Cutlers Holdings Ltd (formerly Sheffield United Ltd) v Shepherd and Wedderburn LLP

Hearing dates: 31 January, 1–3, 6–10, 20–22 February 2023

Approved Judgment

This judgment was handed down remotely at 10 a.m. on 4 April 2023 by circulation to the parties or their representatives by email and by release to the National Archives.

INTRODUCTION

This is the hearing of claims for solicitors' negligence arising from a dispute about the ownership of Sheffield United Football Club (the Club). Prior to the events which have given rise to these proceedings, the Club was owned by Sheffield United Limited ( SUL), the first claimant in these proceedings. SUL was formerly known as Sheffield United plc, or SUPLC, and has now been renamed Cutlers Holdings Limited. Throughout these proceedings, however, it has been referred to as SUL. The second claimant, Scarborough Group International Limited ( SGIL), is SUL's ultimate parent company. Both SUL and SGIL are companies in the Scarborough group, which was founded by Kevin McCabe.

The Club is now owned by Prince Abdullah bin Mosaad bin Abdulaziz Al Saud ( Prince Abdullah or the Prince), a Saudi Prince, through his company UTB LLC ( UTB). The claims in these proceedings arise from the circumstances of Prince Abdullah's acquisition of the Club, leading to an expedited trial before Fancourt J in 2019 in which the judge found largely in favour of UTB: UTB LLC v Sheffield United Limited[2019] EWHC 2322 (Ch) (the UTB trial). That was followed in 2020 by an arbitration before Professor Graham Chase, which determined the price to be paid by UTB for the property assets associated with the Club, including in particular the stadium at Bramall Lane (the Stadium).

Both claims turn on essentially the same facts. Claim BL-2020-001109 (the LLP claim) is brought by SUL and SGIL against Shepherd and Wedderburn LLP ( S+W), the solicitors who acted for SUL in relation to its agreement with Prince Abdullah, and then throughout the litigation in 2018–2020. The LLP claim alleges negligence arising from:

i) the drafting of the initial Investment and Shareholders' Agreement (the ISA) between SUL and Prince Abdullah/UTB in 2013;

ii) the drafting of an option agreement relating to the Stadium (the Stadium Option), which was one of several property option agreements which accompanied the ISA in 2013;

iii) advice given to SUL in December 2017 as to the exercise of a call option under the ISA in respect of Prince Abdullah/UTB's shareholding; and

iv) the failure to advise SUL in 2018 (and thereafter) that S+W were in a position of own interest conflict, given that they had been responsible for drafting and advising SUL on the meaning and effects of the ISA, and failing to advise that SUL should therefore seek independent legal advice. There is also an allegation of breach of fiduciary duty in this regard.

Claim BL-2021-001132 (the Partner claim) is brought by SUL (only) against two partners in S+W who had key involvement in the matters giving rise to the LLP claim: Mr Andrew Blain, who was the client relationship partner throughout the acquisition and subsequent proceedings, and Mr Philip Sewell, who was the litigation partner responsible for the conduct of the litigation before Fancourt J and the subsequent arbitration. It alleges negligence by Mr Blain in respect of the December 2017 advice, and breach of fiduciary duty by both partners in respect of the conflict issue.

The defendants' position is that their drafting and advice was not negligent, that S+W were not conflicted, and that S+W and the partners were entitled to continue to act for SUL without advising the clients to seek independent advice. Furthermore, even if there was any liability in negligence or breach of fiduciary duty, the defendants say that the claim should fail on causation, since SUL would have acted in precisely the same way even if it had been properly advised. The claim for loss said to have been sustained by SGIL is, the defendants submit, an entirely bogus and dishonest claim, and any individual duty owed by the partners is denied. In relation to the conflict claims the defendants also rely on limitations of liability in their 2018 letters of engagement.

The trial took place over the course of four weeks, during which I heard oral evidence from witnesses on both sides. Submissions were made by Mr Elkington KC for the claimants, and by Mr Hollander KC for the defendants.

WITNESSES

Much of the factual background giving rise to the claims turns on matters recorded in the contemporaneous documentary evidence before me, including numerous exchanges of emails. There are, however, some key issues which are addressed by the evidence of the witnesses on both sides, in particular the evidence about what was said at meetings for which the documentary record is incomplete or unclear, and what the various individuals understood at the relevant times. The claimants' witnesses also gave evidence as to what they said would have happened if they had been properly advised by the defendants.

It is therefore appropriate for me to make some preliminary comments on the evidence of the witnesses at the trial. With the exception of Mr Di Ciacca, who gave evidence remotely via Microsoft Teams, the witnesses were cross-examined in person at the hearing.

The claimants' witnesses

Kevin McCabe was the claimants' main witness, and was cross-examined over the course of two days. He was the founder of the Scarborough group and remains its chairman. He played a central role in negotiating the 2013 agreements with Prince Abdullah, and was the main decision-maker within SUL in the exercise of the call option in 2017 and the conduct of the litigation thereafter. He gave extensive evidence in the UTB trial and was clearly very bruised by the outcome of that trial.

Mr McCabe ascribed Fancourt J's appraisal of his evidence in the UTB trial to his lack of witness training before that trial. He appears to have taken the comments in that judgment about the way in which he gave evidence to heart, because at the outset of his oral evidence in this trial he presented as a careful witness, who was doing his best to answer the questions put to him. As his cross-examination progressed, however (and particularly by the second day), he increasingly avoided answering difficult questions and refused to concede points that were obvious on the face of the contemporaneous documentary evidence.

I do not consider that Mr McCabe was being deliberately dishonest. But his evidence on many key points across both days of his cross-examination was in my view disingenuous and inconsistent with the documentary material, blaming others for the events that occurred and refusing to accept responsibility for the instructions that he gave to his legal team and the strategic decisions that he took. I have therefore treated his evidence with considerable caution, and on disputed points I have placed little weight on it where it is not corroborated by other more reliable evidence.

Simon McCabe is one of Kevin McCabe's sons. He has worked for the Club and the Scarborough group in various roles for many years, and is one of the directors of SUL. He was involved in discussion of the property option agreements...