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.