MacAri v Celtic Football and Athletic Company Ltd
| Jurisdiction | Scotland |
| Judgment Date | 08 June 1999 |
| Date | 08 June 1999 |
| Docket Number | No 62 |
| Court | Court of Session (Inner House - First Division) |
FIRST DIVISION
Lady Cosgrove
ContractEmploymentContract of employmentConstructionWrongful dismissalFootball manager summarily dismissedBreach of contractWhether pursuerin material and repudiatory breach of contractWhether motive of defenders relevantWhether implied term that employers and employee have mutual trust and confidence in each otherWhether employers in breach of implied obligation of good faithWhether pursuer could be dismissed only in terms of clause in contractWhether dismissal lawful
A football club in terms of a written contract of employment employed a football manager. Clause 2.2 of the contract provided for a period or notice to be given in the event of its termination failing which a payment could be made by the club in lieu of notice. Clause 13 provided for dismissal by means of notice in writing to the manager in the event that in the opinion of the board of the club any of certain situations arose. The contract also provided for the manager to reside within a particular radius of George Square in Glasgow and for him to be present at the club's premises on a regular basis. A previous board of directors of the club had appointed the manager. When the club was taken over a new board was formed and the managing director was anxious to remove the manager at the outset. The manager failed to obtemper the residence requirement and the instruction that he be present at the club's premises and a warning letter was sent in which the club also requested that the manager report to the managing director on a weekly basis. The manager accepted that when he signed the contract he would have to move his family home within a period of time and had intended to do so at about Easter 1994. He failed to do so; he also failed to make weekly reports to the managing director. The manger fixed a holiday to America without informing the club and was asked to cancel it. He refused to do so. The manager wrote explaining that although the managing director's motives were the same as his, being to restore the club to the position as the premier club side in Scotland and a force in European football, the manager knew more about managing the club than the managing director did and should be left alone to do that job in his own way and not in the way the club wanted him to. The club dismissed the manager purportedly on the basis of clause 13 but no meeting of the board had been convened in respect of it, the dismissal being effected by the managing director personally and subsequently ratified by the board of the club. The manager thereafter brought an action claiming wrongful dismissal and damages for breach of contract. After proof, the Lord Ordinary (Lady Cosgrove) assoilzied the club from the conclusions of the summons. The manager reclaimed.
Held (affg judgment of Lady Cosgrove) (1) that the manager's refusal to comply with the residence requirement was of itself a material breach of contract justifying dismissal as he had failed to move by Easter 1994, had been less than truthful to the managing director about his reasons for not doing so and had been defiant over the matter; (2) that as the manager conceded that the instructions given to him were ones the managing director was entitled to give and the manager was obliged to obey in terms of his contract, by failing to do so, the manager was in material breach of contract irrespective of the managing director's motives; (3) that, in any event, the managing director had not acted in bad faith; (4) that although a party was entitled to withhold performance of an obligation under a contract when the other party had failed to perform his obligation, not every obligation by one party was necessarily and invariably the counterpart of every obligation of the other so that the circumstances of each case had to be looked at; (5) that an employee had a duty to accept the directions of the employer if they were not illegal, were reasonable and were within the scope of his employment and the manager had to carry out any reasonable instruction connected with his responsibilities; (6) that the manager had not refused to obey the club's instructions due to a breach on their part of the implied term of trust and confidence between employee and employer but had deliberately chosen not to comply with them believing he knew best what was involved in managing a football club and being determined to do it his own way and as he had continued to work under his contract, the club's breach of that implied term did not entitle him to disregard the club's lawful and legitimate instructions as to his work; and (7) that as clause 13 did not exclude the club's right to dismiss the manager under the general law of contract, the dismissal was not wrongful, the test being whether an employee's actings or breaches of contract, when viewed objectively, were aiming such as to amount to a repudiation of the contract by him; and reclaiming motionrefused.
Luigi Macari brought an action against the Celtic Football and Athletic Co Ltd claiming damages for breach of contract and wrongful dismissal.
The cause came to proof before the Lord Ordinary (Lady Cosgrove).
At advising, the Lord Ordinary assoilzied the defenders from the conclusions of the summons.
The pursuer reclaimed.
Cases referred to:
Bank of East Asia Ltd v Scottish Enterprise 1997 SLT 1213
Brown v Magistrates of EdinburghENR 1907 SC 256
ESE Financial Services (Pty) Ltd v Cramer 1973 (2) SA 808(C)
Johannesburg (Municipal Council of) v D Stewart&Co Ltd 1909 SC (HL) 53
Malik v Bank of Credit and Commerce InternationalELRICR[1998] AC 20; [1996] ICR 406
Manheath Ltd v HJ Banks&Co LtdSC 1996 SC 42
Tooling (BK) v Scope Precision Engineering 1979 (1) SA 391 (A)
Turnbull v McLeanUNK (1874) 1 R 730
The reclaiming motion called before the First Division, comprising the Lord President (Rodger), Lord Caplan and Lord Marnoch for a hearing on the summar roll.
At advising, on 8 June 1999
LORD PRESIDENT (Rodger)The pursuer, Mr Luigi Macari, is a former professional football player who has had a subsequent career as a football manager. On 27 October 1993 he and the defenders, Celtic Football and Athletic Company Limited (Celtic), entered into a service agreement (the agreement), setting out the terms of his employment as manager of Celtic. Clause 2.2 provided: The period of notice required to be given, by either party, to terminate the employment of the Manager shall be not less than two years, such notice not to be given during the first year of the employment of the Manager. The Company may elect to make payment in lieu of notice. It is agreed that, despite this provision, on 14 June of the following year the defenders terminated the pursuer's employment. Not only therefore was the pursuer dismissed within the first year of his employment, but he was given no notice and no payment in lieu of notice. In the present action the pursuer claims that for these and other reasons his dismissal was a breach of clause 2.2 of the agreement and he sues the defenders for damages for that breach. Broadly put, the defenders' position is that at the time of his dismissal the pursuer was in flagrant material and repudiatory breach of the agreement, that they accepted that repudiation and that his dismissal was accordingly lawful. The Lord Ordinary assoilzied the defenders and the pursuer has reclaimed.
In her opinion the Lord Ordinary gives a vivid account of the events leading up to and surrounding Mr Macari's dismissal. Both sides accepted her findings in fact, though counsel for the pursuer asked the court to make certain further inferential findings. In those circumstances the notes of evidence were not extended and we know nothing of the evidence or of the circumstances apart from what is set out in the Lord Ordinary's opinion, in the agreement and in a handful of letters which were copied for our use. In referring to the relevant facts and evidence, for the most part I have gratefully paraphrased the opinion of the Lord Ordinary.
At the time when the pursuer took over as manager towards the end of October 1993 the fortunes of Celtic, both financial and sporting, were at a low ebb. On 3 March of the following year a consortium of investors headed by Mr Fergus McCann mounted a successful take-over bid for Celtic. The former board of directors were replaced by a new board and Mr McCann, who injected a substantial amount of capital by way of a rights issue, became the managing director. He was a man who had enjoyed a successful career as an international business man but had long entertained the ambition of gaining control of Celtic. He felt that the club was lacking in marketing and general management capability and would benefit from his financial expertise and commercial skills. Perhaps predictably, Mr McCann's approach was wholly different from the one followed by the previous board of directors. In particular the old board had adopted a somewhat laissez-faire attitude to management, exemplified by their perception that the manager must be allowed a free hand and be left on his own to get on with his job. While recognising that the manager had a pivotal role to play in running the club, Mr McCann considered that, as managing director or chief executive of the defenders, he himself had both a supervisory and directory role in relation to the manager. The pursuer, who had been appointed by the old board and had been given a great deal of freedom to perform his job as he considered best in the interests of the club, was thus confronted with a new situation, one of which he had had no previous experience either at Celtic or at the other clubs where he had been manager. Equally predictably perhaps, the pursuer did not find the new approach to his taste and had difficulty in adjusting to these changed circumstances.
There was, however, a further element in the situation. Mr McCann and the new board saw the...
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