New South Wales Rugby League Limited & Ors v Phillip Adamson

[1991] HCATrans 307

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl27 of 1991

B e t w e e n -

NEW SOUTH WALES RUGBY LEAGUE

LIMITED & ORS

Applicants

and

PHILLIP ADAMSON & ORS

Respondents

Application for special leave

to appeal

MASON CJ TOOHEY J GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON THURSDAY, 24 OCTOBER 1991, AT 11.50 AM

Copyright in the High Court of Australia

Rugby 1 24/10/91

MR R.A. CONTI, QC:  Your Honours, in this matter for leave,

I appear with MR L.G. FOSTER, for the first

applicant, which is referred to on page 254 of the
application book, which is the New South Wales

Rugby League Limited. (instructed by Colin w. Love

& Co). All of the applicants referred to on

pages 256 and 257, with the exception of the third

applicant - - -

MASON CJ: With the exception of?

MR CONTI:  The third applicant referred to on page 256, which is the Brisbane - - -

MASON CJ: Canberra District Rugby League Football Club?

MR CONTI:	No, that is the fourth applicant.
MASON CJ:	The fourth applicant - Brisbane, yes.
MR CONTI:	The third applicant is Brisbane Broncos. We have

received communication from the Brisbane Broncos to the effect that they neither oppose nor support the

application and no longer wish to be an applicant.

MASON CJ:  So you appear for all applicants other than the

company named as the third applicant?

MR CONTI: That is so, Your Honour.

MR B.J. GROSS, QC:  May it please the Court, I appear with

my learned friend, MS J.S. GLEESON, for the

1st to 154th respondents, that is, all of the

respondents on pages 295 to 297, other than North

Sydney District Rugby League Football Club.

(instructed by Bush Burke and Company)

MASON CJ:  And there is no appearance for that respondent?

MR GROSS:  No, Your Honour.

MASON CJ: Yes, Mr Conti.

MR CONTI:  Your Honour, on page 262 of the application book

there is an error in the affidavit in support which

we would like to correct. Could Your Honours treat

the words "and basketball" on the last line as

deleted.

Your Honours, the affidavit in support lists

three matters of principle said to arise on appeal

if granted. Perhaps the critical question can be

phrased as one single principle in the following

terms. In the context of restrictions imposed in a

professional team sport setting, what principles

govern the standard of proof upon sporting bodies

Rugby 2 24/10/91

in establishing the reasonableness of those

restrictions particularly where, firstly, the

restrictions bear upon the freedom of choice, as put by the Full Court, of a prospective employer and, secondly, the restrictions are involuntary in

contrast to voluntary, non-contractual in contrast

to contractual and, thirdly, where the challenge

occurs in a context where the restrictions have not

been in force for any significant period of time.

Your Honours, we would embrace what was said by

Justice Gummow below to this extent, that the

ultimate question as to reasonableness is a

question of law.

Your Honours, could I spend just a little time

in introducing certain of the context of the issues to you, notwithstanding that I appreciate you would

have looked at the application book, but there is a

certain emphasis we would like to give as to the

setting in which these issues have arisen.

MASON CJ: Yes.

MR CONTI:  Your Honours, there has been, undoubtedly,

attention which can be identified through the

history of the cases in Australia and the United

Kingdom and New Zealand between the organizers of

professional team sport, perhaps in contrast to, as

it were, one-man professional sports such as

boxing, golf and so on, but team sport, and the professional players by reason of the perceived

need of the organizers to achieve a paramount

objective of evenness of competition and a fair

sharing of the available talent.

GAUDRON J:	Why would that be an end in itself?
MR CONTI:	Why would it be an end in itself?

GAUDRON J:  Yes. I am sorry. I know it has been conducted

in that way but I fail to see why that would be an

end in itself at all.

MR CONTI:  Your Honour, it is not an end in itself.

GAUDRON J:  Or a need. It is only a need because of the

commercial aspects, or the commercial interests of

the organizers, is it not?

MR CONTI:  Your Honour, it is more than that. In relation

to a team sporting situation, particularly in

relation to voluntary restraints, one has an

entirely different context because what one is

looking at is a situation where there are intrinsic

benefits for the person burdened. Although in the

normal case of a restraint one could always

postulate that there is some disadvantage upon the

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covenantor as ..... the person submitting to the

involuntary restraint, in this kind of setting

where it is essential to the conduct of the sport

for the benefit of all, the spectators, the

participants, the players, and so on, and so on, it

is essential that there be this concept of morale

and team spirit.

Therefore, if one is going to achieve - these are the sort of things, as it were, that impinge

upon - albeit a commercial setting, it is not a

pure commercial setting as such. That is the

critical distinction that needs to be understood,

and when I take you to what has been said by this

Court in 1971, one can see that there was a

recognition of the legitimacy in principle of

professional sporting bodies to, as it were,

regulate the move between teams of the

participants. It is legitimate. The question is

whether the restriction is reasonable in the

circumstances.

Your Honours, that passage is cited at page 69

of the application book, where in the joint

judgment it is said:

It is a legitimate object of the League and of the district clubs to ensure that the teams fielded in the competitions are as strong and well matched as possible, for in that way the

support of the public will be attracted and

maintained, and players will be afforded the

best opportunity of developing and displaying

their skill. It is therefore legitimate to

aim to provide a system that will ensure

sufficient stability of membership to permit

those who play for a club to be trained as a
team and to develop a team spirit, and that

will prevent the stronger clubs obtaining all

the best players, thus leaving the weaker

clubs with teams that are unable effectively

to compete with their stronger opponents.

GAUDRON J: There is a difference between a "legitimate

interest" as there stated and "a need" as asserted

by you, is there not, Mr Conti?

MR CONTI: Well, the legitimacy is related to the need

because the need is there identified in terms of

those requirements for even competitions. With

respect, I do not think there is any dispute that

on the cases that - - -

GAUDRON J:  I have no doubt that it is desirable. I

question your assertion of a need.

Rugby 4 24/10/91

MR CONTI: 

Certainly, the view of Mr Justice Sheppard in the

leading judgment would seem to be to recognize the
proposition I have put.

MASON CJ: Where do we find that?

MR CONTI: At page 124, line 16. His Honour said:

No doubt there are many possibilities -

after referring to a citation from a judgment I

need not take you to:

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.

MASON CJ: But this is going off on to another point

altogether, is it not?

MR CONTI:	It is a recognition by His Honour of the fact that there was here - he recognized here that there
was a prirna facie legitimacy for need by the
expression "is necessary", and then acknowledging
that this was one of those cases.

Your Honours, can I pass to another matter of

background, and that is this:  The fact is that

there has been through the history of this sport,

as a natural part of its evolution, a persistent

attempt to regulate in this particular area. The

history is referred to by Mr Justice Hill in his

judgment and aspects of his judgment were adopted

by Mr Justice Wilcox by incorporation into the whole of his judgment, at appeal book pages 25

to 28, but in summary the things were tried - the
transfer fee system, maximum player import system,

and maximum payments for individual players.

Your Honours, all in a context of where clubs

would overspend, and by overspending we get into

financial difficulty, in at least one case in more

recent history, compelled to leave the competition

and, of course, need is to be understood in terms

of clubs finding themselves unable to continue in a
competition with loss of players, and so the
playing community in that sense gets affected.

Therefore, as I say, the need to regulate so that

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there can be evenness so that the competition can

work in a team setting.

All of those previous systems, one of them was

looked at by the Court, the Tutty case, and that

was a case where it was not just that the player
was restricted, but under that system he could be

prevented from playing even though he was not under

a current contract to play, his contract had

expired, but yet the way the system worked, he

could have been prevented from playing at all.

MASON CJ: That can happen under this system, can it not, if

a player does not want to play with a particular

club?

MR CONTI:  If he does not want to play with a particular

club and no other club wants him, then another club

wants to - - -

MASON CJ:	But if he is drafted to a particular club and he does not want to play with that club?
MR CONTI:	If he is drafted to the club and he does not want

to play with that particular club, in that

particular circumstance he can appeal and the

appeal rules are extremely important in determining

the reasonableness in the balancing process.

MASON CJ: Yes, but if he loses the appeal.

MR CONTI:  If he loses the appeal, then he has no

alternative but to go and play in the metropolitan

competition, the country competition, the

Queensland suburban competitions.

MASON CJ: So, he is out of first grade rugby league and he

has no place in representative football?

MR CONTI: That is so, for that season. Your Honour, that,

if I may say so, is the extreme situation and it

has to be weighed in the balance of what the

evidence was before the trial judge in which he found, and that is, because one is dealing with

team sport where morale is so important, team

spirit is so important, there was an unlikelihood

that a club would persist in holding a player who

did not want to be there - and that is what

His Honour found on the evidence, and that evidence

was given by very experienced participants in the

sport who had been internationals themselves who

knew about team sport and, indeed, as was given by

the coach of Newcastle who was called by the

applicants, that he would not have, ultimately, a

person who did not want to be there.

Rugby 6 24/10/91

So, although, Your Honours, it is a perfectly correct analysis, that was not the reality as

His Honour found it.

MASON CJ: Well, you can disabuse my mind, Mr Conti, and

perhaps I am drawing on material that is not in
evidence, but was there not a well known case where

a player did not want to play with the club to

which he was drafted and, none the less, that club

insisted on him playing for them?

MR CONTI:  Yes, Your Honour. That occurred after - I would be delighted - - -

MASON CJ: That is why I said I may be drawing on

information that was not in evidence.

MR CONTI:  Your Honour, I am very happy for you to draw on

that particular case because it is so renowned from

reading the newspapers, although it occurred after

the termination of this litigation. The reality of

that particular case was this: the player went

into the draft stipulating a one year term.

Initially, he did not want to go to Eastern Suburbs

and made that sentiment very well known. The coach

of Eastern Suburbs made it clear that if he could

not make him happy that would be the end of the

matter. The player signed a three year contract,

thereby evidencing, proving exactly what the

evidence of Mr Roy Masters said in the evidence

below that the reality is - he spoke as a well

known coach - the players fit in. The reality is,

the money is the most important thing. That is not

said in any critical way of players. The money is

the most important thing and the players fit in.

Of course, there is always a strangeness about

going to a new club.

Your Honours, that is getting, of course, into

the evidence and I appreciate that it is not really

a legitimate area for me to ultimately go.

MASON CJ: No, but I took you off your path in putting that

to you.

MR CONTI: Yes. Your Honours, may I make this emphasis:

that we are dealing here, essentially, with

non-profit organizations. The one exception is the

Brisbane Broncos which is privately owned. Many of

the sporting clubs in the United Kingdom,

particularly the soccer clubs, that have been

involved in litigation, are private trading

entities.

As His Honour Mr Justice Gummow below

demonstrated by looking at the financial records of

the Rugby League alone, the vast amount of the

Rugby 7 24/10/91

money goes to the players, the raison d'etre for

the clubs, the players; they are non-profit

organizations. There is no tension, "We want as

much money as we can to take from you", "transfer

wealth", as was put below by some of the economic

theorists who were called by the applicants.	It is
not a case designed to transfer wealth from a

player to a club. That is not the real world. The

real world is, the clubs want to spend money on

players as much as they can and the unfortunate

history of the game is that in their desire to win

matches they spend more than they have a financial

capacity for, and that was part of the reason for

the salary cap.

In all events, Your Honours, the Court, as I

say, left open in Tutty the door for the League, as

it were, to promote something which would work in

furtherance to the legitimacy of its objects.	I
did leave with you a photostat copy marked up
Buckley v Tutty.	We have highlighted the areas

that we thought might be of assistance, not

unnaturally, to ourselves. It is at the foot of

page 377, line 5:

It may nevertheless be reasonable to lay down some qualifications for membership of a club,

or to impose some restrictions on the transfer

of professional players from one club to
another or on the extent to which a club may

entice players away from another club.

That is what we have sought to do in this case,

and, Your Honours, as the evidence disclosed, our

inspiration for a combined salary cap draft system

emanated from the Australian Football League. The

Australian rules, as it were, led the path and, of course, this application has more than a passing

interest to Australian rules because they have a

draft system. In fact, it differs from the Rugby

League draft system in two respects which might be

thought as significant. They do not have what we

call the "100 kilometre rule" which was designed to alleviate against the possible hardship of a player

in the city saying, "I don't want to be drafted to

go to Newcastle, Canberra, or Brisbane", so he can

state in his application form, "I'm not going

outside 100 kilometres". There is no such

provision in the Australian rules system.

Also, under the Australian rules system they

can trade their draft choices, so that if you

have - as Your Honours appreciate, the draft system

works on the scriptural principle, "The first shall

be last and the last shall be first", and the clubs

who finish at the bottom of the competition had the

first choice and so it goes on and on. You could

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be - for instance, Footscray - and I hope I do not

offend anyone here - might have come last in the

particular competition and it would have the first

choice, and it decides they prefer to have cash in
the bank rather than the particular players that
are there in operation, but the selection of

players is very much a subjective matter - everyone

has got a different idea of form - so they would
sell that choice. That would assist them to put

some cash in the bank for the purposes of their expenditures. That is where the difference is.

That is where we got the inspiration for the draft.

Your Honours, I am sorry to be going this

factually, but it really is necessary to endeavour

to persuade you, ultimately, as to why this

question of standard -

MASON CJ: Yes, I was wondering where you were going,

Mr Conti.

GAUDRON J: This is designed to show that the case is

important, is it, in the public interest?

MR CONTI:	Yes, Your Honour.
GAUDRON J:	I suppose every male in the country would

accept, unhesitatingly, that there is no greater

public interest than the football competition. Is

that not right?

MR CONTI:  Your Honour, our promotional people tell us that

there is a very increasing appearance of the fairer

sex as well and we think this would not be without

interest to them as well. Your Honours, we

appreciate we have got to establish importance of

legal principle and I will get to that as soon as I

can, but can I just say this: One of the things that is highlighted in the judgments of the Full
Court which overlooked a critical piece of evidence

which was not overlooked by Mr Justice Hill below

was that when we introduced the salary cap for

the 1990 season, the clubs agreed to a freeze on

poaching. No players, in effect, could be

stockpiled or poached during the 1990 season in

anticipation of the draft corning in 1991.

His Honour Mr Justice Gurnrnow, when he was

dealing with the onus of proof, when he said that

he thought His Honour Mr Justice Hill below, his

approach to the onus was perceptively too, as it

were, easy on us, said that -

MASON CJ:  An impermissible lightening of the burden.

MR CONTI: Impermissible lightening of the burden - I just

missed the precise description. Your Honour, there

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was, with respect - and I have to go into the

factual area to explain this to you, and it is very

briefly explained, and that is that His Honour said

that we did not call evidence to show that the

questions of evenness of the competition, the

spreading of talent, and so on, was not going to

be, as it were, accommodated by the salary cap.	We
did not have the evidence there in respect of the
experience from the 1990 season.	How could we?

The reality was that 1990 represented not just only

the introduction of the salary cap, but a

transitional period for the draft. The reality

was, the draft was there in 1990 and it would be

quite impossible to do other than idle speculation.

Your Honours, if I could explain it very

briefly, why there is such a dominant role for the

draft, as well as the salary cap, is that there are

several reasons. All that the salary cap can do is regulate to the extent that clubs cannot spend more than a certain amount of money which has been fixed for them in the light of their financial capacity,

fixed so that they do not, hopefully, go bankrupt

by overspending on players. But it leaves entirely

aside whether they can do the matter which is most

feared by the administration of the game, that they

may be resident in one club which does not have

strong resources to be able to pay what other clubs

are prepared to pay within their salary cap limit

for, say, three or four of their key players.

Now, the salary cap would enable a wealthy

club which had not spent highly on its salary cap

for the time being to go and tear the heart out of

the three best players in the particular team that

they have in their sights. Your Honours, if that

occurs, and there were historical circumstances

where it did occur, the mechanisms that have been

in force in the meanwhile had sought to stop that,
but ineffectively, as His Honour Mr Justice Hill

found, there was a failure to really deter the

wealthy clubs, and all the systems have been tried.

What the draft does is several things. It

brings out into the open, first of all,

negotiations because a player puts his own price

and terms and conditions.	It is not put on by
anybody else.	He puts his own price and whoever

selects him, it is there in the open for

negotiation and they can only get one player.	For
instance, if three people, critical people in a

particular club, all want to go into the draft and

are very talented players, one club just cannot go

and, as it were, grab those three players. It has

got to be shared. The three talented people are

picked up, one, two and three, by the people who

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are in the order of the picking. That is one of

the critical areas that the draft seeks to achieve,

and the perception of the administrators, and it

was put so firmly by the very experienced

administrators who gave evidence, that it was

necessary.

MASON CJ: What about the AFL? I thought there was evidence

from Mr Schwabb that the AFL functioned

successfully with a salary cap system without a

draft.

MR CONTI:  But he was equally insistent, Your Honour, that

the draft played a significant effect, and

His Honour Mr Justice Hill was prepared to make a

finding that although there was an area of debate,

the AFL evidence, on balance, assisted our case.

MASON CJ: That was not the view taken in the Full Court.

MR CONTI:  Your Honour, it was not the view taken in the Full Court in this sense: Mr Justice Wilcox, in

particular - I think he was the only judge who did it - examined Mr Schwabb's evidence at some length

and said it really was not enough to show that

there was an essential role for the draft as well

as the salary cap, and he endeavoured to do the

same in relation to Mr Quayle's evidence.

In relation to Mr Quayle's evidence there was

this fundamental problem that there was a failure

to recognize, with respect, the evidence of

Mr Quayle that there was, in effect, the draft was

in coterminously with the salary cap.

So far as Mr Schwabb's evidence goes, one can understand how difficult it is to prove in any

specific, scientific, demonstrable way that a

matter as intangible as the workings of a salary

cap among a number of clubs produced the particular

benefit that was identified, namely, an increasing

evenness of teams in contrast to the draft.	One
can understand how difficult - it would be

impossible for someone to say, "Well, that's the

cause and that's the effect", and it is left to the

experience of the administrators of the game,

surely, and not the lawyers - and this is not said

with respect to anybody, and without respect - but
for lawyers to pursue economic theories against the
reality of people who are in the game who
understand the way clubs work, the techniques that
clubs use perhaps to beat other clubs to

players - - -

GAUDRON J: On the other hand, the law is clear. It sets

its face against employment by conscription, does

it not?

Rugby 11 24/10/91

MR CONTI:  Yes, if this could be called employment by

conscription. Your Honour, with very great respect, in the terms of the evidence - - -

GAUDRON J: Well, it is called a draft.

MR CONTI:  - - - it was that kind of emotive - with

respect, Your Honour - description which was given

by two economic experts below whose evidence

Mr Justice Hill rejected because His Honour said, in a very practical way, "Look, this is not be

decided by matters of economic theory. This is to

be decided by reality in the real world".

Your Honours, what our position is, is this: if we

got leave to appeal and we show you what the

evidence was, we would seek to persuade you that

the onus was fairly discharged.

MASON CJ: That does not sound like a special leave point to

me, Mr Conti. So far, you have been addressing for

some time, and you have been telling us all about

the evidence and views that were taken by

Mr Justice Hill at first instance, different views

by the Full Court as a basis for submissions that

you are going to make, but it does look to me as

if, if we granted special leave, we would be

plunged into a morass of evidence.

MR CONTI:  No, I, in my misguided enthusiasm, overstated

that. There are findings of fact which were not

challenged and, on appeal, different philosophical

views which I will demonstrate to you in a moment -

and this is one of the critical areas on the

standard of proof - were taken in the Full Court on

one issue, perhaps the most important issue from

the point of view of the players which I will take

you to in a moment, but can I just justify the

course we are now taking.

The issue was, would the players be worse off

financially?	An abundance of evidence was given
and His Honour Mr Justice Hill found, as a fact,

that the players would not be worse off

financially, and a lot for the reasons I have

indicated, non-profit organizations that desire to

push money to the players rather than take money

from them. How that was dealt with on appeal was

not to say, "Well, that was a wrong finding of fact
on the evidence", so you would not be troubled in

the sense of going to that kind of detail, and

perhaps I should not have intimidated the Court -

in fact, it was very unfortunate of me to

intimidate the Court with the possibility of having

to go through a morass of evidence.

How that was dealt with in the Full Court was

to say this, "Look, when you weaken someone's

Rugby 12 24/10/91

bargaining position, as a matter of economics it

necessarily will reduce the money they're going to

get", and that goes to the very heart of what we

are trying to say. When one is dealing with
standards of proof for teams, professional teams,

sporting bodies who are seeking to regulate, what

is - - -

GAUDRON J: But that assumes it is all about money.

MR CONTI:  Yes.

GAUDRON J: That assumes that the policy of the law is all

about money, is an economic or financial policy.

MR CONTI: Quite, and a very important principle,

Your Honour, which we think - and I am grateful you

raise it - is a very important principle that would

necessarily enmesh this matter to be decided, and

that is the third matter of principle which we

raised in our affidavit, and that is this: Can

non-economic situations be taken into account?

GAUDRON J: But that must depend on the sort of restraint,

and the restraint you have here got is a

significant limitation on choice as an individual

as to for whom and when and where you will practise

your livelihood.

MR CONTI:  Your Honour, that is, with respect, a matter

which is I would like to debate with you. It is

not a matter of, really, so much of evidence as looking at the undisputed facts, and can I come back to that in a moment? Can I just deal with one

matter since this third matter of principle is

raised.

If one goes to the original statement in

Lord MacNaghten in Nordenfelt at page 53 of the

application book, one has the traditional statement

of the principle in terms of purely economic

affectation. When you look at the passage that is

cited on page 53, the classic passage, the first
three lines really say it all. His Lordship said:

All interference with individual liberty of action in trading, and all restraints of trade of themselves -

so, it was originally spoken about in terms of

trade, and then trade has subsequently been

translated into professional equations and so on.

In his judgment below when Mr Justice Gummow

summarized the authorities, he said, "No, the

question is gainful employment suggesting notions

of economics". Mr Justice Wilcox, importantly,

Rugby 13 24/10/91

introduced the principle of non-economic matters

and did so at page 171 of the appeal book.

MASON CJ: But it was not essential to his judgment, was it?

MR CONTI:  I appreciate that, Your Honour, and we accept

that if we were here on what we would put as our
third statement of principle in the affidavit

alone, we would not have a ground of appeal because

we could not say it was essential to his judgment.

But, nevertheless, he certainly refers a lot to a

matter of personal inconvenience.

Mr Justice Sheppard, at page 125 of the

application book left the matter open but it may

well - but I cannot assure you of this obviously

that it certainly will - enter the juridical debate

if leave was granted. The critical question is the matter of the standard, as we put it, of proof, the

principles which govern that standard leading to

the ultimate issue of law.

MASON CJ:	Can you tell us where the Full Court went wrong?
MR CONTI:	Yes, Your Honour.

MASON CJ: What was the erroneous principle you say they

apply?

MR CONTI:  The _erroneous principle is that a restraint which

deals with, or addresses, the right to choose one's

prospective employer, as they put it, was, if I

could use the expression, inherently or almost

inherently unreasonable. You could not jump,

really, over that hurdle. That, of course, is

terribly important to us because it means that if

that principle is maintained, and it is doubtless

as important for Australian rules, then any form of

draft in the end is just not open to us.

Irrespective of what experienced people in the game

believe - experienced people in the game believe

the draft is going to be essential if the

competition is going to expand because of the

problems which will arise for the new team, exposed

to all that can occur without a draft.

MASON CJ: Yes, but the majority in the Full Court did not

embrace that principle as an absolute, did they?

MR CONTI:  Your Honour, with respect, could I just take you

to it - it is so close, one would have thought.

That is why I used the expression "inherently or

almost inherently". Can I take you to page 203 of

the judgment of Mr Justice Wilcox, between lines 17

and 20. His Honour said:

Rugby 14 24/10/91

The more fundamental question is:  how, in a

free society, can anyone justify a regime

which requires a player to submit such

intensely personal decisions to determination

by others?

At page 226, at the top of the page, His Honour

Mr Justice Gummow said:

in such cases strikes at the essential

interest of each player in being free to play

with the club of his choice.

Mr Justice Sheppard did not expressly deal

with the matter.	Of course, His Honour generally
agrees with the judgments of his brothers.	He did

mention, inherently referring to this particular

thesis, the drastic operation, as he called it, at

page 124, lines 27 to 30.

Your Honours, if that is so, if that is virtually an insurmountable hurdle in the light of

that material in the Full Court, one would have to

say, "Well look, where can sporting bodies now go

when it comes to drafting, irrespective of

beneficial interests of the game, how bona fide is

the belief held, where does that take us?", they

would have to say, "Well that seems to be the end

of the road", and that is what they wish to test.

They would wish to say that the way in which you

approach the standard of proof is that of

Mr Justice Hill where you look at all of the

relevant aspects, both those dealing with the
legitimacy of the objectives and how the restraint
supports the legitimacy of the objectives, and one

also looks at how that affects the players.

GAUDRON J: What do you say the test is in such a case?

MR CONTI:  Your Honours, we say that there is a traditional

test as to reasonableness, of course, we say that.

The question is whether - - -

GAUDRON J: What is it in this context?

MR CONTI:  We say that you look at reasonableness, as

His Honour did below, by reference to all of the relevant circumstances. His Honour weighed all the circumstances.

GAUDRON J:  Is it no more than a value judgment in the

circumstances?

MR CONTI:  No, Your Honour, with respect, it is more than

that.

Rugby 15 24/10/91

GAUDRON J: Could you tell me what it is? Is it what is

necessary?

MR CONTI:  Your Honour, it is a question of law.

GAUDRON J: Yes.

MR CONTI: Ultimately, it is a question of law, and how one

looks at what are relevant interests bearing upon

that question of law.

GAUDRON J:  You are not suggesting that anyone failed to

take account of relevant considerations, are you?

MR CONTI:  Your Honour, I do. As I said earlier, where

Mr Justice Wilcox and Mr Justice Gummow say, "Well,

look you didn't adduce evidence as to what the

particular application of the salary cap had and

what the particular application of the draft had,

as it were, subdivide and show an area for both".

In our submission, they did ignore the evidence

that so far as the Rugby League is concerned that

they had been operating coterminously and it would

be impossible ultimately to decide which one had

the benign effect of an even competition and

knowing one in which one did not.	So in that
sense - - -

GAUDRON J: Is the reasonableness for which you contend a

question of necessity to obtain an even
competition?

MR CONTI:  No, that is only just one of the factors. We

accept it is only one of the factors. That factor

alone would not get us home, as His Honour

Mr Justice Hill said.	You have got to look at all
the factors.

GAUDRON J: What else, from the League's point of

view - using that to include individual clubs -

could justify a restriction on the freedom of its

employees such that they were, for practical

purposes, obliged to work where the League and the

clubs decided by application of these drafts?

MR CONTI:  Your Honour, can I take you to page 267 because I

think it is probably summarized there without me

running you to and fro through the appeal book.

This is not directly answering your question. I

cannot directly answer it for a particular reason.

What we sought to set out there, on page 267 in

parenthesis, are the various elements that took us
part of the distance. In paragraph (a) there is a

reference to page 67 of the judgment - that is

appeal book 74. I am sorry, when this drafted, of

course, the appeal book had not been printed so one

has to, as it were, go to the judgment and I have

Rugby 16 24/10/91

got the appeal book references here if you had

time. There are three factors there identified and
the first two were concerned with evenness of

competition and the quality of talent. The third

one was the objective of financial stability and,

of course -

GAUDRON J: Are they not all caught up with the evenness of

competition?

MR CONTI:	So many of these concepts overlap and, of course, the concepts of benefit to the player are also
caught up in this, so when one talks in the
abstract about - and this is why, with respect, approach to the way in which one - - -

GAUDRON J: But what is this trying to determine? What is

the ultimate question by which you determine reasonableness in this particular context of

restrictions on choice so that you must work for

those whom your prospective employers decide by
application of their own rules, or not at all, as

the case may be?

MR CONTI:  Your Honour, with respect, we do not accept that

that is really - one cannot put it in such an

absolute way, that being the description of the
draft, but I will deal with that in another way,

but let us assume it is an accurate description.

The answer is, all of the relevant factors going to

reasonableness viewed from the point of view, and

assuming that they are overlapping, of both the

regulator and the person who is subjected to the

involuntary restraint, looking at all those - - -

GAUDRON J:  Is it whether at the end of the day the person

deciding has a nice warm inner feeling about it

all?

MR CONTI:

No, Your Honour, with respect. If you look at

(a), (b) and (c), one has the question of equality

and evenness of competition, (c) was stability, and

the player interest is very much tied up with - as

was common ground between all the judges below -

the player interest is tied up in the stability of

the clubs. If you do not have a stable club, you

do not have an employer and when one goes to look

at the extremity of the proposition of restricting

a person from choosing his employer, one has to

bear in mind that that cannot be stated as an

absolute because tied up in that is the benefit

that flows through from the stability brought about

of the employer.

Then, there is the question of mid-season poaching in (d) but, Your Honour, the most

Rugby 17 24/10/91

important one is (e) and that is the critical one

because if you put that into the balance:

the earning of players of substantially less

rewards, contrary to the contention of the

Respondents, was not a likely outcome.

Now, once one has the circumstance - - -

GAUDRON J: But that is a negative, it is not a positive.

It is not a positive benefit associated with what

you are asserting is reasonable at all. It is

merely to say that is not a negative aspect of it.

You are not answering my question at all, Mr Conti,

I might add, because what is there in (e) is that

which very likely would take it outside the field
of reasonableness. That is not the question. The
question is what brings it inside the field of

reasonableness?

MR CONTI:  What brings it inside the field of reasonableness is the weighing of all of the relevant factors, all of them - - -

GAUDRON J: And making a value judgment.

MR CONTI:  - - - and making a value judgment of law.

GAUDRON J: And you say that was not done, do you?

MR CONTI:  It was done at first instance. When it came to

the Full Court there was a difference of

approach - - -

GAUDRON J:  It sounds a very odd question. I mean, you

categorize it as a question of law but it does seem

a strange - - -

MR CONTI:  His Honour Mr Justice Gummow -

GAUDRON J:  I thought you accepted that.

MR CONTI:  - - - did say at page 282 of the appeal

book - but Your Honour, when it came to the Full

Court there was, amongst themselves, a difference

of approach and Mr Justice Sheppard identified that

by saying, "Look, there's an unevenness in the

approach of my brothers although I agree with

them", and the unevenness lay in this way:

Mr Justice Wilcox would look at the situation from

the employer and the impact on the employee,

whereas Mr Justice Gummow would look purely, so it

would be seen so, at the circumstance of the

restraint per se and whether it could be justified

in terms of the supposed ..... objectives.

Rugby 18 24/10/91

GAUDRON J: But does that not simply indicate, on the line

you take, that they reached different value

judgments?

MR CONTI:  No, there was different standards, and that is

the point we seek to put here on - - -

GAUDRON J: But you say there is none.

MR CONTI:  No. We say the approach to the standard of proof

is to look at all the factors and not to give undue

weight to such an extent that you are saying,

"Inherently it's unreasonable because the person

can't choose his own employer". If one looks at

the reality of the situation - I mean, just assume
that we changed the printed form of contracts in
the appeal book and made the Rugby League the

employer, then that would be simply done and the

player would become the employee of the Rugby

League like a person does with a bank.

If one works for the bank - the reality is, of course, one takes, if one is an employee, orders

from the bank manager where one is stationed. If

one is sent to Broken Hill, and since one is going

to work for another employer, it is no great

occasion for, as it were, economic shock, no

occasion for, as it were, indignation as to

hardship. If these players play for the Rugby

League and the club were purely the medium, that

particular matter would go, and that just goes to

show, with respect, how one has to look at the

substance and not the form.

One does not take hold of a principle, and the

principle in Nokes case, which Mr Justice Hill

refers to, incidentally was not stated in a

restraint of trade context but in a case of
reconstruction of companies and the contract of

service on the reconstruction went from company A

to company Bon the order of the court and the

question was whether contract of service could go

from A to B, and what appears at the top of page 58

of the application book in Nokes is in that

setting. It was not put in a setting of restraint

of trade. It is at the top of page 58, where

Viscount Simon says:

A free citizen, in the exercise of his

freedom, is entitled to choose the employer

whom he promises to serve.

So that, it was really put in a different context,

but in any event, Your Honours, if it is necessary

for me to show and, of course, again, I am straying

from principle, but simply to show the

principles - - -

Rugby 19 24/10/91

GAUDRON J: But you say the form of restraint has no

significance as against any other form of

restraint, is that essentially your proposition in

this case?

MR CONTI:  No, we would not put it as high as that. We

would accept what Mr Justice Hill said below, that
when one is restrained in that area, that is a

highly significant restraint, and does require a
very considerable, as it were, offsetting of

balancing factors before the restraint will be

justified. It is a significant one. It is not to

just to be put on the basis of any kind of

restraint.

MASON CJ:  Mr Conti, can I take you back to page 268. Now

in the third line there it is said:

Mr Justice Hill also found that the restraint was no more than adequate to ensure

fulfillment of the said objectives - Now, there is no dispute, as I understand it, about

what the three legitimate objectives of the League

are.

MR CONTI:	No.
MASON CJ:	Now, do you agree that both Mr Justice Hill and

the members of the Full Court applied the principle
that it was necessary for the League and the clubs

to establish that the restraint was no more than

adequate to achieve the objectives of the League

and the clubs?

MR CONTI:  Yes.

MASON CJ: So, there was no dispute at the first instance or

in the Full Court about the correct general

principle to be applied.

MR CONTI:	No.
MASON CJ:	So it seems that what we are concerned about is

the application of the general principle in a field

of what you constantly say involves value judgments

and perhaps undue weight being given by the

Full Court to some factors over other factors. Is

that correct?

MR CONTI:  It covers a very large amount of the field - - -

MASON CJ: Well, if it does, it does not strike me that this

case is a likely candidate for the grant of special

leave.

Rugby 20 24/10/91

MR CONTI:  When you say, application of the principle, what

we are talking about - we would put it around this
way. What are the principles that govern that application, because what one is talking about is

reaching a question of law? It is not going to be

- if we got appeal - it would not be a tedious

looking at a whole lot of factual areas in the

sense of correctly deciding whether - it is a

question of looking at a few factual findings and

saying, "Look, if, given the principle that we are

looking here" - as we said in our original

formulation of principle - "at professional
sporting teams" which puts a different shade on the
context from the normal restraint of the context,
because of the different circumstance here; you are

dealing with people who have got a job, as the

evidence is, as well as playing football.

You have all those different circumstances.

You have the circumstance that was found as

His Honour found below, that a player will always have in mind more than two clubs; would normally

have in mind two or more clubs. I am sorry, would

be happy to go to two or more clubs and the

inherent unlikelihood, because of the essence of

what we are talking about here is team spirit and

morality and the inherent likelihood that he would

be compelled to ever ultimately stay where he was

not wanted. Put all those factors and then say,

"Well, what are the principles that govern it?"

The principles govern it - - -

MASON CJ: Yes, but that seems to me to be all generality.

Can we come back to the difference between the

conclusion reached by Mr Justice Hill and the conclusion reached by the Full Court. Now we

start, of course, with the knowledge that

Mr Justice Hill regarded it as a border-line case

and what he was saying was border-line was whether

or not the restraint was no more than adequate to

protect the legitimate interests of the League and

the clubs. Now on that border-line question, the

Full Court took a different view and was not that

different view very largely related to a different

conclusion that the Full Court reached about the

necessity for the draft on top of the salary cap?

MR CONTI: That was a significant factor.

MASON CJ: A very significant factor.

MR CONTI:	In relation to the legitimacy of the object of the League, it was a significant factor.
MASON CJ:	Now, quite obviously, if you are going to attack

the Full Court decision in an appeal, well we will

be largely concerned with whether or not the

Rugby 21 24/10/91

Full Court was right in substituting its view of

that issue for Mr Justice Hill's view.

MR CONTI:  Yes.

MASON CJ: Well now again, to repeat what I have said to you

before, it does not sound like a question of

fundamental principle.

MR CONTI: Well, only this; if one is dealing in this very

important area we would say to you, as a matter of

principle, that there was a principle in

Mr Justice Hill's approach which was not accepted in the Full Court and which should have been

accepted, namely that when you make that judgment,

you do not form a view yourself; you give great

weight to the view of those who are in the sport,
and one of the matters we make complaint of is that

the Full Court would suggest ways and means of

problems being overcome, ..... the Full Court, rather

than giving weight to the evidence of those who are

there, are living in it and know it.

MASON CJ:  Mr Conti, I see it is just after a quarter to

one. If it is convenient, we will adjourn now and

resume at 2.15 pm.

MR CONTI: Sorry I have taken so long.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

MASON CJ: Yes, Mr Conti?

MR CONTI:  We conclude with these submissions. We submit

that the Full Court erred, firstly, in elevating

the factor as to restriction on choice of employer

beyond what was reasonable, and thereby gave it undue balance in relation to other factors, and

thus, in the result, imposed a standard of proof
upon the proponents of the arrangements which was

higher than was required in principle.

In doing so, at least one member of the court,

His Honour Mr Justice Gummow, seems to have assumed

that the correct approach to involuntary

restraints, non-contractual restraints, was there

was an absence of valuable consideration which

would operate as a factor, and in doing so took no

regard for the circumstance that with the restraint

Rugby 22 24/10/91

goes a market provided by stable clubs and an even

competition. And also in doing so Their Honours

appear to have taken no account of the finding of

Mr Justice Hill as to the essential unreality in

practice of the restriction of employer choice and

how it would work in the expert opinion of the

administrators in the future, that finding of

His Honour was at appeal book 64 and 66.

It is submitted that also the Full Court gave

no weight to the function and operation of the appeal rules. They are set out at the foot of

page 19 and the top of page 20 of the application book. They were, one might infer, drafted with a

view to what was said by this Court in Tutty at

page 379. If I could read it very briefly. It was

marked in yellow on Your Honours copies.	They
said:

Finally, the apparent severity of the rules

may be mitigated by the decisions of the

Qualification and Permit Committee to which

players may bring appeals. However a player

is completely in the hands of the committee;

he has no right to require it to decide in a

particular way, or in accordance with any

suggested principle, and it cannot be assumed

that the decisions of the committee will

always and necessarily ensure that the

restraint imposed by the rules is no more than

a court would consider reasonable.

And those matters were addressed, as you can see,

by the matters of relevance which the appeals board

is obliged to take into account here and set out at

the foot of page 19 and the top of page 20.

Mr Justice Gummow, at appeal book 230 and 231,

said they were irrelevant to the question which he

had to determine. Mr Justice Wilcox agreed,

however, that the existence of the appeal rules

could, conceivably, have an ameliorating effect on

the impact of the restraint but he declined to take

them into account because he said, firstly, the

first limb of the rules, namely, the best interests

of the game, the player and the club did not

indicate which of those three should have

pre-eminent weight.	We would submit that was not a
justifiable criticism.	He also said that the

expression "unreasonable hardship" which prefaces a
number of specific factors in the second limb of

the rule was lacking in specificity.

And, lastly, the decision of the Full Court

erred in applying, at pages 200 and 201, the

economic theory that perceived weakening and

bargaining strength will necessarily and inherently

Rugby 23 24/10/91

result in economic disadvantage contrary to the

evidence which was accepted by His Honour

Mr Justice Hill, at appeal book page 59, on that subject.

Your Honours, for those reasons we would

respectfully request the application be granted.

MASON CJ: Yes, thank you, Mr Conti. The Court will take a

short adjournment in order to consider the course

it will take in this matter.

AT 2.21 PM SHORT ADJOURNMENT

UPON RESUMING AT 2.29 PM:

MASON CJ:  The Court need not trouble you, Mr Gross.

It is conceded that in the circumstances of

this case, the Full Court of the Federal Court was

correct in holding that it was for the applicants to show that the restraint on the players flowing

from the operation of the internal draft afforded

no more than adequate protection to the legitimate

interests of the New South Wales Rugby League and

the district clubs. Once that is accepted, then

the outcome of the proposed appeal turns very

largely, if not entirely, on the findings of fact

made by the primary judge as qualified by the Full

Court, and the assessment of the reasonableness of

the restraint. In that respect the applicants

would face a formidable task in seeking to

overthrow the conclusions of the Full Court.

In the result, the case does not raise any

question of fundamental principle.	The application
is therefore refused.

MR GROSS:  We ask for costs, Your Honour.

MASON CJ: You do not oppose that, Mr Conti? The

application is refused with costs.

AT 2.31 PM THE MATTER WAS ADJOURNED SINE DIE

Rugby 24 24/10/91