Court of Appeal allows a claim for loss of a chance

Court of Appeal allows a claim for loss of a chance

In McGill v The Sports and Entertainment Media Group and others, the Court of Appeal (“CA”) allowed a football agent’s claim for loss of a chance, reversing the High Court’s (“HC”) decision to dismiss the claim at first instance. The case provides a useful reminder of the application of this complex principal, and that courts can and do uphold claims of this nature in certain circumstances.

The facts
The claimant, a football agent, alleged that it entered into an oral contract with a football player, Gavin McCann, in 2007 and that, under it, it was appointed exclusively for the purpose of finding a new contract for the player and would receive a fee for this service.

Under the Football Agents Regulations (“FA Rules”), made by the Football Association, a representation contract between a licensed agent and a player or club must (amongst other things) be made in a standard written form and contain the whole agreement between the parties. It is worth noting that, although the FA rules do not have statutory force, they are a set of rules by which FA members were contractually bound.

The alleged oral contract between the claimant and the player was in violation of the FA Rules and so would have been unenforceable in any forum governed by the FA Rules. As such, the claimant would not have been entitled to payment of any fee unless it had entered a written agreement with the player. In reality, the player has been reluctant to enter into a written contract with the claimant.

The claimant alleged that it had arranged a deal for the transfer of the player to the club Bolton Wanderers FC. However, the deal was ultimately arranged by the defendants who were agents for the club and who received a fee of £300,000 for their services.

The claimant sued the player for breach of contract and eventually settled its claims in 2009 for £50,000. In 2012 it then issued proceedings against the defendants. It claimed that they had found out about the agent’s arrangements for the transfer deal and had taken over this deal, finalising it on largely similar terms. The defendants had therefore induced the player to breach his oral contract with the agent. The claimant claimed, amongst other things, that the defendants had committed the torts of inducing breach of contract and unlawful means conspiracy.

High Court decision – first instance
The HC found that the claimant and the footballer had indeed entered into an oral contract and that the defendants had induced the player to breach that contract and committed unlawful means conspiracy.

However, the HC dismissed the claim in its entirety for the following reasons.

The HC considered the claimant’s loss to be the fee it would have earned but for the induced breach of contract by the defendant. However, the HC held that there was no evidence that the player would have in fact entered into a written contract with the claimant. As such, the claimant had failed to prove on the balance of probabilities that, but for the defendant’s actions, the claimant would have entered into a written contract with the player under which the claimant would have been entitled to the agents fee. The claim failed because the claimant failed to establish causation.

Court of Appeal decision
The claimant appealed the HC decision, contending that the HC had erred when it decided that claimant had to prove that the player would have signed a written contract with the claimant.

The CA agreed with the claimant, upholding the appeal. It held that:

  • The claimant’s loss was properly analysed as a loss of a chance (and that it was open to the claimant to argue this on appeal);
  • The HC had erred in principle in holding that the claimant needed to prove the player would have signed the written contract. Instead, the claimant only needed to establish a real or substantial chance (rather than a speculative chance) that, but for the defendant’s actions, the player would have entered into the written contract. The CA found this threshold test to be satisfied - the oral contract clearly contemplated the parties entering into a written contract because, without it, the claimant’s rights to payment would not materialise; and
  • The evaluation of the chance was then a matter for quantification of damages and the CA remitted to this issue to the HC. The HC had heard all the evidence and was better placed to make this assessment. It is worth noting that the HC had previously considered that, on the balance of probabilities, the player would not have entered into the written contract. Therefore, in the circumstances (and as noted by the CA), the HC would be bound by its previous finding and so the lost chance that the player would have entered into the written contract could not exceed 50%.

The Jameson argument
An argument forwarded by the defendants at both first instance and on appeal was that, because the claimant had settled its legal proceedings against the player in 2009, it could not now bring a separate claim against the defendants. The defendants relied on the cases of Jameson v Central Electricity Generating Board and Heaton v AXA Equity and Law Assurance Society PLC. In short, the argument is that a claimant who has accepted a sum from a defendant in full and final settlement of claims should not be able to then pursue a claim against a third party if that third party claim formed part of the claim against the original defendant.

The HC dismissed this argument on the basis that, in the circumstances, the claim against the player was a claim in contract and the claim against the defendant was in tort. Although the CA agreed with the HC in its dismissal of the argument, it disagreed with the HC’s reasoning. The correct question to ask was whether, by settling the earlier action, the claimant had fixed the full measure of its loss so that it had no remaining loss to recover from anybody else. In this case, it would be unfair and unjust to hold that the claimant’s earlier settlement with the player precluded its action against the defendants. The claims against the defendant were of such a different nature as those against the player that the settlement agreement would have needed clear language to show, by settling the claim against the player, it also intended satisfy the claims against the defendant.

The case is a useful example of the application of the complex loss of a chance principle and the Jameson defence. In particular, the case serves as a reminder that loss of a chance claims can be upheld by the courts in certain circumstances but the quantum of damages will ultimately be affected by valuation of that chance in percentage terms (which may be less than 50%).

McGill v The Sports and Entertainment Media Group and others [2016] EWCA Civ 1063

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