Judgement handed down in Jack de Belin claim17 June 2019 Topics: Corporate and commercial
On 17 May 2019, the Federal Court handed down judgement in the claim instituted by Mr Jack de Belin against the Australian Rugby League Commission Limited (ARL) and National Rugby League Limited (NRL). Justice Perry found in favour of the ARL and NRL.
Mr de Belin is a professional rugby league player with the St George Illawarra Rugby League Football Club (St George Illawarra). He turned 28 years of age in March 2019, and will be 29 when his contract with St George Illawarra expires at the end of the 2020 rugby league season. Mr de Belin’s contract of $545,000 for the 2019 season is conducive with his standing as one of the top players in Australia’s National Rugby League Competition (NRL Competition). Mr de Belin was charged on 13 December 2018 with one count of aggravated sexual assault in the company of a 19-year-old woman which allegedly took place on 9 December 2018.
Mr de Belin’s criminal trial had not been conducted at the time of the Federal Court proceedings. At the time of Mr de Belin being charged, it was the practice of the NRL (the wholly controlled subsidiary of the ARL that was responsible for operating and managing the NRL Competition) that players charged with criminal offences could continue to play in the NRL Competition pending the determination of the player’s guilt or innocence by a court. Following a series of incidents involving rugby players over the 2018/19 off-season and subsequent to Mr de Belin being charged, the ARL adopted a policy that required players facing serious criminal charges (being offences punishable by a maximum penalty of 11 years’ imprisonment or more) to be stood down on full pay pending the determination of the charge (the new rule).
The primary issue of the case involved an assessment of the ARL and NRL’s ability to unilaterally introduce the new rule and to enforce the new rule on all players. The decision is significant because it confirms the ability of sporting organisations to have some flexibility in the rules which govern the sport, particularly in circumstances where the commercial interests of the sport are being threatened.
Given the Court’s finding in favour of the sporting administration, the case highlights a number of important considerations from the perspective of sporting administrators including matters that should be covered off in key documents such as player contracts and club funding agreements.
In a sporting administration’s key documents:
- It’s constitution should adequately represent the purposes for which the organisation has been established
- Documents should be carefully drafted to ensure that clubs and players are all bound to the rules of the competition, with flexibility for the administrator to change the rules as necessary for the betterment of and to protect the sport
- The competition rules must provide adequate protection for the sporting code and allow for sporting administrators to take action in the best interests of the sport.
In terms of the NRL’s contract documentation (which was found to be sufficient to enable the introduction of the new rule):
- In order to field a team in the NRL Competition, clubs need to enter into licensing agreements with the NRL that hold clubs accountable for ensuring that their officials and players comply with, and continue to comply with, the NRL Rules.
- In order to be eligible to play in the NRL Competition, players must enter into Player Contracts and Registration Applications that specifically reference ongoing compliance with the NRL Rules.
The player documentation also includes provisions whereby players acknowledge that:
- They will at all times act in the best interests of the Club and the NRL
- They will at all times maintain high standards of personal conduct, and recognise that their conduct on and off the field will be the subject of significant media and public scrutiny
- They are bound by the NRL Rules as amended from time to time (irrespective of whether those amendments are effected before or after the date of signing the player documentation).
The ARL and NRL’s case was also supported by evidence which quantified the impact of the issue involving Mr de Belin on the sport. The NRL was able to satisfy that the Court that:
- It is the responsibility of the central sporting administration to manage and grow the commercial interests of the sport (the NRL had grown revenue from $20 million in 1990 to over $500 million in 2018)
- It is in the interests of all participants – including clubs and players – for the commercial interests of the sport to be protected
- The sport’s reputation and its commercial value are intrinsically linked
- The series of scandals impacting the NRL over the summer of 2018/19, including the charging of Mr de Belin and subsequent media reporting, had a quantifiable impact on the value of the NRL Competition.
In this regard:
- The NRL’s media partner advised that the charge against Mr de Belin would have a negative effect on the upcoming season’s television ratings and would significantly dilute the value of future broadcast deal
- The chairman of the Melbourne Storm – Mr Bart Campbell – provided evidence that Mr de Belin’s charge and the surrounding publicity of the charge had caused a substantial impact on the Melbourne Storm’s ability to negotiate new commercial arrangements with sponsors.
Mr Campbell noted that the Melbourne Storm’s contract with its major sponsor for 2019 was 40% less than what it received from its major sponsor in 2018.
From the perspective of players, the review of the NRL Player Contracts also brings to light an issue that will occupy the thoughts of negotiators involved in future collective bargaining discussions between sporting administrators and player associations – the issue of player intellectual property. Under the current NRL arrangements, the club funding agreements include the concept of “Player Property”, which is defined as meaning “the name, photograph, likeness, image, reputation and identity of a player”. Players licence their “Player Property” to the clubs under the Playing Contracts. These rights are then licensed to the NRL to be used for marketing purposes. Players are entitled to a share of revenue from the sale of merchandise incorporating their own Player Property.
The contractual framework recognises that players are not merely employees under their playing contracts but that their name, photograph, likeness, image, reputation and identity is valuable intellectual property. As described by Justice Perry, players could earn revenue for the NRL as a “live advertising space”. This area will continue to evolve, particularly as more data on player performance and training techniques becomes available that is potentially marketable to fans and sponsors.
Mr de Belin’s claim
In pursuing the Federal Court action, Mr de Belin sought to challenge the validity of the new rule on several bases including that:
- The new rule is an unlawful restraint of trade
- The new rule constitutes a tortious interference with the Mr de Belin’s playing contract with St George Illawarra
- The respondents engaged in misleading and/or deceptive conduct by making a determination of Belin’s guilt, and falsely representing that he had been stood down, before the introduction of the new rule
- The respondents engaged in unconscionable conduct.
The Court’s finding: Unlawful restraint of trade.
The parties agreed that the new rule constituted a restraint of trade. A restraint of trade is generally contrary to public policy and therefore void. However, a restraint will be valid if it affords no more protection that is reasonably necessary to protect the interests of the party in whose favour it is imposed; and it is reasonable having regard to the interests of the public. Based on the evidence, the Court concluded that the introduction of the new rule was not otherwise against public policy and was reasonably necessary for the protection of the legitimate interests of the ARL and the NRL.
Factors in support of the Court’s conclusion included:
- The immediate and significant danger to the NRL Competition if it failed to introduce the new rule.
- The ability to amend the NRL Rules from time to time reflected the evolving nature of the game.
- Mr de Belin had been stood down on full pay and could continue to train.
- The player stand down was not indefinite but would operate only for so long as the criminal charge had not been determined.
- The reference to “reputation” in the definition of “Player Property” is not limited to a player’s on-field reputation but would include off-field conduct. A player’s reputation can impact on the reputation of the sport and consequently upon attendance, viewership and the attractiveness of the game to sponsors and broadcasters.
The claim of tortious interference sought to establish that the ARL and NRL interfered with Mr de Belin’s Playing Contract. A key component of a claim for tortious interference is that the party that allegedly undertook the contravening behavior (NRL) must do something to induce a third party (in this case St George Illawarra) to breach its playing contract with Mr de Belin. Mr de Belin failed to establish the grounds for the claim. The basis for this claim rests in section 18 of the Australian Consumer Law which provides that: “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”, Mr de Belin’s claim was that before the adoption of the new rule, the NRL made various public misleading and/or deceptive statements contrary to section 18, Mr de Belin did not assert that the NRL / ARL had explicitly said the statements but rather, they arose by implication and finally, the Court did not agree with Mr de Belin’s claim for damages and declaratory relief. Mr de Belin also alleged that the NRL / ARL had engaged in unconscionable conduct within the meaning of section 21 of the Australian Consumer Law. The Court found that Mr de Belin failed to establish the basis of an unconscionability claim.
If you have any questions about the case or about sports administration law, please contact Sam Adams for more information.