Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2016] CSOH 78

P989/15

 

 

OPINION OF LORD BRODIE

in the petition

by

MICHAEL ASHLEY

Petitioner;

for Judicial Review of determinations of a Judicial Panel and Appellate Tribunal of The Scottish Football Association Limited

 

Petitioner:  Sandison QC; Brodies LLP

Respondents:  O’Neill QC; Burness Paull LLP

10 June 2016

Parties and their relationship
[1]        The petitioner is a businessman.  He is concerned in the business of football.  He controls MASH Holdings Limited (“MASH”).  MASH has interests in Newcastle United Limited (“NUL”).  NUL operates a professional football club. 

[2]        The respondent is the Scottish Football Association Limited.  The respondent acts as the governing body of Scottish football and exists to promote, foster and develop the game of football at all levels in Scotland.  It is constituted by Articles of Association (“the Articles”) which impose certain obligations on those subject to its jurisdiction.  The Articles make provision for a Judicial Panel and Judicial Panel Protocol (“the Protocol”).  In terms of Article 65 of the Articles alleged breaches of the Articles which fall under the jurisdiction of the Judicial Panel shall be dealt with and be construed in terms of the Protocol.  The Protocol includes at annex A the respondent’s Disciplinary Rules, certain of which apply to persons and bodies under the jurisdiction of the respondent.  The Protocol makes provision for the enforcement of the Articles and the Disciplinary Rules and the determination of matters arising from alleged breaches.  That provision includes the appointment of a Compliance Officer who has general responsibility for observance of the Disciplinary Rules and the pursuit of proceedings before the tribunals appointed under the Protocol and the power to represent the respondent in such proceedings.  The tribunals which may be appointed from the Judicial Panel established under the Protocol include a Disciplinary Tribunal for consideration and determination of cases at first instance and an Appellate Tribunal of consideration and determination of appeals. 

[3]        On 6 August 2012 the pursuer gave a letter of agreement to the respondent.  In that letter he confirmed:

“I am (i) a shareholder; (ii) a director; (iii) involved in the management or administration of; and/or (iv) have the power to influence the management or administration of:

(i)      Newcastle United Limited (Company Number 02529667) whose registered office is at St James’ Park, Newcastle-upon-Tyne, NE1 4ST (“NUL”); and

(ii)     SDI Retail Services Limited (Company Number 08143303) whose registered office is at Unit A Brook Park East Road, Shirebrook, Mansfield, NG20 8RY (“SDI”), or of their respective parent companies”

 

Further, the petitioner stated that he intended to become a shareholder of The Rangers Football Club Limited (“RFCL”) “which owns and operates the associated football club known as Rangers FC.”  The petitioner then went on to acknowledge the Articles and to agree to abide by the Articles for so long as he was a shareholder of RFCL and a shareholder, director, involved in the management or administration of and/or having the power to influence the management or administration of NUL.  The letter then stated that for the avoidance of doubt it was acknowledged by the respondent that ownership by the petitioner of less than 10% of the issued share capital in RFCL should not constitute a breach of the Articles. 

 

Article 13 and Disciplinary Rule 19
[4]        Among the Articles by which the petitioner agreed to abide in terms of the letter of 6 August 2012 was Article 13 and among the Disciplinary Rules which applied to the petitioner was Rule 19.  Rule 19 is essentially in the same terms as Article 13.1.  As far as is material Article 13.1 provides:

“Except with the prior written consent of the Board:-

(a)     no club or nominee of a club;  and

(b)     no person, whether absolutely or as a trustee, either alone or in conjunction with one or more associates or solely through an associate or associates (even where such person has no formal interest), who:-

(i)      is a member of a club; or

(ii)     is involved in any capacity whatsoever in the management or administration of a club; or

(iii)    has any power whatsoever to influence the management or administration of a club,

 

may at the same time either directly or indirectly:-

(a)     be a member of another club; or

(b)     be involved in any capacity whatsoever in the management or administration of another club; or

(c)     have any power whatsoever to influence the management or administration of another club.”

 

RFCL is a full member of the respondent and “a club” within the meaning of Article 13.1, as is NUL. 

 

The Credit Facility Agreement
[5]        RFCL was formed (as Sevco Scotland Limited) in 2012.  The petitioner became a shareholder in RFCL in October 2012.  On 18 December 2012 the shareholders of RFCL exchanged their shares for shares in Rangers International Football Club Plc (“RIFC”).  As a result of this exchange RIFC became the sole shareholder in RFCL.  On 1 October 2014 the pursuer transferred his shares in RIFC to MASH. 

[6]        On 26 October 2014 MASH (as “Lender”) and RFCL (as “Borrower”) entered into a Credit Facility Agreement whereby MASH undertook to make a loan of £2 million available to RFCL subject to the condition, among others, that “the Lender has appointed the Lender’s Director in accordance with clause 13”.  Clause 13 of the Credit Facility Agreement provided:

“Immediately prior to first drawdown under the Facility, and at all times whilst any amount is outstanding under any Finance Document, the Lender shall have the right to appoint up to 2 directors (the “Lender’s Director”) on the board of directors of the Borrower.  The Lender shall be entitled to remove and replace any Lender Director from time to time.”

 

[7]        On 5 November 2014 Mr Derek Llambias was appointed as a director of RFCL.  On 2 November 2014 he had been appointed a director of RIFC. 

 

The disciplinary proceedings against the petitioner
[8]        On 15 December 2014 the petitioner was served with a complaint under the Protocol alleging breaches of Disciplinary Rules 19 and 77.  The libel of the complaint was in the following terms:

“…in that already having an interest in Newcastle United FC as a controlling party of MASH Holdings Limited, you did on 26 October 2014 enter into a Credit Facility Agreement with Rangers Football Club Limited, and thereafter MASH Holdings Limited did nominate Derek David Llambias to Rangers FC for appointment as a Director, resulting in his subsequent appointment as a Director of both Rangers International Football Club Plc and Rangers Football Club Limited upon 2 and 5 November 2014 respectively.  These acts being breaches of article 13 of the Articles of Association of the Scottish FA…”

 

In addition, the alleged breach of Rule 77 stated a breach of the undertaking provided by the petitioner to the respondent on 6 August 2012. 

[9]        The matter proceeded to a full hearing before a Disciplinary Tribunal appointed from the Judicial Panel on 2 March 2015.  The respondent was represented by its Compliance Officer.  The petitioner was represented by a solicitor.  By prior agreement, both parties lodged detailed written submissions.  Neither party led oral evidence.  Written statements from a number of witnesses were produced. 

[10]      Following the hearing the Disciplinary Tribunal determined, on 17 March 2015, inter alia that the petitioner was in breach of Article 13 of the Articles and Disciplinary Rule 19 and imposed a fine of £7,500.  It did not find the petitioner in breach of Disciplinary Rule 77.  The Disciplinary Tribunal’s factual findings included the following:

“The Panel was satisfied, on a balance of probabilities, that the factual basis of the charges in the Notice of Complaint had been proved.  Mr Ashley’s controlling interest in Newcastle United FC was not disputed.  While the Credit Facility had been agreed with the Club by MASH Holdings Limited, rather than with Mr Ashley personally, it was effectively Mr Ashley who provided the Credit Facility.  While only the nomination of Mr Llambias by MASH Holdings Limited to the PLC had been confirmed in statements and documents, the Panel, in the absence of any other clear evidence, was satisfied that the inference could be drawn in the whole circumstances, that the arrangements put in place between Rangers FC and MASH Holdings Limited effectively led to Mr Ashley’s nomination of choice being nominated for and appointed to both boards. 

 

Turning to the question of whether a breach of Rule 19 was incurred, the Panel took the view that, even applying a purposive approach, the intention of the Rule and of Article 13 was to prohibit Dual Interests, except with the prior consent of the SFA.  The question of whether any power or influence was actually exercised, or whether it was for the benefit rather than the detriment of the clubs involved, was not relevant.  The Panel was satisfied, as previously stated, that the arrangements gave Mr Ashley a choice over who became a director of Rangers FC and, accordingly, a degree of power to influence the management or administration of that club. 

 

On a balance of probabilities, the Panel was satisfied that the first charge on the Notice of Complaint had been proved.”

 

The Disciplinary Tribunal went on to find that a second charge, a breach of Rule 77, had not been proved. 

[11]      Paragraph 14.2 of the Protocol provides that a party in breach has the right to appeal under the Protocol to the Appellate Tribunal against a determination of a Disciplinary Tribunal in respect of first instance proceedings.  Paragraph 14.8 provides in respect of any such appeal that findings on fact at first instance should be final and an appeal shall only be permitted on specified grounds, one of which (paragraph 14.8.3) is that the Disciplinary Tribunal has issued a determination which it could not properly have issued on the facts of the case. 

[12]      The petitioner exercised his right of appeal in terms of paragraph 14.2.  He presented three grounds of appeal.  These were as follows:

“(i)    The evidence clearly established that MASH Holdings Limited entered into the Credit Facility Agreement and not the appellant, with the result that the Judicial Panel finding was inconsistent with the terms of the complaint;

(ii)     There was no direct evidence that either the appellant or MASH Holdings Limited nominated Mr Llambias as a director and a full and fair reading of all witness statements provided no basis for such an inference; and

(iii)    The Judicial Panel failed to recognise that only illegitimate or adverse interference in the affairs of another club was struck at by Article 13 by failing to adopt a purposive approach to the interpretation of the articles.”

 

[13]      Following a hearing the Appeal Tribunal, by way of determination dated 3 June 2015, refused the petitioner’s appeal.  In terms of its determination the Appeal Tribunal concluded that the Disciplinary Tribunal had been entitled to make the findings that it did and that it therefore followed that the Rule and Article had been contravened in respect of the appellant, with a controlling interest in one club, having been demonstrated to have power to influence the management or administration in another.  However, in relation to sanction, the Appeal Tribunal reduced the fine imposed upon the petitioner to £1,000. 

 

The application for judicial review
[14]      By way of this application for judicial review, the petitioner now seeks reduction of the determinations by the Disciplinary Tribunal and the Appeal Tribunal on the basis of material error of law.  In very large part, the grounds upon which the petitioner presents his challenge comprises a reiteration of the arguments deployed before the respective Tribunals.  The relevant averments in the petition are as follows:

“8.    That the said Judicial Panel and Appellate Tribunal erred in law in upholding the libel of the complaint that the Petitioner had on 26 October 2014 entered into a Credit Facility Agreement with the Club, it being accepted by both the Judicial Panel and Appellate Tribunal that the party which had in fact entered into that Credit Facility Agreement with the Club was MASH.  The terms of the complaint served on the Petitioner clearly distinguished the alleged actions of MASH which were libelled as material to the complaint from the alleged actions of the Petitioner which were libelled as so material to the complaint from the alleged actions of the Petitioner which were libelled as so material, and clearly identified the person alleged to have entered into the Credit Facility Agreement as the Petitioner.  There was no material before the Judicial Panel or the Appellate Tribunal justifying in point of law their treatment of the action of MASH in entering into the Credit Facility Agreement as the action of the Petitioner.

 

9.      That, separatim, in concluding on the basis of the evidence before them that it was open to them to determine that MASH had nominated Mr Llambias for appointment as a director of Rangers International Football Club PLC (‘the PLC’) and the Club, resulting in his appointment as such on 2 and 5 November 2014 respectively, the said Judicial Panel and Appellate Tribunal erred in law.  The circumstances of the appointment of Mr Llambias to those offices were described in witness statements before the Judicial Panel and the Appellate Tribunal by Mr Llambias, Justin Barnes and David Somers, the content of which statements was not put in issue by the Respondent’s Compliance Officer before either body.  On the basis of those statements, no reasonable tribunal could have made any factual determination other than that Mr Llambias, who was already a consultant to the Club, was regarded by Mr Somers, the acting chairman of the PLC, as a person suitable for appointment as a director of the PLC and of the Club, that consequently a suggestion that he be appointed to the PLC Board was communicated by Paul Shackleton, the Nominated Advisor for AIM purposes to the PLC, to Mr Barnes as representing MASH, and that Mr Barnes agreed for the purposes of the operation of the Credit Facility Agreement that Mr Llambias be treated as if he were a nomination of MASH to the Board of the PLC alone.  In these circumstances, no reasonable tribunal could have considered that Mr Llambias had been nominated by MASH for appointment to the Board of the Club.  In the absence of any nomination by MASH of Mr Llambias to the Board of the Club, there was no basis in fact or law upon which any reasonable tribunal could have determined that the Petitioner had any power whatsoever to influence the management or administration of the Club, and was therefore in breach of Article 13 and/or Disciplinary Rule 19. 

 

10.    That, separatim and in any event, the said Judicial Panel and Appellate Tribunal erred in law in concluding that, esto Mr Llambias had been nominated by MASH as a director of the PLC and the Club, resulting in his appointment as such, that such circumstances amounted to a breach of Article 13 of the Articles of Association of the Respondent and/or of General Disciplinary Rule 19.  The Judicial Panel and Appellate Tribunal had no basis in fact or law for concluding that any such nomination would result in the Petitioner having any power whatsoever to influence the management or administration of the Club.  Mr Llambias had, as a director of the PLC and of the Club, legal duties (a) to act in the way in which he considered, in good faith, would be most likely to promote the success of the company in which he was a director, for the benefit of its members as a whole (Companies Act 2006, s.172) and (b) to exercise independent judgment in the performance of his functions as such director (Companies Act 2006, s.173), and the Judicial Panel and Appellate Tribunal had no basis for any conclusion that he would perform those functions other than in full compliance with those legal duties.  Further, on the basis of the content of Mr Llambias’s witness statement, placed before the Judicial Panel and Appellate Tribunal and not put in issue by the Respondent’s Compliance Officer, the Judicial Panel and Appellate Tribunal had no basis for any conclusion that Mr Llambias would be susceptible to any influence which the Petitioner might attempt to exert on him.”

 

[15]      The respondent has lodged answers.  In addition to pleas directed at the relevancy and factual basis of the petition, the respondent takes a plea of no jurisdiction. 

 

Discussion
[16]      The petition called for first hearing at which the petitioner was represented by Mr Sandison, QC and the respondent Mr O’Neill, QC.  Both had lodged written notes of argument which they adopted and to which they referred in the course of oral submissions. 

[17]      I shall in due course turn to the three grounds for review which are put forward by the petitioner but, logically, the first matter for consideration is whether this court has jurisdiction to entertain an application of this sort. 

 

Jurisdiction

[18]      In presenting his submissions on behalf of the respondents Mr O’Neill reminded me that the decisions which the petitioner sought to challenge had their source in a purely private law relationship between him and the respondent; what had given rise to the power of the Tribunals to make their respective decisions was the contract between the parties as constituted by the letter of 6 August 2012 and the Articles. That, submitted Mr O’Neill, had consequences for the extent of the court’s jurisdiction. This was not an appeal. In disputes of which the disciplinary proceeding against the petitioner was an example, parties had agreed, in terms of article 65.5, “not … to take such difference or questions to a court of law”. What the petitioner sought to invoke in this application was the court’s supervisory jurisdiction, the sole purpose of which was to ensure the person or body does not exceed or abuse the jurisdiction that has been delegated or entrusted to it: Davidson v Scottish Ministers 2006 SC (HL) 41 at para 45. Thus, given that the context was that of private law, the only issue that properly could be brought before the court in the present case was whether or not either of the Tribunals had exceeded the jurisdiction with which they had been invested by the parties: see Shanks & McEwan (Contractors) Ltd v Mifflin 1993 SLT 1124 at 1130 D-E and Diamond v PJW Enterprises Ltd 2004 SC 430 at paras 37-38 and 40. The supervisory jurisdiction simply did not extend to a consideration of supposed errors of law on the part of decision-makers whose powers were conferred by contract.

[19]      In response Mr Sandison provided a number of examples of the court having entertained applications to its supervisory jurisdiction in respect of decisions of the present respondents: St Johnstone Football Club v Scottish Football Association 1965 SLT 171, Dundee United Football Co Ltd v Scottish Football Association 1998 SLT 1244, Kevin Fotheringham Petitioner [2008] CSOH 170, Rangers Football Club Petitioner 2012 SLT 1156. He explained that the distinction between public law and private law upon which Mr O’Neill sought to found had never been of importance in Scots law; the supervisory jurisdiction has always been capable of being invoked to review decisions of purely private as well as public bodies: West v Secretary of State for Scotland 1992 SC 385 at 399-340, AXA General Insurance Ltd Petitioners 2012 SC (UKSC) 122 at para 57. As far as the distinction between ultra vires and intra vires errors of law, as discussed in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, was concerned, it was made clear by Lord Hope in Eba v Advocate General for Scotland 2012 SC (UKSC) 1 that that had been abandoned in Scotland. Diamond v PJW Enterprises fell to be distinguished as a case concerning the ability of the court to review intra vires errors of law in the context of arbitration in circumstances where Parliament had provided alternative remedies.

[20]      It is uncontroversial that the decisions of decision-makers whose powers have been conferred by private contract, such as the Tribunals in the present case, are amenable to review by the Court of Session in exercise of what is usually referred to as the supervisory jurisdiction. In that they are no different from decision-makers whose powers are derived from a public law source (typically statute). Equally, it was expressly conceded by Mr Sandison that just as parties could create a decision-making power by contract so could they limit its review by sufficiently clear contractual provision. However, he submitted that they had not done so here and, notwithstanding what he said about article 65.5, I did not understand Mr O’Neill ultimately to dispute that. On that I agree with Mr Sandison. Article 65.5 provides:

“The fact of membership of the Scottish FA shall constitute an agreement by a member that it, any body or person interested through such member, shall submit (and/or agree to the submission of) such complaints, breaches, claims, disciplinary matters, appeals, and/or disputes as are specified in the Judicial Panel Protocol to the jurisdiction of the judicial panel and shall not be permitted to take such difference or questions to a court of law.”

 

Here the parties did not take a difference or question to a court of law. Matters were taken to the respondent’s Tribunals. The petitioner comes to this court not, as Mr O’Neill correctly submitted, to appeal a decision but to have it reviewed as an abuse of jurisdiction. Of course the distinction between appeal and review begins to blur when one turns to consider the grounds upon which that application for review is presented. Mr O’Neill’s submission can be seen as an attempt to restore that distinction by contrasting two sorts of error of law: error of law as to the extent of jurisdiction (ultra vires error) and error of law in the exercise of jurisdiction (intra vires of error). The key cases in understanding Mr O’Neill’s argument but also in leading to the conclusion that, as the law presently stands, it must be rejected, are Anisminic (as explained by Lord Diplock in Re Racal Communications [1981] AC 374 and O’Reilly v Mackman [1983] 2 AC 237), Watt v Lord Advocate 1979 SC 120 and Eba. The relevant line of authority is instructively discussed by Professor Himsworth in Jurisdictional aspects of Judicial Review in Scots Law 2015 JR 353.

[21]      A decision maker can make a variety of errors which can be characterised in various ways. What the present petition is concerned with are what the petitioner describes as errors of law but, as Mr O’Neill emphasised by his citation of Lord Reid in Anisminic at 171B, errors of law are of different sorts,  there are errors of law that can be regarded as having led the decision maker to exceed his jurisdiction or power to decide (ultra vires errors) and then there are errors as to what the law is or how it is to be applied which can be regarded as having been made in the course of an otherwise legitimate exercise of jurisdiction (intra vires errors). What the petitioner complains of here are intra vires errors of law. Mr Sandison did not suggest otherwise, his position being that even if the distinction between ultra vires and intra vires errors is one that can and should be made it is of no consequence.

[22]      There was a point in the development of Scots law when the distinction certainly was of consequence, or at the very least was thought to be. In Watt v Lord Advocate at 131 Lord President Emslie stated (albeit obiter) that “the Court of Session has never had power to correct an intra vires error of law made by a statutory authority exercising statutory jurisdiction.” That statement can be readily understood by reference to what Professor Himsworth describes as the jurisdictional basis of judicial review in Scots law; judicial review is about policing the borders of the jurisdictions or powers to decide conferred on inferior decision makers, rather than with reconsidering the merits of their decisions. Lord President Emslie’s statement is not inconsistent with the propositions set out by Lord President Hope in West v Secretary of State for Scotland 1992 SC 385 at 412 as intended to define the principles by reference to which the competency of all applications to the supervisory jurisdiction of the Court of Session were to be determined. There, for example, Lord Hope explains that the sole purpose for which the supervisory jurisdiction may be exercised is to ensure that the person or body does not exceed or abuse that jurisdiction, power or authority or fail to do what the jurisdiction, power or authority requires. However, maintaining the distinction between ultra vires and intra vires errors of law was not the way that things were taken forward in England following the decision of the House of Lords in  Anisminic (see Himsworth supra and Wade & Forsyth Administrative Law (10^th edit) pp 220‑225). There, as Lord Diplock put it, the distinction between errors of law that went to jurisdiction and that those that did not was for practical purposes abolished: Racal at 383.

[23]      When delivering the opinion of the Inner House in Eba Lord President Hamilton, in the course of a wide survey of the law, noted what had been said in Watt and contrasted with it what had been said in Racal. He also referred to Brown v Hamilton District Council 1983 SC (HL) 1 where Lord Fraser expressed the view that the grounds for judicial review in Scotland and England were the same. However, having noted that what was said in Watt (and other Scottish cases) might require reconsideration, the Inner House did not consider it necessary to do so in the case before them (see 2011 SC 70 at paras 42 – 46).

[24]      It was Mr Sandison’s submission that the issue which had been left over by the Inner House in Eba was addressed and emphatically answered by Lord Hope when that case reached the Supreme Court. The relevant paragraph in his opinion is 34:

“In my opinion the time has come for it to be declared that Lord President Emslie's dictum in Watt (p 131) is incompatible with what was decided in Anisminic Ltd v Foreign Compensation Commission. In Re Racal Communications Ltd (p 382) Lord Diplock said that the decision in Anisminic was a legal landmark which proceeded on the presumption that, where Parliament confers on an administrative tribunal or authority power to decide particular questions defined by the Act, it intends to confine that power to answering the question as it has been so defined and that, if there is any doubt what that question is, this is a matter that the court must resolve. I would hold that the dictum in Watt cannot be reconciled with that interpretation of the decision and that it should no longer be followed. Once again it must be stressed that there is, in principle, no difference between the law of England and Scots law as to the substantive grounds on which a decision by a tribunal which acts within its jurisdiction may be open to review (Brown v Hamilton District Council, per Lord Fraser, p 42; West v Secretary of State for Scotland 1992 SC 885, pp 402, 413).”

 

While Mr O’Neill accepted that the distinction drawn in Anisminic had been superseded in the public law sphere, he submitted that Lord Hope’s declaration in Eba did not relate to those decision makers whose powers were derived from private law. A difficulty with that submission is that it gets no express support from what Lord Hope said. It is true that Lord Hope referred to power conferred by Parliament “on an administrative tribunal or authority”. In that what was in issue was whether and in what circumstances a decision of the Upper Tribunal could be reviewed, that was understandable, but the tenor of what he had to say is entirely general, as it had been in West. Then, while it is true that different considerations are in play, there is the lack of any obvious good reason why there should be any difference as between the grounds for exercise of the supervisory jurisdiction in the public law sphere, to use Mr O’Neill’s expression, and the grounds for its exercise in the private law sphere. The nearest Mr O’Neill got to offering a reason was to emphasise that the petitioner had acquiesced in the procedures provided for in the Protocol and that what was in issue were decisions made in a “footballing context”. I would observe in response to the first of these considerations that acquiescence in particular disciplinary procedures would seem to be close to a necessary prerequisite for any attack on a resulting decision for error of law and that acquiescence in a procedure is not the same as acquiescence in a supposed error made in the course of the procedure. As far as the second of these considerations is concerned I would readily concede the Tribunals’ expertise in matters to do with the business of football and its corporate governance but that of itself does not justify immunity from review for legal error. However, what I would see as being of greater significance is that Mr O’Neill pitched his argument at a high level of generality. Thus, if he is correct, his proposed limitation of review of private law decision makers on error of law to ultra vires error, would apply in every case and yet he proposed no reason of general application for exercising what Lord Hope has explained is the same jurisdiction in one way for one category of cases and another way in another category of cases. Moreover, I question the practicability of drawing the line in the way suggested by Mr O’Neill. In Watt Lord Emslie expressed his regret that, in his opinion, the Court of Session did not have power to correct intra vires errors of law by a National Insurance Commissioner. Thus, while that observation has to be seen in its particular context, he was not suggesting that there was anything problematic in the court exercising this sort of review. Moreover, much has happened, north and south of border, since 1978 when Lord Emslie issued his opinion. In particular, the courts have been willing to engage in an increasingly intensive degree of judicial review which has become inconsistent with the notion that the primary decision maker is entitled to make any error of law whatsoever. True, this has largely been in relation to public law decisions (in England, the only sort of decision subject to judicial review) engaging human rights, but experience in one area tends to spill into another. Of significance was the position adopted in the speeches of Lord Diplock in Racal and O’Reilly.  Wade & Forsyth describe the stage by then reached in England as follows (at p222):

“… it was soon seen that the concept of jurisdictional error had been stretched to breaking-point. For it requires only a simple verbal manipulation to represent any error of law as the result of the tribunal asking itself the wrong question or imposing some wrong requirement. By such logic any and every error of law could be shown to involve excess of jurisdiction. Thus the House of Lords, while purporting to uphold the distinction between errors of law which went to jurisdiction and errors which did not, in fact undermined it. A tribunal had now, in effect, no power to decide any question of law incorrectly: any error of law would render its decision liable to be quashed as ultra vires.”

 

[25]      Accordingly, the respondent’s plea of no jurisdiction is based on a distinction which has not been expressly recognised in the authorities and which relies upon a supposed dichotomy which is slippery at best and in practice has increasingly been ignored. I shall therefore repel it. In doing so I recognise that this is to give the petitioner what Mr O’Neill described as “a third bite of the cherry”, in other words this is the third occasion on which the petitioner has had the opportunity to deploy the same arguments in relation to the same issue. Essentially, Mr O’Neill’s point raises, in a private law context, the question that Eba and its companion case of R (Cart) v Upper Tribunal [2012] 1 AC 663 raised in a public law context: how often should an issue be litigated? In Cart at para 41 Lady Hale observed: “There must be a limit to the number of times a party can ask a judge to look at a question”. Equally, there must be a limit to the number of times a party has to submit to having a question looked at. Given the expertise of the Tribunals which have decided on the complaint against the petitioner and the formality of their decision-making processes, it might be suggested that by now seeking judicial review of the Tribunals’ decisions, the petitioner is pushing beyond the limit envisaged by Lady Hale. However, other than the argument as to the competency of review on intra vires error in a private law context, which I have rejected, Mr O’Neill did not put forward any recognised control mechanism by reference to which the petitioner might be restricted in taking his application forward.

 

Ground 1
[26]      It is convenient to repeat the terms of the complaint served on the petitioner:

“…in that already having an interest in Newcastle United FC, as the controlling party of MASH Holdings Limited, you did on 26 October 2014 enter into a Credit Facility Agreement with Rangers Football Club Limited, and thereafter MASH Holdings Limited did nominate Derek David Llambias to Rangers FC for appointment as a Director, resulting in his subsequent appointment as a Director of both Rangers International Football Club Plc and Rangers Football Club Limited upon 2 and 5 November 2014 respectively.  These acts being breaches of article 13 of the Articles of Association of the Scottish FA…”

 

As is apparent the complaint contains three propositions: (1) that having an interest in NUL and as the controlling party of MASH the petitioner did enter into a Credit Facility Agreement with RFCL; (2) that thereafter MASH nominated Mr Llambias for appointment and as a result Mr Llambias was appointed as a director of RIFC and RFCL; and (3) that the having and exercise of the power of appointment constituted a breach of article 13 of the Articles. The petitioner argues that none of these propositions was established. The three grounds upon which he seeks to reduce the findings of the Tribunals correspond to the three propositions in the complaint.

[27]      The first ground is that the Tribunals erred in law in upholding the libel in the notice of complaint. Mr Sandison emphasised the importance of precision in the framing of a complaint such as that which contained the charge against the petitioner and the need to avoid the unfairness consequential on going beyond the charge. When the argument was before it, the Appeal Tribunal saw the focus as being on the need to give fair notice. It held that the petitioner had been given clear notice of what was complained of, that being that the source of the petitioner’s power to nominate directors was the Credit Facility Agreement entered into by MASH. The Appeal Tribunal rejected the contention that the Disciplinary Tribunal’s finding fell outwith the complaint. Before this court Mr Sandison accepted that the complaint had given clear notice. Where the Tribunals had erred was in finding what had been given clear notice of had been established by the uncontroversial evidence. The critical part of the libel was that “you did on 26 October 2014 enter into a Credit Facility Agreement with Rangers Football Club Limited”. The “you” in that clause was the petitioner; the individual who had in terms of the letter of 6 August 2012 agreed to abide by the Articles. What the evidence showed was that it was MASH which had, on 26 October 2014, entered into a Credit Facility Agreement with RFCL. The petitioner had not entered into any such agreement. Mr O’Neill pointed out that these facts had not escaped the notice of the Tribunals but the Disciplinary Tribunal, supported by the Appeal Tribunal, had held that while the Credit Facility had been agreed with RFCL by MASH, it was effectively the petitioner who had provided the facility. That, said Mr Sandison, was to pierce the corporate veil in circumstance where to do so was unwarranted: Prest v Petrodel Resources Ltd [2013] 2 AC 415.

[28]      The purpose of the prohibition in article 13 is to prevent, otherwise to the extent authorised by the board of the respondent, any person having what was referred to before the Tribunals as “a dual interest”, that is being a member of one club or otherwise being in a position to influence the management or administration of one club while at the same time being a member of another club or otherwise being in a position to influence the management or administration of another club. The article is framed with a view to striking at a variety of ways in which a person can have a prohibited dual interest.  The prohibitions include: “no person … alone or …through an associate …who …has any power whatsoever to influence the management or administration of a club, may at the same time either directly or indirectly … have any power whatsoever to influence the management or administration of another club”. Article 13.5 (c) (i) defines “associate” in relation to an individual as including “any company of which that individual …is a director or over which that individual …is able to exercise control or influence”.

[29]      As appears from the definition, MASH is an associate of the petitioner. Accordingly, if it be accepted that entering into the Credit Facility Agreement gave MASH a power (of nominating a director) such as to allow it to influence the management or administration of RFCL then, at least once that power was exercised, “through an associate” the petitioner had acquired the requisite interest in RFCL such as to constitute a dual interest, when taken with his pre-existing interest, through the same associate, in NUL, in contravention of article 13. Thus, it was sufficient to establish the first proposition in the complaint that MASH had entered into the Credit Facility Agreement. The Disciplinary Tribunal did find that MASH entered into the Credit Facility Agreement. Mr Sandison’s point therefore comes to be the very narrow one that the wording of the complaint directed at the petitioner is “you did …enter” rather than, for example, “your associate MASH Holdings Limited did enter”. According to Mr Sandison, on the wording which was used in the complaint the Disciplinary Tribunal was simply not entitled to find that the petitioner had contravened article 13. That was not the view of the Tribunals and it is not my view. I would see Mr Sandison as ignoring the words which come immediately before “you” in the libel. These are “as the controlling party of MASH Holdings Limited”. The allegation was that MASH had entered into the Credit Facility Agreement and that this was a breach of article 13 by the petitioner because he was the controlling party of MASH. I accept that the placing of the comma at the end of the phrase “…in that already having an interest in Newcastle United FC, as the controlling party of MASH Holdings Limited,” indicates that what is being referred to there is the nature of the petitioner’s interest in NUL and I accept that the phrase “as the controlling party of MASH Holdings Limited” is not repeated after “you”. I do not consider that that matters. It is true that the Protocol provides for a relatively high degree of formality but, nevertheless these are not, for example, criminal proceedings on indictment. I shall have to consider whether the Tribunals were entitled to find the second and third propositions in the complaint to have been established but I agree with their conclusion as to the first proposition: the complaint gives fair notice that it is the actions of MASH that are founded upon and that that allegedly gives rise to breach of article 13 by the petitioner by reason of the fact that he controls MASH which is therefore his “associate” in terms of article 13.

[30]      Mr Sandison briefly but accurately summarised the conclusion  of Lord Sumption’s analysis, in his opinion in Prest v Petrodel Resources Ltd [2013] 2 AC415 at paras 16 to 35, of the circumstances in which the court may pierce the corporate veil: when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control, the court may then “pierce the corporate veil” for the purpose of depriving the company or its controller of the advantage that they would have otherwise obtained by the company’s separate legal personality. It is a matter of circumventing the consequences of the person’s impropriety. I would accept, as Mr Sandison argued, that here there is no case for piercing the corporate veil. It is sufficient, and this is a different matter, to notice that the petitioner controls MASH and to notice the terms of the relevant prohibition. The Disciplinary Tribunal was accordingly entitled to find that the petitioner had acted “through” his associate, MASH. As acting through an associate is expressly prohibited by article 13 there was no such evasion of a restriction necessitating consideration of whether any corporate veil should be pierced. 

 

Ground 2
[31]      The petitioner submits that the Tribunals erred in law in finding that the petitioner or MASH had appointed or nominated for appointment Mr Llambias as director of RFCL in circumstances where there was no evidence to support this finding. In considering that submission I accept, as Mr O’Neill argued, that where what is founded on is error of law, for the petitioner to succeed on this ground the court must be able to conclude that there was no relevant evidence and that therefore the finding can be regarded as irrational or perverse.

[32]      I have been unable so to conclude. The Disciplinary Tribunal did not require to have direct evidence of nomination or appointment by MASH; it was entitled to draw such inferences as were available from the evidence put before it. It was not bound to hold the terms of the witness statements to be conclusive or to have dealt with matters comprehensively. The declarations that witnesses believed the contents of their statements to be true and the absence of cross-examination on the statements went merely to weight. Clause 13 of the Credit Facility Agreement conferred a right on MASH to appoint up to two directors on the board of RFCL and thereafter to remove and replace them. The date of the Credit Facility Agreement was 25 October 2014. Mr Llambias was appointed to the board of RFCL on 5 November 2014, having been appointed to the board of RIFC three days previously, on 2 November 2014. As appears from his witness statement Mr Llambias knows the petitioner well and in 2008 he became managing director of NUL. Whereas Mr Llambias refers to a subsequent disagreement with the petitioner which led to him leaving NUL in 2013, it may be inferred that Mr Llambias was someone in whose abilities the petitioner has confidence. These facts alone might point to Mr Llambias as having joined the board of RFCL as MASH’s appointee or nominee, but there was other material which is discussed by the Appeal Tribunal as follows:

“Paragraph 13 of the Credit Facility Agreement gave MASH Holdings Ltd the right to appoint two directors to the Board of Rangers Football Club Limited. At the same time MASH Holdings Ltd entered into an agreement with Rangers International Football Club PLC whereby the latter irrevocably invited the former to put forward the names of two nominees of its choice for appointment as directors.  That obligation was to subsist for the duration of the Credit Facility Agreement, and Rangers International Football Club PLC undertook to ensure that the director appointment rights contained in the Agreement were fully complied with. The letter stated in terms that it was “understood and agreed” that the two persons nominated by MASH Holdings Ltd to join the Board of Rangers International Football Club PLC would be the same persons nominated by them as lender under the Credit Facility Agreement to join the Board of Rangers Football Club Limited.

 

On 27 October 2014 Rangers International Football Club PLC announced through the Regulatory News Service of the London Stock Exchange that their subsidiary, The Rangers Football Club Limited, had entered into a Credit Facility Agreement with MASH Holdings Ltd (‘MASH’) and that Rangers International Football Club PLC had entered into a letter agreement with MASH, pursuant to which they had invited MASH to put forward the names of two nominees of its choice for appointment to the Board. On 3 November 2014 Rangers International Football Club PLC made a further announcement through that same vehicle to the effect that their Board had appointed Derek Llambias as a non-executive director. The notice went on to state: ‘He was nominated as a director of its choice by MASH Holdings Limited pursuant to its agreement…as set out in the announcement dated 27 October 2014’.

 

In paragraph 7 of his statement, Justin Barnes, consultant to MASH Holdings Ltd, refers to a discussion with Paul Shackleton of the Rangers International Football Club PLC’s Nominated Advisor about the need for MASH to make two nominations to the Board of Rangers International Football Club PLC to enable a drawdown to be made against the Credit Facility. Mr Shackleton asked Mr Barnes if he would be prepared to treat Derek Llambias as one of MASH’s nominees to the Board. Mr Barnes told him that he was happy to treat Mr Llambias as MASH’s first nominee to the Board. They also reached agreement that MASH would waive its second nomination for the purpose of enabling the drawdown of the funds. It is clear from the statement of Mr Somers that Derek Llambias was appointed to the Board of Rangers International Football Club PLC on 2 November 2014and to the Board of Rangers Football Club Limited on 5 November 2014. 

 

If that were the only evidence on the subject, the Judicial Panel would clearly have been entitled to make the finding that MASH Holding Ltd nominated Mr Llambias for appointment as director resulting in his subsequent appointment as a director of both companies on 2 and 5 November 2014 respectively.  It is equally clear that the Judicial Panel gave careful consideration to the statements of Messrs Barnes, Llambias and Somers. Ms O’Neill submitted that the terms of the statements have to be treated as true and accurate since they were not challenged by cross-examination. In her submission they demonstrate that Mr Llambias was appointed at the instigation of Mr Somers and that that flatly contradicts the notion that he was nominated by MASH Holdings Ltd.

 

What this Tribunal found odd about these statements is their failure to address specifically the question of nomination for appointment to the Board, bearing in mind that that was a vital issue to be addressed in any statement relating to the complaint.  Reference was made to paragraphs 7, 9 and 12 in particular of the statement of Mr Llambias.  In paragraph 12 he makes reference to his appointment as a director of both companies without saying anything about who nominated him. He refers to Mr Somers, the acting chairman, stating that he was pleased with the changes being made (Mr Llambias had been engaged as a consultant) and that he recognised that in order for Mr Llambias to continue improving the Club’s position he needed to be able to make decisions on behalf of the Club. In paragraph 13 of his statement, Mr Somers states that it was not practical for him as the only executive director to be present every time a decision was being made.  He goes on to add: ‘Accordingly, on 2 November 2014 and 5 November 2014, Derek was appointed as a non-executive director of the Club’s PLC Board and the Club respectively.’ The question of nomination is not addressed. Reference has been made above to the statement of Mr Barnes. Ms O’Neill relied particularly on paragraph 7, already dealt with above, and paragraph 4 in which Mr Barnes says that MASH did not nominate any individuals for appointment as directors to the Club when the Credit Facility Agreement was signed. Paragraph 7 reflects the situation somewhat later.

 

Having reviewed the statements relied upon by Ms O’Neill, the Tribunal are of the opinion that the Judicial Panel were entitled to consider, as they did, that the information in all three was ‘vague about exactly how Mr Llambias’ appointment to the Club Board took place’.

 

The letter dated 10 November 2014 from RPC, Solicitors, was apparently new material not presented to the Judicial Panel. It refers to earlier correspondence which this Tribunal has not seen. There is nothing in the letter to indicate that the writer has been personally involved in the matters referred to and was doing other than relaying instructions from a client. The terms of the letter contradict the Regulatory News Service announcement of 3 November 2014 by Rangers International Football Club PLC.  The Appellate Tribunal do not consider that the terms of the letter provide a basis for rejecting as inaccurate or misleading the clear statement made in the 3 November announcement. The other document relied on, an Agreement amending the Credit Facility Agreement, contains a clause waiving the requirement on Rangers Football Club Limited to appoint directors, but solely in relation to appointment ‘on the proposed drawdown date of a Loan only’. The only parts of this Agreement produced are those identifying the parties, all or part (it is not clear which) of the interpretation clause, and the signatures at the end. The import of the waiver is not clear. The original Agreement required the appointment of two directors.  There is no evidence of the nomination of a second director. The Tribunal do not consider that the terms of the waiver as disclosed to them provide a basis for saying that the Judicial Panel were not entitled to accept the evidence they did and make the finding they did.

 

[The solicitor acting for the now petitioner] stressed that the timing of both documents, after the alleged nomination and before any complaint was initiated by the Compliance Officer, was an indication of their reliability as evidence that no nomination was made. This Tribunal do not consider the timing to be particularly significant bearing in mind the obvious prospect of dual interest raised by the very terms of the Credit Facility Agreement relating to the nomination of directors.”

 

[33]      The Appeal Tribunal considered that the Disciplinary Tribunal was entitled to make the finding it did about nomination. I agree.

 

Ground 3

[34]      The petitioner submits that even if MASH is taken to have nominated or appointed Mr Llambias as a director of RFCL, that of itself cannot be regarded as a breach of article 13 in that an exercised power to appoint an director does not amount to being “involved in any capacity whatsoever in the management or administration of a club”. It is said that the mischief aimed at by article 13 was to prevent one person being able to influence the management of more than one football club, or one club influencing the management of another,  in a way which might not coincide with the best interests of one or other of the clubs concerned. Mr Sandison emphasised that any director is under the duties set out at sections 171 to 177 of the Companies Act 2006. He must act within his powers and therefore according to the company’s constitution, and for the purposes for which the powers were conferred; seek to promote the success of the company for the benefit of its members; exercise independent judgement; exercise reasonable skill care and diligence; avoid conflict of interests; not accept benefits from third parties; and declare any interest that he may have in any transaction. In the absence of evidence to the contrary Mr Sandison submitted that it was to be assumed that Mr Llambias, having been appointed as a director, would properly carry out these duties in good faith and in the best interests of RFCL.  There could therefore be no question of the management or administration of RFCL being influenced in a way which was contrary to its best interests.

[35]      The question here is whether MASH by exercising a contractual power to appoint a director can be said to have had “any power whatsoever to influence the management or administration of” RFCL. The Disciplinary Tribunal expressed the view that when considering whether there had been breach of article 13 the “question of whether any power or influence was actually exercised or whether it was for the benefit rather than the detriment of the clubs involved was not relevant.” I agree.  The Appeal Tribunal observed, before noting that the Compliance Officer confined his complaint to the situation following exercise of the power of appointment, that the “very granting of the right to nominate directors in and of itself gave rise to the possibility of the petitioner influencing the affairs of two clubs.” Again I agree. Article 13 should be given its natural meaning. I do not see there to be any need to posit misconduct on the part of the director appointed in terms of a power of appointment before there can be a breach. Rather, I would see it as appropriate to assume that Mr Llambias was nominated by reason of his positive qualities and experience in business and corporate governance, as spoken to in his witness statement. All directors must comply with the statutory duties to which Mr Sandison drew attention but it does not follow that every company director has exactly the same qualities. Some are better equipped to direct the affairs of a company than are others. Where there is power to do so, the appointment as director of a particular candidate in whom the appointer has confidence because of his particular qualities is one way of influencing the direction which a company will follow. Again agreeing with the Appeal Tribunal, that the fact that the person appointed is someone of independent mind is beside the point.

 

Decision

[36]      I shall uphold the second plea-in-law for the respondent.  The petition is dismissed. I shall reserve all questions of expenses.