Logicrose Ltd v Southend United Football Club Ltd

Company owning property — Director granting licence — Payment of fee to offshore company — Whether agreement licence — Whether agent had authority — Effect of transaction — Whether principal entitled to rescind licenceThe defendant company is the freehold owner of a football ground and an adjoining car park; the plaintiff company operate a general market of about 400 stalls held twice weekly on the car park under an agreement dated March 1984 and described as a licence. The plaintiffs claimed the agreement created a tenancy within Part II of the Landlord and Tenant Act 1954; the defendants denied the agreement was anything but a licence and claimed rescission of the agreement on the ground that it had been entered into by a director acting outside his authority as an agent of the defendant company. A Mr MacHutchon was chairman of the defendant company and acted as the nominee of Mr Anton Johnson, the controlling shareholder. When the licence was granted, the plaintiffs paid a licence fee of £70,000 and, on Mr MacHutchon’s request, paid the sum into an offshore company. It was part of the defendants’ counterclaim that this payment should have come to them; there had been a corrupt bargain carried through with the knowledge of a Mr Harriss of the plaintiff company. Held 1. The agreement constituted a licence of the car park for the twice-weekly market, as there was much in it inconsistent with the grant of anything more. There was nothing in the agreement to prevent the defendants, as freeholders, erecting a kiosk on market days; they would not be interfering with the market or derogating from their grant. The agreement could not be construed as granting exclusive possession; it was a well-drafted document that succeeded as a licence. 2. On the evidence, Mr MacHutchon as a director of the defendant company, and therefore as its agent, surreptitiously and without the knowledge or consent of his fellow directors contrived to obtain a secret payment into an offshore account under his own name. To obtain this payment he committed the defendants to an agreement which, unknown to them, their own solicitors strongly advised against. The defendants had been deprived of the right to decide for themselves or by a disinterested agent whether to accept or reject that advice. As they had been deprived of the disinterested advice of their agent to the knowledge of the plaintiffs (through Mr Harriss), they were entitled to rescind the agreement. As a principal whose agent has received a bribe from the other party to the transaction is entitled to recover the amount of the bribe from the agent, whether he affirms or repudiates the transaction itself, the defendants were entitled to retain the amount of the £70,000 they had recovered from the offshore account. Grant v Gold Exploration & Development Syndicate Ltd [1900] 1 QB 233 CA followed. Edward Nugee QC and Frederick Philpott (instructed by Ross Williams Neilson & Co) appeared for the plaintiffs; and John McDonnell QC and Guy Newey (instructed by Jefferies, of Westcliff-on-Sea) appeared for the defendants.