Law

The dispute between James Hird and the AFL and the need for settlement agreements to be effective

By 21 January, 2014 January 21st, 2019 No Comments

Summary

Settlement agreements are used by parties to resolve disputes and avoid costly legal fees.  Where legal proceedings have been commenced, parties resolve matters without recourse to trial “out of court” more often than not.  Despite their frequent use and importance in resolving disputes, it is not uncommon for settlement agreements to be vague or silent on a particular issue – it is normally in the interest of all parties to avoid this wherever possible.

This article highlights the importance of ensuring the settlement agreement is reduced to writing and includes all key terms.

Hird and the AFL

On 27 August 2013, the AFL and James Hird agreed that in 2011 / 2012 the Essendon Football Club implemented, while Hird was Senior Coach of the club, a Supplements Program which was inadequately vetted and controlled.

The terms of the settlement agreement included that Hird would receive a 12-month suspension backdated to August 25, 2013 when the AFL Commission issued sanctions to Essendon and its officials for conduct prejudicing the game.

In December 2013 (after the settlement agreement had been in effect for 4 months), the AFL disputed the ability of James Hird to be paid a salary by Essendon.  The AFL adopted the position that whilst there was “no official written agreement that Hird could not be paid during his 12-month ban for his part in the club’s controversial supplements program”, there was a “clear intention” that Hird not be paid.  James Hird construed the terms of the settlement differently.  His lawyer advised “it was very clear on the night (the August 27 hearing settlement) that Hird would be paid by the Essendon FC during his period of suspension”.

In circumstances where both parties were represented by solicitors, how was it possible that a term dealing with whether or not James Hird could be paid had (seemingly) not been addressed?

If you or your lawyer are preparing a settlement in respect of a dispute it should always be recorded in writing.  Please find set out below examples of key matters to be considered for inclusion:

  1. Whether compensation is being paid, the mode of payment (eg. electronically or by cheque) and when it is to be paid (if the payments are to be made on a staged basis, this should be stated);
  2. Whether the payment sum is inclusive of tax liabilities and duties;
  3. Whether the settlement agreement is “without admission of liability”;
  4. Whether the agreement adequately releases each party from the subject matter of the dispute;
  5. If legal proceedings are on foot, whether they are to be dismissed or discontinued and which party is to incur the costs of those proceedings;
  6. Whether the agreement is confidential (including a confidentiality provision is usually in the interests of all parties); and
  7. Whether a non-disparagement provision should be included (this ensures that following the settlement parties cannot make disparaging remarks about each other or their respective businesses).

The Hird and AFL dispute (resolved by Hird being paid his yearly salary for 2014 a year in advance) highlights the importance of ensuring that settlement agreements are reduced to writing and include all relevant key terms.