Proactive Sports Management Ltd v Rooney and another

Hearing dates : 26–27 July 2011

The term "image rights" is used to describe rights that individuals have in their personality, which enables them to control the exploitation of their name or picture. Celebrities often obtain significant income by exploiting their image rights. Wayne Rooney ("WR"), an extremely successful footballer, sought to exploit his image rights, as did his wife, Mrs Coleen Rooney. WR set up a company, Stoneygate 48 Ltd ("Stoneygate"), the first respondent to this appeal, and he assigned his image rights to it. Stoneygate then appointed the appellant sports agency, which I shall call "Proactive", to act as its agent by what is known as an image rights representation agreement. Proactive thereby became responsible for, among other things, negotiating contracts with third parties for exploiting those rights, which I shall call generically "endorsement contracts", such as by allowing WR's picture to be used for advertising sportswear. All went very well until WR fell out with Proactive. Stoneygate terminated the agreement and appointed Triple S Ltd ("Triple S") in its place. Stoneygate and Proactive are in dispute about the financial implications of that termination. No written agreement was ever signed between Proactive and Mrs Rooney although for a time Proactive performed a similar role for Mrs Rooney to that for WR. There is also a dispute as to whether there was any contract between Proactive and Mrs Rooney, and, if so, on what terms as to commission.

Background

The careful judgment of HHJ Hegarty QC, handed down on 15 July 2010, from which Proactive appeals, is 821 paragraphs in length. This judgment will be much shorter than that as there are now many fewer matters in issue between the parties. So far as possible it will refer only to the issues which remain live at this stage.

At the date of termination, the image rights representation agreement in force between Stoneygate and Proactive was an agreement dated 16 January 2003 (though probably not executed until February 2003). I shall refer to this as "the IRRA". There were a number of other agreements before and since, but they are not relevant. A crucial point is that WR was only 17 years old when this agreement was signed and relatively new to the world of professional football.

The IRRA provided in material part:

"THIS REPRESENTATION AGREEMENT is made on 16 January 2003

BETWEEN

(1) STONEYGATE 48 LIMITED…(the "Client");

(2) PROACTIVE SPORTS MANAGEMENT LIMITED… (the "Company").

(3) WAYNE ROONEY…(the "Player")

1 INTERPRETATION

1.1. In this Agreement, unless the context requires otherwise:

"Services" means the services that the Company shall perform for the Client, as more particularly listed in clause 3.

2 APPOINTMENT

The Client appoints the Company, and the Company agrees to act, as the sole and exclusive representative of the Client, and to perform the Services during the continuance of and on the terms and conditions set out in this Agreement.

3 OBLIGATIONS OF THE COMPANY

The Company undertakes and agrees with the Client that it shall at all times during the continuance of this Agreement, diligently and faithfully serve the Client and, in particular, that it shall:

3.1 use its best endeavours and work diligently to represent the Client in all areas of image rights exploitation, licensing and personality management including (but not limited to):

3.1.1. media (including television, radio, press and internet) and publicity relations and negotiations;

3.1.2. product endorsement and merchandising negotiations;

3.1.3. personal appearance, image exploitation and other promotional opportunities;

3.1.4. opportunities involving the Client's Intellectual Property;

3.1.5. contract negotiations in relation to the foregoing.

and such other tasks as the Client may from time to time request, and as the Company shall consider prudent and in the interests of the Client from time to time;

3.2. keep full accounts and records showing clearly all transactions relating to the Client;

3.3. when engaged in the negotiations listed in clause 3.1 above, make proper efforts to negotiate contracts strictly and only in accordance with any instructions or directions given to it by the Client (whether generally or specifically in any instance or circumstance) and, in particular (but not by way of limitation), not negotiate or enter into contracts at prices or on payment terms other than those agreed by the Client;

4 OBLIGATIONS OF THE CLIENT

The Client agrees with the Company that it shall, during the continuance of this Agreement:

…

4.4. not during the term of this Agreement negotiate or enter into contracts (nor permit the Player to enter into contracts) with any other firms of agents or representatives or any other business or persons who may reasonably be regarded as competitors of the Company, except with the prior written consent of the Company;

5 REMUNERATION

6.1 In consideration of the Company's appointment the Company shall pay to the Client (upon the Player's confirmation of these terms and conditions having attained 18 years of age pursuant to Clause 5.3) the sum of £25,000.

6.2 In consideration for the performance of the Services, the Client shall pay to the Company the sum of £1 (receipt of which the Company hereby acknowledges) and a commission calculated on a percentage of all sums payable to the Client as follows:

20% of the gross sum payable under any contract or arrangements for the promotion, endorsement or advertisement of the Client and/or the exploitation of the Intellectual Property and/or products, goods or services to which the Client is a party.

6.3 The Company shall be responsible for its normal and reasonable expenses incurred in performing the Services. If the Client requests that the Company perform services that are beyond the scope of the Services that the Company would provide in normal circumstances and where the Company incurs extra or unforeseeable expenses in providing such Services, the Client shall reimburse the Company in respect of those expenses provided the need to incur such expenses is agreed in advance by the Company. Non-exhaustive illustrations of such expenses would include company administration and company secretarial services provided on behalf of the Company, and legal, financial, accounting and management services performed on behalf o the Company.

7 DURATION AND TERMINATION

7.1 Subject to Clause 7.2, this Agreement shall commence on the date hereof and, subject to the provisions of this clause, shall continue for eight years, unless terminated earlier in accordance with the provisions of this clause 7.

7.2 Either the Company or the Client may terminate this Agreement immediately by giving notice in writing upon the occurrence of a material breach of this Agreement by the other party which is not remedied with 28 days of a written request, or upon the bankruptcy or insolvency (as appropriate) of the other party.

8 CONSEQUENCES OF TERMINATION

8.1 In the event that the Client terminates this Agreement prior to the expiry of the term set out in clause 7.1, other than in accordance with clause 7.2, the Client and/or the Player shall forthwith pay to the Company

8.1.1 £25,000.

8.1.2 a further sum payable to the Company as liquidated damages calculated as follows:

a sum equal to £37,000 multiplied by the number of complete years of the unexpired term of this Agreement (with years to commence from the date of this Agreement and anniversaries thereof).

8.1.3 a sum equivalent to the Company's total costs and expenses properly incurred in relation to its performance in the Services from the date hereof until the date of termination notice…

21 SURVIVORSHIP

This Agreement shall, as to any of its provisions remaining to be performed in whole or in part or capable of having following termination, remain in full force and effect despite termination."

The arrangements made pursuant to the IRRA were highly successful. Proactive employed a special group of employees to look after WR and Mrs Rooney. They were known as "Team Rooney". A number of lucrative sponsorship contracts and other financial opportunities were secured for WR. Both Stoneygate and Proactive derived a substantial income from the exploitation of his image rights.

The break between Stoneygate and Proactive came in about October 2008. In about December 2009, Stoneygate and WR purported to terminate the IRRA and Proactive elected to treat this as a repudiatory breach of contract. Stoneygate made no further payments to Proactive for its commission.

Prior to the breakdown in relations, Proactive had also acted on behalf of Mrs Rooney and her own image rights company, Speed 9849 Ltd ("Speed"). Though there was no written contract between these parties, Proactive had, in practice, levied a commission of 20% on all sums received by Speed in just the same way as in the case of Stoneygate. But Mrs...