SDI Retail Services Ltd v The Rangers Football Club Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Lionel Persey,Lionel Persey |
| Judgment Date | 19 July 2019 |
| Neutral Citation | [2019] EWHC 1929 (Comm) |
| Date | 19 July 2019 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000631 |
[2019] EWHC 1929 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Lionel Persey QC (sitting as a Judge of the High Court)
Case No: CL-2018-000631
Sa'ad Hossain QC, Sam O'Leary and Joyce Arnold (instructed by Reynolds Porter Chamberlain LLP for the Claimant)
Ben Quiney QC and Michael Ryan (instructed by Mills & Reeve LLP) for the Defendant
Hearing dates: 15–18 April 2019
Approved Judgment
Mr Lionel Persey QC
Lionel Persey QC:
Introduction
. The parties to this dispute are well-known – not only in the wider sporting world but also to this Court. The Claimant is SDI Retail Services Limited (“ SDIR”), a company within the Sports Direct group. The Defendant is The Rangers Football Club Limited (“ Rangers” or “ the Club”). The parties' disputes arise out of a Retail Operations, Distribution and IP Licence Agreement concluded on 21 June 2017. I will refer to this as “ the Agreement”. SDIR is a special purpose vehicle that was set up for the purposes of being Rangers' counterparty to the Agreement and its predecessor, in circumstances that I will describe more fully below. This is the third trial between the parties since October 2018 and the court has also been kept busy with numerous interlocutory skirmishes. Teare J. was right to observe at the outset of his judgment following the first trial that the parties to this action are keen on litigation and that it was doubtful that their appetite for litigation would be satisfied following his decision: SDI Retail Services Limited v The Rangers Football Club [2018] EWHC 2772 (Comm) at [1] (“ the October 2018 Judgment”).
. The sale of replica playing kits and other merchandise is a source of considerable income and plays an important part in the business model of football clubs such as Rangers. Pursuant to the Agreement SDIR was appointed by Rangers to operate and manage its retail operations on an exclusive basis. Retail Operations are defined under the Agreement as meaning the retail sale of Branded Products, Replica Kit and Additional Products at the Ground (including at the Rangers Megastore) and on the Rangers Webstore.
. The Agreement was to continue in force until 31 July 2018 (the “ Initial Term”). Rangers was permitted to approach and enter into negotiations with third parties from six months prior to expiry of the Initial Term. In the event that Rangers received an offer from a third party it was required to provide written notice of that offer to SDIR who would then have the right to match the Material Terms of the offer.
. On 30 March 2018 Rangers concluded an agreement with LBJ Sports Apparel Limited trading as the Elite Group (“ Elite”) and Hummel A/S (“ Hummel”) which has come to be known as the Elite/Hummel Agreement. Pursuant to the Elite/Hummel Agreement Rangers appointed Elite as the exclusive worldwide supplier of Technical Products and Hummel as the exclusive worldwide Technical Brand. Elite and Hummel were granted the rights to manufacture and supply official and replica home, away and third playing kits for the 2018/2019, 2019/2020 and 2020/2021 Scottish football seasons and also for the European/Europa league until the end of the 2020/2021 season.
. It is common ground that Rangers never gave SDIR the opportunity to match the Elite/Hummel Agreement.
. The issue between the parties in this trial is whether the Elite/Hummel Agreement falls within the ambit of the Agreement and was concluded in breach of SDIR's matching rights. SDIR submits that Rangers was required to offer all of the elements of the Elite/Hummel Agreement to SDIR and that it would have exercised its right to match had that been done. SDIR seeks injunctive relief to hold Rangers to what SDIR says is its bargain, together with declaratory relief and damages. Rangers contends that the matching rights under the Agreement did not confer any right upon SDIR to supply products wholesale or to manufacture replica kit or other products. The matching rights were instead confined only to the renewal or further grant of retail rights.
The evidence
. The issues of liability depend entirely upon the proper construction of the relevant terms of the Agreement. Some of those terms have already been construed by Teare J in the October 2018 Judgment and by Sir Ross Cranston (sitting as a Judge of the High Court) in his March 2019 judgment given in related Part 8 proceedings: SDI Retail Services Ltd v The Rangers Football Club Ltd [2019] EWHC 591 (Comm) (“ March 2019 Judgment”).
. Five witnesses gave evidence at the trial and a considerable body of documentary evidence was produced. The witnesses were:
(1) Mr Justin Barnes, a business consultant to the Sports Direct group.
(2) Mr James Don Blair, Rangers' Company Secretary.
(3) Mr Stewart Robertson, Rangers' Managing Director.
(4) Mr Neil Friar, the Chairman of Elite.
(5) Mr Mark Underwood, the Managing Director of Elite.
With the notable exception of Mr Underwood I found much of the witness evidence to be unhelpful and unsatisfactory, as I will describe below.
. Mr Barnes is an experienced business consultant who had previous served as Sports Direct's Head of Brands between late 2006 until May 2008. He subsequently started to provide consultancy services to Sports Direct in 2010, albeit in a limited capacity. His role has since expanded. He has considerable experience in trade marks, brands, licensing and the retail sector. He was the primary contact between Sports Direct and SDIR's solicitors, Reynolds Porter Chamberlain LLP (“ RPC”), and took his instructions from executives of Sports Direct. Much of Mr Barnes' written evidence consisted of argument, assertion and inadmissible opinion evidence regarding the meaning to be given to the Agreement. It became clear during cross-examination that he did not have a good grasp of events or of the matters about which he was purporting to give evidence. Mr Quiney QC, who appeared for Rangers, described Mr Barnes as a mouthpiece for SDIR. I consider this to be a fair assessment.
. Mr Blair was, until late 2018, a partner in the firm of Anderson Strathern LLP who were Rangers' legal advisors in Scotland. He is still a consultant with the firm. He has held the position of Rangers' Company Secretary since 2015. He was closely involved with the disputes between the parties, with the drafting of the Agreement and the other contracts to which I will refer and with dealing with Elite. It appears that Rangers' legal team obtained their instructions from him. Much of the correspondence between RPC and Rangers involved Mr Blair. His principal witness statement prepared for the purposes of the trial (his eighth statement) contains a considerable amount of “evidence” and argument as to what the intentions and understandings of the parties, and Rangers, were when concluding the Agreement and other contracts relevant to this dispute. This is all inadmissible. What it does confirm, however, is that Mr Blair has not been shy to enter into the arena on behalf of Rangers and that he sees his role as that of an advocate as much as a witness of fact. This was also apparent from the correspondence which he authored and from his oral testimony. Mr Quiney submitted that Mr Blair's evidence could be seen as arising out of a desire as a drafter and a lawyer to explain why some of the points made against his client were wrong. That may be so, but it does not make it any the more attractive or relevant or admissible.
. Mr Robertson was appointed as Managing Director of Rangers in June 2015. His statement also contained evidence and argument about the intention of the parties and the meaning of the Agreement. He was shown documents that clearly suggested that Rangers were having discussions with other kit suppliers from as early as 12 July 2017 (ie very shortly after the Agreement was concluded and in breach of the non-solicitation provisions in the Agreement). Although he did not accept this there was, in my judgment, considerable force in the point. Mr Robertson was, in my view, a mouthpiece for Rangers.
. Mr Friar was somewhat defensive in his evidence and appeared reluctant to answer some quite straightforward questions, simply saying that he did not remember. I found some of his answers to be unconvincing. He was, for example, reluctant to accept that Elite appreciated that there was a risk that SDIR would make a claim against Elite if it entered into an agreement with Rangers. The documents showed that Elite was aware that there was such a risk.
. Mr Underwood was, as I have intimated above, a good witness and answered all questions in an open and helpful way.
. Much of the evidence was, as I have said inadmissible. Although some useful background and contextual evidence was given by the witnesses much of it has little bearing on the issues which I have to decide.
Background to the conclusion of the Agreement
RRL, the Puma Agreement and the IP Licence
. Between July 2012 and June 2017 SDIR and Rangers were shareholders in a joint venture company, Rangers Retail Limited (“ RRL”), through which the manufacture, supply and retailing of Rangers official replica kit and other merchandise was carried out. The day-to-day running of RRL was carried out by SDIR. Puma was appointed by RRL as manufacturer and supplier of the kit by an agreement dated 27 February 2013 (“the Puma Agreement”). Retail activities were carried out by SDIR and the wider Sports Direct group on SDIR's behalf.
. On 27 January 2015 Rangers and RRL concluded an IP Licence Agreement (the “ IPLA”). This superseded an earlier licensing agreement made in 2012. Rangers granted certain rights to RRL under the IPLA, including: the right to manufacture (or...
To continue reading
Request your trial