AMI Sport & Entertainment Pty Ltd & Anor v The Rugby Union Players Association Inc & Ors

AMI Sport & Entertainment Pty Ltd - First Plaintiff Gregory Paul Keenan - Second Plaintiff The Rugby Union Players Association Inc - First Defendant Australian Rugby Union Limited - Second Defendant PARTIES : Queensland Rugby Union Limited - Third Defendant New South Wales Rugby Union Limited - Fourth Defendant Australian Capital Territory and South New South Wales Rugby Union Limited - Fifth Defendant Western Australian Rugby Union t/as Western Australian Rugby Union Inc - Sixth Defendant

B.J. Gross QC - Plaintiffs COUNSEL : R. Bellamy - First Defendant M.F. Holmes QC, K. Williams - Second to Sixth Defendants

McCabe Terrill - Plaintiffs SOLICITORS : Dempseys Lawyers - First Defendant Freehills - Second to Sixth Defendants

1 The First Plaintiff ("AMI") carries on business as a manager of professional sports people. Amongst its clients are a number of elite professional rugby union players. 2 The First Defendant ("RUPA") is an incorporated association which represents the interests of elite rugby union players. Its members include AMI's clients. The Second Defendant ("ARU") is a body which controls at national level the organisation, management and selection of rugby union teams to represent Australia. The Third to Sixth Defendants ("the Unions") control at State level the organisation, management and selection of rugby union teams to represent their States. 3 On 1 August 2005, RUPA introduced a Player Agent Accreditation Scheme. The Scheme is designed to ensure that rugby union players negotiating playing contracts with the ARU and the Unions are represented by agents who conform to certain standards of professional conduct. The Scheme contains regulations as to the terms which should be included in management or agency contracts between agents and players for the better protection of players. 4 It is of the essence of the Accreditation Scheme that it is compulsory, that is, that all agents seeking to represent elite players in contractual negotiations with the ARU and the Unions must subscribe to the Scheme and must become Accredited Agents, and the ARU and the Unions must refuse to negotiate with any agent purporting to represent a player in negotiations unless the agent is an Accredited Agent under the Scheme. 5 All professional agents representing elite rugby union players in Australia have now subscribed to the Scheme and have become, or will become Accredited Agents - with the exception of AMI. AMI has decided that it does not wish to subject its business to the restrictions imposed by the Scheme. 6 By a Summons filed on 14 September 2005 AMI seeks a declaration that the Scheme, or at least the requirement that it be compulsory, is void for illegality as being an unreasonable restraint of trade. By way of interlocutory relief AMI seeks an order that RUPA, the ARU and the Unions be restrained until determination of the proceedings from refusing to deal with it as agent for any person on the basis that it is not an Accredited Agent under the Accreditation Scheme. Consequential interlocutory relief is also sought. 7 AMI's application for interlocutory relief came before me yesterday as an urgent matter in the Duty Judge List. Mr B. Gross QC appeared for AMI, Mr Bellamy of Counsel appeared for the ARU, and Mr M. Holmes QC appeared with Ms Williams for the ARU and the Unions. 8 Mr Gross submitted that the Accreditation Scheme was either a contract or a combination between RUPA, the ARU and the Unions the effect of which was to restrain or inhibit AMI in the free exercise of its trade or business as a representative of elite professional rugby union players. He said that AMI was, in effect, put in the position that it either accepted the terms upon which the Accreditation Scheme required it to do business with players, the ARU and the Unions or else it was forced out of that business entirely. 9 Accordingly, Mr Gross submitted that the Scheme was a restraint of trade and was void at common law unless the Defendants were able to demonstrate that the restraint was no more than was reasonable for the protection of RUPA, the ARU and the Unions. Mr Gross relied on Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242 and the authorities therein cited. 10 Mr Bellamy, for the ARU, conceded that there was a serious question to be tried as to whether the Accreditation Scheme was void at common law for illegality as a restraint of trade. Mr Holmes QC, for the Unions, conceded that there was a serious question to be tried as to whether the Scheme operated as a restraint of trade but he said that there was no serious question as to whether it was void for illegality because the restraints, if any, were clearly no more than were reasonably necessary for the protection of elite rugby union players, RUPA, the ARU and the Unions. 11 Mr Holmes emphasised those terms of the Scheme which, he said, were beneficial to the sport as a whole, such as the requirement that agents representing players comply with certain minimum standards of professionalism and honesty and that agency contracts between agents and players should not contain certain types of clauses which would operate unfairly against players. 12 This is not the occasion to debate whether such restraints as the Accreditation Scheme imposes upon agents are no more than reasonably necessary for the proper protection of interested parties. What interests require protection and what protections are reasonably necessary are questions which can be decided only at a final hearing, after all of the evidence has been assessed and full submissions have been made. 13 At this stage of the proceedings, especially in the light of the very scant evidence which the parties have been able to produce in the time available, I am satisfied that there is a serious question to be tried as to whether the Scheme provides no more than reasonable protection for the interests legitimately to be protected. 14 Most of the contest in this interlocutory application has been focussed on the issue of the balance of convenience. In my opinion, that is the critical issue. 15 Mr Gross submits that the balance of convenience dictates that the interlocutory relief sought should be granted, for the following reasons:

• AMI is merely seeking the restoration of the status quo, at least as it was before 1 August 2005 when the Accreditation Scheme came into effect;

• if the interlocutory injunction sought is not granted, AMI will be prevented from conducting its business of representing elite rugby union players and from providing services to players under its existing contracts which the players have paid for and are entitled to expect;

• if the injunction is not granted, AMI is at imminent and serious risk of losing rugby players already contracted to it because such players may argue that those contracts have been frustrated by AMI's supervening inability to deal on their behalf with the ARU and the Unions;

• if the injunction is not granted, AMI's goodwill, including its capacity to renew existing agency contracts with players and to obtain contracts with prospective player clients, will be put in major jeopardy;

• if AMI suffers damage from loss of existing contracts and loss of the opportunity to gain new contracts, its damages will be very difficult to quantify;

• the inconvenience to RUPA, the ARU and the Unions if the injunction is granted would be minimal as a legal challenge to the validity of the Accreditation Scheme, although never notified by AMI until a matter of hours before it commenced these proceedings, must nevertheless have reasonably been foreseen. 16 I am unable to accept AMI's submissions. In my opinion, the balance of convenience, as well as discretionary considerations, favour refusal of the interlocutory relief sought. The reasons are, in essence, those advanced by the Defendants. They are as follows. 17 First, and most critically, AMI has been guilty of inordinate and prejudicial delay in commencing these proceedings. 18 The Accreditation Scheme has been the subject of discussion since 2003 in the professional rugby union "industry", if I may call it that. On 23 December 2004 the Defendants entered into a collective bargaining agreement to regulate activities associated with rugby union in Australia. Part of that agreement was the establishment of a Player Agency Accreditation Scheme which would be compulsory. 19 On 24 January 2005 RUPA circulated to all rugby player agents, including AMI, an outline of the key features of the Accreditation Scheme. 20 By letter to AMI dated 24 May 2005 RUPA advised the details of the Scheme. All of the essential features of the Scheme were explained, in particular that the Scheme was compulsory and the ARU and the Unions had agreed to deal only with agents who were accredited under the Scheme. 21 Enclosed with the letter were numerous documents explaining the Scheme in more detail, including a copy of the Scheme Regulations, the Scheme Code of Conduct, a Standard Player Agent Agreement and the Accreditation Criteria. As from 24 May 2005, AMI could have been in no doubt of the essential elements of the Scheme as they affected its business operations. 22 RUPA's letter of 24 May 2005 advised that applications for agent accreditation had to be lodged no later than 15 June 2005. However, from the uncontradicted evidence of Mr Dempsey, RUPA's CEO, it is clear that Mr Keenan, the Controlling Director of AMI, had decided by 24 May that AMI would not participate in the Scheme. 23 As I have noted, the Accreditation Scheme came into effect on 1 August 2005. All other agents representing elite rugby union players have made applications for accreditation under the Scheme, accreditations have been assessed and issued, and the ARU and the Unions have been notified accordingly. All agents save AMI are, therefore, presently bound by regulation as to the conduct of their representation of rugby union players with the ARU and the Unions. Since 1 August 2005 RUPA, its players and members, all other agents, the ARU and the Unions have ordered their affairs on the basis that the Accreditation Scheme was operational and effective, and that agents could only deal with the ARU and the Unions if they were accredited under the Scheme. 24 AMI gave no notice of the present challenge to the validity of the Scheme until late in the afternoon of 13 September 2005 when its solicitors wrote to RUPA requiring certain undertakings to be given by noon on the following day. As soon as the deadline passed, the present Summons was filed. The timing of notice to the Defendants and the commencement of these proceedings suggest that AMI had been preparing its case, at least for some time, prior to 13 September but it gave no prior warning to the Defendants until it was ready to commence the proceedings. Then, it brought the proceedings on with great haste and urgency. 25 I do not accept that, by interlocutory injunction, AMI is seeking to preserve a status quo until determination of the proceedings. On the contrary, AMI is seeking to change the status quo which has been in existence since 1 August, when it had the clearest possible notice of the details of the Scheme since 24 May 2005, and has had early warning of the essential elements since 24 January 2005. 26 For more than three months since 24 May 2005 AMI has stood silently by while RUPA, the ARU and the Unions have proceeded with implementation of the Accreditation Scheme. It has stood silently by while other agents have subscribed to the Scheme and have placed themselves at some disadvantage in comparison with AMI in that they have agreed to be bound in certain respects in the way in which they conduct their businesses while AMI has remained free of such obligations. 27 There is no explanation for AMI's delay offered in its affidavit evidence. Mr Gross, however, submits that it was reasonable for AMI to wait and see whether the Scheme would be accepted by other agents before it decided to test the Scheme's validity by these proceedings. I do not agree. 28 AMI must have been aware that as from 1 August 2005 there was, at the very least, the strong possibility that RUPA, the ARU, the Unions and other agents would be ordering their affairs on the basis that the Scheme was valid and would be operative. If AMI decided to wait and see what happened to the Scheme before commencing proceedings, it took a calculated risk that by the time it commenced proceedings a large number of people would already have acted on the faith of the Scheme so that the balance of convenience would weigh against an interlocutory restraint on its continued operation. AMI cannot have the benefit of a "wait and see" position and yet disregard the consequences caused to others by its delay. 29 Delay in commencing proceedings is relevant not only to the Court's general discretion to grant or refuse equitable relief, it is particularly relevant to a consideration of the balance of convenience in interlocutory applications. The point is succinctly and cogently made by Campbell J in Capgemini US LLC v Case [2004] NSWSC 674 at [40]: "If interlocutory relief is to be sought, it should always be sought promptly: Zuellig v Pulver [2000] NSWSC 7 at [36] - [37]. The court is always entitled to use, as a litmus test of the seriousness of the infringement of a plaintiff's rights which is occurring, how fast the plaintiff reacts to the infringement of its rights. It is not only as an example of the equitable doctrine of laches that delay is relevant on an application for an interlocutory injunction; it is also as an admission by conduct about how serious the infringement of the plaintiff's rights is. Thus, it is a matter which goes to the balance of convenience and not merely to the question of whether there is a serious question to be tried, which might be met by a defence of laches at the trial." 30 In my opinion, the unexplained failure of AMI to take legal proceedings to protect its business interests for such a long time after it became aware of the essentials of the Accreditation Scheme betokens either that the threat to its business posed by the Scheme is not so serious as it now says, or else that AMI's commercial interests were advanced by the delay. 31 I do not accept that refusal of an injunction will make it impossible for AMI to perform its existing contracts with players, as Mr Gross suggests. The terms of the Accreditation Scheme explicitly state that the Scheme does not apply to existing contracts between agents and players. AMI is, therefore, free to continue its activities under existing contracts unaffected by the Scheme. 32 As to the damage to its business and goodwill generally which AMI says it would suffer if the injunction is refused, there is no evidence of the extent to which AMI's business and goodwill is dependent upon its representation of rugby players. There is no evidence as to how many of its present rugby players have contracts which still have years to run, so that AMI's activities pursuant to those contracts are exempt from the Scheme, or how many of its existing contracts with players are due to expire shortly. In brief, there is no clear or persuasive evidence of the extent of the damage which might be occasioned to AMI if the injunction is refused. 33 Finally, it should be noted that although the injunction sought is expressed in negative terms, it is in truth a mandatory injunction: its effect is to require RUPA, the ARU and the Unions to deal with AMI as the agent for certain players. 34 As the Defendants correctly point out, there may be all kinds of legitimate reasons why RUPA, the ARU and the Unions do not wish to deal with AMI, reasons which have nothing to do with AMI's non-participation in the Accreditation Scheme. There is, after all, no present legal obligation binding RUPA, the ARU and the Unions to have any dealings with AMI at all. The injunction as sought, therefore, lacks utility in that it may produce no result whatever for AMI. 35 In all of these circumstances, in the exercise of discretion and on consideration of the balance of convenience, I decline to grant the interlocutory relief sought by AMI. Accordingly, AMI's application for interlocutory relief is dismissed. I will hear the parties as to costs. - oOo -

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