Sport Law
Some big
contemporary
themes!
Rick Sarre - University of South Australia
Officer Plod runs into his first
“grey” Rick
area
of the law.
Sarre - University of South Australia
1.
2.
3.
4.
5.
6.
7.
8.
Protection of committee
members by limited liability
Culture of compliance
Restraint of trade
Ambush marketing
Court of Arbitration for Sport
Breach of the duty of care
Criminal liability
Illicit drugs and shaming
Rick Sarre - University of South Australia
1. Limitations on committee
protection
Limited liability protection has to be
earned. Committee members can be
stripped of the protection offered by
incorporation if they fail to fulfil their
obligations, e.g. a failure to lodge
prescribed notices, a failure to hold an
AGM, illegal activity, or attempting to
make profits for members, or trading
whilst insolvent.
Rick Sarre - University of South Australia
Committee members
Statewide Tobacco v Morley (1990).
A director took no part in management
of the company. It continued to incur
debts and had no proper accounting
system.
Held: the director was liable to a third
party for outstanding debts even though
he did not take an active interest in
management.
Rick Sarre - University of South Australia
‘Innocent’ committee members
Similarly, an innocent member of a
committee could be vulnerable to such
debts. A creditor would have to show not
only breaches of the law such as seeking
funds from the public, or trading while
insolvent, or attempting to make a
pecuniary profit for committee members,
but also that innocent committee
members were (or should have been)
aware of the misdeeds.
Rick Sarre - University of South Australia
2. Culture of compliance
There is a general shift in regulatory circles
away from requiring direct governmental
intervention in the affairs of clubs and
associations, towards self-regulation and the
development of internal systems that have the
effect of rooting out problematic practices.
Associations that do it well are less likely to
be bothered by the regulators. Is that
common?
Rick Sarre - University of South Australia
2006 review by the Institute of
Chartered Accountants
Disclosures in Annual Reports
86% of sport NFPs failed to include any
future-looking information in ARs.
65% of sport NFPs annual reports failed to
provide a transparent understanding of what
the body was trying to achieve.
79% failed to provide a clear statement of
objectives and funding plans.
Rick Sarre - University of South Australia
Poor practices of sport NFPs
75% failed to include Governance Statements
in their Annual Reports.
68% received grant income, but only 42% of
recipients disclosed their “economic
dependence” as required by the Australian
Accounting Standards Board.
See www.charteredaccountants.com.au
Rick Sarre - University of South Australia
3. Restraint of trade and the draft
and salary cap systems
Many professional codes (e.g. AFL) operate
with ‘drafting’ rules and salary caps.
 The draft and salary caps are designed to
even up competition so that games are less
predictable, hence more interest, hence more
advertising, hence more money for players.
 Based upon American ‘socialist’ policy!

Rick Sarre - University of South Australia
Trade Practices Act and AFL rules
Prima
facie the salary cap system,
and the draft, are unenforceable
‘restraints of trade’ and illegal
restrictive agreements
So the players are asked to sign
away any challenges …
Rick Sarre - University of South Australia
AFL rules
Clause 2.6 ‘The player shall:Obey all Rules and Regulations,
resolutions and determinations of the
club and abide by the Memorandum
and Articles of Association of the
club.’
Rick Sarre - University of South Australia
AFL rules
Clause 7: ‘… It is hereby acknowledged by
the player that the Rules restrict the freedom
of players to transfer from one club to
another, restrict the total football payments
that the club may give to or apply for the
benefit of its player and provide for the
players and their associates.’
Rick Sarre - University of South Australia
AFL rules
Very
clever
Never challenged
Never likely to be while the players
reap the rewards.
Given exemption by the ACCC because
the purpose is to encourage competition
But European soccer has no such system
and maintains a healthy competition.
Rick Sarre - University of South Australia
Sonny Bill Williams
Disappears to France
Implicitly says “catch me if you can!”
Settlement which has French paying
$750,000 to the NRL club.
But a big shock for those who thought
that the law would enforce the contract
No guarantee that the salary cap system
would hold up in the face of a massive
challenge.
Rick Sarre - University of South Australia
4. Unfairness in business
practice: ‘Ambush’ marketing
Not illegal. Involves a situation where a sponsor
of an organisation or an event finds that its
advertising advantage has been diluted by some
action of a major competitor undertaken at far
less expense.
Seeks to gain advantage by clever positioning.
(Qantas and Ansett ahead of the 2000 Olympics)
Rick Sarre - University of South Australia
Ambush marketing
Australian Grand Prix (Formula One)
Regulations 2006 Australian Grands Prix Act
1994 (Vic)
An example of legislation that attempts to
prevent ambush marketing by controlling the
sale of items and environment at any of the
Grands Prix. Enforcement provisions provide
the police and ‘authorised persons’ with
extensive powers of enforcement.
Rick Sarre - University of South Australia
Ambush marketing
So governments (and private
events groups) are constantly and
actively seeking to beat off any
ambush so they can safely and
with confidence guarantee that
any sponsor will get their moneys
worth!
Rick Sarre - University of South Australia
5. Appeals to Court of
Arbitration for Sport (CAS)
World wide, the International Court
of Arbitration for Sport has
enormous support and credibility.
1984 created. 1994 went
international and emphasised
mediation as primary tool.
Rick Sarre - University of South Australia
Raguz case 2000
Angela Raguz appealed against her non-selection in judo
(an AOC decision), meaning Rebecca Sullivan would
represent Australia in the Sydney Olympics.
CAS upheld the decision of the AOC.
24 August 2000, NSW C of A decided it had no
jurisdiction to hear the appeal. Thus agreements between
organising committees and candidates for selection are
binding and are unlikely to be challenged successfully in
the courts.
Rick Sarre - University of South Australia
6. Breach of the duty of care
Many cases where the courts have
made it clear that for plaintiffs to win
a negligence case they have to show
that the institution has failed to
address an obvious deficiency.
If they have everything in place, they
will defeat most claims.
Rick Sarre - University of South Australia
Australian Capital Territory Schools
Authority v El Sheik (2000 High Court)
Boy kicked at school by another boy … had a
congenital condition that led to severe injuries.
Parents sued school for failure to supervise.
 Awarded $700,000 by ACT Supreme Court.
 On appeal to Full Federal Court, the decision was
overturned.
 Leave to appeal to High Court rejected.
Rick Sarre - University of South Australia
El Sheik
“Unless an educational authority was prepared to
impose a degree of regimentation that would be likely
to provoke adverse community reaction, it would be
impossible for it to prevent such incidents occurring.
An educational authority can, and should, prevent
rough `horseplay' incidents going on for a significant
time or escalating into a level of violence that is likely,
under normal circumstances, to constitute a danger to
life or limb: but it seems to me that is all it can do.”
(per Wilcox J para 25.)
Rick Sarre - University of South Australia
St Anthony’s Primary School v Hadba
(2005)
Child injured when dragged off flying fox. Defendant
school showed that there was:
 A “hands off” rule on the flying fox
 No past problems
 Great speed with which events took place
 Appropriate behaviour of the children prior to the
incident
Held: no liability
Rick Sarre - University of South Australia
Falvo v Australian Oztag Sports Association
[2006] NSWCA 17.
Falvo injured his knee in a game of
touch footy when he slipped on a
bare patch of grass. Oztag argued
that the game was a “dangerous
recreational activity” within the
meaning of the Civil Liability Act
2002 (NSW). The trial judge
agreed.
Rick Sarre - University of South Australia
Falvo v Australian Oztag Sports Association
[2006] NSWCA 17.
But, on appeal, the NSW Court of Appeal
rejected the trial judge’s interpretation, saying
that the game did not involve a “significant
risk of physical harm” (which is the test).
Moreover, the NSWCA found that the bare
grass had not caused the accident. It was
caused by the player changing his direction
while running at pace. So Falvo was defeated
by his inability to show causation.
Rick Sarre - University of South Australia
Haris v Bulldogs RL Club [2006] NSWCA 53.
Spectator Mr Haris lost an eye when a flare/firework
went off in the crowd on the Homebush terrace.
Was the Club in breach of its duty of care to a
spectator?
Civil Liability Act 2002 (NSW) protects grounds
owners and managers. They are not negligent
UNLESS
1. The risk was foreseeable
2. The risk was not insignificant
3. A reasonable person would have taken those
precautions.
Rick Sarre - University of South Australia
Haris v Bulldogs RL Club [2006] NSWCA 53.
Held: Answer YES to all. The club
HAD taken sufficient precautions.
The Bulldogs did whatever a
reasonable club should have done
to control the crowd and police it.
THUS: Not liable.
Rick Sarre - University of South Australia
7. Criminal negligence
R v Clarke [2007] An employee was charged
with causing grievous bodily harm by criminal
negligence after an accident that left the victim brain
damaged after falling from a flying fox. It was
Clarke’s duty to ensure that the woman was properly
secured into her harness before she left the platform.
Her harness opened and she was left hanging for a
few seconds 20 metres in the air before losing her
grip and plunging to the ground below.
Rick Sarre - University of South Australia
R v Clarke (Qld C of Appeal)
A
jury in the District Court found the
accused guilty of criminal negligence and he
was sentenced to two years and eight months
imprisonment.
He appealed on a number of grounds,
including the severity of the penalty. The
Court of Appeal unanimously rejected the
appeal.
Rick Sarre - University of South Australia
8. Illicit drugs
AFL v The Age [2006] VSC 308
3 players were called before the AFL
for breach of the illicit drugs policy
(“3 strikes” policy and no
“shaming”). The Age newspaper
wanted to publish their names.
Rick Sarre - University of South Australia
Victorian Supreme Court
Held: The Court declared that the
identity of any AFL player who has
tested positive or who is deemed to have
tested positive on the first or second
occasion under the AFL Illicit Drugs
Policy is private information that is
confidential in nature.
Rick Sarre - University of South Australia
AFL v Age
The AFL’s policies designed to
eliminate drugs were vindicated.
The policy is designed to discourage
exposure and encourage
rehabilitation in the event a person is
seeking help. Public interest in
improving lives, not in exposure.
Rick Sarre - University of South Australia
Conclusion
Never a dull moment in
the world of sport and
the law.
Rick Sarre - University of South Australia
Mr Osborne, may I be excused?
Rick Sarre is
- University
My brain
full of South Australia