44 There is no room for argument in the present case as to whether the alleged apprehended breach will infringe the terms of the restraint in clause 3.1(t) as properly construed. The central issue to be addressed is whether the restraint goes any further than is reasonably necessary to protect the interests of the person in whose favour the restraint operates. It is notable that in the present case the restraint purports to extend without geographical limitation and that it applies to any football code. However, it seems to me that the following considerations point to the validity of the restraint, both at common law and under the Act.
45 First, the evidence indicates that the reasons why the first plaintiff seeks to prevent the first defendant, without its consent, from playing rugby league or football for another club or code while he is under contract are the following (as set out in the affidavit of Mr Greenberg of 5 August 2008 at para 6.1) :
(a) it may result in injury to the player and hence prevent him from fulfilling his obligation under the contract;
(b) the recruitment strategy of the first plaintiff has been based upon the first defendant being available to play for it in the NRL competition and, according to the evidence, without the first defendant being available there is an impact upon the first plaintiff's ability to compete in the NRL;
(c) the first plaintiff has invested considerable amounts of money and resources in promoting the image of its players, including in particular the first defendant, in order to encourage support and sponsors for the first plaintiff as a club in the NRL competition;
(d) substantial remuneration has been and continues to be paid to the first defendant in consideration for his exclusive and special services as a rugby league player, remuneration that could otherwise have been directed to the recruitment of other players;
(e) securing the services of the first defendant contributes to the goodwill, patronage, membership subscriptions, pride, prestige and standing of the first plaintiff, particularly given that the first defendant has "star attraction" (as to "star attraction", see also Mr Greenberg's affidavit at para 3.3 and the affidavit of Mr Schubert at paras 23, 27ff and 44).
46 Another consideration in favour of the reasonableness of the restraint of trade is the acknowledgment in the contract (clause 18.2(c)) that the first defendant was given the opportunity to seek independent legal and also financial advice before signing it. Allied to that is the consideration, sometimes expressly mentioned in the cases, that the parties have bargained, so far as one can tell, at arm's length and on an equal footing (see for example Idameneo (No 123) Pty Ltd v Angel-Honnibal [2002] NSWSC 1214 at [51] per Palmer J).
47 Another consideration is the simple idea of sanctity of contract. In the absence of any identified vitiating circumstances, and subject to the special considerations about contracts for personal services noted below, a considered obligation undertaken by contract should be enforced against the person who undertakes it, according to the principle underlying Lord Cairns LC's famous observation in Doherty v Allman (1878) 3 App Cas 709 at 720.
48 Yet another matter applicable in a case such as this, where the contract is an employment contract, arises out of the distinction between covenants that operate only during the course of the period of employment and covenants that extend beyond the termination of the period of employment. Here, importantly, the covenant in question operates only during the course of the contract. In Esso Petroleum Co Ltd v Harpers Garage (Southport) Ltd [1968] AC 269, at 328-9, Lord Pearce said:
"When a contract only ties the parties during the continuance of the contract, and the negative ties are only those which are incidental and normal to the positive commercial arrangements at which the contract aims, even though those ties exclude all dealings with others, there is no restraint on trade within the meaning of the doctrine and no question of reasonableness arises. If, however, the contract ties the trading activities of either party after its determination, it is a restraint of trade, and the question of reasonableness arises. So, too, if during the contract one of the parties is too unilaterally fettered so that the contract loses its character of a contract for the regulation and promotion of trade and acquires the predominant character of a contract in restraint of trade."
See also Buckenara v Hawthorn Football Club Ltd [1988] VR 39 where Crockett J of the Victorian Supreme Court observed (at 44) that only in "very unusual" circumstances would a restraint that operates during the employment be found to be unreasonable. In this case my view is that the restraint falls within the first rather than the last quoted sentence from Lord Pearce's speech.
49 I also note that in Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 the clause under consideration before the Court of Appeal of New South Wales, and upheld, was one that operated during the course of employment. The appellant submitted that the clause was unreasonable on the basis that she had a "right to work", but the Court of Appeal found that the restraints were not unreasonable and that the negative promises made in the contract were not "unnecessary or oppressive" (at 345, 346).
50 I have been referred to a number of cases where this Court has had occasion to consider an interlocutory application for the enforcement of a negative covenant in the contract of a rugby league player: St George District Rugby League Football Club Ltd v Tallis, Windeyer J, 14 December 1995, unreported; St George District Rugby League Football Ltd v Tallis, Santow J, 28 June 1996, unreported, BC9602844; and Australian Rugby Football League Ltd v Cross, Hodgson J, 27 February 1997, unreported. On each occasion the Court has granted interlocutory relief. The Court has done so in vindication of the principles that I address in this judgment.
Contracts of Personal Service
51 Courts of equity adopt a distinctive approach to an application to enforce, by injunction or specific performance, a contract of personal service. The fundamental rule, enunciated in such cases as Warner Brothers Pictures Incorporated v Nelson [1937] 1 KB 209, is that a decree of specific performance, either in the primary or the secondary sense, is not available to enforce a contract of personal service. That principle is extended to a case where the applicant seeks an injunction rather than specific performance, if the injunction would have an effect tantamount to a decree of specific performance, or at least the effect of leaving the defendant with the odious choice of either continuing to work for the plaintiff or being idle.
52 But there is an exception to that approach originating in the famous decision of Lumley v Wagner (1852) 1 De GM&G 604; 42 ER 687. In that case the defendant had agreed to sing at the plaintiff's theatre for a period of three months, and had promised not to perform during that period for any other theatre without the plaintiff's authorisation. The Court granted an injunction enforcing that negative stipulation. Lord St Leonards LC stated that, while he could not order the defendant specifically to perform her contractual obligations, he did have power to "compel her to abstain from the commission of an act which she has bound herself not to do and thus possibly cause her to fulfil her engagement." (At ER 693).
53 The principle of Lumley v Wagner has been followed often in the English and Australian case law. For example, in Curro v Beyond Productions the Court of Appeal of New South Wales cited Lumley v Wagner as authority for the general rule that if the contract is a contract for the provision of special services, the promise not to work for a competitor will be enforced (at 347-8). Because the contract is limited to special services, a negative promise not to work for a competitor will not force the defendant to work for the plaintiff or remain idle. In the Australian Rugby Football League v Cross case, Hodgson J referred to that principle and took the view that for relevant purposes, rugby league footballers could be treated as equivalent to entertainers, in each case providing special services under their contracts. The principle in Lumley v Wagner was applied in the other cases on rugby league football players that I have cited. See also Buckenara v Hawthorn Football Club Ltd at 46, and Hawthorn Football Club Ltd v Harding [1988] VR 49 at 61.
54 In the present case the contract clearly relates to the provision of special services. It is a contract by which an elite rugby league player undertakes not to engage in another football code without the employer's consent. I note that clause 3.1(u) is somewhat wider than this, but it is clearly severable. The injunction sought by the first plaintiff does no more than oblige the first defendant to comply with the express negative stipulation in the contract. The proposed order will not require, nor result in, the first defendant remaining idle. Indeed, an undertaking proffered by the first plaintiff, and submissions made on behalf of it (noted below), indicate that he will continue to receive remuneration from the first plaintiff and will be given the opportunity to resume playing rugby league for the first plaintiff. It seems to me, therefore, that interlocutory injunctive relief is available under the Lumley v Wagner principle.
55 All in all, I am satisfied that there is at least a serious question to be tried as to the first plaintiff's claim for relief.
Risk of Loss and Damage to the First Plaintiff
56 The second criterion to be considered is whether the first plaintiff would suffer irreparable harm for which damages would not be adequate compensation, unless injunctive relief is granted. In addressing this question it is appropriate to refer to special circumstances relating to the loss to a rugby league club of a star attraction. In similar circumstances Santow J said in the St George District Rugby League Football Club, to which I have referred:
"The loss to a football club of a potential star attraction is inherently likely to result in pecuniary loss in terms of patronage, membership subscriptions and innumerable other incidental matters. Such pecuniary loss, at least in some of its aspects to do with winning and pride, prestige and standing of the club, is necessarily incapable of even approximate quantification."
On the basis of the evidence in the present case, I respectfully agree with and apply that observation.
57 In the present case it is relevant that the first plaintiff's player recruitment for the 2008 and 2009 seasons has been based around the assumption that the first defendant would be playing for the club. Other players have been recruited to complement the skills of the first defendant. According to the evidence, there are presently no other available players who would be an adequate substitute for him (see in particular paras 4.2-4.3 of Mr Greenberg's affidavit of 5 August). The first defendant is said to be the first plaintiff's best player and is said to be of great value to the first plaintiff because of his versatility in playing positions (he is adept as a second row forward and as a centre). The first defendant is said to be important for the first plaintiff's marketing activities. According to Mr Greenberg, representations have been made to other players and sponsors that they should support the club because of the presence of the first defendant for the contract period of five years. The evidence provides grounds for the inference that the first plaintiff will suffer loss of ticketing, merchandising and sponsorship revenue (see Mr Greenberg's affidavit of 5 August at para 8.1.)
58 The evidence to which I have referred is not qualified by the fact that the first defendant proposes to play rugby and proposes to do so in France. The damage is sustained by his unavailability here, rather than what he does somewhere else.
Balance of Convenience
59 The exercise of determining whether the balance of convenience requires the Court to intervene by injunction, or to abstain from doing so, is essentially an exercise in weighing the risk of loss and damage to the first plaintiff if relief is not granted, against the hardship and other loss that may be occasioned to the first defendant if the injunction is ordered. Of course, in performing that calculus it is essential to take into account the undertaking proffered by the plaintiffs as to damages.
60 In the present case there are some other factors to take into account in addition to the undertaking as to damages (which, I should note, is in fact offered by both plaintiffs in this case). There two other factors.
61 First, the first plaintiff has offered an undertaking to the Court, operating until further order, that it will continue paying the first defendant the payments it is obliged to make under the contract pending the final determination of the proceedings. That is significant because, in terms of the Lumley v Wagner line of authorities, it tends to confirm the "special services" reasoning, together with the supplementary proposition that even if, as a practical matter, the first defendant were forced to be idle he would nevertheless be paid his salary under the contract.
62 The other matter is this. I was informed in submissions that if the first defendant were to make himself available to play for the first plaintiff, he would in all likelihood be selected to play as and when he is available. Again, that means that if the injunction is granted, the first defendant will have the option available to him to resume playing for the Club, as well as being paid. When one takes into account those two matters, as well as the undertaking as to damages by the second plaintiff as well as the first plaintiff, it seems to me the balance of convenience is tilted in favour of granting the relief that is sought.
63 There are two particular issues about balance of convenience that I need to address, namely, the possibility of hardship to the first defendant and the difficulties arising by virtue of the fact that the first defendant is overseas.
64 As to the possibility of hardship, the first plaintiff submits that no hardship will be suffered by the first defendant in the event that the Court makes the orders that are sought. Further, the first plaintiff submits that if there were any hardship suffered by the first defendant, it would be hardship brought about by his own conduct.
65 There is authority for the proposition that the Court will place little or no weight on hardship suffered by defendants where they are the authors of their own misfortune: John Fairfax v Birt at [49] per Brereton J. In the present case the first defendant's possible hardship would be that he would have to forego his playing opportunities in France and bring to an end whatever work arrangements he has entered into with the second defendant.
66 While the interim injunction is in operation the first defendant will, according to the undertaking to which I have referred, be entitled to continue to receive substantial remuneration from the first plaintiff, and he will be offered the opportunity to play for the first plaintiff . If there is any residual hardship, taking these matters into account, then I agree with the first plaintiff's submission that the first defendant has been the author of it and that consideration reduces its weight.
67 The second matter relates to the fact that the first defendant is abroad and the threatened or apprehended conduct that would constitute further breach of contract would occur in France. The plaintiffs submit that the fact that the first defendant is abroad should not be taken to militate against the making of interlocutory orders, essentially for three reasons.
68 First, the plaintiffs submit that the Court has jurisdiction to order injunctions in respect of a defendant's conduct abroad. The question was addressed by the Full Federal Court in Humane Society International Inc v Kyodo Senpaku Kaisha Limited (2005) 232 ALR 478 at [16]. There Black CJ and Finkelstein J said:
"There are many cases where parties out of the jurisdiction have been subjected to an injunction regarding their conduct abroad. The cases to which we have referred show that if a person is properly served in accordance with the court's exorbitant jurisdiction that person (so far as the jurisdiction of the court is concerned) is in the same position as a person who is within the territorial jurisdiction."
Further, in restraint of trade cases it is not uncommon for courts to grant orders restraining a defendant from engaging in activities within a geographical scope that may include an area outside Australia. It seems to me, on the state of authorities, that the question is not whether the court has jurisdiction but, rather, whether the discretion to grant interlocutory relief should be exercised, given the presence of extra-territorial elements.
69 Secondly, the plaintiffs submit that the Court should not contemplate that its orders will disobeyed or that they are likely to be disobeyed. Again, reliance is placed on an observation of Black CJ and Finkelstein J in the Humane Society International case, at [16], where their Honours said that "when asked to grant an injunction, the Court should not necessarily contemplate that it would be disobeyed", citing copious authority for that proposition.
70 The plaintiffs' third point is that the granting of an injunction to restrain a defendant's conduct abroad is not futile if the defendant has submitted to the jurisdiction and has assets in the jurisdiction. This is an important point in the present case. In my view it is well supported by authorities. In the Humane Society International case Black CJ and Finkelstein J said (at [15]):
"It seems to us that the judge in effect imposed upon the appellant an obligation of showing that an injunction would be a useful remedy. In fact the reverse is true. It is the defendant who has the onus of showing that it has no assets within the jurisdiction which could be sequestrated in punishment for contempt."
71 These observations rely upon the decision of the English Court of Appeal in Hospital for Sick Children (Board of Governors) v Walt Disney Productions [1968] Ch 52 at 71, per Harman LJ. There his Lordship said:
"As to the point about the defendant's assets in England, if that was to be pressed it was for the defendants to show that they had no assets here, which seems to me in fact very unlikely, but anyhow the burden of showing this was on the defendant and they made no attempt to do so."
72 The present Chief Judge in Equity, Young J, explained this principle in Oz-US Film Productions Pty Ltd (in liq) v Heath [2000] NSWSC 967 at [13]:
"A court of equity basically exercises only in personam jurisdiction. That is, it makes orders against people who are present in the jurisdiction or who have submitted to the jurisdiction. The in personam jurisdiction may, in proper cases, be exercised where the defendant has property in the jurisdiction over which the Court can enforce its order. In recent times, this jurisdiction has been further developed by the presumption that a defendant is considered to have property within the jurisdiction unless the evidence shows otherwise. (This is the "Peter Pan" principle from the case where it was expounded, Hospital for Sick Children v Walt Disney Productions Inc [1968] Ch 52, 71, a case over the copyright of the literary work "Peter Pan")."
73 Whether or not the burden of proving that there are assets in the jurisdiction lies on the plaintiff, in the present case the plaintiffs have adduced evidence to show that the first defendant is the registered proprietor of land held under the Torrens system in suburban Sydney. The terms of the contract to which I have referred provide evidence that he has submitted to the jurisdiction of the courts of New South Wales. The evidence of assets in the jurisdiction and submission to jurisdiction makes this case, in a sense, an easier one than the Humane Society International case.
74 The presence of assets within the jurisdiction means that if the injunction is not complied with by the first defendant, it will be open to the plaintiffs, by following the proper procedures under the Rules, to seek enforcement by way of committal or sequestration. In particular, rule 42.6 of the UCPR applies in respect of "judgments" (defined so as to include interlocutory orders) which require a person to do or abstain from doing any act. The orders sought in the present case would fall within that description. Rule 42.7 makes provision for the procedure to be followed for committal or sequestration.
75 In all those circumstances my conclusion is that the making of an interlocutory injunctive order of the kind sought by the plaintiff would not be futile.
Conclusion
76 My conclusion is that the plaintiffs have made out their case for the injunctive relief sought by the first plaintiff and supported by the second plaintiff.
77 The plaintiffs apply for an order under UCPR 11.5 granting leave to serve the Court's orders on the first defendant in France. There may be some scope for debate as to whether the rule applies where the document to be served is an order of the Court but to avoid any uncertainty, I shall make an order granting that leave.
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