Despite their facts relating to different industries, two recent Court of Appeal judgment have direct relevance to the fiduciary duties that football intermediaries owe to their clients (whether they be clubs and/or players) and provide helpful guidance relating to issues that are commonly encountered in disputes between intermediaries and clubs/players.
In Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd  EWCA Civ 83, a broker entered into an Introducing Agreement with an investment firm, pursuant to which the broker would introduce investors to the investment firm. Under the Introducing Agreement, the broker would be paid a proportion of the commission received by the investment firm from the investors. In the High Court, the broker was found to have breached its fiduciary duties to the investors by failing to tell them the precise amount of commission that was being paid to it by the investment firm and that this amounted to a ‘secret commission’.
The Court of Appeal overturned the High Court’s decision, finding that, where a principal is aware that its agent is being paid by another party, it cannot also complain that it did not know the precise amount being paid to the agent by that other party.
However, the precise extent of the knowledge required by a principal will depend on both the nature of the relationship and facts of the case, with the Court of Appeal noting two factors that were of particular relevant in this case:
Failure to pass on information
Staechelin & Ors v ACLBDD Holdings Limited & Ors  EWCA Civ 817 concerned the 2015 sale of a famous painting to the Emir of Qatar for $210 million and whether art dealers who helped facilitate were entitled to a $10 million commission from the sellers. One of the grounds on which the sellers claimed they were entitled to withhold payment was that the art dealers, in breach of their fiduciary duties, had (allegedly) concealed from the sellers the existence of an earlier offer of $230 million from the eventual buyer and that, as a result, the art dealers were not entitled to/had forfeited the contractually agreed commission.
The Court of Appeal rejected the sellers’ argument and made it clear that: (i) dishonesty is the ‘litmus test’ for forfeiture of commission; and (ii) that a mere failure to pass on information ‘does not stand on the same footing as a case of secret profit….an agent will not lose his commission on account of a failure to pass on information if he has neither been dishonest nor acted in bad faith’.
The Court of Appeal found that this conclusion was not inconsistent with the previous Court of Appeal decision in Imageview Management Ltd v Jack  EWCA Civ 63, a case concerning the transfer of the former Trinidad and Tobago goalkeeper Kelvin Jack to Dundee United. In that case, an undisclosed collateral agreement between Dundee United and the intermediary to obtain a work permit for the player for a fee, was found to amount to a secret profit and led to the intermediary having to forfeit all of the commission he had received from the player (even that which had been legitimately earned).
In contrast to the undisclosed collateral agreement in Imageview, a mere failure by an agent to pass on information ‘does not stand on the same footing’ as a case of a secret profit, unless it is motivated by dishonesty or done in bad faith.
Lessons for football intermediaries
#1 Passing on information – An intermediary is not obliged to pass on each and every piece of information that they receive to their principals (whether they be players and/or clubs). And, where neither dishonesty nor bad faith are present, a Court or Tribunal is unlikely to order that the intermediary should forfeit the commission that the intermediary has earned when acting for the player and/or club.
#2 Is the information ‘relevant’ – However, intermediaries must still give careful consideration as to what information is truly ‘relevant’ to the services they are providing to the player and/or club and determine whether it should be passed on. If an intermediary fails to pass on relevant information but did not do so dishonestly or in bad faith, they could still be sued for a breach of the contract that should be in place with the player and/or club and face damages being awarded against them for that breach.
#3 Consider the characteristics of the principal – When considering the level of information that needs to be provided to a player and/or club by an intermediary, a Court or Tribunal will consider how experienced and sophisticated they are. Nevertheless, full disclosure of all relevant information, regardless of the sophistication of the principal, is the safest course of action to take.
#4 Forfeiture of commission – Despite these recent decisions of the Court of Appeal, the case of Imageview confirms that, where appropriate, the Courts will strictly uphold the fiduciary duties owed by agents to their principals where breaches of those duties have occurred, and are prepared to order the repayment of all of commission that has been earned when acting for the player and/or club (even where it has been earned entirely legitimately).
#5 Need for express written consent – As confirmed in Imageview, the ‘complete remedy is disclosure’. In order to ensure that commission which has been legitimately earned for acting on behalf of a player and/or a club does not have to be forfeited, it is important for intermediaries to make a player and/or a club fully aware of any payments they are receiving from other sources and to obtain their express written consent to those payments being received.
If you would like any more information on any of the points raised above or any advice in connection with intermediary-related matters, please contact
Phil Bonner (Senior Associate) – PhilipBonner@centrefield.law – or call 0161 672 5450.
Please note the information contained in this briefing is intended as a general review of the subject featured and is not intended as specific legal advice.