England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		28/04/2016

The Honourable Mr Justice Langstaff:

1. On 12^th April 2013, the Claimant agreed in writing with Leeds United Football Club that he should become the Assistant Manager of the Club. The contract of employment defined his appointment as "the employment of Assistant Manager by the company on the terms of this agreement" (Clause 1.1). His duties were, so far as relevant, described in these terms by paragraph 4:

"4.1 The Assistant Manager shall serve the Company as Assistant Manager

4.2 During the Appointment the Assistant Manager shall:…

(b) diligently exercise such powers and perform such duties as may from time to time be assigned to him by the Chief Executive and the Board at which are commonly undertaken and exercised by managers of Professional football club companies of the Company's status in relation to the playing, coaching and scouting aspects of the Company's undertaking (including but not limited to player conditioning and the development of tactical instructions and playing standards generally) and in the discharge of the same he shall:…

(vii) comply with all reasonable and lawful instructions and requests given:… (B) to the Assistant Manager by the Chairman; (C) to the Assistant Manager by the Company (D) to the Assistant Manager by the Chief of the Executive…

(xii) perform such hours of work as may from time to time reasonably be required of him…"

2. The contract to serve Leeds United in that capacity was for a fixed term ending on 30^th June 2016 (Clause 2). For the year from 1^st July 2014 to 20^th June 2015 he was to be paid £200,000 per annum, and for the final year £220,000 per annum (7.1), in each case monthly in arrears. The contract provided for a car allowance, an accommodation allowance, private medical insurance, and for 25 days paid holiday plus the usual public holidays.
3. The Claimant resigned from his post by a letter dated 26^th July 2014.
4. What is in issue is whether the Claimant was constructively dismissed, by reason of a repudiatory breach of contract by Leeds, or whether he simply chose to go without there being any such breach.
5. Though it has been asserted before me that the Claimant wished to go, it has not been suggested to him, nor advanced in specific terms, that he was himself in breach of his obligations under the contract. The sole questions, therefore, upon which liability depends are whether in all the circumstances of the case Leeds was in breach of its contract with the Claimant; whether that breach was repudiatory; and whether when he resigned, he did so at least partly in response to that breach.
6. The issues which arise for my determination in respect of quantum are (i) whether the Claimant acted unreasonably in failing to mitigate his losses by rejecting an offer from the Chairman of Leeds, Massimo Cellino, to take over as Head Coach/Manager in late August 2014 (ii) the precise amount to be brought into account as against the loss of salary and benefits under the contract with Leeds in respect of the Claimant's subsequent work as First Team Coach of Millwall Football Club, from December 2014 until 30^th June 2015, and thereafter as the Assistant Head of Player Development with Tottenham Hotspur Football Club, under a permanent contract beginning 7^th October 2015. In particular, that contract provides for the payment of a bonus to be paid on 31^st July 2016 in respect of work the Claimant would have performed fully between his date of commencement with Tottenham Hotspur Football Club and the date upon which his fixed term contract with Leeds would have expired (30^th June 2016) if it had still been in force.

The Background

7. I heard evidence from the Claimant, who called Brian McDermott in support of his case. Massimo Cellino, the Chairman of Leeds, Debra Ware, his PA, and Peter ('Stix') Lockwood, the player liaison officer for the Club were called on behalf of Leeds.
8. Many of the circumstances were undisputed, particularly those early in the history. Events between May and the end of July 2014 were more controversial.
9. After a career in professional football playing throughout for Watford Football Club the Claimant became a highly qualified coach holding a UEFA Pro Licence before joining Reading Football Club ("Reading") in 2006. There, he worked with Mr McDermott first as Transition Coach, and his Assistant in coaching the Reserve Team, and latterly from 2009 as First Team Coach, a role which he described as identical in practice to that of an Assistant Manager. After 3¼ years during which he worked closely with Mr McDermott both were dismissed. This followed a run of poor results. On 12^th April 2013 Mr McDermott was interviewed for the post of Manager of Leeds and indicated that he would wish the Claimant to be his Assistant Manager if he, Mr McDermott, were appointed. Thus it was that the offer of employment upon what became the terms of the contract to which I have already referred was made on 12^th April 2013.
10. In early 2014, a company controlled by Mr Cellino took steps to acquire a majority interest in Leeds, upon terms agreed between Leeds and him, and eventually succeeded in doing so. Consideration was given by Leeds to replacing Mr McDermott. He agreed terms upon which he left, on 31^st May 2014. Speculation abounded as to whom his replacement might be. The Claimant, who was accustomed to an environment in which a new manager might be expected to bring in his own assistant, and in which an assistant would be seen as responsible together with the manager for the tactics and team selection, might well also have expected to lose his post. Indeed, so well known is the risk of this happening in such circumstances that it leads to the adoption of fixed term contracts rather than contracts terminable on notice, so that the occupant of a post as manager or assistant has security of income for a reasonable period after first appointment.
11. 31^st May was a Saturday. On Monday 2^nd June, the Claimant met Mr Cellino to discuss his position. It is common ground that the meeting was civil; and that Mr Cellino said that he wished the Claimant to remain at Leeds.
12. Evidence as to the more detailed contents of the conversation came from the Claimant and Mr Cellino both in written and oral evidence, and from documents - in particular from notes which the Claimant made and first put in permanent form by email on 23^rd July 2014 and a letter from Mr Cellino dated 4^th June. The oral evidence of Mr Cellino and Mr Gibbs coincides in that they agreed there was discussion about the possibility of the Claimant becoming the Head Coach of Leeds (in effect, occupying the same role as a manager). The Claimant indicated he would not be interested. The parties differed as to whether the Claimant was actually offered the job as Head Coach, or whether he was merely asked if he might be interested in the role. I do not consider that anything of significance turns on this, though if necessary I would find it was the latter: in part because the idea was forming (or had already formed: it is unnecessary to decide) that the next Coach would be David Hockaday. I find that the Claimant clearly indicated to Mr Cellino that he felt loyalty to Brian McDermott, with whom he shared the same footballing philosophy and with whom he worked well, but did not go so far as to say that he intended or even expected to leave Leeds to follow him wherever he might next go.
13. At the time of the meeting, the Claimant had expected to be dismissed, in common with what generally happened to managers in the Football League. He hoped that Brian McDermott would obtain a position as a coach elsewhere and would wish him to come as his assistant: but (I find) though he would have been prepared to negotiate an early termination of his contract, he was content to remain in post, and to continue to observe its terms. He enjoyed the job. Unless an arrangement could be reached which might reasonably secure his future (I find) he wished to remain providing the same services, though under a new manager, as he had whilst working with Mr McDermott.
14. The letter of 4^th June 2014, which I mentioned above, was written to the Claimant over the hand of Mr Cellino. In its relevant parts it said:-

"You were offered the Assistant Manager's position at Leeds United; (the offer of which you rejected) and informed Benito Carbone and myself that your loyalty lay with Brian McDermott and that you wished to work with him in the future."

Although I understand your loyalty to Brian, I subsequently discussed this matter with my fellow directors on Monday and we agreed that we would like you to stay…. To recap, Brian McDermott's departure does not affect your responsibility to this Club as a consequence of this, please report back to work at Elland Road immediately as per your contract so that we can begin preparations for the new season"

15. The Claimant was already the Assistant Manager. The post he was offered and rejected was that of Head Coach. However, whether it was a mistake to include the word "Assistant" in front of the word "Manager's" or whether Mr Cellino, who was unfamiliar with many of the practices in English football, saw little difference between Head Coach and Assistant Manager is beside the point: the clear thrust of the letter is that Leeds wished the Claimant to remain in the role he had occupied, working as he had previously done.
16. There had been some discussion about the Claimant being put on garden leave. He went to collect his things from the training ground; however, the next day, it was made clear that he was not to be put on garden leave. This was in line with the expressed wish of Mr Cellino, for him to remain in, and perform, his post. He asked when he should return to work. He was told 9^th June, and did so.
17. He made a note of a meeting which occurred on 9^th June when he met Mr Umbers who worked closely with Mr Cellino. During their conversation the Claimant expressed unease at having been required to return to work at a time, post-season, during which he had expected to be on holiday and which was usually treated as such: the players were away, and there was therefore little or no training work to be done. They discussed terms upon which the Claimant might consensually leave the service of Leeds. These conversations were exploratory: they show that the Claimant was not unwilling in principle to go, but that the terms on which he would do so were critical, and that if they were not met he intended to stay and work out his contract.
18. Apart from a general chat by phone on 16^th June the Claimant did not speak to Mr Cellino until Monday 23^rd. On this occasion the Claimant spoke directly to him about the terms upon which he might possibly leave the club. His own note summarises a conversation in which the Claimant indicated that he was unhappy with being brought back into work when there was no work to be done, and said, "there was a deal to be done". The parties were too far apart on the sum one was prepared to offer and the other to accept for an agreement to be made.
19. The Claimant had known for some 11 days that his name was not on the list of those who were to fly to Italy with first team players for pre-season training there in July. As assistant manager fulfilling the role he had previously occupied he would expect to have been included. There was some discussion about this too: Mr Cellino is recorded in the Claimant's note as saying that the Claimant could look after those first team players not going to Italy. There were none (who were not otherwise side-lined by being injured). The Claimant's note reads: "he also said I could do some cleaning work at the training ground".
20. Though the Claimant said in evidence it was quite obvious that Mr Cellino did not wish him to stay at Leeds, this was because, he said, Mr Cellino was talking about a package for him to go. I do not accept that this is to be inferred: the note makes it clear that it was the Claimant who first raised the question whether a financial package might be agreed: the inference is thus rather that the Claimant wished to leave, if suitable terms could be agreed, than that Leeds through Mr Cellino wished him to go.
21. On the 19^th June Mr Cellino announced at a press conference that Mr David Hockaday was to be appointed head coach/manager of Leeds. Junior Lewis was to be appointed assistant coach. During the press conference Mr Cellino however also said that he expected the Claimant to remain part of the staff of Leeds.
22. The relationship between Mr Hockaday and the Claimant was not a happy one. The Claimant did not respect Mr Hockaday's abilities, though he did his best to maintain a professional approach toward him. It rapidly became apparent to Mr Cellino that the Claimant did not much care for working with Mr Hockaday, nor vice versa. When the Claimant spoke to Mr Hockaday the day after his appointment had been announced to ask about his, the Claimant's, future role at the Club, Mr Hockaday replied that he would have to ask Mr Cellino. He indicated that he would speak with Mr Cellino to try to get the situation resolved. He did not invite the Claimant to work with him in respect of the first team.
23. Though Mr Hockaday promised to be in contact with the Claimant over the weekend, to tell him the upshot of his discussion with Mr Cellino he was not. It was in that context that the next discussion with Mr Cellino occurred.
24. The Claimant was not assigned work which it fell within his contract to do, although he turned up ready and willing to do it during the week beginning 23^rd June 2014. On the 23^rd itself he spoke to Mr Cellino to complain that he was being left with nothing to do, and was unhappy about his situation. He indicated that he wished to be provided with proper work befitting his status as Assistant Manager, but if not there had to be a solution which would see him leaving employment on agreed terms. During the course of their conversation Mr Cellino made some reference to there being cleaning work to be done at the ground, which has in my view been over-interpreted in the pleadings for the Claimant as intentionally demeaning of him: I do not think that is how it was intended, though it did indicate that Mr Cellino was not taking the Claimant's concerns very seriously, as in my view they deserved to be. He told the Claimant they would speak again after lunch, but in the event the two did not do so again until August.
25. Though the football staff had a meeting at 10.30 on 24^th June at the Thorp Arch Training Ground, the Claimant was not invited to attend it, though it would have been part of the role to be expected of an Assistant Manager. He thought this to be a snub by Mr Hockaday.
26. A Mr Bean was acting as Club Secretary. When on Tuesday 1^st July (the day after the first team had left, without the Claimant, to head for pre-season training in Italy) the Claimant reported to the Thorp Arch Training Ground, he was told by Neil Redfearn the Manager of the Academy that the Claimant was to work with him. Mr Redfearn said that he had been told this by Mr Bean. This placed the Claimant in the position of being an assistant to the head of Young Player Development.
27. When he requested new training kit for the forthcoming season, none was available specifically for him: he was issued instead with kit from the previous season.
28. Though the Claimant watched the first team training at Thorp Arch, after the players return from Italy, he was not invited by Mr Hockaday to participate in it. He had no instructions as to what he was to do. He did not go with the first team to a pre-season friendly match – that would have been an invitation he would have expected if his usual duties were to be performed. He felt that he was standing around "doing nothing". No training schedules were issued to him, again something which had not previously happened.
29. This general picture of his not being given any work to do, and being disengaged from the training, is confirmed by the evidence before me not only from the Claimant, but also from the evidence of Debra Ware and Stix Lockwood called on behalf of Leeds. Mr Lockwood in particular plainly held the Claimant in high regard.
30. Word reached Mr Cellino that the interaction between the Claimant and Mr Hockaday at the Training Ground was one which Mr Hockaday found difficult. For his part, the Claimant ascribes the difficulties to Mr Hockaday. It is sufficient for present purposes to note that Leeds have not called Mr Hockaday to give evidence nor has any suggestion been made that the Claimant was in breach of any of his duties to Leeds. If it were necessary to do so, therefore, I would find on the uncontradicted evidence of the Claimant that he was excluded from taking any meaningful part in the training of the First Team players by the actions of Mr Hockaday, as to which there is no evidence that Mr Hockaday in doing so was acting contrary to the requirements of the management of Leeds.
31. On the 23^rd. July, Mr Bean rang the Claimant at home, to tell him that he was shortly to receive an email telling him that his role was thereafter to be with Under-18 and Under-21 players (neither group consisting of first team players). He was told that the authority for this had come from Mr. Umbers and Mr Hockaday.
32. Five minutes later the email arrived. It read:

"Dear Nigel

Further to our earlier conversation I am instructed to write to advise you as follows: (i) with immediate effect you are to have no contact and/or involvement with the LUFC First Team and your role at the Club should be confined to working with the Under 21s , Under 18s and other non-first team players…

Kind regards

Graham"

33. In the defence Leeds averred that by 22^nd July 2014 (that is the day before the email was sent) Mr Cellino had decided that the Claimant should not deal with the first team but should instead work with the Defendant's other players.
34. On 24^th July 2014, Mr Hockaday told the Claimant that he did not want him to have any contact with the first team – indeed did not want him to be at the Defendant Club.
35. By a letter dated 26^th July (addressed to Mr Cellino) the Claimant resigned with immediate effect. He did so on the basis that Leeds had shown they were not prepared to honour his contract.
36. Mr Cellino says in his witness statement that he was not told by his PA Deborah Ware nor by the Club Secretary, Mr Bean of the resignation of the Claimant (despite the letter of resignation being addressed to him). He first spoke to the Claimant after his resignation on 23 August 2014. This was at Watford, following a game in which Leeds had suffered a heavy defeat and it had reached Mr Cellino's ears that the Claimant was in the stand, and had been critical of the way Leeds had played. By now, Mr Hockaday was on the point of being sacked (that happened only days later). Mr Cellino and the Claimant spoke by telephone. Mr Cellino told the Claimant that he had not been aware that the Claimant had left Leeds, and had only been informed that afternoon of that. Mr Cellino asked if the Claimant would return to Leeds as head coach, a post which the Claimant refused. He said in his witness statement that he did so because he had experienced how Leeds had behaved toward him under their then management, felt that his credibility with the players had been undermined by the actions of Leeds in sidelining him, and had no continuing confidence in the body that would be his employer.

Liability

37. Much of the cross-examination of Mr Gibbs was designed to show that he had intended to leave the service of Leeds following the departure of Brian McDermott. The veiled suggestion was that he had hung onto the job as a negotiating tactic. However, what is critical for liability is whether the Defendant was in breach of contract, whether the breach was repudiatory, and whether the Claimant resigned at least in part in reliance on the breach without first choosing to affirm the contract rather than elect to treat it as terminated.
38. The precise duties of an Assistant Manager were not spelt out in the contract of employment between the Claimant and Leeds. However, the evidence was all one way as to the duties to be expected of someone whose job was described as "Assistant Manager" of a league football club. Such a person was to be involved in the selection, tactics and training of the first team. That is what the Claimant had done since his first appointment to Leeds in 2013. It is what he had done at Reading before that, whilst assistant to Brian McDermott as manager. Brian McDermott confirmed that was what was to be expected of an Assistant Manager. No other witness suggested that an Assistant Manager could simply be expected to hold a titular post but perform work of any description as directed by the employer. Even if it were to be suggested that the description were so vague that a holder of such a post would be obliged to work at the reasonable direction of his employer, I do not consider in context that requiring a manager and coach who had previously worked with the first team to have no contact with the first team thereafter, but instead to work only with the Under 18s and Under 21s under the direction of another (Neil Redfearn) could be said in context to be a reasonable direction. The loss of status would be plain, not only to the parties, but to others with whom the Claimant had to deal. It would not meet the contractual expectations. In short, to require the Claimant to work as directed by the email dated 23 July was to show an intention thereafter to refuse to perform the contract as it had originally been made. Where, objectively viewed, one party to a contract shows by their conduct that they no longer intend to be bound by it in its essential terms, that is repudiatory.
39. The receipt of the email of 23 July prompted the resignation. I accept Mr Gibbs' evidence to that effect. It is supported by the close connection in time between the two events. It is what one would expect a self-respecting person (such as I hold Mr. Gibbs to be) to do.
40. There was some suggestion from Mr Crystal that the email of 23 July was one which the author had no authority to make. I simply do not accept this. The letter was sent by the Club Secretary. The Claimant had been told it was sent on the instructions of the Manager of the Club and Mr Umbers, who had in the past appeared to work closely with Mr Cellino. Mr Cellino did nothing to revoke the instruction. The parties sending the email had apparent authority to do so, if they did not have actual authority: not least because one of the parties said by the Club Secretary to be responsible for it was the Manager himself; and the fact the Club Secretary formally sent the email again shows that he was purporting to act with the authority of Leeds. The pleaded defence supports the conclusion that Leeds authorised it (see paragraph 32 above).
41. If a case were to be made that the email was sent without authority, I would expect the evidence of this to be called before me in the clearest terms. None has been.
42. The fact that the Claimant had from time to time expressed the view that he was prepared to leave the service of Leeds if suitable terms were offered is beside the point. It does not prevent the conduct of Leeds being a breach. It was no breach on his part to initiate discussion about possible consensual termination. He remained throughout willing – indeed, keen - to fulfil his contractual duties as Assistant Manager. If it were necessary to do so, I would have found that the conduct of Leeds was such after 31^st May as, taken overall, itself to amount to a breach of contract to an extent which was repudiatory, even if the stark terms of the email 23 July were not also to be considered. However, since that email is clear I do not need to consider these other aspects of the case further, even though some time was spent in evidence upon them.

Damages

43. The central issue in respect to damage was whether the Respondent could show on the evidence that the Claimant had acted unreasonably in failing to mitigate his loss.
44. There is nothing inherently unreasonable about the Claimant's approach in refusing the offer made to him by Mr Cellino in August, as expressed in his witness statement and adopted in evidence The way Leeds had acted towards him made it untenable for the Claimant to return, unless he wished to take the chance it would change its behaviour toward him. In my judgment he was not obliged to do so.
45. The Claimant obtained a contract with Millwall Football Club from 15^th December 2014 to 30^th June 2015, at a rate of £75,000 per annum and after that entered a permanent contract with Tottenham Hotspur Football Club ("Tottenham") as Assistant Head of player development with effect from 21^st August 2015. He continues in that role. Under that contract he is entitled to a player development bonus and a discretionary bonus. These are not payable until he has been in service for a year. However, they are payable, in respect, in part, of the period of time until 30^th June 2016, when the Claimant's contract with Leeds would have expired by the effluxion of time. In my view, credit must be given to the Defendant in respect of the net sums receivable in respect of those bonuses, by way of further deduction from the sum of £331, 426.05 set out in the Schedule of Loss and Damage which was filed in December last year.
46. How to adjust the award so as to achieve justice by setting off of an uncertain sum as yet unpaid may be achieved by a number of means. One would be to estimate the amount of bonus which may be payable; another to defer payment or final assessment until the bonus has been declared or it becomes clear none will be paid; but the first suffers from the problem that it is certain to be proved inaccurate in the immediate future, whatever care may be taken in its calculation, and the second from the problem that interest will continue to run on the sums the Claimant should be paid, to the disadvantage of the paying party, and leaves the Claimant unacceptably without much of what will undoubtedly be his entitlement. In the end, I propose (subject to submissions from either counsel to the contrary) that the full grossed-up sum of £331,426.05 be held to the account of the Claimant by his solicitors acting as stakeholders. I invite the parties to agree through Counsel what sum should be withheld from the grossed up total of £331,426.05 in order to ensure that the Claimant is not over-compensated: that sum will be retained by the stakeholders, and the balance will be payable forthwith to the Claimant. That sum retained will be held until the bonus is declared, and then so far as bonus is paid to the Claimant in respect of any period prior up to and including 30^th. June 2016 a sum equivalent to the grossed-up value of that amount, plus any interest attributable to that sum accrued in the meantime, will be repaid to the Defendant.
47. I shall leave it to Counsel to draft the appropriate form of order of which the Claimant shall have carriage: it should, in accordance with the above, provide for the award of £331,426.05 to be paid to the Claimant's solicitors to be held as stakeholder to the extent of the maximum which is realistic and reasonable to expect may be paid to the Claimant in respect of the two bonuses for which he must give credit. Those bonuses are annual in nature. The proportion of the year from 21^st August 2015, to which any bonuses to be paid relate, which is attributable to the period 21^st August 2015 – 30^th June 2016 is not to be paid over to the Claimant until the bonus figures are confirmed: and if any issue arises between the parties at that stage the monies are not to be released without further order of the court, reserved to me. Save as required to be held by the Claimant's solicitors as stakeholders, provided they are willing so to act, the balance is to be payable to the Claimant forthwith. Interest will run on the total sum of damages at the rate as provided for by the CPR until payment over to the Claimant's solicitors. To the extent that sums are paid back to Leeds once the bonus payable from Tottenham to the Claimant has been established and agreed, they will carry the interest which has in fact been earned, if any, whilst in hands of the Claimant's solicitor.
48. I am happy to hear any further submission which either Counsel would wish to make upon my proposed order to take into the effect of the bonus payments so far as they are to be anticipated or eventuate, and I await their agreement to the appropriate form of order.