Hammonds Direct committee denies lease liability in face of pre-action letter

HAMMONDS is gearing up for another bout of possible legal action after serving the partners of failed volume business Hammonds Direct with a pre-action letter.

The firm has contacted the five-member Hammonds Direct partnership committee in an attempt to make the failed conveyancing business’s 41 shareholders, more than 20 of whom are Hammonds partners, pay for the lease on Bradford property Pennine House, from where the business operated.

Hammonds leased the property and sublet parts of it to Hammonds Direct. However, in the letter the firm concedes that it never actually formalised a sub-lease with the volume business.

The letter says: “No doubt because the Hammonds Direct partners were also going to be partners in Hammonds Suddards Edge [now Hammonds], and because this was seen as a mere formality, it was decided that the fact that the lease had not been finalised would not impede the merger [of Hammonds Suddards and Edge Ellison] or the demerger of the Hammonds Direct business.”

The letter continues: “That matter was never completed as you know.”

Hammonds Direct has been disputing liability for the lease since Hammonds Support Services, the business’s trading arm, went into administration in January (The Lawyer, 19 January). All of the Hammonds Direct shareholders had unlimited liability in the business.

Hammonds has suggested that, if the two sides cannot reach agreement on who is liable for the lease, they should go into mediation.

However, in forwarding the letter to the Hammonds Direct partners, committee member David Armitage, who is still a partner at Hammonds, urged them all not to agree or admit any liability for the lease, adding that the committee will meet this week (2 June) to discuss how to proceed.

Armitage told partners: “Hammonds Direct has so far received several opinions of leading counsel robustly supporting the Hammonds Direct position that we have no legal obligation to proceed with a lease of any part of Pennine House.”

A spokesperson for Hammonds declined to comment, adding: “We can confirm that we are in discussions with the Hammonds Direct partnership committee – discussions which have been ongoing for a number of years.”