Phelps v Western Mining Corporation Ltd

ADAMSON v. WESTERN AUSTRALIAN NATIONAL FOOTBALL LEAGUE (INCORPORATED) (1978)
38 FLR 237
Trade Practices

COURT

FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
Smithers(1), Deane(1) and Fisher(1) JJ.

CATCHWORDS

Trade Practices - Contract, arrangement or understanding containing exclusionary provision or substantially lessening competition in market - Football league and club rules preventing professional football player from playing with club of choice - Interlocutory relief - Principles for grant of - Trade Practices Act 1974 (Cth.), ss. 45 (2), (3), 80 - Judiciary Act 1903 (Cth.), s. 78B.

HEADNOTE

The South Australian National Football League and the Western Australian National Football League were affiliated bodies of the National Football League of Australia Ltd. The West Perth Football Club was a member of the Western Australian National Football League. A professional footballer had played and was registered as a player with the West Perth Club. He wished to play with Norwood Football Club in South Australia.

The effect of the rules of the various football leagues was to prevent the appellant, subject to an appellate procedure within the rules, from ever playing football with any club other than the West Perth Club unless that club and the majority of the other clubs constituting the Western Australian League consented, or he first refrained from playing football for a period of three years. This was despite the fact that he had taken up residence in South Australia and was under no subsisting contract with the West Perth Club and had no wish to pursue his occupation as a professional footballer as an employee of that club.

Northrop J. refused to make interlocutory orders in the footballer's favour pending the outcome of his action against the leagues and the club under the Trade Practices Act 1974.

The primary case put on behalf of the appellant was that enforcement of their rules by the respondents, in so far as such rules would in the circumstances of the case preclude the appellant from being employed as a team player by Norwood, would be contrary to the provisions of s. 45 (2) (b) (ii) of the Trade Practices Act 1974, in that it would involve those respondents giving effect to an arrangement or understanding which had the purpose or was likely to have the effect of substantially lessening competition within the meaning of those words in s. 45 (3) of the Act.

Before Northrop J. the appellant argued that there were two alternative markets which were relevant for the purposes of s. 45 of the Act, namely: (a) a market throughout Australia in which football clubs would buy and sell the right to the transfer of football players; (b) a market throughout Australia in which football players would agree to play football for clubs for monetary reward.

In the proceeding on appeal, the footballer was given leave to advance an argument not canvassed before Northrop J. but based on evidence led at first instance. According to this argument, the relevant markets were the markets in which the various clubs within the affiliated bodies of the National League competed both for members and spectators at the games or spectacles in which they participated. It was argued that the relevant rules substantially lessened competition between the clubs competing within the relevant markets in that they restricted the extent to which the clubs could, for the purpose of improving the standard and quality of the spectacle or game in which their teams participated, play a player who would otherwise be available and who was thought, for one reason or another, to be best suited.

The respondents did not challenge the finding of Northrop J. that the considerations relating to the balance of convenience favoured the appellant.

Held: (1) In the ordinary case the court would only interfere with the refusal of the judge at first instance to grant interlocutory relief if it were of the view that such refusal to grant relief was clearly erroneous. In this case, however, the appellant had been permitted to advance an argument not advanced before the judge at first instance and consequently not considered by him. Further, the additional evidence permitted to be placed before the court on the appeal defined with greater precision than the evidence before the judge at first instance, the commercial interest of the club and the trading activities in which, on the appellant's arguments, they are engaged. In the circumstances, it was necessary for the court to examine the argument in the context of the appropriate principles and reach a decision for itself as to whether the issues involved in that argument are sufficiently complex and the appellant has a sufficiently real prospect of ultimate success to warrant the grant of interlocutory relief.

(2) In order for the appellant to be entitled to interlocutory relief, it was necessary for him to make out a prima facie case, in the sense that there were serious and difficult questions of law and fact involved in the proceedings and that the appellant had a real prospect of ultimate success. It also involved the appellant showing that, having regard to considerations such as the balance of convenience, interlocutory relief should be granted.

Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968), 118 CLR 618, applied.

(3) The appellant had complied with s. 78B of the Judiciary Act 1903 in that reasonable notice had been given to the relevant Attorneys-General. In any event, the appeal constituted a proceeding relating to the grant of urgent relief of an interlocutory nature and the interests of justice clearly required that it be disposed of without delay.

(4) In all the circumstances, the appeal should be allowed and the interlocutory relief sought by the appellant should be granted.

HEARING

Sydney, 1978, June 30. #DATE 30:6:1978

APPEAL.

This was an appeal from the refusal by Northrop J. to make interlocutory orders in the appellant's favour pending the final determination of proceedings under s. 80 of the Trade Practices Act 1974, in which the appellant sought to restrain alleged breaches by the respondents of s. 45 (2) (b).

R. Merkel and D. Shavin, for the appellant.

R. Meadows, for the respondent.

Solicitors for the appellant: Meerkin & Apel.

Solicitors for the respondent: Muir Williams Nicholson & Co.

C.A. SWEENEY

JUDGE1

June 30.

THE COURT delivered the following ex tempore judgment.

This is an appeal from the refusal by Northrop J. to make interlocutory orders, pending the final determination of the proceedings, restraining the respondents from giving effect to their rules to the extent to which those rules would operate to prevent the Norwood Football Club (Incorporated) ("the Norwood Club") playing the appellant in its Australian Rules football team in the competition conducted in Adelaide by the third-named respondent, the South Australian National Football League (Incorporated) ("the South Australian League"). We shall for convenience refer to Australian Rules football as "football". (at p239)

The matter is of considerable urgency in that on one view the appellant will lose the possibility of playing with the Norwood Club during the 1978 season unless interlocutory relief is granted today. In the circumstances, it is plainly desirable that we give our decision forthwith without benefit of the time for consideration which we would otherwise have wished to enjoy. (at p239)
The appellant is a professional football player who is resident in South Australia. He wishes to play football, during the current football season, as an employee of the Norwood Club. That club is, apparently, prepared to employ him as such a player provided it can do so without breach of the rules of the South Australian League of which it is a member. (at p239)
Each of them, the respondent - the South Australian League, and the respondent - the Western Australian National Football League (Incorporated) ("the Western Australian League"), is an affiliated body of the National Football League of Australia Ltd. ("the National League"). The respondent West Perth Football Club (Incorporated) ("the West Perth Club") is a member of the Western Australian League. The overall organization of football throughout Australia has been described by counsel for the appellant as a "pyramid-like structure". In so far as the appellant is concerned, he comes within that structure in that having played with the West Perth Club he is registered as a player with that club. (at p239)
At the top of the pyramid are the rules of the National League. Beneath those rules come the rules of the various bodies affiliated to the National League, including the Western Australian League and the South Australian League. Beneath those affiliated bodies come the rules of the clubs which constitute them, including both the West Perth Club (under the Western Australian League), and the Norwood Club (under the South Australian League). (at p239)
It is unnecessary for us to examine in detail the provisions and the interlocking effect of these various sets of rules. It suffices for present purposes to say that under these rules the appellant is precluded, subject to an appellate procedure within the rules, from ever playing football with any club other than the West Perth Club unless that club and a majority of the other clubs constituting the Western Australian League consent to his so doing, or the appellant first refrains from playing football for a period of three years. This position applies even though he lives in a State other than Western Australia, is under no subsisting contract with the West Perth Club and has no wish to pursue his occupation as a professional player of football as an employee of that club. (at p240)
The primary case put on behalf of the appellant both before the learned judge at first instance and this Court was and is that the enforcement of their rules by the respondents in so far as such rules would in the circumstances of the case preclude the appellant from being employed as a team player by the Norwood Club, would be contrary to the provisions of s. 45 (2) (b) (ii) of the Trade Practices Act 1974, as amended, ("the Act") in that it would involve those respondents giving effect to an arrangement or understanding which has the purpose or has or is likely to have the effect of substantially lessening "competition" within the meaning of that word as defined by s. 45 (3) of the Act. (at p240)
Before the learned judge at first instance it was argued on behalf of the appellant that there were two alternative markets which were relevant for the purposes of s. 45 of the Act. Those markets were formulated, to adopt the summary which appears in his Honour's judgment, as "a market throughout Australia in which football clubs buy and sell the rights to the transfer of football players and, alternatively, the market throughout Australia in which footballers agree to play football for clubs for monetary reward". Even if the appellant succeeds in establishing the existence of these alleged "markets", he plainly faces a number of obstacles which will need to be overcome if he is eventually to make good his case with respect to these two alleged markets. One such obstacle results from the definition of "services" contained in s. 4 of the Act which excludes "rights or benefits being the supply of goods or the performance of work under a contract of service". Another in the case of the first of such alleged markets is the need to show that the relevant rules have a purpose or effect of substantially lessening competition, in a context where the existence of both market and competition within it is itself, at least in part, the result of the very aspect of the system of which the appellant complains, namely, "the right" of a club to prevent a player who is bound to it under the rules from playing with any other club. His Honour stated that he was not satisfied that a prima facie case, in the sense explained by the High Court in Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968) 118 CLR 618 , of a purpose or effect of a substantial lessening of competition in relation to either of these two markets had been made out. (at p240)
Before this Court, the appellant repeated the argument by reference to the two markets previously mentioned and his primary case remained unchanged in that his attack upon the relevant rules was on the basis of an alleged infringement of s. 45 (2) (b) (ii) of the Act. The principal argument advanced before us in support of that case was, however, quite different from the argument which was canvassed before the learned judge at first instance. The attack upon the rules on the grounds of alleged contravention of s. 45 (2) (b) is clearly covered by the notice of appeal. The evidentiary basis for the argument advanced in its present form existed in the evidence led at first instance. (at p241)
According to the principal argument now advanced before us, the relevant markets were the markets in which the various clubs within the affiliated bodies of the National League competed both for members and for spectators at the games or spectacles in which they participated. (at p241)
We have reached the conclusion that in all the circumstances the appellant should not be precluded from relying on the new argument before us. During the hearing of the appeal we gave leave to the appellant to supplement the evidence in relation to the facts relevant to this new argument by filing a new affidavit. As we have said, however, the evidentiary basis for that argument was already in the material before us. (at p241)
As the argument was put, the relevant rules (see in particular r. 33 (7) of the rules of the South Australian League) substantially lessen competition between the clubs competing within the relevant markets in that they restrict the extent to which the clubs may, for the purpose of improving the standard and quality of the spectacle or game in which their teams participate, play a player who would otherwise be available and who was thought, for one reason or another, to be best suited. It was argued, to take the case of the Adelaide clubs, that these corporations were, by observing the relevant rules of the South Australian League, giving effect to an arrangement between themselves that they would not feature in their teams any player who was registered with any other club within the National League unless the player was released from the effect of such registration. (at p241)
On behalf of the respondents, it was submitted that the markets to which the appellant related his submissions were not, in the relevant sense, markets at all; that, even if they were, the restrictions resulting from the observance of the rules did not substantially lessen competition within those markets; that, in any event, neither the clubs which employed teams, nor the respondent leagues, nor the National League were "corporations" for the purposes of the Act; that even if one could identify a substantial lessening of competition in a relevant market, that lessening of competition was outweighed by the overall enhancement of competition which resulted from the system embodied in the relevant rules; that, in all the circumstances, we should not interfere with the decision of the judge at first instance not to grant interlocutory relief; and that, in any event, we should refuse to grant interlocutory relief for the reason that we were precluded from so doing by the provisions of s. 78B of the Judiciary Act 1903, as amended. It was further argued on behalf of the respondents that even though the relevant restrictions, according to the appellant's primary argument, were upon competition between the clubs in terms of the quality of their participation in the relevant games or spectacles, the exclusion in the definition of "services", to which reference has already been made, prevented any breach of the provisions of s. 45 (2) (b) (ii) of the Act being involved. See the definition of "competition" contained in s. 45 (3). (at p242)
In order for the appellant to be entitled to interlocutory relief, it is necessary that he make out a prima facie case in the sense explained by the High Court of Australia in Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968) 118 CLR 618 . This involves, as we understand the effect of what their Honours said in that case, the appellant establishing that there are serious and difficult questions of law or fact involved in the proceedings and that the appellant has a real prospect of ultimate success. It also involves the appellant showing that, having regard to considerations such as the balance of convenience, interlocutory relief should be granted. The learned judge at first instance found that considerations relating to the balance of convenience favoured the appellant. This finding has not been challenged by the respondents before us. (at p242)
We have given careful consideration to the submission made on behalf of the respondents that we should approach the matter on the basis that we should only interfere with the refusal of the judge at first instance to grant interlocutory relief if we were of the view that such refusal to grant relief was clearly erroneous. (at p242)
In the ordinary case, there is no doubt much force in that submission. In the present matter, however, we have permitted the appellant to advance an argument which was not advanced before the judge at first instance and which was, in the result and in view of the circumstances in which his Honour of necessity dealt with the proceedings before him, not considered by him. The additional evidence which we permitted to be placed before us on the appeal defines, with greater precision than did the evidence before his Honour, the commercial interest of the clubs in the trading activities in which, on the appellant's argument, they are engaged. (at p242)
In this situation, we think it necessary that we examine the argument which is now advanced for ourselves and, in the context of the appropriate principles, reach a decision for ourselves as to whether the issues involved in that argument are sufficiently complex and the appellant has sufficient real prospect of ultimate success to warrant the grant of interlocutory relief. (at p243)
We can see great force in a number of the arguments advanced on behalf of the respondents and, if it were necessary for us to reach a firm view as to what the ultimate outcome of the proceedings will be, we would have no alternative but to reserve our decision. It is not, in the view we take, either necessary, or indeed, proper that we reach or express such a firm view at this stage of the proceedings. It is only necessary that, as has been said, we be persuaded that there are serious and difficult questions of fact or law involved in the proceedings and that the appellant has a real prospect of ultimate success. We are so persuaded. (at p243)
It follows that unless we are precluded from so doing by the provisions of s. 78B of the Judiciary Act, we are of the opinion that the appeal should be allowed and interlocutory relief should be granted. (at p243)
In so far as the respondents' argument based on s. 78B of the Judiciary Act is concerned, we consider that, in all the circumstances, reasonable notice has been given to the relevant Attorneys-General in compliance with the requirements of that section. In any event, we are of the view that the current appeal constitutes, within the meaning of s. 78B (5), a proceeding relating to the grant of urgent relief of an interlocutory nature and that the interests of justice clearly require that we proceed to dispose of the appeal without delay. (at p243)
In the result, it is unnecessary that we consider whether the appellant would, in any event, have been entitled to succeed in the appeal by reference to the arguments in relation to the other markets which were propounded before the judge at first instance and which have been repeated before us or by reason of his invoking of the associated jurisdiction of the court pursuant to the provisions of s. 32 (1) of the Federal Court of Australia Act 1976. (at p243)

The parties have agreed as to the appropriate undertakings to be given and orders to be made in the event that we reach the conclusion that the appeal should be upheld. Those undertakings and orders have been reduced to writing. They clearly constitute a convenient method of giving effect to our decision and we are prepared to accept the undertakings and make orders in the form set out in that document. (at p243)
The undertakings and orders are as follows: (at p243)
(1) Upon the appellant by his counsel undertaking to abide by any order which the court may make as to damages in the event that the court is of the opinion that the respondents or any of them shall have suffered any by reason of the injunction hereinafter set out which the appellant ought to pay. (at p244)
(2) Upon the appellant and the Norwood Football Club (Incorporated) by their counsel undertaking to sign all documents and take all steps which are within their power to sign or take to effect the reclearance of the appellant back to the West Perth Football Club (Incorporated) in the Western Australian National Football League (Incorporated) in the event that the dispute herein between the parties is finally resolved by the court against the appellant or in the event that the High Court of Australia makes the order nisi granted on 6th June, 1978, absolute. (at p244)
(3) Upon the respondents by their counsel undertaking to this day execute all documents and take all steps which are reasonably within their power to execute and take so as to enable the registration this day of the appellant as a football player of the Norwood Football Club (Incorporated) in accordance with the provisions of r. 33 of the rules of the South Australian National Football League (Incorporated). (at p244)

ORDER

THIS COURT DOES ORDER that the first and second-named respondents and each of them whether by their servants, agents or howsoever otherwise be forthwith restrained from continuing to refuse to grant a clearance to the appellant to the South Australian National Football League (Incorporated) pursuant to the provisions of the Interstate Clearance and Permit Regulations of the National Football League (Incorporated).

(4) Service of this order on the respondents be dispensed with.

(5) This order be passed and entered forthwith.

(6) Liberty be reserved to all parties to apply as they may be advised.

In view of the fact that the appeal has, to no small extent, been concerned with an argument which was not advanced by the appellant before the judge at first instance, we consider the appropriate order for costs is that the respondents pay one-half of the appellant's costs of this appeal.

[1978] FCA 50

30 JUNE 1978