Sydney Organising Committee for the Olympic Games v Reebok International Limited

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40295/00 ED 50149/99

SYDNEY ORGANISING COMMITTEE FOR THE OLYMPIC GAMES v REEBOK INTERNATIONAL LIMITED

1 GILES JA: I ask Heydon JA to deliver the first judgment. 2 HEYDON JA: This is an application for leave to appeal against orders made by Rolfe J concerning access to a sponsorship agreement entered into between Pacific Dunlop Ltd and the defendant. The hearing of argument in relation to the appeal proceeded concurrently with the argument in relation to leave on the assumption that leave might be granted. 3 The defendant's complaint concerned that part of Rolfe J's orders which permitted Mr David Pace, Mrs Stephanie Cucurullo and their secretaries, who are employees of the plaintiff, to have access to an edited version of the agreement. 4 The plaintiff served a notice on the defendant under Pt 23 r 2 (1) (a) of the Supreme Court Rules requiring production of the document on the ground that it had been referred to in the defence. 5 The defendant filed a notice of motion under Pt 23 r 4 in effect seeking to restrict access to the external legal advisers of the plaintiff. 6 The defendant contended that three questions were involved in this application. The first was what the correct test to be applied is when the production or inspection of documents is to be limited on the ground of commercial confidentiality. The second was whether the primary judge applied the correct test. The third was whether the primary judge made adequate findings of fact or whether he failed to take account of relevant considerations. 7 In my judgment the primary judge made no error in relation to the first two questions. He summarised and quoted from a decision of the Court of Appeal of the Supreme Court of Victoria, Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 38 and 39-40. 8 It was said that in two respects the primary judge did not apply that test to which he referred but rather misled himself. First it was said that he wrongly spoke of the high undesirability of solicitors and counsel being left without the benefit of instructions from their clients and secondly it was said that he referred to a prima facie right of inspection which he had somehow himself weighed in the balance. 9 In my opinion the primary judge was correct to speak of the high undesirability of lawyers being left without the benefit of instructions from their clients in the sense that it is incumbent on those who wish to defend that position to show that it is desirable. Secondly, the primary judge was correct, particularly in the context of Pt 23 r 2 and Pt 23 r 4, to speak of the prima facie right of inspection which might be defeated on grounds shown under Pt 23 r 4. 10 The bulk of the argument for the defendant, which both in writing and orally was presented with conspicuous clarity by Mr S J Gageler, concerned the third question. 11 In my opinion the trial judge paid adequate regard to the various matters which he was said not to have paid proper regard to. They related to such questions as to whether Reebok operated in a highly competitive industry and was competitive with Pacific Dunlop, the extent of Reebok's marketing activities throughout the world and the extent of the opportunities which might be legitimately afforded to it if it had access to the agreement in question, in particular the extent to which it might be possible for what was referred to as ambush marketing to be carried out more easily, and the extent to which Reebok might obtain a competitive advantage in the negotiation of future Olympic sponsorships. 12 In some respects the primary judge did not deal with the issues in the precise language employed by the defendant in criticism of him but in substance his reasons for judgment indicate that he did attend to the essential points which the defendant wished him to attend to in those respects. 13 Another group of complaints concerned an alleged failure by him to identify, evaluate and weigh the specific need of Mr Pace and Mrs Cucurullo to have access to the agreement. It was said that they were outside the jurisdiction, that they had significant responsibilities in connection with marketing and that it could not be expected that they would forget or ignore information contained in the agreement. To some extent those submissions were qualified because no criticism was made of Mr Pace and Mrs Cucurullo and no suggestion was made that they would behave wantonly, as it were, in breach of any undertakings they give. 14 The evidence appears to suggest that, whatever has happened in the past, both Mr Pace and Mrs Cucurullo are essentially engaged in legal duties within the plaintiff organisation and though in the past Mr Pace has engaged in negotiations of contracts similar to the type of contract involved in this case, that is not now so or at least will not be so to the extent that the carrying out of those orders might collide with the undertaking. 15 The final major criticism which the defendant made of the primary judge's reasoning related to an alleged disparity between the narrowness of the breach of the contract on which the plaintiff is suing and the breadth of the subject matter contained in the agreement to which access is being sought. The argument was put that the breach consists simply in a grant of a right to supply baseball type caps and that the agreement in relation to which access is sought deals with a very much greater range of subjects. 16 Below the plaintiff propounded an argument that it was legitimate for Mr Pace and Mrs Cucurullo to have access to the agreement so that instructions could be given on whether the present pleadings should be amended. Mr Gageler submitted that in general it was not permissible to determine the extent of investigations or inspection by reference to the likelihood or possibility of further amendments being made. As a general submission I would not wish to dissent from that. The submission may not have full application in the present circumstances by reason of the fact that counsel and external solicitors would have full access to the agreement but the internal legal advisers of the plaintiff would not if Rolfe J's orders are overturned, but it is not necessary to determine whether or not Mr Gageler's submissions are correct even in that special context. 17 There seem to me to be two bases for defending the orders against the criticism made by Mr Gageler. One basis is that an important issue is whether the defendant's conduct has been a material breach of its obligations under the agreement sued on. That at least arguably raises two questions: (1) is there any clause actually broken capable of being characterised as material; and (2) is any breach of any particular clause of such significance as to be described as material. In order to assess the materiality of a breach which is said to arise by having entered into a contract in my judgment it may be necessary to assess the whole context of the covenant which ought not to have been entered into against the background of the contract of which it is a part. 18 The second answer to Mr Gageler's criticism is that while in the pleadings, that is to say section C of the plaintiff's contentions in its summons, par 14 complains specifically that the defendant has entered into an agreement pursuant to which Pacific Dunlop has been granted a right to supply baseball type caps to SOCOG officials and volunteers, there is also a later and much more general allegation in par 29 to the effect that by entering that agreement the defendant has breached the Olympic Supporter Agreement which is being sued upon and, in particular, has breached cl 3.6 of that agreement. Clause 3.6 provides: "Neither SOCOG nor supporter shall during the term enter into any negotiations or arrangements with third parties or take any other action which is or may be inconsistent with its obligations under this agreement." 19 Given that the summons and the defence stand in their present form it does not seem unjust to permit the plaintiff and its internal legal advisers to have access to the whole of the agreement which may be in breach of cl 3.6 and which par 29 contends has caused a breach of cl 3.6. 20 I should note before parting from the application that naturally no solution to the problem before Rolfe J could have pleased wholly either party but, in my judgment, the orders which he has formulated are a sound, practical reconciliation of the competing legitimate interests of both parties and are not vulnerable to the attack which the defendant has against them. 21 I would propose that the application for leave be dismissed with costs. 22 GILES JA: The decision of Rolfe J involved a significant exercise of discretion in an interlocutory application. With the benefit of the full argument, I do not think that his Honour acted on a wrong principle or erred in the matters which he took into account, and the balance his Honour gave to those matters in reconciling the competing interests of the parties was well open to him. 23 For the reasons given more fully by Heydon JA, I agree with the orders he proposes. 24 HODGSON CJ in EQ: I also agree. 25 GILES JA: The orders will therefore be that the application for leave to appeal is dismissed with costs.

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