The Melbourne Rebels are now seeking financial compensation from the ARU for damage to their brand, after being named as one of two clubs in the firing line to be cut from Super Rugby.
In a stunningly powerful statement released on Friday night, the Rebels accused the ARU of withholding vital information about the potential success - or lack thereof - of an expanded 18-team Super Rugby tournament, when selling the licence of the club to millionaire businessman Andrew Cox in 2015.
The Rebels and Western Force were identified by the ARU on Monday as the clubs fighting for survival, after the governing body agreed to cut one club as part of a reduction of Super Rugby back to 15 teams, due to massive financial losses across SANZAAR nations.
Cox's Imperium Sports Management purchased the licence of the Rebels two years ago and formed the Melbourne Rebels Rugby Union (MRRU).
"MRRU notes, and is very disappointed to hear and read statements that the board and senior management of the ARU did not believe for many years in the five-team model and did not believe that model was financially viable," the Rebels statement read.
"MRRU notes that this concern was not conveyed to Imperium Sports Management prior to its acquisition of MRRU despite the full board and management of the ARU having the opportunity to do so.
"Patently, through no fault of our own, MRRU has suffered significant damage (financial, reputational, commercial and personal) by the ARU's handling of this whole process, and its unnecessary public statements and actions.
"Given these actions MRRU has notified the ARU of its intention to seek compensation and at this time has reserved all rights."
The nasty turn of events follows the Force's legal injunction against the ARU, after what it described as an unsatisfactory meeting with the national union and a perceived lack of fairness in being judged to the Rebels when making its case for survival.
Melbourne has largely remained non-committal on its stance this week, even in light of suggestions that Cox would be willing to sell his licence for $A4.75 million, but Friday's statement makes clear that they will take their fight to the courts, if the ARU does not axe the Force.
Their statement said: "MRRU expresses great disappointment in the manner in which the matter has been managed and immediately calls on the ARU to publicly state that MRRU cannot and is not being 'cut or chopped' from the Super Rugby competition and advise the public that it had no right to say it could do this or to 'request the Melbourne Rebels to 'make its case'.
"Last Sunday evening, ARU chair Cameron Clyne advised MRRU chair Jonathan Ling that the ARU had decided to reduce the Australian representation from five to four teams and, further, that the Brumbies were 'safe', and that either the Rebels or the Force would be 'cut'. This was contrary to advice that MRRU had previously received from ARU management.
"We unequivocally reject that the ARU has any ability to 'chop' or 'cut' (ARU words) the Melbourne Rebels Super Rugby licence. Any representation by the ARU, including its chairman, to that effect is legally incorrect and in complete conflict with the constitution of the ARU.
"The ARU's continued use of these terms and perpetuation of this myth continues to cause significant damage to MRRU and its players and staff.
"Despite being advised of its inability to 'chop' MRRU, the ARU proceeded down this path thereby knowingly causing significant additional damage to MRRU - its players, coaches and stakeholders."
The Force, meanwhile, have issued a legal writ against the ARU stating that an alliance agreement signed between the two parties last May commits both parties through to the end of the current broadcast deal at the end of 2020.
The ARU is expected to argue that, while the broadcast money has remained the same, the terms are inherently different due to the cutting of three teams.