HM Insights

Foul play on the agency front

In McGill v Sports & Entertainment Media Group [2016] EWCA Civ 1063, McGill, a licensed football agent, brought a claim of breach of contract against a football player, seeking damages.

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His claim centred on the fact that he negotiated a transfer deal under an oral contract with the player; another agent, having allegedly induced the player to break his contract with McGill, took over the proposed deal and finalised it on essentially identical terms to those McGill said he had negotiated. McGill was therefore deprived of his fee, which could have totalled £300,000.

The claim was defended on the absence of any oral contract and the lack of intention to enter into any legal agreement; however, an agreement was reached in which McGill received £50,000 in full and final settlement of the dispute. McGill then brought a separate claim against the agent who allegedly induced the breach of contract. The claim was considered and dismissed on the inability to prove loss, due to the settlement reached in relation to the contractual claim, and causation, with regard to the lack of evidence that a written agreement would have been signed by the footballer and McGill, a necessary component to McGill receiving payment.

FA regulations provided that all player/agent agreements had to be in writing and registered.

Success on appeal

McGill appealed to the Court of Appeal. The appeal was allowed. McGill was entitled to an award of damages on the basis of the loss of chance to earn a fee. It was held that the judge had erred in holding that the agent required proof that the player would have signed a written agreement compliant with FA regulations prior to the transfer.

McGill pleaded loss of chance, i.e. his loss depended on the possibility that the player would have entered into a written agreement with him but for the inducement of the third party, not on something he said would have happened had the contract not been breached. It was based on the hypothetical actions of a third party.

In this case, McGill lost the possibility that the footballer would have entered into a compliant written agreement with him at or before the time that his deal was finalised. His hurdle to overcome was whether the chance lost was real or substantial and then, on the balance of probabilities, that the defendant’s act had caused the loss of that chance.

The court considered that where concurrent duties in contract and tort were owed to McGill by the defendants, the test for recoverability of damage for economic loss was the contractual test of remoteness. That test looked at whether the matters were in the reasonable contemplation of the parties at the material time.

In the present case it was held that, but for the interference of the defendants, there was a substantial chance a written agreement would have been entered as this is what the oral agreement contemplated.

Second action barred?

Secondly, it was held that the judge at first instance had erred in holding that McGill, by settling the earlier action, was barred from pursuing the current action. The claims were viewed to be of such a different character that clear language was needed in the settlement of the first claim to then bar McGill from seeking to recover the loss against the agent, but no such language had been used. The claims were capable of being heard as one, therefore it would be unfortunate if they were barred due to their sequential presentation before the court. Furthermore, there was no need for McGill to reserve any right to pursue the defendants in these claims, as he was otherwise entitled to pursue the claims.

The claim has now been remitted to the trial judge for assessment of the value of the opportunity which McGill lost. Although decided in England and based on English law, this case is a warning, and reminder, that sport-specific rules that supplement ordinary relationships, such as agent representation or the employment relationship, will influence disputes and be considered by the courts when dealing with them. Particular care needs to be exercised and regard had to the sporting regulations applicable, if assessing and advising in relation to any similar dispute.

This article originally appeared in The Journal of the Law Society of Scotland in December 2016

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