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Harbour has pulled out of the senior grade and is bitter about a decision its feels has robbed players of the opportunity to compete.
Club chairman Martin Paris confirmed the team had disbanded following a ruling from the Otago Rugby Football Union (ORFU), which effectively endorsed an earlier decision by the Dunedin Metropolitan Rugby Council (MRC) not to allow Harbour to play in the top six.
Paris described the decision as ''truly outrageous''.
''There is nothing we can do now but just express our disappointment,'' Paris said.
''We were trying to keep players on the field but when they have nothing to play for it was too hard.''
The trouble began when Harbour defaulted the opening three games of the season.
However, the team had rallied and was looking forward to the rest of the campaign.
But it was ruled that they were not eligible for the top six because of the run of defaults.
Harbour threatened legal action, but appealed the decision through the ORFU instead.
The ORFU said under the regulations Harbour should have been withdrawn from the competition following just two consecutive defaults.
It also stated the MRC had acted outside its authority in allowing Harbour to continue.
However, the ORFU bent the rules because it felt the MRC had acted in the best interests of rugby. It ruled Harbour could continue to play but would not be eligible for the top six.
''To allow the team to qualify for the top six would set a precedent for other clubs to enter teams and then proceed to default a number of games expecting to be included and still eligible to win any respective competition,'' it wrote in a letter to the Harbour Rugby Football Club.
Paris said the players were ''gutted'' by the decision and decided there was no point in continuing.
Harbour did not play last Saturday and played its last game on June 9.
With grass-roots numbers struggling, Paris said it was a shame players who wanted to play were no longer doing so.
''The rules for our declining sport are archaic and you need to change some for the rugby climate at this period of time.''
Harbour is now down to a premier side and a colts side.