Fulham Football Club (1987) Ltd v Sir David Richards and another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lord Justice Longmore,Lord Justice Rix |
| Judgment Date | 21 July 2011 |
| Neutral Citation | [2011] EWCA Civ 855 |
| Docket Number | Case No: A3/2010/2975 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 July 2011 |
[2011] EWCA Civ 855
Lord Justice Rix
Lord Justice Longmore
and
Lord Justice Patten
Case No: A3/2010/2975
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
VOS J
3534 of 2010
IN THE MATTER OF THE FOOTBALL ASSOCIATION PREMIER LEAGUE LTD
AND IN THE MATTER OF THE COMPANIES ACT 2006
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Philip Marshall QC, Mr Paul Harris QC and Mr Owain Draper (instructed by Lewis Silkin LLP) for the Appellant
Mr Richard Snowden QC and Mr James Potts (instructed by Brabners Chaffe Street LLP) for the 1st Respondent
Mr Ian Mill QC and Mr Andrew Hunter (instructed by DLA Piper UK LLP) for the 2nd Respondent
Hearing dates : 8 th and 9 th June 2011
THE HEARING WAS IN PRIVATE
Introduction
Fulham Football Club (1987) Limited ("Fulham") appeals with the leave of the judge against an order of Vos J dated 1 st December 2010 made under s.9 of the Arbitration Act 1996 ("the AA 1996"). Under this order the judge stayed a petition presented by Fulham on 27 th April 2010 under s.994 of the Companies Act 2006 ("the CA 2006").
The petition relates to the affairs of the Second Respondent, The Football Association Premier League Limited ("the FAPL"), which was incorporated in 1992 in order to give the Premier League the commercial independence to organise its own broadcast and sponsorship agreements. Under its memorandum of association, the FAPL is empowered to organise and manage the Premier League (under the jurisdiction of the Football Association ("the FA")) and, for these purposes, to make its own rules. Each of the 20 clubs in the Premier League holds a share in the company. The allegations of unfair prejudice raised in the petition do not, however, relate to the conduct of the other members of the FAPL but rather to that of the First Respondent, Sir David Richards, who is its chairman. What is alleged is that Sir David acted as an unauthorised agent in breach of the FA Football Agents Regulations ("the Agents Regulations") when in July 2009 he was asked by the Chief Executive of Portsmouth City Football Club Limited ("Portsmouth") (Mr Peter Storrie) to approach the chairman of Tottenham Hotspur Football & Athletic Company Limited ("Tottenham") (Mr Daniel Levy) in order to facilitate the transfer to Tottenham of one of Portsmouth's players, Mr Peter Crouch.
At the time Portsmouth was in severe financial difficulties and needed to raise £9 million in order to avoid winding-up proceedings threatened by HM Revenue & Customs. It is alleged that by 25 th July Fulham had made an offer of £9 million to secure the registration of Mr Crouch which had been rejected but was prepared to increase its offer to £11 million. Mr Crouch had indicated his preference to play for Tottenham but Tottenham had made lower offers for the player which had also been rejected.
The principal allegation made in the petition is that on 24 th July Mr Storrie approached Sir David and asked him to assist Portsmouth in facilitating the transfer of Mr Crouch to Tottenham. It is said that Sir David agreed to help and subsequently entered into negotiations with Mr Levy on behalf of Portsmouth to secure an increased offer for the player. What is not in dispute is that on 26 th July Tottenham did make an improved offer of £9 million payable immediately which was accepted by Portsmouth and that Mr Crouch was then transferred to Tottenham.
Article 79 of the Articles of Association of the FAPL ("the Articles") requires the company to comply with the rules of the Football Association ("the FA Rules"). The FA Rules empower the FA to make regulations such as the Agents Regulations which prohibit any player or club from using or seeking to use the services of an unauthorised agent in relation to Agency Activity as defined. This includes acting in the capacity of an agent, representative or adviser to a club, either directly or indirectly, in the negotiations or arrangements of any transaction facilitating or effecting the transfer of the registration of a player from one club to another.
On 10 th August 2009 Fulham made a complaint to the FAPL about Sir David's involvement in the transfer of Mr Crouch to Tottenham. Mr Peter McCormick, a legal adviser to the FAPL, was appointed to inquire into the matter. He produced a report on 10 th February 2010 in which he made findings that Sir David had spoken to Mr Levy and did play a part in "mediating" between Portsmouth and Tottenham. He concluded, however, that Sir David had not brokered the transfer of Mr Crouch to Tottenham. The board of the FAPL considered the report on 2 nd March 2010 and concluded that Sir David's role in the transfer was one which it was legitimate for him to perform as chairman of the FAPL. Fulham was informed in a letter of 3 rd March that its complaint would be dismissed.
On 15 th March 2010 Fulham's solicitors wrote to the FAPL stating that Sir David had acted unfairly so as to prejudice the interests of Fulham as a member of the FAPL. The FAPL offered to place the matter on the agenda of a shareholders' meeting which was scheduled to take place at the beginning of June 2010 and indicated that it would be bound by the decision of the majority of the member clubs taken at the meeting. Article 46 of the Articles entitles the members to dismiss the chairman and the chief executive officer. In the same letter it put Fulham on notice that if it wished to take further action in respect of the complaint then it was bound under the FAPL Rules to submit the dispute to arbitration.
On 27 th April 2010 the petition was presented and on 21 st June 2010 and 9 th July 2010 the FAPL and Sir David issued their respective applications for a stay of the proceedings.
The FA Rules (see Rule B.12) provide that membership of the Premier League constitutes an agreement between the FAPL and the member clubs to be bound by and comply with the FA Rules, the Articles and the FAPL Rules. The FAPL Rules are those made by the FAPL from time to time under the power contained in Article 16.1 for the purpose of regulating the organisation and management of the Premier League. The combined effect of Article 79 and Article 16 is that member clubs are bound by both the FA and the FAPL Rules and any regulations made under the FA Rules.
In its petition Fulham alleges that it is an implied term of the FAPL Rules that members of the board of the FAPL will comply with their fiduciary obligations and not act so as to prefer the interests of one member club over another. The duties of Sir David as a director of the FAPL include the general duties set out in Part 10 of the CA 2006 to act in accordance with the company's constitution and to exercise his powers for a proper purpose (s.171); to act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of the members as a whole having regard (inter alia) to the need to act fairly as between members of the company (s.172); and to avoid conflicts of interest (s.175).
It is alleged that, by acting as he did in connection with the transfer of Mr Crouch, Sir David acted in breach of the FA Rules and caused the FAPL to act in breach of the Articles and the FAPL Rules (para. 23 of the petition); exercised his powers for an improper purpose, namely to advance the interests of Portsmouth and Tottenham over those of other members such as Fulham (para. 24.2); and failed to act in the best interests of the FAPL or to act fairly between its members (para. 24.3).
The board of the FAPL has failed, it is said, to take action to rectify these breaches of the Articles and the FAPL Rules and of Sir David's duties as a director and, by dismissing Fulham's complaint based on the findings in the McCormick report, has conducted the affairs of the FAPL in a manner which is unfairly prejudicial to the interests of some part of its members including Fulham (para. 26).
By way of relief, Fulham seeks an injunction restraining Sir David from acting as an unauthorised agent or from participating in any way in negotiations regarding the transfer of players. In the alternative, it seeks an order that Sir David should cease to be the chairman of the FAPL and such other relief as the Court thinks fit.
The central allegation that Sir David acted as an unauthorised agent for Portsmouth is strongly denied by both Sir David and the FAPL. Sir David has indicated that he intends (if Fulham succeeds in this appeal) to apply to the Companies Court for an order striking out the petition. They have also, through their counsel, made various submissions to the effect that the principal purpose of the petition is to provide a public hearing of the allegations against Sir David. But none of these matters is material to the disposal of this appeal. The issue for the judge was whether the conditions for a stay of proceedings set out in s.9 of the AA 1996 were made out. If so, then the grant of a stay is mandatory: see s.9(4). As to this, Vos J was faced with two conflicting decisions of the High Court. The first in time is that of Rimer J in Re Vocam Europe Ltd [1998] BCC 396 who stayed an unfair prejudice petition under s.9 where a shareholders' agreement provided for all matters in dispute to be referred to arbitration. The second is the decision of HH Judge Weeks QC (sitting as a judge of the High Court) in Exeter City Association Football Club Ltd. v. Football...
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