Exclusive: Rebels take Rugby Australia to Federal Court, seek $30m in damages

Almost five months after deciding to chop the Rebels from Super Rugby, the gloves are now firmly off, with the Melbourne franchise taking Rugby Australia to court.

The Roar can reveal that the Rebels lodged their statement of claim in the Federal Court of Australia on Wednesday.

It’s understood the Rebels, who fell into voluntary administration on January 30 after amassing debts of around $23 million, are seeking more than $30 million in damages and, ultimately, want to return to the playing field.

Twelve months after the Wallabies’ worst World Cup result, the legal action once again puts RA on the back foot.

Any damages could cripple RA, especially with the governing body already in the red after withdrawing more than three-quarters of their $80m debt facility from last November with Pacific Equity Partners. RA hopes to repay its debt from the profits from hosting the British and Irish Lions next winter.

But another drawn-out legal battle could hurt the governing body.

The Rebels claim “Rugby Australia has breached various section of the Corporations Act, has unlawfully oppressed the Rebels and is obliged to indemnify the Rebels for liabilities to the Australian Taxation Office incurred when Rebels players were playing for Rugby Australia teams.”

The Rebels are seeking an urgent order granting them the right to inspect the RA books, including accounting and loan records, to determine whether there has been fiduciary and governance failures by Rugby Australia.

The proceedings have been undertaken by Melbourne Rebels Rugby Union Pty Ltd.

Counsel for the Rebels includes Philip Crutchfield KC, Harry Forrester, tax specialist Gareth Redenbach and Alexander Di Stefano.

It comes after RA announced on May 30 that they would not rescue the Rebels despite the fallen Super Rugby franchise devising a plan that would see them financed through a private equity consortium.

In announcing their decision, RA highlighted that “The Administrator also noted that MRRU may have traded while insolvent from 31 December 2018.

“Since the Rebels’ inaugural year in 2011, MRRU has not been independently financially sustainable despite significant additional investment by RA over and above committed club grants. There is nothing in the Consortium’s proposal which demonstrates with sufficient certainty that this will change.”

Since their culling, the majority of the Rebels squad have found new homes with their Australian rivals, including Taniela Tupou.

In a scathing document seen by The Roar, the Rebels claim the governing body acted unconstitutionally by not acting in the interests of all members by keeping the rugby flame alight in Melbourne.

The Rebels not only claim RA was aware of their financial situation at “all times”, but also that there is “extensive evidence” they were assured that a large private equity deal was imminent and would provide a financial lifeline to rugby in Australia.

Although RA decided to take out an $80m loan facility, the Rebels claim the governing body gave preferential treatment to some Super Rugby franchises, such as the Waratahs and Brumbies, over the Rebels.

“There is no trust and confidence in the board and management of Rugby Australia. Their conduct needs to be both exposed and explained,” a statement provided from the Rebels to The Roar says.

“We are fighting to not only save the professional men’s and women’s Rugby teams, but to maintain the successful pathways from grassroots junior Rugby in Victoria through to the elite level.

“We are grateful for the incredible support we have received from the Victorian Government who also understand the importance of a professional team to the boys and girls in Victoria. Over two decades the Victorian government has provided significant funding to Rugby Australia to facilitate the development – not only of rugby in Victoria but of the broader national game.

“The conduct of Rugby Australia in destroying the Rebels – the men’s and women’s teams – demonstrates an appalling lack of judgement by the national body.”

An RA spokesman said until they saw the statement of claim the governing body could not comment.

The timing of the legal action once again puts RA on the backfoot in the midst of their broadcast negotiations.

With the current $29m broadcast deal to finish at the end of 2025, RA wanted to have their negotiations wrapped up over the next six months. Adding to the desire to get it across the line sooner rather than later is the NRL will likely kick-off their negotiations in the second quarter of next year.

But any legal action, coupled with the Wallabies not winning consistently on the field, will continue to harm the vibe’s game across the country before next July’s showpiece event against the British and Irish Lions.

Full statement from Directors of Melbourne Rebels Rugby Union Pty Ltd

Melbourne Rebels Rugby Union Pty Ltd (‘Melbourne Rebels’) today issued proceedings in the Federal Court of Australia against Rugby Australia.

The Melbourne Rebels are seeking significant damages and indemnities from Rugby Australia along with a declaration that they are entitled to resume control of the Rebels so the team can continue to play in the Super Rugby Competition.

The Rebels are a member of Rugby Australia and had a legal expectation that they would not only be treated fairly but that they would be treated equally to other members. Amongst other things, the Rebels will assert that Rugby Australia has breached various section of the Corporations Act, has unlawfully oppressed the Rebels and is obliged to indemnify the Rebels for liabilities to the Australian Taxation Office (ATO) (as well as other broader employment liabilities) incurred when Rebels players were playing for Rugby Australia teams.

The Rebels are seeking an urgent order granting the Rebels the right to inspect the Rugby Australia books, including accounting and loan records, to determine whether (and the extent to which) there has been fiduciary and governance failures by Rugby Australia.

The Constitution requires that the assets of Rugby Australia be applied for the benefit of all members. The Rebels believe that this has not been the case and that there has been unacceptable and unauthorised spending (perhaps best exemplified by the unauthorised and excessive spending at last year’s Rugby World Cup and the subsequent suppression of the Rugby World Cup independent report).
We want an independent person to decide whether the conduct of Rugby Australia meets the standards required by law – and that will now be a Federal Court Judge.

Counsel for the Melbourne Rebels includes Philip Crutchfield KC, Harry Forrester, tax specialist Gareth Redenbach and Alexander Di Stefano.

The Melbourne Rebels Directors, all unpaid volunteers, will be providing the court extensive documentation demonstrating that Rugby Australia was aware of the financial situation of the Rebels at all times.

There is also extensive evidence of Rugby Australia executives and Directors continuing to reassure the Rebels (and other clubs) that a large private equity deal was imminent and would provide a financial lifeline to Rugby in Australia.

Rugby Australia did secure an $80m loan facility but they chose only to provide funding, indemnities or other financial support to the NSW Waratahs and subsequently the ACT Brumbies in preference to the Melbourne Rebels.

The Rugby Australia Board and executives don’t seem to understand that Rugby Australia is a union of members. The Rugby Australia Board has a legal obligation to act in the interest of all members, they do not have the ability (or legal right) to pick and choose the Clubs and/or States they wish to survive and those that they wish to destroy.

There is no trust and confidence in the board and management of Rugby Australia. Their conduct needs to be both exposed and explained.

RA have had many months to explain their actions and have failed to do so. The Rebels Directors believe that the simple reason for this is that there is no defence to their conduct.

We are fighting to not only save the professional men’s and women’s Rugby teams, but to maintain the successful pathways from grassroots junior Rugby in Victoria through to the elite level. We are grateful for the incredible support we have received from the Victorian Government who also understand the importance of a professional team to the boys and girls in Victoria. Over two decades the Victorian government has provided significant funding to Rugby Australia to facilitate the development – not only of rugby in Victoria but of the broader national game.

The conduct of Rugby Australia in destroying the Rebels – the men’s and women’s teams – demonstrates an appalling lack of judgement by the national body.

The Directors have reserved their right to seek future compensation from RA for personal damages inflicted on them by RA.

With backing from the Private Equity backed consortium, the Rebels can be back on the field at a new home in Tarneit in Melbourne’s western suburbs as soon as the Court clears the path.

More to come