- It is the claim
of Jordan Grand Prix Limited ("Jordan") in these proceedings that
in the course of a telephone conversation held shortly after 6pm on 22 March
2001 and lasting some 10 to 15 minutes between Eddie Jordan, the managing
director of and majority shareholder in Jordan, and David Haines, then global
brand director of Vodafone Global Commercial Services Limited ("Vodafone
Global"), a wholly-owned subsidiary of Vodafone Group plc ("Vodafone
Group"), Vodafone Group agreed to be the Formula One (F1) grand prix
title sponsor of Jordan for the three seasons 2002 to 2004 for payments by
Vodafone Group to Jordan of US$ 39m in 2002, $50m in 2003 and $52m in 2004,
plus bonuses of $9m, a total of $150m. Jordan claims damages for breach of
this alleged contract. In the alternative Jordan claims damages for misrepresenting
in the same conversation that Jordan would be sponsored by Vodafone.
- Vodafone denies
that any such agreement was made and contends that even if there was some
accord it was incomplete and far too uncertain and in any event Mr Haines
had and indeed was known by Jordan to have no authority to commit Vodafone
Group to such a contract.
- The inherent
improbability of an agreement of such a nature for payments of such a size
being made in such a manner is obvious. At the conclusion of the evidence
the inherent improbability was more than fully matched by the reality. Jordan’s
claim was in my judgment plainly demonstrated to be without foundation and
false.
BACKGROUND
AND CAST LIST
Jordan
- Jordan has been
a participant in F1 for many years. In terms of size it is one of the smaller
teams. It is also one of the few teams which is not owned or part-owned by
a major motor manufacturer. Sponsorship is of great importance to all teams.
"Title" (or "team") sponsorship in general terms entitles
the sponsor to have its name associated with the team and to dominate the
space on the car and drivers’ clothing with the sponsor’s name and brand.
For the 2001 F1 season Jordan’s title sponsor was Gallaher plc, and the team
name was "Benson & Hedges Jordan Honda". Honda supplied the
engines for the cars. "Secondary" sponsorship, again in general
terms, entitles the sponsor to limited space on the car and clothing and other
benefits as may be agreed.
- The main players
involved at Jordan are, and were in 2001, Eddie Jordan and Ian Phillips, the
director of business affairs. Both gave evidence. Others whose names appear
in the documents are Mark Gallagher, sponsorship manager, and Dominic Shorthouse,
the representative of Warburg Pincus on the Jordan board. Warburg Pincus owned
a substantial minority shareholding in Jordan.
Vodafone
- In 2000 Vodafone
Group’s business consisted of a number of telecommunications companies operating
under different brand names in many countries. Two of the major operating
companies were Mannesmann/D2 in Germany and Omnitel in Italy. The managing
director of Omnitel was Mr Colao. It was Vodafone Group’s aim to "globalise"
the Vodafone brand. F1, with its worldwide audience and grand prix in several
countries in each year, was seen as a potential component in achieving that
aim. D2 as such was a secondary sponsor of the Renault Benetton team in 2001.
- The main players
involved at Vodafone at the time were Thomas Geitner, David Haines and Peter
Harris, all of whom gave evidence. Mr Geitner is and was chief executive officer
of Vodafone Global and an executive director of Vodafone Group. He was also
until 1 April 2001 chief executive officer of Vodafone Europe Ltd. David Haines
was recruited by Vodafone Global in late 2000 as global brand director (a
new post) for the purpose of co-ordinating the globalisation of the Vodafone
brand. Peter Harris was officially employed from April 2001 as director media
and sponsorship, but was assisting Mr Haines on some F1 matters from late
February. Mr Haines reported to Mr Geitner and Mr Harris reported to Mr Haines.
They were based in Dusseldorf. The chief executive officer of Vodafone Group
was Sir Christopher Gent. Others who play some part in events are Andy Moore,
consumer insights director and Jost Schulte, global brand manager. Mr Moore
and Mr Schulte gave evidence about the 22 March telephone conversation. Vodafone’s
head office is and was in Newbury, Berkshire.
- It is, as stated,
part of Vodafone’s case that even if there was a sponsorship agreement Mr
Haines was not authorised to make it and that both in fact and as a matter
of commonsense Jordan knew Mr Haines did not have such authority. It should
therefore be recorded that the unchallenged evidence is that the relevant
corporate structure of Vodafone Group included a Brand Steering Committee
chaired by Mr Geitner (of which Mr Haines was a member), which had its last
meeting on 29 March 2001. The Brand Steering Committee was succeeded by the
Brand Council which, although it had its first meeting on 15 March 2001, had
not then succeeded to the functions of the Committee. Mr Haines was chairman
of the Council. The members of the Brand Council included representatives
of the Vodafone operating companies. Neither the Committee nor the Council
was empowered to make a decision on a contract of the magnitude under consideration
for F1 sponsorship. Vodafone’s written procedures provided for a recommendation
to be made by the Committee to the European Operations Integration Committee
(EOIC), the Group Operational Review Committee (GORC) and the Executive Committee,
a delegated committee of the full board of directors of Vodafone Group. Mr
Haines’ personal authority to enter into contracts of the nature of the one
in issue in these proceedings was limited by a formal "Schedule of Authorisations"
to £3m. Mr Haines had received a copy of the written procedures both by e-mail
and in hard copy by (at the latest) 2 February 2001.
Brown KSDP
("Brown")
- Brown was a
global branding and design network. Its parent company was Tempus Group plc
(Tempus). In 2000 Tempus was already engaged by Vodafone to assist it on the
global branding exercise. It is not as clear as it should be what Brown’s
precise role was save that Brown was undoubtedly appointed by and to act for
Vodafone and in general terms the brief was to identify and evaluate the opportunities
which might be available to Vodafone in F1. There was no letter of engagement.
Mr Haines said it was agreed that Brown should be paid on the same basis as
Tempus, effectively a time cost plus arrangement. Those at Tempus and Brown
who played a significant part in events were Mr Joe Kieser (whose agency KSDP
had recently been acquired by Tempus) the chief executive, and an account
director, Charles Perring. Mr Kieser reported to Peter Dart, the president
of Tempus. Mr Perring reported to Mr Kieser. Mr Dart had worked with Mr Haines
before and they had become personal friends. Mr Kieser gave evidence at the
instance of Vodafone. Mr Perring, whose witness statement was dated 12 June
2003, did so at the instance of Jordan. Brown also, through Mr Perring, involved
outside solicitors (Townleys) to act on behalf of Vodafone. Those concerned
were a partner, Stephen Townley, and an assistant solicitor, Jeremy Summers.
Gallaher
- Jordan’s 2001
title sponsor was Gallaher. Nigel Northridge was chief executive officer and
Barry Jenner the UK managing director of Gallaher. The sponsorship was the
subject of a substantial written contract plainly drafted by lawyers and signed
by Mr Northridge and Mr Jordan dated 29 January 1997. The term of the contract
expired on 31 December 1997 but with an option exercisable by Gallaher no
later than 31 July 1997 to extend the term to 31 December 1999 and options
in July 1999 and each subsequent July to extend the term for further successive
periods of 1 year, subject to agreement on the fee payable. If a fee was not
agreed, Jordan could not offer title sponsorship to another party on more
favourable terms than those offered to Gallaher without first offering those
terms to Gallaher. The Agreement contained detailed provisions for such matters
as advertising and promotion, intellectual property rights, the livery to
be used on the cars, drivers and team clothing, race tickets and hospitality
and restrictions on the rights which could be granted by Jordan to secondary
sponsors. It also contained both fixed fees and bonus provisions dependent
on the level of success achieved by Jordan in F1 races.
- The Agreement
was duly extended so that for 2001 the fixed fee was £13m and the maximum
bonuses which could be earned were £3m. It was also agreed in July 2000 that
Gallaher’s option to extend the Agreement for the 2002 season could be exercised
at any time until 28 September 2000. In December 2000 the Agreement was further
varied so that the fixed fee was £16m and no bonuses were payable, but if
Jordan’s performance was not such as would have earned a bonus under the earlier
agreement up to £1.5m could be deducted from the fixed fee of £14m for 2002
should Gallaher exercise its option to renew the agreement for that year.
Gallaher’s option for 2002 was also varied so as to be exercisable at any
time until 28 February 2001.
- On 28 February
2001 Gallaher (Mr Jenner) wrote to Jordan (Mr Phillips). The letter states
that at a meeting on 13 February (which, on the evidence was attended by both
Mr Jordan and Mr Phillips) Mr Jenner had advised Jordan that Gallaher was
"not in a position to continue as title sponsor in 2002/3" but,
to preserve Gallaher’s position, and in the interests of confidentiality,
it was proposed that the right to exercise the option to extend the Agreement
should be further extended to 31 March 2001. The letter proposed that Gallaher
should become "the principal secondary sponsor for the 2002 and 2003
seasons" for fees of £10m and £11m respectively.
- Jordan did not,
despite Gallaher’s request, sign and return this letter to confirm agreement
to the extension of the option. Mr Phillips said in his fifth witness statement
that whilst he was quite happy to extend Gallaher’s option he was not happy
with the terms for secondary sponsorship as he did not want to commit Jordan
to numbers at the time. Mr Phillips said he spoke to Mr Jenner and told him
as much but in effect had agreed orally to the extension. Had that been the
case I would have expected Jordan or Gallaher at least to have confirmed it
in writing and that the terms of Jordan’s delayed response dated 20 March
2001 (paragraph 104), would have been different. In any event by 28 February
2001 both Gallaher and Jordan had made clear that Gallaher was not to continue
as title sponsor.
Honda
- Honda and Jordan
(by Mr Jordan) entered into a formal Agreement dated 14 June 2000 for the
supply by Honda to Jordan of engines for the F1 cars. Although the "contract
period" was expressed to be 5 years starting with the 2001 season both
parties were entitled to terminate the Agreement for the 2004 and 2005 years
"without any cause and obligation to compensate" on giving notice
to that effect by the end of December 2002. Further, whilst the supply of
engines for 2001 and 2002 was agreed to be free of charge to Jordan, that
was not the case for subsequent years. In effect as at early 2001 Jordan had
free Honda engines for the 2001 and 2002 seasons and a contractual right to
Honda engines only for those seasons and, provided a price could be agreed,
2003. Honda also supplied engines to the BAR F1 team in 2001 and 2002.
Deutsche Post
(DP)
- DP was a secondary
sponsor of Jordan in 2001 under the terms of a formal Agreement dated 6 December
1999 signed by Mr Jordan. The Agreement continued until the end of the 2002
season, with options for Deutsche Post to extend it for 3 further years. The
fee in 2001 was $17m and bonuses were payable up to a maximum of $2m for results.
The Agreement scheduled drawings showing the approved DP logo and "display
rights" on the cars and clothing. To quote the Amended Particulars of
Claim, without accepting their accuracy, DP was "not entitled to determine
the colouration of the Jordan car but has a known preference for the existing
yellow colouration on which its logo appears in black". By an Agreement
signed in February 2002 DP (in the name of DHL) became Jordan’s title sponsor
for 2002.
Lucent
- Jordan also
had a secondary sponsorship Agreement with Lucent Technologies Inc for a three-year
term ending with the 2001 season. The fee payable by Lucent for 2001 was $1.201m.
Lucent and Vodafone were involved in a legal dispute in early 2001.
Infineon/Mastercard
- Infineon Technologies
AG (a subsidiary of Siemens) and Mastercard were also secondary sponsors of
Jordan in 2001 and 2002. Dr Volker Jung, a managing board director of Siemens
and chairman of the supervisory board of Infineon, gave evidence at the instance
of Vodafone.
Ferrari
- In the event,
Vodafone became principal non-title sponsors of Ferrari for the 2002 and subsequent
F1 seasons. Phillip Morris (Marlboro) were Ferrari’s title sponsors in 2001
and 2002. Jean Todt, Ferrari’s team principal, gave evidence at the instance
of Vodafone. The chief executive of Ferrari was Mr Montezemolo.
Other F1 Teams
Benetton
- In the course
of the material events, apart from Jordan and Ferrari, other F1 teams became
involved as potential subjects of sponsorship by Vodafone and it is convenient
to refer briefly here to those which played some significant part in events.
Benetton’s title sponsor in 2001 and 2002 was "Mild 7" another tobacco
company. The team principal was Flavio Briatore. Paul Jordan was from 2000
until early 2001 commercial director of Benetton. A witness statement by Paul
Jordan was served by Jordan and accepted in evidence as such. Paul Jordan
had been Jordan’s sponsorship manager until 1999. Ted Brezina was Benetton’s
business development manager.
McLaren
- McLaren’s title
sponsor in 2001 and 2002 was "West", another tobacco brand. The
managing director was and is Ekrem Sami who gave evidence at the instance
of Vodafone.
THE
CLAIMS
The Primary Claim
- The primary
claim by Jordan is to be found in paragraph 28 of the Amended Particulars
of Claim (APC) which reads:
On
22 March 2001 at about 6.20pm Mr Haines telephoned Jordan and spoke to Mr
Jordan on a loudspeaker telephone in the presence of Mr Phillips. He informed
Mr Jordan that Vodafone would sponsor Jordan for the three Grand Prix seasons
in 2002 to 2004. In the course of the conversation and in response to Mr Jordan,
Mr Haines said "Eddie, stop, stop, you’ve got the deal".
Mr Jordan thanked Mr Haines for his confidence in Jordan. Mr Haines told Jordan
to sort out any formalities with Mr Harris. Mr Haines had asked for a list
of Jordan’s bankers, shareholders and professional advisers as references
but explained that this was a "formality".
- It is Jordan’s
case that "the deal" to which Mr Haines was agreeing is to be found
in and was established by:
- A document
provided by Mr Perring to Jordan on about 1 February 2001 which has come
to be known as "the benefits wish list";
- A meeting
on 6 February 2001 at Jordan’s premises in Silverstone between Mr Jordan,
Mr Phillips, Mr Perring and Mr Haines when it is said Mr Haines offered
"a deal" then and there if Jordan would commit to a particular
car design and said that "all matters of detail should be dealt with
between Jordan and Brown";
- A meeting
on 14 February at the Hilton Hotel at Heathrow between Mr Jordan, Mr Phillips,
Mr Kieser and Mr Perring when it is said "agreement was reached in
principle" that a total payment would be made by Vodafone of $150m
over three years, additional bonuses "may be" payable for results,
the team name would be Vodafone Jordan Honda, as to "the exclusive
rights to be enjoyed in respect of telecommunications equipment" and
the team title logo.
- To quote paragraph
25 of the APC:
The
only outstanding matter yet to be fully agreed in principle at that stage
was the colouration of the car. This was agreed in principle on 19 March
2001 when Mr Perring sent a design to Mr Phillips which was acceptable to
Jordan and of which DP could not disapprove. At that stage all the necessary
terms for a sponsorship agreement had been agreed in principle.
- To quote paragraph
31 of the APC:
"31. By
reason of the matters set out above a binding sponsorship agreement had been
formed pursuant to which Vodafone was to sponsor Jordan for three years starting
in the 2001 season:
31.1 paying
$42,000,000 in 2002 (being $39,000,000 plus $3,000,000);
31.2 paying
$53,000,000 in 2003 (being $50,000,000 plus $3,000,000);
31.3 paying
$55,000,000 in 2003 (being $52,000,000 plus $3,000,000);
31.4 on
the terms set out in the benefits wish list;
31.5 with
a colouration for the car similar to the artwork submitted by Brown on 19
March 2001."
- There is no
dispute that on 25 May 2001 Ferrari and Vodafone announced their agreement
for sponsorship for the three years 2002 to 2004. Jordan’s claim is for the
loss of $150m less "sums received by way of title sponsorship which would
not have been received if Vodafone had abided by the terms of its agreement
with Jordan". There are no particulars of what that loss might be nor
was any evidence given about it in any witness statement. Had it been relevant
to do so no doubt that could have been addressed later.
The alternative
claim
- The alternative
claim is to be found in paragraph 40 of the APC. If there was no concluded
contract formed on 22 March 2001 it is there alleged that:
"Mr
Haines represented that a contract would definitely be entered into between
Jordan and Vodafone shortly after 22 March 2001."
The
words relied upon are the same as those relied upon in paragraph 28 of the
APC.
- Jordan is said
to have relied upon this representation "in ceasing to negotiate any
sponsorship (until 26 May 2001) with Gallaher for the 2002 season" with
the alleged consequence that "Gallaher lost all interest in being title
sponsor of Jordan and reduced the amount that it was prepared to pay"
for the 2002 season "to a significantly reduced sum as a secondary sponsor
in 2002". The claim is for the difference between £17m or £18m in 2002
plus 50% of that amount for the loss of the chance of the same sum being agreed
for 2003 and the sums Gallaher in fact paid in those years (£7.1m and £6.5m)
alternatively between £10m plus £11m and the sums in fact paid on the basis
that had Gallaher been offered secondary sponsorship at an earlier stage it
would have paid more for it in each of the years 2002 and 2003.
THE
DEFENCE
- Vodafone’s defence
denies Mr Haines’s authority to commit Vodafone to the alleged agreement and
avers that: only the Vodafone Group Board had such authority; "a vast
range of points of substance which would be incorporated into a final contract"
would have required detailed negotiation; no "livery proposal" was
ever agreed; and other F1 teams were always under consideration. On 22 March
2001 it is said that "at most Mr Haines conveyed the impression, which
was in his reasonable opinion correct, that Jordan was the most likely partner."
Authority
- It should be
noted that in a response (dated 10 July 2002) to a request for further information
Jordan made it expressly clear that it was not its case that Mr Haines had
actual authority to bind Vodafone. The case was then (and until the trial
began) only one of ostensible authority. Save for alleged conduct and representations
by Mr Haines himself about his own authority (which, in law, cannot sustain
such a case) the representations by Vodafone relied upon to support that case
were by conduct in permitting Mr Haines "to approach [Jordan] with a
view to concluding an agreement pursuant to which Vodafone would sponsor Jordan"
and by "holding Mr Haines out as its Global Brand Director and permitting
Mr Haines to negotiate" with Jordan in that capacity. In addition reliance
was placed on an alleged representation made by Sir Christopher Gent to Dr
Jung (Infineon) in March 2001 that Mr Haines "was the person who would
select the Formula One team" to be sponsored by Vodafone. That representation
is said to have been relayed by Dr Jung to Mr Jordan and Mr Phillips in Malaysia
when they were there for the Malaysian Grand Prix which took place on 18 March.
- On 23 May 2003
Jordan’s solicitors wrote to Vodafone’s solicitors enclosing proposed amendments
to the further information supplied. The amendments were to seek to make a
case of actual authority. That case ran to 19 sub-paragraphs. Essentially
it came to an allegation that Mr Haines would not have claimed the authority
to make agreements it is alleged he did claim nor made the statements it is
alleged he did make about Jordan having the deal unless authority had in fact
been bestowed upon him to do that and so actual authority to that effect was
to be inferred.
- Mr Boyle QC
for Jordan sought permission to make this amendment on the first day of the
trial. Mr Aldous QC opposed the grant of permission on the basis that the
proposed amended case was demonstrably unsustainable and hopeless. I did not
rule on it at the time on the basis that if Mr Aldous was right it would be
established in the course of the trial and need not delay its progress. In
the course of his closing submissions Mr Boyle entirely properly said he could
not in the light of the evidence pursue the application. Jordan’s "real
case on authority" he submitted was the one advanced in the written opening
submissions and reiterated in the closing submissions that Mr Haines did have
authority to communicate to Jordan that Vodafone Group had taken the decision
to sponsor Jordan even if he did not have the authority to make that decision
himself.
Disclosure
- It should be
recorded that in early April 2003 a Consent Order was made requiring Jordan
to make further disclosure of specific documents including documents in electronic
form. Some of the documents which were produced as a result of that order
proved to be of importance as will become apparent. Further, in the course
of the trial, orders were made for the examination of Mr Harris’ computer
and computers in use by Jordan at the time. Those examinations also produced
significant material to some of which I shall refer. The examination of Mr
Harris’ computer was a specialist examination of the hard disk because, in
circumstances to which no criticism attaches, certain e-mails sent and received
by Mr Harris were no longer otherwise accessible. The examination of Jordan’s
computers revealed documents which were material and readily accessible as
they had not been deleted. The documents disclosed as a result of these examinations
were the subject of supplementary written submissions by both parties. Very
substantial written closing submissions had `already been exchanged and submitted
to the court. Mr Jordan and Mr Phillips also made further witness statements
(in each case the 5th statement) to address some of the Jordan
disclosures and the submissions of Vodafone about them. Both were recalled
to be cross-examined on those statements. Oral closing submissions were made
following that evidence.
THE
KEY WITNESSES
- Since it is
a vital question in a case involving conflicting and irreconcilable accounts
of events decisive of the issues I have to decide, I will summarise here my
views of the key witnesses.
- Mr Haines was
an impressive and, in my judgment, plainly truthful witness. His evidence
was consistent with the documents and the commercial reality and commonsense
of events. He had a lot on his plate at the time with little support before
Mr Harris arrived. Mr Haines relied on Brown as indeed he and Vodafone were
entitled to do. That reliance was, I think, in fact significantly misplaced.
Both Mr Kieser and Mr Perring saw an opportunity for Brown to earn a substantial
sum by way of a commission from Jordan (and later through other work) for
a concluded sponsorship agreement and seem, particularly in Mr Perring’s case,
not to have appreciated the obvious conflict of interest and plain risk that
they might be used by Jordan for Jordan’s purposes in the events which ensued.
That said, I do not doubt that Mr Perring with, as will appear, a limited
perspective on events, did believe that Vodafone’s objectives would best be
met by sponsorship of Jordan.
- Mr Harris was
also an impressive and straightforward witness. Again his evidence was consistent
with the documents and commercial sense.
- I regret to
say that I found both Mr Jordan and Mr Phillips to be wholly unsatisfactory
witnesses. As will appear, their evidence was in many instances in stark conflict
with and indeed belied by the documents, often documents of their own making.
On occasions even Mr Jordan was unable to offer an explanation and was reduced
to embarrassed silence by the exposure of blatant inaccuracies in what he
was saying. The evidence they gave and the claim Jordan makes became more
and more contrived and unsustainable. Mr Haines said, in relation to the telephone
conversation on 22 March, when asked in cross-examination by Mr Boyle how
Mr Jordan could have come to think a contract had then been concluded, that
the only explanation he could give to himself was that "Mr Jordan had
heard what he wanted to hear and not what was said". That was a restrained
and courteous comment. For my part I have no doubt at all that where the substance
of Mr Haines and Mr Harris evidence differed from that of Mr Jordan, Mr Phillips
and Mr Perring on any issue of real importance the evidence of Mr Haines and
Mr Harris is to be preferred.
CHRONOLOGY
- In order to
explain why I have reached the clear conclusion that Jordan’s case is unsustainable
and the evidence of Mr Jordan and Mr Phillips to the contrary is to be rejected,
I propose to set out the chronology of events in some detail. There are three
significant periods in that chronology. First, the period preceding the alleged
oral agreement on 22 March 2001. The probabilities of Mr Haines making a binding
agreement on that date for Vodafone to sponsor Jordan must be seen in that
context. Second, the events of 22 March itself and the days immediately following
it when there was an exchange of correspondence referable to the telephone
conversation. Third, the events which then ensued up to and following the
time when the agreement for sponsorship between Vodafone and Ferrari was concluded
and publicly announced. As will be seen, Jordan’s conduct in this period in
particular was wholly inconsistent with a belief that a binding agreement
had been concluded with Vodafone on 22 March and the attempts of Mr Jordan
and Mr Phillips to explain it in cross-examination did neither of them any
credit.
EVENTS
PRIOR TO 22 MARCH 2001
McLaren and Ferrari
- Vodafone had
been considering possible sponsorship in F1 in late 2000. There had been a
proposal for secondary sponsorship of McLaren for 2001, and Mr Haines met
with McLaren (Mr Sami) and Ferrari on 15 and 17 January. At that time McLaren
were, however, only offering driver sponsorship and a small exposure on the
car for 2002 which Mr Haines doubted would achieve the global impact Vodafone
was seeking. The suggestion of sponsorship of McLaren for 2001 was not pursued.
The meeting with Ferrari was also attended by Mr Colao. Ferrari could not
offer title sponsorship but was prepared to offer what it called one of three
major partnerships with Vodafone having equal or better rights than Shell
whilst Phillip Morris remained as title sponsors.
Brown
- Mr Haines sought
the help of Brown KSDP. Mr Haines first met Mr Perring on 19 January. He had
been told by Mr Dart that Mr Perring had F1 experience which was not in fact
the case. He says, and I accept, that he told Mr Perring he and Vodafone were
on "a learning journey" or "window-shopping" to look at
options and get the facts about F1. It was not urgent. The 2002 F1 races did
not start until March of that year. Mr Haines said (and the documents support
him) that his criteria were maximum media exposure for the Vodafone brand,
joint commercial ventures with a team to obtain "pay-back" from
the sponsorship, and the need to ensure "buy-in" from the operating
companies which would not only be seeing the loss of their own brands (such
as D2) but would also be asked to pay for the cost of globalisation. Mr Haines
readily accepted that at the time he thought the route to maximum media exposure
was title sponsorship and that he had a personal belief that association with
a tobacco company would be a weakness. Those views were known to Mr Perring.
- Brown held what
Mr Perring called a brainstorming meeting on 21 January. No one from Vodafone
was present. Following the meeting a document was prepared "Project Fast
…. The Starting Grid". This identified the "ideal world" as
in effect title sponsorship including "ownership of red".
- On 23 January
2001 Mr Perring sent Mr Haines his "thoughts" on how to approach
meetings with Ferrari and McLaren which had been arranged for the next two
days. The "thoughts" took the form of a document entitled "Project
Fast – Critical Path". It described Mr Haines’ role for Vodafone as "entitled
to sanction the investment" which, as both Mr Geitner and Mr Haines said
and the evidence establishes beyond doubt, was not accurate if it meant entitled
to authorise a decision as distinct from make a recommendation to the decision-making
authority. Mr Haines, however, did not question the description in the document
at the time. Mr Townley’s role was to include "delivery of the ‘partnership
agreement’ and due diligence". Mr Perring’s role included identifying
opportunities for Vodafone and it was suggested Brown should be "positioned
as part of the Vodafone team rather than external specialists".
Jordan
- News of Vodafone’s
activities was quick to reach Jordan. Mr Perring knew a Mr Paul Marshall who
worked for a company providing hospitality at events such as grand prix. Mr
Marshall was in contact with Mr Phillips and Mr Shorthouse. Mr Perring said
in F1 people seemed to know what he was doing before he did.
- It is apparent
from an e-mail sent by Mr Phillips to Mr Shorthouse on 26 January that Mr
Marshall had agreed to arrange a meeting between Jordan and Vodafone and indeed
that Mr Phillips had been told that Vodafone had a "budget of £50m per
year for three years starting 2002 and they have taken the decision to do
F1". Neither piece of information was accurate, but substituting Mr Haines
for Vodafone, US dollars for sterling enthusiasm for F1 but no decision, and
omitting the word "budget" they would have been close to the truth.
The e-mail also shows the tactical plan Mr Phillips had in mind. Mr Phillips
had told Mr Marshall "in the interests of getting this moving" that
13 February, when he was due to meet with Gallaher, was "the deadline".
In fact Gallaher’s option for 2002 was not due to expire until 28 February.
Ferrari Meeting:
25 January 2001
- The meeting
with Ferrari (Mr Todt) went sufficiently well for Brown to conclude that it
looked as if a "deal" was "going to happen". Mr Perring
was present at the meeting. His notes show that matters were discussed in
some detail. Ferrari repeated that it could not offer Vodafone team sponsorship
"at present", because Phillip Morris had first right of refusal
until the end of the 2002 season, but it was willing to offer an equal or
better level of secondary sponsorship to Shell. At the meeting it was agreed
to meet again on 9 February.
Jordan’s opening
proposal
- Mr Perring reported
to Mr Haines by an e-mail sent on Monday 29 January following the meetings
with McLaren and Ferrari and discussions he had with Mr Haines on Friday 26
January. He enclosed what he called a "rights package" which he
said he believed was achievable from both McLaren and Ferrari. This, with
a few adjustments, became "the benefits wish list" on which Jordan
relies as part of the contract it asserts. The e-mail also referred to a call
Mr Perring had received from Mr Jordan "this morning" to the effect
that Mr Jordan would welcome a meeting "as the title rights to the Jordan
team are available from 2002. However he is in ongoing discussions with B&H
which need to be finalised by February 14th if they continue".
The e-mail stated that Jordan was offering title sponsorship, "car livery
in Vodafone colours/brand", "a deal structured around incentives
and team performance" and an "entry level for 2002" at about
$30 to 50m but, Mr Perring added, he believed the title rights could be secured
for approximately $25m in 2002 rising to 30m in 2003 and 35m in 2004, a total
of $90m.
- Mr Perring sent
a further e-mail to Mr Haines on 30 January. Mr Jordan had rung again and
offered some dates for a meeting should Mr Haines be free. The e-mail also
included a copy of the latest "rights package" or "benefits
wish list".
Vodafone Board
Meeting 30 January
- The board of
Vodafone Group met on 30 January. The report by Sir Christopher Gent noted
the decision not to proceed with secondary sponsorship of McLaren in 2001
and stated "the issue of future involvement in motor racing remains open
but dependent upon the nature of the proposal and the willingness of local
operations to commit part of their promotional budget to such a group wide
initiative".
The Benefits
Wish List
- On 1 February
Mr Perring sent the benefits wish list by fax to Mr Jordan, Mr Todt and Mr
Sami. The faxed letters accompanying the wish list were in different terms.
The letter to Mr Jordan referred to a meeting arranged between him and Brown
"tomorrow"; stated that "the Vodafone meeting in Dusseldorf
was extremely positive and I’ve been given the remit from the European Board
to progress our conversations to a stage where we have a refined proposal
on the table by mid next week" (a statement which Mr Kieser, who did
not see the fax, did not consider to be accurate); enquired whether Mr Jordan
could meet Mr Haines at Brown’s offices on Tuesday 6 February; and (with my
emphases) continued:
"Tomorrow
I will get you up to speed with Vodafone’s ambitions and we’ll have the chance
to discuss the benefits programme in more detail. What I’d like to come away
with is a feel for what we know we can deliver and what may be problematical.
By way of a little more background information, Vodafone’s key criteria
for 2002 are as follows:
1. Team
sponsorship and maximum awareness of the Vodafone brand on the car
2. Category
exclusivity (Technology and Telecommunications).
3. Maximising
the hospitality and meeting opportunities at GPs.
4. Developing
Partnerships and Joint Ventures with the Team and Team Partners to generate
additional revenue streams."
- Mr Haines was
not aware that Mr Perring (and Mr Kieser) intended to meet Mr Jordan before
he did. They did meet at Monte’s restaurant in London on 2 February. Mr Haines
also said that the reference to "team sponsor" was true for Jordan
but, as he already knew, was not true for Ferrari or McLaren. That is clearly
borne out by the different terms of the faxes to those teams which recognised
team sponsorship was not available but asked if and when it might be. The
rights wish list itself also set out the alternative forms of sponsorship,
described team sponsorship as the "preferred option", referred to
an initial 3 year term with a 3 year renewal option, and contained an extensive
list of other "rights" expressed as bullet points.
Monte’s Restaurant:
2 February
- It was Mr Jordan’s
evidence that at their meeting at Monte’s restaurant he was told by Mr Kieser
and Mr Perring that Vodafone’s key criteria were title sponsorship giving
maximum awareness of the Vodafone brand and no involvement with tobacco. He
says he was also told that Mr Haines would decide on which team Vodafone would
sponsor. He agreed that Jordan would prepare a presentation for the meeting
on 6 February.
The 6 February
Jordan Meeting
- In the event
Mr Haines accompanied by Mr Dart, Mr Kieser, Mr Perring and Mr Marsall met
Mr Jordan and Mr Phillips on 6 February at Jordan’s premises in Silverstone.
The meeting included a presentation by Mr Phillips and dinner. It started
after 8pm and lasted some 2 hours. It was, as Mr Phillips said, a convivial
evening. Mr Haines described it as "a jovial banter-like discussion".
At some point in the presentation an exchange of glances between Mr Jordan
and Mr Haines led to Mr Jordan stopping the presentation and more general
conversation ensuing. This was the first occasion Mr Haines had met Mr Jordan.
He liked him. Although there is some uncertainty as to how far the presentation
had progressed before it was stopped, a hard copy survives. It included as
"Partnership benefits" "title sponsorship" for a term
of 3 years "with options to be discussed", product exclusivity "to
be determined", and the percentage of colouration of the cars "to
be discussed". Various car liveries were included which were combinations
of yellow and red and black and yellow. "The Cost" was shown to
be "$179 million (includes agency fee)" apportioned over the 3 years
(54m, 58m and 67m) plus race bonuses capped at $5m a year and a championship
bonus to be discussed.
- Jordan places
some considerable reliance on this meeting. In particular both Mr Phillips
and Mr Jordan (supported by Mr Perring) say that on at least two occasions
Mr Haines issued a challenge to Jordan that if Jordan would there and then
accept a particular livery and a total of $150m "the deal was theirs".
Mr Phillips is said to have reacted to the challenge by saying he needed to
check Jordan’s other commitments on livery and would let Vodafone know in
24 hours what they were. Mr Jordan and Mr Phillips say Mr Haines said that
Vodafone had decided on F1 sponsorship, he had authority to choose the team
to be sponsored and to negotiate contractual terms and Ferrari had been rejected
because title sponsorship was not available, it had a strong continuing association
with tobacco and the Ferrari brand would overshadow the Vodafone brand.
- Mr Haines accepts
that he issued a challenge (to his and Mr Kieser’s recollections referring
to $140m not $150m) as he put it to try to get some "realism" on
livery and money into the discussions. He had previously been told that the
car could be all red (Vodafone’s colour) but at the meeting it had seemed
that was not the case. He had been told the price was $90m, now it was double.
He said no one could sensibly have believed in the context of a first exploratory
meeting of this kind that such a challenge could be seen as a contractual
offer. Mr Kieser said Mr Haines and Mr Jordan were sparring. I am sure Mr
Haines is right about this. It is commonsense. Mr Phillips nonetheless sought
to suggest that this was an offer which if then accepted would itself have
given rise to a binding legal commitment. I would characterise that evidence
as fanciful.
- Mr Haines denied
that he said Vodafone had decided on F1 sponsorship or that he had authority
to choose the team. Again I accept that. Neither would have been true and
I see no reason why Mr Haines should lie about them. On the other hand I am
sure that (rightly) Jordan was given the impression that Mr Haines’ recommendation
would be a major factor in Vodafone’s decision and that the perceived problems
with the Ferrari proposal were mentioned. Mr Haines (supported by Mr Kieser)
also said, and I accept, that he made it clear that so far as Gallaher was
concerned if Jordan had to go ahead and sign with Gallaher then Jordan should
do so.
- Brown prepared
a "Contact Report" of the meeting. Mr Perring agreed it was accurate.
It included (with my emphases) the statements that:
"A
3 year initial contract with option to renew for 2 or 3 years was discussed.
….
EJ
looking for a financial commitment in the region of $150m net over three
years … EJ to confirm in writing exact figures … by weekend.
Honda
have a 3 year commitment to supply … engines running 2001-2003.
Deutsche
Post. Contractual commitment to black typeface on yellow background colour
and prominent positioning. Ian Phillips to confirm flexibility of the contract
in respect to Vodafone spend and positional requirements by 09.02"
Ferrari
- Ferrari (Mr
Todt) responded to Mr Perring’s fax sent on 1 February by a fax dated 7 February.
Mr Todt confirmed that Ferrari "would be glad to grant you a package
that would be more substantial than that of Shell" and "could envisage"
the possibility of Vodafone replacing Phillip Morris at the expiry of the
current agreement. The fax said some of the wish list could not be granted
and it should be addressed in detail at the meeting arranged for 9 February.
Mr Perring’s
fax: 8 February
- On Thursday
8 February Mr Perring sent a fax to Mr Haines (which Mr Haines sent on to
Mr Harris) to bring him "up to speed" on all Mr Perring’s discussions
and to set out a timescale for the next 14 days. Mr Perring recorded that
he was due to meet Mr Todt (Ferrari) the next day and Mr Sami (McLaren) on
15 February and that in each case title sponsorship was unavailable. He also
referred to Toyota and Benetton and then to Jordan. Mr Perring recorded that
he had asked Mr Phillips to clarify Jordan’s existing sponsor obligations.
Mr Perring sought "a mandate to progress the Jordan discussions a stage
further, based on our conversation in the car on the way back from Silverstone."
He added "the mandate is by no means an authority to commit Vodafone
to any agreement but merely your sanction for us to proceed with the due diligence
necessary to establish the most accurate position". The suggested basis
for the negotiations was a 3 year term and 2 year renewal option, "fees"
totalling $150m over the 3 year term (net figures which "do not include
any commission") plus bonuses. Mr Perring said Brown would produce various
livery designs for the likely livery obtainable from Jordan. Finally Mr Perring
said he would have "team comparisons" ready for Mr Haines’ meeting
with Mr Gent "where hopefully there will be a clear Team opportunity
which suits Vodafone’s strategic ambitions". Mr Haines did not reply
to this fax. Mr Haines was due to meet Sir Christopher Gent to discuss global
branding on 19 February.
- The reference
to the "conversation in the car" was to the return journey from
the Jordan meeting. In the car Mr Haines was enthusiastic about Jordan and
keen for Brown to get the best proposal they could from Jordan.
Jordan’s obligations
to DP
- As agreed at
the 6 February meeting Mr Phillips faxed Mr Perring on 8 February a document
"outlining Jordan’s commitments for 2002". They included, with reference
to DP, "Car: engine covers, chassis side, front wing endplates, black
on yellow". No longer the red car said previously to be available.
Ferrari:
9 February
- Mr Haines, Mr
Kieser and Mr Perring duly met Mr Todt on 9 February. After the meeting a
document was drawn up to record what had been discussed and was available
from Ferrari. It is a very substantial document. Team sponsorship was shown
to be "unavailable at present"; the status of principal sponsorship
was "available". Most of the other items on the list were "agreed"
or available save for "right to develop a composite identity", and
the detail of branding availability on team clothing and the like was addressed.
Mr Todt’s "summary" included the words:
"A
significant package, elevating Vodafone to principle (sic) sponsor position
above Shell."
Mr
Todt said, and I accept, that Ferrari was enthusiastic about Vodafone’s approach.
This document bears him out. Mr Haines also thought the meeting a success.
Mr Harris
- Mr Harris responded
to Mr Haines about the benefits wish list on 12 February raising basic questions
about Vodafone’s strategy and what it was seeking to achieve by F1 sponsorship.
He also expressed the opinion that Jordan’s bonus criteria were inappropriate.
On 14 February Mr Harris passed on the concerns about Vodafone’s strategy
to Mr Perring. Mr Haines said he was pleased that Mr Harris was asking the
right questions.
The 10 February
Jordan/Brown meeting
- On Monday 12
February Mr Jordan wrote to Mr Perring and Mr Kieser. They had met at Mr Jordan’s
London flat on Saturday 10 February. The letter was about figures. It included
the following:
"You
will note that our original proposal was US$ 163million with a 10% commission
to your agency, giving a total of $179. Having fully evaluated the potential
loss of several existing sponsors … I have been able to trim the net figure
to Jordan by a small amount. This total is US$ 157.5 million to include all
the benefits detailed in our proposal. I repeat that this is a bottom line
net figure to Jordan, no agency commission is included."
The
letter concluded by referring to "Key meetings with our existing title
sponsors in the near future" and the need for "an early indication
of your position".
- Mr Kieser also
wrote to Mr Jordan on 12 February following the Saturday meeting. The letters
probably crossed as Mr Kieser’s letter refers to the fact that the Saturday
meeting had not agreed upon a sponsorship figure and Mr Jordan was to produce
one. Mr Kieser copied his letter to Mr Haines who accepted that he had received
it. The letter sought to confirm "the salient points" of the Saturday
meeting. It is an important letter. The emphases are mine. Mr Kieser wrote:
"We
await your written confirmation regarding the Jordan sponsorship deal
for 2002/2003/2004. I emphasise that as Vodafone needs to conclude their total
marketing plan, including sponsorships, by the morning of Friday 16th
February, we do request that you respond as promptly as possible. We would
anticipate that by Thursday 15th February, Jordan could confirm
the sponsorship package detailing full sponsorship apparel and livery,
auxiliary applications, costs and reassurances regarding the possible settlement
with conflicting sponsors. We would welcome a meeting with our legal council
(sic), Stephen Townley, in order to draft in principle, Heads of Agreement.
Vodafone would finalise a decision by Friday 16th February, and
in turn obtain Board approval by Monday 19th February
….
The
current visual conditions of brand exposure for the Jordan team sponsorship
was tabled, detailing the agreed livery and team applications for Deutsche
Post, Honda, Infineon, Bridgestone, Legg Mason Investors, Mastercard, Brother,
Imation and Danzas/DHL. It was confirmed that even though Deutsche Post
currently requires their identity to be applied black on yellow, that a joint
presentation would suffice to obtain their agreement for application of white
reversed out of black, or black on base white. We were comforted to learn
that in the event of Deutsche Post not agreeing, Jordan will pursue the potential
sponsorship with Nestlé, with whom you have had preliminary negotiations.
The other co-sponsors, Bridgestone and Mastercard, would be retained as is,
as well as Honda.
We
do record your concern, as expressed at the meeting, that if the new team
design called for a base application other than the current yellow, Jordan
might wish to retain the team Jordan identity in year one, utilising the Jordan
yellow in your logo type. You did however emphasise that this was not an imperative,
but merely a request. The meeting discussed the potential 3 year sponsorship
contract and we wish to confirm that the cost of the sponsorship would be
gross including the agreed and acknowledged 10% agent commission. The meeting
could not conclude a realistic sponsorship figure and team Jordan would
rework the 3 year budget to respond no later than Monday 12th February,
in writing. Jordan would present the optional cost of termination and substitution
of the Lucent Technology sponsorship for the current year, net of commission.
BROWN
KSDP confirmed that the various team design proposals were currently being
prepared to be presented to both client and team Jordan by Thursday afternoon.
The meeting was adjourned.
We
look forward to receiving your proposal."
- It is clear
from other documents that Mr Kieser misunderstood the nature of Mr Haines’
meeting with Mr Gent on 19 February. The letter does however plainly refer
to the Vodafone process including "Board Approval" albeit Mr Boyle
pointed out that it said the "decision" would be finalised before
the approval. No "Heads of Agreement" were ever drafted "in
principle" or at all. The problems of the colouration of the car were
plainly stated.
Gallaher and
Jordan
- It was on 13
February that Gallaher and Jordan met and agreed that Gallaher would not continue
as title sponsor in 2002 but would become a secondary sponsor (see paragraph
12).
Jordan’s 15 February
e-mail and 14 February meeting with Brown
- There was a
further meeting between Mr Jordan, Mr Phillips, Mr Kieser and Mr Perring at
the Hilton Hotel at Heathrow on the 14th February. It is referred
to in an e-mail from Mr Phillips to Mr Perring sent on the morning of 15 February.
The e-mail is one of the documents on which Jordan relies for the alleged
contract. The e-mail (with my emphases) included the following:
"Vodafone
rights.
Under
the terms of the contract Vodafone will be the primary presenting sponsor.
The team logo will be similar in proportion to the attached drawing; Vodafone
will be permitted to use other brand names to which it has the rights … in
any of the branding areas granted to it under the contract provided that ….
Fees
net to team.
Contracted
fee: 2002 US $39m, 2003 $50m, 2004 $52m.
NB.
the 2002 fee is subject to the car being predominantly black and yellow
in respect of Jordan’s existing contractual obligations.
Lucent
Technologies
In
the event that Jordan and Vodafone conclude Heads of Agreement or full contract
… Jordan will immediately initiate discussions with Lucent ….
Performance
Bonus.
Vodafone
will pay to Jordan a performance bonus each year based on its race performance
on the following scale-
World
Championship (constructors)
1st
place $5m
2nd
place $3m
3rd
place $2m
In
each Grand Prix
1st
place $5m
2nd
place $500,000
3rd
place $250,000
plus
$100,000 per world championship point scored.
Appearance
bonus
US
$3m in each championship year providing the team classified eighth or
higher in the Championship."
- Thus Jordan’s
proposal required a predominantly black and yellow car for 2002 (albeit with
a lower fee) and performance bonuses and did not include any option to extend
the three-year term.
- Mr Phillips
said that at the meeting Mr Kieser had made it clear that $150m could not
be exceeded and any performance bonus would require separate discussion. The
terms of Jordan’s proposal are, however, plainly set out in his e-mail and
included bonuses. There is not (and on the evidence could not be) any suggestion
that Vodafone ever agreed to predominant black and yellow colouration for
any year.
Mr McNally
- On 16th
February Mr Kieser wrote to Mr Haines. They had met Mr McNally that morning.
Mr McNally was a director of Allsports and was responsible for F1 track signage.
The letter records that Brown would also pursue discussions with Benetton
about title sponsorship and that Mr Perring had arranged to meet Benetton
that afternoon. It records Mr Kieser’s agreement with Mr Haines’ "strategy
of ‘going underground’ for a week or so," and refers to a meeting Mr
McNally wished "to facilitate" which was in fact to be a meeting
between Mr Haines and Philip Morris in Lausanne. Mr Kieser wanted to be invited
to the meeting and to "pursue negotiations with the Ferrari team on your
behalf". In the event he was not invited. Despite Mr Boyle’s submission
that it was plainly the arrival of Benetton on the scene which explained it,
Mr Haines said, and I accept his evidence, that his reason for "going
underground" was to get time to catch his breath and prepare for the
meeting with Sir Christopher Gent which covered the whole global rebranding
project. He was on his own at the time but knew new colleagues would be joining
shortly. He also said that in their conversation Mr McNally had made him think
that title sponsorship would not necessarily deliver maximum brand awareness.
Mr Perring and
The Revised Proposals
- Also at this
time, and on Monday 19 February, a Mr Tazzioli of Ferrari’s sponsorship department
(at the request of Mr Todt) was trying but failing to get in touch with Mr
Perring urgently to explain some drawings attached to e-mails which he said
Mr Perring would need "for the Vodafone presentation tomorrow" and
which Mr Tazzioli said Mr Perring would see made "the visibility of Vodafone"
"very dominant". Mr Tazzioli told Mr Perring that he had therefore
spoken directly to Mr Haines to give him the same information. It is perfectly
clear from Mr Tazzioli’s e-mails that Ferrari were keen that Vodafone should
have their proposals. Mr Perring’s attempts to explain his apparent lack of
interest in what was being said were not easy to follow and did him little
credit.
- On Tuesday 20
February Mr Perring did forward to Mr Haines Jordan’s "revised offer"
which, in agreement with Mr Boyle, I think must be a reference to Mr Phillips’
e-mail sent on 15 February. He also forwarded "revised offers" from
Ferrari and McLaren. Mr Perring agreed with Jordan to keep Mr Haines informed
of Jordan’s renewal deadlines with Gallaher. Mr Jordan had told Mr Perring
that they needed to be addressed "one way or the other, by the end of
the month." In fact Mr Jordan knew by no later than 13 February that
Gallaher was not going to be the team sponsor of Jordan in 2002 (paragraph
12).
Vodafone Internal
Meeting 21 February
- It is apparent
from Mr Phillips’ notebook that Mr Perring kept him informed about the timing
of the presentation to Sir Christopher Gent which was moved from 19 to 21
February. He also told Mr Phillips that Benetton had emerged as a late contender.
Mr Phillips acknowledged, as his note of this conversation makes clear, that
he knew Sir Christopher was going to be closely involved in any decision or
recommendation to the Board.
- Mr Haines made
the presentation to Sir Christopher Gent and Mr Geitner in Dusseldorf on 21
February. The written presentation is available. 5 teams were referred to
but one of them (Toyota) it is agreed was never a serious contender. The others
were Benetton, Ferrari, Jordan and McLaren. Each had a "cost" figure.
Jordan’s cost was shown as $150m including the $3m a season "appearance"
bonus. The "next steps" noted in the presentation were to conclude
with a "sponsorship decision" on 5th April. Sir Christopher
was keen on a number of options including Jordan and Ferrari. No decisions
were taken apart from the process and timetable.
- Mr Haines, Mr
Harris, Mr Perring and Mr Kieser met following the presentation to Sir Christopher
Gent. This was the occasion on which Mr Harris was first introduced to Mr
Kieser and Mr Perring. Mr Kieser made some notes of the meeting. They record
that decisions would be made and announced by mid-April. Mr Perring prepared
his own typed notes (written on 24 February) of the meeting. They include
the fact that Mr Harris would be the day to day contact on the project but
Mr Haines would continue to talk to Mr Todt, Mr Jordan and Mr Briatore. The
notes also recorded:
"The
final decision will be made mid-April. In the meantime PH and CP (Mr Harris
and Mr Perring) would prepare a document for Mid-March which addressed the
question of ‘what Vodafone wants to get out of the project’ both in terms
of awareness and joint venture opportunities. DH (Mr Haines) advised that
Ferrari, Jordan and Benetton were the most favoured teams."
"Next
Actions" included a request by Mr Haines that "all information be
compiled by the end of March for mid-April decision".
- If Mr Perring
had thought on 23 January (paragraph 39) that Mr Haines was entitled to sanction
the investment, as he acknowledged in cross-examination he must now have known
otherwise and he also knew that the final decision would not be made before
mid-April. Such was Mr Perring’s relationship with Jordan I agree with Mr
Aldous that it is not credible that this timetable was not also known to Jordan.
Indeed there was no reason not to inform Jordan of it and every reason to
do so. There is also other evidence to show that Jordan was indeed aware of
it.
Philip Morris
and Benetton
- On 23 February
Mr Haines and Mr Harris met Mr Hogan (European Marketing Director of Phillip
Morris) in Lausanne. Mr Haines described their discussion as "positive".
Mr Haines also met Mr Briatore for the first time on 23 February when they
discussed the possibility of Vodafone sponsoring Benetton and agreed to meet
again. They did meet again, with Mr Harris, on 8 March.
- According to
Mr Phillips, on 1 March in Melbourne, Mr Perring told him that Vodafone were
now only looking at Jordan and Benetton. That was wrong.
Vodafone Executive
Committee
- On 1 March the
Vodafone Group Executive Committee met. The minutes record that "discussions
were being held with both Ferrari and Jordan for the Formula One season for
2002. A further report on progress would be made to the next meeting".
The next meeting was scheduled for 5 April.
Livery A2
- Mr Perring was
working on designs for a Jordan car with Vodafone title sponsorship. On 7th
March he sent some designs to Mr Phillips which were described as "purely
conceptual". One of the designs (denoted A2) had the minimum of yellow
and plainly would not have met the contractual obligations of Jordan to DP
as described by Mr Phillips on 8 February (paragraph 57).
- Further designs
were sent forward to Mr Phillips later on the same day "to give you a
feel for what is possible". Mr Phillips’ response was that "somewhere
in there is the combination which will satisfy everybody. The important thing
is that we can convince David that he will get the dominant branding; we can
work around our existing people when we have achieved that".
Livery C2
- Mr Perring arranged
to meet Jordan on Thursday 8 March. On that day he sent yet further designs
to Mr Phillips saying "the yellow/red version (C2) was one that David
(Haines) found interesting … needs a lot of work but has some potential."
"C2" can perhaps best be described as rather more red than yellow
but no black.
Preparation for
the Brand Council
- There was to
be a first meeting of the new Brand Council of Vodafone on 15 March in Dusseldorf.
Mr Haines sought the views of the operating companies in advance of the meeting
by an e-mail sent on 7 March. The e-mail stated there were three options for
Vodafone: focus on a front row team such as Ferrari or McLaren; negotiate
with a less high profile team "such as Jordan or Benetton… but where
we may be able to achieve more brand exposure on the car" and focus on
trackside advertising alone. Plainly title sponsorship was not the only option
in Mr Haines’ mind. Mr Haines had two responses before the meeting, from Italy
and Greece. Both favoured Ferrari.
9 March Meeting
- Mr Haines and
Mr Harris met Mr Jordan and Mark Gallagher for breakfast in Dusseldorf to
introduce Mr Harris. Mr Haines’ evidence, which I accept, is that he told
Mr Jordan that a recommendation relating to F1 sponsorship would be made in
early April. It was proposed that Mr Gallagher and Mr Harris should have discussions
on joint product development. Mr Jordan and Mr Gallagher were also shown a
Ferrari car in Vodafone mock-up.
The 13 March
Vodafone Group Board Meeting
- On 13 March
there was a Vodafone Group board meeting. Sir Christopher Gent reported that
"during the next months all the operating companies will be invited to
participate in the decision on whether to go with a high profile branding
sponsorship in motor racing which will either feature participation in the
Ferrari team or brand leading sponsorship of Jordan".
Benetton again:
13 March
- Mr Haines and
Mr Harris met Mr Flavio Briatore of Benetton on 13 March at Benetton’s premises
at Silverstone. They were impressed. Mr Briatore also arranged for them to
meet Mr Ecclestone on 26 March.
The Draft Contract
- On 14 March
Mr Phillips sent Mr Perring "a draft contract". He said "there
are a number of notes and blanks in it but it should give you an idea of where
we are coming from". Mr Phillips said that Mr Perring had requested a
draft. The draft contained 21 clauses and 5 proposed schedules and 6 proposed
appendices. It was drafted by Jordan’s solicitors. Most of the Schedules and
Appendices were completely blank apart from titles. It is apparent even from
a glance at the draft that, for example, the colour of the livery had not
been agreed and would be the subject of detailed provisions and depictions;
intellectual property rights would be the subject of detailed provisions some
of which had not been drafted at all; provisions for sponsorship fees and
bonuses were left blank; and "renewal option" was "to be discussed".
Mr Perring
- At some date,
probably in early March, certainly before 14 March, both Mr Kieser and Mr
Perring accept that Mr Kieser warned Mr Perring that Vodafone believed he
had become too close to Jordan and was not giving objective advice to Vodafone.
That indeed was the view Mr Haines had formed and expressed to Mr Dart and
Mr Kieser.
- Notwithstanding
the warning there is a remarkable e-mail from Mr Perring addressed to Mr Jordan
and Mr Phillips at 17.01 on 14 March. The e-mail starts by saying "…
we’re nearly there. As you have gathered there is a bit of indecision creeping
in and we need to contain/manage it". The basis for this was the meeting
with Benetton on 13 March from which it is said Mr Haines and Mr Harris came
away thinking Benetton had the edge. The e-mail continues (with my emphases):
"Quite
frankly, I don’t think the Benetton proposition will hold up…….. the car is
crap and will be for a few years from what I can gather and they don’t offer
the ‘ownership’ that Jordan does…….. However, Flav is talking the talk and
they are buying it and I don’t have enough F1 experience for them to rely
on my word as gospel. I also have to be careful about how much I character
assassinate him in case they think I’ve been bought!!!
I
think the decision making process could become very subjective and every little
aspect could count……can you therefore have a think about the following.
David
is meeting Chris Gent next week to discuss the two options …… principally
car branding in which you have a massive advantage.
Ultimately
we could do with having Gents support and it may be time to wheel Peter Sutherland
in at the appropriate time if Chris has the casting vote.
2….
3….
4….
5.
Performance related fees – have a think about this, but they are taking
an interested view on it – of course Flav doesn’t care if he has to give anything
back because he has Renault support, but there needs to be an element which
says if you don’t finish in the top 3 of the constructors in 2002, you give
some money back…..similarly , put in a bonus structure for finishing top 3
and above and podiums and wins etc…..all based around $150m over 3 years….
6….
7.
Honda – could be key but tricky to involve at the moment….. I’d love to gauge
their interest in Vodafone becoming Team sponsor next season, it could get
them really excited and that can be passed to David….. if he knows there is
a Honda to counterbalance Renault, then he’s going to feel a lot more comfortable
8.
Eddie - the key to David…….need to build on the momentum from last
Friday without appearing to sell yourself too hard…..you know Flav’s game
and I imagine he’s like a dog with a bone…could play into your hands but maybe
on return from Malaysia and armed with great results you should have another
meet….probably be the last one before any decision is made and we know how
David seems to be on-side with whoever he has seen last. Don’t bypass Harris
either, he’s pretty influential and needs to feel he’s being courted as well.
Just
for info……I’m having lunch with Paul Jordan tomorrow, hoping to get an inside
steer on Benetton and I think David and Peter are meeting Bernie around
the 26th – don’t know if he’ll be asked his opinion, but
Flav has given the impression he has the best working relationship with him
of all the team bosses.
Have
a great race…… I’ll keep you updated from my end……..i needn’t say it, but
keep this confidential or they’ll be convinced my blood runs green!
Thanx
also for the draft contract – I’ll read through it and forward to Peter
– on first look it demonstrates the level of commitment you’re prepared to
make which is very positive.
Charlie"
- Whilst it may
be superfluous to comment on the nature of such a communication there is within
it some important information:
- The need to
have Sir Christopher’s support in a vote recognises the level of decision-making
at Vodafone which in any event I think to be a matter of commonsense;
- It would not
have escaped Jordan’s notice that Mr Haines and Mr Harris were to meet Mr
Ecclestone ("Bernie") on 26 March who might ‘promote’ Benetton;
- The need to
build on the perceived "momentum" was stressed.
- Mr Jordan said
he had never seen this e-mail before he gave evidence. On a matter of this
importance to Jordan and in the light of what occurred subsequently (paragraphs
94 and 95) I regret to say I find that incredible. In any event I am sure
Mr Phillips would have told Mr Jordan what Mr Perring had said.
- One consequence
of Vodafone’s views on Mr Perring’s partiality was that he was, as he agreed
when giving evidence, "out of the loop" for a number of things that
occurred at Vodafone during and after March 2001 in particular with Ferrari,
McLaren and Benetton. The inference that he unknowingly presented a misleading
picture to Jordan as a result and that Jordan believed (wrongly) that they
had an inside track is compelling.
- Indeed also
on 14 March Mr Perring sent an e-mail to Mr Harris saying that he had spoken
to Ferrari when they had called him that day and "I have the impression
they still think they are in with a shout… can you advise what the status
is and whether you or David are writing to them advising of your decision."
This e-mail is one of those which only became available upon examination of
the hard disk of Mr Harris’computer. It was of course sent by Mr Perring to
whom Jordan plainly had access. Mr Perring made no reference to it in his
evidence.
- Mr Boyle submitted
that this e-mail was clear evidence that Vodafone had decided by 14 March
not to pursue sponsorship of Ferrari and that was because title sponsorship
was a key criterion and Ferrari had a tobacco company as title sponsor. That
submission, as will be seen, is simply wrong as a matter of obvious fact.
Mr Perring may have thought it was the case but even he had found out otherwise
before 22 March: paragraph 109.
The Brand Council
on 15 March
- The Global Brand
Council did meet for the first time on 15 March. Representatives of Omnitel,
D2 and Vodafone UK were present. They were the three largest and most important
operating companies in the Vodafone Group. Mr Harris prepared a presentation
for the meeting. The timetable for a decision once again showed "final
proposals" by the end of March and a final position by mid-April. The
presentation showed Benetton, Ferrari, Jordan and McLaren all in contention.
- No decisions
were taken at the meeting. Mr Geitner said there was "a strong set of
people amongst my colleagues who were in favour of Ferrari". Mr Haines
said the representatives of the German and Italian operating companies favoured
Ferrari. So did the UK representative. The German representative was particularly
attracted by the fact that Michael Schumacher was the No 1 Ferrari driver.
Both the Italian and UK representatives were also positive about the Jordan
title proposal with total domination of the car’s livery. Mr Haines and Mr
Harris said in their own minds Jordan was slightly ahead at the time.
Jordan’s 15 March
letters
- On 15 March
Mr Jordan wrote to Dr Jung (Infineon) and Mr Sutherland. I do not think that
was a coincidence following Mr Perring’s e-mail of the previous day. The letter
to Dr Jung informed him "on a confidential basis" "that we
are very close to a major sponsorship deal with Vodafone". It recorded
Mr Jordan’s understanding that Jordan was in direct competition only with
Benetton and that "a decision is due in ten days time". It also
asks Dr Jung "perhaps cheekily" if he would "make a recommendation
on behalf of Jordan to David Haines and Chris Gent".
- The letter to
Mr Sutherland stated that Mr Jordan understood Vodafone were "on the
precipice of a decision between Jordan and Benetton; we expect to hear within
the next ten days". It sought "any good reference to Chris Gent
regarding Jordan…." Plainly Mr Jordan was aware of the importance of
Sir Christopher Gent’s opinion in any Vodafone Group decision.
- The "understanding"
that only Benetton was a competitor was plainly erroneous. Another e-mail
from Mr Perring to Mr Harris recovered from the hard disks of Mr Harris’ computer
was sent on 15 March. It was intended to sabotage any proposal for title sponsorship
of Benetton by suggesting Benetton’s contractual arrangements precluded it
giving Vodafone the lead name in the team and raising other concerns. It is,
however, quite clear on the documents that Benetton was offering title sponsorship
with a lead name and that in Vodafone’s perspective that remained a live option
both before and after 22 March.
Mr Jordan and
Dr Jung
- Mr Jordan said
that following his letter to him, Dr Jung had telephoned on 18 March and told
Mr Jordan that he had spoken to Sir Christopher who had confirmed that the
choice of F1 team was "up to David Haines". This is the conversation
relied upon by Jordan in support of the "authority" of Mr Haines.
Dr Jung’s evidence was that he had spoken to Sir Christopher as requested
and been told that Vodafone’s F1 proposal was being prepared by a particular
individual (he could not remember the name but assumed it was Mr Haines) and
that once it was completed the Vodafone Board would then decide who to sponsor.
He said that in any event it was not his understanding that the individual
would bind Vodafone in any F1 deal and he "certainly did not subsequently
say anything of the sort to Eddie Jordan". Dr Jung was a patently honest
and truthful witness and I reject Mr Jordan’s evidence.
The 19 March
Livery
- On 19 March
Mr Perring sent Mr Phillips yet another design for the car. He expressed the
hope that "it complies with other sponsor requirements and is beginning
to look like a Jordan again". It is this livery which Jordan relies upon
as the one which formed part of the "deal" on 22 March. It was a
mix of substantially yellow and red. It drew the wholly unsurprising response
from Mr Phillips the next day that he thought it was "probably too much
like a Jordan!!" adding that it obviously suited Jordan perfectly well
and he would still be prepared to develop design A2 "which may give David
more of his stated dominant branding". In his evidence, Mr Phillips nonetheless
sought to suggest that as the design came from Brown he believed it came with
Vodafone’s approval. His own e-mail belies that. Mr Haines said, and the documents
support him, that Jordan yellow was a contentious point throughout -which
was never resolved.
- The highest
Mr Boyle put the matter of livery in his written closing submissions was that:
"By
19/3/01 it is submitted that it was clearly established that a livery acceptable
to both parties had been arrived at. Obviously, the absolute final form of
the livery would be a result of continued development. What was important
was that livery was perfectly capable of agreement in a form which satisfied
the requirements of Jordan and Vodafone. It followed from that that Jordan’s
proposal for title sponsorship now included a number of different designs
which were acceptable to Vodafone so that the last core element of a Formula
1 contract was in place."
- That submission
considerably overstates the fact. It was not put to any Vodafone witness for
comment. It in any event acknowledges both that livery was a "core element"
of any agreement and that it was not agreed.
Mr Harris’ Presentations
- Mr Harris said,
and I accept, that whilst in Atlanta (where he lived at the time) on Tuesday
and Wednesday 20 and 21 March he prepared various drafts of a presentation
building up to the meeting with Sir Christopher Gent now to be held on 21
March. Mr Geitner said he had never seen the drafts. Mr Harris said he did
not in the event use parts of them. Again I am sure they are right about this
as the final form of the presentation is in the papers. Mr Boyle placed some
considerable reliance on tables included in the drafts which contained a points
scoring system (in fact devised and provided by Mr Perring) for various attributes
and the extent to which they were available from the four teams (Jordan, McLaren,
Benetton and Ferrari) addressed. The tables prepared by Mr Harris resulted
in Jordan scoring best and thus being "first choice", unless McLaren
could provide title sponsorship. Mr Harris said he had prepared these tables
but not used them in any presentation because he had decided that some of
the attributes were much more important to Vodafone than others. Again, I
unhesitatingly accept this evidence. Mr Harris indeed later prepared his own
scoring table in his notebook (paragraph 146). Both Mr Harris and Mr Haines
said that by this time they were not taking Mr Perring too seriously as he
was obviously promoting Jordan. The terms of an e-mail dated 20 March from
Mr Perring to Mr Harris and Mr Haines containing his assessment more than
sufficiently bears out their views. It is also clear from the e-mail that
Mr Perring knew no decision was to be made that week as he expressed a wish
to debate the pros and cons with Mr Haines and Mr Harris "next week".
Once again Mr Harris’ drafts (like the final presentation) set out the process
and chronology of Vodafone’s decision-making starting with "approval
of plan by Chris Gent & Board – March 26/April 12".
McLaren and title
sponsorship
- The reference
to McLaren and title sponsorship was a reference to a very recent and very
confidential proposal made by McLaren. Mr Harris (as his diary shows, and
he and Mr Sami said in evidence) met Mr Sami on 14 and 20 March to discuss
a McLaren title sponsorship proposal. It was very confidential because of
McLaren’s existing contractual commitments. The proposal led to an e-mail
from Mr Harris to Mr Haines sent on 20 March which referred to a priced proposal
for a 4 year deal. Mr Sami is said to have being willing to go to McLaren’s
board provided Mr Haines and Mr Harris agreed to propose McLaren as their
recommended option to the Vodafone Board. Mr Sami is also recorded as insisting
that the proposal should not be shared with Mr Perring or other external parties.
Mr Harris, however, had told Mr Sami he would be given an answer "by
noon" but he had stressed that Vodafone needed "to know for certain
that" McLaren could "make this happen before we go to our Board".
Mr Harris said that the noon deadline was moved and it was arranged to meet
again later. Mr Harris and Mr Sami both said, and I accept, that despite the
recorded risk of an impasse as to who might first commit themselves, this
was potentially an exciting proposal ("big on big") and they were
looking at ways of trying to find solutions for some days. Indeed on 26 March
at the Metropolitan Hotel in London Mr Sami made a presentation to Mr Haines
and Mr Harris of possible Vodafone branding on the McLaren car. Mr Haines
and Mr Harris said that it was only on 28 March that the proposal came to
a halt, when Mr Sami came to Dusseldorf with another (in effect secondary)
sponsorship proposal because it had been realised that title sponsorship could
not be achieved.
- It was part
of Jordan’s case that the McLaren title sponsorship proposal had been rejected
by the time Mr Haines spoke to Mr Jordan and Mr Phillips on 22 March. Plainly
it was rightly recognised that, if it had not, the likelihood of Mr Haines
then making a binding agreement with Jordan was greatly reduced. The evidence,
including the documents and the evidence of Mr Sami, overwhelmingly establishes
that the proposal was still alive on 22 March and for some days thereafter
and known to Mr Haines to be so. The consequence is as Jordan recognised.
The basis for much of Jordan’s cross-examination on this issue was a document
which was dated to 22 March entitled "Vodafone/McLaren – Partnership
Summary" which referred to Vodafone becoming "title partner (effective
2007)". In fact that was a ruse to ensure the secrecy required for the
proposal by McLaren. What it in fact does is further to demonstrate that the
proposal was the subject of considerable continuing work on 22 March itself.
Gallaher 20 March
- It was on 20
March that Mr Phillips wrote to Mr Jenner of Gallaher about their sponsorship
agreement as I mentioned in paragraph 13 of this judgment. The letter refers
to a conversation between Mr Northridge and Mr Jordan the previous day and
was intended to clarify "our mutual criteria for extending our agreement".
In fact it is a classic stalling letter in effect saying that Jordan did want
to extend the relationship along the lines discussed (plainly as a secondary
sponsor) but needed first to explore the opportunities available to find a
title sponsor.
Benetton’s proposal
- On 21 and 22
March Mr Perring was engaged in preparation of a summary of the Benetton proposal.
The "Team Name" was shown as "Vodafone Renault". It is
therefore apparent that the Benetton title sponsorship proposal was also being
worked on on 22 March itself. Indeed as late as 17.13 on that day Mr Briatore’s
assistant was sending Mr Perring amendments he had made to the proposal.
- It was, however,
also a significant plank in Jordan’s case, for the same reason as McLaren,
that by the time of the 22 March telephone call between Mr Haines and Mr Jordan
and Mr Phillips the Benetton proposal had also been rejected and Jordan was
the only acceptable option available to Vodafone as Vodafone was committed
to a title sponsorship and so Ferrari was also not acceptable.
- The foundation
of Jordan’s contention about Benetton was a witness statement of Mr Paul Jordan
(paragraph 19 above). In that statement he said that "on about 22 March
2001 Ted Brezina called me to say that he had heard that Benetton would not
be sponsored by Vodafone and that Jordan were to be sponsored. I immediately
passed this information on to Ian Phillips at Jordan". This statement
was further expanded in a second witness statement dated 14 June 2003 in which
Paul Jordan said he had spoken again with Mr Brezina "who remembers being
told that Benetton would not be sponsored by Vodafone. He does not recall
who told him but that it was from a Benetton employee". Mr Paul Jordan
also says he made a note of Mr Brezina’s call to him which is written on the
back of a note dated Thursday 22 March and before a draft prepared on the
following Monday. There is indeed a note which reads "Vodafone Ted-B’TON
No Deal – Gone to Jordan". There is also a note in Mr Phillips notebook
said to be of his conversation with Mr Paul Jordan which reads "Ted Brezina
Charlie Perring leaked to Ted". That is curious if Mr Paul Jordan had
been told Mr Brezina got his information from a Benetton employee. It is also
curious that Mr Brezina should be told on 22 March by anyone that the sponsorship
had gone to Jordan before Mr Haines had even spoken to Mr Jordan. Even Mr
Perring did not believe any decision was made on 22 March.
- It is not easy
to comment on such second-hand evidence when it is flatly contradicted by
the documents. There can sensibly be no dispute that Benetton remained a live
possibility for sponsorship by Vodafone both at and after 22 March. Mr Perring
himself was still working on it, although he did say that he was told by Mr
Haines on 22 March that Benetton had been dropped. What I do think is likely
and indeed is readily accepted by both Mr Haines and Mr Harris is that at
this time they saw Jordan as a better prospect than Benetton and, though with
less certainty, as a better prospect than Ferrari. But it is perfectly plain
that no decision had been taken to reject Benetton and I reject Mr Perring’s
evidence that he was told otherwise by Mr Haines. It is however, I think,
highly probable that encouraged by Mr Perring and their own efforts Mr Jordan
and Mr Phillips may well have believed that Jordan was very much in pole position
if not alone on the grid and that with a little bit more effort they could
"get the deal". Mr Perring acknowledged in his evidence that he
was not aware of the level of discussions that Benetton were having separately
with Vodafone but thought from his perspective that Benetton had been discounted.
Ferrari at 22
March
- It is also clear
from a further e-mail sent by Mr Perring to Mr Haines at 6.24pm on 22 March
that Mr Perring had spoken to one of Ferrari’s legal advisers about Ferrari
sending a proposal and financial information to Mr Haines and that Mr Perring
believed that Mr Haines and Mr Todt were in touch with each other on the subject.
Jordan at 22
March
- Earlier on 22
March (at 11.06) Mr Phillips had sent Mr Perring an e-mail which converted
the US$ figures in his 15 February "note" to sterling (including
all the bonuses). Despite Mr Phillips’ evidence that the bonuses had been
rejected and his stated belief that they were in any event to come out of
"another budget" it is apparent that insofar as there was any proposal
from Jordan on 22 March the bonuses in the 15 February e-mail were and remained
part of it.
Orange
- There is a note
in Mr Phillips notebook of a conversation he had with Mr Perring on 22 March
which reads "used it to our advantage Red v. Orange us convert 15/2 figures
to £".
- It can therefore
be taken that this note was written before the e-mail referred to in paragraph
110. A number of the e-mails recovered from Mr Harris’ computer show that
on 21 and 22 March Mr Perring was telling Mr Harris that Orange (one of Vodafone’s
major competitors) was unhappy with its sponsorship of the Arrows F1 team,
was looking at other teams and had met with Jordan on 21 March. These e-mails
also make it absolutely clear that Vodafone was still pursuing proposals from
Benetton and that Mr Perring knew as much. Their target indeed was to drive
Vodafone from Benetton to Jordan.
- Anyone reading
these e-mails, let alone someone of Mr Harris’ experience, would at once realise
that they were a naïve and crude attempt by Mr Perring to demonstrate
to Vodafone that if it did not at once commit to sponsor Jordan then a major
competitor might very well do so. The e-mail of 22 March was entitled "Red
vs Orange" and so echoed Mr Phillips’ note to which I have referred in
paragraph 111 of the same date. The thrust of Mr Perring’s thesis was that
Orange would be happy for Vodafone to sponsor Benetton (in effect because
Arrows would always beat Benetton) but would withdraw from F1 completely if
Vodafone sponsored Jordan because Jordan would then always beat Arrows. Mr
Perring also stressed that Orange were aware of the "limited window of
opportunity" for it to agree to sponsor Jordan ("next Friday")
because of Jordan’s need "to re-commit to Benson & Hedges".
- Mr Boyle submitted
that it must have been apparent to Mr Harris and, through him, Mr Haines from
this information that "Vodafone needed to make a decision at once on
whether to commit to a deal with Jordan or risk losing Jordan to Orange in
circumstances where the work done by Brown … the previous day showed that
Jordan was the first choice". Hence, it was submitted, it was entirely
understandable that Mr Haines would have made a binding agreement with Jordan
on the telephone later that day and both he and Mr Harris must have deliberately
chosen not to refer to Orange in their evidence because it would be bound
to have been a significant factor in their thinking at the time.
- I reject this
thesis entirely. It simply cannot stand with the documents and commonsense.
Further it is, I think, much more remarkable that neither Mr Perring nor Mr
Phillips recalled the "Orange threat" when they made their witness
statements and gave evidence unless, perhaps, as is undoubtedly the case (for
reasons which will become apparent) Orange was not a subject which it was
in the interests of Jordan to raise. The evidence of both Mr Jordan and Mr
Phillips was that at this stage Jordan’s discussions with Orange were limited
to a musical arrangement with Mr Jordan personally, albeit Mr Jordan accepted
he and Mr Denny of Orange had "touched on Formula 1" in their discussions.
Mr Jordan thought Mr Perring must have got his information about Orange from
Mr Marshall who had introduced Mr Jordan to Mr Denny. In his fifth witness
statement Mr Phillips also expressed the belief that Mr Marshall was the source
of Mr Perring’s information about Orange. He said he was not. But Mr Phillips
accepted that Mr Perring had telephoned him on 22 March and he had then made
the note about "Red v Orange", but he said he did not ask Mr Perring
to inform Vodafone whilst recognising it was obviously advantageous to Jordan
Mr Perring should do so.
- It is entirely
credible that Mr Haines and Mr Harris would treat an e-mail such as this as
further proof of Mr Perring’s lack of objectivity and indeed naivety and ignore
it. It is not credible that any company such as Orange would commit to a major
sponsorship with Jordan in a matter of days let alone when they were already
title sponsors of another team. Nor is it credible that Mr Haines and Mr Harris
would believe that they would. Both were adamant and I am sure truthful in
saying that they always made it clear that if Jordan needed to act it should
do so without regard to Vodafone. They were not so naïve as to think
that Vodafone needed Jordan more than Jordan needed Vodafone. Mr Perring and
Jordan were, of course, also unaware that both Ferrari and McLaren were still
well in the race as well as Benetton. The fact that neither Mr Haines nor
Mr Harris mentioned Orange is, I think, strongly supportive of their views
of Mr Perring and the likelihood that they simply ignored what he said.
AT
22 MARCH SUMMARY
- At 22 March
and before the telephone conversation between Mr Haines and Mr Jordan:
- Everyone concerned
at Vodafone (including Mr Kieser and Mr Perring) knew that Vodafone’s decision
on F1 sponsorship was due to be taken in mid-April. They also knew (as would
in any event, in my judgment, be obvious) that the decision was to be taken
by the board of directors and not by Mr Haines. I also think it probable
that Jordan was aware of both matters not just as commonsense but also because
Mr Perring would have been certain to tell them. Certainly it is documented
that Jordan was not only told of the important role Sir Christopher Gent
had in the decision but acted on it before 22 March.
- There were
four teams under active consideration: Ferrari, Benetton, McLaren and Jordan.
Jordan may have believed, encouraged by Mr Perring and Mr Paul Jordan, that
Benetton was not a realistic contender. Jordan and Brown knew nothing about
the McLaren title sponsorship possibility. Jordan, again encouraged by Mr
Perring, may also have thought that Ferrari could not provide what Vodafone
was seeking. Mr Haines’ thinking on 22 March was, as he put it, "Jordan
probably had their nose ahead" and was "the most likely partner"
but no more than that. The Brand Council had not met since 15 March when
Ferrari had been favoured.
- The only "proposal"
from Jordan which existed was for a 3 year agreement at a total cost (including
"appearance" bonuses) of $150m with further "performance
bonuses" to be paid, all expressed in sterling, with a yellow and black
car in the first year, with no options to renew, and with none of the detailed
joint venture and intellectual property matters in a form which could even
begin to be the subject of a binding agreement.
- In that context
it is 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 shutting out the other teams. To do so would have been to ignore
Vodafone’s corporate procedures and his own brief and to bind Vodafone to
terms of material uncertainty and indeed which in the case of bonuses and
colouration were known not to be acceptable. Of course the matter has to
be looked at objectively and not by way of Mr Haines’ motives or intentions.
But that does not mean that it has to be looked at without regard to the
factual context and some sense of reality.
THE
22 MARCH CONVERSATION
Mr Phillips
- Mr Phillips’
account is to be found (first) in paragraphs 105 to 113 of his first witness
statement. He says Mr Perring spoke to him (after he had been told by Mr Paul
Jordan that Vodafone had agreed to sponsor Jordan and not Benetton) and told
him that Benetton had been dropped and to tell Mr (Eddie) Jordan to expect
a call later in the day from Mr Haines "with some good news". He
and Mr Jordan therefore expected to be told by Mr Haines that Jordan had the
contract. The statement continues:
"107.
At about 6.20pm David Haines called Eddie Jordan. We were sitting in my office
waiting for the call. The call lasted approximately 10/15 minutes, it was
on the loudspeaker and I heard what was said. Eddie Jordan started by extolling
Jordan but he was cut short by David Haines who said,
"Eddie,
stop, stop, you’ve got the deal".
I
have read the defence regarding this conversation. David Haines certainly
did not make the comments attributed to him. David Haines clearly told Eddie
Jordan that he had the deal. By saying this it left no room for misunderstanding
that the sponsorship contract had been awarded to Jordan.
108.
We were thrilled to hear this and said it was great news and Eddie Jordan
thanked David Haines for his confidence in Jordan. We expected the agreement
would ultimately be replaced by a detailed written sponsorship contract along
the lines of the draft already prepared and given to Charles Perring.
109.
David Haines asked us to send a draft contract to Peter Harris saying "you
can sort out the formalities with Peter". For reasons I have explained
we had no doubt that David Haines had Vodafone’s authority to conclude the
agreement. We agreed with David Haines to keep the deal confidential for the
time being for two reasons. First we wished to break the news to Gallaher
in our own time and second we both wished to publicise the deal at the Monaco
Grand Prix. As far as Gallaher were concerned, Eddie Jordan spent some time
explaining to David Haines that Gallaher had been very good to Jordan over
the past years and he wished to take time to prepare a dignified exit for
them. David Haines acknowledged this was the correct approach and he would
expect to be dealt with in the same way.
110.
After concluding the agreement and discussing Gallaher, Eddie Jordan spent
about five minutes discussing Vodafone’s forthcoming meeting with Bernie Ecclestone.
Eddie Jordan explained how he thought David Haines should deal with Bernie
Ecclestone and that it would be helpful to be able to tell him that Vodafone
were now Jordan’s title sponsor. However it was accepted by Eddie Jordan and
David Haines that the agreement would have to be kept confidential for the
time being."
Mr Jordan
- Mr Jordan’s
account in paragraph 31 of his first witness statement was to the same effect:
"31.
I have read Ian Phillips’ account of the telephone conversation with David
Haines. This accords with my recollection. There is absolutely no doubt that
David Haines told me we had the deal. There were no conditions attached to
this statement. We were of course extremely pleased at this news. I telephoned
Charles Perring to tell him and thank him for his help and spoke to Dominic
Shorthouse. I told Ian Phillips that we needed to write to Vodafone to confirm
David Haines’ decision. We drafted the letter the following day."
Mr Phillips Note
- Nothing more
of substance was said about the conversation in Mr Jordan’s second witness
statement (dated 14 February 2003) nor in Mr Phillips’ second statement of
the same date or third dated 7 April 2003. In Mr Phillips’ fourth witness
statement dated 9 June he referred to going through his notebooks to identify
"relevant notes" (albeit some of those notes had been referred to
in his earlier statements). In paragraphs 4 to 7 of this statement Mr Phillips
added the following:
"4.
C8/1788-1790 are notes made by me and Eddie Jordan during the telephone conversation
with David Haines on 22.03.2001 referred to at IP 107. I should like to amplify
that conversation in relation to the manuscript notes. Eddie Jordan and I
were sitting in my office opposite each other across my desk awaiting the
call which Charles Perring told us to expect. While we were awaiting the call,
I received a call from one of our drivers, Jarno Trulli. I opened my notebook
at page 70 (C8/1790). The left hand page and the right hand page were both
blank. I made a note of his name and telephone number on the left hand page
(C8/1788). The remainder of the writing on that page is Eddie Jordan’s who
used one of my pens. Shortly after my call with Jarno Trulli, Eddie Jordan
had a telephone conversation with Dominic Denny at Orange talking about a
meeting he had had with his boss Denise Lewis. They spoke about the meeting
in their London office at George Street in relation to a music and Formula
1 programme, a key issue being noted as Jordan. Eddie Jordan made the note
as he talked.
5.
Shortly after this we received the call from David Haines when he spoke the
words "you’ve got the deal". Eddie Jordan had the notebook
in front of him and had my pen. When David Haines said "you’ve got
the deal", Eddie Jordan wrote the words "David Haines-do
have". I picked up another pen with a finer nib and pulled the notebook
closer to me and wrote the words in quotation marks "you’ve got the
deal". As a former journalist I am used to writing key notes of importance
particularly quotes.
6.
As Eddie Jordan had been writing on the opposite page and we were writing
on fresh pages the carbon paper remained underneath the previous page. After
writing the quotation Eddie and David started talking about the exit strategies
with Gallaher and I took hold of the book and placed the carbon under page
70. As soon as Eddie and David started talking about the formalities of the
deal they had made I made the further notes.
After
the telephone conversation I drafted the memo to Dot using my broad nibbed
fountain pen which Eddie Jordan had been using. After we left the office in
our separate cars. I drove home to Piddington."
- The importance
of this evidence was (understandably) perceived to be such that in opening
the case Mr Boyle put it right at the forefront of his submissions, producing
the original notebook for inspection and emphasising Mr Phillips’ stated experience
as a trained journalist in "writing key notes of importance particularly
quotes". Mr Jordan’s third witness statement did not address the note.
The note itself (at C8/1790) contains (above the draft memo to Dot) "Lawyers-
David Haines -auditors, Bank, Warburg Pincus Credit Suisse/J Fuily – Peter
Harris". Those words are also on the carbon. The words which are not
on the carbon are "You’ve got the deal" and "contract, etc
to Peter Harris".
Mr Perring
- Mr Perring’s
evidence in his witness statement was that by 22 March he knew Benetton had
been rejected and "therefore made the assumption that Jordan would be
selected because as far as I was aware now it was the only team in the running".
He said he had telephoned Mr Haines to say the teams should be told what the
position was. He says Mr Haines told him that Benetton had been dropped and
that he would be speaking to Eddie Jordan. Mr Perring said (as could hardly
be gainsaid on the documents) that he "did not expect a deal to be done
there and then" and (in the course of his oral evidence) that when told
by Mr Jordan on 22 March that Jordan had the deal, whilst he was not surprised
by the decision, he was by its timing. Importantly Mr Perring said he did
not contact either Mr Haines or Mr Harris about Mr Jordan’s call informing
him about the deal.
Mr Haines
- In his first
witness statement (18 December 2002) Mr Haines said:
"187.
On the 22 March I attended the CEBIT trade fair in Hanover, Germany with my
two colleagues Andy Moore (Consumer Insights Director at Vodafone) and Jost
Schulte (Global Brand Manager at Vodafone). We drove the 3.5 hours from Dusseldorf
to Hanover, it’s about 300 kilometers.
188.
Charlie Perring had called me at some point during that day on my mobile asking
me to call Eddie. He wanted me to reassure Eddie that Jordan was still a contender
for the Vodafone sponsorship.
189.
I spent the return journey from Hanover on the telephone. We left Hanover
around 4pm German time. A couple of hours after we set out on our way back,
I got round to calling Eddie. I had made at least 17 calls before actually
calling Eddie (including a fifteen minute conversation with Ekrem Sami). I
attach a copy of my car phone itemised bill for 22nd March at DH
31. I was using both my car phone and my mobile.
190.
It was dark, raining and there was heavy traffic. It must have been after
7 pm German time. I was in the back of the car with Andy Moore, whilst Jost
Schulte sat in front of me. I was using my mobile phone, which kept breaking
up and cutting the conversation off as we were going through hilly countryside.
191.
In order to understand the context of the telephone conversation with Eddie,
it is important to appreciate that firmly planted in my mind at the time of
the conversation was the following:
a)
Neither I, nor anyone from Vodafone had ever had a contractual discussion
with any representative of Jordan and there were already very significant
outstanding issues from the early meetings we had had ….
b)
The telephone conversation with Eddie was just one of many. I had become used
to Eddie badgering me – he called or asked to be called frequently ….
c)
We were in the midst of the informal approval procedure with the Brand Steering
Committee/Brand Council of the recommendations we were going to make to the
EOIC. We had proposals from Ferrari, McLaren, Jordan and Renault Benetton.
Certain members of the Brand Steering Committee had expressed a strong preference
for Ferrari, but there were perceived problems with Ferrari, and the other
teams (especially Jordan) were offering what appeared to be better branding
packages. The matter was still up in the air and needed more discussion.
d)
Decisions on which team to go with would not be taken until 4th
and 5th April at the EOIC, GORC and Executive Committee meetings
– as we had agreed with Sir Christopher Gent in February.
e)
Peter and I were off to see Bernie Ecclestone in a couple of days to talk
to him about Vodafone’s involvement in F1.
192.
When I actually spoke to Eddie, he seemed agitated, more pushy than normal
and he repeatedly asked me where we were with the Jordan proposal.
193.
As I did not know which way the decision would go with the EOIC, GORC and
Executive Committee on the 4th and 5th April, I was
keen to keep a number of options alive, including Jordan. I do recall using
the phrase "We are getting very close" a number of times to Eddie.
This to indicate that Vodafone were getting very close as the decision as
to which team to pursue negotiations with was to be made on 4th
and 5th April, but no decision had been made yet.
194.
Eddie’s reaction to this was to try and verbally push harder, he was really
trying to pressure me. Whilst I understood why he would have been keen, I
did not understand his heightened level of impatience at this particular time.
I remember thinking that Eddie was not going to push me into a corner as he
had tried to do (unsuccessfully) on 6th February with Gallaher.
195.
In response to this verbal pressure I reiterated the same point using different
language each time. I said, "the Jordan proposal is very interesting",
and "Jordan are a very serious contender for the deal". I also recall
at one point in response to his pressure saying things are looking good for
a deal with Jordan.
196.
I do not believe I said, "you have got the deal". I would not have
given the impression in the telephone call that the deal was Jordan’s, because
it was not.
197.
I did ask Eddie to forward me a draft contract so we could compare the standard
conditions with the Renault Benetton contract that we had already requested
(but never received).
198.
Eddie offered to supply a list of his references. I was surprised at this
as I knew who he was and I had not asked for or been offered references for
any other team. The purpose of these references was unclear to me. I did not
ask for clarification as I wanted to end the conversation and Eddie seemed
to be winding up the telephone conversation. I think he felt he had got as
much out of me as he was going to get.
199.
I do not recall Eddie thanking me for our confidence. If he did, this would
not be out of context as Jordan was in the running, one of four possible teams
the Brand Steering Committee would consider as a recommendation to the EOIC,
GORC, and Executive Committee.
200.
From the entirety of the conversation it was crystal clear to me as it would
have been to any observer that we had not just concluded an agreement to sponsor
Jordan. It was simply the end of another telephone conversation. There was
no excitement or any comments from Eddie that would have indicated he had
concluded a huge deal. If anything, the conversation was somewhat brusque.
201.
In fact, when the conversation ended Jost Schulte turned around and asked
me when we expected to have a decision on Formula 1. I was still annoyed by
Eddie’s tone and manner and remember giving Jost quite a short and direct
answer. I recall telling him in German "we are not that far, don’t expect
an immediate decision".
202.
I did not discuss the conversation with Andy at all who was scribbling notes
across from me."
Mr Moore and
Mr Schulte
- Both Mr Moore
and Mr Schulte also gave evidence. Despite the fact that neither had been
asked for their recollection until many months later both were patently truthful
and careful in giving their evidence and also patently did recall the conversation.
Both readily accepted that they were working on other things in the car and
trying not to give the impression of eavesdropping on Mr Haines’ conversations.
Both found F1 interesting and heard references to "Eddie" and deduced
that Mr Haines was talking to Eddie Jordan. Mr Schulte remembered Mr Haines
using expressions like "it looks good" and "it is very promising".
Neither remembered him using words to the effect of "you’ve got the deal"
or anything similar. Mr Moore remembered Mr Haines using the words "we
are getting very close". Mr Schulte said that whilst he could not exclude
the possibility that Mr Haines did use the words "you’ve got the deal"
they would not have fitted into what he did hear of the conversation or the
brief reference to it between himself and Mr Haines after it had finished.
THE OTHER EVIDENCE
- Before commenting
on this evidence about the conversation on 22 March I will summarise such
other significant evidence as there is about it.
Mr Jordan and
Mr Harris
- At 15.44 hours
UK time on the following day (23 March) a letter was faxed from Mr Jordan
to Mr Harris. Mr Harris was in Atlanta. Atlanta time is 5 hours behind UK
time. The letter referred to an earlier discussion. That was a reference to
a telephone call earlier that day in which Mr Jordan had told Mr Harris (to
his surprise) that Mr Haines had agreed that Vodafone would sponsor Jordan
or as Mr Harris put it in his witness statement "had got the go ahead
for a deal". Mr Harris was non-committal and at once telephoned Mr Haines
who was "shocked and horrified" and asked Mr Harris to write to
Mr Jordan to clear up any misunderstanding.
Jordan’s letter
of 23 March
- The letter signed
by Mr Jordan, and with my emphases, read as follows:
"As
you know I spoke to David yesterday evening and he confided in me of his
decision.
The
list of references David asked me to forward to you is attached.
You
have already met my people who will work with you on the contractual and implementation
issues, Ian Phillips and Mark Gallagher.
Ian
is ready to take the draft contract through to conclusion; if you prefer we
could have a Heads of Agreement ready next week.
Mark
will co-ordinate the added-value technology programme and will contact you
separately on this matter.
In
anticipation of your meeting with Bernie Ecclestone next week, I did point
out to David that a forthright approach usually pays best dividends in the
end. I also suggested that there may be some advantage in delaying negotiations
on future business until your identity as a title sponsor is known as
the team will be able to personally assist you in achieving a better result."
- Mr Harris agreed
that it was likely that he e-mailed this letter on to Mr Haines when he received
it. The reference to "the draft contract" was to the one referred
to in paragraph 84 which Mr Perring had sent on to Mr Harris. Despite attempts
to explain it away, the letter acknowledges in effect that whatever Mr Haines’
"decision" matters had not even reached and would be required to
reach at least Heads of Agreement. The reference to "Mark" was to
Mark Gallagher and the "added value programme" was to be the subject
of one of the schedules to the draft contract which was blank. The reference
to Mr Ecclestone must I think be read as in effect saying better to see him
only once you have signed up with Jordan. Indeed, and again despite his attempts
to explain it, Mr Phillips’ note of his conversation with Mr Jordan on the
morning of 23 March makes that clear as do the earlier drafts of the letter
he prepared and which are also to be found in his notebook. The earlier drafts
are also revealing in other respects. The opening paragraph of an earlier
draft read "As you know I spoke to David yesterday evening and I was
extremely pleased to hear that we will have a relationship going forward".
I agree with Mr Aldous that even the letter as sent suggests an attempt to
achieve a binding agreement as soon as possible rather than an assertion that
such an agreement is already in place. The explanation offered for this was
that the agreement was so confidential that it could not be revealed even
to the typist. I think, in agreement with Mr Aldous’ submission, that is absurd.
The letter does assert a decision by Mr Haines and seeks to have a binding
agreement concluded. To write that an agreement had already been made would
add nothing and not adding it does nothing to keep the essential matter confidential.
Mr Phillips Note
- Perhaps the
most notable, indeed dramatic, exchanges in the trial came, however, when
Mr Phillips was cross-examined by Mr Aldous about the contemporary note of
the conversation on which Jordan placed so much emphasis. The transcript,
understandably, does not fully catch the event. In short it became apparent
that the all important words "You’ve got the deal" might not have
been written contemporaneously rather than added at some unstated later time.
The facts are stark. Mr Phillips made no reference to the note in any witness
statement until 9 June, a week before the trial started, and nine days before
he gave evidence. The account given there and repeated in the witness box
was provided in minute detail bolstered by his journalistic experience in
noting contemporaneously things of importance. But it was clear and accepted
by Mr Phillips that other (and other important) passages in his notebook had
in fact been added later to what were otherwise contemporaneous notes. That
was demonstrated because they had not come through on the carbon. The elaborate
explanation of why that was not so in the case of these four words was demonstrated
conclusively to be false when Mr Phillips was asked to repeat what he said
had happened at the time with the carbon in the witness box. It was demonstrated
that the note could not have been made as he had stated. His final comment
on what was a patently embarrassing experience for him was "You can reflect
at any time and go back and add things; why not?" That has to be compared
with his 9 June witness statement. The experienced journalist, as I find,
failed to make a contemporaneous note about what was presented as the most
important four words spoken in the conversation and indeed words which were
said to be of enormous excitement and importance to Jordan itself at the time
they were supposedly spoken.
Mr Harris’ letter
of 26 March
- As agreed in
their telephone conversation on 23 March, Mr Harris drafted a letter to be
sent to Jordan. The letter is dated 26 March (a Monday) but was sent by fax
on the morning of Tuesday 27 March. Mr Harris was having a heavy weekend.
He flew from Atlanta to the UK arriving on Monday morning. The letter read
as follows:
"Dear
Eddie,
Thank
you for your recent letter dated March 22, 2001.
I
have shared your letter with David and we feel it is important to stress that
we are still completing our final assessment against which Formula 1 team
to potentially sponsor.
As
you are well aware we are committed to making this decision in the very near
future which is why we wish to work with your team on finalising the terms
of a potential title sponsorship deal. However until final terms have been
received from each team and until our Board approves such a decision we cannot
fully commit to a partnership with the Jordan team or any other team at this
time.
I
will follow up with Ian and Mark on next steps but just thought it important
to explain our current position with regard to a final decision.
We
look forward to seeing you soon and wish you the best of luck in Brazil."
- This letter
has been subjected to minute analysis by Mr Boyle. He asks rhetorically why
does it not deny what Mr Jordan was saying, why did neither Mr Haines nor
Mr Harris immediately telephone Mr Jordan to put him right, why does it refer
to a "final decision" as if acknowledging that Mr Haines
had taken a decision. None of these points impress me at all. The position
was not confrontational however it may now be seen. The letter was I think
a polite way of disabusing Jordan of any misunderstanding and expressed belief
in a context where it might well be that the decision would yet go in Jordan’s
favour. It also flagged, as Mr Jordan was said to be and I am sure he was
"well aware", that the decision was due to be taken and taken by
the board in the very near future. Mr Haines said he did not want to be badgered
by Mr Jordan again and writing was, he thought, "the right thing to do".
Mr Phillips’
e-mail of 28 March
- On the morning
of 28 March Mr Phillips sent a short e-mail to Mr Harris in response to his
letter. It read (so far as material):
"Your
letter to Eddie was received yesterday and understood. This is just to say
that Eddie and I will be going to Brazil … and that if you need to discuss
any details of the proposal we are able to come to Dusseldorf at your convenience."
- This response
was only disclosed by Jordan following the court’s order in April 2003 and
was no longer available on Mr Harris’ computer. The explanation for it offered
by both Mr Jordan and Mr Phillips in evidence was that they had been assured
that, in effect, Mr Harris’s letter did not mean what it said and for so long
as Jordan was to be awarded the sponsorship it was better not to take an aggressive
stance by asserting that it had already been awarded the contract. Yet the
response does not even refer to any telephone conversations let alone any
understanding derived from them.
The "covering
ass" note
- There is another
note by Mr Phillips which was made shortly after Jordan had received Mr Harris’
fax and so probably on 27 March itself. The note is of a telephone call from
Mr Perring. The top copy of the note (so far as material) reads "covering
ass letter. No problem. David took decision last week – phone call.
Peter Harris …. Complete deal + bonuses got to tie everything down…."
- The words I
have underlined were, as Mr Phillips accepted, added later. They are not on
the carbon unlike the rest of the note. They look different. They are, again,
one might have thought, the most important words spoken (if they were spoken)
yet other matters were recorded at the time. Moreover, on Mr Perring’s evidence
(which I accept) that he did not think any decision had been made by 22 March
and had not spoken to anyone at Vodafone about the 22 March conversation the
added words cannot be attributable to him. I regret to say that once again
I think Mr Phillips was untruthful in the evidence he gave about this. Read
without the added words and on the basis that Mr Perring was expressing a
personal opinion the note is hardly consistent with Jordan’s case.
- Mr Phillips’
notebook also contains notes of a conversation with Mr Harris said to have
taken place on 27 March following the conversation between Mr Phillips and
Mr Perring. This note also contains material which it is accepted was added
later. Mr Harris had no recollection of any conversation with Mr Phillips
on that day. He was having an even busier day. He met Mr Briatore in the morning
in London, flew to Paris to meet Mr Todt and then back to Dusseldorf in the
evening. So far as material, and again with the words added later underlined,
the note reads:
"Chris
Gent meeting Wednesday. Not delaying. Lot of money, lot of people internally
who have to be convinced. J has a lot of support. Looks good for you.
Letter was if you’ve got to move you must"
- This note both
in its original and additional form is substantially consistent with Vodafone’s
evidence and case. It is not consistent with the 26 March letter meaning anything
other than what it said. It also fits with the response to that letter which
Mr Phillips sent. It is notable that neither in this note nor his e-mail of
28 March does Mr Phillips record surprise nor assert that Jordan already had
a deal. The reference to "if you’ve got to move you must" is a reference
to Gallaher. As I have already mentioned (paragraph 116) Mr Haines and Mr
Harris both said that whenever Jordan raised in conversation the need for
an early decision by Vodafone because of Jordan’s need to meet a deadline
with Gallaher (or otherwise) their reaction was that Mr Jordan should not
let the Vodafone prospect stand in the way of doing whatever they had to do.
Mr Phillips’ evidence was to the precisely opposite effect: he said he was
told on this occasion that if he had to tell Gallaher that it could no longer
sponsor Jordan because Vodafone had agreed to do so then he should do just
that. I have no doubt at all that Mr Haines and Mr Harris evidence is to be
preferred. The note itself supports them. So does the letter. What happened
(and did not happen) with Gallaher thereafter puts the matter beyond doubt.
- Mr Jordan also
said he spoke to Mr Haines on 27 March about Mr Harris’ letter. Mr Jordan
said he was "perplexed and very annoyed" about the letter but decided
"confrontation was not the answer." He says Mr Haines told him that
Mr Harris had been concerned about the 22 March conversation and that he thought
Mr Haines had "jumped the gun." Mr Jordan’s first witness statement
(paragraphs 32 and 33) continues:
"David Haines
said that he had told Peter Harris that his decision was that Vodafone would
sponsor Jordan and that I should not worry and that everything would be sorted
out. He confirmed that he was the boss and it was his programme and his responsibility.
He said he would discuss the matter at a board meeting the following Tuesday
and that he did not want any paperwork showing that a decision had been made.
I was reassured by this conversation."
- Mr Haines recalled
having a conversation with Mr Jordan after 22 March but said that he would
have said nothing to undermine the substance of Mr Harris’ letter which he
had asked Mr Harris to write nor to claim that any decision was his to make.
Again, I unhesitatingly accept what Mr Haines says. He and Mr Harris were
in the process of preparing their recommendations at the time, starting with
a Brand Steering Committee meeting to be held on 29 March.
- There is a handwritten
note made on 28 March by Jane Graves (a secretary to Mr Jordan) which reads
"Vodafone – decision tomorrow by the Board. David Haines – Global Director,
confidentially told EJ and IP –JGP are the one – not rubber stamp by board.
Letter advising jumped the gun". The same note refers to Mr Jordan having
had a meeting with Denise Lewis, a senior executive of Orange. These notes
were taken at a Jordan Executive Meeting attended by Mr Jordan and others
and (part time) Mr Phillips. The typed-up notes made no reference to Orange
but for "action" by Mr Jordan recorded "Vodafone team choice
decision to be made 29/03 by Vodafone –JGP have been confidentially told this
just needs to be rubber stamped by the Vodafone Board meeting on Weds 4th
April". The contrast with the handwritten note and Mr Phillips’ note
of his conversation with Mr Harris remains without satisfactory explanation.
Nor does the meeting appear to have been characterised by such confidentiality
that Mr Haines’ "decision" could not be mentioned.
Mr Ecclestone
- It was also
a significant part of Jordan’s submissions that there was an explanation for
Mr Haines’ change of mind shortly after 22 March away from Jordan. First,
there was a telephone conversation on 23 March in which Mr Todt called Mr
Haines and was told that Mr Harris would be formally joining the Vodafone
team in April and it was agreed that Mr Harris and Mr Todt should meet on
27 March in Paris. Second, the meeting with Mr Ecclestone (arranged by Mr
Briatore) duly took place on 26 March in London when he gave a strong recommendation
that Vodafone should sponsor Benetton and mentioned that Ferrari would not
be a bad option either. These activities, it was suggested, affected Mr Haines’
eagerness for Jordan and so when Mr Haines and Mr Harris met in Dusseldorf
on 28 March to prepare for the 29 March meeting of the Brand Steering Committee
they decided to recommend the "small on big" option with Ferrari
rather than a "big on small" option with Jordan. Whilst such a thesis
may merit the description "inventive" it does not stand up to even
modest examination. Both Benetton and Ferrari were in any event serious contenders.
But even if it were true and even if it helped to explain the 26 March letter,
the fact is that letter was sent and received and acknowledged and Jordan’s
case that Mr Haines and Mr Harris in subsequent telephone conversations then
said in effect that the letter did not mean what it said becomes even more
improbable.
CONCLUSION
ON THE 22 MARCH TELEPHONE CONVERSATION
- I have no doubt
that Mr Haines’ account is to be preferred to that of Mr Jordan and Mr Phillips.
No sensible objective observer could reasonably have thought that any binding
commitment was made by anything which was said or that Mr Haines had made
any decision let alone that Vodafone had. I am sure Mr Jordan was pushing
hard. I do not doubt he thought he was on a winner. He may even have indulged
in wishful thinking. But not even the rudiments of a "deal" in the
sense Jordan seeks to use the word had been established at the time. Nothing
had even reached the stage of what could be described as Heads of Agreement
and even Mr Jordan’s letter recognised both that fact and the need at least
to have agreed such a document. But I also think and find that Mr Haines did
not even use the words "You’ve got the deal" at least in the context
or sense on which Jordan relies. Had he done so Mr Phillips would indeed I
think have noted them at the time rather than or in addition to the somewhat
bland information he did record and the subsequent correspondence and references
to the conversation would not have taken the form they did.
- What happened
after 22 March is itself also wholly inconsistent with any binding commitment
and indeed with any belief on the part of Jordan that such a commitment had
been made.
SUBSEQUENT
EVENTS
Brown’s status
report
- Dated 23 March
Tempus (Brown) prepared a document which was a "status report" on
the Vodafone global brand exercise. Mr Perring, Mr Dart and Mr Kieser were
addressees, as were Mr Haines and Mr Harris. It was recorded that negotiations
were progressing with four teams with a recommendation scheduled for April
5. The text included the statement "Tempus Partners have been in discussion
with Ferrari, McLaren, Jordan, Renault (ie Benetton) and Toyota to determine
the best package of rights for Vodafone, and have subsequently narrowed their
focus to three teams, namely Ferrari, Jordan and Renault". Brown was
of course unaware of the McLaren title sponsorship proposal. The suggestion
that Benetton had been rejected on 22 March is unsustainable. Indeed on 28
March sample Benetton/Vodafone liveries were still being produced in draft
presentations and Mr Perring was sending Mr Harris a copy of this Tempus document.
The thrust of the document was, it is true, wholly slanted in favour of Jordan.
Orange and Jordan
- On 28 March
Denise Lewis of Orange wrote to Mr Jordan, following a telephone conversation
held that day and a meeting, to thank him for his interest in Orange "and
for the opportunity of discussing how we might work together in the future".
The letter stated that nothing could be achieved because "Orange does
not break a contractual bond". That was a reference to Orange’s sponsorship
contract with the Arrows F1 team which, provided Arrows scored a single championship
point, would continue into the 2002 season. The letter added "I would
love to keep talking, but understand that you must now move forward with other
parties". If Mr Jordan seriously believed he had a contract with Vodafone
he could and would not have had any discussions with Orange. In fact the discussions
continued and intensified after this letter. Mr Jordan and Mr Phillips’ explanation
that they could not terminate the discussions without Orange deducing that
a deal had been done with Vodafone and they had agreed to keep that confidential
defies reality and, as will be seen, is unsustainable in the light of the
documents. Mr Phillips’ evidence that everything that happened with Orange
was in any event a waste of time and effort because no agreement could ever
have resulted from it also did him no credit.
Mr Harris’ presentation
- Mr Harris’ presentation
for the internal meetings at Vodafone was finalised with Mr Haines on 28 March.
It put forward the two options "small on big" and "big on small".
Small on big was between Ferrari and McLaren. Big on small was between Jordan
and Benetton. Mr Harris’ notebook shows that at about this time he had prepared
his own "score sheet" against just four criteria (Mr Perring had
many more) which were media exposure, TV race coverage, Vodafone presence
and "market buy-in" (a reference to the operating companies). On
that score sheet Ferrari came first, McLaren second, Benetton third and Jordan
fourth. Ferrari was the recommended team with Jordan and Benetton named as
alternatives. "Next steps" included "an approval of plan by
Chris Gent & Board April 4/April 12".
Brand Steering
Committee
- The Brand Steering
Committee met on 29 March. It was an all day meeting on the branding project
as a whole of which only about 20 minutes at the end of the day concerned
F1. The objective was to agree on the final presentation and recommendations
to be made to the EOIC, GORC and Executive Committees for their meetings on
4 and 5 April. Mr Haines said and I accept that the Brand Committee decided
to recommend the "small on big" option with Ferrari overwhelmingly
preferred to McLaren. That was also the conclusion Mr Harris and Mr Haines
had advanced in the presentation.
The Mastercard
letter
- Albeit unaware
of the precise details of Vodafone’s internal processes, Jordan was aware
of and alive to the importance of internal meetings at Vodafone on 4th
April and Mr Jordan set about mustering support where he could. The terms
in which he did so are revealing.
- Mark Gallagher
drafted and agreed with Mr Jordan a letter to be sent by Mastercard to Mr
Haines. Mr Gallagher (and Mr Jordan’s) objective was plainly that the letter
should be sent prior to Mr Haines’ meeting with Sir Christopher Gent on 4
April. The draft letter begins: "I understand from Eddie Jordan that
there is a possibility of Vodafone working with Jordan in Formula One. We
would welcome the opportunity to work with you…." In my judgment these
words were wholly accurate. They are not, of course, consistent with an existing
contractual commitment by Vodafone with Jordan. Mr Jordan’s attempt to explain
them was close to unintelligible. Mastercard sent the letter without alteration
to the first sentence. It was Jordan’s pleaded case, in paragraph 21 of the
Reply, verified by Mr Phillips, and dated 9 May 2002, that this letter had
been suggested by Mr Phillips to Mastercard at the time of the Malaysian Grand
Prix and that its terms "reflect matters between Jordan and Vodafone
as they stood on 18 March 2001 and not as at 3 April 2001". That was
untrue. E-mails disclosed following the Court’s Order in April 2003 show the
letter was drafted by Mark Gallagher over the weekend of 30 March/1 April
and agreed by him with Mr Jordan at that time.
EOIC and GORC
- Vodafone’s EOIC
(paragraph 8) met on 4 April. The minutes record that "the team’s recommendation
was for either Ferrari or McLaren" and it was agreed to present the matter
for decision by the Executive Committee. The McLaren proposal before the EOIC
was for secondary sponsorship. The GORC met later in the day (with many of
the same members as the EOIC) and the EOIC’s recommendation was noted without
comment. Mr Haines left for a holiday immediately after this meeting, returning
to work on 16 April.
Mr Jordan’s Knowledge
- Mr Kieser’s
evidence was that probably on 4 or 5 April he was telephoned by Mr Jordan
who sounded very concerned and said that he had information that Vodafone
had decided in a meeting that day that Ferrari was first and Jordan second.
Mr Kieser was in Stuttgart on business and had no idea what had been decided
and asked Mr Jordan how he knew. Mr Jordan replied "I know everything,
I already know". Mr Kieser says he called Mr Haines who was flabbergasted
but confirmed that the EOIC would recommend Ferrari to the Executive Committee.
Mr Haines evidence is to the same effect. It also has the strong ring of truth.
Executive Committee
Decision
- The Executive
Committee met on 5 April. The presentation was made by Mr Geitner and Mr Harris.
The Minutes of the Committee’s decision read:
"After
discussion it was agreed that the first preference was to pursue a relationship
with Ferrari. If that proved impossible then a deal with Jordan should be
sought."
Jordan at 5 April
- It is apparent
from some notes made by Mr Phillips that, probably on 5 April, at Mr Kieser’s
request, made in his conversation with Mr Jordan, Mr Phillips prepared a "Ferrari
versus Jordan" document to promote Jordan in that contest. He had been
told by Mr Perring that Mr Harris was due to visit Ferrari at Imola the next
week and that Vodafone wished to explore what Ferrari had to offer. The document
points out (rightly) that Ferrari could not offer title sponsorship, (less
accurately) that Ferrari could not offer dominant branding because of the
presence of Marlboro and Shell and (rightly) that Ferrari could not offer
"perceived ownership" and their title sponsor was the world’s biggest
tobacco brand. There is also a reference to "the joint-venture technology
side" which Jordan was led to believe was important and had a team ready
to discuss but "nobody has taken up our offer to explore this in detail".
- The document
puts forward a strong argument for Jordan. But it is not consistent with a
"deal done" and demonstrates plainly that Jordan knew at this time
where the main competition was to be found. Indeed both Mr Phillips’ notes
and the typed version make reference to the alleged challenge "to commit
… for $150m there and then and we had a deal" which is plainly a reference
to the 6 February meeting. Yet neither refer to any conversation let alone
an actual "deal" on 22 March. That is remarkable if Mr Phillips
and Mr Jordan’s recollection of that conversation was accurate and can hardly
be explained by a wish not to be confrontational. Mr Jordan sought to explain
the document on the basis that Mr Kieser (unlike Mr Perring) could not be
told of the agreement with Vodafone made on 22 March. Mr Aldous described
that evidence as "crass". I agree.
- Mr Phillips
sent an e-mail to Mr Harris at 12.57 on 5 April referring to the presentation
to Vodafone’s board on April 4. This was also disclosed only pursuant to the
Court’s Order in April 2003. Mr Phillips asked: "Anticipating that Jordan’s
proposal may have been a part of your presentation and without being too presumptuous,
could I ask you to let me know what the position is going forward?" Mr
Phillips referred to pressure from Gallaher to renew "plus our other
partners like Honda, Mastercard, Siemens and Deutsche Post who have provided
evidence of their willingness to co-operate with Vodafone and are as anxious
as we are to work with a non-tobacco company". There was no written response
to this, but also on 5 April Mr Phillips has a note of speaking to Mr Harris.
His note reads "Cannot tell you very much in the frame solid position
decision within 2 weeks".
- Mr Boyle was
very critical of this. He said Vodafone was just stringing Jordan along when
a decision to sponsor Ferrari had been taken that day rather than coming clean
and saying they had gone back on "the deal" and were now moving
ahead with Ferrari. Mr Harris could not remember any conversation with Mr
Phillips on 5 April. Indeed he thought it unlikely there had been one as he
went straight from the presentation in Newbury to the airport to fly to Atlanta.
Nor did he expect the negotiations with Ferrari to be concluded in two weeks.
Even assuming a conversation took place of the nature recorded I do not accept
the criticism. There was no guarantee that an agreement could be successfully
negotiated with Ferrari, Mr Harris was due to meet Ferrari at Imola, and Jordan
was indeed seen as a real option in the event agreement could not be reached
with Ferrari. As will also be seen, Jordan was not in any way prejudiced by
not being told more. Of course, Mr Phillips’ e-mail and note are not consistent
with any concluded agreement.
Gallaher re-visited
- On 5 April Gallaher
(Mr Jenner but copied by him to Mr Northridge) wrote to Mr Phillips referring
to a meeting they had had on 1 April. Mr Jenner thanked Mr Phillips for explaining
Jordan’s current thinking and plans regarding sponsorship for 2002/3 "in
light of our decision to seek a lower level of sponsorship during next year
and beyond". Mr Jenner was "encouraged" that Jordan wished
to continue the relationship along the lines previously discussed and recorded
agreement "to meet to formalise matters and agree next steps on or before
30 April". This letter was first disclosed by Jordan on 5 June 2003,
as was Mr Phillips’ reply which read: "we will of course keep you fully
informed of developments which I hope will materialise over the Imola weekend
leaving us clear to finalise our discussions by the end of the month".
- Mr Phillips’
explanation of these letters, even with the admission that he was telling
"porky pies" in saying Jordan wished to continue the relationship,
was remarkable. He said it was only appropriate for Mr Jordan to break the
news to Mr Northridge face to face that because Vodafone had agreed a fortnight
earlier to sponsor Jordan Gallaher would no longer be able to sponsor Jordan
at all because of Vodafone’s perceived (by Jordan) aversion to any association
with tobacco. As an explanation for this elaborate dance this is close to
absurd. Nor was it true.
9 April Jordan
management meeting
- On 9 April Jordan
held a management meeting which was attended by Mr Phillips. The Minutes of
the meeting were not disclosed but were discovered on 14 July 2003 held on
Jordan’s computers. The Minutes record:
"Vodafone
– JGP are still awaiting a response we know the decision will be between JGP
and Ferrari.
B&H
have been stalled until the end of the month. Nigel Northridge will be at
Imola. IP to discuss with EJ."
- That, I have
no doubt, was the truth. Mr Phillips said he was anxious not to reveal to
others who were present at the meeting that a deal had actually been done
with Vodafone and in any event he was confident that Jordan would win any
contest with Ferrari. The reference to Gallaher, he repeated, was because
of the need to treat Galaher correctly by Mr Jordan talking to Mr Northridge.
I simply cannot read the document in the context in the way Mr Phillips sought
to explain it. Gallaher had indeed been stalled by Jordan until the end of
the month, that is to say until after Imola.
Jordan’s Strategic
Review Update
- Jordan disclosed
after the first day of trial an internal document which was prepared on 12
April entitled "Strategic Review Update". The document includes
(with my emphases) the following passage:
"Following
our discussions in Malaysia and Wada-san’s (Honda) helpful letter of support
discussions are progressing with Vodafone for a three year $150m title
sponsorship beginning 2002. We understand that Vodafone’s options have narrowed
to Jordan and Ferrari and that a decision will be made at the end of April.
We have kept Benson & Hedges (ie Gallaher) abreast of the position and
in any case have asked them to relinquish the title for 2002 as it is realistically
beyond their budget …. If we are successful with the Vodafone proposal
operational costs for the next three years are covered …."
- A draft of this
document is in Mr Phillips’ notebook. It also belies two matters which are
fundamental to Jordan’s case and evidence:
- That any agreement
for Vodafone to sponsor Jordan had already been made and that Jordan believed
it had;
- That Jordan
had any interest in Gallaher as a title sponsor and proposed to tell Gallaher
at Imola that their sponsorship was no longer wanted in any form.
- Mr Phillips
again attempted to explain the first of these (as with the discussions with
Orange) on the basis that the agreement with Vodafone was so confidential
that it could not be referred to. Mr Jordan said that he did not know why
the Update was prepared, did not know who wrote it and he had never seen it:
"I can promise you I have never written or seen this document before".
Amongst the documents found on Jordan’s computers was an e-mail sent on 13
April which referred to a letter from Mr Jordan to Mr Fukui of Honda which
enclosed the Update. Mr Jordan said, nonetheless, that even if (and no copy
could be found) a letter had been signed by him enclosing the Update he thought
it highly unlikely he would have done more than sign it. The Update was not
the sort of document he would read.
The San Marino
Grand Prix (Imola)
- The San Marino
Grand Prix was held at Imola over the weekend of 13 to 15 April. Remarkably,
both Mr Jordan and Mr Phillips say that it was at Imola that Gallaher (Mr
Northridge) was told by them that Vodafone had agreed to sponsor Jordan in
place of Gallaher and that Gallaher could not even be a secondary sponsor
because Vodafone did not want an association with a tobacco company. Indeed
that is Jordan’s pleaded case and the basis of the claim for loss in the alternative
claim. Mr Jordan said Mr Northridge "took it well and said he was pleased
for Jordan" but Mr Jordan himself found it "a difficult conversation".
Mr Phillips said he met Mr Northridge later and confirmed the same to him.
In the light of the minutes of the 9 April management meeting and the Strategic
Review Update and Jordan’s knowledge of Vodafone’s interest in Ferrari these
statements make no sense at all. Jordan knew, as the Strategic Review Update
shows, that no decision would be made by Vodafone before the end of April
and knew the decision lay between Jordan and Ferrari. Indeed Mr Phillips made
a note of a telephone conversation with Mr Perring held between 15 and 20
April recording "not as forlorn as we thought, merely confirmed what
V want from Ferrari. Undeliverable v. high price". It would have been
both untrue and commercially stupid to tell Gallaher in mid-April that Vodafone
had agreed to sponsor Jordan and so Gallaher’s sponsorship was no longer required
at all. Neither Mr Jordan nor Mr Phillips are in my judgment commercially
stupid. It is also a matter of legitimate comment by Vodafone that no witness
from Gallaher was called to give evidence. The truth is, as I have said, to
be found in the 9 April minutes. Gallaher was being stalled by Jordan and
was not told of any agreement by Vodafone either at Imola or at all. The 17
April minutes of Jordan’s management meeting record "no change"
from 9 April. Moreover it was not just the continuing prospect of an agreement
with Vodafone if Vodafone could not reach agreement with Ferrari which made
it in Jordan’s interests to stall Gallaher. Orange was very much in Jordan’s
sights at this time also and Orange and Gallaher were not even thought by
Jordan to be incompatible as sponsors.
Orange
- The documents
plainly demonstrate that at this time and after Imola Jordan was pursuing
title sponsorship proposals with Orange. Both Mr Phillips and Mr Jordan were
involved. Mr Denny, the head of global corporate articulation at Orange (junior
to Denise Lewis) acted for Orange. It is some measure of both Mr Phillips
and Mr Jordan’s conduct that Jordan’s late disclosure included a fax letter
from Mr Jordan signed by him to Mr Denny dated 20 April which included (with
my emphases) the following:
"I
felt that our meeting yesterday was very positive and clearly confirmed to
me that there is a great and exciting synergy between Orange and Jordan.
Obviously I respect
the Board’s decision with regard to their current contractual obligations
however I believe that there are some options to consider which could lead
to a long term future between our two companies.
Option 1:
Orange to purchase
the rights now to a full title sponsorship package for 2003, 2004 and 2005.
By doing this
Orange would eliminate Vodafone’s opportunity of title sponsorship with a
leading team (Ferrari, Jordan, McLaren and Williams would no longer be
available).
Option 2:
Orange to
purchase an entry level branding package for 2002 at a favourable rate,
sharing with Jordan’s existing partners. We envisage the title could
be part of this initial programme.
This option causes
no conflict with Arrows but does however through Jordan secure Orange’s future
with a motor manufacturer backed team. This also gives a great opportunity
for long-term planning of the campaign and allows our faithful long-term
supporter to exit with dignity and conveys a very positive PR message.
It also offers an opportunity for joint collaboration with existing sponsors
such as MasterCard, Honda, Deutsche Post and Siemens/Infineon.
We have already
discussed costs which would be in the region of £12 million.
Finally, and
possibly most importantly, I do believe we have a unique opportunity to blend
the elements of your two major promotions, Formula 1 and Music, into a vibrantly
powerful partnership with which to dominate the media.
Thank you
again for your time yesterday and I look [forward] to talking to you Monday.
"
- Mr Phillips
could offer no explanation for this document consistent with Jordan’s case.
Mr Jordan at first said it was never sent or delivered to Mr Denny "because
I did not ever intend Mr Denny to have it". He based that on Mr Denny
saying he had not received it. But an e-mail found on Jordan’s computers showed
that not only was it sent but it was amended to seek to correct a slight typo
which appears on the copy signed by Mr Jordan. Mr Jordan accepted therefore
that it was sent. It leaves little doubt as to who was pursuing whom, and
at a time when on Jordan’s case it had and believed it had an agreement with
Vodafone. The reference to Vodafone in the letter can hardly stand with any
suggestion of confidentiality. Moreover the "faithful long-term supporter"
had not yet, it would appear, exited with dignity. That must be a reference
to Gallaher. Indeed documents prepared by Jordan show that for 2002 it was
envisaged that Gallaher would remain as a secondary sponsor if Orange became
title sponsor.
- The exchanges
between Jordan and Orange at this time included the preparation by Mr Phillips
of schedules showing what parts of the car and clothing could be available
to Orange and Gallaher and ideas for a secret agreement to shut out Vodafone
and keep Arrows in ignorance. At the time Arrows had yet to score a championship
point. There were also negotiations for DP to become title sponsors of Jordan
in late April and early May and Mr Perring was keeping Mr Phillips up to date
with what he knew of Vodafone’s negotiations with Ferrari. A document (disclosed
on 11 July 2003) dated 2 May 2001 further demonstrates that contrary to Mr
Jordan’s evidence it was Jordan which was making the running with Orange and
continuing to use the argument that if Orange agreed "now" to purchase
the rights to title sponsorship of Jordan for 2003-5 it would alleviate "any
problems with existing Orange contracts and effectively prevent Vodafone from
acquiring title rights with any of the top 5 teams". The reference to
"existing Orange contracts" was a reference to Orange’s sponsorship
of Arrows. In fact even when Arrows did score a championship point on 13 May,
Jordan continued to seek an agreement with Orange. As Mr Aldous submitted,
Mr Phillips’ attempts to explain the Orange documentation became increasingly
absurd. Mr Jordan first claimed not to have pursued any negotiation or discussion
of title sponsorship with Orange at all. Faced with the late disclosure he
maintained that there were never any substantive negotiations but "preliminary
and exploratory discussion did take place" which was never likely to
lead anywhere. It is readily apparent from the documents that this evidence
was untrue.
The Pelham Hotel
- On 23 April
there was a meeting at the Pelham Hotel in London between Mr Jordan, Mr Haines,
Mr Harris, Mr Kieser and Mr Dart. Yet again, there is a conflict of evidence
about what was said.
- Mr Jordan’s
first witness statement (paragraph 37) said:
"I
briefly met David Haines, Peter Harris, Joe Kieser and Peter Dart at the Pelham
Hotel in London. I think they were there for a function and I had been asked
to meet David Haines. I told David Haines that I had heard a rumour that Ferrari
might be being considered by Vodafone notwithstanding our agreement. His response
to me was:
"they
cannot deliver what we need, just have faith – you are the only ones."
- Mr Haines said
the meeting was arranged at Mr Kieser’s suggestion after Mr Haines’ return
from holiday on 16 April because Mr Jordan had been calling Mr Kieser regularly
to see what was happening. The date of 23 April was agreed because it was
a day when Mr Haines was due to be in London anyway. When they met Mr Haines
said Mr Jordan was "agitated" and they had told him "what apparently
he already knew, that the Vodafone sponsorship was Ferrari’s to lose, but
that Jordan was still an option if Vodafone could not deliver the Ferrari
sponsorship deal".
- Mr Haines’ account
is fully supported by both Mr Harris and Mr Kieser. All three say that at
no time (despite the fact, as each also says, that he became very angry and
rude) did Mr Jordan claim that there was any agreement with Jordan let alone
that Vodafone or Mr Haines were breaking any agreement. Nor did Mr Jordan
say that he had terminated negotiations with Gallaher because of any deal
with Vodafone. Mr Jordan’s evidence was that Mr Haines had spoken to him when
they were on their way out of the hotel on their own together and he had not
spoken in front of everyone else "because it was confidential" and
"he had no idea who Mr Haines had told".
- I am sure that
Mr Haines, Mr Harris and Mr Kieser were telling the truth about this meeting.
The notion that on 23 April Mr Haines could have been giving further assurances
to Jordan is totally out of context and fantasy. I am also sure Mr Jordan
was very angry and rude which is a curious reaction if such an assurance was
to be sought let alone if one had been given.
The Ferrari Letter
of Intent
- On 10 May Vodafone’s
Executive Committee considered the current state of the negotiations with
Ferrari and resolved to pursue them subject to one matter, which if it could
not be resolved, was to bring the negotiations to an end, in which event "a
deal" would be sought with Jordan. The next day Mr Geitner and Mr Montezemolo
of Ferrari signed a letter of intent which was expressly "subject to
contract". It incorporated a substantial document setting out the rights
and benefits to be granted to Vodafone.
The Ferrari contract
- By 15 May Mr
Jordan was writing to Mr Sutherland that he thought it "inevitable"
that Vodafone would go with Ferrari. By 22 May Vodafone’s board minutes recorded
the expectation that it would sign a sponsorship agreement with Ferrari on
25 May prior to the Monaco Grand Prix. Even at this date, however, the Ferrari
agreement had not finally been resolved. By 25 May it was and the agreement
was publicly announced.
Mr Jordan’s boat
at Monaco
- Before the announcement
was made Mr Haines and Mr Harris saw Mr Jordan and Mr Phillips on Mr Jordan’s
boat in Monaco harbour. There is a further dispute about what was said on
this occasion. Mr Jordan and Mr Phillips say (putting it shortly) that Mr
Haines and Mr Harris were contrite and Mr Harris at least acknowledged Jordan
had earlier been told they had a deal. Mr Haines and Mr Harris say it was
Mr Jordan who was blaming himself for "opening his big mouth" too
wide and too early. There is a measure of agreement both that Mr Jordan expressed
concern because he had told other sponsors that he had a deal with Vodafone
and so had some explaining to do and that Mr Haines agreed to help him with
his sponsors in any way he could. It follows from my earlier findings that
I think Mr Haines and Mr Harris account is much to be preferred.
Gallaher
- On 30 May Mr
Phillips wrote to Mr Jenner "further to your letter of 28 February and
our subsequent discussions" to confirm that Jordan was happy to enter
into a contract with Gallaher for 2002 whereby Gallaher "will be the
principal secondary sponsor in consideration of a sponsorship fee of £10 million.
I would anticipate that Jordan … and Gallaher will enter into a new contract
based on the proposals discussed by you and I on 13 February 2001". The
letter suggested preparation of Heads of Agreement followed as soon as practicable
by a full contract. Mr Jenner sent a reply by e-mail on 1 June agreeing to
proceed on the basis Mr Phillips had outlined. There is no information (apart
from a short handwritten note of Mr Phillips) before the court which describes
"the proposals" in February for which Gallaher would pay £10 million.
They would of course have been different to those for title sponsorship. Had
Jordan told Gallaher at Imola some 6 weeks earlier that Gallaher was not to
continue as a sponsor at all because Vodafone was to become title sponsor
I do not think this letter could sensibly have been written in the terms it
was. It is consistent with Jordan stalling Gallaher. Further had there been
any prospect of Gallaher resuming as title sponsors it could have been expected
that this letter would have raised it.
The 1 June Letter
- On 1 June Mr
Jordan dictated a letter to Mr Haines. Mr Phillips had drafted it. It reads
(with my emphases):
"I appreciate
that you and Peter took the time to speak to Ian and myself before your announcement
in Monte Carlo, even if the F1 grapevine had told us some weeks before of
your intentions…
As I told you
in Monaco your final decision has left Jordan in an unenviable position.
I believe that
we were always correct with you and that our proposal met all the parameters
that you outlined on your visit to Silverstone. Your telephone call to
Ian and I on 22 March at 6.20pm confirmed this when you categorically stated
‘you’ve got the deal’ My letter to Peter of 23 of March, on your instruction,
reflected this.
Naturally
I informed my partners who had taken the trouble to contact you, Honda and
MasterCard, and Dr Jung Chairman of Siemens/Infineon, who had spoken to
Chris Gent, of what I believed to be your decision.
There was
also further embarrassment and potential long term damage to our relationship
with Deutsche Post when Professor Schukies was shown an all-red ‘Jordan’
on a visit to Thomas Geitner at your offices in Dusseldorf.
As
offered by you in Monaco, I would very much appreciate an open letter from
you to me explaining your position fully which I can use to try to redress
the unfortunate position in which I and my company now find ourselves with
our partners."
- This is the
first occasion on which the words "you’ve got the deal" had been
referred to in any open document. The letter itself makes clear that Jordan
had known for "some weeks" that it had lost out. Most remarkably,
in the context of this claim, whilst the letter asserts that various of Jordan’s
sponsors had been told that Jordan was to be sponsored by Vodafone (despite
the supposed confidentiality) and refers to embarrassment with DP, the one
sponsor which is not referred to is Gallaher which is said to have been so
upset that when approached cap in hand by Jordan later only a reduced sponsorship
amount was available. Moreover Dr Jung said, and I accept, that he had "absolutely
no recollection of anyone telling me that Vodafone or Mr Haines had decided
to sponsor Jordan". Mr Jordan himself accepted that it was not true that
Mastercard had been informed.
- Mr Haines’ reply
to this letter was a model of restraint and sought to fulfil his offer of
help with Jordan’s sponsors. It also included the following paragraph:
"I
do not know what you are suggesting … by focussing on one telephone conversation
almost 3 months ago, out of the 30 or more points of contact between our organisations.
I cannot recall the precise terms of the telephone conversation to which you
refer. I am absolutely certain, however, that I would not have said categorically
"You have got the deal". I would probably have conveyed the impression,
which was true at the time, that you were the most likely partner."
- As I find, Mr
Haines was writing accurately and truthfully in this response.
- On 13th
June Jordan’s solicitors wrote a letter before action asserting, as does the
claim, that a binding contract was concluded on 22 March.
- Jordan’s original
particulars of claim (dated 28 March 2002) alleged, in relation to the alternative
claim, that Jordan acted in reliance on Mr Haines’ statement on 22 March 2001
"in ceasing to negotiate any sponsorship (until 26 May 2001) with Gallaher
for the 2002 season and informing Gallaher of the position with Vodafone".
"As a result" it was alleged "Gallaher lost all interest in
being a title sponsor of Jordan and reduced the amount that it was prepared
to pay from a maximum of £19 million for the 2002 season to a significantly
reduced sum as a secondary sponsor in 2002". It was also specifically
alleged that but for the want of negotiations "Gallaher would have been
prepared to pay sponsorship of up to £19 million for title sponsorship in
the 2002 season prior to a date on or around 31 March 2001".
- In almost every
respect this claim has been exposed as false. Indeed it is hard to avoid the
conclusion, despite the statement of truth signed by Mr Jordan, and his third
witness statement in support of the claim, that it was known to Jordan to
be false. Weeks before there was even a suggestion of a deal with Vodafone
Jordan and Gallaher had agreed that Gallaher would not continue as title sponsors.
There was no chance of a deal for title sponsorship at £19m or any other price
before 31 March 2001 or otherwise. There were discussions with Gallaher after
22 March and before 26 May. As I find, it was Jordan not Gallaher which stalled
the negotiations and Jordan did not tell Gallaher that they had a deal with
Vodafone.
- Jordan’s claim
was amended on 17 June 2003 but the passages to which I have referred were
only amended to change £19m to £17m and to add the allegation that
"Further,
had Jordan approached Gallaher shortly after 5 April 2001, Jordan would have
been able to negotiate title sponsorship for 2002 at or about that figure.
Further, Jordan lost the chance of renewing title sponsorship with Gallaher
at or about that figure for 2003. Alternatively, if Gallaher had not been
prepared to make a contract for title sponsorship, it would have been prepared
to make a contract for secondary sponsorship in the sum of £10,000,000 for
2002 and £11,000,000 for 2003. In fact, by the time Jordan came to negotiate
with Gallaher it was only able to secure secondary sponsorship for 2002 in
the sum of £7,000,000. For the 2003 season Jordan was only able to secure
secondary sponsorship from Gallaher in the sum of £6,500,000."
- The references
to title sponsorship are equally fanciful. On the face of some of the documents
Jordan did negotiate a fee of £10m for secondary sponsorship by Gallaher in
2002. In disclosure made on 11 July 2003 Jordan disclosed a document entitled
"Sponsors 2002. Status report". It comes from a file dated 11 June
2001. As regards Gallaher it records:
"Agreement
reached, subject to contract, for £10m in 2002. No title and reduced branding,
Heads of Agreement being prepared."
- Found on Jordan’s
computers, minutes of executive meetings of Jordan dated 12 and 19 June 2001
at which both Mr Jordan and Mr Phillips were present record:
"B&H
deal has been signed for $10m, they understand they will not be the title
sponsors."
- In his 5th witness
statement Mr Phillips’ said these references to an agreement at £10m were
mistaken. A contract had been prepared in that sum but he was told the board
of Gallaher had expressed "unease" about Jordan’s "proposals."
Eventually agreement had been reached (signed only on 17 April 2002) in the
sum of £5.6m, amended by a letter agreement dated 20 May 2002 by increasing
the payment by a further £1.5m. Agreements to that effect were properly disclosed.
The further payment was for additional sponsor places on the car illustrated
by appendices to the letter agreement. What remains undocumented (apart from
the short note of Mr Phillips) is the degree, if any, to which what Gallaher
thought it was to get for £10m was in fact what it got for £7.1m. Plainly,
as Mr Phillips said, the amount which Gallaher would pay for secondary sponsorship
would depend on the amount of exposure it got. Gallaher would also have been
entitled to a "pay-back-fee" under the 2001 contract because of
Jordan’s poor results. There is a letter from Gallaher (Mr Jenner) to Mr Phillips
dated 23 July 2001 which was only disclosed during the trial but which demonstrates
Gallaher’s concerns at the time, all of which are about value for money and
none of which have any relevance to Jordan’s relationship with Vodafone. Mr
Phillips indeed said the 2002 agreement was "a whole different package"
based on the £5.6m Gallaher wanted to pay and "completely different"
from the one they had been discussing in February. In the event Jordan entered
into a title sponsorship agreement for 2002 with DP and secondary sponsorship
agreements with Damovo and Virgin as well as Gallaher.
- On the evidence
before the court I find it impossible to conclude that Jordan has even established
that it suffered any loss let alone the loss claimed by reason of any delay
in concluding an agreement with Gallaher or any weakness in its negotiating
position which can be attributed to the conduct of Vodafone on which it relies
but which in any event I have rejected.
CONCLUSION
ON EVENTS AFTER 22 MARCH
- Both Jordan’s
conduct and the documents are wholly inconsistent with the existence of the
contract or belief in a contract which Jordan asserts. They are also inconsistent
with the loss it claims. Jordan continued to seek title sponsorship elsewhere,
including with a major competitor of Vodafone. As I find, Jordan deliberately
did not inform Gallaher that it had made a contract with Vodafone because
it did not want to lose Gallaher as a secondary sponsor should it lose the
contest with Ferrari for sponsorship by Vodafone or agree title sponsorship
by Orange. Jordan knew very well, as was the case, that any decision by Vodafone
was one to be taken by the board not Mr Haines and it knew that no such decision
had been taken in Jordan’s favour and was in no sense a rubber stamp. Jordan
was not misled by Vodafone in any way.
OVERALL
CONCLUSIONS
- It will be apparent
from my analysis and assessment of the evidence that I reject on the facts
Jordan’s case that in the course of the 22 March telephone conversation Mr
Haines said anything that could reasonably or indeed was taken by Jordan to
be a binding commitment on Vodafone to sponsor Jordan. There are other issues
also on which in my judgment Jordan’s case is equally unsustainable.
- At 22 March
no one could have deduced what were the terms of any contract which Mr Haines
was supposedly making. It was the understanding of both Vodafone and Jordan
that any agreement would have to be in writing. Not even Heads of Agreement
(which might or might not have been drafted so as to be legally binding) had
been established. At this stage there was nothing which could sensibly even
have been said to be "subject to contract". There was no agreement
on livery, no agreement on bonuses, no agreement on intellectual property
matters or joint ventures and no agreement on a renewal option which, it is
agreed, was a provision it was in the interests of the sponsor to secure in
order to safeguard and benefit from the investment the sponsor was making
in the team. Mr Boyle submitted that the "deal" was for those few
matters which had been agreed and those which had not could be ignored or
had been rejected. That submission disguises an impermissible form of cherry-picking
when on any view of the facts a comprehensive agreement and certainly agreement
on the key factors to which I have referred was both expected and required.
- Further, and
again for the reasons apparent from my analysis and assessment of the evidence,
I am entirely satisfied that not only did Mr Haines not have actual authority
to bind Vodafone to the agreement Jordan alleges but Jordan’s case on ostensible
authority is also hopeless. The only matter relied upon which might support
such a case is the alleged conversation with Dr Jung on which I have commented
in paragraph 97. As I find, the conversation does not support Jordan’s case.
- The submission
that even if (as I have found) Mr Haines had no authority to make the alleged
agreement he did have authority to communicate to Jordan the decision of those
at Vodafone who did have authority to decide to sponsor Jordan was founded
on the decision of the Court of Appeal in First Energy (UK) Limited v Hungarian
International Bank [1993] 2 Lloyds Rep 194. I see no need to address the
parameters of that decision as the submission fails on the facts. Even on
Jordan’s case (which I reject) as set out in the letter of 23 March and the
oral evidence of Mr Jordan and Mr Phillips Mr Haines’ words were not communicating
anyone else’s decision (see paragraph 127) let alone a decision of the board
of Vodafone. If Jordan had thought that was so they were plainly told otherwise
in Mr Harris’ letter of 26 March and equally plainly were aware that the board
had not made but would be making a decision thereafter.
- For all these
reasons Jordan’s primary case fails. The alternative case also fails at the
first hurdle. I find no representation was made on 22 March of the kind on
which Jordan relies. Indeed Mr Haines and Mr Harris always made clear that
if Jordan had to move with Gallaher it should do so regardless of Vodafone.
The 26 March letter made the position clear. Moreover Jordan did not rely
upon any representation as alleged. Gallaher, it had been established before
22 March, was not "in any event" going to be Jordan’s title sponsor.
Gallaher was never told that Vodafone had agreed to sponsor Jordan and that
therefore Gallaher could not do so even as a secondary sponsor. Nor am I satisfied
on the evidence that Jordan has proved any loss as a result of the final terms
of the agreements it did negotiate with Gallaher for 2002 and 2003. For all
these reasons Jordan’s alternative claim also fails.
- It follows that
the entire claim by Jordan will be dismissed and I will hear the parties on
any ancillary matters on a date to be fixed following the handing down of
this judgment.