Football and fiduciaries

Football, via WikipediaWhat if a footballer’s agent, in negotiating for his client, makes a secret deal with the club for himself on the side?

This is how Jacob LJ opened Imageview Management Ltd v Jack [2009] EWCA Civ 63 (18 December 2008). It concerns the bung, which is almost as endemic in football as referees, the offside trap, and angry managers. Bungs are secret payments that are sometimes part of football transfers; taking one is against the rules of football; the question in Imageview Management Ltd v Jack is whether the agent breached his duties to his client as well. The duties in question are fiduciary duties, weighty duties of loyalty owed by trustees, directors, agents, and so on.

In Boston Deep Sea Fishing v Ansell (1888) 39 Ch. D. 339, a company director secretly received commission from shipbuilders with whom an order had been placed on the company’s behalf. The Court of Appeal found him in breach of fiduciary duty. More recently, in Imageview Management Ltd v Jack [2009] EWCA Civ 63, the Court of Appeal reiterated the strictness of the fiduciary duties to which agents are subject in a case concerning a football agent. The agent was liable for a payment he received from a football club. The payment was received without the knowledge of the agent’s client (the footballer). One of the judges, Mummery LJ, expressed a regret (at para. [65]):

… that it is still necessary, in the 21st century, to remind agents of what was said by the greatest of all the judges, Bowen LJ in Boston Deep Sea Fishing [v Ansell (1888) 39 ChD 339] at pages 362-363, about conflicts of duty and interest and the necessity for transparency in the dealings of agents, if confidence in them is to continue. In our age it is more important than it ever was for the courts to hold the precise and firm line drawn between payments openly, and therefore honestly, received by agents, and undeclared payments received by agents secretly, and therefore justly liable to all the legal consequences flowing from breaches of an agent’s fiduciary obligations.

Note: Section 176 of the Companies Act (2006) provides that a director must not accept a benefit from a third party conferred by reason of his being a director or his doing (or not doing) anything as a director.

Update (17 February 2009): the case has been reported by the ICLR as part of its WLR(D) service: see here.

For Ireland, compare Head 9(3)(f) of Part A5 of the proposed General Scheme of a Companies Bill proposed by the Company Law Review Group.

Further update: there is an excellent analysis of the case by Laura McGregor on
the Edinburgh Centre for Commercial Law Blog.

So, will this see the end of bungs? I hope so. And then, we’ll have to solve the conundrum of the offside rule!