which the supply of or demand for a product responds to a change in the price of another product.  Cross-elasticities of supply and demand reveal the degree to which one product may be substituted for another, an important consideration in any definition of a market.  This is reflected in s 4E of the Trade Practices Act which provides:

            “For the purposes of this Act, ‘market’ means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services.” (My emphasis.)

Important as they are, elasticities and the notion of substitution provide no complete solution to the definition of a market.  A question of degree is involved – at what point do different goods become closely enough linked in supply or demand to be included in the one market – which precludes any dogmatic answer:  see Times-Picayune v United States.  The process is an inexact one as may be illustrated by reference to the concept of a sub-market which has been employed from time to time.  In Re Queensland Co-operative Milling Association Ltd, the Trade Practices Tribunal observed:

            “The distinction between markets and sub-markets can be merely one of degree.  Sub-markets are the more narrowly defined, typically registering some discontinuity in substitution possibilities.  Where the defining feature of a market is the existence of close substitutes (whether in demand or supply), the defining feature of a sub-market is the existence of still closer and more immediate substitutes.  Sub-markets may be especially useful in registering the short-run effects of change;  but they may be misleading if used uncritically to assess long run competitive effects.””

Toohey J said at 210-211:

“The introduction of s 4E followed a recommendation of the Swanson Committee that the definition of “market” be extended so as to “require that, in the determination of a ‘market’ for particular purposes, regard shall be had to substitute products, being products which have a reasonable interchangeability of use and which have high cross-elasticity of demand, ie where a small decrease in the price of a particular product would cause a significant quantum of demand for a similar product to switch to the product in question”(Trade Practices Act Review Committee (Swanson Committee): Report to the Minister for Business and Consumer Affairs (1976), p 17, par 4.22).  This test of interchangeability of products on the demand side has been widely recognized in other jurisdictions as relevant to market definition:  see, for instance, United States v Du Pont & Co;  L’Oreal v De Nieuwe AMCK.  Indeed, in delineating the scope of the product market demand substitutability has often been emphasized at the expense of supply substitutability.

But this does not mean that supply substitutability is irrelevant to the task of market definition:  see Europemballage Corp and Continental Can Co Inc v ED Commission.  Rather, the definition of the relevant market requires a consideration of substitutability both on the demand and on the supply side.  This has been recognized in Re Queensland Co-operative Milling Association Ltd;  Re Defiance Holdings Ltd;  Re Howard Smith Industries Pty Ltd, both decisions adopted in Trade Practices Commission v Ansett Transport Industries (Operations) Pty Ltd;  Re Tooth & Co Ltd and Tooheys Ltd;  Trade Practices Commission v TNT Management Pty Ltd.  See also BAK, “The Role of Supply Substitutability in Defining the Relevant Product Market”, Virginia Law Review, vol 65 (1979), p 129;  Hubbard, “Potential Production:  A Supply Side Approach for Relevant Product Market Definitions”, Fordham Law Review, vol 48 (1980), p 1199.  And see generally Wyatt and Dashwood, The Substantive Law of the EEC, 2^nd ed (1987), pp 400-405;  Hawk, “European Economic Community and United States Antitrust Law:  Contrasts and Convergences”, Australian Business Law Review, vol 16 (1988) 282, at pp 297-299.”

56                  I have not, of course, reproduced all of relevance from the judgment.  Among the points of interest to emerge are the following:

1.                  That United States and European decisions and concepts are relevant to market definition pursuant to the Act.   This is not surprising, as market is essentially an economic concept.  It is important, as, in each place, but particularly in the United States, there is a well developed jurisprudence on the topic which can be resorted to with profit.

2.                  That a series of early Trade Practices Tribunal decisions, starting with Re Queensland Co-operative Milling Association (1976) 8 ALR 481, 25 FLR 169 and ending with Re Tooth & Co Ltd (1979) 39 FLR 1, are referred to with apparent approval.

3.         That s 4E (which was not in force until after Re Queensland Co-operative Milling Association) introduces economic concepts already recognised in the overseas and Trade Practices Tribunal decisions.  The section was introduced as the result of a Swanson Committee recommendation which regarded the hallmark of substitutability to be:

            “reasonable interchangeability of use and which have high cross-elasticity of demand, ie, where a small increase in the price of a particular product would cause a significant quantum of demand for a similar product to switch to the product in question.” (emphasis added)

4.         Where the products are not actually the same, differentiating characteristics and reasonable interchangeability are to be judged in relation to specific use of the products.

5.                  What is required is the existence of an area of actual or potential close competition between close substitutes in particular goods or services

57                  I can, for the purposes of the present case, put aside supply side substitution in defining the product market (if it be relevant to that market), although the geographic market may be different.  There is no suggestion that anyone else apart from the ARU can produce international rugby test matches in Australia in the foreseeable future.  It also effectively controls the provincial unions.

58                  The concept of market is well explained by the Trade Practices Tribunal in Re Queensland Co-operative Milling Association (supra) at 517:

“We take the concept of a market to be basically a very simple idea.  A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them (if there is no close competition there is of course a monopolistic market).  Within the bounds of a market there is substitution – substitution between one product and another, and between one source of supply and another, in response to changing prices.  So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive.  Let us suppose that the price of one supplier goes up.  Then on the demand side buyers may switch their patronage from this firm’s product to another, or from this geographic source of supply to another.  As well, on the supply side, sellers can adjust their production plans, substituting one product for another in their output mix, or substituting one geographic source of supply for another.  Whether such substitution is feasible or likely depends ultimately on customer attitudes, technology, distance, and cost and price incentives.

It is the possibilities of such substitution which set the limits upon a firm’s ability to “give less and charge more”.  Accordingly, in determining the outer boundaries of the market we ask a quite simple but fundamental question:  If the firm were to “give less and charge more” would there be, to put the matter colloquially, much of a reaction?  And if so, from whom?  In the language of economics the question is this:  From which products and which activities could we expect a relatively high demand or supply response to price change, ie a relatively high cross-elasticity of demand or cross-elasticity of supply?”

59                  Guiding myself by these principles, I first approach the product market without regard to geography or functional level.  I use “product” to describe the services offered.  It is relevant to note that hospitality packages to international rugby union matches are in fact different from hospitality packages to other sports or entertainments because rugby union is a distinct sport, not to be confused with any other sport or entertainment.  It has, among other factors, distinct rules, organisation and history.  It has not been suggested that even rugby league (which was a breakaway from rugby union) is regarded as the same as rugby union.

60                  Are the differentiating characteristics of international rugby union hospitality packages such as to deny interchangeability of function with packages involving other sports or entertainment?  I have little difficulty in concluding, as a matter of fact, that, generally speaking, there is no relevant interchangeability between different recognised sports.  Each is distinct with a recognised identity precisely because it has its own special characteristics, appealing to its own audience of players and fans.  A long line of United States authorities recognise the unique character of major organised professional sports for market purposes.  The cases cited by THG of NCAA v Board of Regents of University of Oklahoma (1984) 468 US 85 and International Boxing Club of New York Inc v United States (1959) 358 US 242 are sufficient to note for present purposes.  Whilst not, of course, automatically transferable in time and space to this case, this line of authority, in my opinion, provides a very sound foundation for consideration of the issues here.  See also, in the EEC, the decision of the Commission of European Communities of 27 October 1992 in Pauwels Travel BVBA (EC Commission Decision 92/521) OJ L326 12.11.92 p 31 as to travel arrangements for the Soccer World Cup. 

61                  The fact that some players and some fans may, on occasion, play or follow other sports is beside the point. As the Full Court said in Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 332:

“But the fact that, upon some occasions, some consumers select one product rather than another does not establish that the two products are “substitutable”, so as to be within a single market.  No doubt there are many people who sometimes drink tea and, at other times, coffee.  But if, for example, a particular company dominated the sale of tea within Australia, it would thwart the objectives of provisions such as ss 46 and 50 of the Trade Practices Act to deny their application because that company did not dominate the “hot beverage market”.  The fact is that tea and coffee are distinct beverages, for each of which there is a distinct demand.  To adopt the test applied in Re Queensland Co-op Milling Association Ltd;  Re Defiance Holdings Ltd (1976) 25 FLR 169 (QCMA), a  rise in the price of tea would probably cause few consumers to abandon tea for coffee.  It is important to remember that the notion of substitutability adopted in s 4E is one which looks to the market itself, not to the habits of individual consumers.  The section speaks of “goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services”.

This point emerges clearly from United Brands.  The applicant in that case was a major distributor of bananas.  But it argued that it was not in a dominant position since the relevant market was not the banana market but the fresh fruit market.  It submitted that bananas compete with other fresh fruit – in the same shops, on the same shelves – at prices that can be compared and to satisfy the same needs:  consumption as a dessert or between meals.  Moreover, statistics showed that consumer expenditure on the purchase of bananas dropped during that part of the year when there was a plentiful supply of other fresh fruit.  Yet the European Court of Justice held that it was appropriate to speak of a banana market.  This conclusion was partly based on the fact that bananas were available throughout the whole year, and therefore substitutability had to be considered on a year-round basis.  But it was also based upon the fact that the banana is a distinct product with a distinct demand (483-484):

            “The banana has certain characteristics, appearance, taste, softness, seedlessness, easy handling, a constant level of production which enable it to satisfy the constant needs of an important section of the population consisting of the very young, the old and the sick.  As far as prices are concerned two FAO studies show that the banana is only affected by the prices – falling prices – of other fruits (and only of peaches and table grapes) during the summer months and mainly in July and then by an amount not exceeding 20 per cent.  Although it cannot be denied that during these months and some weeks at the end of the year this product is exposed to competition from other fruits, the flexible way in which the volume of imports and their marketing on the relevant geographic market is adjusted means that the conditions of competition are extremely limited and that its price adapts without any serious difficulties to this situation where supplies of fruit are plentiful.  It follows from all these considerations that a very large number of consumers having a constant need for bananas are not noticeably or even appreciably enticed away from the consumption of this product by the arrival of fresh fruit on the market and that even the seasonal peak periods only affect it for a limited period of time and to a very limited extent from the point of view of substitutability.  Consequently the banana market is a market which is sufficiently distinct from the other fresh fruit market.””

62                  A conclusion that sports are not interchangeable in function is relevant to, but does not decide, the question as to whether hospitality packages offering different sports are interchangeable.  The purchaser or primary consumer is not necessarily a fan of the particular sport or entertainment, but rather is a corporation using the occasion for entertainment for business purposes.  The event is only part of the product – the hospitality portion is also significant.  Many guests will not particularly mind where they are taken for a day or a night out at someone else’s expense, with food, drink and entertainment thrown in.  However, as I have held, the primary consumer does endeavour to match the interests of the secondary consumer with the invitation offered.  Furthermore, as I have held, there are many targets for corporate entertainment who are keen rugby followers for whom a night out at the ballet or a day out at the tennis would have little or no appeal.

63                  Thus, the question of interchangeability is debateable.  There is plainly some substitutability.  The issue is whether it is sufficiently close to qualify.  It is therefore prudent to look more closely than hitherto at the issue of cross-elasticity of demand.                

64                  It is relevant here to note that it was submitted for the ARU that on-site hospitality organised by IMG on behalf of the ARU, and corporate boxes hired on behalf of Stadium Australia, are in the same market as off-site hospitality packages.  The differing form of the hospitality makes comparison difficult, and there was little evidence directly bearing upon cross-elasticity of demand.  However, I agree that there is close enough substitutability between on-site and off-site corporate hospitality to conclude that they are part of the same market.  It is not so clear that the hiring of corporate boxes is substitutable.    I will return to this point later.

65                  The witnesses called from the ARU said nothing directly as to the pricing of hospitality packages.  Evidence given by IMG’s Corporate Hospitality Manager for Australia and New Zealand included the following:

“Price sensitivity

15                When the top Rugby teams are playing in Australia, customers are more prepared to pay premium prices for their corporate hospitality.  However, corporate hospitality is extremely price sensitive.  For example, the Centenary Match played between Australia and England at Stadium Australia on 26 June 1999 did not sell out. Of the 400 packages which IMG was offering, each comprising 10 tickets to the match, 60 did not sell.  In my opinion, one of the reasons for this was that the packages were too highly priced for the perceived quality of the games.

16                In my experience if a particular event package is too expensive then a client will opt for a less expensive corporate hospitality package involving a different Event or, may purchase tickets separately and organise their own hospitality.

            …

21                In setting prices for corporate hospitality packages to the Rugby Tests, which is one of my duties as manager of corporate hospitality, I have regard to the popularity of the Wallabies, the market attractiveness of the opposing team, my competitors’ prices, the relative prices of other corporate hospitality events and what the market can bear ie what price is too high so as to make the package unpopular.

…

25                Although Rugby is popular (an explanation for that popularity is set out above at paragraph 10), it is often only one of a number of Events that our clients are interested in as illustrated in the examples set out [in] annexure ‘CONFIDENTIAL-L’.

26        If IMG were to receive an inquiry from a client in relation to a Rugby Event and the packages were already sold out that client would subsequently more often than not make inquiries about other events.”

66                  Evidence was tendered as to a number of other events which form the centrepiece of corporate hospitality packages offered by IMG.  Consideration of the material tendered in relation to the other events shows quite a varied range of pricing for packages from which I find it hard to discern a pattern.  The evidence I have quoted was not directly cross-examined upon.  Previous evidence given by the witness was tendered, including the following:

“In relation to those types of hospitality packages would you regard IMG on behalf of ARU as competing with other people like The Hospitality Group? --- Anyone else who sells hospitality packages including the stadium, including the groups that you are referring to, we would compete for customers’ business, correct.

For the purposes of providing hospitality in connection with the rugby union tests? --- Correct.

It would be fair to say that if you lowered your price significantly or enough, but maintained your quality you might expect to attract more custom to you, assuming that your competitors maintain their price? --- That would stand to reason.

…

Do you agree according to your understanding that the ARU wants to increase it’s profit share from the provision of hospitality packages to ARU tests.  Do you agree with that? --- We’re always looking at ways of increasing profitability.

And including through the provision of hospitality packages? --- That would be one way, yes.”

67                  The evidence of Mr Mannion of MBM Corporate Event Management included the following:

“Pricing

19                As noted above, I am responsible for setting prices for MBM’s corporate hospitality products.

20        I note that the brochures which now form exhibit MBM2 show prices for some of the events described, including:

(a)                Showboat:  from $195 per person to $445 per person;

(b)                Australian Open Tennis:  from $145 per person to $1,595 per person;

(c)                Australiana Rules Football:  from $1,980 for a table of 8 guests to $49,450 for a 15 game package;  and

(d)                Australian Grand Prix:  from $6,780 for four guests for four days to $16,950 for 10 guests for four days.

21        Setting ticket prices is not exact or scientific, but I am assisted by my 12 years’ experience in the industry, and by reviewing prices charged by MBM for other events, and prices charged by other hospitality providers for other events and for the event in question.

22                In setting the prices for a corporate hospitality package I also consider:

(a)               event ticket price (that is, the price at which MBM obtains tickets from the event organiser);

(b)               catering costs;

(c)                incidentals such as car parking and program;

(d)               marketing costs such as brochures, mailing and phone calls;

(e)                labour;

(f)                 the inherent value of the event.  By this I mean I consider whether tickets are hard to get, the event is high profile and whether clients are limited in how they can obtain tickets.

23                As noted above, I also consider comparable prices of:

(a)               other events marketed by MBM;  and

(b)               the prices charged by other corporate hospitality firms for the event I am considering and for other events they market.

24                From my 12 years in the corporate hospitality industry, either as an employee or company director, it is my experience that corporate hospitality providers compete in a range of ways, but most particularly, on quality of event and on price.  That is, corporate hospitality providers try to present events with higher quality (that is, better food and beverages, more entertaining guest speaker, higher quality momentos, better quality seats) at a price equal to or lower than the competitors.

25                MBM strives to present premium quality events, with excellent catering, first class guest speakers, premium match or event tickets and quality momentos.  MBM prides itself on the high quality of its products.

26                MBM also attempts to compete on price.  MBM is not a discount business.  We strive to keep our prices consistent with or below those of companies MBM considers to be its competitors, being The Hospitality Group, Image Events, International Hospitality Management, IMG, Octagon, BTTB, to name a few.

27                When setting prices for corporate hospitality, MBM is aware of the need to price a package that will be seen as competitive in the marketplace.  Whether it is rugby, an AFL Grand Final or the Melbourne Cup, in setting price, I attempt to account for what a client will pay.

28                In my experience, corporate clients go to a range of events, not just rugby, and depending on circumstance, each event can be interchangeable with the other.  It is in my experience therefore necessary to set competitive prices for corporate hospitality events, or clients will go to other events we promote, or to events promoted by other hospitality providers.”

He was not directly cross-examined about this evidence.

68                  Evidence was called from Mr Rodney Read, Chief Executive of Sports Marketing and Management Pty Ltd (“SMAM”).  That company represents PGA Tour Enterprises Pty Ltd, which organises two professional golf tournaments in Australia annually – the ANZ Tour Championship (currently played in Brisbane) and the ANZ Player Championship (currently played in Canberra).  His evidence included the following:

“9       In setting ticket prices for golf events, I thoroughly review prices charged by other sports and events, including:

(a)               other golf tournaments;

(b)               international rugby union tests;

(c)                AFL Grand Finals;

(d)               Australian Tennis Open;  and

(e)                Australian Grand Prix.

…

15                In setting prices for corporate hospitality at golf events, I review prices charged for corporate hospitality at other events, including those listed in paragraph 9 and Annexure B.

16                I attempt to set prices for corporate hospitality at golf events at a level competitive with that charged by other entities for events which I believe clients consider to be of a similar standard (such as international rugby union tests, AFL Grand Finals and other golf tournaments).”

He produced the content summary from the Event Business Plan prepared in relation to the ANZ Players Championship 1999 and the Tour Championship 2000.  In relation to hospitality, one of the items was:

“4.2.3  COMPETITIVE PRICING REVIEW

            Other Golf       - Ericsson Masters

- Greg Norman Holden International

            Other Sports    - AFL Grand Final

- Bledisloe Cup

- Australian Open Tennis

- Australian Grand Prix”

He did not produce the Business Plan itself, nor the actual recommendation made.  Mr Read was not cross-examined on this material.

69                  Evidence was called from Mr Kris Donaldson, the General Manager, Marketing – Assets Sales for the Sydney Organising Committee for the Olympic Games (SOCOG).  His evidence included the following:

“Hospitality

13                SOCOG is producing its own corporate hospitality in relation to the Sydney Olympics.  SOCOG is offering a substantial range of different hospitality packages and options for its sponsors and for others at Sydney Olympic events.

14                As noted above, my responsibilities at SOCOG include hospitality.

15                In considering prices for its hospitality packages, I am aware from attending meetings to discuss hospitality, and from conversations as part of my duties, that SOCOG considered prices for hospitality at other major events, both nationally and internationally, including previous Olympiads, the rugby and soccer World Cups, the America’s Cup, NRL and AFL Grand Finals, Bledisloe Cup rugby union matches, and the Superbowl.  SOCOG also considered comparative prices of hospitality packages attached to non-sports events, including, for example, significant concert events such as the Three Tenors and Barbra Streisand.

16                Exhibited to me at the time of swearing my affidavit and marked “Confidential Exhibit KD3” are copies of extracts from documents which I am aware from my role at SOCOG were used by SOCOG in comparing the pricing of its hospitality packages for the Sydney Olympics with other hospitality packages for the Sydney Olympics and hospitality packages for other international or significant sporting events.

17                SOCOG formed the view that its hospitality packages (and its sponsorship arrangements more generally) would be competing both nationally and internationally with hospitality packages at other major events in Australia and overseas, including those set out above.  In my role at SOCOG, I participated in meetings at which this view was discussed.

18                In setting prices for hospitality events, SOCOG formed the view that the corporate hospitality market is competitive and, on that basis, attempted to price its corporate hospitality packages competitively with other national and international events, bearing in mind the additional attraction of an event the size and reputation of an Olympiad.  In my role at SOCOG, I attended meetings at which SOCOG’s view was discussed.”

70                  The exhibit “Confidential KD3” is an illuminating document which I set out, omitting prices for the Olympic packages as they may still retain some commercial confidentiality:

“Comparison of Pricing

 

1                    Competing Sydney 2000 Hospitality Products

There are currently six other hospitality programs offered in the marketplace.  Four of these are run by sponsors (2UE, Channel 7, Fairfax & Holden) and two are rogue operations, but all give us an indication as to prices and market expectations.

The four sponsor packages all include accommodation and some are tied in with advertising packages for television or radio.  All must be bought in blocks with the price ranging from $** per person per day to $** per person per day on premium finals days.

Of the rogue hospitality programs which are actively selling, IHM has not yet secured a venue (although has stated that it may use Centennial Park and bus its patrons to the venue) and THG Worldwide states that its venue is “located outside of the official sponsor village”.  THG also states that it cannot guarantee ticketing availability.

The rogue hospitality packages could be seen as our biggest competitor as, to the general purchaser, they are similar – even though their tickets or location are not a certainty.  For example IHM is marketing an Opening Ceremony Package, which like ours offers a meal, drinks, guest speakers and commemorative gift for $** per person.  We are looking at offering two Opening Ceremony Packages, the Millennium Room at $** per person and Club 27 at $**  THG has on offer a Closing Ceremony Package, with the same inclusions – meal, ticket, drinks etc – for $** per person, where our top price in the Millennium Room within the Olympic Stadium is $**.  The Opening and Closing Ceremonies are also included in the Superbox and Suite packages.

The biggest difference in all of the packages is that SOCOG’s packages are the only ones with guaranteed tickets, are within and have ready access to the Sydney Olympic Park precinct.  Given the uncertainty of the rogue competitors to deliver and the location of SOCOG’s packages, either in the Olympic Stadium or next door at Club 27, our pricing seems to be good value.

Product	IHM	Millennium Room	Club 27
Opening Ceremony	$**	$**	$**
Closing Ceremony	$**	$**	$**
Athletics 23/9	$**	$**	$**
Athletics 24/9	$**	$**	$**
Athletics 30/9	$**	$**	$**

All of the above products contain a ticket, meal, beverages both alcoholic and non-alcoholic, commemorative gift, souvenir programs, guest speakers and television coverage.

2       Other World Class Events

Also by comparing our indicative pricing to other international events which offer similar levels of hospitality we can get a feel for what the market will bear – keeping in mind that this is the Olympic Games and not a yearly event such as Wimbledon or the Super Bowl.  Some events such as the Super Bowl and Rugby World Cup were in stadiums and so were limited and therefore sold out whereas others such as the US Masters and President’s Cup golf were off site and the venue was tailored to the numbers sold.

Event	Cost per Person	Marquee/Suite Cost
NFL Super Bowl – Sold out	A$**
Wimbledon/US Open Tennis	A$**	A$** Suite for 15 A$** Marquee for 50
Rugby World Cup – Sold out	A$**
US Masters Golf		A$** Marquee for 25
Presidents Cup – Melbourne	A$**	A$** Marquee for 40 -Excludes catering
New Years Eve – Sydney Opera House	A$**
New Years Eve – Luna Park	A$**

            ▪           All of the above products contain a ticket, meal, beverages both alcoholic and non-alcoholic, commemorative gift, souvenir programs, guest speakers and in for the sporting events television coverage.

If we take our current pricing of $** per person for the Opening Ceremony in the Millennium Room then we are on par with a day at Wimbledon and find that any Olympic final is cheaper than attending the NFL’s Super Bowl.  New Years Eve in Sydney with prices ranging from $** to more than $** also give a good indication of what people are willing pay on what is seen as once in a lifetime experiences.

Pricing Comparisons

 

Major Events

The following event hospitality pricing provides relevant comparative information regarding pricing at major events worldwide.  All costs are in Australian dollars.

Rugby World Cup Finals

            -           per person                                                                          $2,500

Superbowl

            -           per person                                                                          $7,500
                                                                                                                            

NBA Playoffs

            -           per person per game                                                          $9,000

US Masters Golf

            -           Four day ticket (minimum price)                                      $7,500

            -           Marquee for 25 people (not on course)                         $770,000

Wimbledon/US Open Tennis

            -           Marquee (50 people)                                                     $450,000       -           Suite 12-20 people$300,000                                                                                                 -       Single person incl F&B    $5,000

Presidents Cup, Melbourne 99

            -           40 person marquee                                                        $195,000

            -           Table of Ten                                                                    $27,000

Honda Indy 300, Gold Coast

70 person suite for four days                                                                  $75,000

Bledisloe Cup, Australia

Table of Ten                                                                                            $10,000

Formula One Grand Prix, Melbourne

70 person suite including F&B for four days                                       $165,000

Syndicated facility – per person for four days                                          $2,640

Australian Open Tennis, Melbourne

Gold corporate package – per person                                                      $2,950

24 sessions (does not include F&B)

BENCHMARKS – Packages and Prices

 

Event	Package items	Price per person per full day ($)
Henley (rowing) – UK	-         Morning coffee -         5 course lunch -         afternoon tea -         11am-7pm beverages -         car park -         trip on riverboat	900
Grand Prix – Vic	Range between: -         reserved seating -         catering -         beverages -         daily lunch pack -         2 TVs -         one advertising sign per 20 person booking -         catering incl desserts -         cloak room service -         superscreen viewing -         daily pit walk -         roof-top viewing -         copy of official programme -         lockable storage unit per suite	188 648
Melbourne Cup – Vic	Range between: -         3 course lunch -         afternoon tea -         admission -         race book -         beverages (wine/beer) -         reserved seats -     5 star dining -         3 course lunch -         afternoon tea -         admission -         race book -         reserved seats Excludes beverages	240-400 600

 

71                  Evidence was called from Mr Ken Edwards, Managing Director of Ogden IFC (Sydney) Pty Ltd, which manages Stadium Australia as the agent of Stadium Australia Management Ltd.  Stadium Australia offers corporate suites, open-air corporate boxes, four restaurants and the Millennium Room for matches organised by the ARU.  The ARU hires the Millennium Room, two of the four try-line restaurants and a 56 person corporate suite for its on-site hospitality.  Stadium Australia was able to offer corporate hospitality for approximately 1,700 people for the rugby union matches.  I think that corporate hospitality suites can, for relevant purposes, be ignored, as they are leased on a long-term basis.  The open corporate boxes, however, are of interest as some packages included other major events such as the Australian/New Zealand rugby league test, rugby league State of Origin match, the official opening soccer match and the rugby league Grand Final, as well as the Centenary Test and Bledisloe Cup match.  Some boxes were sold on an individual event basis.  I would be inclined to view the open corporate boxes at Stadium Australia as in the same market as hospitality packages.  The only evidence of comparative pricing of them in the contemporaneous documents was comparison with other stadiums in Australia.

72                  As I have said, no evidence was called by the respondent as to its own pricing policies.  The ARU tendered a bundle of material from the respondent, and some other sources.  Counsel put submissions as to what can be gleaned from the material.  The ARU, I think correctly, submitted that it bears out a degree of substitutability as to the events which form part of packages.  However, counsel’s attempt to analyse and reconstruct prices to demonstrate close parallels was not convincing.

73                  This body of material indicates that:

1.                  International rugby matches are among a group of elite events in demand for corporate hospitality.

2.                  The inability to offer hospitality packages for international rugby matches would be a competitive disadvantage for those in the field.

3.                  It is, at least, doubtful whether international rugby matches played in Sydney can be distinguished from international rugby matches played elsewhere in Australia.

4.                  Events in the package are substitutable for some clients – this is evidenced, for example, by bundled packages, clients taking packages in more than one event, and by transfer to another event if one is sold out.

5.                  Pricing of corporate hospitality packages takes account of the price of other hospitality packages to some extent, but there is no close parallel between the price of packages for different events.  The differing content of the packages makes comparison difficult.

6.                  The principal purpose for which the price of other packages is taken into account is to assess, in general terms, what the traffic will bear, rather than to undercut to attract extra custom from other events or avoid losing custom to other events.  It is to be borne in mind, of course, that the clients are primary, rather than secondary, consumers.

7.                  There is no reliable evidence of customers moving from event to event because of the price.

74                  It is also necessary to consider the expert evidence tendered on behalf of the parties.  The starting point is the evidence called by THG from Mr John Sergeant, who designed and administered a survey to establish the level of price responsiveness among clients of hospitality services provided in conjunction with major sporting events.  He concluded:

1.                  That a small, but statistically significant, relationship was found between price level and interest in purchasing corporate hospitality at the Australia v New Zealand rugby test such that the higher the price, the less likely respondents were to indicate that they would purchase the hospitality.

2.                  That demand for each of certain other sport hospitality events was negatively correlated with the price charged for rugby-related hospitality, although in no case was this significantly so.

The survey was not designed to be a study of cross-elasticity of demand between different event types.  It was described by Mr Sergeant as a relatively simple exercise in which the price of a single product is systematically varied to see if this affects the level of demand.

75                  The ARU did not lead evidence of any survey conducted for the purposes of the case.  It called evidence from Dr Mark Uncles, Professor of Marketing at the University of New South Wales, who criticised the Sergeant survey design and the relevance of conclusions drawn from it.  He did not, however, offer any opinion as to what would be a reliable survey design.  It follows, of course, that he could proffer no opinion as to what the result of a properly designed survey might have been.

76                  The criticisms by Professor Uncles were answered by Mr Sergeant in his affidavit in reply.  Mr Sergeant was also ably cross-examined upon them, but did not resile from his position.  Mr Sergeant is well qualified academically and, particularly, by experience, to design and administer a survey such as this.  He is independent of the parties.  The criticisms are matters of opinion.  There is no doubt that other, and more sophisticated, surveys could have been designed to elicit other, and arguably more cogent, information.  In particular, a survey to test cross-elasticity of demand between hospitality packages might have been devised.  Generally speaking, I accept the evidence of Mr Sergeant as to the results of the survey, and regard it as reliable within its own limits.

77                  A much more difficult issue arises as to the significance of those results for the case.  THG called Dr Ronald Bewley, Professor of Econometrics at the University of New South Wales, to express his opinion as to issues relating to the relevant market.  His initial conclusions which were admitted in evidence were as follows:

“6.1    There is a separate market for hospitality during 1999 for the two matches, the Centenary Test and the Bledisloe Cup Test, both to be played at Stadium Australia, Sydney (“the Hospitality Market”).

6.2              ARU and THG are in direct competition in this market.  ARU has stated as much (AC.0011) and through their profit sharing and control with IMG and David Campese Management Group.

…

6.5              The imposition by the ARU of the Condition on all ticket sales will have the effect in the Hospitality Market of increasing profits to the ARU, increasing price to the consumer and/or decreasing the availability and/or quality of Match Hospitality.

6.6              The implementation of the ticketing regime described in the affidavits of Brian Thorburn sworn 16 April 1999 is likely to impact on the Hospitality Market by rewarding specific groups of customers and support the conclusions to 6.5.

6.7              The ARU is exercising monopolistic power in the Hospitality Market.

            …

6.9                         The implementation of the ticketing regime described in the affidavits of Brian Thorburn sworn 16 April 1999 was an exercise of market power in the Hospitality Market by the ARU.  The ARU has a complete monopoly through the supply of tickets.”

78                  These conclusions were arrived at by Professor Bewley prior to the Sergeant survey.  After considering the results of that survey, he confirmed his conclusion that there is a separate market for match hospitality as outlined in his previous evidence.

79                  The ARU called Dr Robert Officer, Professor of Finance at the University of Melbourne and Deputy Director of the Melbourne Business School, to “comment upon” the markets alleged by THG and the evidence of Professor Bewley and Mr Sergeant.  He did not give evidence as to his opinion as to the relevant market or markets, and made clear that he would not be in a position to express such an opinion without further work.  He, however, criticised both the Sergeant survey and the opinion of Professor Bewley.  As a tribunal of fact I did not find this evidence of any great value.  Indeed, much of it was of doubtful admissibility, as it was argumentative as to mixed questions of fact and law.  Furthermore, the general economic principles which underlie Pt IV and its overseas progenitors are well understood, were no doubt taken into account by the legislature and do not need to be restated.  By and large, his evidence added little to the cross-examination of the applicant’s experts by counsel for the respondent which was, no doubt, based in part upon assistance from Professor Officer.  Even that cross-examination would have been more effective if deployed to support a positive view as to market based upon admissible expert evidence.  It would be correctly seen as misconceived in a personal injury case for the defendant to call a specialist physician, who had not seen the patient and had expressed no opinion as to the plaintiff’s medical condition, who proceeded to take pot shots at a well-qualified specialist called by the plaintiff who had examined the plaintiff and had expressed an opinion as to the plaintiff’s condition.

80                  This does not mean that I uncritically accept all that Professor Bewley said.  In any event, as a judge of fact, I must have regard to the lay evidence, including the survey evidence, as well as the evidence of economists about it, bearing in mind that the applicant bears the onus of proof to the civil standard.  I have considered the criticisms of Professor Bewley’s evidence advanced in the submissions on behalf of the ARU.  I do not propose to rehearse or deal with them all.

81                  A major issue is the fact that the survey upon which Professor Bewley relied in part was not designed to test all relevant aspects of cross-elasticity of demand.  I do not think that this invalidates either the survey or Professor Bewley’s opinion.  It, however, must be taken into account when assessing this evidence along with the other evidence.  A similar point is that the survey was weighted towards persons who had purchased rugby hospitality.  I was initially concerned about this, but, given that the objective was to test price sensitivity of that group, this criticism has little force.  I do not accept the criticism as to the level of price changes as being too small to be valid.  The question is not what level of price increase would cause a change in behaviour.  It is obvious there will be a price at which consumers will not purchase services because they do not regard the services as good value, not because they wish to transfer to a substitute.  That level of increase may cause the consumer to spend the money saved in some quite different way at another time.  The issue is close substitution, and the test of price sensitivity is to be judged by modest, rather than major, price increases.  In my view, increases of 10% and 20% are certainly significant enough.  The difficulty of comparing actual packages is not a factor in the survey because it assumes the same non-event content.  The criticism that the survey does not take account of quality differences has little weight.  Price sensitivity is the standard test for substitution, and, of course, assumes constant quality.  I do not see that the survey is to the contrary of this.  Asking about actual past behaviour may have gleaned additional relevant material, but failure to do so does not invalidate the survey within its own limits.  The fact that the sample was smaller than initially desired does not invalidate the results.

82                  The ARU rely upon the fact that the Sergeant survey detected statistically significant price sensitivity.  However, the relationship, although statistically significant (ie, reliable), was small.  An exact relationship between price and demand would produce a result of 1 (or –1) and if there were no relationship the result would be 0.  The P value of this result was 0.018.  On further investigation, one of the three random cells was more likely than the other two to go elsewhere.  Furthermore, there was no statistically significant evidence that demand would be transferred to any of the four alternatives, namely, the National Rugby League Grand Final, the first final of international one-day cricket, the Indy Carnival Gold Coast Grand Prix and the Melbourne Cup.  These alternatives were chosen as being likely to be close substitutes.  In my view, this was a reasonable hypothesis, although, of course, they are by no means comprehensive as a list of potential close substitutes.  Overall, I do not regard the survey, or the expert evidence, to be decisive.

83                  I should say something as to the judgment at first instance in News Ltd v Australian Rugby Football League Ltd (1996) 135 ALR 33 insofar as it relates to market issues.  It was relied upon by the applicant and it has some obvious factual similarities with this case.  Firstly, it was a decision on the facts;  as a single judge decision it could not lay down any principle in an area covered by High Court and Full Court authority.  Secondly, it was a decision on the evidence in that case, which is not the evidence before me.  Thirdly, the judgment was set aside on appeal, albeit on a different point.  That creates a real question as to the status of the judgment on the market point, particularly as the analysis of the relationships which was found to be flawed had implications for the market analysis (see Gummow J in Boland v Yates (1999) 167 ALR 575 at 604).  Fourthly, the decision has been criticised by a number of commentators (a list is appended to this judgment).  One basis for criticism was the manner in which the judge dealt with the United States authorities.  In particular, it is, with respect, difficult to see how the rule of reason applied in the United States referred to by his Honour in distinguishing those authorities has anything to do with market definition.  Those authorities, up to the Supreme Court, speak with virtually one voice as to market in relation to major organised sport.  It was bold to prefer minority opinion in a field where the High Court have acknowledged the persuasive value of United States authorities.  The decision has also been criticised by commentators (in my opinion, correctly) for the manner in which substitutability was approached, particularly in relation to s 4E. I have set out earlier the passage from the Swanson Committee Report in which it was recommended  that the economic concept of substitutability, which had been established in the United States and Europe as relevant, should apply here where there is:

“reasonable interchangeability of use and … high cross-elasticity of demand, ie, where a small decrease in the price of a particular product would cause a significant quantum of demand for a similar product to switch to the product in question” (emphasis added)

The purpose was not to specify a wider rather than narrower market, but to ensure that the economic understanding of market as applied in overseas jurisprudence would be applied in Australia.  As a judge of fact, the decision in News Ltd (supra) gives me little assistance.

84                  Taking all of this into consideration, there is much to be said for the view that there is no close substitute for international rugby union test match hospitality.  It is unique in its appeal to a significant number of consumers, primary and secondary.  This conclusion is assisted by considering whether a monopolist in the provision of international rugby test match hospitality packages could extract a super profit or monopoly rent, which is the other, and business, end of the test of price sensitivity.  If the cross-elasticity of demand is not high enough, and substitutability not close enough, then price competition will only be partially successful (if at all) in restraining the price the monopolist can charge.  This, of course, does not mean that the monopolist is able to charge an unlimited amount.  With discretionary spending such as is involved here, a limit is set by what people can afford (or choose) to spend.

85                  The conclusion is open that if the ARU were able to control all international rugby union test match hospitality packages it would be able to extract a significant monopoly profit compared with that which would prevail if there were competition from other providers of international rugby test match hospitality packages.  Put another way, the existence in the market of competitors such as THG is likely to affect prices of packages.  Indeed, this perception may be a significant reason for the desire of the ARU to stamp out what it calls “pirate operators”.  I have set out in the account of the facts some of the material which points in that direction, including the undertaking in the tender material by the ARU to take the very action that has been taken here against external operators.  This was obviously inserted in order to assure the tenderers of freedom from external competition, thus enabling higher prices to be charged, reflecting itself in higher rewards to the ARU.  It is to be borne in mind that the ARU conducts and controls all on-site and off-site hospitality by its agents. 

86                  However, THG has called no evidence from its own ranks or from the ranks of its consumers, whether primary or secondary.  It is a participant in the market, however it be defined.  It has actually set and charged prices.  It is part of a group of companies involved in corporate hospitality in a number of countries.  I can infer from its documents which are in evidence that it would have directly and indirectly available to it evidence of actual market behaviour by customers and potential customers.  Indeed, with the possible exception of IMG, it would probably have a better relevant knowledge of the realities of this field of commerce than any of the parties who were called.  Such evidence would have been most relevant (Re Tooth (1979) ATPR 40-113 at 18;  Mark Lyons Pty Ltd v Bursill Sportsgear Pty Ltd (1987) 75 ALR 561, 591).  There is no suggestion that it was not available.  I must apply the principle in Jones v Dunkel (1959) 101 CLR 298 and assume that any such evidence would not have assisted THG’s case (see, in similar circumstances, Beaumont J in Trade Practices Commission v Arnotts Ltd (1990) 93 ALR 657 at 671-2).  This, in itself, does not mean that THG must fail.  The Jones v Dunkel inference does not supply positive evidence. However, in this case there is evidence both ways.  The question of market is one of fact and degree, and the evidence which has been called permits an answer either way.  In those circumstances, I regard the Jones v Dunkel inference as a powerful factor against THG’s case.  This is particularly so where the instructions on behalf of THG for the design of the Sergeant survey were narrow, and did not permit a comprehensive investigation of the cross-elasticity of demand.

87                  Therefore, notwithstanding the appeal of much of THG’s argument upon this issue, I find that THG has failed to establish the market pleaded.  It follows that the defence and cross-claim based upon breach of Pt IV of the Act must fail.  Each alleged breach depends upon THG establishing the market as alleged by it.

88                  I should also say that I am not persuaded that the relevant market can be confined to events at Stadium Australia or, indeed, in Sydney.  It is of interest to note that two (and possibly three) out of the four substitute events in the Sergeant survey were interstate.  The evidence of the manner in which rugby hospitality packages are marketed is to the same effect.  Whilst geography is obviously relevant, because of the increased cost in going interstate, the premium nature of the event has special significance for the consumer.  I would have been inclined to include events conducted in Brisbane, Canberra and Melbourne in the relevant market. 

89                  Whether this, in itself, would have been fatal is another matter.  The consequence would be that the applicant has not proved an aspect of the market it pleaded and contended for in evidence and in submission.  On that basis, it could be said that the respondent would be entitled to succeed on the issue.  On the other hand, it is perfectly obvious that the ARU has dominant market power in any market limited to international rugby test matches.  It controls the event and admission to the event.  I cannot perceive any difference for relevant purposes between the  market pleaded and the market I would have found in that respect.  I note that in Queensland Wire the High Court justices saw little difficulty in considering and, indeed, finding, varying markets, and stressed that market definition was a step along the way to the ultimate issue.  There, no matter which market proposed was selected, BHP had market power.  The same may be said here with even greater emphasis if the market is limited to international rugby.  However, in that case, various alternate markets had been pleaded (Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Ltd 16 FCR 50 at 53-4).

COMMON LAW RESTRAINT OF TRADE

90                  It is submitted by the respondent that the applicant’s purpose in introducing the ticket condition was to prevent competitors, such as THG, from gaining access to tickets, and so competing in relation to corporate hospitality.  It is put that this restrains the respondent’s trade and is not reasonable in the public interest, and so is invalid as an unreasonable restraint of trade at common law and pursuant to s 4 of the Restraints of Trade Act 1976 (NSW), referring, inter alia, to Buckley v Tutty (1971) 125 CLR 353.

91                  The response on behalf of the ARU is that:

1.                  The doctrine can have nothing to do with the dealings with ATFS – the condition in that contract is entirely reasonable and legitimate.

2.                  There is no trade of the respondent’s which is restrained, certainly no existing trade (referring to Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd (1968) AC 269 at 298 and 328-9).

3.                  The existence of a restraint such as this is not recognised in the textbooks, eg, Heydon The Restraint of Trade Doctrine (2nd ed) (1999), and does not fall within any of the examples given.

4.                  The ARU has a legitimate commercial interest to protect and there was no inhibition at common law in protecting that interest.  The ARU had no duty to put on the test matches, and assumed significant commercial risks in doing so.  It was entitled to control those who entered the stadium, and was entitled to do what it could to capture all available profit from the event.  Furthermore, it also had a legitimate interest in promoting the sport, and if it forbore profit in order to cater for this duty, by providing tickets cheaply to followers, it had a legitimate interest in ensuring that the tickets were used as intended rather than being “scalped”.

92                  In my opinion, the applicant’s first and last propositions are correct, and are sufficient to dispose of the point.  That the introduction of statutory restrictive practices legislation was required in common law jurisdictions is the consequence of the correctness of these arguments.  The common law restraint of trade doctrine – whilst extended to cover non-party restraints – is not the equivalent of developed anti-trust legislation.  Put another way, THG bears the onus of proving that the restraint is against the public interest.  It is difficult to think of a situation in circumstances such as these where a Pt IV Trade Practices claim would fail, but a claim of common law restraint against public interest would succeed.  In my view, this is not such a case.  The court is not equipped to judge whether keeping a competitor out of a particular aspect of commerce is against the public interest when set against organising a successful and profitable test match series, with tickets for followers kept at a reasonable level, and with profits distributed to help the sport.  The respondent’s defence founded upon this basis fails.

APPLICANT’S CAUSES OF ACTION

93                  I return to the applicant’s causes of action.

Contract

94                  The ARU submits that the 1999 ticket condition was and will be a term of the contract with each initial purchaser and that sufficient steps are being taken to bring the effect of it to the attention of such purchasers.  I agree.  Each form of condition prohibited any such purchaser from entering into the  transactions which were proved in relation to 1999 (to which I shall return) and will prohibit any purchase of tickets by THG or ICM as principal or agent for 2000 and beyond.

95                  The ARU submits that as the ticket is, or is the equivalent of, a bearer instrument, the terms specified in the condition bind the bearer from time to time, and so the respondents are directly susceptible in contract to appropriate injunctions.

96                  The respondents submit there was never an assignment to THG of the burden of any contractual promise contained in the ticket not to use the ticket for a proscribed purpose because:

1.                  The “1999 condition” was not a contractual promise;

2.                  If the “1999 condition” was a contractual promise, the burden of that contractual promise (as distinct from the benefit) is incapable of assignment:  Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85, at 103E;  Halsbury’s Laws of Australia Vol 7, 7.3 [151];

3.                  The contract evidenced by the ticket automatically came to an end upon a proscribed resale so that there was nothing to assign to THG;

4.                  The contract, evidenced by the ticket, contained an express prohibition on assignment for a proscribed purpose so that an assignment for a proscribed purpose was invalid and of no effect to bring ARU into direct contractual relations with THG:  Linden Gardens (supra) at 108F;  Halsbury (supra) at [150].

Because THG was never in a contractual relationship with the ARU there never was a breach of the “1999 condition” by THG as submitted by the ARU.

97                  In response to this it was argued for the ARU that, in the alternative, there was a novation of contract rather than assignment of the burden of the contract.  The ARU impliedly agreed to transfer by the holder on the face of the ticket and was bound to honour the ticket when presented by the purchaser of the ticket, and in consideration of this, the purchaser agreed to be bound by the conditions of the ticket.  The breach of term involved did not automatically bring the contract to an end – rather, it was a breach entitling the ARU to rescind and not permit entry if discovered.   An alternative argument, based upon  Coulls v Bagot’s Executor & Trustee Co Ltd (1967) 119 CLR 460 was put on behalf of the ARU, but without any great enthusiasm.  In response, it was put for THG that there was no new consideration for the novation (or new contract).

98                  Neither counsel cited any authority as to assignment or novation close to the present circumstances, although it is obvious that pre-issued tickets for entry to an event have been around for a very long time.  No doubt the explanation is that usually the promoter will have no means of knowing the title of a person presenting a ticket at the gate, and will, in any event, usually not care provided the ticket has been paid for.  Counsel did not refer to any authorities closely in point as to the result of breach of a term forbidding transfer in like circumstances, although I was referred to Meagher, Gummow & Lehane Equity – Doctrines & Remedies 3^rd ed (1992), pars 691 and 692.

99                  I should say that, in my opinion, on any view, the ARU is entitled to refuse entry to the holder of a ticket which was, or was in the process of being, dealt with in breach of the condition.  The contract is either still on foot according to its terms (as Mr Gleeson submits) or was terminated on breach (as Mr Palmer QC submits).  In neither event is the holder entitled to entry.

100               With some hesitation, because of the lack of authority cited to me, I conclude that the applicant’s submission on the contract issue is to be preferred, and the 1999 ticket condition binds each holder of the ticket.  The ticket conditions impliedly envisage transferability – the clause in question makes the point.  In those circumstances, the law would normally favour a result which would give a bona fide transferee of a ticket a contractual right of entry rather than a “grace and favour” arrangement.  Furthermore, the law does not usually favour self-executing provisions and there is no sensible reason why the ARU would have framed a term with that result here as it would defeat its objective.  The analysis by the authors of Equity – Doctrines & Remedies (supra), in my opinion, favours the effectiveness of the assignment notwithstanding breach.  I do not regard the effect of the transfer of tickets in these circumstances as assigning the burden of a contract – the holder of the ticket receives the benefit of the promise to admit to the stadium.  I do not regard the obligation to comply with the condition here as being a burden in the relevant sense.  If I am wrong in this, then the burden is adequate consideration to support a novation of contract.

Inducement of breach

101               This covers both the ticket condition and the ATFS contract.  I shall deal with the ticket condition first.

Ticket condition

102               The ARU says that it is a straightforward case of the respondents offering to and purchasing tickets from purchasers of tickets from the ARU contrary to the express terms and conditions of the ticket known to it.

103               The first and second respondents submit, in answer to this:

1.         The contract between the ARU and the purchaser of a ticket containing the “1999 condition” does not contain a contractual promise by the purchaser not to resell at a premium or use the ticket for advertising, etc.

2.         The “1999 condition” is a condition subsequent to the continuation of the obligation of  the ARU to perform the contract by admitting the purchaser to the event. If the ticket purchaser re-sells or uses the ticket for a proscribed purpose, the contract expressly states what the only consequence will be:  the contract is automatically at an end:  “the bearer will be denied admission”.

3.                  It is unreasonable to construe the “1999 condition” as a promise by the purchaser, breach of which renders the purchaser liable not only to automatic termination of the contract but also to damages for breach of contract.  That would not be how a lay purchaser of a ticket would understand “condition”:  FL Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 236 at 250F-251E;  256G-257B.

4.         As there was no contractual promise by a purchaser of a ticket not to use it for a proscribed purpose, THG cannot be liable in tort for procuring a breach of contract by any such purchaser in inducing that person to on-sell to THG.

104               I have already held that the 1999 ticket condition bound all holders of a ticket and that it follows that the condition will bind all holders of tickets issued or to be issued in this form.  I have rejected THG’s arguments to the contrary which are, in essence, repeated here.

105               If this analysis is correct, then the sale of any ticket at a premium would be a breach of contract, and purchasing a ticket at a premium, with knowledge of the condition, would be inducing breach of contract by the seller.  An injunction should go to prohibit that conduct.  In my opinion, THG would be caught, even if purchasing as an agent for an undisclosed principal.  The party responsible does not have to be a principal party to the breach (DC Thomson & Co Ltd v Deakin [1952] Ch 646, 677-8, 694-7;  Merkur Island Shipping Corp v Laughton [1983] 2 AC 570, 607-8;  Daily Mirror Newspapers Ltd v Gardner [1968] 2 QB 762, 781).

106               What of a ticket purchased, but not at a premium?  It cannot be used for advertising, promotion or other commercial purposes.  The provision of corporate hospitality comes comfortably within that description.  Thus, to sell, or provide, as agent or otherwise, tickets to purchasers of corporate hospitality for that purpose would also be to induce breach of contract.  That conduct can, and should, be restrained.  Appropriate injunctions will be made.

107               The applicant is entitled to damages for the 1999 breaches.  The applicant goes further and claims both restitutionary damages and exemplary damages.  I shall return to this after considering the ATFS contract.  No claim in relation to the Wimbledon transaction was pressed.

ATFS contract

Applicant’s case

108               The applicant submitted that ATFS breached cl 3.11 by entering into the agreement with ICM on 3 March 1999 because:

1.         Clause 3.11 of the ATFS/ARU contract contained a general prohibition upon ATFS reselling the tickets unless it fell within the particular permitted purpose of a travel package which was not a sale by wholesale;

2.         Some of the key indicia of a wholesale sale are either a sale in bulk or a sale to a person who is not an end user:  Woolworths Ltd v Campbells Cash & Carry Pty Ltd (1996) 92 LGERA 244 (NSW CA) at 247.

3.                  The sale to ICM under the ATFS/ICM contract satisfied both these criteria for a wholesale sale.  First it was a sale in bulk (200 tickets for the Centenary Test and 450 tickets for the Bledisloe Cup). Second ICM was not an end user.

4.                  In addition, the contract between ATFS and ICM was not for sale as part of a travel package.  The use of the expression “travel packages” within the contract is not of itself determinative.  The sale was not to a person wishing to travel to the game.  There was no travel component identified in the contract (or even intended by ICM).

109               It is then submitted that both ICM and THG committed the tort of inducing ATFS to breach the contract contained in clause 3.11.  The conduct constituting the inducement, and the necessary knowledge and intent, can be summarised as follows:

1.                  On 24 December 1998 the solicitors for the ARU wrote to THG informing it that all tickets to rugby test matches are issued to the purchaser by the ARU on a condition including the words “this ticket may not be resold at a premium or for commercial purposes without the prior written consent of the ARU”.  Thus THG knew when dealing with ATFS that it was not permitted to resell at a premium or for commercial purposes unless that was specifically allowed in the contract between the ARU and ATFS;

2.                  THG on 12 February 1999 specified ticket requirements to ATFS for the Centenary Test and Bledisloe Cup;

3.                  At a meeting on 26 February 1999 Mr Whan informed Mr Rees that it was a condition of ATFS’s status as a licensed travel agent that it was not under any circumstances to sell rugby tickets to THG or to hospitality groups generally;  rugby tickets could only be sold with travel or accommodation – not on their own.

4.                  At the meeting Mr Whan handed Mr Rees copies of flyers like those at Annexure G to Mr Whan’s affidavit.  In each case the travel package included hotel accommodation and optional additional flight bookings.  Prices for the Centenary Test commenced at $210 per person for the cheapest hotel, going up to $285.  Prices for the Bledisloe Cup ranged between $230 and $300.  The single supplement in each case commenced at $60 or $70 respectively.  Mr Whan says that he never received any further communication from Mr Rees in relation to the travel packages so described on the flyers.

5.                  Mr Whan says that Mr Rees, at this same meeting, went on to say:

                        “We have another company which is not associated with THG and which is not a hospitality company which can purchase packages.”

Mr Rees described the company as a marketing company.  He said the tickets would be in the order of the number set out in the THG fax of 12 February.  He expected the travel component to be minor in dollar terms, for example, an amount to cover a short coach journey from a nearby city such as Newcastle or Wollongong.  The price was then agreed of $165 for the Centenary Test and $180 for the Bledisloe Cup.

6.                  In making the offer to purchase tickets in the order of the number set out in the 12 February 1999 fax, at the prices of $165 and $180 respectively, Mr Rees was providing an inducement to ATFS to breach its contract.  Contrary to his statements, Mr Rees knew that ICM was associated with THG and that the purpose of its purchase was to enable THG to fulfil its obligations to provide corporate hospitality at the rugby union.  He knew, based on Mr Whan’s description of ATFS’s obligations to the ARU, that Whan would in all probability be in breach of those obligations by making the contract with ICM.  By telling lies about ICM’s association with THG and the purpose of the purchase he quite intentionally induced Mr Whan to breach his obligations to the ARU;

7.                  Mr Rees admitted in earlier cross examination [which was tendered] that what he needed was tickets and to the best of his knowledge nothing else;  he did not want to have travel packages;

8.                  The next step in the inducement was the signing of the ATFS/ICM contract on 3 March 1999 followed by ICM making the payment of $114,000 to ATFS on 4 March 1999.

9.                  THG had knowledge of the ARU’s claim in the form of the Application and affidavits filed on 16 April 1999;

10.              The next inducement was the demand by ICM to ATFS on 17 May 1999 for delivery of tickets pursuant to the contract and a further demand by THG on 20 May 1999 containing a threat to refer the matter to lawyers.  It shocked and astonished Mr Whan that THG was seeking to enforce the contract;

11.              The further step in the inducement was accepting delivery of the tickets from Mr Whan on 24 May 1999;

12.              No travel component was ever requested by ICM or THG.

Respondents case

110               The only relevant contract between the ARU and ATFS was entered into on 2 March 1999.  The only relevant prohibition in the ATFS contract is cl 3.11.  That clause only prohibits selling a match ticket which is not part of a travel package.  Clause 3.11 does not prohibit ATFS from selling rugby tickets “to hospitality groups generally”, nor does it impose upon ATFS as “a condition of ATFS’ status as a Licensed Travel Agent that it not under any circumstances sell rugby tickets to THG”, as Mr Whan wrongly informed Mr Rees on 26 February 1999, before any contract between the ARU and ATFS had come into existence.

111               Clause 3.11 is concerned only with a prohibition on selling tickets alone.  It prohibits a sale of a ticket without a travel package and, by way of amplification, prohibits a sale of a ticket alone as a wholesale product.  It prohibits an on-sale of tickets alone by any means.  The clause nowhere states that travel packages (which necessarily include tickets) must not be sold as a wholesale product.  The reason is obvious:  a significant number of travel packages would be sold to groups, eg, clubs or other social organisations, who would want to travel together and would want to purchase in bulk to on-sell to their members.  Clause 3.11 is directed to preventing traffic in tickets alone, not to preventing on-sale of travel packages.

112               On 26 February 1999  Mr Rees agreed on behalf of ICM to buy rugby tickets from ATFS as part of travel packages.  He said the travel component would be minor, but Mr Whan still calculated the price of the package by including an amount for the travel component and Mr Rees agreed.

113               Pursuant to the oral agreement on 26 February 1999, ATFS entered into a written agreement with ICM on 3 March 1999.  That agreement was for the supply of “450 travel packages to the Bledisloe Cup” and “200 travel packages to the Centenary Test”.  There is no evidence whatsoever that at the time ATFS entered into this agreement it believed that it was not genuinely agreeing to supply the tickets as part of travel packages or believed that ICM did not intend to avail itself of the travel component of the packages.  Even if at the time of the contract ICM had the undisclosed intention not to use the travel part of the travel packages, that does not convert the contract from a contract to sell travel packages into a contract to sell tickets alone.

114               The entry by ATFS into the agreement with ICM was therefore not in breach of cl 3.11 of the ARU agreement.

115               Mr Whan delivered the Centenary Test tickets to ICM on 24 May 1999.  He was concerned whether ICM and THG were related, but that concern arose from his mistaken belief that the ATFS contract with the ARU prohibited a sale of tickets to THG under any circumstances.  There is no evidence whatsoever that when Mr Whan delivered the tickets on 24 May he knew or believed that the tickets were not part of genuine travel packages sold in conformity with cl 3.11.  He only became aware that ICM did not require any travel arrangements some time after 7 June 1999.

116               The result is that ATFS genuinely contracted to sell travel packages to ICM in conformity with cl 3.11 of its contract with the ARU.  The fact that ICM after delivery of the tickets unilaterally chose to discard the travel part of the packages it had contracted to buy and to pay for does not retrospectively turn ATFS’s contract with ICM to supply travel packages into a contract to supply tickets alone and thereby render ATFS in breach of its contract with the ARU.

117               As ATFS did not commit a breach of contract in supplying the Centenary Test tickets to ICM, neither ICM nor THG can be liable for inducing a breach of contract as submitted in par 8(a) and (b) of the applicant’s submissions.

118               THG did not itself breach the contract between ARU and ATFS, as submitted in par 8(c) of the applicant’s submissions because it was never a party to that contract.  There was no other contract between THG and the ARU.

119               Further, if the true construction of cl 3.11 is that it prevents the sale of travel packages as a wholesale product, the case pleaded by the applicant must still fail on the undisputed facts, for the following reasons:

“To establish [the tort of inducing breach of contract] it is not sufficient to prove that a third party has in fact done something which had the effect of inducing a party to a contract to break it.  It must be proved that the breach was knowingly and intentionally procured … It is necessary to establish that the third party knew of the contract, knew that the doing of a particular act by one of the parties to it would be a breach of it, and with that knowledge procured the party to do the act.”:    Independent Oil Industries Ltd v Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 414-15, quoted with approval Allstate Life Insurance Co v ANZ Banking Group Ltd (1995) ALR 469 at 483.

“In my opinion, the authorities establish conclusively that the gravamen of the tort is intention.  Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of a tort, it is in fact an aspect of intention.  The requirement that the alleged tortfeasor have `sufficient knowledge of the contract’ is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights.  Both this intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the `actual’ or `subjective’ state of mind of the alleged tortfeasor”:   Allstate (supra) at 484 per Lindgren J, in whose judgment the other members of the Court agreed.

120               The applicant pleads that:

1.                  The first and second respondents “were aware of Clause 3.11” of the ATFS contract with the ARU.

2.                  The first respondent knew that by purchasing the tickets from ICM or ATFS it induced a breach of cl 3.11 of the contract between ATFS and the ARU.

3.                  The first respondent intended to interfere with the contract between ATFS and the ARU.

121               The only evidence as to the first and second respondents’ alleged knowledge of cl 3.11 is the undisputed evidence of Mr Whan as to what he said to Mr Rees on 26 February 1999:

1.                  He did not show Mr Rees cl 3.11 – the ATFS agreement with the ARU had not yet come into existence.

2.                  He did not give Mr Rees a correct summary of cl 3.11.

3.                  He, critically, did not once mention the word “wholesale” or tell Mr Rees that the ATFS contract prevented the wholesale of travel packages.

122               Mr Whan agreed with Mr Rees to sell travel packages wholesale to ICM, expressly not tickets alone, after Mr Whan had expressly and emphatically drawn to Mr Rees’ attention what Mr Whan believed to be the restrictions in ATFS’s future contract with the ARU, that is, the sale of tickets alone to THG or hospitality groups.  By agreeing to sell travel packages to ICM, Mr Whan was clearly representing to Mr Rees that, according to Mr Whan’s understanding, wholesale selling of travel packages to ICM would not be in breach of the terms of the contract which he had just warned Mr Rees about.

123               There is no evidence from which it could be inferred that Mr Rees knew that Mr Whan’s explanation of the future cl 3.11 was inaccurate and that what Mr Whan was proposing in the wholesale of travel packages to ICM would be in breach of a contract with the ARU which Mr Rees had never seen.  If Mr Rees had no such knowledge, neither ICM nor THG could have that knowledge, nor could they have the actual intention to procure a breach of cl 3.11.

Decision

124               In my view, the construction of cl 3.11 put forward by the first and second respondents is too literal, and does not take account of the context.  The contract as a whole was designed to limit the role of ATFS to retail dealings, ie, dealings with actual customers who were interested in a travel package, and cl 3.11 should be construed against that background.  In my view, no matter what arguments may have arisen in other situations, Mr Rees did not present to Mr Whan as a retail customer, and neither he nor ICM were a retail customer. 

125               I am satisfied that Mr Rees had sufficient knowledge of the substance of the restriction.  It is clear that THG were acutely aware of the ARU’s efforts to frame contract conditions so as to exclude it, hence the approach to ATFS.  Mr Rees did not give evidence.  He no doubt did not inquire about the contract because he knew or feared the answer.  Precise knowledge is not required (JT Stratford & Son Ltd v Lindley [1965] AC 269, 332-3).  Constructive knowledge of the terms of a contract is sufficient, so that a respondent may be liable if he or she recklessly disregards the means of ascertaining the terms of the contract (Northern Territory of Australia v Mengel (1995) 185 CLR 307, 342). In my opinion, ICM induced a breach of contract by ATFS, participated in by THG.   As I have said, even if ICM and THG (or either) were acting as agents for undisclosed principals, my conclusion would not change.

126               This finding supports injunctive relief.  I now turn to monetary relief.

MONETARY RELIEF

Damages

127               The difficulty confronting the ARU is that there is no basis upon which I can find that it suffered any loss by reason of any breach.  All tickets wrongly acquired or used had been paid for at the asking price.  It would be speculation to find that any other loss had been suffered, and quantification of it would be impossible.

Account of profits

128               Mr Gleeson put an argument to suggest that the ARU is entitled to an account of profits made by THG as a result of the breach.  In relation to breach of contract, he said that I should follow the lead of the obiter dicta of the United Kingdom Court of Appeal in Attorney General v Blake [1998] 2 WLR 805 (now on appeal to the House of Lords) and referred to passages in the judgment of Deane J and Gaudron J in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 (145-6 and 174-7).  Such a radical change in the received wisdom as to the common law of Australia is not for a single judge.  Even if the House of Lords were to approve what was said on the issue in the Court of Appeal, I would have significant reservations about adopting it.  In any event, I do not think it appropriate to hold up this judgment until the House of Lords decision is available. 

129               Mr Gleeson submits that the tort of inducing breach of contract is appropriate for the award of restitutionary damages, and referred to Mason & Carter, Restitution Law in Australia, 1995, pars 1520, 1612 and 1616, and Lightly v Clouston (1808) 1 Taunt 112, 127 ER 774;  Foster v Stewart (1814) 3 M&S 191, 105 ER 582;  Phillips v Homfray (1883) 24 ChD 439 at 462;  and Federal Sugar Refining Co v United States Equalisation Board 268 F #575 (DC, NY, 1920).  I do not read any of these authorities as providing a foundation for the proposition that damages for the tort of inducing breach of contract can include profits earned by the wrongdoer as a result of the tort which would not have been earned by the plaintiff absent the tort.  The remedy of account of profits in relation to the tort of passing off is, perhaps, a more promising analogy.  The history is sketched by Windeyer J in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 33-4 and, in rather more detail, by Gummow J in 10^th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 318-323.  If those principles are applicable in a wider area, then the facts here might be sufficient to justify the grant of an account of profits.  However, passing off has been regarded as sui juris, and there are, as Windeyer J points out, proprietary overtones.  I do not think that I have a proper basis to transpose the remedy to this situation.

Exemplary damages

130               Exemplary damages are given only in cases of conscious wrongdoing in contumelious disregard of another’s rights (per Knox CJ in Whitfeld v De Lauret & Co Ltd (1920) 29 CLR 71 at 79) are punitive for reprehensible conduct and are awarded as a deterrent (per Isaacs J in Whitfeld (supra) at 81).  See also Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 per Taylor J at 129-130 and Windeyer J at 149.  In XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1984-5) 155 CLR 448 at 471-2 Brennan J adopted Lord Diplock’s description of the social purpose to be served by an award of exemplary damages as “to teach a wrongdoer that tort does not pay”, and stressed the importance of the deterrent effect upon the wrongdoer.  The topic has again been discussed in recent times by the High Court in Gray v Motor Accident Commission (1998) 196 CLR 1, although the aspects which were controversial in that case do not arise here.  The authorities were also reviewed by the Full Court in Sanders v Snell (1997) 143 ALR 426 with particular reference to quantum.  One aspect of the authorities is the divergence between the High Court and the House of Lords upon this issue following the limitations upon the remedy imposed by the decision of the latter in Rookes v Barnard [1964] AC 1129.  It should be recalled, however, that one of the three special cases reserved by the House of Lords appropriate for the award of exemplary damages was “where the defendant’s conduct had been calculated to make a profit which might well exceed the compensation payable to the plaintiff” (Rookes (supra) at 1226-7).  The remedy applies to this tort.  Indeed, Whitfeld was such a case, and Sanders v Snell (supra) might have been.

131               The breaches were a conscious and planned response to the ARU efforts to shut THG out of access to the stadium, in full knowledge that the ARU was asserting that the ticket conditions and other contractual provisions were effective to do so.  It was also obvious that it would be very difficult for the ARU to detect the acquisition of tickets by THG, or, indeed, to ascertain which persons presenting at the gate were using tickets supplied by THG.  It also must have been obvious that, even if detected, the ARU would have difficulty proving damages, as the tickets had been paid for at the asking price.

132               There is no evidence that any particular justification, including Pt IV, was raised prior to action.  If there had been an honest belief that the conduct would be protected because of the operation of Pt IV (or for any other reason, for that matter), that claim could have been made in a timely fashion, and proceedings to test the position commenced by THG and ICM accordingly.  Instead, they chose clandestine self-help.  They also chose to contest the proceedings without calling evidence from their own witnesses to establish bona fides.

133               THG is part of a multinational group with a substantial business in the pertinent field of commerce.  By not choosing to tender for off-site hospitality, it has decided to remain outside the ARU system, which is underpinned by contracts of various kinds.  There is plainly a risk of further breaches.   I am not satisfied that the injunctions to be granted avoid the need for a deterrent.  Breaches of those injunctions will be difficult to detect, and contempt of court is not easily proved.  The result of this judgment is that there will be no award of damages or account of profits.  The ARU contends that THG would have made a profit of more than $200,000 by using the tickets acquired.  This was based upon a fairly broad-brush assessment.  If the profits can be retained (whatever they may have been), THG may well decide to chance the odds again, particularly as it is at a competitive disadvantage if it cannot offer these packages.  Whilst exemplary damages are exceptional in the sense discussed in Gray v Motor Accident Commission (supra), in my view the present case has those unusual features which call for such an award.   The question is what award is necessary to have a deterrent effect – what will be sufficient to make THG smart so that it will learn that tort does not pay (to adapt Brennan J in XL Petroleum (supra)).  Taking into account the matters to which I have referred, I assess that amount to be $100,000.

SECTION 52

Applicant’s contentions

134               The representations relied upon were made by THG in three main ways:

1.                  The actual contracts for sale of rugby hospitality packages with customers made between March 1998 and April 1999 for the Centenary Test and the Bledisloe Cup.

2.                  A series of promotional faxes sent to various potential clients especially around December 1998.

3.                  The flyer sent to various clients.

135               As to the representations contained in the contracts, they follow this format:

1.                  Between March 1998 and 15 September 1998 the nature of the representation was that reserved grandstand seats could be provided.

2.                  Commencing on 23 September 1998 with Pepsi Cola Bottlers Australia, and repeated on numerous occasions thereafter, were representations that the ten reserved grandstand seats could be provided on a guaranteed basis in a block between the 22 metre lines.

3.                  In the particular case of Smith & Nephew (10 December 1998), the representation was that the seats would be blocked between the 22 metre lines in the lower level;  this coincided with the faxes referred to above.

4.                  Thereafter, the representations continued until and including 29 January 1999, on the basis that the seats would be blocked between the 22 metre lines but without a specific representation that they would be in the lower level.

5.                  From 3 February 1999 most of the representations were on the basis that the seats were blocked grandstand seats but without any representation concerning the 22 metre line.

136               The representations were misleading and deceptive in the following respects:

1.                  In no instance where the representation in the contract was made did THG have any tickets which could fulfil the representation.  The first occasion upon which any tickets were acquired was 16 April 1999, with the 48 Cameron Jackson tickets for the Bledisloe Cup.  This was after the making of the last of the contracts.

2.                  Except for the final five contracts, in no instance at the time the representations contained in the contracts were made did THG have any contractual arrangements in place which would or might enable it to acquire tickets.  In respect to the last five contracts, the exception to this was that the ICM/ATFS contract had now been entered.  However, the entry of that contract was a tortious act by ICM which was liable to be restrained by injunction.  There is no evidence of any actual arrangement whereby THG was entitled to whatever rights ICM may have under this contract.

3.                  In respect to all contracts entered between 1 March 1998 and 18 December 1998, THG has led no evidence to show that it had any reasonable basis for a belief that it would, prior to the matches, acquire the necessary tickets.  That is, THG has not shown any basis for a belief that, when tickets were ultimately issued, they would be lawfully transferable to THG for the purposes of bundling them with hospitality.

4.                  In respect to all contracts entered between 5 January 1999 and 13 April 1999, THG was on notice of the condition which was to be placed on the tickets and therefore on notice that it could not fulfil its obligations unless it could establish in court that the condition was invalid.  It failed to qualify the representations made in the contracts during this period by indicating to the purchaser that a legal cloud hung over its ability to provide tickets (leaving aside whether it could obtain them in the first place).

5.                  In respect of those contracts identified above, where there was a specific representation that the seats were guaranteed between the 22  metre lines, THG has produced no evidence of any reasonable basis for a belief that it would be able to obtain such tickets at the time it made the representations.  Mr Thorburn’s evidence shows the only tickets which might have been available (ie, Ticketek) even if between the 22 metre lines, would be at the far back of the stadium.

6.                  The most heinous example is the Smith & Nephew contract, where the representation was that the seats would be between the 22 metre lines in the lower level.  THG acknowledged in subsequent correspondence that this representation should not have been made.

137               The representations contained in the contracts were made on a continuing basis.  The representations remained operative at all times unless and until THG informed its customers that it was not able to deliver seats as per those contracts.  On the following occasions, THG declined to make the necessary qualifications to its representations:

1.                  After receiving notice of the ARU’s assertion on 24 December 1999.

2.                  After receiving notice of the precise terms of the condition to be used for the 1999 season in the letter of 12 March 1999.

3.                  After receipt of the application and affidavits for these proceedings, which clearly set out the ARU’s case, on 16 April 1999.

138               If the representations are construed as representations of existing fact, ie, THG’s ability to provide the tickets which it was guaranteeing, then for the reasons set out above they were misleading or deceptive.  If the representations are construed as going to the future, then THG has failed to discharge the onus imposed on it under s 51A of the Trade Practices Act to prove a reasonable basis for its representations.

139               The second category of the representations is in the promotional faxes.  They contain the same vices, in particular the representation that seats could be provided between the 22 metre lines.  In many cases, the representation was that seats could be provided in the lower level.

140               The third category of representations is the THG flyer, which represented that THG could provide “Reserved Grandstand Seating” and “Corporate Level Tickets”.  They contain similar vices.

141               Inter partes undertakings were dragged out of THG with great reluctance on its part, and the various statements it made from time to time as to the representations it was making to clients were progressively proved false, requiring further undertakings.

142               THG did not endeavour to correct its misrepresentations.  Indeed, when pressed by its clients, it obfuscated.

143               It should be inferred that an essential element of the marketing which THG has done is to sell its packages a long time before the event (ie, often more than twelve months);  providing guarantees of a quality of seating, without there being actual tickets, contractual entitlements, or any other reasonable basis for a belief that the guarantees can be met, and notwithstanding conditions on tickets that may prevent their conduct.

144               In respect of the Centenary Test, THG was able, in the end, to meet the guarantees given of seats between the 22 metre lines.  This was only because ATFS received an upgrade of seats which it passed on to THG.  Had the ARU known that ATFS was going to breach its contract, this delivery of seats to THG would have been restrained.  Thus, THG was saved from the final consequences of its misleading conduct only because the wrongdoing of it and ATFS was concealed from the ARU at the time.

145               In respect of the Bledisloe Cup, approximately 210 THG customers did not receive seats at all.  Of those that received seats, none were between the 22 metre lines and in the lower level.  Approximately 40 seats were between the 22 metre lines, but were right up the back, which rendered the representation, although literally true in substance, false.  THG was unable to meet the following promises:

1.                  114 seats between the 22 metre lines.

2.                  10 seats between the 22 metre lines and in the lower levels.

3.                  210 seats at all.

Respondents’ contentions

146               There was no representation that THG actually had tickets at the time of selling the packages.  The only representation was that the relevant seats could be provided in time for the event.

147               There was no representation that at the time of selling the packages THG had any contractual arrangement which would enable it to acquire tickets.  There was simply a representation that the tickets could be provided, not a representation as to the means of providing the tickets.  Further, in relation to the last five contracts, ICM had a contract with ATFS for the supply of travel packages.  That contract had not been entered into in breach of ATFS’s contract with the ARU for the reasons given above (see par [111-126]).

148               That THG had a reasonable belief that it could acquire the necessary tickets is self-evident from the fact that it did acquire the tickets for the Centenary Test and those tickets were between the 22 metre lines.  Further, THG did acquire seats for the Bledisloe Cup.

149               The fact that THG could not obtain all the tickets of the quality it promised was due to ARU’s insistence on a ticket restriction which is in breach of Pt IV of the Trade Practices Act.  The ARU cannot rely on its own illegal conduct in preventing THG from fulfilling its promises as the basis for seeking remedies for the failure of those promises.

150               THG could not guarantee seats between the 22 metre lines in the lower level, but it has acknowledged this.  The remedy for any misrepresentation to this effect is not one to which the ARU has a claim.  Smith & Nephew might have had a claim, but they have not made one.

Section 52 decision

151               I construe all of THG’s statements as to the availability of tickets to be statements as to the future, ie, what would happen when the tickets were required.  THG has called no evidence to discharge the onus imposed upon it by virtue of s 51A of the Act.  The conclusion required by that section is far from a self-evident truth in the present case.  If the statements were statements of existing fact, then they were undoubtedly misleading.  Sufficient tickets were not held or contracted either generally or in the positions advertised.  The applicant’s case is established as to the representations concerning tickets.  The other representations pleaded were not the subject of argument.

152               The issue of relief is more controversial.  The fact that breach has been established entitles the ARU to any damages it can prove were sustained by the breach, but, as I have held, none can be established.  Breach does not necessarily establish a case for the wide ranging injunctive relief which is sought, which would prevent THG from offering hospitality packages to any rugby test.  I have no doubt that THG, unless restrained, will seek to offer such packages, and will take such measures as it can to acquire tickets.  I also have no doubt that the condition (or perhaps a more restrictive condition) will continue to be imposed by the ARU.  However, there is a question as to whether there is a legitimate role for s 80 orders in this case.  The making of an order pursuant to s 80 is discretionary.  The purpose of s 52 is not the enforcement of contractual obligations or the prevention of other torts.  It is designed to protect consumers, not the ARU and its commercial objectives.  The risk to the consumers is that no ticket will be forthcoming, or (much more remotely) that a ticket holder will be refused entry to the ground.  I cannot regard the latter as having sufficient practical likelihood to justify an order pursuant to s 80.  If that transpired, the client and the ACCC may well have a good action against THG.  The same can be said of the no ticket possibility. 

153               I am not disposed to make any order based on s 52 alone going beyond restraining THG (and associated entities) from representing that tickets or admission to the ground are guaranteed.  I have assumed that an order as to distinguishing the packages offered along the lines of the interlocutory order would be agreed if pressed.  To go further, and prohibit the offering of packages at all, would be to go beyond appropriate s 52 relief, and make a consumer protection section the handmaiden of contract.  In saying this, I should not be taken to be expressing any approval of the offer of packages by THG. 

154               I will stand the matter over for a short period to enable the parties to bring in short minutes of order which would give effect to these reasons which should deal also with costs and with the fourth respondent.  The parties can then also draw my attention to any necessary matter I have overlooked.

REASONS FOR INTERLOCUTORY ORDERS

155               On the afternoon of the first day of the trial, counsel for the first and second respondents indicated that he would be seeking to adduce oral evidence from a number of primary and secondary consumers, namely, those who had purchased hospitality packages and those who had been invited to attend the event.  Counsel for the applicant objected to this course being taken without leave being sought from the Court.  It was then arranged that the first and second respondents would file a notice of motion and affidavits in support.  That was done.  On the following day I embarked upon the hearing of a notice of motion supported by an affidavit of Mr Harrowell, solicitor for the first and second respondents.  I refused the applicant leave to cross-examine for reasons which are recorded in the transcript.  I commenced hearing addresses, during which further evidence on the motion was foreshadowed.  I had ruled that the effect of the case management of the matter, and the directions which had been given, was such that leave was required before oral evidence of the kind foreshadowed could be led at the trial.

156               On the following day, a further affidavit of Mr Harrowell was read, some further oral evidence was led from him and I permitted limited cross-examination of him.  I then received submissions from counsel on either side, including some written submissions from Mr Gleeson.  I considered the matter overnight, and on 23 March, made a number of orders.  At the time, I indicated to the parties that I would deliver reasons with the final judgment, but mentioned the factors which had principally weighed on my mind in making the orders that I did. 

157               Having reviewed the relevant pages of the transcript, in conjunction with the motion, affidavits, written submissions and exhibits, I think that, except as to one matter, my reasoning was adequately disclosed at the time.  Re-stating the position now would be merely to put into longer and more grammatical form what is already clear from the transcript.  What I should say a little more about is the view I expressed that, even if the application for leave had been made in a timely fashion, it should not have been granted as it would have involved an unwarranted exercise by the Court of compulsory powers in the particular circumstances of the case.  Although my decision did not turn upon this point, it raises a question of general importance.

158               As is apparent from the principal judgment, the first and second respondents are  involved in the provision of various types of corporate hospitality packages, including those to rugby international test matches.  It sold packages to primary consumers who, in turn, invited secondary consumers along.  When Sackville J considered the application for interlocutory relief (Australian Rugby Union Ltd v Hospitality Group Pty Ltd [1999] FCA 1136), his Honour found that there was not a serious question to be tried concerning the existence of the hospitality market supported by Professor Bewley, inter alia, because that opinion was insufficiently supported by primary evidence of the assumptions that underlay his opinion, and that, in particular, there was no cogent evidence that primary consumers were insensitive to increases in price and reductions in quality.  At that stage, there was no survey evidence and no direct evidence from consumers.  Thereafter, the first and second respondents proposed to conduct a survey.  As part of the interlocutory regime, by consent, the Court directed that:

“The applicant give further discovery by verified list of documents which record the persons or entities (“bodies”) which or who received corporate hospitality at matches conducted by the applicant at Stadium Australia since 1 January 1999, together with the contact person and contact telephone number in relation to such bodies, such list to be served by 30 November 1999 with inspection allowed immediately thereafter.”

159               Whilst there is an issue as to whether the further discovery was limited to use for the purpose of the survey or not, that was plainly the primary purpose of the consent direction.  It was, in fact, availed of and was utilised for the purposes of what became the Sergeant survey. The first and second respondents also subpoenaed persons and entities identified on the verified list for documents, with the purpose of obtaining from the recipient (the primary consumer) the identity of those who received invitations to the hospitality (the secondary consumers).  On return of the various subpoenae, the documents were inspected and any identified secondary consumers were noted and, in turn, subpoenaed either to give evidence (if the identity of the person was known) or to produce documents (if the identity of the person was not known), with a view to ascertaining the identity of the individual and, ultimately, subpoenaing him or her to give evidence.  As a result of this process, a number of primary and secondary consumers, or individuals representing primary and secondary consumers, were identified and were proposed to be called.  Mr Palmer QC made it clear that he was not able to say what the effect of the evidence from any of those persons would be.

160               In my opinion, this process involved use of the subpoena power which should not be permitted.  The result was to subject a large number of organisations and people with no interest in the proceedings, to considerable disruption and expense.  It was submitted that the Federal Court Rules which provide for recompense is an answer to this.  I disagree.  It may be that where the use of a subpoena is appropriate it can be taken that the Court scale of remuneration is sufficient recompense for performing the relevant duty.  This begs the question, however, as to whether persons and organisations should be disrupted in this way at all.  Next, and perhaps more importantly, confidential business, and perhaps personal, affairs of a large number of persons have been brought to Court for scrutiny by persons with absolutely no relevant connection with those persons, and it was proposed that they be publicly questioned about those matters.  Why people take hospitality packages, who they invite and why, the relationships between the persons involved, and so on, are simply none of the business of the parties to this litigation.  Here, the applicant and the first two respondents are engaged in competitive, commercial activity.  The case is, at root, about money.  For their own purposes, the first and second respondents wish to contend that restrictions sought to be imposed by the ARU are in breach of the Trade Practices Act.  They pleaded that case.  Sackville J held that they had no proper basis for doing so, at least in relation to the market which became the relevant market at the trial.  It sought to cure the defect not by calling evidence from its own officers, or from its own clients or from their invitees, but, rather, used the compulsory processes of the Court to conduct a trawl to locate the identity of parties indirectly associated with the other side.  In my opinion, this was truly to conduct an impermissible fishing expedition and to utilise a barrage of subpoenae for that purpose.

161               It was put that if any third party was unduly affected or oppressed by a subpoena, then application could be made to set it aside.  In my opinion, this is a quite inadequate answer.   A subpoena is an order of the Court directed to a party.  The natural tendency of most recipients is to obey an order of the Court.  This tendency is, of course, very much accentuated when it is appreciated that to seek to set a subpoena aside would, in most cases, cost more in direct and indirect costs than producing the documents.  Furthermore, the third party is in no position to judge the cogency or relevance of the documents to the issues before the Court. 

162               Mr Palmer QC submitted, on behalf of the first and second respondents, that interference with third parties is simply an unfortunate by-product of the right of a litigant to obtain and lead relevant evidence by any means lawfully available to it, this, in turn, reflecting the public interest in settling disputes by curial process, with all available relevant evidence tendered.  It was put that a party has a right to lead admissible evidence, and that a court in a civil case has no discretion to reject it.  That being so, a party can avail itself of all means to bring that evidence to the court.

163               It is no doubt generally correct that if a party at a civil trial tenders admissible evidence then, subject to any statutory discretion (cf Evidence Act 1995 (Cth) s 135), a judge has no discretion to reject it.  It does not follow that a party will always be allowed to tender all the evidence that it desires.  The essence of case management, both before and at trial, is that the general demands of justice may result in limits (including time limits) being placed upon the presentation of evidence, including the form of that evidence.  In a case such as the present, where evidence is by way of affidavit, and comprehensive procedural directions are given, a party simply cannot present oral evidence at trial without leave.

164               In any event, it does not follow that all of the compulsory processes of court are available on demand to a party to ascertain and bring such evidence to the trial.  Discovery and interrogatories, for example, are discretionary.  The present form of O 27 r 6 and the usual practice under it may give encouragement to the notion that the issue of a subpoena is an unrestricted right of a party.  However, that rule makes the duty of the Registrar to issue a subpoena on request subject to:

1.                  A contrary order of the Court.

2.                  Reference of the request to a judge for directions when the Registrar is of the opinion that the issue of the subpoena may be an abuse of the process of the Court or be frivolous or vexatious.

In truth, a subpoena is an ex parte order of the Court, and in no sense does a party have a right to the issue of a subpoena.  Apart from the express reservations in O 27 r 6, the permissive terms of O 27 r 2 and the terms of O 27 r 9 underline this.  I would not read down the latter rule in any way.  There may be a myriad of circumstances in which it might be appropriate to make an order under that rule falling short of abuse of process, vexation or frivolity.  Case management may be one.  Indeed, the earlier authorities which deal with a subpoena returnable at trial need to be approached with some caution today.

165               It is generally correct that all competent witnesses are compellable, and that all compellable witnesses can be ordered to attend Court by a subpoena (McKinley v McKinley (1960) 1 WLR 120 at 122).  It may also be accepted that, subject to case management dictates, a subpoena should normally be issued to compel the attendance of a competent witness (or the production of relevant documents).  Even that is not a general rule – for example, the Court will not order an expert with no relevant connection with the matter in issue (but who might be able to give relevant evidence) to give evidence against the wishes of that expert (Re Cordova v Philips Roxane Laboratories Inc;  Forsyth, Application of [1984] 2 NSWLR 327;  referred to recently by Heydon JA in Witness v Marsden [2000] NSWCA 52 at par [59]). 

166               Morgan v Morgan [1977] 2 All ER 515 is authority for the proposition that in certain circumstances a stranger to a suit will not be forced to divulge personal affairs against that person’s will by compulsory process of the Court even if there is some relevance to the proceedings.  This decision has been referred to on a number of occasions without disapproval, eg, In re Norway’s Application [1987] QB 433 per Ralph Gibson LJ at 496H;  Yaramin Pty Ltd v Murphy (1987) 5 ACLC 300;  Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90, 101;  In Marriage of Lea (1990) 101 FLR 66, 74-5;  White & Tulloch v White (1995) 19 Fam LR 696, 703-708; ;  Witness v Marsden (supra) at par [57]). 

167               There is much to be said for this proposition, having in mind the discretionary nature of discovery, and the principle that restrictions on discovery cannot be avoided by the issue of subpoenae (Kizon v Palmer (1997) 75 FCR 261, 271-2;  Diddams v Commonwealth Bank [1998] FCA 497).  It could hardly be correct that a third party with no interest in the proceedings is subject to more draconian interference by the Court than a party to the proceedings.

168               If THG wished to call evidence from consumers, it would have been perfectly entitled to call it in a timely fashion.  It presumably had access to its own clients.  If it did not have such evidence available, then it chose to plead the cross-claim without it.  That gap should not be filled by having a de facto survey of persons identified by compulsory court process following access to the identity of opposition clients by compulsory court process.  Other means may have been available to achieve the objective, including subpoena if justified.  That is not the point.  This particular exercise would not have been justified.

 

I certify that the preceding one hundred and sixty eight (168) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Associate:

Dated:              20 June 2000

Counsel for the Applicant:	JT Gleeson
Solicitor for the Applicant:	Freehill Hollingdale & Page
Counsel for the Respondent:	GA Palmer QC and WG Muddle
Solicitor for the Respondent:	Hunt & Hunt
Date of Hearing:	20-24 March and 27-30 March 2000
Date of Judgment:	20 June 2000

APPENDIX

Warren Pengilley, ARL v Super League:  What Does it Mean for Sporting Organisations?.  Competition & Consumer Law Journal, Vol 5, (1997) p 77

Geoff A Edwards, From Super-League to the super-Market?  The Appropriate Emphasis in Market Definition.  Competition & Consumer Law Journal, Vol 4, (1996) p 220

 

Charles Sweeney, Professional Sporting Leagues and the Competition Laws.  Competition & Consumer Law Journal, Vol 4, (1997) p 173

Trade Practices Act, Equity and Professional Sport:  News Limited and Ors v Australian Rugby Football League Limited and Ors.  Sydney Law Review, Vol 19, (1997) p95

Warren Pengilley, Misuse of market power:  is section 46 infringed by a denial of spare parts to a motor vehicle dealer?.  Australian & New Zealand Trade Practices Law Bulletin, Vol 14, (Dec 1998) p 97

Mitchell G Landrigan, Is the Australian Rugby League Wrapped Up? … Section 46 of the Trade Practices Act and the Cellophane Fallacy.  Trade Practices Law Journal Vol 4, (Dec 1996) p 156

Dominique Hogan-Doran, Regents Pty Ltd v Subaru (Aust) Pty Ltd [1996] ATPR 41-463.  Trade Practices Law Journal Vol 4, (Dec 1996) p 206

Warren Pengilley, Super League.  New Zealand Law Journal, (Jan 1998) p 32

David Brewster, Market Definition and Substitutability – Australian Courts Continue to Struggle with Part IV of the Trade Practices Act 1974 (Cth).  Queensland University of Technology Law Journal, Vol 12, (1996) p 246

Richard York, Revolution and Competition Law:  The Superleague Case, News Ltd v Australian Rugby Football League Ltd.  Trade Practices Law Journal, Vol 5, (Mar 1997) p 48

Warren Pengilley, Super League:  What are the Lessons?.  Commercial Law Quarterly, Vol 11, (Dec 1997) p 9

SG Corones, The Impact of Trade Practices Law on Disputes Involving a Sports League and its Member Clubs.  Australian Business Law Review, Vol 25, (1997) p 406