HIGH COURT OF AUSTRALIA
Barwick C.J., McTiernan, Windeyer, Owen and Gibbs JJ.
BUCKLEY v. TUTTY
(1971) 125 CLR 353
13 December 1971
Restraint of Trade
Restraint of trade—Employment—Trade—Professional football player—Rules of football association—Retention and transfer of players—Retained player disabled from playing with other clubs—No maximum period for retention—Transfer fees—Player disabled from transferring to other club unless fee paid by new club—Whether restraint of trade—Whether reasonable—Declaration and injunction.
Decision
December 13.
THE COURT delivered the following written judgment: -
The respondent is a professional footballer. The appellants, Buckley and Stephen, are the president and secretary respectively of the N.S.W. Rugby Football League ("the League") and the appellant Humphreys is the secretary of Balmain District Rugby League Football Club ("the Balmain Club"). The respondent as plaintiff commenced in the Supreme Court of New South Wales in its equity jurisdiction proceedings against the appellants as defendants seeking certain declaratory orders. The suit was heard by three judges of the Supreme Court sitting together pursuant to s. 6 of the Equity Act, 1901 (N.S.W.), as amended, and the Court (1970) 92 WN (NSW) 329 ordered and declared as follows:
"1. Order that the defendants William George Buckley and
Kenneth Gibson Stephen be appointed to represent for the
purposes of this suit the class comprised of the members of
the New South Wales Rugby Football League other than
the plaintiff.
2. Order that the defendant Kevin Emery Humphreys be
appointed to represent for the purposes of this suit the class
comprised of the members of the Balmain District Rugby
League Football Club other than the plaintiff.
3. Declare that rr. 26, 27, r. 28 except for the last sentence
thereof, r. 30 (c), (f), (g), (h) and (i), and r. 105 (g) of the
Constitution, Standing Orders and Competition Rules of
the New South Wales Rugby Football League are void as
being in unreasonable restraint of trade.
4. Order that the defendants William George Buckley and
Kenneth Gibson Stephen and the members of the New South
Wales Rugby Football League other than the plaintiff be
restrained from acting upon or in any way enforcing, or
attempting to enforce the said Rules against or in any
respect so as to affect the plaintiff.
5. Order that the defendant Kevin Emery Humphreys and
the members of the Balmain District Rugby Football
League other than the plaintiff be restrained from acting
upon or in any way enforcing or attempting to enforce
the said Rules against or in any respect so as to affect the
plaintiff.
6. Order that the defendants pay the plaintiff's costs of this
suit."
From this decision the present appeal is brought by special leave. (at p363)
2. The League is an unincorporated voluntary association whose objects are to foster and control Rugby League football throughout the State of New South Wales and to co-operate with other States in the formation of a board of control for Rugby League football in Australia. It is the governing body for Rugby League football in New South Wales. It is constituted under an instrument published under the heading "Constitution and By-laws, Standing Orders and Competition Rules of the New South Wales Rugby Football League". In fact, the constitution, by-laws and competition rules all form part of the one instrument to which it will be convenient to refer as "the rules". There are separate Standing Orders which are of no relevance to the present case. (at p363)
3. By r. 1 (b) of the rules the League consists of a number of metropolitan district clubs ("District Clubs") and Junior Leagues, The Country Rugby Football League of New South Wales and its affiliated Leagues and the New South Wales Rugby League Referees' Association. The district clubs are unincorporated voluntary associations established within the districts of the metropolitan area whose boundaries are set out in the schedule to the rules. The principal object of each district club is to promote and maintain Rugby League football within its district and by r. 7 of the rules the funds of a district club are to be devoted to fostering the game of Rugby League football. The Balmain Club, which has a large membership, is one of the district clubs. In each district there is also a junior league which is subordinate to the district club. The rules, which are not a model of draftsmanship, leave curiously obscure the position regarding membership of the League. It is clear that the League may have life members (r. 12) but there does not appear to be any express provision enabling individual persons to join the League except as life members. Rule 10 which deals with applications for membership appears to relate to membership of a district club. However one of the facts agreed at the hearing in the Supreme Court was that the membership of the League is numerous and the appeal before us was conducted on the footing that the respondent is a member of the League. It may be that it is intended that each member of a district club should automatically become a member of the League and this intention may perhaps be discerned in r. 15 (which appears in a section of the rules headed "Establishment of District Clubs") which reads as follows:
"Every member, upon joining becomes entitled to all
privileges the League can impart in accordance with these
By-laws, and, as his joining is a voluntary act on his part, so
his acquiescence in these By-laws, or any that may be
hereafter enacted, is hereby implied, as well as his submission to
the restrictions enforced and penalties imposed by them." (at p364)
4. By r. 1 (c) of the rules the jurisdiction of the League is said to extend to all its constituent bodies and all members thereof, and the League is declared to be the final court of appeal in the State in all matters of dispute, misconduct or otherwise except where the rules otherwise provide. Power to supervise and control the activities of district clubs is given to the League by a number of provisions of the rules to some only of which it will be necessary to refer. (at p364)
5. The League derives revenue from the promotion and management of Rugby League football and possesses assets derived from such revenue and other sources. District clubs (including the Balmain Club) also have assets of their own. (at p364)
6. It appears that competition matches for senior players (i.e. players who have attained the age of sixteen years) are organized in two divisions, the more important of which is comprised of the first, second and third grades. There are in addition many junior matches. It was said in evidence that there are as many as 50,000 registered players in the metropolitan area of whom less than 1,000 receive payment. The evidence did not satisfactorily establish whether or not the figure of 50,000 included juniors and the figures can hardly be taken as accurate but it is clear that the majority of players of Rugby League football are amateurs who receive no payment for playing the game. On the other hand, the majority of the players in the first, second and third grades are professionals who do receive payment. However very few of these players engage full time in professional football and most of them are gainfully employed in other occupations as well. (at p364)
7. It is now necessary to turn to the rules of the League which deal with the registration, retention and transfer of players. All district clubs must register their members and must forward to the secretary of the League each year a copy of such registrations (r. 19). Each district club must also forward to the secretary of the League for registration a list of the playing members (r. 20). All players must be registered before taking part in any competition match (r. 20 (a)) and any club playing an unregistered player may lose the match in which he takes part (r. 20 (b)). A bona fide member of a club is one who after attaining the age of sixteen has signed a registration form and before he can play the secretary of his club must have received an acknowledgment of his registration from the secretary of the League (r. 24). A player who wilfully signs more than one registration form is liable to be dealt with by the Qualification and Permit Committee of the League (r. 25). Provision is made for the registration of amateur players (rr. 25 and 88) but we are concerned only with the position of professionals. Rules 26, 27 and 28 are as follows:
"26. Each Club shall forward to the League Secretary on
or before the 30th November of each year:
(a) A list of players on their register whom they wish to
retain.
(b) A list of players they are prepared to transfer. A copy
of this list must be sent by the League Secretary to
each Club in membership. When a player's name has
been inadvertently omitted from the retain or transfer
list, application may be made to the Qualification and
Permit Committee to have it restored, but such
application must be in the hands of the League
Secretary not later than five days after the printed
retain and transfer lists have been delivered to the
Clubs. Clubs may be fined a sum not exceeding 5 pounds
for each name omitted.
Players not placed on either the retain or transfer lists
are at liberty to sign for or transfer to any other Club.
27. (a) A player who is on the transfer list shall be equally
eligible to play for his Club as one on the retain list,
provided he is eligible under the rules.
(b) The terms of all transfers on the list shall be stated.
If a Club indicates that it is willing to negotiate the
transfer of a player whose name does not appear on the
transfer list of the Club, then the Club shall remove the
player's name from the retain list and place it on the
transfer list if requested to do so by the player
concerned or by any other Club or when instructed to do
so by the Qualification and Permit Committee.
(c) Clubs may approach and sign any player on the transfer
list without asking the consent of the Club on whose
list the name appears, but must first notify said Club
that they are prepared to pay the transfer fee stated
on such list.
(d) Clubs signing a player on the transfer list must at once
notify the Club on whose list his name appears, and
at the same time forward a cheque for the amount of
the transfer fee.
(e) Players whose names are on the transfer list, who are
unable to arrange their transfers on the terms named in
such list, may appeal to the Qualification and Permit
Committee, who shall have power to adjudicate.
(f) When a player is placed on the transfer list by the
Club he can be taken off at the Club's discretion
without asking permission of the player, but when a
player is placed on the transfer list at his own request
the Club must obtain his (the player's) permission
to remove him from the Transfer list.
(g) A player on the transfer list at his own request shall
receive 5% of the transfer fee.
A player on the transfer list at the Club's request
shall receive 10% of the transfer fee. In each case
in addition to the respective foregoing percentage
for service above 5 years the player shall receive 1% for
each year's service with a maximum of ten years'
service. Such player to receive only one bonus and
nothing for any subsequent transfer.
28. Any Club, member thereof, player, official or authorised
agent guilty, directly or indirectly, of inducing, or attempting
to induce, a bona fide player of another League Club to leave
the club for which he is registered, or any player so registered
who shall approach any other League without the permission
in writing from the Club to which he already belongs, shall
be deemed guilty of misconduct and shall be dealt with as the
Qualification and Permit Committee think fit. Any Club or
player offering or receiving a bonus or any inducement to or
from another Club, or the players of another Club, to win, lose
or draw a match shall be deemed guilty of misconduct and shall
be dealt with as hereinbefore provided."
All agreements between clubs and professional players must be in writing and except by mutual consent a club or player shall not be entitled to determine the agreement between them during a current season, without the consent of the Qualification and Permit Committee (r. 29). Rule 30 includes the following provisions:
". . .
(c) A player who signs as a professional player should
note carefully that he is in effect tied to his Club and
cannot subsequently sign for any other club unless he
is released - either by transfer or by the club agreeing
to strike his name from their list of registered players.
. . .
(f) Unless the Club agree in writing that the player's
name shall be removed from their list of registered
players at a stated time then the Club is entitled to
retain the player's name on its register indefinitely.
For example, in return for a sum of money the player
may agree to register as a professional for, say, six
seasons. At the expiration of this period the player
is not obliged to re-register as a professional with the
Club. The Club on the other hand is not then obliged
to 'strike-off' the player's name from their register
unless they have previously agreed, in writing, to do so.
(g) A player may agree to have trials with a Club for a
short period in the hope that he may be offered a
'signing-on' fee. If the terms eventually offered are
not acceptable he will then wish to have his registration
form cancelled. If during the trial period he wishes
to be paid for playing then he must register as a
professional. This will automatically tie him to the Club
unless he receives a declaration in writing from the
club to the effect that on such and such a date (or after
so many matches) his name will be 'struck-off' the
Club's register if he and the Club fail to agree on terms.
(h) A player who is on the transfer list of a club and is
dissatisfied with the fee placed on him may appeal
to the Qualification and Permit Committee for a
reduction.
(i) No player whose name is on the retained list of a
District Club shall be allowed to participate with
another Club in either Competition or Trial Fixtures
without permission from his previous Club."
The Qualification and Permit Committee (which in fact consists of men experienced in football and football administration) is given by r. 47 power to investigate and decide various questions including disputes with regard to transfer and transfer fees and its decision is final unless altered by the General Committee of the League. The General Committee has power to deal with complaints of misconduct and to "disqualify, suspend, fine or otherwise deal with any person, Club, League, Association or constituent body or any player or team" (r. 80). Power to deal with members for misconduct is also given (inter alia) to district clubs subject to control by the League (r. 81). By r. 105 (f), it is provided, inter alia, that any club playing an unqualified player may lose the matches in which such player took part. Clause 105 (g) reads as follows:
"No player member of a Club shall play with any other
Club without a clearance from the League and any such player
playing with such other Club and the Club playing such player
shall render himself and itself liable to disqualification and
or any other penalty that might be imposed."
If a player is granted a clearance or transfer he ceases to be a member of the club granting it (r. 12 (a)). The rules are not in all respects clear and easy to understand but those responsible for framing them may have thought that any difficulties that might arise could be resolved by the application of r. 100 which reads:
"In case any difference of opinion arises as to the meaning
of these By-laws, such meaning shall be decided by the General
Committee. Such decision shall be recorded and shall be
accepted as the true meaning of the By-law until otherwise
interpreted at a General Meeting after due notice of motion
has been given." (at p368)
8. Before the respondent attained the age of sixteen he was a member of the Leichhardt Wanderers Junior League Football Club, which is a junior club within the Balmain district. On 31st March 1964, he made application to join the Balmain Club and be registered as one of its players. After registration he played with the club during the 1964 playing season. On 20th August 1964, he entered into a written agreement with the Balmain Club whereby he agreed to play for that club during the 1965, 1966 and 1967 playing seasons and the club agreed to pay him 500 pounds per season over and above his earnings as a player. What those earnings were to be is not stated in the agreement. Clause 3 of this agreement read, inter alia:
"The player shall observe and be subject to all the Rules
Regulations and By-laws of the N.S.W. Rugby Football
League together with any amendments or additions thereto
which may be made from time to time during the currency
of this Agreement."
The respondent in fact played with the Balmain Club during those three seasons; he proved a successful player and during the 1966 season he played all matches except one in the first grade and in 1967 he played entirely in that grade and during that year was chosen to represent Australia in a test match against New Zealand. Prior to 30th November 1967 the Balmain Club placed the respondent's name on the retain list. The respondent in March 1968 applied to the Balmain Club for a clearance and to be placed on transfer and when this request was refused lodged an appeal to the League. The Qualification and Permit Committee commenced to hear his appeal on 8th April 1968 but before the hearing was completed the respondent withdrew the appeal and in May 1968 made an oral agreement to play for the Balmain Club during the 1968 playing season for an increased remuneration. It was common ground that the terms of the previous written agreement other than as to remuneration and as to the seasons covered by the agreement became implied terms of this oral agreement which therefore contained an implied term that the respondent should observe and be subject to the rules of the League. The respondent in fact played during the 1968 season, on all occasions, except one, in the first grade. In October 1968 he again applied to be placed on the transfer list but he was again placed on the retain list. He did not appeal but during the 1969 season did not play football for the Balmain Club or any other district club and derived no income from playing the sport. In May 1969 he commenced the present proceedings. In October 1969 the Balmain Club placed him on its retain list for the 1970 season. Again he did not appeal but pursued the litigation which had apparently been allowed to fall in abeyance. (at p369)
9. The respondent wishes to continue to play professional football but believes that he would be able to obtain from other district clubs terms more favourable than those which have been offered to him by the Balmain Club. The effect of the rules of the League, from a practical point of view, is that while the respondent remains on the retain list of the Balmain Club he cannot transfer to any other district club and no other district club can include him as a player in any of its teams withou incurring the sanctions that the League may apply, including the loss of any match in which he plays. Unless the Balmain Club agrees either to strike him off its list of registered players, or to his transfer, or the Qualification and Permit Committee allows an appeal against a refusal to place him on a transfer list, he will remain registered with that club indefinitely whether he plays with it or not. If the Balmain Club agrees to put him on a transfer list the amount of the transfer fee which it may fix will (subject to appeal to the Qualification and Permit Committee) be entirely within its discretion and will probably be determined having regard amongst other things to what the club considers it has spent on the respondent and to what it will cost to replace him. If it matters the evidence shows that between the introduction of the present transfer system on 26th October 1959 and 2nd April 1970, eighty players have appealed against the refusal of a club to place them on the transfer list and 163 have appealed against the amount of transfer fee placed on them; of these appeals, fifteen and ninety-two respectively were successful. One of the witnesses, Drewes, the chairman of the Qualification and Permit Committee, said that unless the committee formed the view that a player was being victimized he would have no chance of getting a transfer if the committee considered that he had any obligations to his club. If, for example, the club had spent money on training him, or had lent him money, and wished to retain him for his football ability his appeal would not be likely to succeed. It further appears that because of agreements that have been made with the governing bodies of the sport in Queensland (the only other State in Australia in which Rugby League is extensively played) New Zealand and England a player registered in New South Wales could not play with any club within the jurisdiction of those governing bodies unless he had first obtained a clearance from his club in New South Wales. (at p370)
10. The present by-laws were introduced in 1959 in place of rules that provided for persons who played for district clubs to have residential qualifications. Under the earlier system it was found that the strongest clubs would attract the best players, with the result that in some strong clubs players were forced to play in lower grades than their skills warranted. It was also found that some clubs were placed at a disadvantage because of poaching by others, and it is obvious enough that it must be difficult for a football team to retain its strength if its best members are from time to time enticed away. Moreover a player might, in reality or in appearance, change his residence to enable him to qualify for membership of another club, and this was regarded as an abuse. According to the evidence of the appellant Buckley the main justification for the present system is that it has allowed clubs to plan ahead and build up strong teams because of the continuity of their membership. This he said has had the further result that the game attracts more spectators and it has been possible with the increased finances available to improve the amenities of the sport. He also said that the present system allows a freer flow of players, and enables a player to move about without the resort to undercover methods. When asked to state the advantages of the system from the point of view of the player he replied:
"I suppose the nearest thing to his heart would be the
money he gets . . . Under this system a club has some claim
on a player's services and they can afford to pay him and to
look to the future; they can afford to go ahead with team
building with the knowledge that they will have a certain
number of players and they will have players to follow on.
They can adopt a team building and coaching programme. It
gives the player some sense of stability. He gets the advantage
of playing with players with more experience than himself,
who gradually bring him up to their standard. From the
overall benefit it makes his team stronger, you get a stronger
competition and stronger public support."
The main disadvantage from the point of view of the player was, he said, that he could not move about from club to club as he could previously. He added that under the present system there is not the same amount of movement of players from club to club as there was before. It is of course difficult to reconcile this statement with the witness's remarks about the freer flow of players to which we have just referred. However whether transfers are more or less numerous under the present system than before, it is clear that whether any particular player can transfer from one club to another lies entirely within the discretion of the club to which he belongs or, if an appeal is brought, within the discretion of the Qualification and Permit Committee. (at p371)
11. The argument on behalf of the appellants maintained that the declarations and orders made by the Supreme Court were erroneous for the following reasons:
1. The League and the Balmain Club were merely voluntary associations whose rules had no contractual effect and the Court therefore has no jurisdiction to entertain the respondent's application for relief;
2. The rules do not operate in restraint of trade;
3. If the rules do amount to a restraint of trade the restraint is no more than is reasonable; and
4. If the rules are in restraint of trade they are merely unenforceable and since the appellants have not threatened to enforce them no relief should be granted. (at p371)
12. It seems to us convenient first to consider whether the rules operate as a restraint of the respondent's trade, for that is the starting point of the respondent's case. It may well be said that a professional footballer, who habitually plays the game for reward, practises a trade within the ordinary meaning of that expression, but it is immaterial whether that is so, for it is now trite to repeat what Lord Atkin said in Hepworth Manufacturing Co. Ltd. v. Ryott (1920) 1 Ch 1, at p 26:
"It is a misapprehension to suggest that this doctrine is
confined merely to restraint of trade in any ordinary meaning
of the word 'trade'; it extends further than trade, it
undoubtedly extends to the exercise of a man's profession or
calling."
The doctrine regarding restraint of trade is not limited to any category of skilled occupations but applies to employment generally. The fact that football is a sport does not mean that a man paid to play football is not engaged in employment. "It may be sport to the amateur, but to a man who is paid for it and makes his living thereby it is his work": Walker v. Crystal Palace Football Club Ltd. (1910) 1 KB 87, at p 93 The position of a professional footballer vis-a-vis his club is that of employer and employee: Commissioner of Taxation (Cth) v. Maddalena (1971) 45 A.L.J.R. 426, at p. 427. Of course, if the club is an unincorporated association, and therefore not a legal entity, the employer will be the members comprising the association, or some officer or trustee therefor; but it is convenient, although not strictly accurate, to speak of the club as the employer. The written agreement made between the respondent and the Balmain Club on 20th August 1964 is indistinguishable from the agreement which was held in Commissioner of Taxation (Cth) v. Maddalena (1971) 45 ALJR 426 to be a contract of service. The conclusion we have reached in this case accords with the view accepted by Wilberforce J., as he then was, in Eastham v. Newcastle United Football Club Ltd. (1964) Ch 413 The professional footballer who was the plaintiff in that case was the fulltime salaried employee of the club (a company) which employed him but the fact that a man does not work full time does not mean that he is not in employment. Some attention was devoted in the course of argument to the question whether the League or the district clubs organized their activities for profit, and whether they were engaged in trade, but it is unnecessary to consider those questions. The professional footballers employed by the district clubs are engaged in trade within the meaning of the doctrine, whether or not the district clubs themselves and the League are engaged in trade. (at p372)
13. However it was submitted on behalf of the appellants that if professional footballers engage in trade the Rules do not operate in restraint of that trade but rather foster and encourage it. The League, so it was said, has promoted the sport and provided an organization within which opportunities are provided for players who wish to do so to turn their skill to profit and it is not a restraint of the trade of a player who wishes to remain a member of the League to require him to abide by its rules while he takes advantage of the benefits membership affords. Alternatively it was put that the League was analogous, not to an association of employers, but to a large corporation which conducts numerous enterprises and provides opportunities for many people to find employment, and which may (subject no doubt to any statutory restriction or to the determination of any industrial tribunal) impose rules that prevent the transfer of employees from one of its own branches or factories to another. We do not find it helpful to pursue analogies or to consider questions which do not fall for decision in the case before us. However, the suggested analogy of a corporation which is itself an employer is inappropriate to the present case. The League may sometimes employ footballers - e.g. those who play in State teams - but it is not the sole, or the most important, employer. One of the principal functions of the League is to control, either directly (as in the case of district clubs) or indirectly (through The Country Rugby Football League of New South Wales), the bodies who are employers of Rugby League professionals. The district clubs which provide employment for professional footballers are, in truth, in keen competition for the more skilful players. The rules however prevent professional players from making the most of the fact that there are clubs prepared to bid for their services. If valid, the rules prevent a professional player who is a member of one club, even if he is not contractually bound to play for it, from becoming employed as a professional footballer by another club, except with the concurrence of the former club or the Qualification and Permit Committee. This is plainly a fetter on the right of a player to seek and engage in employment. It is not to the point to say that the player may resign from the League. If he does resign he may perhaps obtain employment as a labourer or as a cricketer but he will not be able to obtain employment as a professional Rugby League footballer, either in New South Wales or in a number of other places. The rules in our opinion operate as a restraint of trade. In this respect also we respectfully agree with the decision in Eastham v. Newcastle United Football Club Ltd. (1964) Ch 413, and, for the reasons we have given, we consider that the decision in Elford v. Buckley (1969) 90 WN (Pt 1) (NSW) 756, that the rules of the League relating to the retention and transfer of players do not attract the doctrine of restraint of trade, was erroneous and should be overruled. (at p373)
14. We have not so far dealt with the separate question whether the restraint imposed by the rules is a valid one but before considering that matter we may revert to the argument of the appellants that the members of the League were not as such in any contractual relationship. The appellants urged most strongly that the present case comes within the decision of this Court in Cameron v. Hogan (1934) 51 CLR 358 In that case the plaintiff, a member of Parliament, brought an action against the executive officers of a political party, a voluntary association, claiming that he was a member of the party and that his purported exclusion therefrom and the refusal to submit his name for nomination for endorsement as the party's candidate at an election were wrongful. His action failed on the grounds that he had no such proprietary right or interest in the property of the association as entitled him to a declaration or an injunction in respect of his exclusion from the association and that the rules of the association did not operate to create enforceable contractual rights and duties between members, or between executive officers and members. We are not concerned to define the circumstances in which it is justifiable for the courts to intervene in the affairs of a voluntary association at the instance of a member who claims that his purported expulsion therefrom was wrongful or that a breach of the rules of the association has been committed and the only relevance of Cameron v. Hogan (1934) 51 CLR 358 to the present case is in relation to the question whether the rules of the League have contractual force as between its members. The majority of the Court in that case, speaking of the general character of the voluntary associations which are likely to be formed without property, and without giving to their members any civil right of a proprietary nature, said (1934) 51 CLR 358, at pp 370-371:
"They are for the most part bodies of persons who have
combined to further some common end or interest, which is
social, sporting, political, scientific, religious, artistic or
humanitarian in character, or otherwise stands apart from
private gain and material advantage. Such associations are
established upon a consensual basis, but, unless there were
some clear positive indication that the members contemplated
the creation of legal relations inter se, the rules adopted for
their governance would not be treated as amounting to an
enforceable contract."
(See also (1934) 51 CLR, at p 376 and per Starke J (1934) 51 CLR, at p 384) The League is not without property, although it may well be right to say that its rules do not give to its members any civil right of a proprietary nature. Whether the League is a body that stands apart from private gain and material advantage is doubtful, since the regulation of the activities of professional players and of the rewards that district clubs may obtain from transfer fees forms part of its functions. Whether or not what was said in Cameron v. Hogan (1934) 51 CLR 358 is applicable to the position of the League, the rules would not form part of a contract between the members if it were concluded that it was not intended that their provisions should give rise to enforceable legal relations. The provisions of r. 15 that every member upon joining becomes entitled to all the privileges the League can impart in accordance with the rules has been thought to support the conclusion that there is a contractual relation between the members of the League: See Hawick v. Flegg (1958) 75 WN (NSW) 255, at p 259; r. 18 of the former rules of the League which is there mentioned corresponded with the present r. 15. On the other hand, the provisions of r. 1 (c) which purport to make the League the final court of appeal in all matters of dispute, and the provisions of r. 98 which make the General Committee the sole interpreter of the rules, point in the opposite direction. Moreover, as we have pointed out, the rules leave in some obscurity the question who are the members of the League, and this circumstance makes it more difficult to conclude that it was intended that the rules should form part of a binding contract between, inter alios, the many thousands of persons who are members of the district clubs. It is however unnecessary to resolve in the present case the questions of difficulty that would arise if, e.g., plaintiffs suing on behalf of the League sought to enjoin an alleged member from committing a breach of the rules or if a person claiming to be a member sought damages for a breach of the contract said to be constituted by the rules. To succeed against the first and second appellants in the present case the respondent need not establish that the rules constituted a contract between the members of the League. Nor is it necessary to determine, for the purposes of the claims against the third appellant, whether the effect of the oral agreement made in May 1968 between the respondent and a representative of the Balmain Club was that the parties to that agreement were contractually bound to each other in terms of the rules notwithstanding that the playing season referred to in the agreement had expired. It is unnecessary to decide these matters because 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. In Dickson v. Pharmaceutical Society of Great Britain (1970) AC 403, at p 440, Lord Wilberforce said:
"It is of no materiality that members are not contractually
bound to observe the rule; to make a distinction between a
case such as the present and a case such as McEllistrim v.
Ballymacelligott Co-operative Agricultural and Diary Society
Ltd. (1919) AC 548
(where the rule had this effect) would be something of a
mockery. The 'doctrine' of restraint of trade has never been
limited to contractual arrangements: Lord Macnaghten
(1894) AC, at p 565
expressed it in the words 'all interference with individual
liberty of action in trading, and all restraints of trade . . . are
contrary to public policy,' putting in modern terms what had
been said by Lord Macclesfield in Mitchel v. Reynolds
(1711) 1 P Wms 181 (24 ER 347)
where he applied the 'doctrine' to grants or charters from the
Crown, customs and by-laws. Recently this House restated
this generality of principle by reference to the practical working
of the restraint, irrespective of its legal form (see Esso Petroleum
Co. Ltd. v. Harper's Garage (Stourport) Ltd.
(1968) AC 269 and cf White CJ
in Standard Oil Co. of New Jersey v. United States
(1951) 2 Lloyd's Rep 36 cited in
the Esso Case). There is, moreover, amply authority that the
'doctrine' applies outside the contractual field, viz. to Charters
(City of London Case (1610) 8 Co. Rep. 121b (77 E.R. 658),
ordinances of the nature of by-laws (Ipswich Tailors' Case
(1614) 11 Co Rep 53a (77 ER 1218),
by-laws made under a Charter (Gunmakers' Co. v. Fell
(1742) Willes 384 (125 ER 1227),
rules of Friendly Societies (Swaine v. Wilson
(1889) 24 QBD 252 )" (at p376)
15. The restraint of trade imposed by the rules will be contrary to public policy and invalid unless it is justified by the special circumstances of the case, within the principle laid down by Lord Macnaghten in Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd. (1894) AC 535, at p 565:
"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."
In Heron v. Port Huon Fruitgrowers' Co-operative Association Ltd. (1922) 30 CLR 315, at p 324, Knox C.J., Gavan Duffy and Starke JJ. said:
"'The real test' whether a contract is reasonable between
the parties 'is', in the language of Lord Birkenhead
(McEllistrim v. Ballymacelligott Co-operative Agricultural and
Dairy Society Limited (1919) AC, at p 563),
'does the restriction exceed what is
reasonably necessary for the protection of the covenantee?'
Do the articles 'impose upon the appellant a greater degree of
restraint than the reasonable protection of the respondents
requires'?"
The language in these, as in many of the leading authorities, was used in relation to a restraint imposed by means of a contract but it may be applied, mutatis mutandis, to other restraints. In Swaine v. Wilson (1889) 24 QBD, at p 261, where the rules of a friendly society were challenged on the ground that they were in restraint of trade, Lindley L.J. said (1889) 24 QBD, at p 261:
"The test of validity in a case like this is reasonableness
with reference to the real and legitimate objects of the society."
A similar test was stated in Dickson v. Pharmaceutical Society of Great Britain by Lord Reid (1970) AC, at p 421 and Lord Hodson (1970) AC, at p 430 Obviously this necessitates a consideration of the interests of the members of the society and in the present case the restraint in the rules will not be justified unless it is reasonably related to the objects of the League or of its members, including the district clubs. (at p377)
16. It is common ground that the onus of establishing circumstances which show that the restraint affords no more than adequate protection to the interests of the League and the district clubs lay on the appellants. It is a question of law whether the circumstances justify the restraint. (at p377)
17. 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. It is, of course, impossible to ensure by any means that the membership of a football club will remain for ever unchanged. Some players will cease to play for the club whatever the system. On the other hand, even if there were no restraint on the movement of players, not all players would go; some might not be fortunate enough to receive offers and others to whom offers were made might for one reason or another not wish to accept them. Moreover a club may ensure some continuity of membership by binding its professional players by contract to remain employed for a number of years and, if necessary, by staggering the periods for which different players are engaged. 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. It is not for a court to advise in advance what restraints would be reasonable; our function is only to consider whether the rules in their present form impose a greater restraint than is necessary for the adequate protection of the interests of the League and its members. In our opinion the rules now under consideration go beyond what is reasonable in two main respects. In the first place, they enable a club to prevent any professional who has played in one of its teams from playing with another club, notwithstanding that he has ceased to play for the club which retains him and no longer receives any remuneration from that club. There is no time limited for the exercise of this power; a club may retain a former player no matter how short the period of his employment with it may have been or how much time has elapsed since his engagement expired. A member may be retained even by a club which refuses to employ him, or, if he is employed, to select him to play in any team. We are not satisfied that the interests of the League or of the district clubs would be jeopardised if the rules did not contain provisions so drastic. (at p378)
18. A second objection to the rules in their present form is in relation to the question of transfer fees. Although a club does not wish to retain a player, and is prepared to see him go to another club, it may fix a transfer fee, most of which goes to the club itself, although it may be quite unrelated to any benefit which the player has received from his membership of or association with the club. If a man has proved himself to be a valuable player his club can fix a substantial fee which may adversely affect his chance of obtaining a new engagement and may also effect the amount he is likely to be offered by another club as a joining fee. The transfer fee not only may prevent a player from reaping the financial rewards of his own skill but it may impede him in obtaining new employment. It is no answer to say that the transfer fee may be fixed by reference to what it would cost the club to obtain another player equally skilful, for this is only another way of saying that an employer may restrain an employee from working elsewhere unless he is compensated for the loss of his services. In this respect also the restraint imposed by the rules goes further than is necessary to protect the reasonable interests of the League and its members. (at p378)
19. We must refer briefly to some further matters mentioned by counsel for the appellants, although they do not affect the conclusion at which we have arrived. Most persons who play football under the control of the League are amateurs, but that circumstance is not material when what is under consideration is the validity of the rules as far as they affect professionals. The players may take part in the election of delegates to the General Committee of the League, but that is quite immaterial to the question whether the rules of the League are reasonable. A player may, by a written agreement made at the time of his engagement, contractually bind a district club to release him, without fee, at a stipulated time; however an existing restraint cannot be said to be reasonable on the ground that a person in fact subject to it might not have been so subject if he had been well enough advised and in a sufficiently strong bargaining position to act on the advice. 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. (at p379)
20. We hold that the rules impose upon the respondent a restraint of trade which is unreasonable and unjustified. (at p379)
21. The final submission of the appellants was that if the rules are in unreasonable restraint of trade the result is merely that the law will not lend its aid to enforce them, and the respondent will not be entitled to prevent the League and the district clubs from continuing to observe them voluntarily if they wish to do so. Therefore, it was said, the respondent is not entitled to any relief, and certainly not to an injunction. (at p379)
22. The terminology used by courts of high authority to describe the consequence of holding that a contract is in unreasonable restraint of trade has not always been uniform and precise. Such contracts have often been described as illegal (e.g. Swaine v. Wilson (1889) 24 QBD 252; McEllistrim v. Ballymacelligott Co-operative Agricultural and Dairy Society Ltd. (1919) AC 548; Lindner v Murdock's Garage (1950) 83 CLR 628, at pp 640, 653), but they are not illegal in the sense that to enter into them is to commit an offence or an actionable wrong (Mogul Steamship Co. Ltd. v. McGregor Gow &Co. (1892) AC 25, at pp 39, 42, 46-47, 51) It was said by Lord Macnaghten in the Nordenfelt Case (1894) AC, at p 565, and it has frequently been repeated, that contracts in unreasonable restraint of trade are void, but according to Lord Atkinson in Thompson v. New South Wales Branch of the British Medical Association (1924) AC 764, at p 769, thisinvolves a misuse of language. In Joseph Evans &Co., Ltd. v. Heathcote (1918) 1 KB 418, at p 431, Bankes LJ said that contracts of this kind are more properly spoken of as contracts which the law will not enforce. There is much authority to support this view, and some of it may appear at first sight to support the appellants' contentions. In Attorney-General (Cth) v. Adelaide Steamship Co. Ltd. (1913) AC 781, at p 797, Lord Parker of Waddington said:
"The parties to such a contract, even if unenforceable,
were always at liberty to act on it in the manner agreed."
And in Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd. (1968) AC 269, at p 297, Lord Reid said:
"One must always bear in mind that an agreement in
restraint of trade is not generally unlawful if the parties choose
to abide by it: it is only unenforceable if a party chooses not
to abide by it."
However, in these passages their Lordships were speaking of a contractual restraint which all parties to the contract were willing to observe. To say that a restraint is unenforceable does not mean that the law will simply ignore its existence or that the only remedy of a person upon whom it is sought to be imposed is to defend such legal proceedings as are brought to enforce it. The law treats unreasonable restraints as unenforceable because it is contrary to the public welfare that a man should unreasonably be prevented from earning his living in whatever lawful way he chooses and that the public should unreasonably be deprived of the services of a man prepared to engage in employment. It would indeed be a strange weakness in the law if it afforded no protection to a person who was against his will subjected in fact to an unreasonable restraint of trade. However, it seems to us now to be established that in an appropriate case a member of an association may obtain a declaration that a rule of the association which affects him is unreasonably in restraint of trade and an injunction to prevent the rule being applied against him. In McEllistrim v. Ballymacelligott Co-operative Agricultural and Dairy Society Ltd. (1919) AC 548, the appellant was a shareholder in the respondent society, whose rules bound the society and its members as if each had covenanted to observe the same. The House of Lords held that one of the rules of the society was unreasonably in restraint of trade, and therefore ultra vires. It was declared that the offending rule was illegal as in restraint of trade and ultra vires the society, and an injunction was issued restraining the respondent from acting upon or putting in force the said rule against the appellant. In Dickson v. Pharmaceutical Society of Great Britain (1970) AC 403 the restraint contained in the society's rules was involuntary and not contractual, but this was not regarded as material, and similar orders were made. In that case Lord Upjohn said (1970) AC, at p 433:
"A person whose freedom of action is challenged can always
come to the court to have his rights and position clarified,
subject always, of course, to the right of the court in exercise
of its judicial discretion to refuse relief in the circumstances of
the case. In the judicial exercise of this discretion the court
may declare the rights of the parties and by way of ancillary
relief grant injunctions, and so on."
Since it is common ground that the respondent is a member both of the League and of the Balmain Club, those two cases are sufficient authority for the view that the Supreme Court had power to make a declaration and grant an injunction in the present case. However, since we have said that we regard the question, what persons are members of the League, as not altogether clear, we would add that even if the respondent had been a stranger to those organizations he would have had a right to relief. In Eastham v. Newcastle United Football Club Ltd. (1964) Ch 413, the plaintiff was not (except for certain limited purposes) a member of, and he was not in contractual relationship with, two of the defendants, the association and the league, but he was granted a declaration that certain rules of those bodies were in unreasonable restraint of trade and ultra vires. Wilberforce J., as he then was, said (1964) Ch, at p 446:
"If I am right so far, then the court has jurisdiction to
grant a declaratory judgment, not only against the employer
who is in contractual relationship with the employee, but also
against the association of employers whose rules or regulations
place an unjustifiable restraint on his liberty of employment."
It does not appear that an injunction was claimed in that case but in Nagle v. Feilden (1966) 2 QB 633, an action was brought by a female trainer of racehorses against persons representing the Jockey Club, claiming inter alia a declaration that the practice of the stewards in refusing a trainer's licence to any woman was void as against public policy and an injunction. The Court of Appeal allowed an appeal against an order striking out the statement of claim and held that although there was no contractual relationship, and no question that the plaintiff was a member of the Jockey Club, it was at least arguable that the court might grant the relief sought, because the courts have power to intervene to protect a person's right to work. We respectfully agree with those decisions. (at p381)
23. In the present case, in our opinion, the respondent had a sufficient interest to obtain the relief which the Supreme Court granted to him. His right to work was affected by the rules and although the appellants disclaimed any intention of attempting to enforce the rules against him by legal process this was mere sophistry; it was not necessary to invoke the processes of the law to compel the respondent to observe the rules, although it was necessary for the respondent to resort to the courts to escape from their restraint. It is clear from the whole conduct of the case that the League intends to maintain the present system of retention and transfer if it lawfully may, and to apply its rules on those subjects to the respondent, as to every other professional player. There is no doubt also that the Balmain Club seeks to retain the respondent under the rules. There is therefore a real dispute between the parties, and the respondent has an important interest to protect by obtaining a declaration and an injunction. In our opinion, it was appropriate for the Supreme Court in the exercise of its discretion to grant the relief that it did. However, as we have said, the Supreme Court directed the injunction (a) to the appellants Buckley and Stephen and the members of the League other than the respondent and (b) to the appellant Humphreys and the members of the Balmain Club other than the respondent. Mr. Deane in his argument on behalf of the appellants informed us that if the injunction were directed only to Buckley, Stephen and Humphreys, the League and the Balmain Club would observe its provisions as though it had been directed to all of their members. We need not consider whether it was right to direct the injunction to all the members of the League and of the Balmain Club, since we would consider it more convenient in all the circumstances of the case that the injunction should be directed only to the three named appellants. (at p382)
24. Subject to this minor variation in the form of the order, the appeal will be dismissed. (at p382)
Orders
Vary order of the Supreme Court by deleting the words "and the members of the New South Wales Rugby Football League other than the Plaintiff" where they appear before the words "be restrained" and the words "and the members of the Balmain District Rugby Football League other than the Plaintiff" where they appear before the words "be restrained".
Otherwise appeal dismissed with costs.