Mr Jeffrey Ross Blue v Mr Michael James Wallace Ashley
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leggatt |
| Judgment Date | 26 July 2017 |
| Neutral Citation | [2017] EWHC 1928 (Comm) |
| Docket Number | Case No: CL/2015/000691 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 26 July 2017 |
[2017] EWHC 1928 (Comm)
The Hon. Mr. Justice Leggatt
Case No: CL/2015/000691
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Jeffrey Chapman QC and Mr Simon Atrill (instructed by Mishcon de Reya LLP) for the Claimant
Mr David Cavender QC and Ms Tamara Kagan (instructed by Reynolds Porter Chamberlain LLP) for the Defendant
Hearing dates: 3 – 6, 10 and 12 July 2017
Judgment Approved
The question in this case is whether, as a result of a conversation in the Horse & Groom public house in Great Portland Street, London W1, on the evening of 24 January 2013, a contract was made between the claimant, Mr Jeffrey Blue, and the defendant, Mr Michael Ashley, under which Mr Ashley owes Mr Blue £14 million.
This judgment follows the trial of Mr Blue's claim and is arranged as follows:
OVERVIEW OF THE EVIDENCE
Background
| I. Overview of the evidence | 3 |
| II. The dispute | 45 |
| III. The requirements for a contract | 49 |
| IV. Evidence based on recollection | 65 |
| V. What was said on 24 January 2013? | 71 |
| VI. Was a binding contract made? | 80 |
| VII. Was payment triggered? | 137 |
| VIII. Conclusion | 142 |
Mr Blue's background is in investment banking. From January 2001 until March 2007 he worked for Merrill Lynch specialising in corporate finance. At the end of that period he worked on an Initial Public Offering ("IPO") of shares in Sports Direct International Plc, a company which is the UK's largest retailer of sporting goods. Mr Ashley is the founder of Sports Direct and still owns more than 60% of its shares. Mr Blue first met Mr Ashley, and had regular contact with him, when he worked on the IPO. As part of that process, Mr Blue travelled with Mr Ashley and the then Chief Executive of Sports Direct, Mr David Forsey, on a management "roadshow" for two weeks to present the business to potential investors.
In March 2007 Mr Blue left Merrill Lynch and joined a group of Icelandic investors. However, that business collapsed in the financial crisis. In August 2009 Mr Blue established Aspiring Capital Partners LLP as a vehicle through which to provide his services as a consultant. In March 2010, he acted as an advisor to Sports Direct in connection with a proposed acquisition of Blacks Leisure Group, which ultimately did not proceed. In May 2011 Mr Blue joined DC Advisory, a firm which provided corporate finance advice. In December 2011, in that capacity, he again assisted Sports Direct in connection with a potential bid to acquire Blacks Leisure Group. Also in late 2011 and early 2012, Mr Blue was involved in a joint venture project to open Sports Direct stores in Iceland and Denmark.
The Management Services Agreement
Following discussions with Mr Forsey, on 25 October 2012 Mr Blue entered into a Management Services Agreement with Sportsdirect. com Retail Limited (a wholly owned subsidiary of Sports Direct) on behalf of Aspiring Capital Partners, which agreed to provide Mr Blue's services as a consultant for a minimum of three days per week at a fee of £12,500 plus VAT per month. In the event that Mr Blue worked for any additional days, the fee was to be increased pro rata. The agreement was to continue for an initial period of two years after which it could be terminated by either party giving three months' written notice.
Mr Blue started working for Sports Direct on 19 November 2012. From the outset, he spent at least four days a week working for Sports Direct and Aspiring Capital Partners was paid under the Management Services Agreement on that basis. From April 2014 this increased to five days a week.
I accept Mr Blue's evidence that his discussions with Mr Forsey before the agreement was signed envisaged that his role would be focussed on looking at potential strategic opportunities and acquisitions in the UK and Europe. This is reflected in a draft announcement which Mr Blue prepared in relation to his appointment and also in the terms of the Management Services Agreement itself, which described the services to be provided as "consultancy and advisory services on strategic development opportunities and related matters, as requested by the Company from time to time." In practice, however, the work that Mr Blue did for Sports Direct went well beyond this. An area in which he became involved almost immediately was investor relations, although this was not an area of which Mr Blue had any previous direct experience.
Finding a corporate broker
As soon as he started work, Mr Blue learnt from the Finance Director of Sports Direct, Mr Bob Mellors, that, although it had not yet been formally announced, Bank of America Merrill Lynch had resigned as Sports Direct's corporate broker. This left a much smaller firm, Oriel Securities Limited, as the only corporate broker retained by Sports Direct. Mr Blue was asked by Mr Mellors to assist in identifying and retaining a new corporate broker to replace Merrill Lynch. To that end Mr Blue drew up a shortlist and contacted a number of institutions to invite them to pitch for the role. However, none of them was interested in doing so. Some of them expressed concerns that, because of Sports Direct's poor reputation in the City, acting as a corporate broker for Sports Direct would risk damaging their own reputation.
One of Mr Blue's former colleagues at Merrill Lynch was Mr Peter Tracey. Mr Tracey had led the corporate broking team that worked on the IPO for Sports Direct and he therefore already knew Mr Ashley, Mr Forsey and Mr Mellors. Mr Tracey was now the Head of Corporate Broking at Espirito Santo Investment Bank ("ESIB") and Mr Blue approached him to find out if ESIB would be interested in acting as Sports Direct's corporate broker. Mr Blue and Mr Tracey met at a café at Waterloo Station on their way into work on 7 December 2012 to discuss this proposal. Mr Tracey was keen to work with Sports Direct and in an email sent to Mr Blue after their meeting suggested some other services that ESIB could offer Sports Direct as well as corporate broking. Mr Tracey proposed that, to cement the relationship and as part of what he called the "bonding process", it would be a good idea to arrange an informal meeting between Mr Ashley and the senior members of ESIB's capital markets team. They worked closely with ESIB's corporate brokers in seeking to interest investors in buying shares in companies which the corporate brokers represented, and Mr Tracey regarded their support on the trading floor as important to the success of the relationship with Sports Direct. He thought the best way to get them to "buy in" to the relationship was to arrange for ESIB's Head of Market Making, Mr Simon McEvoy, and Head of Sales Trading, Mr Russell Clifton, to meet Mr Ashley. As Mr Tracey explained in evidence:
"I didn't want [Sports Direct] to just be a faceless client to Mr McEvoy and Mr Clifton, I wanted them to feel like they were working for 'someone' rather than 'a PLC'."
On that basis, Mr Tracey asked Mr Blue to arrange for Mr McEvoy and Mr Clifton to meet Mr Ashley for a drink. This was the genesis of the meeting on 24 January 2013 at the Horse & Groom. All five individuals who were present on that occasion – that is to say, Mr Blue, Mr Ashley and the three representatives of ESIB – gave evidence at the trial.
The 24 January 2013 meeting
On 24 January 2013, Mr Tracey, Mr McEvoy and Mr Clifton came to Sports Direct's London offices in New Cavendish Street at around 6pm. Mr Ashley and Mr Blue met them in the ground floor lobby area. After making introductions, the group walked to the nearby Horse & Groom public house around the corner in Great Portland Street. The plan was to meet for half an hour or an hour for a chat. In the event the occasion lasted much longer and turned into an evening of drinking. Mr Blue left the pub at around 8:30pm and some time around 9pm the others moved on to a bar in Soho. The gathering broke up after midnight. Mr Clifton then went home, but Mr Tracey and Mr McEvoy left Mr Ashley talking to some other people he knew and went on by themselves to another bar in the same street, where they stayed until two or three o'clock in the morning. Mr Clifton estimated that over the course of the evening he drank at least 8 to 10 pints of beer and it is likely that Mr Ashley drank a similar amount of alcohol. Mr McEvoy probably drank somewhat less. Mr Blue accepted that he drank at least two or three pints of lager before he went home. Mr Tracey was the sole member of the party who did not drink alcohol that evening.
From Mr Tracey's point of view the evening was a fantastic success. Mr Clifton and Mr McEvoy had a really good time and enjoyed meeting Mr Ashley. There was a lot of conversation about football and in particular about Newcastle United Football Club, which Mr Ashley owns. Mr Tracey also remembers that, while Mr Blue was present, Mr Ashley was talking enthusiastically about Mr Blue, praising him a lot to Mr Clifton and Mr McEvoy. Mr Tracey thought that Mr Ashley was doing this to make Mr Clifton and Mr McEvoy see Mr Blue as important because he wanted Mr Blue to be the main point of contact for ESIB at Sports Direct.
The alleged oral agreement
At one point in the evening, probably around an hour to an hour and a half after the group had started drinking at the Horse & Groom, there was discussion of Sports Direct's share price and what level it might reach if the company continued to perform well. Mr McEvoy recalls that it was Mr Tracey who initiated this discussion. I think that he is likely to be right about this, as bringing up this topic would have fitted in with Mr Tracey's game plan for the meeting. At the time, shares in Sports Direct...
To continue reading
Request your trial
-
Ann Legg and Another v Aaron Burton and Others
...point there made, dealing with the fallibility of memory, I was referred to the recent decision of Leggatt J in Blue v Ashley [2017] EWHC 1928 (Comm), where the judge had to deal with the allegation of an oral agreement by a businessman to pay a sum of millions of pounds in certain circumst......
-
Julia Kogan v Nicholas Martin
...of human memory in Gestmin SGPS S.A. v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) at [15] to [22] and in Blue v Ashley [2017] EWHC 1928 (Comm) at [68] to [69]. The judge understood these passages as “an admonition that the best approach for a judge is to place little if any reliance a......
-
Gary James Keane v David Sargen
...of Mr Justice Leggatt, as he then was, in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) and Blue v Ashley [2017] EWHC 1928 (Comm) concerning the approach the Court should adopt to oral evidence in particular bearing in mind the lapse of time and its effects upon memorie......
-
Taylor v Van Dutch Marine Holding Ltd and Others
...truthfully to the best of their recollection. I nonetheless bear in mind the valuable discussion in cases such as Blue v Ashley, [2017] EWHC 1928 (Comm) at [65]–[70] about the inherent unreliability of memory and the various conscious and sub-conscious influences that may combine to underm......
-
The Dangers Of Informality In Contractual Dealings
...time still an employee of Investec, so there could be no claim. The latest development in this line of cases came in Blue v Ashley [2017] EWHC 1928 (Comm). In this case, the defendant owned the majority of shares in Sports Direct. The claimant was appointed to provide consultancy services t......
-
Be Careful What You Promise: The Court's Approach To An Alleged Oral Contract
...approach to be applied when determining the existence of an oral contract and followed the principles summarised in Blue v Ashley [2017] EWHC 1928 (Comm) when considering the reliability of oral evidence as to distant recollections: the best approach is for a judge "to place little if any r......