s IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION JUDGMENT No, ato. 78S... NOT FOR GENERAL DISTRIBUTION NEW SOUTH WALES DISTRICT REGISTRY NSW G.95 of 1988 we BETWEEN: STEVE CARFINO First Applicant MARINARO PTY LTD Second Applicant =. AND: THE AUSTRALIAN BASKETBALL FEDERATION INCORPORATED First Respondent TASMANIAN BASKETBALL ASSOCIATION INCORPORATED Second Respondent HOBART BASKETBALL CLUB INCORPORATED Third Respondent CORAM: WILCOX J xy \ i PLACE: SYDNEY in DATE: 1 FEBRUARY 1988 ma vi | \ FEDERAL COURT OF i AUSTRALIA s PRINCIPAL REGISTRY MINUTES OF ORDER Upon the applicants by their counsel giving the usual undertaking as to damages seein on oan YY THE COURT ORDERS THAT: 1. Until further order, the respondents and each of them, their servants and agents, be restrained from: (i) refusing to permit the applicant, Steve Carfino, from playing as a member of the team fielded by Sydney NEC Kings Club and; (ii) taking any action by way of punishment or reprisal as a result of his so playing, whether against the applicant or any other person or organisation. 2. The costs of the application be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. NOT FOR GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NSW G.95 of 1988 ) ) GENERAL DIVISION BETWEEN: STEVE CARFINO . First Applicant MARINARO PTY LTD Second Applicant AND: THE AUSTRALIAN BASKETBALL FEDERATION INCORPORATED First Respondent TASMANIAN BASKETBALL ASSOCIATION INCORPORATED Second Respondent HOBART BASKETBALL CLUB INCORPORATED Third Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 1 FEBRUARY 1988 EXTEMPORE REASONS FOR JUDGMENT Last Friday afternoon I was approached by counsel for the applicants, Steve Carfino and Marinaro Pty Ltd, seeking an ex parte injunction, the effect of which would have been to ne require the three respondents to this proceeding, The Australian Basketball Federation Incorporated, Tasmanian Basketball Association Incorporated and Hobart Basketball Club Incorporated, to grant the necessary clearance to permit Mr Carfino to play for a Sydney basketball club, known as Sydney NEC Kings, in a competition organised by The Australian Basketball Federation and commencing on Friday night. That competition is known as the Australian Basketball Classic. Marinaro is involved because that company has undertaken the task of employing basketball players to play for the Sydney NEC Kings club. I declined to make the orders requested by the applicants on Friday afternoon because it seemed to me that to do so would be to change the existing situation. I took the view that ex parte orders, which would change the status quo, should not normally be made without the affected persons having notice of the application for those orders. Accordingly, I went no further than granting leave to the applicants to serve short notice of the Application, made returnable this morning. When the matter came before the Court this morning, counsel for the respondents appeared. They indicated that there had been very little time to consider the matter. Accordingly I stood the matter down until 2.15 p.m. in order to enable them some chance to obtain further instructions, and perhaps to discuss some method of resolving the immediate problem. Sir daeniaiiaiaetmedpacniamecaeenen -ayore: => wae ror poems mr - core Re my reer oe It appears from the evidence before me that Sydney NEC Kings has been eliminated from the competition which commenced on Friday night and will not be engaged in the final tonight, but that it is to play a preliminary exhibition match. The club would wish to have the services of Mr Carfino for that match if possible. There is also an engagement for the team to visit Tasmania next Friday and it is desired that Mr Carfino be able to play at that time. The main competition of the basketball year commences on 12 February and, not unnaturally, the club wishes to settle its team as soon as possible. This afternoon I was informed that no interim arrangement had been agreed. Counsel for the applicants thereupon renewed the application made ex parte on Friday. It seems to me that orders should be made which will enable Mr Carfino to play for the Sydney NEC Kings club pending the final resolution of this matter, or at least pending further consideration of the case. The first matter which I have to consider in connection with the making of an interlocutory order is whether there is a serious question to be tried. On behalf of the applicants, counsel has identified three causes of action. In the first place, he says that what has occurred constitutes a breach of s.45(2)(b) of the Trade Practices Act 1974. Secondly, he says that there is a breach of s.45D of the Trade Practices Act; and, thirdly, that the rules and by-laws which On 3 November 1987, Mr Wayne Monaghan, who is apparently the President of the third respondent, wrote to Mr Carfino in America. He referred to the conversation with Mr Adkins. In his letter he told Mr Carfino that he was legally bound to the club by way of contract for the 1988 NBL season. That is a reference to the National Basketball League. Mr Monaghan referred to the possibility of Mr Carfino playing with another NBL team and said that he would appreciate the courtesy of being told of his situation. The letter goes on: "T must point out that we would not consider releasing you from your contract unless that team is prepared to offer satisfactory compensation for the loss of your services to us. Congratulations on making the 1987 NBL All-Star team for the second year running. I have cancelled the return ticket of your flight to Australia with Quantas (sic) and would be pleased if you would return the ticket to the above address. Also I have advised the Department of Immigration of your decision and your 'statement of position' as when you departed Australia. I will forward any outstanding accounts/bills to you from Hobart that you may have left so that you can keep your name 'clean' with the Immigration Department should you desire to play with another NBL Team in the future." Following the receipt of this letter, Mr Carfino apparently acted upon the basis that he would not be returning to the Hobart club. He was contacted by a representative of the second applicant and, as a result of that contact, he made an agreement to play for Sydney NEC Kings subject to the appropriate clearance being provided by the second respondent, the Tasmanian Basketball Association, in accordance with the by-laws of the first respondent. For that purpose, an wt pene cnecer Loy "i application for sponsorship was submitted to the Department of Immigration and Ethnic Affairs by the second applicant. This was endorsed by the first respondent and approved. Mr Carfino duly arrived back in Australia, his travel costs being met by Marinaro. He sought a clearance from the Tasmanian Association, with which the Hobart club is affiliated, but this was refused because of the objections of the Hobart club. He then appealed to the Management Committee of the Australian Basketball Federation pursuant to the rules of the Federation. But the Federation refused to grant a clearance. The actual decision is set out in a statement made by Mr Staunton, Executive Director of the Federation, made on 28 January in these terms: "The Management Committee of the Australian Basketball Federation has been asked by Mr. Steve Carfino to approve his interstate transfer from the Hobart Tassie Devils Club. The Management Committee has perused a large amount of information supplied by both parties. From that information it appears that the club and the player are in dispute as to whether or not the contract between them is still in existence. It is not for the ABF to determine such a dispute. Accordingly until that dispute is resolved the Management Committee will not consider approving the application for interstate transfer." The difficulty confronting the Management Committee is obvious but the effect of its decision was that the application for clearance was not granted and, consequently, Mr Carfino was left in the position of being unable to play for the Sydney club. Under those circumstances, he comes to wee cr pe or wove pears this Court challenging the validity of the relevant rules. Those rules are contained in the by-laws of the Australian Basketball Federation. Part 4 of the by-laws deals with interstate transfers. Paragraph 4.1 provides: "Any person registered as a playing member of a Constituent Association or its affiliates, must first obtain a certificate of clearance from the Constituent Association in which he 1s registered before being eligible to register as a playing member of any other Constituent Association or its affiliates." Paragraph 4.2 prescribes a form of certificate of clearance. Paragraph 4.3 provides a right of appeal to the Management Committee against a decision by any constituent association to refuse to grant an interstate clearance. Paragraph 4.4 states: "The Management Committee shall be empowered to ratify or veto the decision of the Constituent Association." Paragraph 4.5 contains an exception relieving a person from obtaining a clearance in a case where his playing membership of a constituent association has lapsed for a period of 12 months immediately prior to the date of his application for membership of another constituent association. The reference to constituent associations is a reference to the various State organisations and, of course, includes the second respondent, the Tasmanian Basketball Association. The effect of these rules is that a person who is registered as a playing member of an association, or an affiliate of an association in one State, as was Mr Carfino when he was registered with the Hobart club, must obtain a certificate of clearance from the Tasmanian Association or, on appeal, the Management Committee of the Federation, before being able to be registered by another constituent association. Although the rules do not spell this out, it is accepted on all hands that, without registration in New South Wales, except in a special case, a person would not be entitled to play for a club affiliated with the New South Wales Association. Apparently the third respondent has taken the view that it has a subsisting contract with Mr Carfino and for that reason it will not agree to a clearance. I think that there is a very strong argument that the contract made between Mr Carfino and the Hobart Basketball Club has come to an end. At this stage, it is not possible to make any confident findings as to what passed in the various conversations last year. Neither would it be appropriate to attempt to do so. But the letter to which I have referred seems to me to indicate that at that time one of two events occurred. If it be the position that Mr Carfino had indicated in the telephone conversation to Mr Adkins that he would not return to Hobart, prima facie at least that would represent a repudiation of his contract to play for the Hobart club in 1988. The letter from Mr Monaghan made it quite plain that the club did not expect Mr Carfino to return to Hobart. I have in mind the reference to the club cancelling his return air ticket and to Mr Monaghan's discussing the possibility of Mr Carfino playing for some other club. If there had been prior breach by Mr Carfino, it seems to me strongly arguable that Mr Monaghan's letter constituted an acceptance of that repudiation. seepe ie -e ——sr Alternatively, 1t may be that there was no prior breach by Mr Carfino and that the letter amounted to a repudiation by the Hobart club. Mr Carfino, on that analysis, would have accepted the repudiation by his subsequent conduct in entering into an agreement with Marinaro and coming to Sydney to play for Sydney NEC Kings. As I say, it is not necessary or desirable to reach any conclusion about this question, but I think that it would be very difficult for the Hobart club to make out a case that there is continuing obligation by Mr Carfino to play for that club. It may be that there was a breach by him which enables the club to obtain damages; but that is another matter. In a sense, the contractual question is by the way; although it is undoubtedly the reason why the matter has come to this Court, both in the thinking of the Hobart club and in the view taken by the Management Committee of the Australian Basketball Federation. The real question, in this Court, is whether there is a serious question to be tried on any of the three bases referred to by counsel for the applicants. As to the first basis, that 1s s.45(2)(b) of the Trade Practices Act, I have difficulty in seeing that there is a strong case. It seems to me that the decision of Northrop J, 1n Adamson v West Perth Football Club (1979) 39 FLR.199, 1s in point. Mr Rothman seeks to distinguish that case because of the interposition of Marinaro, but I did not think that distinction very convincing. I do not say that a claim based Po 10. on s.45(2)(b) will fail. But I indicate that if the present case depended only upon that section I would have serious doubts as to whether 1t ought to be regarded as raising a serious question to be tried. However, Mr Rothman also relies on s.45D({1) of the Trade Practices Act, and it seems to me that there is a stronger argument under this section. In essence what is said 1s that the three respondents are persons who, in concert with each other, are engaging in conduct which hinders or prevents the supply of services by Marinaro to the Sydney NEC Kings Club; the services, of course, being those of Mr Carfino. Section 45D(1) was not relied upon in Adamson's case, probably because there was no party in the position of Marinaro. Without attempting to reach any conclusion on the matter it seems to me that there is a serious question arising under s.45D. Indeed, the contrary was not put by counsel for any of the respondents. In connection with the third matter, restraint of trade, once again Adamson provides some assistance. I have some difficulty in distinguishing the decision of Northrop J in that case, that the relevant rules constituted a restraint of trade void at common law because of their unreasonableness. The only factual distinction between the two cases seems to be that, in the case of the rules there under consideration, it was necessary for a person not to play for three years in order to avoid the operation of the rules; whereas, in the ll. current case, the relevant period is 12 months. Perhaps that is a sufficient point of distinction; but I have reservations about that. It was put on behalf of the first respondent, in the present case, that the rules as to clearance were merely designed to achieve good order and to prevent players breaching a contract with a club. I can understand the desire of the administrators in any sport to ensure orderliness in relation to the relationship between players and their various clubs. No doubt the same submission was put in Adamson's case. But I do not think that it provides an answer in law. Again without coming to any conclusion, it seems to me that there is a substantial argument in favour of this third leg of the applicant's claim. It follows from all this that, in my opinion, there is a serious question to be tried. I turn to the question of the balance of convenience. The position is quite clear that, unless the Court intervenes, Mr Carfino will not be allowed to play for the Sydney club. This is not a case where the choice lies between him playing for the Sydney club or for the Hobart club. There is evidence that the Hobart club has already engaged two foreign players for the 1988 season, and under the rules of the Basketball Federation no club may play more than two foreign players. Quite clearly the Hobart club has accepted that Mr Carfino will not play for it this season. As I have indicated, his — coe oy vy te og eur Sr ee we we ee se nme nee ae ne nee -u, eo eel meme 12. return air ticket was cancelled. He has never been asked to attend for training with the Devils or to make himself available to play with that team in any game in 1988. So the choice lies between him playing for the Sydney club and not playing at all. When I inquired from counsel for the third respondent what damage would be suffered by the third respondent if Mr Carfino were to play for the Sydney club, pending resolution of the matter, he quite frankly indicated that there would be no damage except that it might adversely affect the club's negotiating position with the applicants in relation to a fee to facilitate a clearance. I can understand this commercial reality but I do not think that the balance of convenience is to be determined by reference to such a consideration. In my view, consideration of the matters of convenience points strongly to the Court intervening to grant interim relief. The form of relief suggested by counsel for the applicants would have required the respondents to grant a clearance to permit transfer to New South Wales; but subject to an undertaking being taken from Mr Carfino, that if he failed at the final hearing, he would do whatever was necessary to have his membership transferred back to the Hobart club. It seems to me that this is unnecessarily cumbersome. At my invitation counsel addressed themselves to the question whether there would be any difficulty about an interim order which simply restrained the respondents from declining to permit Mr Carfino to play with the Sydney club 13. pending the outcome of the matter and restraining them from taking any consequential action. Counsel indicated that there would be no objection to an order along those lines. It seems to me that this is the appropriate order to be made. Consequently, upon the applicants by their counsel giving the usual undertaking as to damages, I order that, until further order, the respondents and each of them, their servants and agents, be restrained from: (i) refusing to permit the applicant, Steve Carfino, from playing as a member of the team fielded by Sydney NEC Kings Club and; (ii) taking any action by way of punishment or reprisal as a result of his so playing, whether against Mr Carfino or any other person or organisation. I reserve the costs of the application. I certify this and the twelve (12) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate » (anne, ffewe: Date: 5 February 1988 —ere Counsel for the Applicants: Solicitors for the Applicants: Counsel for the First Respondent: Solicitors for the First Respondent: Counsel for the Second and Third Respondents: Solicitors for the Second and Third Respondents: Date(s) of hearing: Mr S C Rothman Landerer & Co Mr M S Willmott L S Davis & Associates Mr J D Cummins QC Lowrie, Longbottom & Blissenden 1 February 1988 tery ene Caer a) FO v