Case note: McGill v. The Sports and Entertainment Media Group and Others

Published 03 January 2017 By: Sam Stevens

Man making stop sign with hand between footballs

A footballer and an agent enter an unwritten exclusive agency agreement. The agent sets up a transfer for the player. However, a different agency takes over as the player’s agent prior to completion. This was the basic factual background before the Court of Appeal in McGill[1]. The court had to deal with various interesting legal issues arising from this litigation, and its judgment merits careful consideration.

This article will deal primarily with the Court of Appeal’s decision on the agent’s claim that he lost a chance to complete the player’s transfer. It will also briefly touch on the findings in relation to the agent’s earlier settlement with the player and how this affected his subsequent litigation against the other agency (the Jameson / Heaton[2] issue).

 

The Facts

Cast your mind back to the 2006 – 2007 football season. Aston Villa Football Club finished 11th in the Premier League. Gavin McCann, then age 29, had played 30 games for Villans, but was nearing the end of his time there. He sought a move to another club to extend his career in the Premier League. Needing an agent, Mr McCann contacted Tony McGill, an old friend and licensed football agent. Mr McGill flew from Monaco to the Marriott in Preston to arrange next steps with the midfielder: the game was afoot.

In anticipation of the requirements of the FA’s Football Agents Regulations 2006 (“the 2006 Regulations”), Mr McGill armed himself with a standard form agency contract for Mr McCann to sign. However, the player did not want to sign the agreement, fearing a heavy tax liability. It was Mr McGill’s case that he entered into an oral contract with Mr McCann providing that Mr McGill would act as the player’s exclusive agent for the purpose of finding him a transfer to a club that would pay around £26,000 per week. Mr McGill would receive a 10% agency fee if the new club paid it, or a 5% fee if the club refused. Crucially, Mr McGill said that Mr McCann would have subsequently regularised their arrangement in a compliant written contract.

Following the meeting in Preston, Mr McGill appears to have done a good job, teeing up Mr McCann with a transfer to then seventh placed Bolton Wanderers Football Club. Unfortunately for Mr McGill, he didn’t seal the deal. In the words of the first instance judge, the Sports and Entertainment Media Group (“SEM”) “got wind of the fact that Mr McCann was on the move…and decided to try and poach him”. They did so, and the player sacked Mr McGill. The Bolton deal still went through, but with SEM receiving a £300,000 agency fee, whilst Mr McGill took nothing.

 

The Litigation

Mr McGill first sued the player. The case settled at the door of court for a global sum of £50,000, despite the agent’s legal costs being around £155,000. He then pursued SEM and Bolton. He also sued various directors and employees of SEM and Bolton personally. He relied on numerous causes of action. His claims against SEM and Bolton included the tort of inducement to breach contract; breach of confidence; conspiracy to injure; conspiracy to use unlawful means; and unlawful interference with the actions of the player. Further, he claimed a quantum meruit (what one has earned) against Bolton and pursued a restitutionary claim against SEM.

Mr McGill’s main cause of action was inducement to breach contract, which he pursued again SEM, an agent employed by SEM, Bolton and Bolton’s general manager.[3] In order to succeed, he had to show the following:

  1.  A defendant had procured Mr McCann to stop using Mr McGill as an agent and instead use SEM;

  2.  That constituted a breach of contract between Mr McCann and Mr McGill; and,

  3.  That defendant was aware of the contract and intended for Mr McCann to breach it.

Importantly, Mr McGill also had to show that any such inducement caused him to suffer a loss (e.g. agency fees).

 

First Instance Decision

At first instance, HHJ Waksman found that Mr McGill had proved all the elements of the claim for inducement to breach contract save for causation. In other words, he had failed to show that the inducement to breach the contract had caused Mr McGill to suffer a loss. The judge held that Mr McGill had pleaded and pursued his case on causation at trial on a “but for” basis (i.e. but for the defendants’ actions, Mr McCann would have entered into a compliant written agreement with Mr McGill and he would have received agency fees). In order to succeed, Mr McGill had to show that Mr McCann would have signed the standard form contract at some point following the Preston meeting but for the inducement to breach the contract. HHJ Waksman found that he had not proved this on the balance of probabilities, and, accordingly, the claim failed in its entirety at first instance.

Both parties appealed. Mr McGill sought to overturn the findings on causation. The defendants wished to uphold the decision on other grounds, for example by overturning the finding that SEM and Bolton had induced Mr McCann to breach contract. Of particular importance and interest was the Court of Appeal’s judgment on the issue of causation.

 

Court of Appeal Decision

The Court of Appeal held that this was not a claim to which the “but for” test applied. In this case, whether or not Mr McGill suffered a loss was not dependent on what either he or the defendants would have done “but for” the inducement to breach contract. Whether or not he would have been paid an agency fee depended on what Mr McCann would have done. Accordingly, his loss was the lost chance for Mr McCann to enter into a compliant written agreement with Mr McGill.

Henderson J, giving the leading judgment of the court, reviewed two important authorities on loss of chance: Allied Maple Group Limited v. Simmons & Simmons [1995] 1 WLR 1602 and Wellesley Partners LLP v. Withers LLP [2015] EWCA Civ 1146, [2016] 2 WLR 1351. In short, those authorities set out a two-stage approach to loss of chance.

  • First, Mr McGill had to show on the balance of probabilities that there was a real or substantial (more than speculative) chance that Mr McCann would have signed the compliant agreement. If he was able to do so, he succeeded on causation. 

  • The second stage of the test is for damages to be quantified by reference to the percentage likelihood of Mr McCann signing the standard form contract.

 

Causation Test

The Court of Appeal found that the test for causation was satisfied. First, the oral agreement must have contemplated a written agreement in future, otherwise Mr McGill could not enforce it. Second, there was an implied term of the agreement that the player would co-operate with Mr McGill. Although the likelihood of him signing was not over 50%, there was still a real or substantial (i.e. more that speculative) chance of him so doing.

However, the question remained: was it open to Mr McGill to pursue this argument? Henderson J noted that he had not pursued a loss of chance argument in cross examination or submissions. However, his Particulars of Claim did state “the Claimant has suffered loss and damage in the loss of the opportunity to be paid the agent’s fee” and that was never formally withdrawn in court. As such, the Court of Appeal found that the argument could be pursued.

 

Reliance on Earlier Settlement

The defendants also pursued an argument in relation to Mr McGill’s earlier settlement with Mr McCann. They relied on two House of Lords authorities – Jameson v. Central Elecricity Board [2000] 1 AC 455 and Heaton v. AXA Equity and Law Assurance Society Plc [2002] UKHL 15, [2002] 2 AC 329 – to argue that the settlement precluded Mr McGill pursuing this claim. Full discussion of these two interesting cases is outside the scope of this article, but in summary, they provide that a sum accepted in settlement of a claim against defendant A may also fix the full measure of the claimant’s loss. Whether or not it does fix the loss depends on the proper construction of the compromise agreement. If the loss is fixed and the claimant pursues defendant B (being a concurrent tortfeasor or successive contract breaker), that defendant can rely on the earlier settlement to argue that the claimant has been fully compensated.

The Court of Appeal found this a difficult issue to consider on the present facts, but rejected the defendant’s argument. Henderson J reasoned that there were two separate types of claim in this case:

  1. the claim for breach of contract against Mr McCann; and,

  2. then the claims for procuring the breach.

Henderson J held that the claims in contract against Mr McCann were of such a different character from those in tort against the SEM defendants that “clear language would…have been needed if, by settling with the Player, Mr McGill were to be taken to have also satisfied his claim against the SEM defendants”. There was no such clear language in the earlier settlement, so the Jameson / Heaton argument failed.

 

Assessing Quantum

Quantum (i.e. the amount of damages McGill is to receive) remains outstanding. The Court of Appeal felt HHJ Waksman ought to resolve this question because he had heard the witness evidence during the trial and had all the documentation before him. The judge will have to determine the percentage chance that Mr McCann would have signed a compliant standard form contract. He will then apply that figure to the agency fee he would have received but for the poaching of the player. The judge had previously found that there was a less than 50% that Mr McCann would sign such a contract, so Mr McGill can expect no more than half of the agency fee he would have received.

 

Final Thoughts

Loss of chance is a useful tool to claimants. If proof of damage is dependent on the hypothetical acts of a third party, the claimant can rely on loss of chance. It was enough to get Mr McGill home and receive some damages. It is, however, a double edged sword, and the doctrine can be useful for defendants as well to discount awards of damages.

As this case shows, loss of chance will be particularly relevant in cases in any claim where a party wrongfully poaches a player and the poacher is pursued and there is a question mark over what the player would have done. The strength and value of the claim depends on the number of contingencies and the likelihood of each occurring. Each case is heavily fact sensitive, and claimants must build their case through inferences on the available evidence. Contemporaneous documents will be extremely important to build that picture.

The crucial take home lesson for FA agents is to ensure all agreements are reduced into the standard written form before they embark on securing the transfer, as required by The FA Regulations on Working with Intermediaries. This has the obvious advantage of making them enforceable. Mr McGill was unable to get Mr McCann to sign the agreement, and may not have secured any work if he insisted on the same. Although Mr McGill will now be entitled to some compensation, he will be paid less than half of what he initially agreed and has had to go through two sets of litigation to get there.

Parties should also give careful thought to Henderson J’s findings on the Jameson / Heaton issue. Where the claimant initially pursues a player contract breaker, but there is prospect of subsequent litigation for procuring that breach, the terms of any settlement should be considered in detail with Jameson / Heaton in mind. Claimants ought to consider reserving expressly the right to pursue other defendants and confirming that the settlement does not fix the loss. Similarly, defendants may have good reasons to do the opposite. This may lead to further stumbling blocks in negotiations, but one thing is certain: it is an issue that parties must consider.

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Sam Stevens

Sam Stevens

Sam read Law at the University of Warwick, following which he completed an LLM at the University of Cambridge.

Sam accepts instructions to advise and represent clients in contractual, regulatory/disciplinary and personal injury matters involving all major sports.

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