As a publicly accountable body the trustees always act under professional advice.
In 2012 in evaluating Sisu’s offer of £5.5m for our shares and negotiating with it on terms of a sale the charity would inevitably incur professional charges which would need to be paid out of charitable funds.
These would be wasted if the transaction came to nothing. So there was a signed agreement that if the sale/purchase didn’t happen for certain reasons outside the trustees’ control, Sisu would pay those costs to a maximum of £29,000.
Joy Seppala was also at pains to promise personally during negotiations, to both another trustee and my husband as clerk to the trustees, that she would not “do down a charity” as she put it, if the negotiations led to nothing. When that in fact happened, Sisu declined to pay the charity their wasted costs.
Our professional advice was that the debt was recoverable and as trustees we should pursue it. We wrote to Sisu but they made no reply to our letters. It was open to Sisu to pay up or to argue the claim if they didn’t think it was just. They could also have negotiated a compromise.
In fact just after the expiry of the court time limit for lodging a defence, they did so. Then many months later, in January this year, they issued a counterclaim against us for almost exactly ten times the amount of our claim. From that moment we were not free to withdraw from litigation unless we agreed to pay Sisu’s legal costs of the action and at least their £290,000.
Our claim had been issued in the County Court, but the size of this counterclaim meant that it was transferred to the High Court which enormously increased our legal costs. The trustees tried to settle matters out of court both at an early stage and in the period before the trial took place, including a proposal for mediation, but Sisu made no serious attempt to achieve a resolution and so avoid a trial.
As everyone now knows, in the event the Judge threw out Sisu’s counterclaim for £290,000 as being “hopeless” on the first day of the trial.
He said that Sisu’s argument against us was: “as plain a case as there could be of an attempt to rewrite the parties’ bargain”.
He added: “It is clear from the express terms of the contract that the only party which was given a right to recover wasted costs in certain circumstances was the Charity”.
“In short , the attempt to imply out of Sisu’s promise to reimburse the Charity’s costs to a maximum of £29,000 in certain circumstances an unstated promise by the Charity to reimburse Sisu’s costs with no limit in amount in certain circumstances seems to me to be hopeless”.
This judgment also effectively dismissed Sisu Capital’s application to bring into this case those other Sisu companies that were not part of this claim but are, unlike Sisu Capital, involved in the Judicial Review.
Serious allegations were made by Sisu both in their skeleton argument and in their witness statements: were they fair?
They were indeed very serious allegations about the trustees’ behaviour and their “secret and perverse plan”. The Judge, in his judgment, very clearly and explicitly rejected them.
He said: “It follows that the criticisms made of the Trustees by Sisu as to the propriety of their conduct in December and January and the arguments made about them undermining the bargain by their actions at that time are misplaced, and it is unfortunate that allegations were made in some of the pejorative terms which have been used by Sisu in these proceedings. There was no warrant for those allegations”.
Regrettably, Sisu’s skeleton argument, setting out those allegations, was publicly distributed shortly after the case ended and when the High Court Judge had already rejected them. I think that should answer your question.
Who won the Court case?
The Judge described it as a “nil-all draw”, which is why he said he would have made a court order that we each bear our own costs had we not already agreed to do so.
So perhaps Mark Labovitch of Otium and Sky Blue Sports and Leisure didn’t know this when
he told the Coventry Telegraph: “I think it’s extremely magnanimous of Joy (Seppala, Sisu’s boss) not to pursue costs from the charity”.
It could fairly be said that the case should never have come to court at all – and certainly not to the High Court. In the event Sisu chose to be represented by up to seven lawyers, (one an eminent London QC who will be appearing in the Judicial Review), for three days in order to avoid paying £29,000 to a charity.
From the charity’s point of view it was of great value that the slurs and allegations made against the trustees were thrown out and
the huge counterclaim attack on our funds was dismissed so emphatically – but we should not have had to spend charitable resources defending a hopeless counterclaim and such baseless charges.
We were disappointed that our original claim for wasted professional costs was not successful but we understand the Judge’s reasoning behind his decision.
we might never come back.
