Banter or Business? The High Court hands down judgment in the Mike Ashley case

Banter or Business? The High Court hands down judgment in the Mike Ashley case

The latest ruling at the High Court is a sharp reminder to us all that you need to protect your agreements in writing.

In the matter Mr Justice Leggatt dubbed “a lot more interesting” than most business disputes he presides over, Sports Direct (and Newcastle United) owner Mike Ashley was accused of not complying with the terms of an alleged business agreement made with his former colleague Jeff Blue during a night of drinking.

Blue was claiming that Ashley agreed to pay him £15 million if he got the Sports Direct shares to £8 per share, which was double their value at the time. This figure was achieved and Blue says he only received £1 million of the £15 million agreed. The main issue here was that the alleged business deal was conducted during a night of heavy drinking in a pub, which Ashley claims not to remember the details of.

Part of Blue’s claim set out to show that Ashley often conducted business transactions in a similar fashion, which is why he had reason to believe Ashley was making a legitimate business deal. Blue referenced various other business meetings which Ashley had conducted “in unorthodox ways and in unusual venues”, as well as claiming that after one senior management meeting, which was “effectively a pub lock-in”, Ashley vomited into a fireplace.

Speaking at Court, Ashley defended his actions saying “I can’t remember the details of the conversations that we had in the pub as it was a heavy night of drinking,” however he did “remember that we had a lot of drinks and a lot of banter”. Furthermore, Ashley stated that if he had at some point during the night of drinking said that he would play Blue “£15m if he could increase [Sports Direct’s] share price to £8, it would be obvious to everyone, including Mr Blue, that [he] wasn’t being serious.” He didn’t deny paying the £1 million to Blue, however Ashley claimed that this was for “other deals” unrelated to the night in the pub.

The idea that the ‘banter’, if it occurred, should not be taken as a serious agreement able to be enforced at Court, was one which Mr Justice Leggatt agreed with when he ruled that the claim against Ashley was to be dismissed.

Whilst Ashley was not present at Court for the judgment, he did release the following statement:

“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.”

A casual observer of this matter may say that if Mr Blue truly believed an agreement was entered into during that drunken night then this should been drafted in some form of formal document the next available day (or the next available day without a sore head). However it can be tempting when people are well known to each other, to feel like it is possible to dispense with this step which is often seen as time consuming or expensive. This case should stand as a reminder that this is often a false economy. One would save time and money in the first instance, but this could be negligible to the time and costs involved in litigation for which there is not documentary evidence. The omission of the obvious step in the case, lead to this (alleged) agreement being shaken not just stirred.