England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Liverpool District Registry
HHJ Hodge QC
[2010] EWHC 3116 (Ch)

		Royal Courts of Justice Strand, London, WC2A 2LL
		20/07/2011

The Chancellor :

Introduction
1. On 14th November 2006 the claimants, Mr and Mrs Burridge, signed judgment in default of appearance against the defendant MPH Soccer Management Ltd ("MPH") for £56,042.48 in respect of a dishonoured cheque for £50,000 and costs. The consideration for the cheque was commission earned in connection with the transfer of Ali Al Habsi to Bolton Wanderers. On 18th September 2007 Mr and Mrs Burridge applied to the Liverpool County Court for a third party debt order against the third party, West Ham United plc ("West Ham"), for payment by the latter to the former of so much of the debt due by West Ham to MPH as was necessary to discharge the debt due by MPH to Mr and Mrs Burridge. An interim order was made by District Judge Fitzgerald on 1st October 2007 pending a final hearing on 9th November 2007. On 1st November 2007 the fourth party, Mr Peter Harrison, applied to be joined as a party to the proceedings. In his witness statement made the same day he claimed that the debt due from West Ham was owed to him, not his company MPH.
2. For reasons which have not been explained the hearing of the third party debt order application was not held until 27th November 2009. By then (on 14th April 2009) MPH had been struck off the register of companies and dissolved. For the reasons given in his judgment dated 3rd December 2009 but handed down on 19th March 2010 District Judge Baker made the third party debt order final. Mr Harrison appealed. His appeal was allowed by HH Judge Hodge QC on 22nd September 2010 and the third party debt order discharged. Mr and Mrs Burridge now appeal with the permission of Aikens LJ.
3. Before District Judge Baker and HH Judge Hodge QC the issue had been whether the debt due by West Ham was due to Mr Harrison or MPH. Not unprompted by Aikens LJ, the issue before us is whether the debt due by West Ham to Mr Harrison was assigned by him to MPH before the third party debt order was made so as to fall within it. West Ham has not taken part in any of the hearings. It was not served with the appellant's notice or the application of Mr and Mrs Burridge to amend it to contend that the debt had been assigned by Mr Harrison to MPH. Whilst in principle, West Ham is a proper party to this appeal and the application the money in dispute has been paid by West Ham to the solicitors for Mr Harrison and is held by them pending the outcome of this appeal. In those circumstances it would only increase costs without serving any useful purpose to insist on service on West Ham.
4. Accordingly, the issues before us are

(1) whether the debt formerly due by West Ham was due to Mr Harrison, as HH Judge Hodge QC thought, or to MPH, as District Judge Baker held.

(2) If the debt was due to Mr Harrison did he assign it to MPH before the making of the interim third party debt order on 1st October 2007?

In order to deal with those issues it is necessary to set out the facts in some detail.

The debt due by West Ham
5. Mr Harrison is also a football agent. He is duly licensed by the Football Association in accordance with the regulations promulgated by them. Those regulations were made by the FA in order to satisfy the requirement of FIFA that national associations should promulgate regulations governing the conduct of agents in the football industry. In accordance with article 1.2 they govern the activities of a licensed agent engaged by an intended party to a contract between clubs for the transfer of a player from one of them to the other or a contract under which a player agrees to become an employee of a club. Article 3 requires a licensed agent to be a natural person and of good character and reputation. Article 14 sets out in some detail the duties of a licensed agent. He must conclude a written representation agreement with the club on a standard form (art.14.12), the amount of the remuneration due to the agent must be set out in that contract (art.14.6) and the agent must give the FA details of the bank account to which his remuneration is to be credited (art.14.21). The regulations also cast correlative duties on clubs. Thus article 12.13 requires the club to disclose to the FA details of all payments made to agents, including those with an only indirect involvement in the transactions to which the regulations apply.
6. The regulations provide that though the agent must be a natural person "he may organise his business through a limited company" (art.14.22). The agent is required by article 14.29 to disclose to the FA all details of "payments received and/or made by him and/or his company" in relation to his duties as such an agent, including any indirect involvement in a transaction relating to a contract as described in article 1.2.
7. On 19th January 2007 Mr Harrison, therein defined as the Agent, concluded a written agreement with West Ham ("the Representation Agreement") to act for them to complete the negotiations for the transfer of Lucas Neill from Blackburn Rovers to West Ham. By clause 1.2 Mr Harrison agreed to comply with the FA regulations in relation to agents. West Ham agreed by clause 2 to pay to Mr Harrison a once only commission of £900,000 payable in four instalments the first within fourteen days of the registration of Lucas Neill with West Ham and the remaining three on 1st October 2007, 2008 and 2009. Payment of each of the three later instalments was conditional on a number of matters specified in clause 2.6. Clause 2.3 provided that the payments to be made thereunder should be made "through the Football Association subject to receipt of the Agent's invoice therefore."
8. On the same day West Ham and Mr Harrison completed and signed a form ("the Declaration") entitled "The Football Association – Declaration of Payment to a Licensed Agent". In paragraphs 1 and 2 were set out the details regarding the parties and the sums payable and the dates on which there were payable. The form continued:

"The fee due to the Agent is to be sent to the Football Association for onward transmission to the agent.

Please provide bank details for the Agent and ensure that all fees are forwarded in the appropriate currency.

Please contact the Football Associations Finance Department if assistance is required.

Bank Name Lloyds TSB

Branch [the address is given]

Sort code 30-93-71

Bank account number: 03717572 M.P.H. Soccer Management Ltd.

THE UNDERSIGNED CONFIRM THAT NO PAYMENT OTHER THAN THAT SPECIFIED BELOW WILL BE MADE IN RESPECT OF THIS AGREEMENT AND THE AGENT CONFIRMS THAT NO PAYMENT SHALL BE SOUGHT OR ACCEPTED FROM ANY OTHER PARTY TO THIS TRANSACTION"

The Declaration is then signed and dated by Mr Harrison. There is then added:

"WEST HAM UNITED FC will pay £900,000 + VAT to PETER HARRISON."

It is then signed by the secretary of West Ham and dated by him.

9. The first tranche of the debt due by West Ham was duly paid by West Ham to the FA and by the FA to the account of MPH on 2nd February 2007. The money so received was used by MPH in payment of its business liabilities. The second tranche due on 1st October 2007 coincided with the making of the interim third party debt order. The amount necessary to satisfy that order (£58,219.54) was retained and the balance paid to another company with which Mr Harrison was connected, namely Platinum 4 Sports Ltd, pursuant to an invoice rendered by Mr Harrison on 17th September 2007. As I indicated earlier the retained money is now in the hands of Mr Harrison's solicitors and is held by them pending the outcome of this appeal. The third and fourth tranches became due and will have been paid before the hearing of this appeal.
10. As I have indicated the issue (amongst many others) before District Judge Baker was whether under the Representation Agreement the second tranche was due to MPH or to Mr Harrison. He concluded that it was due to MPH. His reasons were:

"17. In my judgment the following findings can be made:-

17.1 That the agreement made on the 19th January 2007 was made between West Ham and Peter Harrison of MPH and that he was as 'a natural person' to fall within the FA Rules was conducting the negotiations on behalf of MPH of which he was a director. I believe that I am supported in that view by the fact that he directed payments of the commission due from West Ham into MPH's bank account and the evidence of Mr Synnott.

17.2 In these circumstances the relationship of creditor and debtor existed between MPH and West Ham. Certainly that was the case so far as West Ham was concerned.

17.3 The debt was due and accruing as at the date of the I3PD Order on 1st October 2007."

Mr Synnott was a solicitor acting for West Ham. In his witness statement made on 16th February 2007 he had described the Representation Agreement as having been made between MPH and West Ham.

11. HH Judge Hodge QC took a different view. In paragraph 45 of his judgment he said:

"It seems to me clear in the present case that the representation agreement dated 19th January 2007 is indeed an agreement made between West Ham United Football Club plc and Mr Peter Harrison as an individual. It is not an agreement made with MPH Soccer Management Limited; nor does it seem to me that that position is affected by the terms of the Declaration of Payment to a Licensed Agent. The commission, including the second instalment due on 1st October 2007, is payable to the agent, namely Mr Harrison. All that the Declaration of Payment does is to provide that the payment should be effected by way of a transfer through the Football Association to a bank account maintained by MPH Soccer Management Limited. It does not seem to me that that document constitutes any variation, novation or assignment in relation to Mr Harrison's status as a contracting party under the representation agreement of 19th January 2007. The payment is, subject to satisfaction of the relevant conditions, to become due and owing from West Ham United Football Club plc to Mr Harrison personally. Payment is to be effected through his company's bank account. There is, in my judgment, nothing to constitute MPH Soccer Management Limited a creditor of West Ham United Football Club plc. There is nothing to prevent Mr Harrison nominating another payee to receive the monies into its own account. On the evidence, that is what Mr Harrison would appear to have done by submitting an invoice in respect of the 1st October 2007 commission payment, not in the name of MPH Soccer Management Limited, but in the name of Platinum 4 Sports Limited."

12. Accordingly, HH Judge Hodge QC set aside the third party order. In doing so he added in paragraph 48:

"I should say that I reach that result with no sense of satisfaction. It does seem to me that the claimants have been strung along by Mr Harrison; and it may well be that the claimants have good reason for complaining about his conduct to the Football Association. But, as a matter of law, and with regret, it seems to me that there was no third party debt due from West Ham United Football Club plc to the judgment debtor, and therefore it was wrong in principle to make a final third party debt order in relation to the part of the commission payment which equalled the amount of the judgment debt and the costs."

13. In his appellants' notice counsel for Mr and Mrs Burridge gave as their ground for appeal that the Judge was wrong to conclude that the debt was due to Mr Harrison. They contend that the judge should have found that it was due to MPH. Permission to appeal was refused by Judge Hodge. Permission for what would be a second appeal was refused by Aikens LJ on the papers but given following an oral hearing on 3rd March 2011. In paragraph 10 of the transcript of his judgment he said:

"It seems to me that, on the documents, it is at least arguable that there was an assignment of any debt that West Ham owed Mr Harrison under the terms of the agreement of 19 January 2007 to MPH Soccer Management Ltd."

He did not give permission for any amendment to the appellant's notice. The requisite application was made by notice issued on 9th June 2011. We have heard full argument on the question of assignment. It was not suggested by either party that had this point been raised at the outset further or other evidence would have been advanced. Accordingly, I would give permission to Mr and Mrs Burridge to amend the appellant's notice as sought.

14. At the hearing of the appeal counsel for Mr and Mrs Burridge conceded that he could not pursue the grounds of appeal contained in the original notice. In my view that concession was properly made. It is clear that the party to the Representation Agreement and the agent to whom the payments were due was Mr Harrison. Accordingly the only issue on this appeal is whether the Declaration, when regarded in the context of the FA Regulations in relation to Football Agents and the Representation Agreement, constituted an assignment by Mr Harrison of the debt due to him by West Ham to MPH.
Assignment
15. The principle to be applied is not in doubt. It was formulated by Lord Macnaghten in Wm Brandt's Sons & Co v Dunlop Rubber Co. Ltd [1905] AC 454, 462. He said:

"But, says the Lord Chief Justice, "the document does not, on the face of it, purport to be an assignment nor use the language of an assignment." An equitable assignment does not always take that form. It may be addressed to the debtor. It may be couched in the language of command. It may be a courteous request. It may assume the form of mere permission. The language is immaterial if the meaning is plain. All that is necessary is that the debtor should be given to understand that the debt has been made over by the creditor to some third person."

16. As an example of the application of that principle counsel for Mr and Mrs Burridge relies on the dictum of Sir John Romilly MR in Bell v The London North-Western Railway Company (1852) 15 Beav. 548. The document relied on was a letter from a contractor to his employer containing a request to pass the cheques due on his account "to my account" with a particular branch of a named bank. That was held not to constitute an equitable assignment to the bank but merely constituted the bank as the contractor's agent to receive the money. The Master of the Rolls indicated that if the letter had invited the employer to pass the cheques to the bank, rather than the contractor's account with the bank, it would have constituted an equitable assignment.
17. Counsel for Mr and Mrs Burridge submits that the form of declaration I have quoted in paragraph 8 above when considered in the light of the Representation Agreement and the FA regulations constituted an equitable assignment by Mr Harrison to MPH of the debt due by instalments by West Ham. He submits that the consideration is to be inferred from the fact that MPH was a company owned and controlled by Mr Harrison in the books of which Mr Harrison would be credited with the amount of the debt received and debited with such amounts as he drew.
18. This is disputed by counsel for Mr Harrison. He contends that the Declaration was no more than a revocable mandate. He points to the fact that the second instalment was paid to Platinum 4 Sports Ltd, not MPH, but £58,000 odd was retained to answer the interim third party debt order. He contends that there is no evidence of any consideration sufficient to support an equitable assignment.
19. The question whether the Declaration constituted an equitable assignment of the instalments due, subject to the conditions, by West Ham to Mr Harrison is a question of construction to be determined in the light of the circumstances then prevailing. Thus the fact that some 9 months later Mr Harrison submitted an invoice in the name of Platinum 4 Sports Ltd is irrelevant to the question we have to answer.
20. In my view the relevant starting point is the FA Regulations which bound both debtor and creditor, namely West Ham and Mr Harrison. Under those regulations Mr Harrison had to be the agent through whom the club acted because only a natural person could participate in the transactions described in Article 1.2. The relevant debt was incurred in relation to such a transaction. But Article 14.22 recognised in terms that the agent might organise his business through a limited company. In addition Article 14.29 envisaged that the agent's remuneration might be paid to his company. So long as both the club and the agent promptly and correctly informed the FA as the amount of the remuneration and to whom it was paid they might make such arrangements as they pleased. Accordingly, it is in my view plain that the debt due by West Ham to Mr Harrison was assignable by him to his company without involving any breach in the FA Regulations.
21. It is clear from the Representation Agreement alone that the remuneration payable thereunder was due to Mr Harrison. To that extent I agree with the judgment of HH Judge Hodge QC. The Declaration is in three parts. The first part consists of paragraphs 1 and 2. They set out the basis on which the remuneration is payable. This part correctly records that it is payable to the other party to the written contract therein referred to and properly described as the Agent. The third part is the capitalised declaration and what follows it. This declaration satisfies the obligations of the Club and the Agent under Articles 12.13, 14.4 and 14.12.
22. The second part is what lies in between. Omitting immaterial words it provides:

"The fee due to the Agent is to be sent to the Football Association for onward transmission to the agent…[at] Lloyds TSB…Sort code 30-93-71…account number…03717572 M.P.H. Soccer Management Ltd."

To my mind that is a direction to pay MPH. It is given in relation to a debt payable by four instalments over a two and a half year period. There is nothing to suggest that it is revocable. Indeed a mere revocation would involve a breach of the FA Regulations. In terms of language it is quite sufficient to satisfy the test described by Lord Macnaghten in Wm Brandt's Sons & Co v Dunlop Rubber Co. Ltd [1905] AC 454, 462. That is not to say that the consequences of such an assignment are not capable of novation with the agreement of all three parties, namely Mr Harrison, MPH and the FA, and that is what may have happened in relation to the payments to Platinum 4 Sports Ltd. But by then the interim third party debt order had intervened to inhibit their ability to do so in so far as the part retained was required to satisfy the order.

23. Such a declaration would, it seems, have satisfied the Master of the Rolls in Bell v The London North-Western Railway Company (1852) 15 Beav. 548 as sufficient to constitute an equitable assignment. Given the circumstances of the FA Regulations and Mr Harrison's ownership and control of MPH at the time the Declaration was signed I see no reason why it should not satisfy us also. I can well understand that on the argument advanced to him that HH Judge Hodge QC concluded in paragraph 45 of his judgment that the Declaration did not constitute an assignment of the debt due by West Ham to MPH. The argument addressed to us has been materially different.
24. We are concerned with the proper destination of the £58,000 odd retained from the second instalment. That was payable on 1st October 2007 which, coincidentally, was the date the interim third party debt order took effect. There is no suggestion that the condition specified in clause 2.5 of the Representation Agreement was not then complied with. Similarly there is no evidence to suggest that any of the events described in clause 2.6 of the Representation Agreement had occurred so as to determine any liability to pay in accordance with the Declaration. Payment was actually made by West Ham to the FA and, so far as the retained sum is concerned, by agreement between the parties by West Ham to the solicitors for Mr Harrison. That sum is now held by them to await the outcome of this appeal. Accordingly, any objection which might have been raised under clause 2.3 in relation to the invoice to Platinum 4 Sports Ltd was waived.
25. In my view, the Declaration constituted an equitable assignment to MPH of the debt due by West Ham to Mr Harrison. Given that the debt was then a future debt consideration is required. I accept the submissions of counsel for Mr and Mrs Burridge that the relationship between Mr Harrison and MPH will have supplied it. MPH would have been obliged to keep proper accounts of its receipts and payments. It would have been bound to credit Mr Harrison with the payments received and allow him to draw on that credit.
26. For all these reasons I consider that the sum of £58,000 odd now in the hands of Mr Harrison's solicitors was payable to MPH. It became subject to the interim third party debt order before MPH was dissolved. It was retained by Mr Harrison's solicitors subject to the terms of the final third party debt order and was due to Mr and Mrs Burridge. I would allow the appeal and restore the order of District Judge Baker.

Lady Justice Hallett

27. For the reasons given by the Chancellor I too would give permission to amend the appellants' notice and allow the appeal.

Lord Justice Aikens

28. I agree.