Broughton v Kop Football (Cayman) Ltd & Ors

An appellate court will interfere with a first-instance case-management discretion only for legal error, failure to consider relevant matters, consideration of irrelevant matters, or a decision plainly outside the generous ambit within which reasonable judges may differ. A represented party will not ordinarily succeed by relying on a relevant matter which it did not put before the judge.

A financial condition should not require the impossible, but a party relying on impecuniosity must provide full and credible evidence of its own and available third-party resources. A term is implied only where necessary to give the contract its proper meaning. Necessity remains the test despite the reasonable expectations of the parties. In a mortgage context, equity ordinarily regulates the mortgagee's duties; a forbearance agreement will not readily imply positive obligations inconsistent with the mortgagee's existing rights.

The Kop defendants sought permission to appeal from case-management orders made by Peter Smith J in High Court proceedings brought by Sir Martin Broughton and the Royal Bank of Scotland. The proceedings arose from the sale of Liverpool Football Club following the lenders' pressure to realise secured indebtedness.

The orders fixed an April 2013 liability trial, required staged security as a condition of defending and counterclaiming, and continued restrictions on access to disclosed documents until security was provided. A later order addressed evidence for a proposed variation of the payment timetable. The defendants also challenged the refusal to permit amendments alleging implied terms in refinancing and sale-related agreements.

The central issues were whether the judge's discretionary case-management orders were wrong and whether the proposed implied terms were necessary.

1. Permission to appeal was refused and the application dismissed. Lewison LJ gave the reasons, with McCombe and Tomlinson LJJ agreeing. The court would not re-exercise a first-instance case-management discretion. Intervention required legal error, omission of a relevant consideration, consideration of an irrelevant one, or a decision plainly outside the generous ambit within which reasonable judges might differ.
2. The April trial date was a proper discretionary choice. The parties had presented the judge with competing dates in 2013, rather than an objection in principle to expedition. There was no evidence that an April date would cause hardship. It was also impermissible, in the circumstances, to criticise the judge for not considering a point which professionally represented parties had not advanced.
3. The staged security orders were within the judge's discretion. A court should not impose a condition which a party cannot satisfy, but a party asserting inability to pay must support that assertion with full, credible evidence of its assets, liabilities and available support. The judge permissibly required such evidence and left liberty to apply for a variation.
4. The confidentiality regime did not render the security order wrong. The defendants had no entitlement to the disclosed material apart from the proceedings, and had not shown that the regime prevented payment of the first tranche. Although the judge erred in deciding too soon how evidence supporting a later variation could be disseminated, permission was still pointless because the parties had agreed an initial lawyers-only arrangement and the court lacked the evidence needed to determine any further confidentiality club.
5. The proposed implied terms could not be pleaded. Attorney General of Belize v Belize Telecom did not displace necessity as the test for implication. The refinancing documents imposed no positive obligation on RBS beyond forbearance. The suggested terms were neither necessary nor consistent with RBS's existing mortgagee rights. Equity, rather than implied contractual duties, ordinarily regulated the mortgagee's duties; those duties did not require RBS to co-operate in refinancing or to secure the club's maximum sale value.

• Court of Appeal (Civil Division): In [2012] EWCA Civ 1743 , the court refused permission to appeal from the case-management and implied-term rulings.
• High Court, Chancery Division (Peter Smith J): Orders made on 22 and 29 October 2012 fixed an expedited liability trial, imposed staged security and addressed confidentiality and evidence relating to a proposed variation of the payment timetable.