Sport Law

1. Sport Law Some big contemporary themes!

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

3. Protection of committee members by limited liability • Culture of compliance • Restraint of trade • Ambush marketing • Court of Arbitration for Sport • Breach of the duty of care • Criminal liability • Illicit drugs and shaming

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

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

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

7. 2. Culture of compliance There is a general shift in regulatory circles away from requiring direct governmental intervention in the affairs of clubs and associations, towards self-regulation and the development of internal systems that have the effect of rooting out problematic practices. Associations that do it well are less likely to be bothered by the regulators. Is that common?

8. 2006 review by the Institute of Chartered Accountants Disclosures in Annual Reports 86% of sport NFPs failed to include any future-looking information in ARs. 65% of sport NFPs annual reports failed to provide a transparent understanding of what the body was trying to achieve. 79% failed to provide a clear statement of objectives and funding plans.

9. Poor practices of sport NFPs 75% failed to include Governance Statements in their Annual Reports. 68% received grant income, but only 42% of recipients disclosed their “economic dependence” as required by the Australian Accounting Standards Board. See www.charteredaccountants.com.au

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

11. Trade Practices Act andAFL rules • Prima facie the salary cap system, and the draft, are unenforceable ‘restraints of trade’ and illegal restrictive agreements • So the players are asked to sign away any challenges …

12. AFL rules Clause 2.6 ‘The player shall:- Obey all Rules and Regulations, resolutions and determinations of the club and abide by the Memorandum and Articles of Association of the club.’

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

14. AFL rules • Very clever • Never challenged • Never likely to be while the players reap the rewards. • Given exemption by the ACCC because the purpose is to encourage competition But European soccer has no such system and maintains a healthy competition.

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

16. 4. Unfairness in business practice: ‘Ambush’ marketing Not illegal. Involves a situation where a sponsor of an organisation or an event finds that its advertising advantage has been diluted by some action of a major competitor undertaken at far less expense. Seeks to gain advantage by clever positioning. (Qantas and Ansett ahead of the 2000 Olympics)

17. Ambush marketing Australian Grand Prix (Formula One) Regulations 2006 Australian Grands Prix Act 1994 (Vic) An example of legislation that attempts to prevent ambush marketing by controlling the sale of items and environment at any of the Grands Prix. Enforcement provisions provide the police and ‘authorised persons’ with extensive powers of enforcement.

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

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

20. Raguz case 2000 Angela Raguz appealed against her non-selection in judo (an AOC decision), meaning Rebecca Sullivan would represent Australia in the Sydney Olympics. CAS upheld the decision of the AOC. 24 August 2000, NSW C of A decided it had no jurisdiction to hear the appeal. Thus agreements between organising committees and candidates for selection are binding and are unlikely to be challenged successfully in the courts.

21. 6. Breach of the duty of care Many cases where the courts have made it clear that for plaintiffs to win a negligence case they have to show that the institution has failed to address an obvious deficiency. If they have everything in place, they will defeat most claims.

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

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

24. St Anthony’s Primary School v Hadba (2005) Child injured when dragged off flying fox. Defendant school showed that there was: • A “hands off” rule on the flying fox • No past problems • Great speed with which events took place • Appropriate behaviour of the children prior to the incident Held: no liability

25. Falvo injured his knee in a game of touch footy when he slipped on a bare patch of grass. Oztag argued that the game was a “dangerous recreational activity” within the meaning of the Civil Liability Act 2002 (NSW). The trial judge agreed. Falvo v Australian Oztag Sports Association[2006] NSWCA 17.

26. But, on appeal, the NSW Court of Appeal rejected the trial judge’s interpretation, saying that the game did not involve a “significant risk of physical harm” (which is the test). Moreover, the NSWCA found that the bare grass had not caused the accident. It was caused by the player changing his direction while running at pace. So Falvo was defeated by his inability to show causation. Falvo v Australian Oztag Sports Association[2006] NSWCA 17.

27. Spectator MrHaris lost an eye when a flare/firework went off in the crowd on the Homebush terrace. Was the Club in breach of its duty of care to a spectator? Civil Liability Act 2002 (NSW) protects grounds owners and managers. They are not negligent UNLESS The risk was foreseeable The risk was not insignificant A reasonable person would have taken those precautions. Haris v Bulldogs RL Club [2006] NSWCA 53.

28. Held: Answer YES to all. The club HAD taken sufficient precautions. The Bulldogs did whatever a reasonable club should have done to control the crowd and police it. THUS: Not liable. Haris v Bulldogs RL Club [2006] NSWCA 53.

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

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

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

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

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

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

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