Watson v Prager
| Jurisdiction | England & Wales |
| Judgment Date | 1991 |
| Date | 1991 |
| Year | 1991 |
| Court | Chancery Division |
Restraint of Trade - Boxer - Boxer-manager agreement - Manager of professional boxer also promoter - Terms of agreement complying with regulations and restrictions of British Boxing Board of Control - Disputes to be referred to board's arbitration procedure - Whether terms reasonable - Whether restrictions enforceable against boxer
On 1 April 1987 the plaintiff, who became a professional boxer in September 1984, signed a boxer-manager agreement with the first defendant, a prominent person in the professional boxing world who, through the medium of either the second defendant company or some other company which he controlled, was also the promoter of nearly all the boxing contests in which the plaintiff had taken part. The agreement was in the form prescribed by the British Boxing Board of Control, which regulated and controlled professional boxing in the United Kingdom. Under the terms of the agreement the obligations of the manager included, inter alia, obligations to use his best endeavours to arrange a proper programme of boxing contests, matches, exhibitions and other professional engagements and events, including such things as literary contributions to suitable publications, and radio television or broadcasting, and to negotiate in every transaction terms and conditions as advantageous as possible to the boxer, and to account fully for all moneys received and expenses incurred. The obligations of the boxer were not to enter into any agreement with any other manager or person without the consent of the manager and to accept and fulfil to the best of his ability all the events reasonably negotiated on his behalf. The agreement was for an initial period of three years, but it contained a provision giving the first defendant, as manager, the option to extend the term for a further period of three years if the plaintiff should during the initial period become a British, European, Commonwealth or World champion. On 21 May 1989 the plaintiff became the Commonwealth middleweight champion, and on 1 June 1989 the first defendant exercised his option, claiming to extend the boxer-manager agreement for a further three years. The plaintiff became dissatisfied and, on 10 September 1990, he issued a writ, claiming that he was no longer bound by the boxer-manager agreement since it constituted an unreasonable restraint of trade, and the first defendant had committed various repudiatory breaches of contract, which the plaintiff had accepted, thereby determining the agreement.
By notice of motion the first defendant applied for the action to be stayed pending compliance with clause 9 of the agreement, which provided that all disputes arising under the agreement should be referred for arbitration under the board's regulations and that the arbitration procedure should be exhausted before any application was made to the courts. The plaintiff issued an originating summons seeking an order, under section 24 of the
On the hearing of the preliminary issue, inter alia, whether the agreement was unenforceable on the ground of being in restraint of trade: —
Held, (1) that, although the terms of a commercial contract or a contract of service freely entered into by the parties would not usually be the subject of intervention by the courts during the period of the contract, the terms of the agreement between the plaintiff and the first defendant were prescribed by the British Boxing Board of Control as the only terms a licensed boxer and licensed manager could enter into; that, therefore, it was not a commonplace commercial contract and, although it was imposed by the board in the interests of professional boxing, public policy required judicial supervision to ensure that the restrictions imposed were reasonable and not in undue restraint of trade; that, further, an agreement was not an ordinary commonplace contract where the manager was also a promoter with a conflict between his financial interests as promoter and his duty as manager to use his best endeavours to arrange a proper programme for the boxer and to negotiate terms and conditions as advantageously as possible to the boxer; and that, accordingly, the contract would only be enforced against the plaintiff if it was reasonable (post, pp. 740E–F, F–741D, 745E–F, G–746D, 747A–F, G–H).
(2) That the reasonableness of the contract was to be tested by its terms and not by how it had been performed and, therefore, the amount of the purses received by the plaintiff did not alter the fact that the first defendant was unilaterally able to fix the amount of each purse and decide whether it was sufficient to exclude the plaintiff from receiving any television receipts; that the requirement that the plaintiff was to fight on terms imposed on him by the first defendant in his capacity of both manager and promoter without the plaintiff having the right to negotiate on his own behalf was unreasonable; that, further, while a three-year contract with an option to renew on the plaintiff becoming a champion was reasonable, the option to renew for a period as long as three years was unreasonable; that, since the agreement contained restrictions on the plaintiff which were unreasonable and unduly restrictive, it was unenforceable; and, that therefore, the first defendant could not rely on the arbitration clause and his application for a stay of the plaintiff's action would be dismissed (post, pp. 748C–F, 749E–F, G–750D, G–H).
Per curiam. (i) The board's corporate policy of dual licensing of the same person as manager and promoter is involved in the dispute. In these circumstances the board as the named arbitrator to try the dispute “is not or may not be impartial” within the meaning of section 24(1) of the
(ii) “Fraud” in section 24(2) of the Act of 1950 is to be given its ordinary meaning and the plaintiff's allegations against the first defendant of breach of contract, breach of fiduciary duty and breaches of fidelity, loyalty and good faith are not therefore allegations of fraud within the meaning of the subsection (post, pp. 751H–752B, C).
The following cases are referred to in the judgment:
Cunningham-Reid v. Buchanan-Jardine [
Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd. [
Instone v. A. Schroeder Music Publishing Co. Ltd. [
Nagle v. Feilden [
Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd. [
Scott v. Avery (
Warren v. Mendy [
The following additional cases were cited in argument:
Barnes v. Youngs [
Braunstein v. Accidental Death Insurance Co. (
Cipriani v. Burnett [
Dawson v. Fitzgerald (
Derry v. Peek (
Eastham v. Newcastle United Football Club Ltd. [
Green v. Howell [
Heyman v. Darwins Ltd. [
Metropolitan Properties Co. (F.G.C.) Ltd. v. Lannon [
Osenton (Charles) & Co. v. Johnston [
Radford v. Hair [
Rex v. Sussex Justices, Ex parte McCarthy [
Russell v. Russell (
Ruston v. Tobin (
Stafford Winfield Cook & Partners Ltd. v. Winfield [
Vawdrey v. Simpson [
Wallis v. Hirsch (
Warner Brothers Pictures Inc. v. Nelson [
Young v. Timmins (
PRELIMINARY ISSUE
On 10 September 1990 the plaintiff, Michael Alexander Watson, issued a writ against Michael Prager (professionally known as Mickey Duff) as first defendant and Mickey Duff Promotions Ltd. as second defendant seeking: A. against the first defendant (1) a declaration that the agreement in writing dated 1 April 1987 made between the plaintiff and the first defendant was and always had been void and unenforceable and/or was in unreasonable restraint of trade and contrary to public policy and illegal; and/or was unenforceable so far as unperformed; (2) further or alternatively (a) damages or an inquiry as to damages for breach and/or repudiation of the agreement; and (b) a declaration that the agreement was terminated on or about 7 September 1990 by the plaintiff's acceptance of the first defendant's repudiatory breaches of that agreement; (3) further or alternatively, a declaration (a) that the first defendant owed to the plaintiff from about 1 April 1987 fiduciary duties and/or duties of fidelity and good faith, including, and in particular, a duty not to place or allow himself to remain in a position where his personal interests and his duty to the plaintiff conflicted without making full disclosure to the plaintiff and a duty not to use his position as manager of the plaintiff to acquire profits and/or benefits for himself whether directly or indirectly or through nominees or...
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