New South Wales Supreme Court St George Football Association Inc v Soccer NSW Ltd [2005] NSWSC 1196 CITATION : This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 22/11/05, 23/11/05, 24/11/05 JUDGMENT DATE : 24 November 2005 JURISDICTION : Equity Division JUDGMENT OF : Barrett J DECISION : Passages of affidavit rejected CATCHWORDS : EVIDENCE - relevance - statement by party of subjectively held intention as to contract formation - such intention not communicated to other party - whether statement may rationally affect assessment of whether contract made LEGISLATION CITED : Evidence Act 1995, s.55 Air Great Lakes Pty Ltd and KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 CASES CITED : Forbes v Australian Yachting Federation Inc (1996) 131 FLR 241 St George Soccer Football Association Incorporated - First Plaintiff PARTIES : Bonnyrigg White Eagles Sports Club Limited - Second Plaintiff Soccer NSW Limited - Defendant FILE NUMBER(S) : SC 5501/05 Mr P.M. Biscoe QC/Mr S.J. Philips - Plaintiffs COUNSEL : Mr M. Walton SC/Mr M.S. White - Defendant Levitt Robinson - Plaintiffs SOLICITORS : Minter Ellison - Defendant LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J THURSDAY 24 NOVEMBER 2005 5501/05 - ST GEORGE SOCCER FOOTBALL ASSOCIATION INCORPORATED & ANOR v SOCCER NSW LTD JUDGMENT - On admissibility of evidence; See p 166 1 An issue in this case is whether a contractual relationship arose between the defendant (Soccer NSW Ltd) and the two plaintiff clubs in circumstances where the clubs submitted applications to field teams in the revised premier league competition to be conducted by the defendant and those applications were considered and deliberated upon by the defendant. 2 The defendant seeks to read a passage in the affidavit of its president, Mr Doumanis, as follows: "It was never intended by me, nor the expressed intention of the board, that any of the criteria or the provisions of the Report would give rise to a contractual relationship between SNSW and the applicant clubs." 3 The reference to the "Report" is a reference to a document circulated by the defendant among potential applicants setting out procedures and content requirements to be observed by clubs making applications. The reference to the "criteria" is a reference to criteria published by the defendant and identified as criteria that would be taken into account in considering applications. 4 The plaintiff clubs object to this passage on the grounds of relevance. They say that evidence of the unexpressed subjective intentions of the defendant and its president could not rationally affect the assessment of the probability of the existence of any fact in issue: Evidence Act 1995, s.55. They submit that evidence of one party's subjective intention as to contract formation (specifically, an intention that no contract should come into existence) has no such capacity where the subjectively held intention remained, as it were, embedded in that party's brain and was never communicated to the other party. 5 The defendant, in contending for the relevance and admissibility of the passage in question, points to a passage in the judgment of Santow J in Forbes v Australian Yachting Federation Inc (1996) 131 FLR 241 at p.285 referring to subjective intention to enter into contractual relations as a matter relevant to the question of contract formation before him. His Honour referred in that connection to the decision of the Court of Appeal in Air Great Lakes Pty Ltd and KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309. It is relevant to quote a portion of the judgment of Mahoney JA in that case appearing at pp.330-331: "But this does not mean that actual subjective intention qua contract may not be relevant. Thus, if A, notwithstanding what he said, had the actual subjective intention that no contract should result, a binding contract may not be held to exist. If the terms of A's promise were such that B, as a reasonable man, would take it to involve a legal commitment and B did not know that A did not intend that there be a binding contract, then a binding contract would result. A would not be permitted to set up, against such a meaning of what he had said, a contrary subjective intention. But the result would not, I think, be the same if B knew of A's actual subjective intention. The law would not, I think, impose the relationship of contract where, eg, A though he was play-acting and B knew of that fact. A's actual subjective intention would be effective to prevent the contract arising. A fortiori, if both A and B had the intention that no contract should result, and each knew of it, then none would be imposed. And, I think, this notwithstanding that a reasonable bystander would take from what they said and did that there was an exchange of congruent promises and a mutual purpose to contract. I put aside for this purpose special cases, of estoppel, third party rights, and the like. The result is therefore that intention to contract, in the subjective sense, is relevant to but not determinative of the existence of a binding contract. It acts, in a sense, as a limiting factor, that is, as a reason for not giving to what on the face of it is an exchange of congruent promises, the legal consequences which would otherwise be given to it. And on this basis, it is, in principle, relevant to know what was the actual subjective intention of each party, in the example that I have given, in order to determine whether the legal relationship of contract is to be held to exist. More correctly, it is relevant to know the intention of the one party where it is the intention of or known to the other." 6 It is, in my opinion, clear that Mahoney JA attached significance to the subjectively held intention of one party only to the extent that it was an intention of which the other party was aware. I would emphasise parts of the extract quoted: "… if B knew of A's actual subjective intention"; "… and each knew of it"; and, in particular, the concluding words, "… it is relevant to know the intention of the one party where it is the intention of or known to the other" [emphasis added]. 7 Mahoney JA also observed that the existence of a contract is: "a consequence which the law imposes upon, or sees as the result of, what the parties have said and done." That, of course, is a statement of the objective theory of contract formation. Something that a party has neither said nor done but has kept locked up in the party's head cannot be one of the things by reference to which the law imposes a contract in the way to which his Honour referred. 8 My assessment is that, while matters of subjective intention may play some part in determining the question of contract formation, they cannot do so where the particular intention is uncommunicated and remains the privately held and unexpressed frame of mind of the party holding it. Such an assessment seems to me to be warranted by the approach taken by Mahoney JA in Air Great Lakes; and I do not consider it to be inconsistent with anything said by Santow J in the Australian Yachting Federation case. 9 Mr Biscoe QC, who appears for the plaintiffs, referred in argument to the example of a ticket case. A person going through a ferry turnstile or parking his or her car in a parking station (or, for that matter, going into a corner shop to buy a loaf of bread) might afterwards be asked, "Did you, at that time, have an intention of entering into a contract?" Any answer then given (being an answer that conveyed something additional to what could be seen and inferred from things actually said and done on the particular occasion) would have no bearing on the legal question whether a contract was in fact made. The question of contract formation falls to be determined by reference to what was communicated by each party to the other and the other observable circumstances in which the parties dealt with one another. 10 The passage in question in paragraph 34 of Mr Doumanis's affidavit is therefore rejected. The same ruling applies to the last sentence of paragraph 38 of Mr Doumanis's affidavit. ********** 25/11/2005 - Error in frontsheet - Paragraph(s) 25/11/2005 - - Paragraph(s) 25/11/2005 - Typographical error - Paragraph(s) 3 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.