FEDERAL COURT OF AUSTRALIA South Sydney District Rugby League Football Club Ltd v News Ltd (No 3) [2000] FCA 947 SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED v NEWS LIMITED & ORS N 1295 of 1999 FINN J 24 JULY 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1295 OF 1999 BETWEEN: SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 487 390) APPLICANT AND: NEWS LIMITED (ACN 007 871 178) FIRST RESPONDENT NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED (ACN 081 778 538) SECOND RESPONDENT AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED (ACN 003 107 292) THIRD RESPONDENT NATIONAL RUGBY LEAGUE LIMITED (ACN 082 088 962) FOURTH RESPONDENT AND the Fifth to Twenty-third Respondents set out in the Schedule JUDGE: FINN J DATE OF ORDER: 24 JULY 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. leave be given to NRL to amend its defence to raise the issue of Souths' ability and financial capacity to participate in an elite rugby league competition in 2001. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1295 OF 1999 BETWEEN: SOUTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 487 390) APPLICANT AND: NEWS LIMITED (ACN 007 871 178) FIRST RESPONDENT NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED (ACN 081 778 538) SECOND RESPONDENT AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED (ACN 003 107 292) THIRD RESPONDENT NATIONAL RUGBY LEAGUE LIMITED (ACN 082 088 962) FOURTH RESPONDENT AND the Fifth to Twenty-third Respondents set out in the Schedule JUDGE: FINN J DATE: 24 JULY 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant ("Souths") seeks to have set aside a notice to produce served on it by the fourth respondent ("NRL"). The notice calls for the production of documents which relate to Souths' capacity and financial ability to participate in an elite competition in 2001, and to the likelihood that Souths will suffer any or any substantial damage if it does not so participate. It is unnecessary to outline in any particularity the various claims made and issues raised in the proceeding. Suffice it to say Souths seeks orders (a) under s 80 of the Trade Practices Act 1974 (Cth) in respect of alleged contraventions of Part IV and V of that Act and (b) in the Court's equity jurisdiction to restrain an alleged breach or further breach of implied contractual terms. It is appropriate to refer briefly to the terms of several of the injunctions sought. While the s 80 injunction is cast in a variety of ways, para 2A of the relief sought is as follows: "An injunction pursuant to s 80 that each of the first to fourth respondents do all things necessary on its part to be performed to enable the applicant to participate in the national rugby league competition." 2 Para 5 seeks: "An injunction restraining the second, third and fourth respondents from proceeding to exclude the applicant from the national rugby league competition." 3 The basis upon which objection is taken to the Notice to Produce is, put shortly, that the question of Souths' capacity and financial ability to participate in the 2001 competition and the likelihood it will suffer damage if it does not participate in that competition are not, on the pleadings, relevant issues. Souths, I should note, does not press any claim for damages for financial loss in consequence of the conduct impugned or breaches of contract alleged. Its damages claim is limited to what, for convenience, I will call a loss to reputation. 4 The dispute before me is essentially a pleading dispute, albeit one as I will indicate that occurs in a rather distinctive setting. I should state at the outset that it is the case that NRL has not pleaded explicitly and specifically that injunctive relief should be denied because of Souths' inability and incapacity to participate in the 2001 competition. In paras 32 and 54 of its defence NRL has pleaded (in response to Souths' claim that it has, and will, suffer loss or damage by reason of the conduct contravening Part IV of the Trade Practices Act) that (a) that Souths has not and will not suffer such loss or damage, and (b) that if Souths were to participate in the 2000 competition or subsequent competitions its financial position would worsen compared to its financial position if it did not so participate. Para 57 of NRL's defence responds to para 43 of the Third Further Amended Statement of Claim. Para 43 is simply a claim for the relief sought in the application. Para 57(a) is a general plea denying "that Souths is entitled to the relief sought in the Application or any relief". Para 57(b) is in terms that: "to the extent that the claim involves relief in the discretion of the Court, the Court ought not to exercise its discretion to grant relief to Souths by reason of the following matters: … (iii) the interests of persons not parties to the conduct complained of would be affected by the injunction sought by Souths including the Clubs, players who participate in the 2000 NRL competition (and subsequent NRL competitions) and sponsors." 5 Put shortly, NRL's claim is that its pleading sufficiently puts in issue the matter of the futility of making an order compelling NRL to do all things necessary on its part to be performed to enable Souths to participate in the national rugby league competition. Such an order, it is said, could require it to enter into a contract with Souths in the same manner as it has done with all of the other Clubs competing in the competition; to make funding arrangements for Souths; and possibly other matters. It likewise complains that Souths has not itself indicated what the acts are that are necessary to be done in the award of the relief sought. It equally claims that its denial that loss will be suffered by Souths is itself a relevant matter and made so by the provisions of s 80 of the Trade Practices Act. 6 Insofar as s 80 is concerned, NRL focuses particular attention upon the stipulation of subsection (1) that the Court may grant an injunction "in such terms as it determines to be appropriate", the emphatic word in this being "appropriate". Equally NRL points to subsections (4) and (5) which mandate the grant of an injunction, "whether or not there is an imminent danger of substantial damage to any person" if the contravening conduct is engaged in. 7 NRL's claim is that by (i) its general denial in para 57(a), (ii) its pleading of what can be characterised as a hardship defence involving third parties, and (iii) its denial of loss in paras 32 and 54, it has put directly in issue both the futility of granting an injunction in terms of para 2A and, because subsections (4) and (5) of s 80 make the question of loss a possibly relevant consideration when assessing whether it is appropriate to award an injunction, they have put that matter in issue as well. By way of a more general contextual claim, it is said that given the nature of the injunction sought no court properly exercising a judicial discretion would order acts to be done as sought without being informed of the nature of those acts and the feasibility of their being able to be performed. 8 The position taken by Souths in submission is that the question of Souths' ability to participate in the 2001 competition could be a relevant issue if it had been pleaded. The complaint is simply that it was not. The burden of the complaint as it relates both to the equitable injunction sought in para 5 and the s 80 statutory injunction sought in para 2A is that (i) in relation to the equitable injunction what is being raised is an equitable defence and as such is required to be pleaded under O 11 r 10(a) of the Federal Court Rules; and (ii) for the purposes of s 80 of the Trade Practices Act what in substance is being alleged is a matter that makes the claim not maintainable for the purposes of the same rule. Further it is submitted by Souths that the general denial of para 57(a) is insufficient properly to put in issue the issue of Souths' participation in the 2001 competition. Additionally Souths claims that nowhere in the pleading is the question of loss or damage specifically related to the award of injunctive relief. It is said as well that para 57(b)(iii), if it be taken to raise a hardship defence, does not itself indicate the basis of the alleged hardship. 9 I should add by way of background, that in the interlocutory proceedings before Hely J the question of whether Souths was able to and had the financial capacity to participate in the 2000 competition was a very live question. It bore directly upon whether interlocutory injunctive relief should be granted and a considerable body of material was put in on the issue: South Sydney District Rugby League Football Club Ltd v News Ltd (1999) 169 ALR 120 at 142ff. It equally is clear that at least from 10 May 2000 it had been made apparent to Souths that, so far as NRL was concerned, documentation that was being sought from Souths by NRL's solicitors was said to be clearly relevant to the issue of the utility of the relief sought. 10 Souths' solicitor countered the above claims to the documentation sought by indicating he did not understand there to be such an issue in the proceedings. The position taken by NRL's solicitors was nonetheless reiterated. When the matter came on before me for directions on 22 May counsel for NRL in seeking production of documents relating to Souths' financial position indicated that Souths was raising in the proceedings the question of utility in making an order of the type contained in para 2A of the application. It is clear from comments of counsel at that directions hearing, as also from the oral evidence now given on this matter by the solicitor for Souths, that the view was entertained by Souths and particularly by its solicitor that the question of utility was simply not one that could be raised irrespective of the state of the pleading. 11 I can state my own view on this dispute shortly. The purpose of pleadings in defining the issues and in informing the parties in advance of the case to be met is well accepted: see Dare v Pulham (1982) 148 CLR 658 at 664. O 11 r 10(a) and (b) of the Rules encapsulate important dimensions of those purposes as they relate (inter alia) to a defence. The rule provides: "In a pleading subsequent to a statement of claim a party shall plead specifically any matter of fact or point of law (for example, performance, release, any relevant statute of limitation, fraud or any fact showing illegality) that - (a) he alleges makes a claim or defence of the opposite party not maintainable, (b) if not specifically pleaded might take the other party by surprise, or (c) raises issues of fact not arising out of the preceding pleading." 12 Considered against the expectations of the rule I am satisfied that the defence filed by NRL is not, for present purposes, a "sufficient defence": cf Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 at 42,769. I have already indicated that the defence does not directly and explicitly raise the issue of utility of the relief sought. If that issue was to be discerned - or divined - from what has been pleaded it could only be so obliquely, if at all. In my view, on a matter so fundamental and one requiring the marshalling by Souths of what could be a considerably body of evidence, NRL ought as a matter of procedural fairness to have alerted Souths clearly and unequivocally by its defence that this particular matter was one to be raised in the proceedings. This it did not do. 13 The general denial in para 57(a) was inadequate to that burden. While the hardship to non-parties defence pleaded in para 57(b)(iii) may have gone some distance in suggesting that a mandatory order would bear injuriously or disadvantageously on third parties: cf Spry, Equitable Remedies, 5th Ed, 402; Miller v Jackson [1977] QB 966 at 988; it no more than suggested that such injury or disadvantage would be consequential on that suffered by NRL because of the contract etc it would be obliged to enter into with Souths. And the denials of loss, while pointing up the alleged effects of the exclusion on Souths, were themselves premised on Souths having the capacity and ability to participate in the competition in 2000 and thereafter. 14 It is well understood and long accepted that equitable defences to a claim for injunctive relief are to be pleaded specifically: see eg Bullen & Leake & Jacob, Precedents of Pleadings, 13th Ed, 1214; Supreme Court Practice 1995, 297 (UK). A futility claim (whether founded in disproportionate hardship to the respondent or otherwise: see Spry, at 405-406) ought, in consequence, properly to be pleaded specifically. For my own part, while accepting the difference in character of the s 80 statutory injunction from that of the purely equitable remedy: see ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248; I am nonetheless satisfied that those well known considerations which, in equity, are required to be specifically pleaded because they put in issue the entitlement of the applicant to the relief sought, should likewise be pleaded specifically in a s 80 case where they are relied upon by a respondent to put in issue in a particular way the appropriateness of the award of the injunction sought. 15 In a case such as the present that pleading requirement can probably be regarded as being imposed by either r 10(a) or r 10(b). For the purposes of r 10(b) I am satisfied that the question of Souths' capacity and financial ability to compete in 2001 is a matter that, if not pleaded specifically, might take the applicant by surprise. 16 A failure to comply with the requirements of the rule does not end the matter. As Buckley LJ pointed out in Re Robinson's Settlement; Gant v Hobbs [1912] 1 Ch 717 at 728 of an ancestor of O 11 r 10, after observing that the rule provides "no consequence" for non compliance: "The effect of the rule is, I think, for reasons of practice and justice and convenience to require the party to tell his opponent what he is coming to the Court to prove. If he does not do that the Court will deal with it in one of two ways. It may say that it is not open to him, that he has not raised it and will not be allowed to rely on it; or it may give him leave to amend by raising it, and protect the other party if necessary by letting the case stand over. The rule is not one that excludes from the consideration of the Court the relevant subject-matter for decision simply on the ground that it is not pleaded. It leaves the party in mercy and the Court will deal with him as is just." 17 The present clearly is a case in which leave to amend ought be given. Souths have for some time been on notice that NRL has regarded, and has persisted in regarding, the futility of the orders sought as a matter in issue in the proceedings and has sought documents from Souths to that end. Souths, at least through its solicitor, appeared to have entertained the view that futility could not be in issue for s 80 purposes at the final hearing. That misapprehension has led Souths not to have given the views of NRL the significance that they clearly deserved. In granting leave to amend it is appropriate to take steps to protect Souths from prejudice (it not having gathered evidence to meet the futility argument), its misapprehension notwithstanding. Nonetheless that misapprehension does not provide reason for refusing an amendment in the circumstances. 18 The terms of the para 2A relief sought necessitate that consideration would have to be given by me to what were the actions required to be taken before an order in the terms of 2A would be made. Absent appropriate evidence thereon, it is most unlikely that such an order would be made. It would be an order in the dark. 19 Souths has sought to minimise the need for such evidence by not pressing the relief sought in para 2A to any greater extent than the injunction sought in para 5. Given the opacity of what para 5 would actually require of NRL, the alleged limitation on 2A put by Souths may well be more apparent than real. 20 In the circumstances, while mandatory relief is sought (whether in form or in substance) the issue NRL wishes to agitate ought be addressed. Accordingly leave will be given to NRL to amend its defence to raise the issue specifically. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate: Dated: 24 July 2000 Counsel for the Applicant: Mr T E F Hughes QC with Mr R W White SC and Mr M G Scheib Solicitor for the Applicant: Nicholas G Pappas & Company Counsel for the First and Second Respondents: Mr N C Hutley SC with Ms S J Goddard Solicitor for the First and Second Respondents: Allen Allen & Hemsley Counsel for the Third Respondent: Mr D Campbell with Mr S Hughes Solicitor for the Third Respondent: Colin W Love & Co Counsel for the Fourth Respondent: Mr A J Meagher SC with Mr J E Marshall and Mr P J Brereton Solicitor for the Fourth Respondent: Minter Ellison Counsel for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents. Mr A Coleman Solicitor for the Fifth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third Respondents. Henry Davis York Date of Hearing: 16, 19-23, 26-30 June, 3-6, 10-13 July 2000 (and continuing) Date of Judgment: 24 July 2000 THE SCHEDULE CANBERRA DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 008 568 634) Fifth Respondent CANTERBURY-BANKSTOWN RUGBY LEAGUE CLUB LTD (ACN 001 869 405) Sixth Respondent CRONULLA-SUTHERLAND DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 692 186) Seventh Respondent NEWCASTLE KNIGHTS LIMITED (ACN 003 363 228) Eighth Respondent ST GEORGE ILLAWARRA RUGBY LEAGUE FOOTBALL CLUB PTY LIMITED (ACN 085 008 340) Ninth Respondent BRISBANE BRONCOS RUGBY LEAGUE CLUB LIMITED (ACN 010 769 025) Tenth Respondent COWBOYS RUGBY LEAGUE FOOTBALL LIMITED (ACN 060 382 961) Eleventh Respondent MELBOURNE STORM RUGBY LEAGUE CLUB LIMITED (ACN 081 369 468) Twelfth Respondent MANLY WARRINGAH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 003 348 436) Thirteenth Respondent NORTH SYDNEY DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 003 009 158) Fourteenth Respondent EASTERN SUBURBS DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 002 687 416) Fifteenth Respondent PENRITH DISTRICT RUGBY LEAGUE FOOTBALL CLUB LIMITED (ACN 003 908 583) Sixteenth Respondent PARRAMATTA DISTRICT RUGBY LEAGUE CLUB LTD (ACN 002 254 980) Seventeenth Respondent WESTS TIGERS RUGBY LEAGUE FOOTBALL PTY LIMITED (ACN 090 076 403) Eighteenth Respondent AUCKLAND WARRIORS RUGBY LEAGUE LIMITED (Registered in NZ No. 508 646) Nineteenth Respondent MANLY-NORTHS RUGBY LEAGUE FOOTBALL CLUB PTY LIMITED (ACN 090 093 833) Twentieth Respondent VALIMANDA PTY LTD (ACN 002 639 778) Twenty-first Respondent AH CB PTY LIMITED (ACN 068 819 152) Twenty-second Respondent BRISBANE BRONCOS CORPORATION PTY LTD (ACN 057 607 208) Twenty-third Respondent