UK: Football Fever: On The Pitch And In The Court!

A striking coincidence? On 24 June 2019: England beat Norway to secure a place in a World Cup semi-final and on 24 June 2018 England beat Panama 6-1 in the World Cup group stages, on route to a World Cup semi-final.

Brilliant moments bookending a year of football that has reinvigorated the passion and pride that playing for (or cheering on) your team or country should foster, encouraged youngsters (multiplying numbers of girls as well as boys) to play football (or any sport for that matter) and brightened up a Brexit-bumbling Blighty for ordinary people needing a good news story. These teams and their managers (both ex-players who suffered World Cup set-backs and have gone on to be great leaders) have taught us many lessons this year.

Football clubs have given us plenty to think about in the construction law arena too in the last year. Swansea, West Ham and Nottingham Forest have all been in action in the courts and the results have clarified some rules of the construction litigation game. Here are the highlights.

1. If the full-time whistle has blown, it is too late to have a shot at goal.

Swansea Stadium Management Company Ltd v. (1) City and County of Swansea and (2) Interserve Construction Ltd 2018

Practical completion was certified on 31 March 2005 and Interserve had 12 months to put right any known defects. Interserve failed to do that, but the Employer's Agent issued a Notice of Making Good Defects on 14 April 2011 anyway, confirming defects were rectified. In fact, there were still defects. The tenant, Swansea Stadium Management (SSM), had the benefit of a collateral warranty enabling it to sue Interserve for defects, so it took a shot.

" No goal - the full-time whistle had already been blown. The collateral warranty contained a "no greater liability clause" (which every provider of a collateral warranty should take care to include), meaning that Interserve's liability to the tenant could not be any more extensive than its liability to the Employer. "

No goal - the full-time whistle had already been blown. The collateral warranty contained a "no greater liability clause" (which every provider of a collateral warranty should take care to include), meaning that Interserve's liability to the tenant could not be any more extensive than its liability to the Employer. The effect of this was that the same limitation period applied to claims under the building contract and the collateral warranty, (generally 12 years from PC if the contract has been executed as a deed). In this case (by just 4 days), time was up.

SSM tried to get around the decision on limitation in a second set of proceedings by arguing that Interserve breached its defects obligations post-PC, so limitation had not yet expired. The TCC cried foul. Interserve's failure to put the defects right did not give rise to a cause of action that survived the Notice of Making Good Defects. Such notices mean that defects are deemed rectified, even if they are not. The remedy for defects is a claim under the building contract or collateral warranty, but only if the clock has not already stopped.

2. Documents recording match strategy will be for team ears and eyes only, provided that their dominant purpose is the conduct of that match.

WH Holding Limited (1) and West Ham United Football Club Limited (2) v. E20 Stadium LLP2018

West Ham and E20 fell out over West Ham's use of the London Stadium. During the case, West Ham wanted to see 6 emails between E20 board members relating to settlement strategy. E20 refused to release them, arguing that the emails were protected by litigation privilege (as opposed to legal advice privilege). The Judge at first instance agreed with E20. West Ham appealed and won. The Court of Appeal's decision clarified the test for litigation privilege:

Litigation privilege:

  1. applies only if litigation is in reasonable contemplation;
  2. covers communications between parties, their solicitors and third parties provided its dominant purpose is obtaining information or advice relating to the conduct of the litigation;
  3. conducting litigation includes deciding whether to litigate and to settle;
  4. if information in the relevant documents cannot be separated from, or would reveal, privileged information or advice, then the document is privileged;
  5. a party's internal communications will not be privileged unless they meet this test.

E20 scored an own goal. Its emails did not pass point 2 of the test. Litigation was contemplated, and settlement strategy can be covered by privilege, but the "dominant purpose" of E20's emails was not "obtaining information or advice relating to the conduct" of the litigation. More careful drafting, or a verbal discussion, might have protected E20's position better.

3. Decisions can be reversed following an appeal to the Video Assistant Referee (VAR).

Al-Hasawi v. Nottingham Forest Football Club Ltd & Ors 2018

VAR has caused some controversy during the 2019 World Cup, influencing results in some matches. In the courts, we have seen how West Ham's result benefitted from a second look and Nottingham Forest was another beneficiary.

NF Football Investments Limited (the Purchaser) purchased shares from NFFC Group Holdings Limited (owned by Mr Al-Hasawi). The Purchaser relied on a representation that the club's debt was £6.5m. It wasn't, it was £10m. The Purchaser took a shot at a misrepresentation claim. Al-Hasawi made a save at first instance by relying on an entire agreement clause. Nottingham Forest appealed and the Court of Appeal took another look at the shot.

Interpreting the language of the JCT entire agreement clause narrowly, the Court of Appeal held that misrepresentation claims were not excluded after all, so the Purchaser's misrepresentation claim stood. Parties wanting to exclude such claims must spell that out expressly in clear words.

Looking ahead to the 2019/2020 season, Tottenham Hotspur could challenge its contractors over the late opening of its new stadium. Fulham and Brentford, amongst others, are building new stadia – let's hope they've picked the right teams and no contractors need to be sent off. The commercial wrangle between Cardiff City and Nantes over a transfer fee may need a referee.

Back on the pitch, the 2018 and 2019 World Cups are over for England – but their Euro and Olympic preparations are underway. It's all to play for...!

Originally published July 9, 2019


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