EASTERN ATHLETIC ASSOCIATION FOOTBALL TEAM LTD v. ALESSANDRO FERREIRA LEONARDO

HCA 2383/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2383 OF 2015

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REASONS FOR DECISION AND DECISION ON COSTS
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1.  This is an application for interlocutory injunction to restrain the Defendant from playing for other football teams before 31 May 2018 without the prior written consent of the Plaintiff.

2.  In the summons day hearing on 23 October 2015, I dismissed the Plaintiff’s application.  I now give my reasons.

Background

3.  The Plaintiff is a local football club and the Defendant is a professional football player.

4.  The Plaintiff claims that earlier this year, the Plaintiff and the Defendant had entered into a “provisional contract” (“the Provisional Contract”) whereby the Defendant agreed to join and play for the Plaintiff from 1 June 2015 to 31 May 2017, with an option to the Plaintiff to extend the term to 31 May 2018.

5.  On 15 May 2015, the Defendant’s solicitors wrote to the Plaintiff challenging the validity of the Provisional Contract on the grounds that, inter alia:

(i) the Provisional Contract was not executed in the form specified by Hong Kong Football Association (“HKFA”) or in triplicate, and so the Provisional Contract could not be submitted to HKFA for registration;

(ii) HKFA would not accept or recognize the Provisional Contract since the Plaintiff had not submitted the Provisional Contract to HKFA for registration within 10 days as required by the latter.

6.  There were then some exchanges of correspondence between the solicitors for both parties, each maintaining their different stances about the validity of the Provisional Contract.  In the meantime, the Defendant signed to play for a rival team, namely Kitchee Football Club (“Kitchee”).

7.  The 2015/2016 football season started in September 2015.  Each team has played a few matches ever since.

8.  On 15 October 2015, the Plaintiff took out the application for interlocutory injunction to restrain the Defendant from playing for any other football clubs before 31 May 2018.  The summons came before me on the summons day on 23 October 2015.  By that time, the Defendant had not filed any affidavit in opposition, and yet he was prepared to contest the application without further evidence.  Hence, the application was disposed of in the summons day hearing.

Merits of the application

9.  As the evidence before the court on the merits of the claim is rather limited, it is quite impossible for me to express any views on the merits of the claim.  At this stage, both parties agree for the court to proceed with the application on the basis that the Plaintiff has an arguable claim and there is a serious question to be tried regarding the validity of the Provisional Contract.

10.  Despite such consensus, the court should not grant the application based on the following reasons:

(i) the court would not grant an injunction to enforce negative stipulations under a contract for the performance of personal services involving the continuing exercise of some special skill or talent and a high degree of trust and confidence, if the grant of the injunction would effectively compel specific performance of the positive obligations or would result in the defendant being idle, which is exactly the case here; and

(ii) there was delay on the part of the Plaintiff in making the interlocutory injunction application, which also undermines the Plaintiff’s complaint that it would suffer irreparable damage if the Defendant is allowed to play for other football clubs.

11.  I will deal with these reasons in turn.  Either of them would be sufficient for the court to dismiss the application.

12.  First, it is quite settled law that the court will not grant specific performance of a contract of personal services on both sides involving mutual trust and confidence, and will not grant an injunction which effectively compels performance of the positive obligations in a contract of personal services.

13.  In Worth Achieve Associates Ltd v Huang Sheng Yi[1], Lam J (as he then was) said:

“18. The starting point is that the court cannot grant specific performance of a contract of personal services on both sides involving mutual trust and confidence. As Oliver J put it in Nichols Advanced Vehicle Systems Inc v De Angelis (unrep., 21 December 1979):

An award of damages in such a case can seldom be a complete or adequate remedy for breach of such an agreement, but in general it is the only remedy which the law is able to provide; for not only can the court not practically supervise the performance of the contract but in addition there is something morally repugnant in the notion of shackling together in a relationship of mutual trust, dependence and daily personal contact, individuals who are at loggerheads or who have lost confidence in one another.

19. We are of course not dealing with specific performance and the plaintiff is seeking injunction instead. Still, there are good authorities for the proposition that the court will not grant an injunction to enforce negative stipulations under a contract for the performance of personal services that involved the continuing exercise of some special skill or talent and a high degree of mutual trust and confidence if the grant of the injunction would effectively compel performance of the positive obligations, see Warren v Mendy & Another [1989] 1 WLR 853; Nichols Advanced Vehicle Systems Inc v De Angelis (unrep., 21 December 1979), Oliver J; Page One Records Ltd & Another v Britton & Others [1968] 1 WLR 157 and Subaru Tecnica International Inc & Another v Burns & Others (unrep., Ch D, 12 December 2001), Deputy Judge N Strauss QC.

20. The underlying rationale for this proposition can be found in the judgment of Lindley LJ in Whitwood Chemical Co v Hardman [1891] 2 Ch 416 at p 427:

What injunction can be granted in this particular case which will not be, in substance and effect, a decree for specific performance of this agreement?  It appears to me the difficulty of the plaintiffs is this, that they cannot suggest anything which, when examined, does not amount to this, that the man must either be idle, or specifically perform the agreement into which he has entered. … The principle is that the court does not decree specific performance of contracts for personal service.”

14.  The same principle applies even if the plaintiff has done nothing wrong at all [2].

15.  Here, the effect of the Plaintiff’s injunction is to compel the Defendant to honour the purported implied term of the Provisional Contract to play only for the Plaintiff.  There is no realistic chance that the Plaintiff would consent to the Defendant playing for another football club.  The injunction will thus force the Defendant to play for the Plaintiff against his wish, when it cannot possibly be disputed that mutual trust and confidence between a football player and his club is the bedrock to any club-and-player relationship.  In the circumstances, the court should not grant an interlocutory injunction with such effect.

16.  In support of the application, Mr Yau, counsel for the Plaintiff, relies on Thomas Marshall Ltd v Guinle[3] and Evening Standard Ltd v Henderson[4] to argue that, whilst specific performance of the positive obligations under the contract cannot be decreed, the court can restrain an employee in default from breaching the negative obligations like not working for other employers during the contractual term.  Further, the Plaintiff is prepared to provide an undertaking to the court that, in the case of the grant of the injunction, it would honour its obligation under the Provisional Contract including the provision of monthly salary and quarters to the Defendant.  In such case, so long as the Defendant is not playing for other football clubs, he will not be forced to play for the Plaintiff against his wish.

17.  I cannot accept these arguments.  In Thomas Marshall Ltd v Guinle[5], the court only granted an injunction to restrain an employee from committing other breaches of his obligations during the period of his contract, namely not to solicit or to deal with customers, or not disclosing or using confidential or trade secret of the employer.  In other words, the injunction was granted only to protect the properties of the employer.  Megarry V.-C in that case expressly acknowledged that the court was powerless to force the defendant to work in accordance with his contract[6].

18.  Evening Standard Ltd v Henderson[7] was slightly different.  The defendant was employed by the plaintiffs as the production manager of an evening newspaper.  The contract of employment required 1 year’s notice of termination and that, during its duration, the defendant was not to engage in work outside the company without special permission.  The defendant only gave 2 months’ notice of termination and sought to join a competitor.  The English Court of Appeal granted an interlocutory injunction to restrain the employee from working for the competitor for the duration of the contractual notice period on the basis of an undertaking given by the plaintiffs to pay the defendant for that period regardless of whether he presented himself for work.

19.  I agree with Mr Chang, counsel for the Defendant, that Evening Standard is very much a case on its own facts.  Firstly, the plaintiffs in that case gave a further undertaking to the court not to seek any damages against the defendant for the period when he was not working for them.  Secondly, the defendant had been working in the production room of the plaintiffs ever since he sent in his letter of resignation.  It was certainly not the case that the parties were at loggerheads or had lost confidence in one another.  Thirdly, Evening Standard was a case requiring the employee to continue working for the same employer during the contractual notice period.  I am not aware of any case that the court had granted an interlocutory injunction requiring an employee, who had not worked for the claimant before, to stop his existing employment and to switch to work for the claimant.

20.  More importantly, there is one crucial difference between the employee in Evening Standard and the Defendant in the present case.  There is no real loss to the employee in Evening Standard if he just sat idle and did not work for his employers.  He would still receive his salary without worrying for any complaint by his employers.  The Defendant here is a professional football player.  Even without any evidence from the Defendant himself, one would appreciate that he needs to play in football matches to keep and improve his skills and physiques, not to mention that he needs to play in professional football matches to increase his chance for being selected to play for his national team.  In such circumstances, one cannot realistically expect that, in the case of the grant of the injunction, the Defendant would just sit idle and receive his salary.  In effect, he has little choice but to play for the Plaintiff, otherwise it would possibly mean the end of his football career.

21.  In this regard, the dicta made by Lam J in Worth Achieve Associates Ltd v Huang Sheng Yi[8] are also applicable in the present case.  In that case, the defendant, an actress, appointed the plaintiff as her exclusive manager and agent initially for 3 years.  During the term of the agreement, both parties complained that the other side had committed breaches of the agreement.  The defendant then signed an agency agreement with another party, claiming that the plaintiff had, by its conduct, precluded any cooperation between them.  The plaintiff alleged that the original agency agreement was still subsisting and made an application for interlocutory injunction to restrain the defendant from committing any further breaches of the agreement.  Lam J refused the application.

22.  In his judgment, Lam J made the following observations about the nature of the agreement between the parties:

“26. The Contract plainly requires performance of personal services involving the continuing exercise of some special skill or talent on the part of the defendant. Given the nature of the entertainment industry, it is also essential that the defendant can continue with her performing activities in order to maintain her psychological and material well-being. Hence, if the defendant is barred from taking part in any public performances or from using her image or name for any promotion for a substantial period in terms of years, that would be the end of her career. … …

… … …

28. On the plaintiff’s case, the Contract shall run until 2011. Thus, if the court were to accede to the submissions of the plaintiff, there would have to be an injunction up to 2011. Looking at the matter realistically, I have little doubt faced with such an injunction, the defendant would have no alternative but to engage the plaintiff as her manager according to the Contract.

… … …

30. More importantly, the smooth operation of the Contract requires a high degree of trust and confidence between the parties.  It involves personal services or guidance from both parties.  The defendant has to be willing to follow the advice or guidance of the plaintiff as regards what were good for her in the furtherance of her career in performing activities.  To achieve that, she must have confidence in the plaintiff.  At the same time, the plaintiff also has to have confidence in the good faith of defendant.  Otherwise, it would have difficulties in getting the best projects for the defendant and in promoting her effectively. … … …”

23.  Taking into account the similar features between an actress agency agreement in the entertainment industry and the player-and-club agreement in the football industry, the dicta made by Lam J in Huang Sheng Yi are also applicable in the present case.  As I find that the material facts of the two cases are no different, the court should not allow the Plaintiff to obtain interlocutory injunctive relief against the Defendant even if it is prepared to provide the said undertaking to the court.

24.  I then turn to the question of delay.  As early as in May 2015, the Defendant through his lawyers had already challenged the validity of the Provisional Contract for its failure to comply with HKFA rules on registration of players.  Further, as shown in the letter of the Plaintiff’s solicitors dated 7 July 2015, the Plaintiff was by then fully aware that the Defendant had signed a contract to play for Kitchee, and yet it did take any legal action to protect its right or to stop the Defendant from playing for the rival football club.

25.  In seeking to justify the delay, Mr Yau submits that the Plaintiff had lodged a complaint to HKFA on 14 July 2015 after learning from the press that the Defendant had signed to play for Kitchee.  2 weeks later, HKFA wrote to the Plaintiff for more information.  The Plaintiff supplied further information in its letter dated 31 August 2015.  By the subsequent letter dated 18 September 2095, HKFA replied that the information provided to them was “incomplete and inconsistent” and indicated that it would not take further action.  The Plaintiff immediately contacted its legal representatives with a view to commence legal action against the Defendant.

26.  According to Mr Yau, it is common in the sports world to refer a dispute of this nature to the governing body of the relevant sport.  It is the primary arbiter of disputes among those involved in that sport.  The court should actually encourage the parties to do so without resorting to legal action and so it should not penalise the Plaintiff for the “delay” in seeking the assistance of the court.

27.  Again, I have to reject such argument.  Firstly, there is an issue as to whether HKFA had any legal basis to deal with the dispute as the Defendant had yet become a “contract player” under r 20 of the HKFA Rules.

28.  More importantly, under the HKFA Rules, it is not obligatory for a football club to refer a dispute of this nature to HKFA for adjudication.  The 2015/2016 football season had already started in September 2015.  After the Plaintiff learnt of the challenge to the validity of the Provisional Contract back in May 2015, it basically did nothing.  It was only after the Plaintiff heard about the news of the Defendant joining Kitchee that it made a complaint to HKFA.  If the Plaintiff was really concerned about the “irreparable” damage caused to it by the Defendant playing for Kitchee, it should have pressed HKFA to resolve the dispute at a reasonable time before the commencement of the season, as football clubs had to make preparations and plans for the season based on their lists of players.  Yet the Plaintiff had not done so.  More surprisingly, the Plaintiff, knowing that HKFA could not resolve the dispute within a short period of time, had not made any application for interlocutory injunction before the commencement of the football season.  In my judgment, such delay undermines the credibility of the Plaintiff’s complaint about irreparable damage and delay alone is already a sufficient ground to deny the Plaintiff’s application.  I therefore so ordered in the hearing.

Costs of the summons

29.  I have reserved the costs of the summons for further consideration.

30.  Since there are established authorities showing that the court will not grant interlocutory injunction with the effect of compelling specific performance of the positive obligations in a contract of personal services of this nature, the Plaintiff should not have made the present application and it should therefore pay for its costs.  However, the court has not considered the overall merits of the claim.  In my judgment, though the Plaintiff has made a wrong tactical decision in making such application, it would not be fair to ask the Plaintiff to pay for such costs before the conclusion of the case.  In particular, it seems that the Defendant is not disputing the signing of the Provisional Contract, and he is seeking to rely on some technical reasons to challenge the validity of the claim.  In such circumstances, I order that that the costs of the application be to the Defendant in any event.