Last Friday’s Federal Court decision on the National Rugby League’s “No-Fault Stand Down” rule represents a clear recognition by the Australian courts of the importance of protecting brand and reputation as a legitimate interest of a sports governing body.

It will be welcomed by sports administrators as a vindication of their right to implement robust regulations to deal with serious misconduct which compromises the reputation and commercial interests of their sport.

The automatic suspension of a player without any finding of misconduct is highly unusual.  Whilst some sports have a discretionary power to suspend a player pending the determination of a criminal charge, the NRL accepted in cross-examination that their new rule did not have a parallel in any of the other sports they had researched.

The decision is also notable as it distinguished a line of earlier Australian cases (and one English case) on restraints of trade in sport, all of which were decided in favour of the restrained player.

In this article, we summarise the decision and explain how the earlier cases were distinguished.

Facts of the Case

A brief summary of the facts is as follows:

  • the 2018/19 NRL off-season was described by the media as the “Summer of Hell” after a series of allegations and charges against no fewer than 6 NRL players for physically or sexually assaulting women;
  • one of the most widely reported incidents concerned Jack de Belin (a St George Illawarra player) who, in December 2018, was charged with the aggravated sexual assault of a 19 year-old woman; specific details of the confronting and graphic allegations against the player became public after his first court appearance in relation to the charge;
  • when Mr de Belin was charged, the relevant NRL rule permitted a player charged with a criminal offence to continue playing pending the determination of their guilt or innocence;
  • in March 2019 and shortly before the start of the 2019 season, in response to the unprecedented level of negative media reporting and the damage being done to its reputation, the NRL implemented a new rule that players facing serious criminal charges were no longer permitted to continue playing pending the determination of the charge – the “No-Fault Stand Down” rule;
  • the new rule provides that where a player is charged with a serious criminal offence (being an offence punishable by 11 years’ imprisonment or more), they will be automatically suspended from playing in the NRL competition (and related competitions), but they will remain on full pay and may continue to train with their club and have access to welfare and education support through the NRL and their club;
  • as a player affected by the new rule, Mr de Belin commenced proceedings against the NRL in the Federal Court asserting, among other things, that the new rule was an unlawful restraint of trade; and
  • the case was heard in the Federal Court by Justice Perry on 15 April 2019 and the decision handed down on 17 May 2019.

Restraint of Trade

The relevant legal principles governing restraint of trade are well-established and were not at issue in the case.

It was accepted by the NRL that the new rule imposed a restraint of trade on Mr de Belin, notwithstanding that he remained on full pay whilst stood down and was permitted to train with his club.

Having accepted this, the onus was on the NRL to do the following:

  • identify the legitimate interests which the restraint was introduced to protect;
  • establish that there was a clear and present danger to those legitimate interests at the time the restraint was introduced; and
  • show that the restraint went no further than what was reasonably necessary to protect those legitimate interests.

Impact of the Restraint

The seriousness of the restraint imposed on Mr de Belin was held to be highly relevant.  The NRL accepted that Mr de Belin could miss one or even two NRL seasons before his criminal charge is determined, and Perry J accepted evidence from Mr de Belin’s agent on the adverse impact the restraint would have on Mr de Belin’s skills, profile, reputation and career trajectory.

There were also two other factors which increased the burden on the NRL of justifying the restraint:

  • whilst Mr de Belin had agreed in his Player Contract to be bound by the NRL Rules as amended from time to time, this was not a case of the restraint being arrived at through negotiation between Mr de Belin and the NRL; the restraint was in effect imposed on Mr de Belin involuntarily; and
  • the new rule applied automatically to Mr de Belin; he had no opportunity to be heard as to whether he should be stood down, and no right to appeal or have the decision reviewed.

Legitimate Interests

The NRL put on evidence identifying the interests which the new rule was seeking to protect.  Much of this was drawn from the interlocking contractual documents governing the relationship between the NRL, the players and the NRL clubs, including the NRL’s Constitution, the NRL Rules, the Player Contract, the Player Registration Application, the Code of Conduct and the NRL’s values as set out in its Strategic Plan.

These interests included, among other things, being able to provide adequate funding for rugby league from the junior to the elite levels, protecting and enhancing the image of the NRL and its competitions and promoting the game as inclusive and, in particular, as respectful, attractive and welcoming to female fans and players.

Perry J found that the evidence clearly established that these were legitimate interests for the NRL to seek to protect.  She also accepted the NRL’s evidence as to why the alleged misconduct by players during the 2018/19 off season and associated publicity represented an immediate and significant danger to those legitimate interests, including a threat to the financial stability of the NRL and its clubs.  The bulk of this evidence related to the negative reaction of sponsors, broadcasters and fans to the poor player behaviour during the “Summer of Hell”, as had been communicated to the NRL’s CEO and Chief Commercial Officer who were the NRL’s key witnesses.

Reasonableness of the Restraint

The key question was whether the restraint imposed by the “No-Fault Stand Down” rule was no more than was reasonably necessary to protect the NRL’s legitimate interests.

In reaching her conclusion that the rule was reasonably necessary, Perry J distinguished this case from a number of earlier decisions involving restraints in sport which dated back to the 1970s, all of which were decided in favour of the restrained players.

These included cases involving former Balmain rugby league player, Dennis Tutty (Buckley v Tutty (1971) 125 CLR 353), former England cricket captain Tony Greig (Greig v Insole [1978] 3 All ER 449), Australia’s former cricket captain Kim Hughes (Hughes v Western Australian Cricket Association (Inc.) (1986) 19 FCR 10) and the player draft which New South Wales Rugby League sought to introduce in the early 1990s (Adamson v New South Wales Rugby League Limited [1991] 27 FCR 535).

The earlier cases were distinguished on a number of different grounds.

No financial loss

It was held to be relevant that the restraint did not impose any restriction on Mr de Belin’s ability to continue training with the team, to access welfare and education support, to derive an income (as he remained on full pay) and even to seek to negotiate a new contract with his current or other clubs (albeit that it was highly unlikely that any club would enter into negotiations with him while the charge was pending).

Whilst Perry J accepted that there would be an impact on Mr de Belin’s profile and career trajectory from not playing, she was not persuaded that the restraint would have the effect of ending or substantially impairing his career and ability to earn money under a future playing contract in the NRL or elsewhere.

In short, Perry J found no evidence that Mr de Belin had suffered a financial loss by reason of the automatic stand down, as distinct from any loss he suffered from the damage caused to his reputation by reason of the charge and the publicity surrounding it.  Her view was that any potential loss of income from his non-inclusion in the 2019 State of Origin matches was merely speculative, as there was no guarantee that he would be included in the NSW team.

Mr de Belin’s case was different to the earlier cases of:

  • Tutty, in which the New South Wales Rugby League rules governing the registration and transfer of players, in particular the rules preventing players from playing for other clubs without the permission of the player’s registered club, had the effect of preventing that player from playing for, or negotiating contracts with, other clubs, despite the fact that he no longer played for the registered club and was not remunerated by it; and
  • Adamson, in which a player draft to regulate the transfer of rugby league players between clubs had the effect of restricting a player’s right to negotiate and contract with another team of their choosing and, in some cases, to prevent them from playing altogether.

Restraint was not indefinite in its operation

It was held to be relevant that the restraint was finite and definite – i.e. it only operated for so long as the criminal charge had not been determined – and that there was a rational connection between the reason for the stand down (i.e. pending criminal charge) and the period for which the stand down applies (i.e. the date on which criminal charge is determined).  The duration of the restraint was no longer than that which was reasonably necessary to protect the legitimate interests of the NRL in managing any adverse publicity or sponsor backlash during the stand down period.

This was distinguished from the restraint in Hughes which was indefinite in its duration.  In that case, the Cricket Council had made an amendment to its rules to the effect that a player was automatically disqualified from playing club cricket if the player participated in South Africa (which was under pressure to end its apartheid policy).  The effect of this rule was to preclude the player from being selected for Sheffield Shield, and therefore, Test cricket teams.  Unlike the “No-Fault Stand Down”, the Cricket Council’s rules did not prescribe the circumstances in which the automatic disqualification would be lifted, and it was therefore effectively indefinite in its operation and went beyond what was reasonably necessary to protect the Cricket Council’s legitimate interests.

‘Immediate and significant’ danger to the NRL’s legitimate interests

Perry J found there was compelling evidence of the risk of sponsors, broadcasters and fans being alienated and the financial viability of the game being compromised if Mr de Belin and the other players facing similar charges were permitted to continue playing pending the determination of the charges.  An important consideration in her decision was her view that the NRL’s evidence had established that the repercussions from the “Summer of Hell” posed an immediate and significant danger to its legitimate interests, and that nothing short of the urgent implementation of the “No-Fault Stand Down” rule would address this.

This was distinguished from the facts, and the finding, in Adamson.  In that case, there was no evidence to suggest that the introduction of the player draft which was intended to supplement a salary cap was necessary to promote the financial viability of the clubs, or the competitiveness of the league.  To the contrary, the court in that case found that the game had in fact prospered and expanded under the existing salary cap system without the player draft.  There was, therefore, no immediate or significant danger to the financial viability of the clubs, or NSWRL, which reasonably justified the imposition of the player draft.

Retrospective operation of the restraint

Mr de Belin’s submissions gave particular weight to the retrospective operation of the new rule.  It was submitted that the new rule went beyond what was reasonably necessary (including by reason of its retrospective application) and that the earlier case of Greig which also involved the retrospective application of a new rule was directly applicable.

In Greig, the International Cricket Council had introduced a rule which had the effect of disqualifying players from playing in official international Test cricket if they had played in a cricket match organised by the rival cricket series, World Series Cricket.  The rule was retrospective in its operation, meaning that players who had played World Series Cricket prior to the introduction of the rule were in breach of the new ICC rule and were banned, notwithstanding that they had no knowledge of it at the time.  After considering the legitimate interests which the ICC was seeking to protect, Slade J in the High Court (England & Wales) held that the relevant threats to these interests could have been adequately met by a prospective ban, and that the restraint therefore exceeded what was reasonably necessary.

Perry J distinguished the facts of Greig from the NRL’s case, finding that the restraint did not put Mr de Belin in breach of the NRL Rules for something that he did prior to the introduction of the new rule (as was the case in Greig).  Instead, the alleged conduct by Mr de Belin (if proved) was unlawful at all times and the restraint was automatically engaged by the existence of this serious criminal charge, regardless of when the charge was laid and without any finding of breach.  For this reason, Perry J found that the “No-Fault Stand Down” rule did not operate retrospectively in a relevantly adverse way, or in a way which unfairly discriminated between players.

Rich has been advising sports and media clients on a wide range of matters for over 14 years. Rich is a partner in our International Media, Entertainment and Sport Group, based in Sydney. He has a unique combination of private practice and in-house experience having spent 7 years as the General Counsel of Rugby Australia. Rich advises on a broad range of commercial, regulatory and contentious matters in the sports and media sector. He has particular expertise in sports media and marketing rights, sales and acquisitions of sports clubs, joint ventures, collective bargaining and other stakeholder arrangements, sports governance, and the implementation and enforcement of sports integrity policies and programmes.
Tom is an Associate in our EU & Competition group, based in Sydney, who has experience advising clients on corporate, commercial and regulatory issues. He regularly assists in advising the firm's communications and technology clients in relation to competition and consumer law, intellectual property law and corporate and commercial law generally.

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