How comments from Rugby Australia could turn Israel Folau case

Israel Folau is seeking up to $10 million in damages from RA after it terminated his contract following an Instagram post. Photo / Photosport

Much has been said about the ongoing dispute between Israel Folau and Rugby Australia. But just a few words uttered by the chair of rugby's governing body could have inadvertently opened up a whole new legal — and lucrative — avenue for the former Wallabies fullback to pursue, a legal expert has said.

And this could see not just Rugby Australia (RA) at odds with Folau but Qantas and other sponsors as well.

Folau is seeking up to A$10 million in damages from RA after it terminated his contract following an Instagram post that said gay people were headed to hell unless they repented.

Speaking on Friday, after the breakdown of a conciliation meeting between RA and Folau, the code's chairman Cameron Clyne said his former star player's repeated posting of controversial social media comments had put him at odds with the Government, staff and sponsors and left them with little choice but to act.

"(The alternative) would be that we'd have no sponsors at all because no sponsor has indicated they would be willing to be associated with social media posts of that sort and that includes government, because we've also heard from them," the former boss of NAB said.

Rugby Australia Chairman Cameron Clyne formerly ran National Australia Bank. Photo / File

RA's headline sponsor is Qantas but big brands backing the code also include Land Rover, Swisse and HSBC bank. Both RA and Qantas have said the airline was not involved in the Folau decision.

That admission from the top brass that sponsors do have an effect on the organisation's decision making has potentially opened a whole can of worms for RA — and a rich seam of damages for Folau, one lawyer has said.

Speaking to The Australian on Monday, Sydney barrister Jeffrey Phillips said it could now be argued the severing of Folau's contract was at the behest of sponsors.

"If it be the case that sponsors, or even the Government, has placed any pressure on RA to terminate his contract, then that raises prospects of interference with contractual relations and aspects of Australian competition and consumer law, in particular, section 45D dealing with secondary boycotts." Phillips said.

Legal experts have told news.com.au Folau's legal team was entitled to attempt to use section 45D to drag Qantas and others into his dispute, and if Folau could show sponsors were behind his sacking, he could be in line for millions.

Legal experts have told news.com.au Israel Folau's legal team was entitled to attempt to use section 45D to drag Qantas and other sponsors into the dispute. Photo / Photosport

"It's high stakes indeed," said Josh Bornstein, head of legal firm Maurice Blackburn's employment law group.

But it would be "challenging" to make the case stand up in court, said another lawyer, unless it could be proved several sponsors worked in tandem to force RA's hand.

HOW FOLAU COULD USE SECTION 45D

If you're not across section 45D of the competition and consumer act, let us break it down for you.

Sydney University professor of labour law Shae McCrystal told news.com.au 45D goes back to a 1970s dispute where unions attempted to force service stations from selling discount loaves of bread.

"It's essentially an anti-union mechanism, designed to stop secondary boycotts, which is unions and members interfering in industrial disputes in another business," McCrystal said.

"Let's say employees at a clothing peg manufacturers are in dispute with their employer about pay. Then a union that represents workers in an another company that supplies metal fasteners for the pegs refuses to allows those fasteners to be supplied. So you have the employees and union of one business putting pressure on the peg company to settle with their employees.

"Presumably Folau's argument would be that sponsors pressured RA. But its use in this context is more challenging, it's not for this kind of thing."

A sticking point is the act states it has to be proven that two parties acted in "concert" to bring pressure on a third party that then disadvantaged a fourth.

Folau is one party, RA another and the sponsor a third — but where's the fourth?

"The problem is you need to show two of the parties acting in concert — so some kind of collaboration between the sponsors rather than them acting independently."

If the sponsors did act independently, McCrystal explained, then there was likely no case.

"If an individual chooses not to contract with someone because they don't like that individual, that's their choice," she said.

Companies spend millions of dollars sponsoring sporting codes, usually for good publicity, not to be caught up in a debate on religion. Photo / Getty Images

"I might make a choice not to buy shampoo from a manufacturer that doesn't use recycled plastic. We all make these choices every day."

HIGH STAKES

For his part, Clyne said suggestions Qantas put direct on pressure on RA to ditch Folau were "simply wrong".

"Sponsors have a right to associate themselves with a game they feel best represents their values, but it is absolute nonsense to suggest it was done at the behest of a sponsor," he said on Friday.

Late last month Qantas CEO Alan Joyce said the insinuation the airline was involved in Folau's dumping was "outrageous" but the firm had asked RA what it was doing about the saga.

"Israel's comments were terrible for a large element of the community, and a vulnerable element of the community," Joyce said.

"It is (RA's) issue to resolve, they have put a solution in place … and we're very supportive of what they're doing."

Maurice Blackburn's Bornstein said he was "not a fan" of relying on 45D and it likely wouldn't apply. But the sponsors could be dragged in through other avenues.

"There are two or three legal options if you can show a third party is involved in the sacking of an employee. But you would need credible evidence of the involvement by the sponsor," he said.

"If he wins the case against the employer or any third party he will have a very substantial damages claim. He was on a very high income and may not be able to earn anything like that for foreseeable future. It's high stakes indeed."

MKI Legal director Nicholas Marouchak backed that up saying a sponsor could be in trouble if they "assisted, influenced, recommended, or caused" RA to terminate Folau's contract because of his religion.

"For a sponsor to be held liable, Folau has to first win his primary claim against RA and the sponsor would have needed to have essentially encouraged RA to sack him or provided other material assistance to RA in helping RA carry out the sacking, such as advising or counselling them in doing it," Marouchak told news.com.au.

Folau has hurdles to get over though, not least persuading a court his dismissal was due to his religion rather than RA's view that it's down to him being in breach of his contract.

"If that happens, the extent of Qantas' involvement in the sacking will be examined, such as what discussions were had between RA and Qantas before Folau's sacking," Marouchak said.

"Qantas would defend themselves by explaining they either had nothing to do with RA's decision to sack Folau or if they were part of it somehow, it had nothing to do with Folau's religion."

But for Qantas, and other sponsors, the outcome of any case might be of less importance than the reputational fallout.

When companies spend millions of dollars sponsoring sporting codes, they usually do it for good publicity, not to be hauled before a judge to explain their views on religion.