Wednesday, November 17, 2004

High Court Latest: Private Law Fans Rejoice!

One of the High Court’s two opinions today discusses the potential proprietary basis of the tort of interfering with contractual relations: Zhu v The Treasurer of the State of New South Wales [2004] HCA 56

Mr Zhu had a contract with TOC Pty Ltd to sell Sydney 2000 Olympic tickets in China. SOCOG (the organising body of the Sydney games) then induced TOC to breach its contract with Zhu. Zhu then sued in the Supreme Court of NSW for the tort of interference with contractual relations, and won $4,234,319 in damages.

SOCOG succeeded in the Court of Appeal with a defence of justification, based on the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth), in that since Zhu’s contract was in breach of that act, and SOCOG was justified in inducing the cessation of illegal conduct.

But on appeal to the High Court, even SOCOG conceded that the contract did not authorize—let alone require—illegal conduct, and thus this strand of the court’s reasoning was in error. Zhu’s conduct was in China, not Australia. Nonetheless, SOCOG’s argument was that since it had ‘superior’ contractual and quasi-proprietary rights, the assertion and exercise of these rights justified the interference with Zhu’s contract. As we shall see, the High Court unanimously disagreed, and allowed Zhu’s appeal.

How can one resist a judgment that begins:

It is a truth almost universally acknowledged - a truth unpatriotic to question - that the period from 15 September 2000 to 1 October 2000, when the Olympic Games were held in Sydney, was one of the happiest in the history of that city. The evidence in this case, however, reveals that the preparations for that event had a darker side.

Then, on the doctrinal point about what suffices to create a defence of justification, the court said that the case law

supports the view that an "actually existing superior legal right" is required, and that such superiority is not established by priority between merely contractual rights. Superiority is conferred by the proprietary nature of the right or, as in James v The Commonwealth, must be found in statute. No such statutory right or duty exists in the present case, as explained earlier in these reasons. This approach to the defence of justification should be accepted for Australia

And later:

in stating the law for Australia, it should now be accepted that, where the superiority of right rests in some characteristic of the general law, then, as indicated above, and as perceived by Jordan CJ, temporal priority of other purely contractual rights will not suffice. …
Even if the whole of SOCOG's allegations of unlawful conduct against the plaintiff had been made good, it would still be unable to rely on the justification defence, because, for the reasons just set out, it was not reasonably necessary to protect even that very wide conception of its rights.

Quite aside from the particular issue to be resolved, the judgment is interesting for its discussion of the proprietary (or quasi-proprietary) nature of contractual rights and other choses in action.

Finally, we at the Branch are mystified as to who authored the unanimous joint judgment: we have to guess out of Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ, and the style of the judgment doesn't seem to fit any of them. Perhaps the sense of fun and joi de vivre -- qualities not normally associated with the current High Court -- are because the opportunity to decide private law cases are so far and few between [see post below] so they have to be savoured when they do arise. If you can guess who it was, e-mail us to let us know.