UK Edition
Mike Ashley wins High Court fight over £15m deal he dismissed as 'pub banter'
Mike Ashley, the Newcastle United owner and Sports Direct boss, has won a High Court battle with an investment banker over a £15 million deal allegedly made in a London pub.
The case revolved on an evening of "heavy drinking" in 2013 where Jeffrey Blue, a former investment banker, claimed that the billionaire agreed to pay him £15m if he helped Sports Direct's shares to rise from £4 to £8.
A judge this morning dismissed the £15m claim after declaring that an agreement was "not a serious discussion...but was banter in which Mr Ashley was displaying his wealth and scale of ambitions".
Mr Justice Leggatt said that the "jocular" remark by Mr Ashley that he would pay Mr Blue was not a contract and "that there was no one present in the Horse & Groom pub who thought that it was genuine...they all thought that it was a joke."
The judge said in summary "the fact that Mr Blue has since convinced himself that the offer was a serious one, and that a legally binding agreement was made, shows only that the human capacity for wishful thinking knows few bounds.
Mr Ashley's legal team, led by David Cavender QC, attempted to pursue Mr Blue for £1.5m in legal costs and indemnity, after arguing that a number of allegations made by Mr Blue's witness statement were irrelevant to the case and designed to embarrass Mr Ashley and put pressure on him to settle.
Mr Justice Leggatt said that he was "critical" of some of the allegations made by Mr Blue, including claims that Mr Ashley had intended to bribe non-executive directors; manipulate Sports Direct's share price and that the company's brokers at Merrill Lynch had resigned because of the threat of an investigation by the Financial Conduct Authority.
The judge said that they were "mischievous allegations that had no relevance to the case and ought not to have been included", but said that he did not think it was right to award indemnity costs in this case. Instead Mr Blue will face initial legal costs of £600,000 which must be paid within 21 days.
During the case, Mr Blue told the judge that Mr Ashley was a "serious businessman". He said the work ethic at Sports Direct was "like nothing else I have ever seen".
But he said Mr Ashley sometimes did business "in unorthodox ways and in unusual venues".
He told how Mr Ashley once vomited into a fireplace after a senior management meeting that was "effectively a pub lock-in" and said the businessman would take naps under tables at "boring" meetings.
Mr Justice Leggatt agreed that the inclusion of evidence that Mr Ashley had vomited into a fireplace and had wined and dined his non-executive directors provided background that the billionaire often conducted business meetings in settings where large volumes of alcohol was consumed. However, he added there was "no evidence that Mr Ashley has ever negotiated or concluded a contract at one of these meetings."
Mr Ashley was not in court to hear the judge deliver his ruling, but his lawyers said he had won a "comprehensive" victory.
In a statement, Mr Ashley said: “The only reason the Sports Direct share price exceeded £8 and will hopefully do so again, is because of the sterling efforts of all the people who work at Sports Direct.”
Mr Justice Leggatt analysed evidence at a High Court trial in London earlier this month and delivered the ruling this morning.
In summary, he explained that he ruled against Mr Blue partly because the banker had failed to have an agreement in writing months after the conversation.
"I cannot believe that if Mr Blue had thought at the time he had made a contract with Mr Ashley under which he stood to potentially receive £15m he would have regarded it as unnecessary for months afterwards to ever check that Mr Ashley recalled what had been said."
Mr Justice Leggatt told lawyers, at the end of the trial, that the case had been "a lot more interesting than some".
During the case Mr Ashley had claimed that he could not remember the details of the pub conversation with Mr Blue. "I can't remember the details of the conversations that we had in the pub as it was a heavy night of drinking," Mr Ashley said said. "I do remember that we had a lot of drinks and a lot of banter.
"If I did say to Mr Blue that I would pay him £15 million if he could increase (Sports Direct's) share price to £8, it would be obvious to everyone, including Mr Blue, that I wasn't being serious."
He said he paid Mr Blue, who he called "Jeffis", £1 million for "other deals" unrelated to the night in the Horse and Groom, including for property deals.