[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Middlesborough Football & Athletic Company (1986) Ltd. v Liverpool Football & Athletic Grounds Plc [2002] EWCA Civ 1929 (25 November 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1929.html Cite as: [2002] EWCA Civ 1929

[New search] [Printable RTF version] [Help]

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
(MR JUSTICE ASTILL)

		Royal Courts of Justice Strand London, WC2
		25 November 2002

Monday, 25 November 2002
1. LORD JUSTICE SIMON BROWN: Mr Christian Ziege ("Mr Ziege") is a footballer of some renown, a German international who, in recent years, has played for a number of famous clubs as an accomplished left-sided wing back. In the summer of 1999 the appellants, Middlesborough, bought him from AC Milan for approximately £4 million. In the summer of 2000 the respondents, Liverpool, acquired him from Middlesborough for £5.5 million. In the summer of 2001 Liverpool sold him on to Tottenham Hotspur, subject to conditions, for a maximum of £4 million.
2. These proceedings arise out of the second of those transactions, Liverpool's acquisition of Mr Zeige in the summer of 2000 for £5.5 million, a transaction to which Middlesborough were strongly opposed and which Liverpool achieved, so it is alleged, only by breaking the football Association Premier League Rules("the Rules").
3. The Rules are contractually binding on all member clubs of the Premier League and on all players, agents and others registered with the League. But for Liverpool's breaches of the rules, Middlesborough argue, Mr Zeige would either have remained with them or, had Liverpool or any other club bought his registration, they would have paid substantially more than the £5.5 million in fact paid. Either way they suffered loss and for that loss they are claiming in these proceedings.
4. By application dated 26 September 2001 Liverpool sought summary judgment under CPR Part 24.2:

"The court may give summary judgment against a claimant ... on the whole of a claim ... if -

(a) it considers that -

(i) that claimant has no real prospect of succeeding on the claim ..."

5. That application was dismissed by Master Eyre on 19 February 2002. On 21 May 2002, however, Astill J allowed Liverpool's appeal and dismissed the claim. He did so on the basis that even assuming that Liverpool were liable to Middlesborough for breaches of the rules (as he had to assume but did not decide) Middlesborough had no more than a fanciful prospect of establishing a claim for anything more than nominal damages.
6. This second appeal comes before the court by permission of Mance LJ given on 9 July 2002 in these terms:

"The decisions below are to opposite effect ... the judge's decision has the radical effect of striking out the whole of a claim for a potentially very significant sum, prior to disclosure of documents and without any of the evidence being developed, heard or tested. The existence of a breach of contract is not in issue. The only issue is whether any and if so what damages are recoverable. The judge does not appear to have covered all the points, and his reasoning on the points he has covered appears to me open to the criticisms of principle that he has attempted to evaluate the evidence, and to do so on a wrong basis (probability rather than loss of a chance). The prospects of success also appear to be sufficiently good to constitute a compelling reason for permission."

(Second appeals, it will be appreciated, are rare creatures).

7. With that brief introduction let me next set out the directly relevant provisions of the Rules before returning comparatively briefly to the facts. The relevant provisions of the Rules were at the material time in section J, as follows:

"1. A Club shall be at liberty at any time to make

an approach to a player with a view to negotiating a contract with such a Player,

1.1 if he is an Out of Contract Player, or,

1.2 in a case of a Contract Player, with the prior

written consent of the Club ... to which he is contracted.

3. Any Club which by itself, by any of its Officials, by any of its Players, by its Agents, by any other person or body on its behalf or by any other means whatsoever makes an approach either directly or indirectly to a Contract Player except as permitted by Rule J.1.2 or Rule J.2. [Rule J.2 allows Clubs to approach contract players in certain circumstances between the third Saturday in May and 1st July. It has no application whatever to the circumstances of the present case] shall be in breach of these Rules ...

5. ... a Contract Player, either by himself or by any person or body on his behalf, shall not either directly or indirectly make any such approach as is referred to in Rule J.4. [an approach to the club with a view to negotiating a contract] without having obtained the prior written consent of his Club.

22. A contract between a Club and a Player shall be treated as confidential and its contents shall not be disclosed or divulged either directly or indirectly to any person, firm or company whatsoever by either party thereto except:

22.1 with the prior written permission of both parties ..."

8. Rule J.22 has a particular relevance in this case since Mr Zeige had secured the inclusion within his contract with Middlesborough of the following clause:

"f7. In the event that during the period of this contract Middlesborough Football Club receive an offer in writing for the transfer of the registration of the player for a minimum sum of £5.5 million, the club will give the player permission to discuss personal terms with the offering club. If the player agrees personal terms with the offering club, Middlesborough Football Club will grant his release and terminate his contract on receipt of a written request from the player."

9. Whilst, therefore, in the ordinary way a club can veto the transfer of a contracted player even if another club wishes to buy his registration and the player wishes to be transferred, Middlesborough here had contracted out of that veto to the extent that they had no choice but to transfer Mr Zeige if another club offered £5.5 million or more for his registration and if Mr Zeige wanted to move to that club and agreed personal terms with it.
10. It is Middlesborough's case that clause f7 was included essentially lest Mr Zeige, who had been unhappy in Milan, felt unable to settle on Teeside; that in fact Mr Zeige and his family settled in perfectly; and that he and Middlesborough had an excellent 1999/2000 season, Mr Ziege being Middlesborough's third top goal-scorer, voted by the club their "player of the year", and speedily recovering his place in the German national team. Mr Zeige was central to Middlesborough's plans for the 2000/2001 season as he had been to their success in the previous season.
11. Liverpool, however, had other plans for Mr Zeige. According to their chief executive Mr Rick Parry's statement of 1 February 2002, during the 1999/2000 season they had identified in their team "a particular weakness on the left side" and wanted to "sign a left-sided player with attacking qualities."
12. It appears that in May 2000 they came to learn of the clause in Mr Zeige's contract by which he could, if he wished, be transferred from Middlesborough to any other club who offered £5.5 million or more.
13. In the event, some days prior to 24 July 2000, Liverpool approached Mr Zeige directly without having informed Middlesborough of their interest in him, and, having persuaded him to agree to a move, they made a written offer that he be transferred at that price. Mr Parry states:

"On joining Middlesborough, Christian had, it seemed to us, played well for that club but not so well for his national side. In any event, we certainly thought that £5.5m was at the upper end of the price range for a full-back and certainly more than we expected to receive for Matteo, who would have to leave if Christian arrived ...

Indeed, at the time, as I recall, I was dubious about even considering paying so much as £5.5m to Middlesborough ... We most emphatically would not have paid materially more for him and nowhere near the £7.5m I understand that Middlesborough are seeking to claim that he was worth."

14. Let me explain that reference to £7.5 million. Middlesborough's chief executive, Mr Keith Lamb, in a statement dated 17 January 2001 said that, having realised that Mr Zeige would, despite their hopes, be leaving the club, consideration had to be given to obtaining the best price for him possible. There followed written offers both from Rangers and from Chelsea to buy Mr Ziege's registration for £7.5 million, Valencia having at an earlier date indicated by telephone that they would be prepared to pay £8 million for him. In the event, however, Mr Zeige said that he was not interested in playing for any of these other teams, so that on 25 August 2000 he signed a personal contract with Liverpool, his transfer to them from Middlesborough for £5.5 million being completed the same day.
15. Given that for the purposes of the present proceedings liability, although denied, is to be assumed, it is, I think, unnecessary to go further into the facts surrounding it. I add only that the Premier League appointed an Independent Commission chaired by Mr David Pannick, QC, to inquire into the alleged breaches of its Rules, which on 14 March 2002, following a two-day hearing, found Liverpool to be in breach of Rule J3 and Mr Zeige to be in breach of Rule J5 for which they were fined respectively £25,000 and £10,000.
16. The particular breaches of which Middlesborough complain in this action and which they contend caused them loss are, first, Liverpool's misuse of confidential information, namely the use of their knowledge of Clause f7 of Mr Zeige's contract to pitch their bid for him at exactly £5.5 million, the minimum sum by which, assuming his cooperation, they could secure his transfer from Middlesborough despite Middlesborough's opposition. Secondly, Liverpool's direct approach to a contract player without Middlesborough's consent and without, therefore, Middlesborough having any opportunity in advance of Liverpool's overtures to seek to persuade the player to stay.
17. On the bare facts already stated I find it a little difficult to see how no claim for damages arises. One thing surely is plain - but for Liverpool's knowledge of the confidential clause in Mr Ziege's contract, they would not have bid £5.5 million for him. It is hardly to be thought that they would have done so by sheer chance, and certainly no court would find it on the balance of probabilities. Either Liverpool would have bid more for the player, in which case Middlesborough's minimum loss would be the difference between £5.5 million and that larger sum, or, as Mr Parry's statement tends to suggest, they would have bid less, in which case Middlesborough would not even have had to communicate Liverpool's interest to Mr Zeige, and Mr Zeige would have remained at Middlesborough. In that event Middlesborough's damages would be the loss sustained through losing Mr Zeige for the 2000/2001 season and/or the loss of the chance of selling him for more than the £5.5 million in fact achieved. However difficult it may be to calculate such losses, it strikes me as somewhat cavalier to say that they must be regarded as just so speculative and uncertain as to be characterised as worthless and justifying no more than a nominal award of damages.
18. Having expressed these preliminary thoughts let me now indicate how the matter was dealt with below. What the judge did was to identify and consider in turn each of two ways in which the claim is pleaded. The first head of loss claimed is for £2 million being the difference between the £5.5 million paid and the £7.5 million which, based on the offers received from Rangers and Chelsea and the indication from Valencia, is pleaded to be "the market value of the transfer of Mr Zeige's registration."
19. The further or alternative claim is based on the assumption that Mr Zeige would have remained at Middlesborough, and it sets out losses which Middlesborough say they suffered through losing his skills for the 2000/2001 season. The total of these losses is put at marginally over £5.5 million, and includes such claims as £1,345,688 for the loss of a merit award, the amount Middlesborough would have received had they finished the 2000/2001 season four places higher than in the event, without Mr Zeige, they did; £778,855 for loss of gate receipts; £22,202 for loss of profit on ancillary sales; £1,569,000 for the loss of TV facility fees, a sum calculated on the basis that whereas during the 1999/2000 season there were six live broadcasts of Middlesborough's matches in 2000/2001 there were only three; and £809,279 being the cost of seeking to mitigate their loss by employing Mr Terry Venables as an additional coach in an effort to reverse the decline in Middlesborough's performances through Mr Zeige's departure.
20. The judge's conclusions on these various claims were as follows:

"The difficulty facing [Middlesborough] in the £2 million claim is clause f7. That effectively removed [Middlesborough] from the picture. It was left with no choice, a choice which it would otherwise have had under the terms of the standard contract. The only way in which it could be saved is if it could show that it was probable that [Liverpool] would have offered more than £5.5 million or that Mr Ziege would have been persuaded to stay.

As to the first, Mr Parry has categorically

stated otherwise and if that is suspect as a hindsight statement the valuations of Mr Ziege are not. He was sold by AC Milan to the respondent for £4 million, sold to the appellant for £5.5 million and sold on to Tottenham Hotspur Football Club for £4.5 million [the true figure, as previously stated, being somewhat less].

There is no realistic possibility of Mr Parry

changing that view at trial. It is speculation based on hope rather than the chance of adducing evidence which might reasonably satisfy the standard of probability. In my judgment, there was no market value in the sense that Mr Ziege was available to any other club rather than the appellant for the reasons given by Mr Ziege in his latest statement. The value placed on a player is not the market value unless he is available on the market. It is the potential market value, and that was the position here. The respondent had no control over what happened once an offer of £5.5 million was received. By its own hand, it had removed itself from the negotiating process by agreeing to the inclusion of clause f7 in Mr Zeige's contract.

It is not so much that the claim on this

basis is fanciful, it is that it does not exist. The loss of a chance to persuade Mr Ziege to remain at [Middlesborough] is fanciful, given Mr Ziege's latest statement that for footballing reasons he wanted to go to Liverpool and would go nowhere else whatever the offer. There is no existing or potential evidence to support the probability that the respondent would have been able to persuade him to stay if Liverpool had not approached him first.

For these reasons, the £2 million claim has

no real prospect of success and the Master was in error in holding otherwise."

So much for the first limb of the claim.

21. As to the other head of claim, the judge described it as "based on speculation", and suggested that no court could ever award damages on the basis "of a probability that a Premier Division Club would have finished, say tenth rather than eleventh if it had had the services of a player it had lost."
22. That was the view he took, effectively, about all the components of the claim advanced as losses incurred through Mr Ziege's departure.
23. For my part I find the judge's reasoning unconvincing. It must be remembered that this application for the claim's summary dismissal was heard even before discovery in the action. Who knows what documents Liverpool may have which could illuminate their thinking about Mr Ziege and the desirability of acquiring him? It is important also to recognise the nature of the Part 24 jurisdiction. As Lord Woolf MR pointed out in Swain and Hillman [2001] 1 All ER 91, 925:

" ... the proper disposal of an issue under Part 24 does not involve the judge conducting a mini-trial, that is not the object of the provisions; it is to enable cases, where there is no real prospect of success either way, to be disposed of summarily."

24. It is all very well for Mr Parry and Mr Zeige to make categoric written statements of their thinking and intentions. These remain unchecked against any disclosed documentation and untested by cross-examination. There can of course be no certainty that had the Rules been complied with Middlesborough would either have had a better season in 2000/2001, or indeed that they would have sold Mr Ziege for more than £5.5 million, still less that they suffered losses precisely as particularised.
25. None of that, however, means that their claim is fanciful. As Mance LJ observed when granting permission for this appeal, these claims may well ultimately fall to be assessed on the loss of a chance basis. That is so, to my mind, in respect of both limbs of the case: the loss of a chance that they would have sold Mr Ziege for more than the sum obtained; and the loss of a chance of having enjoyed a financially more successful 2000/2001 had he remained.
26. That success on the field brings financial reward cannot be doubted. Professional football is a business like any other. If a club is wrongfully deprived of a valuable player the courts ought not simply to throw up their hands and say that its loss is incalculable and so in law must be regarded as speculative and irrecoverable. Rather, they must value it as best they can using for the purpose all the opportunities afforded by the conventional processes of litigation.
27. I would add just two things. First, many assumptions have been made in favour of Middlesborough for the purposes of determining this Part 24 application. It may be that at trial some at least of those assumptions will prove unfounded. Certainly their claim is not bound to succeed. They must, however, in my judgment be entitled to advance it. Secondly, cases will be few and far between when claims can properly be struck out on the ground that, notwithstanding the defendant's admitted or assumed contractual liability, the claimant can show no real prospect of establishing any entitlement to damages save only for a nominal award.
28. I do not say such cases will never arise. I would, however, suggest that they will be exceptional and that this is certainly not one of them. I would allow the appeal.
29. LORD JUSTICE MAY: Middlesborough's damages claim is put in two ways. First, if there has been no breach of contract or confidence by Liverpool, which for present purposes we have to assume, Mr Zeige's registration would have been transferred for up to £2 million more than the £5.5 million which Liverpool paid, or, that they, Middlesborough, had lost the chance of that. Alternatively, it is said that if there had been no breaches Mr Zeige would have remained with Middlesborough; if he had, the club's performance would have been better and financially more profitable and they would not have had to incur expenses to mitigate that loss; or that they lost the chance of greater profitability in those circumstances.
30. It is said that the first basis for the damages claim has no real prospect of success because a combination of clause f7 and Mr Zeige's personal commitment to move to Liverpool and nowhere else, meant that there was, in the strange circumstances of this case, no market.
31. The judge was persuaded by this submission, but I am not. It depends on the as yet untested written statements of Mr Ziege and Mr Parry among others. It seems to me to be beyond the proper bounds of summary proceedings to conclude that there was no real prospect of those and related facts being displaced in whole or in part after disclosure of documents and evidence tested in court.
32. As to the alternative basis for the claim for damages, it is submitted that it is intrinsically speculative to attempt to establish that the presence or absence of Mr Zeige alone would have made the club's performance better. It is suggested that the fortunes of a premier league football team and the performance of its individuals players depend on such an amalgam of imponderables that a finding of this kind could not realistically be made whatever the evidence. The judge was persuaded by this, but I am not in the context of a summary judgment application. There may well be difficulties with this alternative claim. But it depends on an evaluation of evidence which cannot, in my judgment, properly be carried out on paper alone. Middlesborough may be able to establish that they lost a chance and to persuade the court on the evidence that there is a more than nominal value to be attributed to that loss.
33. I am not persuaded that this damages claim in either of its alternatives is so fanciful as to justify summary determination in favour of Liverpool. Beyond that I say nothing as to the strengths of the claims. Those are matters for later determination if necessary on the evidence.
34. I, too, would allow this appeal.
35. LORD JUSTICE CLARKE: I agree.

1. The claim for £2 million.

36. I wish to say only it is in relation to the suggestion that but for the assumed breach of contract or confidence, Liverpool would or might have offered more for Mr Ziege. Is there a realistic chance in the sense of more than a fanciful chance of Middlesborough persuading a trial judge that there was a real or substantial, rather than a speculative chance, that Liverpool would have offered more for Mr Ziege than the £5.5 million which they in fact paid for him? Mr Phillips correctly conceded that if that question is answered in the affirmative this part of the appeal must succeed.
37. To my mind the answer is plainly in the affirmative. It is true that Mr Parry says that Liverpool would not have paid more than the £5.5 million which they in fact paid. However, that evidence has not been tested by cross-examination, nor have Liverpool yet given discovery of documents. It is to my mind impossible to say now that his evidence will be accepted by a trial judge.

2. The alternative claim.

38. This assumes that Mr Ziege would have stayed with Middlesborough. There appear to me to be many difficulties facing this head of claim. However again the question is whether there is a realistic chance of Middlesborough persuading a trial judge that there is a real or substantial chance that Middlesborough would have been more than it was if Mr Zeige had stayed and because he stayed. Again I would answer that question in the affirmative. It seems to me to be at least arguable that it is essentially a jury question having regard to the heads of income earned by Middlesborough in the relevant period. Mr Phillips submits that the claim is wholly speculative and should now be struck out as being fanciful. I recognise that a trial judge may reject all these heads of claim on the basis that, even if it be the relevant test, there was no realistic chance of Middlesborough earning anything more than it in fact earned if Mr Ziege had stayed.
39. However, to my mind there is a sufficient basis for Middlesborough's claim to permit it to argue at the trial that there was a real chance that it would have done better if Mr Ziege had stayed. This is a type of business interruption claim. Such claims are notoriously difficult to quantify. In my opinion this claim is not likely to be so difficult to quantify that Middlesborough should not be permitted to advance it.
40. For these reasons in addition to those given by Simon Brown and May LJJ, I, too, would allow this appeal and would only add this. As I see it nothing which we have said today prejudges either liability or indeed the correct approach to the quantification of any parts of Middlesborough's claims.

(Appeal allowed; order of judge below set aside; part of the Master's order be reinstated; Appellant's costs to be subject to a detailed assessment).