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A mediator’s guide to the AFL trade period

It’s a great time of year for football.  The AFLX, whatever that was, is over.  The AFLW is in full swing, and we are nearly as far as it is possible to get from the horror that is the yearly trade period.

Even for those of us who really like football, the AFL trade period is terrible. It consists of 11 days of waiting for something to happen followed by about four hours where you might see a few trades completed, and then it’s over.

If you follow the trade period each year, I’m sure you always ask yourself the same question as I ask myself, which is “How can we use the lessons we learn from this to improve the way we do mediations?”

Here’s three things I think we can learn from past trade periods that might be useful next time you need to negotiate a settlement. I apologise in advance for using a whole bunch of examples involving the Collingwood football club, but those are the only trades I really care about.

 

It’s possible to find a win-win solution

On a good day (usually around 1pm on the last day of the trade period) it’s possible to spot a good outcome.  Perhaps the best one in recent history was the Heath Shaw/Taylor Adams trade in 2013.

Collingwood had a rare talent in Heath Shaw (we will never forget that smother in the 2010 Grand Final replay) but it seemed pretty clear that he was no longer happy at the club and he needed a fresh start. Meanwhile, Collingwood seems to have taken the view that  that the premiership window had closed much sooner than they expected so it was time to recruit some younger players.

Taylor Adams for Heath Shaw was a great deal for both clubs.  GWS got a talented, experienced player who could provide leadership for their developing group.  Sure, it is sometimes painful to watch Heath Shaw in All-Australian form and possibly playing the best football of his life for the Giants, but we all know he wouldn’t be playing like that if he was still at Collingwood.

Meanwhile, Collingwood picked up a solid midfielder and future leader who will, one day, probably play in a Grand Final.

Comparing apples and oranges is never a good idea, and it’s almost equally hard to compare Taylors and Heaths.  However, you will get much better outcomes in mediations if you worry less about a direct comparison between the value of what you get and what you give away, and more on how the agreement directly benefits you.

 

Don’t judge the outcome too soon

In 2014, Dayne Beams needed to get back to Brisbane for family reasons.  There was no point in trying to force him to play out his contract, knowing he wanted to be elsewhere, so really, Collingwood had an awful bargaining position and just had to make the best of it.  In that situation, picking up draft picks 5 and 25 wasn’t a bad outcome, but they also picked up young midfielder Jack Crisp.

At the time, reaction to this trade was not particularly kind to Crisp, with the term “steak knives” getting thrown around a fair bit.  However, at the end of his first season at Collingwood, Crisp finished third in the Club’s best and fairest, with more votes than anyone expect Dane Swan and Scott Pendlebury.

Meanwhile, Collingwood traded pick 25 for Levi Greenwood and used pick 5 to recruit Jordan De Goey.  At the time of writing, Levi Greenwood is battling injury and Jordan De Goey has managed to get himself suspended again, this time indefinitely.

In hindsight, picking up Jack Crisp in that trade was a great outcome.

It’s not always so clear cut.  Injuries aside, Levi Greenwood has clearly been an asset to Collingwood.  Meanwhile, North Melbourne used the draft pick they received for Greenwood to recruit Daniel Nielson.  I only know this because I looked it up while I was writing this article.  It turns out Daniel Neilson has played seven games for North Melbourne since making his debut in 2017.  Is he better than Greenwood?  It’s far too early to say.

It’s important to accept that in any mediation, there will be some degree of uncertainty.  If you will only accept a deal when you can unequivocally say that it is better than the alternatives, the deal will not get done.  However, if you use your best judgment at the time, there’s a pretty good chance that the eventual outcome will turn out to be better than the alternatives, even if it’s not for the exact reason as you initially thought.

 

Focus on key goals, not trivial side issues

The main reason why I hate trade week is that it can take forever for really obvious deals to get done. I can’t really say why this happens, but I suspect that it’s often because both parties are trying to get a few extra concessions so they can say that they “won” the trade.  Often, those concessions are actually worthless.

Adam Treloar’s trade to Collingwood was described in The Age as the most prolonged and acrimonious of the 2015 trade period.  In the end, Collingwood got Treloar and pick 28 in exchange for pick 7, a first round pick for the following year, and pick 65.  What did the Giants do with pick 65?  Nothing. As far as I can tell, they literally did not use it.

There are many more examples of absurdly high draft picks being traded to get a deal done.  I didn’t even mention that the Dayne Beams trade also involved Collingwood giving Brisbane Pick 67, because it really didn’t matter. For the record, Brisbane used it to recruit Josh Watts, who never played a senior game for them.

I don’t have any data on how many trades have fallen over because people were arguing about late round draft picks.  It does seem like a lot of big trades get held up until the last possible minute, which probably means other deals can’t get done before the deadline.  The whole process could be improved if less time was spent on trading draft picks that will probably never make any difference to the club that receives them.

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I strongly suspect that the 2018 trade period will play out exactly like every other trade period before it, and this article would make no difference to this even if every club in the AFL reads it.   However, I hope that if you go into your next mediation knowing what you want and what it’s worth to you, keeping an open mind about the potential benefits of a deal, and determined to focus on what really matters, your mediation experience will be better, and quicker, than an AFL trade period.

 

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The Franchising Code – Penalties for Non-Disclosure

The current Franchising Code came into effect on 1 January 2015.  The first case involving a penalty for breaching the current Code was decided on 10 November 2017.  The case is known as ACCC v Morild Pty Ltd [2017] FCA 1308.

This case is a useful guide to the penalties that may be imposed for breaching the Code, and the issues that the Courts will consider when deciding what the penalty should be.

The case involved the “Pastacup” franchise system, which operates a chain of pasta restaurants in Western Australia and New South Wales.  Morild Pty Ltd is the current franchisor. Stuart Bernstein co-founded the Pastacup franchise in 2008 and remains involved in the promotion and management of the franchise.

Mr Bernstein was previously a director of two other companies (SSP Holdings and Pastacup Australia) which acted as franchisors for the Pastacup franchise. Those companies both ended up insolvent.

A Disclosure Statement provided to potential franchisors in 2014 did not disclose that Mr Bernstein had been a director of those other companies, or that those companies had become insolvent while acting as franchisors for Pastacup.  The Disclosure Statement was amended in 2016 to state that the two previous franchisors were associates of Morild Pty Ltd and that they were externally administered companies, but the updated Statement failed to disclose Mr Bernstein’s role in those companies, and failed to disclose that the companies had become insolvent while acting as franchisors for the franchise.

The first franchisor, SSP Holdings, entered into a creditor’s voluntary winding up in December 2013 after a general meeting resolved that it could not meet its debts as and when they fell due.  SSP Holdings was reported as owing $1,667,238 to its unsecured creditors when it went into liquidation.

Pastacup Australia took over as franchisor but it was wound up in insolvency after an application made by the Deputy Commissioner of Taxation in July 2014.  The administrator’s initial report estimated that Pastacup Australia owed $2,006,176 to its unsecured creditors. This estimate was later revised to $2,430,441.

The administrator’s report stated that Pastacup Australia had failed due to a lack of financial management, the failure of several franchised stores,  poor record keeping, poor cash flow and trading losses and insufficient capital to provide for the initial set up costs.

The Court found that the failure by Morild and Mr Bernstein to disclose such matters meant that prospective franchisees lost, at least, the opportunity to make a fully informed decision as to whether to commit significant time, money and resources to a Pastacup franchise.  The Court also noted that if the franchisor became insolvent, franchisees would lose the right to use the Pastacup intellectual property, which would cause them loss.

Morild and Mr Bernstein admitted that they had breached the Code.

The Court ordered that Morild and Mr Bernstein must include relevant information regarding the previously franchisors and Mr Bernstein’s involvement in those companies in future disclosure statements.  This requirement will continue until December 2023 for information about SSP Holdings, and until October 2024 for information about Pastacup Australia.

As this was the first decision about penalties under the current Franchising Code, the Court set out the various arguments about penalties and it’s reasoning in detail, in the hope that this would avoid the need for parties to “reinvent the wheel” in any future cases.

The relevant considerations included:

  • The whole course of conduct
  • The nature and extent of:
    • the act or omission
    • any loss or damage caused and
    • impact on the market and innocent third parties
  • Circumstances in which the act or omission took place
  • Any previous contraventions or similar conduct
  • Involvement of senior management and whether the conduct was deliberate
  • Whether the conduct comprised isolated conduct or occurred over a period of time
  • Corporate culture
  • Size and financial position of the respondents,
  • The deterrent effect of the penalty
  • Whether the respondent company has improved or modified its compliance systems since the contraventions
  • Whether the respondents have cooperated with the ACCC

The Court also ordered Morild to pay a fine of $100,000 and Mr Bernstein to pay a fine of $50,000, and ordered them to pay costs of $12,000 to the ACCC.

Every case is different so it will always be difficult to to predict the amount the likely penalty.  If you are concerned that there may have been a breach of the Code’s requirements, it would be best to seek legal advice immediately.

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Religious freedom and the right to discriminate

I am a lawyer.  I am also a Christian.  This means that I wake up every day and go to work with the goal of running my law firm according to a few basic Christian principles, like treating my customers the way I would want to be treated, trying to resolve conflicts instead of causing them, and putting ethics ahead of profit. I believe this is what the intersection between Christian faith and the law should look like.

There is no law against any of those things, so I have no reason to believe that anyone is ever going to try to threaten my freedom to practice my faith in this way.

Today, being a Christian lawyer also means that I feel compelled to comment on an article that appeared in The Age recently, with the headline Churches demand new ‘religious freedom’ law to combat era of ‘hatred’ .  I believe that this is the exact opposite of what the intersection between Christian faith and the Law should look like.

According to the report, several church groups, including Hillsong, the Presbyterian Church and the Anglican Diocese of Sydney, have endorsed a submission to the Federal Government’s review of religious freedom laws calling for existing exemptions to anti-discrimination laws to be codified and expanded.

The submission proposes that Church church-run organisations (including schools and aged care homes) would be allowed to hire and fire staff “in accordance with their values”.  This would mean an employee who enters into a same-sex marriage could be fired for that reason.

The report did not indicate whether the submission also calls for the right to fire people who get divorced, or try to re-marry after a divorce, or who live together before they are married.

The submission also called for:

  • Changes to the Marriage Act to ensure facilities such as school chapels cannot be used for same-sex weddings against the wishes of the diocese, even if the school principal gives permission;
  • The right for parents to remove their children from public school programs that don’t accord with their values; and
  • The creation of a “national religious freedom commissioner” within the Australian Human Rights Commission.

The Age quotes the author of the report, Professor Patrick Parkinson from the University of Sydney, as saying “Christians are not into freedom to discriminate, they’re really into freedom to select.”

I must admit to being very surprised that a professor of law at a leading Australian University would suggest that when it comes to employment law, there is any difference at all between “freedom to discriminate” and “freedom to select.”

With all due respect to Professor Parkinson, firing someone because they choose to get married is wrong no matter what you call it.  As a Christian, I do not want this “freedom to select”. I do not want it at my law firm, I do not want it at my church, I do not want it at my children’s schools.  I do not want it anywhere.

I married my beautiful wife sixteen years ago.  It did not even occur to me that someone could threaten to fire me for that decision, because that is just not how things work in this country.  If we change the law to allow people to be fired for getting married, that will be a huge backward step.

Let’s not do that.