Australia: Knuckles Connolly dusts up the QRU with a handshake: The importance of documentation and procedures in the sports industry

Last Updated: 18 September 2017
Article by Jon Erbacher and Rozelle Bothma

On 1 September 2017, Justice Dearden of the District Court of Queensland delivered judgment in the matter of Connolly v Queensland Rugby Union Ltd [2017] QDC 221.

John "Knuckles" Connolly, former head coach of the Reds and the Wallabies, sued Queensland Rugby Union for $159,000 in respect of consultancy fees which would have accrued under a contract for the provision of coaching consultancy services to the Reds during the 2015 and 2016 Super Rugby seasons, had the contract not been prematurely terminated by the QRU.

As Connolly had consulted to the Reds for only six weeks before his services were terminated by the QRU, the Court awarded a total of $150,000 in damages, representing the fees which would have been payable to Connolly during the balance of the term of the contract.

Notwithstanding that the QRU had prepared three separate written contracts in respect of the consultancy services which Connolly was to provide (all of which had been signed, albeit not by both parties), the Court found that the only legally binding agreement between the parties was a "handshake" deal made during a 90-second telephone call between Connolly and Rod McCall, then-Chairman of the QRU, on 9 May 2015 whilst Connolly was doing his grocery shopping at Woolworths.

Facts

  1. The game plan - 8 May 2015

    • The warning signs for the Reds were apparent from the outset of the game on 8 May 2015 as the Crusaders scored their first try after just two minutes of play. The end result was a whitewash, with the hapless Reds being thumped by the Crusaders by more than 40 points.
    • McCall attended the game with Jim Carmichael, then-CEO of the QRU. After the game, McCall described the Reds' performance as "diabolical". McCall and Carmichael conferred as to the merits of bringing in Connolly as a coaching consultant to assist the Reds. McCall had known Connolly for a long time, since he was McCall's coach and the pair had remained friends and kept in touch since.
    • McCall and Carmichael decided to appoint Connolly as a coaching consultant to "take some heat off the team's performance". The plan was for Connolly to start as soon as possible, and to make a media announcement to that effect.
    • In fact, on the day before the game, 7 May 2015, a draft press release had been pre-prepared and exchanged between the QRU and Reds media managers, referring to Connolly joining "the Reds' coaching staff" and noting that he would "work with the Reds for the remainder of the 2015 Super Rugby season", and later that day revised to refer to Connolly joining the "coaching staff as a consultant" who would be "contracted to the Reds for the remainder of the 2015 and 2016 seasons."
    • So the press release was ready, and all that needed to be done was to obtain Connolly's agreement to take on the job.

  2. The telephone call - 9 May 2015

    • Connolly recalled a brief telephone call that he received from McCall whilst he was shopping at Woolworths. During that conversation, McCall asked Connolly if he would "go on board as a consultant, $3,000 a week" and was told by McCall that the appointment would be "until the end of the next Super Rugby season."
    • McCall's evidence differed from Connolly's. His version of events was that he had not given any iron-clad guarantee as to the term of the deal, and he said to Connolly "...you'll be contracted like everyone else" (said to be a reference to QRU's standard employment contract which had an early termination clause).
    • Over the next few hours, the draft press release was passed back and forth between the QRU and Reds media managers, Carmichael, McCall and Sam Cordingley, then-General Manager High Performance of the QRU.
    • The press release was sent to Connolly, and then provided to media later that day, with Connolly to start work on the following Monday.

    Was the telephone conversation binding?

    The Court preferred Connolly's version of events in relation to the telephone conversation over that of McCall. The Court found that there was a legally binding agreement on the following terms:

    • Connolly was contracted by the QRU as a coaching consultant;
    • Connolly's fee for his services was $3,000 per week;
    • the duration of the agreement was from the time of the telephone conversation until the end of the 2016 Super Rugby Season;
    • there was no provision for early termination by the QRU.

  3. The employment contract

    • Following the press release, a draft employment contract was prepared by the payroll officer at the QRU, upon instruction from then-CFO of the QRU, Ashley Selwood, who had been instructed by Carmichael to prepare the contract. The employment contract was prepared from a standard template and included the following:

      • a "salary of $156,000 per annum (or $3,000 per week for the period of the contract)";
      • a term "commencing 11 May 2015 and terminating one week after the Reds' final game in Super Rugby competition in 2016";
      • a clause which entitled the QRU to terminate the agreement upon 60 days' notice.

    • Cordingley (another former rugby player who had played for the Reds and knew Connolly) was tasked with sending the draft employment contract to Connolly, which he did on 14 May 2015.
    • Connolly subsequently signed and returned the employment contact to the QRU. Connolly gave evidence that, after signing and returning the employment contract to the QRU, he telephoned Selwood, who Connolly had known for some 20 years since his days of coaching the Reds. Connolly said to Selwood "Listen, the contract I put back in is the wrong contract. We've agreed to a consultancy, not an employment contract." Connolly explained in evidence that he signed the employment contract "based out of loyalty and getting on with the job and trust".
    • The employment contract was not signed on behalf of the QRU.

    Was the employment contract binding?

    The Court found that the employment contract, even if operative upon Connolly's signature alone, came to an end and was subsumed because Connolly was clearly engaged as a contractor (as opposed to an employee) for a defined term and for a weekly fee, and the employment contract was unsigned by the QRU. Also, the QRU had not undertaken any practical steps to put the employment contract into operation – for example, by obtaining the relevant tax, banking or superannuation information to process Connolly's pay as an employee. As such, neither party, by conduct or intention, entered into a legally binding agreement consistent with the terms of the employment contract.

  4. The contractor agreement

    • Following the conversation between Selwood and Connolly, a contractor agreement was prepared by the QRU and forwarded to Cordingley, who sent it on to Connolly on 2 June 2015. The contractor agreement was also prepared from a template and contained a clause which entitled the QRU to terminate the agreement upon 30 days' notice.
    • The draft contractor agreement was subsequently signed by Connolly and returned to the QRU. Connolly gave evidence that he, again, telephoned Selwood and said "Mate, get the whiteout out, because there was no agreement with the termination clauses".
    • Relevantly, the contractor agreement also included a clause providing that "This agreement starts the date that it is signed by both parties..."
    • The contractor agreement was not signed on behalf of the QRU.

    Was the first contractor agreement binding?

    The Court found that the QRU's failure to execute the contractor agreement, coupled with the provision of a second contractor agreement (referred to below), clearly indicated that despite Connolly's signature, the parties did not intend to be bound by that document and it was not legally binding upon them.

  5. The second contractor agreement

    • Following a conversation between Selwood and Carmichael on 7 July 2015 in relation to the termination clause in the initial contractor agreement, a second contractor agreement was prepared by the QRU and forwarded to Connolly. The second contractor agreement was essentially on the same terms as the first contractor agreement, but contained a 60 day termination clause.
    • Connolly did not sign the second contractor agreement, and gave evidence that he telephoned Selwood and said "Actually, this is all over the shop. This is not what I agreed to." There were no further discussions about the content of the agreement.
    • The second contractor agreement was signed by the QRU (although not witnessed or dated).

    Was the second contractor agreement binding?

    The Court found that the second contractor agreement was not legally binding on either Connolly or the QRU, whether by conduct, intention or the signature of both parties.

Outcome

The only legally binding agreement between Connolly and the QRU was the agreement arising from the telephone conversation between Connolly and McCall on 9 May 2015. As the terms of that agreement did not incorporate any provision for the QRU to terminate the agreement prior to the expiry of the agreed term, the QRU's termination of the agreement was found to be unlawful and constituted a repudiation of the agreement by the QRU. The QRU's repudiation of the agreement resulted in Connolly suffering loss and damage in the amount of $3,000 per week for the balance of the term of the agreement.

Accordingly, the QRU was ordered to pay Connolly $150,000 plus costs and interest.

Consideration

The reality for participants in the sports industry is that deals will often be done on the basis of an initial informal arrangement, whether arising from a telephone discussion, a meeting, a text message or by email. That is particularly the case where:

  • participants in the industry (including coaches, players and those involved in the administration of sport) are often well-known to each other, whether socially, in business or both; and
  • the pressures of the sports industry (particularly in professional sport) may require decisions to be made quickly, in order to meet the expectations of stakeholders, supporters and the media.

In the present scenario, an agreement which ultimately cost the QRU dearly was the product of a decision which was made in haste and under pressure, followed by a 90 second conversation between two rugby union stalwarts with personal and professional history spanning more than 20 years. They were mates, who trusted and were loyal to each other. They'd "shared beers, rogue moments, laughs, triumphs, defeats and secrets together" (according to The Courier-Mail). This is a common scenario in the sports industry.

Notwithstanding that the QRU did follow its practice of preparing and issuing a standard form contract in an attempt to document the agreement, the terms of the template documents which were prepared and the insufficient management procedures which were in place to ensure that the agreement was appropriately executed, left the QRU exposed to, and ultimately bound by, a loosely defined "handshake" deal formed during an earlier oral discussion.

Takeaway tips

The outcome of this case highlights the inherent dangers of informal arrangements, which can be common place within the sports industry (and, indeed, other industries as well). As sport becomes increasingly professionalised and continues to develop into large-scale business, it is important to ensure that participants in the industry adequately protect themselves by adopting appropriate processes and procedures, and obtaining professional advice when necessary.

Here are our tips to take away to avoid this type of scenario (and the potential to become involved in litigation):

  • During any informal communications, make it clear as to whether you intend to be immediately legally bound by the terms of any agreement which may arise;
  • After any important telephone conversations or meetings, follow up with an email or take a diary note to record the relevant matters discussed;
  • Any agreement which may arise during informal communications should be expressed to be conditional upon the agreement being documented in a formal contract (if that is what is intended);
  • Engage legal advisers to assist in preparing the necessary documentation in order to ensure that it accurately reflects the intentions the parties; and
  • Ensure that you understand the terms of any agreement, and conduct yourself in accordance with those terms.

© HopgoodGanim Lawyers

Award-winning law firm HopgoodGanim offers commercially-focused advice, coupled with reliable and responsive service, to clients throughout Australia and across international borders.

2015 AFR Beaton Client Choice Awards:
Best Law Firm (revenue $50m - $200m)
Best Professional Services Firm (revenue $50m - $200m)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.