New South Wales Supreme Court CITATION : Malo v South Sydney District Junior Rugby Football League [2008] NSWSC 552 HEARING DATE(S) : 30/05/2008 JUDGMENT DATE : 5 June 2008 JUDGMENT OF : Hoeben J DECISION : The plaintiff is granted leave to file a Fourth Amended Statement of Claim. The plaintiff is to pay the defendants' costs of this application. CATCHWORDS : Amendment to Statement of Claim - reliance upon s74 of the Trade Practices Act 1974 - whether the s82 time limitation applies to amendment - whether new cause of action raised - whether amendment futile - whether prejudice suffered by defendants. Civil Liability Act 2005 LEGISLATION CITED : Limitation Act 1969 Trade Practices Act 1974 CATEGORY : Procedural and other rulings Arturi v Zupps Motors Pty Limited (1980) 49 FLR 283; 33 ALR 243 at 245-246 CASES CITED : Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Hughes v Western Australian Cricket Association Inc & Ors (1986) FCA 357 at [57] The Queen v Federal Court of Australia Ex parte: WA National Football League (1978-1979) 143 CLR 190 at 233-34 Harry Malo - Plaintiff PARTIES : South Sydney District Junior Rugby Football League Limited - First Defendant Maroubra Rugby League Football Club Incorporated - Fourth Defendant FILE NUMBER(S) : SC 20659/2001 Mr F Tuscano - Plaintiff COUNSEL : Mr S Walsh - First Defendant Mr K Rewell SC - Fourth Defendant Maurice Blackburn Cashman - Plaintiff SOLICITORS : Riley Gray-Spencer Lawyers - First Defendant Thompson Cooper Lawyers Pty Ltd - Fourth Defendant IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HOEBEN J Thursday, 5 June 2008 20659/01 - Harry MALO v SOUTH SYDNEY DISTRICT JUNIOR RUGBY FOOTBALL LEAGUE LTD & ORS JUDGMENT 1 HIS HONOUR: Nature of proceedings and factual background The plaintiff seeks the leave of the Court to file a Fourth Amended Statement of Claim. The amendment relies upon s74 of the Trade Practices Act 1974 (the Act) against each of the defendants. In order to understand the significance of the amendments sought, it is necessary to briefly set out the background to the claim. 2 The plaintiff sues the defendants for damages in respect of the conduct of a rugby league competition in the South Sydney area. One of the teams playing in that competition was the Maroubra Lions Rugby League Team, which was part of the fourth defendant and which was an A Reserve grade team in a league administered by the first defendant. 3 On Saturday, 26 July 1998 a rugby league match in the A Reserve grade division took place between the Maroubra Lions and the South Eastern Rugby League Football Club. The plaintiff participated in that match. During the second half of the match, the plaintiff was tackled by two opposing players, as a result of which he suffered severe spinal injuries and is now a quadriplegic. 4 There is no allegation of illegality in the tackle which resulted in the plaintiff's injuries. The plaintiff's claim is that he was grossly fatigued at the time of the injury and that fatigue made him vulnerable to spinal injury in that he was less able to prepare himself for the tackle. 5 The plaintiff alleges that on the day of his injury, the Maroubra Lions fielded a team of only eleven players, being two short of the usual number, for a rugby league team. The plaintiff alleges that only six (including himself) of those eleven players were "fresh" at the commencement of the game. It is common ground that the plaintiff did not complain of fatigue prior to his injury, nor did he ask to leave the field or that the game be forfeited or abandoned. 6 The primary case against the first defendant as administrator of the league is that the first defendant failed to have in place rules which prevented teams fielding an inadequate number of players or players who were fatigued from participating in a prior fixture. 7 The plaintiff alleges that the fourth defendant was negligent in failing to abandon and/or forfeit the match at half time when it was apparent that the opposition were overwhelming and the players were excessively fatigued. Alternatively, it is alleged that the fourth defendant should have abandoned the match at its outset when it was unable to field a full team and when the team included players who were fatigued from a previous fixture. 8 Damages have been agreed between the parties, subject to the issue of liability being decided. 9 The matter was delayed because the plaintiff applied to have the proceedings heard by a jury. The plaintiff succeeded at first instance but that decision was overturned on appeal. The plaintiff then sought special leave from the High Court but special leave was refused. The hearing as to liability will now proceed before a Judge. 10 The proposed amendments raising s74 are too extensive to be usefully set out here. In general terms, the plaintiff alleges that he was a consumer within the meaning of s4B of the Act and that "services" were provided to him by the defendants within the meaning of s4. 11 The plaintiff alleges that the first defendant provided services to him in the nature of the provision of a rugby league competition, arranging and providing venues, referees and officials for games and that such services were provided to the plaintiff in exchange for him becoming a member of the first defendant and agreeing to play for its teams. 12 The plaintiff alleges that the services provided to him by the fourth defendant were similar to those alleged against the first defendant but included co-operation with the first defendant in the first defendant's arranging, providing or specifying venues, referees and officials for games. A contract between the plaintiff and the defendants is alleged. 13 The plaintiff alleges that the price which he paid for the services provided by the defendants was his membership fee, which was $40 per annum. 14 The plaintiff alleges that each of the defendants was conducting a business, ie the operation of a local rugby league competition in the South Sydney area, and otherwise controlling, promoting and fostering participation in the game of rugby league in that area. 15 The terms which the plaintiff seeks to have implied into the contract, pursuant to s74 of the Act are: "(a) That the defendants' services would be rendered with due care and skill. (b) That the defendants' services would be reasonably fit for the plaintiff's purpose of enabling him to play rugby league football in the competition safely for his personal entertainment, recreation and instruction. (c) That the defendants' services were of such a nature and quality that they might reasonably be expected to achieve the result desired by the plaintiff, namely that the plaintiff would not suffer serious injury in so doing." 16 The defendants are alleged to have breached these implied items as a result of which the plaintiff suffered injury. 17 The application to amend the statement of claim is opposed by both defendants. 18 On 9 June 2004 this Court extended the time within which proceedings could be commenced against the fourth defendant. The Amended Statement of Claim filed pursuant to that order, relied not only upon negligence but also on contract. The contractual allegation was pleaded as follows: "Further and in the alternative, it was an implied term of the contract whereby the plaintiff agreed to play rugby league for the fourth defendant in the competition organised by the first defendant, that reasonable measures would be taken to ensure that teams fielded were of a suitable quality and strength, so as to obviate the risk of injury through excessive fatigue to players of under strength teams, and the plaintiff's personal injury, loss and damage was caused by the breach of such implied terms as particularised above." The particulars to which reference is made were the particulars of negligence. Submissions and consideration 19 Because these events took place in 1998, and the Act has undergone amendments since that date, it is useful to set out the definition of "services" which was operative at the time when the plaintiff suffered his injuries: "Services includes any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be provided, granted or conferred under: (a) a contract for or in relation to: (i) the performance of work (including work of a professional nature), whether with or without the supply of goods; (ii) the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; (b) a contract of insurance; (c) a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking; or (d) any contract for or in relation to the lending of monies; but does not include rights or benefits being the supply of goods or the performance of work under a contract of service." 20 The defendants submit that the plaintiff's claim is properly characterised as a claim for personal injury damages and as a result, the limitation provisions of ss 82 and 87F of the Act apply. Whether the appropriate limitation period is three years (s87F) or six years (s82), the defendants submit that the plaintiff is out of time. There is no provision under the Act for an extension of time. There is no provision in the Limitation Act 1969 (NSW) for an extension of the limitation period of six years for an action for a breach of contract. 21 The plaintiff submits that s87F has no application in that it is restricted to proceedings to which Part VIB of the Act applies. Section 74 is to be found in Part V. He submits that s82 has no application to s74. Section 82 relates to conduct done in contravention of Part V. Section 74 on the other hand provides for the implication by statute of terms into an existing contract. Accordingly, the remedy for breach of s74 is to sue for breach of the implied condition, rather than to proceed for damages under s82. 22 In that regard the plaintiff relies upon what Brennan J said in Arturi v Zupps Motors Pty Limited (1980) 49 FLR 283; 33 ALR 243 at 245-246: "Jurisdiction arises under s82 when the damage claimed in the proceedings is alleged to have been caused by conduct done in contravention of Part IV or V of the Act, that is to say, conduct which does not conform to norms of conduct prescribed by those provisions. Section 71 prescribes no norm of conduct: it affects the legal relationship between the parties to a contract by importing one or more conditions into the contract. It does not proscribe conduct by the supplier of the goods; it relates to the quality of the goods supplied. There are two reasons why a breach of a condition which is implied by s71 does not involve conduct in contravention of a provision of Part V. First, the breach does not consist in the conduct of supplying goods, but in the want of correspondence between the state of the goods supplied and the quality referred to in s71. Secondly, s71 takes effect by imposing an obligation upon one of the contracting parties as though the parties had embodied the obligation in their contract … but by describing the obligation as an implied condition, s71 defines the nature of the obligation. It is an obligation which takes effect by a legal fiction, namely, that the parties had made a contract which included the obligation. For the purposes of s82, therefore, a breach of the obligation is not to be treated as a breach of an obligation imposed upon the obligor by the Act dehors the contract, but an obligation imposed by the contract itself. It follows that a proceeding for damages for breach of a s71 condition is not a proceeding falling within s82 …" 23 The plaintiff submits that although his Honour was dealing with s71, the rationale remains valid for s74. I agree. Accordingly, for the reasons set out by Brennan J, I accept the plaintiff's submission that the proposed amendment is not caught by s82 of the Act. 24 The defendants submit that the amendments amount to a "fresh cause of action". In that regard they submit that at least in so far as the fourth defendant is concerned, the reliance upon such a fresh cause of action goes beyond the leave granted by the Supreme Court when an extension of time was granted. They submit that it is therefore necessary for the plaintiff to bring himself within s 65 of the Civil Liability Act 2005 (CLA). 25 I do not agree. In accordance with the reasoning of Brennan J set out above, the correct characterisation of the amendment is the imposition of additional implied terms into the contract which has already been pleaded. The cause of action remains the same. It is true that for those terms to be implied, the contract needs to have certain characteristics. That, however, does not it seems to me alter the essential nature of the cause of action or of the proposed amendments. 26 The defendants submit that the amendments should not be allowed, because they are futile. They submit that it is not possible for the plaintiff to establish the essential characteristics of the contract which are necessary for terms to be implied pursuant to s74. In particular the defendants submit that it cannot be established that they were "trading corporations" carrying on a "business". They submit that the reality was that the plaintiff was an amateur player, playing for an amateur rugby league club. 27 In support of that submission the fourth defendant relied upon affidavits from the secretary of the fourth defendant in 1998, the treasurer for 1998 and the current treasurer. The effect of their evidence was that in 1998 membership fees were not paid, the players were not paid and that the only business actually carried on by the club were fund raising activities by way of raffles and the operation of the a kiosk on game days. Their major revenue came from a grant from the first defendant and from sponsors. On the basis of that material it was submitted that the fourth defendant at least could not be regarded as a "trading corporation" carrying on a "business". 28 The fourth defendant relied upon the observations of Mason J in The Queen v Federal Court of Australia Ex parte: WA National Football League (1978-1979) 143 CLR 190 at 233-34: "'Trading corporation' is not and never has been a term of art or one having a special legal meaning. Nor, as the Chief Justice pointed out, was there a generally accepted definition of the expression in the 19th century. Essentially it is a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation … Not every corporation which is engaged in trading activity is a trading corporation. The trading activity of a corporation may be so slight and so incidental to some other principal activity, viz. religion or education in the case of a church or school, that it could not be described as a trading corporation. Whether the trading activities of a particular corporation are sufficient to warrant its being characterised as a trading corporation is very much a question of fact and degree." 29 In similar vein, the fourth defendant relied upon the comments of Toohey J in Hughes v Western Australian Cricket Association Inc & Ors (1986) FCA 357 at [57]: "When some activities [of the clubs] are income producing and others are not, the exercise is not straight forward. For instance it is apparent that most of the time spent by members of the club is on the playing of cricket, whether at training sessions or at matches. This is an activity which does not directly produce income at the club level, though of course it has incidents such as sponsorships which are income producing. How then is the comparison to be made? The amount of revenue produced from a particular activity may not be a satisfactory guide. A trading activity may represent a significant part of the club's income, but be relatively insignificant in an overall consideration of the club's activities." 30 The fourth defendant submitted that insofar as its activities were concerned, its trading activities in running a kiosk and raffles were but a minor part of its overall activities. The fourth defendant also relied upon the evidence that no membership fee was paid by players in 1998. For those reasons the fourth defendant submitted that as against it, the reliance upon s74 and therefore the amendments to the statement of claim, were futile. 31 There is a factual issue as to whether or not membership fees were paid in 1998 and specifically whether the plaintiff paid a membership fee in that year. In an application such as this, it is not appropriate to decide disputed issues of fact. Accordingly, the court must assume in favour of the plaintiff that that allegation can be made out. 32 The plaintiff declined to adduce any evidence in reply to that of the fourth defendant. He submitted that the court was not able, nor should it make a decision on questions of whether the first or fourth defendants were "trading corporations" and were conducting a "business" until all of the evidence was before it. The evidence to be called by the plaintiff on this issue was not before the court and as with the membership issue, this was not a matter which should be decided by the court on an amendment application. 33 The plaintiff submitted that all that he had to establish to overcome the submission as to futility was that there was a triable or arguable issue to be decided. In that regard the plaintiff referred to the evidence of the fourth defendant. He submitted that the affidavits made it clear that there were trading and/or business activities conducted by the fourth defendant. The fourth defendant was also in receipt of a grant from the first defendant and from sponsorships. As to whether these activities amounted to the conduct of a "trading corporation" in a "business" was a question of fact and degree which would depend upon all of the evidence ultimately placed before the court. There was sufficient evidence in the affidavits to make it clear that there was a triable issue. 34 I agree. I am satisfied that there is sufficient evidence before the court to demonstrate that a triable issue exists on this question. The concept of futility in an amendment application such as this relates essentially to matters of law or where there is an undisputed limitation defence. Where as here, there are real issues of fact to be decided, the futility of the amendment does not arise. 35 Accordingly, although I suspect that the plaintiff may have difficulty in establishing that a contract existed between him and the fourth defendant which had the special characteristics required to attract the operation of s74 of the Act (see Hughes v Western Australia Cricket Association and Ors (1986) FCA 357), this is not a basis for refusing the amendment. 36 While accepting that different principles apply to an amendment pursuant to s64 of the CLA than to an application for an extension of time, the defendants submit that if the amendment is allowed they will be significantly prejudiced. They submit that the financial records of the fourth defendant are no longer available. The evidence to this effect comes from the affidavits of the treasurer of the fourth defendant in 1998 and the present treasurer. They submit that had this evidence been available, they would have been able to demonstrate that membership fees were not paid or payable in 1998 and that insofar as the fourth defendant is concerned, it was not a "trading corporation". 37 The defendants also rely upon presumptive prejudice in that it is inevitable that recollections will have faded with the passage of time, particularly in relation to financial matters. Reliance is placed on Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541. 38 The plaintiff submits that the affidavits upon which the defendants rely do not indicate that the financial records of the fourth defendant are not available since there is no evidence of search. He submits that the evidence goes no further than to disclose that neither the present treasurer nor the treasurer in 1998 has the financial records of the fourth defendant for that year or knows where they are. The plaintiff submits that there may be copies of those records in the possession of an accountant, the first defendant or elsewhere if a proper search is conducted. 39 The plaintiff submits that the absence of those financial records is as much a difficulty for the plaintiff as for the defendants. The plaintiff carries the onus of proving that the first and fourth defendants were trading corporations. If the absence of the 1998 financial records creates a difficulty on that issue, that is a matter which the plaintiff must overcome. The plaintiff further submits that the financial records are not decisive in establishing whether either or both the defendants were trading corporations. Evidence as to the activities of the defendants would be available from sponsors, yearbooks and other publications and from persons who were active in the defendant organisations during 1998. 40 I accept that if it turns out that the financial records of the fourth defendant for 1998 cannot be found, this could present difficulties for contesting the claim arising from the application of s74 of the Act. There is, however, some force in the plaintiff's contention that this is a problem for both sides. At this stage I am not satisfied on the evidence that a full search for these records has been carried out and that they are in fact unavailable. 41 If it turns out that the 1998 financial records are unavailable, it is clear from the evidence in the affidavits that there are persons available to the defendants, in particular the fourth defendant, who can give evidence as to what activities the defendants were engaged on during 1998. 42 I am not satisfied that even if the financial records of the fourth defendant for 1998 cannot be found, the prejudice is such as to prevent an amendment pursuant to s64 CLA. 43 The first defendant submitted that the form of the Fourth Further Amended Statement of Claim was defective and in particular referred to paragraphs 12(c) and 17(c) of the draft. Those paragraphs were criticised as vague and as not setting out with sufficient particularity the terms of the contract which is relied upon by the plaintiff. 44 I accept that the averments which are referred to could be better pleaded. I do not accept that the defects are such as would lead me to refuse the application to amend. Any problem with those clauses of the Fourth Amended Statement of Claim can be remedied by a Request for Particulars. 45 It follows from the above analysis that the plaintiff should be allowed to file his Fourth Amended Statement of Claim. 46 The only outstanding matter is costs. The proceedings against the first defendant have been on foot since 2001 and those against the fourth defendant since June 2004. There is no evidence or explanation as to why the plaintiff delayed for so long before seeking this amendment. In the circumstances I am of the opinion that the defendants were entitled to oppose the application. Even though the plaintiff has succeeded in obtaining the order which he sought, he is seeking an indulgence from the court. 47 Because of that fact and because the plaintiff has failed to explain in any way the reason for the delay, I am of the opinion that the plaintiff should pay the defendants' costs of this motion. 48 The orders which I make are as follows: (1) The plaintiff is granted leave to file a Fourth Amended Statement of Claim. (2) The plaintiff is to pay the defendants' costs of this application. ********** 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.