Zhu v Treasurer of the State of New South Wales

• Jurisdiction: Australia Federal only
• Judge: Gleeson CJ,Gummow,Kirby,Callinan,Heydon JJ
• Judgment Date: 17 November 2004
• Neutral Citation: [2004] HCA 56,2004-1117 HCA B
• Docket Number: S616/2003
• Date: 17 November 2004
• Court: High Court

[2004] HCA 56

HIGH COURT OF AUSTRALIA

Gleeson CJ Gummow, Kirby, Callinan AND Heydon JJ

S616/2003

Peter Tao Zhu

Appellant

and

The Treasurer of the State of New South Wales

Respondent

Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth), s 12.

Sydney Organising Committee for the Olympic Games Act 1993 (NSW).

Zhu v The Treasurer of the State of New South Wales

Tort — Interference with contractual relations — Contract between the plaintiff and TOC Management Services Pty Ltd (‘TOC’) authorised and obliged the plaintiff to sell memberships in an ‘Olympic Club’ to residents of China — Sydney Organising Committee for the Olympic Games (‘SOCOG’) interfered with the plaintiff's contract — Whether SOCOG had obligations to protect intellectual property under the Olympic Charter and the contract by which Sydney hosted the 2000 Olympic Games — Whether the plaintiff contravened the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth), s 12 — Whether SOCOG's interference with the plaintiff's contract was justified.

Tort — Interference with contractual relations — Defence of justification — TOC owed contractual obligations to SOCOG not to engage in certain conduct — Contract between TOC and the plaintiff obliged the plaintiff to engage in conduct contrary to the contract between TOC and SOCOG — Whether SOCOG held ‘proprietary’ or ‘quasi-proprietary’ rights — Whether SOCOG held an ‘actually existing superior legal right’ — Whether SOCOG's conduct was ‘reasonably necessary’ — Whether SOCOG was justified in interfering with the contract between TOC and the plaintiff.

Contract — Deed Poll — Plaintiff executed Deed Poll in favour of SOCOG — Plaintiff was required to execute Deed Poll pursuant to contract between the plaintiff and TOC — Plaintiff did not know there was a separate contract between SOCOG and TOC — Whether Deed Poll and contracts inconsistent — Construction of Deed Poll and contracts — Whether the plaintiff's activities required SOCOG's prior written consent — Whether the plaintiff breached the Deed Poll or his contract.

Words and phrases — ‘interference with contractual relations’, ‘justification’, ‘proprietary right’, ‘quasi-proprietary right’, ‘superior legal right’, ‘reasonably necessary’.

1 Gleeson CJ, Gummow, Kirby, Callinan AND Heydon JJ. It is a truth almost universally acknowledged — a truth unpatriotic to question — that the period from 15 September 2000 to 1 October 2000, when the Olympic Games were held in Sydney, was one of the happiest in the history of that city. The evidence in this case, however, reveals that the preparations for that event had a darker side.

Gleeson CJ

2 Mr Peter Tao Zhu (‘the plaintiff’) was born in the People's Republic of China (‘China’) in 1962. He migrated to Australia in 1989 and became an Australian citizen on 16 April 1997.

3 On 11 March 1999, the plaintiff entered an agreement (‘the Agency Agreement’) with TOC Management Services Pty Ltd, the second defendant (‘TOC’). It authorised and obliged him to sell memberships in an ‘Olympic Club’ (‘the Club’) to residents of China. It is now not controversial that the Agency Agreement was breached when TOC purported to terminate it on 5 November 1999. Nor is it now controversial that TOC was persuaded to commit that breach by the first defendant, the Sydney Organising Committee for the Olympic Games (‘SOCOG’). SOCOG also interfered with the Agency Agreement in two other ways — by preventing TOC from performing it, and then by causing the New South Wales police to arrest the plaintiff.

4 In December 1999, the plaintiff sued for interference with contract. Bergin J, sitting in the Equity Division of the Supreme Court of New South Wales, conducted a 20 day trial between 30 July and 11 September 2001. On 23 November 2001, she gave judgment for the plaintiff against SOCOG in the sum of $4,234,319. That figure included $95,000 in aggravated damages for injury to the plaintiff's feelings as a result of the arrest and $200,000 in exemplary damages by reason of SOCOG's ‘high-handed and reprehensible’ behaviour in relation to all three interferences1.

5 After hearing argument on 29 and 30 October 2002, the New South Wales Court of Appeal (Sheller, Giles and Hodgson JJA) allowed an appeal on 20 December 20022. It found that SOCOG had established the defence of justification. It said that SOCOG had a right and duty under the Sydney 2000

Games (Indicia and Images) Protection Act 1996 (Cth) (‘the Indicia Act’) and the Sydney Organising Committee for the Olympic Games Act 1993 (NSW) (‘the SOCOG Act’) to interfere with the Agency Agreement, because the plaintiff had allegedly made unauthorised use of the name ‘The Olympic Club’, the ‘Games Logo’ and a ‘Club Logo’. The Games Logo depicted, below lines suggesting the roof of the Sydney Opera House in silhouette, a figure of a runner above the words ‘Sydney 2000’ and five interlinked rings well known as a symbol of the Olympic movement (the ‘Olympic Symbol’). The Club Logo incorporated the Games Logo in conjunction with the words ‘The Olympic Club’. The name ‘The Olympic Club’, the Games Logo and the Club Logo are referred to below as ‘the intellectual property rights’.

6 By special leave granted on 2 December 2003, the plaintiff has appealed to this Court. Various questions arise about the legislative, contractual and other arrangements pursuant to which the Olympic Games were conducted in Sydney in 2000, and about the defence of justification in the tort of interference with contract. These questions should be answered favourably to the plaintiff and the appeal should be allowed.

7 The issues in the appeal were numerous and complex. Discussion of them below is organised as follows.

Background events	[8]–[31]
Parties	[32]
The trial	[33]–[41]
SOCOG's arguments in the Court of Appeal	[42]–[47]
The Court of Appeal's conclusion and assumption	[48]–[50]
The relevant instruments	[51]–[61]
- Olympic Charter	[51]–[55]
- Host City Contract	[56]
- Establishment Agreement	[57]
- Licence Agreement	[58]–[60]
- Deed Poll	[61]
The Court of Appeal's reasoning	[62]–[69]
SOCOG's complaints about the plaintiff's conduct in Australia	[70]–[72]
SOCOG's complaints about the plaintiff's conduct in China	[73]
SOCOG's contentions on the plaintiff's chain of title	[74]–[76]
The plaintiff behaved lawfully in Australia	[77]–[91]
- Effect of cl 3.3(h) of the Licence Agreement on cl 3.3(g)	[78]–[79]
- Clauses 1 and 3 of the Deed Poll	[80]–[85]
- Effect of cl 5 on cll 1 and 3 of the Deed Poll	[86]
- Section 12(1) of the Indicia Act	[87]–[88]
- The letter of 30 August 1999	[89]–[90]
The legality of the plaintiff's conduct in China	[92]–[104]
- Olympic Charter Bye-law, par 11.2	[93]
- Clause 9.1(a) of the Agency Agreement	[94]–[95]
- Section 12(1) of the Indicia Act	[96]–[98]
- Clauses 3.3(g) and (h) of the Licence Agreement	[99]–[100]
- The Deed Poll	[101]–[103]
SOCOG's argument on justification	[105]–[107]
Justification: the correct approach	[108]–[174]
- Preliminary difficulties in SOCOG's argument	[108]–[119]
- Interference in legal relations between other parties	[120]–[122]
- Kitto J's analysis of contractual rights as ‘quasi-proprietary’	[123]–[124]
- The status of Kitto J's reasoning	[125]–[134]
- Jordan CJ's approach	[135]–[146]
- Authorities for a wider approach	[147]–[160]
- Was SOCOG's conduct ‘reasonably necessary’?	[161]–[171]
- Conclusion on defence of justification	[172]
- Justification questions which need not be considered	[173]–[174]
Orders	[175]

Background events

8 SOCOG. SOCOG was constituted by the SOCOG Act. Section 6(1) of the SOCOG Act gave SOCOG the same legal capacity and powers as a company under the Corporations Law, and hence the legal capacity and powers of a natural person. Section 9(1) of the SOCOG Act provided that the primary objective of SOCOG was to organise and stage the Games of the XXVII Olympiad, as the Act grandly called them, in Sydney in the year 2000, in accordance with the rights and obligations conferred and imposed under the Host City Contract. That contract was a contract between the International Olympic Committee (‘IOC’), the Council of the City of Sydney and the Australian Olympic Committee Inc (‘AOC’) dated 23 September 1993. SOCOG became a party to the Host City Contract on 4 February 1994.

9 Section 10(2)(d) of the SOCOG Act provided that one of SOCOG's functions was ‘establishing a marketing program in consultation with’ the IOC and the AOC. Section 10(2A) provided that SOCOG ‘has and always has had power to enter into agreements … for the granting of sponsorship or licence rights or rights relating to the manufacture, distribution, marketing or sale of goods or services associated with the Games’. Section 11(a) and (b) provided that in exercising its functions SOCOG was to take into account, to the fullest extent practicable, the Olympic Charter and the Host City Contract. Under a ‘Bye-law’ to rr 12–17 of Ch 1 of the Olympic Charter (‘the Olympic Charter Bye-law’), SOCOG was obliged by par 10 to secure compliance by third parties with the Bye-law, par 11.2 of which forbad the use of rights (including the intellectual property rights) in China or Australia without the written approval of the Chinese Olympic Committee and itself respectively3. Clause 48(iii) of the Host City Contract conferred an entitlement on the IOC Executive Board to terminate that contract and withdraw the Games from Sydney if SOCOG violated that contract, the Olympic Charter or the applicable law4.

10 The Olympic Club Trust. On 26 September 1997, a trust deed was executed establishing the...