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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Proform Sports Management Ltd v Proactive Sports Management Ltd & Anor [2006] EWHC 2903 (Ch) (26 July 2006) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2006/2903.html Cite as: [2007] BusLR 93, [2007] Bus LR 93, [2007] 1 All ER 542, [2006] EWHC 2903 (Ch), [2007] 1 All ER (Comm) 356 |
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MANCHESTER DISTRICT REGISTRY CHANCERY DIVISION
IN THE MATTER OF:
Courts of Justice, Crown Square, Manchester. |
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B e f o r e :
(Sitting as a Judge of the High Court)
____________________
IN THE MATTER OF: PROFORM SPORTS MANAGEMENT LIMITED |
CLAIMANTS |
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AND |
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PROACTIVE SPORTS MANAGEMENT LIMITED AND MR. PAUL STRETFORD |
DEFENDANTS |
____________________
Cater Walsh Reporting Limited, First Floor,
Paddington House, New Road, Kidderminster. DY10 1AL
Telephone: 01562 50921/510118; fax: 01562 743235;
e-mail: info@caterwalsh.co.uk
MR. V. JOFFE Q.C. AND MR. D. CASEMENT (Instructed by Halliwells LLP.) appeared on behalf of the Defendants
____________________
Crown Copyright ©
HIS HONOUR JUDGE HODGE Q.C.
By clause one, Wayne Rooney appointed Proform to act as his executive agent and to carry out all the functions in respect of personal representation on behalf of his work as a professional football player for a period of two years from the date of the agreement.
By clause two, the player confirmed that he was free to enter into the agreement, and wished to employ Proform to represent him exclusively in contract negotiations and transfers.
Clause three provided for the player to pay Proform a management fee equal to 5% plus Value Added Tax on the player's earnings under his player contract and transfers.
By clause four, Proform was to have the following duties: (1) to employ competent persons, and (2) to devote their time attention and skill to manage, advise and negotiate for the benefit of the player, and to perform their duties diligently.
By clause five, the player was to have the following duties: (1) not to appoint any other agents, and (2) not to negotiate playing contracts and transfers covered by the agreement in person, and to refer to Proform all offers of contract and transfer negotiations received by him.
By clause six the player agreed to pay any such fees applicable under the agreement within the correct terms, as detailed on a Proform invoice.
A box at the bottom of the formal agreement provided expressly that Proform reserved the right to assign the benefit of the contract in their absolute discretion.
"As you are aware, the contract between Wayne and yourself expires in December 2002. Following careful consideration we have decided that we will not be renewing this agreement. This is in no way a reflection of the work that you have undertaken to date, it is more a review on what we believe are Wayne's requirements going forward. Therefore, we will not be utilising the services of the company from this point forward. As you are aware there has been a great deal of interest in Wayne from a number of the major representation agencies and having considered all options we have made the decision that Wayne's professional career will be better served by one of these companies. I would request that Wayne be released from all obligations under the terms of the representation agreement immediately.
It only remains for me to thank you for all your support and efforts and to wish you all the best for the future."
"We have therefore made a number of approaches to other football management companies in order to gain an understanding of the services that they offer. We have decided to sign for Proactive Sports Management based in Wilmslow from December of 2002. We recognise that this makes it difficult for us to work together in the short term and would therefore ask that you contact Neil Rodford, the managing director", on a number which is then given, "to discuss the best way forward for all parties."
The third paragraph mirrored the terms of the earlier letter of 27 June.
"There are a number of issues which are fact sensitive in the present case and the parties clearly intend to present conflicting evidence, which can only be resolved at trial. However there are a number of matters which are so clearly against the claimant that it is appropriate for this matter to be disposed of by way of summary judgment. The existence of these issues is clear from the defence filed and served in these proceedings but the claimant has failed to deal or deal adequately with these issues or any of them."
At paragraph 38 of his witness statement, Mr. Diaz-Rainey acknowledges that on a summary judgment application, it is unlikely that a court would be able to resolve the issue of whether Mr. McIntosh was suitable to act on behalf of Wayne Rooney. However, it is said that the summary judgment application does not raise any such factual issues. Rather, the defendants say that, as a matter of law, the claim is entirely misconceived and has no reasonable prospect of succeeding. In this regard the defendants say (1) as a matter of law, they cannot be liable for inducing the breach of a voidable contract; and the Proform agreement was such a contract, because (i) it did not fall within the class of contracts which are enforceable against a minor, and (ii) even if it did, it was not for Wayne Rooney's benefit. (2) As a matter of law, the defendants say they cannot be liable for inducing breach of contract if they acted on legal advice, which they did; and (3), they say that Proform cannot establish that any acts or omissions of the defendants caused them any loss.
(1) that the overall burden of proof is on the applicant to establish that there are grounds to believe that the respondent has no real prospect of success and that there is no other reason for a trial: it is a negative test.
(2) The inclusion of the word 'real' in the rule distinguishes fanciful prospects of success, but all this means is that the respondent has to have a case which is better than merely arguable. There is no onus to show his case would probably succeed at trial. He quotes from paragraph 24.7.5 of the White Book -
"If the applicant for summary judgment adduces credible evidence in support of his application, the respondent becomes subject to an evidential burden of proving some real prospects of success or some other reason for a trial. The standard of proof required of the respondent is not high."
(3) The hearing of an application for summary judgment is not a summary trial. Where there are significant differences between the parties on factual issues, the court is in no position to conduct a mini trial.
(4) It is common ground that Mr. Rooney and his parents had no legal advice before signing the Proform agreement. (5) That agreement was made between Mr. Rooney and Proform. (6) Proform was incorporated on 9 November 2000, just 33 days before the Proform agreement was signed, and it was formed as a £100 company. (7) Proform had never had any significant worth. Its 2001 accounts showed an income of £43,687, a loss on ordinary activities after tax of £76,413 and net assets of £14,704. That reference to net assets was explicable only on the basis of a substantial increase in the share capital which in fact post-dated the reference date in the relevant accounts. The 2002 accounts showed a loss on ordinary activities after tax of £14,974 and net liabilities of £270 after income of only £6,851. Mr. King told me on instructions that that was because X8 had taken over most of the business of Proform during the year 2002. The corresponding figures for 2003 and 2004 are, in the case of profits and losses, nil; and in the case of net assets, £270, thus suggesting that Proform was not then trading. Thus, it is said by the defendant that Proform was insolvent, at least from 1 January 2002. (8) Finally, Proform was struck off the register under Section 653 (5) of the Companies Act 1985 on 14 September 2004, on the application of its directors at the time. It was dissolved on 21 September 2004. It was only restored on 18 April 2005 in order to pursue these proceedings.
"Where the contract is determinable, the defendant incurs no liability merely by inducing the contracting party to determine the contract lawfully, for there is then no breach. It must follow, therefore, that it is no tort to procure the breach of a voidable contract, at least where the person induced is the party who enjoys the right to rescind."
"For the purpose of this judgment, therefore, so far as it is relevant at all, I propose to assume in favour of the defendants, without deciding, that it does not constitute a tort for a third party to induce a person to exercise a lawful right to rescind a contract."
"The principle that contracts beneficial to a minor are binding on him is not confined to contracts for necessaries and contracts of employment, apprenticeship or education in a strict sense. It extends also to other contracts which in a broad sense may be treated as analogous to contracts of service, apprenticeship or education. So, for instance, a contract by a minor (who was a professional boxer) with the British Boxing Board of Control whereby he agreed to adhere to the rules of the Board was held binding on him because he could not have earned his living as a boxer without entering into the agreement."
The authority cited is Doyle -v- White City Stadium Limited [1935] 1 KB 110.
"Similarly, it has been held that an agreement between a minor and a publisher for the publication of the minor's biography which was to be written by a "ghost writer", was binding on the minor."
The authority cited is Chaplin -v- Leslie Frewin (Publishers) Limited [1966] Ch 71.
"So also, a contract between a group of under-age musicians (known as "The Kinks") whereby they appointed a company as their manager and agent, was held binding as analogous to a contract of employment."
The authority cited is the first instance decision in Denmark Productions Limited -v- Boscobel Productions Limited reported only at (1967) 111 Solicitors Journal 715 and reversed on other grounds by the Court of Appeal. The footnote goes on to contrast from that case the case of Shears -v- Mendeloff (1914) 30 TLR 342, where the contract contained oppressive terms and was void. The text goes on:
"On the other hand there is no general principle to the effect that any contract beneficial to a minor is binding on him. So a minor's trading contracts are not binding on him, even if beneficial."
(1) In my judgment there is no reasonable prospect of the claimant establishing at trial that the Proform agreement was a contract for necessaries or analogous to a contract of apprenticeship, education or service, so that as a matter of law it falls outside the general rule that contracts with minors are voidable.
(2) In the light of that holding, it is unnecessary for me to consider whether the Proform agreement was for the benefit of Wayne Rooney, so that as a matter of law it falls outside the general rule that contracts with minors are voidable. I am satisfied that Mr. Joffe is right in his submission that there can be no liability in tort, even if the defendants were responsible for procuring a breach of the Proform agreement, because, in my judgment, that agreement was voidable by Mr. Rooney.
(3) I would not have given summary judgment on the basis that, given the legal advice of leading Counsel, the defendants could not be said to have had the necessary intention to induce a breach of contract, had I not already held that the contract was voidable as a matter of law.
(4) I would have held that the claimant had a real prospect of proving that at least some loss had been caused by the alleged inducement to breach of contract on the part of the defendants.
For the reasons I have given, however, I do give summary judgment to the defendants.