Imageview Management Ltd v Jack
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jacob,Lord Justice Dyson,Lord Justice Mummery |
| Judgment Date | 13 February 2009 |
| Neutral Citation | [2009] EWCA Civ 63 |
| Docket Number | Case No: A2/2008/1408 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 February 2009 |
[2009] EWCA Civ 63
Before : The Rt Hon Lord Justice Mummery
The Rt Hon Lord Justice Dyson and
The Rt Hon Lord Justice Jacob
Case No: A2/2008/1408
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
THE HON MR JUSTICE UNDERHILL
LS0217A
QUEEN'S BENCH DIVISION (LEEDS DISTRICT REGISTRY)
Mr Jonathan Lopian and Mr Seb Oram (instructed by Messrs Hill Dickinson) for the Appellant
Mr Steven Turner (instructed by Messrs Bates Wells & Braithwaite) for the Respondent
Hearing date: 18 December 2008
Lord Justice Jacob:
What if a footballer's agent, in negotiating for his client, makes a secret deal with the club for himself on the side? That is what this case is about. It would not have happened if Mr Mike Berry (whose company, Imageview Ltd. was the footballer's agent) had been open. If he had told his client, the footballer Kelvin Jack, that when he was going to negotiate for Mr Jack to sign for Dundee United, he was also going to make a deal with the club for himself about getting a work permit for Mr Jack, then, if Mr Jack had had no objection, there would have been no problem. Instead of doing that Mr Berry made a secret deal.
The details are short and simple:
(a) Mr Jack is Trinidad and Tobago's international goalkeeper. In July 2004 he wanted to play professionally in the UK (and had just been briefly on the books of Reading FC). The close of the transfer window was only a week or so away. He had contact with Dundee United and then asked Mr Berry (whom he knew) to negotiate with the club. Mr Berry agreed that he (in fact via Imageview) would act as his agent. There was no written contract of agency at the time. There was one later, dated 3 rd August 2004. It is agreed that the written contract reflected the July oral agreement. So I can refer to its language as a matter of convenience.
(b) The contract was for a 2 year term. Mr Jack was to pay Imageview 10% of his monthly salary if Imageview successfully made arrangements for him to sign with a UK club. Imageview agreed, inter alia, to provide “advice and representation in connection with any contract or renewal of a contract which the Player might wish to enter into”. It further provided that Imageview was to “use its reasonable endeavours to promote the Player and act in his best interests”.
(c) Mr Berry spoke to his contact at Dundee. He negotiated a contract for Mr Jack to play for the club for two years. At the same time he agreed that Dundee would pay Imageview a fee of £3,000 for getting Mr Jack a work permit. Such a permit was needed because Mr Jack is a non-EU citizen.
(d) Mr Berry did not tell Mr Jack about this work permit contract. And about a year later, when Mr Jack asked about it, Mr Berry told him “it was none of your business.”
(e) Imageview duly obtained a work permit for Mr Jack and Dundee paid the £3,000 fee.
(f) The Recorder held that the actual value of the work done in getting the permit “in real terms” was £750. There is not (and realistically could not be) any appeal about that finding.
(g) The fee of £3,000 for the work permit contract was set by Mr Berry by, in part, taking into account the length of Mr Jack's contract with Dundee.
(h) Mr Jack signed and played for Dundee and began paying the 10% due under his agency contract with Imageview. He stopped doing so after a year or so when he found out about the work permit contract.
In these proceedings:
i) Imageview claims the unpaid agency fees from Mr Jack (£3,203.07);
ii) Mr Jack defends that claim and himself claims back the agency fees he has already paid;
iii) Mr Jack also claims the full £3,000 received by Imageview from Dundee, alternatively the “excess” above the real value of the work done, namely £2,250.
The first question: was the undisclosed side deal a breach of Imageview's duty as an agent?
Unless there was a breach of duty, the other questions do not arise and Mr Jack is liable for the unpaid balance of the fees. Was the undisclosed side deal “none of Mr Jack's business”? Mr Recorder Walker, upheld by Underhill J, held that it was indeed Mr Jack's business: it was not Mr Berry/Imageview's private and separate arrangement.
The basis for such a finding was that Imageview in negotiating a deal for itself had a clear conflict of interest. Put shortly, it is possible that the more it got for itself, the less there would or could be for Mr Jack. Moreover it gave Imageview an interest in Mr Jack signing for Dundee as opposed to some other club where no side deal for Imageview was possible.
There is no answer to this. The law imposes on agents high standards. Footballers' agents are not exempt from these. An agent's own personal interests come entirely second to the interest of his client. If you undertake to act for a man you must act 100%, body and soul, for him. You must act as if you were him. You must not allow your own interest to get in the way without telling him. An undisclosed but realistic possibility of a conflict of interest is a breach of your duty of good faith to your client.
That duty should not cause an agent any problem. All he or she has to do to avoid being in breach of duty is to make full disclosure. Any agent who is doubtful about his position would do well to do just that – the mere fact that he has doubts will generally be a message from his conscience. As Mr Steven Turner, counsel for Mr Jack put it, all an agent has to do is to “give the player details of any side-deals that may form part of his transfer arrangements. Sunlight is, after all, the best of disinfectants.”
The law as to an agent's duty of fidelity where there is a realistic possibility of a conflict of interest, goes back a long, long way. Sadly the courts have found it necessary to re-state it from time to time. I make no apology for doing so yet again. I go to just three old cases to demonstrate that what I said above contains nothing new.
At least as early as 1888 (there are earlier cases, for instance Salomons v Pender 1 H&C 639, a citation from which appears below) the principles were firmly laid down in Boston Deep Sea Fishing v Ansell (1888) 39 Ch. D. 339. A managing director of a company in placing orders for vessels for his company secretly agreed with the shipbuilders to receive a commission.
Cotton LJ said this at p.357:
Then when he was engaged in that contract, in respect of the matters of that very contract, he in one instance got a percentage of 1 per cent. from the Shipbuilding Company, and, in the other case, he insisted on getting —that is the evidence —and did get, a lump sum of £50. It is suggested that we should be laying down new rules of morality and equity if we were to so hold. In my opinion if people have got an idea that such transactions can be properly entered into by an agent, the sooner they are disabused of that idea the better. If a servant, or a managing director, or any person who is authorized to act, and is acting, for another in the matter of any contract, receives, as regards the contract, any sum, whether by way of percentage or otherwise, from the person with whom he is dealing on behalf of his principal, he is committing a breach of duty. It is not an honest act, and, in my opinion, it is a sufficient act to shew that he cannot be trusted to perform the duties which he has undertaken as servant or agent. He puts himself in such a position that he has a temptation not faithfully to perform his duty to his employer. He has a temptation, especially where he is getting a percentage on expenditure, not to cut down the expenditure, but to let it be increased, so that his percentage may be larger. I do not, however, rely on that, but what I say is this, that where an agent entering into a contract on behalf of his principal, and without the knowledge or assent of that principal, receives money from the person with whom he is dealing, he is doing a wrongful act, he is misconducting himself as regards his agency, and, in my opinion, that gives to his employer, whether a company or an individual, and whether the agent be a servant, or a managing director, power and authority to dismiss him from his employment as a person who by that act is shewn to be incompetent of faithfully discharging his duty to his principal.
Bowen LJ put it this way at p.362:
This is an age, I may say, when a large portion of the commercial world makes its livelihood by earning, and by earning honestly, agency commission on sales or other transactions, but it is also a time when a large portion of those who move within the ambit of the commercial world, earn, I am afraid, commission dishonestly by taking commissions not merely from their masters, but from the other parties with whom their master is negotiating, and with whom they are dealing on behalf of their master, and taking such commissions without the knowledge of their master or principal. There never, therefore, was a time in the history of our law when it was more essential that Courts of Justice should draw with precision and firmness the line of demarcation which prevails between commissions which may be honestly received and kept, and commissions taken behind the master's back, and in fraud of the master.
And at p.363:
Now, there can be no question that an agent employed by a principal or master to do business with another, who, unknown to that principal or master, takes from that other person a profit arising out of the business which he is employed to transact, is doing a wrongful act...
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