'Part of that bargain': Supreme Court backs NBL

• The Court of Appeal upheld the stay, so neither judgment examined the allegations
• Court records show the clubs sought documents to decide whether to go to CAS
• All 165 games of the NBL27 season in one list

The Illawarra Hawks and South East Melbourne Phoenix have lost their appeal against the National Basketball League.

The NSW Court of Appeal upheld the stay on the clubs' preliminary discovery application on September 3, 2026, before Chief Justice Andrew Bell, Justice Mark Leeming and Acting Justice John Griffiths, who had reserved judgment after hearing the matter on July 22.

The NBL called it a "decisive" win and said the court "has now twice confirmed what the NBL has maintained throughout; that these proceedings should never have been commenced, and this dispute should have been addressed through the agreed grievance processes, not the courts".

The Supreme Court's case page for the appeal, proceedings 2025/00491694, records that the two clubs sought preliminary discovery under rule 5.3 of the Uniform Civil Procedure Rules "to determine whether they have a proper basis to bring substantive claims before the Court of Arbitration for Sport (CAS)".

On the court's own account they were not trying to get around CAS. They were trying to obtain the documents that would tell them whether they had a case worth taking there, and preliminary discovery is not a procedure CAS offers.

Justice Elisabeth Peden had in fact rejected the NBL's primary argument at first instance. In November 2025 she held that the preliminary discovery application did not fall within the arbitration agreement and did not involve a "matter capable of settlement by arbitration", so the mandatory stay under the International Arbitration Act 1974 was never engaged.

She stayed it anyway, under section 67 of the Civil Procedure Act 2005, because filing the application breached the covenant not to sue in clause 14.3 of the NBL licence agreements.

"Clause 14.3 makes clear that the parties have agreed to resolve all issues only through private dispute resolution and not in a court," Justice Peden wrote.

"Part of that bargain is that the parties are precluded from accessing court procedures, even if they are not available in CAS."

Crest Sports and Entertainment, the Jared Novelly company that owns the Hawks, told AAP the outcome "does not resolve the substantive issues that prompted the application", and told the Illawarra Mercury that the two decisions "should not be misrepresented as an exoneration of NBLCo's conduct, which the Court has not examined".

The conduct was examined, just not by a court. Basketball Australia's Integrity Unit appointed Justin Gleeson SC in June 2025 to investigate Crest's complaint against NBL owner Larry Kestelman, and he delivered his report in December 2025. It has never been published. In April 2026 Basketball Australia issued a public statement on the investigation that was widely reported as clearing Kestelman.

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On August 26, 2026, Basketball Australia corrected that statement: "Basketball Australia did not intend for that statement to leave Mr Gleeson's findings open to misinterpretation and acknowledges that the distinction between the overall decision and the broader findings of the report should have been made clearer.

"Basketball Australia now corrects that statement."

Setting out Gleeson's conclusions, BA said he found Kestelman "does not present on the totality of the evidence gathered in the course of the investigation, as a 'bad faith actor'", and had invested "an enormous amount of his own time and money, over a decade" in bringing the NBL back "from the brink of financial ruin and collapse".

But it also says he found Kestelman "has, in the course of those endeavours, made mistakes".

Kestelman was given "a period of one year, to complete the processes of remediation", and Basketball Australia says that if his promises "prove to be dashed, it would remain within the BAIU's remit to take further action of its own accord".

On the December 2025 report date that year runs to about December 2026, inside the NBL27 season.

The two clubs are also isolated among their peers. In August, the seven owners who had stayed out of the fight for eighteen months came off the fence, backing Kestelman and disowning the breakaway owners' association that Illawarra, South East Melbourne and Perth had formed.

Adelaide, Brisbane, Cairns, Melbourne, New Zealand, Sydney and Tasmania told CODE Sports the association "has been created by three owners who have a long-standing legal fight with the league", and that "their views do not reflect the views of the other seven owners". What moved them was not principle.

Owners said they feared what the fight was doing to franchise valuations, and one put it plainly on condition of anonymity: "we don't want this to go on any longer, we want it to be over."

Note: The first applicant is Illawarra Basketball Club Pty Ltd, the second applicant is RC Aussie Hoops Pty Ltd as trustee for the RC Aussie Hoops Unit Trust, which owns the Phoenix. The respondent is National Basketball League Pty Ltd (ACN 164 187 937).

Both NBL clubs were plaintiffs before Justice Peden and both went to the Court of Appeal.

Costs on the appeal are not stated.