Sdi Retail Services Ltd v The Rangers Football Club Ltd
| Jurisdiction | England & Wales |
| Judge | Peter MacDonald Eggers |
| Judgment Date | 13 December 2021 |
| Neutral Citation | [2021] EWHC 3364 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000631 |
[2021] EWHC 3364 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter MacDonald Eggers QC
(sitting as a Deputy Judge of the High Court)
Case No: CL-2018-000631
Sa'ad Hossain QC (instructed by Reynolds Porter Chamberlain LLP) for the Claimant
Akhil Shah QC and Max Kasriel (instructed by Allen & Overy LLP) for the Defendant
Hearing dates: 3rd December 2021
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Peter MacDonald Eggers QC
Peter MacDonald Eggers QC:
Introduction
In this action, the Claimant (“SDIR”) and the Defendant (“Rangers”) entered into a Retail Operations, Distribution and IP Licence Agreement dated 21st June 2017 (“the Agreement”).
SDIR applies for an order for disclosure of certain documents (“the Castore Documents”) pursuant to paragraph 18 of CPR Practice Direction 51U (“CPR PD51U”), which sets out the Business and Property Courts Disclosure Pilot. SDIR also submits that these documents are “ known adverse documents” within the meaning of paragraph 2.8 of CPR PD51U and so are disclosable in any event pursuant to paragraphs 3.1(2) and 3.3 of CPR PD51U.
In order to understand the grounds of SDIR's application, the issues arising out of the Agreement and SDIR's claim need to be considered.
Factual background and SDIR's claim
Under the Agreement, Rangers granted to SDIR certain rights, including: (a) the exclusive right to operate and manage the retail sale of “Branded Products”, “Replica Kit” and “Additional Products” at the Ibrox Stadium (including the Rangers Megastore) and on the Rangers Webstore; (b) the non-exclusive right to perform the “Permitted Activities” in relation to the Branded Products, Replica Kit and Additional Products; (c) the non-exclusive right to manufacture Branded Products; and (d) certain Ancillary Rights relating to SDIR's designation as Official Retail Partner and Official Merchandise Supplier, branding and advertising, and Advertising Rights.
Paragraph 5 of Schedule 3 to the Agreement provided for SDIR to have a matching right (“the Matching Right”) in respect of “Third Party Offers” received by Rangers. The Matching Right entitled SDIR to match any offer made by a third party for certain “Offered Rights” (namely, the right to operate and manage the Retail Operations, the right to perform the Permitted Activities in relation to the Branded Products and/or Additional Products, and/or the right to perform the Permitted Activities in relation to the Official Kit and/or Replica Kit), or to renew the Agreement where offers from third parties were not made, and thus to extend the duration of its rights.
In October 2018 and in July 2019, Teare, J and Mr Lionel Persey QC (sitting as a Deputy Judge of the High Court) respectively held that Rangers breached the Matching Right in entering into three contracts without giving SDIR an opportunity to match. In particular, Rangers entered into an agreement dated 30th March 2018 with LBJ Sports Apparel Ltd trading as The Elite Group (“Elite”) and Hummel A/S (“Hummel”) (“the Elite/Hummel Agreement”), under which 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. In September 2018, by two further agreements (“the September 2018 Agreements”), Rangers granted Elite: (i) the non-exclusive right to distribute, market, advertise, promote, offer for sale and/or sell products bearing any Rangers brands or Rangers related brands, replica kit of the official Rangers Football Club kit and Rangers branded products or products dealing with Rangers content; and (ii) further rights in relation to certain retail units.
Rangers therefore did not give SDIR the opportunity to match the Elite/Hummel Agreement. The Court further held that SDIR would have matched the Elite/Hummel Agreement had it been given the opportunity which would have led to a further agreement between SDIR and Rangers for the 2018– 2019, 2019–2020 and 2020–2021 seasons (“the E/H Further Agreement”).
It is SDIR's case that it would then have acquired those Offered Rights not covered by the E/H Further Agreement, so that it would have been Rangers' Official Retail Partner during the 2018–2019 and 2019–2020 football seasons. It is Rangers' case that a third party (Elite or another) would have sought to be Rangers' official retail partner, but Rangers makes no admission as to whether SDIR would have matched that third party's offer.
At paragraphs 31A-31C of SDIR's Re-Re-Amended Particulars of Claim (“the Particulars of Claim”), it is pleaded by SDIR that:
(1) Had Rangers provided SDIR, in or around March 2018, with a Notice of Offer in respect of the Offered Rights and connected commercial arrangements granted to Elite/Hummel under the Elite/Hummel Agreement, SDIR would have matched it, leading to a further agreement under paragraph 5.7 of Schedule 3 to the Agreement (the E/H Further Agreement). I understand that this means that SDIR would therefore have acquired rights to manufacture and wholesale the Rangers Replica Kit (amongst other things) for the 2018– 2019, 2019–2020 and 2020–2021 seasons.
(2) SDIR would then have acquired those Offered Rights (or parts thereof) not covered by the E/H Further Agreement.
(3) Where Rangers did not enter into the Elite/Hummel Agreement, but entered into the E/H Further Agreement: (a) Elite would not have made the offer set out in the “4 June 2018 Purported Notice of Offer”, (b) no other third party would have made an offer to be Rangers' retail partner; and (c) SDIR would then have renewed the Agreement in respect of those Offered Rights (or parts thereof) not covered by the E/H Further Agreement. Alternatively, SDIR would have matched the Elite offer (as in fact happened). SDIR maintains that this means that SDIR would also have continued to have rights of retail of Rangers Replica Kit and other Branded Products for the 2018– 2019, 2019–2020 and 2020–2021 seasons, but Rangers disputes that this extends to the 2020–2021 season.
(4) During the 2018–2019 and 2019–2020 football seasons, SDIR would have been Rangers' only retail partner, and would also have had rights under the E/H Further Agreement (paragraph 31C).
Further, at paragraphs 32–32B of the Particulars of Claim, it is pleaded that:
(1) SDIR's loss and damage includes: (a) lost profits from the sale of Replica Kit and Branded Products; (b) lost profits from the sale of other products that would have been sold to customers who, but for Rangers' breach of contract would have purchased Replica Kit and Branded Products; (c) loss of goodwill as Rangers' Official Retail Partner and Official Merchandise Supplier, as a result of the grant of rights to Elite and other third parties to sell Replica Kit and/or Branded Products; and (d) loss of the payment SDIR would have received from the brand sponsor under the E/H Further Agreement or an E/H-Similar Agreement.
(2) SDIR's damages in respect of the lost profits should be calculated as follows: (1) the starting point is that SDIR's revenues would have been at least as great as those made by Elite under the relevant agreement for the relevant season; (2) SDIR's revenues would have been greater than Elite's due to: (a) the retail expertise of the Sports Direct group, to which SDIR had access; and (b) the large number of Sports Direct shops in which SDIR could have stocked Replica Kit and Branded Products, and the reach of the Sports Direct webstore. This would have increased overall sales. Further, if the E/H Further Agreement or an E/H-Similar Agreement had been in place, SDIR would have been able to make a large proportion of its sales through Sports Direct shops and the Sports Direct webstore, and so obtain the retail revenues on those sales.
Therefore, as to the quantum of SDIR's damages in respect of Rangers' breaches of the Agreement, SDIR's case is that:
(1) In each of the 2018– 2019, 2019–2020 and 2020–2021 seasons (ending on 30th June), SDIR would have had exclusive rights of manufacture and wholesale supply of Rangers Replica Kit and certain other branded clothing and accessories similar to that granted to Elite/Hummel for those seasons.
(2) In the 2018–2019 and 2019–2020 seasons, SDIR would have been the exclusive operator of the Rangers Megastore and Webstore, and would have retailed Replica Kit and Branded Products. These rights also extend to the first month of the 2020–2021 season, because the renewed agreement would end on 31st July 2020 (and the football season commenced on 1st July 2020). This means that the 2020–2021 season's kit would have been launched prior to the 2020–2021 season commencing (from around May 2020) as is customary. SDIR would therefore, as manufacturer and supplier and retailer, have launched the 2020–2021 Replica Kit and made significant retail sales including at the Rangers Megastore and Webstore for approximately three months until 31st July 2020.
(3) Throughout the remainder of the 2020–2021 season, SDIR would have been able to continue to retail Replica Kit and other Branded Products by virtue of its position as exclusive manufacturer and supplier for each of the 2018– 2019, 2019–2020 and 2020–2021 seasons (ending on 30th June), by supplying itself with such products for sale through its bricks and...
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