UK: Misrepresentation Means Game Over For Dowie´s £1 Million Compromise Agreement

Ethics and football can make for an interesting mix. Recently, Iain Dowie learned to his regret that trying to pull the wool over the eyes of Crystal Palace Chairman Simon Jordan in negotiating his exit from the club left him painfully exposed.

Iain Dowie’s contract, as manager of Crystal Palace, was due to expire on 30 June 2008. One of the terms of his contract was that if he left the club early and took a post at another football club before 30 June 2008 Crystal Palace would be paid £1 million in compensation.

However, on 22 May 2006 Crystal Palace (by Simon Jordan) and Iain Dowie signed a Compromise Agreement whereby the club accepted that its right to the £1 million "shall cease to exist … [and that the compensation] clause shall not be enforced against [Mr Dowie] or any other person, entity or otherwise".

A few hours later Iain Dowie's departure from Crystal Palace was publicly announced at a joint press conference. One of the main reasons cited for this decision was that Iain Dowie wanted to work geographically closer to his family in Bolton.

It came as a surprise to many therefore that, just over a week later, Iain Dowie was unveiled as the new manager at Charlton Athletic, just 10 miles away.

On the same day Crystal Palace served Iain Dowie with a High Court claim for £1 million in damages. The claim was made on the basis that Iain Dowie had deliberately lied to Simon Jordan about his reasons for wanting to leave Crystal Palace, and thereby had enticed Simon Jordan to agree to forfeit the £1 million in compensation.

At a preliminary issue hearing¹ the Judge was asked to rule upon two issues, of which the main one was:

• Did Crystal Palace enter the Compromise Agreement because Mr Dowie lied to them about the chance that he would become Charlton's manager?

The Judge reviewed the written and oral evidence of a number of witnesses. He also examined material that was found on Iain Dowie's computer (including a presentation that he had prepared in connection with his application for the position at Charlton).

The Judge decided that:

1. Iain Dowie had intended that Simon Jordan would sign the Compromise Agreement under false pretences; and
2. Simon Jordan was deceived about the chances of Iain Dowie taking the manager's job at Charlton, which influenced him to sign the agreement by which the club forfeited the right to £1 million.

The amount of compensation that Iain Dowie has to pay to Crystal Palace will be decided at a later date. However, he has already been ordered to pay over £360,000 in respect of the Claimant's legal costs.

Just because you have entered into an agreement under which you waive or forfeit your entitlement to certain legal rights, that is not necessarily "game over". If you have been enticed to enter into an agreement by the other contracting party deceiving and/or lying to you, then you will be able to void that agreement and where appropriate recover compensation for consequential loss.

Footnote

^{1 This is a form of early minitrial to decide certain key issues in a case.}