Author: Guy Thomas Now that the transfer window has closed, the list of free agents published by the Professional Footballers Association  makes for illuminating reading. Whilst (in theory) many of these could be signed up by clubs tomorrow, the BBC (and others) have already reported on how quiet the transfer market has been this season. When players like DeMerit, who performed well for the United States at the recent World Cup, are still looking for a position at this stage of the season, then it seems like financial restraint has at last dampened the market. Hang on…..whilst its tempting to point to this as a sign of the financial strain that clubs are still under, statistics published by the German based website www.transfermarkt.co.uk seem to point to yet another enormous mismatch between the monies received in by Premiership clubs from player sales and how much they have (reportedly) had to fork out for their new purchases. No one should be surprised that Manchester City tops the table for net transfer spending but with an apparent mismatch of £247.490.000 for the Premiership’s season so far (i.e. the reported transfer revenue received in by Premiership clubs is £168.160.500 & the reported transfer expenditure spent by Premiership clubs is £390.901.500), it’s surprising that more alarm bells haven’t rung out about this. Put another way; it’s an odd sort of belt tightening that leads Premiership clubs that are paying for new players to spend close to quarter of a billion pounds more then they have received in on the sale of other players.

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Spend, Spend, Spend?

Author: Nathanael Young For years, the identity of Top Gear’s the Stig has been the subject of speculation and amateur detective work. Now, with publisher HarperCollins set to reveal all in a new book, the matter has been passed to the lawyers. The BBC has applied for an injunction to halt publication, and both parties were in the High Court on Monday over the issue. At present, further details of the case are hard to come by. It seems the BBC is alleging that the publication breaches confidentiality agreements entered into in connection with the show, and that HarperCollins is standing by its right to publish the mysterious driver’s story. No doubt more will emerge in due course, although how much depends on the outcome of the litigation. To the public, the interesting question may be the face behind the trademark black visor, but there are likely to be serious legal issues in a case of this sort. Secrets are not usually kept for long under the constant glare of media publicity; they have to be carefully guarded. There can be little doubt the BBC has given serious thought to the issue from Stig’s first appearance in 2003, or there would now be nothing confidential to protect. In English law, secrets of this sort will be protected by the law of confidence. To stop disclosure, someone will generally have to show the information is confidential in nature, that it was disclosed in confidential circumstances and that there is a threat to use it to their detriment. The best way to satisfy this test is by having a carefully drafted confidentiality agreement. In this case, HarperCollins is not likely to have received their information from the BBC, so there is unlikely to be a signed agreement. It may be the BBC will instead allege the publisher is obliged not to use information they received from the unknown driver, since they knew or ought to have known that was confidential. There is precedent for this; since when Michael Douglas and Catherine Zeta-Jones sued Hello! magazine for using unauthorised images of their wedding, there was again no confidentiality agreement between the magazine and the couple. In that case the source of the photographs must have been a guest or member of staff with a hidden camera. However, it was held that Hello! were liable for using the images obtained in breach of confidence. Cases of this sort may seem far from the world of business. However, all businesses will have confidential information about their processes, customers, suppliers and systems. Sometimes, this information can be the single most valuable thing the business owns. It makes sense to control and protect it, and this means carefully worded confidentiality clauses are a must. After all, some things are best kept under your hat – or helmet.

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The Stig Issue: BBC battles to keep driver veiled

Author: Guy Thomas Southend United Football Club , Sheffield Wednesday Football Club  , and Cardiff City Football Club Limited . All three clubs are in the Royal Courts of Justice today facing hearings to decide whether they should be wound up. Its been well reported that payments for historic debt have already been made with Her Majesty’s Revenue & Customs (HMRC) to avoid any immediate doom. However, just because they lost the last two rounds with Pompey , HMRC are not going anywhere. In fact the defeats, especially whilst the issue of the Football Creditors Rule remains undecided, will have likely increased the desire of HMRC to hammer down on recalcitrant Clubs who are late with their tax. Further, a winding up petition puts HMRC in the right position to set up and agree payments for future tax liability. Barring a late intervention by other creditors, such as “Charterhouse Commercial Finance Plc” against Southend, It looks like these three clubs “deals” with HMRC will help them avoid disaster today. But they (and other Clubs) had better keep up the payments on the agreed terms, or else HMRC will be back to Court for more attempts at winding them up. The golden rule with all debt repayments, football clubs and ordinary companies alike is to keep the creditors informed. Above all, no surprises. Having said that, I can’t see HMRC being too sympathetic to any Clubs that need to change payment terms later in the season, can you?

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Cardiff In Court, Shrimpers Slip Up and Wednesday on Wednesday - Three Clubs Face Winding Up Hearings Today

Author: Chris Cook   I am pleased to report that SA Law recorded its third consecutive victory on Wednesday evening against a strong Hillier Hopkins side.   Having elected to bat on a damp evening, SA Law made a stuttering start with Satinder and Rob Griffiths both falling early on and ringer Nathanael Young  and Chris Alexander departing without scoring.  The skipper was joined by Gary Dunger  at the crease, the latter of whom batted impressively to reach 25 and retire before ringer Josh Rose arrived and gave us the usual display of powerful hitting to score him 25 and retire in express fashion.  Simon Walsh then came to the crease and the rain started to fall and gave us a humorous display of his skating skills as he spent most of his innings on his backside.  The heavens opened 11 overs into the scheduled 15 and the SA Law innings finished on 90 for 4, giving Hillier Hopkins a decent target of just over a run a ball.   There were calls to call off the match during a 30 minute downpour but after discussion the match carried on.  Ringers Josh and Pahrag produced tidy bowling spells in slippery conditions.  In the circumstances SA Law’s fielding was solid although there were understandably a few errors, most notably including Pahrag’s son copping a fearsome blow to the shin and Chris A bottling a routine stop in the field, clearly mindful of the same outcome.  Chris A atoned with some solid bowling against some decent batsmen, as he (one wicket) and Satinder (two wickets) both kept the run rate down.  Hillier Hopkins finished on 77 for 7, which was 319 runs short of their Duckworth-Lewis adjusted score.   Many thanks to the players and spectators.  It is likely that this was our last game of the season, and if so the players are to be commended on finishing undefeated against some good opponents, particularly in the absence of Rob “we’ve never lost a game when I’ve played” Ryall.

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Cricket V Hillier Hopkins

Author: Guy Thomas And on the Third Day the Word came down… Not Guilty!* After yesterday (the second day of the hearing) in which the HMRC finished off putting their case to Mr Justice Mann, Pompey’s lawyer, Richard Sheldon QC, took about three hours to explain the club’s position and plead for the Clubs survival (amazingly) it worked. The Judge gave his executive summary this afternoon and, as reported by Portsmouth News and others, HMRC have decided not to Appeal. No doubt the judge will publish his fulsome and no doubt carefully worded explanation, very soon. The judge’s decision was hoped for by many and expected by only a few. Mr Sheldon had told the judge yesterday the club would receive a total of £48m over the next four seasons. The judge said that with £22.5m owed to football creditors this would leave £25.5m. HMRC position was that they were determined to get the best deal for the taxpayer. High stakes poker, winner takes all, with a dealer called Mr Justice Mann. This appeared to be largely technical case focused on case law, the interesting Football and Tax aspects were merely the setting, but in the end though the Judge seems to have taken the view that the alternative was too poor an outcome for all concerned (including the HMRC). Yesterday, Pompey’s lawyer painted a Doomsday scenario for the judge if he failed to back the club in his verdict, stating that if the Revenue won the club it would prevent Mr Chainrai becoming the new owner and ‘in all likelihood [the Club] would go into liquidation’. There is so much at stake for the HMRC that an appeal seemed inevitable (and I still would have rated their chances). You’ll notice who I missed off from that …the fans, they’ll not want to appeal this. Where were Andronikou and Lampitt for the result? Were they too embarrassed to show their face to the media and fans whose attention they had previously courted? No, that’s unfair. They were more likely already preparing the Club’s Appeal had they lost. Well that’s that, except for the lawyer’s fees of course. £230,000? You’ll have heard the expression: “Play Up Pompey”, well now it’s “Pay Up, Pay Up Taxman”. *Well not exactly, not guilty but you get the gist.

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Pompey in the Dock: Pompey Win! And No Appeal

Author: Guy Thomas The hearing of Her Majesty’s Revenue & Customs’ (HMRC) appeal against the approval of Portsmouth’s Company Voluntary Agreement (CVA) kicked off this morning in Court 52 of the Royal Courts of Justice in front of Mr Justice Mann. Portsmouth Today reported on the day’s proceedings by Twitter and with on line reports. BBC’s Dan Roan also attended and blogged before the hearing. For all of you that can’t wait for the more considered analysis, the first days highlights are as follows: The hearing started briefly but was immediately adjourned so the judge, Mr Justice Mann, to read extra papers submitted by HMRC. Having read the additional evidence, the Judge began proceedings by listening to the submissions of Gregory Mitchell QC (for HMRC). Mr Mitchell said the taxpayer was always the victim when a football club went into administration. ‘It’s always the Treasury which loses out when a football club becomes insolvent.  Mr Mitchell QC went on to say that HMRC had worked out Pompey owed them over £30m. ‘This assessment goes back some way - to the tax year of 2006/07 - and has been a very complex investigation. ‘PAYE should have been paid and has not been paid. He went on to describe the arrangements as. ‘a sham. It was a way in which the club could pay the money into a tax haven.’ Mr Mitchell went on to criticise another ’sham’ he alleged Pompey used to avoid paying tax. This concerned money paid into players’ employment benefit trusts in what he described as ‘tax havens’.  He said: ‘The Revenue says these are disguised payments of salaries on which PAYE should have been paid.’ The arguments then went on to “whether HMRC might have suffered prejudicial treatment by Pompey” and, “whether that prejudicial treatment was unfair”. Mr Justice Mann also queried exactly which grounds the Revenue has brought the case against the club and the differences between the rules of association for the premier league and football league (and what happens when a club goes bust in either league) and finally what happened when Wimbledon FC went bust. There will be more tomorrow and the judgement will be handed down on Thursday. As he went in to Court this morning Pompey’s chief executive David Lampitt was reported to be  “nervous” about these proceedings….It’s too early to tell but that sounds about right!

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Pompey in the Dock – Day 1 : ‘This appeal is not about precise figures, it’s about principle”

Author: Nikki Petken You may recall SA Law’s blog on 25 September 2009, in which we confirmed that the High Court had ruled it was legal for employers to force workers to retire at the age of 65. The government has now made a dramatic u-turn and proposed that the current default retirement age of 65 is scrapped in the UK from October 2011. The implications are that employers would no longer be able to dismiss staff because they had reached the age of 65. The current position is that an employer can meet with an employee 6 to 12 months before their 65th birthday and notify them of their intention to retire them at that date. An employee is entitled to put forward their case not to be retired but the only obligation on an employer is to consider this. It is the employer’s discretion as to whether or not to terminate employment. Groups that have long campaigned for the default retirement age to be scrapped have welcomed the decision. Marion Birch, Chief Executive of Age UK Hertfordshire has told SA Law, “Older people are one group of society that are not protected from discrimination by legislation so we are delighted that people over the age of 65 will have full employment rights for the first time. Age UK Hertfordshire is pleased that the Government is finally sweeping away this discrimination against older people and will be allowing individuals the dignity of choosing when to retire.  Enabling people to work and contribute their skills for longer not only keeps them active, it also makes economic sense as our population ages.” Given the length of notice required to notify an employee of their intended retirement, it is likely that these measures will come into force from 6 April 2011. The main concern appears to be the length of time in which employers will need to come up to speed with the new law. Really they have only just got to grips with the retirement process and employers will need to deal with their new workforce at that time in particular; •    reviewing policies and practices such as benefits to ensure these are not discriminatory to employees over the age of 65 years; •    consider alternatives to forcing retirement such as adjustments to role, variation of terms or flexible working. If you have any questions about the new retirement plans, do not hesitate to call Nikki Petken on 01727 798023

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New Government: New Plans for Retirement

Author: Guy Thomas It has been reported by the Telegraph that Deloitte’s c.£100,000 review of cricket finances is nearly ready to be handed up to the England and Wales Cricket Board. The report “Building a Stronger Future for the Domestic Game” is a review of the finances of county cricket’s leading clubs and is reported to reveal the dangerous state of the game’s economy. One of the quotes lifted from the review by the Telegraph includes this harsh warning: “Without corrective action there is a looming risk of CAVs [Category A Venues] facing financial difficulties and maybe even insolvency.” Interestingly, the review appears to highlight “an over-reliance on broadcast money” and the “pitfalls of the competitive bid process” for hosting major competitions. Sound familiar?  Earlier this year we saw a (then) Premiership Club, Portsmouth come very close to Liquidation and oblivion, many others clubs have been taken to the precipice, and Pompey’s Administrators have a show down with HMRC listed for 3/4th August in the High Court . This threat to cricket raises more questions then answers about the comparison of the finances of Football and Cricket: Could the cricketing counties be facing the same issues and imminent threats of insolvency that some football clubs are currently facing? Could it be that the tide of money, which previously flowed into the both football and cricket is now ebbing away, leaving comparable headaches for (football) Clubs and (cricket) Counties? Well the reality is  probably no, not yet. Sorry but for one thing cricketing counties pay out a fraction of their wage bill for football Clubs.  Nevertheless, whatever detail contained in this review, it is clear that the drop off in income caused by the recession will continue to throw up potentially fatal problems for both Clubs and Counties. Those that don’t review and adjust now will face dramatic problems in the near future and “maybe even insolvency”.  Anyone for Tennis? Ah….maybe not.

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Howzat? Will Cricket face the same financial problems that now confront Football?

Author: Chris Alexander Much has been made of the interference of Prince Charles in the row surrounding development of the Chelsea Barracks site in London, some of the most expensive residential real estate in the world.  The resulting litigation between CPC Group Limited (“CPC”) and Qatari Diar Real Estate Investment Company (“QD”) has been widely reported particularly because of the connection to the heir to the throne.  While Prince Charles’ involvement does raise interesting legal issues regarding royal political interference, the key issues in dispute between the parties have been glossed over to some extent. Contract CPC and QD entered into a joint venture for the acquisition of the Chelsea Barracks site in the form of a Guernsey based special purpose vehicle called Project Blue (Guernsey) Ltd (“PB”) which applied for planning permission for the development of 638 residential units, a hotel and various other community facilities.  CPC then sold its interest in PB to QD for an initial payment of just under £38 million and a deferred payment mainly dependant upon the success of the planning application up to a combined total of £81 million.  QD was under an express obligation to use all reasonable but commercially prudent endeavours to achieve the triggers for payment of the deferred consideration and to act in good faith. As we now know, His Royal Highness then expressed his displeasure at the architectural merits of the scheme contained in the planning application to his royal counterparts in Qatar.  Boris Johnson also expressed differing architectural concerns.  The planning application was then withdrawn, potentially in breach of QD’s obligations to CPC.   Proceedings  With the planning application withdrawn, CPC faced a much longer wait for their second payment and sought a number of declarations that QD were in breach of their obligations and for further or other relief.  QD responded to the claim by alleging that CPC had acted contrary to the requirement for good faith by forcing QD’s hand after Prince Charles had intervened and that QD had in turn accepted this repudiatory breach bringing the joint venture to an end (in their favour).   Mr Justice Vos held that in withdrawing the Planning Application, QD were in breach of their contractual obligations although not in breach of their obligation of good faith.  CPC were also declared not to have acted contrary to their requirement of good faith.  However, it was not a complete victory for CPC, who did not get all of the declarations sought and the question of what damages they may be entitled to, was left for another day as were costs.   Conclusion  With the sale contract still in force, a new planning application will probably be submitted in due course and CPC may well still receive payment of the deferred consideration, albeit somewhat later than they would have liked.  What therefore did this litigation achieve?  Mr Justice Vos identified that had the parties focused upon resolving their mutual problems rather than digging in for an expensive fight then the dispute could well have been avoided.  That sentiment often rings true whether the sums involved are millions, thousands or just hundreds of pounds.  Conditional payments or conditional obligations are commonplace in many land transactions, particularly where development is involved and while in most instances royal intervention won’t be an issue, conditionality is a fertile ground for disputes.

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Impact of Prince Charles’ Interference with the Chelsea Barracks

Author: Jacqueline Button Public sector employees worried about their pay and pensions aren’t the only ones affected by the new government’s clamp down on spending. Property Week reported last month (4/6/10) that on 24 May Whitehall’s Efficiency and Reform Group announced a halt to lease extensions in the current financial year that do not have Treasury approval. The government is also planning to exercise break options which it has this year, including at Eland House, Victoria Street SW1, the 24,200 sq ft headquarters of the Communities and Local Government Department. A client of ours has had a similar experience – a government department tenant, initially keen to renew their lease have backed out of negotiations and will be relocating to cheaper premises. (Spare a thought for the staff – no pay rise, no pension and forced to work in the back of beyond). So landlords of public sector bodies must beware – your once star tenants are fading. Check break dates and expiry dates. If any are coming up soon, you may find yourself looking for a new tenant.

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Public Sector Lease Freeze