Rangers FC – Yet Another Court Case. This Time As Pursuers, But Still Not Good News

 

 

As I have often said, the Scottish Court Service court lists are a mine of information.

Today’s list shows an interesting case listed under the “Sist Warning List”.

 

SIST WARNING LIST

The sist in the undernoted case has expired.  Accordingly the case will be put out By Order in the near future.  Intimation should be given to the Keeper of the Rolls of any cause on the list which has settled:-

1

A32/11 The Rangers Football Club plc v CRE8 (Publishing) Ltd

Dundas & Wilson CS

McClure Naismith

 

To explain quickly a “sist” is a suspension of a case. This can come about because both parties agree to it; because one party persuades the court that it is necessary; or at the instance of the Judge. A sist can be ordered because there needs to be time for further investigation, for negotiation or because there are other proceedings which might affect the outcome of the present case.

To avoid cases being sisted and going into what one Sheriff referred to as “outer darkness” cases which are sisted at the Court of Session are brought back to court after the sist has been in place for a period so that the court can check if the sist needs still to be in place, or if progress needs to be made with the case.

This action was raised early this year and first called in court in February.

The Rangers Football Club plc, incorporated under the Companies Acts (Co No.SC004276) and having its registered office at Ibrox Stadium, Glasgow AG CRE8 (Publishing) Ltd, incorporated under the Companies Acts (Co No. 06676057) and having its registered office at Fraser House, Wadham Close, Southrop, Lechlade

Dundas & Wilson were listed as solicitors for Rangers. As this was a pre takeover case, and as Mr Whyte seems to have dispensed with most, if not all, of those connected to the Murray Holdings era, one wonders if Rangers are still instructing D&W.

Unfortunately for Rangers, there seems to be little or no point in them pursuing the case.

As the Drum Magazine reported in May 2011 CRE8 (Publishing) Ltd had gone into liquidation. This company was printer of many football clubs’ programmes.

As the Drum reported, “Liquidation documents show Rangers owed almost £500,000, Celtic £400,000, Arsenal £270,000, West Ham £103,000 and Spurs £42,000.

“Celtic fans were urged in November last year to apply to Cre8 for subscription refunds when the club cancelled its contract with the publisher due to allegedly unpaid royalties. Rangers likewise cancelled its contract telling fans to “cancel any direct debit payment with immediate effect”.

“The collapse comes just three years after the group’s predecessor company Cre8 UK collapsed owing creditors including Birmingham City and Watford more than £2.1m.”

As the company is in liquidation, it looks as if there will be no point in Rangers continuing to pursue the action. Accordingly, the sum of £500,000 in their accounts as a debtor will need to be written off – thus denting the profit and loss account and balance sheet further.

As the case would seem to have little value to pursue, one wonders if Dundas and Wilson have any money due to be paid to them, or if they will have to join Levy & McRae and Fyfe Ireland in taking Rangers to court. Surely not!

It is interesting that, in November, Rangers prudently told fans to cancel Direct Debits to a company whose financial existence was in great peril. I am sure that no one would consider giving the same advice to Rangers fans as regards their own team.

 

 

 

 

 

Rangers Have Been Sued – But This Time It Is The Parent Company!

From the Scottish Court Website for Edinburgh Sheriff Court on Wednesday 23^rd November 2011 – Scroll down to number 26 on the Small Claims Preliminary Hearings and you will find the following –

Fyfe Ireland LLP – v – The Rangers FC Group         Fyfe Ireland        SA3147/11

 

This is a Small Claim. The sum sued for can be up to a maximum of £3,000. It is a comedown from the claim of over £1 million lodged by Martin Bain, and the smaller one for several hundred thousand pounds by Donald McIntyre.

 

Fyfe Ireland is a blue chip Scottish law firm. It carries out all sorts of legal work, but is best known in the commercial, property and corporate fields. Few bills in that area come to such a low figure as £3,000!

 

The Defender here, unless the Sheriff Court has made a mistake, is NOT the football club, but instead the “parent company” which was incorporated for the purchase of Rangers FC from the Murray Group, and which was formerly called “Wavetower”. Rangers FC Group is Mr Whyte’s company, and has nothing to do with the former management at Ibrox.

 

Mr Whyte has publicly said that all the bills from the old regime were being looked at prior to payment, thus leading to court actions by Levy & McRae and Capita Trustee Services Limited. This is not one of those. This is a bill for services rendered to Mr Whyte’s company.

 

I would be astonished if the case actually called on Wednesday. These court lists are made up when the court actions are warranted. Many of the cases on the list will have already resolved by the time the case is scheduled to call, and if so, the case probably would not trouble the court at all.

 

Procedurally, if Rangers FC Group wanted to defend the action, then they would have needed to lodge a response with the Sheriff Clerk by Wednesday 16^th November at the latest. If not, and if there has not been an agreement to settle the case, Fyfe Ireland would obtain a decree against Rangers FC Group.

 

Bearing in mind that this company is incorporated in England, and apart from owning Rangers FC, probably has no assets in Scotland, enforcement of a decree might be a problem. There are procedures for registering Scottish decrees to enforce them in England but they can be time-consuming. In addition, if Rangers FC is the only “asset” owned by the former Wavetower, then is it actually worth anything!

 

It is perfectly possible that there is a legitimate dispute about the amount of the bill, or indeed if there is any liability at all. If so, the world (or at least the part of the world in the Small Claims court at Edinburgh on Wednesday) will hear it.

 

On the other hand, is this simply yet another situation where Mr Whyte, who has already commented, to Tom English in the Scotland on Sunday, that he has lost count of the court actions, simply has taken things to the wire and beyond to avoid paying a debt?

 

Coming after Ally McCoist was quoted in the newspapers at the weekend saying that Rangers did not need to sell players in the January transfer window, and indeed might be able to bring in new players, it seems incongruous that the parent company has delayed paying a bill which amounts to less than one day’s salary for Allan McGregor!

The MacAskill Plan to Save Scots Law Gangs Agley

Last year, according to Kenny MacAskill, Scottish Justice Secretary, the Cadder ruling by a “foreign” court put the future of Scots law at risk.

As part of the defence mechanism Lord Carloway was asked to chair a review into Scots criminal law post-Cadder.

The most distinctive feature of Scots criminal law the world over is the need for corroboration before a criminal conviction.

Lord Carloway’s 414 page report has concluded that the need for corroboration is “archaic” and has recommended its abolition.

So the unique distinguishing mark of Scots law is to go?

Perhaps there will be a hunt to see if His Lordship can be classed as “foreign”?

The report covers much more, which I will consider later, but this point seemed note worthy!

A Quick(ish) Update on Rangers in light of the Adjournment of the Tax Appeal

 

 

 

 

First of all, my Part II update is still in gestation. Thoughts on Mr Craven’s ban and Hearts situation, together with the latest regarding, inter alia, “illicit” chanting will be arriving at a blog near you soon.

 

However, in light of the adjournment of the First Tier Tribunal (Tax) to three days in January, I wanted to drop a few thoughts, and also to deal with some of the issues which are hot topics on the RangersTaxCase.com blog.

 

 

 

The FTT(T)

 

As RTC said back in the mists of time – the FTT(T) had to look into every single transaction involving Rangers and the EBT. Some might have been legitimate and some might not. Parts of some might be kosher, and parts not. The case might involve a hundred, if not hundreds, of transactions and payments.

 

If Rangers had some knockout punch to establish the whole thing was legal, then the hearing would be long over. It is not. Therefore one assumes that what is being argued about is how much Rangers owe.

 

The FTT(T) will almost certainly find that Rangers are due to pay tax, and a great deal of it, when this ends, but (and as far as the UEFA licence goes) until the appeal is decided, and indeed any subsequent appeal, this money is not overdue.

 

 

 

The UEFA Licence

 

Did the SFA grant Rangers a licence to play in Europe this season against their own rules. Put shortly, if Rangers were overdue tax payments to HMRC on 31^st March 2011, and had not cleared these by the end of May or June (I can’t check right now, but am sure either one is correct) then they ought not to have been permitted to play in Europe this season.

 

The wee tax case, referred to below, is the key here. Was it overdue within the meaning of the regulations at the relevant dates?

 

As we have already seen, neither UEFA nor the SFA are going to give out the sensitive commercial information involved (although much of it of course is publicised in the annual accounts). The possibilities are as follows.

 

1          Rangers were not overdue with taxes at the relevant dates within the meaning of the rules and therefore fully complied with all licence regulations. Nothing to see here – move along please. The issue is closed

 

 

2          Rangers were overdue with their taxes at the relevant dates within the meaning of the rules in which case:-

 

2A       Rangers told the SFA this and the SFA disregarded it. This was either:-

 

2A1     Because the SFA misunderstood what they were being told, and therefore granted the licence in error, or

 

2A2     Because the SFA deliberately disregarded it and granted a licence despite its own rules. If so, it makes “Farry-gate” pale into insignificance.

 

 

2B       Rangers did not tell the SFA this. In which case there are the following possibilities:-

 

2B1     Rangers deliberately misled the SFA by way of false documents or declarations for the purpose of deceiving them to their financial advantage. If so, this is a police matter, over and above footballing issues.

 

2B2     Rangers innocently misled the SFA either by making innocent errors in their paperwork to the SFA or by declaring that no tax was overdue under a misapprehension as to the true legal and factual position.  

 

 

If the answer is found in para 1, then the matter is over.

 

If in para 2A, then Rangers cannot be faulted but the action which will involve the SFA will be determined by whether this was a mistake or a deliberate act.

 

If we are in the realms of para 2B2, then, as with a mistaken SFA view, questions will be asked, but these matters are complex, and errors can be made.

 

If we are in para 2B1 then, as I said, we are looking at fraud allegations involving the relevant officials.

 

I want to make it clear, I have no knowledge as to the correct answer but will take at face value the official position which is that para 1 applies.

 

All public indications are that the licence was granted correctly. How can the truth be ascertained to the satisfaction of outside observers? The parties with the most interest would be the teams denied European football by Rangers having a licence, or denied a place in the Champions League pot and instead going into the Europa League.

 

As members of the SFA and as parties directly affected, they could seek to have the decision making process reviewed internally and confidentially. Alternatively, an application could be made to the court for an order under the Administration of Justice Act for documents to be produced by the SFA on the basis that they are likely to be necessary for a future court action, for example against Rangers.

 

Alternatively, if a concerned citizen thought that, by analysing the public pronouncements and accounts, there was a prima facie case suggesting that a fraud may have been committed (and I am not making such an accusation) then this could be reported to the police. As we saw in the “Cash for Honours” saga, which ultimately did not lead to any prosecutions, the police acted on allegations coming from parties who were not involved in the alleged wrong doing, but instead were acting as “concerned citizens”. What would happen if a “concerned citizen” pitched up at a Strathclyde Police station asking to make a criminal complaint against Rangers and/or the SFA? What level of “evidence” would be needed for the police to investigate?

 

I have no doubt that the police, in conjunction with the prosecuting authorities, would act entirely appropriately should such an allegation be made.

 

The “concerned football fan” is not going to get at this information officially. Commercial confidentiality (and I think the rules of the SPL anyway state that financial information given is confidential) precludes this being published.

 

Equally the concerned football fan would have no title or interest in pursuing a court action against the SFA or Rangers in this scenario.

 

Until matters are laid bare, whether in court or elsewhere, this will continue to be a source of speculation.

 

 

 

The Wee Tax Case

 

Rangers have, reportedly, paid £500,000 of their £2.8 million liability for tax due under the Discounted Options Scheme. They say that the penalties are under appeal.

 

The sum of £2.3 million has been arrested. If Rangers do not suffer an Insolvency Event by early December then that money will be sent by the bank holding it to HMRC. Otherwise, and depending on the nature of the Insolvency Event, the money might go back into the pot, where Mr Whyte will have first call under his floating charge.

 

No one from Rangers has publicly explained why they have refused to hand over this money. Rangers will be accruing higher interest charges on the bill than they will be earning interest. The only credible reason is to hold on to it in the hope or expectation that the Insolvency Event will happen.

 

 

HMRC

 

There has been speculation that HMRC will cut some form of deal with Rangers, either because in insolvency they will get nothing, or otherwise will allow Rangers to pay up a £50 million bill at £5 million a year for 10 years.

 

Put simply, there is no chance of either happening. Especially in the present climate, HMRC takes a very hard line. If a taxpayer wants time to pay off a bill which is outstanding, then they need to be up to date with all ongoing taxes, and pay off the sums due in a year. The tax man will not give someone 10 years, or anything like that, to pay up an outstanding bill, where the company is still trading.

 

In addition, HMRC looks at the co-operation from the taxpayer. As shown in the Wee Tax Case section above, there has been no co-operation. Why should HMRC accept any undertaking or promise from Rangers when the liability was formally agreed months ago, and the new owner promised the shareholders he was putting up the money to clear it. Over six months later it has not been paid and there is no proof any of that part of the promised funds has been invested by the new proprietor.

 

HMRC are likely to pursue matters even to the point of liquidation. If it means that in the Rangers case they got nothing back, it would be an example “pour encourager les autres”. They would be making it clear that other football teams, and indeed other businesses, no matter how prestigious, cannot get away with not paying tax which is due, without serious consequences befalling them.

 

Some have wondered why HMRC has not sought to liquidate Rangers now, as it could. As matters stand, it will get £2.3 million next month. If it appointed a liquidator now, it might get nothing. HMRC has a bird in the hand. It is not going to give that up to get the two in the bush, but once it has cashed the bird the bank is holding for it, HMRC will be back for the two, or the £50 million, in the bush!

 

 

Cash Flow

 

The adjournment of the FTT(T) means that a decision in the case will not come now till March or April. Therefore if Mr Whyte planned, as has been speculated, to call in a receiver when the FTT(T) decided matters, and blame the Murray regime for the fall, he will have to wait longer, and fund the “black hole” of £10 million which he himself described, for much longer. Whilst many observers saw the strategy of talking Rangers over, clearing the debt to the bank, keeping the floating charge, racking up the interest and management charges, and then putting the club into receivership as a classic and shrewd way for this successful venture capitalist to get back his money and a substantial profit over a short term, does this change his plans?

 

It looks as if a lot more needs to be brought in to keep the wages paid.

 

Are we now looking at a selloff of Rangers players in the January sales? Will buyers pay full price, knowing that long term instalment deals won’t help?

 

In addition of course, the sale of a player incurs tax liabilities too. Would that process make HMRC even more anxious to pursue them, especially if there were funds about?

 

 

 

Conclusion

 

Perhaps today’s news will make no difference. Perhaps Mr Whyte is in the game for the long term. Perhaps he has procured funds to keep the Ibrox team on its way to another league title in May.

 

Or else the delay scuppers his plans to make a profit and we will see the Rangers fans, who seem to have been very supportive of him so far, change their minds?

 

How many more creditors are going to take Rangers to court and to threaten arrestments?

 

Might the delays with the tax case result in Rangers still being afloat when Martin Bain’s case is scheduled to come to proof next July?   

 

Who knows? It will be interesting to see, whatever happens.

 

What Has Happened to Craig Whyte’s Threatened Court Action against the BBC?

 

The Sunday Mail today has reported that the BBC has refused to apologise to Craig Whyte in connection with the “Inside Story” programme last month. They report that Mr Whyte had earlier ordered his solicitors, Carter Ruck, to sue on his behalf, and that, as they have no right of audience in Scotland, they have engaged Bannatyne Kirkwood France to pursue the matter in this jurisdiction.

 

I find it very interesting that no action has yet been raised by Mr Whyte, despite the threats to do so immediately. As he was quoted as saying to Tom English in the Scotland on Sunday three days after the programme, “It’s outrageous. I actually can’t believe that they went with the allegations they went with. We told them. We sent lawyers letters all week, warning them that these things aren’t true and warning them what would happen if they ran with these allegations.” There was also comment from a spokesman for Mr Whyte that action was being raised immediately.

 

Interestingly, when Martin Bain won his arrestment order against Rangers, a Rangers spokesman was quoted as saying that they would be immediately appealing this “outrageous” decision. Nothing happened.

 

In connection with the Rangers dispute with former solicitors, Levy & McRae, Collyer Bristow (the London law firm in which Gary Withey, Rangers company secretary, is a partner) lodged a complaint with the Scottish Legal Services Commission on Rangers’ behalf. Levy & McRae alleged that this was done deliberately ignoring significant evidence produced by them to Collyer Bristow to the effect that they were perfectly entitled to act for Mr Bain, despite previously acting for Rangers, this being advice from two QC’s and from the Head of Professional Practice at the Law Society! Mr Whyte, in the same discussion with Mr English last month said, “Levy & McRae acted for Rangers previously and under Law Society rules they shouldn’t be acting against their client so when they represented Bain we complained about them to the Law Society…” This is despite Levy & McRae, about two months ago, asking the Court of Session to overturn the SLCC decision even to accept the complaint as irrational. Rangers, despite clearly being a party to the case, as the complainer, have not entered appearance and therefore, despite Mr Whyte’s noises, do not seem to be pursuing this issue now.

 

As far as the libel proceedings against the BBC go, Carter-Ruck has a well earned reputation as one of the most aggressive, and best, plaintiff’s firms. They generally do not wait prior to raising court action. One demand for a retraction or apology and then they are off to court. Indeed, with the rights of privacy under the Human Rights Act, there is often a case for seeking an interdict or injunction to stop publication of the article or programme complained of in advance.

 

As this is a case where, according to Mr Whyte the BBC knew his complaints prior to broadcast, then once the credits had rolled, one would have expected a writ to follow by return. In addition, there would have been no doubt that this action would have been raised in the High Court in London. People with even the most tangential connection with England try to get their cases heard at the High Court in London. They are known as “libel tourists”. Notorious cases where publications with only minuscule circulations in England have been successfully sued there have led to demands to change the laws, and in the USA for example, moves to make English libel awards unenforceable there. Why is England a good place to sue for libel? Firstly, even though awards of damages have been restricted from years past, they are still much higher than in other jurisdictions, including Scotland. Secondly, it makes far more financial sense for the client, and for his lawyers, to pursue a libel case in London, rather than a defamation action in Edinburgh. The BBC programme was shown, or was available to be seen, in England, and the BBC is based in London. There is no jurisdictional reason not to pursue the case in London.

 

High Court libel proceedings in London are far more costly than defamation proceedings in the Court of Session. Although presently subject to review, “no win-no fee” agreements are very common in libel cases in England, and Carter Ruck are one of the main users of them.  No win no fee agreements save the client funding the claim up front, and also protect them against costs if unsuccessful. The successful lawyer can also recover an enhanced fee from the defendant, increasing their recovery by up to 100%.

 

In Scotland, cases can be pursued “no win, no fee”.  The costs payable to the successful lawyer are far less, and whilst there can be uplifts of fees; they are far less than in English cases. There is little point in pursuing a defamation case in Edinburgh, if you can sue in England. Firstly any damages awarded will be higher, and secondly the greatly inflated costs make it far more likely that the defendant would settle.

 

He clearly has the best advice he can get, but it seems an interesting tactic to look to sue in Scotland. If the case goes ahead, there might be some interesting discussions about the jury. (In Scotland a defamation case is normally heard before a jury of 12 members in the Court of Session in Edinburgh.) After the verdict in John Wilson’s trial for allegedly assaulting Neil Lennon, there was some cynical comment about Scottish juries. One can only imagine what would be said about a jury which found in favour of Mr Whyte or one which found against him.

 

The Sunday Mail quotes his spokesman as saying “This legal action against the BBC is not about money.” I was told a long time ago that if a client tells his lawyer “It’s not about the money” you should run away very fast! The courts deal with monetary damages, not fixing reputations. And clients who say it is not about the money when a case starts become very concerned about it when the case ends unsuccessfully.

 

The Carter-Ruck website still states that they are “advising” both Mr Whyte and Rangers in connection with the programme. I’m not aware of any criticism of Rangers per se in “Inside Story”.

 

As far as the no win, no fee arrangement is concerned via Carter Ruck they state that the following are the factors they consider:-

• The claim needs to be of a sufficient value or involve a fundamental right or important principle;
• We need to be satisfied as to the merits of the potential claim; and
• We need to be satisfied as to the opposing party’s ability to pay any damages and/or costs orders.

If we do not feel able to offer a CFA, we may be prepared to consider offering a differential fee arrangement, whereby we will charge reduced hourly rates as the litigation progresses and enhanced rates if, and only if, the case is won.

 

Presumably Mr Whyte’s solicitors think the claim is worth enough money – after all, accusations of criminality against a prominent businessman would seem to be material. In addition, the BBC can pay an award of damages.

 

Does this suggest therefore that Carter Ruck is not satisfied as to the merits of the claim? As I have commented before, the programme seemed to me to be framed very carefully, making accusations against Mr Whyte which come from public documents, such as court records. In addition, as far as accusations such as that of being a “shadow director” go, this appears to have come from court documents concerning the winding up of Re-Tex Ltd, and qualified privilege applies to reporting of court matters without malice. Proof of malice is extraordinarily difficult.

 

To conclude, does this look at the history of Mr Whyte’s threatened litigation since he took charge at Ibrox, show a pattern emerging of threats and bluster, but no concrete action?