Hammonds faces court action over Football League contract

The Football League is considering suing Hamm-onds (formerly Hammond Suddards Edge) after failing in the High Court last Thursday (1 August) to hold Carlton and Granada liable for the £178m it is owed by ITV Digital

The Football League, advised by Lawrence Graham, lost its case over a contract drawn up by Edge Ellison, now part of Hammonds, between itself and OnDigital, the precursor to ITV Digital.
The contract, drawn up in June 2000, failed to mention Carlton and Granada, OnDigital's owners, as parent guarantors to the deal. It simply said: “On-Digital and its shareholders will guarantee all funding to the FL [The Football League] outlined in this document.”
In his judgment last week, Mr Justice Langley commented: “It might also have been a nice question whether the shareholders guarantee was joint and several or to be limited to 50 per cent each.”
Langley described the wording of the contract as “odd” and “inelegant”. Andrew Dobson, head of litigation at Lawrence Graham, said that suing Hammonds over this matter was “clearly something the board of the Football League will have to think about”.
He said the board now had three options: to appeal, to look into why Carlton and Granada allowed ITV Digital to go into liquidation, or to sue Hammonds.
Hammonds was acting for the Football League up until December 2001, when the league began to realise that ITV Digital was doomed. Partner Richard Alderson wrote to Granada and Carlton asking them to provide a parent guarantee. This was a year-and-a-half after the original contract was signed.
Alderson wrote: “Given all the paper talk about the alleged intentions of Granada and Carlton over the past few weeks the future solvency of ITV Digital has become an issue… The Football League must now look for parent company guarantees from Granada and Carlton.”
Hammonds had stopped acting for the league by April this year when Lawrence Graham was instructed to take over the case.
When the league launched its action against Carlton and Granada, it was assumed by many experts that it would also launch a protective action against Hammonds.
But as revealed by The Lawyer (22 April), Hamm-onds gained what could now turn out to be a temporary reprieve prior to the judgement, as the partners who drew up the contract were used as witnesses for the League in the High Court case.
Following the judgment Hammonds said in a statement: “Hammond Suddards Edge is aware of the press comment concerning the possibility of legal action by the Football League in relation to the ITV Digital media rights deal. Hammond Suddards Edge has had no communication from the Football League or its advisers with regards to this matter. Naturally Hammond Suddards Edge will continue to observe its obligations of client confidentiality.”