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[2026] NSWCA 182
respondent. Leave to appeal refused with costs; the Court did not determine the matters raised in the Respondent’s Notice of Contention.
The Court of Appeal refused the clubs permission to challenge a permanent stay of their preliminary discovery application. It read the licence agreements as containing a broad, additional promise not to bring proceedings outside CAS about matters connected with the agreements or NBL participation. The clubs’ application fell within that promise even though CAS had no equivalent preliminary discovery procedure. The Court regarded that absence, without stronger prejudice or public-policy considerations, as insufficient to justify refusing the stay.
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Illawarra Basketball Club Pty Ltd and RC Aussie Hoops Pty Ltd, as trustee for the RC Aussie Hoops Unit Trust, participated in the National Basketball League (NBL). Their participation was governed by licence agreements with National Basketball League Pty Ltd (NBLCO). Those agreements included a tiered dispute resolution process and a promise concerning where proceedings could be brought.
The clubs applied in the Supreme Court of New South Wales for preliminary discovery under r 5.3 of the Uniform Civil Procedure Rules 2005 (NSW). The rule allows the court, in defined circumstances, to order discovery where an applicant may have a claim but cannot decide whether to bring it without information held by a prospective defendant: [3]. The clubs were considering potential claims concerning their agreements and NBL participation, including contract, misleading or deceptive conduct, fiduciary or directors’ duties, and competition law issues: [6]-[7]. Those were potential claims, not claims whose merits the Court of Appeal decided.
The licence agreements’ cl 14 set out a grievance procedure. Clause 14.2 provided for negotiation, mediation and, if those steps did not resolve the matter, referral to arbitration before the Court of Arbitration for Sport (CAS). It described the process as being “to obtain a resolution to any Grievance or any other matter regarding this Agreement or their participation in the NBL”: [14]. “Grievance” was broadly defined, including disputes arising out of or relating to NBL participation and a non-exhaustive list of documents and other matters: [15]-[21].
Clause 14.3 provided that the dispute procedure would be followed and the CAS decision would be final and binding. It then stated: “It is further agreed that no party will institute or maintain proceedings regarding a Grievance or any other matter regarding this Agreement or their participation in the NBL in any court or tribunal other than CAS”: [14].
The primary judge concluded that the preliminary discovery application did not fall within the arbitration agreement for the purposes of the International Arbitration Act 1974 (Cth) or the Model Law provisions relied on by NBLCO. The application was preliminary, there was not yet a dispute requiring arbitration, and the parties agreed CAS had no equivalent procedure: [10], [27]. Nevertheless, the primary judge permanently stayed the application under s 67 of the Civil Procedure Act 2005 (NSW), holding that it breached the separate negative covenant in cl 14.3: [9], [28]-[29].
The clubs sought leave to appeal. The Court of Appeal refused leave with costs. It did not determine the Respondent’s alternative grounds in its Notice of Contention: [57]-[58].
The central question was whether the second sentence of cl 14.3 was merely an expression of the parties’ promise to arbitrate disputes, or a broader, additional promise not to bring proceedings elsewhere. The Court accepted that cl 14.3 had to be read in the context of cl 14 and the entire agreement, consistent with the interpretive approach stated in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd: [39]. But contextual interpretation did not overcome the wording “It is further agreed”. Bell CJ considered that phrase indicated that the second sentence did something “more than and different to” the first sentence: [39].
The Court also focused on the distinction between proceedings “to resolve” a dispute and proceedings “regarding” that dispute or another matter connected with the agreement or NBL participation. The second sentence used “regarding” twice and covered both “a Grievance” and “any other matter”: [40]. That wording was not confined to proceedings which themselves determined a dispute through arbitration. The preliminary discovery proceeding sought information concerning potential claims connected with the clubs’ agreements and NBL participation. It therefore comfortably fell within the second sentence’s description: [40].
The Court regarded the covenant as a promise not to sue other than in CAS, rather than a covenant not to sue without qualification. That distinction mattered to the Applicants’ argument that the primary judge had misapplied Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd. Bell CJ concluded that Francis Travel was not inapposite because the covenant was directed to preventing proceedings between the parties in forums other than CAS, insofar as legally possible: [49]. The Court also noted the breadth of the “Grievance” definition and the additional wording in cl 14.3: [48]-[49].
The absence of CAS preliminary discovery was the main claimed source of prejudice. The Court considered that UCPR r 5.3 did not confer a substantive right to obtain discovery. It provided an opportunity to apply for a discretionary procedural order, and the application did not determine the merits of any eventual claim: [42]-[43]. The Court cited authorities describing preliminary discovery applications as summary and procedural, rather than as a determination of substantive rights: [43].
The Court accepted that strong reasons can justify refusing a stay. Akai Pty Ltd v Peoples Insurance Company was an example in which an English choice of law and jurisdiction arrangement risked depriving an insured party of the benefit of the Insurance Contracts Act 1984 (Cth): [45]-[46]. The present case was different. The Court identified no comparable public policy or consumer-protection consideration. It said that no equivalent CAS procedure, on its own, was not enough to establish strong reasons: [46]. Ordinary procedural or forensic inconvenience resulting from a forum bargain was generally a direct consequence of that bargain: [44].
The Court also rejected the clubs’ reliance on non-exclusive jurisdiction clauses naming Victorian courts. Such clauses can serve purposes such as interim relief or enforcement of awards, and do not themselves displace the cl 14.3 covenant: [50]. The existence of a court’s jurisdiction and the contractual question whether a party has promised not to bring proceedings there are distinct matters. The Court’s conclusion was that the jurisdiction clauses did not assist the Applicants on this application.
Finally, leave to appeal was not justified. The applicable criteria were an issue of principle, a question of public importance, or reasonably clear injustice beyond what was merely arguable: [52]. No issue of principle or public importance was identified: [53]. Because the stay concerned a procedural application rather than substantive rights, the higher threshold applicable to an interlocutory procedural decision was relevant: [55]-[56]. The Court found no error in the construction of cl 14.3 and no reasonably clear injustice, so refused leave: [51]-[57].
The judgment presents its interpretation as an application of existing interpretive and appellate principles, rather than a change to the law. It recognises the broad and liberal approach to dispute resolution clauses associated with Francis Travel, based on the commercial rationale of resolving related disputes in one forum: [19]-[20]. It also applies the orthodox method of reading contractual words in their context and as part of the agreement as a whole: [39].
The judgment’s contribution is its application of those principles to a clause containing both an arbitration process and a separate, expressly “further” promise not to institute or maintain proceedings outside CAS. The Court held that the second promise could reach preliminary proceedings even where those proceedings were not themselves within the arbitration agreement: [39]-[41]. On this wording, the negative covenant’s scope was broader than the arbitration obligation.
The decision also restates the limited weight ordinarily given to the loss of local procedural benefits when parties have chosen another forum. It does not say that procedural differences can never justify refusing a stay. Rather, it indicates that the absence of an equivalent procedure will not, without significant prejudice or another strong reason, necessarily outweigh a broad contractual forum commitment: [44]-[46].
On leave to appeal, the judgment applies the established criteria for interlocutory appeals and the higher threshold for a procedural decision: [52]-[56]. It does not purport to alter those criteria. The outcome is fact- and wording-sensitive. The Court’s reasoning turned on the specific language of cl 14.3, including “further agreed”, “proceedings regarding”, and “any other matter”: [39]-[41].
At [39], Bell CJ said the words “It is further agreed” meant the second sentence was “doing something more than and different to the first sentence”. In plain English, the court treated the no-court proceedings promise as an additional contractual commitment, not simply another way of saying that disputes must be arbitrated.
At [40], the Court contrasted proceedings “to resolve” a matter with proceedings “regarding” it. It found the preliminary discovery application was “proceedings regarding” matters connected with the licence agreements or NBL participation. In practical terms, the covenant could cover a preliminary step about a potential dispute, not only a final hearing deciding the dispute itself.
At [44], the Court said forensic inconvenience resulting from a forum clause is generally a direct consequence of the bargain. This did not mean all inconvenience is irrelevant. It meant that a party’s loss of a procedural advantage available in a local court did not, by itself, establish a strong reason to avoid the agreed forum.
At [46], the Court distinguished the claimed loss of preliminary discovery from the statutory-protection issue in Akai. It found no identified matter of high public policy or overriding consumer protection that outweighed the parties’ contractual choice. The judgment’s point is not that preliminary discovery has no value, but that the procedural opportunity under r 5.3 was not treated as equivalent to the substantive statutory protection involved in Akai.
At [50], the Court explained why the non-exclusive jurisdiction clauses did not change its conclusion. Such clauses can coexist with arbitration provisions and can facilitate interim measures or enforcement. Their presence did not, in the Court’s view, cancel the specific promise in cl 14.3.
Leeming JA agreed, observing at [59] that the drafting was inattentive to syntax and grammar, but that this did not prevent the Court from identifying the broad scope of the clause and the still broader promise not to sue outside CAS. Griffiths AJA agreed with Bell CJ: [60].
The reasoning is most directly engaged where a contract contains both an arbitration clause and a separate negative covenant preventing proceedings in other courts or tribunals. The wording matters. This judgment focused on an additional promise introduced by “It is further agreed”, applying to proceedings “regarding” a Grievance or “any other matter” connected with the agreement or the parties’ participation in the NBL: [39]-[41].
The case is particularly relevant where a party seeks preliminary discovery or another procedural step in court before commencing substantive proceedings, and argues that the step is outside the arbitration clause because no dispute is yet being referred for determination. The Court’s analysis shows that exclusion from the arbitration clause does not necessarily answer the distinct question whether a broader covenant not to sue applies: [27], [39]-[41].
The judgment is also relevant where a party argues that the chosen arbitral forum lacks a procedure available in court. The court’s assessment will depend on the nature of the lost procedure and the prejudice shown. Here, the Court emphasised the discretionary, procedural character of preliminary discovery and the absence of a demonstrated strong reason beyond the lack of an equivalent CAS process: [42]-[46].
The decision should not be read as deciding the effect of every arbitration clause, every non-exclusive jurisdiction clause, or every covenant not to sue. The precise text, contractual setting, the nature of the proposed proceedings, and any substantial prejudice remain important. The Court itself recognised that strong reasons may lead to refusal of a stay in an appropriate case: [45]-[46].
The judgment contains no account of later courts considering or applying Illawarra Basketball Club Pty Ltd v National Basketball League Pty Ltd. Accordingly, the source does not establish any subsequent treatment, adoption, distinction or criticism of this decision.
The judgment does identify authorities that informed its reasoning. Francis Travel was applied to the interpretation of the forum covenant, while Raguz and several English authorities were distinguished in considering whether similar wording was confined to appeals from arbitral awards: [41], [49]. Incitec and Global Partners were relied on in relation to forum clauses, inconvenience and strong reasons for refusing a stay: [44]-[45]. Owners of Strata Plan No 100777 v Ausbao was applied on the higher leave threshold for an interlocutory decision of a procedural character: [55]. These are the relationships described by this judgment, not evidence of later treatment of Illawarra itself.
The Court did not decide how cl 14.3 would apply to every possible court proceeding connected with the licence agreements. It held that this preliminary discovery application was covered by this particular wording. The boundary of “proceedings regarding” a matter, especially for proceedings with a more remote connection to NBL participation, was not explored beyond the facts before the Court: [40].
The judgment also did not determine how a different clause, lacking the words “It is further agreed” or the broad phrase “any other matter”, should be construed. Its reasoning depends substantially on those textual features and on the exceptionally broad definition of “Grievance”: [18]-[21], [39]-[41].
The Court did not set out a complete test for what degree of procedural disadvantage amounts to “true and significant prejudice” or a strong reason to refuse a stay. It contrasted the circumstances with Akai and concluded that the absence of CAS preliminary discovery was insufficient on the arguments presented: [45]-[46]. The weight of other kinds of lost procedural protection would require consideration in their own context.
Nor did the Court decide the merits or likely availability of the potential substantive claims. It noted that no submissions had been made about whether the Applicants could meet the five criteria for preliminary discovery under r 5.3: [46]. The application was not a determination of entitlement to damages or other final relief.
Finally, the Respondent’s Notice of Contention was left unresolved. The Court expressly considered it unnecessary to determine those grounds after refusing leave: [58]. The judgment therefore does not establish whether the alternative statutory stay arguments or the Respondent’s argument about entitlement under r 5.3 would have succeeded.
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Illawarra Basketball Club Pty Ltd v National Basketball League Pty Ltd [2026] NSWCA 182
Hearing dates: 22 July 2026
Date of orders: 03 September 2026
Decision date: 03 September 2026
Before: Bell CJ at [1];
Leeming JA at [59];
Griffiths AJA at [60].
Decision: Leave to appeal refused with costs.
Catchwords: APPEALS — Application for leave — Principles governing — need to establish a reasonably clear injustice beyond that which was merely arguable — where primary judge ordered permanent stay of proceedings — whether arguable case that promise not to sue other than in the Court of Arbitration for Sport applied to application for preliminary discovery where no equivalent procedure available in Court of Arbitration for Sport
CIVIL PROCEDURE — Preliminary discovery — To identify potential cause of action — whether, although held to fall outside the scope of an arbitration clause, application was within scope of promise not to sue other than in Court of Arbitration for Sport — stay ordered notwithstanding that preliminary discovery not available in Court of Arbitration for Sport
COMMERCIAL ARBITRATION — Arbitration agreement — where primary judge stayed application for preliminary discovery on basis that promise not to sue other than in the Court of Arbitration for Sport applied to that application — whether primary judge erred — whether scope of negative covenant exceeded scope of arbitration agreement
Legislation Cited: Civil Procedure Act 2005 (NSW) s 67
Commercial Arbitration Act 1984 (NSW) s 38(4)
Insurance Contracts Act 1984 (Cth)
International Arbitration Act 1974 (Cth) s 7(2), Sch 2 art 8
Supreme Court Act 1970 (NSW) s 101(2)(e)
Uniform Civil Procedure Rules 2005 (NSW) r 5.3
Cases Cited: Akai Pty Ltd v Peoples Insurance Company (1996) 188 CLR 418; [1996] HCA 39
Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61
Be Financial Pty Ltd as trustee for Be Financial Operations Trust v Das [2012] NSWCA 164
Cheng v Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118
Collier v Lancer (No 2) [2013] NSWCA 186
Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577; [1954] HCA 62
Essex County Council v Premier Recycling Ltd [2006] EWHC 3594
Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53
Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160
Global Partners Fund Limited v Babcock & Brown Limited (in liq) (2010) 79 ACSR 383; [2010] NSWCA 196
Halford v Price (1960) 105 CLR 23; [1960] HCA 38
House v The King (1936) 55 CLR 499; [1936] HCA 40
Incitec Ltd v Alkimos Shipping Corporation (2004) 138 FCR 496; [2004] FCA 698
Jaycar Pty Ltd v Lombardo [2011] NSWCA 284
Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184
Mineralogy Pty Ltd v CITIC Ltd [2024] WASCA 168
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
National Iranian Oil Company v Crescent Petroleum Company International Limited [2022] EWHC 1645 (Comm)
nearmap Ltd v Spookfish Pty Ltd [2014] NSWSC 1790
O’Connor v O’Connor [2018] NSWCA 214
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; [1988] HCA 32
Owners of Strata Plan No 100777 v Ausbao (286 Sussex St) Pty Ltd [2026] NSWCA 61
Pfizer Island Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48
Press v iSam Securities (UK) Ltd [2024] NSWCA 260
Qantas Airways Ltd v Rohrlach [2021] NSWCA 48
Raguz v Sullivan (2000) 50 NSWLR 236; [2000] NSWCA 240
Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206
Shell Egypt West Manzala GmbH v Dana Gas Egypt Limited [2009] EWHC 2097 (Comm)
The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26
Category: Principal judgment
Parties: Illawarra Basketball Club Pty Ltd (ACN 640 302 610) (First Applicant)
RC Aussie Hoops Pty Ltd as trustee for RC Aussie Hoops Unit Trust (ACN 619 010 285) (Second Applicant)
National Basketball League Pty Ltd (ACN 164 187 937) (Respondent)
Representation: Counsel:
D McLure SC, O Jones SC (Applicants)
P Herzfeld SC, T O’Brien, H Ryan (Respondent)
Solicitors:
Johnson Winter Slattery (Applicants)
Arnold Bloch Leibler (Respondent)
File Number(s): 2025/491694
Publication restriction: N/A
[This headnote is not to be read as part of the judgment]
Illawarra Basketball Club Pty Ltd and RC Aussie Hoops Pty Ltd as trustee for the RC Aussie Hoops Unit Trust (the Applicants) operate teams in the National Basketball League (NBL).
Two licence agreements between each Applicant and the National Basketball League Pty Ltd (the Respondent), which operates the NBL, governed the terms of the Applicants’ participation in the NBL. Clause 14.2 of those agreements provided for a tiered dispute resolution procedure culminating in arbitration before the Court of Arbitration for Sport (CAS) “to obtain a resolution to any Grievance or any other matter regarding [the agreements] or [the Applicants’] participation in the NBL”. “Grievance” was exceptionally broadly defined.
Clause 14.3 of the licence agreements provided that the procedure in cl 14.2 will be followed and that the decision of the CAS will be “final and binding”. Clause 14.3 also provided that it is “further agreed” that no party will “institute or maintain proceedings regarding a Grievance or any other matter regarding [the Agreements] or [the Applicants’] participation in the NBL in any court or tribunal other than CAS”.
The Applicants applied for preliminary discovery pursuant to r 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) against the Respondent. No equivalent procedure was available in the CAS. A permanent stay of proceedings was sought including pursuant to s 67 of the Civil Procedure Act 2005 (NSW).
The primary judge, although holding that the preliminary discovery application did not fall within the scope of the arbitration clause in the licence agreements, nevertheless permanently stayed the preliminary discovery application on the basis that the application had been made in breach of the negative covenant contained in cl 14.3 of the licence agreements. The Applicants applied for leave to appeal to this Court.
The Court (Bell CJ, Leeming JA and Griffiths AJA agreeing) held, refusing leave to appeal:
Cheng v Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118; Jaycar Pty Ltd v Lombardo [2011] NSWCA 284; Be Financial Pty Ltd as t**rustee for Be Financial Operations Trust v Das [2012] NSWCA 164; The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206; PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48, cited.
Owners of Strata Plan No 100777 v Ausbao (286 Sussex St) Pty Ltd [2026] NSWCA 61, applied.
Mineralogy Pty Ltd v CITIC Ltd [2024] WASCA 168; Collier v Lancer (No 2) [2013] NSWCA 186, cited.
Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160, applied.
Raguz v Sullivan (2000) 50 NSWLR 236; [2000] NSWCA 240; Essex County Council v Premier Recycling Ltd [2006] EWHC 3594; Shell Egypt West Manzala GmbH v Dana Gas Egypt Limited [2009] EWHC 2097 (Comm); National Iranian Oil Company v Crescent Petroleum Company International Limited [2022] EWHC 1645 (Comm), distinguished.
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited.
Incitec Ltd v Alkimos Shipping Corporation (2004) 138 FCR 496; [2004] FCA 698; Global Partners Fund Limited v Babcock & Brown Limited (in liq) (2010) 79 ACSR 383; [2010] NSWCA 196, applied.
Akai Pty Ltd v Peoples Insurance Company (1996) 188 CLR 418; [1996] HCA 39, distinguished.
O’Connor v O’Connor [2018] NSWCA 214; Pfizer Island Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193; Press v iSam Securities (UK) Ltd [2024] NSWCA 260; Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, cited.
BELL CJ: This is an application pursuant to s 101(2)(e) of the Supreme Court Act 1970 (NSW) for leave to appeal from an interlocutory decision of Peden J (the primary judge) to order a permanent stay of proceedings: Illawarra Basketball Club Pty Ltd v National Basketball League Pty Ltd [2025] NSWSC 1111 (PJ or primary judgment).
The proceedings the subject of the stay were not for substantive relief but, rather, comprised an application by Illawarra Basketball Club Pty Ltd (Illawarra) and RC Aussie Hoops Pty Ltd as trustee for the RC Aussie Hoops Unit Trust (together, the Applicants) for preliminary discovery pursuant to r 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
Rule 5.3 of the UCPR relevantly provides:
“(1) If it appears to the court that—
(a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and
(b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and
(c) inspection of such a document would assist the applicant to make the decision concerned,
the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person’s possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief.
….”
The Applicants are clubs that participate in the National Basketball League (NBL) which is run by National Basketball League Pty Ltd (NBLCO), the Respondent to this appeal.
As explained by the primary judge at PJ [2]:
“The clubs each have an almost identical licence agreement with NBLCO, which provides the terms on which the clubs can field a basketball team in the NBL. The licences prescribe in detail the parties’ rights and obligations, including the licence conditions, the parties’ general obligations, the terms for exploitation of commercial rights associated with the NBL, marketing, media and communications, and equalisation and revenue sharing arrangements. A condition precedent of each licence is entry into a Revenue Share Agreement (RSA), which the clubs have done. The RSA requires NBLCO to share some of its revenue with the clubs, so long as they have a licence agreement with NBLCO.”
NBLCO was named as respondent to the preliminary discovery application. The primary judge recorded, based on the evidence before her, that the clubs are considering bringing claims against NBLCO and Larry Kestelman, a director and the ultimate beneficial owner of NBLCO.
For the purposes of the preliminary discovery application, the potential claims identified by the clubs are summarised at PJ [4] and include:
“claims for breach of contract in respect of various terms and alleged implied terms in the licences, the RSA, and a Letter Agreement between [Illawarra] and NBLCO, misleading or deceptive conduct, breach of fiduciary duty or directors’ duties in respect of Mr Kestelman and knowing assistance in respect of NBLCO, and breaches of the Competition and Consumer Act 2010 (Cth). One of the plaintiffs is also contemplating seeking a declaration that certain aspects of the licence are void as an unlawful restraint of trade.”
Before the preliminary discovery application was heard, the Respondent sought a stay of that application on alternative bases.
The primary judge ultimately ordered a permanent stay of the proceedings pursuant to s 67 of the Civil Procedure Act 2005 (NSW) (CPA) which provides that “[s]ubject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day.” The basis for her Honour’s decision was that the preliminary discovery application had been brought in breach of a contractual promise not to sue other than in the Court of Arbitration for Sport (CAS), the promise being contained in the standard-form “NBL Licence Agreement” (licence agreement) between each Applicant and the Respondent: see further at [14] below.
The primary judge rejected two alternative bases for the grant of a stay urged by the Respondent, namely s 7(2) of the International Arbitration Act 1974 (Cth) (IAA) and art 8 of the UNCITRAL Model Law on International Commercial Arbitration (Model Law). In relation to the application based on the IAA, her Honour held that the preliminary discovery proceedings did not involve the “determination” of a “matter … capable of settlement by arbitration” before the chosen arbitral body, namely the CAS. Her Honour refused to order a stay pursuant to art 8 of the Model Law because she held that the application was not an “action … brought in a matter which is the subject of an arbitration agreement”.
The Applicants seek leave to appeal from the decision to order the permanent stay and accept that that was a discretionary decision requiring the establishment of House v The King error: see (1936) 55 CLR 499 at 504-505; [1936] HCA 40 (House v The King). The Respondent opposes leave to appeal but, if leave is granted, seeks by way of Notice of Contention to challenge the refusal to order a stay pursuant to IAA s 7(2) or Model Law art 8 or on the ground that the Applicants were not “entitled to make a claim for relief from the court” within the meaning of UCPR r 5.3 because it was not seriously in contest that the arbitration agreement in each licence agreement would preclude any substantive claims being brought curially.
For the reasons that follow, I would refuse leave to appeal with costs.
At the heart of this case is the dispute resolution clause in the licence agreement between each of the clubs and Respondent that governs the terms on which each team may participate in the NBL.
Clause 14 of the licence agreements provides.
“14 Grievance procedure
14.1 In the event of a Grievance between the parties (including, but not limited to, any Grievance arising out of the review process in clause 16), the affected party may give the other a written notice setting out the material particulars of the Grievance. Notwithstanding the existence of the Grievance, the parties shall continue to perform their obligations under this Agreement.
14.2 Subject to clauses 14.4, 14.5 and any other provision of this Agreement, the parties agree to the following process to obtain a resolution to any Grievance or any other matter regarding this Agreement or their participation in the NBL:
(a) Each party shall appoint a person with authority to negotiate and reach settlement (‘Representative’). The parties[’] Representatives shall meet and attempt to negotiate an agreed resolution in good faith within 10 Business Days of the notification of the Grievance by one party to the other.
(b) Failing agreement under clause 14.2(a), the parties shall appoint a person (who is agreeable to the parties) to mediate the dispute within seven days. The parties shall agree to the manner in which the mediation shall be conducted however, failing agreement, the mediator shall determine the manner in which it shall be conducted.
(c) Failing agreement under clause 14.2(b), and following further notice being given to the other party, either party may refer the matter to arbitration by the Court of Arbitration for Sport (‘CAS’) for determination according to the procedures set out in the Code of Sports Related Arbitration.
14.3 The parties agree that the procedure in clause 14.1 shall be followed and that the decision of CAS shall be final and binding. It is further agreed that no party will institute or maintain proceedings regarding a Grievance or any other matter regarding this Agreement or their participation in the NBL in any court or tribunal other than CAS.
14.4 All disciplinary and other incidents that occur during an NBL Game, whether in relation to a Player, Key Personnel or other member of Club staff are governed by the Rules and Regulations, the Code of Conduct, the CBA and the Operations Manual.
14.5 All matters relating to anti-doping are governed by the Anti-Doping Code in the Rules and Regulations.” (emphasis added)
The parties agree that the reference to “clause 14.1” in cl 14.3 should be a reference to “clause 14.2” and I proceed on that basis. That is a course which would be supported by Fitzgerald v Masters (1956) 95 CLR 420 at 426-427; [1956] HCA 53 in any event.
“… a dispute arising out of or in relation to the Club’s participation in the NBL, including a dispute about the breach, termination, validity, or subject matter of:
(a) this Agreement;
(b) the Rules and Regulations;
(c) the Player Contract System;
(d) the Collective Bargaining Agreement;
(e) the Standard Player Contract;
(f) the Code of Conduct; or
(g) any other matter.
For the avoidance of doubt, where any of these documents includes a procedure for the resolution of disputes (for example, the Rules and Regulations will include a tribunal procedure), such procedures will be paramount and the Grievance Procedure will not supersede those procedures.” (emphasis added)
A number of matters may immediately be noted about this definition.
First, the defined term “Grievance” is central to an understanding of the multi-tiered operation of cl 14. That clause sets out the procedure for the resolution of a Grievance.
Second, the definition of “Grievance” is extremely broad. As a term clearly intended to be read into cl 14, it forms part of the dispute resolution clause: Halford v Price (1960) 105 CLR 23 at 28 (Dixon CJ, Menzies and Windeyer JJ agreeing), 32-33 (Fullagar J); [1960] HCA 38.
Third, as is generally accepted, the contemporary approach to the interpretation of dispute resolution clauses is to afford them a broad and liberal meaning on the basis that the parties must be presumed, as a matter of commercial commonsense, to want to resolve all aspects of their dispute in the one forum: Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165 (Francis Travel). See, eg Qantas Airways Ltd v Rohrlach [2021] NSWCA 48 at [64]-[75].
Fourth, irrespective of the work of any presumption or accepted broad and liberal approach to be taken to the interpretation of dispute resolution clauses, the definition of “Grievance” is drafted with exceptional breadth. Each of the phrases “arising out of” and “in relation to” is itself broad in reach (although breadth will be affected by context) but, when used as alternatives (“or”) in collocation with each other as they are in the definition of “Grievance”, the breadth of the reach is only emphasised. It is still further emphasised by the use of the word “including”. The non-exhaustive nature of the nexus of Agreements, Contracts, Rules and Regulations and Codes of Conduct in subparagraphs (a)-(f) of the definition is rendered broader still by the reference to “or any other matter” in subparagraph (g).
Thus, when the definition of “Grievance” is embedded or read into cl 14 of the licence agreements, the broad scope of disputes captured by the definition is clear beyond measure. But cl 14 goes even further in at least one respect in that, although cl 14.1 refers only to a “Grievance”, in both the chapeau to cl 14.2 and in the second sentence of cl 14.3, in addition to referring to Grievance, the drafter also adds “or any other matter regarding this Agreement or [the Applicants’] participation in the NBL”. Evidently the contractual drafter was at pains for cl 14 to be as exhaustive and far-reaching as possible.
One additional textual matter to note is the wording of cl 14.3 which is similar but not identical to the wording of a dispute resolution clause considered by this Court in Raguz v Sullivan (2000) 50 NSWLR 236; [2000] NSWCA 240 at [85]-[89] (Raguz). That clause, which appeared in a number of agreements referred to in that case and was reproduced at [5], [11] and [12], provided that:
“The decision of the said Court [the CAS] will be final and binding on the parties and it is agreed that neither party will institute or maintain proceedings in any court or tribunal other than the said Court.”
The issue in Raguz was whether that clause was sufficiently broad to exclude the Supreme Court’s jurisdiction to grant leave to appeal under s 38(4) of the Commercial Arbitration Act 1984 (NSW). It was held that it was. The institution or maintenance of proceedings was interpreted as extending to putative appellate proceedings.
“It is further agreed that no party will institute or maintain proceedings regarding a Grievance or any other matter regarding this Agreement or their participation in the NBL in any court or tribunal other than CAS.”
Close textual analysis of the wording of cl 14 as a whole and cl 14.3 in particular lay at the heart of the parties’ arguments on the application for leave to appeal.
It is next appropriate to turn to the primary judge’s reasoning.
As noted at [10] above, the primary judge rejected the Respondent’s argument that the preliminary discovery application should be stayed pursuant to IAA s 7(2) or Model Law art 8.
It is not necessary to address the primary judge’s reasoning in that regard in any detail given that it is not the subject of the application for leave to appeal and arises only by way of the Notice of Contention. It is sufficient to note that her Honour held (at PJ [22]-[23]) that an application for preliminary discovery did not fall within the scope of the arbitration agreement in cl 14.2 and that the nature of a preliminary discovery application meant that no actual dispute had arisen between the relevant parties requiring settlement by arbitration; the entire purpose and rationale for the application was to obtain preliminary discovery of material that would “relate to the question of whether or not the applicant [was] entitled to make a claim for relief”: UCPR r 5.3(1). See, in this context, the reasoning of Bergin CJ in Eq in nearmap Ltd v Spookfish Pty Ltd [2014] NSWSC 1790 at [72]. The primary judge also had regard to the common position of the parties that preliminary discovery as provided for in UCPR r 5.3 was not available in the CAS: PJ [24].
Turning then to that aspect of the decision which is the subject of the application for leave to appeal, namely the stay of the preliminary discovery application pursuant to CPA s 67, the primary judge’s reasoning centred on the second sentence of cl 14.3 which is set out at [23] above. Her Honour recorded at [36] the Respondent’s submission that:
“a stay should be granted because the clubs’ application was contrary to the contractual promise to arbitrate and the contractual covenant not to sue in cl 14.3, such that ‘as a pure matter of contract this action shouldn’t be allowed to proceed’”
and noted that that submission:
“drew on the power historically enjoyed by courts of equity to restrain a breach of a negative covenant, like a covenant not to sue, by issuing an injunction: see Doherty v Allman (1878) 3 App Cas 709; McDermott v Black (1940) 63 CLR 161 at 186-188 (Dixon J). After the adoption of Judicature legislation, that result is achieved by granting a stay of proceedings, rather than issuing an injunction: see eg s 61 Supreme Court Act 1970 (NSW); In the matter of Prismex Technologies Pty Limited; Taggert v Matyear [2013] NSWSC 292 at [49] (Brereton J); Broken Hill Proprietary Co Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 572 (Yeldham J).”
“[41] The clubs contended that the covenant not to sue only relates to a ‘Grievance or any other matter’, that is capable of being resolved by CAS arbitration on a ‘final and binding’ basis, which preliminary discovery is not. In other words, no breach of the covenant not to sue has taken place because preliminary discovery does not fall within the terms of cl 14.3.
[42] I do not agree.
[43] The first sentence of cl 14.3 contains an agreement to follow the process set out in cl 14.2 (the clause refers to cl 14.1, which the parties agreed ought be taken as a reference to cl 14.2) to obtain a ‘resolution’, and that ‘the decision of CAS shall be final and binding’. But properly construed, the second sentence of cl 14.3 is not merely, as the clubs submitted, ‘the other side of the coin’ and just a promise to not litigate disputes that must be arbitrated. It goes further. Both parties promise to not ‘institute or maintain proceedings regarding a Grievance or any other matter regarding [the licence agreement] or their participation in the NBL in any court or tribunal other than CAS’. The wording is important:
(1) The language in the second sentence goes beyond ‘resolution’ of a ‘Grievance’ or ‘other matter’ that is dealt with in the first sentence and cll 14.1 and 14.2; the promise is not to institute or maintain proceedings ‘regarding … any other matter regarding … their participation in the NBL’.
(2) The reference to the second sentence being a ‘further’ agreement reinforces that it was intended by way of addition and not mere emphasis.
[44] Therefore, cl 14.3 makes clear that the parties have agreed to resolve all issues only through private dispute resolution and not in a court. Part of that bargain is that the parties are precluded from accessing court procedures, even if they are not available in CAS. Here, it is ‘unlikely’ that the parties ‘intended that different disputes should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument’: Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165 (Gleeson CJ).
[45] I accept that the preliminary discovery application is ‘any other matter’ regarding the clubs’ involvement in the NBL, and that such an application amounts to instituting proceedings. Therefore, this application falls within the scope of the covenant not to sue in cl 14.3.
[46] I also reject the clubs’ submission that ‘it would not be proper to exercise’ the power to grant a stay ‘where there is no arbitration that could or would resolve the relevant dispute’. The absence of arbitral power to order preliminary discovery does not revive or preserve a right that has otherwise been expressly relinquished by a covenant not to sue.”
“The primary judge erred in concluding that, on its proper construction, the second sentence of clause 14.3 of the licence agreement between each of the appellants and the respondent had the effect that the appellants were prohibited from instituting or maintaining proceedings for preliminary discovery pursuant to r 5.3 of the [UCPR].”
The Applicants recognised that, in order to vitiate the exercise of discretion consistent with House v The King, they needed to demonstrate error in the construction of cl 14.3: see Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [22].
The Applicants’ essential contention is that the primary judge should have found that the effect of the second sentence of cl 14.3 was to prohibit proceedings that the parties had agreed would be brought in the CAS from being brought in a court or tribunal other than the CAS. In this respect, they embrace the primary judge’s finding that the preliminary discovery dispute did not fall within the scope of the arbitration agreement despite its great breadth and dispute her Honour’s conclusion in PJ [43]-[44] that the language of the second sentence of cl 14.3 went “beyond” the concepts referred to in cl 14.2. The Applicants contend that if, as her Honour held, a preliminary discovery application is not a “dispute” for the purposes of cl 14.2, then it is also not a “dispute” for the purpose of the definition of “Grievance” where the word is used in the second sentence of cl 14.3.
The Applicants sought to identify as an error of principle the primary judge’s reference at the conclusion of PJ [44] to Francis Travel at 165, submitting that it was inapposite and that it has “never been applied” to “interpret the scope of a covenant not to sue that is said (as NBLCO contends in the present case) to be wider than the arbitration clause” (emphasis in original). They submit that “it has been applied, in the present case, not to determine where a person’s legal rights will be determined as a matter of commercial convenience, but rather whether they can be asserted at all”: (emphasis in original).
Such an outcome, it was submitted, would result in “significant prejudice to those, like the [A]pplicants, who would be shut out as a result from invoking the Court’s jurisdiction in relation to matters such as preliminary discovery that are not capable of settlement by arbitration.” It was submitted that such a consequence suggests that “a construction that produces it does not accord with the objective intention of the parties.”
In terms of the syntax of cl 14.3, the Applicants stress the connection between the first and second sentences in the clause and that the second sentence of cl 14.3 “is a way of giving effect to the first” and that “the negative promise in the second sentence of cl 14.3 can be seen as the other side of the coin of the positive obligation to follow the arbitration procedure in cl 14.2”.
They also call in aid Raguz to support the submission that the words “final and binding” in the first sentence of cl 14.3 “operated to create a , but did not prohibit a challenge to the arbitral award in another court or tribunal. To achieve that effect, some further promise was required.” This was said to be the purpose of the second sentence of the clause.
“even on the primary judge’s preferred approach, the second sentence of cl 14.3 does not have the effect of prohibiting all proceedings ‘regarding a Grievance or any other matter regarding this Agreement or [the clubs[’]] participation in the NBL’. Clause 24.1(b) of the Licence Agreements, and cl 10.16 of the Revenue Share Agreements, contemplate that the courts of Victoria will have non-exclusive jurisdiction in relation to issues arising from the Licence Agreements and the Revenue Share Agreements.”
A number of observations have already been made about cl 14 and the definition of “Grievance”: see at [17]-[23] above.
The Applicants’ submission that cl 14.3 should be read as a whole including in the context of the entirety of cl 14 is, of course, correct and perfectly orthodox: see Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]. But it does not overcome the fact that the second sentence of cl 14.3 is introduced by the words “It is further agreed …” (emphasis added). That language does not support the Applicants’ submission that the second sentence “is a way of giving effect to the first” or simply the “other side of the coin” of the first sentence. It is doing something more than and different to the first sentence. This is the effect of the word “further” in the second sentence of cl 14.3.
Nor is the second sentence of cl 14.3 simply confined to a “Grievance” as that term is defined. It operates in terms as a prohibition on the institution or maintenance not only of proceedings to resolve a Grievance or any other matter regarding the licence agreement or participation in the NBL but goes beyond that ambit; it prohibits the institution or maintenance of proceedings regarding a Grievance or any other matter regarding the licence agreement or participation in the NBL. Indeed, the word “regarding” is twice used in the second sentence. The difference may be subtle and marginal in its practical operation but that is not to deny its existence. The preliminary discovery proceedings comfortably fitted within the description of, or were apt to be characterised as, “proceedings regarding … any other matter [ie outside the concept of a Grievance] regarding [the licence agreement] or [the Applicants’] participation in the NBL” which is the sphere of the second sentence’s operation.
The fact that similar language to that contained in the second sentence of cl 14.3 was considered in Raguz (and a number of other English authorities referred to by the Applicants in their submissions in this Court: see Essex County Council v Premier Recycling Ltd [2006] EWHC 3594; Shell Egypt West Manzala GmbH v Dana Gas Egypt Limited [2009] EWHC 2097 (Comm); National Iranian Oil Company v Crescent Petroleum Company International Limited [2022] EWHC 1645 (Comm)) and that Raguz held that such language was a sufficiently strong textual indication to preclude an appeal being brought from an arbitral award did not have the consequence that such language was solely directed to negativing a statutory right of appeal. Indeed, neither the clauses under consideration in Raguz nor the second sentence of cl 14.3 contains any language that would suggest that they were directed (and directed alone) to the question of appeal. Clause 14.3 does not prohibit the institution or maintenance of appeals but “proceedings” of a particular kind. True it is such proceedings may include appellate proceedings but the language of the clause is not so confined.
“There are no rules of ethics or equivalent that apply when commencing arbitration proceedings before the CAS. More particularly, there is not an ethical rule or any procedural rule (legal interest or good faith) preventing a party from initiating a claim that it might have, but in respect of which it is uncertain of one of the essential factual elements. A request for document production filed in such proceedings may, thus, have the purpose to find out whether the claim filed exists at all.”
This evidence was relied on in the appeal in aid of a submission that the apparent anxiety in relation to the formulation of claims against the Respondent that animated the application for preliminary discovery in New South Wales would not stand in the way of the Applicants bringing their putative claims against the Respondent in the CAS. It is sufficient for present purposes to note that, if that view were correct, any suggestion of prejudice would be further diluted. As the primary judge did not make any findings in relation to this aspect of the evidence (which was disputed by the Applicants’ expert, Mr Bernasconi), I do not put any weight on this submission although note that the Respondent’s reliance in this Court and at first instance on that evidence may preclude or impede it from raising objections to any Points of Claim in the CAS were the Applicants to bring proceedings for substantive relief in that forum.
As far as what may be inferred or discerned to be the objective intention of the parties in drafting the second sentence of cl 14.3 as they did, that intention was a mutual covenant not to sue each other other than in the CAS. This flowed not only from the language of that sentence but also from the definition of “Grievance” in all of its conspicuous generality which has been described at [18]-[21] above. Concerns to preserve confidentiality and privacy are obvious reasons which may have underpinned such an intention although the matter of intention is to be assessed objectively.
Insofar as the Applicants contended that the primary judge’s reference to Francis Travel conflated principles relating to the interpretation of the scope of jurisdiction or arbitration clauses with the interpretation of covenants not to sue, the second sentence of cl 14.3 was not a covenant not to sue simpliciter as may, for example, be found in a deed of settlement. Rather, it was a covenant not to sue other than in the CAS. The primary judge’s reference to Francis Travel was not inapposite in that context. Moreover, consistent with that part of Francis Travel referred to by the primary judge at PJ [44], the parties in the present case were at pains to prevent any proceedings between them occurring in any forum other than the CAS insofar as they legally could. As noted at [20] above, the breadth of language employed by the drafter did not require any special principles of liberal and broad construction to be invoked to reach the conclusion that the primary judge did as to the meaning of the second sentence of cl 14.3.
To the extent that the Applicants pointed to the existence of a non-exclusive jurisdiction clause nominating the Courts of Victoria in support of the argument summarised at [37] above, that argument should be rejected for at least two reasons. Such clauses are common in contracts that otherwise contain arbitration clauses. They exist because both the IAA and the Model Law contemplate that, even in the context of mandatory international arbitration, urgent interim relief may be given in respect of matters otherwise falling within the scope of the arbitration clause. Non-exclusive jurisdiction clauses may also facilitate the enforcement of ultimate or interim arbitral awards. Further, focussing specifically on cl 14.3, even though, on the primary judge’s interpretation, it operates to preclude the maintenance of the preliminary discovery application, such clauses do not oust the jurisdiction of the Court (see Compagnie d**es Messageries Maritimes v Wilson (1954) 94 CLR 577; [1954] HCA 62) and their enforcement is ultimately subject to the exercise of judicial discretion. Once this is understood, the presence of a non-exclusive jurisdiction agreement in the licence agreements does not avail the Applicants.
See Cheng v Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118 at [15], citing Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; Be Financial Pty Ltd as trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[38] (Be Financial); The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13]; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28]; PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [6].
No “issue of principle” or matter of public importance was identified although it is acknowledged that some of the suite of agreements referred to and the licence agreements in particular are standard-form as between NBLCO and the clubs participating in the NBL competition.
Turning to the third criterion, the concept of a “reasonably clear injustice” “focuses on the interests of justice as between the parties to the particular case”: Mineralogy Pty Ltd v CITIC Ltd [2024] WASCA 168 at [63]. It focuses on whether “there is an error of principle which, if uncorrected, will result in substantial injustice”: Collier v Lancer (No 2) [2013] NSWCA 186 at [7]. In Be Financial, Basten JA (with whom Tobias AJA agreed) said at [37]:
“The idea that injustice may be measured on a scale reflects a number of underlying considerations. First, the ability to assess the existence of an injustice in a preliminary proceeding, such as a leave application, is limited. In assessing the merit of a proposed appeal, the Court may well apply a vague criterion, such as whether the judgment below is attended by ‘sufficient doubt’. Secondly, injustice involves a balancing exercise. The delay and cost of further litigation will constitute a form of injustice to the successful party below, whatever the outcome of the appellate process. Thirdly, the entitlement of the parties to justice is not unconditional, but is dependent upon the resources of the court made available by the government and the appropriate allocation of resources by the parties, which may depend upon their individual assessments of the importance of the issues in dispute. The parties may well make disparate assessments in a particular case.”
“[18] As to the third established criterion for the grant of leave, namely whether the decision in respect of which leave is sought gave rise to ‘a reasonably clear injustice going beyond something that is merely arguable’, this formulation sets a reasonably high bar for good reason, as Simpson AJA and I pointed out in PPK Willoughby by reference to the sage observations of Sir Frederick Jordan in In the matter of the Will of F B Gilbert (dec) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318 at 323 (Gilbert). Sir Frederick Jordan had expressed the opinion in Gilbert that:
‘there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. If a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.’
[19] I have previously observed that ‘it may be that the decision to grant a permanent stay of proceedings does not sit comfortably within the dichotomy Sir Frederick Jordan drew in In Re Will of F B Gilbert (dec) … namely between “an exercise of discretion on a point of practice or procedure”, on the one hand, and “an exercise of discretion which determines substantive rights”, on the other hand’: Wigmans v AMP Ltd (2019) 103 NSWLR 543; [2019] NSWCA 243 at [34]; see also CBRE (V) Pty Ltd v Trilogy Funds Management Ltd (2021) 107 NSWLR 202; [2021] NSWCA 316 at [4]-[10]. …”
In the present case, it is clear that the stay granted by the primary judge did not involve “an exercise of discretion which determines substantive rights”.
When regard is had to that fact as well as my reasons for rejecting the Applicants’ criticism of the primary judge’s interpretation of cl 14.3, it follows that leave to appeal should be refused with costs.
It also follows that it is not necessary to resolve the matters raised by the four grounds of the Notice of Contention, and as Mr Herzfeld was resolute in his opposition to the grant of leave to appeal notwithstanding the potential merit of at least some of those contentions, it is not appropriate to extend these reasons any further.
LEEMING JA: The drafters of the “grievance procedure” clause central to this application for leave to appeal were inattentive to syntax and grammar, but as the Chief Justice points out, that does not prevent imputing to them the intention that (a) the clause was of a very broad scope and (b) the promise not to institute or maintain proceedings other than in the CAS was even more broadly expressed. For the reasons given by the Chief Justice, I agree that leave to appeal from this interlocutory decision should be refused.
GRIFFITHS A****JA: I agree with the Chief Justice.
**********
Illawarra Basketball Club Pty Ltd
National Basketball League Pty Ltd
(1988) 165 CLR 197
[1936] HCA 40
(1996) 188 CLR 418
(2019) 99 NSWLR 419
(2022) 108 NSWLR 342
(1954) 94 CLR 577
(1956) 95 CLR 420
(1996) 39 NSWLR 160
(1960) 105 CLR 23
(1936) 55 CLR 499
(2004) 138 FCR 496
(2014) 89 NSWLR 633
(2015) 256 CLR 104
(2017) 257 FCR 62
(2000) 50 NSWLR 236
(2017) 95 NSWLR 597
(2013) 82 NSWLR 268
(1940) 63 CLR 161
(2019) 103 NSWLR 543
(2021) 107 NSWLR 202
Leave to appeal refused with costs; the Court did not determine the matters raised in the Respondent’s Notice of Contention.
The Applicants advanced the further submission that:
Turning now to the arguments summarised at [34] above relating to the “significant prejudice” that it was said would be occasioned as a result of the primary judge’s construction and what should be inferred to be the objective intention of the parties, it must be recalled that UCPR r 5.3 does not confer upon a party a “right” other than in the most attenuated sense of that word. At most, r 5.3 confers an entitlement to apply for something which, even if the statutory criteria are satisfied, may or may not be awarded, a decision to order preliminary discovery being a matter that is classically discretionary. It is also procedural in nature.
Determination of an application for preliminary discovery under UCPR r 5.3 does not involve determination of the merits of any claim for relief an applicant might propound: O’Connor v O’Connor [2018] NSWCA 214 at [76]. Such applications are summary in nature and not mini-trials, and the use of such applications as dress rehearsals for a trial have rightly been deprecated: Pfizer Island Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193 at [2] and [126]. For the purposes of applications for leave to appeal, decisions in relation to applications for preliminary discovery are characterised not as involving any substantive rights but merely as matters of practice and procedure: Press v iSam Securities (UK) Ltd [2024] NSWCA 260 at [22].
In light of these matters, being denied such a “right” because of its non-availability in the CAS scarcely warrants the description of “significant prejudice” as contended by the Applicants. It is not uncommon when parties agree to a particular form of dispute resolution, or an exclusive jurisdiction for the resolution of a dispute, that not all the procedural rules or benefits potentially available in a local forum will be available in the chosen forum. At one level, this may be said to result in a “prejudice” to the party who is precluded, by its contractual choice, from taking advantage of locally available procedures. But that prejudice is generally not given any particular weight or relevance, as explained by Allsop J in Incitec Ltd v Alkimos Shipping Corporation (2004) 138 FCR 496; [2004] FCA 698 at [49]: “[t]o the extent that the operation of the exclusive jurisdiction clause causes … forensic inconvenience to the party which bound itself to the clause, that, of itself, is to be seen as only the direct consequence of the bargain entered and, generally, can be set to one side”. See also Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61 at [101]-[103].
In cases where true and significant prejudice can be pointed to, the discretionary nature of the power to grant a stay of proceedings may result in a stay application being refused. Thus it was that a stay of proceedings was refused by the High Court in Akai Pty Ltd v Peoples Insurance Company (1996) 188 CLR 418; [1996] HCA 39 (Akai) in circumstances where the combined effect of an English choice of law clause and an exclusive jurisdiction agreement for the English courts would have deprived Akai Pty Ltd of the benefit and protection it would have had, as an insured party, of the Insurance Contracts Act 1984 (Cth). This is consistent with the more general doctrine that “strong reasons” may warrant the refusal of a stay of proceedings: Global Partners Fund Limited v Babcock & Brown Limited (in liq) (2010) 79 ACSR 383; [2010] NSWCA 196 at [89], referring in turn to Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 259; [1988] HCA 32 and Akai at 429, 445.
Accepting that cl 14.3 was different in form from the jurisdiction and arbitration agreements referred to in the cases referred to above, the point remains the same in the present context. No “strong reasons” were presented in the present case other than the fact that no similar preliminary discovery procedure existed within the CAS. Moreover, in the context of asserted prejudice occasioned by reason of the stay of the application for preliminary discovery, no submissions were made as to whether the Applicants were likely to have been able to satisfy the five criteria required to be satisfied under UCPR r 5.3 even before the question of discretion was reached. Unlike the likely loss by Akai Pty Ltd of its ability to rely on the Insurance Contracts Act if the New South Wales proceedings were stayed (which was critical for the majority in Akai), the “right” conferred by r 5.3 should not be seen as involving a matter of high public policy or element of overriding consumer protection that trumped the autonomy of the parties in the present case to draw their contract as they did.
A submission made by Mr Herzfeld SC (appearing for the Respondent) which should be noted was that one of the two experts on Swiss private international law relevant to the CAS (Mr Haas) who was called at first instance by the Respondent had opined that:
For these reasons, although the matter was skilfully argued by Mr McLure SC for the Applicants, I do not discern any error in the reasoning of the primary judge.
It also follows from this conclusion that the criteria for granting leave to appeal are not made out. In this context, the Court will generally grant leave to appeal only where the proposed appeal raises:
an issue of principle;
a question of public importance; or
a reasonably clear injustice beyond something that is merely arguable.