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The Legal Battles At Ibrox – Both In and Out of Court

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What Has Been Going On At Court?

Since last Friday, when the Herald newspaper splashed on the story of the money still owed by Rangers to their former solicitors, Levy & McRae, Craig Whyte and his team have gone on the offensive.

On Friday the reporters from the Herald group of newspapers were declared persona non grata at Ibrox.

Later that day Rangers posted a statement on the official website saying, “The remarks in the Court of Session today made by Levy & McRae with regard to their concerns about the Club’s solvency are unfounded and unwarranted and these are nothing more than scaremongering tactics. The Club is extremely disappointed and angry that this action was taken when there were categorical assurances from the Club’s lawyers that the money was on its way and it is regrettable that those assurances were not deemed sufficient by Levy & McRae.”

That accuses Levy & McRae of misleading the Court – a very serious allegation to make about a legal firm, especially as it does not appear from what has been reported that Rangers’ counsel put forward that position in court.

On Tuesday, Rangers were back in court where Martin Bain, the former Chief Executive, was successful in having his lawyers persuade Lord Hodge to grant an order freezing almost £500,000 because of concerns as to the solvency of Rangers. The Judge said: “I am not persuaded that the outcome of the Revenue claim is too remote in time for the court to form a view as to the existence of a risk…Having regard to the structure and terms of the takeover deal I am satisfied that there is a real and substantial risk of insolvency if the tax case were to be decided against the defenders (Rangers) in favour of the Revenue in the sums being spoken about.”

Rangers’ Response

Rangers’ response came in a variety of ways. Their counsel, Brian Napier QC, had told the court that they were pursuing a counterclaim against Mr Bain and that he had failed to show that there was any real insolvency risk. Lord Hodge did not accept that.

Separately, a Rangers spokesman was quoted as saying that, “The club is disputing any money is due to Mr Bain and we will be vigorously appealing the decision. It should be noted the case taken against Rangers has not yet been proven or even heard yet.”

The spokesman went on to say, “In a week where the focus should be on football, the conduct of Martin Bain, who always claimed to have the best interests of Rangers Football Club at heart, is truly astonishing and I am sure our supporters would agree.“

The BBC reported further attacks. A “source close to Craig Whyte” was quoted as saying: “It was clearly intended to embarrass the club in the run-up to the first Old Firm game of the season”. In addition, the details of the counter-claim by Rangers against Mr Bain, which apparently claims he breached his contract and duties as a company director, were described by the “source” as “explosive”.

In his press briefing on Tuesday, Mr Whyte made clear that it was “business as usual” at Ibrox, and on Wednesday, the intensity of Rangers’ attack increased again.

Craig Whyte’s Statement of 14th September

Craig Whyte released a statement to the Rangers website on behalf of his Board. In it he re-stated the “business as usual” line.

He went on to say, “The board finds it reprehensible that the law courts have been used in recent days to suggest the club is on the brink of insolvency. It is not. At the Court of Session yesterday during a hearing instigated by the former chief executive, Martin Bain, and his lawyers, the Judge, Lord Hodge, confirmed what has been already reported – that the club will face potentially serious consequences should the HMRC tax tribunal find against the club and recommend the imposition of an unmanageable liability.”

He added, “We at the club note that during yesterday’s legal proceedings there was no mention of the fact that this potential liability from HMRC, came to the fore on the watch of the previous regime. As chairman, I find it breath-taking that the former chief executive, who was in post when this issue emerged, has now sought fit to seek legal protection from its potential consequences.”

Mr Whyte then commented on the position of Rangers’ former solicitors saying, “Much was made in court yesterday of the club’s dispute with the legal firm, Levy & McRae yet no mention was made of the fact the club had raised a complaint with the Scottish Legal Complaints Commission with regard to a potential conflict of interest. Levy & McRae had acted for Rangers FC on many occasions and the club felt it was inappropriate for them to subsequently act against the club on behalf of the former chief executive. That matter is now with the Law Society of Scotland.”

If we look at some of the terms now being used by Rangers – unfounded, unwarranted, scaremongering, astonishing conduct, explosive, reprehensible, breathy-taking and conflict of interest, amongst others – we see a consistent approach, seemingly designed to denigrate the parties who have taken Rangers to court.

What Risks Does This Strategy Have For Rangers?

But Rangers should be very careful about their comments regarding the court process. First of all, there are rules regarding contempt of court which restrict comment on ongoing cases, Secondly, criticism of Mr Bain’s application, where that was actually successful, could be interpreted as an attack upon the Judge, which would not be a wise step at all. It falls far short of criticism that might see Mr Whyte, for example, summoned to court to explain himself, but Judges read newspapers. The image of the judge asking “What is Gazza?” is not applicable to the Scottish Bench these days. It will not help Rangers to risk antagonising the very judges they will depend upon deciding in their favour if they are to defeat Mr Bain’s claim.

The reason why Mr Bain’s alleged fault for the tax issues was not mentioned at court was that it was irrelevant to the question before Lord Hodge. He was not deciding the case. Instead he had to consider if there was a stateable case and if there were reasonable risks that Mr Bain, if successful, might not get his money from Rangers. The intricacies of the case were not for the court yesterday.

Mr Bain is quite entitled to make his application to the court, and Rangers can apply on appeal to have the arrestment order lifted, but fighting the battle with Mr Bain outside the court is unlikely to find favour with the courts. In addition, from a tactical point of view, there is a danger that Mr Whyte’s comments will be used against Rangers as the case goes ahead.

In the same way that it was Mr Whyte’s comments that Mr Bain was not coming back to Ibrox, at a time when the Chief Executive was under investigation, but before the inquiry had concluded, which triggered his claim, Mr Whyte’s public statements about his state of knowledge of the tax cases might seem to undermine Rangers’ court efforts to blame Mr Bain for the mess. Mr Whyte’s due diligence drew these matters to his attention, yet he went ahead, on the basis that he was a Rangers fan, as he told the Rangers website. I suspect that Mr Bain’s lawyers are rubbing their hands with glee whenever Mr Whyte is quoted. So far, on each occasion he issues a statement, he seems to say something to his club’s detriment.

Do Rangers Have a Legitimate Complaint Regarding Levy & McRae?

And turning to the problems Rangers have with Levy & McRae, once again the reference to matters not being mentioned in court seems incorrect. It was irrelevant to the “dispute” between Rangers and the law firm, as Rangers had agreed to pay, and had delayed fulfilling that agreement.

There is clear animosity extending from Rangers towards their former lawyers, and, as Mr Whyte has stated, there has been a formal complaint made regarding a conflict of interest in Levy & McRae acting for Mr Bain and against Rangers. That will be dealt with through the normal complaints process and I imagine that Levy & McRae will consider their position to be rock-solid.

It is one of the most eminent law firms in the country, and I am sure they would not act for Mr Bain if they were concerned about a conflict of interest. As Mr Whyte said, they had acted for Rangers over many years. However, it is clear that they were identified by Mr Whyte as being the lawyers for “the old guard” and that they were told that once the takeover was finalised, Rangers would use other lawyers. That would explain why they were so quick to sue Rangers for the fees for the work in connection with the UEFA disciplinary process earlier this year – they knew they were getting no more work from Rangers.

However Mr Bain will have worked closely with Levy & McRae over the years. As such, especially when he knew that they had taken action against Rangers themselves, it is perfectly understandable why he instructed them too.

Rangers’ tactics smack of taking the man and the ball at the same time. Litigation is not meant to be conducted outside the court. Attacking the other party’s lawyers is generally counter-productive.

The only value would seem to be from a PR point of view, as these tactics will do them no good in a legal sense. That might work, and assist in creating a “siege mentality” around the organisation. That is a tactic that many successful managers and coaches in different sports have used to their organisation’s advantage, but the issue facing Rangers are far more important even than a forthcoming Old Firm match. The suggestion that the court application was timed to embarrass Rangers in the run up to the Old Firm game was ridiculous. That would have played no part in either the solicitors’ decision as to when to apply, nor to the Court in fixing the hearing.

Conclusion

The strategy Rangers are pursuing seems high-risk. That is not to say that it won’t work, but even convincing their fans that all is in order is not enough just now. Picking a fight with Levy & McRae won’t get them far either. If worst comes to worst for Mr Bain, he will change lawyers – that will not send the case back to square one! I fully expect Levy & McRae to take some form of action as regards the statement on Friday too. I do not see them letting that lie.

The legal complexities around Ibrox are a long way from resolution and we can only wait expectantly for the next exciting instalment!

Written by Paul McConville | scotslawthoughts.wordpress.com

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