Bulldogs Rugby League Club Ltd & anor v Williams & ors

LEGISLATION CITED : Restraints of Trade Act 1976 (NSW) UCPR Part 11 rule 4

Agar v Hyde (2000) 201 CLR 552 ASIC v Sweeney (No 2) [2001] NSWSC 477 Australian Broadcasting Corporation v O'Neill (2006) 229 ALR 457 Australian Rugby Football League Ltd v Cross, Hodgson J, 27 February 1997, unreported Buckenara v Hawthorn Football Club Ltd [1988] VR 39 Building Insurers' Guarantee Corporation v Eddie [2008] NSWSC 195 Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 Doherty v Allman (1878) 3 App Cas 709 Esso Petroleum Co Ltd v Harpers Garage (Southport) Ltd [1968] AC 269 CASES CITED : Hawthorn Football Club Ltd v Harding [1988] VR 49 Hospital for Sick Children (Board of Governors) v Walt Disney Productions [1968] Ch 52 Humane Society International Inc v Kyodo Senpaku Kaisha Limited (2005) 232 ALR 478 Idameneo (No 123) Pty Ltd v Angel-Honnibal [2002] NSWSC 1214 John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 Lumley v Wagner (1852) 1 De GM&G 604 Oz-US Film Productions Pty Ltd (in liq) v Heath [2000] NSWSC 967 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 Warner Brothers Pictures Incorporated v Nelson [1937] 1 KB 209

Bulldogs Rugby League Club Ltd (First Plaintiff) National Rugby League Ltd (Second Plaintiff) PARTIES : Sonny Bill Williams (First Defendant) Rugby Club Toulonnais SA (Second Defendant) Khoder Nasser (Third Defendant)

N C Hutley SC with A R Moses (First Plaintiff) COUNSEL : J E Marshall SC with Z Steggall (Second Plaintiff) No appearance for Defendants

SOLICITORS : Clayton Utz (First Plaintiff) Kennedys (Second Plaintiff)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY LIST

3944/08 BULLDOGS RUGBY LEAGUE CLUB LTD & ANOR V SONNY BILL WILLIAMS & ORS JUDGMENT (Ex tempore; revised on 11 August 2008) 1 HIS HONOUR: By their amended summons filed on 5 August 2008 the plaintiffs seek declaratory relief, orders in the nature of injunctions and orders for damages. 2 So far as the first defendant is concerned they seek: (a) a declaration that the contract between the first plaintiff and the first defendant, registered with the second plaintiff, is valid and enforceable; (b) a declaration that the first defendant's engagement with the second defendant or any other rugby league or rugby union club during the period 2008-2012 is a breach of clause 3.1(t) of the contract between the first plaintiff and the first defendant dated 16 May 2007; (c) an order that the first defendant be restrained up to and including 31 October 2012 from participating in any football match of any code, other than certain matches referred to in subclause 3.1(s) of the contract that he has entered into, without the prior consent of the first and second plaintiffs; (d) an order that the first defendant be restrained up to that date from playing the game of rugby league football as organised by the second plaintiff with any person, team or organisation save for certain exceptions not presently material; (e) damages. So far as the second and third defendants are concerned, the plaintiffs seek declarations that each of them knowingly induced and assisted the first defendant's breaches of clause 3.1(t) of the contract, and orders restraining them from further assisting the first defendant to breach the contract. The plaintiffs also seek damages against them. 3 There are two applications before the Court today. The first is an application by the plaintiffs, filed by leave in court today, for an order under Part 10 rule 14(2) and (3) of the Uniform Civil Procedure Rules that service of the amended summons, notice of motion of 5 August and affidavits be taken to have been served on the first defendant by 8am on 6 August 2008 (Sydney time), and an order abridging the time for service of those documents on the second defendant to 1i.30am on 6 August 2008 (Toulon time). Additionally, today's notice of motion seeks an order granting leave to the plaintiffs to proceed against the first, second and third defendants in their absence, pursuant to Part 11 rule 4 of the UCPR. 4 There is another notice of motion before the court today. It is the notice of motion filed on 5 August, by which the plaintiffs seek interlocutory injunctive relief against the first defendant. According to the notice of motion, upon the plaintiffs giving their usual undertaking as to damages, the plaintiffs seek an order, until further order: "(a) restraining the first defendant from participating in any football match or matches in any code other than the matches referred to in subclause 3.1(s) of the contract, without the prior written consent of the first and second plaintiffs; and (b) restraining the first defendant from playing the game of rugby league football as organised, administered and approved by the second plaintiff with any person, team or organisation save for the first plaintiff or in a Representative Match or Matches in a Related Competition as defined in the contract, without the prior written consent of the first plaintiff." 5 In fact, at today's hearing the plaintiffs did not seek the relief in paragraph (b) above, but they vigorously pressed their case for the order in paragraph (a). At the end of the hearing they proposed some re-wording, so that the text of the injunction would identify in plain words the exceptions in subclause 3.1(s). 6 In summary, therefore, there are broadly three matters before me for decision on the notices of motion: · first, whether I should make what I might loosely call curative orders with respect to the adequacy of service of the summons, the earlier notice of motion and affidavits; · second, whether I should grant leave to proceed under Part 11 rule 4, as is required in the present circumstances; and · third, whether I should grant an injunction against the first defendant to enforce clause 3.1(t) of the contract. The Parties 7 The first plaintiff is the holder of a licence to field a team in the National Rugby League competition (NRL competition) which is an elite competition for the game of rugby league in Australasia. The entity National Rugby League Limited (NRL) is the second plaintiff in the proceedings. The NRL competition commenced in 1998 as a rugby league competition pursuant to a partnership agreement between News Limited and the Australian Rugby League. The competition is contested by sixteen teams. The NRL markets the game on behalf of the clubs, including the first plaintiff, and is responsible for the competition draw, finals matches and the grand final. NRL matches are played in Australia and New Zealand during the autumn, winter and spring seasons. 8 The first plaintiff engages professional players of the rugby league game to participate in the NRL competition pursuant to a contract styled a "National Rugby League Playing Contract". The relationship between the first plaintiff and its players is one of employer and employee. In 9 The second plaintiff requires that the players employed by the first plaintiff enter into a standard playing contract, that is to say, the National Rugby League Playing contract to which I have referred. The contract entitles the player to remuneration from the employing club and also to be remunerated by what are called "third party agreements", or "TPAs". The National Rugby League Playing Contract is executed by the club, the player and an agent of the player registered with the second plaintiff. The second plaintiff has a system of registering the contracts. Pursuant to the contract, the second plaintiff retains certain intellectual property rights and other rights concerning the use of images of players to promote the game of rugby league. The second plaintiff has a system of registering player's agents. Only registered players' agents are entitled to sign an NRL player registration application. 10 It will be seen from this outline that the contract that is the subject of the application for enforcement is a contract between the first plaintiff and the first defendant. While the second plaintiff is not a party to the contract, nevertheless, in the ways that I have indicated, the second plaintiff has a substantial commercial interest in the enforcement of the contract. When the matter first came before me on 28 July, I acceded to an application by the second plaintiff that it be granted leave to be separately represented at the interlocutory hearing. 11 The first defendant entered into a National Rugby League Playing Contract with the first plaintiff to play rugby league for that club in the NRL in about 2002. At the time he was recruited he was a 16-year-old and, according to the evidence, he was then given guidance by a number of coaches and senior officials of the first plaintiff. 12 In late 2006 or early 2007 the first defendant and the first plaintiff commenced negotiations in relation to a new contract. During those negotiations the first plaintiff was represented by a manager, Mr Gavin Orr. Mr Orr was and is a registered player's agent with the NRL. As a result of the negotiations, the first defendant signed a five year contract with the first plaintiff on 16 May 2007, due to commence on 1 November 2007. A season in the NRL competition is the period commencing on 1 November in one year and expiring on 31 October in the following year. Pursuant to the contract the first defendant was to be paid an annual salary of $400,000 per season. 13 The evidence indicates that, in accordance with the contract, the first plaintiff has paid the first defendant monthly salary instalments up to July 2008, and as I shall indicate, there is evidence of its willingness to continue to do so. In addition to this salary, under the contract the first plaintiff has agreed to use its best endeavours to obtain TPAs for the first defendant, which are estimated to be worth about $50,000 per season. Typically these are sponsorship deals. 14 The contract contains the following relevant clauses: " SECTION 3: OBLIGATIONS OF THE PLAYER 3.1: General Obligations The Player agrees to: … (s) not play the Game with any person, team or organisation save for the Club or in a Representative Match or matches in the Related Competitions except with the prior written consent of the Club; (t) not, without the prior written consent of the Club, which the player acknowledges will only be given with the consent of the NRL, participate in any football match of any code other than matches referred to in subclause 3.1(s); (u) without limiting subclauses 3.1(s) or 3.1(t), not participate in any sporting or leisure activities other than matches approved by the club and the NRL pursuant to subclause 3.1(t) except where: (i) the chances of injury are unlikely; (ii) such will not otherwise limit his ability to perform his obligations under this Agreement; (iii) there is no pre-arranged media coverage; (iv) the Player is not (directly or indirectly) paid; except with the prior written consent of the Club." 15 It will be seen that the application for an interlocutory injunction that is before me for consideration today seeks to enforce clause 3.1(t).

16 The second defendant is Rugby Club Toulonnais SA. It is a public limited company in professional sports registered in France. It is a rugby club based in Toulon, which will compete in a "Top 14" competition in the 2008-2009 season. Fourteen French professional rugby union clubs contest the Top 14 competition, which is organised by Ligue Nationale Rugby. The Top 14 season begins on 26 August and is played over 26 games, concluding in the following May. The second defendant is scheduled to field a team in a trial match on Friday 8 August 2008, that is to say today (French time). 17 It appears from the evidence before me that the second defendant commenced negotiations with the first defendant from about June 2008, with a view to the first defendant playing for the second defendant. According to newspaper reports, the second defendant has recently signed a contract with the first defendant which will require him to play for the second defendant in the 2008-2009 Top 14 competition. 18 The third defendant is Mr Khoder Nasser. The plaintiff's claim against him asserts that at all relevant times he represented himself to the first plaintiff as being the agent/manager of the first defendant. In recent times it appears he has denied that he occupies that role. The plaintiffs assert that it is clear on the material before the Court that the third defendant has aided and abetted the first defendant in the breach of clause 3.1(t) of the contract. I mention those allegations, but of course those matters are not before me for determination today. Indeed, I am informed that the third defendant has not yet been served.

Service of process 19 The first issue for consideration is whether to make orders of a curative kind concerning the service of process and affidavits on the first and second defendants. When this matter was first before me I made orders for abridgement of service in circumstances said to be urgent, and brought the matter back before the Court on 5 August. An application was made on 28 July for orders for substituted service, but it was denied and so the plaintiffs attempted to effect personal service on the first defendant, who had left Australia on 26 July. 20 On 5 August I was informed that those attempts at personal service - which were detailed at some length, particularly in Mr O'Reilly's affidavit of 5 August - had been unsuccessful. I was persuaded that it was appropriate at that stage to make orders for substituted service. I made orders for substituted service on the first defendant. I made orders requiring that substituted service be effected by taking several steps, namely service of copies of the documents at five addresses of the Toulon Rugby Club, leaving copies at the address of the first defendant's property in suburban Sydney, leaving copies at the registered office of his company and sending text messages to what appeared to be his mobile phone number and the mobile phone number of Mr Nasser. 21 Mr O'Reilly's affidavit dated today indicates that this method of substituted service was substantially implemented, but not entirely. My understanding is that everything was done, except that of the five addresses for the Toulon Rugby Club, service of the documents at two of those addresses (addresses at football stadiums) was not effected within the time specified by my orders, and service at a post office box address was not effected quite as directed. 22 So far as the latter is concerned, the documents were posted at the post office connected to that post office box, rather than being left at the post office box, because the process server found that the post office box, which was in the street, was locked. Posting the documents from inside the adjacent post office was sensible in the circumstances. 23 So far as the stadiums are concerned, Mr O'Reilly's evidence, on information and belief, is that the process server attended the two addresses on Tuesday 5 August 2008 Toulon time, but found that the clubhouses at the stadiums were locked and had no letterbox. Rather than leave the documents on a public footpath, the process server left the premises and returned to both clubhouses on the next day, Wednesday 6 August. He found that one of the clubhouses was open on that day, and he handed the documents to the manager of the clubhouse, who said that he would provide the documents to the director of Rugby Club Toulonnais. That was after 8am Sydney time, but it was still on Wednesday 6 August. 24 Something else of significance happened, namely that in addition to substantial compliance with the requirements for substituted service on the first defendant, it appears that eventually personal service was effected on him. Mr O'Reilly's evidence, on information and belief, is that the process server attended the training ground of Toulon Rugby Club with copies of a letter to the first defendant and sealed documents on 7 August, and observed the defendant training with the Toulon Rugby Team. 25 The process server went onto the training pitch and called out for the first defendant that he had documents for him. He threw the documents in the direction of the first defendant. The documents were picked up by a trainer of the Toulon Rugby Team who handed them to the first defendant, and in doing so said, "Williams, c'est pour toi." It seems to me that those events constitute personal service. 26 I am satisfied, in all the circumstances, that the documents that are the subject of the orders for substituted service have been adequately brought to the attention of the first defendant, and therefore I will make the "curative" order sought. The orders for substituted service were substantially complied with by the required time of 8 a.m. on Wednesday 6 August. As to the second defendant, the evidence is that it was served according to French law on the morning of 6 August, just before 11:30 a.m. Toulon time. As no substantive interlocutory relief is sought against the second defendant, it is appropriate to extend the time for service to the time of actual service. It therefore seems to me that the appropriate orders to make are those in paragraphs 2 and 3 of the notice of motion of 8 August. Leave under Part 11 rule 4 27 The second issue for consideration is the application in the notice of motion of 8 August for leave under Part 11 rule 4 of the Uniform Civil Procedure Rules. Part 11 rule 4 is in the following terms: "(1) If originating process is served on a defendant outside Australia and the defendant does not enter an appearance, the plaintiff may not proceed against the defendant except by leave of the Supreme Court. (2) a motion for leave under subrule (1) may be made without serving a notice of motion on the defendant." 28 None of the three defendants has yet entered an appearance or sought to appear, and the notice of motion seeks leave to proceed against each of them. Obviously there will be no grant of leave at this stage against the third defendant, who has not been served. 29 It is worth noting that subrule 11.4 (2) allows the application for leave to proceed without serving that application on a defendant. The significance of this is explained by the judgment of Gaudron J, McHugh J, Gummow J and Hayne J in Agar v Hyde (2000) 201 CLR 552 at [53]. Their Honours said that in circumstances where the application is made without notice to a defendant, there will be no occasion to consider any question about the strength of the plaintiff's claim. Other cases - and Agar v Hyde itself - indicate that there are essentially four matters to consider in an application for leave under rule 11.4. 30 The first matter is whether the defendant has been properly served. There is authority for the proposition that proper service under rule 11.4 and its predecessor in the Supreme Court Rules can be affected by substituted service: ASIC v Sweeney (No 2) [2001] NSWSC 477 at 40; Building Insurers' Guarantee Corporation v Eddie [2008] NSWSC 195. Substituted service was effected on the first defendant in this case. However, it is unnecessary to rely on substituted service because, as Mr O'Reilly's affidavit of 8 August shows, the first defendant was personally served on 5 August with copies of the amended summons, the notice of motion of 5 August and the affidavits. Because of subrule (2), it is unnecessary to serve the notice of motion of 8 August. The evidence also indicates that the second defendant has been properly served in accordance with French law. 31 The second question to be addressed is whether the claims in the amended summons fall within Schedule 6 of the UCPR. I agree with the submissions made by Senior Counsel for the first plaintiff that the claims in this case fall within three paragraphs of Schedule 6, namely: (a) where the proceedings are founded on a cause of action arising in New South Wales; (c) if the subject matter of the proceedings is a contract, where the contract is made in New South Wales or governed by the law of New South Wales; and (h) where the proceedings are proceedings in respect of which the person to be served has submitted or agreed to submit to the jurisdiction of the Court. 32 The last matter is of some importance here. Under clause 28.1 of the contract, the agreement is said to be governed by the law of the state of New South Wales and it is said that the parties submit to the exclusive jurisdiction of the courts of this State. By clause 18.2 (c) the Player, the first defendant in this case, has acknowledged that the Club, the first plaintiff, has advised him to seek, and given him sufficient time to seek, independent legal advice about the agreement before signing it. Those provisions read together constitute evidence of submission to the jurisdiction of the courts of New South Wales. 33 The third matter to consider on an application for leave is whether the plaintiff has an arguable case, in the sense that would be sufficient to survive an ordinary application for summary judgment: see Agar v Hyde at [51] and [56] -[61]. I shall address the question of "arguable case" later in these reasons. 34 The fourth matter to be considered is whether the local forum is "clearly inappropriate" and there is some other forum which is more appropriate. Clause 28.1 seems to me to make it clear that the Supreme Court of New South Wales is not only an appropriate forum, but obviously the most appropriate forum for consideration of relief based on allegations of breach of this contract. 35 My conclusion therefore is that the grounds have been made out for the granting of leave under rule 11.4 with respect to the first and second defendants, and I shall make orders accordingly. Application for interlocutory injunction 36 I turn now to the first plaintiff's application for an interlocutory injunction against the first defendant. To obtain such relief pending a final hearing, the first plaintiff must be able to demonstrate three things; namely that there is a serious question to be tried, that the applicant would suffer irreparable harm for which damages would not be adequate compensation, and that the balance of convenience weighs in favour of the granting of relief: Australian Broadcasting Corporation v O'Neill (2006) 229 ALR 457. Serious Question to be Tried 37 The evidence before the Court satisfies me that the first defendant has failed to attend to his contractual responsibilities since 25 July 2008, and departed Australia on 26 July 2008. The evidence provides, at the very least, reasonable cause for apprehension that the first defendant does not intend to play for the first plaintiff, although he has agreed to do so until 31 October 2012. The evidence equally provides a basis for reasonable apprehension that he intends to breach clause 3.1(t) of the Contract by playing rugby for the second defendant. Indeed, if the newspaper reports that are in evidence are correct, there is a high probability that the first defendant intends to breach that provision of his contract. 38 The departure card tendered in evidence indicates that the first defendant stated the purpose of his travel was for business and that he intended to spend a predominant period of his time overseas - estimated at eight months - in France. There is evidence that the first defendant was in negotiations with the second defendant, and there is some indirect evidence that he has entered into a contract to play rugby for the second defendant, during the very period in which he is meant to play rugby league for the first plaintiff. Further, there is some evidence that the first defendant intends to play for the second defendant in a rugby game this evening. 39 The evidence on those matters needs to be coupled with Mr O'Reilly's evidence about his attempts at service. It was not submitted to me that the first defendant had intentionally evaded service up until 5 August, but Mr O'Reilly's evidence indicates that the first defendant applied for a visa to France from London without attending the French Consulate, where a process server was waiting for him, and that he moved from place to place whilst in London. 40 I agree with the submission made on behalf of the plaintiffs that the irresistible inference from these various matters is that the first defendant intends to play rugby for the second defendant tonight in breach of clause 3.1(t) of the contract. 41 In those circumstances, there is clearly a serious question to be tried as to the plaintiff's claim to entitlement to enjoin that breach. Provided that the contract is valid, there is no suggestion that there has been any grant of permission by the first plaintiff, or for that matter by the second plaintiff, and nothing in the facts would suggest that the first plaintiff has accepted the first defendant's repudiatory conduct as bringing the contract to an end. Indeed, the first plaintiff clearly maintains that the contract remains on foot and has acted very promptly after the first defendant's departure. 42 As to the question of validity of clause 3.1(t), I have received submissions that set out at some length the law concerning restraints of trade, both under the common law and under the Restraints of Trade Act 1976 (NSW) (as the contract in this case is governed by New South Wales Law). It is unnecessary, in my view, to expound that law in any detail here. There is a convenient statement of the relationship between the common law of restraint of trade and the statutory law under the 1976 Act in the judgment of Brereton J in John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 at [6], [25] and [26], upon which I am content to rely: "6. Although at common law a restraint of trade is contrary to public policy and void unless it is justified by the special circumstances of the particular case (for which purpose it is sufficient justification that the restriction is reasonable having regard to the interests of the parties concerned and in reference to the interests of the public, so that while affording adequate protection to the party in whose favour it is imposed, it is not injurious to the public) [ Nordenfelt v Maxim Nordenfelt Guns & Ammunition [1894] AC 535, 565; Herbert Morris Ltd v Saxelby [1916] 1 AC 688, 706, 707; Lindner v Murdock's Garage (1950) 83 CLR 628, 653], in New South Wales a restraint is valid to the extent to which it is not against public policy, even if not in severable terms [ Restraints of Trade Act , 1976 (NSW) s 4(1); Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449, [26]-[27]]. The effect of the Restraints of Trade Act is that, in New South Wales, one approaches this type of case by determining, first, whether the alleged breach (independently of public policy considerations) does or will infringe the terms of the restraint properly construed; secondly, whether the restraint in its application to that breach is against public policy; and thirdly, if it is not, then in its application to the alleged infringing conduct, the restraint is valid unless the court makes an order under Restraints of Trade Act , s 4(3) [ Orton v Melman [1981] 1 NSWLR 583; Woolworths Limited v Olson [2004] NSWCA 372, [42]]. That is because the effect of the Restraints of Trade Act , s 4(1), is to require that, for the purpose of determining the validity of a restraint, attention be focussed on the actual or apprehended breach, rather than on imaginary or potential breaches." "25. The second step is to consider whether each restraint, in its application to the alleged breach, is against public policy. While the same general principle applies in all cases of restraint of trade, a stricter and less favourable view is taken in respect of covenants in restraint of trade between employer and employee than in commercial agreements for sale of goodwill [ Nordenfelt , 566; Mason v Provident Clothing & Supply Co Limited [1913] AC 724, 731, 738; Herbert Morris Ltd v Saxelby ; Geraghty v Minter (1979) 142 CLR 177, 185; Woolworths Limited v Olson , [38]; J D Heydon, The Restraint of Trade Doctrine , 2nd Ed, pp68-69]. An employer is not entitled to be protected against mere competition, and the legitimate interests of an employer which may be the subject of protection by covenant are in the nature of proprietary interests [ Vandervell Products Ltd v McLeod [1956] RPC 185, 192; Tank Lining Corp v Dunlop Industrial Pty Ltd (1982) 140 DLR (3d) 659, 664], including the employer's trade secrets and confidential information, and the employer's goodwill including customer connection." "26. In this context, there are two main questions: first , does the employer have a legitimate protectable interest, and secondly , is the restraint no more than reasonable for the protection of that interest. The validity of a restraint is judged as at the time at which the contract is made, by reference to what the restraint entitled or required the parties to do, rather than what they intend to do or have actually done [ Nordenfelt , 574; Commercial Plastic Limited v Vincent [1964] 3 WLR 820, 829; Heydon, pp37-40; Lindner v Murdock's Garage ; Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337, 334; Woolworths Limited v Olson, 372, [40]]." 43 Applying the principles stated by his Honour in these passages, it seems to me that there is at least a serious question to be tried based on the proposition that clause 3.1(t) is valid and enforceable in its terms.

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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