Rick Sarre - University of South Australia Sport Law Some big contemporary themes!

U N I V E R S I T Y O F S O U T H A U S T R A L I A

Rick Sarre - University of South Australia

Sport LawSport LawSome big Some big

contemporary contemporary themes!themes!



Officer Plod runs into his first “grey” area of the law.



1.1. Protection of committee Protection of committee members by limited liabilitymembers by limited liability

2.2. Culture of complianceCulture of compliance3.3. Restraint of tradeRestraint of trade4.4. Ambush marketingAmbush marketing5.5. Court of Arbitration for SportCourt of Arbitration for Sport6.6. Breach of the duty of careBreach of the duty of care7.7. Criminal liabilityCriminal liability8.8. Illicit drugs and shamingIllicit drugs and shaming



1. Limitations on committee 1. Limitations on committee protectionprotection

Limited liability protection has to be Limited liability protection has to be earned. Committee members can be earned. Committee members can be stripped of stripped of thethe protection protection offered by offered by incorporation if they fail to fulfil their incorporation if they fail to fulfil their obligations, e.g.obligations, e.g. aa failure to lodge failure to lodge prescribed notices, prescribed notices, aa failure to failure to hold an hold an AGM, AGM, illegal activity, or attempting to illegal activity, or attempting to make profits for members, or trading whilst make profits for members, or trading whilst insolvent.insolvent.



Committee membersCommittee members

Statewide Tobacco v MorleyStatewide Tobacco v Morley (1990). (1990).A director took no part in management of A director took no part in management of the company. It continued to incur debts the company. It continued to incur debts and had no proper accounting system.and had no proper accounting system.Held: the director was liable to a third Held: the director was liable to a third party for outstanding debts even though he party for outstanding debts even though he did not take an active interest in did not take an active interest in management.management.



‘‘Innocent’ committee membersInnocent’ committee membersSimilarly, an Similarly, an innocentinnocent member of a member of a committee could be vulnerable to such committee could be vulnerable to such debts. A creditor would have to show not debts. A creditor would have to show not only only breaches of the law such as seeking breaches of the law such as seeking funds from the public, or trading while funds from the public, or trading while insolvent, or attempting to make a insolvent, or attempting to make a pecuniary profit for committee members, pecuniary profit for committee members, but also that innocent committee members but also that innocent committee members were (or should have been) aware of the were (or should have been) aware of the misdeeds.misdeeds.



2. Culture of compliance2. Culture of complianceThere is a general shift in regulatory circles There is a general shift in regulatory circles away from requiring direct governmental away from requiring direct governmental intervention in the affairs of clubs and intervention in the affairs of clubs and associations, towards self-regulation and the associations, towards self-regulation and the development of internal systems that have the development of internal systems that have the effect of rooting out problematic practices.effect of rooting out problematic practices.

Associations that do it well are less likely to Associations that do it well are less likely to be bothered by the regulators. Is that be bothered by the regulators. Is that common?common?



2006 review by the Institute 2006 review by the Institute of Chartered Accountantsof Chartered Accountants

Disclosures in Annual ReportsDisclosures in Annual Reports86% of sport NFPs failed to include any 86% of sport NFPs failed to include any future-looking information in ARs.future-looking information in ARs.65% of sport NFPs annual reports failed to 65% of sport NFPs annual reports failed to provide a transparent understanding of what provide a transparent understanding of what the body was trying to achieve.the body was trying to achieve.79% failed to provide a clear statement of 79% failed to provide a clear statement of objectives and funding plans.objectives and funding plans.



Poor practices of sport Poor practices of sport NFPsNFPs75% failed to include Governance Statements 75% failed to include Governance Statements in their Annual Reports.in their Annual Reports.

68% received grant income, but only 42% of 68% received grant income, but only 42% of recipients disclosed their “economic recipients disclosed their “economic dependence” as required by the Australian dependence” as required by the Australian Accounting Standards Board.Accounting Standards Board.

See See www.charteredaccountants.com.au



3. Restraint of trade and 3. Restraint of trade and the draft and salary cap the draft and salary cap

systemssystems Many professional codes (e.g. AFL) operate Many professional codes (e.g. AFL) operate with ‘drafting’ rules and salary caps.with ‘drafting’ rules and salary caps. The draft and salary caps are designed to The draft and salary caps are designed to even up competition so that games are less even up competition so that games are less predictable, hence more interest, hence more predictable, hence more interest, hence more advertising, hence more money for players.advertising, hence more money for players. Based upon American ‘socialist’ policy!Based upon American ‘socialist’ policy!



Trade Practices ActTrade Practices Act andand AFL rulesAFL rulesPrima facie Prima facie the salary cap system, the salary cap system, and the draft, are unenforceable and the draft, are unenforceable ‘restraints of trade’ and illegal ‘restraints of trade’ and illegal restrictive agreementsrestrictive agreementsSo the players are asked to sign So the players are asked to sign away any challengesaway any challenges … …



AFL rulesAFL rules

Clause 2.6 Clause 2.6 ‘‘The player shall:- The player shall:-

Obey all Rules and Regulations, Obey all Rules and Regulations, resolutions and determinations of the resolutions and determinations of the club and abide by the Memorandum club and abide by the Memorandum and Articles of Association of the and Articles of Association of the club.’ club.’



AFL rulesAFL rulesClause 7: ‘… It is hereby acknowledged by Clause 7: ‘… It is hereby acknowledged by the player that the Rules restrict the freedom the player that the Rules restrict the freedom of players to transfer from one club to of players to transfer from one club to another, restrict the total football payments another, restrict the total football payments that the club may give to or apply for the that the club may give to or apply for the benefit of its player and provide for the benefit of its player and provide for the players and their associates.’players and their associates.’



AFL rulesAFL rulesVery cleverVery cleverNever challengedNever challengedNever likely to be while the players Never likely to be while the players reap the rewards.reap the rewards.Given exemption by the ACCC because Given exemption by the ACCC because the purpose is to encourage competitionthe purpose is to encourage competitionBut European soccer has no such system But European soccer has no such system and maintains a healthy competition.and maintains a healthy competition.



Sonny Bill WilliamsSonny Bill Williams

Disappears to FranceDisappears to FranceImplicitly says “catch me if you can!”Implicitly says “catch me if you can!”Settlement which has French paying Settlement which has French paying $750,000 to the NRL club.$750,000 to the NRL club.But a big shock for those who thought But a big shock for those who thought that the law would enforce the contractthat the law would enforce the contractNo guarantee that the salary cap system No guarantee that the salary cap system would hold up in the face of a massive would hold up in the face of a massive challenge.challenge.



4. Unfairness in 4. Unfairness in business practice: business practice: ‘Ambush’ marketing‘Ambush’ marketing

Not illegal. Not illegal. Involves a situation where a sponsor Involves a situation where a sponsor of an organisation or an event finds that its of an organisation or an event finds that its advertising advantage has been diluted by some advertising advantage has been diluted by some action of a major competitor undertaken at far action of a major competitor undertaken at far less expenseless expense..

Seeks to gain advantage by clever positioning.Seeks to gain advantage by clever positioning.

(Qantas and Ansett ahead of the 2000 (Qantas and Ansett ahead of the 2000 Olympics)Olympics)



Ambush marketingAmbush marketingAustralian Grand Prix (Formula One) Australian Grand Prix (Formula One) Regulations 2006 Regulations 2006 Australian Grands Prix Act Australian Grands Prix Act 19941994 (Vic) (Vic)An example of legislation that attempts to An example of legislation that attempts to prevent ambush marketing by controlling the prevent ambush marketing by controlling the sale of items and environment at any of the sale of items and environment at any of the Grands Prix. Enforcement provisions provide Grands Prix. Enforcement provisions provide the police and ‘authorised persons’ with the police and ‘authorised persons’ with extensive powers of enforcement.extensive powers of enforcement.



Ambush marketingAmbush marketingSo governments (and private So governments (and private events groups) are constantly and events groups) are constantly and actively seeking to beat off any actively seeking to beat off any ambush so they can safely and ambush so they can safely and with confidence guarantee that with confidence guarantee that any sponsor will get their moneys any sponsor will get their moneys worth!worth!



5. Appeals to Court of 5. Appeals to Court of Arbitration for Sport Arbitration for Sport

(CAS)(CAS) World wide, the International Court World wide, the International Court of Arbitration for Sport has of Arbitration for Sport has enormous support and credibility. enormous support and credibility. 1984 created. 1994 went 1984 created. 1994 went international and emphasised international and emphasised mediation as primary tool.mediation as primary tool.



Raguz case 2000Raguz case 2000Angela Raguz appealed against her non-selection in judo Angela Raguz appealed against her non-selection in judo (an AOC decision), meaning Rebecca Sullivan would (an AOC decision), meaning Rebecca Sullivan would represent Australia in the Sydney Olympics.represent Australia in the Sydney Olympics.

CAS upheld the decision of the AOC.CAS upheld the decision of the AOC.

24 August 2000, NSW C of A decided it had no 24 August 2000, NSW C of A decided it had no jurisdiction to hear the appeal. Thus agreements between jurisdiction to hear the appeal. Thus agreements between organising committees and candidates for selection organising committees and candidates for selection areare binding and are unlikely to be challenged successfully in binding and are unlikely to be challenged successfully in the courts. the courts.



6. Breach of the duty of care6. Breach of the duty of care

Many cases where the courts have Many cases where the courts have made it clear that for plaintiffs to win made it clear that for plaintiffs to win a negligence case they have to show a negligence case they have to show that the institution has failed to that the institution has failed to address an obvious deficiency.address an obvious deficiency.

If they have everything in place, they If they have everything in place, they will defeat most claims.will defeat most claims.



Australian Capital Territory Australian Capital Territory Schools Authority v El Sheik Schools Authority v El Sheik (2000 High Court)(2000 High Court)Boy kicked at school by another boy … had a Boy kicked at school by another boy … had a congenital condition that led to severe injuries. congenital condition that led to severe injuries. Parents sued school for failure to supervise.Parents sued school for failure to supervise. Awarded $700,000 by ACT Supreme Court.Awarded $700,000 by ACT Supreme Court. On appeal to Full Federal Court, the decision was On appeal to Full Federal Court, the decision was overturned.overturned. Leave to appeal to High Court rejected.Leave to appeal to High Court rejected.



El SheikEl Sheik““Unless an educational authority was prepared to Unless an educational authority was prepared to impose a degree of regimentation that would be likely impose a degree of regimentation that would be likely to provoke adverse community reaction, it would be to provoke adverse community reaction, it would be impossible for it to prevent such incidents occurring. impossible for it to prevent such incidents occurring. An educational authority can, and should, prevent An educational authority can, and should, prevent rough `horseplay' incidents going on for a significant rough `horseplay' incidents going on for a significant time or escalating into a level of violence that is likely, time or escalating into a level of violence that is likely, under normal circumstances, to constitute a danger to under normal circumstances, to constitute a danger to life or limb: but it seems to me that is all it can do.”life or limb: but it seems to me that is all it can do.”(per Wilcox J para 25.)(per Wilcox J para 25.)



St Anthony’s Primary School v St Anthony’s Primary School v Hadba Hadba (2005)(2005)Child injured when dragged off flying fox. Defendant Child injured when dragged off flying fox. Defendant

school showed that there was:school showed that there was: A “hands off” rule on the flying foxA “hands off” rule on the flying fox No past problemsNo past problems Great speed with which events took placeGreat speed with which events took place Appropriate behaviour of the children prior to the Appropriate behaviour of the children prior to the

incidentincident

Held: no liabilityHeld: no liability



Falvo v Australian Oztag Sports AssociationFalvo v Australian Oztag Sports Association [2006] NSWCA 17.[2006] NSWCA 17.

Falvo injured his knee in a game of Falvo injured his knee in a game of touch footy when he slipped on a touch footy when he slipped on a bare patch of grass. Oztag argued bare patch of grass. Oztag argued that the game was a “dangerous that the game was a “dangerous recreational activity” within the recreational activity” within the meaning of the meaning of the Civil Liability ActCivil Liability Act 2002 (NSW). The trial judge 2002 (NSW). The trial judge agreed. agreed.



Falvo v Australian Oztag Sports AssociationFalvo v Australian Oztag Sports Association [2006] NSWCA 17.[2006] NSWCA 17.

But, on appeal, the NSW Court of Appeal But, on appeal, the NSW Court of Appeal rejected the trial judge’s interpretation, saying rejected the trial judge’s interpretation, saying that the game did not involve a “significant that the game did not involve a “significant risk of physical harm” (which is the test). risk of physical harm” (which is the test).

Moreover, the NSWCA found that the bare Moreover, the NSWCA found that the bare grass had not grass had not causedcaused the accident. It was the accident. It was caused by the player changing his direction caused by the player changing his direction while running at pace. So Falvo was defeated while running at pace. So Falvo was defeated by his inability to show causation.by his inability to show causation.



Haris v Bulldogs RL ClubHaris v Bulldogs RL Club [2006] NSWCA 53. [2006] NSWCA 53.

Spectator Mr Haris lost an eye when a flare/firework Spectator Mr Haris lost an eye when a flare/firework went off in the crowd on the Homebush terrace.went off in the crowd on the Homebush terrace.

Was the Club in breach of its duty of care to a Was the Club in breach of its duty of care to a spectator?spectator?

Civil Liability ActCivil Liability Act 2002 (NSW) protects grounds 2002 (NSW) protects grounds owners and managers. They are not negligent owners and managers. They are not negligent UNLESSUNLESS

1.1. The risk was foreseeableThe risk was foreseeable2.2. The risk was not insignificantThe risk was not insignificant3.3. A reasonable person would have taken those A reasonable person would have taken those

precautions.precautions.



Haris v Bulldogs RL ClubHaris v Bulldogs RL Club [2006] NSWCA 53. [2006] NSWCA 53.

Held:Held: Answer YES to all. The club Answer YES to all. The club HAD taken sufficient precautions. HAD taken sufficient precautions. The Bulldogs did whatever a The Bulldogs did whatever a reasonable club should have done reasonable club should have done to control the crowd and police it. to control the crowd and police it.

THUS: Not liable.THUS: Not liable.



7. Criminal negligence7. Criminal negligence

R v Clarke R v Clarke [2007][2007] An employee was charged An employee was charged with causing grievous bodily harm by criminal with causing grievous bodily harm by criminal negligence after an accident that left the victim brain negligence after an accident that left the victim brain damaged after falling from a flying fox. It was damaged after falling from a flying fox. It was Clarke’s duty to ensure that the woman was properly Clarke’s duty to ensure that the woman was properly secured into her harness before she left the platform. secured into her harness before she left the platform. Her harness opened and she was left hanging for a Her harness opened and she was left hanging for a few seconds 20 metres in the air before losing her few seconds 20 metres in the air before losing her grip and plunging to the ground below. grip and plunging to the ground below.



R v Clarke (Qld C of R v Clarke (Qld C of Appeal)Appeal)A jury in the District Court found the A jury in the District Court found the accused guilty of criminal negligence and he accused guilty of criminal negligence and he was sentenced to two years and eight months was sentenced to two years and eight months imprisonment. imprisonment. He appealed on a number of grounds, He appealed on a number of grounds, including the severity of the penalty. The including the severity of the penalty. The Court of Appeal unanimously rejected the Court of Appeal unanimously rejected the appeal.appeal.



8. Illicit drugs8. Illicit drugs

AFL v The Age AFL v The Age [2006] VSC 308 [2006] VSC 308 3 players were called before the AFL 3 players were called before the AFL for breach of the illicit drugs policy for breach of the illicit drugs policy (“3 strikes” policy and no (“3 strikes” policy and no “shaming”). “shaming”). The AgeThe Age newspaper newspaper wanted to publish their names.wanted to publish their names.



Victorian Supreme CourtVictorian Supreme CourtHeld: The Court declared that the Held: The Court declared that the identity of any AFL player who has identity of any AFL player who has tested positive or who is deemed to have tested positive or who is deemed to have tested positive on the first or second tested positive on the first or second occasion under the AFL Illicit Drugs occasion under the AFL Illicit Drugs Policy is private information that is Policy is private information that is confidential in nature.confidential in nature.



AFL v AgeAFL v AgeThe AFL’s policies designed to The AFL’s policies designed to eliminate drugs were vindicated. eliminate drugs were vindicated. The policy is designed to discourage The policy is designed to discourage exposure and encourage exposure and encourage rehabilitation in the event a person is rehabilitation in the event a person is seeking help. Public interest in seeking help. Public interest in improving lives, not in exposure.improving lives, not in exposure.



ConclusionConclusion

Never a dull moment in Never a dull moment in the world of sport and the world of sport and the law.the law.



Mr Osborne, may I be excused? My brain is full

Rick Sarre - University of South Australia Sport Law Some big contemporary themes!

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