How serious is the prospect of legal challenge?

CAST considers whether or not the future of Charlton could once again to be heading for the courts.

The consortium led by Charlie Methven has today released the following statement:

Our group refutes Thomas Sandgaard’s claim last Friday February 10 that we are in breach of the signed agreement to buy Clear Ocean Capital, the holding company of Charlton Athletic. We were expecting to complete the deal last Thursday February 9: a substantial deposit had been paid, the agreed purchase price had not changed, the money required was in the relevant bank accounts and Owners and Directors Test applications had been lodged with the EFL.

Our clear legal advice is that we are still in exclusivity to complete the purchase and we still expect to do so imminently, as stipulated by the agreement of December 20 signed by Mr Sandgaard. We note Mr Sandgaard’s statement that he has been conducting discussions with other potential investors and had been working on “a Plan B”. Such actions were, and are, in contravention of the exclusivity agreement, and any third party participating in such discussions would be committing tortious interference, for which the penalties are significant.

We note also Mr Sandgaard’s removal of the entire senior management of Charlton Athletic, also in contravention of the December 20 agreement. This, together with attempting to renege on the deal, has introduced unwelcome uncertainty and instability to the club and its fans, after a brief period when a competent management team had started to plan constructively for the club’s future. We urge Mr Sandgaard to complete the signed deal he previously agreed without the necessity for legal action.

Much of this statement seems dubious to us, and it is notable that it is in vague terms. Various allegations of contraventions of the exclusivity agreement and tortious interference by third parties are imprecise and broadly phrased. One might think that if there were a genuine legal challenge being mounted, the consortium might be dealing with that through its lawyers and not wasting its time with statements like this, but here we are, yet again. It comes as no surprise to Charlton fans that our club is, once again, being treated like a plaything by those with too much ego and free time, and too little common sense and integrity.

Sandgaard and the consortium had agreed to an exclusivity period, giving them some time to negotiate terms for the purchase of Clear Ocean Capital, the company which owns Charlton Athletic Men’s and Women’s teams (through the companies which operate them). It appears that a significant deposit was paid and, of course, the consortium was permitted to put its management team in place, both on and off the pitch. That all gives the impression of negotiations which were pretty advanced.

But that is not the same thing as a done deal. If you exchange contracts to buy a house (perhaps a poor analogy here, because it’s not clear that this deal had even reached that stage), it is still entirely possible to pull out before you complete on the purchase. In that scenario, the seller typically has to return the deposit, along with interest which has accrued on it, and pay the buyer’s reasonable costs. By the sounds of things, this situation may well be more akin to you seeing a house you like, sending the deposit to your lawyer to prove how interested you are, and sending your contractor over to put in a new kitchen. If the seller then pulls out leaving you with a Howdens' bill, more fool you. The agreements here are doubtless considerably more nuanced than that, but it is notable that the Methven statement does not allege a breach of anything other than the exclusivity agreement, aside from the vague assertion in the final sentence, urging Sandgaard “to complete the signed deal he previously agreed”. As any first-year law student will tell you, agreements to agree are almost never enforceable.

The real gripe the consortium seems to have, and the thing which it is said leads to a potential legal liability, is Sandgaard allegedly having negotiated with a third party during the exclusivity period. It is our understanding that the exclusivity period Methven refers to in fact expired on 31 January 2023. That being the case, it is unclear why Sandgaard’s decision not to proceed and to remove the management team put in place in anticipation of the takeover completing after the end of the exclusivity period, and to have started negotiations with a third party in recent days, is said by the consortium to constitute a breach of their agreement.

If we’re wrong about that, and some kind of extension of the exclusivity period had been agreed, it remains unclear precisely what Methven & Co think they’ve lost here. To make out a claim against a third party for the tort of inducing or procuring a breach of contract, the individual has to have induced or procured another person to breach a contract, in which circumstances they can be held liable for the loss suffered as a result of the breach of contract. The claimant, importantly, has to have suffered economic loss.

If we are right about the exclusivity period having expired, it is difficult to see what that breach of contract might be, and even if we’re wrong about that, it’s similarly difficult to see what the economic loss suffered might have been, aside from relatively minor costs and expenses. The “penalties” referred to – we assume Methven means ‘remedies’ – would likely be damages for the losses suffered and, again, it is difficult immediately to see what those losses might be. Without getting too far into it (we know, we know – too late), it sounds like the sort of wishy-washy threat somebody might make because they are just a bit disappointed and embarrassed that things haven’t worked out as they’d hoped.

There can be few football clubs in recent years that have been the subject of as much litigation – threatened or actual – as Charlton Athletic. As with Paul Elliott’s ESI Mark II and Craig Freeman’s, well, whatever that was, it rather begs the question: why are these people so interested in acquiring Charlton Athletic, a club which doesn’t own its ground or training facilities, which makes a significant operating loss, and which is languishing in League One, without any obvious plan to reunite it with its assets and invest with a view to achieving promotion back to the Championship? Might they have seen the personal benefits others have reaped from their brief periods of ownership of the club? Have they, too, got Range Rover dealerships on speed dial?

Ultimately, for now, it doesn’t matter. Sandgaard has terminated the talks and moved on, apparently to Marc Spiegel, an Atlanta-based businessman - new talks apparently, about a new deal, reportedly at a higher price than had been agreed with Methven & Co. Unless and until Methven’s consortium put their legal fees where their mouths are and issue a claim, they are just a bunch of people who were once, maybe, going to buy our football club.


If you are not already among the 2,700 Charlton supporters who are members of CAST, do join today - it only costs £5 annually.