Horizon solicitor to give forensic account of "Christmas party" signing

The Rory Mcllroy v Horizon court case rumbled on through the discovery process in the Commercial Court this week and while Judge agreed to McIlroy's request for full information on the legal and benefical ownership and shareholdings of all three companies he's suing — Horizon and the two special purpose non-trading companies set up by the Dublin management company to handle his affairs — it remains to be seen if he will succeed in proving that Conor Ridge and Co set up Gurteen Ltd and Canovan Management Services to suit their own interests (and potentially those of others) rather than his.

As the Irish Independent reported on Friday:

While the defendants had argued Mr McIlroy was not entitled to documents concerning Horizon, the judge ruled he was because there was an issue in the case as to whether Horizon controlled Gurteen and Canovan.

The identity of the beneficiairies and shareholders in Horizon may or may not produce some interesting names but the more important business of the day in the Commercial Court related to what has been dubbed the "Christmas party" signing of the December 2011 contract between McIlroy with Horizon.

McIlroy claims he signed the December 2011 representation agreement under “undue influence” when he was just 22 years old and inexperienced and, as a result, has paid more than US$6.8m based on “unreasonable” fee rates “many times greater” than is standard in the sports agency industry.

Headlines in newspaper reports last October gave the impression that McIlroy had signed the contract at Horizon's Christmas party and while the two events did occur on the same day, solicitor Owen O'Connell, who is a partner in William Fry Solicitors, will be allowed to give evidence on commission regarding the exact sequence of events that day.

Currently suffering from serious illness, Mr O'Connell was present and took detailed notes at the signing of the contracts between McIlroy and Horizon. Given his illness, he will be allowed to give evidence in advance of the trial, which is scheduled for October.  

That process, a recording session, is scheduled for June with Horizon's counsel bringing him through the evidence before he is cross-examined by McIlroy's counsel. The entire proceedings is then presented to the judge when the case is tried in the Commercial Court in October.

McIlroy's case hinges on two things — that he was inexperienced at the time he signed the contract and was not given legal advice.

However, Horizon has vigorously denied these claims, as their barrister Paul Sreenan SC explained before Ms Justice Finlay Geoghegan during the discovery proceedings in the Commerical Court on Thursday:

MR. SREENAN: Judge, you will see there that there is an e-mail exchange between Conor Ridge, who is the principal of Horizon Sports Management Limited, to Rory Mcllroy on the 19th October 2011 and he is saying:

"As discussed yesterday, this e-mail is to confirm the agreement we have reached as follows:

You appoint Horizon Sports Management as your exclusive management agent with effect from the termination of your arrangement with ISM."

ISM were an organisation run by Mr. Chubby Chandler and who were the then existing sports management representatives of Rory Mcllroy.    

"1. We will manage, represent and advise you and promote your business and professional interest both on and off the golf course.    

2. Our appointment will be for an initial three years and will then roll over for successive periods of two years unless terminated by three months notice expiring on any two-year date.    

3. We will get paid 20% of all gross off-course income generated by us on your behalf and 5% of all gross on-course earnings. You and Horizon will enter into a formal agreement and power of attorney in due course which will contain further detailed arrangements, although the essentials of our agreement are as above and we might mutually decide to substitute a new company devoted only to your management for Horizon. The new company, if used, will have access to Horizon's resources and expertise, including me of course. If you agree this accurately summarises our agreement, you might confirm to me by e-mail so that we can proceed with the appropriate planning arrangements and start putting the right structures in place for you.  I have copied this e-mail to your lawyer, Ian Coulter, of Tughans in case he may have any comments."    

Tughans being a Northern Ireland firm of solicitors who were introduced to Mr. Mcllroy by Horizon as being a firm in Belfast that he could retain if he so wished.    

Rory Mcllroy responds on the following day by saying:    

"Hi Conor, That all sounds good and look forward to working with you over the coming years."    

So what we can see from that exchange here, Judge, is that firstly the function that was to be performed by Horizon initially was to be the exclusive manager and agent and, secondly, the term was agreed as being an initial period of three years, terminable by three months' notice expiring on any two-year date, there being a two-year roll over.

Then the rate of commission was also agreed as being 5% of on-course earnings and 20% of gross off-course income and it was then specifically flagged that a new company might well be substituted, devoted only to Mr. Mcllroy's management by Horizon and that that would be something that could be mutually decided upon.

That is an important background to the claim that is now being made by Mr. Mcllroy in these proceedings because it was followed up with a written agreement that was indeed executed on the 21st December 2011 with the Second Defendant, Gurteen, and which contained the same terms in relation to rates of commission and there was then an amendment agreement in March of 2013 which was also with Gurteen and which was signed by Mr. Mcllroy and which reduced the commissions that he was on.

It abolished the commissions on the on-course earnings and it reduced his commission in respect of the Nike contract from 20 after a period of time down to 15, but 20% otherwise on other off-course earnings.

In these proceedings, the Plaintiff is alleging that he didn't have the benefit of independent legal advice, despite the reference to Mr. Ian Coulter in Tughans and our response to that is that he did get advice at that time, which he recites indeed in his Statement of Claim and subsequently, in December, having been again advised both by the Defendants and by their solicitors, William Fry, to get independent legal advice, he chose to proceed without the benefit of it.

Now he entered into that representation agreement in December 2011 and he now argues in these proceedings that that was a breach of fiduciary duty that he says was owed by the Defendants to him and the fiduciary duty seems to be based on the fact that Horizon was his exclusive manager from October 2011 and he says essentially that Horizon should have advised him in December 2011 that the rates of commission were too high or that other terms he would say of the agreement were improvident and he makes the same argument in relation to the March 2013 amendment agreement.

He relies on those  contracts, those series of contracts, in order to argue for the fiduciary duty that he says exists, while at the same time suing to rescind the representation agreement and suing for declarations that the     representation agreement and accordingly the amendment agreement are void as being contrary to competition law."

Rory McIlroy in action at the Honda Classic earlier this month. Picture: Fran Caffrey www.golffile.ie

The nub of the matter appears to be that while McIlroy is claiming he was never aware that Gurteen and Canovan were being set up to ring fence his affairs from the rest of Horizon's business and to protect his confidentiality, Horizon say it was very much the plan all along and McIlroy was fully aware of that fact.

In casting doubt on this, it would appear that the McIlroy strategy is to prove that Horizon — Conor Ridge and his partner Colin Morrissey — had an ulterior motive in creating the two special purpose non-trading companies and did so for Horizon's benefit rather than his.

The game of cat and mouse continues.