16 January 2013 | By Katy Dowell
20 January 2014
17 June 2013
16 April 2013
22 July 2013
14 October 2013
A courtroom battle relating to Liverpool Football Club settled last week after the Court of Appeal (CoA) refused to vary an order for the claimants, former LFC owners Tom Hicks and George Gillett, to surrender in excess of £10m by way of security for costs.
The order was delivered by Mr Justice Peter Smith in October. Hicks and Gillett were requested to make a series of staged payments on account to both sets of defendants - first, Royal Bank of Scotland and second, the club’s directors Christian Purslow and Ian Ayre and its former chair Sir Martin Broughton.
For the RBS action the American pair were told to cough up £5.1m, with approximately £3.8m paid before the start of the planned trial. For the Broughton action the pair were ordered to hand over £6.1m, with £3.1m surrendered by 15 April to cover the conclusion of the trial.
By the time the case settled last Friday (11 January 2013), Hicks and Gillet had paid around £4m into a costs account.
The eye-watering amount reflected what Smith J said was his own distrust of the claimants, who, he said, “have demonstrated […] that if it suits them they will abuse the process”. The CoA’s refusal to vary the order reinforces the view.
It has been a fierce fight for all involved and one that has broken new ground in the courts. The case, listed as one to watch in The Lawyer’s Top Cases 2013, was due to have a 50-day outing starting in April with 11 barristers including six silks appearing for the parties.
Clyde & Co brought in three silks for the claimants (see legal line-up below), who alleged that Broughton, Purslow and Ayre conspired with the club’s financiers RBS to sell the club at a reduced price.
The spat first entered the courtroom in 2010, when the American duo attempted to reconstitute the board and prevent a proposed sale to New England Sports Ventures (NESV). Hicks and Gillett and their respective companies at that time owed the bank £200m.
RBS fought to have the sale endorsed by the High Court in a week of tense high-profile hearings (11 October 2010).
Mr Justice Floyd granted the order to the bank, but the next day Hicks and Gillett went to a Texan court requesting a temporary restraining order against the sale. They had been swindled, they told the court. The Texan court granted the order.
In London, the bank went back to the High Court, which retaliated by issuing an anti-suit injunction preventing the case from continuing in the US. Floyd J’s judgment revealed that neither Hicks nor Gillett had informed the Texan court of the proceedings in London. The sale went through (6 October 2010).
The following February the lawyers were back in court, where Hicks and Gillett were told that the anti-suit injunction would not be lifted (18 February 2011). The decision meant that any future claims launched by the pair could only be brought through the English courts.
Hicks and Gillett launched their conspiracy case in the High Court early last year (8 March 2012).
The claimants, however, have been haunted in the courts by their previous attempt to block the sale in the US.
Smith J mentioned it in his order and the CoA repeated the view in its latest judgment, with Lord Justice Lewison stating: “It was a matter of particular concern that the Texan lawyers representing the Kop defendants had untruthfully told the Dallas court that they had been unable to obtain relief in England because the courts were closed.
“The truth was that, immediately before the petition had been filed in the Dallas court, the Kop defendants had applied to the Chancery Division for an injunction which Floyd J had refused. The Dallas court was not told of this.”
The collective orders in this spat have repeatedly been critical of the claimants. In requesting costs of approximately £10m for the four defendants Smith J sent a clear message.
Lewison LJ refused to vary the order in the Broughton proceedings in December, stating that security of costs for an appeal should be paid to Broughton despite the fact that the appeal had not been granted. The court, it said, had jurisdiction to make such an order, in effect extending the law.
Later that same month the appellate court also refused to delay the start of the case (8 January 2012).
Had the claimants continued what might have followed, one lawyer familiar with the case said, would be tantamount to death by a thousand paper cuts.
Writing in The Lawyer this week Burges Salmon partner Mark Gay stated flatly: “The judicial semiotics are clear: Hicks and Gillett - they hate your claim. In these circumstances, no matter what your sense of grievance lingers there is little to be done.”
This has been a costly battle all round. RBS and the directors are understood to have jointly estimated costs in the run up to the trial to be around £7m.
The settlement had a sense of the inevitable about it, but it may not be the end of the case. Any whiff of a breach of confidentiality and they’ll be back in court.
The legal line-up
For the claimants Tom Hicks and George Gillett, and their respective companies: 3 Verulam Buildings’ Ali Malek QC and Gregory Mitchell QC, and 4 Stone Buildings’ Richard Hill QC leading 3 Verulam Buildings’ Christopher Harris and Sebastian Isaac of One Essex Court, instructed by Clyde & Co partner Paul Friedman.
For the defendants Broughton, Purslow and Ayre: Monckton Chambers’ Paul Harris QC and Serle Court’s Philip Marshall QC leading Monckton Chambers’ Owain Draper, instructed by Couchmans partner Satish Khandke and Enyo Law partner George Maling.
For the defendant RBS: Erskine Chambers’ Richard Snowden QC leading James Potts of the same set and Fountain Court’s Patrick Goodall, instructed by Freshfields Bruckhaus Deringer partner Patrick Swain.
For the defendant NESV: Erskine Chambers’ David Chivers QC and Philip Gillyon, instructed by Shearman & Sterling partner Jo Rickard.