THE SCOTTISH PREMIER LEAGUE LIMITED
REASONS
for Decision dated 12 September 2012
by
THE RT HON
LORD NIMMO SMITH,
NICHOLAS STEWART QC
and
CHARLES FLINT QC
the Commission appointed by Resolution
of the Board of Directors of the Scottish
Premier League Limited dated 1 August
2012 in relation to RFC 2012 Plc and
Rangers FC
_______________
Our remit
[1]
By Resolution of the Board of Directors ("the Board") of The Scottish Premier
League Limited ("the SPL") dated 1 August 2012 we were appointed respectively as
Chairman and members of a Commission in terms of a Notice of Commission, a draft
of which was on that date approved by the Board, all in terms of section G of the
Rules of the SPL (“the Rules”).
Rules G1.1 and G1.2 provide:
"G1.1 The Board and, where appointed by the Board, a Commission, shall
have the power of inquiry into all financial, contractual and other
arrangements within, between and/or amongst Clubs and Players and all
matters concerning compliance with the Financial Disclosure Requirements
and into all matters constituting or pertaining to any suspected or alleged
breach of or failure to fulfill the Rules by any Club, Club Official and/or
Player or any matter considered by the Board or, where appointed by the
2
Board, a Commission, to be relevant to an Adjudication or an Appeal and
every Club and Club Official and Player shall be liable to and shall afford
every assistance to the Board or, as the case may be Commission, as may be
requested or required of it or him.
G1.2 Subject to Rules G1.3 and G1.4, the Board and, where appointed by
the Board, a Commission, shall (i) have the power of determination as to
whether there has been a breach of and/or failure to fulfil the Rules and in
Adjudications and Appeals; and (ii) may exercise such of the powers set out in
Rules G6.1 and G6.2 as it shall think appropriate."
[2]
Rules G1.3 and G14 are not relevant for present purposes. Annex B to the
Rules sets out Rules of Procedure which govern the proceedings of this Commission
and other bodies appointed in terms of the Rules (any such body being referred to as a
"Tribunal").
History
[3]
Rangers Football Club was founded in 1872 as an association football club. It
was incorporated in 1899 as The Rangers Football Club Limited. In recent years the
company’s name was changed to The Rangers Football Club Plc, and it is now called
RFC 2012 Plc (in administration). In line with the terminology used in the
correspondence between the parties, we shall refer to this company as “Oldco”.
[4]
The SPL was incorporated in 1998. Its share capital consists of sixteen shares
of £1 each, of which twelve have been issued. Oldco was one of the founding
members of the SPL, and remained a member until 3 August 2012 when the members
of the SPL approved the registration of a transfer of its share in the SPL to The
Dundee Football Club Limited. Each of the twelve members owns and operates an
association football club which plays in the Scottish Premier League (“the League”).
The club owned and operated by Oldco played in the League from 1998 until 2012
under the name of Rangers Football Club (“Rangers FC”).
[5]
When the SPL was first formed, a controlling interest in Oldco was held by
David (later Sir David) Murray through the medium of Murray MHL Limited. On
6 May 2011 the controlling shareholding was acquired by Wavetower Limited, a
newly incorporated company formed for the purpose of the acquisition, and controlled
by Craig Whyte. On 19 March 2012 the Court of Session made an administration
order in respect of Oldco, and Paul Clark and David Whitehouse, both of Duff &
3
Phelps Limited, were appointed joint administrators, all with effect from 14 February
2012.
[6]
On 14 June 2012 a newly incorporated company, Sevco Scotland Limited,
purchased substantially all the business and assets of Oldco, including Rangers FC, by
entering into an asset sale and purchase agreement with the joint administrators. The
name of Sevco Scotland Limited was subsequently changed to The Rangers Football
Club Limited. We shall refer to this company as Newco.
[7]
Newco was not admitted to membership of the SPL. Instead it became the
operator of Rangers FC within the Third Division of the Scottish Football League
("the SFL"). It also became a member of the Scottish Football Association (“the
SFA”), the governing body of the sport in Scotland. These events were reflected in an
agreement among the SFA, the SPL, the SFL, Oldco and Newco which was
concluded on 27 July 2012 and in this Commission’s proceedings is referred to as
“the 5-Way Agreement”.
The Notice of Commission
[8]
The Notice of Commission sets out lists of players, referred to as "Specified
Players", and "Issues for Enquiry into and Determination by the Commission" (“the
Issues"). It is not necessary for present purposes to explore the terms of the Issues in
detail, so we shall confine ourselves to a summary of them. It is however, necessary,
to quote the definition of the expression "EBT payments and arrangements":
"Payments made by or for [Oldco] into an employee benefit trust or trusts for
the benefit of Players, including the Specified Players, employed by [Oldco]
as Professional Players, Registered and/or to be Registered as Professional
Players with the Scottish Premier League and Playing and/or to Play for
Rangers FC in the Scottish Premier League and payments made by or for
[Oldco] into a sub-trust or sub-trusts of such trust or trusts of which such
Players were beneficiaries, payments by such trust or trusts and/or sub-trust or
sub-trusts to such Players and/or for the benefit of such Players and any and all
arrangements, agreements and/or undertakings and the like or similar relating
to or concerning any of such Players and payments."
[9]
The Issues may be divided into four main chapters, the first three of which
relate respectively to the period from 23 November 2000 to 21 May 2002, 22 May
2002 to 22 May 2005 and 23 May 2005 to 3 May 2011. We understand that the
division into those three chapters within that period 2000-2011 reflects changes in the
Rules of the SPL and the SFA in force from time to time. The fourth chapter alleges
4
that during the period from 15 March 2012 Oldco (then in administration) and
Rangers FC, in breach of the relevant Rules of the SPL, failed to co-operate and to
respond to requests for documents. Broadly speaking, the Issues in the first three
chapters allege that Oldco and Rangers FC breached the relevant Rules of the SPL,
and also those of the SFA (breach of which constitutes a breach of Rules of the SPL),
by failing to record EBT payments and arrangements in the contracts of service of the
Specified Players and/or other Players and by failing to notify them to the SPL and
the SFA. We also note one Issue in the third chapter (Issue 3(c) in the Notice of
Commission), directed only against Rangers FC, alleging that the club was in breach
of the Rules by playing ineligible players. The fourth chapter alleges that during the
period from 15 March 2012 Oldco (then in administration) and Rangers FC, in breach
of the relevant Rules of the SPL, failed to co-operate and to respond to requests for
documents. The Notice of Commission was served on Oldco, Newco and Rangers
FC by letters dated 2 August 2012.
Our Independence
The Commission
[10]
In most cases, it would not be necessary to discuss this topic, but in the
circumstances of the present case we think it appropriate to do so. It is fundamental
to the constitution of a body with investigatory and disciplinary powers, such as the
present Commission, that it must act independently of the person or body appointing
it. We must of course operate within the terms of our remit, and apply any rules
which are applicable, but in reaching our final determination of the Issues, and in
making any incidental decisions, we shall exercise our own judgement, on the basis of
the evidence which is adduced, in accordance with the principles of natural justice,
and unfettered by the influence of the Board or of anyone else. None of us would
have accepted his appointment on any other basis. We have the use of SPL premises
and are assisted by SPL staff, but this is because we have given instructions to that
effect; the members of staff, in particular, act under our instructions.
[11]
What we have just said is borne out by a passage in the Minute of the SPL
Board meeting on 1 August 2012:
"The Board was advised by the Secretary that the proposed Commission
would inquire into the Issues to determine if there had been any breach or
breaches of or failure or failures to fulfil Rules and that in the event that the
Commission did so determine then it would be for the Commission to exercise
5
such powers under Rules G6.1 and G6.2 as it deems appropriate. The
Secretary advised that once appointed a Commission is wholly independent
from the SPL and SPL Board and manages its own process.
It was agreed unanimously that the draft notice be approved and that a
Commission be appointed in terms of that notice."
Finally, we would add that an appeal lies to the SFA against an adverse determination
by this Commission.
The Chairman
[12]
It is appropriate at this point to mention the position of the Chairman. By
resolution of the Board of Directors of the SFA dated 23 February 2012 he and three
others were appointed members of an Independent Committee established pursuant to
Article 63.1 of the Articles of Association of the SFA for the purpose of ascertaining
if there was any prima facie evidence to support the institution of disciplinary
proceedings against Oldco and/or any of its officials in respect of possible breaches
by Oldco (and/or any of its officials) of those Articles and all associated statutes,
regulations and directives of whatever nature in the period from 6 May 2011 to
14 February 2012. This of course was the period during which Craig Whyte held a
controlling interest in Oldco.
[13]
On 6 March 2012 the Independent Committee reported in confidence to the
Board of Directors of the SFA. As is public knowledge, the report (1) recommended
that the Board of the SFA decide the question whether Mr Whyte was a fit and proper
person within the meaning of SFA Article 10.2, and (2) stated that in their opinion
there was prima facie evidence to support charges that both Mr Whyte and Oldco had
acted in such a way as to bring the game into disrepute, within the meaning of SFA
Article 94.1. They recommended that the whole matter be referred to the
Compliance Officer of the SFA to consider commencement of proceedings against
both Mr Whyte and Oldco. The report concluded the work of the Independent
Committee. The recommendations were acted upon, with consequences for
Mr Whyte and for Oldco, but the Special Committee had no further part to play after
completion of the report.
[14]
The topic of the employee benefit trust (“EBT”) referred to in the Issues
before this Commission was touched upon in two paragraphs (and only those two) of
the report of the Special Committee of the SFA, but no recommendation was made to
6
the Board in that regard. The main reasons for not making a recommendation were:
(1) the EBT came into existence several years before the period with which the
Special Committee was concerned; and (2) there was in any event no sufficiently
clear evidence of a breach of SFA Article 12.3 to justify any further action at that
stage. Now that the present Notice of Commission has been prepared, it can be seen
that there is no overlap between the period with which the Special Committee was
concerned and either the period to which the first three chapters of the Issues relate or
the subsequent period to which the fourth chapter relates.
[15]
In a letter dated 23 August 2012 (referred to below) solicitors for Newco
expressed concerns about the appointment of the Chairman to this Commission. In
short, while it expressly did not allege actual bias on his part, it suggested that by
reason of his previous Chairmanship of the SFA Special Committee the Chairman
might not be seen to be impartial. Following receipt of this letter authorisation was
obtained from the Board of the SFA - to whom the Special Committee's report
remained confidential - to disclose to the solicitors the terms of the two paragraphs of
the report in which reference was made to the EBT, together with two preceding
formal passages to explain the context in which it was discussed. Newco did not
respond to the Commission on this point, and in the event no application has been
made that the Chairman should recuse himself from these proceedings.
[16]
It is well understood that the rules of natural justice require that a judge, or a
person performing a quasi-judicial function, such as the Chairman of this
Commission, must be free not only from actual bias but also from apparent bias in his
determination of the Issues before him. The test for establishing apparent bias is
authoritatively laid down in Porter v Magill [2001] UKHL 67, [2002] 2 AC 357, in
which Lord Hope of Craighead said at paragraph 143:
"The question is whether the fair-minded and informed observer, having
considered the facts, would conclude that there was a real possibility that the
tribunal was biased."
To this may be added that the "fair-minded and informed observer" is "neither
complacent nor unduly sensitive or suspicious": Johnson v Johnson (2000) 201 CLR
488, paragraph 53.
[17]
Bearing this test in mind, the Chairman, in consultation with the other two
members of the Commission, has given careful consideration to this question, and has
concluded that the fair-minded and informed observer, having considered the facts,
7
and in particular the terms of the SFA Special Committee report quoted above, would
not conclude that there was a real possibility that the Chairman was biased. The
main reasons are, as already indicated, that: (1) those of the present Issues which
relate to the EBT arise from a period which ended before the period with which the
SFA Special Committee was concerned; and (2) not only did the SFA Special
Committee not reach any conclusion about the EBT, it did so because there was
insufficient material to enable it to reach any conclusion. The mere fact that the
Chairman has reached conclusions adverse to Oldco on another occasion in respect of
other issues does not preclude him from continuing to act as Chairman of this
Commission, any more than a judge would be precluded in comparable circumstances
in court. The Chairman therefore sees no need to recuse himself and that view is
shared by the other two members of the Commission.
[18]
As noted above the question raised as to the position of the Chairman was not
referred to again in correspondence after the release to the solicitors for Newco of the
relevant passage from the report of the SFA Special Committee. More importantly, it
was not mentioned in the list of preliminary issues which we discuss below.
The Procedure so far
[19]
Rule 17 of the Rules of Procedure which govern our proceedings confers
power on the Chairman to make certain specific orders and "any other order as he
considers will assist in securing a just and expeditious disposal of any matter or issue
before or which may be before the Tribunal." Bearing in mind therefore the
requirements of natural justice and the need for an expeditious disposal, the Chairman
made orders on 20 August 2012. In terms thereof, he first confirmed his earlier
appointment, in terms of rule 1.5, of Mr Iain Blair, Operations Director and Company
Secretary of the SPL, as Secretary to the Commission. Mr Blair has throughout acted
in that capacity under the instruction of and as directed by the Chairman and the
Commission as a whole. Secondly, he directed that any party intending to appear
and/or be represented at the forthcoming hearing (“a respondent”) give notice to that
effect to the Secretary by 24 August 2012. Thirdly, he directed that a hearing into the
Issues set forth in the Notice of Commission, and any preliminary issue, take place on
11 September 2012 and following days.
[20]
The order continued:
8
"Any preliminary issue, in particular the issue of jurisdiction raised by Messrs.
DWF Biggart Baillie on behalf of RFC 2012 Plc (in administration) by letter
to the Secretary dated 17 August 2012, will be heard and determined before
any hearing on the merits of the Issues. For the avoidance of doubt, in the
event that the Commission determines that it has jurisdiction in respect of the
Issues, any hearing on the merits of the Issues will take place immediately
following such determination.
The remaining orders directed that documents, notes of argument and lists of
witnesses be lodged by specified dates, and requested that all parties use their best
endeavours prior to the hearing to reach agreement on any matter of fact which was
not in controversy.
[21]
By letter dated 2 August 2012 to each of Oldco, Newco and Rangers FC,
enclosing the Notice of Commission, the Secretary asked to be advised no later than
17 August 2012 whether each of them wished to appear and/or be represented before
the Commission. As matters stood, when the Chairman's orders were made on
20 August 2012 the Secretary had received separate letters from Michael McLaughlin
of Messrs DWF Biggart Baillie on behalf of both Newco and Oldco. In the course of
a letter dated 15 August 2012 on behalf of Newco Mr McLaughlin disputed the
jurisdiction of the SPL, and thus of the Commission, in relation to Newco and
Rangers FC. He stated that Newco would not be in a position to decide whether or
not it was necessary or appropriate for it to appear or be represented before the
Commission until he had been provided with clarification in relation to these matters.
By letter dated 17 August 2012 Mr McLaughlin stated that he acted for Oldco and
that he had been instructed to advise that Oldco wished to appear and be represented
before the Commission. The letter also disputed that the SPL, and thus the
Commission, had jurisdiction in relation to Oldco and Rangers FC.
[22]
Following the issue of the Chairman's orders further letters were written. By
letter dated 23 August 2012 Mr McLaughlin, on behalf of Newco, raised a number of
matters. The letter stated:
“Purely to preserve any position that may require to be protected in this matter
my client wishes to be regarded as a respondent as defined in paragraph two of
the orders for the time being. This should not in any way be regarded as an
admission that the SPL has any form of jurisdiction over my client in respect
of this and/or any other matter or that my client [sic]. It has ‘entered
appearance’ simply to allow the preliminary jurisdictional issues to be
resolved.” (italics in original)
9
Among other concerns, the letter raised the question of apparent bias on the part of the
Chairman which we have already discussed.
[23]
By letter dated 24 August 2012 Mr McLaughlin, on behalf of Oldco, stated:
"Having reflected on your process as a whole following on from receipt of [the
Chairman's] orders my client is now firmly of the view that the Commission
constitutes a legal process pursuant to Paragraph 43, sub paragraph 6 of
Schedule B1 to the Insolvency Act 1986 and accordingly it can only be
progressed with the Joint Administrators’ consent or with leave of court. My
client does not give its consent. ... Accordingly, the orders of the Commission
dated 20 August 2012 must be vacated unless and until such time as leave of
court has been obtained."
The Chairman took the view that a response to this was primarily a matter for the
SPL, as any application for leave of the court would require to be made by it. By
letter dated 27 August 2012 Rod McKenzie of Messrs Harper Macleod LLP,
Solicitors, on behalf of the SPL, replied to Mr McLaughlin's letter, setting out a
contrary argument.
[24]
We should add that, in addition to these letters, numerous emails were being
exchanged, some of which we have seen.
[25]
It was thus apparent to the Commission that several preliminary issues had
been raised on behalf of both Oldco and Newco. The Commission had not of course
reached a decision on any of these issues since, in terms of the orders of 20 August
2012, they were to be the subject of the first stage of the hearing commencing on
11 September. In the light of the points raised in the correspondence since 20 August
and the likely complexity of the issues, and having consulted the other members of
the Commission, the Chairman by further directions dated 3 September 2012 revised
paragraph 3 of the original directions. It is appropriate to set out the terms of these
directions:
“1.
The hearing to commence on Tuesday 11 September will consider all
jurisdictional and procedural issues raised by the parties and give all necessary
case management directions for the determination of the substantive issues.
Two days [have] been allowed for this hearing.
2.
The parties should exchange and serve on the Commission by 4pm on
Friday 7 September outline arguments identifying all the issues to be raised at
the hearing commencing on 11 September.
3.
Subject to the outcome of that hearing, the Commission is minded to
fix the substantive hearing for 13 – 16 November, with 20 and 21 November
available if required.
10
4.
Subject again to the outcome of the hearing on 11 September, the
Commission is minded at that hearing to make a direction that the SPL serve
an outline argument (to the extent that such argument is not covered by the
outline argument referred to in paragraph 2 hereof) which should:
(a) Set out by reference to a small number of example cases the precise
facts which constitute the alleged breaches of the Rules or SFA
articles;
(b) Explain which persons are alleged to have been responsible for the
making of the EBT Payments and Arrangements, without disclosing
them in the contracts of service disclosed to the SPL;
(c) If it is alleged that any entity or person other than The Rangers
Football Club Plc (ie. RFC 2012 Plc (in administration)) is subject to
sanction under Rule G 6.1, set out a detailed legal argument addressing
the rules of the SPL and the general law explaining how such liability
arises.
5.
In the meantime the parties are not required to comply further, and to
the extent that they have not already been complied with, with paragraphs 4, 5
and 6 of the directions issued on 20 August.”
[26]
It will be recalled that Mr McLaughlin had already stated that Oldco wished to
appear and be represented before the Commission. He had reserved the position of
Newco, pending further clarification, but by letter dated 5 September 2012 he wrote
to clarify the position of Newco in relation to the preliminary hearing. He raised
again questions of jurisdiction - which were of course to be considered at the
preliminary hearing - and stated:
"Newco is prepared to appear and be represented at next week's hearing
because as SPL Limited's own correspondence recognises, it has an interest in
any process that purports to involve business and assets which it acquired from
Oldco, namely Rangers FC."
Enclosed with the letter was a document entitled "List of Preliminary Issues for
Determination", containing eight paragraphs. In addition to this, by email dated
4 September 2012, Mr McLaughlin stated that he would lodge and intimate a bundle
and a Note of Arguments on 7 September 2012. In the event this was not done
[27]
Given the procedure thus far, the Commission expected that both the SPL on
the one hand and Oldco and Newco on the other would be represented at the hearing
on 11 September 2012. During the afternoon of 10 September, however, letters were
received from Mr McLaughlin on behalf of both Oldco and Newco stating that he had
been instructed by each of them that it would not appear or be represented at the
preliminary hearing and did not intend to take part in any further procedure. The
11
letters reiterated the argument about jurisdiction which had previously been made and
was reflected in the list of preliminary issues, and which was of course due to be
considered the next day.
[28]
Rule 1.13 of the Rules of Procedure provides:
"1.13 A Tribunal shall be entitled to determine any matter before it
notwithstanding that a party invited or entitled to attend shall
fail, decline or shall elect not to attend and/or present any
evidence and/or make any representations at or to a hearing. “
At the hearing on 11 September the SPL was, as expected, represented by
Mr McKenzie, and there was no other appearance. After considering the position,
and having regard in particular to the correspondence outlined above, we decided in
exercise of our powers under Rule 1.13 to proceed in the absence of Oldco and
Newco.
[29]
In the course of the hearing we had regard not only to the outline argument for
the SPL, as developed in oral argument by Mr McKenzie, but also to the arguments as
set out in Mr McLaughlin's letters and as focused by his list of preliminary issues.
We ensured that Mr McKenzie's contentions were thoroughly tested, at least as
rigorously as they would have been had Mr McLaughlin appeared. The hearing
lasted for a full day, and we adjourned overnight to consider our decision.
[30]
On 12 September, when we sat again, we delivered a decision in these terms:
“The Commission has considered all the preliminary issues raised in the list
submitted by Newco and points raised in letters from solicitors acting for Newco
and for Oldco. It has decided:
1. The Commission will proceed with its inquiry in the terms of the Notice of
Commission and will now set a date for a hearing and give directions.
2. Oldco and Rangers FC, who are named in the Issues contained in the Notice of
Commission and alleged to have been in breach of Rules, will continue to
have the right to appear and be represented at all hearings of the Commission
and to make such submissions as they think fit.
3. Newco, as the current owner and operator of Rangers FC, although not alleged
by the SPL to have committed any breach of Rules, will also have the right to
appear and be represented at all hearings of the Commission and to make such
submissions as it thinks fit.
4. Written reasons for this decision will be made available in due course.”
We now give our reasons for this decision.
12
Jurisdiction
Oldco
[31]
As has been seen, one of the main preliminary issues which we have to
consider is whether the SPL, and thus this Commission, has jurisdiction in relation to
Oldco, Newco and Rangers FC. At the outset, Mr McKenzie accepted - as he was
bound to do - that the SPL has no direct jurisdiction in relation to Newco: Newco is
not and never has been a member of the SPL, is not and never has been bound by its
Rules, and is accordingly not liable to have any sanction imposed on it for any alleged
breach of the Rules. It does however, for reasons which we shall explain, have a
direct interest in these proceedings. What we propose to do is to give our reasons for
holding that Oldco, as a former member of the SPL, remains subject to the jurisdiction
of the SPL and of this Commission in respect of the Issues contained in the Notice of
Commission, and is accordingly liable to have sanctions imposed upon it for these
alleged breaches of the Rules, committed while it was a member of the SPL, should
such breaches be established. We shall also consider the position of a Club in terms
of the Articles and Rules of the SPL and explain why in our opinion Rangers FC
remains liable to the imposition of sanctions for breaches of the Rules committed
while it was owned and operated by Oldco, even though it is now owned and operated
by Newco. It is for this reason that Newco has, in our opinion, a direct interest in
these proceedings.
[32]
A company and its members, by virtue of their membership, are contractually
bound between and among themselves by the terms of the company's constitution,
which includes its Articles. This proposition has been established for many years,
and it is sufficient for present purposes to refer to section 33(1) of the Companies Act
2006 which provides:
"The provisions of a company's constitution bind the company and its
members to the same extent as if there were covenants on the part of the
company and of each member to observe those provisions."
A company’s constitution includes its Articles: see section 17. There were provisions
to the same effect in the Companies Act 1985. The commencement date of
section 33 of the 2006 Act was 1 October 2009, from which date Oldco remained
bound, as it had been since 1998 when it first became a member, by the provisions of
the Articles of the SPL.
13
[33]
It is now necessary to quote some of the provisions of the Articles of the SPL.
Article 2 contains definitions which, so far as relevant are:
“Club means the undertaking of an association football club which is, for the
time being, entitled, in accordance with the Rules, to participate in the
League
...
Company means The Scottish Premier League Limited
...
League means the combination of Clubs known as the Scottish Premier
League operated by the Company in accordance with the Rules
...
Rules mean the Rules for the time being of the League
...
Share means a share of the Company and Share Capital and Shareholding”.
[34]
Articles 5 and 6 provide:
“5. The authorised Share Capital of the Company at the date of adoption of
these Articles is £16 divided into 16 Shares of £1 each.
6. A Share may only be issued, allotted, transferred to or held by a person
who is the owner and operator of a Club and if a Member shall cease to be the
owner and operator of a Club then such Member shall cease to be entitled to
hold a Share.”
As we have said, twelve of these shares have been issued.
[35]
Articles 11, 12 and 13, so far as relevant, provide:
“11. Except where the transfer of a Share is occasioned by the promotion of an
association football club from and relegation of a Club to the [Scottish
Football League], the approval of the Members in General Meeting shall be
required before the transfer of any Share shall be registered and the Members
may, in their absolute discretion, refuse to approve the registration of the
transfer of any such Share.
12. The Members shall not approve the registration of the transfer of a Share
for the purposes of Article 11 unless the Board shall first have confirmed that
the Board has approved the instrument of transfer and that there exists [sic] no
circumstances in which the Members shall refuse to approve the registration of
the transfer of the Share in terms of Article 13.
13. The Members shall refuse to approve the registration of the transfer of a
Share:(i) to a person who the Board is not satisfied is or, at the time that the
transferee will be entered in the Company’s Register of Members as
the holder of the Share, will be the owner and operator of a Club; ...”
[36]
Finally, Article 97 provides:
14
“97. Each Member shall be responsible for the discharge of the obligations
and duties and shall be entitled to the benefits and rights accruing under and in
terms of the Rules of and to the Club which it owns and operates.”
[37]
It is also necessary to quote certain of the Rules. Rule I1 provides definitions
of various terms in the Rules. Of these, we refer to the following:
Club means an association football club, other than a Candidate
Club, which is, for the time being, eligible to participate in the
League and, except where the context otherwise requires,
includes the owner and operator of such club
...
Company means The Scottish Premier League Limited
...
Contract of Service means a contract of service for a Player in
the standard form of the League and/or SFL and references to
any particular type of Contract of Service shall be construed
accordingly
...
League or Scottish Premier League means the combination of
association football clubs comprising the Clubs known as The
Scottish Premier League
...
Player means a player who is or has been a Professional Player
or Amateur Player of a Club
...
Registration means the registration of a Player with the League
to a specified Club in accordance with Section D of the Rules
and the words Register and Registered shall be construed
accordingly”.
It should be noted that this definition of “Club” is wider than that in the Articles, as it
includes its owner and operator.
[38]
Rule A2.1 provides:
“A2.1 The League shall consist of 12 leading association football clubs
in Scotland. The association football clubs eligible to participate
in the League in any Season shall, subject to the Articles of
Association and Rules, be those Clubs which participated in the
League in the immediately preceding Season, except that,
subject to Rules A2.2, A2.3 and A2.4, the Club finishing in last
place in the League in the immediately preceding Season shall
not be eligible to participate in the League and shall be
relegated to the SFL and the Candidate Club shall be promoted
15
from the SFL and admitted entry to the League.”
[39]
Rule A4 provides:
“A4 The owner and operator of a Club participating in the League
shall become a member of the Company by acquiring one
Ordinary Share therein at par for cash, such Ordinary Share to
be acquired, through the Secretary, in accordance with the
provisions of the Articles of Association. The owner and
operator of a Club ceasing to be entitled to play in the League
shall cease to be a member of the Company and shall relinquish
its Ordinary Share at the end of the relevant Season in
accordance with the Articles of Association.”
[40]
Rule A7.1.1 provides:
“A7.1.1 Membership of the League shall constitute an agreement
between the Company and each Club, and between each of the
Clubs, to be bound by and to comply with:
(a) these Rules and the Articles of Association;19
(b) the SFA Articles and the statutes and regulations of
UEFA and FIFA.”
[41]
Rule A7.2 provides:
“A7.2 Such agreement shall have effect from the date of the Club's
admission to the League and terminate upon the Club ceasing
to be a member thereof (but without prejudice to any rights or
claims which may have arisen or arise in respect of
circumstances prior to such date and to any Rules which, by
their terms, establish rights and obligations applicable after such
date).”
[42]
It appears to us to be beyond argument that while it was a member of the SPL
Oldco was contractually bound to the SPL (and to the other members) to comply with
the Rules, and was liable to sanctions as provided by the Rules in the event of a
breach.
[43]
In paragraph 1 of its list of preliminary issues Oldco argues that all contractual
rights and obligations between the SPL and Oldco were terminated by the SPL on
3 August 2012, i.e. the date when its share in the SPL was transferred to The Dundee
Football Club Limited. The answer to this appears to us to be straightforward.
Although a contract has been terminated, obligations arising from it may continue to
be enforceable after termination: see Lloyds Bank Plc v Bamberger 1993 SC 570,
Lord Justice-Clerk Ross at p 573. Rule A7.2, quoted above, expressly provides that
termination of a Club's membership shall be "without prejudice to any rights or claims
16
which might have arisen or arise in respect of circumstances prior to such date.” The
definition of "Club" in Rule I1, also quoted above, includes the owner and operator of
a Club. The initiation by the SPL of disciplinary proceedings against a former
member of the SPL appears to us to constitute enforcement of rights or claims which
may have arisen or arise in respect of circumstances prior to the date when it ceased to
be a member, given that the alleged breach or breaches of the Rules were committed
during the period of membership.
[44]
The provisions of Rule A7.2 make clear what would in any event be the
general position at law, and also accord with sound practical sense. To take the
hypothetical example of a Club which has been engaged in match-fixing in the last
game of the season, but is then relegated and consequently ceases to be a member of
the SPL, there is every reason why it should still be liable to disciplinary action at the
instance of the SPL – whether or not the breach comes to light before or after that
Club has relinquished its SPL membership. We can think of many similar
hypothetical examples. Oldco appears to us to be in no different a position. We
therefore reject the argument set out in paragraph 1 of the list of preliminary issues.
Rangers FC
[45]
Paragraphs 2 and 6 of the list of preliminary issues advance essentially the
same argument, which is that on 14 June 2012, when the business and assets of Oldco
were purchased and transferred to Newco, Rangers FC ceased to be a Club as defined
in the Rules, and is accordingly not subject to the jurisdiction of the SPL, and thus of
this Commission, in relation to any breach or breaches of the Rules committed in the
period prior to that date. The SPL disputes that Rangers FC ceased to be a Club on
14 June 2012, and argues that the relevant date is 3 August 2012; but in our view
nothing turns on the exact date, as all the breaches alleged in the Notice of
Commission relate to a period before the earlier of these two dates.
[46]
It will be recalled that in Article 2 "Club" is defined in terms of "the
undertaking of an association football club", and in Rule I1 it is defined in terms of an
association football club which is, for the time being, eligible to participate in the
League, and includes the owner and operator of such Club. Taking these definitions
together, the SPL and its members have provided, by contract, that a Club is an
undertaking which is capable of being owned and operated.
While it no doubt
depends on individual circumstances what exactly is comprised in the undertaking of
17
any particular Club, it would at the least comprise its name, the contracts with its
players, its manager and other staff, and its ground, even though these may change
from time to time. In common speech a Club is treated as a recognisable entity
which is capable of being owned and operated, and which continues in existence
despite its transfer to another owner and operator. In legal terms, it appears to us to
be no different from any other undertaking which is capable of being carried on,
bought and sold. This is not to say that a Club has legal personality, separate from
and additional to the legal personality of its owner and operator. We are satisfied that
it does not, and Mr McKenzie did not seek to argue otherwise. So a Club cannot,
lacking legal personality, enter into a contract by itself. But it can be affected by the
contractual obligations of its owner and operator. It is the Club, not its owner and
operator, which plays in the League. Under Rule A7.1.1 the Club is bound to comply
with all relevant rules. The Rules clearly contemplate the imposition of sanctions
upon a Club, in distinction to a sanction imposed upon the owner or operator. That
power must continue to apply even if the owner and operator at the time of breach of
the Rules has ceased to be a member of the SPL and its undertaking has been
transferred to another owner and operator. While there can be no question of
subjecting the new owner and operator to sanctions, there are sanctions which could
be imposed in terms of the Rules which are capable of affecting the Club as a
continuing entity (even though not an entity with legal personality), and which thus
might affect the interest of the new owner and operator in it. For these reasons we
reject the arguments advanced in paragraphs 2 and 6 of the list of preliminary issues.
[47]
We stress that the Commission has not yet come to the stage of deciding
whether there have been any breaches of the Rules at all by Oldco or Rangers FC.
That is a question to be determined on the further hearing of this matter, which we
have directed to begin on Tuesday 13 November 2012. It follows that we remain
entirely open-minded on the question of what sanctions, if any, might be appropriate
if we were to find that there have been breaches of the Rules as alleged by the SPL
The Insolvency Act 1986 and "Legal Process"
[48]
The Insolvency Act 1986, Schedule B1, paragraph 43 provides for a
"moratorium on other legal process in relation to a company in administration." Subparagraphs (2) to (6) prohibit the taking of certain steps except with the consent of the
administrator or with the permission of the court. Sub-paragraphs (2) to (5) relate
18
respectively to the enforcement of security over the company's property, repossession
of goods in the company's possession under a hire-purchase agreement, the exercise
of a right of forfeiture by peaceable re-entry in relation to premises let to the company
and, in Scotland, the exercise of a right of irritancy in relation to premises let to the
company. Sub-paragraph (6) provides:
"No legal process (including legal proceedings, execution, distress and
diligence) may be instituted or continued against the company or property of
the company except (a) with the consent of the administrator, or
(b) with the permission of the court".
What we have to consider is whether this provision, on a proper construction, applies
to the circumstances of this case, so that the SPL was prohibited from initiating the
proceedings by the Notice of Commission except with the consent of the joint
administrators (who do not consent) or with the permission of the court. As we have
said, this may be regarded as primarily a matter for the SPL; but we accept that it is
also a matter for us, as we would also have to take notice of any legal impediment to
the proceedings.
[49]
Paragraph 43(6) and its predecessor provisions have been interpreted and
applied in a number of court decisions to which we were referred by Mr McKenzie,
and which we list here: Air Ecosse Limited v Civil Aviation Authority 1987 SC 285,
Re Olympia & York Canary Wharf Limited [1993] BCC 154, Bristol Airport Plc v
Powdrill [1990] 1 Ch 744 and In Re Frankice (Golders Green) Limited (in
administration) [2010] EWHC 1229 (Ch), [2010] Bus LR 1608. The first of these, a
decision of the Second Division of the Inner House of the Court of Session, is binding
on us, while the others, which are decisions of the English courts, may be persuasive
or, in the case a decision of the Court of Appeal, highly persuasive.
[50]
We find it convenient to start with a reference to a passage in the Canary
Wharf case, in which Millett J at pages 157-158 considered the legislative purpose for
which the statutory provisions then in force (which do not materially differ from those
now in force) where enacted. He said:
"They are intended to impose a moratorium upon the creditors of the company
in order to assist the administrator in his attempts to achieve the statutory
purpose for which he was appointed. They are couched in procedural terms
and are designed to prevent creditors from depriving the administrator of the
possession of property which may be required by him for the purpose of the
administration. ... Their construction should be approached with that
19
legislative purpose in mind. They are not intended to interfere with the rights
of creditors further than is required to enable the administrators to carry out
their functions, and in particular they are not intended to interfere with the
creditors' contractual rights to crystallise their rights or discharge their own
contractual liabilities."
In the course of the same judgment Millett J also considered the meaning of the word
"process", which was defined in Stroud's Judicial Dictionary (5th Ed, 1986) as "the
doing of something in a proceeding in a civil or criminal court, and that which may be
done without the aid of a court is not a 'process'."
[51]
In the Air Ecosse case the Second Division considered the meaning of the
word "proceedings". An application had been made by another airline company to the
Civil Aviation Authority (“CAA”) for revocation of the air transport licences of Air
Ecosse Limited, which was then in administration. It was held, affirming the
judgment of the Lord Ordinary, Lord Jauncey, that the word "proceedings" referred to
proceedings by creditors or in relation to actual assets or property of the company and
that the hearing before the CAA did not amount to "proceedings" in terms of the
statute: see in particular Lord Justice-Clerk Ross at p 295. We have examined the
other two English cases to which we were referred, and have found nothing in them
that appears to us, on a proper analysis, to be incompatible with this approach which
is, as we have said, in any event binding upon us.
[52]
Applying that approach to the present proceedings, we have concluded that
they do not constitute a "legal process" within the meaning of paragraph 43(6), and
accordingly that there is no statutory prohibition on their being continued without the
consent of the joint administrators or the permission of the court. There are three
main reasons why we reach this conclusion. First, these disciplinary proceedings
arise from the operation of the Articles and Rules by which the SPL and Oldco were and, for the reasons we have given, still are - contractually bound. Secondly, by
initiating these proceedings under the Rules, the SPL is not acting as a creditor of
Oldco and the proceedings are not at any stage capable of depriving the joint
administrators of the possession of property which may be required by them for the
purpose of the administration of Oldco. Thirdly, these proceedings do not in any
event constitute a legal process because they can be conducted from beginning to end
without the aid of a court. We accept that, in our final determination, should a breach
or breaches of the Rules be established, we have the power to impose a financial
sanction, which might constitute the SPL a creditor of Oldco. But this Commission
20
has no power to enforce its determination on any sanction, nor to deprive a company
in administration of the property available to the administrators The SPL might
require the assistance of the court to enforce a sanction determined by a Commission
and, depending on the form of any such sanction, at that stage a question might arise
as to whether there was a “legal process” within the meaning of the statute. We are
satisfied that in exercising our powers under Rule G1.2 firstly in making any
determination as to breach of the rules and secondly (if it arises) in imposing any
sanction this Commission is not engaged in any “legal process”. For these reasons,
we reject the argument advanced in paragraphs 7 and 8 of the list of preliminary
issues.
Issues 3 and 4
[53]
Paragraphs 3 and 4 of the list of preliminary issues seek to advance arguments
to the effect that the SPL is, by its conduct, barred from seeking the imposition of
sanctions, or at least of a particular sanction, in the event of a breach or breaches of
the Rules being established. We do not propose to deal with these arguments at this
stage, as they appear to us to be premature. They would only arise if we had already
held that a breach or breaches of the Rules had been established, and there is therefore
nothing in them which could affect our consideration of the merits of the Issues set
out in the Notice of Commission. Moreover, a plea of bar is for the party advancing
it to substantiate, and in the absence of evidence in any form from Oldco or Newco to
substantiate these arguments we have no basis upon which would could uphold them
at this stage. We shall therefore reserve them to be reconsidered, if necessary, at a
later stage.
Further procedure
[54]
Once we had announced our decision, for which we have now given reasons,
on 12 September we proceeded, after discussion, to make the following directions:
“Further to the decision made today we make the following procedural orders:
1. We set a date for a hearing to commence on Tuesday 13 November 2012 with
continuations from day to day as may be required until Friday 16 November
2012. We will also allocate Tuesday 20 and Wednesday 21 November 2012
as additional dates should any further continuation be required.
21
2. We direct that the solicitors for The Scottish Premier League Limited lodge
any documents, additional to those already lodged, together with an outline
argument and a list of witnesses by 4 pm on Friday 19 October 2012.
3. We direct that Oldco, Newco or any other person claiming an interest and
wishing to appear and be represented at the hearing give intimation to that
effect and lodge any documents together with an outline argument and a list of
witnesses, all by 4 pm on Thursday 1 November 2012.
4. We direct that intimation of the aforesaid decision and of these directions be
made to the solicitors for Oldco and Newco.
[55]
We wish to emphasise that, as is plain from our decision and directions of
12 September, the door remains open for Oldco and Newco to appear and be
represented at the hearing in November. We would invite each of them to reconsider,
in light of what we have written above, the decision they took on 10 September not to
participate in the proceedings.
Publicity
[56]
By Rule G7.2, it is for the Board to determine what, if any, publicity is to be
given to a decision of the Board or a Commission. In our view, the present document
should be published as soon as it is made available, and we so recommend.