Industrial Relations Commission of New South Wales CITATION: Chipperfield v Barataud [2006] NSWIRComm 31 APPLICANT Scott Chipperfield PARTIES: RESPONDENT Alain Barataud FILE NUMBER(S): IRC 2779 of 2005 CORAM: Staff J CATCHWORDS: Unfair contract - No appearance by respondent - Ex parte hearing - Contract of Employment - Professional football player and player's agent and manager - Whether contract unfair - Contract unfair on basis of respondent unjustly and unfairly claiming payments of commission from applicant - Exclusivity clause unfair - Failure to provide shareholding in company - Arrangement unfair - Arrangement voided - Orders - Costs LEGISLATION CITED: Industrial Relations Act 1996 Industrial Arbitration Act 1940 (NSW) Barham v Stevenson (1975) 1 NSWLR 31 CASES CITED: Davies & Anor v General Transport Development Pty Ltd [1967] AR (NSW) 371 Stevenson v Barham (1977) 136 CLR 190 HEARING DATES: 13/01/2006 DATE OF JUDGMENT: 02/09/2006 APPLICANT Mr R Reitano of counsel Solicitor: Mr C Sheppard LEGAL REPRESENTATIVES: Russell McLelland Brown RESPONDENT No appearance JUDGMENT: - 1 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: STAFF J 9 February 2006 Matter No IRC 2779 of 2005 SCOTT CHIPPERFIELD v ALAIN BARATAUD Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2006] NSWIRComm 31 1 This application was brought in May 2005. It concerns contracts or arrangements between Mr Scott Chipperfield ("the applicant"), a professional football player and Mr Alain Barataud ("the respondent") a player's agent and manager, which came into effect in or around May 2001, February 2002 and June 2002. 2 There was no appearance on behalf of the respondent when the matter came before the Registrar. There has been no communication received by the Court from the respondent himself. No appearance has been filed by the respondent. 3 No response to the summons for relief ("the summons") has been filed and there was no appearance for the respondent when the matter was listed for conciliation. A certificate under s 109 of the Industrial Relations Act 1996 ("the Act") was issued and the respondent notified of the hearing. 4 The solicitors for the applicant served affidavit material on the respondent at his last known address. There was no communication from the respondent and no appearance for the respondent at the hearing. The hearing proceeded ex parte. 5 The relief claimed in the summons is as follows: 1. An order declaring void or varying in whole or in part from its commencement of (sic) from some other time the contract and the arrangement between the applicant and the respondent whereby the applicant and/or the respondent performed work in an industry. 2. Further, in addition, an order that the respondent pay the applicant in connection with the contract and the arrangement so varied or avoided (sic) by the Commission an amount of money as the Commission considers just in the circumstances. 3. Further, in addition, an order that the respondent pay interest on the sum of money referred to in Order 3 (or from such other date as the Commission may determine) calculated pursuant to section 94 of the Supreme Court Act. 4. An order that the respondent pay the applicant's costs of and incidental to these proceedings. 5. … 6 Affidavit evidence was given by the applicant. The evidence showed that in about May 2001, the applicant entered into an oral players' agency agreement with the respondent ("the agreement"). The agreement was negotiated and concluded at the Novotel Hotel at Homebush where the applicant was in camp with the Australian Soccer Team. 7 The agreement required the respondent to provide management, or players' agent services to the applicant. 8 The respondent came to the Hotel and showed the applicant a fax from Basel Football Club, Switzerland ("Basel FC"). The fax contained a dollar figure which the applicant was told was his annual salary if he signed a playing contract with them. The respondent informed the applicant that he would have to go to Switzerland for a medical. 9 The applicant flew to Switzerland and was met by a Mr Marco Grassi. Mr Grassi was the agent who had negotiated the applicant's initial contract with Basel FC. The applicant believed he was paid US$100,000 by the Basel FC when the applicant signed the original contract on or around 26 June 2001. 10 It was a term of the players' agency agreement that the applicant would pay to the respondent 10 percent of all earnings derived by the applicant as a soccer player, consequent upon any player agreement negotiated by the respondent for the applicant with a soccer club. 11 As part of the agreement between the applicant's former club, the Wollongong Wolves Soccer Club ("the Wolves") and Basel FC, the Wolves were paid a transfer fee of $100,000. The applicant had an agreement with the Wolves that he would receive 10 percent of any transfer fee. The Wolves forwarded a tax invoice to Basel FC for $100,000 which was subsequently paid. 12 The applicant authorised the respondent to collect his 10 percent transfer fee from the Wolves. The agreement between the applicant and the respondent was that the respondent would pass this money on to the applicant. 13 On or about 10 January 2003, the respondent provided the applicant with an ANZ bank cheque in the sum of $10,000. When the cheque was presented, it was dishonoured. 14 When the applicant returned to Australia for Christmas in or about mid December 2001, he had a meeting with the respondent who said that the applicant owed him a fee for making the arrangements with Basel FC. The respondent asked for a fee of $6,000. The applicant drove with the respondent to the St George Bank at Corrimal, New South Wales and withdrew the sum of $6,000 and provided it to the respondent. 15 On 1 June 2002, the respondent presented the applicant with a written document titled "Players' Agent's Regulations Annexe C: Standard Representation Contract" ("the contract"). The applicant signed this contract which was annexed to his affidavit. Paragraph 3 of the contract was in the following terms: 3) Exclusivity The parties agree that the placement rights be transferred exclusively to the players' agent. 16 The applicant entered into further contracts with Basel FC on 8 January 2004 and 22 July 2004, negotiating the terms of each contract himself ("the second and third contracts or arrangements"). 17 During the beginning of 2002, the respondent informed the applicant that he was a director and shareholder of Australian Beach Soccer Management Pty Ltd ("ABSM"). The respondent informed the applicant that he intended to start up an Australian professional beach soccer league. The applicant was informed that if he paid to the respondent the sum of $35,000, he could have a 20 percent shareholding in the company. 18 The applicant agreed to the respondent's proposal and the respondent drafted a document described as "Heads of Agreement". The document was dated 19 February 2002 and signed by the applicant. In total, the applicant paid the defendant $35,000 but was never provided with any shareholding in ABSM. 19 The applicant tendered an ordinary statement of claim, No 4591 of 2004, filed in the District Court of New South Wales at Sydney, in respect of a claim by Alain Barataud against Scott Chipperfield. In essence, the respondent in the present proceedings claimed 10 percent of all earnings derived by the applicant as a football player consequential upon any player agreement negotiated by the respondent on behalf of the applicant, and that the applicant in these proceedings was in breach of the exclusivity term provided for in the agreement and had failed to pay the respondent 10 percent of the annual gross salary paid to the applicant by Basel FC. 20 Mr R Reitano of counsel, who appeared for the applicant, informed the Court that the applicant had filed a defence and a cross-claim in the District Court. The plaintiff in the District Court proceedings, Mr Barataud, did not appear and the matter was summarily dealt with and dismissed with a verdict being given in favour of Mr Chipperfield. Mr Reitano informed the Court that a judgment had not yet been entered pending an assessment of damages. Counsel gave an undertaking that the applicant would not proceed with any assessment in respect of damages that were the subject of any compensatory orders made by this Court. Consideration 21 The Unfair Contracts Jurisdiction under the Act is concerned with contracts, whereby work is performed in an industry. Counsel for the applicant did not refer the Court to any authorities in this regard. 22 In Stevenson v Barham (1977) 136 CLR 190, Mason and Jacobs JJ at 201 set out the appropriate test for the application of jurisdiction as follows: …if the contract is one which leads directly to a person working in any industry it has the requisite industrial character — it is a contract 'whereby a person performs work in any industry'. This is the relevant jurisdictional fact which needs to be established. 23 In Barham v Stevenson (1975) 1 NSWLR 31 at 35, Street CJ observed that in many cases the contract or arrangement may not be documented, therefore resort must be had to the oral evidence of discussions and conduct. Frequently the real contract or arrangement existing between the parties will best be discovered by examining the actual relationship between them, and then regarding this as the manifestation of their contract or arrangement. 24 In the present case, the applicant works as a professional footballer and it was the intention of both parties to the oral and written players' agents contracts that the respondent would be entitled to commission for employment contracts negotiated by him. 25 The evidence discloses that the respondent did not negotiate the contract with Basel FC in June 2001. This contract was negotiated by the applicant and Mr Grassi. 26 Barwick CJ in Stevenson v Barham at 192 cautioned this Court that in exercising the jurisdiction granted by s 88F of the Industrial Arbitration Act 1940 (NSW), the predecessor to s 106 of the Act, it should not interfere with 'bargains freely made by a person who is under no constraint or any inequality, or whose labour was not being oppressively exploited'. 27 The authorities dealing with s 106 of the Act (or its predecessor, s 88F) have shown that the section's 'massive power' should not be used to permit the section to become a 'refuge for those who are merely disgruntled with a bargain entered into on even terms'. See Davies & Anor v General Transport Development Pty Ltd [1967] AR (NSW) 371 at 375. That case also shows, however, that even those who have been foolish or negligent, may be entitled to relief under the section, if they have been the subject of fraud, deceit, or other unconscionable dealing. 28 The evidence led in this case, in my view, amounts to oppressive exploitation. There can be no doubt that the evidence demonstrated the requisite unfairness of the contract and the respondent's unconscionable conduct towards the applicant. The oral and written players' contract contained terms that permitted the respondent to obtain and claim payments of money from the applicant in circumstances where the respondent performed no work and provided no service to the applicant in respect of the negotiation of any employment contracts with Basel FC. 29 In my view, the oral and written contracts permitted the respondent to take commercial advantage of the applicant and to unjustly and unfairly claim payments of commission from the applicant. The exclusivity clause which deprived the applicant negotiating employment contracts on his own behalf was clearly harsh and unfair. 30 In respect of the contract or arrangement whereby the applicant paid the sum of $35,000 to the respondent for a shareholding in ABSM, which intended to market beach soccer with the applicant, this contract or arrangement was also unfair. The applicant met the respondent's terms in relation to the venture; he provided money to the respondent but received no shares or benefit at all from ABSM or any income which was generated by the business. The respondent has retained all of the money provided by the applicant and appears to continue to operate ABSM. 31 Money orders in relation to the payments made for the purchase of the shares in ABSM must follow. Similarly, money orders should be made in respect of the employment contracts. 32 Taking into account all of the evidence and the relief sought in the summons, I make the following orders: 1. The contracts or arrangements (including the written contract dated 1 June 2002 and headed "Players' Agent's Regulations Annexe C: Standard Representation Contract") between Scott Chipperfield and Alain Barataud relating to the provision of management or players' agent services by Alain Barataud to Scott Chipperfield and/or requiring Scott Chipperfield to pay to Alain Barataud commission on any employment contracts entered into by Scott Chipperfield are voided from their commencement. 2. The contract or arrangement between Alain Barataud and Scott Chipperfield relating to the creation of Australian Beach Soccer Management Pty Ltd and the granting of a shareholding to Scott Chipperfield in Australian Beach Soccer Management Pty Ltd is voided from its commencement. 3. Alain Barataud shall pay to Scott Chipperfield the sum of $51,000 together with interest in the amount of $16,065. 4. Alain Barataud shall pay to Scott Chipperfield costs as agreed or as assessed. 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