A guide to The Football League’s decision on Massimo Cellino

Earlier this month, The Football League’s Professional Conduct Committee¹ (“the Committee”) issued its decision ² in the appeal made by Leeds United owner, Massimo Cellino, against his disqualification under The Football League’s owners’ and directors’ test set out in Appendix 3 of its Regulations and Rules (the “Regulations”).³ 

The case involved complex and technical arguments concerning the various elements under the test that need to be proven in order to lead to a disqualification. It is interesting to note from the decision how the Committee addressed these arguments with an eye on how future cases may be determined.

Background

Massimo Cellino was convicted on 18 March 2014 by a court in Sardinia of an offence relating to non-payment of import tax in respect of a boat called the Nélie. Mr Cellino was fined €600,000 and the boat was confiscated. Mr Cellino claimed he honestly believed that he was entitled to a tax exemption however the Italian court rejected this and found that a shell company was deliberately setup in order to evade payment of tax.⁴

As a result of the decision, the Football League Board unanimously agreed⁵ that Mr Cellino was subject to a disqualifying condition under the owners' and directors' test as he had an unspent conviction for “an offence involving a dishonest act.”⁶ A dishonest act is defined in the Regulations as “any act which would reasonably be considered to be dishonest.”⁷ As a result, Massimo Cellino was prevented from buying a majority stake in Leeds United in accordance with Appendix 3 Rule 2.1.

Mr Cellino appealed that decision to the Professional Conduct Committee⁸ who upheld his appeal in April 2014 on the basis that whilst Mr Cellino did have a conviction, it was not a conviction for “an offence involving a dishonest act” since there was insufficient information regarding the offence to reasonably conclude that his offence was dishonest. Mr Cellino was then subsequently free to acquire a controlling interest in the club. However, Tim Kerr QC, who chaired the committee alone, confirmed in his initial decision that “if the reasoned ruling of the court in Cagliari discloses that the conduct of Mr Cellino was such that it would reasonably be considered to be dishonest, he would become subject to a Disqualifying Condition.”⁹

The Football League successfully applied for a copy of the Italian Court’s reasoned judgment in October 2014 and, after considering it, they once again concluded that Mr Cellino was subject to a disqualifying condition under its rules and disqualified him from acting as Director or exercising any control over the club.¹⁰ Massimo Cellino issued a further appeal, and the Committee heard this second appeal on 15 January 2015.

Grounds of Appeal

Mr Cellino’s grounds of appeal were that the Italian Court’s decision was not a conviction; alternatively that it was not a conviction involving a dishonest act; alternatively that there are compelling reasons why Mr Cellino should not be disqualified from holding office or being a Director of Leeds United. In the event that Mr Cellino’s appeal was dismissed, he made an application under Appendix 3 Rule 6.3 of Regulations to review the length of his disqualification. Mr Cellino urged the Committee to reduce the length of his disqualification to nil on the basis that it was disproportionate to the nature of his conviction.¹¹

There were five issues that the Committee had to decide:

1. Whether it was open for Mr Cellino to reopen the issue as to whether the Italian Court’s decision was a conviction under the Football League rules;
2. Whether the Italian Court’s decision was a conviction under the Football League’s Regulations;
3. If so, whether it was a conviction “for an offence involving a Dishonest Act”;
4. If so, whether there are compelling reasons why Mr Cellino should not be disqualified from holding office or acting as the club’s director; and
5. If not, whether Mr Cellino’s application to reduce the length of his disqualification should succeed. 

1. Had the matter already been decided (doctrine of “res judicata”)?

The Football League submitted that it was not open for Mr Cellino to argue that the Italian Court’s decision was not a conviction under the Regulations because the Committee had already decided in April 2014 that it was. This decision was, therefore, binding on the parties in accordance with the doctrine of res judicata.

Lord Macdonald, on behalf of Mr Cellino, claimed it would be wrong to prevent Mr Cellino to challenge the decision on this issue as it was an appeal against a fresh decision and he was not expected to challenge the previous decision by the Committee as he won that appeal on another ground. Mr Cellino also argued that the present proceedings were not arbitration proceedings but internal disciplinary proceedings so the doctrine of res judicata should not apply and “to do so would be unfair and inconsistent with the right to a fresh appeal.”¹²

The Committee found no basis to reopen the conviction issue. Caselaw confirmed that the doctrine also applies to disciplinary proceedings and whilst the doctrine is sometimes not applied when there are a change of circumstances, there were no material changes in this case to “justify reopening the conviction issue.”¹³ The Committee, therefore, decided that the conviction issue could not be reopened but nevertheless went on to consider the issue again in case they were wrong on this point.¹⁴