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    Fulham Football Club Ltd... Summary

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    Truc Ha Thanh
    The directors of Fulham Football Club had agreed not to oppose future planning applications for redevelopment of the club's stadium in return for substantial payment from the developer, Cabra Estates. However, when Vicenza Developments, a subsidiary of Cabra Estates, later submitted new planning applications that were refused, Fulham Football Club withdrew its support. The Court of Appeal held that the directors did not improperly fetter their discretion by the original agreement, as they believed it benefited the company at the time, and performance of a valid contract does not breach the duty to act in the company's best interests.

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    Fulham Football Club Ltd... Summary

    Uploaded by

    Truc Ha Thanh
    255 views3 pages
    The directors of Fulham Football Club had agreed not to oppose future planning applications for redevelopment of the club's stadium in return for substantial payment from the developer, Cabra Estates. However, when Vicenza Developments, a subsidiary of Cabra Estates, later submitted new planning applications that were refused, Fulham Football Club withdrew its support. The Court of Appeal held that the directors did not improperly fetter their discretion by the original agreement, as they believed it benefited the company at the time, and performance of a valid contract does not breach the duty to act in the company's best interests.

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    Fulham Football Club Ltd... summary

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    The directors of Fulham Football Club had agreed not to oppose future planning applications for redevelopment of the club's stadium in return for substantial payment from the developer, Cabra Estates. However, when Vicenza Developments, a subsidiary of Cabra Estates, later submitted new planning applications that were refused, Fulham Football Club withdrew its support. The Court of Appeal held that the directors did not improperly fetter their discretion by the original agreement, as they believed it benefited the company at the time, and performance of a valid contract does not breach the duty to act in the company's best interests.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    255 views3 pages

    Fulham Football Club Ltd... Summary

    Uploaded by

    Truc Ha Thanh
    The directors of Fulham Football Club had agreed not to oppose future planning applications for redevelopment of the club's stadium in return for substantial payment from the developer, Cabra Estates. However, when Vicenza Developments, a subsidiary of Cabra Estates, later submitted new planning applications that were refused, Fulham Football Club withdrew its support. The Court of Appeal held that the directors did not improperly fetter their discretion by the original agreement, as they believed it benefited the company at the time, and performance of a valid contract does not breach the duty to act in the company's best interests.

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    of 3

    Fulham Football Club Ltd and others v.

    Cabra Estates Plc


    I. Summary:
    Fulham, as lessees of Craven Cottage, agreed with Cabra, a developer, who had
    applied for planning permission to redevelop the ground, shortly before a public
    inquiry which had been set up to consider the planning application; and also a
    proposal by the local authority (which Fulham FC had supported) for the making of a
    compulsory purchase order of the ground. Fulham were to receive payment from
    Cabra in return.
    February 10, 1989, Vicenza Developments Ltd who were a subsidiary of Cabra Estates
    Ltd, made an application to the local planning authority, Hammersmith and Fulham
    London Borough Council, for planning permission to develop the site for residential
    purposes.
    On February 24, 1989 the council made planning applications for an alternative
    development of the site and on May 3, 1989 the council issued a compulsory purchase
    order for the site.
    1. The first enquiry: In due course the secretary ordered a public enquiry which
    was started from January 30, 1990. On January 28, 1990 Vicenza Development
    Ltd who were subsidiary of Cabra Estates Ltd and Cabra made an agreement in
    writing with Fulham Football Club, its shareholders and directors as to the
    possible future development of the site and also on that day, they entered into a
    legally binding agreement with Cabra Estates which involves leaving the
    Cottage.
     At the end of the first enquiry, the inspector in due course reported to the
    secretary of state who announced his agreement with the inspector and
    decided not to confirm the compulsory purchase order nor to grant the
    associated planning permissions sought by the council.
    2. The second enquiry: Vicenza made a new applications for planning and
    submitted them to the council but they were refused and Vicenza appealed 
    Another further local public enquiry was ordered, began on June 2, 1992.
    But by this time, Fulham Football Club and its shareholders changed their
    mind and stated that they couldn’t give their support to Vicenza’s
    application. //However, Cabra’s solicitor claimed that the undertakings
    included a provision requiring support.//
     Justice Chadwick concluded that enforcing the obligation in the
    undertakings would contrary with the public policy. Besides, Mr Chadwick
    rejected Cabra’s argument based on the fiduciary duties of the covenantors
    as directors of the football club.
     The directors of Fulham Football Club were held that they breached the
    duty of exercising independent judgement because they had not restricted
    the future exercise of their discretion accordingly.
    However, The Court of Appeal so held in a reserved judgment when allowing
    the appeal of Cabra Estates plc against the order made by Mr Justice Chadwick
    ((The Times July 1) in accordance with his decision given on June 19, 1992,
    granting Fulham Football Club Ltd and its shareholders and directors, a
    declaration that they were entitled to give evidence to a public enquiry
    concerning a compulsory purchase order, contrary to certain undertakings they
    had given in an agreement under seal.
     LORD JUSTICE NEILL , giving the judgment of the court, said that the
    case concerned the future use and development of the football ground and
    surrounding land known as Craven Cottage in Fulham, the home of Fulham
    Football Club.

    II. Rules:
    The High Court of Australia in Thorby v Goldberg ((1964) 112 CLR 597)
    "If, when a contract is negotiated on behalf of a company, the directors bona
    fide think it in the interests of the company as a whole that the transaction
    should be entered into and carried into effect they may bind themselves by the
    contract to do whatever is necessary to effectuate it."
    - “Bona fide” is the state of mind while doing an act, entering a contract or
    transaction where in such activities are done with good intention, without
    knowing the defects involved. Bonafide intention is a pre-condition for
    validity of a contract.
    - In the present case, the undertakings given by the directors were part of the
    contractual arrangements made on January 28, 1990 which conferred
    substantial benefits on the club. On January 28, 1990 Vicenza and Cabra
    made an agreement in writing with Fulham Football Club, its shareholders
    and directors as to the possible future development of the site and on that
    same date the shareholders and directors entered into a letter of
    undertaking with Cabra Estates in which they covenanted, inter alia, not to
    provide witnesses to give evidence in support of the council's compulsory
    purchase order at the enquiry and not to object to the planning application
    made by Cabra.
     It could not be said in those circumstances that the directors improperly
    fettered the future exercise of their discretion.
    III. Judgements:
    Football club had football ground on lease. In return for substantial payment,
    directors of club agreed not to oppose any future planning applications which
    owners of the ground might make. Sought to get out of contract by alleging it was
    unlawful fetter of their duty to act in best interests of club in future. Held:
     Performance of a contract is not breach of section 173 CA 2006 if director
    exercised independent judgment when entering into the contract;
     It is believed that the contract was for benefit of company at time he
    entered it, cannot claim later on that contract stops him acting for benefit of
    company;
     Directors entered agreement which substantially benefitted company
     It cannot be said that they improperly fettered their future discretion.
    IV. Facts:
    1 với 2: On January 28, 1990 Vicenza and Cabra made an agreement in writing with
    Fulham Football Club, its shareholders and directors as to the possible future
    development of the site and on that same date the shareholders and directors entered
    into a letter of undertaking with Cabra Estates in which they covenanted, inter alia,
    not to provide witnesses to give evidence in support of the council's compulsory
    purchase order at the enquiry and not to object to the planning application made by
    Cabra.
    3:
    By the time that Vicenza made a fresh applications for planning permission and
    submitted them to the council but the applications were refused and Vicenza appealed,
    however, Fulham Football Club and its shareholders and directors had had a change
    of heart and stated that they could not give their support to Vicenza's application

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