Highlights of the Opinion by Lord Nimmo Smith’s Commission
The “EBT” charges cover a period from 23rd November 2000 to 3rd May 2011.
This includes a charge of fielding ineligible players.
There is a further charge against Rangers (In administration) for failing to co-operate after March 15 this year, which is capable at the very least of causing Duff and Phelps embarrassment.
There is a clear distinction between the Independent Commission set up by the SPL and the SPL itself.
No fair-minded and informed observer would consider the possibility that the Commission or a member thereof was biased.
Rangers dropped the bias argument before the hearing on 11th September.
Mr Green has said the SPL refused to reply to his lawyers.
The Commission says that the SPL’s lawyer did so by letter and in numerous emails.
Which of the two statements above is correct?
Oldco and NewCo were going to turn up, represented by the same lawyer, to argue that the SPL had no jurisdiction. At the last minute they declined to attend.
The SPL undoubtedly has jurisdiction over OLDCO.
The SPL undoubtedly has jurisdiction over THE CLUB.
The club is a separate but non-legal entity which continues notwithstanding transfer from one owner to another. Rangers Football Club therefore continue as before even though ownership has been transferred.
The SPL has no jurisdiction over NEWCO, but as it has power to impose sanctions on the club, owned by newco, newco has a direct interest in proceedings.
Therefore newco could face all of the punishments for the offences if proved, on the basis that the club it bought was guilty of them.
The administrators’ argument that this was a legal process and as such ought to be stopped without their consent failed. The case can go forward to a full hearing.
The most clear cut and most informative analysis of the saga of Rangers Football Club (apart of course from that on this site 🙂 ) has come from the courts or from legally qualified people presiding over regulatory matters.
The opinion of Lord Hodge in the case of Martin Bain v Rangers spelled out in detail the financial perils for Rangers and included the assessment by his Lordship that Rangers faced “a real and substantial risk of insolvency if the tax appeal were to be decided against Rangers in the sums which have been discussed”.
We had the decision of Sheriff Ross in One Stop v Tixway, which blew any remaining credibility Mr Whyte had to smithereens. In that case the Sheriff said of the former Rangers Chairman “I reject the evidence of Mr Whyte as wholly unreliable. It is not possible to ascertain whether he is not telling the truth or is simply unable to recollect the true position, and has convinced himself that this arrangement is something that he would not have entered into. Either way, his evidence is contradicted by virtually every other piece of evidence.”
Gary Allan QC chaired the SFA Judicial Panel which found that Rangers and Mr Whyte were guilty of various offences against football’s rules. Their judgement laid bare a concerted campaign by Mr Whyte to avoid paying millions of pounds of taxes, which money was used to keep Rangers Football Club running as far as February (and as the administrators started with around £3 million in the bank which should have been paid to HMRC, that non-payment probably enabled Rangers to make it to the end of the season).
Lord Glennie then overturned the transfer embargo imposed by Mr Allan’s Panel and confirmed by the Appellate Tribunal under Lord Carloway.
We also had Lord Hodge’s opinion on the application by the administrators to regularise their appointment when it turned out they had failed to notify all relevant parties.
We can now add to the ever growing pile of judicial consideration the Opinion published yesterday by the SPL. This is written by the SPL Independent Commission, consisting of Lord Nimmo Smith, Nicholas Stewart QC and Charles Flint QC.
It deals with their hearing last week to determine further procedure in the so-called Rangers EBT investigation. This is the procedure condemned by Mr Green as unfair and seeking to arrive at a pre-determined conclusion.
So, now that these three legal luminaries have considered preliminary matters and issued their opinion, where does it take us?
After referring to the appointment of the Commission, the opinion narrates some of the relevant history.
At paragraph 4 it states-
The SPL was incorporated in 1998. Its share capital consists of sixteen shares of £1 each, of which twelve have been issued. Oldco (Rangers Football Club PLC) 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”).
This confirms what seemed rather odd, namely that oldco, even though no longer owner and operator of a football team, remained a member of the SPL for almost two months after the sale of its entire assets.
Para 6 says:-
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.
This comes back again to the point I discussed earlier this week namely that the purchaser seemed to change from Sevco 5088 Ltd to Sevco Scotland Ltd, although this statement by the Commission does not tally with the Rangers spokesman mentioned in the piece I quoted.
Para 7 states:-
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”.
Let’s look at that again. Newco became a member of the SFL and became a member of the SFA (not that it had the existing membership of oldco transferred to it).
Para 8 summarises the definition of the notorious EBTs to be considered by the Commission. It states:-
“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.”
Para 9 indicates that the periods covered in the “complaint” run from 23 November 2000 to 21 May 2002, 22 May 2002 to 22 May 2005 and 23 May 2005 to 3 May 2011 in relation to EBT payments and after 15 March 2012 in relation to failure by Rangers to co-operate with the SPL and to comply with the SPL Rules. Bearing in mind that this last charge is effectively levelled against Duff & Phelps, who were running the company as administrators, it makes the declaration by them that they would have nothing more to do with these proceedings remarkable. A finding that administrators had failed to comply with the regulatory body’s investigations in an industry where they were administrators would at the very least be embarrassing and at worst could have serious financial and disciplinary consequences for the firm and the partners involved.
The “charges” allege that Oldco and Rangers FC breached the relevant Rules of the SPL, and also those of the SFA, 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. There is one Issue 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 and Rangers FC 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.
The Commission then goes on to comment on certain preliminary matters.
They state in para 10:-
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.
The Minute of the Board Meeting appointing the Commission is referred to:-
“The Secretary advised that once appointed a Commission is wholly independent from the SPL and SPL Board and manages its own process.”
The Commission then goes on to consider the position of Lord Nimmo Smith. Some have argued that his roe in an SFA inquiry into issues surrounding Rangers means he ought not to deal with this matter.
This is answered in robust fashion. Lord Nimmo Smith’s role was as part of an SFA Independent Committee. Its investigations formed the basis for the Judicial Panel proceedings against Mr Whyte and Rangers, and most importantly dealt with Mr Whyte’s period of stewardship. For all the criticism of Mr Whyte, he is not accused of paying anything out in the form of an EBT!
Once the Independent Committee report went to the SFA, the business of the Committee was concluded and Lord Nimmo Smith took no further part in proceedings. However, some say, surely he must have found things out which prejudice him!
Apart from that being a wholly offensive accusation to level at such a distinguished judge as Lord Nimmo Smith, he points out why it is unfounded as a concern.
Para 14 states:-
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 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.
Para 15 points out that newco’s lawyers did raise the issue:-
In a letter dated 23 August 2012 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.
“Our lawyers have made that point repeatedly to the SPL in correspondence and yet our requests for an explanation from the SPL have been completely ignored. The SPL’s silence on these issues is deafening.”
That suggests to me one of the following:-
- The Commission is telling an untruth;
- Mr Green is telling an untruth;
- Newco’s lawyers have omitted to tell their very high profile and vocal client that the Commission actually replied; or
- Mr Green is being deliberately obfuscatory in saying that the SPL did not reply, when in fact it was the Independent commission which responded.
Observers may have views on which one is most likely. I know which my money is on…
The Commission outlines the legal tests re bias as follows:-
The test for establishing apparent bias is authoritatively laid down in Porter v Magill  UKHL 67,  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.
Para 17 goes on to say:-
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, 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.
Para 18 then says:-
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.
This statement might have a bearing on the assessment of the veracity of Mr Green’s statement referred to above.
Procedure So Far
After detailing various procedural steps, the Opinion continues:-
[The Chairman] 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.
The order continued:
“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.
So the jurisdiction issue had been raised. A hearing had been set to deal with the issue. It would be dealt with before the substantive matters. This is a common procedure in court cases where a fundamental preliminary point, such as one about jurisdiction, is raised by or on behalf of a party.
Para 21 states:-
In the course of a letter dated 15 August 2012 on behalf of Newco Mr McLaughlin (of DFW Biggart Baillie) 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.
Mr McLaughlin was therefore acting for both oldco and newco. Was this a conflict of interest? As matters stand, I do not think so – there seems to be a singularity of mind between Mr Green and the administrators. The mere fact that a solicitor acts for more than one party in a matter is not necessarily proof of conflict. As I have commented before, the legal definition of such a conflict is actually far narrower than the public perception of the issue. No criticism of Mr McLaughlin or his firm is intended nor should any be inferred from what I say above. In fact it could be argued that the dual instruction would reduce costs payable by the administrators and thus they are acting in the interests of the creditors by reducing costs to the bankrupt company.
By letter dated 23 August 2012 Mr McLaughlin, on behalf of Newco, wrote:
“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)
Among other concerns, the letter raised the question of apparent bias on the part of the Chairman already discussed.
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 Commission referred the matter back to the SPL, as it would be the body requiring to seek court approval, if the same was considered necessary.
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. In addition to these letters, numerous emails were being exchanged, some of which the Commission have seen.
Again returning to Mr Green’s statement, he said:-
“Our lawyers have made that point repeatedly to the SPL in correspondence and yet our requests for an explanation from the SPL have been completely ignored. The SPL’s silence on these issues is deafening.”
So maybe Mr McLaughlin only received these emails and letter as Oldco’s Lawyer, and not as Newco’s lawyer? Maybe he felt that he ought not to disclose to newco that he had received replies, including “numerous emails”, to his correspondence?
This seems familiar to the situation earlier this year when Mr McCoist demanded that the identity of the Judicial Panel be revealed, when in fact colleagues of his within Ibrox had been aware of the identities before the hearing and had sat in the room whilst the case was being dealt with. In that case Mr McCoist could have strolled along an Ibrox corridor to find out what he demanded publicly. Maybe here Mr Green should have asked Mr McLaughlin, his lawyer, if there had been any response before decrying the SPL for a failure to reply?
Or else he is being 100% accurate in his words, in that the SPL did not reply, but the SPL’s lawyer did?
The Chairman then made an order regarding further procedure:-
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.
- 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.
- 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.
- 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.”
On 5th September 2012 Mr McLaughlin 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
Para 27 states:-
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 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
So, having raised the issue of jurisdiction, and having had a session set aside to decide it, Oldco and Newco took their ball home and refused to play. It is also noteworthy, as recorded by the Commission, that no accusations of bias were out forward in the List of Preliminary Issues.
This seems very odd, as Mr Green, a few days later, made a great song and dance about bias and lack of independence.
In addition, it is a legally risky tactic to raise an issue about jurisdiction and then to refuse to attend to argue it. It places any appeal in jeopardy. If Rangers “lose” in these proceedings and were to seek the protection of the court in an appeal, then it would be argued that they had failed to engage with the process and to “exhaust their remedies” prior to going to court. When a party decides deliberately not to come to court, it makes it very hard to argue about what happens in its absence!
After explaining why the hearing had continued in the absence of newco and oldco, as permitted by the rules, para 29 states:-
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.
I am sure the suggestion is not that Mr McLaughlin would have been an unnecessary participant! However, bearing in mind the issues raised, and the calibre of the Commission members, I have no doubt that there would have been a very detailed and through analysis of the legalities before the Commission arrived at its decision.
That decision was as follows:-
“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:
- 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.
- 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.
- 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.
- Written reasons for this decision will be made available in due course.”
The Opinion then expands upon that decision.
Para 31 states:-
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.
“The SPL have been in contact with RFC 2012 PLC with regard to the SPL’s Commission which is examining Rangers’ historic use of EBTs. However, having taken legal advice, it is the Joint Administrators’ opinion that the SPL is not able to pursue RFC 2012 PLC in this matter.”
Oddly, until the letters sent by Mr McLaughlin on 10th September, Oldco was set to attend the hearing. There must have been a late change in the legal advice, it appears. I am sure it would be wrong to suggest that the administrators were meekly going along with exactly what Mr Green told them to do.
The Commission go on to quote some of the provisions of the SPL Articles and the SPL Rules as follows:-
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”.
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.”
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
(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; …”
Finally, Article 97 provides:
“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.”
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.
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 from the SFL and admitted entry to the League.”
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.”
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;
(b) the SFA Articles and the statutes and regulations of UEFA and FIFA.”
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).”
Para 43 stated:-
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 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.
So, the allegation that the SPL Rules were broken whilst Rangers were members of the SPL means that, even when no longer members, the SPL still has jurisdiction over them. That had seemed a very straightforward position, but the strident arguments to the contrary sought to drown that out.
Para 44 makes that clear:-
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.
It was argued also that, with Oldco having disposed of the assets which made it a football club, the SPL could have no further jurisdiction over it.
Para 46 states:-
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 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.
This suggests an answer to the Rangers – alive or dead – conundrum. The Club can pass from owner to owner, although it cannot do anything legally itself, not being a legal entity. Here the club has passed from oldco to newco. Whilst the SPL do not have any jurisdiction over newco, they still have jurisdiction over the club. In this way, newco has an interest in the case, even if not a direct one.
Insolvency Act Moratorium
Are the SPL proceedings a “legal process (including legal proceedings, execution, distress and diligence)”? If so, then they cannot proceed as regards oldco without consent of the administrator or the court.
The Commission’s analysis runs from para 49 as follows:-
Paragraph 43(6) (of the Insolvency Act 1986) 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  BCC 154, Bristol Airport Plc v Powdrill  1 Ch 744 and In Re Frankice (Golders Green) Limited (in administration)  EWHC 1229 (Ch),  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.
 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 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’.”
 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.
 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 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”.
So, as this is not a court case, then it is not a “process” and as such the moratorium does not apply. As the Commission says, the enforcement of any financial order made against oldco may well constitute proceedings against which the moratorium would operate, but it is not a bar to these proceedings.
Para 53 reads:-
The list of preliminary issues (also) seeks 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.
This seems to relate to Mr Green’s assertions about a pre-determined punishment. As the Commission says, arguing about the sentence before there is a verdict is premature. In any event there requires to be evidence and someone there to argue it. In the absence of representation, it is very hard to see how the Commission can be faulted for ignoring the matter, as it would not have been attempted to be made out, nor would a judicial appeal be looked on favourably on that ground where there has been a wilful decision to ignore the process.
The Commission concluded by giving directions as follows:-
“Further to the decision made today we make the following procedural orders:
- 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.
- 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.
- 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.
- We direct that intimation of the aforesaid decision and of these directions be made to the solicitors for Oldco and Newco.
And the final words make the position of the Commission clear:-
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.
Will Oldco or Newco respond to the invitation? Who knows!
Posted by Paul McConville