Fulham Football Club (1987) Ltd v Tigana

This is an appeal by Fulham Football Club (“Fulham”) against a decision of Elias J of 12 November 2004. After a trial lasting 11 days, 9 days of evidence and 2 days of oral argument, Elias J dismissed the claim of Fulham for breach of contract and fiduciary duty against Mr. Jean Tigana (“Mr. Tigana”) as the manager Fulham from 1 July 2000 to 30 June 2003 and a director of it from 25 January 2001 to 4 July 2003. Elias J allowed Mr. Tigana’s counterclaim for the sums that were due in respect of, inter alia, share options. Mance LJ granted Fulham permission to appeal on 21 December 2004.

In 1997, Mr. Mohammed Mr Al Fayed, (“Mr Al Fayed”) took control of Fulham, which was then in the second division. Following Fulham’s promotion to the first division under the management of Kevin Keegan, Mr. Tigana was brought out of retirement in France and appointed Manager on a fixed term contract, to run from 1 July 2000 until 30 June 2003.

Following an initially successful relationship between the Chairman and Mr. Tigana, a breakdown in trust occurred in 2002, a cause seeming to be Mr Al Fayed’s dissatisfaction with a player, Steve Marlet. In March 2003, Fulham made it known publicly that Mr. Tigana would not be retained beyond the end of his contract. In those circumstances it was difficult for Mr. Tigana to retain the respect of the players and he agreed to be placed on garden leave, with effect from 17 April 2003. Fulham purported to dismiss him for gross misconduct on 30 June 2003. The effect of the dismissal rather than his contract expiring through effluxion of time was to deprive him of share options worth £2.1 million and other sums of money that would otherwise have been payable.

Following the termination of Mr. Tigana’s contract, Fulham brought an action against him contending that he was in breach of various contractual and fiduciary duties. Fulham’s case consisted of the following grounds of complaint:

Before the Judge, counsel for Fulham accepted that the two alleged breaches of duty concerning van der Sar and Carew were of significantly less weight than the other breaches, and the thrust of Fulham’s case was directed towards the Marlet transfer and Mr. Tigana’s alleged failure during subsequent enquiries to give an open and honest account of his part in them. Fulham claimed damages which allegedly flowed from those breaches of duty, and claimed that Mr. Tigana’s repudiatory breaches legally justified it failing to honour his share options.

In addition to the proceedings before the High Court, various other legal actions have been commenced in relation to these allegations:

Elias J gave a judgment that substantially vindicated Mr. Tigana. He dismissed the whole of Fulham’s claim.

Under clause 1.2 of his contract dated 9 April 2000, Mr. Tigana was under a contractual duty to recommend to the Board the buying and selling of players. Clause 2.1.1 required him to exercise his powers and perform his duties “faithfully and diligently to the best of his abilities”. Clause 2.2 required him to “provide such information and explanations as the Board may require” in connection with the progress of his activities and duties carried out under his contract of employment or otherwise in relation to the affairs of the club.

Elias J found that Mr Tigana’s contract obliged him to use his contacts and experience to obtain information in relation to the footballing abilities of a player, but that that duty did not extend to finding out information material to the financial aspects of a transfer.

Elias J also decided that:

In relation to Mr. Tigana’s fiduciary duties, Elias J relied upon Item Software v Fassihi [2004] EWCA Civ 1244, in which Arden LJ held that, whilst a director was under a fiduciary duty to disclose his wrongdoing to the company, this was not a separate and independent duty but was part of the more general obligation to act in what he in good faith considers to be in the best interests of the company.

Elias J found that Mr. Tigana did not generally become involved in transfer negotiations. His opinion would be sought as a matter of course when transfers were envisaged, and this would be the case as regards transfer fees but not personal terms. Mr. Tigana was not the only person with experience of evaluating players: Mr. Fiddy, the Chief Executive in the summer of 2001, had also developed a certain knowledge and expertise as a result of transfers he had been involved in. In spite of this general position, there were instances, particularly involving transfers of French players, when the division between acting as intermediary and as direct negotiator could become blurred. Elias J concluded that there was no evidence that Mr. Tigana was cavalier about transfer fees in general, and noted that he had previously turned players down on the grounds that the fees or salary requests were too high. In any event, Mr Al Fayed had the final veto over any proposed transfer.

In the summer of 2001, it came to Mr. Tigana’s attention that Marlet might be available and so he contacted Marlet’s agents, the Boisseau brothers. There was a factual dispute between Mr. Tigana and Pascal Boisseau about what was said about salaries and transfer fees: Mr. Tigana claimed that he was told Marlet would be seeking a salary of FFr 800,000 per month and that Lyon were seeking about FFr 100-110 million as a transfer fee for the player, while Pascal Boisseau says that Fulham volunteered that they would pay FFr 800,000 net per month. The Judge rejected Mr Boisseau’s evidence, finding it highly unlikely that Mr. Tigana would have offered a figure without any prior indication from the player or agent as to the amount sought.

On 17 August, a meeting was held in Lyon between Marlet, the Boisseau brothers, Mr. Tigana and Mr. Fiddy, which was conducted almost exclusively in French. There was debate as to what was discussed at that meeting, but Elias J found it “inconceivable” that the question of the principal terms sought by Marlet would not have been raised, and that he “could not imagine that Mr. Fiddy would have been indifferent to the sums being proposed”. He therefore found that, at some point either during the meeting or as a result of discussions with Mr. Tigana shortly afterwards, Mr. Fiddy would have known what the player was seeking by way of salary.

There then followed a discussion with Mr. Aulas, the President of Lyon, who wanted confirmation that Fulham was interested in the player. Fulham consequently made an offer of FFr 90million which was faxed to Lyon on 21 August 2001. On that day, a meeting was held between Mr. Aulas and the Boisseau brothers, following which Pascal Boisseau told Mr. Tigana that Lyon would not accept a fee of less than FFr100 million. Pascal Boisseau claimed that Mr. Tigana told him that Fulham would increase its offer accordingly, which Mr. Tigana denied. Elias J did not accept that Mr. Tigana would have unilaterally raised the offer for Marlet. On 27 August, a meeting was held between Lyon representatives, Marlet and the Boisseau brothers. The Boisseau brothers said it became clear at that meeting that Mr. Aulas was prepared to sell Marlet. It also became clear that Mr. Aulas was not prepared to share the transfer fee with either Marlet or BMB as required by Marlet’s contract, and that he would not be prepared to sell the player if he were required to honour the Marlet Entitlement. Pascal Boisseau said that he had anticipated this problem in advance and alerted Mr. Tigana to it on 26 August, which Mr. Tigana denied. Elias J preferred Mr. Tigana’s evidence for two reasons, namely: there was inconsistency in solicitors’ correspondence prior to the BMB litigation about which Boisseau brother had allegedly told Mr. Tigana about the problem; and secondly because it would not have been prudent for Boisseau to have notified Fulham of such a contractual term in advance, as it might have caused the Club to take a tougher stance in negotiations.

Mr. Tigana did become aware that Marlet was being required to forgo his portion of the transfer fee on 27 August 2001. Mr Boisseau alleged that he thought a fee of FFr130 million had been agreed, but that Mr. Tigana then proposed that, if Fulham were to pay an extra FFr 5 million to the player, Lyon ought to drop its fee by FFr10 million. The Judge did not believe that a figure of FFr130 million had been agreed as, if there had been agreement at that figure, it would not have made commercial sense for Mr. Aulas to have reduced the figure by FFr10 million merely because Fulham had agreed to offer the player himself FFr5 million.

At 12.07 on 27 August 2001, Fulham sent a fax to Mr Aulas “confirming” an offer of FFr120 million, which the Judge found must have indicated that an offer had been made previously. Marlet went to Fulham the next day, whereupon his contractual arrangements were completed [para 60].

Mr. Tigana denies ever stating that Fulham would pay another FFr5 million to Marlet, but alleges that his proposal to break the deadlock over the Marlet Entitlement had been that there should be 2 charity matches with the proceeds going to Marlet. He said he had rung Mr. Fiddy to make him aware of the problem of the Marlet Entitlement, but that Mr. Fiddy had already known about it. In contrast, Mr. Fiddy says he was never informed that Marlet had given up his proportion of the transfer fee, but was told by Mr. Tigana that there should be an extra FFr 5 million paid to the player and that a tax efficient way of doing this would be to pay Marlet FFr1 million by way of image rights for each year of the five year contract.

The Judge did not accept Mr. Fiddy’s evidence for the following reasons:

Telephone records of the various parties were admitted as evidence in an attempt to demonstrate whether it was Mr. Tigana or Mr. Fiddy who was responsible for conducting the negotiations. In the light of those telephone records, Elias J found that the decision to recommend the fee of FFr120 million was taken by Mr. Fiddy. He found that nobody expected that the initial offer of FFr90 million would be accepted by Lyon, and that it was appreciated by Fulham that this would have to rise to FFr 120million. The Judge also found that Mr. Fiddy was being put under pressure by Mr. Tigana to acquire the player and that this would have encouraged Mr. Fiddy to make an offer at the higher end of the spectrum. He did not accept however that Mr. Fiddy would have agreed to allow Mr. Tigana to negotiate the fee without consultation or discussion.

In summary therefore, in relation to the Marlet transfer, Elias J found :

Elias J therefore found that Mr. Tigana did not deliberately and knowingly conceal information from Fulham prior to Fulham making its offer for the player. Further, as Mr. Tigana attached little weight to the Marlet Entitlement type of clause, the Judge was satisfied that knowledge of the Marlet Entitlement was not information which Mr. Tigana would have considered would materially assist Fulham in the negotiations with Lyon.

The Judge did however, not surprisingly, accept that Mr. Tigana would have been in breach of contract had he recommended a fee which he believed was more than the club should properly play for the player. The Judge also stated “Since in my view there is no basis to say that the salary offered was anything other than an appropriate (if generous) sum, I do not think he would have been under the further obligation to reveal to the Club about the percentage arrangement” (para 72).

The facts in relation to this head of the claim were largely undisputed. Agreement was reached for Fulham to purchase Carew subject to a satisfactory medical: a medical conducted by a Mr Haddad pursuant to the agreement concluded that there was a small but significant risk that Carew could face a career threatening injury and he was consequently rejected by Mr Al Fayed. Disappointed, Mr. Tigana took Carew to Paris to be examined by a second doctor, Dr Saillant. There was a dispute as to whether Mr. Tigana informed Mr Collins, the then Chief Executive, as to his visit to France. The Judge thought that the likelihood was that Mr Collins was told. Dr Saillant did not agree with Mr Haddad about Carew’s prospects but Mr. Tigana was nonetheless unable to persuade Mr Al Fayed to go ahead with the transfer.

Elias J found that it was inconceivable that Mr. Tigana was intending to conceal his activities. He was satisfied that Mr. Tigana thought, wrongly, that he might be able to change Mr Al Fayed’s mind, as had happened in the past. Further, Elias J found that Mr. Tigana wanted to secure the player because he thought it was in the best interests of the club, therefore there was no basis for concluding that he was acting in a disloyal manner towards the Chairman in arranging the additional medical.

As Elias J had found that Mr. Tigana did not negotiate the fee for Marlet, did not agree the additional FFr5 million payment to him, and did inform Fiddy of the Marlet Entitlement, Fulham’s allegations that he gave dishonest answers in relation to these matters were bound to fail.

However, by the end of the case, counsel for Fulham was placing the most reliance on one argument: namely that Mr. Tigana had failed to give a full and frank account of his involvement in the Marlet transfer, in particular that he deliberately sought to conceal when he came to know about the Marlet Entitlement, and that, once on garden leave, he was deliberately vague and imprecise in his answers about this so as to minimise his role in events at that time.

Questions were put to Mr. Tigana about the Marlet transfer on several occasions. For the purposes of the appeal, it is necessary to look at these in detail:

In assessing whether Mr. Tigana had breached his duty, the Judge considered that Mr. Tigana was required to do no more than respond to the questions raised with him in interview by Fulham’s lawyers. Whilst accepting that Mr. Tigana’s witness statement of 22 May 2003 gave the clear impression that he “did not become aware of the fact until after the negotiations were done and dusted” he commented that it was difficult to see why Mr. Tigana would deliberately conceal the stage at which he became aware of the Marlet Entitlement, given that he had found that Mr. Tigana did inform Mr. Fiddy at the material time.

Elias J did not make an explicit finding that Mr. Tigana did not deliberately conceal the information. He did however go on to say;

“Even had I formed the view that Mr. Tigana did deliberately conceal this particular item of information, and was thereby in breach of his obligations towards the Club, I would not have concluded in the circumstances of this case that this would justify Fulham treating that conduct as repudiatory breach.”

(para 103, emphasis added).

In support of his view that the conduct of Mr. Tigana would in any event not be of sufficient gravity to constitute a repudiatory breach the Judge cited Sinclair v Neighbour [1967] 2 QB 279 at p. 287 per Sellers LJ and Neary v Dean of Westminster [1999] IRLR 288 para 22.

It is common ground that, if Fulham could not establish that the dismissal was justified by a repudiatory breach, the counterclaim must succeed. Elias J therefore found that Mr. Tigana was entitled to damages representing the value of his share option rights.

Mr Ian Croxford QC forcefully and compellingly advanced the only arguments that were available to Fulham under two heads. The first and by far the most important was based on Mr. Tigana’s allegedly dishonest and misleading answers to the enquiries about the Marlet Entitlement. As to this, Fulham had seven grounds of appeal. The grounds are largely factual, but Mr Croxford submitted that, while the grounds challenge the Judge’s conclusions as to the facts, “they do so on the basis that the Judge failed to adopt the correct legal approach when reaching those findings”. He contended that the Judge erred in law :

Mr Paul Goulding QC on behalf of Mr. Tigana does not accept that the issues before this Court are issues of law. He submits that the issue before us, as in the Court below, is an issue of fact; namely: did Mr. Tigana commit an act of gross misconduct thereby repudiating his contract? He further submits that Fulham has tried to turn issues of fact and assessment of witnesses into “issues as to the legal approach taken by the Judge”.

He also submits:

While it is tempting to embark on a detailed examination of the respective arguments of the parties, that temptation should be resisted because in my view this is unnecessary for the determination of this appeal. There are two questions that can be identified which, if they are answered in favour of Mr. Tigana, are undoubtedly conclusive as to the outcome of this appeal. The questions are;

In answering both of these questions and evaluating the Judge’s conclusions, the fact that the Judge had made findings in relation to allegations made by Fulham which are not challenged should not be ignored. Nor should the real reservations that the Judge had about the evidence of Mr. Fiddy and the Boisseau brothers. By contrast Elias J stated early in his judgment generally of Mr. Tigana “I found him to be an essentially honest witness but his memory of events at this distance was not, as he accepted, always reliable” (para 33). In relation to the allegation of serious dishonesty against Mr. Tigana in respect of van der Sar, the Judge made a finding not now challenged: “I find that there is no case at all for suggesting that [Mr. Tigana] acted in any way in breach of his contractual duties to the Club in connection with this transfer” (para 49). In paragraph 58 the Judge explains why, for perfectly good reasons, he prefers Mr. Tigana’s evidence to that of the Boisseau brothers. This is a pattern that is followed by the Judge repeatedly throughout his judgment of not only identifying the evidence he prefers, but also explaining the reasons for his preference based on objective facts supporting his conclusions.

The only real ammunition that Mr Croxford has in support of the appeal is that Mr. Tigana undoubtedly did give conflicting answers as to the date of his knowledge of and participation in the Marlet Entitlement, and the absence of an explicit finding as to this by the Judge. However, the Judge identified the issue that he had to decide. He said (para 99) “The issue here, which I must decide is whether Mr. Tigana deliberately concealed matters which he believed Fulham wanted to know” (emphasis added). The Judge then referred to points that substantiated that Mr Tigana did not do so. He pointed out that Mr. Fiddy also made mistakes in his recollection. He referred to the fact that, “confirmed by other evidence” Mr Tigana did not attach great significance to the Marlet Entitlement. He pointed out that this only caused a “blip” that was resolved relatively quickly (para 102) and then turned to what would be the position “Even had I formed the view that Mr Tigana did deliberately conceal this particular item of information”, thus implicitly indicating that was not the view that he had formed (para 103).

Mr Croxford argued that the Judge could not have been correct in his conclusion that Mr Tigana told Mr Fiddy of the Marlet Entitlement, because Mr Tigana made statements to Fulham on 1 and 22 May which gave the impression that Mr Tigana was not aware of the Marlet Entitlement until after the negotiations were “done and dusted”. While, obviously, if Mr. Tigana was not aware of the entitlement, logically he could not have told Mr. Fiddy about it, it does not follow, as Fulham submits, that the statements must have been made dishonestly in an attempt to explain why Mr Tigana failed to disclose the true position regarding the Marlet Entitlement. Nor does it necessarily follow that the Judge did not take these statements into account, since if he had he would not have rejected the evidence of Mr Fiddy. The explanation could be, as Mr Tigana claimed, that he was mistaken.

In addition there are two problems with Fulham’s contentions. Firstly, during cross-examination of Mr Fiddy, his own evidence was that he had known about the Marlet Entitlement prior to completing the agreement. He agreed that he had conversations with the Boisseaus and Lyon, agreed that these seemed to have been about some specific problem, and agreed that, if Mr. Tigana had known there was a problem, it would be surprising if he had not told Mr Fiddy about it. He further admitted that the image rights payment to Marlet must have reflected something he was giving up, and the only thing being given up was the Marlet Entitlement. In closing, Fulham’s counsel accepted that it would be surprising if Mr Fiddy had not known at the time. Secondly, Elias J gave detailed reasons which were more than adequate for his finding that Mr. Fiddy had known of the Marlet Entitlement, regardless of any later finding as to Mr. Tigana’s witness statement.

I accept that, when reaching his conclusion, the Judge omitted to deal with the discrepancy between Mr. Tigana’s evidence and the answers made in the May statements. However, the Judge had his independent reasons for his finding, and I do not believe that the May statements affect the validity of these reasons. Even if the Judge had addressed the May statements at this juncture, he would not have been able to ignore these other reasons, which entitled him to reach the conclusion he did in fact reach. It is clear from the trial transcripts that Mr. Fiddy’s evidence of his knowledge of the Marlet Entitlement was unsatisfactory. The Judge’s reasons for rejecting Mr. Fiddy’s evidence are convincing and once this is done, the Judge’s acceptance of the evidence of Mr Tigana is fully justified.

In my judgment therefore, despite Mr Croxford’s arguments to the contrary, it is clear that the Judge did come to the conclusion that Mr. Tigana had acted honestly, and that this conclusion was objectively justified.

That leaves the Carew transaction. The Judge’s decision that Mr. Tigana was acting in the interests of Fulham is overwhelming. In addition, even if the Judge should have found that, contrary to my view, Mr. Tigana’s actions were a breach of the duty of loyalty, the breach fell substantially short of meeting the threshold required for a repudiatory breach. Mr. Tigana was acting in what he perceived to be the best interests of Fulham, no harm was in fact caused, he did not conceal his actions, and Mr Al Fayed did not consider this to be an act of misconduct at the time. Further, even if Mr. Tigana’s actions could somehow have constituted a repudiatory breach, Mr Al Fayed subsequently acquired full knowledge of events and allowed Mr. Tigana to continue in employment for a further 18 months, clear evidence of affirmation of the contract. This allegation therefore provides no support of Fulham’s case. I would answer the two questions identified earlier in Mr. Tigana’s favour. I would, therefore, dismiss the appeal with costs. I would order detailed assessment of those costs with an interim order payable within 7 days of £50,000.