Adamson v New South Wales Rugby League Ltd

Re: PHILLIP ADAMSON and OTHERS
And: NEW SOUTH WALES RUGBY LEAGUE LIMITED and OTHERS
No. G79 of 1991
FED No. 550
Trade Practices - Restraint of Trade - Unfair Contracts
(1991) 13 ATPR 41-141
103 ALR 319
(1991) 31 FCR 242
(1991) 38 IR 427

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sheppard(1), Wilcox(2) and Gummow(3) JJ.

CATCHWORDS

Trade Practices (restrictive) - contracts or arrangements affecting competition - "exclusionary provision" - respondents comprise 16 professional football clubs (each of which fields a team in a regular competition) and the body ("the League") which controls that competition and the conditions upon which football players may become and remain members of particular teams - appellants a number of professional football players - adoption by League of rules known as "the internal draft" providing for the procedure to be followed at the end of each season by clubs and players whose contracts with particular clubs have expired - players required by internal draft to nominate terms and conditions upon which they are prepared to play football for any club and to submit themselves to all clubs on those terms and conditions but in the order provided for in the internal draft, that is, in an order which is the reverse of that in which the teams were ranked at the conclusion of the competition - each player obliged to accept employment from first club requiring his services - whether internal draft an "exclusionary provision" within the meaning of s.4D of Trade Practices Act 1974 - whether players' participation in competition constitutes "services" for the purposes of the definition of that term in s.4 of the Trade Practices Act.

Restraint of Trade (common law) - whether internal draft rules in unreasonable restraint of trade - whether restraint imposed by such rules beyond that reasonably necessary to protect interests of League and clubs.

Unfair Contracts - whether internal draft rules "unfair" within meaning of s.88F of Industrial Arbitration Act 1940 (N.S.W.) - dismissal of proceedings based on this section because section applies only to contracts actually in force - absence of evidence to enable Court to judge whether particular contracts, assuming any to be in force, were unfair.

Trade Practices Act 1974, ss.4(1)(definition of "services"), 4D, 45, 51(2)(a).

Industrial Arbitration Act 1940 (N.S.W.), s.88F

HEARING

SYDNEY

#DATE 6:9:1991

Counsel and Solicitors Mr B.J. Gross QC and Mr B. Walker
for the Appellants: instructed by Messrs Bush Burke and Co.

Counsel and Solicitors Mr T.E.F. Hughes QC, Mr A.J. Sullivan QC
for the 1st Respondent: and Mr T.D.F. Hughes instructed by

Messrs Colin W. Love and Co.

Counsel and Solicitors Mr L.G. Foster instruced by Messrs Sly
for the 2nd - 17th Respondents: by Messrs Sly and Weigall
Respondents:

ORDER

Orders that the appeal be allowed.

Orders that of the orders made by Hill J. and entered 9 April 1991, order 3 and so much of order 2 as dismissed the proceeding commenced in this Court, be set aside.

Orders that the first respondent be released from its undertaking given to the Court and noted in the said orders entered 9 April 1991.

Declares that the Rules and Regulations of the first respondent are void as being in unreasonable restraint of trade insofar as they oblige each of the clubs (together being the 2nd - 17th respondents) to treat as eligible to play for it in a match in the New South Wales Rugby League Premiership Competition a player (not being a player in any one or more of the Categories 1, 2, 3, 4, 5, 8 and 9 listed in Rule 47 (c), but being a player described in Rule 56 (a)) only if he has participated in the Internal Draft established by Rules 55 - 58.

Orders that there be liberty to apply in relation to the form of the declaration in para. (4) hereof.

Orders that the respondents pay two thirds of the appellants' costs of the appeal.

Orders that the proceeding be remitted to a Judge of the Court and that there be liberty to apply as regards costs of the proceeding at first instance.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

JUDGE1

In this matter I have had the advantage of reading the judgments to be delivered by Wilcox J. and Gummow J. I agree in their respective conclusions that the appeal should be allowed.

There are some matters which I wish to mention. The only aspect of the trade practices point about which I wish to say something is the submission made by counsel for the appellants that the adoption of the internal draft rules was done with the purpose of preventing or restricting the supply of services by players within the meaning of s.4D of the Trade Practices Act 1974. The decision of this Court in ASX Operations Pty. Limited v Pont Data Australia Pty. Limited (No. 1) (1990) 27 FCR 460 establishes that the word "purpose" is used in a subjective sense. In the submission of counsel for the appellants, the necessary purpose is established because the rules operate to prevent players providing their services to the clubs as independent contractors rather than as employees. Objectively speaking that is true. But the difficulty with the submission is that the evidence does not establish that that was an intended purpose which the rules were designed to have. It is no doubt correct to say that the restriction is a consequence of their operation but what evidence there is about the matter does not suggest that that effect was contemplated or intended by those responsible for the internal draft rules.
The principal evidence which bears on the matter was given by Mr Quayle who is the General Manager of New South Wales Rugby League Limited. His evidence establishes - there is other evidence on the point as well - that for many years the League has insisted on players signing standard form contracts before they are entitled to play for a club. The form of these contracts has varied over the years but all have provided for employment of players by the clubs. Mr Quayle was asked whether players had ever been allowed to have their own service companies contract on their behalf for the purposes of their playing rugby league. Mr Quayle said there were some contracts made out in the name of players' personal companies which he said were private companies set up for the players for taxation reasons. Mr Quayle said that the League had no objection to that form of contract but if a player wished to contract with a club otherwise than on the standard form contract, the club would not accept the contract. It followed that, if a player wished to contract on the basis that he was an independent contractor rather than an employee, neither the club nor the League would agree because the contract would not be in accordance with the standard form.
The difficulty with the appellants' submission is that there is no evidence to suggest that players, whether personally or by their agents or advisers, have in the past sought contracts which would make players independent contractors rather than employees; and there is no suggestion in the evidence that players, or some players, would in the future prefer to be engaged as independent contractors rather than employees. It is one thing to draw the conclusion that the rules, as they presently stand, would prevent such a course and that administrators, particularly Mr Quayle, would not countenance it. But that does not establish any demand for it and makes less likely the fact that the League had any purpose of achieving such a result when the internal draft rules were adopted. For all the evidence shows, the matter was not present to the minds of any of those who control the League before or at the time when the rules were made. In those circumstances it is quite impossible to draw the inference that the provisions of the internal draft rules were adopted for the purpose of ensuring that players would be unable to offer or to provide their services otherwise than by a contract of employment.
The appellants would be entitled to succeed if they could show that the internal draft rules had or were likely to have the effect of substantially lessening competition with respect to services other than the performance of work under a contract of employment (i.e. those services not excluded by the definition of "services" in s.4); see para. 45(1)(b). But the appellants cannot succeed under this provision because their evidence does not establish that the internal draft rules, whether because they prevent players from being engaged as independent contractors or operate in some other way so as to prevent or restrict the supply of relevant services to the club, had or were likely to have the particular effect of substantially lessening competition.
I turn to the case made by the appellants based on unreasonable restraint of trade.
A point of possible unevenness between the other judgments, with the substance of both of which I am generally in agreement, concerns the question whether it is relevant to take into account the interests of, or matters affecting, the players. In my respectful opinion, this is a relevant consideration. I recognise that this is a case of a combination between the League and the various clubs which has the effect of limiting or restricting the freedom of action, not only of the clubs, but also of the players who are not parties to the combination. The question at issue is whether the restrictions imposed by the internal draft rules are in unreasonable restraint of trade. If they are, the public interest requires that they be avoided. There is sometimes an issue in cases of this kind whether there is a restraint of trade at all; Eastham v Newcastle United Football Club Ltd. (1964) Ch 413 was such a case. In relation to that question it is plainly relevant to look at the likely or potential effect which the rules in question will have once they begin to operate, and, if they have been implemented, to look at the effect they are already having on the freedom of players to compete with each other economically or to procure from clubs the most satisfactory terms and conditions of employment from their point of view.
When one comes to the question, as one does in this case, of whether it has been established that an attempted restraint goes no further than is reasonably necessary to protect the interests of those who have imposed it, I have not understood why the likely or potential effect on those most affected by it - in this case professional football players - is not a matter relevant to be taken into account. The ultimate question is whether the restraint is unreasonable. If one does not make a judgment about how it is likely to affect the players whose ability to earn their living is or may be restricted by it, one will not have the complete picture. The restraint, as I have said, affects the clubs, but they are parties to it. It also has drastic consequences for the players who are not. Unless one examines the consequences or potential consequences upon the players, one will not be able to make an adequate or satisfactory judgment on the question whether the persons who have imposed the restraint have established that it goes no further than is reasonably necessary to protect their legitimate interests. An important part of the mosaic will be absent.
In Eastham there are indications that Wilberforce J. (as he then was) did take account of effects or likely effects of the rules there in question on players, not only for the purpose of determining whether there was a restraint, but also for the purpose of determining whether the restraint that he found to exist was reasonable. Amongst other things he said (p 437):-

"Now I must consider the transfer system. Taking this alone - that is, on the assumption that the retention system is not used to reinforce it - it does not appear to me to be so very objectionable. As I have already pointed out, placing a player on the transfer list and asking a fee for him, though it prevents a player from going to another league club unless the fee is paid, leaves the player with the right to apply to have the fee reduced or eliminated (which is often obtained in practice) and leaves him free to seek employment outside the league. There is a restraint here, but it would not require so much to justify it."

I have emphasised the last sentence of the quotation to indicate that his Lordship was considering reasonableness at the time he said what he did. Later he said (p 438):-

"What makes the transfer system objectionable, in my judgment, is its combination with the retention system. When it is so combined - that is, when a man is retained and it is made known that his club is open to offer, or when a man is put on both the transfer and the retain list - he cannot escape outside the league, all he can do is (in the latter case) to apply to have the transfer fee reduced. But even if it is reduced, no club in the league may pay it, and yet he cannot go outside. It seems to me that the arguments put forward in favour of the retention system alone equally fail to support this combined system."

No doubt there are many possibilities. There may be cases in which the restraint is so obviously unreasonable that no examination of its effect in the market place is required in order to reach a conclusion. But there will be others of a kind where it will be shown that the restrictions or some aspects of them, are reasonably necessary to protect the interests of the person or persons imposing them. In such cases - and I think this is one of them - one needs to consider the impact of the restraint upon those whom it is intended to affect. The effect upon them may be minimal with the consequence that the court will reach the conclusion that the restraint is, after all, reasonable. In other cases such as this one the effect will be drastic and will lead plainly to the conclusion that the restraint is unreasonable.
Some of the effects upon players, which were referred to in argument and are referred to in the judgment of Wilcox J., are of a personal or domestic kind rather than of an economic kind. Some may affect players both economically and in their personal and domestic lives. Still others have purely economic consequences. I think there is a question whether it is appropriate to take into account effects which are only of a private or domestic character and not economic in their consequences. Whether a party has engaged in unreasonable restraint of trade to my mind raises for consideration substantially, if not wholly, economic considerations. I think there is a real question whether it is appropriate to take into account anything other than economic effects.
I have not found assistance, one way or another, in any of the authorities to which we were referred on this question. In the present case it is obvious, as the judgment of Wilcox J. demonstrates, that the internal draft rules operate, or are capable of operating, to the substantial economic disadvantage of players in given circumstances. This is not to say that in some cases the existence of the internal draft may not also be of economic advantage to players. But that is of no relevance to the point I am now making. It is that, because there is ample evidence of actual or potential adverse economic effect on players as a result of the operation of the draft, the matter does not arise directly for decision in this case. It is, accordingly, a matter which I would prefer to leave open in the present case.
In the course of the submissions made on behalf of the respondents much was said about the fact that the League, the clubs and the administrators were acting in good faith and with the best interests of the game looked at from all points of view, including that of the players, in mind. I do not doubt that that is indeed how the matter is perceived by the administrators. But the fact that that is so does not warrant the conclusion that there is no unreasonable restraint of trade. A similar argument was put to Wilberforce J. in the Eastham case. The circumstances with which his Lordship had to deal were different from those here in question but the following passage from his judgment is instructive, namely (p 438):-

"... it was said that this system, the combined system of registration, retention and transfer fees, or something like it, is operated in all professional leagues and has been so operated for a long time. This is claimed as evidence that those who know best consider it to be in the general interest of the game. I do not accept this line of argument. The system is an employers' system, set up in an industry where the employers have succeeded in establishing a united monolithic front all over the world, and where it is clear that for the purpose of negotiation the employers are vastly more strongly organised than the employees. No doubt the employers all over the world consider the system a good system, but this does not prevent the court from considering whether it goes further than is reasonably necessary to protect their legitimate interests."

Finally, as is mentioned in the other judgments, there is in force a provision known as a "salary cap". By this provision each club is obliged to spend no more in salaries in any given year than the "cap" which is prescribed for it by the League. With some exceptions the cap is, at the moment, $1.5 million for each club. No challenge to the salary cap was made by the appellants. It was not in issue in the case. It was their submission that, if the salary cap remained in place and were enforced, the League's fears about the effects of cheque book warfare would be shown to be unjustified. Such disadvantages as might flow from cheque book warfare would be avoided because no club could spend more than its allotted cap.
I agree with what both Wilcox J. and Gummow J. have said about the salary cap and its significance for the outcome of this case. But it ought to be clear that the validity of the rules providing for the salary cap was not in issue. The validity was assumed by all parties. I have no reason to think that the rules may be invalid - I have not considered them; but I would not wish to pre-empt the decision of this or any other court which may need in the future to deal with those rules. I should mention also in this respect that the only task of this Court is to consider the validity of the rules in question in the case as they now are. It is not for the Court to contemplate what the situation may be in relation to rules expressed in a different form. That is not a matter which I have considered nor upon which I have any view.
The parties agreed that it would be sufficient, assuming that we came to the conclusion that the appeal should be allowed, for there to be a declaration rather than any injunctive relief. I agree in the form of declaration formulated by Gummow J. in his judgment and with the other relief which he has proposed.

JUDGE2

This proceeding is brought by a group of Rugby League players by way of challenge to the portion of the rules of the New South Wales Rugby League which deals with what is called "the internal draft". When the proceeding was commenced there were 222 applicants but 52 discontinued their claim prior to the delivery of judgment by the trial judge, Hill J. The remaining 170 applicants joined in the appeal to this Court against his Honour's dismissal of their claim that the internal draft rules contravened s.45 of the Trade Practices Act 1974 and s.88F of the Industrial Arbitration Act 1940 (NSW) and were invalid at common law as constituting an unreasonable restraint of trade. However, when the appeal was called for hearing, counsel for the appellants sought leave to discontinue on behalf of 16 of his clients. Leave was granted, subject to the matter of costs, leaving 154 applicants actively pursuing the case. The respondents are New South Wales Rugby League Limited ("the League"), the controller of the game in New South Wales, and each of the 16 clubs which contested the 1990 New South Wales Rugby League Premiership Competition ("the Competition") and are currently participating in the 1991 competition.

Background facts

The 16 clubs which presently participate in the competition consist of two Queensland clubs (Brisbane and Gold Coast), the Canberra club, clubs located in Newcastle and the Illawarra district and 11 clubs whose home grounds are situated in the Sydney metropolitan area. All clubs play in three grades: the President's Cup (Third Grade), the Reserve Grade (Second Grade) and what Hill J described as "the pinnacle of rugby league competition in Australia and perhaps the world" the First Grade, presently known as the Winfield Cup Competition.
The League is a company incorporated by guarantee. Pursuant to its Memorandum and Articles of Association it has formulated rules and regulations providing, amongst other subjects, for the conduct of the Competition. A club applying to participate in the Competition must agree to abide by those rules. All of the 16 respondent clubs have agreed. Playing contracts, made between clubs and players, are subjected to those rules.
The rules with which this case is concerned are contained in Part II of the League's rules and regulations. That Part is headed "Premiership Competition Rules". The Part is introduced by a statement of objectives in the following terms:

"OBJECTIVES

The League and the Clubs as defined in Article 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."

Rules 38 to 42 deal with entry by clubs into the Competition. Rule 42 provides:

"42. Each Club admitted into the Competition agrees to abide by the Memorandum and Articles of Association of the League and the Rules, Regulations and decisions of the Board of Directors of the League and any Committee of the League made pursuant thereto and any terms and conditions imposed upon its admission to the Competition."

Rules 43 to 45 specify the three Competition grades. Rules 46 and 47 deal with player qualifications. The effect of rule 46 is that, before each match of the Competition, each club must nominate not more than 57 players as participants in the three games for that Competition round. In order to be eligible for nomination a player must satisfy five conditions: first, he must be a member of the nominating club; second, he must be registered with the League as a player of the club; third, subject to some limited exceptions, he must have played, or be playing, for the club before 30 June in the relevant year; fourth, he must be not less than 16 years of age and; fifth, he must be suitably qualified with the relevant club.
The specification of qualifications, the fifth matter referred to above, is a central facet of the rules' scheme. So it is desirable to set out in full the relevant provision, para. (c) of rule 47:

"(c) He is contracted at that time to play for the Club in the Competition and he has at least one of the following qualifications with that Club:

(i) Category 1 - A player who played in the preceding Competition and whose last match in that Competition was with the Club.

(ii) Category 2 - A player who did not play for the Club in the preceding Competition but who played for the Club on the last occasion that he played in the Competition and such occasion was not more than two (2) years prior to the date of the commencement of the current Competition.

(iii) Category 3 - A player who at the date of the commencement of the Competition had never played in the Competition but who had played Rugby League with a team located within the boundaries of the Club in at least one match after 30 June in each of the two (2) seasons preceding the date of the commencement of the Competition.

(iv) Category 4 - A player who has not played Rugby League anywhere in the world at any time during the three (3) seasons prior to the date of the commencement of the Competition.

(v) Category 5 - A player who has contracted to play for the Club pursuant to the provisions of the External Draft.

(vi) Category 6 - A player who has contracted to play for the Club pursuant to the provisions of the Internal Draft.

(vii) Category 7 - A player whose name was included on an Internal Draft List but was not selected by any Club at the Internal Draft Meeting and is contracted pursuant to Rule 56(e)(i).

(viii) Category 8 - A player who at the date of commencement of the Competition had never played in the Competition but whose father played for the Club for at least five (5) seasons of the Competition.

(ix) Category 9 - A player who has completed at least his tenth consecutive season playing for any one Club in the Competition."

It is common ground that most players will become qualified under category 1 or 2 (last game with the nominating club), category 5 (the external draft) or category 6 or 7 (the internal draft).
Rules 48 to 50 deal with the nomination of players. It is unnecessary to discuss them. Rules 51 to 54 relate to the external draft. Those rules are concerned with players (mainly juniors) who have not previously played in the Competition. Although the Statement of Claim used language wide enough to include an attack upon the validity of the external draft rules, no such case was mounted at the trial. Consequently, we are not concerned with those rules.
Rules 55 to 58 are the internal draft rules. It is desirable to set them out in full:

"55. On 7 November, 1990 and on the first 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.

58. A Club shall not sign a contract with a player to play for the Club unless such contract is in the standard form approved from time to time by the League with such additional conditions as may be agreed upon between the Club and the player."

Rules 59 to 64 are concerned with appeals against selections made pursuant to the external and internal drafts. There is to be an Appeals Board constituted by a legally qualified Chairman, a person nominated by the League's Board of Directors and a person nominated by the President of the Association of Rugby League Professionals, a players' organisation (rule 59). A player who does not wish to play for a club which selected him at an External or Internal Draft Meeting is entitled to appeal to the Board (rule 60). The Board must accord the player the opportunity of a hearing, at which he is entitled to be legally represented, and must give reasons for its decisions (rule 63). By force of rule 61, in determining appeals the Board is to 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."

Rule 64(a) provides that a player who is successful in an appeal to the Appeals Board against his selection by a club at an Internal Draft Meeting "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". Rules 65 and 66 deal with players' contracts. They provide:

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."

Finally, it is necessary to refer to the bracket of rules concerning player registration. Rule 67 forbids the League to "register a player as a player of a Club" unless certain conditions are met, including the registration of a playing contract between the club and the player pursuant to the rules. Rule 70 provides that a club "playing an unregistered or unqualified player may lose any competition points gained in a match of the Competition in which that player has taken part".
In his reasons for judgment Hill J noted that not all rugby league players are paid for participating in the sport. But, when it comes to the Competition, the position is otherwise. In a finding that has not been challenged, the learned trial judge found that all players in the Competition are professionals "in the sense that they are paid in one way or another for their services".
The adoption of the internal draft rules
As might be expected, the problems which the internal draft rules are designed to meet are neither novel nor confined to the Competition. It is useful to set out a passage from his reasons in which Hill J offered an overview of the position and an explanation, from the evidence, of how the present rules came to be adopted:

"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.

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) 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.
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.
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.

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, 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.
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.
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.
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."
At the time when the trial commenced there had been no experience of the operation of the internal draft rules. However, in November 1990, during the course of the trial, the first Internal Draft Meeting was held. Evidence was given to Hill J as to the result. One hundred and fifteen players, all of whom had been on contract with clubs in the 1990 season, submitted applications setting out the terms and conditions upon which they were prepared to be engaged for the 1991 season or beyond. Twenty three players were selected in the draft, leaving 92 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, and/or to reconsider their terms and conditions in anticipation of the second draft in January 1991. Hill J noted that South Sydney club, the club which came last in the Winfield Cup for the 1990 season and was therefore entitled to first bid under the internal draft system, did not bid. No evidence was adduced in explanation of this failure.
The Trade Practices Act
It will be necessary to return to the evidence in discussing the claim of common law unreasonableness. But the issues between the parties in connection with the application of the Trade Practices Act depend upon the proper construction of the relevant provisions of that legislation. It is convenient immediately to turn to them.
Section 45, upon which the appellants rely, relevantly provides:

"45.(1) ...

(2) A corporation shall not -

(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 and 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.

(4) ...

(5) ...

(6) ...

(7) ...

(8) ...

(9) ..."

The applicants rely upon both sub-paras. (i) and (ii) of paras. (a) and (b) of subs. (2). Accordingly, the definition of "exclusionary provision" is relevant. It is contained in s.4D which reads:

"4D.(1) A provision of a contract, arrangement 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.

(2) A person shall be deemed to be competitive with another person for the purposes of sub-section (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates."

Subject to one matter - which, however, is of critical importance - there is no doubt that the arrangement embodied in the internal draft rules would offend both sub-paragraphs of both paras. (a) and (b). The effect of the internal draft rules is that a footballer who has previously played in the Competition for a club is not free to contract with any other club unless selected by that club at an Internal Draft Meeting. A player not selected at the Internal Draft Meeting is precluded from negotiating with any club, except on the terms and conditions notified in his previous internal draft application. Accordingly, those rules constitute an arrangement which has both the purpose and the effect of restricting the supply of services by footballers to the participating clubs. Subject to that one matter, the rules clearly constitute an arrangement which both contains an exclusionary provision and which has the purpose and the likely effect of substantially lessening competition between clubs for players' services.
However, and this is the critical matter, the prohibitions in both sub-paras. (i) and (ii) relate only to contracts for the supply of goods and services, as these terms are defined in s.4 of the Act. Paragraph (a) of the s.4D(1) definition of "exclusionary provision" includes the element that the parties to the contract, arrangement or understanding be "persons any two or more of whom are competitive with each other". The concept embodied in those words is explained by subs. (2). A person is only competitive with another person, for the purposes of subs. (1), if the first-mentioned person, or a related body corporate, is, or is likely to be or would but for the contract etc. be or be likely to be, in competition with the other person or its related body corporate "in relation to the supply or acquisition of all or any goods or services" to which the relevant provision of the contract etc. relates.
In the present case it is not suggested that the arrangement embodied in the rules relates to the supply of goods. It is suggested on behalf of the appellants, and disputed by the respondents, that it relates to the supply of services, in the defined sense.
The position is similar in relation to sub-para. (ii) of paras. (a) and (b) of s.45(2). Both these paragraphs refer to a contract etc. which has the purpose or likely effect "of substantially lessening competition". That phrase is defined, for the purposes of the section, in s.45(3). The word "competition" means competition in a market in which a corporate party to the contract etc. or a related body corporate "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."
Once again there is no question of a contract, arrangement or understanding for the supply or acquisition of goods. But there is a contested claim that the arrangement embodied in the rules relates to the supply or acquisition of "services", as that word is defined.
The respondents do not dispute that, as a matter of ordinary English, the participation by a player in the Competition constitutes the supply of "services". The League and its participating clubs are engaged in the business of providing public entertainment. The entertainment is supplied directly by the players, giving their time and employing their football skills. However, the respondents say that the players' contribution does not constitute "services" within the definition of that term provided by s.4 of the Act. That definition reads:

"'services' includes any rights (including rights in relation to, 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; ..."

It is clear that a contract between a player and a club whereby the player binds himself to play matches on behalf of the club and to perform ancillary obligations such as achieving an acceptable level of physical fitness and attending training is a contract which confers benefits upon the club. It is common ground, as I have said, that the respondent clubs are engaged in the business of providing public entertainment for reward, which is an aspect of trade or commerce, and that their contracts with players are made in the course of that business. Accordingly, the relevant benefits are conferred in trade or commerce. But the respondents argue that the services provided by the players pursuant to those contracts are excluded from the definition because of the concluding words of the definition; they are "the performance of work under a contract of service".
The appellants do not dispute that the form of contract stipulated by the League pursuant to rule 58 is a contract of service, rather than a contract for services; that is, that the player is an employee rather than an independent contractor: cf. Commissioner of Taxation v Maddalena (1971) 45 ALJR 426. Nonetheless they contest the conclusion suggested on behalf of the respondents, presenting several alternative arguments. In the first place, they say that the rules must be read as a whole. It is true, say counsel for the appellants, that the rules contemplate only a contract of service between player and club, excluding the possibility of a contract between, say, the player's family company and a club pursuant to which the company promises to make the player available for stipulated duties, but without there being any contract directly between club and player. (Compare, for example, Building Workers' Industrial Union v Odco Pty Limited (1991) 99 ALR 735 and Hughes v Western Australian Cricket Association (1986) 19 FCR 10 at pp 40-41, where Toohey J found that the relevant contract, under which a professional cricketer was made available to a club, was a contract for services.) But counsel say that rule 58 has to be seen as merely part of the exclusionary provision, or term substantially limiting competition, which the rules impose. They submit that the whole subject must be considered as if there were no such rule; in which case, they say, it would immediately be seen that players' services might be provided otherwise than under a contract of service. At this point, counsel for the appellants draw attention to the incontestable facts that the opening words of the definition of "services" are wide enough to include the provision of benefits under a contract for services and that para.(a) of the definition expressly contemplates that benefits may be provided in a contract for or in relation to "the performance of work". The only relevant exclusion from the definition, say counsel, is benefits which amount to a "performance of work under a contract of service". Once it be accepted that relevant work may be performed under a contract for services, counsel say, it follows that the exclusion is not adequate totally to exclude those benefits which might, but for the improper provisions, be supplied to clubs.
This argument is attractive. It accommodates the holding of Northrop J in Adamson v West Perth Football Club (Incorporated) (1979) 39 FLR 199 - the only present authority on the concluding words of the definition - at p 228 that "(t)he right or privilege of the club ... to enter into a contract of service with a footballer is not acquisition of services by a club under s.45(3) of the Act". Northrop J was plainly contemplating a contract of service; the possibility of a contract for services does not appear to have been mentioned to his Honour. But difficulties emerge, in this case, once one begins to apply the definition contained in s.4 to the relevant statutory provisions. Thus, to take the first claim, exclusionary provision, the question is whether the internal draft rules have the purpose of preventing, restricting or limiting the supply of "services" - that is, on this approach, services provided by way of a contract for services rather than a contract of service - to clubs. This question, in turn, immediately raises the vexed issue whether the word "purpose" in s.4D(1)(b) is used in an objective or subjective sense. In Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at p 75 Franki J expressed the view that the term is used objectively. His Honour pointed to the fact that the paragraph speaks of the purpose as being the purpose of a provision - of a contract etc. - in contrast to other contexts in the Act, for example s.45D, in which the relevant purpose is that of a person. If his Honour's view had prevailed, there would have been much to be said in favour of the view that rule 58, at least, fell within s.4D. But in ASX Operations Pty Limited v Pont Data Australia Pty Limited (1990) 97 ALR 513 at pp 526-528 the Full Court held that the word "purpose" in s.4D(1)(b) is used in a subjective sense.
Once it is determined that the word "purpose" is used subjectively, the appellants' submission runs into the difficulty that there is no evidence that any of the respondents ever intended to exclude the supply of services pursuant to contracts for services, as distinct from contracts of service. There is nothing to suggest that anyone concerned with the formulation of the rules ever considered the possibility of footballers working otherwise than pursuant to a contract of service. Perhaps this was because the League had always insisted upon a particular form of contract, which was, in law, a contract of service. But whatever the reason, the fact is that there is a total absence of evidence of the formation of the necessary purpose.

Sometimes it may be unnecessary to have evidence that a particular purpose was actually formed. The relevant provision may so obviously be intended to constrain particular conduct that the purpose of imposing that constraint may be inferred from the terms of the provision itself. But I do not think that such an inference ought to be drawn where the only effect of the provision, in this case rule 58 which requires adherence to the League's standard form of contract of service, is to impose a regime which has always applied in the relevant industry and has not previously been challenged.
The position is much the same when one turns to the second formulation: "substantially lessening competition". Here the relevant question is whether the corporation, the relevant club, acquires or is likely to acquire or would, but for the provision, acquire or be likely to acquire services by way of a contract for services, as distinct from a contract of service. Once again, there is no evidence of any such acquisition or likelihood of acquisition. The evidence does not suggest that anybody involved with the sport has ever considered such a possibility.
The second argument put by counsel for the appellants, in connection with the application of the definition of "services", depends upon the fact that, under the standard form of contract, clubs commonly supply benefits to players, other than the payment of money. It is said, by way of example, that clubs usually provide coaching services, fitness and training facilities and medical treatment to their players. Counsel concede that the provision of these benefits is an advantage to the club, enabling it to field a team whose skill and physical fitness will be conducive to its playing success. But football skills and fitness are also beneficial to players, say counsel; consequently, players' contracts should be seen as contracts under which clubs supply benefits to the players. Even if those benefits are supplied under a contract of service, they are not "the performance of work under a contract of service" so as to be caught by the concluding words of the definition. Counsel contend that those words exclude only the services which the performer of the work - in this case, the player - supplies under such a contract.
A similar argument was put to Hill J. He described it as appearing "to turn the prohibition of s.45 on its head". It certainly turns the players' contracts on their heads. The services to which counsel refer are not services supplied by the clubs to the players at large; as, for example, if a club operated a public gymnasium or medical centre. They are simply an incident of a contract whereby the player puts his time and skills at the disposal of the club, a contract under which he performs work. It cannot be said, on the evidence, that the internal draft rules had either the purpose or likely effect of interfering with clubs' rights to train or medically attend their contracted players.
The third proposition of the appellants is even less tenable. On this argument the relevant benefit is the opportunity to enter into a service agreement (whether by way of contract for services or contract of service). The rules limit that opportunity, thus they restrict the supply of benefits (the opportunity of contracting with him) by a player to a club. Counsel say that the concluding words apply only to a contract, of a particular nature, actually made. They have no application, according to the argument, at the negotiation stage. This argument was rejected by Northrop J in Adamson at p 228. But counsel rely upon a comment by Woodward J in Walsh v Victorian Football League (1983) 5 ATPR 40-422, a strike out application. In declining to strike out the applicant's claim Woodward J noted that the applicant sought to challenge the view expressed in Adamson. He said: "Without wishing to indicate any dissent from Northrop J's view, I believe that the applicant should not be summarily deprived of that right". This is less than a ringing endorsement of the present appellants' argument.
The reason why I describe this third argument as untenable is that it would render otiose the concluding words of the definition. Even if the proposed work was clearly to be supplied under a contract of service, those words would in all cases be excluded by focussing attention upon the antecedent negotiation stage. That cannot have been intended.
The definition does not stipulate that the services to which it refers must be services supplied pursuant to a contract, understanding or arrangement; although, as they do have to be provided etc. "in trade or commerce" this will generally be the position. So perhaps the mere fact that the opportunity to negotiate arises outside of any contractual context is not an answer to the appellants' argument. And it is true that the definition is framed in inclusive, rather than exhaustive, terMs Nonetheless, the definition refers to those things which, as a matter of ordinary English, are known as services, subject to any relevant exclusion under one of paras. (a) to (d). As a reference to any standard dictionary will show, although the word "services" has a wide application, it imports always the notion of some assistance or accommodation being made available by one person to another. It is impossible to regard a mere freedom to negotiate with a person as the supply by that person of "services" to the prospective negotiator.
In the result I am of the opinion that each of the arguments put by the appellants in relation to the statutory definition of "services" must fail. The claim cannot be brought within s.45 of the Trade Practices Act. Consequently, it is not strictly necessary for us to rule on the submission put by counsel for the League that s.51(2)(a) of the Act would, in any event, defeat the appellants' s.45 claim. That paragraph provides that, in determining whether there has been a contravention of s.45, amongst other provisions:

"... regard shall not be had ... to any act done in relation to, or to the making of a contract or arrangement or the entering 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."

Counsel contend that adherence to the internal draft rules is "an act done ... in relation to the making of a contract (with the player) ... to the extent that the contract ... relates to the remuneration" etc. of players.
In view of my conclusion that s.45 does not apply to the case, it is inappropriate to attempt any definitive statement about the application of s.51(2)(a), the interpretation of which is not free from difficulty. However, as it seems to me, counsel's contention could not be sustained. If one thing about the paragraph is clear, it is that the exclusion from the operation of s.45 which it confers is limited to contracts relating to remuneration, conditions of employment, hours of work or working conditions of employees. Presumably, the intention of Parliament was to prevent any overlap with the type of matters regulated under industrial legislation. But the arrangement under challenge in the present case is the arrangement between the respondents embodied in the internal draft rules. That arrangement is directed to the circumstances under which clubs may recruit players; it says nothing about their remuneration etc. once recruited.
From a policy viewpoint some people might think it unfortunate that s.45 does not apply to a case such as this. As I have pointed out, the internal draft rules undoubtedly have the purpose of restricting the supply of footballers' services (in the ordinary sense of that word) and the effect of substantially limiting competition in the market place for those services. Section 45 would apply, freeing up the market and facilitating competition, if there was a history of Rugby League footballers offering themselves to clubs pursuant to contracts for services, as distinct from contracts of service. It is difficult to see what policy purpose is achieved by leaving inviolate arrangements under which potential employers agree not to compete amongst themselves for the recruitment of employees who will work on a contract of service basis. Such a situation seems to be inconsistent with the general philosophy underlying Part IV of the Trade Practices Act. It certainly is not in the interests of employees. They find themselves, uniquely so far as the Act is concerned, having to suffer any collusion amongst those with whom they would negotiate. And it is not necessary to have that situation in order to avoid conflict between the Trade Practices Act on the one hand and the Industrial Relations Act 1988, and awards and agreements made thereunder, on the other. As I have pointed out, the latter provisions bear upon the terms of the employer-employee arrangement, the former upon any restrictive arrangement between prospective employers. It seems to me that the present position is anomalous. That anomaly may achieve particular importance if there is a movement towards "enterprise bargains" in the labour market, with increased reliance on contracts between employers and employees to regulate matters such as remuneration and employment conditions. In such a climate any agreement between prospective employers which restricts competition between them for prospective employees may be extremely prejudicial to employees.
The Industrial Arbitration Act
Section 88F of the New South Wales Industrial Arbitration Act relevantly provides:

"88F.(1) The commission may make an order or 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) ..."

As Hill J pointed out, s.88F is directed primarily to contracts relating to the performance of work. If the section had any application to this case it would be in connection with the contracts of service actually entered into by the players with their clubs. These are the contracts pursuant to which the players perform work.
The submission was put to Hill J that the provisions of the playing contract were unfair because they operate to prevent the players from changing employment. No doubt they do have that effect, during the subsistence of the contract. But that is because the contract binds the player to the contracting club for the duration of the contract. True, there is a term requiring the player to observe the rules of the League, which include the internal draft rules. However, during the subsistence of the contract, that is a matter of no relevant practical importance; the player would, in any event, not be free to go to another club. The internal draft rules affect the player only at the expiration of his contract.
The central complaint of the appellants in this litigation is that the internal draft rules are unfair or unreasonable. Once the complaint is changed from a non-contracted player's position under the internal draft rules to the position of a contracted player, as is required by the s.88F submission, it is evident that the question of unfairness may not be considered in the abstract. The Court would have to consider the position of each player pursuant to the contract, weighing the disadvantage of his loss of freedom to change clubs with the benefits he takes under his contract. No attempt has been made to adduce evidence on those matters. The Court knows virtually nothing about the personal position of individual appellants. In that situation, and leaving aside any other difficulties in the appellants' reliance on s.88F, it is obvious that their case under that section cannot be sustained.
Restraint of trade at common law
The classic statement of the modern common law rule regarding restraint of trade is that made by Lord Macnaghten in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Company Limited (1894) AC 535 at p 565:

"The true view at the present time I think, is this: The public have an interest in every person's carrying on his trade freely: so has the individual. All interference with individual liberty of 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."

The principles enunciated by Lord Macnaghten have most often been applied in cases where the only persons affected by the restraint were parties to the agreement; as, for example, a contract made on the sale of a business or in a contract of employment. Notwithstanding that, by his contract of employment with his existing club, each player is required to observe the rules of the League, it seems to be artificial to treat each player as a party to the agreement embodied in the internal draft rules. Those rules were made by the League, with the concurrence of its constituent clubs, and not by the players. But, as Buckley v Tutty demonstrates, this does not matter. In that case the rules were solely the creation of the League. Counsel for Buckley argued that the common law rules regarding restraint of trade were inapplicable since there was no contractual relationship between Tutty, a player, and the League. The High Court held, at p 375, that it was not necessary for Tutty to show a contractual relationship. The Court said that "the doctrine of the common law that invalidates restraints of trade is not limited to contractual provisions. There is both ancient and modern authority for the proposition that the rules as to restraint of trade apply to all restraints, howsoever imposed, and whether voluntary or involuntary".
Before turning to the facts of the case, it is desirable to mention one legal issue which arose during the course of the argument: the nature of the players' interests which may legitimately be taken into account. In particular, there was a question of the relevance of non-economic considerations. Counsel for the League argued that the principles regarding restraint of trade were protective only of economic interests, as opposed to social interests or mere domestic convenience. But they were not able to cite any authority to that effect. It will be recalled that, in Nordenfelt, Lord Macnaghten spoke simply of "the interests of the parties concerned", without elaboration. In that case the only argued interests were economic ones. As the subsequent cases show, this is commonly the position. But, of course, it does not follow from those circumstances that non-economic interests must be disregarded in those cases where they arise.
In order to put this issue into context, it is relevant to note the limit to which a third party's interest (economic or non-economic) is relevant. The main focus of inquiry, in considering the issue of reasonableness between the parties, is upon the position of the covenantee; that is, the person for whose benefit the restriction was imposed. Isaacs J pointed this out in Brightman v Lampson Paragon Limited (1914) 18 CLR 331. Referring to Lord Macnaghten's reference to "the interests of the parties concerned" Isaacs J said at pp 337:

"The words upon which the appellant laid stress were 'the interests of the parties concerned,' and he said that they meant the interests of the covenantor as well as and as distinct from those of the covenantee. The answer to his argument, in my opinion, is this: It is quite true that by the law the interests of both parties are conserved, but in this way, that the covenantee is entitled by law, if he can get such an agreement from the covenantor, to have all reasonably necessary provision for his adequate protection. That is so whether the agreement is one relating to the sale of a business or the engagement of an employee. On the other hand, the covenantor is entitled, whatever he has actually agreed to do or to abstain from doing, to have the fullest liberty of action consistent with all reasonably necessary precautions consented to for the adequate protection of the covenantee. That is the frontier line, so to speak, dividing the interests which the law preserves for both parties. If that line is not passed, then the covenantor's interests are not infringed and up to that point the law permits the covenantee to adequately protect his own interests. That is what I understand the passage I have read to mean."

This exposition was endorsed by Latham C.J. in Lindner v Murdock's Garage (1950) 83 CLR 628 at p 633.

However, although the primary question will always be the extent of the covenantee's need for protection, it is impossible to leave out of account the effect of the restraint upon the covenantor: see Amoco Australia Pty Limited v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 per Gibbs J at p 316. The very notion of reasonableness involves a balancing of competing considerations. The more onerous the restraint, the more difficult it is for the person seeking to enforce the restraint to satisfy a court that it was, in all of the circumstances, no more than was reasonably necessary for the protection of his or her interests.
In most cases, I suppose, the only persons directly affected by a restraining covenant will be the covenantor and covenantee. In such cases, the court will be concerned only with their interests. But where a third party's interests are directly affected, it will be necessary to consider the effect of the restraint upon those interests before it can say whether the provision is reasonably necessary for the protection of the covenantee. No doubt it is for that reason that, in cases involving agreements between sporting clubs and their controlling bodies regarding player recruitments, the courts have always considered the effect of the agreement upon the players, even though the players were not parties to it.
There is nothing in any of the cases, so far as I am aware, to suggest that consideration of onerousness must be confined to economic effects. On the contrary, Isaac J's reference to the covenantor's "fullest liberty of action" suggests that his Honour held the view that the covenantor's total position is relevant. Whether or not that is so, it seems to me that, in principle, non-economic effects ought not to be disregarded. They may not be as easy to evaluate as economic effects; but they may be just as significant, especially in the case of a restraint on a person's ability to choose an employer.

What was said in Buckley v Tutty, in the passage referred to at 376-377, followed a reference by the Court to another case of a combination, McEllistrim v Ballymacelligott Co-operative Agricultural and Dairy Society Ltd (1919) AC 548. There, (at 563), Lord Birkenhead L.C. propounded the test in terms of what was reasonably necessary for the protection of the co-operative society whose rules were challenged. Lord Finlay (at 572-573) and Lord Shaw of Dunfermline (at 589) spoke in like terMs
Similarly, in Eastham v Newcastle United Football Club Ltd supra Wilberforce J. put the issue as whether the restraints upon the players were no more than was reasonably necessary for the protection of the English national bodies, The Football Association, The Football League or other member clubs. His Lordship held (at 439) that the defendants "do not discharge the onus which rests on them of showing that the restraints are no more than is reasonable to protect their interests". Wilberforce J. (at 434) had referred to the personal circumstances of the players, but not, in my view, as part of any "balancing" process. An unsuccessful submission was made by the defendants that the "retention system" was no more than what was necessary to prevent richer clubs from buying all the best players. His Lordship accepted the submission in response that these results would be prevented by "natural checks", such as reluctance of players with children at school to move from one locality to another. In this respect, the judgment illustrates not a "balancing" process, but the assessment and determination of the justification attempted by the defendants.
I have referred to the passage in the judgment of the primary Judge (27 FCR at 568) in which his Honour concluded that the League and the clubs had shown on balance that the restraint imposed by the Internal Draft was not unreasonable, and stated that in so deciding, he had had regard to "the legitimate interests of the League and the clubs, on the one hand, and the players on the other". His Honour had proceeded on the footing that was a question of "balancing" those competing interests. In my view, that was impermissibly to lighten the burden carried by the respondents. What they had to show was that the restraint was reasonably related to the objects of the League or the clubs, and that the restraint afforded no more than adequate protection to the interests of the League and the clubs. Otherwise it would be void.
Where the restraint is imposed contractually in the sense I have described, the interests involved are of each party to the contract. The investigation of special circumstances said to justify the restraint is never conducted as if the Court had before it a representative action. Indeed, to treat the appellants as if each were party to a covenant he had agreed with the respondents and then to inquire as to the effect of that covenant upon the personal position of each appellant as covenantor would have been an impossible task.
Further, if the Court was required to take into the "balance" the particular effects upon the appellants of the restraint which is imposed by the present combination, one would expect personal circumstances to differ between them. The result could then be that at the suit of some players, the restraint survived challenge, whilst at the suit of others a declaration of invalidity was granted. Yet such relief would be expressed in general terMs An odd result, which suggests that the law is as I have indicated.
The Appeal Rules
The fourth matter concerns the appeal provisions in the Rules. Before the primary Judge, and on appeal, the respondents relied, as a matter supporting the reasonableness of the restraint, upon the appeal rules whereby a player dissatisfied with the outcome of the Internal Draft might appeal. The so-called appeals procedure is provided for in Rules 59 - 64 of the Rules. The Appeals Board is obliged by Rule 61 to have regard to various matters including, but not limited to, unreasonable financial or other hardships caused to the player with reference to his age, marital status, the health and welfare of his family, his employment and possible loss of income, and his financial obligations. His Honour decided (27 FCR at 568) that these rules assisted in ameliorating the consequences to a player of a draft selection which might prove disadvantageous to him, and stated that the rules assisted him in reaching his ultimate conclusion in the case.
In my view, the existence of such a procedure in the Rules might have been relevant to an argument that, when the restrictions flowing from the operation of the Internal Draft provided for in Rules 55 - 58 were properly understood, there was no relevant restraint to which the common law doctrine applied. That would have been a difficult argument, bearing in mind the well-settled and fundamental proposition expressed long ago by James v-C. in Leather Cloth Co. v Lorsont (1869) LR 9 Eq 345 at 354 (a passage since approved by the House of Lords on at least two occasions) namely, that public policy requires that when a man has by skill or by any other means obtained something which he wants to sell, he should be at liberty to sell it in the most advantageous way in the market.
Be that as it may, the alleged amelioration upon the position of the players which is said to flow from the existence of the appeal procedure, in my opinion does not go to the central issue on this appeal, namely whether the restraint, to which the common law doctrine admittedly applies, is no more than the provision of adequate protection to the interests of the League or the clubs.
In Buckley v Tutty supra, unlike the present case, there had been a contention that the relevant rules did not operate as a restraint of trade. The High Court rejected that submission (at 373), then dealt with the further question as to whether the restraint of trade doctrine was limited to restraints imposed by contractual provisions (at 375), and then decided that there were no special circumstances justifying the restraint (at 377-378). Then, the High Court passed on, as it said, to refer briefly to some further matters mentioned by counsel for the unsuccessful appellants "although they do not affect the conclusion at which we have arrived". It was in that setting that there was a discussion of the inadequacies of the alleged mitigation in the severity of the rules by the appeal procedure. If it had been accepted by the appellants in Buckley v Tutty that the rules operated as a restraint of trade, it is difficult to see how there then would have been room for the argument that the apparent severity of the rules was relevantly mitigated by the existence of the appeal procedure; cf Watson v Prager (1991) 3 All ER 487 at 508.
Therefore, there is no need to decide a subsidiary issue which emerged at the hearing of this appeal, namely the extent to which, if at all, the proceedings of the Appeals Board would be amenable to the remedies of public law. The Board appears to be a body exclusively concerned with private rights and interests which do not have any statutory or public law source. The authorities as to the scope for public law remedies in such cases are divided and, at least in Australia, indecisive; see Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487 at 511; Shepherd v S.A. Amateur Football League Inc. (1987) 44 SASR 579; Dixon v Australian Society of Accountants (1989) 95 FLR 231; R. v Panel on Take-overs and Mergers ex parte Datafin plc (1987) QB 815, and the paper "New Horizons In Administrative Law" delivered by Professor Sir William Wade to the 9th Commonwealth Law Conference, 1990, with comments by Sir Patrick Neill QC These materials are published as "9th Commonwealth Law Conference Papers", 1990, CCH New Zealand.
The Rule of Reason
In returning to consider whether the present respondents have met the burden imposed upon them of showing the necessary special circumstances to support the restraint, it is necessary to consider the statement by Barwick C.J. in Howard F. Hudson Pty Ltd v Ronayne supra at 453, that the restraint of trade doctrine is to be applied to factual situations "with a broad and flexible rule of reason". In speaking as he did, the Chief Justice was referring to a passage in the speech of Lord Wilberforce in Esso Petroleum Co. Ltd v Harper's Garage (Stourport) Ltd supra at 331-332. After using the expression "rule of reason", his Lordship had continued:

"The use of this expression justifies re-statement of its classic exposition by White C.J. in Standard Oil Co. of New Jersey v United States (221 US 1 (1910)). Speaking of the statutory words 'every contract in restraint of trade' (Sherman Act, 1890), admittedly taken from the common law, almost contemporaneous with Lord Macnaghten's formula and just as wide, he said (at 63): '. . . as the acts which may come under the classes stated in the first section and the restraint of trade to which that section applies are not specifically enumerated or defined, it is obvious that judgment must in every case be called into play in order to determine whether a particular act is embraced within the statutory classes, and whether if the act is within such classes its nature or effect causes it to be a restraint of trade within the intendment of the Act . . .'

And he goes on to say that to hold to the contrary would involve either holding that the statute would be destructive of all right to contract or agree or combine in any respect whatsoever, or that, the 'light of reason' being excluded, enforcement of the statute was impossible because of its uncertainty. The right course was to leave it to be determined by the light of reason whether any particular act or contract was within the contemplation of the statute. One still finds much enlightenment in these words."

Earlier, in The Bacchus Marsh Concentrated Milk Co. Ltd (In Liquidation) v Joseph Nathan and Co. Ltd supra at 441, in a passage later approved by Dixon J. in Peters American Delicacy Co. Ltd v Patricia's Chocolates and Candies Pty Ltd (1947) 77 CLR 574 at 591, Isaacs J. discussed the general principle upon the law in this area rests and said:

"That principle is that true freedom of trade is not to be restricted, but that a provision which, taken by itself, would amount to such restriction may, when considered in conjunction with and as qualified by the surrounding circumstances, prove to be not really a restriction but merely part of a larger transaction which, regarded as a whole, does not restrict, but may even assist, freedom of trade."

(Emphasis supplied).

The distinction, implicit in this passage, between restriction and permissible regulation, earlier had been drawn by Brandeis J.. In Chicago Board of Trade v United States 246 US 231 (1918) at 238, he said:

"(T)he legality of an agreement or regulation cannot be determined by so simple a test, as whether it restrains competition. Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition."

However, in other respects, in the United States the common law (and statute) has developed differently. In United States v Addyston Pipe and Steel Co. (1898) 85 F 271, Taft C.J. rejected the proposition that competitors may lawfully agree to sell their goods at the same price as long as the price is reasonable. In so doing, he referred to a number of English cases, including the judgment of Lord Macnaghten in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co. Ltd (1894) AC 535. Further, in the United States some species of restraint remain totally beyond the pale of the Rule of Reason: National Society of Professional Engineers v United States 435 US 679 (1978) at 687-692. For example, the American decisions have unequivocally foreclosed any interpretation of the Rule to permit an inquiry into the reasonableness of price fixing agreements, whilst, as Professors Areeda and Kaplow note with some incredulity, the English courts have even enforced such agreements: Areeda and Kaplow, "Antitrust Analysis", 4th Ed., 1988, pp 47-48, 254-256.
These concerns are apparent in the judgment of the majority of the Court of Appeals in Smith v Pro Football Inc. 593 F 2d 1173 (1978). Counsel for the appellants referred us to this authority. When dealing with the player selection system operated by the National Football League (also called the "draft"), the majority said (at 1185-1186):

"The draft that has been challenged here is undeniably anticompetitive both in its purpose and in its effect. The defendants have conceded that the draft 'restricts competition among the (National Football League) clubs for the services of graduating college players' and, indeed, that the draft 'is designed to limit competition' and 'to be a "purposive" restraint' on the player-service market. The fact that the draft assertedly was designed to promote the teams' playing-field equality rather than to inflate their profit margins may prevent the draft's purpose from being described, in subjective terms, as nefarious. But this fact does not prevent its purpose from being described, in objective terms, as anticompetitive, for suppressing competition, is the telos, the very essence of the restraint. The trial judge was likewise correct in finding that the draft was significantly anticompetitive in its effect. The draft inescapably forces each seller of football services to deal with one, and only one buyer, robbing the seller, as in any monopolistic market, of any real bargaining power. The draft, as the District Court found, 'leaves no room whatever for competition among the teams for the services of college players, and utterly strips them of any measure of control over the marketing of their talents'. The predictable effect of the draft, as the evidence established and as the District Court found, was to lower the salary levels of the best college players. There can be no doubt that the effect of the draft as it existed in 1968 was to 'suppress or even destroy competition' in the market for players' services.

(T)he draft, while it may heighten athletic competition and thus improve the entertainment product offered to the public, does not increase competition and the economic sense of encouraging others to enter the market and to offer the product at lower cost."

It follows that notwithstanding references that have been made to the Rule of Reason in dealing with the common law in this country and England, the approach taken by the Court of Appeals in dealing with the National Football League draft cannot provide an immediate guide to resolution of the present appeal. In particular, the authorities binding us do not set so high a requirement of the respondents that they must show that the effect of the draft is actually to increase or assist competition. Rather, the immediate question is to identify the criteria by which, as a matter of law, the Court is to identify and assess the "interests" of the League and the clubs, and the "adequacy" of the protection given by the draft to those interests. What is it for which and what is it against which, protection is required?

The Legitimate Interests of the League

A starting point is provided in the judgment of Stephen J. in the Pamag Case supra at 277-278:

"In the Esso Case the maintenance of a stable system of distribution, the preservation of secure outlets, Esso's interest in selling petrol at the covenantor's site, these were regarded as interests justifying lawful protection by a restraining covenant. In Peters American Delicacy Co. v Patricia's Chocolates and Candies Pty Ltd the interests which might be protected were variously described. Latham C.J. referred to 'the protection of the plaintiff's trade'; Rich J. cited a passage from a judgment of Wrottesley L.J. referring to the protection of the covenantee's business, Dixon J. treated price maintenance of the supplier's goods as not illegitimate, and Williams J. referred both to the protection of the covenantee's business and to it being the 'goodwill of that business which they are entitled to take reasonable measures to protect'. In Buckley v Tutty this Court treated a football league and its member clubs as having a legitimate object in ensuring that competing teams were strong and well matched and, as ancillary to that, that there existed a degree of stability in membership of teams, to be preserved by restraints upon transfers of players from one club to another."

The primary Judge identified some three relevant legitimate interests of the League and the clubs with the protection of which the Internal Draft was concerned. First, there was the desirability of a strong and competitive Competition in which the clubs were as evenly matched as possible. Secondly, the clubs competing in the Competition should be financially viable. Thirdly, it was desirable (though one might have thought not necessarily compatible with the first objective) that individual clubs retain the players presently engaged by them, and that, in particular, rich clubs should not "plunder" the weaker clubs of their good players. As I understood it, the appellants did not challenge the legitimacy of these "interests" but disputed the conclusions reached concerning their significance in underpinning the Internal Draft.
The adequacy of the protection given those interests by the Internal Draft must be assessed in the light of the degree of danger, clear and present, remote or conjectural, which was presented to those interests when the Internal Draft was adopted in 1990. At the outset in these reasons, I referred to some of the salient points in the evidence which indicate that the League was then prospering and that its fortunes, and therefore those of the clubs to which it made substantial, and increasing, distributions, were improving from year to year. Any danger to the legitimate interests identified by the primary Judge appears not to have been immediate or significant. Of course, things might change, but they might change even more for the better.
As to the first objective, the trial Judge found that the draft system "should go some way" towards assisting in bringing about, and certainly in maintaining "equality of talent" (27 FCR at 562). The importance of this objective was explained in an earlier passage:

"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."

On the other hand, the primary Judge recognised that the assessment of equality of talent in teams will always be very subjective, and that there was a question as to whether there was any way at all of determining objectively whether and when equality of playing talent exists. His Honour appears to have accepted evidence for the appellants that whilst 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, this inequality was no longer as noticeable, even before the introduction of the internal draft. Further, his Honour noted (27 FCR at 561) that Mr Quayle, the General Manager of the League, had conceded in evidence that the Competition, at least in the preceding two or three years, was one that was very competitive and successful. The rising level of operating profit by the League would support that view of matters.

The primary Judge concluded (27 FCR at 564) that the internal draft, on the balance of probabilities, did operate "to some degree" to assist in the furtherance of the legitimate object of the League and the clubs, to endeavour to improve and maintain competitiveness of teaMs But his Honour went on:

"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."

Thus, it was the other two interests or objectives which were crucial to his Honour's conclusion upholding the restraint. To appreciate the finding as to financial stability, it is necessary first to refer to the introduction of the "salary cap".
The "salary cap" was introduced by the League in time for the 1990 Competition. The appellants made no attack upon its validity. The new system involves the determination by the League of an expenditure limit for each club within which all payments to players are to be made, subject to a 2 1/2% margin for error. Some clubs, given their financial position in 1990, were allocated a lower ceiling than the wealthier clubs; that is to say, the salary cap is fixed after taking into account the effect of expenditure upon players on the financial position of the clubs. The expenditure limits fixed by the League for 1990 ranged between $0.8m and $1.5m. The League's ultimate intention is to set a uniform salary cap for each club.
The primary Judge said (27 FCR at 565-566):

"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."

The primary Judge's conclusion as to the third interest or objective appears from the following passage (27 FCR at 566):

". . . 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."

It will be apparent that at least in the second of these passages there is an impermissible lightening of the burden carried by the respondents to show special circumstances justifying the restraint. What they had to show, and what, as it appears to me, was not found, was that the restraint on players flowing from the operation of the internal draft, afforded no more than adequate protection to the interests of the League and the district clubs.
The evidence bearing upon the justification by the objective of financial stability is analysed by Wilcox J. in his reasons for judgment, particularly with reference to the significance of the adoption in 1990 of the "salary cap". One of the witnesses, Mr Schwab, had occupied an important position in the affairs of the Victorian Football League throughout a five year period during which it operated a salary cap system without an internal draft. There was no evidence of any problems as to financial stability in a system which imposed salary caps without an internal draft. Further, the evidence of Mr Quayle, to which his Honour also refers, indicates that the success of the 1990 Competition, may be, at least in part, attributed to the introduction in 1990 of the salary cap.
Wilcox J. also deals in his judgment with the evidence bearing upon the other significant factor in the conclusion reached by the primary Judge, namely the prevention of mid-season agreements being reached between players and clubs. As Wilcox J. points out, whilst the practice of clubs approaching a player during the course of a season with a view to persuading him to play with that club in the following season appears to be quite common, the evidence does not indicate how frequently such approaches were successful, so that a club wishing to negotiate a renewal found that the player in question already had contracted to join a different club. In any event, perhaps the best way to keep a player with a club is to offer him a long term contract. I agree that the case put forward by the respondents on this issue falls well short of meeting the onus of supplying a justification for the restraint of trade imposed by the internal draft.
Conclusion
In my view, the primary Judge should have held that the attempted justification of the Internal Draft by propositions concerning competitive equality, financial viability and player retention did not succeed.
It may be that the respondents' fears could be met by rules which were more limited in their operation and which did not offend the restraint of trade doctrine. The primary Judge accepted, as a step assisting him in upholding the validity of the Internal Draft, an undertaking to bring forward the date of the first Internal Draft meeting (27 FCR at 559). But this does not remove the essential vice in the Internal Draft, its restraint upon trade. The respondents may now wish to reconsider the Rules and should not be hampered in a full review by the continuance of the undertaking.
The High Court emphasised in Buckley v Tutty supra at 337-338, it is not for the Court to advise in advance as to what restraints should be reasonable. Wilberforce J. spoke to the same effect in Eastham v Newcastle United Football Club Ltd, supra at 438. The function of the Court is to determine whether the rules of the Internal Draft in their present form impose a greater restraint than is necessary for the adequate protection of the interests of the League and its members.
The appeal should be allowed and the League released from the undertaking given to the Court and noted in the orders entered 9 April 1991. The restraint which is void is imposed by a complex interaction between Rules 42, 47, and 55-58, together with the definition provisions in Rule 37. There should be a declaration (with liberty to apply in relation to its form) that the Rules and Regulations of the 1st respondent, the League, are void as being in unreasonable restraint of trade, insofar as they oblige each club (together being the 2nd - 17th respondents) to treat as eligible to play for it in a match in the Competition a player (not being a player in any one or more of the Categories 1, 2, 3, 4, 5, 8 and 9 listed in Rule 47 (c), but being a player described in Rule 56 (a)) only if he has participated in the Internal Draft established by Rules 55-58.
The respondents should pay two-thirds of the appellants' costs of the appeal, on the basis that the respondents were successful on the trade practices point. The matter should be remitted to the primary Judge and there should be liberty to apply as regards costs of the proceedings at first instance.

[1991] FCA 550

06 SEPTEMBER 1991