Those watching the recent National Rugby League Grand Final staged in Sydney on the weekend saw that the rub of the green did not go the way of Canberra’s “Green Machine”.
For non-NRL fans, the situation was thus. With the score locked at 8-8 and with eight minutes left to play, the Canberra Raiders were on the attack when, on the 5th and final tackle, the on-field referee deemed that the ball had touched a Sydney Roosters player. The referee announced that the Raiders could retain the ball for a further six tackles, by the usual sign of such adjudication, namely waving his arm in the air in the manner of urging the team to “play on”. Thus, in accepted rugby league language, the referee had announced that the Canberra Raiders could carry the ball for another six tackles, known as “six again”.
In reliance on the referee’s “six again” announcement, the Raiders player allowed himself to be tackled, instead of passing or kicking the ball, for the simple reason that the Raiders had been awarded six more tackles. If they had not been awarded “six again”, the Raiders player taking the tackle has confirmed that he would have taken a different option. It was not until the Raiders player stood to play the ball that he became aware that the referee had overturned his “six again” decision. It was a turning point in an otherwise outstanding NRL Grand Final.
In this Dispute Dialogue, Moulis Legal’s Shaun Creighton tests his love for the Green Machine against the objectivity of equitable estoppel. Regrettably for him, the law wins out.
Do legal rules for business extend onto the sporting field?
In the middle of a sporting contest, it is an accepted principle that a team or player needs to accept the referee’s decision. In the case at hand, the Raiders might argue that they were misled by the referee to their very great detriment. However, in a sporting contest there is no time or opportunity, for example, to quickly run off and seek an urgent injunction from a judge. The Court of Arbitration for Sport has confirmed in a number of judgements that there are very limited circumstances when the decision of an official in a sporting contest can successfully be challenged.
If the rub of the green doesn’t go your way in a business transaction, what types of rights and remedies would you have? Well, like any legal dispute, it all depends on the facts.
Let’s assume the facts are similar to the NRL Grand Final where:
- A customer has complex requirements and has engaged several specialist firms to undertake the scope of the works required. This could be a property redevelopment, an IT refresh, or similar.
- The various firms (the players) commence performance of their contractual obligations. They consider that they are playing by the established rules.
- The customer then makes an important statement or announcement, for example that a milestone date has been brought forward, or that its baseline technology will be upgraded.
- The customer communicates that statement or announcement to the players.
- The players, whose performance of their contract depends on the content of the customer’s statement, are in receipt of the statement, and make certain decisions in reliance on the statement.
- The statement made by the customer is or becomes untrue.
- The players, having relied on the statement made by the customer, suffer loss or damage.
Under Australian law, a party relying on a statement or announcement made by another person to the party’s detriment, where it was reasonable in the circumstances to rely on the statement or announcement, would generally have rights and remedies against the other person under the doctrine of estoppel.
When you can and can’t “change your call”
Estoppel is a complex legal concept, the scope of which cannot be fully explained in a newsletter. To further complicate things, it has traditionally been said that estoppel is to be used “as a shield rather than as a sword”.
In our NRL Grand Final example, could the Canberra Raiders have hypothetically used estoppel “as a sword” to bring a claim, if the game was actually a commercial transaction and not a sporting competition?
Since Mason and Deane JJ’s judgements in Legione v Hateley[1] and the High Court of Australia’s landmark case Waltons Stores (Interstate) Ltd v Maher,[2] promissory estopped has been accepted as a “sword” in Australian law. Further, such an estoppel can be established even if a promise is lacking in detail: Doueihi v Construction Technologies Australia.[3]
Elements of the doctrine of estoppel
Generally, for an equitable estoppel to exist, these conditions must be satisfied:
- A plaintiff assumes a particular legal relationship exists, or would come to exist, between the plaintiff and defendant.
- The defendant induces the plaintiff to adopt that assumption or expectation.
- The plaintiff acts or abstains from acting on the faith of the assumption or expectation.
- The defendant knows of the plaintiff’s action or intends the plaintiff to act in that way.
- The plaintiff’s action or inaction causes it to suffer detriment when the assumption / expectation is not fulfilled.
- The defendant fails to act to avoid the detriment by fulfilling the expectation or otherwise.[4]
However, the doctrine will not apply where to do so would indirectly enforce a contract otherwise void or contrary to public policy.
Waltons Stores – the landmark case
In the Waltons Stores case, Mr and Mrs Maher owned land with buildings on it in Nowra, NSW. After some months’ negotiating a lease to Waltons Stores, Waltons Stores indicated that it wanted an existing building to be demolished and replaced. In November 1983, the Mahers informed Walton Stores that they would have to commence demolition of their buildings and construction of the new buildings for Walton Stores to occupy. Otherwise, they advised Waltons Stores, the timeframe for completion of the new building would not be met. The Mahers executed the lease documents with changes requested by Waltons Stores, and provided the lease documents to Walton Stores for execution. But they were not signed.
Waltons Stores instructed its lawyers to “slow the deal” but permitted the Mahers to continue to believe a lease would be signed. The Mahers relied on the representations, demolished the building and began constructing a new building. When the new building was about 40% complete, Waltons Stores withdrew from negotiations without a lease being signed. The Mahers sought to enforce the promise that Waltons Stores had made. The majority of the High Court held, in these circumstances, that equitable estoppel protected the Mahers, and awarded damages in their favour.
Mere reliance on a promise to do something, resulting in a party changing its position or suffering detriment, does not necessarily bring estoppel into play. More is required. There must be the creation of an expectation by the other party that the promise will be kept, or some other form of encouragement of that belief by the other party.
Equitable estoppel applies to broad circumstances
The doctrine of estoppel can apply to a wide range of matters. In Arfaras v Vosnakis,[5] Mrs Arafas (the mother in law of Mr Vosnakis) owned a burial licence for two people. Following the death of Mrs Arafas’ daughter (Mr Vosnakis’ wife), Mrs Arafas offered the burial plot for her daughter and promised to transfer the burial licence to Mr Vosnakis so that he could, in the future, be buried with his wife. Mr Vosnakis relied on the promise and arranged for his wife to be buried in the plot. Mrs Arfaras then refused to honour the promise.
Even though there was no contract, and no “consideration” or money value had been discussed by the parties, Mr Vosnakis was successful in a “sword” action under estoppel. The NSW Court of Appeal held:
- Mrs Arafas made a clear offer and then promise to Mr Vosnakis.
- Mr Vosnakis adopted an assumption that he would be able to be buried with his wife in the future, and had his wife interred in the plot.
- In doing so, Mr Vosnakis placed himself in a position where he was at a material disadvantage were Mrs Arafas to be permitted to depart from the assumption.
- It would be unconscionable for Mrs Arafas to depart from the assumption.
Equitable estoppel is a cause of action in its own right. If successful in such an action, a party is entitled to equitable relief. This includes to “make good” some of the detriment suffered in reliance on the promise or assumption. Estoppel operates very broadly.
Estoppel on the sporting field?
Estoppel has been successfully used in legal disputes arising in the sporting arena. For example, in New Zealand Olympic Committee (NZOC) v Salt Lake Organising Committee (SLOC) & Federation Internationale de Ski (FIS) & International Olympic Committee (IOC)[6] the NZOC had entered skiers in two disciplines, even though only qualifying in one discipline. These entries were initially accepted by SLOC. When SLOC later changed its mind and enforced a requirement for skiers to be qualified in all disciplines in which they wished to compete, the Court of Arbitration for Sport ruled that the skiers had relied on SLOC’s acceptance of their nomination and, accordingly, that SLOC was estopped from changing its decision.
The Canberra Raiders clearly relied on the referee’s decision when hearing and / or seeing the “six again” call. It could certainly be argued that such reliance was to their very great detriment. However, the decision was made in the middle of a sporting contest, where all the players agreed, by their participation, to abide by the decision of the appointed referee. It was legally appropriate that play continued, and is now appropriate that the matter be left on the sporting field, where it belongs.
As the Court of Arbitration for Sport stated in Segura v International Amateur Athletic Federation (IAAF)[7] in an appeal relating to the disqualification of a race walker at the Sydney Olympic Games:
CAS arbitrators do not review the determinations made on the playing field by judges, referees, umpires, or other officials who are charged with applying what are sometimes called ‘rules of the game’…[T]hey are not, unlike on-field judges, selected for their expertise in officiating the particular sport.
The rub of the green did not go with the Green Machine. On-field decisions, as controversial and disappointing as they may be, should rightly stay on the field.
Off the playing field, however, it’s a “different ball game”. If you rely on a representation to your detriment, where a legal relationship is in existence, then it may be worth a closer look at the doctrine of estoppel.
Moulis Legal is a progressive modern legal business handling commercial and international matters. Our experience and expertise in sports law covers professional football codes, Olympic sports and major sporting events. Our Partner Directors Daniel Moulis and Shaun Creighton have acted in a wide range of legal and governance matters relating to sport, events and sporting organisations. In addition to knowing the law, we know sport. Daniel was a Socceroo in the 1980s, and Shaun represented Australia in the 1996 and 2000 Olympic Games.
For more information, please contact Shaun Creighton (+61 2 6163 1000 or shaun.creighton@moulislegal.com).
This memo presents an overview and commentary of the subject matter. It is not provided in the context of a solicitor-client relationship and no duty of care is assumed or accepted. It does not constitute legal advice.
© Moulis Legal 2019
[1] (1983) 152 CLR 406
[2] (1988) 164 CLR 387
[3] [2016] NSWCA 105
[4] See Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 528, Priestley JA
[5] [2016] NSWCA 65
[6] CAS OG Salt Lake City 02/006
[7] CAS OG Sydney 2000/13: Digest Vol.2 p. 680
