The Denny Solomona transfer: Why did Castleford settle and does the case set a new precedent?

Published 29 June 2017 | Authored by: James Hill

The High Court action brought by Castleford Tigers against Denny Solomona, Sale Sharks and Andrew Clarke (Solomona’s agent) in relation to Solomona’s contentious move from Castleford to Sale has been settled.

In a remarkably detailed statement, Castleford has disclosed that the settlement figure is in excess of £200,000 and it is to recover approximately £100,000 in legal costs.  The statement also sets out additional detail about the background to the matter[1].  It should be noted that neither Solomona, Sale Sharks nor Clarke have released any statement of their own.  However, one would assume the decision to settle was led and underwritten by Sale.

Back in January 2017, the author wrote an article for LawInSport examining the key legal issues arising out of the Solomona case (available here)[2].  This article re-visits these issues in light of the settlement and Castleford’s statement.  Specifically it looks at:

  • Was there a breach of contract and an inducement to breach contract?

  • Why did Castleford decide to settle the case?

  • Does the case set a new precedent?

 

Was there a breach of contract and an inducement to breach contract?

The author’s previous article concluded that Castleford had a strong prima facie case against Solomona for breach of contract, and against both Sale and Clarke for inducing Solomona's breach of contract.  The additional background material contained within the Castleford Statement supports this view.  It appears that:

  1. On 19 August 2016, Sale made a formal approach for Solomona which was rejected by Castleford, following which Solomona made it clear that he would only stay at Castleford if he was paid a salary effectively four times more than what he was currently earning;

  2. On 29 August 2016, Sale withdrew their previous offer and made a new significantly reduced offer on the basis that Solomona could repudiate his contract and walk away from Castleford;

  3. Castleford reminded Solomona and Clarke of the player’s contractual obligations and put Sale on notice that they should not induce the player to breach his contract;

  4. However, unbeknown to Castleford, Solomona had completed Heads of Agreement to sign a full contract to commence on the date of a UK Visa being issued. On 23 September 2016, Solomona signed his full contract with Sale notwithstanding the fact that he was still contracted to and playing for Castleford in the 2016 Super League season;

  5. On 27 September 2016, Solomona purported to resign his employment with immediate effect.  That resignation was not accepted by Castleford;

  6. On 7 November 2016, Solomona failed to turn up for Castleford’s pre-season, following which the club learnt that Solomona was training with Sale from at least 22 November 2016, if not before.  Therefore, Castleford terminated Solomona’s contract with immediate effect.

This chronology supports the argument that Solomona was in breach of his Castleford contract given that he had signed a full contract with Sale and began training with Sale whilst still under contract with Castleford.  Such actions would almost certainly amount to a repudiatory breach of contract, as reflected by Castleford’s decision to terminate his contract.

Applying the same “facts” to Sale and Clarke, it would seem that they knowingly and intentionally induced Solomona’s breach without reasonable justification, and that they were aware that the inducement would result in a breach of contract, particularly given that both were repeatedly put on notice by Castleford that the player was not for sale and that he was under contract until the end of 2018.

 

Why did Castleford decide to settle?

In light of such a strong prima facie case, the question that many Castleford (and rugby league) fans will be asking is why, given that Castleford’s claim was for circa £500,000, did the club settle the claim at this stage for a significantly lower amount rather than proceed to trial.  There are likely two main reasons.

Firstly, in any claim there is an inherent level of litigation risk, which means that success in even the strongest claims cannot be considered a certainty.  Therefore, settlement will always be more sensible than heading to trial if an acceptable settlement figure can be reached, particularly where legal costs escalate significantly when litigating to trial.

Notwithstanding this, more likely in Castleford’s case is the uncertainty as to the level of damages that they would be able to recover.  Damages for breach of contract are intended to compensate the innocent party for the loss they have suffered as a result of the breach,[3] and damages for inducing breach of contract are to compensate for loss suffered as well as all direct losses, whether foreseeable or not.[4]  However, calculation of such loss in a sporting context is extremely difficult, particularly where the calculation is of a player’s value and, potentially, the loss of commercial revenue (in contrast with, for example, a simple debt claim).

Indeed, there is no objective mechanism for calculating a player’s transfer value, meaning that the court would likely consider factors such as the “market value” of comparable players, the availability and cost of replacement players, the age and potential of the player, the desire of the buying club to secure the player and the commercial value of the player to the club when calculating a player’s value.  Such a calculation is all the more difficult given that transfer fees in rugby are rare (and usually undisclosed).  Additionally, it would be extremely difficult for the court to identify and apportion commercial losses suffered by a club to the loss of a specific player. The courts have also previously been reluctant to determine what effect the unavailability of a player would have on a team’s performance[5].  Given that Castleford has performed better this season and their attendances are up, they may not have been able to show any commercial loss attributable to the loss of Solomona at all.

Therefore, whilst Castleford may have calculated its loss to be in the region of £500,000, a positive finding of liability at trial would be no guarantee that the damages awarded would reflect the figure sought. 

Furthermore, if the defendants’ settlement offer was made by way of a Part 36 offer,[6] the effect of such an offer would be that had Castleford obtained a judgment less advantageous than the Part 36 offer made by the defendants, the court would have ordered Castleford to pay the defendants’ legal costs from the date that the offer expired (unless the court considered it unjust to do so).

Consequently, it is likely that Castleford will have reached the conclusion that the settlement figure on offer outweighed the inherent litigation risk, uncertainty over the level of damages which may be awarded (particularly if the costs consequences of a Part 36 offer were in play) and the significant additional costs which would need to have been incurred to see the matter through to trial.

Interestingly, settlement agreements of this nature normally remain confidential. However, it appears that Castleford have made the release of such a statement an important part of the settlement terms they were prepared to agree, presumably in order to reassure fans of both the club and sport, as well as to put a marker down for similar scenarios in the future given the high-profile nature of this case.

 

Does the case set a new precedent?

The Castleford statement claims that the settlement shows that players cannot simply walk out of a contract, with a new employer having no liability to pay any form of transfer fee.  However, whilst the evidence would suggest that is indeed the correct analysis in Solomona’s case, caution must be given to suggesting that this matter has set a new legal precedent.

Given that the matter has been settled out of court, no binding judgment has been handed down by the High Court that would set a legal precedent as to how such matters would be viewed judicially. 

Furthermore, there is no indication from Castleford’s statement that the settlement included any admission of liability on behalf of the Defendants.  Consequently, one would assume that this settlement was on a no liability basis, as is normally the case with settlement agreements.

Notwithstanding this, it would appear that in light of this matter, clubs on both sides of the rugby dichotomy will likely approach such transfers with more caution.

 

Conclusion

The general view of this transfer is that it has been conducted in an unsatisfactory manner, and this settlement will likely add to that sentiment. 

As the author has argued previously,[7] incidents of cross-codes “tapping-up” such as this cannot be enforced by the relevant governing body as they do not have jurisdiction over clubs in another code.  However, whilst most transfers result in a fee being agreed between the two clubs, the settlement in this matter (whilst not setting a legal precedent per se) adds weight to the view that buying clubs, players and agents cannot conduct transfers in the way Solomona’s transfer was.

In a statement,[8] the RFL has stated that National Governing Bodies from all sports and leagues must work together to ensure that clubs and players are protected and contracts are respected by all concerned.  For the reasons examined previously, it seems unlikely that governing bodies from different sports would be willing to work together to prevent such behaviour in circumstances where it may have a detrimental impact on their own sport.

Ultimately, Castleford fans will be pleased that not only has the club received a substantial sum for the loss of Solomona, but also that Castleford are top of the Super League with his replacement Greg Eden on course to beat Solomona’s record for the most tries in a Super League season.[9]

 

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About the Author

James Hill

James Hill

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.

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