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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Trade Practices - whether rules of NSW Rugby Leage incorporated in players' contracts requiring players to submit to a player draft procedure prior to contracting with a new club ("the players' internal draft rules") amount to a restraint of trade - whether restraint of trade reasonable having regard to interests of players and clubs - common law doctrine of Restraint of Trade considered - whether the players' internal draft rules constitute an arrangement or understanding containing an exclusionary provision under s.45(2) of Trade Practices Act 1974 (Cth) - whether having the purpose or likely effect of substantially lessening competition - definition of exclusionary provision considered - whether supply or acquisition of services - whether s.51(2) Trade Practices Act 1974 directed regard not to be had to provisions of the players' internal draft rules.Arbitration (NSW) - harsh, unfair or unconscionable contracts - s.88F of the Industrial Arbitration Act 1940 (NSW) - discussion of principles to be applied - whether arrangement held to be reasonable in the interest of players and clubs could be per se unfair - effect of absence of evidence of surrounding circumstances.
Trade Practices Act 1974 (Cth) ss.4, 4D, 45, 51(2)
Industrial Arbitration Act 1940 (NSW) s.88F
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) ss.5, 8
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) s.5
HEARING
SYDNEY Counsel and Solicitors B.J. Gross QC and R.W. White
for Applicant: instructed by Bush Burke and Co.
Counsel and Solicitors T.E.F. Hughes QC, A. Sullivan QC
for Respondent: and T.D.F. Hughes instructed by Colin W.
Love and Co. for the first respondent
R.A. Conti QC and L.G. Foster
instructed by Sly and Weigall for
the second to seventeenth respondents
ORDER
The matter be stood over to a date to be fixed when subject to the giving of an undertaking by the first respondent as to the amendment of the Premiership Competition Rules, orders will be made in accordance with the reasons for judgment.Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
DECISION
The present proceedings were instituted by 222 applicants, all of whom, one may assume (evidence was adduced only in respect of some of them), were players of the sport of rugby league. Fifty two applicants were granted leave to discontinue, leaving a total of 170 applicants desiring to challenge the validity of the rules of the New South Wales Rugby League, relating to what has been referred to throughout the proceedings as the "internal draft". The respondents to the application are the New South Wales Rugby League ("the League") and the sixteen clubs throughout New South Wales and Queensland which are members of the League and which, by invitation of the League, participated in the 1990 New South Wales Rugby League Premiership Competition and propose to participate in the competition for the 1991 season. That competition is played in three grades: the President's Cup (Third Grade), the Reserve Grade (Second Grade) and the pinnacle of rugby league competition in Australia and perhaps the world, the First Grade, presently known as the Winfield Cup Competition.2. The League has formulated rules for the conduct of the New South Wales Rugby League Premiership Competition, which rules are known as the Premiership Competition Rules. Power so to do is to be found in the Memorandum and Articles of Association of the League. Each of the clubs admitted to the competition, agrees to abide, inter alia, by these rules and contracts entered into between clubs and players are made subject to these rules.
3. A player is not eligible to play in the competition and may not be fielded by a club unless he is inter alia a member of that club and is registered with the League as a player of that club. A club is entitled to have 57 players registered with the League at the commencement of the competition and contracted to the club. Not more than 32 of these players may be over the age of 21 years as at 31st December in the year preceding the year in which the player is to be registered, and a player must have attained the age of 16 years by that 31 December date.
4. The rules provide for two forms of draft: the external draft and the internal draft. Although the application originally challenged both, it was conceded in submissions that the applicants' case was concerned solely with the internal draft.
5. The external draft is concerned essentially with a system whereby persons who have not played in the Premiership Competition or equivalent competitions elsewhere, and are not already contracted to play for a club, may become employed by and play for a club in the competition for the first time. It is unnecessary to detail the manner in which this external draft works. The internal draft on the other hand is concerned only with players who have previously played in the Premiership Competition or an equivalent competition. For present purposes that means a player who has been previously contracted to play for one of the respondent clubs as being one of the 57 registered players of that club.
6. The Premiership Competition rules are prefixed by a statement of
objectives, formulated in their present language at the time
the rules
concerning the internal draft were introduced in 1990. The objectives are
stated as follows:
"The League and the Clubs as defined in Article7. The provisions specifically concerned with the internal draft are contained in rules 55-57 which provide as follows:
1 of the Articles of Association of the League
wish to ensure that the teams fielded in the
Competition are as strong and competitive as
possible. Public support and the opportunities
for players to develop and employ their skills
both depend upon the League continuing to
conduct the Competition between evenly matched
and financially viable Clubs. In order to
achieve these ends, and in pursuance of the
objects in its Memorandum of Association, and
with the unanimous support of the Clubs, the
League has adopted these rules with a view to
providing a system that will:
(a) Ensure sufficient stability in the
membership of Club teams to enable team
spirit and public support to be maintained
both at Club and League level.
(b) Prevent the stronger Clubs from obtaining
the services of an unfair proportion of
the better players at the expense of the
weaker Clubs.
(c) Provide Clubs with an incentive to expend
substantial time and effort in the
development of Rugby League at School and
Junior levels.
(d) Prevent Clubs from weakening Country and
Interstate Leagues by recruiting excessive
numbers of Country or Interstate players.
(e) Provide an orderly basis for Clubs to
negotiate with players and minimise the
problems arising out of Clubs negotiating
with players during the course of a season
and thus distracting them from their
current obligations.
(f) Provide young talented players with the
opportunity to play the game at the
highest level.
36. These Rules shall govern the entry to and
conduct of the New South Wales Rugby
League Competitions."
"55. On 7 November, 1990 and on the first8. A player not wishing to play for the club which selected him at an internal draft meeting is entitled to appeal to an Appeals Board constituted by a Chairman, qualified for admission as a barrister or solicitor of the Supreme Court of New South Wales, and two other persons, one to be nominated by the Board of the League and the other to be nominated by the President of the Association of Rugby League Professionals. Sir Laurence Street, the former Chief Justice of New South Wales, and Mr John Brown, the former Commonwealth Minister for Sport and Tourism have accepted the first two positions on this Appeal Board. In determining appeals, the Appeal Board is directed by rule 61 to have regard to the following matters:
Wednesday of November of each succeeding
year the League shall circulate to each
Club a list to be known as the 'Internal
Draft List'. Where necessary, pursuant to
the provisions of this Rule, the League
shall also circulate to each Club a
further Internal Draft List on the first
Wednesday of each of the months from
January to June of the year in which the
Competition is played.
56. (a) A player who has or will have
attained at least sixteen (16) years
of age by 31 December prior to the
commencement of the Competition may
make application to be placed upon
an Internal Draft List on the form
prescribed by the League from time
to time provided that:
(i) he has previously played in
the Competition or in a major
Premiership Competition
conducted in another country
or in a senior Rugby League
team representing Australia or
New South Wales or Queensland;
(ii) he is not contracted to play
for a Club in the Competition and;
(iii) he is not contracted to play
for any other Club or body
affiliated with the League
unless a clearance is
submitted to the League from
such Club or body granting or
having the effect of granting
permission for the player to
play in the Competition for a
specified period of the Competition.
(b) The League shall include in each
Internal Draft List the names of all
applicants received by the League
prior to the preparation of that
List. The League shall not place
the name of a player upon an
Internal Draft List if his
application does not comply with the
requirements of the preceding paragraph.
(c) A player shall be entitled to
stipulate in his application that no
Club whose ground is situated more
than one hundred (100) kilometres in
a direct line from the ground of the
Club with which the player last
played in the Competition shall be
entitled to select him at the
Internal Draft Meeting.
(d) The Internal Draft List shall be in
a form prescribed by the League from
time to time.
(e) A player who participates in an
Internal Draft and is not selected
at the Internal Draft Meeting shall:
(i) be entitled to negotiate and
enter into a contract with any
Club on the terms and
conditions contained in his
application to be placed upon
an Internal Draft List;
(ii) be entitled to make
application to be placed upon
any subsequent Internal Draft
List and shall be entitled to
vary the terms and conditions
which were inserted in any
prior application to be placed
upon an Internal Draft List.
57. On 20 November, 1990 and on the third
Tuesday of each month in which the League
circulates an Internal Draft List pursuant
to these Rules, the League shall conduct a
meeting to be known as the 'Internal Draft
Meeting'. At that meeting a
representative of each Club shall be
entitled to attend and, subject to Rule
56(c), to make selections of players from
the Internal Draft List until the total
number of players with whom the Club has
contracted reaches fifty-seven (57), in
the following manner:
(a) At the November Internal Draft
Meeting each Club shall be given the
opportunity of selecting the players
whose names appear on the Internal
Draft List one at a time in the
reverse order to the order in which
the Clubs finished at the completion
of the preceding Competition.
(b) At subsequent Internal Draft
Meetings held from January to June
of each year each Club shall be
given the opportunity of selecting
players in the same order as in (a)
above with the exception that such
order of selection shall continue
from where it concluded at the
previous Internal Draft Meeting."
"61. In determining appeals by players pursuant9. The rules provide that an appeal is to be heard as soon as possible after a notice of the appeal has been lodged. The consequences of a successful appeal are dealt with in rule 64 which provides as follows:
to these Rules the Appeals Board shall
have regard to:
(a) The best interests of the game, the
player and the Club;
(b) Any unreasonable financial or other
hardship caused to the player by
reason of him joining that Club
having regard to:
(i) his age
(ii) his marital status
(iii) the health and welfare of his family
(iv) his employment and any
possible loss of income
(v) any mortgages or other
financial obligations of the player
(c) The service he has given to the game;
(d) Any other relevant matter."
"64. (a) In the event that a player who has10. Finally, the rules concerning players' contracts, rules 65 and 66, read as follows:
been selected at an Internal Draft
Meeting is successful in his appeal
to the Appeals Board then he shall
be entitled to participate in the
next Internal Draft Meeting
following that Appeals Board Meeting
on the same terms and conditions as
he placed upon himself in the
previous Internal Draft.
(b) In the event that the Appeals Board,
in determining an appeal by a player
selected at an External Draft
Meeting, determines that the offer
made by the Club selecting the
player is unreasonable then that
player may complete an application
to be placed on the Internal Draft
List on the form prescribed by the
League from time to time setting out
the terms and conditions upon which
he is willing to contract with a
Club and he may participate in the
next Internal Draft Meeting
conducted by the League."
"65. The lodgement with the League by a player11. The challenge to the internal draft as elaborated upon in the applicants' statement of claim proceeded on two grounds. First, it was said that the draft infringed the provisions of the Trade Practices Act 1974 ("the Act") and in particular s.45(2) of that Act. Although the statement of claim alleged, as well, a breach of s.45D of the Act, this allegation was abandoned at the hearing. Second, the draft was challenged as being a restraint of trade contrary to public policy and thus invalid at common law. The applicants sought injunctions restraining the respondents from giving effect to the rules relating to the internal draft and declarations that there has been an arrangement or understanding in breach of s.45 of the Act and/or a declaration that the internal draft was contrary to public policy and invalid.
of an application to be included in an
Internal Draft List shall constitute an
offer to any Club drafting that player to
employ the player on the terms contained
in the prescribed application form and any
Club drafting such player shall be deemed
to have accepted the offer of employment
of the player upon such terms. A Contract
shall thereupon be constituted between the
Club and the player incorporating the
terms contained in the said form and the
terms contained in the standard Playing
Contract. The player and the Club shall
thereupon execute a standard Playing
Contract as approved by the League from
time to time and containing the terms
referred to in the prescribed application form.
66. A copy of every playing contract entered
into between a Club and a player shall be
lodged for registration with the League by:
(a) a date twenty eight (28) days after
the date of its execution or;
(b) the expiry date of any existing
playing contract registered with the
League between the same Club and player,
whichever is the later."
12. Simultaneously with commencing proceedings in this Court, the then applicants in the proceedings in this Court commenced proceedings as well in the Industrial Commission of New South Wales for orders under s.88(F) of the Industrial Arbitration Act 1940 (NSW). Orders were then obtained by consent from the Supreme Court of New South Wales under s.8 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) that the proceedings in the Industrial Commission be removed to the Supreme Court of New South Wales and under s.5 of that Act and s.5 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), that the relevant proceedings be removed to this Court.
13. In anticipation of a submission by the respondents that this course would
lead to an argument concerning a matter arising under
the Constitution, the
applicants gave notice to the State and Commonwealth Attorneys-General
pursuant to s.78B of the Judiciary Act 1903. In the result, only the New
South Wales Attorney-General indicated a desire to intervene and then only in
the event that the constitutional
point arose. The anticipated argument was
apparently that, were this Court to exercise the powers under the Industrial
Arbitration
Act 1940 (NSW) of the Industrial Commission, this would be an
exercise of non-judicial power and the cross-vesting legislation did
not
operate validly to vest non-judicial power in this Court. In fact, no
submission was made by the respondents or any of them
to this effect, and all
parties were content to proceed upon the basis that the Industrial Commission
proceedings were properly before
me and that this Court had, as a result of
the cross-vesting legislation, power to grant such relief as could be granted
under s.88F
of the Industrial Arbitration Act 1940 (NSW) by the Industrial
Commission of New South Wales.
Rugby League in New South Wales
14. The sport of rugby league is essentially played in five countries around the world, Australia, United Kingdom, New Zealand, France and Papua New Guinea. Representatives of each of these countries form an international body which governs the sport worldwide. In Australia, the game is controlled under the banner of the Australian Rugby League Limited, an incorporated body, the Board Members of which come from New South Wales and Queensland, these being the two states of Australia in which the sport is predominantly played. The New South Wales incorporated body was incorporated as a public company limited by guarantee in 1983. It is responsible for the general administration of the game in New South Wales, including the organisation and development of schoolboy and junior rugby league games and club competitions, as well as the Premiership Competitions to which reference has already been made. Although one of the matters which has fostered rivalry between the sports of rugby league and rugby union, has been the ability of rugby league players to be paid for participating in the sport, not all rugby league players are so paid and indeed the great majority of rugby league players will presumably be amateurs. Nevertheless, the players participating in the Premiership Competition are all professional players in the sense that they are paid in one way or another for their services.
15. The history of professional sport, both in Australia and overseas, reveals a tendency to regulation in ways which interfere with the freedom of players to contract. Such regulation may take a number of different forms. For example, it is not uncommon for there to be a requirement in organised sport, that a player play for a club only in the geographical area in which he resides.
16. Since the early 1970s, there have been a number of attempts made to regulate the sport of rugby league for the stated objective of promoting or encouraging evenness of competition. One such method, was what is referred to as a "ceiling payment scheme", under which there was a maximum sign-on fee and match payments that could be made by a club to a player. That regulation failed, apparently because of the inability of the League to enforce it in light of payments being made by associates of clubs rather than by the clubs themselves. Another rule, was what is known as the "thirteen import rule", pursuant to which no club could have any more than thirteen players on its books from another area at the one time. That rule clearly restricted the right of clubs to some degree to poach players from other clubs, but apparently was thought to be practically unenforceable. It was replaced by the introduction of the transfer system, ultimately declared invalid by the High Court of Australia in Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353. Under that system, a player was effectively tied to a club, even if the player was not contracted to play with the club. If a player was placed upon a transfer list, any other club wanting his services was required to pay a transfer fee entirely within the discretion of the club with which he was previously registered and under which the player received only a small percentage.
17. The transfer system in force at the time of Tutty's case was replaced by a modified transfer system pursuant to which if a player desired to transfer to another club a fee had to be paid to his old club, that fee being set by the League in conjunction with the Players Association as 80% of the average playing fee of contracts, relevant to the standing of the player. In the first year of this new system, $36,000 was the maximum transfer fee, which amount rose to a maximum fee of $50,000 for an individual who played international football through to $2,500 for a junior.
18. The Board of the League regarded the transfer system, in its modified form, as unsatisfactory. It did not act to deter wealthier clubs from spending a large amount of money to obtain key players at the expense of clubs that were less wealthy. Those responsible for the administration of the sport perceived the transfer system as not being in the interests of players either, as a club desiring to employ the player had to pay not only the sign-on fee for the player but also the transfer fee. The solution was thought by those administering the League to be the introduction of a salary cap and the draft system.
19. The League first gave consideration to the introduction of a players' draft in early 1988, although the question of the salary cap had been discussed earlier than that. In determining to implement both the draft and the salary cap, the League looked to the experience of professional sport in the United States, and in particular NFL football and American basketball, as well as to the experience in Australia with the regulation of the Australian Football League. American basketball has an external draft system as well as a salary cap. The idea of an external draft evolved in American football apparently in 1936. However, in neither sport in the United States is there an internal draft of the kind presently under attack. The Australian Football League, the body responsible for administering Australian Rules Football, had introduced, in 1984, a salary cap, and in 1986 and 1989 an external and an internal draft respectively. In formulating the present rules, the League gave close consideration to the rules adopted by the Australian Football League, although the present rules are somewhat simpler.
20. At a meeting of the New South Wales Rugby League Premiership Policy Committee, a committee of the League, held on 18 August 1988, that committee decided to recommend the implementation of a player payment ceiling (the salary cap), that ceiling to be determined by reference to player contracts for the 1987-1989 seasons and the financial state of the clubs. The specific problem which gave rise to the recommendation of a salary cap was that some clubs had overspent on salaries to players in order that these clubs might remain competitive. As a result, clubs required additional finances, either from outside sources or from the League. Further, the poorer clubs could not remain competitive as they could not meet the demands of players and accordingly risked losing the services of their players to other and richer clubs.
21. The salary cap was introduced by the League to be operative in the 1990 season. It was not the subject of attack by the applicants, but forms an important part of the context of the competition rules against which the internal draft must be seen. In implementing the salary cap, the League determined a ceiling of expenditure for each club, having regard to the financial situation of the club in question. Although it is clearly desirable that each club have the same ceiling, some clubs were, no doubt because of their financial difficulties, allocated a ceiling somewhat below that of the wealthier clubs. All payments to players were to be made from the ceiling allocated, subject to a two and a half percent margin for error. The initial ceilings ranged from either $800,000 or perhaps $1,000,000 to $1,500,000. A similar inequality of ceiling is in operation for the 1991 season. The ultimate intention is to set a uniform ceiling for each club.
22. The player draft was scheduled to commence at the end of the 1990 season. The rules for the draft took some time to prepare and some criticism of the proposed rules led to minor amendments being made. To enable the draft to be introduced, the chief executives of the respondent clubs agreed that they would not negotiate or attempt to negotiate with players registered with other clubs to obtain their services for the 1991 season or beyond until an initial date of 20 March 1990. That agreement was subsequently varied so that until further notice, no club, or person acting on behalf of that club, was to negotiate or to attempt to negotiate with a player currently registered with another club with a view to obtaining the services of that player for any future season or seasons.
23. At the time the present application was filed, the rules of the draft had only just come into operation and there had been no occasion when, in fact, the draft had been implemented. In consequence, most of the evidence, both of the applicants and of the respondents, was directed at predicting the consequences that would flow from its implementation. As such, evidence was given from persons experienced in the game, as players, coaches or administrators, directed at what the probable consequences of the player draft would be.
24. Before the evidence was completed, the first internal draft was held in November 1990. Prior to that date, 115 players, who had formerly been on contract with clubs in the 1990 season, submitted application forms setting out the terms and conditions upon which they were prepared to be engaged for the 1991 season or beyond. Twenty three of these players were selected in the draft, leaving ninety two players in a situation where they were free to negotiate with any club, but only on the terms and conditions set out in their offer. To the extent that these subsequent negotiations proved unsuccessful, these players were left to reconsider the terms and conditions upon which they had offered their services in anticipation of the second draft to be held in 1991. In the light of arguments subsequently to be noted, it is interesting to see that the South Sydney Club, the club that came last in the Winfield Cup for the 1990 season, although entitled to first bid under the internal draft system, in fact did not bid. No evidence was adduced in explanation, although it is probable that this failure to bid arose because of financial difficulties faced by that club. It is, of course, also possible that the failure to bid arose because South Sydney had no interest in the players who had nominated for the draft.
25. A great deal of evidence was adduced. On behalf of the applicants, in addition to evidence from Mr Kevin Ryan, the President of the Players' Association of Rugby League Professionals ("the Players' Association"), evidence was adduced from a number of players including Paul Dunn, Paul Langmack, Joseph Vitanza, David Greene and Sean Townsend. Evidence was also adduced on behalf of the applicants from Alan McMahon, coach of the Newcastle Knights Club, Gregory Mullane, second grade coach with Balmain, and Warren Ryan, coach with the Balmain club in the 1990 season, and with Western Suburbs for the 1991 season. In addition, evidence was called from Mr Simon Madden, a former President of the Players' Association of the Australian Football League, Mr Peter Jess and Mr Gregory Willett, both representatives of players, and from two academic economists as expert witnesses. A summary of this evidence, much of which was anecdotal, and little of which was referred to in submissions, would overly prolong this judgment. For the respondents, evidence was adduced from Gavin Miller, a player, from Mr Quayle, the General Manager of the League, from Roy Masters, a well-known former coach and journalist and from Mr Cowan, Mr Massey and Mr Fitzgerald, each executives of clubs.
26. The evidence showed that players of rugby league were remunerated in a variety of ways. Some players received sign-on fees, that is to say they were paid a sum of money irrespective of performance. Others received match payments, that is to say payments at varying rates as each played in a particular grade. Others received incentive payments for winning games or for being selected to play representative football. A number of clubs offered superannuation benefits to players. Some players were found jobs as part of their remuneration package. Those jobs could be directly for the club in a promotional capacity or for sponsors and might involve vocational training.
27. In the absence of the draft, decisions by players to leave one club and go to another, were dictated by a variety of reasons. A player might wish to change clubs because he was dissatisfied with his club or the coach of that club; he might move because he was unable to secure selection in the first grade team in that club or because he could not play in a position of his choice or because his girlfriend or wife was unhappy or because the training timetable, adopted in that club, was unsuitable. A player might desire to move from one club because it suited his business purposes where he carried on some other business, because it involved a lesser distance to work or because the club in which he was playing was not performing and this might affect his chances for representative selection to play, for example, in the State of Origin matches or for Australia.
28. The reasons why a player may wish to go to a club of his choice are
obviously related to the reasons why he may wish to leave
an existing club.
He may be attracted, apart from salary, by the coach or staff of the club, by
the quality of other players in that
club, by the proximity of that club to
his home, by accommodation that may be offered to him, by the opening up of
new business prospects
with the new club, by quality of life, by the potential
of the new club to win competitions and in turn enhance representative
selection,
by the attitude of his wife or girlfriend, by the position that he
may be able to play in a new club or by the advantage a new club
may give him
in playing first grade and by other factors.
The case under the Trade Practices Act
29. In their case under the Trade Practices Act, the applicants relied upon
s.45(2)(a) and (b) of that Act. Those subsections provide as follows:
"(2) A corporation shall not -30. Subsection (3) of the same section, relevant to s.45(2)(a)(ii) and s.45(2)(b)(ii) provides as follows:
(a) make a contract or arrangement, or
arrive at an understanding, if -
(i) the proposed contract,
arrangement or understanding
contains an exclusionary
provision; or
(ii) a provision of the proposed
contract, arrangement or
understanding has the purpose,
or would have or be likely to
have the effect, of
substantially lessening
competition; or
(b) give effect to a provision of a
contract, arrangement or
understanding, whether the contract
or arrangement was made, or the
understanding was arrived at, before
or after the commencement of this
section, if that provision -
(i) is an exclusionary provision; or
(ii) has the purpose, or has or is
likely to have the effect, of
substantially lessening competition."
"(3) For the purposes of this section and31. Both limbs of each subsection of s.45 were relied upon, although the primary attack was on the basis that there was an arrangement or understanding to which the respondent clubs were all parties that contained an "exclusionary provision" defined in s.4D of the Act which reads as follows:
section 45A, 'competition', in relation to
a provision of a contract, arrangement or
understanding or of a proposed contract,
arrangement or understanding, means
competition in any market in which a
corporation that is a party to the
contract, arrangement or understanding, or
would be a party to the proposed contract,
arrangement or understanding, or any body
corporate related to such a corporation,
supplies or acquires, or is likely to
supply or acquire, goods or services or
would, but for the provision, supply or
acquire, or be likely to supply or
acquire, goods or services."
"4D(1) A provision of a contract, arrangement32. Finally, s.4(1) of the Act defines "Services" to include:
or understanding, or of a proposed contract,
arrangement or understanding, shall be taken to
be an exclusionary provision for the purposes of
this Act if -
(a) the contract or arrangement was made, or
the understanding was arrived at, or the
proposed contract or arrangement is to be
made, or the proposed understanding is to
be arrived at, between persons any two or
more of whom are competitive with each
other; and
(b) the provision has the purpose of
preventing, restricting or limiting -
(i) the supply of goods or services to,
or the acquisition of goods or
services from, particular persons or
classes of persons; or
(ii) the supply of goods or services to,
or the acquisition of goods or
services from, particular persons or
classes of persons in particular
circumstances or on particular conditions,
by all or any of the parties to the
contract, arrangement or understanding or
of the proposed parties to the proposed
contract, arrangement or understanding or,
if a party or proposed party is a body
corporate, by a body corporate that is
related to the body corporate."
"...any rights (including rights in relation to,33. It was common ground that the clubs and the League were parties to a contract, arrangement or understanding to implement the rules relating to the internal draft and that the clubs were competitive with each other in securing the services of players. The applicants then put their case in the alternative, either that the provisions of the draft restricted the acquisition of the services of the players by the clubs and had that purpose, or that the draft restricted the supply of the services of the clubs to the players and had this purpose.
and interests in, real or personal property),
benefits, privileges or facilities that are, or
are to be, provided, granted or conferred in
trade or commerce, and without limiting the
generality of the foregoing, includes the
rights, benefits, privileges or facilities that
are, or are to be, provided, granted or
conferred under -
(a) a contract for or in relation to -
(i) the performance of work (including
work of a professional nature),
whether with or without the supply
of goods;
(ii) the provision of, or of the use or
enjoyment of facilities for,
amusement, entertainment, recreation
or instruction; or
(iii) the conferring of rights, benefits
or privileges for which remuneration
is payable in the form of a royalty,
tribute, levy or similar exaction;
(b) a contract of insurance;
(c) a contract between a banker and a customer
of the banker entered into in the course
of the carrying on by the banker of the
business of banking; or
(d) any contract for or in relation to the
lending of moneys,
but does not include rights or benefits being
the supply of goods or the performance of work
under a contract of service;"
34. It was submitted that the rules relating to the draft came into effect upon the contract between the applicants and their respective clubs for the 1990 season coming to an end hence requiring the applicants to submit themselves to the "lottery" of the draft and so to restrict the activity in the club/player market.
35. For the respondents it was submitted that the players, by entering the draft, made a standing offer to each club in the competition (except perhaps the club to which immediately before the draft the player had been contracted). It was said to be a misuse of language to say that the offer of a contract of services by the player was the supply of a right or benefit to be provided, granted or conferred under a contract for and in relation to the performance of work so as to be "services" for the purposes of the Act. It was submitted that the definition of "services" in s.4(1) was not to be read expansively but rather restrictively: cf Queensland Aggregates Pty Limited v Trade Practices Commission [1981] FCA 138; (1981) 57 FLR 314 at 318. If, however, the inclusive part of the definition of "services" applied, then the respondents submitted that the exclusory provisions of that definition relating to "contracts of service" applied, the evident policy of that exclusion being to take out of consideration for the purposes of the definition of "exclusionary provision", restrictions of the present kind.
36. Somewhat similar issues arose for consideration in Adamson v West Perth
Football Club (Incorporated) [1979] FCA 81; (1979) 39 FLR 199. That case concerned a
challenge to the clearance and permit regulations of the National Football
League governing Australian Rules
Football at the time. Northrop J held,
firstly, that for the purposes of s.45(1)(b)(i) the reference to competition
in the market,
was used in a commercial and economic sense rather than in a
sporting sense. So construed, his Honour was of the view that the only
relevant market to consider was what his Honour referred to as the "club to
footballer market". The same can be said of that word
when used in
s.45(2)(a)(ii) and 45(2)(b)(ii). So much was common ground before me. Next,
his Honour held that the exclusory provisions
in the definition of "services"
expressly excluded from the meaning of "services", rights or benefits, being
the provision of work
under a contract of service from which it followed, in
his Honour's view (at p 228):
"...that a club does not come within s.45(3) of37. Third, his Honour rejected an alternative argument that the right or privilege to enter into a contract of service did not come within the exclusory provisions of the definition. His Honour said, at 228-9:
the Act when it acquires rights or benefits
granted or conferred under a contract for the
performance of work."
"The right or privilege of the club, if it can38. The judgment, while expressing these conclusions, does not expand upon the process of reasoning leading to them. Perhaps his Honour was of the view that it was self-evident. In any event I would, as a matter of comity, as a single judge, follow the view of another single judge of this Court on essentially the same subject matter, unless I were to form the view that it was clearly wrong.
be so called, to enter into a contract of
service with a footballer is not the acquisition
of services by a club under s.45(3) of the Act.
In any event the provisions of the rules and
regulations of the various leagues and clubs do
not restrain the right or privilege of a club to
enter into contracts of services, they operate
on the performance of work under such contracts
or other arrangements in the sense that if a
club fields a player in a match without having
obtained the necessary clearance and permit that
club is liable to suffer a penalty."
39. The applicants submitted that all that was excluded from the definition of "services" was the actual performance of work under the contract. It was said that the draft had no operation or effect upon the actual performance of work, that being the playing of football, but was concerned with the competitive process of recruiting players which took place at the expiration of the 1990 year contract and prior to the contract that was to be entered into in respect of the 1991 season.
40. The language of the definition of "services" is not a model of clarity.
To understand its consequences in the present context,
it is convenient to
write out in full the relevant parts of the definition together with
s.45(2)(b) and the definition of "exclusionary
provision". So read, the
provisions can be written out as follows:
"A corporation shall not make an arrangement41. It may be noted that when so read, the arrangements proscribed are not limited to those which limit or restrict the supply (or "provision": see the definition of "supply" in s.4(1)) or actual performance of work under a contract of service but include those arrangements which limit or restrict the rights or benefits that are to be provided under contracts for the performance of work in the future. Thus, the prohibition is directed not only to those restrictions which relate to the actual performance of work under a contract of service, but also to the antecedent formation of contracts where those contracts provide for the performance of work. The question thus posed in the present case can be formulated as follows:
(etc) if the proposed arrangement (etc) contains
a provision and that provision has the purpose
of restricting or limiting the acquisition of
services, including any rights or benefits that
are to be provided, granted or conferred under a
contract for or in relation to the performance
of work but not including rights or benefits
being the performance of work under a contract
of service (by all or any of the parties to the
arrangement or the proposed parties to the
proposed contract)."
42. It follows that I am of the view, consistent with that formed by Northrop J in Adamson v West Perth Football Club Inc (supra) that the restrictions imposed by the rules do not come within the ambit of either s.45(2)(a) or (b) of the Act.
43. The alternative formulation of the applicants, which places emphasis upon the provision by the clubs of services to the players and characterises the draft as limiting or restricting the provision of those services, lacks, in my view, substance. It appears to turn the prohibition of s.45 on its head. Although it is obvious that services, in the nature of coaching and fitness training and the like are, in fact, provided by the clubs to players, the draft rules do not as a matter of fact when viewed objectively (cf Trade Practices Commission v TNT Management Limited (1985) 6 FCR 1 at 75) have, nor on the evidence did the respondents adopt them (cf ASX Operations Pty Limited v Pont Data Australia Pty Ltd (Federal Court of Australia, full court, unreported 19 December 1990)) for the purpose or for that matter indeed even a purpose of restricting the services that are or are to be provided by the clubs to the players.
44. It was submitted, for the applicants, that the case could also fall within s.45(2)(a)(ii) or s.45(2)(b)(ii) of the Act. Although this submission was formally put, it appeared not to have been embraced with great enthusiasm and was not elaborated upon.
45. It is not, however, necessary to consider the submission in any detail because s.45(2) is not directed at arrangements which affect competition generally. Such competition has to be in a market in which a party to the arrangement etc. for relevant purposes, acquires services. That, in turn, takes one back to the definition of "services" in s.4(1), but the player club market is a market in which the clubs acquire rights or benefits with respect to the performance of work under contracts of service with the players and for that reason a club does not fall within s.45(3). It follows, therefore, in my view that the present case falls neither within s.45(2)(a)(i) or (2)(b)(i) or within s.45(2)(a)(ii) or (2)(b)(ii).
46. It was submitted for the respondents that even if I should form the view
that s.45(2)(a)(ii) or (2)(b)(ii) applied, the present
case fell outside the
scope of s.45 having regard to the operation of s.51(2)(a) of the Act. That
subsection provides as follows:
"(2) In determining whether a contravention of47. It is, of course, accepted that the players are to be regarded as employees of the club: Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353, Commissioner of Taxation v Maddalena (1971) 45 ALJR 426, Adamson v West Perth Football Club Inc (supra) at 228.
a provision of this Part other than section 45D
or 45E or 48 has been committed, regard shall
not be had -
(a) to any act done in relation to, or to the
making of a contract or arrangement or the
entering into of an understanding, or to
any provision of a contract, arrangement
or understanding, to the extent that the
contract, arrangement or understanding, or
the provision, relates to, the
remuneration, conditions of employment,
hours of work or working conditions of employees;"
48. The respondents' submission gave a broad operation to s.51(2)(a). In
essence it was submitted that, for the purposes of s.45,
no regard was to be
had to any act done in the course of arriving at an employment contract. The
section, however, is not expressed
in language as simple as that suggested by
the respondents. As originally enacted, s.51(2)(a) provided:
"(2) In determining whether a contravention of a49. The subsection as originally enacted, was repealed in 1977 following upon the report of the Trade Practices Review Committee (the Swanson Committee) so as to read:
provision of this Part other than section 48 has
been committed, regard shall not be had -
(a) to any act done, or to any provision of a
contract, in relation to the remuneration,
conditions of employment, hours of work or
working conditions of employees, or to any
act done by employees or by an
organisation of employees not being an act
done in the course of the carrying on of a
business of the employer of those employees
or of a business of that organisation."
"In determining whether a contravention of a50. The change was brought about for two reasons. The first, related no doubt to the introduction of the secondary boycott provisions of s.45D. Once that section had been introduced, by the 1977 amendments, secondary boycotts by employees directed at third persons to the detriment of their employers, were prohibited, unless the s.45D(3) exception operated, that is to say where the dominant purpose was substantially related to matters of employment or remuneration. The previous s.51(2)(a) had obviously been substantially concerned with protecting arrangements between employees or arrangements between employers relating to employment conditions. In the form the section took, both in 1974 and 1977, s.51 would not have conferred upon respondents to an application such as this brought at the time, protection if otherwise the arrangements were proscribed by s.45. While regard can not be had to a provision of the arrangement proscribed under s.45 relating to employment conditions, the arrangement itself did not concern employment conditions at all. Nor could the draft rules or the implementing of them be an act done in relation to a provision of the contract, arrangement or understanding in the relevant sense.
provision of this part other than section 45D or
48 has been committed, regard shall not be had -
(a) to any act done in relation to, or to any
provision of a contract, arrangement or
understanding to the extent that the
provision relates to, the remuneration,
conditions of employment, hours of work or
working conditions of employees;"
51. The legislation was again amended in 1986, when it obtained its current
formulation. It is clear from the Explanatory Memorandum
that accompanied the
Trade Practices Revision Bill 1986, that the amendment of that year was
concerned to overcome doubts created
by the decision of the full court of this
Court in Ausfield Pty Ltd v Leyland Motor Corporation of Australia Ltd (1977)
ATPR 40-025. That case involved an arrangement between a union and Leyland
Australia, whereby a ban on the handling of Leyland goods was lifted
on
condition that Leyland ceased to supply parts to Ausfield. The latter sought
to restrain Leyland relying upon s.45 of the Act.
In an ex tempore judgment,
so given because of the urgency of the case, Bowen C.J., with whom Northrop J
agreed, expressed the view
that the words "any act done" in s.51(2)(a) as it
then stood were: (at 17,352)
"...inappropriate to refer to the complex52. Thus, in its present form, the section directs for the purposes of s.45 of the Act that regard not to be had to any one of three things. First, regard is not to be had to any act done in relation to a provision of a contract, arrangement or understanding but only to the extent that the contract, arrangement or understanding relates to conditions of employment in the nature of remuneration etc. For the purposes of s.51(2)(a), the contract, arrangement or understanding must be the same contract, arrangement or understanding as is referred to in s.45(2). This first limb has no application in the present case. Second, regard is not to be had to the making of a contract or arrangement or the entering into of an understanding to the extent that the contract, arrangement or understanding relates to conditions of employment. Again, this second limb has no application. The third element in s.51(2)(a) is concerned with taking out of consideration any provision of a contract, arrangement or understanding identified in s.45 to the extent that the contract, arrangement or understanding or the provisions of it, relates to conditions of employment. Again, in my opinion this third aspect of s.51(2)(a) has no application to the present case. The legislative purpose of s.51(2)(a) was not, in my opinion, to remove altogether from the Act any acts done or any contract, agreement or arrangement that may in any way relate to an employment contract. Rather, the statutory protection of s.51(2)(a) is directed at agreements or arrangements or acts done in relation to them, but only to the extent that those agreements or arrangements or provisions in them relate to employee conditions. The present is not such a case.
operation of making a contract or arrangement or
entering into an understanding. These may be
brought about by oral communication, by writing
or by conduct or by a combination of these. One
might have expected something more than a
reference to 'any act done' to refer to that situation."
53. However, on the view that I have already expressed, the present case
falls outside s.45 altogether, with the result that the
applicants' case under
the Trade Practices Act must fail.
The applicants' case under s.88F of The Industrial Arbitration Act 1940.
"88F. (1) The commission may make an order or54. S.88F is directed primarily to contracts relating to the performance of work, that is to say, it is directed primarily at contracts of service and contracts for services. The section extends to arrangements whereby a person performs work as well as to conditions or collateral arrangements relating to contracts for services or contracts of service. On the facts of the present case, if this section is to apply, it would apply to the contracts of service actually entered into by the players with their clubs, since these are the contracts pursuant to which the players perform work.
award declaring void in whole or in part or
varying in whole or in part and either ab initio
or from some other time any contract or
arrangement or any condition or collateral
arrangement relating thereto whereby a person
performs work in any industry on the grounds
that the contract or arrangement or any condition
or collateral arrangement relating thereto -
(a) is unfair, or
(b) is harsh or unconscionable, or
(c) is against the public interest. Without
limiting the generality of the words
'public interest' regard shall be had in
considering the question of public
interest to the effect such a contract or
a series of such contracts has had or may
have on any system of apprenticeship and
other methods of providing a sufficient
and trained labour force, or
(d) ...
(e) ..."
55. The applicants' case under s.88F was not much developed in argument by their counsel. This may have been because of the difficulty in bringing before the Court actual material in respect of all 170 applicants, some of whom no doubt were employed by clubs for nominal amounts or otherwise full time engaged in non-playing occupations, and some of whom were full time professional footballers.
56. It was submitted, however, that the provisions of the playing contract were unfair because they operated to prevent the footballers from changing employment. In this context, reference was made by way of analogy to Lumby v Yorkshire-General Life Assurance Co. Limited (1978) 1 NSWLR 626 where a clause in the contract of an insurance agent providing that on termination of the contract he would not be paid any commission, bonuses or other remuneration, not at the date of termination due and payable, was held void as being unfair both on its face (or as Macken J put it, "in abstract") and having regard to its method of operation. The evidence in Lumby was that the insurance company had used the clause as a sanction against certain agents who were induced by rivals to leave to obtain a promotion to a position which could not be offered within the respondent's structure.
57. The cases decided under s.88F have quite deliberately eschewed the formulation of a test of what constitutes an arrangement etc that is unfair, harsh or unconscionable or against the public interest. Rather, the cases have proceeded upon a case by case basis. Although it has been suggested that the words "unfair, harsh or unconscionable" are a "tautological trinity", Davies v General Transport Development Pty Limited (1967) AR (NSW) 371 at 373, the preferable view is that there are perceptible differences of meaning between them: A and M Thompson Pty Limited v Total Australia Limited (1980) 2 NSWLR 1 at 12. Generally speaking, an arrangement may be unfair, although not so unfair as to be harsh or unconscionable. Hence, the applicants' case was put on the basis of unfairness rather than harshness or unconscionability.
58. Matters involving the question of the unfairness of a contract will include the terms of the contract itself, whether standard form contracts are involved, the relative equality of bargaining power of the parties and the conduct of the parties. What is involved is the application of standards which balance the advantages and disadvantages of the parties to a contract, cf A and M Thompson Pty Limited v Total Australia Limited (supra) at 12-16. No doubt in considering fairness, regard may be had to the potential of certain events occurring in the future which might render a contract otherwise fair at the time it was formed, unfair.
59. The provision in the employment contract of players that is said to be unfair in the present case is the provision which incorporates an obligation upon each player to observe the rules of the League, which rules incorporate the provisions of the internal draft. Fairness, in the sense used in s.88F clearly involves consideration of all the circumstances of each player. In respect of those players who did not give evidence, and that was the substantial number of the applicants, it is impossible to properly evaluate the issue of fairness. By way of example, a player might be full time employed in an occupation and receive only match payments for games played in the competition. It would be hard in such a case to regard the impugned provision as in all the circumstances unfair to him. Even in the case of those of the applicants who were full time footballers, other terms of their engagement, including the provision of training, scholarships or jobs and the like, would need to be evaluated to determine the issue of overall fairness. Virtually no attention was given in the evidence to the detail of these other benefits, which makes it difficult for the applicants to satisfy the onus of showing unfairness unless it be the case that irrespective of any other facts the internal draft requires a finding of "per se" unfairness.
60. It may be thought that if a consideration of the draft rules against the
tests of the common law restraint of trade doctrine
produces the result that
the restraints of the internal draft are reasonable in the interests of the
players and the clubs, that
conclusion would also produce the result that the
mere incorporation of the draft rules in the player contract would not be
unfair.
It would be wrong to suggest that this should be seen as a principle
of law and there must remain a theoretical possibility in a
particular case
that a restraint of trade might be held to be reasonable in accordance with
the common law doctrine as between the
employer and employee having regard to
the legitimate interests of the employee, yet in all the circumstances
(including the manner
in which it was entered into) be unfair: cf as to the
significance of the manner in which the contract was entered into the case
of
Sulkowicz v Parramatta District Rugby League Club Limited (1983) 4 IR 272.
But the present is not such a case. Conversely, if a consideration of the
draft rules against the tests of the common law produces
the result that the
restraints of the internal draft are unreasonable and therefore unenforceable,
the result will be that the contract
shorn of these provisions will no longer
be, on any view of the matter (absent other factors) unfair and the applicants
would have
no further interest in seeking to apply s.88F to excise the
offending provisions. Accordingly, it seems preferable to proceed to
consider
the applicants' case at common law.
Common Law restraint of trade
61. The general principles to be applied in determining the validity of an
agreement that operates in restraint of trade are well
settled and were not in
dispute between the parties. They owe their modern formulation to the oft
repeated words of Lord MacNaghten
in Nordenfelt v Maxim Nordenfelt Guns and
Ammunition Company Limited (1894) AC 535 at 565:
"All interference with individual liberty of62. The cases which have considered the application of these principles have dealt with a great variety of restraints in diverse contexts. A number of them concern restraints entered into by players with various sporting organisations: Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353, Eastham v Newcastle United Football Club Limited (1964) Ch 413, Hall v Victorian Football League (1982) VR 64, Blackler v New Zealand Rugby Football League (1968) NZLR 547, Adamson v West Perth Football Club [1979] FCA 81; (1979) 27 ALR 475, Hoszowski v Brown (unreported Supreme Court New South Wales, Helsham C.J. in Eq, 6 October 1978), and Foschini v Victorian Football League (unreported Victorian Supreme Court, Crockett J, 15 April 1983). These cases, while having a commonality of context, do no more than apply familiar principles and illustrate the difficulty adverted to by Lord Jenkins in Kores Manufacturing Co Limited v Kolok Manufacturing Co Limited (1959) 1 Ch 108 at 117 of the application of these principles to the fact of a particular case.
action in trading, and all restraints of trade
of themselves, if there is nothing more, are
contrary to public policy, and therefore void.
That is the general rule. But there are
exceptions: restraints of trade and
interference with individual liberty of action
may be justified by the special circumstances of
a particular case. It is a sufficient
justification, and indeed it is the only
justification, if the restriction is reasonable
- reasonable, that is, in reference to the
interests of the parties concerned and
reasonable in reference to the interests of the
public, so framed and so guarded as to afford
adequate protection to the party in whose favour
it is imposed, while at the same time it is in
no way injurious to the public."
63. A number of propositions may be distilled from an examination of the
cases:
1. Prima facie, all restraints of trade are invalid: Lindner v
Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 at 633.2. A contract will be one relevantly in restraint of trade where it
involves the giving up of a freedom to trade with others which,3. In determining whether a restraint is a restraint of trade the
apart from the agreement the covenantor would have had or
otherwise where the covenantee forfeits his choice of pursuing his
calling: Esso Petroleum Company Limited v Harper's Garage
(Stourport) Limited [1967] UKHL 1; (1968) AC 269 at 298, 308-9, Hepworth
Manufacturing Co Limited v Ryott (1920) 1 Ch 1 at 26.
Court is entitled to have regard to how the restraint, in fact,4. For a restraint to be reasonable in the interests of the parties
operates: Eastham v Newcastle United Football Club Limited (supra)
at 430. But this does not mean that, if in fact a restraint is
ignored or likely to be ignored, the Court should take no account
of the rights and obligations in law created between the parties:
Amoco Australia Pty Limited v Rocca Bros. Motor Engineering
Company Pty Limited [1973] HCA 40; (1973) 133 CLR 288 at 301 and see too per
Gibbs J at 314.
it must afford no more than adequate protection to the party in5. The onus of showing that the restraint goes no further than is
whose favour it is imposed: Herbert Morris Limited v Saxelby
(1916) 1 AC 688 at 707. Reasonableness will be judged having
regard to the legitimate interests of the person in whose favour
the restraint operates which interests they are entitled to
protect: Bridge v Deacons (1984) AC 705 at 714.
reasonably necessary to protect the interests of the person in6. Although there may be thought to be a difficulty in seeing how a
whose favour the restraint operates lies on the party seeking to
support the restraint as reasonable: Herbert Morris Limited v
Saxelby (supra) at 707, Attwood v Lamont (1920) 3 KB 571 at 587,
Buckley v Tutty (supra) at 377.
restraint could be advantageous to the person subject to it (cf7. If the restraint is shown to be reasonable in the interests of the
Latham C.J. in Lindner (supra) at 633), it would seem that all that
is meant is that such person shall have "the fullest liberty of
action consistent with all reasonably necessary precautions
consented to for the adequate protection of" the person benefiting
from the restriction: Brightman v Lamson Paragon Limited [1914] HCA 90; (1914)
18 CLR 331 at 337. In any event the effect of the restraint on
the position of the person restrained must be considered: Rocca
(supra) at 316.
parties the onus of showing that it is nevertheless injurious to8. The time at which the reasonableness of the restraint is to be
the public is on the party attacking the restraint: Herbert Morris
(supra) at 700 and 708. If the restraint be however reasonable as
between the parties the onus will not be a light one: Attorney-General
of the Commonwealth of Australia v Adelaide Steamship Co.
[1913] UKPCHCA 2; (1913) AC 781 at 797, Kores Manufacturing Company Limited (supra)
at 120. There may be some overlap between the two tests of
reasonableness since the test of reasonableness as between the
parties itself depends upon public policy so that the occasion for
the operation of the second test of reasonableness in the public
interest may be rare: Rocca (supra) at 308 per Walsh J.
Nevertheless, the test of reasonableness in the public interest
remains as a distinct test.
assessed is the time at which, if the subject of a contract, the64. There can be little doubt that the rules relating to the internal draft do operate as a restraint of trade: not in the sense that they operate to prevent a player from exercising his trade at all, as was the case in Tutty, but in the sense that a player may be prevented from playing with the club of his choice. The employment agreement is fundamentally a personal agreement so that it might be thought that short of restraining a player from playing altogether there could seldom be a greater restraint upon trade than restricting an employee's freedom from choosing his employer. As Viscount Simon L.C. said in Nokes v Doncaster Amalgamated Collieries Ltd (1940) AC 1014 at 1020, albeit in a different context:
contract be entered into: Lindner (supra) at 653, Rocca (supra) at
318. However, facts occurring after that date are not necessarily
irrelevant as throwing light on the circumstances existing at the
time the contract is entered into: Rocca (supra) at 318.
"a free citizen, in the exercise of his freedom,65. It seems to me no answer to say, as the respondents do, that a player is free, without the limitations of the draft, to play in competitions other than those regulated by the rules for the conduct of the New South Wales Premiership Competition. No doubt, a player may seek employment in the United Kingdom and may obtain at least comparable remuneration or perhaps in New Zealand, or play competition football in Queensland or in the lower grades of competition played in club football in New South Wales or in the Metropolitan Cup, a competition not regulated by the present rules. The evidence, however, makes it clear that the New South Wales First Grade Competition is the premier competition in rugby league in the world and the pinnacle of attainment in rugby league football. Although the analogy is not completely apposite, it is like saying that a person may not practice at the bar of a capital city in Australia but is entitled, should he so desire, to practice in a country town.
is entitled to choose the employer whom he
promises to serve ..."
66. The applicants submitted that the internal draft should be characterised as a restraint upon a player leaving his existing club. The effect of the draft, is that a player, who enters himself upon the draft gives an option over his services on terms and conditions which he nominates to all of the clubs in the competition other than the club with which he was previously contracted. Such are the potential vagaries of the draft, it was said, that a player might be likely to accept a lower amount from the club with which he has been playing rather than place himself upon the draft not knowing which club may draft him. So it was said, that clubs would be likely to offer players substantially less rewards, being aware of the dilemma in which the player finds himself.
67. It may be said that this is a possible outcome of the internal draft rules, but the evidence before me does not support the conclusion that it is the likely outcome. There is a real difficulty in the present case, arising from the fact that for most of the time occupied by the hearing there was no experience of the operation of the rules. Although questions of likely outcome involve matters of opinion, I accept the evidence of Mr Quayle, with considerable experience in the administration of the game, that if a club genuinely wants to retain the services of a player that club will reward the player financially. If, however, a player goes into the draft and is not selected, his previous club can, under the rules of the draft, offer him less money and the player might be minded to accept it rather than to run the risk of placing his name on a further draft and sitting on the sidelines in the meantime. But the player, by putting himself into the draft and not being selected, has tested the market and found that no club was prepared to contract with him on the terms and conditions which he nominates, so that it is unlikely that without the draft the player would have obtained the remuneration which he sought. Rather he would likely have had to settle for the lesser remuneration offered by his previous club.
68. As I have already indicated, a number of applicants who are players of various calibre, gave evidence of their views as to the likely outcome of the draft rules. One well known player, Gavin Miller, gave evidence for the respondents on the same matter. Evidence of coaches was also given on behalf of the applicants and the respondents. No question of the credit of any of the players or coaches arises. I accept that they all honestly hold the views which they expressed, although it is obvious that their views as to the practical operation of the draft in the future were coloured by whether they favoured the draft or not.
69. I would conclude from the evidence of the players that many, if not most,
players were not, in desiring to be free to choose
the club with which they
would play, motivated solely by monetary considerations. To many players other
considerations were at least
equally significant. Among these were:
* the chance of improving their game with a good team or aThe effect of the draft could well be that these legitimate interests of players would be put to nought if the player were selected other than by a club of his choice.
good coach; geographical considerations; quality of life;
* the need to fit in service with the club with family
requirements;
* the potentiality of a job which would provide a career after
the player's league career had come to an end;
* the possibility of advancing the player's long term goals of
being a coach;
* improving the player's choices of playing first grade or
representative football which might be poor if the player
were required to play with a team already well catered for
in the position of his choice;
* the chance of playing with a winning team; and
* the prospect of getting better television and media
exposure.
70. First, the applicants stressed the importance that a particular player may place upon the ability to obtain a job which might provide training for a future career. That job might be available if the player were free to contract with one club, but not if he could be "compelled" to play with another club. The problem was illustrated by the example of a well known first grade player who had had a job offer, not from the club of his choice, but from an employer situated in the area from which that club drew support. The job was one providing for training leading to a career in real estate. In the event it turned out that the player was drafted by a different club with the result that the job offer was lost to him.
71. It may be noted that the draft rules require a player entering the draft to stipulate the terms and conditions upon which he is prepared to play in his application form. As the rules and the application form presently read, there seems no reason why a player could not stipulate, as a term of his offer to the clubs in the draft, that he requires them to find a job of a particular kind. Indeed there is much to be said for the view that a player may go further and stipulate that it is to be a condition that the club drafting him obtain for him a job with a particular employer, or for that matter at a particular location. Counsel for the first respondent indeed submitted that this was the correct interpretation of the rules although this view did not meet with enthusiasm from counsel for the remaining respondents and, if accepted, would provide a mechanism whereby a player could defeat the objectives of the draft as seen by the League and ensure that he played with a club of his choice.
72. There is I think a difficulty in deciding in abstract the correct interpretation of the rule when no dispute has arisen between parties to it. However, while not wishing to pass upon an extreme interpretation of the rules, I am of the view that, at the very least, a player could stipulate, if not for a job with a defined employer or at a defined place, at least for a job of a particular kind. Once this interpretation of the rules is accepted it can be seen that the hardship to the player complained of is considerably mitigated.
73. Second, the applicants submitted that a player could be drafted by a club with which the player did not want to play at all. His reasons for not wanting to do so could be varied. One example no doubt would be where the player did not get on with some members of the team or indeed a coach. This is no doubt a theoretical possibility and one of which some players have a real fear. Mr Willett, who managed the affairs of a number of players, gave evidence that in discussions concerning a high profile player he was told by a representative of one of the clubs that that club would snap the player up if he put his name on the draft at a particular figure. This was notwithstanding the fact that the player in question did not have a desire to play with the club named. In the result the player in question invoked the 100 kilometre rule and he was able to avoid being drafted by the club with which he did not wish to play. So the problem evaporated.
74. In practical terms, however, I am of the view that no club would nominate a player under the draft who clearly did not wish to play with that club. Many witnesses gave evidence to this effect. There is little doubt that morale in a team sport is a matter of fundamental significance, particularly if the club is to have a chance of winning the competition. The likely practical operation of the draft seems to me to be well illustrated by the evidence of Paul Langmack, David Greene and Mr Willett. Paul Langmack, a high profile player, had not, at the time his evidence was given, put his name in the draft after the expiration of his playing contract with Canterbury pending the outcome of the case. However, he had had negotiations with another club, Western Suburbs, which had indicated its interest in him and he hoped that they would draft him should the occasion arise. (In fact he was subsequently selected in the draft by that club). David Greene, a less high profile player, had initially contemplated going on the draft and had talks with another club through an agent before deciding to resign with Penrith. Mr Willett spoke of the negotiations which he had conducted on behalf of a number of his clients with clubs prior to the first draft. So far as I was able to compare the evidence Mr Willett gave with the outcome of the first draft meeting, it seemed that a number of the players he represented did in fact go to clubs with which he had conducted negotiations, these presumably being clubs which the players were prepared to play with.
75. Counsel for the applicants put to Mr Quayle in cross-examination that the first draft really produced the same results as would have been expected to have followed had there been no draft at all. This of course was a two-edged sword because if the draft rules produced the same result as would be produced by free bargaining then the rules could be said not to substantially work to the detriment of the players at all. Hence it could be said that it would need but a small amount of evidence of benefit to the respondents to bring about a finding of "reasonableness". Reference was made to Pat O'Doherty, formerly of Queensland who left Western Suburbs and went to the Gold Coast, to David Gillespie, Joe Thomas, Paul Langmack and Steven Burns, all of whom, it was said, were drafted by Western Suburbs and each of whom had had a prior association with the coach of that club, Warren Ryan. While Mr Quayle did not accept the suggestion, and indeed could hardly be qualified to give evidence as to what would have happened to these players had there been no draft, there is no evidence to suggest that any player was selected by a club with which he did not want to play. I accordingly do not need to consider a suggestion made by Roy Masters, a well known coach and journalist, to the effect that players chosen under the draft would settle down and "fit in" with the club which drafted them even if initially unhappy. There is also the right of a player to appeal to which I shall later return.
76. Third, emphasis was placed on the fact that having regard to the divergence of methods of remuneration and particularly where bonuses are given dependent upon team success, the actual remuneration receivable by the player would vary dependent upon the team which drafted him, notwithstanding that the legal terms and conditions of remuneration stipulated remained the same. Put in another way, although a player could nominate the terms and conditions upon which he was prepared to play, the value of these terms and conditions would vary dependent upon the club which drafted the player where those terms included incentive bonuses. A player selected by the team, bottom in the competition, might thus receive less than a player selected by the top team, notwithstanding that the contractual terms and conditions of his playing employment were the same. This must clearly be conceded. Indeed it is more significant with players of lesser standing who are more likely to be remunerated by incentive payments and the like than high profile players who can demand and get high signing-on fees in excess of $100,000 per annum. There is considerable strength in the submission that this constitutes a real detriment to players. It must be weighed in due course against the legitimate interests of the League.
77. Related is the dilemma that a player suffers in stipulating a term of years for his potential engagement. A player in a free market might wish to negotiate a long term contract with a club which is financially strong but take a different view in negotiating a contract with a club which was less financially secure where a short term contract may be more advantageous to him.
78. The fourth matter emphasised related to the timing of the draft. The rules (Rule 57) provide for the holding of the first internal draft meeting after the end of the playing season on 20 November. The Winfield Cup competition is, save for the final play-off, finished by the end of August. That is to say that, for all but the top five teams (unless there is a tie), the competition will be at an end at that time. The semi finals and finals are played in the month of September. The new season's competition commences in March although there is an earlier pre-season competition played in February. Some teams commence training for the new season as early as October and others, such as Canterbury-Bankstown in early November. A player whose future, having regard to the draft meeting, is uncertain must therefore either miss out on training with a club and perhaps train alone or arrange to train with a club which might not ultimately be the club which selects the player in the draft. Paul Langmack, for example, had commenced training with Western Suburbs which had expressed interest in employing him around the end of October although at that stage had not participated in the draft.
79. One can readily observe that the timing of the draft imposes what could
be a very significant detriment to a player whose future
may be uncertain
until some time towards the end of November and who might as a result miss out
on training for a period in excess
of a month. Counsel for the first
respondent indicated from the bar table that it was proposed that the rules be
varied to bring
forward the date of the first internal draft meeting to
obviate this problem. He indicated a preparedness to give an undertaking
to
the Court to do so if required. While an undertaking to effect a change in the
rules for the future could not preclude the applicants
from obtaining a
declaration as to the invalidity of the draft rules if those rules in fact are
an unreasonable restraint of trade,
the giving of such an undertaking would no
doubt be a legitimate matter to take into account in exercising a discretion
whether to
make a declaration or for that matter whether to grant an
injunction. I propose to accept the undertaking proffered.
The internal draft as it affects the interests of the respondents
80. In Buckley v Tutty (supra) at 377, the High court identified, by
reference to the facts then before it, the legitimate interests
of the League
in the following passage relied upon by the respondents:
"It is a legitimate object of the League and of81. Subsequently, their Honours indicated that it might "be reasonable to impose some restrictions on the transfer of professional players from one club to another or on the extent to which a club may entice players away from another club". The Court, however, refused to advise in advance what restraints would be reasonable. The passage cited is not, of course, a statement of legal principle. It is rather a statement of fact. Nevertheless the evidence before me permits the drawing of the same conclusions.
the district clubs to ensure that the teams
fielded in the competitions are as strong and
well matched as possible, for in that way the
support of the public will be attracted and
maintained, and players will be afforded the
best opportunity of developing and displaying
their skill. It is therefore legitimate to aim
to provide a system that will ensure sufficient
stability of membership to permit those who play
for a club to be trained as a team and to
develop a team spirit, and that will prevent the
stronger clubs obtaining all the best players,
thus leaving the weaker clubs with teams that
are unable effectively to compete with their
stronger opponents."
82. The respondents submitted that in determining whether the internal draft
rules were reasonable, consideration should be given
to the following
objectives which underlay the rules:
* The desirability of a strong and competitive PremiershipEven competition
competition in which the participants are as evenly matched as is
possible looking at the matter at the beginning of the playing
season.
* The desirability that the clubs competing in the competition are
financially viable.
* The desirability of retention, so far as is possible, by
individual clubs of players playing with them.
* The prevention of strong or rich clubs plundering weaker clubs of
their good players, especially mid season.
* The development of the game at junior levels.
83. Of those who had participated in the sport and gave evidence, only one witness, Mr Ryan, a well known coach, really challenged the desirability of there being a strong and competitive Premiership competition in which the participants are as evenly matched as is possible. The foundation of Mr Ryan's opposition was quite clear. A successful coach builds up and sustains his reputation by coaching successful teams. If the team does not win the coach may not survive. The draft may operate, and in Mr Ryan's opinion would operate, to prevent a coach selecting the players he would prefer to build up a successful team.
84. Mr Ryan expressed a point of view that tended to equate equality of playing talent with mediocrity. He said that if there were true parity among teams, each team would score an equal number of points in the competition so that all sixteen teams would finish the competition with equal points. Mr Ryan, for his part, believed in champion teams, and the pursuit of excellence, a factor no doubt instrumental in his success as a coach. Mr Ryan did point out, and I accept, that it is a fact of life that there are some players of exceptional talent (he named Mal Meninga, the captain of the Canberra Raiders, the premier team in the 1990 Winfield Cup competition, as an example) but that not all players can be as good. The result is, as must be accepted, that there will always be inequality in playing talent.
85. Notwithstanding Mr Ryan's position, which I respect, and his desire for excellence, which I admire, I do not think that there is much doubt that it is a desirable objective that at the beginning of the playing season, teams be matched for talent as evenly as is possible. Where teams are evenly matched, it is likely that public support for the game reflected in attendances at games and in the number of people watching matches televised, will be maintained and increased. In consequence, sponsorship will become more readily available to clubs and the quantum of funds provided by sponsors is likely to increase. This, in turn, is likely to lead to higher remuneration to players, to games being played in places where no games are currently played, and to an increase in support for the game among junior players.
86. The applicants argued that the restraints imposed by the internal draft rules were not, however, reasonable because, as far as was practicable, equality of playing talent existed at the present time. There was evidence that in the past there had been a noticeable inequality of teams with the result that some teams had dominated the field in the competition for a number of years while others had consistently been at the bottom end of the competition. However, this inequality is no longer as noticeable. A number of witnesses asserted that the competition was now as hard as it could be and that teams were evenly matched. Mr Quayle himself conceded that the competition, at least in the preceding two or three years, was one that was very competitive and successful. The conclusion that an optimum state of evenness of competition had been arrived at, was militated against somewhat by the results of the 1990 competition where the South Sydney team, the Premiers in the 1989 season, had been consistently losers. Further, a number of witnesses agreed that the division in the 1990 competition of teams into northern and southern divisions had demonstrated that there were better teams in the one division than the other.
87. The debate as to equality of competition raises an issue as to whether
there is any way at all of determining objectively whether
or when equality of
playing talent exists. Subject to the evidence of two economists to which I
will shortly turn, it seems to me
that the assessment of equality of talent in
teams will always be a very subjective one. A player regarded as of
considerable talent
by one coach may well be not regarded as favourably by
another, albeit that agreement may well be reached with respect to the talent
of exceptional players. Further, the actual results of competition matches do
not, in my view, necessarily provide an indication
of the playing ability of
the team in question. There will be a number of factors which will affect the
outcome of a particular
match, including psychological matters affecting
particular players, injuries, a particular player being off his game or chance
factors.
All things being equal (and by that I include the equality of clubs
to finance the acquisition of players) the fact that the weaker
clubs have the
ability to purchase first the very best player should assist these weaker
clubs to achieve greater equality with the
stronger clubs based on their own
subjective assessment of playing talent. Of course, it takes more than one
good player to make
a good club and under the draft system the weakest club,
as judged by the results of the previous year's competition, still has only
one chance of drafting a player in each sixteen chances assuming all other
teams participate in the draft. Nevertheless, I find
that the draft system
should go some way towards assisting in bringing about, and certainly in
maintaining, equality of talent.
The economic evidence
88. Evidence was adduced for the applicants from two economists, Mr Dabscheck, a senior lecturer in the School of Industrial Relations at the University of New South Wales with a Master of Economics degree from Monash University, and Professor Swan, Freehill Hollingdale and Page Professor of Management in the field of law and economics at the Graduate School of Management of the University of New South Wales.
89. Mr Dabscheck's thesis for the degree of Master of Economics had been concerned with the labour market for Australian Rules footballers. He was the author of a number of papers concerned with the effect of labour market regulation on professional sport.
90. Mr Dabscheck had devised a method to attempt to measure the degree of competitiveness of teams over time. The method he devised consisted of taking a minimum number of years equal to the number of teams in the competition and making the assumption that if there were strict equality of competition between the teams, every team in the period selected would finish once in each place in the competition. Thus if there were twelve teams, he would take a twelve year period and each of the teams would, in that period, given equality of playing talent, be assumed to occupy positions finishing from first to twelfth. In the result the mean score of each team would be 6.5. He then would take the actual placings of teams in the period and calculate a standard deviation of the actual results from the mean.
91. Mr Dabscheck's evidence and the calculations made by him on this basis as to competitiveness in the rugby league competition, were the subject of attack on the voire dire as Mr Dabscheck had studied only one year of statistics in the course of his undergraduate studies. However, as Mr Dabscheck explained, and as I accept, the statistical analysis used by him was not complex and involved applications of statistics understood by anyone with a university degree in economics and indeed is taught to students at the Higher School Certificate. While I accepted the calculations in evidence, I do not accept that Mr Dabscheck was qualified to give evidence that his method was an appropriate statistical procedure for determining an index of competitiveness. Such evidence could only be given by a person qualified as an expert in statistics. Other methods suggested by Mr Dabscheck to measure competition involve looking at the top team and the average places of the other teams behind the leader, and looking at the percentage of games won by the top five sides and the bottom five sides and the average position of the sixth team in the competition. Mr Dabscheck conceded that there was no discussion in the literature of the appropriateness of a particular measure of competitiveness in team sport, and his evidence satisfies me that there is no generally accepted method of arriving at an index of competitiveness.
92. Mr Dabscheck's calculations suffered, as well, from a number of problems which would deprive them, in any event, of significance. First, his results were based upon figures said to be taken from newspaper reports and there was no agreement between the parties as to the correctness of the yearly results upon which the calculations were based. Indeed, some of the results were said to be wrong. More significantly, however, the results of the calculations became somewhat problematic, as indeed Mr Dabscheck himself conceded, when he took a period which did not correspond with the number of teams in the competition. This particularly became a problem when the teams playing in the period, and indeed the number of teams playing in the period varied in some of the years. Further, with respect to Mr Dabscheck I have difficulty in accepting the underlying assumption asserted by him for his own index of competition, namely that where there was equality of playing talent each team would fill once and once only each position in the ladder over a period corresponding with the number of teams. While, no doubt, that assumption would be correct if a long enough period of time is taken, I have some doubt as to its correctness when the number of years taken is equivalent to the number of teams. If a dice having six sides is thrown a sufficiently large number of times then the dice will fall an equal number of times on each number. But if a dice be thrown only six times, variations will occur by chance from the theoretical possibility that each dice would fall on each number twice. Again, as I have already said, fundamentally the actual results of the competition are affected by matters other than the playing talent of the players of each club. All these matters lead me to conclude that there is no objective test accepted by experts in the field and upon which I could rely to measure the competitiveness of playing talent of teams in a competition.
93. Both Mr Dabscheck and Professor Swan also gave evidence in their capacity as academic economic experts, of the effect of labour market controls. Both supported, in general terms, free labour markets. Professor Swan, in particular, expressed his views in rather emotive language. He drew upon free market theory for the conclusion that regulation of the labour market in sport, such as by the adoption of the draft, would lead to a reduction in the remuneration of players and a transfer of resources from players to clubs. He drew upon American literature to express views as to the effect on the competitiveness of teams.
94. With respect to Mr Dabscheck and Professor Swan, I find their evidence
unhelpful in the resolution of the issue before me. The
question of the
reasonableness of the restraint imposed by the internal draft is not a
question to be determined by reference to
theories of economics. Indeed there
would be a danger in so doing particularly where those theories depend upon
views bordering
upon the political. Such matters are outside the realm of law.
The issue of reasonableness is required to be determined by me by
reference to
the practical operation of the rules of the draft guided by the evidence of
those involved in the administration and
playing of the sport and not by
reference to academic theory. Another difficulty of the evidence of Professor
Swan was that the literature
to which he referred was concerned with other
forms of regulation in baseball in the United States and not with the
operation of
the internal draft, of which there is no United States
equivalent, at all.
Evidence as to the operations of the internal draft by the Australian Football
League
95. Evidence was adduced by both sides as to the operation of the draft system and particularly the internal draft by the Australian Football League. Although there is some similarity in the rules there are also differences. In Victoria, for example, clubs may, with the consent of the players affected, trade their draft choices, an option unavailable in the rules of the League.
96. Mr Schwab, the Executive Commissioner of the Australian Football League deposed to a dramatic increase in club membership and crowd matches since the introduction of the external draft system in Victoria with an increase in club revenues, television and sponsorship in the same period. The internal draft commenced two years later and was expected, Mr Schwab said, to create a more even competition. Player plundering, a matter subsequently discussed, was said to have been reduced, although it was unclear whether these results were a result of the salary cap (where all clubs have an equal spending limit), the external draft or the internal draft. This evidence was not the subject of challenge. However, Simon Madden, a leading Australian Rules Player and former president of the AFL Players' Association, expressed the view that clubs were using the combination of the salary cap and the draft to offer less money to players. The precise effect of each component (salary cap and internal draft) in this conclusion was unclear.
97. Although this evidence taken as a whole does support the submissions of
the respondents, it must be viewed with some caution
having regard to the
ability in Victoria for clubs to trade their draft choices for a player or
players. I have therefore placed
little weight upon it. The evidence is
further affected by the fact that, as in New South Wales, so too in Victoria,
the time with
which there has been experience of the internal draft has been
short.
Conclusions as to the effect of the internal draft on competitiveness of teams
98. On the evidence I find that immediately prior to the introduction of the
internal draft the game of rugby league in New South
Wales was very
competitive although it had not reached such a state of equal competition that
no improvement in competitiveness was
possible. It is a legitimate object of
the League and the clubs involved in the competition, to endeavour to improve
and maintain
competitiveness of teams. I am of the view that the internal
draft, on the balance of probabilities, does operate to some degree
to assist
in the furtherance of these aims. However, if no other matter were to be
taken into account beyond that discussed to this
point, I do not think that
the respondents would have satisfied the onus of showing that the restraint of
the internal draft, having
regard to the detriments it places upon the
players, is no more than is reasonably necessary.
Effect of the internal draft on financial viability of clubs
99. The League has clearly a legitimate interest in ensuring the financial viability of clubs, an interest coincident with the interests of players. The example was given in evidence of the Cronulla club being required to reach an agreement with its players whereby they accepted half of their originally agreed salary. There is no challenge to this proposition, for upon the financial strength of clubs depend matters such as the retention of players, their remuneration, and the maintenance and development of facilities for both players and spectators.
100. While the goal of financial strength of clubs is obvious, the reality of equally financially successful clubs has not been achieved. Some clubs are supported by wealthy and successful social clubs. Others have no such support. One club is privately owned and sponsored. Some clubs (eg South Sydney) are located in areas regarded by some as disadvantaged, others are in areas regarded as wealthy, such as Eastern Suburbs. Financial instability of a club may lead to that club not being accepted into the competition by the first respondent. It may lead to the ultimate dissolution of the club as was the case with the Newtown club in years gone by. It may lead to relocation of the club as occurred when the Western Suburbs club moved to its present Campbelltown location. It could possibly lead to the merger of clubs.
101. One of the undesirable consequences of inequality of financial strength of clubs lies in the ability of the wealthier clubs to offer higher rewards to players which the poorer clubs are unable to match. The outcome, unless some restraint is applied, is likely to be that the less wealthy clubs can not attract the top players and coaches if the wealthy clubs engage in what the evidence referred to as "cheque book warfare". The likely result would be a lessening of competitiveness among the clubs.
102. In an effort to overcome this problem the League introduced the concept of the salary cap which has previously been discussed. Provided that cap were equal for all clubs and provided each of the clubs were sufficiently financially viable to enable it to spend up to the limit of its salary cap, the internal draft scheme would have no particular effect in ensuring financial viability and its reasonableness could not be supported on this ground. However, the present salary cap limits are not equal, for the reason that they are determined on a basis that takes into account the effect of the expenditure on the club's financial viability. Further, the evidence supports the view that some clubs are unable or perhaps unwilling for prudential reasons to spend money on players even up to the limits of the salary cap set by the League. The internal draft must be considered against this factual background.
103. One of the consequences of the draft is that clubs can not approach players and offer high rewards in the knowledge that the club making the offer will secure the services of the player. The player must participate in the draft and in the result notwithstanding previous negotiations his services may be acquired by some other club. Hence, to some extent the internal draft does militate against the consequences of full blown "cheque book warfare" when taken together with the existence of the salary cap. Within the confines of the salary cap rules, each club has the ability to select in turn the best talent available in the draft.
104. In my opinion the internal draft may be justified by the objective of
financial stability (when taken together with the matters
hereafter discussed
under the heading of retention of players) given the situation now prevailing
that some clubs are less viable
than others and where unequal salary caps are
factually justified. With greater financial equality of clubs and an equal
salary
cap (both objectives of the League) the result may well be different.
Retention of players and mid-season offers
105. There are obvious advantages both to the players and to the clubs of players being encouraged to stay with the clubs with which they started their football career. Spectators identify players with clubs, the players themselves identify with their clubs and morale is increased. This in turn brings advantages both tangible and intangible to the player both in recognition in the club district and in job opportunities. This is not to say that to restrain a player from leaving his club would, of itself, be capable of justification as reasonable.
106. The significant matter relied upon to support the reasonableness of the draft under this heading, was the need as perceived by those responsible for the implementation of the draft to prevent one club from poaching players from another club mid-season. This need must, of course, be viewed also in conjunction with the matters set out above relating to the financial inequality of the clubs.
107. The way in which the internal draft achieves this object is by preventing mid-season agreements being reached between players and clubs. This is so because neither the player nor the club can be sure that the player will be selected by the club making the offer in the draft at season's end. The draft also prevents arrangements being reached between a club and a number of players each coming from the one club at the time the offer was made. Examples were given in evidence of what was referred to as one club "plundering" another by taking a number of the top players. Other examples were given of offers being made mid-season by a club to a player and in effect the player being signed up mid-season to play with the club making the offer. Notwithstanding the result of the first draft being that Western Suburbs secured a number of top players, it does not seem likely that the internal draft would ordinarily result in a number of players from one club moving together to another club.
108. It was submitted that, in addition to the impact which poaching may have on the team poached and therefore competitiveness of teams, mid-season signings were disruptive and affected the performance both of the player and his team mates. The evidence on this point was conflicting. Gavin Miller expressed the view, by reference to examples including his own experience, that a mid-season offer disrupted playing and affected the performance on the field. Other players remained firmly of the view that there was no disruptive effect at all. These views were all honestly held.
109. The evidence satisfies me that the consequences on morale and playing
performance of mid-season offers will vary depending upon
the personality of
the player receiving the offer and the personalities of his team mates.
However, I am satisfied that it is reasonable
for the League to seek to outlaw
unrestricted mid-season offers that would lead to the loss of the top playing
talent of a club,
particularly where multiple poaching might otherwise occur.
Judged against this criterion, but subject to the earlier qualifications
as to
the possibility that a different conclusion might follow if equal salary caps
and equal ability to purchase players up to the
salary cap existed, I am of
the view that the restraint created by the internal draft is reasonable in the
legitimate interests of
the League.
Development of the game at the junior level
110. There can be no doubt that the development of the game at the junior level is of the utmost significance to the future of the game. It ensures not only a large reservoir of good players in the future but as well greater interest in the sport. The evidence suggests that while in the past the response of clubs to the call to develop junior talent was varied and often unsatisfactory, there had been in recent time an increase of effort and expenditure to this end.
111. The internal draft may, by acting in part as a deterrent to a player
leaving a club, have some impact in the development of
the game at the junior
level. It does not seem to me nevertheless that the internal draft itself has
been shown to be likely to
have any significant effect in developing juniors
in the club. Rather if judged by this criterion alone the draft would not
have
been shown to be a restraint that went no further than was necessary to
ensure this object. The object of developing the game at
junior level can best
be implemented in other ways by the clubs and the League directing resources
to this end rather than imposing
restraints on players. It may be that the
external draft is capable of justification under this heading but that is not
the issue
before me.
Additional matters in support of reasonableness
112. There remain to be considered two further matters raised by the respondents in support of the reasonableness of the internal draft restraints. First, reference was made to the 100 kilometre rule and the ten year rule exceptions to the internal draft. These exceptions do mitigate the effects of the draft to a minor degree. The ten year rule will not be likely to have a significant impact. A player's career is relatively short, although the evidence suggested that players are commencing in the upper levels of the game at the age of 16 or 17. There seem to be few top players remaining in the game over the age of 30.
113. The 100 kilometre rule may operate in some cases to mitigate what would otherwise be the effect of the internal draft requiring a player to contract and thus play with a team more than 100 kilometres away from his previous club and presumably therefore more than 100 kilometres away from his place of residence. The rule has some strange consequences in that a player in Newcastle or Canberra invoking the rule could not be drafted by any team (there being no team situated less than 100 kilometres from each city). A player formerly playing with the Brisbane club invoking the rule could only be drafted by one club, the Gold Coast, and vice versa. A top player with the Brisbane Broncos could freely negotiate with the Gold Coast team at any time and know that that team would be assured of his playing services. A player playing with a club in Sydney by invoking the 100 kilometre rule can ensure he is not drafted by four teams in the competition. Although these exceptions do assist marginally in the conclusion that the internal draft is reasonable they ultimately play little part in the conclusion.
114. The remaining matter is the existence of the appeal rules. A player
dissatisfied with the outcome of the draft may appeal.
The rules have been
drafted to take account of the defect that existed in the appeal rules
considered in Tutty's case. There, it
was said, (at 379) that a player was:
"completely in the hands of the committee; he115. Under the present rules, the player is granted a right to appeal to an appeals board, to be constituted as earlier discussed. The matters required to be considered by the appeals board are enumerated in the rules. Additional to personal factors relevant to a player the appeals board is required to consider the best interests of the game the player and the club in question. The appeal procedure is to be implemented promptly following notice of appeal and players are given the right to be represented at a hearing.
has no right to require it to decide in a
particular way, or in accordance with any
suggested principle, and it cannot be assumed
that the decisions of the committee will always
and necessarily ensure that the restraint
imposed by the rules is no more than a court
would consider reasonable."
116. The rules thus do not suffer the defects of those considered in Tutty's case and assist in ameliorating the consequences to a player of a draft selection that may prove disadvantageous to him. As such the rules assist me in reaching a conclusion.
117. I should say that I have not found the question easy to resolve, for the present is a borderline case. There are compelling arguments on each side to be balanced and it must steadily be born in mind that to prevent a player from exercising a free choice as to the club which is to employ him, involves a significant restraint on the freedom of the player, notwithstanding that that restraint may be somewhat mitigated by the factors to which I have already referred. Nevertheless, I am of the view that the respondents have shown on balance that the restraint imposed by the internal draft is not unreasonable having regard to the legitimate interests of the League and the clubs, on the one hand, and the players on the other.
118. It follows, in my view, that the application brought by the applicants and the proceedings commenced in the State Industrial Commission and remitted to this Court should be dismissed with costs. I will, subject to the giving of the undertaking previously referred to, order in respect of the application commenced in this Court that it be dismissed with costs. I will also make orders in the same terms in respect of the proceedings initiated in the New South Wales Industrial Commission. I defer, however, the making of these orders at this stage, to allow the parties to discuss whether those applicants who discontinued the proceedings commenced in this Court also intended to discontinue the proceedings originally initiated in the Industrial Commission. If this were intended, it will be necessary for Notices of Discontinuance to be filed in the latter proceedings prior to an order for costs being made.
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/1991/9.html