Brand agencies with obvious conflict of interest, blatant inaccuracies, claims without foundation and false – litigation involving F1’s colourful Eddie Jordan was never going to be dull.
Who: Jordan Grand Prix Limited & Vodafone Group Plc
Where: Chancery Division, High Court, London
When: August 2003
In this contractual dispute between F1 racing team Jordan Grand Prix (“JGP”) and telecommunications giant Vodafone, there was never any concluded written agreement between the parties, although lengthy discussions did take place. What the case boiled down to, was a claim that in the course of a telephone conversation held shortly after 6pm on 22nd March 2001 and lasting some 10-15 minutes between Eddie Jordan, the Managing Director and majority shareholder of JGP and David Haines, the Global Brand Director of Vodafone Global Commercial Services Limited, Vodafone agreed to be title sponsor of Jordan for three F1 seasons at a total potential cost of $150 million.
At the time of the 22nd March conversation, a draft contract was in existence. However, crucial aspects such as livery, intellectual property rights, ownership and renewal had yet to be agreed.
Vodafone denied that there was any concluded agreement and contended that even if there was some record of it at the relevant time, it was incomplete and far too uncertain.
Given the position taken by the two sides, the evidence given in the box by Eddie Jordan for JGP and David Haines for Vodafone was therefore crucial. Mr Justice Langley found Mr Haines to be ‘impressive, and in my judgement, a plainly truthful witness’.
Eddie Jordan on the other hand was found to be a ‘wholly unsatisfactory witness’. His ‘evidence was in many instances in stark conflict with, and indeed belied by the documents, often documents of [his] own making. On occasions, even Mr Jordan was unable to offer an explanation and was reduced to embarrassed silence by exposure of blatant inaccuracies in what he was saying. The evidence [he] gave and the claim Jordan makes became more and more contrived and unsustainable’.
Eddie Jordan’s evidence was that in the course of the 22nd March 2001 conversation, David Haines clearly stated ‘you’ve got the deal’. Haines denied ever having uttered the phrase. On the evidence, it was quite clear that Vodafone were at that time in discussions with a number of potential F1 teams with a view to title sponsorship, and in the light of this and the absence of any detailed, agreed terms in a properly worked up contract, Langley J found it ‘little short of inconceivable that Mr Haines, whatever pressure Mr Jordan might put on him, could have decided that day to commit to any contract with Jordan’.
The Judge also had comments on the position in the matter of consultants (“Consultants”) appointed by Vodafone whose brief was to identify and evaluate opportunities which might be available to them in F1.
There were no written terms governing the Consultants’ appointment , but in addition to their fees from Vodafone, it appeared that the Consultants also stood to receive a commission from JGP if a JGP/Vodafone contract was signed.
On the evidence, it was clear that David Haines, who had a lot on his plate, relied on the Consultants heavily to handle the negotiations with JGP. Langley J found that this reliance ‘was, I think, in fact significantly misplaced’.
The Judge fully accepted that it was the Consultants’ sincere view that Vodafone’s objectives would best be met by signing up with JGP. Nevertheless, the Consultants seemed, the Judge said, ‘not to have appreciated the obvious conflict of interest and the plain risk that they might be used by Jordan for Jordan’s purposes in the events which ensued.”
Why this matters:
Some reports suggest that JGP will be out of pocket in terms of legal costs to the tune of £5 million as a result of this verdict, against which they are not going to appeal.
With the benefit of hindsight, it is perhaps surprising that JGP’s case against Vodafone should have proceeded as far as it did. It is quite clear that Eddie Jordan was convinced of the justness of his case, but the report underlines the danger of placing reliance on conversations as opposed to written communications. There is also the great difficulty any party alleging the existence of a contract must face, if it appears that at the relevant time fundamental aspects of the alleged contract had not in fact been agreed.
The case also calls into question the role of brand/sponsorship agents in a case where there was a possibility of them being used by one side or the other. The lesson for brand owners here is that written terms should govern a relationship of this kind, and these terms should make the nature of the appointment transparently clear.