Its not just footballer players that can’t manage on £400,000pa

Paul Smith v. Chelsea Football Club Plc [2010] EWHC 1168 (QB)

The full case report can be found here: http://www.bailii.org/ew/cases/EWHC/QB/2010/1168.html

This case concerns Paul Smith, former Group Business Affairs Director of Chelsea Football Club, who having been dismissed by the Club, brought a case against them at an Employment Tribunal.

The background to the claim is that Smith was appointed by Peter Kenyon on 16^th September 2003 to act as a ‘consultant’ marketing commercial director to the Board of Directors, as Peter Kenyon had been placed on “gardening leave” by Manchester United prior to being released to join Chelsea. At the end of October 2003, the claimant was given a draft contract stating his salary would be £300,000pa, with additional bonus entitlements as appropriate. As the contract contained confidentiality and non-competition clauses, the claimant refused to sign it and instead invoiced the club £25,000pm until he was put on the payroll four months later. His salary later rose to £330,000 in July 2004 and again to £400,000 when a new contract was drafted on 27^th February 2007, making him the second highest-paid executive director at the club.

On 27^th July 2007 however, the claimant was told by Peter Kenyon that his role was redundant.

The claimant took the club to an Employment Tribunal in October 2007, however while the tribunal found that the club had failed to comply with the requirements of section 4 of the 1996 Act when it increased the claimant’s salary in July 2004 and February 2007 by not giving a written statement containing particulars of this change; it also found that despite not signing either the 2003 or 2007 draft contracts, the claimant “did not act in any other way inconsistent with it” [16]. As such there was no enforceable agreement ever reached in respect of bonus or any employment benefits [18] that the claimant could use to support his claim for unpaid salary or bonuses. The tribunal found that even if there had have been an agreement, the club was within its rights not to exercise its discretion to operate the scheme [21(2)].

The club later admitted that it did not follow the statutory dismissal and disciplinary procedures and awarded the claimant the maximum compensatory award of £60,600 and a basic award of £1,395.

The claimant now seeks in the High Court:

1)      A declaration as to his terms and conditions of employment with the defendant pursuant to s.11 of the Employment Rights Act 1996

2)      Compensation for unfair dismissal

3)      An award for alleged unlawful deductions from his wages, pursuant to s.30 of the 1996 Act

 The claimant argues that the money owed to him is due to either an implied term of the contract or on a quantum meruit for the work actually performed [32], neither of which arguments were pursued at the employment tribunal. In a somewhat cheeky and money-grabbing manner, the claimant also argued that in the absence of any signed contract, “the question of what he should reasonably have been paid for the true worth of his services remains at large” [48].

The Court however rejected this argument as entirely artificial and more akin to statutory construction than a holistic view of what the tribunal was determining. Because the claimant could also quantify the exact amount of the sum claimed, it did not matter whether the claim was brought as an implied term or a quantum meruit, the fact it was essentially the same as the claim brought before the Employment Tribunal, prevented it from being argued again (issue estoppel) and therefore the claim being made in the present case constituted an abuse of process [66].

News Reports from 2008:  http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/2791266/Paul-Smith-in-1m-fight-with-Chelsea-Football-Club-over-sacking.html

Ironically, Peter Kenyon was himself dismissed in 2009: http://www.dailymail.co.uk/sport/football/article-1214017/Chief-executioner-Peter-Kenyons-Chelsea-fate-sealed-Luiz-Felipe-Scolari-row.html

BASC makes sport shooting possible

Last year, we covered the case of British Association for Shooting and Conservation Ltd (BASC) and their dispute with the tax authorities over the status of membership subscriptions: http://sportslawnews.wordpress.com/2009/03/18/bacs-do-not-have-to-become-arms-dealers/

This case has now been reheard by Mr Justice Colin Bishopp in British Association for Shooting and Conservation Ltd (BASC) v. The Commissioners for Her Majesty’s Revenue and Customs [2010] UKFTT 268 (TC). The full case can be read at: http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKFTT/TC/2010/TC00562.html

I don’t propose to repeat the facts again in this posting (they can be found in the original article), but essentially the Tribunal needed to determine whether BASC’s subscriptions fees were connected to politics or sport

The correct test for whether an item received an exemption from tax due to sport, is contained within Item 3 of Group 10 of Sch.9 to the Value Added Tax Act 1994:

“The supply by an eligible body to an individual, except, where the body operates a membership scheme, an individual who is not a member, of services closely linked with and essential to sport or physical education in which the individual is taking part.”

and essentially has five conditions (recognised in Canterbury Hockey Club v. Revenue and Customs Commissioners (Case C-253/07) [2008] STC 3351):

1)      The supply must be made by a non-profit making organisation [tick! BASC is a non-profit making organisation]

2)      The organisation must make a supply of services [tick! BASC makes a supply of services]

3)      Those services must be supplied to persons taking part in sport [ partial tick! The Court stated at [5] that the shooting of game is a sport, although some animal rights supporters might question this, disagreement over the supply to persons taking part]

4)      The services must be closely linked to sport  [disagreement]

5)      The supply must be essential to the transactions exempted [disagreement]

What changed in this judgment is that BASC provided additional evidence [7] as to how its activities support sport:

• Organisation of three deer stalking schemes (two in England, one in Scotland)
• Preservation of game habitats
• Web service for members to identify and contact landowners who offer stalking
• Negotiation of rights of access, and the formulation of codes of conduct for coastal wildfowling
• Provision of training courses for coaches, range officers, school teachers, young people and its own members
• Lobbying and educating ministers, MPs, Chief constables and others about the sport, in particular the securing of an amendment to the Hunting Act 2004

 

And Mr Justice Bishopp clarified at [14] that BASC did not have to exclusively supply all sport shooters with membership and services, and the fact that members could obtain some of the services themselves or through competing organisations did not affect the exemption analysis, although the court did add later that paragraph that BASC was unique.

Given that clarification, the Court accepted that the previous test was too high and that the test should not have been whether BASC’s suppliers were essential  to make sport physically possible (through the provision of land, game or guns), but rather whether the omission of its supplies would materially lessen the quality of the sport [15].

On this point, while the evidence was unanimous that if BASC or an equivalent did not exist, there would be significantly greater restrictions of shooting and that any available facilities would be of a much poorer quality [16], the defendants tried to challenge the decision on the grounds that BASC wider social and political functions beyond that of just sport prevented BASC’s services from being an essential supply (part 5 of the test) [19].

This argument was however rejected, as once the test had been satisfied that BASC’s supplies were closely linked to the sport of shooting and added (significant) value to the sport , the fact that other people and organisations also benefitted from them was irrelevant [20].

 Youtube, “Shooting Politics”, episode 9, 9th December 2009 (including a debate about Shooting and the 2012 Olympics):

Youtube, “Shooting Sports Trust”