Procuring a breach of contract - loss of chance damages

In April 2007 Anthony McGill entered into an oral agency contract with a football player, Gavin McCann, to act as his exclusive agent and to arrange his transfer from Aston Villa to Bolton Wanderers (Bolton).  Mr McGill negotiated an in-principle transfer deal with Bolton.  However, before the transfer to Bolton was formalised, Mr McCann signed a written agency contract with the Sports and Entertainment Media Group (SEM), a rival agency, to arrange the transfer to Bolton, which went through on 11 June 2007 on materially the same terms Mr McGill had negotiated.  Bolton paid SEM a commission of GBP 300,000.  

Mr McGill first sued Mr McCann for repudiatory breach of their oral agency contract. That claim was settled in September 2009 for GBP 50,000.  Mr McGill then commenced these proceedings against SEM, Bolton, and certain individuals alleging that they induced Mr McCann to breach the oral agency contract, depriving Mr McGill of the commission he would otherwise have earned.     

At first instance, HHJ Waksman QC accepted that there was a binding oral agency contract, and that SEM and Bolton had induced Mr McCann to breach that contract. However the Football Association Regulations 2006 (FA Regulations) prescribe that, to be enforceable, agency contracts must be made in a standard written form. Therefore to demonstrate that SEM and Bolton's actions caused him loss, Mr McGill had to show that Mr McCann would have signed an FA Regulations compliant written agency contract prior to the completion of the transfer.  HHJ Waksman QC applied the ordinary "but for" causation test, and held that Mr McGill was unable to prove on the balance of probabilities that Mr McCann would have done so.

The Court of Appeal held that HHJ Waksman QC had applied the wrong causation test. Whether or not SEM and Bolton's actions had caused Mr McGill loss depended on the hypothetical actions of a third party, namely whether Mr McCann would have signed a written agreement.  Following its previous judgments in Allied Maples Limited v Simmons & Simmons [1995] 1 WLR 1602 and Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146, the Court of Appeal held that where a claimant's loss depends on the hypothetical actions of a third party, he need only prove that there was a real or substantial chance, as opposed to a speculative one, that the third party would have so acted. A real or substantial chance can be less than or equal to a 50% probability, and so the threshold to establish causation is less in such cases than the balance of probabilities requirement of the "but for" test. However once causation is established on this approach, the claimant can only recover the same percentage of his loss as the percentage chance he established. By contrast, under the "but for" test, if causation is established on the balance of probabilities then the claimant can recover the full amount of his loss.

The Court of Appeal did not disturb the High Court's finding that Mr McGill had not proved on the balance of probabilities that Mr McCann would have signed an FA Regulations compliant contract, but accepted that Mr McGill could show a real or substantial chance that he would have done so.  Therefore, Mr McGill was entitled to recover damages as a percentage of the lost commission, but that percentage could not exceed 50%. The case was remitted back to the High Court for an assessment of that percentage.

The Jameson principle

The Court of Appeal also considered the application of the principle in Jameson v CEGB [2000] 1 AC 455, that where concurrent tortfeasors are liable for the same harm and the claimant enters into a settlement with one of them, the other tortfeasors are discharged from liability for the same damage if the settlement is, on a proper construction of the relevant agreement, in full and final satisfaction of the claimant's claims. 

Bolton and SEM argued that Mr McGill's settlement with Mr McCann barred him from pursuing his claims against them under this principle, as Mr McGill was seeking to recover the same losses from Mr McCann that he now claimed from them. The settlement with Mr McCann should therefore be treated as in full and final satisfaction of Mr McGill's losses.

Both HHJ Waksman QC and the Court of Appeal rejected this argument. The Court of Appeal did so on the basis that Jameson concerned concurrent tortfeasors and, whilst the House of Lords in Heaton v AXA Equity and Law Assurance Society Plc [2002] UKHL 15 confirmed that the principle could apply to successive contract breakers, this case concerned claims in both contract and tort. Whilst Heaton established that the Jameson principle could apply in such circumstances, the Court of Appeal considered that it should not bar a claimant from pursuing such claims sequentially, unless there was clear evidence that settlement of the first pursued claim satisfied other claims of a different character. The Court stated that that would require clear language in the relevant settlement, and in this case no such language was present.

Comment

This case is a cogent reminder that courts may award damages on the loss-of-chance basis. Whilst the loss-of-chance approach involves a lower evidential standard to establish causation than the "but for" approach, the quantum of damages recoverable will only be a percentage of that whicht could be recovered on the latter approach. 

It also raises important practice points for those drafting settlement agreements. The Court of Appeal has confirmed that the Jameson principle can apply not only to concurrent tortfeasors and contract breakers, but in circumstances where a claimant has both contractual and tortious claims against different parties. Therefore care needs to be taken when acting for a claimant settling claims against only one defendant in these circumstances not to compromise any remaining claims, of whatever nature, against other defendants. The Court of Appeal helpfully clarified that clear language would likely be required to do so, but close attention always needs to be paid to precisely what is being settled.  

Further information

This case summary is part of the Allen & Overy Litigation and Dispute Resolution Review, a monthly publication. For more information please contact Amy Edwards at amy.edwards@allenovery.com.