Supreme Court of WA|2005-07-27|Before: Mr P, Blaxell J

Magro v Fremantle Football Club Limited & Ors [2005] WASC 163 (27 July 2005)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : MAGRO -v- FREMANTLE FOOTBALL CLUB LIMITED & ORS [2005] WASC 163

Trade Practices Act 1974 (Cth) - Misleading and deceptive conduct - Plaintiff appointed as assistant coach to first defendant football club - Representations as to future matters including duration of employment - Failure to appoint plaintiff on basis as represented - Representations made by remaining defendants who were also responsible for the same not being met - Whether remaining defendants accessorially liable for conduct of corporation

Trade Practices Act 1974 (Cth), s 51A, s 52, s 75B, s 82

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1

Poseidon & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332

Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175

Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514

Arnotts Ltd v Trade Practices Commission (1990) 97 ALR 555

Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635

Compaq Computer Australia Pty Ltd v Merry & Ors [1998] FCA 968; (1998) 157 ALR 1

Fernandez v Glev Pty Ltd [2000] FCA 1859

Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre [1978] HCA 11; (1978) 140 CLR 216

Hungerfords v Walker [1989] HCA 8; (1990) 171 CLR 125

La Rosa, Re; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 104 ALR 237

Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46179

Security Pacific Gold Ltd v Tricontinental Corporation Ltd [1991] FCA 413; (1991) 107 ALR 351

Su t/as Ausviet Travel v Direct Flights International Pty Ltd [1999] FCA 78

Sutton v AJ Thompson Pty Ltd (in liq) (1987) 73 ALR 233

Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

Tomlinson v Cut Price Deli Pty Ltd (1995) ATPR (Digest) 46-151

Trade Practices Commission v Manfal Pty Ltd (No3) (in liq) [1991] FCA 650; (1991) 105 ALR 520

Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099

Wheeler Grace & Pierucci Pty Ltd & Ors v [1989] FCA 127; (1989) 16 IPR 189

1 BLAXELL J: The claim in this matter arises from negotiations between the parties during 1997 which led to the appointment of the plaintiff as an assistant coach to the first defendant football club ("Fremantle"). At all material times the second, third and fourth defendants were respectively the Chief Executive Officer, Football Manager, and Chairman of the Board of Management of Fremantle.

2 Prior to his appointment the plaintiff was an assistant coach with Collingwood Football Club in Victoria, and he claims that he made it clear to the defendants that he would only transfer to Western Australia if certain conditions were met. He contends that the second, third and fourth defendants (on behalf of the first defendant) agreed to these conditions which (inter alia) were that:

• the term of the plaintiff's appointment as assistant coach to Fremantle would be 3 years.

• Fremantle would obtain employment for the plaintiff's wife in Western Australia.

• Fremantle would pay the plaintiff's expenses of relocating from Victoria to Western Australia.

• in the event of there being a vacancy for senior coach at Fremantle, the plaintiff would be interviewed for that position.

3 The plaintiff commenced as assistant coach at Fremantle in October 1997, but was dismissed less than one year later, on 23 September 1998. Prior to then the position of senior coach at Fremantle became vacant but the plaintiff was not interviewed for that position. Furthermore, Fremantle did not obtain employment for the plaintiff's wife, and the plaintiff claims that he was not paid all of his relocation expenses.

4 The defendants deny that they made representations or agreed to the plaintiff's conditions as alleged. They further contend that the plaintiff was appointed as assistant coach pursuant to an oral contract that was terminable by either party upon reasonable notice to the other. That contract was subsequently varied pursuant to a letter of appointment dated 15 October 1997 which included a term that the plaintiff's employment could be terminated upon the giving of one month's notice or payment of one month's salary in lieu thereof.

5 The plaintiff's claims in the present proceedings have included damages against Fremantle for breach of contract and damages against all defendants in respect of alleged contraventions of s 52 or s 53B of the Trade Practices Act 1974 (Cth). However, on the eve of trial, the plaintiff and Fremantle entered into a deed of release settling the claim against that defendant. The trial has nevertheless continued against the remaining defendants.

6 The plaintiff was born in 1954 and showed early promise as an Australian Rules footballer. He captained the State schoolboys football team in 1969 and played his first game of League football (with South Fremantle Football Club) as a 15-year-old the following year.

7 The plaintiff went on to play 103 league games for South Fremantle between 1970 and 1976. He then transferred to Collingwood Football Club ("Collingwood") in Victoria where he played 96 league games (including seven grand finals) during the period until 1982.

8 While playing for Collingwood, the plaintiff suffered a number of injuries that ultimately resulted in him departing that club at the end of the 1982 season. The plaintiff then transferred to Western Australia where he played 20 games for East Perth Football Club over two seasons before retiring from League football at the age of 28.

9 During 1985 the plaintiff successfully coached the Wagin football team which won its grand final that year. The plaintiff went on to coach the South Fremantle reserves team which won the Premiership in 1986. Subsequently, the plaintiff was senior coach of South Fremantle Football Club between 1987 and 1990, and of East Perth Football Club in 1992 and 1993. The plaintiff then returned to Collingwood in Victoria where he was an assistant coach between 1993 and 1997.

10 Throughout this period the plaintiff was closely acquainted with Mr Peter Gepp, who was an accountant practising in East Fremantle and a one-time coach of the North Fremantle Amateur Football Club. Mr Gepp had coached the plaintiff during his teenage years and had encouraged him in his subsequent football career. Sometimes Mr Gepp had also assisted the plaintiff in his contractual negotiations with football clubs.

11 One such occasion was in 1993 when the plaintiff became assistant coach at Collingwood. Once the plaintiff had reached agreement with Collingwood on the fundamental terms of his appointment, Mr Gepp stepped in to negotiate the detailed contractual arrangements. These included a "consultancy agreement" under which the club remunerated the plaintiff's family trust (at the rate of $83,000 per annum) for services provided by him (inter alia) as assistant coach. These arrangements were extended for a further year, following the expiry in 1996 of the plaintiff's initial three-year term.

12 During the plaintiff's first two seasons as assistant coach at Collingwood he worked under the senior coach, Leigh Matthews. At the end of the 1995 season, Matthews was replaced as senior coach by Tony Shaw, following some turmoil within the club and the election of a new president. The plaintiff was disappointed that Mr Shaw was appointed without any prior selection process because he himself had hoped to become Collingwood's senior coach. Mr Magro nevertheless remained with Collingwood as assistant coach for a further two seasons.

13 At all material times the second defendant (Mr Hatt) was the Chief Executive Officer, the third defendant (Mr McNeill) the Football Manager, and the fourth defendant (Mr Kelly) the Chairman of the Board of Management of Fremantle. The senior coach at Fremantle was Mr Gerard Neesham, who had been appointed under a three-year contract which expired in 1997, but which was then extended by one year until 1998.

14 One of Mr McNeill's roles as Football Manager was to be the initial point of contact for anyone seeking appointment as a player or assistant coach at Fremantle. During 1996 Mr Gepp telephoned and then met with Mr McNeill to investigate the prospects of Mr Magro transferring to Fremantle upon the expiry of the latter's initial three-year contract with Collingwood. However, nothing eventuated from these discussions and Mr Magro continued as assistant coach at Collingwood for a further year.

15 During the 1997 season Richmond Football Club enquired of Mr Magro whether he would be interested in becoming an assistant coach there. He discussed this offer with Mr Gepp who suggested that he might prefer a transfer to Fremantle instead. In this regard, Mr Gepp had heard rumours that an assistant coach at Fremantle, Neale Daniher, would be accepting a more senior appointment in Victoria.

16 As it happened, these rumours were true, and senior personnel at Fremantle, including Messrs Neesham, Hatt and McNeill, were seeking to identify a suitable replacement for Daniher. Mr Magro had been identified as one such possible candidate.

17 During August 1997 Mr Gepp contacted Mr McNeill, and they discussed the prospects of Mr Magro transferring to Fremantle. Mr Neesham also telephoned and (on 17 August 1997) met with Mr Magro who expressed interest in being appointed assistant coach at Fremantle.

18 There were then direct telephone discussions between McNeill and Magro, followed by a formal interview of the plaintiff by Messes Hatt, McNeill and Kelly at the Carlton Crest Hotel in Melbourne on 21 September 1997. As a result of that interview Magro was appointed assistant coach at Fremantle to fill the vacancy caused by the departure of Daniher.

19 Needless to say, there are substantial issues as to what took place during the discussions and meetings in August and September 1997, and as to the terms on which the plaintiff was appointed as assistant coach.

20 According to Mr Magro, he at all times made it clear to Mr Gepp and to the defendants that he was only willing to give up his position at Collingwood and to transfer to Fremantle if he was appointed as assistant coach for three years. His reasons for taking this stance were that his previous interstate moves had had a very unsettling impact upon his family (particularly on his youngest daughter) and he wanted to minimise any future disruptions.

21 Mrs Anna Magro has corroborated this evidence from her husband. She confirms that because of her youngest daughter's history of anxiety attacks, she and her husband discussed and agreed that he would only accept appointment at Fremantle if it was to be for a term of three years. This would enable their daughter to complete her final three years of schooling without further disruption. Mr Magro advised Mr Gepp of this decision during the course of the latter's contacts with Mr McNeill in August 1997.

22 I am still to rule on an objection by the defendants to the admission of evidence of conversations between Mr Magro and Mr Gepp, and between Mr Magro and his wife, on the basis that the same are hearsay. I rule that the same are admissible as evidence of the fact that those conversations occurred rather than as evidence as to the truth of what was then said. I also rule that the Magros are able to give evidence of their daughter's anxiety attacks without medical evidence to that effect being called.

23 During the first telephone conversation between Gepp and McNeill the former inquired whether Daniher was leaving Fremantle, and the latter said that the club was still not sure whether or not this would be happening. McNeill told Gepp that it was Fremantle's preference that Daniher should enter into a new three-year contract with Fremantle, but it was nevertheless likely that he would be leaving to become a senior coach elsewhere. Gepp informed McNeill that the plaintiff was interested in filling Daniher's position should it become available.

24 It is Mr Gepp's evidence that McNeill telephoned him later that month to inquire whether the plaintiff was still interested in the position of assistant coach at Fremantle. McNeill said that there was a strong possibility that Daniher would leave and that it was "Fremantle's policy to sound out high-profile Fremantle identities so that people could identify with the Fremantle aspect".

25 Mr Gepp then telephoned the plaintiff and advised him of his conversation with McNeill. He inquired whether Mr Magro had renewed his contract with Collingwood and whether he had given any further thought about a transfer to Fremantle. The plaintiff said that he would discuss the matter with his wife and then get back to Mr Gepp.

26 A few days later the plaintiff telephoned Mr Gepp and instructed him to advise Fremantle of his interest in the position on the basis of "$100,000 per year and a three-year contract like his initial contract at Collingwood". Mr Gepp then telephoned Mr McNeill once again and said that the plaintiff would be prepared to accept the position subject to a three-year contract at $100,000 per annum and payment of relocation costs. Gepp also informed McNeill that the plaintiff had ambitions to become a senior coach of an AFL club. McNeil then agreed that if the plaintiff was appointed as assistant coach his contract would definitely be for three years, and he would be given an interview for the position of senior coach at Fremantle "should it become available". This conversation concluded with Gepp advising McNeill that the latter should deal directly with the plaintiff to discuss the matter in more detail.

27 It was subsequent to that third conversation between Gepp and McNeill that Mr Neesham telephoned Mr Magro on 13 August 1997. Neesham told Magro that he was aware of the preliminary discussions between McNeill and Gepp and inquired whether he had given the matter further consideration. Magro and Neesham then agreed to meet at the Carlton Crest Hotel in Melbourne on 17 August 1997.

28 It is Mr Magro's evidence that he regarded this meeting with Neesham "as an interview for the position". The two men discussed the plaintiff's credentials as an assistant coach, and Fremantle's future prospects which Neesham said he wanted Magro "to be a part of". Magro also advised Neesham of his family circumstances and the reasons why he would require a three-year contract with Fremantle. Neesham responded that he did not think this requirement was unreasonable and that he would go back to Fremantle to discuss Magro's appointment with the club's management.

29 During late August and early September 1997 Mr Magro had one or two further telephone conversations with each of McNeill and Neesham. They both informed him of their discussions within Fremantle and said that the club was "moving towards arranging an interview for the position with me". Eventually an appointment was made for that interview to take place at the Carlton Crest Hotel on 21 September 1997.

30 The interview was conducted by Messrs Hatt, McNeill and Kelly, on behalf of Fremantle, and it is the plaintiff's evidence that, "I said that if I was to accept the position I would require a three-year contract at $100,000 per annum." The plaintiff also explained the reasons why he required a three-year contract. In response to this Mr Hatt said:

"That's okay. That's similar to Daniher's request when he moved to Fremantle."

31 Mr Magro also pointed out that his wife would have to leave her employment in Melbourne as a medical receptionist and that she would require similar employment in Perth if he was to be appointed to the position. In response, Mr Hatt said:

"That's no problem. We can find her similar work through our sponsor and supporter groups within the club."

32 The plaintiff also said that he would want Fremantle to meet the costs of his family and himself relocating to Perth. In response, Mr Hatt nodded his head, saying words such as, "Yeah, that's fine," or, "No problem. That's normal." McNeill and Kelly did not demur to any of these statements by Hatt.

33 There was then a discussion about Fremantle providing Magro with a vehicle (which is not relevant for present purposes), following which the plaintiff made a presentation which included his resume, a videotape, and a "set play booklet". By this time, McNeill had excused himself from the meeting. Following his presentation, Mr Magro asked Hatt and Kelly whether they considered that he had the right attributes to eventually become a senior coach, and they each responded positively. The meeting concluded with Hatt stating that the plaintiff had presented well and that they would be in contact to advise whether or not he would be appointed to the position.

34 During early October 1997 Mr McNeill telephoned the plaintiff and said that Fremantle had appointed him to the position of assistant coach. McNeill requested that the plaintiff immediately fly to Perth to attend the club's 1997 fairest and best medal count and presentation night which was to be held on 4 October 1997. Collingwood had scheduled its fairest and best medal count for 3 October 1997 and because of this the plaintiff wanted to be sure that his appointment with Fremantle had been finalised. Consequently he asked Mr McNeill: "So everything's agreed?" McNeill said: "Yes, it has." In response to the plaintiff's question: "So how do I get to sign?" McNeill said (inter alia):

"Everything's agreed. Don't worry about the contract. That can be drawn up and signed later. Just get over here and we will sort it all out."

35 It is the plaintiff's evidence that if Messrs Hatt, McNeill and Kelly had not indicated that his requirements for appointment would be met, and if McNeill had not assured him that Fremantle had agreed to his terms, he would not have accepted the position and made the "significant move to Western Australia". In reliance on these assurances he contacted Shaw at Collingwood, advised him of his appointment as assistant coach of Fremantle, and said that he could not attend the function on 3 October. The plaintiff then flew to Western Australia and attended the Fremantle function on 4 October 1997, where Mr Kelly announced his appointment as assistant coach.

36 The plaintiff then returned briefly to Melbourne, where he made arrangements with his wife to sell their recently purchased house. Following this, Mr Magro went back to Fremantle while Mrs Magro and the family remained behind in Melbourne. Their house initially passed in at auction, but was eventually sold in early December 1997 with settlement taking place in January 1998. Subsequently, Mrs Magro and the children moved to Western Australia.

37 In the meantime, Mr Magro had asked Mr Gepp to assist him in finalising his contract with Fremantle. With this in mind, Mr Gepp telephoned Fremantle's Business Manager, Mr John Cumming, in mid October and arranged for a meeting on 22 October 1997. At that meeting, Mr Gepp brought with him and showed to Mr Cumming a copy of the plaintiff's contract with Collingwood. He told Cumming that the plaintiff had agreed to a three-year term at Fremantle for $100,000 per annum plus relocation costs and he requested a written contract confirming these details.

38 Mr Cumming responded that Fremantle "did not do contracts" (which Mr Gepp understood to mean that the club would not enter into a consultancy arrangement of the type Magro had had at Collingwood.) Mr Cumming added that it would be more beneficial if Mr Magro was paid as an employee of Fremantle so that he could take advantage of certain fringe benefit tax exemptions and other tax concessions.

39 Mr Gepp reiterated that the plaintiff had agreed to a three-year contract with Fremantle and that he (Mr Gepp) was not in a position to renegotiate any terms of the contract. His only role was to assist in finalising the contract and to discuss how the plaintiff's "remuneration package" was to be structured.

40 Mr Cumming then said that he would talk to Mr Hatt about the matter and asked Mr Gepp to wait while he did so. After leaving the room for a short period Cumming returned and stated that Fremantle "preferred to engage their staff as employees". Gepp's response was that Hatt and Magro would have to sort this issue out between themselves.

41 The two men then discussed the manner in which Fremantle structured its fringe benefit tax remuneration packages and Cumming provided Gepp with some of the relevant documentation. On the basis of this information Gepp calculated that the plaintiff would be roughly $8000 per annum "better off" if he accepted Fremantle's FBT remuneration package as an employee.

42 Following his meeting with Mr Cumming, Mr Gepp telephoned Mr Magro and informed him of what had occurred, and of the potential benefit of an FBT remuneration package. Mr Magro responded that he was "not too fazed" as to how Fremantle structured his remuneration package and was only interested in the best financial outcome.

43 Subsequently Mr Gepp made further inquiries as to the nature of the FBT packaging arrangements and attended a seminar conducted by the external consultants who handled such matters for Fremantle. Ultimately, on 12 February 1998, Mr Gepp met with Mr Cumming once again and advised him that Fremantle's FBT proposal would be acceptable to Mr Magro.

44 On 16 February 1998 there was a further telephone conversation between Mr Cumming and Mr Gepp concerning Mr Magro's relocation costs and his superannuation entitlements. Mr Cumming said that Mr Hatt had agreed that Fremantle would pay all relocation costs and had also said that the $100,000 per annum salary was to be inclusive of superannuation. (At Mr Gepp's request Mr Cumming checked this latter point again with Mr Hatt and confirmed that the club regarded the salary as inclusive of superannuation).

45 Mr Gepp later prepared the necessary paperwork for the FBT "salary sacrifice package", including a list of Mr Magro's education expenses, mortgage repayments, motor vehicle expenses, health insurance premiums and council payments. When Mr Gepp had completed this paperwork he handed it on to Fremantle's external consultants.

46 It is the evidence of both Mr Magro and Mr Gepp that neither of them received or was aware of a letter dated 15 October 1997 signed by Mr Hatt (Ex 19) which purported to appoint the plaintiff as assistant coach for an indefinite period terminable on one-month's notice. This letter was addressed to Mr Magro and is said to have been posted on that date to his address in Melbourne.

47 On 8 December 1997 Mr Magro sent a letter to Cumming (Ex 22) advising his preferred structure for a remuneration package under Fremantle's salary sacrifice and FBT arrangements. Subsequently, the plaintiff received a series of four letters or memos from either Mr Hatt or Mr Cumming (Ex 23, 27, 31 and 32) concerning these salary packaging arrangements. None of these letters made any reference to the term of Mr Magro's appointment.

48 Mr Magro commenced his duties as assistant coach with Fremantle in early October 1997, and continued in that role until 23 September 1998. For all but the last three or four weeks of that period the senior coach was Gerard Neesham (whose initial three-year term expiring on 31 October 1997 had been extended for a further year). It is the evidence of both Mr Magro and Mr Neesham that the two of them would sometimes joke about the fact that their contracts were for three years and one year respectively.

49 Mr Magro's wife and youngest daughter relocated to Fremantle in late January or early February 1998. The family initially stayed with Mrs Magro's mother and their furniture was kept in storage at Grace Removals Group. Although Fremantle arranged for the furniture and household goods to be transported to Western Australia, it refused to pay the costs of storage.

50 Before coming to Western Australia Mrs Magro resigned from her employment as a medical receptionist in Melbourne. A couple of months after his wife's arrival Mr Magro asked Fremantle's Welfare Manager, Mr Tony Solin, to find alternative employment for her. All that happened in response was an "interview" for Mrs Magro at the front counter of the Fremantle Tourist Bureau, and no further steps were taken by Fremantle towards placing her in employment. Mrs Magro eventually by her own efforts obtained a position as a packer in a factory/warehouse.

51 On about 17 August 1998 Fremantle announced that Neesham would not be continuing as senior coach of Fremantle after the 1998 season. Mr Magro expected that he would be a candidate for the vacancy thus created and on about 18 August 1998 he met with Mr Hatt. Mr Hatt stated that Mr Magro was held in very high regard by Fremantle and would definitely be interviewed for the senior coach position. At a further meeting a day or two later, Mr Hatt informed the plaintiff that Fremantle would engage in a thorough process before appointing the new senior coach and that the plaintiff would definitely be in the final two or three candidates for the vacancy. Mr Hatt also said that Mr Magro should prepare a resume and a presentation for his interview.

52 On about 24 August 1998 Fremantle's Chairman of Selectors, Mr Ron Alexander, informed Mr Magro that he would be interviewed for the senior coach's position at 11 am on 27 August 1998. However, early on 27 August 1998 Mr Alexander telephoned the plaintiff and advised that he was about to fly to Melbourne for business reasons and that the interview had to be cancelled. No other reason was given for the cancellation.

53 On Friday 28 August 1998 Mr Magro travelled to Melbourne for Fremantle's last game of the 1998 AFL season. Later that evening Mr McNeill took him aside at the Carlton Crest Hotel and told him that Damien Drum had been appointed as senior coach at Fremantle for three years. According to Magro, McNeill appeared to be embarrassed about this decision and the fact that the plaintiff had not been interviewed.

54 Subsequently, on 10 September 1998, Mr Magro met with Drum at Fremantle to discuss future coaching arrangements. Magro assumed that he would be continuing as an assistant coach under Mr Drum for at least the following two years. However, at a meeting on 23 September 1998 Messrs McNeill and Drum informed him that he was no longer a part of Fremantle's coaching staff and that his employment was terminated. According to Mr Magro, Mr McNeill was blushing and appeared to be "somewhat embarrassed by the whole situation".

55 Mr Magro subsequently requested Mr Gepp to approach Fremantle and negotiate a termination payment on the basis that he had a three-year appointment. During the negotiations that followed, he and Gepp saw for the first time copies of the "letter of appointment" dated 15 October 1998 (Ex 19) and a letter signed by Mr Hatt dated 23 September 1998 (Ex 38) terminating his employment.

56 As the parties were unable to come to any agreement, the plaintiff commenced the present proceedings.

57 The defence case needs to be understood against the background of the management structure within the first defendant club. At all material times, the club was subject to direction by two separate boards, being a Board of Directors and a Board of Management. As I understand the evidence, the Board of Directors represented the interests of the owners of the club (the Western Australian Football Commission) and exercised a very general supervisory role. The Board of Management was chaired by the fourth defendant, Mr Kelly, and had more direct responsibilities in the management of the club. Nevertheless, the decision-making process on important matters was "executive driven" by Mr Hatt as Chief Executive Officer (T777).

58 The staff working under Mr Hatt included Mr McNeill as Football Manager and Mr John Cumming as Business Manager. Also contributing to decisions concerning the appointment of coaching staff was Mr Ron Alexander, who was a member of the Board of Management and the Chairman of Selectors.

59 The defence evidence in general shows that Messrs Hatt, McNeill, Kelly and Alexander, as well as the Senior Coach, Mr Neesham, all played a role in selecting Mr Magro as Assistant Coach in 1997. Messrs McNeill, Hatt and Cumming also shared responsibility for negotiating and deciding on the terms of his appointment, but it is fair to describe their evidence in this regard as being contradictory.

60 Mr McNeill, as Football Manager, had the responsibility of negotiating contracts with the entire playing squad at the club, and in each instance the main issues that inevitably arose were the quantum of remuneration and the length of tenure. Similarly, it was Mr McNeill who had negotiated those issues with Neale Daniher when he was appointed assistant coach at the club.

61 Mr McNeill confirms that it was in August 1996 that he was first approached by Mr Gepp concerning the possible appointment of Mr Magro. Gepp said that Magro and/or his wife were keen to return to Western Australia and McNeill replied to the effect that he would keep this in mind and advise when and if a position became available. Mr McNeill later told Mr Alexander of Gepp's approach.

62 In about July 1997 Mr McNeill saw Mr Magro at a game at Waverley Park in Victoria. He asked Magro if he was still interested in returning to Perth should a position become available at Fremantle and the plaintiff indicated that he was.

63 Subsequently, Mr Gepp contacted Mr McNeill once again and the two men arranged to meet on 8 August 1997. By this time it was public knowledge that Mr Neesham's position was in doubt, and Gepp said that Magro was interested in the position of senior coach if that became available, or alternatively in the position of assistant coach. There was no discussion at that time about the terms or conditions that would apply to any appointment of Magro.

64 It is Mr McNeill's evidence that between 8 August and 21 September 1997, he had several telephone conversations with Mr Gepp concerning the possible appointment of Magro as assistant coach. It was during this period that Gepp informed him that "it would cost $100,000 to get Magro". McNeill was not surprised by this figure and he responded that that was about what the club would expect to pay. There was no discussion about any other terms or conditions.

65 According to Mr McNeill he was also told by Gepp that Magro was unhappy about being overlooked for the senior coaching position at Collingwood and was contemplating a move to "a football manager type position" which might become available at that club.

66 Mr Magro was not the only applicant for the position of assistant coach at Fremantle, and interviews with three candidates took place at the Carlton Crest Hotel on 21 September 1997. The candidates, apart from Magro, were Peter Schwab, and Tony Elshaug. The interviews with Schwab and Magro were conducted by all of Messrs McNeill, Hatt and Kelly, but Mr McNeill interviewed Elshaug on his own. According to Mr McNeill, Magro was the preferred candidate of Mr Neesham and himself. From his perspective, the purpose of the interviews at the Carlton Crest Hotel was to "get Hatt and Kelly's approval of Magro".

67 During the interview of Magro on 21 September 1997 the discussions mainly concerned what he could bring to Fremantle. According to McNeill, while he was present, there were no discussions about any terms or conditions for Magro's employment with the club. However, McNeill had previously passed on to Mr Hatt the information from Gepp that Magro "wanted $100,000" (T529).

68 It is Mr Hatt's evidence that he was aware of Mr Gepp's approach to Mr McNeill in 1996 at about the time that that happened. When he became aware, during 1997, of Mr Daniher's likely departure he decided, in consultation with McNeill and the Board of Management, that Fremantle would recruit another assistant coach. He discussed suitable candidates with Neesham, and authorised the latter to have an "informal chat" with Magro. However, Neesham did not have authority to agree or make representations as to the terms or conditions of Magro's possible appointment. Mr Hatt also instructed McNeill to organise interviews with a series of suitable candidates and to invite expressions of interest from three people including Magro.

69 The interviews of the three candidates were conducted by Hatt, McNeill and Kelly at the Carlton Crest Hotel on 21 September 1997. During Mr Magro's interview he made a presentation on his suitability for appointment as assistant coach and also said that he was unsure about his future at Collingwood. To the best of Mr Hatt's recollection there was no discussion about the terms or conditions of employment, and he is "adamant" that there was no discussion at all about length of tenure.

70 Mr Kelly played no role at all in the selection process for assistant coach prior to 21 September 1997, and (according to him) he was asked to participate in the interviews that day because "McNeill had to leave early". He was present only at the interviews with Schwab and Magro (and it is not in issue that McNeil left the interview with Magro at a late stage in order to interview Elshaug).

71 It is Mr Kelly's evidence that the subjects discussed with Magro included the latter's credentials, his views on coaching, and his role and situation at Collingwood. Magro indicated that he was not happy at Collingwood and was disappointed that he was not interviewed for the senior coach's position at that club. Magro was asked if he intended to pursue a career as a senior coach with an AFL club and he said that he would not be actively seeking to do so. However, if the opportunity arose to become senior coach at Fremantle he would take that opportunity.

72 Mr Kelly cannot remember whether the question of length of tenure was discussed, but according to his statement of evidence-in-chief:

"At that time our coaches were on two to three-year contracts and if asked by Magro we would have indicated to him that in the ordinary course of events, we would expect him to receive a two to three-year contract, but that these details would need to be sorted out when we made him an offer. We certainly would not have made any undertakings as to the term of any appointment as at that time."

73 However, during his viva voce evidence Mr Kelly asserted that this statement was based on a "false impression":

"Well, as it turned out it was a false impression. I had only been involved in two contracts at the very early stages of the creation of the club. One was with Gerard Neesham and one was with Neale Daniher and both of those had three-year contracts. I falsely assumed that all our other coaching contracts would be three years. As it turned out, I was wrong." (T475)

74 Although Mr Kelly does not recall any specific discussion about salary, he believes that if the subject was raised Magro would have been told that "the sort of range" that Fremantle was looking at was between $75,000 and $100,000. However, there would have been no firm commitment "as this is something that we would deal with after an offer had been made".

75 Mr Kelly thinks that during the course of the interview Magro indicated that his wife was working and would wish to continue to be employed if they relocated to Perth. He believes that in response to this Magro "would have been told" that Fremantle would do everything it could to find his wife employment, but that this could not be guaranteed.

76 It is the evidence of Messrs Hatt and Kelly that Peter Schwab was their preferred candidate but Mr Schwab later advised that he was unavailable. The decision was then made to appoint Magro as assistant coach.

77 According to Mr Hatt, it was at this stage that the question of salary was first discussed, and it was he who suggested the figure of $100,000 plus a motor vehicle. It is Mr Hatt's evidence that:

"I had spoken with a couple of my contemporaries. I had taken into account the fact that Stan had eight years of experience at a reasonably senior level and my view was that he should be paid in the order of $100,000." (T656)

78 Accordingly, Mr Hatt instructed McNeill to negotiate the appointment of Magro as assistant coach on that basis. As to the length of the appointment, it is Mr Hatt's evidence that McNeill:

" ... knew full well the principles of the club in relation to letters of appointment and contracts ...

The policy was that almost invariably for all club personnel we were all to be on letter of appointment, such as myself and all the others. There were two exceptions to that. One was the senior coach. (The other exception) was people who are from Victoria, such as Daniher, domiciled, lived all their life in Victoria, who are relocated to Western Australia." (T669)

79 It is Mr McNeill's evidence that once the decision was made to appoint Magro he telephoned him, advised that he had the job, and said that he should attend the club presentation night on 4 October 1997. Although Mr McNeill does not specifically recall, he assumes that he said words to the effect that "the details of his appointment would need to be sorted out by Gepp". However, he was not himself involved in any subsequent negotiations regarding the terms and duration of Magro's employment.

80 Mr McNeill denies that Messrs Magro or Gepp at any time raised the issue of a three-year contract. Furthermore, it was Fremantle's policy that "a fixed term contract would only be offered where an assistant coach was required to relocate from his home State". Accordingly, there was no discussion of the term of Magro's appointment prior to it being announced at the medal count presentation on 4 October 1997.

81 It is relevant to note that at all material times Mr McNeill disagreed with Fremantle's policy of offering long-term contracts only to assistant coaches who were being relocated from their home State. In September 1997, he prepared a paper (Ex 88) which included a recommendation for a change in this policy, but this was rejected by Mr Alexander by way of handwritten endorsements on the document. Furthermore, it is McNeill's evidence that he was "forever going to David Hatt to try and get ... contracts for our assistant coaches ... (and to ask him) to put Mark Riley and/or Stan Magro on a contract." (T518)

82 According to Mr Hatt he advised a meeting of Fremantle's Board of Directors on 6 October 1997 that "Stan Magro had been appointed for no fixed period" and that "it was anticipated that a letter of appointment would be put in place". The defence has sought to tender purported minutes of that board meeting but following an objection by the plaintiff, I reserved my decision as to whether or not that should occur.

83 Having considered the matter I now rule that the document should not be admitted into evidence. The basis of this ruling is that the document is not an original, it was not signed by the Chairman of the meeting, and has not been produced from a minute book kept in accordance with s 251A of the Corporations Law. However, I understand Mr Hatt to say that although he has refreshed his memory from the purported minutes, he has an independent recollection of informing the directors as above. This being so, his oral evidence of that event is admissible.

84 Subsequent to the directors meeting on 6 October Mr Cumming prepared the "letter of appointment" dated 15 October 1997 (Ex 19) setting out the purported terms of Mr Magro's appointment. It is Mr Cummings' evidence that he prepared this letter on instructions from Mr Hatt without he himself having been involved in any prior negotiations with either of Messrs Gepp or Magro.

85 Mr Hatt contradicts this assertion because it was his understanding that the letter of appointment was the culmination of a process of negotiation between Messrs Magro and Cumming (T683). Mr McNeill's evidence is to the effect that he had no involvement at all in determining the contents of the letter of appointment (T523). Accordingly, there is no evidence from the defence of any negotiations or agreement with Mr Magro giving rise to a contract of employment as pleaded in par 17 of the defence.

86 According to both Hatt and Cumming, the letter dated 15 October 1997 was signed by the former, and "subsequently sent" to Magro at his address in Victoria. However, there is no evidence as to the actual posting of the letter, and it is common ground that it was never in fact countersigned by Mr Magro in the space provided in the document for such countersigning.

87 On 22 October 1997 Mr Cumming met for the first time with Mr Gepp whom he believed to be Mr Magro's "manager". His objective at that meeting was "to get the letter signed and finalise Magro's employment arrangements."

88 According to Mr Cumming, Gepp did not at any stage raise the subject of a fixed term for Magro. However, he recalls a specific discussion with Gepp (which he believes took place at the meeting on 22 October 1997) to the effect that "the letter of employment which had been sent to Magro was an open letter of employment which did not specify a particular term". It is also his recollection that:

"Gepp replied with words to the effect that he and Magro did not have a problem with there not being a term specified for Magro's employment and that he anticipated that Magro would be with the club for a long time."

89 Mr Cumming prepared a file note of his meeting with Mr Gepp on 22 October 1997 (Ex 20). That file note did not refer to the above conversation but did list a number of items that had been discussed. These items included the costs of furniture storage and accommodation during November and December 1997, and assistance in finding employment for Mrs Magro.

90 Mr Cumming also recalls that on or about 22 October 1997 he discussed with Gepp whether or not the salary of $100,000 was inclusive of superannuation. He has a file note of a telephone conversation with Gepp on 23 October (Ex 21) when they discussed this issue as well as the other matters listed in his file note from the previous day.

91 Subsequently there were further negotiations and correspondence between Cumming and Gepp concerning matters of detail including Magro's salary sacrifice packaging arrangements. However, none of these communications touched upon the question of the length of Mr Magro's appointment.

92 Mr Magro commenced as assistant coach in October 1997 and a fair summary of the evidence from the defence is that at all material times Fremantle was satisfied with the manner in which he performed his duties and considered that he was doing a "solid job" (T691-692). During this period there were two other assistant coaches, being Mark Riley and Ben Allan, as well as the senior coach, Gerard Neesham. Although Mr Hatt contends that Ben Allan was not a full time assistant coach, the latter's contract (Ex 90) and the evidence of other defence witnesses establish that he was.

93 In August 1998 Fremantle decided that Neesham's contract would not be renewed, and it is Mr Hatt's evidence that Magro was told that he would be considered for that position. Fremantle formed a panel chaired by Ron Alexander to select a new senior coach. According to Mr Alexander, Mr Magro was informed ''as a matter of courtesy" that he would be interviewed for the position, even though the panel had decided that Damien Drum was the better candidate. In the end, Fremantle had to quickly decide whether to recruit Drum because the later was being sought by another club. The decision to appoint Drum was made a few days prior to the scheduled interview with Mr Magro, and consequently that interview was cancelled by Alexander.

94 Mr Drum made it a condition of his appointment (and Fremantle accepted) that he could bring with him an assistant coach of his choice. By this time, Riley and Magro were the only assistant coaches at Fremantle because Ben Allan had resigned in the aftermath of Neesham's departure. Fremantle informed Drum that if he brought his own assistant coach, one of the existing assistant coaches would have to go, and that he would have to choose between Riley and Magro.

95 It is Mr Hatt's evidence that after Drum was appointed he spoke separately to each of Riley and Magro and advised that one of them would be losing his position. Magro did not at any time assert that he had a three-year contract with Fremantle or otherwise object to the potential loss of his employment.

96 In the end, it was as a result of Damien Drum's choice of Riley that Magro's employment as assistant coach was terminated on 23 September 1998. By that time, Fremantle had already entered into a contract (dated 19 September) with Terry Bright, who was to replace Mr Magro as assistant coach.

97 Mr Hatt left it to Drum to inform Magro that the latter's services had been terminated. On 23 September 1998 Mr Hatt also sent Mr Magro a letter (Ex 38) advising that it was "the considered view of the club that your services as assistant coach are no longer required". The letter did not offer any payment in lieu of notice, but Mr Hatt later asked Mr Cumming to contact Mr Gepp with a view to "coming to an agreement". Mr Hatt also gave two instructions to Mr Cumming:

"One was to ensure that we got correct legal advice from our solicitors, Phillips Fox, in relation to this issue and the second one was to be as amicable as possible." (T678)

98 By letter dated 20 November 1998 (Ex 38) Mr Hatt offered Mr Magro an "additional ex gratia payment equivalent to three-months' salary" in final settlement of all claims. That offer was rejected, and the present proceedings then ensued.

99 There are very substantial conflicts in the evidence which must necessarily be resolved by my findings as to the credibility of opposing witnesses. Despite the nature of these conflicts, it was not put to any witness that he or she was being deliberately untruthful, and it follows that I should not make any finding to that effect.

100 As to whether particular witnesses might be mistaken, it is significant that the events in question occurred some seven or eight years ago. The potential failings of human recollection over such a period are well known, and accordingly there is room for even the most honest of witnesses to be wrong about some of the relevant events.

101 However, as a matter of logic and common experience, the particular nature of some issues makes it unlikely that one or more of the witnesses will be mistaken. For example, it is most unlikely that Mr and Mrs Magro would mistakenly remember discussing and agreeing that they would only leave Melbourne if it was to be for a minimum of three years. Given their family circumstances as well as the need to sell their recently purchased home, this was an important decision for them to make, and it would be unreasonable to suggest that they could be mistaken about this fact.

102 Accordingly, and as a starting point in unravelling the facts, I make the finding that in August 1997 Mr and Mrs Magro did indeed discuss and agree between themselves that he would only accept a transfer to Fremantle if it was to be for a minimum of three years. I base this finding on the credibility of their evidence on this point, and on the general impression I gained from their demeanour whilst testifying, that they were honest witnesses. Somewhat unusually, I am supported in this assessment by Mr McNeill, who has testified:

"I have known Magro for some time and know him to be an honest person. I can only assume that his manager, Peter Gepp, told him that matters had been agreed with the club which had not in fact been agreed."

103 Of course, this assumption on Mr McNeill's part cannot explain all of the conflicts in the evidence, and in particular the issues as to what was said at the meeting on 21 September 1997 between Mr Magro and all of the defendants.

104 As to the question of what occurred during the initial negotiations between Mr McNeill and Mr Gepp, I make the following observations about the surrounding circumstances. Firstly, it is significant that Mr McNeill had the role as Football Manager to negotiate the fundamental terms of engagement of players and assistant coaches. As he has said in evidence, the major issues in each instance were the quantum of remuneration and the length of tenure.

105 Secondly, the question of the appropriate length of tenure for assistant coaches was a very live issue for Mr McNeill. During September 1997, at the very time of his negotiations with Mr Gepp, he prepared and submitted to his colleagues within Fremantle a confidential paper titled "Strategies for Success - 1998" (Ex 88) which included the following recommendation:

"The new assistant/development coach (ADC) be employed for a contract period of two years."

106 Others within Fremantle disagreed with this recommendation, and Mr Alexander, in particular, endorsed on his copy of Mr McNeill's paper that the new appointment should be for one year only. In this regard, it is Mr Alexander's evidence that:

"I had discussions with McNeill, Hatt, Kelly and the Board, during which I put forward the opinion that it would not be appropriate to appoint an assistant coach for a term longer than the senior coach. I put forward this opinion during the course of discussions about the term of Magro's appointment if a decision was made to appoint him."

107 It would seem that at all material times this issue remained unsettled within the club. Although Messrs Hatt and McNeill both say that it was Fremantle's policy that a fixed term contract would only be offered to an assistant coach who was relocating from his home State, it is also Mr McNeill's evidence that:

" ... I was forever going to David Hatt to try and get ... contracts for our assistant coaches so I didn't actually agree with the policy because I thought the assistant coaches were probably just as - you know, it was an insecure profession so I must say there were times when I'd go to David and ask to put Mark Riley and/or Stan Magro on a contract but definitely at the point in time because he wasn't seen to be a relocated coach he wasn't offered a term of contract." (T518-519)

108 It may also be significant that up until late September 1997 it was uncertain whether Mr Gerard Neesham would be continuing as senior coach at Fremantle. Mr Neesham took "an amount of time" to decide whether to accept the offer of a one-year extension to his initial three-year contract, and that decision was made only a week or two before the function on 4 October 1997. Accordingly, it could not have been known until then whether the length of any tenure offered to an assistant coach would be consistent with that of the senior coach (whoever he was to be) for the 1998 season.

109 It is against the background of all of these circumstances that Mr McNeill contends that there was no discussion between him and either of Messrs Gepp or Magro as to the length of tenure of the latter's proposed appointment. To my mind, the mere expression of that proposition demonstrates how improbable it is. In this regard, it is important to note that the tenor of Mr McNeill's evidence is not that he deliberately sidestepped the question of tenure during the course of negotiations, but that the issue simply never arose.

110 If I was to accept Mr McNeill's evidence on this point, I would also need to accept that on this one occasion he failed to exercise his normal role of negotiating the tenure of an appointment (in circumstances where he has not given any reason for failing to do so). I would also need to accept that Mr Magro, having agreed with his wife that he would not accept a transfer to Fremantle for less than three-years, simply did nothing further to ensure that that outcome would occur. Self-evidently, neither of these propositions is very credible.

111 Furthermore, the impressions I gained of each of Messrs McNeill and Gepp while testifying, assist me in coming to the conclusion that I should prefer the evidence of the latter. At critical points of his evidence, Mr McNeill appeared to be very ill at ease, and anxious to place as much distance as possible between himself and the issue of the length of Mr Magro's tenure. Mr Gepp, on the other hand, was a very careful witness who impressed me with his willingness at times to make concessions (albeit reluctantly) which tended to undermine his version of events. For example, after denying that he had discussed matters recorded in Mr Cumming's file note of 23 October 1997, Mr Gepp reconsidered and then stated:

"I've got enough respect for him to say if he's made the note ... there must have been (the discussion)" - (T451)

112 For all of these reasons I have no hesitation in coming to the conclusion that I should prefer the evidence of Mr Gepp to that of Mr McNeill. Accordingly, I find that Gepp made it clear to McNeill that Magro would only accept the position of assistant coach subject to a three-year contract at $100,000 per annum and payment of relocation costs, and that McNeill did not give any indication that those requirements would be unacceptable.

113 With regard to the interview with Magro at the Carlton Crest Hotel on 21 September 1997, I have already outlined a number of inconsistencies in the evidence for the defence. Those inconsistencies may well be the result of the witnesses having to remember aspects of events some eight years ago which might not have been of any great importance to them at the time.

114 Mr Magro, on the other hand, was testifying as to matters which were of vital importance to him at the time of the interview on 21 September 1997, and in my view he is much less likely to be mistaken about his recollections of what occurred.

115 In the end, the defence case rests upon the proposition that when applying for the position at Fremantle, Mr Magro was willing to give up his position at Collingwood, to sell his house in Melbourne, to uproot his family, and to transfer to this State without seeking any security of tenure. Furthermore, if Mr Hatt is to be believed, Mr Magro did not even seek any indication of what salary he would be paid.

116 In my view, and as a matter of logic and ordinary human experience, each of these propositions is inherently improbable. It really would be extraordinary for someone in Mr Magro's situation to be willing to apply for and accept a position interstate without knowing the likely duration of the appointment or the salary that would be payable.

117 The credibility of the defence case is further undermined by the circumstances surrounding the "letter of appointment" dated 15 October 1997. Yet again there are inconsistencies between defence witnesses as to how the contents of the letter were arrived at, and there is no evidence at all that those terms were ever discussed or agreed with Mr Magro. The letter was not in a standard form and was based, in large part, upon the terms of Fremantle's previous contract with Daniher (Ex 71). However, the "engagement" was subject to "a review following a three-month probationary period" and was terminable by one-month's notice, payment of one-month's salary in lieu of notice, or "summarily for any cause for which the firm is entitled to dismiss summarily at common law".

118 If that letter had been posted as claimed by Messrs Hatt and Cumming, it would have been received by Mrs Magro, who was still residing at the family home in Victoria and opening her husband's mail. Her evidence, and the evidence of Mr Magro satisfies me that neither of them ever received or saw the letter.

119 Another unusual aspect of the circumstances surrounding the letter of appointment is that there was ever a need to post it to Victoria at all. The letter in its terms stated that Mr Magro had started his full-time duties at Fremantle as at 13 October, and his evidence is that he had in fact commenced at an earlier date. Mr Magro was working from the same office as Messrs Hatt and Cumming, and therefore it would have been very simple for one of them to have presented the letter to him in person rather than to post it all the way to Victoria (along with the request that it be countersigned and returned within ten days).

120 It is also significant that there was no mention of the letter in Mr Cumming's file note of his meeting with Mr Gepp on 22 October 1997. If the subject of the letter had been raised, it surely would have resulted in a fairly vigorous discussion which Mr Cumming would have summarised and recorded. Furthermore, there is no evidence of any follow up by either of Messrs Hatt or Cumming when Mr Magro failed to respond to the letter, and as at 17 November 1997, Mr Cumming stamped a copy of the same as a "draft" (Ex 19.1).

121 Although there is always room for the remote possibility that the letter was sent but never received, I consider it to be much more likely that the letter was never in fact posted. In my view, the evidence in general points to the probability that Fremantle wished to avoid the issue of the tenure of Mr Magro's appointment, rather than to address and resolve it.

122 As against these anomalies in the defence case, I consider that the evidence from Mr Magro is cogent and credible. I am satisfied on the balance of probabilities that on 21 September 1997 he did state to the defendants that he would only accept a contract at Fremantle if it was for a term of three-years, that Mr Hatt indicated that this would not be a problem, and that Messrs Kelly and McNeill did not demur. I am also satisfied that Mr Magro was told that Fremantle would meet his costs of relocation to Western Australia, would use its best endeavours to find employment for his wife, and that he would be considered for the position of senior coach if that position became available.

123 Accordingly, when Mr Kelly announced Mr Magro's appointment as assistant coach on 4 October 1997 all defendants were aware that the latter had accepted that appointment subject to the conditions claimed. Notwithstanding this state of affairs, I accept Mr Hatt's evidence that on 6 October he informed the board of directors that the appointment was for "no fixed period". Thereafter Fremantle (within its internal processes) purported to employ Mr Magro on that basis.

124 Subsequently, Mr Gepp met with Mr Cumming to finalise the terms of Mr Magro's appointment. At all times Mr Gepp assumed that the appointment had been made for a period of three years. To the extent that Mr Gepp's evidence conflicts with that of Mr Cumming, I am satisfied that the former was not at any time told by the latter that the appointment had been made in the terms of Ex 19. Accordingly, when Mr Gepp negotiated on Mr Magro's behalf and agreed to an FBT salary sacrifice package he had no reason to suspect that this was inconsistent with a three-year term of appointment.

125 It is not for me to speculate why the first defendant purported to engage Mr Magro as assistant coach for an indefinite term, notwithstanding that it was aware (through the second, third and fourth defendants) that he was only willing to accept that appointment for a three-year term. Nevertheless, the evidence makes it difficult to accept that this could have occurred as a result of oversight or misunderstanding.

126 Fremantle's later failure to interview Mr Magro for the vacant position of senior coach was a breach of the representation that had been made approximately one year earlier. However, even if Mr Magro had been interviewed, I find that he would not have been appointed to fill that vacancy. In this regard I accept Mr Alexander's evidence that Fremantle in any event would have appointed Mr Drum.

127 The defendants have sought to portray Mr Magro's subsequent termination as being attributable to a choice made by Damian Drum, when in fact it was the outcome of a decision by Fremantle to reduce the number of assistant coaches. In this regard, there had been three assistant coaches under Mr Neesham, whereas following Mr Magro's departure there were only two under Mr Drum.

128 At all material times Mr Magro believed that he had a three-year appointment, and I accept the evidence that he and Neesham had occasionally joked about their respective contracts. Accordingly, the termination of his employment on 23 September 1998 came as a complete shock. That termination was in fact a summary dismissal, and the evidence does not show (even on the defence case) that there were any grounds for Fremantle to take such an extreme step.

129 Mr Magro undoubtedly suffered loss as a result of these events, and my detailed findings as to the nature and quantum of his loss appear below.

Whether the second, third and fourth defendants are liable

130 As the plaintiff's claims against Fremantle were settled by a Deed of Release executed prior to trial, the findings that I am about to make are not in any way binding on that party. However, for the purposes of the continuing claims against the remaining defendants, I need to determine whether or not Fremantle contravened any provisions of the Trade Practices Act 1974 (Cth) (the "TPA") and the Fair Trading Act 1987 (WA) (the "FTA"). In this regard, the statement of claim pleads that Fremantle's conduct constituted the following breaches of those acts:

"(1) representations that were misleading or deceptive or likely to mislead or deceive (contrary to s 52 of the TPA and s 10 of the FTA).

(2) conduct that was liable to mislead the plaintiff in relation to and in seeking employment with Fremantle as to the terms and conditions of that employment (contrary to s 53B of the TPA and s 14 of the FTA)."

131 In light of the findings that I have already made, it is self-evident that Fremantle did in fact contravene the provisions of the TPA and the FTA in each of the ways pleaded. It is also clear that those contraventions were entirely the result of representations and conduct by each and all of the second, third and fourth defendants ("the remaining defendants").

132 However, the plaintiff does not claim that the remaining defendants are directly liable for these contraventions in the sense that any of them personally breached s 10 or s 14 of the FTA. The case against the remaining defendants is that they are accessorially liable pursuant to s 75B of the TPA. That section relevantly provides:

"(1) A reference in this Part to a person involved in a contravention of a provision of Part ...V ... shall be read as a reference to a person who:

(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; ..."

133 The leading authority on the meaning of this provision is the decision in Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 where the majority of the High Court held (at 670 - 671) that:

"There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention ...

[Similarly] the proper construction of paragraph (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention."

134 In the present instance the plaintiff bases his claim on representations made as to future matters, namely the terms of Mr Magro's proposed employment by Fremantle. In my view, on the facts as found, the claim could have been based on a representation as to an existing fact, namely Mr McNeil's communication in early October 1997 which was implicitly to the effect that Mr Magro had been appointed on the basis as previously represented. However, the claim is not pleaded in this way, and this being so, it is relevant to note the following provisions in s 51A of the TPA:

"(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation."

135 Section 51A was inserted into the TPA in 1986, and as can be seen, it is partially substantive and partially procedural in nature. The substantive change to the law that previously applied, is that a corporation is no longer liable for misleading or deceptive representations as to future matters, if there are reasonable grounds for making such representations. The procedural change was brought about by the deeming provision in subs (2) which has the effect of placing an evidential onus on the corporation to show that there were such reasonable grounds.

136 In the context of the present matter, the question arises whether a plaintiff can rely upon the deeming provision in subs (2) in respect of a claim for accessorial liability against defendants other than the corporation. This question was conclusively answered in the negative by the Full Federal Court in Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175 when it held:

"... where s 75B or s 80 accessorial liability is in issue in relation to a representation with respect to a future matter, the existence or otherwise of reasonable grounds will be relevant. If reasonable grounds exist, there will have been no contravention and thus no question of accessorial liability will arise. However, as against the accessorial respondent, the onus will be on the applicant to show the respondent had actual knowledge that

• the corporation had no reasonable grounds for making it."

137 Accordingly, in the present matter, the remaining defendants will only be liable if the plaintiff has established that they each had actual knowledge that the relevant representations were made, and that such representations were misleading or that Fremantle had no reasonable grounds for making the same.

138 Clearly, Mr McNeill was aware of the representations that he made on behalf of Fremantle, and all of the remaining defendants were aware of the representations similarly made at the meeting with Mr Magro on 21 September 1997. The question whether each was also aware that the representations were misleading or that there were no reasonable grounds for making the same, requires a further consideration of the facts.

139 In this regard, it is common ground that each of the remaining defendants was authorised by Fremantle to act on its behalf not only in the negotiations with Mr Magro, but also in appointing him as assistant coach. Furthermore, it was the remaining defendants who had the authority to determine the terms on which such an appointment was made.

140 The self-evident and inevitable conclusion from the facts as found is that the second, third and fourth defendants failed to appoint Mr Magro as assistant coach on the terms as previously represented. Quite the contrary, little more than two weeks later Mr Hatt was able to state to the Board of Directors that Mr Magro had been appointed for "no fixed period". Similarly, Fremantle's subsequent lack of effort in finding employment for Mrs Magro, or in meeting all of Mr Magro's relocation expenses, is indicative of a failure by the remaining defendants to take steps to ensure that those representations would be met.

141 In these circumstances, the facts that are critical to the question of liability are that the remaining defendants represented to Mr Magro that he would be appointed on a particular basis, but then failed to exercise their authority and power to ensure that this occurred. They appointed Mr Magro without saying more, thus misleading him into believing that his appointment was as previously represented. Of necessity, these were all matters that were within the actual knowledge of the remaining defendants.

142 Given these circumstances, it is my view that there is simply no scope for s 51A(2) to operate. Put another way, in circumstances where accessorial defendants make representations as to future matters on behalf of a corporation, but then by their own conduct bring about the situation where those representations are not met, they are necessarily a "party" to the contraventions involved. Accordingly, there is no need to resort to the question of whether there were reasonable grounds for making the representations because the defendants, by their own conduct, ensured that the representations did not come to pass.

143 Even if I am wrong in this view, it is relevant to note that the deeming provision in s 51A can only operate to the extent that the representations are "taken to be misleading". The deeming provision cannot operate in respect of representations that are "likely to mislead" (s 52) or "liable to mislead" (s 53B). In this regard, and on the facts as found, each of the remaining defendants was certainly a "party" to representations which were likely to mislead or liable to mislead.

144 The defence also contends that if I am to make the findings that I have, I should also find that Mr Magro did indeed have a three-year contract with Fremantle, and thus (in that respect) there is no loss that can be claimed. While this submission is superficially attractive it fails to take account of the realities of what occurred. At all material times the remaining defendants have either ignored or denied the existence of any such contract. Furthermore, there is no plea in the defence (either in the alternative or otherwise) that Mr Magro had a three-year term of appointment, and it follows that this submission should be rejected.

145 For all of these reasons I make the finding that the second, third and fourth defendants are liable to the plaintiff for Fremantle's contraventions of s 52 and 53B of the TPA. I make this finding notwithstanding the views that I expressed prior to trial when refusing leave for the remaining defendants to bring an application to strike out the statement of claim. That proposed application was based on the contention that the authority of Quinlivan (supra) made the plaintiff's claim for accessorial liability untenable. At that time the first defendant was still a party to the proceedings, and when refusing leave I stated (inter alia):

"As against all defendants, the plaintiff could only succeed if he proves, on the balance of probabilities, that the representations as to future matters were made and, as against the second to the fourth defendants, the plaintiff must also establish as a matter of law that the deeming provisions in subs (2) of s 51A applies to their accessorial liability."

Magro v Fremantle Football Club Limited & Ors [2005] WASC 163

At a glance

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Decision date

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Judgment (259 paragraphs)

Magro v Fremantle Football Club Limited & Ors [2005] WASC 163 (27 July 2005)

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Legislation Cited (2)

Cases Cited (18)