Harrison v Burridge & Anor

This is my extemporary judgment in the case of John Burridge and Janet Burridge (as claimants) against MPH Soccer Management Limited (as defendant) in claim number 6LV24665, appeal number 47 of 2010.

This is an appeal by the fourth party, Mr Michael Peter Harrison, from an order of District Judge Baker, sitting in the Liverpool County Court, dated 19^th March 2010 and perfected on 31^st March 2010. Permission to appeal, limited to ground number 5 of the grounds of appeal as set out in Mr Harrison’s appellant’s notice filed on 31^st March 2010, was given by me on paper on 1^st April 2010 in an order perfected on 12^th April 2010. There has been no renewed application by Mr Harrison to seek permission to appeal in relation to grounds 1 to 4 and therefore the only active ground of appeal is that set out in ground 5 of Mr Harrison’s grounds of appeal.

By the district judge’s order, a final third party debt order was made in the sum of £58,219.54. The third party, West Ham United Football Club plc, was ordered to pay that sum by four o'clock on Monday, 22^nd March, together with any accrued interest, to the solicitors for the claimants, Hill Dickinson LLP.

Mr Harrison appeals that third party debt order. The third party, West Ham United Football Club plc, has adopted a neutral position in relation to whether a third party debt order should be made against it and has not participated in this appeal. The defendant, the judgment debtor, MPH Soccer Management Limited, has, as I understand it, been struck off the register and dissolved since the commencement of these proceedings and it too has taken no part in the appeal. The effective parties to the appeal are therefore Mr Michael Peter Harrison, as appellant, represented by Mr Wilson Horne of counsel, and Mr and Mrs Burridge, as respondents, represented by Mr Jonathan Crystal of counsel.

The background to this appeal is as follows. On 11^th September 2006, the claimants, Mr and Mrs Burridge, issued a claim form in the Liverpool County Court seeking to recover £50,000 plus interest from the defendant, MPH Soccer Management Limited. That sum of £50,000 was said to represent an agreed fee due and owing from MPH Soccer Management Limited to Mr and Mrs Burridge for their assistance in arranging the transfer of a footballer, Mr Ali Al Habsi, to Bolton Wanderers Football Club in or about 2005. The claimants had invoiced the defendant in the sum of £50,000 on 7^th July 2005. The defendant company had drawn a cheque payable to the claimants in that sum, and dated 4^th May 2006, but that cheque was not met on presentation. As a result, the claimants brought this claim against MPH Soccer Management Limited which, it is common ground, was then a corporate vehicle of Mr Michael Peter Harrison. Judgment in default was obtained in the sum of £56,042.48 in those proceedings on 14^th November 2006.

On 18^th September 2007, the claimants issued an application for a third party debt order in respect of a sum of money which was to fall due from West Ham United Football Club plc to MPH Soccer Management Limited on 1^st October 2007. That sum of money represented the second tranche of a series of payments totalling £900,000 plus VAT which was to fall due pursuant to an agreement dated 19^th January 2007 relating to the transfer of another footballer, Lucas Neill, from Blackburn Rovers Football Club to West Ham United Football Club on a two and a half-year player’s contract. An interim third party debt order was made in respect of the judgment debt by District Judge Fitzgerald on 1^st October 2007. That interim third party debt order became the subject of a final third party debt order as a result of the judgment of District Judge Baker which is the subject of this appeal.

District Judge Baker had heard the matter on 27^th November 2009 and he prepared a written reserved judgment, dated 3^rd December 2009, which was formally handed down on 19^th March 2010. District Judge Baker was asked on that day to give permission to appeal to Mr Harrison, but he refused permission to appeal on the footing that he considered that there was no reasonable prospect of success in interfering with the generous ambit of the discretion available to the district judge.

As I have indicated, an appellant’s notice was filed on 31^st March 2010 raising five grounds of appeal. The matter came before me on paper on 1^st April 2010. It did so so soon after the filing of the notice of appeal because there was also an application for a stay of enforcement of the final third party debt order. I refused permission to appeal on grounds 1 to 4 on the footing that the appeal on those grounds did not stand any real prospect of success, and there was no reason (still less any compelling reason) why an appeal should be heard on any of those grounds. That decision has not been challenged. But I did give permission to appeal on ground number 5.

That ground was that the district judge had been wrong to find that (a) effectively MPH was the party to the agency agreement with West Ham and (b) the relationship of creditor and debtor consequently existed between MPH and West Ham. It is said that the district judge should have held that the parties to the relevant agency agreement were West Ham and the fourth party, Mr Harrison, in compliance with articles 3.1 and 12.11 of the Football Association Football Agents Regulations. Further, it is said that District Judge Baker should have held that it was open to the fourth party to direct to whom instalments due under the agency agreement should be paid, as envisaged by article 17.7 of the FA Regulations, as the relationship of creditor and debtor is said to have existed between Mr Harrison and West Ham United Football Club.

It is necessary for me to refer to the terms of the relevant agreement. As I have said, that was made on 19^th January 2007. The parties are said to be West Ham United Football Club plc and Michael Peter Harrison of MPH Soccer Management Limited, Suite 9, Vance Business Park, Norwood Road, Gateshead, NE11 9NE (therein described as “the agent”). There follow four recitals. It is recited that West Ham is a professional football club playing in the FA Premier League and is desirous of signing the player Lucas Neill from Blackburn Rovers Football Club on a two and a half-year player’s contract. The agent is said to be registered with the English FA as a player’s agent and to be in possession of a licence issued in accordance with FIFA for that purpose. It is recited that West Ham wishes to appoint the agent on a non-exclusive basis to assist in and complete the negotiations with Blackburn Rovers Football Club for the acquisition and the registration of the player, and the agent had agreed so to act upon the following terms. Finally, it is recited that West Ham should not be obliged to use the services of the agent and that it might represent itself in any negotiations and/or transactions should it so desire.

The operative part of the agreement provides for the appointment by West Ham of the agent to act on West Ham’s behalf in relation to the acquisition of the player’s registration and, in consideration of the payments thereinafter mentioned, the agent had agreed so to act. By clause 1.2, in pursuance of his duties under the agreement, the agent agreed to comply with the FIFA Regulations and the FA Regulations for the time being governing players’ agents.

Clause 2 provided for the commission. In consideration of the services, West Ham agreed to pay to the agent a once-only commission fee payable (subject as thereinafter mentioned) by four instalments. The first instalment was to fall due within 14 days of West Ham receiving notification that the contract had been registered. A further instalment, which, although it is redacted in the form of agreement before me, I am told was £200,000 plus VAT, fell due on 1^st October 2007.

By clause 2.3, payment was to be made through the Football Association, subject to receipt of the agent’s written invoice therefor.

By clause 2.6, if the registration of the player’s contract was subsequently transferred, or the contract was renegotiated by West Ham and the player, or the player was no longer employed by West Ham, or the agent was no longer registered as a FIFA licensed agent, or ceased to hold valid and active professional liability insurance cover in respect of the provision of the services before any of the instalments set out at clause 2.1 had been paid to the agent, then the agreement was immediately to terminate, and such outstanding instalments should not be payable.

By clause 2.7, the agent undertook and warranted to West Ham that (a) he should carry out performance of the services to the best of his ability and use his best endeavours in connection therewith; (b) he should comply with the Football Association Rules and the Agents Regulations as well as all relevant public law provisions; and (c) he had in place valid and active professional liability insurance in respect of the services.

The agreement was executed as a deed and was delivered by the agent in the presence of a witness. The deed was executed by Mr Harrison personally.

Contemporaneously with the entry into that representation agreement a further document was completed by Mr Harrison. It is headed The Football Association Declaration of Payment to a Licensed Agent. By clause 1, West Ham United Football Club recorded that it had employed the services of a licensed player’s agent in the transfer contract negotiations involving Lucas Neill as player.

By clause 2, the fee agreed by the club was £900,000 plus VAT and was to be paid in accordance with the written agreement between the club and Mr Harrison (described as “agent”). The dates for the various payments are then set out, including the payment due on 1^st October 2007. The document then went on to record that the fee due to the agent was to be sent to the Football Association for onward transmission to the agent. The form continued: “Please provide bank details for the agent and ensure all fees are forwarded in the appropriate currency. Please contact the Football Association’s finance department if assistance is required.” The bank name was inserted as Lloyds TSB, the branch was inserted as a branch at Newcastle-upon-Tyne, the sort code was given, as was the bank account number, and then the name of the account holder was inserted as MPH Soccer Management Limited. The form concluded: “The undersigned confirm that no payment other than that specified below will be made in respect of the agreement”; and the agent confirmed that no payment should be sought or accepted from any other party to the transaction. As I have said, the document was signed by Mr Harrison as agent and dated 19^th January 2007. The club, West Ham United FC, agreed to pay £900,000 plus VAT to Mr Harrison.

It is not disputed that that agreement should be construed against the background of the FA Football Agents Regulations of 2006. These appear at page 245 and following of the appeal bundle. I have been referred by Mr Horne for the appellant to regulations 1.5, 3.1.1, 12.4, 12.11, 14.12, 14.28, 17.1 and 17.7. Under the terms of those regulations, only an individual and not a company may act as a licensed agent. But, by clause 17.7, a licensed agent may organise his occupation as a business as long as his employees’ work is restricted to administrative duties connected with the business activity of a licensed agent. Only the licensed agent himself is entitled to represent and promote the interests of players and/or clubs with other players and/or clubs.

The Football Association’s understanding of those regulations is set out in a letter, dated 1^st July 2008, from Mr David Lampert, the Head of Financial Regulation at the FA, to Miss Victoria Barry of Hill Dickinson, the claimants’ solicitors. That letter is at pages 243 to 244 of the appeal bundle. The writer makes it clear that he is not making any comments regarding the factual basis of the claim or of Mr Harrison’s or MPH Soccer Management Limited’s defence. The writer limits the letter to an explanation of the form and effect of the FA’s regulatory framework governing agents insofar as it is relevant to the queries which had been raised. The writer explains that at all relevant times the FA had domestic requirements governing the conduct of agents in the football transfer market, the relevant regulations being the 2006 Regulations.

Mr Lampert addresses two matters. The first is the parties to an agency contract. He writes:

“Both FA and FIFA Regulations stipulate that a licensed agent must be a natural person (see article 3.1 of FA Regulations, for example). MPH Soccer Management Limited is not a natural person. Players and clubs would not be permitted to contract directly with MPH to provide football agency services. The regulations require that only a natural person (that is appropriately licensed or otherwise exempt) can enter into such a contract. A licensed agent is required to act in accordance with this requirement (see in particular article 14.12) whether he is employed by a company or not. It is the FA’s view that the January 2007 contract fulfils these requirements.”

The second is the status of companies under the FA Regulations:

“It is recognised in both the FA and FIFA regulatory regimes that agents may choose to organise their business through limited companies. This is permissible under the regulations. However, it must be the licensed individual who contracts to provide and actually provides the agency services to the client. It is also recognised practice for payment arrangements in respect of agency services to be made through the offices of a company where relevant. The FA operates a clearing house system for all payments to agents made by English clubs and more often than not payments for agency services will be made to a company such as MPH rather than to an individual. This is of course as you would expect as it will generally be the agency company that manages the invoicing and billing processes in order to collect fees on behalf of its employed licensed agents.”

Clearly the court is not bound, on a matter of construction, by the view of any third party; but it does seem to me that Mr Lampert has accurately summarised the true meaning and effect of the applicable Football Agents Regulations.

As I have indicated, District Judge Fitzgerald had made an interim third party debt order on 1^st October 2007. The effect of that order was to provide that, until the hearing of the claimants’ application for a final third party debt order, West Ham United Football Club plc was not, unless the court ordered otherwise, to pay to the judgment debtor, MPH Soccer Management Limited, or to another person, any sum of money due or accruing due by the third party to the judgment debtor except for any part of that sum which exceeded the total shown below, which, with court fees and costs, amounted to £58,219.54. The interim order went on to make clear that it did not authorise West Ham to pay any money to the claimants as judgment creditors at that stage.

The scheme for third party debt orders is contained in Part 72 of the Civil Procedure Rules. By CPR 72.2 (1), upon the application of a judgment creditor, the court may make an order (a “final third party debt order”) requiring a third party to pay to the judgment creditor (a) the amount of any debt due or accruing due to the judgment debtor from the third party; or (b) so much of that debt as is sufficient to satisfy the judgment debt and the judgment creditor’s costs of the application.

By CPR 72.2 (2), the court will not make an order under paragraph 1 without first making an order (known as an “interim third party debt order”) as provided by rule 72.4 (2).

CPR 72.4 contains provisions relating to interim third party debt orders. By subrule (1), an application for a third party debt order will initially be dealt with by a judge without a hearing. By subrule (2), the judge may make an interim third party debt order (a) fixing a hearing to consider whether to make a final third party debt order; and(b)directing that until that hearing the third party must not make any payment which reduces the amount he owes the judgment debtor to less than the amount specified in the order. By subrule (4), an interim third party debt order becomes binding on a third party when it is served on him.

CPR 72.8 provides for the further consideration of the application for a third party debt order. By subrule (6), at the hearing the court may (a)make a final third party debt order; (b)discharge the interim third party debt order and dismiss the application; (c)decide any issues in dispute between the parties, or between any of the parties and any other person who has a claim to the money specified in the interim order; or (d)direct a trial of any such issues, and if necessary give directions.

It is common ground that the applicable principles are those set out in the notes to CPR Part 73 relating to charging orders, stop orders and stop notices at paragraph 73.4.5 of the 2010 edition of Civil Procedure. Mr Horne, in particular, notes and accepts the eighth of those principles, which is that the court has a discretion, which will not be interfered with on appeal unless exercised on a wrong principle.

In summary, it is Mr Horne’s contention for the appellant that the district judge misconstrued the representation agreement when he held that, under its terms, there was a debt due or accruing due from West Ham United Football Club plc to the judgment debtor, the defendant, MPH Soccer Management Limited. After addressing various arguments, which are not material for the purposes of the only live ground of appeal, the district judge addressed the issue of the true meaning and effect of the representation agreement at paragraph 17 of his judgment. He made the following findings: First, that the agreement of 19^th January 2007 was made between West Ham and Mr Harrison of MPH and that he was, as a natural person, to fall within the FA Rules, conducting the negotiations on behalf MPH, of which he was a director. The district judge believed that he was supported in that view by the fact that he directed payments of the commission due from West Ham into MPH’s bank account, and by the evidence of Mr Synnott.

Mr Synnott was a partner in the firm of solicitors who act for West Ham United Football Club plc, Michael Simkins LLP. In connection with an earlier application for a third party debt order in respect of the first instalment of the monies payable under the representation agreement, Mr Synnott had made a witness statement, dated 16^th February 2007, in which he had referred to the agreement as being between MPH and West Ham. He had also indicated that a further conditional payment in excess of the sum claimed by the claimants was to be made by West Ham to MPH on 1^st October 2007 provided that the player remained employed by West Ham and remained represented by MPH. It was that statement which had led the claimants to make the application for a third party debt order in respect of the instalment of the commission that was to fall due on 1^st October 2007.

Returning to the district judge’s judgment, his second finding was that, in the circumstances he described, the relationship of creditor and debtor existed between MPH and West Ham. Certainly, he said, that was the case so far as West Ham was concerned.

Thirdly, he said that the debt was due and accruing as at the date of the interim third party debt order on 1^st October 2007.

Fourthly, in so far as the exercise of his discretion was concerned, the district judge was mindful that he was dealing with an application to enforce a judgment debt for a fairly substantial sum of money where there was no doubt that the third party was, at 1^st October 2007, holding a sum substantially in excess of the judgment debt, which was to be paid into the judgment debtor’s bank account. Thereafter, and either at the direction of Mr Harrison personally or as the director of MPH, there had been a number of concerted attempts to prevent those monies, the subject of the interim third party debt order, being paid to the claimants in satisfaction of the judgment debt due to them from MPH. In all the circumstances, and having dealt with the various points made on behalf of Mr Harrison, the district judge was not satisfied, on the balance of probabilities, that cause had been shown either by Mr Harrison or by MPH as to why the interim third party debt order should not be made final. Accordingly, he made the interim third party debt order against West Ham plc a final order in the sum provided for by the order of 1^st October 2007.

For the appellant, Mr Horne challenges that decision. He says that, in essence, the district judge made two errors of principle. First, he was wrong to construe, as he did in subparagraph 17.1 of his judgment, the representation agreement as a contract between the club and MPH. In support of that contention, Mr Horne relies upon the various matters which are set out at paragraph 15 of his written skeleton argument dated 30^th March 2010. He submits that the following aspects of the agreement should have led the district judge to conclude that the fourth party, namely Mr Harrison, was indeed the contracting party:

Mr Horne goes on to submit that the agreement must also be construed in the light of the FA Regulations applicable to a player’s agent since these govern how the player’s agent must conduct his business. In particular, he relies on the fact that a player’s agent must be a natural person, and only that person can contract directly with a football club, albeit he is able to organise his business through a limited company.

Insofar as the document headed Declaration of Payment to a Licensed Agent is concerned, Mr Horne submits that the FA effectively acts as a clearing bank for the onward transmission of agents’ fees from the football club paying the fee. The agent has the right to provide bank details for where he wants the money due to him to be paid. It is in that context that Mr Harrison nominated the company as the recipient of the payment; but, he submits, that does not alter the fact that the payment is contractually due and owing, not to the company, but to Mr Harrison, the individual agent and, Mr Horne submits, the contracting party.

Mr Horne also refers to what actually happened in or about October 2007. That is set out in a witness statement from the fourth party, Mr Harrison, dated 1^st November 2007. At paragraph 4, Mr Harrison relates that he delivered an invoice to the third party, West Ham, via another company of his, Platinum 4 Sports Limited, as he was allowed to do under the FA Regulations. He goes on to relate that West Ham refused to pay him the full amount of the invoice and referred to the interim third party debt order as the reason for this. He records that the third party consequently paid the net amount of the sum owed to Platinum 4 to it via the Football Association, the third party retaining an amount equivalent to the retained sum in order to comply with the interim third party debt order.

At paragraph 12, Mr Harrison relates that the monies were owed to him personally. He advised the FA that he wished the second tranche of monies, including the subject monies of the interim third party debt order, to be paid to Platinum 4 Sports Limited. The third party had done this, save for the retained monies, and all monies had been paid on to him by the FA.

From a letter dated 10^th October 2007 from Mr Harrison’s solicitors, Mohindra Maini, to West Ham’s solicitors, Michael Simkins LLP, exhibited as PH2 and appearing at page 276 of the appeal bundle, it would appear from the second paragraph that the invoice delivered by Platinum 4 Sports Limited to West Ham was dated 17^th September 2007 and related to the full amount of the second instalment of £235,000 including VAT. Although Mr Harrison has not exhibited that invoice, that evidence was not challenged before the district judge. Mr Horne makes the point that, at the time of the hearing before the district judge, West Ham United Football Club plc had been represented by solicitors and had seen Mr Harrison’s witness statement but had not sought to challenge his version of events.

Mr Horne submits that because, for those reasons, the district judge had been wrong to construe the representation agreement as a contract between the club and the defendant judgment debtor, the district judge had also been wrong to treat the relationship of creditor and debtor as existing between MPH Soccer Management Limited and West Ham. Thus, Mr Horne submits, the district judge exercised his discretion on a wrong principle. Accordingly, he submits, the court should interfere with the decision of the district judge.

In his response, Mr Crystal submits that the issue for the district judge, which he says he correctly addressed, was whether there was a debt due or accruing due from West Ham United Football Club plc to MPH Soccer Management Limited. It was for Mr Harrison to persuade the court that there was no debt due from West Ham to MPH Soccer Management Limited, but rather the debt was due to him. Mr Crystal emphasises that Mr Harrison has, on the evidence, consistently conducted his business activities as a licensed football agent not in his own name but through corporate vehicles. In addition to MPH Soccer Management Limited, there was also the company Platinum 4 Sports Limited. Mr Crystal drew an analogy with the position of a solicitor who practises as part of a limited liability partnership. The individual solicitor would provide the services of a solicitor, but fees would be invoiced by, and payment would be made to, the limited liability partnership of which he was a member. Mr Crystal emphasises what I accept is the unattractive nature of the submission being advanced by Mr Harrison, that this is a debt due to him rather than to his company, MPH Soccer Management Limited.

Mr Crystal submits that the district judge directed himself correctly in subparagraph 17.1 of his judgment and he addressed the correct issue. He says that he correctly distinguished between the individual agent and the corporate vehicle through which that agent chose to carry on his business. Essentially, he says that the defendant, MPH Soccer Management Limited, was supplying Mr Harrison’s services to West Ham United Football Club plc. He submits that the court should not substitute the exercise of its own discretion for that of the district judge. I accept that, provided the district judge exercised his discretion on a correct view of the law, this court should not substitute the exercise of its own discretion for that of the lower court. That was one of the bases upon which I refused permission to appeal in relation to grounds 1 through to 4 of the appellant’s notice.

Those essentially are the submissions. In the notes to CPR 72.2, at paragraph 72.2.1 (on page 1907) of the current (2010) edition of Civil Procedure, it is said to be essential to the making of a third party debt order that the relationship of creditor and debtor should exist between the judgment debtor and the third party respectively. If the judgment debtor could sue the third party for the amount and recover it, it is plain that there is an attachable debt. But that is said not to be an infallible test. There must therefore be money due or accruing due to MPH Soccer Management Limited from West Ham United Football Club plc as at 1^st October 2007, the date of the making of the interim third party debt order.

As Mr Horne rightly acknowledges, the court is not bound by expressions of opinion even from qualified solicitors, such as Mr Synnott or his partner, Mr Roger Graham Billings, who made two witness statements dated 31^st October and 4^th December 2007, as to the true meaning and effect of a contractual document. The construction of a contract is a matter of law, and it is a matter to be determined by the court.

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

It follows that, in my judgment, the district judge fell into error when he found that MPH was a party to the representation agreement with West Ham United Football Club plc. Consequently, he also fell into error when holding that the relationship of creditor and debtor existed between MPH and West Ham. I agree with the appellant that the district judge should have held that the parties to the agency agreement were West Ham and Mr Harrison. I accept also that the district judge should have held that it was open to Mr Harrison to direct to whom instalments due under the agency agreement should be paid. On the evidence, it would appear that, even before the making of the interim third party debt order, Mr Harrison had re-directed the payment of the 1^st October 2007 commission instalment to be made, not to MPH, but to Platinum 4 Sports Limited.

It follows that I accept Mr Horne’s submission that the district judge exercised his discretion to make a final third party debt order on a wrong principle, and that this appeal should be allowed accordingly.

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

I therefore, with regret, allow the appeal.