Court of Appeal
Published March 24, 2009
Imageview Management Ltd v Jack
Before Lord Justice Mummery, Lord Justice Dyson and Lord Justice Jacob
Judgment February 13, 2009

An agent who made a secret deal with his principal’s employer breached his fiduciary duty to his principal, forfeited his agency fee and had to account for the secret profit.

The Court of Appeal so held when dismissing the appeal of the claimant, Imageview Management Ltd, from Mr Justice Underhill in Leeds District Registry ([2008] EWHC 1421 (QB)) who allowed the appeal of the defendant, Kelvin Jack, a professional footballer, and dismissed Imageview’s cross-appeal from Mr Recorder Walker who, in Central London County Court on January 2, 2008, allowed its claim for unpaid agency fees due under a contract whereby Imageview had agreed to act as Mr Jack’s agent in negotiating a contract for him to play for Dundee United Football Club.

Mr Jack denied liability on the ground that, in negotiating a secret side commission for itself from the club in connexion with obtaining a work permit for him, Imageview had breached its fiduciary duty to him; Mr Jack counterclaimed. Mr Jonathan Lopian and Mr Seb Oram for Imageview; Mr Steven Turner for Mr Jack.

LORD JUSTICE JACOB said that if the agent had told his client that when negotiating for the client, he was also going to make a deal with the club for himself about getting a work permit for the client, and if the client had had no objection, there would have been no problem. Instead, the agent had made a secret deal.

Despite long-standing authority as to an agent’s duty of fidelity where there was a realistic possibility of a conflict of interest, such as Boston Deep Sea Fishing v Ansell ((1888) 39 ChD 339), the claimant submitted that Hippisley v Knee Bros ([1905] 1 KB 1) demonstrated that an agent could legitimately try to make a profit on the side which was not regarded as so serious that his entire commission became repayable, provided that the agent/third party arrangement were not sufficiently connected with the principal/agent relationship or were purely incidental to it.

The better way to look at it would be to ask whether the agent was faced with a realistic possibility of a conflict of interest, rather than whether there was a secret profit directly impacting on the moneys payable to the principal as the judge had done in The Peppy ([1997] 2 Lloyds Rep 722, 729).

It was the conflict of interest which ought to bring the agent’s conscience into play. There could be cases of harmless collaterality, or where there was just an honest breach of contract such as Keppel v Wheeler([1927] 1 KB 577).

But this was simply not such a case. This was a case of a secret profit obtained because the claimant was the defendant’s agent. And there was a breach of a fiduciary duty because of a real conflict of interest.

That in itself would be enough, but there was more: the profit was not only greater than the work done but was related to the very contract which was being negotiated for the defendant. Once a conflict of interest was shown, the right to remuneration went in its entirety.

That strict rule was there as a real deterrent to betrayal. The defendant was not liable to pay the claimant any more agency fees and was entitled both to recover all the fees he had already paid and to an account of the whole of the secret profit.

Lord Justice Dyson agreed and Lord Justice Mummery gave a concurring judgment.

Solicitors: Hill Dickinson, Liverpool; Bates Wells & Braithwaite.

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