Peter Tao Zhu v Sydney Organising Committee for the Olympic Games & Ors

Introduction 1 This litigation arises out of a dispute between the plaintiff, Peter Tao Zhu, and the first defendant, Sydney Organising Committee for the Olympic Games (SOCOG) in relation to an Agency Agreement entered into by the plaintiff and the second defendant, TOC Management Services Pty Limited (TOC) in March 1999 whereby the plaintiff was authorised to sell to Mainland Chinese in Mainland China International Memberships of the Olympic Club (the Club).

The Plaintiff 2 The plaintiff was born in the People's Republic of China in 1962. He migrated to Australia in 1989 and was granted Australian citizenship on 16 April 1997. 3 Since arriving in Australia in 1989 the plaintiff has carried on a number of businesses including an import/export, travel consultancy and migration business in the name "K & Z Consultants" which was incorporated into a company in December 1992 known as "K & Z Marketing Pty Limited". 4 The plaintiff is a licensed migration agent having obtained his licence in 1997. He has also worked as an education consultant for the Chinese community providing services to overseas students who wish to study in Australia. He has also been involved in real estate and mining investment, including a property development project in Northern China.

SOCOG 5 SOCOG was constituted by the Sydney Organising Committee for the Olympic Games Act 1993 (NSW) (the SOCOG Act) and operated from its headquarters at Ultimo, Sydney. SOCOG has the same legal capacity and powers as a company under the Corporations Law (s.6(1)). 6 The primary objective of SOCOG was to organise and stage the Games of the XXVII Olympiad in Sydney in the year 2000 (the Games) (s 9(1)). It was required to (a) act in a financially sound and responsible manner, (b) have regard to the limits of the available financial resources, (c) use its best endeavours to avoid the creation of debts and liabilities that would extend beyond the winding up date in March 2002 and (d) use its best endeavours to ensure that preference was given to the use of Australian goods, services and materials (s 9(2)). 7 SOCOG's functions included establishing a marketing program in consultation with the International Olympic Committee (the IOC) and the Australian Olympic Committee (the AOC) (s 10(2)(d)). SOCOG had the power to enter into an agreement, including a contract, arrangement or understanding, relating to the distribution, marketing or sale of goods or services associated with the Games (s10 (2A)). 8 During the period the subject of this litigation the affairs of SOCOG were managed and controlled by the Board of Directors constituted under the SOCOG Act (s 15). The Board included the President of SOCOG, the Minister for the Olympics, Mr Michael Knight (Mr Knight), the President of the AOC, Mr John Coates (Mr Coates) and the Chief Executive Officer of SOCOG, Mr Sandy Hollway (Hollway).

The Olympic Intelligence Centre 9 The Olympic Intelligence Centre (the OI Centre) was constituted by members of the New South Wales Police Service (the Police Service) and was located in the same building as, but on a separate floor from, SOCOG in Ultimo. The Police Service also established the Olympics Investigation Strike Force (the Strike Force) to carry out specialised investigations into criminal offences and threats that related to the safety and/or conduct of the Games. The Commander of the Strike Force was Detective Superintendent Nick Kaldas (DSI Kaldas) and the Team Leader was Detective Sergeant Leslie Warren Nicholls (DS Nicholls). The Strike Force was located elsewhere from the OI Centre. TOC 10 TOC was established in July 1997, having been previously known as Electronic Financial Systems Pty Limited and prior to that Emphatic Productions Pty Ltd. The Directors of TOC as at July 1997 included William David Sherbon (Sherbon) and Stefan Wisniowski (Wisniowski). The shareholders included companies associated with Sherbon and Wisniowski, Sherbon and Associates Pty Limited and Bipolar Group Pty Limited. 11 Synthesis Consulting Pty Limited (Synthesis), previously known as Communication Initiatives Pty Limited and Critical Decisions Pty Limited, and Synthesis Group, previously known as Sherbon Greenlaw Pty Limited, provided consulting services in relation to international business strategies and marketing strategies. The directors of Synthesis included Sherbon and Wisniowski. The shareholders of Synthesis included Sherbon and Bipolar Group Pty Limited . 12 Keith Wyness (Wyness) was appointed as the Managing Director of TOC on 17 September 1997 and remained in that position until the latter part of 1999 although he is recorded on ASIC records as a director until 4 January 2000. Angus Roderick Noble (Noble), a chartered accountant, commenced employment with Synthesis in September 1997. His employment was "transferred" to TOC in December 1997 when he became known as the Commercial Director. 13 Synthesis and Synthesis Group Pty Limited developed the concept of the Club and TOC was incorporated for the purpose of being appointed Trustee of the Olympic Club Trust

The Olympic Club Trust and the Olympic Club 14 A Trust Deed establishing the Olympic Club Trust was executed on 26 September 1997. The unit holders of the Trust were the AOC, SOCOG and Synthesis. TOC was the Trustee of the Trust and provided management and other services to the Club. Wyness was the Managing Director of TOC at all relevant times. Noble's responsibilities were to establish and manage the Club reporting to Wyness. 15 The Club was established pursuant to The Olympic Club Establishment Agreement (the Establishment Agreement) executed on 5 December 1997. Under the Establishment Agreement the parties, TOC as Trustee and for itself, SOCOG, the AOC and Synthesis acknowledged that they intended that the Club was to be established as an affinity program by Contract between the Trustee and each member. They also acknowledged that the purpose for which the Trust had been established was the encouragement or promotion of sport through the programs offered by the Club and that the members of the Club would benefit from the Club through, amongst other things, the provision of the Olympic Benefits and other privileges (Cl 2(a) - (c)). 16 Olympic Benefits included tickets to Olympic Games, test events, Paralympic Games and Olympic Arts Festival events, access to the Official Dress Rehearsal of the Opening Ceremony, Club Member recognition on a special memorial, privilege rights to become a volunteer, and involvement rights in the Torch Relay. (Cl 1(a); Sch 1). 17 In the Establishment Agreement TOC, when referred to in its role as trustee was referred to as "the Trustee" and when referred to in its personal capacity was referred to as "TOCMS". The Recitals to the Establishment Agreement included: B Synthesis has been integrally involved in the development with SOCOG and the AOC of the concept for the Club (to be called the Olympic Club) and has established TOCMS for the express purpose of acting as trustee of the Trust. C The parties have established the Trust in connection with the Club with the Trustee as the trustee. The Trust Deed contemplates that the parties will enter into this agreement. D The parties have agreed to establish the Club and that the Trust will be the vehicle through which the Club will be operated. E SOCOG and AOC will make certain contributions to the establishment and operation of the Club. The parties have agreed to establish the Club Committee to oversee the operation of the Club. F The Trustee's rights and obligations are outlined in this Agreement and the Trust Deed and will be set out in full in the other transaction documents. G SOCOG will make funds available to the Trust under the Loan Agreement. Synthesis has agreed to arrange a letter of credit in favour of SOCOG to ensure the repayment of these funds.

The Club Committee 18 The Club Committee was constituted under the Establishment Agreement and comprised two representatives of each of SOCOG, the AOC and Synthesis as notified to the Trustee from time to time, the chief executive officer of the Trustee who was to be regarded as the Trustee's representative and any person appointed as chairman who was not prior to the appointment one of the members of the Club Committee (Cl 5(b)). During the period, the subject of this litigation, the members of the Committee included Paul Reading (Reading) and John Moore (Moore) of SOCOG, Craig McLatchey (McLatchey) and Alan Grover of the AOC, Sherbon and Wisniowski of Synthesis and Wyness. 19 Relevant provisions of the Establishment Agreement in relation to the Club Committee included the following: 5(d) The functions of the Club Committee shall be: (1) generally to oversee the operations and management of the Club; (2) to give directions to the Trustee which are consistent with its role as expressed in Clause 5(e) or otherwise in the express circumstances set out in and manner permitted by a transaction document; and (3) to negotiate and to agree the Budgets and any variations thereto. (e) The Club Committee, and the members of the Club Committee, will have a similar role and similar duties in respect of the Club and the Trust to those of a board of directors, and the members of a board of directors, in respect of a company, without affecting the Trustee's rights and duties under Clause 4(a) as to the day to day management of the Trust and the Club. Each of the AOC, SOCOG and Synthesis will ensure that their respective representatives on the Club Committee enter into a Deed with the Trustee accepting this role and these duties as a condition of their appointment and holding office. (g) If all the AOC and SOCOG representatives are reasonably of the opinion that an activity of the Trustee is likely to affect the goodwill or reputation of the Olympic movement adversely, they may direct the Trustee to cease that activity. The Trustee must comply with such a direction.

The Plaintiff meets with TOC 20 Prior to January 1999 TOC engaged a company known as Salesforce Australia Pty Limited (Salesforce) to provide services for direct sales of the Club memberships to the general public. Salesforce arranged for a team of sales representatives to sell Memberships of the Club by way of a door knock approach. Noble was responsible for the supervision of the Salesforce personnel, one of whom was Mr Tim Go (Go). 21 In January 1999 Go informed Noble that he knew the plaintiff and that the plaintiff thought that there was a market for selling Club memberships to residents of Mainland China as part of an accommodation and travel package for the Games. Noble asked Go to arrange for the plaintiff to visit him. 22 Early in February 1999 a meeting was arranged in TOC offices at Chatswood between the plaintiff, Noble and Go (the initial meeting). At the initial meeting the plaintiff informed Noble that he saw a big market in China for people to come to the Games. Noble informed the plaintiff that the Club did have some ideas for taking the Club internationally beyond the Games and that his idea could work in well with the Club's "long term plan". Noble informed the plaintiff that he would speak to his directors and then they would speak to SOCOG because "everything had to be approved by SOCOG". 23 At the initial meeting the plaintiff also informed Noble that he would need to provide tickets to the Games in his accommodation package. The Chinese interest in such sports as badminton, table tennis and soccer was discussed and the plaintiff asked whether it would be possible to buy tickets for such events and include them in the package. Noble informed the plaintiff that he could not guarantee it and said "but with our connections with SOCOG, I would be able to provide you with assistance with your negotiations with SOCOG" and "it is likely that there will be tickets available for the less popular sports." 24 The plaintiff and Noble met on a number of other occasions in February 1999 and during one of their meetings Noble informed the plaintiff that he had the "go ahead" for the plaintiff's idea. Noble requested a copy of the plaintiff's resume and two reference letters as "we will need to check you out". 25 By late February the plaintiff had worked out the elements of the basic travel and accommodation package incorporating Club memberships which he intended to sell. At a meeting with Noble in late February 1999 the following conversation took place:

Noble: You can probably sell as many memberships in China as you like. There will be no real limit. However, we can only provide you a maximum 10,000 at the Opening Ceremony Dress Rehearsal. Accordingly, our contract in the first place will have to be limited to that number because of the restriction on those tickets. It won't be a problem however if you want to sell more than that if demand for memberships is great, then you could sell more, but we'll have to discuss that and you must understand that any extra memberships over the 10,000 would be sold without tickets to the Opening Ceremony Dress Rehearsal being guaranteed. For the time being therefore, we will leave it at 10,000 and see how your sales go.

The plaintiff: I would be prepared to pay a $350 fee for each Club membership, if that includes one ticket to the Opening Ceremony Dress Rehearsal. Can you and SOCOG guarantee that I can get 10,000 tickets to the Opening Ceremony Dress Rehearsal?

Noble: Oh, sure. We can guarantee 10,000 to the Dress Rehearsal guaranteed. 26 The plaintiff informed Noble that he would need a letter of introduction that he could use as authority to act on behalf of the Club and a letter of introduction to the Chinese Olympic Committee. Noble informed the plaintiff there would be no problem in providing such letters and advised him that "we will need a simple form of Agency Agreement". Noble also informed the plaintiff that "you have our full support, we really like the idea and are planning to establish agencies in other countries". The following conversation also took place:

The plaintiff: Do I need to notify the names of members as they are sold? How will it work?

Noble: You can buy memberships in bulk and on-sell them as part of your travel packages. Then you provide us with the member's name and mailing address we can then send out the welcome kit and enter the details in the database. 27 On 3 March 1999 Noble faxed a draft Letter of Understanding and Introduction Letter for discussion to the plaintiff. After the plaintiff responded to that letter on 4 March 1999 Noble signed the terms of a letter dated 8 March 1999 which was also signed by the plaintiff as Chairman of Australian Chinese Sports Connections Pty Ltd (ACSC). In the discussions in February the plaintiff had informed Noble that he had purchased this company for use in the sale of the packages. Noble informed the plaintiff that he could use a company but that the Agency Agreement needed to be in the plaintiff's name because the Club wanted him to be personally responsible for the Agency.

The Plaintiff appointed as Agent 28 The Letter signed by Wyness as Managing Director on 8 March 1999 was in the following terms:

To whom it may concern. Mr Peter T Zhu is an Authorised Agent of the Olympic Club and is hereby authorised on an exclusive basis in the territory of the Peoples Republic of China to sell Olympic Club International Memberships to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games as a component of a travel and accommodation package for the period 1 April 1999 to 30 June 1999.

29 On 10 March 1999 Noble supplied the plaintiff with a letter of that date signed by him as Commercial Director introducing the plaintiff to the Chairman of the Chinese Olympic Committee in the following terms:

Chairman Chinese Olympic Committee Dear Sir The Olympic Club of the Sydney 2000 Olympic Games is pleased to advise that Mr Peter Tao Zhu has been chosen as the Exclusive Authorised Agent of the Club to market International Memberships to residents of the Peoples' Republic of China in China. The Olympic Club has chosen Mr Zhu as its first Exclusive Authorised Agent for Overseas Memberships after lengthy consultations, discussions and investigation. We are therefore pleased to introduce Mr Zhu to your Committee. We respectfully request you provide such assistance as your Committee deems appropriate to Mr Zhu in his work of enlisting Peoples' Republic of China residents to join the Club via these International Memberships.

The Agency Agreement 30 On 11 March 1999 the plaintiff and TOC signed the Agency Agreement in which TOC was referred to as "the Company" and the plaintiff was referred to as "the Agent". The "Commencement Date" was 1 April 1999 and the "Initial Termination Date" was defined as 30 June 1999. The "Further Term" was defined as 1 July 1999 to 30 September 2000. The Agreement provided: 2 Agency 2.1 The Company hereby appoints the Agent exclusively and the Agent agrees to accept the exclusive appointment to provide the services to the company upon the terms and subject to the conditions set out in this Agreement for the initial term and (if applicable) the further term. 31 "Services" was defined as "the activities to be conducted or supervised by the Agent set out in Schedule 1 or any part thereof" (Cl.1.1). Schedule 1 provided: Services (Clause 1.1) During the Initial Term the Agent shall sell 2,000 International Memberships in the Territory to Mainland Chinese visiting Australia for the Sydney 2000 Olympic Games and during the further term 8,000 International Memberships.

The "Territory" was defined as the Mainland of the Peoples Republic of China (excluding Hong Kong), in which "the Agent will provide the Services". 32 "International Membership" was defined as "International Membership of the Olympic Club of the Sydney 2000 Olympic Games as endorsed by the Sydney and Australia Olympic Committees" (Cl.1.1). Other relevant terms of the Agency Agreement were: 3. Term of Agency 3.1 The Agency shall commence on the Commencement Date and shall terminate on the Initial Termination Date (the "Initial Term" ) unless earlier terminated by the Company in accordance with clause 15.2, or extended by the exercise of the Option. 4. The Option 4.1 Subject to the Conditions Precedent set out in Clause 5, the Company grants to the Agent an Option for the Further Term on the terms and conditions of this Agreement. 5. Conditions to The Exercise of The Option 5.1 The Parties acknowledge and agree that the following duties and responsibilities are Conditions Precedent to the exercise of the Option granted in Clause 4: - (a) The Agent shall sell, by no later than 30 June 1999, a minimum of 2,000 International Memberships in the Territory. (b) The Agent shall pay to the Company all and any Membership Fees due and owing including the minimum sum of AUD$700,000 in respect of this clause 5.1(a) (c) The Agent shall not be in any breach of this Agreement. 6 Remuneration 6.1 In consideration of the Company appointing the Agent for the Term, the agent shall pay to the Company the Agency Fee set out in Schedule 4. 6.2 The Agent shall pay to the Company, the Membership Fee set out in Schedule 4, in accordance with clause 7.1(c). 7 The Company's Duties 7.1 The Company Covenants and agrees with the Agent that: (a) The appointment of the Agent is exclusive within the Territory. (b) Upon execution of this Agreement, the Company shall provide to the Agent a letter introducing the Agent as the exclusive agent of the Company and The Olympic Club to sell International Memberships to the people of the Mainland of the Peoples Republic of China, and a copy of the letter of introduction is annexed hereto and marked "A". (c) Within no more than eight (8) weeks of receiving notification from the Agent of his enlisting and/or signing, not less than 500 new International Memberships, and subject to payment of the Membership Fee, the Company shall supply to the Agent's nominated Sydney postal address an International Membership Welcome Kit for each and every new International Membership. (d) It shall publish and deliver to the Agent's nominated Sydney postal address every four calendar months from the time of enlisting a Chinese International Member, an International Membership Mailer for each and every nominated International Membership. (e) In the event the Agent exercises the Option, the Company shall provide to the Agent every three (3) calendar months with further letters in accordance with Clause 7.1 (b), authorising the Agent for the following three (3) months until the Completion of the further term provided that the Agent is not in breach of this Agreement. (f) It shall do all things reasonable to assist the Agent in his negotiations with the Sydney Olympic Committee to obtain ticket allocations to the Sydney 2000 Olympic Games. (g) It shall do all things reasonable to assist the agent in making applications for Chinese International member visas to enter Australia for the Sydney Olympic Games. (h) It shall do all things reasonable to assist in introducing the Agent to the Chinese Olympic Committee 8. Illness or Incapacity 8.1 If the Agent is unable to attend to his duties as set out in clause 9 due to illness or incapacity the Company for a period of more than two (2) months the Company may terminate the Agency on fourteen (14) days written notice of its intention so to do. 9. The Agent's Duties 9.1 The agent convenants and agrees with the Company that he shall: (a) Do all things and sign all documents reasonably necessary to obtain the appropriate and required approvals and authorisations from the Government of the Peoples Republic of China and the Chinese Olympic Committee (b) Refrain from, in any way, utilising the Sydney 2000 Olympic Club Logo or this Agency generally for the purpose of promoting, marketing or selling any services other than the International Memberships and the Agent agrees to execute the Marketing Restriction Deed Poll presented to him at the time of executing this Agreement. For the sake of clarity, the Marketing Restriction is to extend to, but not be limited to the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and all and any merchandising by the agent or all and any of his associated or related entities, individuals or bodies corporate. (c) To obtain the written approval of the Company prior to utilising the Sydney 2000 Olympic Club Logo or any variation thereon in any print or electronic media or marketing or sales material. (d) To do all things reasonably necessary and expeditious to sell up to 10,000 International memberships in the Territory. (e) Within no more than fourteen days of selling an International Membership provide to the Company the names, addresses and Passport or Identification Card details of all new International Memberships. (f) Unless prevented by illness or incapacity carry out his duties as an agent and do all in his power to promote, develop and extend the sale of International Memberships in the Territory. (g) Conform to, observe, obey and comply with the reasonable directions and regulations made by the Company and with such directions as may be given to him by any authorised employee of the Company from time to time; (h) Exercise that reasonable degree of skill, care and diligence that is to be expected of a suitably experienced person engaged in the performance of comparable duties and in accordance with generally accepted practices in Australia appropriate to the kind of duties being performed under this Agreement; (i) Arrange for the destruction and disposal of all material of a confidential or draft nature in accordance with the Company's directions; (j) Act in the best interest of and endeavour to protect and preserve the interests of and the Business and the Company and not engage in other activities which would adversely affect his ability to perform his duties and fulfil his obligations under this Agreement. 10 Consultation

10.1 The company and the agent will discuss, as necessary, any action which needs to be taken to ensure the Standards are maintained. 11. Unsatisfactory Services 11.1 If, in the reasonable opinion of the Company, the Services or any of them are at any time not being satisfactorily performed, the Company will so notify the Agent and the Company and the Agent will consult in good faith as to the best method of rectifying the problem. 11.2 The Agent will use its best endeavours to remedy unsatisfactory performance of the services as soon as possible including, without limitation, by performing the unsatisfactory Services again, and by taking appropriate measures to ensure that the problem does not recur. 11.3 If, in the opinion of the Company, the Agent fails to use its best endeavours to remedy any unsatisfactory performance or other breach of this Agreement, the Company may, in its absolute discretion, terminate this Agency on fourteen (14) days within notice of its intention so to do. 12. Agent Not to Pledge Company's Credit 12.1 Except where specifically authorised by the Company, the Agent shall not: (a) Pledge the credit of the Company; (b) Receive or pay monies on behalf of the Company save and except for the Membership Fee; (c) Represent to any person that he has the authority of the Company to pledge the Company's credit or receive or pay moneys on behalf of the Company otherwise than in accordance with this clause 12(b). 14. Injunction Relief 14.1 The Agent acknowledges that the Confidential Information is of a unique and special nature, the loss of which may not be reasonably or adequately compensated for in damages or in an action at law and agrees that any failure on his part to observe and perform his obligations under this Agreement shall entitle the company to institute proceedings for an injunction to restrain the Agent from committing or continuing any breach of this Agreement. 15. Termination of the Agency 15.1 The Agency shall terminate on the Initial Termination Date subject to the exercise of the Option and the fulfilment of the Conditions Precedent set out in this Agreement and in the event of the exercise of the Option the Agency shall terminate no later than the Completion of the Further Term. 15.2 The Company may terminate the Agency at any time by giving fourteen (14) days written notice to the Agent (the "Termination Notice" ) if the Agent is in breach of his duties as specified in clause 8 provided that a Rectification Notice has earlier been given by the Company to the agent and the Breach(es) specified therein have not been rectified; 15.3 On the date being fourteen (14) days after the service of the Termination Notice upon the Agent, the Agency shall be terminated; 15.4 Nothing in this clause 15 shall be taken to or is intended to affect or restrict the Company's right to terminate the Agency if the Agent is guilty of conduct justifying summary dismissal. 16. Obligations on Termination of Agency 16.1 On the Termination Date the Agent shall forthwith: (a) Deliver to the Company all documents whether original or copies in the possession or under the control of the Agent which relate to or concern the Business; (b) At the Company's expense, do all things and execute all documents reasonably necessary to effectively terminate the Agency; and (c) From further representing himself as an agent of the Company, the Business or of The Olympic Club. 33 The Standards referred to in the Agency Agreement, for instance in Clause 10.1, were set out in Schedule 3 as follows:

1. All activities are to be undertaken in a professional and workmanlike manner and in accordance with the procedure prescribed by the Company from time to time. 2. To the extent it is within the Agent's control, all activities are to be undertaken within the time frame set by the Company for the completion of any given task. 3. Reporting timetables nominated by the Company are to be adhered to, subject to this not being precluded by factors beyond the control of the Agent. 4. All statutory requirements, to the extent they are within the Agent's control, are to be complied with. 34 The Remuneration referred to in Clause 6 was set out in Schedule 4 as follows: The Agency Fee means: the sum of AUD$30,000 by bank cheque and the company acknowledges its receipt Membership Fee means the sum of AUD$350 for and upon the sale of each and every International Membership to The Olympic Club for the Sydney 2000 Olympic Games, payable to the Company in accordance with the Terms and Conditions of this Agreement.

The Marketing Restriction Deed Poll 35 Pursuant to the Agency Agreement the plaintiff as Covenantor also signed the Marketing Restriction Deed Poll directed to SOCOG, the terms of which were as follows: 1. The Covenantor will not, without the prior written permission of SOCOG, which SOCOG may withhold in its absolute discretion, represent, hold out, market, promote or advertise in any way that it has any connection or association with the Olympic Bodies, the Sydney 2000 Olympic Games (the Olympic Games) or the 1998 or 2000 Australian Olympic Teams (the Teams). 2. The Covenantor acknowledges that it has no right to use any intellectual property belonging to the Olympic Body, including but not limited to, any Olympic Logo, mark or design. 3. The Covenantor agrees that, without the prior written consent of SOCOG, which SOCOG may withhold in its absolute discretion, it has no right to use and will not use for any purpose, including, but not limited to, for any marketing, promotional or advertising purpose, any words, phrases, symbols or images which, in SOCOG's opinion, suggest any connection or association between the Covenantor and any Olympic Body, the Olympic Games or any of the Teams. The Covenantor further agrees that, without the prior written consent of SOCOG (which SOCOG may withhold in its absolute discretion), in any marketing, promotion or advertisement it will not: (a) refer to any Olympic Body, the Olympic Games or any of the Teams; or (b) use the words "Olympic", "Games", "Sydney 2000"; or (c) use any other words, phrases, symbols or images which refer to, directly or indirectly, any Olympic Body, the Olympic Games or any of the Teams; or (d) use of "Sydney 2000 Games images" or "Sydney 2000 Games indicia" (as these terms are defined in the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth)) 4. The obligations of the Covenantor imposed by this deed shall survive notwithstanding the expiry or termination of any agreement to which it is a party. 5. The obligations of the Covenantor imposed by this deed are subject to any rights granted to the Covenantor by any Olympic Body, any rights granted to the Covenantor by operation of law (including without limitation under the Corporations Law and the Rules of the Australian Stock Exchange Limited). 6. This deed is irrevocable and the obligations of the Covenantor under this deed terminate on 31 December 2000 but termination will not prejudice any antecedent rights of SOCOG against the Covenantor. 36 On 8 March 1999 the plaintiff arranged for the payment of $30,000 by way of bank cheque payable to "The Olympic Club" of which TOC acknowledged receipt in Schedule 4 of the Agreement.

Plaintiff meets with Chinese Authorities 37 On 10 March 1999 the plaintiff met with Mr Keming Wu, the Consul General of the Peoples Republic of China in Sydney, at the Consulate General's Office in Elizabeth Street, Surry Hills. The Consul General informed the plaintiff that he would do everything he could to assist him and arrange for him to meet with the "top sports administrators in China". He informed the plaintiff that he would arrange for him to meet with Mr Tu Mingde (Mr Tu), the Director of the Liaison Department of the State Sports General Administration and Chief Secretary of the Chinese Olympic Committee and also Mr Shaozu Wu (Mr Wu), the Minister for Sport in China. 38 The Consul General provided a letter to the plaintiff directed to the State Sports General Administration of China. It stated: The 2000 Olympic Games will be held in Sydney. The Australian Chinese in Sydney are willing to do something to help Chinese athletics complete the Games and win more gold medals. Mr Tao Zhu (Mr Peter T Zhu) the Chairman of Australian Chinese Sports Connections, is the exclusive agent authorised by the Australian Government to recruit international members in China region for the Sydney Olympic Club. Mr Lin Jian Guo (Mr Jack Lin) the Vice Chairman and Secretary General of Australian Chinese Sports Connections, is the senior adviser for China region. Mr Zhu and Mr Lin will go back to China shortly to promote membership cards for the Sydney Olympic Club. Chinese citizens who obtain the membership cards will be granted Australian visa by DIMA to watch the Dress Rehearsal of Olympic Opening Ceremony and a match and to bolster Chinese athletics' morale. Mr Zhu and Mr Lin have promised to sponsor China's sports and award gold-medal winners. Please assist them in the activities they are undertaking.

39 The plaintiff, with Mr Lin, met with Mr Tu on 23 March 1999 in China. At the meeting the plaintiff informed Mr Tu that he had been appointed as the Exclusive Agent by the Olympic Club in Australia to sell International Memberships of that Club in China and that he was planning to organise travel and accommodation packages for Chinese citizens to go to Sydney to watch the Games. 40 The plaintiff asked Mr Tu whether the Chinese Government had plans to organise people to go to the Olympics. Mr Tu informed the plaintiff that the Government did not have such a plan "at the moment" and that "we will need to ensure that the Government Travel Agency co-operates with you so we can work together". 41 The plaintiff gave evidence that he and Mr Tu spoke at length about the plaintiff's personal background and his plans for arranging travel to Sydney for the supporters of the Chinese Olympic Team during the Games. Mr Tu said that the Chinese Olympic Committee did not have any right to grant approvals and it was not interested in participating in that type of commercial activity. 42 The plaintiff said he raised with Mr Tu the possibility of receiving a letter of support. Mr Tu responded that it "usually takes time to issue an urgent letter, maybe the Olympic Games will have finished before the letter is issued". Towards the end of the conversation Mr Tu said "I cannot issue a letter of support because your activity has not yet commenced. When you have concrete plans, let me know and our Olympic Committee will consider them and provide its assistance". The plaintiff also advised Mr Tu that he would donate "nearly half of the profit" generated from the project which he advised was $US1 million to support "Chinese Sports". 43 After the meeting with Mr Tu the plaintiff wrote to the Consul General in Sydney on 29 March 1999 advising him of his activities in China in the previous three weeks. He informed him of his meeting with Mr Tu describing it as a "friendly and soft meeting". He advised that:

State Sport General Administration of China supports and encourages us in conducting our activities in China, assisting Chinese Athletic Team in the 2000 Sydney Olympic Games, sponsoring China's sports and awarding gold-medal winners. Moreover they reminded us that we should find out reliable partners while doing our job in China and congratulated our success beforehand. 44 The plaintiff also advised the Consul General of his meeting with the Vice President of the Tianjin Municipal Sports Committee and the Government departments and companies in Shanghai. He informed the Consul General that everything had been going well and it would not have happened without his support.

45 During the period from March until June 1999 the plaintiff made trips to and from China and was away from Australia most of the time in that period setting up the marketing of his project. He appointed a number of sub-agents one of whom was Zhang Zhao Ming (Zhang). Whilst he was away Go acted on the plaintiff's behalf in communicating with Noble and the Club. The plaintiff rang Go every few days whilst he was away.

Wyness writes to the AOC 46 On 29 March 1999 Wyness wrote to McClatchy, the Secretary-General of the AOC, and advised:

Currently we have been approached by individuals wishing to develop travel and accommodation packages to the Sydney 2000 Olympic Games with International Australian Olympic Club Memberships attached for the Territories China, Turkey, Macedonia, Bangladesh, India and Sri Lanka. We would greatly appreciate if you could advise those National Olympic Committees that the Australian Olympic Club is an initiative of Sydney Organising Committee of the Olympic Games and the Australian Olympic Committee and is fully supported by the Australian Olympic Committee.

47 Wyness' letter made no mention of the Agency Agreement of 11 March 1999 with the plaintiff or the letter of 8 March 1999 Wyness had signed under seal which authorised the plaintiff to act as TOC's exclusive agent in the PRC for the period 1 April 1999 to 30 June 1999 to sell International Memberships as a component of a travel and accommodation package.

Club Committee Meeting 15 April 1999 48 The Club Committee met on 15 April 1999. Those present at the meeting included Reading, McLatchey and Wyness with Noble in attendance. Noble provided to the Committee a document in which he outlined the Club's then current financial position, some key budget assumptions and contingency plans. Also produced at the meeting was a document prepared by Wyness with the assistance of his staff entitled "Incremental Revenue Opportunities" which included a section entitled "International Olympic Club Membership". 49 The section dealing with International Memberships recorded that memberships were to be sold "via agents" and that the membership "consists of Welcome kit containing: Satchel, Magazine, Video, CD, Membership Certificate, Member Pin, Australian Souvenir". The "Status" was recorded as "commitments from China; agents ready to be appointed; costing for kit components being finalised" (Ex A.292). 50 Noble's document dealt with membership fees and recorded that after door to door direct sales revenue and revenue from corporate purchases "the only other acquisition channel included in the budget is 3,300 international sales with a net contribution of $265 per member, accounting for $875K profit sales commencing in October 1999 (Ex A. 289). The Minutes of the meeting recorded that McLatchey inquired as to how the membership acquisition actual numbers compared with budget, and whether the forecast revenue was on budget (Ex. A. 793). 51 The Minutes also recorded that in respect of "International Olympic Club Membership (travel and accommodation packages for non Australian residents)" TOC had discussed the matter with the AOC, McLatchey, who was to write to the relevant National Olympic Committees (NOCs). It was recorded that "no international activity is to be undertaken unless approved by SOCOG, AOC, NOC, and IOC" (Ex A. 794). The Minutes also recorded that Noble had held "full, in depth discussion" with McLatchey and that local agents would sell the International Olympic Club. It was also noted that it was a "potentially very good revenue generating mechanism" (Ex A 794-795).

Baggage Search 52 On 27 April 1999 one of the plaintiff's sub-agents, Zhang, arrived at Sydney International Airport from Hong Kong and was selected by Australian Customs officers for a baggage examination. Documents found in his possession included documents "authorising him to enrol international memberships" of the Club. Zhang advised the Customs officers he was a sub contractor to the plaintiff who was an agent of TOC to sell international memberships in China. The documents included a copy of the letter from the Consulate General and the March letter from Wyness to the plaintiff appointing the plaintiff as the exclusive agent in China for the period 1 April to 30 June 1999. 53 It is apparent that the Australian Customs Service advised the OI Centre of the Zhang search and the documents found in his possession. The Consulate General's letter was translated and provided to the OI Centre. The OI Centre provided details of the contents of the documents to TOC and SOCOG. It is clear that the OI Centre consulted with Noble in respect of this incident and was informed by him that the plaintiff "does indeed have an authority to sell Olympic Club memberships in China and authority to appoint other agents who may obtain Olympic Club memberships from Chinese residents" on the plaintiff's behalf (Ex A 328). 54 Noble was informed that the Consulate General's letter contained a claim by the plaintiff that "once Chinese residents obtain their Olympic Club membership, they will then be provided with a visa from the Department of Immigration". Noble advised the OI Centre that he had informed the plaintiff that TOC could not guarantee visas for club members but that TOC would "assist if required".

May Meetings with Noble 55 In May 1999 the plaintiff was in Sydney and attended a meeting with Noble in the presence of Go. The plaintiff said:

What we have done so far is meet with the Chinese Government Officials both in China and in the Consulate here in Sydney, for the purpose of getting the necessary government approval to establishing this business in China. In China it is very important because of the political system, that you follow the correct channels and have the approval of the right government department. In addition, because this is dealing with the Chinese Olympic Team, it is even more important to ensure that everything is seen to be proper, correct and legal. 56 The plaintiff advised Noble of his activities in China including his meetings with travel authorities and the concern expressed in relation to the obtaining of Visas. The plaintiff asked Noble whether SOCOG could give assistance in obtaining Visas. Noble responded:

We have had discussions before with people with SOCOG about Visas. This is of course a Federal Government responsibility not State Government, but SOCOG people tell us anybody that doesn't have a criminal history and therefore would be classed as an undesirable person, should be able to get a Visa provided they can prove they have tickets and some sort of accommodation/travel package to come to Sydney for the Games. Obviously we can't guarantee anything, but we will do whatever we can to get SOCOG to assist you with these people getting Visas. 57 The following conversation then took place:

The plaintiff: Look, we have a bit of a problem in selling 2,000 memberships before 30 June. As you know, the publicity for the Olympics because of Salt Lake City, is not that good. In addition, outside of Australia because it is so long away from the Olympics, interest in the Olympics in other countries is not as strong as it is in Australia at the moment. On top of that, China is a huge market and a very large country and it will take some time to get everything set up. I want to make sure this is done properly and that it is not slip-shod. I therefore don't want to race into selling things without being sure that everything is in place to be done properly. I therefore don't think I will be able to sell all 2,000 memberships by 30 June - it's just too soon. If I try to sell them by that date, then with things not being done properly, it could damage the program. What I want to know is can I get the condition to sell 2,000 memberships before the 30 June, waived.

Noble: Peter, I can see what you are saying and I also appreciate now that there is a lot of work to be done. Because you have been working so hard we can see that you are genuine and that you are putting a lot of time, effort and money into this. I think it is reasonable, therefore that we remove this condition, however, I will have to discuss this with the Board and if agreed, the Club would require payment of some additional moneys in return for waiving that condition.

Noble: I don't know for sure, I will have to discuss that with the Board, but it would need to be a reasonably substantial sum on top of the $30,000 you have already paid. I would think probably at least another $150,000 but I will get back to you.

The plaintiff: If we pay extra money in advance that would not just be a further fee to the Club, it would have to be credited towards membership payments due in the future.

Noble: Oh, that would be okay. That would be understood. We wouldn't take your money without giving you something for it.

The plaintiff: Fine, can you let me know how much money it would cost to get the extension. 58 On 18 May 1999 Noble wrote to the plaintiff as Chairman of ACSC in he following terms;

Following our recent conversation, I confirm that it is the responsibility of the individual travelling to Australia to obtain visas to Australia which are issued at the discretion of the Australian Government. However as discussed we are happy to assist to ensure that the individuals that purchase International Olympic Club memberships are made fully aware of the Australian Government immigration requirements and guarantee that members will be provided with a full refund for any membership fees if they are unsuccessful in obtaining a Visa subject to the return in original condition of any Olympic Club merchandise such as the Welcome kit. 59 Approximately 2 days after the meeting the plaintiff telephoned Wyness and the following conversation took place: The plaintiff: Has Gus discussed with you my request for the extension of the contract as it will not be possible for me to have 2000 memberships sold by 30 June and I asked him for an extension. Gus said he thought that it would be okay, but he needed to speak to the Board. Have you made a decision yet?

Wyness: Yes, Gus and I discussed it. I haven't made up my mind yet, but I think it is a reasonable request. Gus has given me a report of what you have been doing and it seems to me it is best for everyone that we give you the extension but we will have to decide on how much money will need to be paid for the extension. We will get back to you shortly with our decision on that. 60 Some days later the plaintiff and Noble had a conversation on the telephone in the following terms: Noble: Peter we've agreed that we will give you an extension and waive the requirement that you sell 2,000 memberships by 30 June, but in return you'll have to pay us at least $200,000 by 30 June. If you can pay $200,000 to the Club by 30 June, we will give you exclusive rights up to the end of December 2000 and waive any conditions for minimum sales of membership.

The plaintiff: Would that $200,000 be credited towards the cost of future memberships?

Noble: Oh yes as I said before we would not be taking the money for nothing.

The plaintiff: That is okay. I can arrange to have $200,000 paid by 30 June, will you give me the extension if I do.

The OI Centre advises SOCOG and Strike Force 61 On 24 May 1999 the Director of the Criminal Intelligence Unit of the OI Centre, Neil Fergus (Fergus), wrote to Reading at SOCOG and provided him with a copy of an intelligence report which identified the "Subject" as:

Summary of intelligence obtained re: persons of interest involved in the sale of Olympic Club International memberships as a part of a travel and accommodation package to Chinese residents travelling to Australia for the Sydney 2000 Olympic Games. (Ex A 328)

62 The Intelligence Summary referred to the translation of documents in Zhang's possession which indicated that as part of the contractual arrangements between the plaintiff and TOC, the latter had agreed to "guarantee to help members to obtain visas" to Australia. The Summary recorded that although the plaintiff was not "currently involved in either activity" he "had appeared on a range of Australian criminal indices in relation to unlawful immigration activity and false documentation violations". It also stated the he had been "recorded as being associated with persons who are currently the subject of investigations involving Asian organised crime" (Ex A 329). 63 The Summary recommended that the Club consider revoking the plaintiff's contract and passing the information on to the Strike Force (Ex A 329). Fergus advised Reading that there were a number of "vulnerabilities" that had been identified in the Olympic commercial framework which could be exploited by criminal enterprise" and that "the investigations into the persons of interest will continue with" the Strike Force (Ex A 327). 64 The information was passed on to the Strike Force at a meeting with DS Nicholls on 27 May 1999 who subsequently recorded the briefing "for intelligence purposes only" as no action was required from the Strike Force. His note stated - "intelligence received from the Olympic Intelligence Centre is that Chinese Nationals recorded on criminal indices - re drugs are involved in the sale of Olympic Club Memberships to Chinese residents travelling to Australia".

Agency Agreement extended 65 On 31 May and 1 June 1999 the plaintiff paid the further amounts required pursuant to his discussions with Noble and Wyness and on 4 June 1999 was issued with a letter signed by Wyness in identical terms to that issued in March save that the period 1 April 1999 to 30 June 1999 was replaced by the period 1 April 1999 to 31 December 2000.

Appointment of Sub Agents 66 Zhang, who was also known as James Chang, and the plaintiff travelled back and forth from China making an assessment of what had to be done to market the International Memberships and the package. Zhang was subsequently appointed as a Director of ACSC and became a 40% shareholder of that company. 67 Between March and June 1999 the plaintiff and Zhang appointed another ten sub-agents. In March Linhong Hay was appointed for the Province of Guangdong and Sichuan. In April Jun Hu (Shandong), Sun Tao (Guangix) and Xian Zhang Min (Heilongjiang) were appointed. In May Frank Yang Hu (Beijing), Weiping Ke (Chongqing), William Peng (Shanghai), Liping Yuan (Shaanxi/Gansu), Lin Ho (Wendy) Cheung (Jiangmen) and Shao Qiang Liao (Zhuhai) were appointed as Sub Agents.

Intelligence Meeting 10 June 1999 68 On 10 June 1999 a meeting was held at which were present representatives of the Australian Customs Services (ACS), the Australian Federal Police (AFP) and the OI Centre "regarding the matter of" the plaintiff. An internal immigration document noted:

The meeting discussed the issue of the accreditation given by the Olympic Club to Peter Zhu and his company to sell Club Memberships in China in the lead up to the Olympics. This issue was of concern to the meeting in view of the material held with the sub-contractors signed by Mr Zhu to represent him in the PRC and also given the concerns that exist with the participants regarding the activities of Mr Zhu himself.

69 The note went on to record that the AFP and the ACS were of the view that there were "not enough grounds" to launch an investigation and they were not willing to progress the matter further. It was noted that the meeting agreed that the accreditation/contract signed between the Club and the plaintiff should be reconsidered. It also noted that Fergus had indicated that the plaintiff's contract would be revoked or not renewed after 30 June 1999. By this time TOC had already extended the plaintiff's Agency Agreement to 31 December 2000.

SOCOG asks some questions 70 On 16 June 1999 Moore of SOCOG wrote to Wyness advising that he was "disturbed" to hear that the Club may have appointed a company AIT International to "sell TOC in Singapore". In fact, by this time, TOCMS had appointed Michael Liew as its agent in Singapore. Moore's letter advised Wyness that the Club had "no rights offshore unless they have been signed off by the IOC, SOCOG, and the National Olympic Committee of the relevant country" and that to Moore's knowledge there had been no request of SOCOG "nor have we given you the right to sell TOC in Singapore or other offshore territories". 71 On 17 June 1999 Wyness issued a letter to the plaintiff at his request in relation to Visas and Sub Agents. That letter was in the following terms:

1 Visa for Chinese International Members The Olympic Club has been in touch and will be in regular contact with the Australian Immigration Department on this matter. The goal of the Visa program is to screen visitors for any criminal or undesirable element. Provided the Member does not fall into these categories then the Olympic Club will do its upmost to assist you in getting Visas for the Chinese Members. 2 Appointment of Sub agents We will be happy to allow you to appoint sub agents provided they are referred to us first for investigation and for our approval. Such approval will not be unreasonably withheld. 72 On 25 June 1999 McLatchey wrote to Moore and asked whether Moore had received any response from Wyness to his letter of 16 June 1999. There is no evidence that Wyness responded to this letter, however at the Club Committee meeting on 2 July 1999 at which McLatchey and Wyness were present there was discussion about the International Memberships. There was certainly no protest made about these memberships at the meeting (tr.641) and the Minutes record that Wyness was to "clarify the information" McLatchey "is to include in a letter to" the National Olympic Committees with "regard to the International Olympic Club".

Intelligence Meeting 6 July 1999 73 On 6 July 1999 Noble met with Fergus and two other officers of the OI Centre, Lesley Honeyman and John Valastro. A record of the "outcomes" of that meeting includes:

Preliminary discussions with Gus Noble determined that it was not necessary at this stage to contemplate the cancellation of any contract between Peter Zhu and the Australian Olympic Club. Specifically, it was determined appropriate action in this case would involve the development of strategies to effectively manage the risk associated with the arrival of Chinese residents to Australia using the existing contract. Subsequently the following strategies have been highlighted: · TOC to amend its authorisation package to delete all mention of assistance with visa applications for Olympic Club members. · Applications for Chinese members to contain a clause (written in Mandarin) which clearly indicates that Olympic Club Membership does not guarantee Chinese residents a visa to Australia. · TOC to continue to provide all names and details of existing authorised agents and any subcontractors they appoint

Olympic Club Documents and Website 74 On 19 May 1999 Zhang had attended the Club's offices at Chatswood with the plaintiff and met with Noble. Noble advised them that the International Members from China must have tickets to the Games, return tickets and hotel accommodation before they would be able to obtain a Visa. Noble also advised that the Club was making contact with relevant Government bodies. 75 In early June 1999 the plaintiff and Zhang once again met with Noble at the Club's Chatswood premises. Zhang informed Noble that he and the plaintiff would need to translate the Club's Information Sheets and other documents into Chinese with some information about International Membership. He informed Noble that they would need to distribute those in China as part of the marketing program. Zhang raised the problem of the Olympic Club website being printed in English and suggested that the website should have a Chinese translation. 76 Noble advised Zhang that the Club did not wish to go to that expense and that if the plaintiff and Zhang wanted a Chinese Language website they would have to do that themselves. Zhang advised that he could arrange to get that done and that it would not cost the Club anything. Noble said it was a good idea and they could go ahead with the plan. 77 Zhang then engaged a third party to register a domain name and set about establishing a website. Mr Zhang had the website set up under the domain name "TOCMS", which was registered with the Department of Fair Trading on 20 July 1999 under the name of his company Haggerso Holdings Pty Ltd. On 22 July 1999 he changed the proprietor of the business name from that company into his name, Zhao Ming Zhang.

Zhang opens Bank Account 78 Zhang claimed he met with Wyness in July 1999 at the Club's premises and that Vera Lau was also present. Vera Lau worked in the TOC office at Chatswood for a period during 1999. Her title was Manager of the International Department of the Club and part of her role was to translate English/Chinese conversations, both on the telephone and in person (tr. 692). Zhang claimed he advised Wyness that he had set up the Chinese language version of the Club's website and requested Wyness to open an account which could be used on the website so that overseas members could pay their money into the account. Zhang suggested that Wyness could then take out the membership fees and pay the rest of the money to Zhang. 79 Zhang claimed that Wyness advised that he did not want to do that and said:

You are the official agent of the Club so you can open up the account yourself. You collect all the money into that account and then you just pay us the membership fees as they are due. You need to keep the rest to pay for your air tickets, accommodation and your profit etc. We don't want to act as collector for you, it would be much better if you just open your own account.

80 Zhang opened an account at the Chatswood Westside Branch of the Westpac Bank in the name "TOCMS". Wyness denied this conversation took place (tr. 693-694).

Plaintiff's 5 July 1999 meeting with the Chinese Ministry of Sport 81 In late May or early June the plaintiff had informed a friend of his, Frank Yang Hu (Hu) that he needed assistance to meet with some people in China to help him perform his obligations under the Agency Agreement. Hu was a personal friend of the Minister and Vice Minister of Sport in the Government, Yuan Wei Min (Mr Yuan) and Mr Yu Zai Qing (Mr Yu). Mr Yuan was the Minister for Sport in the State Sport General Administration PRC and the President of the Chinese Olympic Committee. Mr Yu was the Vice Minister of the State Sport General Administration Ministry in the PRC and the Vice President of the Chinese Olympic Committee. 82 On 5 July 1999 Hu and the plaintiff met with Mr Yu and a representative of Mr Yuan's office at the Government Offices in Beijing. The plaintiff informed Mr Yuan and Mr Yu that he had been appointed as the exclusive agent by the Olympic Club of Sydney to sell International Memberships in China. The plaintiff informed the meeting that he would be selling those Memberships as part of a tour package for Chinese citizens to travel to Sydney to support the Chinese athletics at the Sydney Games. The plaintiff also asked Mr Yu and Mr Yuan what the Government requirements were for him to carry out his tasks in China. 83 After describing the project the following conversation then took place: Mr Yu: Yours is a very good project. It would be good for China and for Chinese people to give them the opportunity to attend the Games and to share the experience and support our athletics. We will, therefore, give you whatever support you need. How can we assist you?

The plaintiff: I need approval from your Government for this project and I need letters of support and authority to show that I have approval. Can you help me with those?

Mr Yu: That is not necessary. You do not need any Government approval. You are free to do what you like. The market is open, we do not licence people, so you don't need any letter from me. It would be difficult under our system to give you an official letter. Those things take a lot of time but do not worry, you do not need a letter.

The plaintiff: But people might not believe me. If I have an official letter from you it would be a big help.

Mr Yu: No, everyone knows you do not need approval for this sort of project. It is not required. Besides it would be very difficult for me to give you such a letter. You know what our system is like. As the Vice Minister, I have to be very careful about giving letters. Do not worry, you do not need a letter.

The plaintiff: Thank you very much. I am very grateful for your assistance. If it is not possible to get a letter from you as the Vice Minister showing Government approval, could I have a letter from you as the Vice Chairman of the Chinese Olympic Committee just to say that you support this proposal in your capacity of that committee? That would be of great benefit to me.

Mr Yu: No, that would still be a problem. Yuan Wei Min is the Head Minister and he is also the President of the Chinese Olympic Committee. The Government and the Olympic Committee are the same people. If I give you a letter, it doesn't matter whether I speak for the Olympic Committee or the Government, it would still be coming from me as Vice Minister in the Government. I would therefore have to go through all the processes of issuing a letter. Besides, as I have said, you do not need a letter. The market is open, you can do what you like. I support your project, I am the Vice Minister and the Vice Chairman. You may tell everybody that I have given you my support. In addition if you need any help I would be happy to help you so you or Mr Hu should just ring me if you require any assistance.

The plaintiff: Thank you very much. I am greatly honoured by your taking time to meet with me and Mr Hu in your busy schedule. I am also very greatly appreciative of your support and your offer of assistance. It is wonderful that you, such an important man in the Government of China, would take time to meet with me and offer your support. To show my appreciation and to celebrate my good fortune in your being so kind to me, I would like to invite you to attend dinner this evening. We will have a banquet in honour of your kind and generous help. 84 At the conclusion of the meeting the plaintiff, Mr Yu, Hu, Hu's brother, Mr Xiao An Wei, the Director of the State Tourism General Administration Ministry, and one of Mr Wei's assistants Mr Ren Zhi Lee went to dinner at the Chaohaowei Seafood Restaurant at the Chagan Building in Beijing. Photographs of that celebration are in evidence.

Noble Meeting with Immigration 21 July 1999 85 On 21 July 1999 a meeting took place at the offices of the Department of Immigration and Multicultural Affairs (DIMA) at which were present Noble and DIMA officers. Noble had been referred to DIMA by the OI Centre to discuss in particular "the entry of Club members from PRC, Bangladesh, Pakistan, India and Indonesia". `By this time TOC had appointed a number of other agents in these areas, including Mr Go as the agent for the territory of Indonesia. 86 Noble informed the meeting that TOC saw a market for itself and "agents and sub-agents who sub-contract the rights to sell packages" in those territories. The e mail in which there was detail of the discussions recorded: Their initial foray, through a sole agent in the PRC has revealed pitfalls they didn't expect especially where their agents attempt (or appear) to link TOC membership to an Australian visa entitlement. TOC accept the importance of being clearly separate from visa activity and entitlement and is keen to incorporate an appropriate disclaimer in their application forms and membership cards. Mr Noble explained that TOC sells memberships to Australian based companies who then can sell these on to individuals. TOC requires the personal and passport details of those to whom memberships are onsold so as to maintain some control over membership. Mr Noble has offered to supply DIMA with this information, including travel itinerary, accommodation arrangements etc of the international TOC members if that would assist us with overstayers etc.

In the case of the PRC, where difficulties have emerged with the sole agent, TOC demanded that the agent provide them with $700,000 as proof of sale of 2,000 memberships by 30 June 1999. The agent had previously asserted that he would have no difficulty selling 20,000 memberships in the PRC. In the event the agent deposited only $200,000 by the due date. TOC also has evidence that the agent used their letterhead without authority and has reprimanded him. TOC is now wary of this agent and is monitoring his activity. Mr Noble says TOC would cancel the agent's contract if he acts inappropriately in future. The sole agent has subcontracted his authority to sell memberships to a number of sub-agents. This is allowed for by TOC. TOC provided Ann and Gary (DIMA officers) with material on those sub-agents

87 The DIMA e mail then recorded DIMA's suggestion to TOC that a disclaimer be included in the membership application form that personal details may be passed on to DIMA and that membership of the Club did not entitle the holder to a visa for Australia. 88 At a meeting of the Club Committee on 2 July 1999 Wyness had been asked about letterhead being provided to the plaintiff or his company. Wyness gave evidence that Reading had said there had been some "dodgy Chinese letters floating around". The Minutes of that meeting record that Wyness "assured the meeting that TOC had not provided letterhead to the Chinese company purporting to represent the Club, and suggested it may have been computer generated".

The Club's Financial Difficulties 89 At the Board Meeting of TOC on 7 June 1999 the "financial position, cash, creditors, budget and payments" were the main topics of discussion. On 9 June 1999 a director of TOC, Sherbon wrote to Reading and requested SOCOG to "breathe deeply for a bit until cash becomes available to get back on line with payment". His letter stated: My understanding is that latest revised cash shows payments back on line by end of month, providing moneys from International Memberships are remitted punctually (which I understand they have been to date).

90 On 11 June 1999 Reading requested Wyness to arrange for a payment of $65,126 to SOCOG that Reading claimed should have been paid by 31 May 1999. Reading also noted that a further $153,166 would be due at the end of June. 91 On 2 July 1999 at the Club Committee meeting McLatchey requested an external and independent review of the financial position of the Club. On 5 July 1999 Wyness wrote to Ernst & Young advising that SOCOG had requested the review. Later on that day Ernst & Young met with the Club Committee and the directors of TOC and on 8 July 1999 Ernst & Young provided its Report. The Report strongly recommended that the Club Committee "consider whether the Club is a going concern and whether it will be able to meet its debts as and when they fall due". 92 Between 8 July 1999 and 22 July 1999 various proposals were put forward but rejected. On 22 July 1999 Sherbon advised Messrs Holloway, Coates and Knight and the Club Committee that the Trustee had been advised by the designated administrator that it must put the Trustee Company into administration. Sherbon stressed his grave concerns that such "regrettable action" would create public controversy and have a significant and negative impact on the Club Members. He suggested that it would further seriously erode "the general public's perception of SOCOG and the Olympic Movement" and that it would "reflect poorly on the Government". Sherbon requested an urgent meeting to resolve the issue. 93 As the result of a suggestion made by McLatchey a mediation took place on 30 July 1999. Those present included Reading and McLatchey, a representative for Synthesis and Wyness for the Trustee. At the conclusion of the mediation a document was signed by McLatchey for the AOC, Reading for SOCOG, Wyness for TOC and the representative of Synthesis. The document included the following: 12. The parties agree to work together to terminate current arrangements in a manner reasonably satisfactory to all parties. 13. TOCMS, Synthesis and the AOC agree that ownership of the Club concept and all know-how in relation to the operation of the Club will be transferred to or shared with SOCOG. … 15. SOCOG will be responsible for the payment of all operating costs of the Club incurred after 30.7.99. … 17. In any announcement or public statement concerning the Club the position of all parties is that SOCOG can better run the Club in house to deliver benefits and reduce costs. 18 This agreement is intended to create legal relations upon execution and the parties agree to execute such further documents as are necessary to give effect to this agreement.

Transfer to SOCOG 94 On 3 August 1999 a News Release was issued with the headline "SOCOG to Assume Ownership of the Olympic Club: Members Entitlements Remain Unchanged" and reported that SOCOG was to "assume sole control of the Olympic Club" and that all parties recognised the "synergistic benefits of bringing the Club directly into SOCOG".

The Consul and SOCOG 5 August 1999 95 On 5 August 1999 the Cultural Consul of the PRC of the Consulate General's staff in Sydney, Wang Zhiang, attended the Club's offices at Chatswood with the plaintiff, Zhang, Mr Lin and Hu and met with Wyness. Consul Wang asked Wyness whether the Club was genuine and an official SOCOG organisation. He also asked whether it was "genuine" that the plaintiff had an agency to sell memberships in China. Wyness said "Yes it is, I can show you some documents which will prove the Olympic Club is a genuine SOCOG body and yes, Mr Zhu is our Olympic Club agent for China". 96 Wyness then showed some documents to Consul Wang and was asked questions by the Consul about Visas for people travelling from China to Australia to attend the Games. Wyness said "We, in conjunction with SOCOG, are in a position to assist people get Visas who wish to travel to the Games. The Australian Government will be making sure genuine Games attendees can get Visas. They will have to do this. As far as our position goes, we cannot guarantee anyone a Visa, therefore we will not make any promises, but we do promise we will assist our agents to get Visas for their members". 97 Consul Wang then asked Wyness about accommodation and tickets. Wyness then said "Accommodation will be no problem, SOCOG have a scheme to ensure there will be plenty of accommodation and the New South Wales Government has been working accommodation arrangements for a long time. As far as tickets go, the membership package for China includes one ticket to the Open Ceremony Dress Rehearsal - they are guaranteed there is no problem with those. In relation to tickets to other events, we cannot guarantee any tickets, but we can help with dealings with SOCOG to get tickets. There will be plenty of tickets available for all sorts of events at the Games, although premium events will be difficult".

98 It is apparent that during August 1999 information and documentation held by the Club was transferred to SOCOG, in particular to Reading. Michael Brann, a lawyer with SOCOG was contacted by another SOCOG employee, Elizabeth Langdon, on 18 August 1999 advising that she had been contacted by Consul Wang who requested a meeting to discuss the Club, an offer to 10,000 Chinese tourists to visit Australia and to introduce a new cultural attache to SOCOG. 99 It is apparent that Langdon was informed by Consul Wang that the General Manager of the Club had indicated to him that tickets were held by the Club which could be made available "as could Visas".

Reading's "advice" to Wyness 24 August 1999 100 On 24 August 1999 Reading had a conversation with Wyness in which Reading said to Wyness "Who is Peter Zhu - I have seen some documents in which you refer to him as being an agent of the Olympic Club?" Wyness said words to the effect "Some sort of arrangement has been reached with Peter Zhu regarding the Olympic Club in China". The documents to which Reading referred were the letter of authorisation for the plaintiff for the period 1 April 1999 to 31 December 2000 and the letter of 8 March 1999 signed by Noble and the plaintiff. 101 Towards the end of the conversation Reading said to Wyness "Well its a bit of a worry, I don't want loose canons running around - I know we want to try to make this thing work but you know the position regarding getting approvals - the Police are looking at this fellow - my advice to you is that you protect yourself by reining him in - if you had plans for China I suggest that you better do what you can to stop them." Reading informed Wyness that he did not want TOC or SOCOG to be exposed.

The Consul returns to SOCOG 102 On 25 August 1999 Consul Wang met with officers of SOCOG at SOCOG's premises in the absence of the plaintiff. He met with John Bowen, the Manager of International Relations with SOCOG, and Margaret McLennan, the Program Manager IOC International Relations and Protocol. The Consul informed the SOCOG officers that he was concerned to ensure that the Club was genuine and capable of performing its obligations to the Chinese members. The Consul was informed that the Club was "real" and that it was "genuine". 103 The Officers informed Consul Wang that they were not directly concerned with the Club however they believed that the Club had been taken over by SOCOG and that SOCOG would be running it from now on. They advised Consul Wang that they did not have direct information about the Club but would be happy to arrange for someone to meet with the Consul and answer any questions so that he could be satisfied that "it is genuine". 104 After the meeting with the Consul, Bowen reported to Reading that he had informed the Consul that the officers of SOCOG were still briefing themselves and that "he would hear from Mr Reading in a week or so". Bowen's Report continued: He said he looked forward to making contact with you . What he wished to explore were reports he was getting that people in the Chinese community, through the Olympic Club, had access to 10,000 tickets and were proposing to bring that many tourists from China to the Games on arrangements which included travel, accommodation and Visas. The deal included access to the Rehearsal for the Opening Ceremony. He wondered whether it was possible that such large numbers of people from China could be looked after on such an arrangement . We said that we could not comment but that you would be happy to discuss it with him in a few days. It actually sounds quite fishy and we think Wang thinks so too. It would be worth talking to him as soon as we conveniently can. I will leave his contact details with Lyn. 105 Reading wrote on the message from Bowen "please tell Wang that no deal is in place". There is no evidence that such message was communicated to Consul Wang.

Zhang seeks approval 106 On 30 August 1999 Zhang (as Mr Chang) wrote to Wyness enclosing "printed material" for the International Members of the Olympic Club in China. These materials included the Olympic Club folder, an application form for International Membership, a document relating to Membership Privileges and Benefits, a Membership Card and a Fact Sheet in Chinese. The letter concluded "we are looking forward to having the approval of the Club and SOCOG". 107 In his affidavit evidence Wyness stated that he had received a package of documents in Chinese which included TOC logo. He said: I understood those documents to have been printed for or on behalf of the plaintiff who sought the approval of The Olympic Club and SOCOG to print multiple copies of those documents. The plaintiff's request caused me concern because the plaintiff appeared to be in breach of provisions in the Agency Agreement which prohibited him from utilising the Sydney 2000 Olympic Club logo. Further, those documents appeared to me to disclose a breach of the marketing restriction deed poll. (par. 35 aff. 29.11.2000) 108 Wyness' evidence in cross examination was quite extraordinary. He said that when he received the letter he placed it on his desk and there it remained for several months. He said he looked at the documents "initially" and that he recalled "glancing" at the letter. He said "I would have read it and put it in my in tray" (Tr. 667). He said that events overtook the letter as Reading has asked him to terminate the relationship "with the group" (Tr. 668). He gave the following evidence: Q Didn't you say in paragraph 14 of your statement yesterday, the general appearance of the documents provided to me caused me some concern? A Ah yes I did. Q So notwithstanding that concern, you left them sitting on your desk? A Yes I did. Q Didn't you say in your evidence of yesterday that the basis of your concern was because they were not printing proofs or artwork, but appeared to be printed finished documents which may have already been utilised. A Yes I did. Q And you left them on the corner of your desk? A Yes I did. Q Had you looked at the documents, you would have seen that there are references in them to bank accounts and phone numbers and matter such as that in English. Did you see that? A I can recall the printed, coloured document. Q So your attention didn't go beyond the coloured printing material at the top? A It may have done but I can't recall reading that document you mentioned. Q You didn't yourself as at 30 August, perceive that you had any responsibility of your own to Mr Zhu under the Agency Contract? A Yes I did. Q Did you take any steps which, to your mind, went in the direction of fulfilling any of those obligations? A I was thinking of the best way to present those to SOCOG but I knew that they would be very hard to be approved. Q So you did nothing? A No, I also asked for a translation of the document as well. Q Of whom? A Of a friend. Q Who is this friend? A A Chinese friend of mine. Q The name? A I'm sorry. Q The name? A I can't remember her name, I'm afraid. Q And she is a friend? A She is a friend yes. (Tr. 668-669) 109 Wyness was asked whether he had viewed the documents provided to the point where he saw bank account details, phone numbers, addresses and other details in English on the documents. He said he did not. He gave the following evidence: Q Did you not bother to look past the coloured page on the front? A I looked at the documents and scanned them. I did not pay attention to detail, to what was there because they were proofs. Q Proofs, you say? A Sorry, they were there for approval. Q For the purpose of approval you did nothing? A As I stated earlier I did not. Q I thought you told me your friend was asked to translate them? A I did not do anything in terms of moving them on to SOCOG. I did ask for my friend to give me a reading of what was in Chinese on the cover. Q On the cover only? A Yes, because I believed that was all that was in Chinese, the thing on the cover of the documents. Q Everything on the inside of the documents was in English, was it? A I don't recall …. Q Did she help you with the translation? A She did. It made it clear that to me there was nothing untoward. Q When did she help you? A After I received the document. It would have been about early October, I presume. Q You said she made you believe there was nothing untoward? A Correct. (tr. 695-696) 110 Counsel for SOCOG took this topic up in re-examination. It was at this stage that the evidence became even more extraordinary. It was as follows:

Q Have you been able to recall the friend who assisted you with any translation of the Chinese documents which came with the letter of 30 August? A She was a person I visited for therapeutic massage on different occasions. Perhaps a friend is the wrong term, but she was the only Chinese person I knew well enough to ask to assist me on that occasion. I don't remember her name (tr. 706)

Deed of Release and Termination 111 On 13 September 1999 TOC as Trustee, SOCOG, the AOC, Synthesis and TOC in its personal capacity executed a Deed of Release and Termination. In this Deed TOC, when referred to in its personal capacity was referred to as TOCMS and when referred to in its trustee capacity was referred to as the Trustee. The Deed included the following Recitals:

E. The Trustee has entered into contracts with members of the Olympic Club in accordance with Clause 2 of the Establishment Agreement. F. SOCOG has agreed to assume and perform the obligations of the Trustee pursuant to the Member Contracts G. In consideration of the covenants contained in this Deed, TOCMS, the Trustee, SOCOG, AOC and SCPL have agreed to terminate the Olympic Club Trust, the Establishment Agreement and other related agreements relating to the Olympic Club and to each release the other from all claims relating to or in any way connected with the establishment and operation of the Olympic Club on the terms set out in this deed.

112 SOCOG agreed that from 30 July 1999 it would provide the Member Benefits in accordance with the Member Contracts and otherwise assume all the obligations of TOC as Trustee to the members (cl.3.1). From 20 September 1999 all of the Member Contracts were assigned to SOCOG (cl.3.2). During the period from 31 July 1999 until the winding up of the Trust, TOC as trustee agreed to provide all reasonable assistance to SOCOG to enable it to assume responsibility for provision of the Member Benefits (cl.8.1). 113 SOCOG, the AOC and Synthesis, agreed to terminate the Trust effective from 20 September 1999 (cl.9.1). Clause 11.1 stated: 11.1 The parties agree that in any announcement or public statement concerning the Club, the sole position of all parties in respect of the transfer of control of the Club to SOCOG is that SOCOG can better run the Club in house to deliver benefits to Members and reduce costs and the parties agree not to make any announcement or statement which is inconsistent with this position.

Further sub-agents appointed 114 The plaintiff and Zhang appointed further sub-agents after June 1999. Chi Ming Lam and Zhao Bang Huang were appointed prior to the end of September 1999. Others included James Zhong, Hunan Gold Coast Advertisement and Marketing Pty Ltd, Everbright Corporation, Kam Chung Chan, Zheng Hai Zhang, Sai Sing Chung, Jian Zhao Wang, Lian Zhu Chang and Fen Ru Song.

Reading directs Wyness to terminate plaintiff's Agency 115 In "mid September" 1999, a date that Wyness put at about 10 September, Reading telephoned Wyness and asked him to "terminate the relationship with the Group" (tr. 668;Wyness aff.29/11/200 par 38). During the trial it became clear that there is no real issue that SOCOG directed Wyness to terminate the Agency agreement between TOC and the plaintiff.

SOCOG'S Management of the club 116 SOCOG employed Moiya Roberta Ford (Ford) as the Program Manager of the Club as and from 30 August 1999. Ford's duties included the management of the Olympic Club from that time. Concurrently from 31 July 1999 to 31 October 1999 Wyness continued in employment working out "his notice". 117 When Ford arrived she was given a briefing by her superior, Reading, and also had a short briefing with Wyness. Ford gave evidence that at the time of these initial briefings she was not informed of the existence of the Agency Agreement with the plaintiff or the appointment of the plaintiff as the Exclusive Agent in China to 31 December 2000. She claimed to be totally ignorant of any concept of International Memberships of the Club until it was raised some weeks later. 118 It is apparent that in early October 1999 an officer from the DIMA contacted Ford in relation to enquires being made in China in relation to Visas. Ford was apparently concerned by this conversation and subsequently met with the officers of OI Centre including Honeyman. Honeyman informed Ford that there had been several meetings between the OI Centre and Noble in relation to the plaintiff and that Noble had been informed that the plaintiff had not been charged with any offences "nor were any of his sellers". 119 Honeyman also informed Ford that this information was provided to Reading just before the contract was "taken over by SOCOG". Honeyman informed Ford that the OI Centre was under the impression that the contract had been cancelled. Ford advised Honeyman of three telephone numbers upon which she claimed she had been attempting to contact the plaintiff but that the numbers continually rang out and she had not been able to contact him. 120 On 14 October the ownership of the business name "the Olympic Club" was transferred from TOC to SOCOG.

The Plaintiff meets with Wyness 121 On 21 October 1999 the plaintiff returned from China and went to the Club's premises and met with Wyness. The plaintiff informed Wyness that he was just back from China and advised him that things were going very well and that there was a lot of interest in the program. A conversation then took place in the following terms: Wyness; Peter I have some bad news. The Olympic Club has been taken over by SOCOG as you know and SOCOG have said they don't want these International members to continue. I don't know whether they will let this keep going or not. They seem to be fairly determined on wanting to cancel the arrangement.

The plaintiff: They can't do that. I have a contract. I have paid all this money and I have put all this work and effort in. How can SOCOG just break my contract, I won't let them.

Wyness: I know its not fair but you must understand Peter, the Olympic Club has been in a lot of trouble, SOCOG have taken it over and they don't really want to be bothered with it. I'm trying to do what I can to help you and to make sure these agreements keep going, but SOCOG are pressing for me to cancel the contract. You must understand I'm not in charge any more. I'll be leaving the Club in about November, in the meantime, I'm only helping them out like a consultant, but they tell me what to do and I have to do it. My position is very difficult at the moment.

The plaintiff: They can't do that, I won't let SOCOG do that I have a contract, they can't break my contract.

Wyness: Peter let me see what I can do. As you say things are going so well with your planning in China, I'll tell SOCOG that and I'll see what we can do about letting the contract continue. I will try to help you whatever way I can, I know you have worked very hard on this project.

The plaintiff: Thank you very much, I appreciate your help. Please do what you can. I cannot have this contract terminated I have put too much time, money and effort into it. My face will be ruined in China if this contract is terminated. I have dealt with so many big officials and told publicly everyone what we are doing and how good it is. It will ruin my face in China if you do not stop SOCOG from doing this, please help me.

Wyness: Peter I will see what I can do. I will let you know. 122 On 26 October 1999 the plaintiff wrote to Wyness confirming an understanding that the Club "may have new policies and arrangements". The plaintiff asked for an "official document affirming the relationship between SOCOG, the Olympic Club and the International Members' Department". The letter continued: · Who, on behalf of SOCOG, will be responsible for the Chinese International Membership? · If I can obtain assistance from the Olympic Club in purchasing Olympic Games tickets for the Chinese International members? · Whether it is possible to purchase 30 Opening Ceremony tickets for our members? · When the welcome kits will be delivered. According to our agreement, each Chinese International Member is entitled to one welcome kit. Therefore, we are looking forward to receiving 742 welcome kits for our payment of about $260,000. · When will be the appropriate time to send the Chinese International Member a letter of invitation to the Opening Dress Rehearsal? 123 On 29 October 1999 Wyness responded to the plaintiff's letter in the following terms: 1 SOCOG now has complete control over the Olympic Club and I will be clarifying who your contact is regarding the production of the International members' kits. As I stated the instructions from SOCOG are clear that the agreement should be terminated. 2 I will determine who your contact will be. That contact will advise you on the possibility of assistance with purchasing tickets, when the kits will be delivered and the possibility of getting Opening Ceremony tickets, which I believe is remote. They will also advise when the dress rehearsal tickets will be released but I expect it will not be until nearer to the Games as with the rest of the tickets. 3 With regards to the authorisations, we were supposed to do a full background check on the sub agents and as such it will be hard for me to sign these now as the checks were not carried out at the time of the contract signing. I am concerned as to what these agents will be paying for as you will have no rights to grant them other than the memberships you have already purchased. As I stated I am happy to help you in any way I can and resolve the issues you have, however I must be aware of any legal responsibility that I will have. I will get back to you early next week with any further information I have and would request that any visits to our office are arranged ahead of time by appointment. 124 On the same day Wyness wrote to Ford in terms which included the following: Peter Zhu purchased up to $260,000 of International memberships which has been held in inventory until the names were supplied to us as a normal corporate sale would be. He has now asked for information on when he can start to receive this. He has also asked if there is any possibility of assistance he can receive in purchasing a batch of tickets. Paul Reading asked me to unwind any future arrangements with regards to International Memberships which I am doing however he should receive these membership kits which he has paid for. I believe Tina has details of what the contents of these kits were. If you have any questions I will be happy to assist, I believe handled correctly this could be a strong revenue source for you going forward.

A copy of that letter was provided to Michael Brann and Reading.

Ford's meeting with the OI Centre on 2 November 1999 125 Ford attended the Ol Centre on 2 November 1999. Ford had little recollection of the conversation at this meeting. She emphasised that she was present to "receive" rather than provide information. Ford gave evidence that when she mentioned the plaintiff's name to the officers of either SOCOG or the OI Centre they "reacted". When asked to explain what she meant by that Ford said that they reacted in a way that suggested "they knew something that I didn't". 126 I am satisfied that at this meeting on 2 November 1999 Ford expressed concerns to the officers in relation to the Club and the possible continual involvement of Wyness in the development and marketing of the Club and its activities. Ford more probably than not expressed the concern about Chinese documentation and copies of invoices and cheques totalling $230,006. I am also satisfied that at this time Ford advised the officers that she had concerns over the physical safety of the staff from former members of TOC. 127 I am also satisfied that Ford informed the officers that instructions to terminate arrangements between the plaintiff and TOC had been "ignored" and that Wyness was using Olympic Club official letterhead when he was not authorised to do so and that several boxes of documents were still in his possession which were the property of SOCOG. I am also satisfied that Ford expressed concerns that there were false promises still being made in the market place in relation to the obtaining of Visas. 128 On 3 November 1999 notwithstanding Ford's discussions with a number of people relating to the plaintiff she wrote to Wyness in the following extraordinary terms: The Peter Zhu issue is new to me, I wasn't aware that we had any International Memberships. Can you send me a copy of the agreement as soon as possible together with the details of what it was TOCMS agreed to provide? I also do not have any contact details for him, so would appreciate some assistance.

Purported Termination of the Agency Agreement 129 On 5 November 1999 Wyness wrote to the plaintiff in the following terms: Re: Agency Appointment

We refer to the agency agreement executed in March 1999, for the Territory of the People's Republic of China (the agreement). We further refer to our meeting of Tuesday October 19 1999 at which time we notified you that your appointment as an agent of the Olympic Club had terminated on the following grounds: 1 The term of appointment was stated in the agreement to terminate on 30 June 1999 subject to you exercising your option to extend that term, and you failed to exercise your option. 2 In any event, you failed to perform the preconditions to exercising your option which are set out in clause 5 of the agreement, in that you (a) only sold 743 memberships as at October 19 1999 in breach of your agreement to sell 2000 memberships. (b) You failed to pay AUD$700,000 by 30 June 1999 or at all. At our meeting you agreed your appointment had been terminated. The Olympic Club will of course fulfil its contractual obligations with respect to the memberships sold by you and we await notification from you as to when you require delivery of the membership kits. We otherwise call upon you to return all property which belongs to or was supplied to you by the Olympic Club and you should cease to associate yourself with or represent yourself as having any form of association with the Olympic Club. We thank you for your assistance and cooperation. 130 On the same day Wyness forwarded a copy of that letter to Ford advising her of a telephone number on which the plaintiff could be contacted. Wyness advised: I have told him that the contract has been terminated for the reasons given in the letter. The options would be to return his $260,000 or to fulfil his 743 membership kits which he has paid for. These memberships were priced at $350 each and only included the merchandise as listed in the contract. They were not valid to enter the ticket draws. These were treated as a "Corporate sale" in the sense that they were put into inventory until we received the names from Mr Zhu. 131 On 15 November 1999 Fergus wrote to Ford. He referred to the recent dealings with Ford and her concerns about "possible breaches of law relating to" the Club's Contract. Fergus recommended that a full audit of the financial transactions of the Club be undertaken "to ascertain if any criminal acts might have occurred". He also recommended that professional legal opinion be sought by SOCOG in relation to a possible breach of contract between the Club and others and SOCOG. In a draft of the letter which was not forwarded to Ford it was noted that a review of the material available and provided by Ford to the OI Centre revealed "no prima facie evidence to suggest any criminal acts have occurred" (Ex A. 565). 132 On 18 November 1999 the plaintiff responded to Wyness' letter of 5 November 1999. He denied that any meeting took place on 19th October 1999 and did not agree with Wyness' claim that he had admitted that the Agreement was terminated, indeed he denied ever having made such a statement. The letter continued:

As to your notification that you purport to terminate the agreement on grounds that I failed to comply with conditions under that agreement, I state that such purported termination is invalid because the conditions to which you refer have been satisfied and waived by the Club. On this point, I note that at a meeting which took place between myself and Mr Gus Noble of the Club prior to the 30th June, 1999, Mr Noble, on behalf of the Club, agreed that the conditions attaching to the agreement concerning minimum number of memberships to be sold and requirement for exercise of option would be waived. Subsequent to that meeting the Club then confirmed that the agreement had become unconditional and that the agreement would extend until the 31st December 2000. For the above mentioned reasons I maintain that the agreement is still in full force and effect and I deny any right of the Club to terminate same.

133 It is apparent that a conversation took place between Ford and Wyness on 29 November 1999. Following that conversation Wyness sent a fax to Ford in the following terms:

Following our conversation this morning I wanted to give you my reading of the situation. In early 1999 we were approached by Tim Goh who was working with Salesforce regarding a possible corporate purchase. The concept we were offered was that of an Olympic Club merchandise package being made available to international visitors who were to be visiting during the Olympics. The purchase of these memberships was to be made by an Australian based company and delivered to the visitors when they arrived in Australia. There was to be no entry into the ticket ballot and we were advised that our merchandise package would have a high perceived value for these visitors. An Agency Agreement would be formed for each country who would be sending visitors. Initially I had been asked by John Moore to contact overseas travel agents who were sending official groups to see if they would buy into the concept and John provided me details of certain companies such as Sportsworld and Jetset etc. I asked Gus Noble to meet with Olympic Intelligence and Immigration and he was advised that there was no strong objection to us working with Peter Zhu (note attached). They paid approx. $260,000 in advance memberships but did not fulfil the full conditions to maintain their status with the Club as an agent. On further advice from Paul Reading in approximately September I was asked to wind down the relationship. I met with Mr Zhu at the first opportunity after his return from China and informed him that we were terminating his agreement due to unfulfilled clauses in the agreement. All payments from Mr Zhu and his company were processed through the normal bank accounts and are available to be audited by any outside party with our prior agreement. Gus Noble was in charge of this International program on behalf of the club and would be the person who would advise on any of the finer details that may be required.

134 From approximately 22 November onwards Go was attempting to make contact with Ford. On 30 November 1999 Ford wrote to Reading advising that she had done everything to try and avoid meeting Go but with no success stating "I now think it will only get worse if I continue to fob him off". She advised that she would go ahead and meet with Go with another Club staff member present. 135 Ford advised Reading that she intended to explain to Go that the Club was seeking legal advice on the "whole issue" and that the plaintiff had paid $260,000 approximately for around 730 memberships. She explained that she intended to advise Go that the "Zhu Contract was terminated by TOCMS in September and that SOCOG had no arrangement with Mr Zhu and would not be entering into any in the future". She further explained that she intended to advise Go that SOCOG would not be offering "any International Memberships or engaging any other agents in the future" and that SOCOG were currently exploring whether to refund the plaintiff money or fulfil obligations to provide the kits. 136 In her correspondence with Williams and Reading, Ford advised that she had looked at the numbers and it would be "far cheaper to put together some kits than to refund the money" and that if they decided to provide the kits "it may close the matter once and for all which would be a really good thing".

Ya Fa Wang 137 Ya Fa Wang (YF Wang) is self employed and has business interests in a number of companies in both Australia and China. In 1998 and 1999 he was based generally in China and part of his business involved doing work for Chinese businesses in Sydney. In February 1999 he was asked by the Wuliangye Group of companies in Cichaun province China (the Group) to look at opportunities for sending a number of their employees to the Games. In May 1999 YF Wang was telephoned by a friend who informed him of the existence of the Club. 138 On 28 August 1999 YF Wang returned to Sydney and on about 16 September 1999, with his wife, met with Liao and his wife for yum cha at a Parramatta restaurant. The Club was the subject of discussion during the meting and YF Wang and Liao agreed to meet later to talk further about it. Two or three days later Liao took YF Wang to meet Zhang. Zhang gave YF Wang Wyness' letter of 17 June in relation to visas and sub-agents, a copy of the Facts Sheet in both Chinese and English and a sample of a Membership Certificate. 139 YF Wang prepared a contract between the Group and "the International Division of the Olympic Club" in which the Group agreed to pay $8,700 per package and after signing the agreement to provide a list of 25 members to attend the Games. It was agreed that after paying what was described as the initial payment the Group would be provided with Membership Certificates and that Olympic Club officers would attend Shanghai where Olympic Club Membership Cards would be issued to the 25 members at a press conference which the Group would organise and pay for except for the airfares of the Club's representatives to Shanghai. One hundred and twenty five tickets to such events as table tennis, badminton volleyball and "female soccer" were agreed to be provided to the Group. 140 The initial payment was one third of the total price of the purchase for the 25 packages. The total was $217,500 of which one third was $72,500. YF Wang met with Zhang and Liao on 22 September 1999 and paid $72,500 by way of cheque and was provided with a receipt on the Olympic Club with compliments slip with the details of the bank, branch, BSB, account number and name "TOCMS" and address of the bank. On 23 September 1999 Zhang and Liao provided an executed copy of the contract YF Wang had drafted and the following day YF Wang returned to China.

141 On 12 October 1999 Liao sent a facsimile to YF Wang in China requesting him to provide the list of 25 people so that Membership Certificates could be provided. On 15 October 1999 YF Wang sent to Zhang and Liao by facsimile the list of 25 names that had been requested. On 16 October Liao sent a further facsimile to YF Wang asking for the date of birth, occupation and address of the 25 people so that details could be entered into the computer when their applications are "examined and approved". Liao informed YF Wang that after the Certificates were faxed and confirmed the balance of the amount for the packages would have to be paid. These details were forwarded and Liao advised that he expected to be able to fax the Certificates by 20 October 1999. 142 YF Wang returned to Australia on 26 October 1999 and on 4 November 1999 met with Zhang who handed him the Membership Certificates with the names of the 25 persons thereon and a number. YF Wang also met with Zhang about three or four days before Zhang left to go to China. At this meeting Zhang informed YF Wang that he was returning to China to attend the press conference for the presentation to the 25 members and informed him that he also had 25 "club packs" to be given to them at the presentation. Zhang asked YF Wang to return to Shanghai and that he could take 15 of the packs and Zhang would take the other 10 packs. 143 YF Wang asked Zhang if the Certificates were genuine pointing out that the signatures of Messrs Knight and Coates on the Certificates were "printed". Zhang assured YF Wang that they were "genuine". Zhang asked YF Wang to get the 25 people to fill out the Forms that he gave him which were headed "The Olympic Club International Membership Application (the China Region)". This form had spaces for the type and number of "competitions" the applicants "preferred to watch" and a statement that the applicant would "abide by the law and customs of Australia" when they came to Australia. 144 Sometime after 23 November 1999 Francis Lee, the Chairman of the Asia Media Council, a friend of and at the behest of YF Wang, contacted the Club and spoke with Reg Roberts, a person under the supervision of Ford. Mr Lee advised Roberts that his friend, YF Wang, had purchased 25 packages, International Olympic Club Memberships, at a total cost of $72,500. Mr Lee advised that Olympic Club Membership Certificates were provided with membership numbers. A copy of a certificate was provided to the Club in the name of Mr Peng Guo Chang with a membership number thereon. 145 Subsequently YF Wang made contact with the Club to ascertain the genuineness of the Certificates and the authority of Messrs Liao and Zhang. As a result of that contact the Club forwarded this information, including copies of the Certificates, to the OI Centre.

Sub-Agent Liao arrested 146 The Strike Force was brought into the matter and DS Nicholls interviewed YF Wang on 30 November 1999. YF Wang agreed to assist the police who were in surveillance of a meeting that YF Wang set up with Liao at the Airport on 1 December 1999 at which he was handing over a photocopy of a cheque for $145,000 for the balance owing for the 25 packages. Liao was arrested and charged with obtaining a benefit by deception and also with attempting to obtain a benefit by deception. 147 YF Wang telephoned Liao on 4 December 1999 and Liao informed him that the Certificates were genuine and provided Zhang's phone number in China. YF Wang telephoned Zhang that evening in China and was assured by Zhang that the Olympic Club was genuine and that "if it wasn't he would return the money" to YF Wang.

Strike Force briefs SOCOG on 3 December 1999 148 After Liao was arrested a search warrant was executed at Zhang's business premises in Sussex Street, Sydney, and on 2 December 1999 DS Nicholls met with Ford and Reg Roberts during which items seized were inspected and DS Nicholls was provided with what he described as "certain" information (Ex 17 par 36). These items included stationery, application forms, booklets, and an official seal. 149 In the meeting on 2 December 1999 Ford informed DS Nicholls that Liao had no connection with the Club and had no authority to sell Club memberships (tr. 732). Ford also informed him that the certificates that Wang had been given contained numbers that were not on the Club data base (tr.742). Ford informed DS Nicholls that the information on the certificates was "not genuine" (tr.743-744). DS Nicholls said that Ford was the "central person" for him to contact for inquiries he had in relation to the investigation (tr. 750). 150 When DS Nicholls prepared his statements in the proposed prosecution and in this case (EX 14,15 & 17) he did not make mention of any meeting on 3 December with SOCOG or Ford. In his statement (Ex 14) he stated that prior to the arrest of the plaintiff on 6 December 1999 he "had not received any instruction or had any discussions with anyone associated with" SOCOG "concerning the arrest of" the plaintiff (par 18). 151 In cross-examination he agreed he had a meeting in the conference room on the floor on which the OI Centre was located. He could not deny that it was on 3 December 1999 nor that Reading and Ford were present as well as Brann. Fergus was also present as was Bill Swingler the General Manager, Games Services of SOCOG. 152 He agreed that he informed the meeting that a lot of material had been seized and described its nature. Having had his recollection refreshed he gave evidence that the purpose of the meeting was for him to "give a short operational briefing in relation to the investigation to date" (tr.717). He said that until the morning of giving his evidence in this trial (16/8/2001) he had forgotten about the meeting. However he accepted that he would have informed the meeting of the intended media conference in Shanghai on 6 December 1999. He understood the media conference was for the "sole purpose of presenting these membership certificates" (tr.733). He also said that he would have informed the meeting that YF Wang had been informed that the Certificates issued to him "had not been recorded on the Olympic data base" (tr. 721). 153 During the meeting DS Nicholls displayed some of the seized items, including the seal, and advised that the travel and accommodation packages were to be sold for $8,700 each. He gave evidence that the purpose of the meeting was to notify the "relevant stakeholders" of what the Strike Force was doing. He said that SOCOG was one of those with a relevant interest (tr. 726-727). He did not recall saying that Noble and Wyness were being treated as witnesses at that stage, but accepted that was the factual position. 154 Reading offered to allow DS Nicholls to review SOCOG's documents. There was discussion in relation to the Shanghai presentation and an opinion was expressed that it would lead to a great number of enquiries. I am satisfied that at this meeting on 3 December 1999 Reading asked "what should we do" and was informed that the problem had to be "tackled as a team", the Shanghai conference should be stopped and the OI Centre would contact Chinese law enforcement, the Australian Consulate, DFAT and the Shanghai Public Security Bureau. Mr Swingler's note of the meeting states that the "cops also advised that the crims were establishing a web site in the name of TOCM" (Ex A 689). 155 This was the mindset of the SOCOG representatives by this stage with Ford advising that the Certificates were not genuine in an atmosphere of deep suspicion that the plaintiff and his sub-agents were operating without any authority and fraudulently. I am also satisfied that Ford had suspicions about the bona fides of Wyness and Noble. Ford had consulted with Ernst & Young after the OI Centre suggested a full audit of the financial transactions of the Club (Ex A 566). Ernst & Young provided an oral report and an interim written report dated 6 December 1999 (Ex A 615). 156 Ernst & Young noted their instructions not to contact Wyness or any of the TOC trustees or the Club management until further notice. This instruction is indicative of the secretive approach adopted in not consulting with the very people who knew what had happened. This was driven by the suspicion that not only the plaintiff and his sub-agents were acting illegally but Noble and Wyness were also possibly involved in the plaintiff's alleged illegal activity. 157 Ernst & Young advised that they had reviewed the deposit books and bank statements in relation to the relevant entries for the Chinese International Memberships. They noted that the quality of the record keeping was "poor" and recommended that Wyness and Noble be interviewed. Importantly the report stated that "International Sales" was not a secretive initiative but a well known strategy of TOC" and referred to the fact that their 8 July 1999 report had made specific reference to such sales with the estimate of revenues from that program. This did not quell the rising tide of suspicion within SOCOG about the plaintiff's conduct.

The Plaintiff and Sub- Agents are arrested 158 When the plaintiff heard of Liao's arrest in Sydney he cancelled the media conference planned for 6 December 1999 and immediately returned to Australia from China. On his return to Australia on 6 December 1999 he was arrested at Sydney airport and his home was subsequently searched and all the documents relevant to the conduct of his agency were seized. 159 On 12 December 1999 SOCOG issued a News Release in which it stated that the CEO of SOCOG, Hollway, had said "he wanted any allegation of fraud to be vigorously pursued" and that "SOCOG has authorised no agents or sub-agents to sell Olympic Club material overseas. To the best of our knowledge, any arrangement that may have been in place prior to SOCOG assuming control of the Olympic Club in August was terminated by the previous management of the Olympic Club" (Ex A 638). 160 On 26 April 2000 the plaintiff was charged with obtaining money by deception and attempting to obtain money by deception. On 16 October 2000 the Director of Public Prosecutions advised the plaintiff's solicitor that the Director had decided that all charges against the plaintiff, Liao and Zhang who was also charged, would be withdrawn. The Director also recommended that the matter be referred to the Police Integrity Commission for possible investigation.

Proceedings are commenced 161 The plaintiff commenced these proceedings on 22 December 1999 seeking declaratory relief and orders against SOCOG, TOC and Wyness. The proceedings between the plaintiff and Wyness have been settled. The proceedings between the plaintiff and TOC have been stayed by operation of law as a liquidator was appointed to TOC in August 2000. 162 The proceedings first came on for hearing in February 2001 before Acting Justice Brownie, however that trial was aborted. These proceedings were heard by me between 30 July 2001 and 22 August 2001, and on 10 & 11 September 2001. Mr JC Kelly SC leading Mr MF Galvin of counsel, appeared for the plaintiff, and Mr M Pembroke SC leading Mr R McHugh of counsel, appeared for SOCOG.

The Plaintiff's claims 163 The plaintiff seeks declarations that TOC wrongfully repudiated the Agency Agreement on 5 November 1999 and that SOCOG procured that wrongful repudiation. The plaintiff claims that the wrongful repudiation caused him loss and damage. The plaintiff also claims that SOCOG instructed TOC to terminate the Agency Agreement with knowledge of it and intending to interfere with the contractual relationship between the plaintiff and TOC. 164 Liability for the tort of interference with contractual relations will attach "if the intervenor, with knowledge of the contract and intent to prevent or hinder its performance, either (1) persuades, induces or procures one of the contracting parties not to perform his obligations, or (2) permits some act, wrongful in itself, to prevent such performance": Fleming, The Law of Torts, 9th Edn, 758. 165 In AllState Life Insurance Co v Australian and New Zealand Banking Group Ltd & Ors (1995) 130 ALR 469 at 479, Lindgren J, with whom Lockhart and Tamberlin JJ agreed, said: Linguistic confusion can arise in respect of the alleged tortfeasors' state of mind with respect to breach of a contract. Both "intention" and "knowledge" have been used in this context. But a person's "knowledge" that what he is inducing will constitute a breach of contract and his "intention" to induce a breach of contract by what he is doing refer to one and the same thing. After all, ex hypothesi, the alleged tortfeasor's acts are intentional, a breach of contract occurs, and the acts induce the breach. Against that background, "knowledge" and "intention" that the breach will result from the acts do not signify any relevant distinction.

After drawing the authorities together at 484 Lindgren J said: In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have "sufficient knowledge of the contract" is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights. Both this intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the "actual" or "subjective" state of mind of the tortfeasor. Although an alleged tortfeasor must have "a fairly good idea" that the contract benefits another in the relevant respect, knowledge of the contract may be sufficient for the purposes of grounding the necessary intention to interfere with contractual rights although the precise term breached is not known: DC Thomson & Co Ltd v Deakin , supra, at 687 (Lord Evershed MR); Emerald Construction Co v Lowthian [1966] 1 WLR 691 (CA) at 700-1 (Lord Denning MR), 704 (Diplock LJ); Daily Mirror Newspapers Ltd v Gardner [1968] 2 QB 762 (CA) at 780-1 (Lord Denning MR), 784 (Davies LJ); Woolley v Dunford (1972) 3 SASR 243 (SA, Wells J) at 282; Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 (NSW, Young J) at 625-6. 166 In Tszyu v Fightvision Pty Ltd (1999) 47 NSWLR 473, the Court of Appeal (Sheller, Stein and Giles JJA) said at 512: The plaintiff must prove that the defendant intentionally procured the breach. The requirement that the defendant have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Ignorance of the existence of the contract or of its terms born of inadvertence or negligence is not enough. On the other hand, reckless indifference or wilful blindness to the truth may lead to a finding of the necessary intention. 167 It is not necessary for the plaintiff to show that SOCOG was conscious of the precise terms of the plaintiff's contractual rights. It is sufficient to show that SOCOG had "some appreciation of the general nature of those rights and of the fact that the course of action which (SOCOG) was advocating would constitute a breach of them:" Sanders v Snell (1997) 143 ALR 426 at 440 per Wilcox, O'Loughlin and Lindgren JJ (reversed on appeal on other grounds). 168 The plaintiff claims that the contractual right with which SOCOG interfered was his right to enjoy his appointment as an authorised agent of TOC. That appointment was made by TOC in its capacity as Trustee of the Olympic Club Trust and the Club upon the terms and conditions set out in the Agency Agreement dated 11 March 1999, the relevant portions of which are extracted earlier in this judgment. The plaintiff paid an Agency Fee of $30,000, and, in consideration of the payment of further sums totalling $230,006 the Agency Agreement was extended to 31 December 2000 in accordance with an authority under the seal of TOC signed by Wyness and dated 4 June 1999. 169 The plaintiff claims that the interference by SOCOG occurred in a number of ways (1) by the entry into the Deed of Release and Termination by which the Trust was terminated and the business of the Club was transferred to SOCOG, referred to by the plaintiff as "inconsistent dealing", (2) by the directions by Reading to Wyness to terminate the Agency Agreement and (3) by causing the plaintiff to be arrested. SOCOG's defences 170 SOCOG concedes that TOC remained legally bound to the plaintiff to perform the Agency Agreement until the purported termination on 5 November 1999. SOCOG also conceded that it instructed TOC to terminate the Agency Agreement and that the other ingredients of the tort of interference were present. It was submitted that the plaintiff may only succeed if he is able to prove that the termination of the Agency Agreement on 5 November 1999 was a wrongful repudiation by TOC. It is submitted the tort is not committed if the interference results, not in any breach of the contract, but merely in the exercise of a lawful right to terminate the contract: Greig & Ors v Insole & Ors [1978] 1 WLR 302 at 333. 171 SOCOG claims that the termination was valid by reason of circumstances that existed at the time of the termination, which justified the termination. It claims that the plaintiff has misconducted himself personally and through his sub-agents and that such misconduct was unknown or not fully apprehended at the time the letter of 5 November 1999 was sent to the plaintiff: Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359: Byrne v Australian Airlines Ltd (1995) 185 CLR 410; Concut Pty Ltd v Worrell (2000) 75 ALJR 312 Pars [27], [29] and [42]. 172 SOCOG concedes that the grounds for termination stated in the letter of 5 November 1999 were not available grounds for the termination of the Agency Agreement but that the reliance on those grounds does not matter in the circumstances of this case. It was submitted that the plaintiff's conduct exemplified by a number and variety of serious breaches of contractual and fiduciary duty owed by him to TOC justifies the termination. It is submitted that such conduct was inconsistent with the terms of the Agency Agreement in fundamental respects and incompatible with the trust and confidence which TOC was entitled to expect to have in its agent. 173 It was submitted that the agency relationship is a fiduciary relationship which gave rise to three primary equitable obligations (a) that the plaintiff was required to act strictly in accordance with the agency agreement and not to exceed the authority given to him, (b) that the plaintiff was required to obey the instructions of TOC and (c) that the plaintiff was required to act with good faith and loyalty towards TOC and not prefer his own interests to those of TOC.

The Agency Relationship 174 TOC appointed the plaintiff "to provide the services to" TOC pursuant to the Agency Agreement. The "services" were defined as "the activities to be conducted or supervised by the Agent set out in schedule 1 or any part thereof". Schedule 1 required the Agent to sell 2,000 memberships in the initial term and 8,000 memberships in the further term. 175 The nature of the relationship that was intended by the parties may be gleaned from a number of the clauses of the Agency Agreement. Clause 10.1 required TOC and the plaintiff to discuss, as necessary, any action that needed to be taken to ensure standards were maintained. The standards of professional and workmanlike performance of activities, compliance with timeframes and reporting timetables and compliance with statutory requirements were to be the subject of discussion if necessary. 176 There was also provision (clause 11) for TOC to notify the plaintiff if it had reasonably formed the opinion that the plaintiff was not performing the services satisfactorily. If such notification was given to the plaintiff then TOC and the plaintiff were required to consult "in good faith as to the best method of rectifying the problem". The plaintiff was required to use his "best endeavours" to "remedy unsatisfactory performance of the services" and ensure that the "problem does not recur". If the plaintiff failed to use such best endeavours TOC "in its absolute discretion" was entitled to terminate the Agency on 14 days notice. 177 These provisions created a relationship in which it was necessary for open discussion and problem solving in an atmosphere of good faith. They provided the plaintiff with an opportunity of rectifying any problems identified by TOC before the plaintiff could be exposed to termination. There was a further provision for a "Rectification Notice" to be served upon the plaintiff (clause 15.2) prior to termination "at any time" on 14 days written notice if the plaintiff was in breach of his duties under the Agreement. 178 It is evident that the Agency Agreement was entered into on 11 March 1999 with some sense of urgency having regard to the terms of the Agreement itself. For instance, the letter referred to as "annexed" and marked "A" was not annexed, clause 15.2 referred to the Agents' duties being specified in clause 8 which did not specify such duties but dealt with illness or incapacity, clause 16.1 (c) was probably intended to prohibit the plaintiff from further representing himself as an agent after the termination date but omitted the word "refrain" so that the clause was meaningless. 179 There were a number of conditions precedent to the exercise of the option for the further term. Two of those conditions were (1) the sale of the minimum of 2,000 international memberships by 30 June 1999 and (2) the payment to TOC of the minimum sum of $700,000. Wyness and Noble waived these preconditions to the exercise of the option and such waiver is evidenced in writing in the 4 June 1999 letter signed by Wyness extending the plaintiff's Agency to 31 December 2000. 180 This extension was granted in circumstances of pressing financial need in TOC and once again seems to have been attended to with some sense of urgency. This appears from the terms of the 4 June 1999 letter signed by Wyness. The Agency Agreement provided that in the event of the plaintiff exercising an option TOC was required to provide the plaintiff "every three (3) calendar months with further letters in accordance with clause 7.1 (b), authorising the Agent for the following three (3) months until the Completion of the further term provided the Agent is not in breach of this Agreement" (clause 7.1 (e)). This provision permitted a measure of review of the situation every three months. TOC did not take advantage of this provision and provided the letter not for three months but for the following 19 months, to the end of December 2000. 181 SOCOG submitted that the letter of 4 June 1999 was not a contractual document. I disagree. It was the document evidencing the plaintiff's contractual entitlement to continue his exclusive agency to sell in China International Memberships of the Club as a component of the travel and accommodation packages. It was provided to him in circumstances in which the requirement to sell 2,000 memberships by June 30 was waived and instead of being required to satisfy the condition precedent of paying $700,000 he was required to pay $200,000. Having satisfied that varied condition precedent the Option was granted not for the "further term" as defined in the Agency Agreement, which was 30 September 2000, but until 31 December 2000. 182 SOCOG also submitted that the plaintiff procured the grant of the Option by misrepresentation. Reliance was placed upon the plaintiff's evidence in his affidavit (13/3/2000 para. 44) in which he stated that he informed Noble in May 1999 that he had "met with the Chinese Government Officials both in China and in the Consulate in Sydney, for the purpose of getting the necessary Government approval to establishing this business in China". In cross-examination (tr. 343-344) the plaintiff rejected the suggestion that he informed Noble in that conversation that he had already obtained the approval. He said that he informed Noble it was important for him to get the "right department, the right channel" and that he was still "doing that". 183 By May 1999 the plaintiff had met with Mr Tu on 23 March 1999 and I am satisfied that the plaintiff statement to Noble referred to at least this meeting. Mr Tu was but one of the people in China from whom the plaintiff sought approval. Mr Yu, who seems to me to have been the more important figure to approach, was consulted in July 1999. This was consistent with the plaintiff's stated position that he was "still" finding the right channels to obtain the relevant approvals. If SOCOG's submissions were correct and the plaintiff had secured the grant of the option by tricking Noble into believing that he had already obtained the approvals there was absolutely no need for the plaintiff to spend time, effort and money in visiting and dining Mr Yu. 184 SOCOG submitted that the plaintiff's conduct indicated a lack of frankness and good faith on his part and concealed the fact that he had been acting in breach of the Agency Agreement by promoting, marketing and selling International Memberships before satisfying his obligation under clause 9.1 (a). I do not accept that the plaintiff informed Noble that he had already obtained the relevant approvals. I accept the plaintiff's evidence that he informed Noble that he was still pursuing the various departments and channels to obtain the relevant approvals. I am satisfied that the plaintiff did not obtain the grant of the option by misrepresenting the position to Noble. SOCOG also claimed that the plaintiff had committed a repudiatory breach in failing to obtain the relevant and required approvals pursuant to his obligation under clause 9.1(a) and I have dealt with those submissions later in this judgment. 185 The plaintiff had positive obligations to do everything reasonably necessary and expeditious to sell up to 10,000 international memberships in China. He was also required to do everything in his power to promote, develop and extend the sale of international memberships in China. He was required to act in the best interest of and endeavour to protect and preserve the interests of and the business of TOC (clause 9.1 (d), (f) & (j)). The plaintiff was also required to conform to, observe, obey and comply with the reasonable directions and regulations made by TOC (clause 9.1 (g)). 186 The commercial setting of this contract was one in which pressure was placed on the plaintiff to sell as many memberships as possible up to a maximum 10,000 as quickly as possible so that TOC would receive funds from the plaintiff to ease its pressing financial burden. This contract was part of an expansion by TOC into international areas other than China. It was also pursued by TOC in the hope that the Club would continue after the Games. 187 There is no doubt from the terms of the Agency Agreement that the parties intended that the plaintiff would be notified of any "problem" TOC had with the way in which the plaintiff was conducting, or supervising the conduct of, the Agency and given an opportunity to rectify the problem. There is also no doubt that the parties expected each other to act in good faith. It is also clear that if the plaintiff conducted himself or allowed his sub-agents to conduct themselves in a manner that struck at the fundamentals or root of the Agency relationship or justified a loss of trust and confidence by TOC in the plaintiff the Agency Agreement could be summarily terminated.

Plaintiff's evidence 188 Mr Pembroke SC submitted that the plaintiff's evidence should be treated as generally unsafe except where it is against interest or is corroborated by contemporaneous documents. Mr Pembroke's submission that I should treat the plaintiff's evidence as "generally unsafe" may be understood as a criticism either of the plaintiff's reliability or credibility. These two concepts require different assessments. In the former the Court is assessing whether the witness' "genuine recollection truly describes what was said, done, heard, seen or thought" and in the latter the Court is assessing whether the evidence is "genuine". In other words assessing whether a witness is accurate in the former case or truthful in the latter case: JLT Scaffolding International Pty Ltd (in liq) v Silva, unreported, 30 March 1994, NSW CA, per Mahoney JA; Ryan v Health Administration Corporation, unreported, 23 May 1995, NSW CA; The Hon. Justice R.D.Giles The Assessment of Reliability and Credibility The Judicial Review (1996) Vol 2 No.4 p281 The nature of the submissions in support of the proposition seemed to support the latter, however I will review the evidence on both bases. It was submitted that the plaintiff frequently denied the obvious or asserted the improbable. In support of this submission reliance was placed upon the plaintiff's evidence in relation to a number of topics. 189 The first related to a business card (Ex. 1) with the name, GNS Solicitors, at the top and the address at the bottom and the plaintiff's name in the centre. There is no description of the plaintiff's occupation or qualifications. Mr George Stathopoulous (GNS) performed work as a solicitor from the plaintiff's suite of offices. The plaintiff referred work to GNS and sometimes interviewed clients who could not speak English. Sometimes the plaintiff would be an interpreter and at other times the plaintiff's staff would interpret for GNS. The plaintiff conceded that he informed people that he had a business association with GNS. 190 The plaintiff said that he informed third parties that GNS was a solicitor working in his office and if the plaintiff's clients needed some legal advice it was very convenient to refer them to GNS. The plaintiff denied ever telling anyone that he had been employed by GNS or that he was a consultant of GNS Solicitors. The plaintiff agreed that he had the cards printed but did not agree that the card was misleading. He claimed that the card simply meant that he was working with them "like I mean the passing the clients to them" (tr. 94). 191 It is true that the plaintiff's name on the card does not specifically claim that he is a solicitor and it is clear that the plaintiff advised third parties that he had a business association with GNS. It was never positively put to the plaintiff that he had informed any person that he was a solicitor nor was any evidence called to establish that he had. The attack on the plaintiff in this regard is confined to the alleged misleading nature of the card. 192 It may have been more prudent to have the plaintiff described on the card as a provider of translation services to put the matter beyond attack however, the production of this card in the circumstances of the evidence given in relation to it does not lead me to the conclusion that I should treat the plaintiff's evidence as generally unsafe. 193 The next matter relied upon by Mr Pembroke was the evidence given by the plaintiff in cross-examination about the way in which he produced his affidavit. He was asked whether he swore on a bible and he said that he swore that the affidavits were true but he did not swear on a bible (tr. 98). It was submitted that the plaintiff's evidence was that he did not understand the difference between swearing and affirming the truth of his affidavits and that his affidavits, where they indicated that he had taken an oath, were false. 194 In cross-examination the plaintiff explained the history of his religion. He was initially baptised a Catholic and ultimately changed his religion to Buddhism. He was asked whether he had "no idea what the difference is between swearing your affidavit on oath and affirming the correctness of what you have to say". He was asked "you understand any difference between those two things" he answered "yes. One thing is swear to the God. The other thing is swear- to just swear…I think I swear in my heart, not to God, just say I swear I said it's all the truth yes". 195 It is not necessary that a religious text be used in taking an oath before giving evidence (s 24 Evidence Act 1995 (NSW)). In any event, having regard to the plaintiff's evidence referred to above I am not satisfied that SOCOG's submission is sustainable and the plaintiff's evidence on this matter would certainly not lead me to the conclusion that I should treat his evidence as generally unsafe. 196 Another matter relied upon was the contrast between the plaintiff's evidence in par 63 of his affidavit of 13 March 2000 (the earlier affidavit) and par 38 of his affidavit of 7 March 2001 (the later affidavit) and his evidence in relation to those paragraphs. In par 63 of the earlier affidavit the plaintiff deposed: Document "Y" is a letter from Mr James Chang to Keith Wyness dated 30 August 1999. I saw copies of the Olympic Club Folder and other documents referred to in that letter before they were sent to Keith Wyness for approval. The documents were prepared in the Chinese language for use in the course of marketing in China and the purpose of the documents being sent to Mr Wyness was to obtain the approval of The Olympic Club and the first defendant for that use. 197 In par 38 of the later affidavit the plaintiff deposed: I did not see or approve the terms of any of the documents that were forwarded by Mr James Zhang to the third defendant under cover of his letter dated 30 August 1999 but I was aware that he had in hand the task of preparing the final form of a number of documents to be used in the promotion and sale on International Memberships in the People's Republic of China when selling got under way and I expected him to prepare those documents and send them to the second defendant for approval. Copies of those documents were subsequently given to me but I did not have occasion to examine them or put them to any use in my agency.

198 In cross examination (tr. 202-203) the plaintiff was asked "so which is the false statement, the one in which you said that you saw the documents enclosed with Mr Zhang's letter or the one in which you said you did not see or approve the documents enclosed with Mr Zhang's letter?". The plaintiff said they were "both correct". He was asked "both are correct?" to which he replied "yes" and then "is that your answer?" to which he replied "yes". That was the totality of the evidence on this topic. Mr Pembroke SC noted that there was no re-examination in relation to this evidence and submitted that the two statements were inconsistent and the plaintiff's assertion that both were correct should lead me to treat his evidence as generally unsafe. 199 There may have been an explanation as to why it was that the plaintiff asserted both statements were correct but he was not asked to explain how that could be so. The earlier affidavit refers to seeing copies of the documents before they went and the later affidavit refers to not seeing or approving the terms of the documents with an awareness that a final form of the document was being prepared for forwarding for approval. An explanation may be that the plaintiff saw copies of the documents that were not in final form. However I just do not know because no explanation was given. The evidence is curious and I will take it into account but standing alone it is not evidence that would cause me to treat the plaintiff's evidence as generally unsafe. 200 Further evidence relied upon by SOCOG, submitted to be in a similar vein, was the plaintiff's evidence in par 89 of his earlier affidavit that he had caused a letter of 6 August 1999 (Ex A 436-437) to be sent to Wang You De (also known as Oscar Wong) in which he requested assistance with arrangements in mainland China in Guangzhou City on 5 September for the forthcoming announcement and granting of certificates to the first International Members of the Club. It was submitted that the plaintiff "disclaimed knowledge" of this letter in his evidence at tr. 279. 201 The plaintiff gave the following evidence at tr. 279: Q. Is that a letter dated 6 August 1999 from you to the person described as Mr Youed Wang, also known as Oscar Wong? A. My name is on it but - my signature is not there. That letter I don't know at that time. Q. This letter, Mr Zhu, may I tell you was found in your possession by the police? A. Yes, I know that because at that time I don't know. What happen is that after they change the time - they're supposed to have the things in October in Guan Dong, but they change that to Shanghai. I say why they change it and then they show me that letter and they say because they have to be ready, that's why they change it to Shanghai

Q. So by the end of October the letter..was given to you? A. Yes. Q. By whom A. James Zhang.

202 The letter does not have the plaintiff's signature upon it and it does have the plaintiff's name on it. I am not satisfied that the plaintiff's evidence amounts to a disclaimer of knowledge of the letter. It appears to be a letter that he had knowledge of at a later time and that it was Zhang who drew it to his attention in October. Once again it is curious that the plaintiff had said in his earlier affidavit that he caused it to be sent. It may that he did cause it to be sent by Zhang. It was certainly not put to him that he had made an error in his earlier affidavit or that he did not cause it be sent. I am not going to treat this evidence as a basis for regarding the plaintiff's evidence as generally unsafe. 203 Another matter relied upon by SOCOG was the plaintiff's evidence (at tr.201) that he designed the application form (Ex. 35 p.79) according to the very similar form he was given by TOC (Ex 4). Mr Pembroke submitted that the plaintiff's evidence should be treated as unreliable because there was "no similarity" in the two forms. 204 There is some similarity in the two forms. The TOC form describes the categories of membership available, the fee and what is included in the membership. The plaintiff's form includes a description of what the applicant for International Membership will receive on the payment of a certain amount. Each form has a box for the applicant to fill in name, address and telephone number. The plaintiff's form requests additional information in respect of the applicant's occupation and I.D. card and work address. Each form requires signature of the applicant and the date of the application. The TOC form includes a reference to a "money back guarantee". The plaintiff's form advises that there will be a "full refund" if the application for a visa is rejected. Each form contains the Club's Logo. 205 The submission that there is no similarity in the two forms is unsustainable as is the further submission that this part of the plaintiff's evidence should cause me to view his evidence as generally unsafe. 206 There were a number of other areas of the plaintiff's evidence that SOCOG attacked as being unreliable and I will deal with them later in this judgment when considering the allegations of repudiatory breaches by the plaintiff. However there is another matter with which I should deal before I leave this series of attacks on the plaintiff's reliability as a witness. It relates to Mr Tu and Mr Yu with whom the plaintiff met in China in March 1999 and July 1999 respectively. 207 In opening this case Mr Pembroke referred in particular to a claim made in SOCOG's Defence that the plaintiff had breached his obligations under cl. 9.1 (a) of the Agency Agreement by reason of his failure to obtain, and making no attempt to obtain, approvals from the Government of the PRC or the Chinese Olympic Committee (par 11 (a)-(b)). 208 Mr Pembroke referred to par. 11 (d) of the Defence in which it was pleaded that Mr Tu had expressly informed the plaintiff that the Chinese Olympic Committee declined to give approval to the plaintiff's proposal to promote, market and sell memberships in the PRC and further that Mr Tu had forwarded a letter dated 23 April 1999 "directing the plaintiff not to conduct such activities prior to obtaining the approval of the Chinese Olympic Committee" (par 11 (d) (ii) & (iii)) (tr. 60). 209 On the third day of the trial Mr Pembroke informed the Court (tr.96-97) that Mr Tu, the Secretary General of the Chinese Olympic Committee and a high officer in the Government, had assured SOCOG's legal representatives that both Mr Tu and Mr Yu would be available to give evidence via video link. Mr Kelly ultimately consented to this course. 210 On the eighteenth day of the trial I adjourned the matter for 10 days in part to allow SOCOG the opportunity to call evidence from Mr Tu and or Mr Yu by video link. SOCOG was on that day reasonably confident that it would be in a position to call that evidence. Neither Mr Tu nor Mr Yu was called to give evidence. In the circumstances of this case they were witnesses that SOCOG would be expected to call. I intend to take their absences into account in the plaintiff's favour when I consider the allegations of repudiatory breach that touch upon the matters surrounding the meetings with Mr Tu in March 1999 and Mr Yu in July 1999.

Inconsistent Dealing 211 On 3 August 1999 SOCOG issued a public announcement that from that date it was to "assume sole control" of the Club. Wyness continued to manage the Club until 30 August 1999 when SOCOG appointed Ford. From the time SOCOG took over the management of the Club Wyness was employed in the role akin to that of a consultant until he ceased his employment, he said, on or about 5 November 1999. 212 On 13 September 1999 the Deed of Release and Termination (the Deed) was executed. It made no reference to the Agency Agreement between the plaintiff and TOC as Trustee for the Trust and the Club. The Deed terminated the Trust effective from the termination date, originally 13 September 1999 but which the parties to the Deed subsequently agreed to be 20 September 1999. The Trust was therefore terminated as at 20 September 1999. (cl 9.1 & 1.1). On termination of the Trust, subject to payments to external creditors and operating costs of the Club, the Trustee was required to "realise the assets of the fund" and "pay all liabilities of the Trustee in its capacity as Trustee of the Trust" (cl 4 & 5). 213 The Trustee was also required to distribute the assets of the Trust to SOCOG on 20 September 1999. Although the assets of the Trust were included in Schedule 3 of the Deed they did not include the Agency Agreement between the Trustee and the plaintiff. All member contracts were assigned to SOCOG and became its responsibility (cl. 3.2). Any moneys received from member contracts was payable to SOCOG and any moneys received by TOC or the other parties to the Deed in respect of the Club after the termination date were to be held on trust for SOCOG and paid to it within 5 working days (cl 3). 214 The plaintiff submitted that SOCOG's conduct in entering into the Deed of Release and Termination to terminate the Trust, when it had knowledge of the Agency Agreement and the fact that termination would disable TOC from performing any of its contractual obligations to the plaintiff, was an intentional interference, by way of inconsistent dealing, with the plaintiff's contractual right to enjoy his agency: D.C.Thomson & Co Ltd v Deakin [1952] 1 Ch 646 at 682-687; Australian Rugby Union Ltd v Hospitality Group Pty Ltd & Ors (2000) 173 ALR 702 at 735-741. 215 It is alleged that the relevant breach of contract by TOC was its agreement to terminate the Trust that had the effect of disabling and preventing it from performing any of the contractual obligations to the plaintiff that it had promised to perform in its capacity as Trustee of the Trust when it executed the Agency Agreement. It was submitted that such conduct gave rise to a repudiation of the Agency because such was a clear indication that, as from that date, TOC was no longer ready, willing or able to perform its obligations. 216 It was submitted that when SOCOG took over the Club and left TOC in a position in which it had no authority to conduct that business either in the capacity of Trustee of the trust or otherwise it knew that such termination was inconsistent with the Agency Agreement and would disable TOC from performing its obligations under it. The plaintiff relied upon Reading's 24 August conversation with Wyness, the fact that Reading was always "blunt and forceful" (tr. 631), the fact that Wyness considered himself as being obliged to do whatever it was that Reading instructed him to do (tr.602), the September conversation between Reading and Wyness in which he was informed that Reading did not want to deal with "these people" (tr. 603), the fact that such conversation took place around the time of the execution of the Deed of Release and Termination, and the fact that neither Reading or Hollway were called to give evidence, in support of the submission that SOCOG knew that the termination of the trust was inconsistent with the Agency Agreement. 217 The plaintiff also relied upon the terms of the Deed of Release and Termination as pointing to SOCOG's knowledge that the termination of the Trust was inconsistent with the Agency Agreement and would disable TOC from performing its obligations under the Agency Agreement. The termination of the Trust Deed and the Establishment Agreement effected by the Deed of Release and Termination put an end to TOC's operating authority. It was submitted that the absence of any exception, novation or assignment which preserved the plaintiff's Agency Agreement, is consistent only with an intention that the parties were content for TOC to be disabled and the plaintiff to be deprived of any opportunity he may otherwise have had to enjoy his contractual rights. 218 I am satisfied that SOCOG was aware or constructively aware of the contractual obligations TOC owed to the plaintiff and was aware that the entry into the Deed of Release and Termination would cause TOC to breach the Agency Agreement. In my opinion this was an inducement by SOCOG of TOC to breach its contract with the plaintiff: Australian Rugby Union Ltd at 740 [125] 219 The plaintiff was not aware of the existence of the Deed of Release and Termination although he was informed that SOCOG had "taken over" the operations of the Club. He sought clarification of the position in his 26 October letter to Wyness in which he confirmed his understanding that the Club "may have new policies and arrangements" and requested a copy of any "official document affirming the relationship between SOCOG, the Olympic Club and the International Members' Department". The plaintiff understood that Wyness was working for SOCOG as a consultant and would discuss further with SOCOG its desire to terminate the plaintiff's Agency Agreement having regard to the plaintiff's complaint that he had "a contract" and had spent a great deal of money. 220 On 29 October 1999 Wyness responded to the plaintiff's 26 October letter but did not provide him with the "official" document that he had requested. Wyness informed the plaintiff that SOCOG "now has complete control over the Olympic Club" and that SOCOG's "instructions are clear that the agreement should be terminated" and that he would be happy to help the plaintiff with "any issues". By this time, although the plaintiff was unaware of the reality of the situation, the Trust had been terminated and TOC had agreed to and had transferred the "business" of the Club to SOCOG. This was repudiatory conduct by TOC demonstrating an indication of an absence of readiness or willingness to perform the Agency Agreement: J.W.Carter Breach of Contract par [908]. 221 The parties each submitted that the correct legal description of the arrangement between the plaintiff and TOC as and from the date of termination, 20 September 1999, was that TOC was a bare trustee and held the benefit of the Agency Agreement pursuant to a resulting trust in favour of the beneficiaries of the Trust: Creamoata Ltd v The Rice Equalization Association Ltd (1953) 89 CLR 286 per Fullagar J 319; RP Meagher and WMC Gummow Jacobs Law of Trusts in Australia 6th Edn. para 222. Neither party argued that the Deed brought the Agency Agreement to an end. SOCOG conceded that TOC was legally bound to continue to perform the Agency Agreement up until the purported termination on 5 November 1999.

Justification? 222 As I have already said, SOCOG conceded that the elements necessary for the tort of interference with the contractual relationship between TOC and the plaintiff were present and that the grounds relied upon in the letter of 5 November 1999 from Wyness to the plaintiff purporting to terminate the Agency Agreement were not grounds available to TOC to terminate the agreement. However SOCOG submitted that the termination is valid because there were repudiatory breaches by the plaintiff, of which TOC was unaware as at 5 November 1999, of which SOCOG is now aware, entitling summary dismissal pursuant to cl 15.4 of the Agency Agreement: Shepherd v Felt Textiles (1931) 45 CLR 359. 223 Clause 15.4 entitled TOC to terminate the Agreement if the plaintiff was "guilty of conduct justifying summary dismissal". Such conduct would have to "strike at the root" of the agreement and be "wholly inconsistent with the continuance of confidence between the parties" to the agreement: Shepherd v Felt Textiles, (per Starke J at 372). In Shepherd the alternative ground for dismissing the agent was that he breached his duty of faithful and loyal discharge of duty towards his employer by positively working to impede or defeat the employer (per Dixon J. at 378). An actual repugnance between the employee's acts and his relationship must be found. Uneasiness as to the future conduct of the Agency would not be enough to warrant or justify summary dismissal: Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 per Dixon & McTiernan JJ at 82. 224 Mr Pembroke SC submitted that although the alleged breaches when viewed individually may not be so characterised, which was not conceded, when viewed cumulatively, they do strike at the root of the agreement and would lead to the lack of confidence such as would justify summary dismissal. Mr Pembroke SC also submitted that it is irrelevant to the interests of SOCOG that TOC either waived, or alternatively downplayed the significance of the plaintiff's conduct which it alleges amounted to repudiatory breaches. 225 Mr Pembroke used the example of a contract between two parties, A and B, through the wrongful performance of which caused damage to X. It was submitted that there may be a host of reasons why A and B may be content for the contract to remain on foot. It was submitted that it would be entirely inconsistent with the notions of justification if the attitude of A or B could be determinative as to whether X's interference was able to be justified. Reliance was placed on another example used in Smithies v National Association of Operative Plasterers [1909] 1 KB 310. Buckley LJ said at 337 "no doubt there are circumstances in which A is entitled to induce B to break a contract entered into by B with C. Thus, for instance, if the contract between B and C is one in which B could not make consistently with his preceding contractual obligations towards A, A may not only induce him to break it, but may invoke the assistance of a Court of Justice to make him break it". 226 It was submitted that the Court must analyse the circumstances relied upon as justification by assessing the objective facts and not from the perspective of the parties to the contract, the plaintiff and TOC. Such an approach is submitted to be consistent with the fact that the issue of repudiation turns upon objective facts and omissions and the question to be determined is what effect the plaintiff's actions would be reasonably calculated to have upon a reasonable person: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623. 227 It is important when considering the objective facts to review the circumstances and facts which gave rise to the objective facts the subject of the allegations of repudiatory breaches. This is particularly so where the basis for the justification is reliant upon the principles enunciated in Shepherd a significant feature of which is that the alleged breaches are not known of at the time of the dismissal or termination. It seems to me that it is also relevant that SOCOG were represented on the Club Committee and took over the operations and management of the Club in August 1999. 228 This case is different from the examples used or relied upon by Mr Pembroke. SOCOG was not a party without control over or a say in the way in which TOC conducted its activities as Trustee. Indeed SOCOG accepted the plaintiff's covenants in the Deed Poll signed on 11 March 1999. I intend to look at all relevant facts in assessing whether the conduct, the subject of complaint, would justify summary termination of the Agency pursuant to clause 15.4 instead of requiring notice to the plaintiff pursuant to clause 15.2 of the Agency Agreement. 229 Although the plaintiff submitted the SOCOG could not rely upon the principles in Shepherd I intend to decide the case on the basis that it can. No judicial definition of "justification" has been developed. Whether conduct justifies summary dismissal has been left to the "good sense" of the Court in deciding "on which side of the line" such conduct falls: Ranger Uranium Mines Pty Ltd & Anor v Federated Miscellaneous Worker's Union of Australia & Ors (1987) 54 NTR 6. In this case I have to decide whether the conduct complained of strikes at the root of the Agency Agreement or justifies a loss of trust and confidence in the agency relationship. There are a number of repudiatory breaches alleged with which I will now deal.

Visa Representations 230 SOCOG relied upon the representations made by the plaintiff and his sub-agents in various documents that were produced by them after March 1999 (Exs. 18 -22, 25-27) or evidenced in documents produced by others to the effect that Chinese persons who became International Members of the Club would be guaranteed a Visa to enter Australia. 231 The representations relied upon include the letter provided to the plaintiff by the Consul General introducing the plaintiff to the Chinese State Sports General Administration. There are a number of translations of this letter in evidence. The plaintiff referred to and provided a copy of the letter in Chinese with an English translation in his earlier affidavit. That translation states that "Chinese citizens who obtain the membership cards will be granted Australian visa by DIMA to watch the dress rehearsal" (Ex A 215). That translation was certified by Naati Translator Xun Zhou, 34664 , Chinese English on 19 March 2001. 232 Another translation of the same letter states that "Any citizen of China who has obtained this card can obtain the visa from the Australian Department of Immigration so that they can go to Australia to attend the dress rehearsal" (Ex 22 p.9). This translation was certified by Naati Translator Teresa Y.L.Lee, 2541, MandarinEnglish. Ms Lee was called to give evidence in relation to these translations. 233 Ms Lee claimed in a statement (Ex 28) that the Chinese symbol/word "ke" in the Consul General's letter translated by her into "can obtain a visa" (Ex 22 p 9) when used in the Chinese context means "can get" a visa and "can go" to Australia in the sense that the persons "will be able" to obtain a visa and "will be able" to go to Australia. 234 Other evidence on this topic was given by the plaintiff. He relied upon the Modern Comprehensive English Chinese Dictionary (Ex Y) which included the symbol for "ke" in the definition of "possible". It was submitted that a reasonable reading of the Consul's letter is that the members "may" obtain a visa or that it is "possible". I am of the view that there is real doubt as to the appropriate translation of the Consul's letter, however I intend to assume that the translation is as Ms Lee opined, and that it would have conveyed to the reader that the members would "be able" to obtain a visa. 235 After Zhang's bags were searched at the Sydney International Airport in April 1999 this letter and/or the details of its contents were known to SOCOG and TOC. Each were advised of the contents by the OI Centre either orally or in writing. The matter was raised with Noble by DIMA on 21 July 1999. In my view it is more probable than not that the reference to "dodgy Chinese letters" at the 2 July Club Committee meeting included this letter. 236 In the Agency Agreement with the plaintiff, TOC agreed to "do all things reasonable to assist" the plaintiff in "making applications for Chinese International member visas to enter Australia" for the Games (cl.7.1.(g)). This term was reviewed as part of the discussions between Noble and DIMA in July 1999. The Application Form was also the subject of discussion at this meeting. It was suggested that a "disclaimer" should be included in the application forms for the Chinese applicants.

237 Mr Kelly submitted that by 5 November 1999 far from these matters being significant breaches or new to TOC or SOCOG's knowledge, they were insignificant to the point where TOC had not even bothered to communicate with the plaintiff about them. No one from TOC or SOCOG raised the problem with the Consul when his representative attended SOCOG twice in August 1999. Mr Kelly submitted this was "old news". 238 When some of the documents about which complaint is made were produced to TOC for approval under cover of Zhang's letter of 30 August 1999 Wyness' evidence is that they were ignored but for the translation performed by Wyness' erstwhile Chinese masseuse, whose name simply eluded him. I am asked to find that these representations when viewed objectively provide proper grounds for the termination of the Agreement in line with the principles in Shepherd v Felt Textiles. I do not accept that they were not known to TOC or to SOCOG at the relevant time. 239 Whatever interpretation is preferred as to the meaning of the Chinese word "ke" and the message conveyed in the Consul's letter and the various documents produced, one document is significant in assessing the effect of the documents. It is the Application Form that was to be provided to prospective Applicants for International Membership. That form stated in part that the Applicants would receive a full refund if their "application for a visa is rejected" (Ex. 35 p 80). This provides a clear message to the applicant that the visa may not be granted. It could not be suggested that applicants were led to believe that a visa was "guaranteed" if they became a member of the Club.

240 When this is taken into account together with the fact that the Application Form and letter were discussed with TOC by DIMA and that TOC and SOCOG were aware of the contents from at least mid 1999 I am satisfied that the conduct falls into the category of conduct that should have been notified to the plaintiff, discussed with him, suggestions for changes made and then if the plaintiff or his sub-agents did not comply action could have been taken. It is not conduct that falls on the side of the line that would warrant summary dismissal.

TOCMS Bank Account 241 Mr Pembroke SC submitted that the plaintiff "baulked" when cross-examined about Zhang opening the bank account in the name "TOCMS". He also submitted that the plaintiff's evidence demonstrated that he had an "enormous sense of guilt" in respect of the matter. 242 The evidence of the plaintiff relied upon for this submission was his denial that Zhang informed him that he had registered the name "TOCMS", or that he had opened the bank account in that name. Reliance was also placed on what was referred to as the plaintiff's refusal to accept in evidence that he was responsible for the opening of the bank account (tr 251-252). This was contrasted with the plaintiff's acceptance throughout his evidence that he was responsible for the actions of his sub-agents. 243 It is important to decide whether I accept Zhang's claims that he met with Wyness in Vera Lau's presence in July 1999 and discussed the opening of the bank account. Zhang did not suggest that Wyness authorised the opening of the account in the name TOCMS, only that Wyness authorised the opening of a bank account. 244 Wyness did not when first cross-examined have any memory of Zhang. When Zhang was referred to as "the printer" Wyness did recall him, however he could not, for instance, remember Zhang being present at the meeting with the Consul on 5 August 1999. He admitted to having meetings with Zhang but would not concede there were any more than one or two meetings. Wyness accepted that in late July early August 1999 the Club was in a "crisis" and that it was a "turning point in the Club's management" (tr.610). There is little doubt that the Club's financial position was fairly dismal at that time and Wyness was also concerned because he took the view that SOCOG was not honouring its legal, ethical and moral obligations to the Club (tr. 612). 245 Neither party called Vera Lau to give evidence. Either party could have called her in the circumstances of her presence in the Chatswood offices of TOC in her role as manager of the "international department" of the Club. Her evidence may have assisted either party as she is alleged to have been interpreting the conversation between Zhang and Wyness. However I intend to treat her unexplained absence as an inference adverse to the plaintiff as it is the plaintiff who has the burden of proof in respect of the alleged conversation about a bank account in late July 1999: Jones v Dunkel (1959) 101 CLR 298. In these circumstances, with the adverse inference in place, the evidence from Zhang, of assertion that the conversation took place, and Wyness, of denial of the conversation, has to be assessed in the light of the surrounding circumstances, my view of their respective reliability and any other evidence that is relevant to the probability that the conversation did or did not take place. 246 Zhang gave evidence that he did not believe that he had to tell the plaintiff everything he did as long as he believed that what he did was "not violating any rules of business" (tr.873). He was cross-examined about the documents he attached to his letter to Wyness dated 30 August 1999. There is little doubt that a document entitled "Fact Sheet" was attached to that letter. It was suggested to Zhang in cross-examination that the only Fact Sheet he sent to Wyness was in Chinese. Certainly the covering letter stated that item 5 as provided was "the Fact Sheet in Chinese" (Ex. A 468). Zhang gave evidence that he believed that at the time he had a translated version but he was not sure whether he attached the English version (tr. 881). Wyness' evidence was that he believed that all the documents were in English except for the front cover of a booklet (tr.668-669). 247 The Fact Sheet is important because it contained the following question and answer: Q: How should the applicants pay for the International Membership Packages? A: Applicants or members can pay the specified travel agents and the amount will be forwarded to the Olympic Club. The Banking details are as follows: Bank: Westpac Banking Corporation Branch: Chatswood Westside BSB: 032-091 Account Name: TOCMS Address: 5 Brown Street, Chatswood Westside. NSW. 2067 Australia.

248 Whether the Facts Sheet sent to Wyness was only the Chinese version and not the English version as well is not ultimately of great significance because the Chinese version contained the Bank account details in English (Ex 35 page 13 & 15). I am of the view that it would have been obvious to anyone who read it that there was such a bank account at Chatswood Westside in the name TOCMS associated with the Chinese International Memberships of the Club. 249 It was suggested to Zhang in cross-examination that he knew that TOC was referred to as TOCMS in 1999 (tr. 876). Zhang denied this. The evidence establishes that there were some agreements and Deeds, internal to TOC, SOCOG and others in which TOC was referred to as TOCMS when reference was made to it in its personal capacity. Those agreements refer to TOC as the Trustee when reference is made to its role in relation to the Club. There are also other internal memos, minutes and correspondence in which TOC is referred to as TOCMS. All the OI Centre Intelligence Reports refer to TOC as TOC. Ernst & Young referred to it as TOC. 250 It is apparent that Ford referred to TOC as TOCMS in some of her communications but Reading referred to it as TOC. The Agency Agreement with the plaintiff does not use the name "TOCMS" and refers to TOC as "the Company". There was no registered name and the only business name that was transferred to SOCOG was the name "the Olympic Club". I am not satisfied that the name "TOCMS" was "known" to refer to TOC in 1999 in a general way and there is no evidence to establish that Zhang knew of the references to TOCMS referred to above. 251 If, as SOCOG would have it, Zhang was furtively and wrongly opening a bank account, it is very curious that he would then send full details of that account, including its name TOCMS, to Wyness in documents for TOC's approval. Zhang presented to me as a sensible, careful and open witness. He could have claimed that Wyness expressly authorised the name of the account but did not and was resilient to suggestions that he had acted improperly. 252 Wyness' memory of his meetings with Zhang was not good. The Club was pressed financially and I am sure that the main focus was on the financial demands being placed on the Club at the time. The estimated revenue from International Memberships was an important factor in the presentation of the Club's financial position at the meetings in July 1999 and I am satisfied that TOC was dependent upon the plaintiff achieving the projected sales to give the Club a boost in its income. 253 The correspondence with the plaintiff in May and June 1999 in relation to visas demonstrates that the Club was willing to do its "utmost" to assist the plaintiff and I am satisfied that the same approach was adopted with Zhang. Wyness' memory of some matters of importance to TOC was not reliable and I have dealt with this in more detail in relation to the alleged breaches of clause 12.1(b) & (c) later in this judgment. Although the evidence in relation to the masseuse is not at the core of the issues, my observations of the manner in which Wyness gave that evidence provided further support for the view I formed that he was not a reliable witness. Having regard to all those matters and taking into account the inference adverse to the plaintiff's case in the absence of Vera Lau I prefer Zhang's evidence to that of Wyness on this topic. I am satisfied that Zhang did have the conversation he claimed he had with Wyness in late July at the Club's premises. 254 The fact of the existence of this account in the name TOCMS was known or should have been known to TOC not later than 30 August when the Fact Sheet was provided to Wyness. The only thing that was not expressly authorised was the use of the name TOCMS. Once Wyness informed Zhang, as I have found he did, that he was an official agent for the Club and could open up an account, and once the name and other details of that account were provided to Wyness, such conduct in my view could not fall within the summary dismissal category. 255 Why would this strike at the root of the agency agreement or engender a lack of trust? Here is Zhang keeping TOC informed. There is nothing in the use of this name or account in the circumstances that I have found to exist that would justify summary dismissal. This is the type of situation that was envisaged by clauses 10 and 11 of the Agency Agreement if TOC saw this name or account as a "problem". It was a matter for discussion, if necessary, and rectification by the plaintiff if required. 256 I do not accept that the plaintiff presented as having "an enormous sense of guilt". The evidence relied upon in support of this submission (tr. 251-252) was given after the plaintiff was informed by the cross examiner that he could not give an explanation. That evidence needs to be read with the plaintiff's earlier evidence in which he said he accepted responsibility for Zhang depositing monies into that account (tr.218). Even if there were such a perception, it is not relevant in the light of my findings in respect of Zhang's conduct.

Use of TOCMS generally 257 Zhang also provided the booklet "The Olympic Club International Membership Privileges and Benefits" (Ex 6) to Wyness under cover of his letter of 30 August 1999. This was in line with the discussion about the Web site and the need to translate the booklet into Chinese. The Club's booklet "The Olympic Club Membership Privileges and Benefits" (Ex 5) English version gave contact details as telephone 1800 659 2000, fax 1800 659 201, internet www.TheOlympicClub.com.au, terms and conditions 1800 659 212 and address Reply Paid 2000, The Olympic Club Locked Bag 2000 Ormond Vic 3204. 258 Zhang's booklet (Ex 6) contained contact details in English on the back page as Suite 3003, Level 30, Australia Square, 264 George Street, Sydney NSW 2000, Australia, G.P.O. Box 1008, Sydney NSW 2001 Australia, 61-1800 080 070, 612 - 92522233, 612 - 92523988, 612- 92523933, http://www.tocms.com.au, info@tocms.com.au. 259 There was every opportunity for Wyness to be fully apprised of the fact that the plaintiff and Zhang were using the name TOCMS. It appeared in a number of places and there was no furtiveness about its use at all. I am satisfied that TOC knew it was being used or should have known it was being used. This to my mind does not strike at the root of the contract or engender a lack of trust such that the use of the name would warrant summary dismissal.

Membership Certificates 260 The Membership Certificate was part of the International Membership Welcome Kit (cl. 1.1 Agency Agreement) (the Kit). Once TOC had received notification from the plaintiff of the enlistment or signing of not less than 500 new International Memberships and had received payment of Membership Fees it was obliged to supply the plaintiff with a Kit for each new International Membership (cl 7.1 (c) Agency Agreement). The plaintiff was obliged to provide TOC with the name, address and Passport or Identification Card details of all new International Memberships within 14 days of "selling" such membership (cl. 9.1(e)).

261 Noble gave evidence that over 100 kits were provided to the plaintiff for marketing or demonstration purposes. He said that the only difference between the Membership Certificate in the Kits provided to the plaintiff and the final Certificate was that the latter had the members name on it and a number allocated by TOCMS (tr.383-4). 262 TOC had what has been referred to in evidence as a database of memberships. There were different categories within the database including individual memberships and corporate memberships. The correspondence in November 1999 refers to the plaintiff's 743 memberships. A letter in August 1999 from Wyness' secretary to Cendant, the call centre in Melbourne at which the main frame computer was situated, referred to 657 memberships rather than 743 memberships (Ex. A 444). 263 It was suggested with some ingenuity to Wyness that the difference could be accounted for as a reduction of "a bit under a hundred" because the plaintiff had been forwarded about 100 Kits. (tr 649). This seems to me to be a non sequitur. There is no evidence that the database entries were deleted once the Kits were sent out. The difference between the two numbers is eighty six. I am of the view that the 657 memberships related to the payment by the plaintiff of $230,006 in late May early June 1999. The membership fee was $350 and $230,006 purchased 657 memberships. 264 The plaintiff had paid $30,000 as an Agency Fee pursuant to the Agency Agreement (cl.6.1). However it appears that later in 1999 when Wyness and Ford were communicating about the alternatives available to SOCOG in respect of the monies paid by the plaintiff, the Agency Fee amount was included in the calculation of the number of memberships to which the plaintiff would be entitled. At $350 per membership that amount would have purchased 86 memberships. When both amounts are taken into account totalling $260,006 the number of memberships purchased is 743. 265 Wyness gave evidence that the intended arrangement with the plaintiff was that he would buy blocks of memberships and they would be "warehoused or put into inventory in the database" (tr. 647). When the plaintiff paid money referable to any blocks of memberships a large number of unallocated and open memberships would go into the database. Wyness' evidence was that the plaintiff was then at liberty to allocate or attach those memberships as he saw fit (tr. 648). Wyness also gave evidence that as the plaintiff had paid for the membership kits "he should receive them"(tr.649). 266 The plaintiff utilised a system with his sub-agents whereby booklets of application forms with numbers upon them were issued to the sub-agents. Those numbers were the internal records of the plaintiff and his sub-agents that enabled the identification of the sub-agent and the memberships sold. There were a number of certificates into which the internal numbers from the plaintiff's records were typed. These were the memberships "sold" to YF Wang and contained the names of the persons Wang represented and their application form number. The plaintiff intended to present these Certificates to those members at the Media conference on 6 December 1999 in Shanghai. It is these Certificates that SOCOG alleges were "false" certificates, the creation of which justifies summary dismissal pursuant to cl 15.4 of the Agency Agreement. 267 SOCOG submitted that the plaintiff gave "unsatisfactory" evidence on this topic. In his earlier affidavit the plaintiff gave evidence that Noble informed him in late February 1999, prior to the entry into the Agency Agreement, that there was no reason why he could not buy memberships in bulk and "on-sell" them as part of the travel packages. Noble informed him that the Welcome Kit would not be delivered until a membership number "is allocated" which would not be until the plaintiff gave TOC the member's name and mailing address (par15 & tr. 129 & 341). The plaintiff gave evidence that he was not aware that TOC had not allocated the numbers on the Certificates and that Zhang had informed him that he, Zhang, had "put the copy into the Club" (tr.342). 268 The plaintiff also gave evidence that Noble provided him with a few samples of Kits but that after he paid the money to TOC Noble delivered a box of Kits that were not samples (tr.262). The plaintiff said that 25 Membership Certificates that were given to the persons represented by Wang and another 5 given to persons with whom another sub-agent was dealing were the only issued Certificates of which he was aware (tr.263/4). He also said that the number on the Certificate was an internal number of his organisation (tr. 263/4). The plaintiff also gave evidence that he did not understand that the number was the important thing, so long as the name was provided to the Club. He instructed his sub-agent to give Certificates to new members and then notify the Club (tr.266). 269 A system was envisaged at the time the Agency Agreement was entered into whereby TOC would issue Kits to the plaintiff when memberships were purchased. What happened was a little different. TOC accepted the plaintiff's $230,006 in June 1999 and subsequently a total of 657 memberships were "allocated" on the database to ACSC. The entries in the database in ACSC's name that are in evidence (Ex. A 617-629) each had a number. According to the then Managing Director of the Club, Wyness, there is little doubt that the plaintiff was entitled to be issued with the Kits once he had paid the Membership Fee. 270 The most obvious step to be taken by SOCOG was to ask the plaintiff and Zhang about the Certificates. Rather than do this there was a secretive collaboration with the OI Centre and the Strike Force with an abysmal failure to properly assess the very records that would have informed SOCOG that the plaintiff had purchased 657 memberships and was entitled to "on-sell" them. Noble gave evidence that when a corporate membership was "taken out", it was allocated a number of memberships, according to the amount paid. This is exactly what happened in respect of the plaintiff's payment of $230,006. His company was allocated 657 memberships. 271 Noble gave evidence that under his management the plaintiff "and his sub agents were at liberty to allocate any one of those memberships to any person they chose and provide us with the personal details of their customer as and when they thought fit". He said "that was the system of handling the sale of International Memberships that was put in place so that Mr Zhu, as our agent, might sell and process as many International Memberships as possible". (affd. 25/1/01. par 45) 272 These Certificates were to be presented at the ceremony in Shanghai at which was to be present a bevy of representatives of the press. There was no furtiveness about the creation of these Certificates. They were Certificates that the Club's official sub-agent had inserted an internal number upon with the name of the member who had paid the membership fee. I am of the view that the circumstances of the creation of the Certificates did not strike at the root of the contract nor would such creation, when viewed in the light of the planned presentation under the gaze of national and possibly international press representatives, be wholly inconsistent with the continuance of confidence between the parties. It was not a repudiatory breach and would not justify summary dismissal pursuant to cl.15.4 of the Agency Agreement.

Sub-Agents 273 The plaintiff agreed to sell 2,000 International Memberships during the initial term of the Agency Agreement, that is, between 11 March 1999 and 30 June 1999. This Agreement was subsequently varied, but the initial obligation required the plaintiff to put in place an infrastructure to enable him to market and sell those memberships in the PRC. Noble claimed that he was "pushing him hard" for the money from those sales because the Club was in a tight financial position at that time. (Record of Interview 10/12/99. (ROI) Q 74,79-80) Commercial good sense dictated that it would have been impossible for the plaintiff to comply with this obligation without the assistance of others. Noble agreed that he authorised the plaintiff to appoint sub-agents. 274 Noble asked the plaintiff to provide details of the people he intended to use as sub-agents so they could be "checked out". Noble said that the plaintiff "made available" to him "copies of the passport details (including photographs) of a number of people" he wanted to appoint as sub-agents. Noble passed those documents on to the OI Centre. (affd. 25/1/01. par 30). 275 It was suggested to the plaintiff in cross-examination that he did not seek TOC's approval for the appointment of any sub-agents prior to 17 June 1999. The plaintiff said that he provided to the Club copies of the appointment letters of the sub-agents, a photocopy of their passport and details of their residential address if they lived in Australia. If the sub-agents lived in China the plaintiff said that he provided a copy of the identity card to the Club. 276 In his oral evidence Noble confirmed that the plaintiff had provided details and photocopies of the front pages of passports of the sub-agents that had been sent on to the OI Centre. He said that the Club did not keep any copies of those documents (tr.408). SOCOG submitted that the plaintiff had breached his obligation to TOC because he only provided details of 8 sub-agents out of 22 appointed sub-agents and he had appointed the sub-agents prior to providing the details to the Club. 277 The figure of 8 sub-agents was relied upon by reference to the number of documents that were shown to Noble in an interview with DS Nicholls on 10 December 1999 (the ROI). Although Noble had given evidence that the Club did not keep copies of the documents that were sent on to the OI Centre it is apparent from the general context of the ROI and also Noble's reference to a piece of paper which he "chucked" in the file, that the 8 documents shown to him in the interview came from the Club's files. 278 It is also apparent that the documents DS Nicholls had in the interview that were shown to Noble were copies of the appointment certificates of the sub-agents with an Olympic Club seal stamp upon them. (ROI p 53-54) Noble said that they "were copies" he "got from" the plaintiff. This is consistent with the plaintiff's evidence that he had provided the appointment documents to the Club after the sub-agents were appointed. It is also clear that the Club was in possession of and was or should have been aware that the plaintiff had appointed these persons as sub-agents and was using the seal with the words Olympic Club and some Chinese symbols upon it. The plaintiff gave evidence that he had discussed this with Noble who informed him that he could use the seal (tr.182-183). During 1999 when TOC was aware of the appointment of the sub-agents and the use of the seal the plaintiff was not questioned critically about any of this nor was it suggested to him that the seal he was using on such documents should not be used. 279 There is other evidence relevant to this complaint. The note of the meeting of 6 July 1999 with Noble at the OI Centre refers to one of the outcomes as "TOC to continue to provide all names and details of existing authorised agents and any subcontractors they appoint" (Ex. A 394). This note is consistent with the continuation of a practice that had already developed and a practice that the information provided was in relation to subcontractors or sub-agents already appointed. There is the further note of the meeting with Noble on 21 July 1999 with DIMA which recorded that "The sole agent has subcontracted his authority to sell memberships to a number of sub-agents. This is allowed for by TOC. TOC provided (DIMA officers) with material on those sub-agents". 280 At the time of the DIMA meeting (21/7/99) the plaintiff had only appointed two agents since 17 June 1999. They were Chi Ming Lam who was appointed on 15 July 1999 and the Everbright Corporation/ Mr Chen who was appointed on 20 July 1999. It is obvious that DIMA were given documents in relation to a number of sub-agents. I am satisfied that more probably than not such documents did not include the Everbright document which had been executed the previous day in China. It is probable that they included any number of the appointment documents on which the seal was stamped in relation to the sub-agents that had been appointed by then: Hay on 30/3/99, Jun Hu on 3/4/99, Sun Tao on 8/4/99, Zhao Ming Zhang on 12/4/99, Frank Yang Hu on 12/5/99, Xian Zhang Min on 19/4/99, Weiping Ki on 21/5/99, William Peng on 25/5/99, Wendy Chung on 31/5/99, Shiao Qiang Liao on 31/5/99 and Jian Zhao Wang in about April 1999 (Ex 31 & 36). 281 During the plaintiff's cross examination he was asked to spend time going through a rather large amount of material produced on subpoena from the NSW Police Service which included copies of documents seized from various places including the plaintiff's home. The plaintiff tagged all the photographs of sub agents he could find in the material (tr.339). Exhibit 13 is an admission by the plaintiff that he did this and contains the names of 22 persons in relation to whom he had tagged documents in the subpoena material. 282 SOCOG relies on this list of 22 persons and the inability of the plaintiff to find in the subpoena material any covering letters to the Club in respect of these persons (tr.339) as a basis for the submission that the plaintiff committed a repudiatory breach in respect of his obligations to provide such information to the Club. I am satisfied this would be a very unreliable basis for making such a finding. It is obvious that the Club was given the details of at least 8 of the appointed sub-agents. It is also obvious that the OI Centre had already received information in relation to the sub-agents prior to 6 July 1999 as it was a practice they wished to continue. It is also obvious that DIMA was given details in respect of a number of sub-agents. 283 There is no evidence as to which sub-agents the 8 documents shown to Noble in the ROI related. There is no evidence of the date of those documents or the date they were received by the Club. There is no mention of a covering letter having been received with those documents. Noble's evidence was that he sent them on to the OI Centre after he received them and did not keep copies. It may be that these were yet to be sent on to the OI Centre. I do not know. 284 The plaintiff gave evidence in his earlier affidavit (par 60) that he did not believe that the terms of the 17 June letter in relation to sub-agents applied to agents he had appointed prior to that date. He also gave evidence that he had supplied details of the sub-agents that he had appointed to the Club prior to the date of the letter. It was submitted that this latter evidence was "palpably false". I am of the view that to establish its falsity SOCOG would at least have to prove that those 8 documents shown to Wyness in the ROI were all received after 17 June 1999. It did not do so. 285 A further document which demonstrates that there was an awareness at least in the OI Centre of the appointment of the sub-agents is the internal DIMA document recording the meeting of 10 June 1999 (Ex A 352), prior to the 17 June letter upon which SOCOG places so much store for this submission. That note refers to "subcontractors signed by Mr Zhu to represent him in the PRC". This may have been a reference to Zhang and the materials that had been found when he was searched at the Airport however the reference is to subcontractors. Noble's evidence was that he asked the plaintiff in April 1999 for information on the sub-agents and that he provided the information (affd.25/1/01 par.30).

286 It also has to be remembered that the letter of 17 June signed by Wyness was a letter that originated from the plaintiff after he had a discussion with Wyness on 16 June 1999. I am satisfied from the terms of the 17June letter that such discussion was prompted by information passed on to the Club after the 10 June meeting to which I have just referred. The plaintiff drafted a letter for Wyness which included a section in relation to sub-agents but also referred to a "lengthy meeting" with DIMA (Ex A 353). The effect of the plaintiff's draft was that TOC would only grant sub-agencies under the plaintiff's "direction" as he was to "be totally responsible for their conduct". 287 It is clear that TOC held at least 8 appointment letters from which it must have been obvious that the sub-agents had already been appointed (Ex 31 & 36). It therefore knew at the time the letter of 5 November 1999 that the plaintiff had appointed sub-agents and then passed on the information to the Club. In those circumstances I am satisfied it cannot be relied upon as a significant breach of which it was unaware at the time the letter of 5 November 1999 was sent. 288 Support for the reliability of the plaintiff's evidence that he sent the appointment letters and details of the sub-agents to TOC for approval is found in a letter from Wyness to the plaintiff dated 26 October 1999. From the terms of that letter (Ex. A 535) it is clear that Wyness had become concerned about his own legal liability in the environment in which he was being pressed by SOCOG to terminate the relationship with the plaintiff. Relevantly to this alleged breach Wyness informed the plaintiff that it would "be hard for me to sign" the authorisations for the sub-agents "now" because "we were supposed to do a full background check on the sub-agents" and they "were not carried out at the time of the contract signing". 289 I am satisfied that notwithstanding Wyness' letter of 17 June 1999 TOC permitted the plaintiff to go forward in this fashion appointing sub-agents and then after the event receiving from him, without complaint, the documents to which reference has been made. It was not suggested to the plaintiff during 1999 nor has it been shown in these proceedings that any of the sub-agents appointed by the plaintiff were persons in respect of whom TOC would have withheld approval. I am not satisfied the plaintiff's conduct in respect of the appointment of sub-agents was a repudiatory breach justifying summary dismissal.

Obtaining approvals 290 The plaintiff had an obligation under the Agency Agreement to do all things and sign all documents reasonably necessary to obtain the appropriate and required approvals and authorisations from the Government of the People's Republic of China and the Chinese Olympic Committee (cl 9.1(a)). SOCOG alleges that the plaintiff conducted himself in China and permitted his sub-agents to conduct themselves in China, knowing that he had not complied with his obligations under clause 9.1(a). 291 At the date of entry into the Agency Agreement neither the plaintiff nor TOC knew what was reasonably necessary for the plaintiff to do nor what documents were reasonably necessary to sign, nor what approvals or authorisations were appropriate or required by the Government or the Chinese Olympic Committee in order for the plaintiff to be able to market and sell the package, of which the International Membership was a component, in China. 292 This clause is peculiarly worded and does not expressly require the plaintiff to obtain the approvals, only to do the things and sign the documents reasonably necessary to obtain the appropriate and required approvals. Notwithstanding this wording there is little doubt that the parties intended that the plaintiff would comply with all necessary requirements of the Government and the Chinese Olympic Committee to enable him to market and sell the package in China with their approval. That is what the plaintiff was endeavouring to explore and obtain on 23 March 1999 when he met with Mr Tu and on 5 July 1999 when he met with Mr Yu. 293 SOCOG relied upon a number of letters that are in evidence to submit that the plaintiff had not complied with his obligations in this regard. They are letters purporting to have been sent (1) by Mr Tu to the plaintiff (2) from Mr Tu's office to the Consul in Sydney and (3) from Mr Tu's office to the National Tourism Administration in China (Ex 31 pp 95-101). The plaintiff denied he had ever received the letter from Tu and no such letter was found in his possession or at his house when the plaintiff was arrested or when his premises were searched in December 1999. Although SOCOG was invited to request documents from the Consul in a letter, rather than a subpoena to which objection was taken, no such letter purportedly sent to the Consul by Mr Tu has been obtained from the Consul. There is also the fact that Mr Tu did not give evidence to prove the letter was sent. 294 Mr Lin kept a record of the plaintiff's meeting with Mr Tu in China on 23 March 1999 (Ex A 251-252) and no real challenge has or could be made to it having regard to the absence of Mr Tu from the witness box. From the record kept of the meeting I am satisfied that Tu informed the plaintiff he could provide "macro support" and the plaintiff needed to find "a relevant organisation" as his partner in China. He advised him to "hurry up" and find such a partner otherwise the Games "will have been closed before the project starts". I am satisfied that Mr Tu also informed the plaintiff that if there were problems he could assist in solving them. The plaintiff conceded that Mr Tu asked him to come back at a later date if he had concrete proposals (tr.344). 295 From the letters relied upon by SOCOG it is apparent that Mr Tu became aware that the plaintiff was conducting activities in China in late April 1999. The letter that was purportedly sent to the plaintiff dated 23 April 1999 confirmed receipt of a fax from the plaintiff with a schedule for payment of a donation the plaintiff had promised during the meeting on 23 March. Tu advised in the letter that there were to be "no strings attached" to the donation and if that was accepted by the plaintiff he "may conduct a press release at the end of this year or the beginning of the next year when our sports delegation is set up and after all the money has been paid" (Ex 31 p 96). 296 There is no evidence that Mr Tu wrote to the plaintiff demanding or requesting him to desist in any activities in China nor withdrawing the approval he had granted in the letter that the plaintiff claimed he did not receive. Whatever Tu wrote to the Consulate or the Chinese Department does not seem to me to matter much in the light of the communication he claims he wrote to the plaintiff and the terms of the "macro approval" that I am satisfied he gave to the plaintiff at the 23 March meeting. 297 No evidence was called either from Mr Yu or his employees in respect of the meeting with the plaintiff on 5 July 1999 and the dinner thereafter. I am satisfied that on 5 July 1999 Mr Yu informed the plaintiff that he would give the plaintiff whatever support he needed and that he did not require a letter and the "market is open". 298 The plaintiff did take and continued to take steps to obtain the required and appropriate approvals and authorisations. The fact that Mr Tu referred to a concrete plan later in the year did not place the plaintiff in breach of his agreement and certainly not in breach to the extent that would justify summary dismissal. I am satisfied there is no substance in the allegation that the plaintiff was in breach of clause 9.1 (a) of the Agency Agreement.

Alleged breaches of Clause 12.1(b)&(c) 299 Unless specifically authorised by TOC, the plaintiff was obliged not to "receive or pay monies on behalf of" TOC "save and except for the Membership Fee" (cl. 12.1(b)). Additionally, unless specifically authorised by TOC, the plaintiff was obliged not to represent to any person that he had the authority of TOC "to receive or pay monies on behalf of" TOC "except for the Membership Fee". 300 SOCOG relied upon the Fact Sheet to which reference has already been made, a remittance memo from Wang You De (Oscar Wong) for $25,000 and a With Compliments slip issued to YF Wang receipting $72,500 for his payments of deposits for 25 packages in support of its submissions that the plaintiff had committed repudiatory breaches of his obligations. 301 It is alleged that the receipt by the plaintiff, through his sub-agents, of the moneys was in breach of clause 12.1(b) in that such was a receipt of moneys other than the Membership Fee on behalf of TOC. It is also alleged that receipt of the remittance memo to TOC and the issuing of a receipt on the TOC With Compliments slip for moneys which included not only the Membership Fees but also amounts for the travel and accommodation components of the package, evidenced representations had been made and were being made that the plaintiff, through his sub-agents, had TOC's authority to receive those moneys on behalf of TOC in breach of clause 12.1(c). 302 The terms of the conversation between Zhang and Wyness in July 1999 in Vera Lau's presence are important in considering these allegations. There was discussion as to whether the prospective International Members should pay the money for the package into the TOC account so that TOC could keep the membership fees and pay the balance to the plaintiff. Wyness informed Zhang that TOC did not wish to act as "collector" and informed Zhang that as "the official agent of the Club" he could open the bank account and "collect all the money into that account and then just pay us the membership fees as they are due". 303 If this conversation amounted to a "specific" authorisation for the plaintiff, through Zhang, to receive moneys on behalf of TOC, and to represent that he was authorised to receive those moneys, there can be no question of a breach of clause 12.1(b) and/or (c) of the Agency Agreement. 304 There was a degree of looseness in Wyness' dealings and discussions with the plaintiff, Zhang and others who made enquiries in relation to the International Memberships. This is exemplified in some respects by the presence in TOC's office at Chatswood of Vera Lau who was assisting the plaintiff to sell the International Memberships as a component of the travel and accommodation package. The plaintiff and Zhang requested Wyness and Noble to allow Vera Lau to be present at the TOC offices in Chatswood to assist with translation and interpretation of calls, enquiries and meetings in relation to the Chinese International Memberships. Wyness agreed that he provided Ms Lau with an office suite including desk and chairs, telephone and typing and correspondence facilities (tr. 692). 305 When prospective Chinese International Members telephoned TOC they were then passed on to Vera Lau who, as Wyness agreed, was known as the manager of the "international department" (tr. 692). Wyness said that he "didn't pay much attention to the role she played in the office" (tr 693) and once he was satisfied for her reason for being there he did not pay much attention to her on a day-to-day basis and had no reason to be in contact with her (tr.694). He agreed that he "permitted her to act, in substance, as the international department of the Olympic Club" under Noble's direction (tr. 694). 306 Wyness' attitude of not "paying much attention" permeated other aspects to the management of TOC. Another example is his failure to respond to Moore's letter of 16 June 1999 in which SOCOG noted it was "disturbed" to hear of the appointment of a company to "sell TOC in Singapore". Wyness' letter to McLatchey of 29 March 1999 was also in peculiar terms in the circumstances. By this time TOC had authorised the plaintiff as its "exclusive" agent in PRC and the Agency Agreement with the plaintiff had been entered into yet Wyness' letter stated that TOC had "been approached by individuals wishing to develop travel and accommodation packages" in various parts of the world including China. This was hardly the correct position as it then pertained in relation to the plaintiff. 307 Another example is the taking of important Trust business to a masseuse for translation. A further example is Wyness' claimed forgetfulness in respect of the letter of 4 June 1999 in which he authorised the plaintiff as the exclusive agent of TOC in PRC for the extended period to 31 December 2000. His evidence on this topic was puzzling having regard to the fact that at the meeting with the Consul in August 1999 he believed he may have mentioned the plaintiff and said the plaintiff was "our agent". His evidence about his memory of the extension was: Q. Is this right: You are saying to her Honour that as at 5 November 1999 you had totally forgotten that the agency of Mr Zhu had been extended beyond 30 June 1999? A. Yes I am. Q. Are you saying to her Honour that so far as you were aware, as at 5 November 1999, the agency of Mr Zhu had not been extended beyond 30 June 1999? A. That was my recollection on 5 November. Q. So what were you terminating? A. (No verbal response) Q. What were you terminating? A. The agency agreement. Q. But there was nothing there you have just told her Honour. What were you terminating? A. There was an agreement, as I understand it, in place that had not been ended and it was the arrangement between myself and Mr Zhu. (tr. 588) 308 In later evidence Wyness said that "it may well have been" that he informed Noble that he would agree to the plaintiff's agency being extended to the end of December 2000 but he did not remember that such extension was conditional upon the plaintiff paying at least $200,000 by the end of June 1999 (tr. 620). His evidence that what he thought was in place was an "arrangement" between himself and the plaintiff is in my view indicative of the looseness with which Wyness approached the management of TOC and the Club business as it related to the plaintiff. 309 I am satisfied that Wyness gave to Zhang specific authority to open an account to collect all the money and then pay the membership fees to TOC and that such permitted the plaintiff to act as agent of TOC in so doing. Wyness could have insisted that a separate account for the receipt of money in relation to memberships be opened and separate receipts issued. This was "specifically" not required by the terms of the July conversation with Zhang. 310 I am satisfied that in the circumstances of the way in which Wyness dealt with the plaintiff and in particular allowed the "international department" to operate as part of TOC, SOCOG could not rely upon any receipt of payments or representations as to authority to receive such payments as a breach of clause 12.1 of the Agency Agreement such that it would warrant summary dismissal. Having regard to the terms of the Wyness/Zhang conversation I am satisfied that it would require notification to the plaintiff and clarification of the arrangements in relation to the recept of the component parts of the deposits received and a request for a separate bank account. Only if such requests were not complied with would such conduct warrant summary dismissal.

Alleged false statements and misrepresentations 311 SOCOG relied upon the terms of a letter (Ex 31 p 39-40) the plaintiff sent to the Chinese Consul General in Sydney prior to the execution of the Agency Agreement to submit that the plaintiff must have known its contents "constituted a medley of fantasy bearing little relation to the truth in important respects". 312 The letter is dated 3 March 1999 and introduced the plaintiff as a "new immigrant from mainland China" with some background on his working history in Australia. It then referred to the plaintiff's plan to "organise over 10,000 Chinese citizens" to travel to Australia to watch the Games. It continued: The project has been approved and authorised by the Australian Government. Currently, there is an Olympic Club (the Olympic Club) (TOC) in Australia, which is affiliated to AOC and SOCOG. They are both government organisations. After a period of negotiation and persuasion, TOC's board of directors unanimously approved the decision to authorize me as the exclusive general agent for the region of Mainland China in order to organize citizens from Mainland China to travel to Australia, watch the dress rehearsal of opening ceremony and other matches and share the Olympic spirit.

313 The plaintiff also gave the Consul a copy of the letter of introduction to the Chinese Olympic Committee dated 10 March 1999 Noble had given to the plaintiff, the terms of which are set out earlier in this judgment. 314 It was suggested to the plaintiff that it was not true that the project had been approved by the Australian government (tr.127-128). The plaintiff referred, rightly in my opinion, to the context of the letter in which the statement appeared. He emphasised that TOC was the authorising entity but that it was associated with SOCOG which he understood was part of government. 315 I am satisfied that Noble had informed the plaintiff that everything was approved and that the "simple" Agency Agreement would be drawn up. Noble had informed the plaintiff that he had been chosen as the exclusive agent. His letter of 10 March confirmed that and Wyness had signed the authority on 8 March 1999. The Agency Agreement was concluded on 11 March 1999 and the Deed Poll directed to SOCOG was signed on the same day. Having regard to the context in which the statement about which complaint appears I am not satisfied that it is conduct within any reach of justifying the termination of the Agency Agreement. 316 SOCOG's reliance on this aspect of the plaintiff's conduct to somehow impugn his credibility is rejected. It does not strike at the root of the Agency Agreement nor would it reasonably lead to a lack of trust in the plaintiff. It cannot be relied upon as justification for the termination of the Agency Agreement.

Other alleged misrepresentations 317 SOCOG relied upon the plaintiff's dealings with and the supply of documents to his sub-agents to submit that the plaintiff had made a large number of written and oral misrepresentations on significant matters. It was submitted that a common theme was that TOC would provide benefits, which the plaintiff knew TOC was never going to provide and was not able to provide. Caught up in this submission was a series of submissions about the representations in relation to visas. I have already dealt with those representations under a separate heading earlier in this judgment. I will now deal with the balance of the matters relied upon. 318 SOCOG claimed that the Chinese booklet of Privileges and Benefits (Ex.6) contained misrepresentations. This was the booklet sent to Wyness under the cover of Zhang's 30 August 1999 letter. The cross examination relied upon does not in my view expose or establish any conduct that could possibly justify summary termination of the Agency Agreement. 319 The plaintiff's evidence was that after SOCOG took over TOC he had a conversation with Wyness, which I accept occurred, in which office space and the use of TOC's telephone number was discussed. The letterhead that had been provided to the plaintiff by Noble contained the telephone number of TOC at Chatswood. That telephone had been utilised by the plaintiff in particular with the benefit of Vera Lau's management of the " international department" at Chatswood. 320 After SOCOG took over the Club and Wyness informed the plaintiff that there were some difficulties, the plaintiff asked Wyness whether he could still utilise TOC's telephone number. Wyness informed the plaintiff that, subject to Telstra's agreement, if he obtained rented premises in Chatswood close to TOC's premises it may be possible for him to still utilise that telephone number. 321 The plaintiff looked for alternative premises in the City so that he would be in the position to use those premises for visits by Chinese dignitaries and others. He secured premises in Australia Square, for which a 1800 telephone number was obtained and separate telephone lines into those premises were connected. This address and the telephone numbers were in the booklet (Ex.6) and sent to Wyness. This conduct is not within reach of any justification for summary termination of the Agency Agreement. 322 Another matter that SOCOG relied upon was the Application Form to which some reference has been made earlier in this judgment. The plaintiff gave evidence that he designed the form according to the "very similar" form given to him by TOC. After he designed the Form he discussed it with Noble and gave him a copy in about March 1999 (tr 201). A later form was designed and sent to Wyness under cover of letter from Zhang of 30 August 1999. 323 The plaintiff had a discussion with Noble in relation to the Application Form in which he said "we'll have to change the standard form used by TOC to accommodate the matters of international memberships"(tr 206). The application form designed by the plaintiff included the details to which reference has earlier been made with a statement in the following terms- I want to go to Sydney, Australia, to watch the Olympic Games in 2000 to share in the next millennium Olympic spirit. I will abide by the law and the customs of Australia when I am there. I also know clearly that the 45,000 yuan RMB that I pay will include: (1) The International Membership Card of the Olympic Club, a videotape, a CD, souvenirs, a commemorative gold coin, a commemorative badge. (2) A ticket for the Dress rehearsal for the opening ceremony and at least one ticket for watching a match. (3) Return air tickets, hotel accommodation, meals and tour guides. (4) Fee for a visa. (5) The public liability insurance and the travel insurance during (the stay) in Australia. The membership (card) must not be transferred nor speculated!

Method of Payment: At the time of completing the Application Form, you must pay 5,000 yuan RMB in advance. If your application is not accepted, the 5,000 yuan RMB will be returned to you in full. If your application is accepted, when you become a member, you have to pay 40,000 yuan RMB. If your (Application for) a visa is rejected, you will get a full refund of 45,000 yuan RMB. You would have to return the (membership) card of the Club and the souvenir such as the videotapes and some of the CDs at the same time. (Ex35. p80) 324 It is submitted that the Membership Application Form represented that TOC would provide the return air tickets, accommodation and other aspects to the travel and accommodation components of the package. It is claimed that such a representation would justify summary dismissal or termination of the Agency Agreement. 325 The original Application Form was provided to Noble and the later form was provided to Wyness. Neither Noble nor Wyness ever informed the plaintiff that the statements relied upon for this argument within the Application Form should be changed. TOC and SOCOG were aware of the wording of the Form at least from the OI Centre and DIMA. TOC was aware of these representations prior to 5 November 1999 and I am not satisfied that SOCOG can rely upon the contents of these forms as a basis for summary dismissal. If changes were required they should have been discussed with the plaintiff. 326 SOCOG also relied upon a document created by the plaintiff entitled The publicity plan of the Olympic Club to the initial batch of the Chinese members (Ex 35 p61-62). That document outlined a plan to recruit the initial members and then to conduct "membership certificate presentation ceremonies" in the presence of members of TOC and SOCOG. The statement relied upon by SOCOG in this document is a statement that the initial batch of members, between ten and twenty five, would each receive an admission ticket for the opening ceremony of the Games "given out by the Olympic Club". 327 This was a document used only by the plaintiff's sub-agents and was not one destined for publication to applicants. This was the publicity plan of what would happen with the initial members numbering up to twenty-five people. It was intended that at the certificate presentation ceremonies tickets to the opening ceremony would be given to the initial members. It was submitted that such a statement was a misrepresentation. The plaintiff was cross-examined upon this topic to suggest that such statement meant that the membership of the Club entitled the members to tickets to the opening ceremony. I accept the plaintiff's evidence that he was intending to purchase twenty-five opening ceremony tickets and provide those to the initial members. These were additional to the entitlements of membership of tickets to the dress rehearsal to the opening ceremony. 328 I am satisfied that in the publicity plan the reference to the admission tickets being "given out by the Olympic Club" is merely a reference to what was to happen at the presentation ceremony for publicity purposes. I am not satisfied that this document contains material upon which SOCOG or TOC would be justified in terminating the plaintiff's Agency Agreement. 329 SOCOG also relied upon the appointment letters of the plaintiff's sub-agents Zhang and Liao (Ex 31 pp21-25, 28-29). Each of the letters of appointment of Zhang and Liao were signed by the plaintiff as Chairman as ACSC. Each of the letters referred to the certification of Zhang and Liao being authorised by ACSC as an agent in their respective provinces to enrol international members for the Australian Olympic Club. There is no doubt that Noble informed the plaintiff that he was entitled to use ACSC but that his Agency Agreement had to be personal as TOC wanted him to be personally liable. 330 It is true that the letters of appointment referred to ACSC but on the evidence before me the plaintiff accepted that his Agency Agreement and his responsibilities for his sub-agents would be personal and not that of his company. A further document was relied upon which is a contract between ACSC, as Party A and Zhang as Party B. It provided: (1) Party A authorises party B to be agent for Guizhou, Guangdong (provinces) of China, and to provide relevant information. (2) Party B must not set up other agencies of his own accord. (3) Party B must not circulate the materials privately or modify it. (4) Party B must not recruit the following kinds of people: (b) All those who have been banned from leaving the country by the Office of Immigration Control of the Ministry of Public Security of China must not be recruited. (b) All those who are travelling on public expenses must not be recruited. (d) All those who may overstay must not be recruited. (5) When party B is (recruiting) members, he should abide by the law and policies of China. (Ex. 31 p 23)

331 Once again reliance is placed on the fact that ACSC was the party to the contract rather than the plaintiff personally. Having regard to the findings that I have made in respect of the appointment of sub-agents and the notification to TOC of the appointment letters with the Olympic Club seal thereon I am satisfied that it is more probable than not that TOC was aware of the appointments by ACSC and continued to allow the plaintiff to proceed on this basis. SOCOG cannot rely upon this conduct for any justification of the termination of the Agency Agreement. 332 SOCOG also relied upon the Fact Sheet (Ex 35 pp1-18). There are a number of Fact Sheets in evidence, which have been amended in handwriting and/or by cutting and pasting with a computer programme (Ex 35P10). The Fact Sheet has already been referred to previously in this judgment but is relied upon on this aspect to establish that the plaintiff made serious misrepresentations. There is within the Fact Sheet a statement that the Olympic Club members would obtain "free admission tickets for watching matches of the Olympic Games" (Ex35 p 16). 333 There is no doubt that, subject to SOCOG's discretion, the International Membership entitled the member to a free ticket to the opening ceremony dress rehearsal. There were no other ticket benefits attaching to International Membership. The plaintiff gave evidence that the provision of the tickets was part of the package that he was selling and it was up to him to supply the additional benefits he was promising (tr 211).

334 This Fact Sheet had not been distributed to prospective applicants but had been provided to sub-agents. The impression and message that one form of the Sheet gave was an incorrect impression that the Club, rather than the plaintiff was to provide those tickets. The package entitled the applicant to the additional tickets not the membership of the Club. The bona fides of the plaintiff and his sub-agents appear from all the amendments to the Fact Sheet. There is no doubt that there was a search for the appropriate wording and the approval of the Club. The wording was a blurring of the different roles of the plaintiff and TOC and was conduct that would fall within the provisions of clause 11 of the Agency Agreement for rectification or clause 15.2 for rectification but not fall within 15.4 justifying summary dismissal. 335 Further documents relied upon by the SOGOG included a document entitled "Proceeds of payment and conditions with Wendy Cheung" (Ex 31 p 30A) and an Agreement for the purchase and Buyback of Olympic Club memberships (Ex31 p 30). Ms Cheung provided the $30,000 payable to the Olympic Club which was part of the money the plaintiff paid to TOC in late May early June at which time the Agency Agreement was extended to 31 December 2000. The plaintiff was cross-examined about these documents and accepted that a visa for entry into Australia was something that was not within his power to provide to Chinese residents (tr312). I have dealt with the visa representations earlier in this judgment and am of the view that these statements are to be read in the light of the clear indication in the Application Form that a visa application may be rejected and money would be returned. 336 The agreement for Buyback is, as was conceded by the plaintiff, a "sloppy" document signed by Messrs Zhang and Liao in which there is reference to $1,000. I am satisfied in the circumstances of all the evidence that such reference was to a deposit rather than a total amount for 30 memberships. It is clear from the Agreement that Ms Cheung was provided with Application Form numbers 301451-301480 in which the full amount of the cost of the packages appeared (Ex.31 p.30). Ms Cheung was protected by the form of agreement entered into with the plaintiff's sub-agents Liao and Zhang in that if she was unable to sell the memberships by 30 September 1999 Zhang and Liao would pay $2,000 per membership or $3,000 if she was unable to sell them by 31 December 1999. Additionally the plaintiff agreed to be held "personally responsible" in relation to the agreement with Ms Cheung. I am not satisfied that these arrangements were such as to justify summary dismissal or termination of the plaintiff's Agency Agreement. 337 Finally SOCOG relied on the letter from the plaintiff to YF Wang of 28 November 1999 (Ex. A 589). That was a letter on the Olympic Club letterhead advising YF Wang that the ceremony for the presentation of the Membership Certificates for the twenty-five people from the Group would take place in Shanghai on 6 December 1999. It also advised that that the Commercial Director and the plaintiff would be present at the ceremony and that the twenty-five persons would be eligible (Ex.18 Ann "P") or qualify (Ex.A 589) for admission tickets allocated by the Club for the opening ceremony at a price determined by SOCOG. The letter also advised that the group should pay the outstanding monies by 30 November 1999. A handwritten letter to YF Wang (Ex A 589) from the plaintiff advised him of the mobile phone contact number in China and that Noble, Mr Hu , members of the Chinese NOC and the cultural attaché of the Australian Embassy in China would be present at the Certificate Ceremony in Shanghai on 6 December 1999. 338 It is suggested that this letter contained some misrepresentations or false statements and that it also makes representations in breach of the Agency Agreement in marketing the package with use of the Club logo and Olympic symbol. 339 This "ceremony" had originally been planned for September 1999. At that time Noble was still employed, albeit under the new management regime of SOCOG taking the Club in-house. The date of the presentation had to be changed to later in the year and although Noble had ceased his employment he travelled to Shanghai with the plaintiff, at the plaintiff's cost, and his presence at the "ceremony" was planned. This presentation was part of the agreement with YF Wang (clause 4). This letter was written on the letterhead that had been provided to the plaintiff by Noble for use in his Agency. 340 Having regard to the findings that I have made in respect of the submissions relating to the alleged breaches of clause 9.1 (b) I am not satisfied that the use of this letterhead in the circumstances of the planned presentation of Membership Certificates is a breach that justifies summary termination of the Agency Agreement. YF Wang had agreed to pay the balance of the money at an earlier time than 30 November 1999 and the plaintiff intended that any money paid would be paid to the Club to discharge his obligations to sell and pay for, as he saw it, 10,000 memberships at $3.5 million. This request for the balance was made on the Club's letterhead and having regard to the findings I have made in respect of the alleged breaches of clause 12 of the Agency Agreement earlier in this judgment and looked at in the light of the plaintiff's desire to act in support of the promotion of the Club in China and obtaining funds for the Club I am not of the view that this conduct would warrant summary dismissal.

Use of Agency Generally 341 SOCOG submitted that there was a clear and significant limitation on the scope of the plaintiff's agency so as to prohibit the plaintiff from utilising the agency or the Olympic Club logo to sell "any services other than the International Memberships" (cl 9.1(b)). It was submitted that the prohibition is emphasised by the second sentence of the clause which stated that "for the sake of clarity, the marketing restriction is to extend to, but not be limited to the sale of travel schemes, arrangements or tickets to Australia, accommodation in Australia, other activities in Australia, and or any merchandising by the Agent or all and any of his associated or related entities, individuals or bodies corporate". 342 It was submitted that it was unnecessary to add those words because of the clear prohibition in the first part of clause 9.1(b) by which the plaintiff covenanted to refrain from "in any way, utilising the Sydney 2000 Olympic Club logo or this agency generally for the purpose of promoting, marketing or selling any services other than the International Memberships". It was submitted that the second sentence of the clause highlighted the limitation on the plaintiff's conduct. 343 There is a tension between the letter issued to the plaintiff on 4 June 1999 by which the Agency Agreement was extended to 31 December 2000 and the prohibition that has been highlighted by SOCOG. The plaintiff was appointed as the authorised agent of the Club on an exclusive basis to sell International Memberships "as a component of a travel and accommodation package'. SOCOG submitted, and I accept, that the plaintiff recognised the distinction between the sale of International Memberships pursuant to the Agency Agreement and the sale by him of his travel and accommodation package (tr. 210-211 & 258-259). 344 As a component, or part or element of a larger whole, the International Membership was part of the "package" which included the travel and accommodation for the attendance at the Games. To dissect the marketing of this part from the larger whole or package presented some challenges and the alleged repudiatory breaches in relation to the marketing of the International Memberships need to be assessed in a realistic way having regard to the commercial purpose of the Agency Agreement. 345 SOCOG submitted that the plaintiff used his agency generally to promote the other services he was to provide by way of accommodation and travel package in breach of his Agency Agreement. Clause 9.1(b) required the plaintiff to refrain from utilising the Club logo or the Agency for the purpose of promoting marketing or selling any services "other than the International Memberships". 346 This allegation needs to be reviewed having regard to the Agency Agreement and the two letters, 8 March 1999 and 4 June 1999, the commercial setting and the intention of the parties. The plaintiff was precluded from utilising the Club logo or Agency in a manner that amounted to marketing or selling services other than the International Memberships. The plaintiff was authorised to sell those memberships as a part of the package. He was not appointed as an exclusive agent in China to sell memberships per se. The authority and appointment letter read with the Agency Agreement authorised sale of the memberships as a component of the package. 347 SOCOG relied on the plaintiff's documents to which reference has already been made to submit that the plaintiff breached clause 9.1 (b) of the Agency Agreement and that such breach warrants summary dismissal. I regard this submission as without foundation. TOC was well aware that the Application Form referred to matters other than the International Memberships. It was well aware that the other component parts of the package together with the price to be paid for the whole package were referred to and that the prospective applicants were required to sign such application. This is made abundantly clear from the documents in Exhibit A referring to discussions between the OI Centre, DIMA and Noble. There was no discussion with the plaintiff or his subagents in which he was required to extract from the Application Form those parts of it that referred to specific items such as accommodation and visas. I am satisfied that the conduct of TOC demonstrates beyond any doubt that the parties intended that the plaintiff would market the package as he did in the application form and other documents referred to Wyness for TOC's and SOCOG approval on 30 August 1999. 348 If the plaintiff's conduct amounted to a breach of the Agency Agreement TOC, by its conduct, authorised the plaintiff to proceed with the marketing of the package in the manner contained in the Application Form. I am not satisfied that there was any breach of clause 9.1 (b) of the Agency Agreement and there is nothing in the evidence to justify the summary dismissal of the plaintiff in relation to his conduct in marketing the package.

The Club Logo 349 Clause 9.1 (c) of the Agency Agreement required the plaintiff to obtain the written agreement of TOC prior to utilising any promotional material incorporating the logo. Once again I should refer to the fact that the Booklet and promotional material that the plaintiff intended to use was produced to Wyness on 30 August 1999. Although SOCOG submitted that the letters appointing the sub-agents were not approved by TOC I am satisfied that a number of the appointment letters were in the TOC's possession and it was well aware that the plaintiff was utilising the club logo and a stamp which had been approved by Noble. 350 In July 1999 at the club committee meeting Wyness suggested that the letterhead might have been created by a computer. This statement was made without any foundation at all. Indeed Noble gave evidence that a great deal of letterhead, over one hundred pages, had been provided to the plaintiff during the period of his agency and prior to September 1999. It is also clear that TOC provided letterhead and with compliments slips to many of the door-to-door sales people and in Salesforce. 351 These steps were obviously providing the plaintiff and his sub-agents with authority to use the club logo in this material. I am not satisfied that there has been a breach of clause 9.1(c) of the Agency Agreement in this regard and certainly not any breach that would justify a summary dismissal of the plaintiff or termination of his Agency Agreement.

The Deed Poll 352 SOCOG alleged that the plaintiff had breached the terms of the Deed Poll by the use of documents and items that included the Olympic symbol and the Club logo. It also alleged that this conduct was in breach of the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth) (the Act). 353 The plaintiff acknowledged in the Deed Poll that he had no right to use any intellectual property belonging to any Olympic Body including but not limited to any Olympic logo, mark or design (clause 2). Clause 5 of the Deed provides that the obligations imposed by it are "subject to any rights granted to the Covenantor by any Olympic Body". Olympic Bodies are defined in the Deed as "SOCOG, the Australian Olympic Committee Inc, the International Olympic Committee, the Olympic movement and the official sponsors, suppliers and others who are from time to time authorise to use those rights". The rights referred to include the intellectual property and words, phrases, symbols or images which suggest a connection or association with an Olympic Body, the Games or any of the Olympic Teams. 354 It was submitted that TOC was a body that was from time to time authorised to use the rights of SOCOG and the AOC and was therefore an Olympic Body. It was further submitted that TOC granted the plaintiff the right to represent, hold out and promote himself as having a connection or association with an Olympic Body, namely, that he was an authorised agent of the Club for the sale of International Memberships of the Club as a component part of the package. Additionally it was submitted that TOC granted the plaintiff the right to use the intellectual property belonging to an Olympic Body when it provided the plaintiff with the authorities dated 8 March 1999 and 4 June 1999 containing the logo and when it provided the plaintiff with letterhead of the Club and approximately 100 Welcome Kits containing satchels and other merchandising material for use in the Agency. 355 In all the circumstances I am satisfied that the exception to covenants 1, 2 and 3 of the Deed contained in clause 5 applies and that there was no breach of the Deed Poll. There was no breach of the Act for the same reason. In any event I agree with the plaintiff's submission that if there had been a breach of the Deed in the circumstances of this case it would have been necessary to notify the plaintiff and request return of the materials or some other action to remedy the conduct, the subject of any complaint. It could not justify summary dismissal.

Alleged breaches of fiduciary duty 356 SOCOG submitted that by reason of the Agency Agreement and agency relationship the plaintiff had three equitable or fiduciary duties (1) to act strictly in accordance with the terms of the Agency Agreement, (2) to obey the reasonable instructions or directions of TOC and (3) to act in good faith and with loyalty towards TOC. In this regard Mr Pembroke relied generally upon Chapter 24 of Justice P.D.Finn's book Fiduciary Obligations The Law Book Company 1977 entitled "Harming an "employers" Business". 357 Having regard to the findings that I have made in relation to the way in which Wyness dealt with the plaintiff and his sub-agents and the consequent looseness of some of the arrangements made between the Club and the plaintiff and his sub-agents I am not satisfied that the first duty identified by SOCOG has been established on the evidence. The plaintiff had an obligation to act in good faith with loyalty towards TOC and to obey the reasonable directions of TOC. 358 I have absolutely no doubt that this plaintiff was acting in good faith in the circumstances of this Agency Agreement. I am also satisfied that the plaintiff made every effort to choose sub-agents who were responsible and trustworthy people. The enormous energy that he displayed in the nine months of his Agency in appointing the sub-agents, approaching the government and Chinese Olympic Committee for approval, raising over $200,000 in funds for the Club, making the numerous trips to and from China was expended in the endeavour to achieve the very thing he had been appointed to achieve, the sale of up to 10,000 memberships of the Club as a component part of a package to travel to Australia for the Games. I am not satisfied that any breaches of fiduciary duty have been established.

Conclusion on Justification 359 In reviewing the plaintiffs conduct in relation to the alleged breaches I should return to Mr Pembroke's submission that conduct in isolation may not warrant summary termination but when viewed cumulatively may warrant such summary termination of the Agency Agreement. Having regard to my findings that in some instances the plaintiff's conduct would warrant notice being given to him it is important to look at those instances to see if viewed cumulatively they would justify summary termination. 360 The areas in which I am satisfied that the plaintiff's conduct would have warranted notice for either discussion or rectification are the documents in which there appeared to be a blurring of the roles of TOC and the plaintiff. Viewing those matters cumulatively and taking SOCOG's submissions in relation to the plaintiff's evidence into account I am still satisfied that the conduct does not warrant summary dismissal. SOCOG's justification case fails. 361 The failure of SOCOG's case on justification means that the Agency Agreement was not validly terminated on 5 November 1999. It is therefore necessary to consider the next claim made by the plaintiff that SOCOG interfered with his contractual relationship by causing him to be arrested on 6 November 1999. I will now consider this claim but before doing so I should return to the nature of the relationship between SOCOG and TOC.

SOCOG and TOC 362 The relationship between TOC and SOCOG was in some respects antagonistic. The cause for the antagonism seems to have stemmed from a lack of trust in TOC that SOCOG would honour an agreement to provide TOC with certain tickets. An additional cause for the antagonism was the financial difficulties of TOC during 1999 and the late payments by it of amounts outstanding to SOCOG. The finances of TOC were in such a parlous state by July 1999 that it was unable to meet the payment to Australia Post for the next mail out. 363 SOCOG was not itself free from controversy. During 1999 criticism was levelled at SOCOG in relation to what became known as the provision of tickets on a "rich list". The ticketing arrangements for the Games was the subject of a parliamentary inquiry at the end of 1999 into ticketing and an internal review of SOCOG's management and the Board's supervision of SOCOG. (Ex A p 697). 364 In July 1999 Sherbon as a director of TOC stressed his grave concerns that placing TOC into administration would create public controversy. This controversy was avoided by the transfer of the Club to SOCOG and the public was never informed of the parlous financial state in which TOC then found itself. This was ensured by the agreement reached at the mediation that the AOC, SOCOG and TOC would only announce publicly that SOCOG can "better run the club in house to deliver benefits and reduce costs". It was in this commercial setting with a desire to avoid public controversy that the management of the Club was transferred to SOCOG. It was also in this setting that Reading became nervous about SOCOG's and TOC's "exposure" to further criticism by the presence of what he described as "loose canons", referring to the plaintiff and his sub-agents. 365 Reading had received information that enabled him, when discussing the plaintiff with Wyness, to inform Wyness that the police are "looking at this fellow". The fact that the police were "looking" at the plaintiff and his operations was always envisaged. Noble informed the plaintiff prior to the execution of the Agency Agreement that the plaintiff would have to be "checked out". The continuing process of the provision of the details in relation to the sub-agents was consistent with a further "checking out" of the sub-agents. It was a process to give TOC the opportunity to require the plaintiff to refrain from using the services of any particular sub-agent. 366 The Establishment Agreement provided an avenue for SOCOG through representation on the Club Committee to direct TOC to cease certain activities. Paragraph 5(g) required that before such direction was given to TOC, all of the AOC and SOCOG representatives on the Club Committee were to be "reasonably of the opinion" that such activity was likely to adversely "affect the goodwill or reputation" of the Olympic movement. There is no evidence that the AOC and SOCOG representatives were of that view in respect of the plaintiff's conduct. 367 Reading was not called to give evidence and McLatchey who was called did not give such evidence and as I have said, SOCOG conceded that all the relevant elements of the tort of interference with contractual relationships were "present". That concession was made in respect of the interference by Reading in directing Wyness to stop the plaintiff's activities and to work out some way of getting out of the arrangement. No such concession was made in respect of the plaintiff's claim that SOCOG indirectly interfered with the contractual relationship by enlisting the aid of the NSW Police Service and "causing" the plaintiff's arrest on 6 December 1999.

Cause of Plaintiff's Arrest 368 It is submitted that but for the erroneous information provided to YF Wang and DS Nicholls by Ford and the failure of SOCOG to provide other obviously relevant information the plaintiff's arrest would not have occurred. It is submitted that the provision of the information that the certificates were not genuine and the failure to inform DS Nicholls of the arrangement between TOC and the plaintiff and the dispute that had arisen in November 1999 was a wrongful and unlawful act resulting in the exercise of discretion by DS Nicholls to arrest the plaintiff. 369 When DS Nicholls made his statement on 16 February 2001 he stated that prior to the plaintiff's arrest he had not received any instructions or had any discussions associated with SOCOG concerning the plaintiff's arrest. In none of the three statements DS Nicholls made (Ex 14,15 & 17) did he mention the meeting with SOCOG on 3 December 1999. In my view that was a significant meeting in relation to the arrest of the plaintiff. That provided an opportunity for an exchange of information between SOCOG and the OI Centre and the Strike Force in respect of the arrangements between TOC/SOCOG and the plaintiff. 370 No one informed DS Nicholls of the fact that the plaintiff had at least six hundred and fifty seven memberships in the database. No one informed DS Nicholls that the plaintiff had paid nearly a quarter of a million dollars to TOC and no one informed DS Nicholls that in June 1999 the Agency Agreement had been extended to December 2000. No one informed DS Nicholls that a purported termination of the Agency Agreement on 5 November 1999 was being challenged by the plaintiff and his solicitors. I am satisfied that by the time Reading attended this meeting he had viewed a copy of the 4 June 1999 letter signed by Wyness for TOC extending the term of the exclusive agency of the plaintiff to December 2000. It is also apparent that DS Nicholls was not informed of the correspondence from Wyness to Ford or from the plaintiff to Wyness or from the plaintiff's solicitors to Wyness in respect of the civil dispute that had arisen in relation to the plaintiff's contractual rights under the Agency Agreement. 371 It seems to me that SOCOG, via Ford, was of the view that not only was the plaintiff involved in a fraudulent conspiracy but Wyness and Noble were also involved in some way. Ford's relationship with Wyness certainly lacked candour. Ford obviously knew of the existence of some arrangement with the plaintiff when she wrote the letter to Wyness pretending the "Zhu issue" was new to her. This was something that I am satisfied she had discussed with the OI Centre, in particular with Honeymen, and that she had been informed that Reading had also had a briefing on the matter when SOCOG took over the Club. Ford was suspicious. That is evidenced by her suggestion that people reacted when she mentioned the plaintiff. She thought they knew more than she did and whatever it was it was being kept from her. 372 Ford knew that the plaintiff had paid nearly one quarter of a million dollars to TOC and she was hopeful that the whole thing would "go away" if the kits and paraphernalia were given to the plaintiff. Her own correspondence and e-mails establish that she saw that as a cheaper alternative for SOCOG than refunding the plaintiff's money. It is my view that her failure to inform DS Nicholls of the payment by the plaintiff and the existence of at least six hundred and fifty seven memberships in the database was a significant omission by her and thus by SOCOG. Reading's failure to disclose that he had sighted the letter extending the plaintiff's agency to December 2000 and that there was a dispute as to whether the Agency Agreement had been terminated on 5 November 1999 was also a serious omission. 373 DS Nicholls conceded that if he had been informed by Reading that the Chinese Consul with responsibility for cultural matters and the Olympics had attended SOCOG's offices in August 1999 seeking and receiving assurances from SOCOG that the Club and the plaintiff's agency were genuine, he would have taken those matters into account in determining what he did next (tr.735). He was not given this information. DS Nicholls also agreed that he would have been most concerned to ascertain the correct position in relation to the plaintiff's authority before moving to arrest him, if only to avoid the embarrassment of an inappropriate arrest (tr. 735). He gave the following evidence: Q. Indeed, even if you had been told by, say Moiya Ford that there were conflicting claims between SOCOG and Mr Zhu about whether his agency was on foot or not. On foot, in other words a civil dispute? A. Yes. Q. That would have been a fact which would have been material to you as you left the meeting? A. Yes. Q. In the ordinary course of the discharge of your duties as a police officer you would not ordinarily lend any aid to a civil dispute? A. That's correct. Q. Had you been informed by Mioya Ford, for example on the 2 December, or for that matter on the morning of 3 December. A. Yes Q. That there was a dispute between SOCOG and Mr Zhu about his agency, dispute in the sense of Mr Zhu complained that his agency was on foot, SOCOG claimed that his agency was not on foot? A. Right. Q. That piece of information is a piece of information that would have been material to you for the purpose of your further conduct of your investigation, I suggest? A. Yes, if that dispute related to the specific issues that were raised in the Wang complaint. Q. Because from your point of view, if Mr Zhu was an authorised agent of the Olympic Club you would need to investigate and satisfy yourself whether or not, as such, agent-- A. Yes. Q. -- he was entitled to present certificates in the manner that had been made the subject of complaint that you have heard? A. That's one factual matter relating to whether his conduct amounts to criminal offences in relation to the representations that were made to Mr Wang. Q. But you wouldn't have gone ahead had you received that piece of information and arrested him without further investigation, I suggest? Q. Had you been given it? A. Yes, I agree with that, yes. (tr. 736-737) 374 DS Nicholls gave some rather elliptical evidence in re-examination which he had not mentioned in any of his statements or in his cross examination. It was that he had given "advice" to the OI Centre that "on the face of the documents they had at hand at that time, it was a civil dispute"(tr. 750). Those documents included extracts from the "original agency agreement", a trust deed, a deed of release and "another sourced document" that he could not describe "with a heading" and "a bundle of documents" that touched on the issue of the agency agreement itself (tr. 750). He said that he took the fact that a civil dispute existed into account when he made the arrest on 6 December (tr. 750-751). 375 I was not informed what was in the "bundle of documents" DS Nicholls saw at the time he provided this advice. The only evidence as to when he gave that advice was that it was in "the months previous" to 6 December 1999 (tr.750). I am satisfied that it was prior to the events of 5 November 1999 and could not have included the letter extending the plaintiff's Agency Agreement to December 2000 nor the correspondence between the plaintiff and Wyness and the plaintiff's solicitors and Wyness in relation to the civil dispute to which DS Nicholls' attention was drawn in the above extracted evidence, otherwise he would not have agreed with the proposition that was put to him. 376 That level of satisfaction is comfortable by reason of some unchallenged evidence given by the plaintiff. After the plaintiff's arrest DS Nicholls informed him that the Strike Force was investigating a complaint that he had been representing himself as a person who was entitled to sell memberships of the Club in China without having authority to do so. The plaintiff informed DS Nicholls that he was an authorised agent and he was the exclusive agent for the Club in China. DS Nicholls said "that is not what I have been told. What authority have you got?". The plaintiff informed him that he had an Agency Agreement and an authority in writing under seal. He was asked where the authority was and, after looking through the documents he had with him, the plaintiff produced the letter of 4 June 1999. 377 DS Nicholls went away for a period and on his return said to the plaintiff "I have been told that this is a forgery. It must have been put together by photocopying other documents". The plaintiff then informed DS Nicholls that such allegation was "not true" and that he had paid the Club $260,000 and that he was an authorised agent. DS Nicholls asked who could confirm this claim and the plaintiff informed him that either Wyness or Noble could do so. DS Nicholls then said that he had been told that the agency had been terminated on 5 November 1999. The plaintiff informed him that it was not and that he had written to Wyness disputing such purported termination. 378 If DS Nicholls had already seen the correspondence purporting to terminate the plaintiff's agency on 5 November 1999 and the subsequent correspondence, it seems to me that he would not have had to debate the matter with the plaintiff in the manner that he did. It seems to me from the evidence that after the plaintiff produced the 4 June letter DS Nicholls made some inquiries from some person, more probably than not within SOCOG, and was informed that the agency had been terminated on 5 November 1999. Even then it was left to the arrested plaintiff to inform DS Nicholls that there was a dispute about the purported termination. 379 Notwithstanding the rather elliptical evidence in re-examination I am satisfied that the evidence DS Nicholls gave in cross-examination extracted above is unassailed. Had he been told about this dispute he would not have gone ahead and arrested the plaintiff on 6 December 1999 without a further investigation.

380 On 6 December 1999 the plaintiff was returning to Australia to investigate what had happened in relation to the arrest of his sub-agent. Charges were not brought against the plaintiff until 26 April 2000. The DPP's withdrawal of the charges and referral of the matter to the Police Integrity Commission for possible investigation is a step from which I am able to infer that there was no reasonable prospect of conviction. If there had been a careful, open and commercially sensible assessment of the matter in December 1999 with the provision of accurate information to DS Nicholls there would have been no arrest of the plaintiff on 6 December 1999. 381 In October 1999 Reading told Ford that he understood that there had been some "negotiations" with the plaintiff and that after he had received the briefing from OI Centre he had advised Wyness to terminate those "negotiations" (Tr 512). From the intelligence report (Ex A 539) I am satisfied that it is more probable than not that Reading informed Ford that his instructions appeared to have been ignored in relation to the termination of those "negotiations". Ford saw the facsimile from Wyness of 29 October 1999 on Olympic Club letterhead and I am satisfied reported to the OI Centre that Wyness had used such letterhead and was not "authorised" to do so (Ex A 589) (Tr 528). A further inference available from the intelligence report is that Ford expressed her concerns in relation to the "on-selling" of the packages. On 5 November 1999 Ford was provided with the plaintiff's telephone number and was informed again by Wyness that the plaintiff had paid for 743 memberships (Ex A 548). 382 DS Nicholls arrested the plaintiff on the basis of the information provided by YF Wang, which was itself reliant on the information provided by Ford, and the information conveyed to him by Ford on 2 December 1999 that the twenty five membership certificates provided to YF Wang were "not genuine" (Ex 15 para 2(c)). On the same day, 2 December 1999, the CEO of SOCOG, Hollway, advised Reading and Ford that there was to be a "continuation of full cooperation with the police" (Ex A 604). 383 It was submitted on behalf of the plaintiff that his arrest and the manner of causation of it is analogous to the arrest in Dickenson v Waters Ltd [1931] 31 SR (NSW) 593. In that case the plaintiff was arrested at a Cash and Carry store in Paddington after a shop inspector said to her "you have a bottle of celery salt and a bottle of Draper's relish that you have not paid for". The manager telephoned the police and a conversation took place in which the police officer said to the manager "do you wish to proceed against these people" referring to the plaintiff and another person present on a different charge and the manager said "yes". 384 Ferguson J (with whom Davidson and Halse Rogers JJ agreed) said:

In the present case I think there was ample evidence to support the conclusion at which the jury arrived. The plaintiff was told she must go to the manager's office, and when she was there the police were sent for. If after the charge against her had been to some extent investigated in the presence of the police the manager was not willing to withdraw the charge, one of three courses was open to him. He might proceed by summons; he might desire the police to arrest the plaintiff; or he might leave it to their discretion to take the steps that in their opinion the occasion warranted. It is extremely unlikely that Constable Pedler, if left to the exercise of his own discretion, would have taken the extreme step of arresting the plaintiff….His cross-examination made it fairly obvious that he would not have taken her in to custody except for the answer given by the defendant's manager to his question "do you wish to proceed?" 385 It is submitted that SOCOG made an allegation of dishonesty against the plaintiff when Ford informed DS Nicholls and YF Wang that the certificates were not "genuine". It is also submitted that such allegation was made with reckless indifference to the truth, bearing in mind that Ford was aware of 657 or 743 memberships which the plaintiff was entitled to allocate. It is also submitted that Reading knew the true position because he had seen copies of the correspondence between Wyness and Ford and had discussed with Ford the alternatives of repaying the plaintiff $260,006 or providing the Welcome Kits and paraphernalia and was seeking legal advice from Williams on the matter. 386 The question posed in Dickenson "do you want to proceed against these people" was not put in express terms to SOCOG. However the consultation between SOCOG and the OI Centre and the Strike Force on 3 December 1999 was to the same effect. The information that the Certificates were not genuine provided by SOCOG was pivotal to the exercise of DS Nicholls's discretion to arrest the plaintiff. In my view to suggest that the complaint was from a third party and not SOCOG does not accurately reflect the reality of the situation. This was a complaint that the plaintiff was acting criminally and at no stage prior to the arrest of the plaintiff did SOCOG withdraw or qualify that information in any way. It had that opportunity on 3 December 1999. It did not inform DS Nicholls that many blank certificates had been issued to the plaintiff and that these were part of a Kit of paraphernalia that the plaintiff was entitled to issue or have issued. 387 Far from withdrawing the allegation on that day SOCOG went further and as part of the "team" consented to the stopping of the press conference in Shanghai and the notification internationally to policing agencies in respect of the plaintiff and his sub-agents. I am satisfied that but for the information provided by SOCOG that the Certificates were not genuine and the failure to provide the information in relation to the civil dispute that had arisen the plaintiff would not have been arrested on 6 December 1999. I am satisfied that SOCOG's conduct caused the plaintiff's arrest and the subsequent seizure of all his documents relevant to the conduct of his agency. 388 SOCOG's inducement of DS Nicholls in the circumstances of the existence of the plaintiff's Agency Agreement was therefore unlawful and an intentional infliction of harm to the plaintiff. It amounted to an indirect interference with the contractual relationship. The plaintiff's Agency Agreement remained on foot until he accepted the wrongful repudiation of it by the commencement of these proceedings on 22 December 1999.

Unjust enrichment 389 The plaintiff claims that SOCOG's conduct caused the plaintiff to lose $260,006 comprising the $30,000 agency fee paid on 8 March 1999 and $230,006 paid in June 1999. It was not until this trial commenced before me that SOCOG made an offer to repay the plaintiff this money together with interest. That was not an unconditional offer and the letter stated that SOCOG was only willing to pay that amount together with interest if the plaintiff would agree to the proceedings being otherwise dismissed with no order as to costs. That offer was made on 3 August 2001 and was open until 10.00am on 6 August 2001 (Ex 7). No money has been paid into Court and there is absolutely no basis, and none has been argued, upon which SOCOG is entitled to retain the amount of $260,006. 390 The plaintiff is entitled to the amount of $260.006 with interest upon which I will hear submissions. 391 The next head of damages that the plaintiff claims is the loss of opportunity to earn a profit from the Agency by the sale of up to 10,000 International Memberships as a component of travel and accommodation packages to residents of the PRC calculated at a loss of $1,794 per package. The plaintiff also claims out of pocket expenses in the amount of $269,200 and makes a claim for aggravated and exemplary damages.

Loss of Opportunity 392 The plaintiff submitted that the parties to the Agency Agreement contemplated that the plaintiff would be on selling the international memberships as part of a travel and accommodation package to be offered for sale to up to 10,000 persons travelling to Australia for the Games. Additionally SOCOG was on notice of the fact that the plaintiff was so authorised and would lose the opportunity to profit from that opportunity if it interfered with the plaintiff's contractual rights and caused the agency to be lost. 393 SOCOG submitted that the conduct of instructing TOC to terminate the Agency Agreement did not prevent the plaintiff from selling travel and accommodation packages. It was submitted that such conduct only prevented the plaintiff from selling International Memberships of the Club. It was submitted that the only benefits that the plaintiff was entitled to receive for his customers pursuant to the Agency Agreement were those set out in clauses 7.1 and 1.1 of the Agency Agreement. They were Welcome Kits consisting of a satchel, magazine, video, CD, membership certificates, pin, Australian Souvenir and, subject to SOCOG approval, an invitation to the Opening Ceremony dress rehearsal. The further benefit was the International Membership Mailer the contents of which were at SOCOG's discretion. 394 The plaintiff submitted that on the balance of probabilities he would have sold most if not all of the available 10,000 packages. It was submitted that TOC and the plaintiff entered into the Agency Agreement with a view to exploiting the market that was seen by them to be substantial in the Mainland of the PRC that contains a substantial portion of the population of the world. 395 It was also submitted that the package possessed the unique feature of membership of the Club, which was an affiliation or loyalty Club intended to provide a marketing advantage for Club related products. Emphasis was placed on the exclusivity of the plaintiff's agency for the PRC. None of the other travel agents or persons wishing to market travel deals or packages from China to the Games had this advantage. 396 Shortly after the Agency was granted the Club budgeted for revenue from the sale of 3,300 International Memberships. In the April Club Committee Report the net contribution was fixed at $265 per member accounting for $875,000. ( Ex. A 289) which related solely to China (tr. 702). The April Club Committee report was prepared by Noble in consultation with Wyness who had considerable experience in marketing, particularly in relation to affiliation and loyalty programs. Wyness' involvement in the budgeting for 3,300 sales is relied upon by the plaintiff in support of the submission that such is the very least number of sales the Court would find the plaintiff would probably have sold, but for the wrongful termination of his Agency Agreement. 397 Reading, who was also at the April Club Committee meeting, was the Group General Manager, Commercial and Marketing, of SOCOG. There is nothing in the evidence to suggest that Reading regarded the budget estimate of 3,300 sales as unrealistic. It is submitted that the failure of SOCOG to call evidence from Reading justifies an inference that his evidence could only assist the plaintiff. It is also submitted that the minutes of the April Club Committee meeting support an inference that the market for sales in PRC had substantial prospects. In this regard reliance was placed upon the entry in paragraph 3.11.7 which recorded "revenue share arrangements expected with NOC's" and paragraph 3.11.8 in which Mr Larrum of SOCOG was recorded as saying the International Olympic Club was a "potentially good revenue generating mechanism" (Ex. A 794-795). 398 Between 15 March 1999 and 5 December 1999 the plaintiff made eight trips to China. He was in China for 138 days and made 54 domestic airline trips to various parts of the country. By the time the plaintiff accepted the repudiation and brought the Agency to an end on 22 December 1999, he had made contact with a wide range of people in China for the purpose of promoting his Agency and establishing a network of sub-agents. He had put in place contracts with China Everbright International Travel Inc., the travel agency of the government of the PRC and the Jin Xiang Entertainment Company in Zhengzhou City in the Henan Province (the JXE Co). The unchallenged evidence of Mr Gao is that the JXE Co had accepted deposits for considerably more than the initial allocation of 500 memberships. Exhibit W contains 600 receipts for deposits taken by that company. 399 The plaintiff also relied upon SOCOG's file note of the meeting on 3 December 1999 which records that "the conference in Shanghai will lead to a great number of enquiries". It is submitted that the decision recorded in the file note to "stop the conference" underscores the popularity of the plaintiff's packages. It is submitted that Reading was the person with the most pressing interest to stop a flood of inquiries because he was grappling with the problem of whether to return the money the plaintiff had paid to TOC or honour the obligation to provide the member benefits. It is submitted that the reason recorded to stop the conference evidences a fear that if it went ahead it would lead to a great number of enquiries and embarrass SOCOG. 400 SOCOG submitted that the plaintiff could have obtained souvenirs and merchandise from other sources and that the Club was "merely an add-on" to the plaintiff's packages (Tr. 624-625). It was submitted that on the plaintiff's evidence, there was a strong market in China for travel and accommodation packages to the Games. In this latter respect reliance was placed upon Mr Hu's evidence (6/2/2001. pars.12 & 13) that after the plaintiff informed him that he could not proceed with his Agency Mr Hu was able to sell "numerous travel and accommodation packages". It was submitted that this evidence demonstrated that the Club membership component would not have been material to the success of the sale of the plaintiff's packages. Reliance was also placed on the evidence of Mr Gao who agreed that anyone who had a business of selling travel packages to the Games which included airfares, accommodation and tickets to events would have a successful business in China (tr. 447-448). 401 The comparison with Messrs Hu and Gao may have been more apt had they too been arrested and been the subject of press coverage in the Chinese newspapers reporting that they had been arrested and charged with substantial fraud charges as was the plaintiff (Ex D 87-103). SOCOG's evidence demonstrates the importance of having "face" to do business in China (tr. 600). Once the plaintiff could no longer proceed with his Agency he had to inform those with whom he had dealt in China that he could not continue with the proposed arrangements. This alone caused a loss of "face" which was compounded by the press reports, which I am satisfied would have identified the plaintiff in the minds of those who read the reports with whom the plaintiff had dealt. I am satisfied that such loss of "face" would have impacted adversely on the plaintiff's capacity to do business in China in particular to market the packages that were the subject of the press reports. In these circumstances the comparisons with Messrs Hu and Gao is not apt or helpful to SOCOG's case. 402 The benefit for which the plaintiff bargained was the exclusive right to market the total package of which the Club membership was a component. I am satisfied that the other component parts of the package were all the more attractive because of the connection to what was seen as an Olympic entity, in this instance the Club. This is what the SOCOG and TOC representatives at the April Club Committee were predicting and I am satisfied on the evidence (e.g .Ex W) they had some justification for doing so. 403 The plaintiff and SOCOG each relied on the evidence of expert accountants. The plaintiff relied upon the evidence of Goodwin Cullimore Allen Gower (Mr Gower) of GCA Gower & Co and SOCOG relied upon the evidence of John Henry Banks (Mr Banks) of KPMG. 404 In his original report (9 June 2000) Mr Gower refers to the projection of the fixed/flexible cost expenses document prepared by the plaintiff in which the expenses were projected to be $58,460,000. In addition to those expenses was the US $1 million the plaintiff promised to the Chinese government as well as US $50,000 per gold medal winner. Mr Gower considered that it was reasonable to expect that the packages would have been sold at an average price of AUS $8,000. This opinion was based upon the evidence of the plaintiff in his affidavit of 13 March 2000 par 28, the plaintiff's letter to his sub-agents advising that the cost of children under 12 years of age would be AUS$5,400 and a number of other documents. The other documents included the agreement with the Wuliangye Group in which it was agreed to pay $8,700 per package, the agreement with the Everbright travel company in which a converted Australian dollar amount of $7,385 is mentioned and a letter from the plaintiff to the Chinese Consul in which mention is made of a converted Australian dollar amount of $9,000 per package. 405 Mr Gower has assumed that 10,000 packages would be sold thus giving a revenue of $80 million. He then subtracted the projected expenses of $58,460,000 and a figure of $3 million for payment to the Chinese government to reach a total cost figure of $61,460,000. Mr Gower then subtracted that figure from $80 million to reach the figure for lost profit of $18,540,000. 406 In his first report (7 December 2000) Mr Banks reviewed Mr Gower's first report and concluded that it was generally understood that the Club was not a success because the benefits it provided were considered poor value. He expressed the view that the plaintiff could have provided equivalent benefits at a cost of no more than membership of the Club. He concluded that the Agency Agreement had no value to the plaintiff. Mr Banks was also critical of the plaintiff's projected expenses. He required more information in relation to return air tickets and suggested that the concept of paying for what he described as a "premium travel package" which required four persons in one room was questionable. 407 Mr Banks suggested that the tour would incur a loss if the tickets provided for in the agreement with the Wuliangye Group were provided to all purchasers of the packages. These extra tickets were only for the initial members as part of the proposed presentation ceremony in Shanghai on 6 December 1999. Mr Banks' concern is therefore without foundation. There were a number of other areas of projected expenses upon which Mr Banks did not reach a conclusion because he suggested he had not seen "adequate information" in relation to them. 408 Mr Gower produced a second report (7 August 2001) in which he reviewed documents produced under subpoena by Mr Hu and responded to Mr Banks first report. Mr Gower used Mr Hu's documents that disclosed costs of hotel accommodation, events and bus charter to effectively check the reasonableness of the plaintiff's projected expenses. It is apparent from the documents that the plaintiff's projected expenses for accommodation of $150 per person per night was significantly higher than the cost of the accommodation Mr Hu was able to secure. Mr Gower concluded that the accommodation expense allowance that he had adopted was adequate and likely to be conservative. 409 Mr Gower also reviewed Mr Hu's documents relating to the cost of tickets for various events and concluded that the plaintiff's projected expenses of $250 per person for tickets to events was reasonable. After reviewing Mr Hu's documents in relation to bus charter costs Mr Gower was satisfied that the plaintiff's projected expenses were too low in respect of this item. He concluded that the expenses should be increased by $60 per person amounting to $600,000 for 10,000 packages. This reduced the loss of profit calculation from $18.54 million to $17.94 million. 410 In reviewing Mr Banks report Mr Gower opined that Mr Banks had failed to recognise that the plaintiff had an agreement to bring 10,000 Chinese visitors to the Games and provide all the necessary accommodation and services during the visit. Mr Gower disagreed with Mr Banks' valuation of the Agency Agreement at nil and stated that the opportunity provided to the plaintiff as the exclusive agent to sell travel and accommodation packages of which Club membership was a component could not reasonably be equated to Club membership only, which is what Mr Gower suggested Mr Banks had done. 411 Mr Banks' second report (20 August 2001) also reviewed the documents produced on subpoena by Mr Hu. By comparison with the accommodation and event cost Mr Banks reached a conclusion that the plaintiff's projected expenses were "inadequate" by at least an amount of approximately $400. He agreed with Mr Gower that the plaintiff's projected expenses in relation to bus charter were $60 per person too low. He also expressed a lack of understanding of what the packages intended to provide on certain days of the itinerary and highlighted the fact that the plaintiff's projected expenses did not include any cost for inbound trips. 412 Mr Banks also reviewed the reasonableness of the plaintiff's claim that it was more probable than not that he could have sold 10,000 packages. In this review Mr Banks once again relied upon the documents produced by Mr Hu and concluded that he had sold "no more than 1000". Mr Banks relied upon a document from the Australian Bureau of Statistics (ABS) relating to overseas arrivals and departures in the period July 2000 to December 2000. The monthly arrivals from China ranged from 7,600 in June 2000 to 15,100 in December 2000. Mr Banks noted that the number of visitors from China increased in each of the months from June to December between 1999 and the year 2000, except September 2000, the month of the Olympics. In his first report Mr Banks referred to an article "Sydney sales of admission tickets to go to Olympics sluggish in China" from the website Chinaonline.com. That article referred to a number of reasons why the sales of tickets in China were sluggish. These included the fact that the Olympics were to take place before the long holiday celebrating China's National Day on 1 October, a claim that the tickets were expensive, a suggestion that the Olympics had been poorly publicised in China, a reference to travel restrictions for top-level executives and a claim that illegal tickets had been available in China at a low price. 413 Mr Banks' opinion based on the documents reviewed by KPMG was that the assumption that 10,000 packages would have been sold at an average of $8,000 each was "grossly overstated" (Ex. 30). Mr Banks did not review the evidence of Mr Gao in respect of the actual sales or the deposits which were held by Everbright or the JXE Co (Ex W). 414 The plaintiff relies upon one aspect of Mr Banks' evidence relating to his analysis of visitor figures produced by the ABS. which shows that the number of visitors from Australia to China in September in the Olympic year was down by approximately 4,100 from the previous year. It is submitted that 4,100 visitors would not therefore be out of the ordinary and up to 10,000 would be within the bounds of probability. 415 The plaintiff submitted that the Court could be confident that the net profit before tax the plaintiff would have made from each package, but for the intentional interference with his contractual rights, is in the order of $1,794, being the net profit before tax, expressed on a profit per package basis. 416 Mr Pembroke SC emphasised that the plaintiff had not provided any evidence in relation to the working capital available to him to finance the project. It was submitted that at the very least the plaintiff would have been required to pay deposits in relation to their tickets and accommodation well in advance of the Games. It was also submitted that the plaintiff has not proved the size of the deposits or when they would be payable. 417 Mr Pembroke also attacked the figure of $8,000. He submitted that Mr Gower did not perform any independent function or check the $8,000, but merely adopted that figure. He also submitted that there was an almost complete absence of supporting evidence as to the cost of implementing the plaintiff scheme. 418 In reaching a reasonable and fair figure for the opportunity I am satisfied the plaintiff lost by reference to the degree of probability and possibility: Poseidon Ltd & Sellars v Adelaide Petroleum N.L.(1994) 179 CLR 332, I have had regard to all the evidence and in particular to the expert opinions expressed by Mr Gower and Mr Banks. The actual contracts that were entered into are of assistance as are receipts for deposits that were received for the packages (Ex. W). 419 I am satisfied that the $1,794 extrapolated from the figure reached by Mr Gower should be reduced to an amount $1,200 as a fair and reasonable figure at which to assess the plaintiff's loss in respect of each package. I am also satisfied that having regard to the budgeted sales of packages, the possible difficulties that may have been encountered by the plaintiff, both in respect of the controversies surrounding SOCOG itself and the possible difficulties obtaining visas and/or tickets together with the date of the Olympics clashing with the Chinese holiday, the actual number of deposits that had been taken by the end of 1999 and the actual sales made by Mr Hu, a reasonable and fair number of sales that the plaintiff could have expected to have sold and for which he could have obtained a Visa is 2500.

420 On this head of damage the plaintiff is therefore entitled to damages for the loss of $1200 on each of 2500 packages, a total of $3 million.

Out of Pocket Expenses 421 The claim made by the plaintiff for the actual costs incurred of $529,206 in preparing to sell the packages would only be necessary to consider if I had found against the plaintiff in respect of the lost opportunity claim. The plaintiff accepts that this claim should not be considered in addition to the lost opportunity claim because it would be double counting. As I have found the plaintiff did lose the opportunity referred to above by reason of the conduct of SOCOG I do not need to consider this head of damage. 422 If it had been necessary to do so SOCOG claimed that the expenses were not supported by documents evidencing that $529,206 had actually been spent. It was submitted that the plaintiff had not discharged his burden of proving not only the fact that he had suffered loss but also the amount of the loss: JLW (Vic.) Pty Ltd v Tsiloglou (1994) 1 VR 237. It was also submitted that the Court has no basis upon which to determine the quantum of expenditure and as these matters could have been proved with precision there is no warrant for the Court to engage in guesswork or to come to a "jury assessment": Tsiloglou at 241, 248 and 251. 423 That is not quite the position in this case. Mr Gower referred to the plaintiff's evidence and the fact that many purchases are made in cash in China to conclude that if such a claim would be considered it should be accepted at the amount claimed by the plaintiff. The plaintiff was not cross examined upon this figure in any detail. SOCOG complained that the plaintiff had never provided an English translation or explanation for the bundle of expenses documents (Ex.B) and complaint was also made that the expenses were in round figures and were not referable to any particular evidence. A translation was provided with details of the expenses during final addresses. SOCOG took the course of not cross examining upon these figures in detail and the Court has to do its best in the circumstances: Biggin & Co Ltd v Permanite [1951] 1 KB 422 at 438. If it had been necessary to consider this head of damage it seems to me that the plaintiff would have been entitled to $529,206.

Exemplary damages 424 The plaintiff also makes a claim for exemplary damages. It is submitted that SOCOG showed a conscious disregard for the rights of the plaintiff and that its conduct was an outrageous misuse by a government instrumentality of the police powers of the State and justifies an award of substantial exemplary damages in accordance with the principles enunciated by Brennan J in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 471. 425 SOCOG submitted that the claim for exemplary damages must fail at the threshold. It claims it merely co-operated with the police in relation to the complaint made by YF Wang. It was submitted there was nothing improper in SOCOG's conduct particularly in the light of Ford's understanding that the "arrangement" with the plaintiff had been terminated. It was submitted there is no foundation and no basis for the requisite finding of "conscious wrongdoing" to justify an award of exemplary damages: Whitfeld v de Lauret & co. Limited (1920) 29 CLR 71. 426 Such awards have been described as "exceptional" as they arise chiefly, if not exclusively, in cases of conscious wrongdoing in contumelious disregard of the plaintiff's rights. But that is not the sole reason for the award of exemplary damages. As Kirby J said in Gray V. Motor Accident Commission (1998) 196 CLR 1 at 29 "such damages may be recovered whatever the subjective intention of the tortfeasor if, objectively, the conduct involved was high-handed, calling for curial disapprobation addressed not only to the tortfeasor, but to the world". The object of such an award extends beyond SOCOG and other like-minded persons "generally to conduct of the same reprehensible kind": Lamb v Cotogno (1987) 164 CLR 1 at 9-10. 427 The evidence upon which the plaintiff relied in support of his claim for exemplary damages includes SOCOG's discussions with Consul Wang. Reliance was placed on an e-mail and a note made by Reading in which he recorded his discussion with a SOCOG employee in which he advised her to inform the Consul that SOCOG had only just become involved and had not decided about overseas action (Ex.A 454). It is submitted that the obvious inference from the terms of Reading's note is that he well understood that what the Consul wanted to discuss was the Chinese International Membership scheme. By the time Reading spoke to the SOCOG employee on 24 August 1999 he had received a facsimile including copies of the 8 March 1999 and 4 June 1999 letters and had telephoned the director of the OI Centre to make a "check" and had received information that the plaintiff was "known to them" (Ex. A 456). 428 There is no evidence that the plaintiff was a criminal or had a criminal record. There is no basis in the evidence upon which a finding could be made that the plaintiff was and is anything but a man of good character. However it was Reading who described the plaintiff to Wyness as a loose canon and informed him that the "police are looking at this fellow-my advice to you is that you protect yourself by reining him in". It is submitted that Reading was treating the plaintiff as a criminal without any regard for his rights as an agent of the Club and that this was indeed high handed conduct deserving of an award of exemplary damages. 429 The plaintiff submitted that Reading's instruction to his staff in relation to what they should tell the Consul was to cause an entirely disingenuous proposition to be delivered, that was, that SOCOG had just become involved and had yet to make up its mind what it would do in relation to International Members. The truth was that on or about 24 August 1999 Reading had already decided that SOCOG was not prepared to deal with the plaintiff. 430 In deciding whether an award of exemplary damages is appropriate in this case it is necessary to review Ford's evidence. Ford gave her evidence over a two-day period and in many respects did not have a good recollection of events or the timing of events. Ford had been seconded from the ACT government to manage the Club for SOCOG. Her position with the ACT government was as head of the Office of Business Development and Tourism in the Chief Minister's Department. She gave evidence that she had put much of the detail of the time with SOCOG out of her mind because she did not believe it was necessary to retain it. I accept that her memory of the detail of events was not good. 431 Ford gave evidence that she made a number of efforts to ascertain the plaintiff's contractual status. She said that by 2 November 1999 she was "forming a view that an arrangement appeared to be still in place notwithstanding the information" that Reading had given to her. That information was that Reading had instructed Wyness to terminate whatever arrangements were in place. She said that she asked Reading about the plaintiff and international memberships (tr. 528) and was informed that any arrangements had been terminated. 432 However she had formed a view that the matter needed to be assessed and understood. She also said that the question as to whether the plaintiff should have his money back or have the memberships honoured was a question that was on foot "the whole time". She said "the whole discussion of the whole situation was about what is it SOCOG is obligated to do, if anything" (tr.538). As late as 29 November 1999 Ford was still asking about international memberships and SOCOG's obligations. Ford said that she was not going to do anything unless Reading told her to return the money or to honour the memberships (tr.541). She felt it was her obligation to find information from SOCOG about how they wanted her to handle "the issue" (tr.543). She agreed that if there was a dispute between SOCOG and the plaintiff it was a matter properly to be resolved by legal process. She denied that what she had been doing during November 1999 was to attempt to fob off Mr Go. After being referred to her e-mail of 30 November 1999 she agreed that she had used the term "fob off" in relation to what she had been doing in relation to Mr Go. 433 Ford admitted receiving a number of contract documents but could not recall the detail of them. She denied ever having seen the 4 June 1999 letter and admitted that she had informed DS Nicholls that the plaintiff was not an authorised agent of SOCOG. She also admitted that she informed DS Nicholls that the memberships certificates provided to YF Wang were not genuine. She recalled some of the matters that were discussed at the meeting on 3 December 1999. She recalled that the conference in Shanghai was spoken about and her best recollection was that there was discussion about stopping people attending rather than stopping the conference itself. 434 The way in which Ford was brought into her task of managing the Club was certainly less than ideal. I accept that she was not informed at the outset of the existence of the contractual arrangements that TOC had entered into not only with the plaintiff but with Mr Go for the agency in Indonesia and Mr Liew for the agency in Singapore. She had reviewed the Deed of Release and Termination and understood that TOC's relationship with the Club had terminated. She was informed that some employees had "come over" to SOCOG but took the view that Wyness' continued involvement and his use of the letterhead of the Club may be in breach of his obligations. 435 There is no doubt that Ford knew the plaintiff had purchased at least 657 memberships. Her evidence about her attempts to understand the concept of International Memberships was quite extraordinary having regard to the seniority of her previous position and the importance of the position with SOCOG. The impression I am satisfied she sought to convey was that as hard as she tried no one would assist her with an explanation. I am satisfied that she had decided not to telephone Wyness to have an open and frank discussion with him because she was suspicious of him. That is why she told Ernst & Young not to make contact with him or Noble. 436 The obvious step to take to understand what had happened in relation to the plaintiff and his contractual status was to speak to Wyness or Noble. It was never suggested to her that she should not do so, albeit that she gave evidence that it was suggested to her by the OI Centre that she should not speak to the plaintiff. Her failure to speak to the very people who were in control of the management of the Club at the time about any "arrangements", as she understood them, that were put in place with the plaintiff was, notwithstanding her suspicions or concerns, quite extraordinary. 437 All she had to do was pick up the telephone and ask Wyness what the situation was with the plaintiff. If she had done that in late November 1999 when she was dealing with DS Nicholls I have little doubt that she would have been informed that Wyness had written to the plaintiff purporting to terminate the agreement and that the plaintiff's solicitors were challenging such purported termination. The press release issued by SOCOG on 12 December 1999 in which it claimed that to the best of its knowledge "any arrangement that may have been in place prior to SOCOG assuming control of the Olympic Club in August was terminated by the previous management of the Olympic Club" is also quite extraordinary in the circumstances. SOCOG well knew by this time that the letter of 5 November was the time at which Wyness wrote to the plaintiff, long after it took over the Club. It also knew that such was at its direction and it well knew that the plaintiff was challenging the entitlement to terminate his contract. This exemplifies SOCOG'c conduct in relation to the way it dealt with the plaintiff which was high handed and disgraceful. 438 The level of suspicion in this world of whispers of Ford and others at SOCOG was fuelled by a lack of proper information, a lack of effective communication within SOCOG and with its enquirers, a lack of sensible commercially sound inquiries of the people of whom inquiries should have been made, a refusal to deal in good faith with or even speak to the people who had been appointed as agents of the Club and a willingness to become embroiled in what I am satisfied was a disastrous "team" approach to what was thought by the police, on the information provided to them by SOCOG, to be an international conspiracy to defraud and damage the Club. I am satisfied on the evidence before me that this concatenation of police "intelligence" and what was seen as the "stakeholders" information, or more accurately misinformation, had a disastrous consequence for the plaintiff. 439 It was submitted that SOCOG's conduct in enlisting the aid of the police in the context of a civil dispute and causing the plaintiff to be arrested instead of proceeding in the Court to obtain appropriate relief was outrageous. Mr Kelly SC submitted that the first occasion upon which SOCOG's team of lawyers seems to have turned its mind to the possibility of proceeding in Court was at a meeting between Brann, Swingler and Ford on 14 December 1999 (Ex. A 639). The minutes of that meeting record that Brann was uncertain how to proceed without advice. The alternatives of obtaining an injunction or writing to individuals or writing to TOC's solicitors were considered. There was also a reference to uncertainty about the level of knowledge within SOCOG of the activities of the Club. 440 Mr Kelly SC submitted that Reading was not labouring under any uncertainty. Reading had represented SOCOG on the Club Committee throughout the whole of the period January 1999 to December 1999. It is submitted that he was the repository of SOCOG's knowledge of the international membership activities of the Club. It was submitted that even if Reading's attention had been distracted by the so called premium or "rich list" ticket inquiry, he had received a copy of the relevant documents relating to the plaintiff from McLatchey's secretary who had gone through the AOC's file. 441 From the moment SOCOG took over the Club the plaintiff's rights under the Agency Agreement were totally disregarded. SOCOG decided that it did not want to deal with the plaintiff and did not have the commercial courtesy to write to the plaintiff directly or to telephone him or to suggest a meeting for the purpose of discussing either the future conduct of the Club or what it was that SOCOG had in mind in respect of the $230,006 that the plaintiff had paid to the Club. It is clear it took the view that it was required to do something about the plaintiff's contract of which it had knowledge by Reading's use of the words in his direction to Wyness to get "us out" of the arrangements. It decided to retain the money whilst it shuffled between the option of returning the plaintiff's money or providing the Welcome Kits. This decision apparently proved too difficult for it to reach and had not even been made at the time it took part in the 3 December 1999 meeting with the OI Centre and Strike Force. It retains that money to this day. 442 Reading's direction to the SOCOG employee to provide Consul Wang with the excuse that SOCOG had not decided what to do about International Members when he knew that he had given a direction to Wyness to "stop" the plaintiff is hardly the way a statutory body would be expected to deal with an official representative of another government in relation to the enquiries the Consul was making. By this time the Consul had already been informed that the plaintiff and the Club were "genuine". The internal correspondence and e-mails in November 1999 evidence a totally unedifying performance by a statutory body. The failure to meet with Mr Go and the obvious "fobbing off" tactics that were employed were in the circumstances disgraceful. 443 SOCOG was in a supervisory role of the Club on the Club Committee. There was a proper mechanism to direct the Trustee to cease activities if the AOC and SOCOG representatives were all reasonably of the opinion that its activities were likely to affect the goodwill or reputation of the Olympic movement. It did not take that proper course. 444 The plaintiff was treated as a criminal. SOCOG has had the better part of two years to gather evidence to justify such treatment being meted out to the plaintiff. It has produced nothing. His telephone numbers were available, his contact in Sydney, Mr Go, was at the door of SOCOG wanting to speak with Ford. There was absolutely no good reason why the plaintiff should not have been contacted by SOCOG except that Reading wanted to "get out of the arrangement". The high handed "fobbing off" in what I regard as a reprehensible fashion demonstrates a conscious and contumelious disregard for the plaintiff's rights and is also evidence of the consciousness that it was wrong to treat the plaintiff and his representative in this way. The failure to even call Reading to give evidence of what arrangements he understood were in place is demonstrative of the way in which SOCOG approached the arrangements with the plaintiff during 1999. 445 SOCOG did not inform the police of the fact that TOC had extended the Agency Agreement in consideration of the payment by the plaintiff of over $200,000. It knew that a person claiming to be his sub-agent had been arrested. It knew that the police intended to notify international policing agencies and must have understood the consequences of allowing that to occur. SOCOG was not without the resources to act properly. It had a team of legal people who could have been brought into the matter a great deal earlier than they appear to have been on 14 December 1999. For Reading to simply inform the police that they could look at SOCOG's documents without alerting them to the 4 June 1999 letter of which I am satisfied Reading was well aware and the civil dispute that had arisen in respect of the purported termination on 5 November 1999 was in my view reprehensible. 446 I am satisfied that the manner in which SOCOG dealt with the plaintiff from August to December 1999 was so high-handed and reprehensible that it is deserving of curial disapprobation and I intend to make an award of exemplary damages. I am of the view that an appropriate award in all the circumstances is $200,000.

Aggravated Damages 447 In Lonrho PLC & ORS v Fayed & ors (No 5) [1993] 1 WLR 1489 the English Court of Appeal held that damages for injury to reputation and injury to feelings were recoverable only in an action for defamation and that such damages could not be recovered in an action for conspiracy. It is submitted that that the present case is distinguishable from Lonrho on the basis that the injury to the plaintiff's reputation and feelings arises out of a physical event, namely, the plaintiff's arrest. The plaintiff submitted that once actual loss is shown damages are at large for the tort of intentional interference with contractual relations: Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1991) 2 VR 636. Understood accurately the plaintiff's claim for aggravated damages in this case is for the mental distress, or hurt to feelings, that was occasioned by the way in which the wrongful interference was perpetrated. 448 In Air Pilots Brooking J compared the situation between England and Australia and said that "so far as aggravated and exemplary damages are concerned, in England Rookes v Barnard permits an award of aggravated damages but not of exemplary damages, except in cases falling within one of the two categories defined by Lord Devlin". When his Honour referred to the Australian circumstance, he referred only to exemplary damages and said they could be awarded "on a much wider basis and may be given for interference with contractual relations or conspiracy or, unlawful interference with trade or business" (at 646). It may be that his Honour was referring to aggravated damages in the general reference that he made to exemplary damages, but this is not certain. I incline to the view that His Honour was distinguishing between the categories Lord Devlin had fixed for exemplary damages and the greater freedom for the award of exemplary damages in Australia. 449 Brooking J. referred to Pratt v British Medical Association [1919] 1 KB 244 and concluded that that the damages awarded by McCardie J in that case included "aggravated or exemplary damages". This was based on the fact that McCardie J had taken into account the long period during which the plaintiffs had suffered "humiliation and menace". McCardie J did not refer to either aggravated damages or exemplary damages. He fixed a figure for "damages" on the conspiracy claim after referring to the fact that he had taken the period of humiliation and menace into account. There is another feature to Pratt that in my view makes it difficult to rely upon for the purpose of establishing that aggravated damages rather than exemplary or merely compensatory damages were awarded. It included actions for libel and slander that were also the subject of an award of damages but the portion of the judgment in relation to those actions or damages, but for mention of their existence and the way the defendant approached the defence of the claims (at 274), is not included in the Report. 450 In Lonrho Dillon L.J. referred (at 1495) to Sir Michael Kerr's reference in Joyce v Sengupta [1993] 1 W.L.R. 337 at 384 to cases that supported the conclusion that in claims other than for defamation, damages for distress and injury to feelings were not recoverable as a separate head of damages but only in an appropriate case as an ingredient of aggravated damages. The tort of wrongful imprisonment is one example. 451 In Addis v Gramophone Co. Ltd. [1909] AC 488 the House of Lords held that damages for the wrongful dismissal of the servant could not include compensation for his injured feelings even if the circumstances of his dismissal were harsh and humiliating. Such damages were also refused by the Court of Appeal in Groom v Crocker [1939] 1 KB 194 in which the plaintiff's solicitor breached his contract by wrongly admitting negligence of the plaintiff in an action brought against the plaintiff in respect of a motor vehicle accident. However in Heywood v Wellers [1976] Q.B. 446 the Court of Appeal allowed the plaintiff damages for the resulting mental distress and upset that she suffered when her solicitors failed to effectively bring proceedings to stop a man from molesting her. In this case Bridge L.J. drew the distinction between mental distress that was an incidental consequence to the plaintiff by reason of the solicitors misconduct and mental distress that was the direct and inevitable consequence of the solicitor's negligent failure to obtain the relief that was the sole purpose of the litigation to secure (at 463-464). Bridge LJ concluded that only the latter sounded in damages. However in Shove v Downs Surgical plc [1984] 1 All E. R. 7 Addis was applied so as to preclude a company chairman and managing director from such damages for an abrupt wrongful dismissal lacking in humanity, sympathy or tolerance. 452 I have found that SOCOG wrongfully interfered with the plaintiff's contractual rights by causing his arrest. It is the manner of interference that the plaintiff claims entitles him to the award of aggravated damages. The wrongful repudiation on 5 November 1999 is not relied upon in this claim. It is the shock and hurt feelings caused by the arrest that is relied upon as a basis for this claim. This case is different from Addis and Shove in that neither case involved a claim for wrongful interference. 453 In Gray v Motor Accident Commission the High Court refused the application for aggravated damages because it had not been claimed at the trial and did not make a finding as to whether the applicant would have been entitled to such an award (at 36). The majority (Gleeson CJ, McHugh, Gummow and Hayne JJ) stated that the reaction of the party who is wronged to high-handed and deliberate conduct may well be a reason for awarding aggravated damages in further compensation for the wrong done (at 7). Kirby J analysed the nature of aggravated damages and referred to the confusion that has existed in distinguishing between aggravated and exemplary damages. His Honour expressed the view that the lack of "complete clarity of the differentiating features of aggravated damages and doubts as to what they involve" was "doubtless" the reason for the proposal to replace the "misleading phrase", aggravated damages, by a specific component of damages for mental distress (at 35). 454 Kirby J also said "Aggravated damages are given for conduct which shocks the plaintiff. Exemplary damages are awarded for conduct which shocks the tribunal of fact, representing the community. Obviously the two affronts will often coincide and overlap. But in awarding an additional element in the plaintiffs compensatory damages as aggravated damages for such affront, the attention of the decision-maker must be concentrated upon the impact which the wrong has on the plaintiff and the particular injury done to his or her feelings" (at 35). 455 This claim is distinguishable from a defamation case in which the plaintiff claims hurt to feelings as a result of published material that conveys an imputation defamatory of the plaintiff's reputation. It is in my view distinguishable from the facts in Lonrho. This is a case in which the plaintiff's distress and hurt to feelings was the direct and inevitable consequence of SOCOG causing him to be arrested for allegedly holding himself out, as was put to him by the arresting officer, as an authorised agent when he was not so authorised, when the fact was that he was so authorised. I am not satisfied that the law in Australia precludes an award of aggravated damages in this case. 456 I am satisfied that as a matter of principle an award for aggravated damages is available. SOCOG submitted that as it was not responsible, or did not cause, the plaintiff's arrest, it matters not how humiliated or hurt the plaintiff was by his arrest. SOCOG emphasised that it was "merely" cooperating with the police. I accept that it was co-operating with the police. That is exactly what the CEO directed the staff to do. However the fact that one co-operates with the police does not remove a requirement to act responsibly, indeed, the need for clarity of approach and the provision of accurate information is heightened by the involvement of the police because of a foreseeable and probable consequence that a person against whom a complaint is made may well be arrested. 457 I disagree with SOCOG's submissions that it "merely" co-operated with police. YF Wang gave evidence that if he had not been told the Membership Certificates were not genuine he would have proceeded with the purchase of the packages from the plaintiff's sub-agents. DS Nicholls was also reliant upon information from SOCOG about (1) whether the plaintiff was an authorised agent and (2) whether the certificates were genuine. Had he been informed of the civil dispute that had arisen he would not have arrested the plaintiff on 6 December 1999 without further investigation. The fact that the plaintiff was charged at a later time in April 2000 is not relevant to this consideration. I am satisfied for the reasons I have given earlier that SOCOG's conduct caused the plaintiff's arrest. 458 The plaintiff gave evidence of the hurt to his feelings. He said that he was deeply shocked and humiliated by his arrest. I accept his evidence that he felt he had never had such a horrifying or humiliating experience in his life. SOCOG attempted to suggest that he did not feel hurt by his arrest but I am of the view that such a suggestion was wholly unwarranted. The plaintiff also impressed me as a resilient man with the fortitude to argue for what he believed to be his entitlements. This is evidenced in his conversations with Wyness and his dealings with the arresting officer. That is not to say he was not hurt or did not feel humiliated. It is however a factor I have taken into account in deciding on the quantum by which his damages should be increased by way of this award. 459 In fixing an amount it is important to ensure that there is no double counting or overlapping with the award of exemplary damages I have made. I have focused only on the plaintiff's hurt to feelings and humiliation and have excluded any element of punishment or deterrence or expression of curial disapprobation. I am satisfied that the plaintiff is entitled to an additional amount by way of an award of aggravated damages in the amount of $95,000. 460 Conclusion 461 SOCOG procured TOC to wrongfully repudiate the plaintiff's Agency Agreement and unlawfully interfered with the plaintiff's Agency Agreement. The plaintiff is entitled to damages in the amount of $3,555,006 comprising the conceded amount of $260,006 plus interest that is yet to be calculated, $3 million for the loss of opportunity, $95,000 in aggravated damages and $200,000 in exemplary damages. The parties are to bring in Short Minutes of Order and I will hear argument in relation to interest and costs at that time. *********************

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