Australia: Sports Discipline: Porsche Driver Crashes At Court As Golfers Play Through

Last Updated: 8 April 2003
Article by Max Duthie

In June 2002, Jonathon Webb won the sixth round of the 2002 Australian Porsche Cup at Barbagallo Raceway in Western Australia. But before he could spray Moët & Chandon from the podium, the race stewards found Webb guilty of dangerous driving and disqualified him. This cost Webb the national championship.
Two weeks later, Webb appealed to the National Appeal Tribunal (NAT) of the Australian motor racing governing body, the Confederation of Australian Motor Sports (CAMS). His appeal was dismissed, so he issued proceedings in the New South Wales Supreme Court, seeking a declaration that the decisions of both the race stewards and the NAT be overturned and that he be reinstated as the race winner. CAMS opposed Webb's application and sought an order that the proceedings be stayed.

In November, Justice Dunford heard Webb's application and dismissed it. Why? Because Webb had not appealed to the Australian Motor Sport Appeal Court, and therefore he had failed to exhaust all of the remedies available to him from within the sport.1

On the face of it, the case simply confirms the application of a fairly clear provision in CAMS's National Competition Rules (NCR), which formed part of the contract between Webb and the governing body. Rule 57 of the NCR provided that each competitor in a CAMS event, each CAMS licence holder, and each member of a CAMS-affiliated club (Webb was in fact all three) agreed not to bring proceedings against CAMS in any circumstances until all remedies allowed by the NCR had been exhausted.

But, the case does raise the interesting issue of the courts' willingness to exercise their jurisdiction over sporting disputes, particularly when the relevant sports governing body has clear provisions that seek to oust the courts' jurisdiction, or make it subject to certain conditions, such as the exhaustion of internal remedies.

The resolution of sporting disputes: A private matter
It is common for the organisers of a sport to provide for some form of internal mechanism for the resolution of disputes with or between its constituents, whether such disputes relate to discipline (such as doping or misconduct), eligibility or entitlement to compete, or, to a lesser extent, the commercial exploitation of the sport. Such internal processes form part of the regulatory remit of a governing body and allow it to deal with disputes (particularly disciplinary matters) speedily, privately, with considerable flexibility, and by recourse to decision-makers who have knowledge and experience of the particular sport.

The courts in many jurisdictions have recognised that a sport's internal processes are, on the whole, the most appropriate system for adjudication on sporting issues and so have repeatedly expressed caution about judicial intervention. Not only that, where competitors and organisers have entered into binding agreements, providing for the resolution of disputes in a certain way, then the courts' starting point is that such agreements should be enforced unless there is a good reason not to do so. In McInnes v Onslow-Fane, where the English court held that there had been nothing that would warrant judicial intervention when a would-be boxing manager's application for a licence was refused by the British Boxing Board of Control, Vice Chancellor Megarry said:

'I think that the courts must be slow to allow any … obligation to be used as a means of bringing before the courts for review honest decisions of bodies exercising jurisdiction over sporting and other activities which those bodies are far better fitted to judge than the courts.'2

And in Australian Football League v Carlton Football Club, where the Court of Appeal in Victoria effectively refused to overturn an Australian Football League tribunal's finding that the Carlton player, Greg Williams, had unduly interfered with an umpire, Judge of Appeal Tadgell said:

'Examples are legion in which the courts have consistently refused to review on the merits decisions made by private or domestic tribunals. … For one thing, where the parties have agreed to have their disputes decided by domestic tribunals designated for the purpose, the courts have been in the habit of respecting the agreement … For another thing, the courts have been prepared to recognise that there are some kinds of dispute that are much better decided by non-lawyers or people who have a special knowledge of or expertise in the matters giving rise to the dispute.'3

The general position is that the courts will almost certainly refuse to hear any claim that a sports disciplinary tribunal simply came to a decision that was wrong on the merits. And it is virtually inconceivable that they would ever consider a claim that an on-field decision-maker made a wrong decision (eg if a match referee made a mistake when awarding a penalty or sending a player off).

So, if Jonathon Webb's claim had been that the stewards and then the NAT had considered his actions in the race and simply made the wrong decisions about his driving, and that therefore a judge should now look at the evidence of the race and decide whether or not Webb had in fact been driving dangerously, then such a claim would probably not survive an application for summary dismissal. However, Webb's argument was that the earlier decisions had not been reached fairly and in accordance with the relevant rules. In other words, it was not so much the merits of the decisions that were questioned, but the process through which the decisions were reached. In such cases, the courts' usual reluctance to intervene in the regulatory functions of private sports bodies has its limits.

So when will the courts intervene?
The circumstances in which the courts will hear a claim by a disgruntled competitor who has been disciplined by their governing body principally fall into four categories: where the governing body has breached an express rule; where it has applied an unlawful rule; where it has breached the implied obligation to act fairly; and where it has acted unreasonably or disproportionately.

Where the governing body has breached an express rule
The courts will hear cases where it is contended that a governing body has breached or failed to follow one of its own rules. So in Webb, say, if the only penalty permitted under the NCR had been a fine, then the stewards' decision to disqualify Webb would have been a breach of the rules by CAMS, and the courts would have been entitled to intervene to enforce the terms of the contract between the competitor and the governing body (subject to when the court challenge was made, see below). Similarly, where there is a dispute over the meaning of the rules, then the courts will have jurisdiction to adjudicate on this.

Where the governing body has applied an unlawful rule
The courts will hear a claim that the governing body through, say, its disciplinary tribunal, applied a rule that was invalid, and therefore unenforceable. If the substantive rule that a disciplined player is alleged to have breached was invalid, then the court might declare that the decision reached by the governing body should be reversed. In order to be found invalid, the rule might, for example:

  • have been adopted otherwise than in accordance with the governing body's constitutional procedure for rule adoption4
  • be an unreasonable restraint of trade (eg if it unreasonably restricted a player from transferring from one club to another club in a different state)5
  • contravene the competition law provisions of the Trade Practices Act 1974 (eg if it provided for the automatic disqualification of a cricketer for playing in an unsanctioned match)6, or
  • contravene anti-discrimination legislation.

In addition, if a procedural rule conflicts with the implied obligation to act fairly, then it will be unenforceable (eg if a rule provided that there should be no hearing in relation to certain offences, or worse, if it provided that the rules of natural justice did not apply).7

Where the governing body has breached the implied obligation to act fairly
The obligation to act fairly, or to observe the rules of natural justice, is necessarily something of a moving target, and while there are certain general principles, these will manifest themselves differently depending on the circumstances. So, it is not possible to say that a disciplinary tribunal must always, for example, have three adjudicators, allow legal representation, grant a right of appeal, give reasons for its decisions, or give 14 days' notice of a hearing. Rather, it must provide a procedure that as a whole is fair to the player being disciplined.

In broad terms, a disciplined player must have the chance to put his case to an unbiased tribunal acting in good faith. Where the disciplinary tribunal does not do this, because, say, it fails to give the player sufficient time and opportunity to review the evidence against him, challenge that evidence, adduce his own evidence and present his position (probably at an oral hearing if the player wishes); or fails to provide a tribunal that is free from bias or prejudice, then generally it will have breached its implied obligation and the courts will readily intervene.

The second of the two recent New South Wales cases, which was decided in December 2002, illustrates the point well. This case concerned Gary Cheer and Joe Kerr, both of whom are members of the Eastlakes Golf Club in Sydney. When the club captain, Greg Starr, put in a claim for travel expenses following a social function at the club, Cheer and Kerr publicly questioned the legitimacy of those expenses. As a result, Cheer and Kerr were disciplined by the club's board of directors and, following their respective hearings, they were consequently suspended from all playing and social privileges at the club for a period of three years.

The disciplinary procedure adopted by the club was questionable for a variety of reasons, but when Cheer and Kerr brought the case before Windeyer J in the New South Wales Supreme Court, the judge found that the wording of the disciplinary charges against the two golfers had been so unclear that there was widespread confusion as to what had to be proved to establish guilt. The judge concluded that, as a result, the process had not been fair: ' … the forms of charge … are so ambiguous and uncertain that proceedings on them produce a denial of natural justice'. As you might imagine, Joe Kerr and his friend had the last laugh and the suspensions were set aside.8

Where the governing body has acted unreasonably or disproportionately
The governing body must not act unreasonably, or penalise the disciplined player in a way that is disproportionate to the offence, and the courts will intervene and declare that any such action is invalid. Concluding that the governing body acted unreasonably or disproportionately might take the court close to a review of the governing body's decision on the merits of the case (ie deciding that on the facts the disciplinary tribunal came to the wrong decision). As we have seen above, the courts will not do this, and therefore there is a margin of appreciation: a tribunal's decision will not be overturned simply because it appears to be wrong, but rather only if it is a decision that no governing body, properly instructed on the law and the facts, could have made.

Can a governing body prevent the courts from ever intervening?
So, we can see that despite a general reluctance, the courts will intervene in disputes between players and disciplining bodies in the relatively small number of circumstances outlined above. But even this may be too much for a sports body that would rather keep each and every one of its disputes in-house, and therefore away from the scrutiny of the courts, the media and the public. The question, then, is can a governing body or a club adopt a rule that purports to prohibit the reference of any matter in dispute (including questions of law) to the courts?

In short, the answer is no. The courts will not allow their jurisdiction to be totally ousted as this is contrary to public policy,9 and any attempt to do this in the rules of a sport will be unenforceable.10

However, it is possible for a sports body to place limits on the courts' jurisdiction, thus making the courts' interventions even more infrequent and unlikely. It can do this in at least two ways:

  • by including in its rules a clause referring all disputes to arbitration
  • by specifying that the disciplined player must exhaust all of the sport's internal remedies before seeking redress in the courts.

As for the first point, by adopting a valid arbitration clause, a litigation-averse governing body can establish its internal disciplinary tribunal as the arbiter of fact (in almost every case the final arbiter of fact), and an external arbitration body as the final arbiter of law. The courts can be shut out completely. Well, almost. Even a valid arbitration clause will not totally oust the courts' jurisdiction. For example, if a governing body's rules referred all disputes (including those resulting from disciplinary action) to arbitration, then under Australian legislation, the courts would still retain the power, among other things, to terminate any arbitration proceedings for inordinate delay, to remove the arbitrator for misconduct and set aside his award, to determine whether the arbitrator is impartial, suitable or competent, and in certain circumstances to determine a preliminary point of law, to hear any appeal on a point of law, and to make any interlocutory orders, such as interim injunctions, which the arbitrator would not have power to make.11

As for the second point, it is not uncommon for the rules of governing bodies to state, like rule 57 of CAMS's NCR, that internal remedies must be exhausted before any recourse is made to the courts.12 On the whole, the courts will accept such a temporary ouster of jurisdiction, as doing so represents good law and good policy.13

Good law because where the rules provide for an internal appeal process, then an action brought in the courts by a disciplined player (say, for breach of the obligation of fairness) before pursuing an internal appeal ordinarily ought to fail for the simple reason that, prior to such an appeal, the governing body will not have breached any obligations it owes to the player. This follows from the principle that the governing body's obligation in a disciplinary matter is to produce a fair result overall (and this includes the appeal where the rules provide for one) and not to produce a fair result at each stage of the process.14

Good policy because insisting on the exhaustion of internal remedies will mean fewer disputes making it to the courts (since the internal appeal process might come up with the right decision), and a speedier resolution for those that do get there (if the issues have been helpfully distilled by the various stages of internal appeal).15

However, even where the rules state that internal remedies must be exhausted, it is clear from the judgment in Webb that the courts will have jurisdiction to hear a case before those remedies have been exhausted when 'it is necessary to do justice between the parties'. What is not clear is when that will be the case (the court in Webb did not find that justice required its intervention in that case, nor did it suggest the circumstances in which justice would require such intervention), and it is right and proper that this situation not be governed by hard rules but rather treated with a flexible, case-by-case approach.

In any event, the circumstances requiring intervention are likely to be limited. On the facts of Webb, it was argued that the remedy the driver did not exhaust (an appeal to the Australian Motor Sport Appeal Court) would have been 'futile and illusory' due to, among other things, there being limited grounds of appeal, the fact that there was no automatic right to appeal and that leave to appeal need be granted by the chairman of the Australian Motor Sport Appeal Court (which in fact had not been sought), and the absence of a transcript of the evidence given before the stewards or the National Appeal Tribunal. Justice Dunford considered that each of the arguments was not supported by the facts and/or would not render the appeal futile and illusory in any event.

Governing body rules that state that internal remedies must be exhausted will generally be upheld and enforced by the courts, unless the disciplined player can show the court that justice requires its early intervention. Justice might require intervention for example, because only the court can act with the necessary speed that justice requires, because the required remedies can only be granted by the court, or because the issues are numerous, complicated, and go further than those traditionally dealt with by governing bodies.16 If justice does not require the court's intervention, then the court will send a matter spinning back to the governing body, for the exhaustion of internal remedies. As Jonathon Webb knows all too well.

1 Webb v Confederation of Australian Motor Sport Ltd. (unreported, Supreme Court of New South Wales, Common Law Division, Dunford J, 14 November 2002).

2 McInnes v Onslow-Fane and Another [1978] 3 All ER 211.

3 Australian Football League and Others v Carlton Football Club and Another [1988] 2 VR 546.

4 One issue that appears not to have been considered and resolved by the courts is whether a governing body can enforce a new rule against a player (e.g., a rule that was adopted after the player formally agreed to be bound by the rules) by relying on another provision that purports to bind a player to the rules 'in force from time to time'. As a matter of contract law, this might be characterised as one party (the governing body) unilaterally varying the terms of an agreement with another party (the player) after the agreement was entered into, which of course would ordinarily be unenforceable. The authors of the relevant chapter in the new English text on sports law, Lewis and Taylor, think that this does not offend the principle of contractual certainty and that a 'dry' contractual analysis is in any event inapplicable; see Lewis and Taylor Sport: Law and Practice (2003, Butterworths), paragraph A2.57. It is by no means clear that the courts would share this view.

5 Buckley v Tutty (1971) 125 CLR 353.

6 Hughes v Western Australian Cricket Association Inc and Others (1986) 69 ALR 660.

7 Lord Denning MR in Enderby Town Football Club v Football Association [1971] Ch 591: 'If [the rules of a governing body] lay down a procedure which is contrary to the principles of natural justice, they are invalid …'

8 Cheer v Eastlakes Golf Club Limited/Kerr v Eastlakes Golf Club Limited (unreported, Supreme Court of New South Wales, Equity Division, Windeyer J, 20 December 2002). The comments of Windeyer J on the question of the court's suitability to decide the matter are poignant: 'As I stated a number of times during the hearing, this has been a most unfortunate matter which would have been much better determined by mediation from the point of view of all parties …'.

9 Scrutton LJ famously commented that 'there must be no Alsatia in England where the King's writ does not run', Czarnikow v Roth, Schmidt & Co [1922] 2 KB 478.

10 See, for example, Lee v The Showmen's Guild of Great Britain [1952] 2 QB 329; Enderby Town Football Club v Football Association [1971] Ch 591.

11 See sections 38-39, 42 and 44-47 of the Victorian Commercial Arbitration Act 1984, the provisions of which are largely replicated throughout Australia.

12 See, for example, paragraph 24.23 of the Australian Football League (AFL) Player Rules 2002: 'A person shall exercise his right of appeal under this Rule 24 [governing appeals from AFL tribunals] and have any appeal heard and determined by the Appeal Board before commencing any proceedings or becoming a party to any proceedings in a court of law.'

13 In fact, the courts will often insist that internal remedies must be exhausted even where the governing body's rules do not specifically provide for this. But this is not always the case: Webb referred the judge to a number of cases where there had been judicial intervention prior to the exhaustion of internal remedies, and Dunford J distinguished these on the basis that in each case there had been no express requirement for exhaustion (as there was in Webb).

14 See the judgments of Latham LJ and Mance LJ in Modahl v British Athletic Federation [2001] EWCA Civ 1447.

15 See Croatia Sydney Soccer Football Club Ltd v Soccer Australia Ltd. (unreported, Supreme Court of New South Wales, Equity Division, Einstein J, 23 September 1997), page 80, where Einstein J quotes from Aronson and Dyer, Judicial Review of Administrative Action, LBC, Sydney, 1996.

16 As they did in Croatia Sydney Soccer Football Club Ltd v Soccer Australia Ltd., where the fact that the internal appeal process had not been exhausted did not prevent the court from exercising its jurisdiction, because the issues 'went well beyond' merely the construction of the rule that had purportedly been breached and the merits of the matters considered by the initial tribunal. In fact, the numerous issues raised before the court also included claims that the tribunal had contravened statutory provisions on racial discrimination; that the governing body had sat in judgment when its own role was impugned; and that the tribunal had not acted fairly by being motivated by bias, failing to give warnings of the type of penalty that was eventually imposed, failing to give reasons for its decision, and failing to allow representations to be made to all members of the tribunal.

Max Duthie is a sports law litigator at Freehills, Melbourne, and is a member of the firm’s sports industry group. A former professional rugby player, Max previously worked for many years in the UK’s leading sports law practice, where he acted in disciplinary matters before the Football Association, the International Rugby Board, the Rugby Football Union, the Six Nations Committee, the European Rugby Cup, the British Lions, and the National Greyhound Racing Club.

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