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29 Apr 2013

The High Court has ruled that Blackburn Rovers must pay Henning Berg the full amount specified in the agreed “early termination” compensation clause contained in his contract with the Club.

Having dismissed Berg after only 57 days in charge, the Club initially accepted its obligation to pay, and sought time for payment, only then to execute a complete about-turn, claiming that its Managing Director, Derek Shaw, did not have authority to enter into the contract in the first place, and that before the contract became binding, it was a requirement that the Club’s owners had to approve its terms.

Delivering a lengthy judgment, the High Court stated:

“(Blackburn’s) case is that Mr Shaw did not have actual authority to conclude the contract. At no stage was it suggested in the course of (pre-contract) discussions that approval would have to be sought before the contract could be signed or that if signed the contract could not take effect until such approval had been obtained”.

Blackburn’s case before the High Court was that by no later than 8 April 2013, the Club had concluded that Henning Berg’s contract had been entered into by Mr Shaw on its behalf in breach of express instructions given to him by Mrs Desai of the Club’s owners. This was despite the fact that on 9 April 2013 a news item was posted on the Club’s own website, which was in these terms:

“Following recent and misleading media speculation Blackburn Rovers FC would like to offer clarification on the situation concerning former manager Henning Berg. The owners wish to make it clear that the club’s lawyers are actively seeking agreement with Mr Berg on the settlement of his contract. They also wish it to be known that a £500,000 instalment has already been paid to Mr Berg. Additionally the owners would like to state that there is no investigation into this matter with regard to managing director Derek Shaw who continues to have their complete backing and support”.

The following extract of the High Court’s judgment makes staggering reading:

“It is Blackburn’s case that in effect Mr Shaw is operating the affairs of Blackburn outside the control of the owners. It is said that an aspect of this conduct was the posting of the press announcement referred to above, which it is contended was posted on the direction of Mr Shaw without the permission of the owners or any of them, and was not removed thereafter (and in the event not until the late afternoon of 24th April 2013) because Mr Shaw failed and refused to instruct Blackburn staff to do so”.

The High Court had no hesitation in dismissing Blackburn’s arguments and ordering the Club to pay out under the contract in full, the Judge stating:

“In my judgment it is unarguable to suggest that the Managing Director of Blackburn does not have implied or usual authority to sign employment contracts on its behalf”.

Blackburn’s application for permission to appeal was dismissed.

Commenting after the case, Henning Berg said: “Being appointed Manager of Blackburn Rovers was a great opportunity for me. The Club has always had (and continues to have) a special place in my heart. I was very disappointed to be dismissed after only 8 weeks in charge without being able to make the changes I felt were necessary to take the club towards the Barclays Premier League. When the Club refused to honour its obligations I had no option but to take legal action. Fortunately, with the backing of the League Managers Association and my fantastic legal team, led by Paul Gilroy QC and Martin Price of Slater & Gordon, Solicitors, the Court has upheld my claim which I always expected it would. I now wish to place all of these events behind me and move on in my coaching career. I wish the Club’s players and loyal and committed supporters all the best for the future.

Richard Bevan, Chief Executive of the LMA, said:

“A Football Club, like any other business, needs to act professionally at all times, and in particular it needs to act in accordance with its legal obligations. It is a sad fact of life that all too many Football Managers are dismissed before they are given the opportunity to prove themselves for the full period they have been signed up to serve. Whilst acknowledging that this is the case, the LMA will not hesitate to back its members in order to ensure that their legal rights are respected and upheld, and when a Club seeks to avoid its clearly defined legal obligations, the LMA will act immediately to enforce those rights.

From a wider perspective, the Football League needs to take a long hard look at the High Court’s judgment in this case. It is unacceptable for a Football League club to allow the state of affairs to arise whereby its own case before the High Court is that its Managing Director is out of control and operating outside the authority of the Club’s owners”.

Henning Berg

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