Cross-code transfers in Rugby – Will the Denny Solomona case set a new precedent?
Published 13 January 2017 By: James Hill
Cross-code transfers have been a feature of the Rugby League / Rugby Union dichotomy for decades. However, Denny Solomona's recent controversial move of officially retiring from the Super League’s Castleford Tigers to sign a new contract with the English Premiership’s Sale Sharks sets a new precedent. Castleford have now commenced proceedings in the High Court against Solomona, his agent and Sale Sharks. The case could arguably affect cross-code transfers in the way that the Bosman ruling affected football back in the 1990s.
This article examines the key legal issues arising out of Solomona’s case, namely:
- The factual background;
- The prospect of success of Castleford's claims against Solomona for breach of contract;
- The prospects of success of Castleford's claims against Sale Sharks and Solomona's agent, Andrew Clarke, for inducing breach of contract; and
- The impact that the case may have on future cross code moves and any processes which may be put in place to prevent moves being forced through in a similar manner.
Following a season in which Solomona scored a Super League record 42 tries and was nominated for the Man of Steel award, given to the league's best player, he attracted significant interest from several clubs in both the Super League and English Premiership. Despite approaches from at least two Rugby Union and one Rugby League clubs, Castleford refused to sell their star player.
In light of Castleford's refusal to sell him or release him from the remainder of his contract, despite having signed a new three-year deal with Castleford in November 2015, Solomona took the extraordinary step to retire from Rugby League in order to extricate himself from his Castleford contract so that he could sign with Sale on a free transfer.
In response, Castleford have issued proceedings against Solomona for breach of contract, and against Sale Sharks and Solomona's agent, Clarke, for inducing breach of contract. The RFL have publically backed Castleford. However, despite stating that they respect the RFL's concerns regarding the "sanctity of contracts", the RFU has registered Solomona as a Sale player on the basis that they do not have the jurisdiction to act on a dispute between a player and club in a different sport.
This raises similar issues to those which I dealt with over two years ago following Sam Burgess's transfer from South Sydney Rabbitohs of the NRL to Bath of the English Premiership (see here). In that instance, there was allegation that Burgess had been "tapped-up" to sign for Bath. The conclusion reached in that article was that whilst "tapping up" is in breach of both codes' regulations, the fact that neither code had jurisdiction over the other code's clubs, players and agents meant that the "losing code" could take no action to enforce its tapping up regulations and the "receiving code" would have no incentive to enforce its regulations given its gaining of a prized asset.
Whilst the Rabbitohs and Bath were able to negotiate a transfer fee in that instance, this has not been possible in respect of Solomona. Should his retirement route prove to be successful, it could pave the way for clubs to avoid significant transfer fees and for players to get out of unwanted contracts. Indeed, retirement is currently being used by Johan Goosen to get out of his contract with Racing 92 in the French Top 14.
Breach of Contract
Without having sight of the contract between Castleford and Solomona, as well as the full background facts of the matter, it is difficult to fully analyse the prospects of success of Castleford's breach of contract claim. C1:1:6 of the RFL's Operational Rules require that each agreement between a Club and a Player must be in the form of the RFL's Standard Player Contract. Whilst this standard form contract is not publically available, a number of assumptions can be made.
Normally a player will retire in one of two instances: where they have reached the end of their career or they have suffered a career ending injury which renders them incapable of playing any further. In the former, a player will usually either retire at the end of their contract or negotiate a release from the remainder of their contract. In the later it is likely the player will still be in contract meaning that the club and player will negotiate a release from the remainder of the contract, which will normally be easy given the circumstances in which the retirement has occurred. Indeed, Castleford's chief executive Steve Gill has acknowledged that
"If the shoe was on the other foot and Solomona had suffered a career ending injury in the last match of the season there would have been an absolute obligation on us to honour our contractual obligations".
In this instance, Solomona had a further two years remaining on his contract from which Castleford refused to release him, and no club met Castleford's valuation of him. It has been reported that Solomona had been in communication with Sale regarding a potential deal with them whilst still under contract with Castleford, and that Solomona attempted to resign by e-mail on 27 September, which was rejected by Castleford (presumably because there had been no breach of their contractual obligations to him).
Subsequently, Solomona effected his "retirement" by failing to report for pre-season training, on 7 November, and, impliedly, making himself unavailable to fulfil a number of his contractual obligations to Castleford which are likely to include, among other things, provisions requiring him to only play for Castleford, to make himself available for all training and matches, to make himself available for all promotional activates, to preserve the reputation of the club and Rugby League through his conduct both on and off the field and not to bring the game into disrepute. Furthermore, social media images emerged in the following days showing Solomona playing table-tennis with Sale players and of a Sharks removal van outside his home. It is a fair assumption to state that these actions would amount to a repudiatory breach of contract and give rise to the right for Castleford to immediately terminate their contract with Solomona and claim damages from him for breach of contract, as they have done.
Damages for breach of contract are intended to compensate the injured party for the loss they have suffered and should place the injured party in the same position as if the contract had been performed. Most contractual damages awards compensate the injured party for financial loss, which includes costs or liability the injured party has incurred to a third party (which would not have been incurred but for the breach) and profits the injured party has foregone (being those it would have earned but for the breach).
In Castleford's circumstances, such damages could extend to the transfer fee it has missed out on, the cost of a replacement player and the commercial revenues it will miss out on in ticket sales, shirt sales and sponsorship opportunities, for example. Therefore, Solomona could be liable for a significant payment in damages if found to be in breach of contract. Given the circumstance in which the transfer arose, it may be that Solomona has sought an indemnity from Sale in respect of any potential claim by Castleford. If Sale have given such an indemnity, it would be a bold move on their behalf given Solomona's actions have clearly given rise to a number of repudiatory breaches of contract. Ultimately, this analysis suggests that a player should only seek to "retire" when they are doing so in good faith.
"Players’ agreements may be terminated by Club or Player in accordance with the procedures for termination as set out in the Standard Player Contract from time to time and there shall be such rights of appeal as set out in the Standard Player Contract."
Therefore, any purported termination by either Castleford or Solomona would have had to have been in accordance with these procedures. Given that Castleford terminated its contract with Solomona on the basis his repudiatory breaches, it would seem likely that such a termination would be in accordance with the procedures set out in the RFL's Standard Player Contract. Similarly, any termination by Solomona would have had to be on the basis of his breaches of contract by Castleford. In the absence of any evidence of breaches on their part, it would seem that Castleford were correct to reject the attempted resignation by Solomona.
Inducing Breach of Contract
To bring a claim for the economic tort of inducing a breach of contract against a third party, the claimant must show that the third party knowingly and intentionally induced or procured the breach without reasonable justification (for example, actively persuading or communicating pressure on a contracting party to breach their contract with the claimant), and that the claimant suffered economic loss as a result. Inducing or procuring a breach of contract requires proof that the defendant actually knew that he was inducing or procuring an act that was a breach of contract, or would have this effect, and also that he intended to procure that breach. Therefore, the defendant will not be liable if he unknowingly or unintentionally procured a breach of the contract. If the breach is not the desired end but merely a foreseeable consequence of the defendant's actions, then it cannot be said to have been intended and the defendant will not be liable.
If a defendant is found liable for inducing a breach of contract, the claimant may be able to recover all direct loses, whether foreseeable or not. Therefore, the damages recoverable may exceed the damages for the actual breach.
The pre-eminent example of inducement of breach of contract by a club is the matter of Chelsea FC and Gael Kakuta. FIFA's dispute resolution chamber found that Chelsea were guilty of inducing Kakuta to breach his youth contract with Lens FC, by signing Kakuta whilst he was still a contracted youth player at Lens. FIFA imposed a transfer ban and a fine for training compensation on Chelsea, as well as a finding that Kakuta should pay compensation for which Chelsea were jointly and severally liable. Whilst, following an appeal from Chelsea, the parties subsequently settled the matter, agreeing that there had been no valid youth contract between Kakuta and Lens, this case suggests that where a club persuades a player to deliberately breach their current club contract, in this case by signing Kakuta whilst he was still purportedly subject to a contract with Lens, it will amount to inducing a breach of contract.
Applying the law to Sale's approach for Solomona, it is public knowledge that Sale was one of three clubs who put in official enquiries with Castleford for Solomona. Indeed, it is reported that Sale made an initial offer of £150,000 rising to £200,000, which was rejected by Castleford and later withdrawn by Sale. Castleford reportedly allege that Sale and Clarke then entered into a “cynical calculation that they would be better off by procuring the player to breach the contract with Castleford Tigers rather than negotiate a transfer fee to secure a lawful release”.
Subsequently, Sale's director of rugby, Steve Diamond, allegedly sent an e-mail to Castleford's chief executive Steve Gill on 8 September 2016 (prior to Solomona's attempted resignation) stating that:
"Since we last spoke, Denny’s agent has informed me that Denny has spoken to yourself and your Chairman and said that he doesn’t want to play Rugby League any longer.
After being informed of this, legal advice has been sourced and we are confident that when he walks away he will be free to play Rugby Union. Our advisors also said that any claim for damages that you may have will be significantly lower than the £150,000 previously offered and that is why we withdrew that offer.
I am told that whilst you should be compensated for any breach, the courts won’t just award the amount you say is required to replace Denny…
I, however, do not want to get the lawyers involved, it isn’t our style and it will be a distraction as well as expensive to go through the courts for the next two years and you will not receive any cash for that period. Therefore, the club are prepared to pay immediately £50,000 and you will release Denny from his contract at the end of September after your last match.
Hopefully you will see the sense in a quick quiet deal and allow you to recruit alternatives."
As referred to above, the test for inducing a breach of is whether Sale and/or Clarke knowingly and intentionally induced or procured Solomona to breach his contract. Quite aside from the astonishing and careless nature of the alleged e-mail, the inference which is drawn from the content and timing of it is that both Sale and Clarke appear to haveactively persuaded or communicated pressure on Solomona to commit a breach of contract, that is, to "retire" in order to make himself available to sign for Sale.
In addition, the e-mail suggests that both Sale and Clarke were aware that Solomona's breach of contract would cause Castleford economic loss through, at the least, the loss of a transfer fee. Ultimately, Diamond's e-mail suggests that he and Clarke were fully aware that they may be inducing a breach of contract.
Therefore, if Solomona's "retirement" was indeed brought about in the way implied in the alleged e-mail, it would appear that Castleford has a strong prima facie case against both Sale and Clarke for inducing Solomona's breach of contract. In the event that Sale have, in fact, given Solomona an indemnity in respect of any claim against him for breach of contract (which would not be unfeasible given the tone of Diamond's alleged e-mail) it would only serve to increase Sale's exposure to damages.
Retention of Registration
It should be noted that in the circumstances, given that Solomona had a further two years on his Castleford contract, it would seem likely that the RFL would allow Castleford to retain Solomona's RFL registration.
Therefore, should Solomona seek a return to Super League within the next two seasons (which is not unforeseeable given the number of players who have returned after short stints in Rugby Union) then Castleford may be able to seek a transfer fee from his new club in order to obtain his registration. This is of course likely to be of little solace to Castleford.
As referred to above, the analysis in this case would suggest that only a bona fide "retirement" undertaken in good faith (that is, where the retirement was not instigated to facilitate signing for another club) would prevent a player from being in breach of contract in circumstances where they later come out of retirement to sign for a new club, whether in the same or a competing sport. Indeed, it cannot be right (or in the spirit of the game or contract) that a player can engineer a move to a new club or sport simply by purporting to retire when they have absolutely no intention of actually doing so.
In light of this new threat, it may be that clubs should seek to insert some form of post-termination non-compete clause preventing a player from playing for another professional sports team for a term of, say, 12 months without the express permission of the former club. However, whilst this would seem a proportionate means of achieving a legitimate aim, such a clause would certainly be open to a challenge in respect of its validity, particularly given the difficulty of enforcing such clauses.
Therefore, the conclusion of Castleford's claim has the potential to be highly significant. Provided that the claim is seen through to determination by the High Court (or any higher court on appeal), clubs will have certainty as to whether or not a player is capable of retiring in order to extricate themselves from a contract with their current club in order seek employment in another club in a different sport.
In the event that this matter is settled before determination is made, what steps could be taken to deal with such issues in the future? One suggestion has been to set up an overarching body or tribunal to arbitrate on cross-codes transfers. However, this would appear an unlikely prospect given the financial muscle held by Rugby Union compared by Rugby League, and the seemingly one way traffic of big moves from Rugby League to Rugby Union. Indeed, Rugby Union has very little to gain from such an arrangement given that most Rugby Union to Rugby League moves these days involve players returning to the sport deemed as "failures".
Furthermore, cross-code switches are not limited to Rugby League and Rugby Union, with players such as Israel Folau moving from Rugby League to Australian Rules Football and Jarryd Hayne moving from Rugby League to the NFL in recent times (indeed, Hayne retired from the NFL (in good faith) in an attempt to get selected for Fiji’s Olympic Rugby Sevens team). Such moves could also feasibly extend to transfers between MMA and boxing promotions, for example. Therefore, given the conflicts of interest between the Rugby Union and Rugby League authorities, as well as the potential for "cross-code" moves in a multitude of sports, it would seem unlikely that such a body would ever see the light of day given the number of potential sports involved and the vested interests of the various parties involved.
Another potential forum for resolving such disputes may be the Court of Arbitration for Sport (CAS). However, there would appear to be significant difficultly for CAS in making a decision enforcing the regulations of one governing body against the clubs, players and agents of a governing body. Again, therefore, this appears to be an unsuitable route.
Consequently, it would appear that the only way for this question to be permanently answered is for Castleford to see this case through to determination by the High Court. Given the negative ramifications that a finding in favour of the defendants may have on governing bodies, clubs and players, it seems to me highly likely that the Court would find in Castleford's favour.
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James Hill is an Associate at Onside Law. James works on a broad range of commercial disputes, including High Court claims and arbitration, as well as a variety of regulatory matters. In particular, James has experience of obtaining injunctive relief against employees for breach of contract and theft of confidential information.