Riddled with inaccuracies': the full story of Ken Bates' libel trial defeat | David Conn
At the heart of the damning High Court judgment which condemned Ken Bates to defeat in the libel case last week were the findings by the judge, Sir Charles Gray, that Bates had used the chairman's notes in three Leeds United's match programmes as a platform to write personal attacks on a former club director, Melvyn Levi. These articles, the judge ruled, were "riddled with material inaccuracies," caused "obvious distress and injury to Mr Levi's feelings," and constituted "grave" libels.
The case, heard over nine days in gloomy, wood-panelled court 16 in the gothic halls of The Strand, shone an illuminating light into Bates' dealings at Leeds, from his January 2005 takeover, until he put the club into administration in May 2007 owing creditors £35m and Leeds were relegated to League One. Sir Charles ruled that Bates' accusations that Levi was a "shyster" trying to "blackmail the club," and that Levi had put off investors willing to put money into the club, were false and libellous.
In fact, the judge found, Bates had deliberately engineered moves first to take Levi's match tickets away and ban him from Elland Road, then to orchestrate share dealings which meant he did not have to repay Levi, and Levi's partner Robert Weston, £1.4m they had personally lent to Leeds which Bates, when he took over, had agreed would be repaid. Sir Charles also ruled that Bates' conduct was "improper," when he made use of Levi's own private legal advice, and repeatedly wrote about it in the programme.
Bates was ordered to pay £50,000 damages, "in the higher bracket" of the scale Levi's barrister, Simon Myerson QC, had asked for, which Sir Charles said reflected "the gravity of the libels." Bates must also pay his and Levi's costs, which are reliably estimated at £1.5m.
Afterwards, Levi said he was wholly vindicated for having been courageous enough, risking being ruined by having to meet costs on that scale, to sue Bates for libels which, Levi said, had been untrue, unfair and had a grave impact on him and his family. His solicitors, Ford and Warren in Leeds, had taken the case on a "no win, no fee" basis against the reputed might in libel litigation of Bates' solicitors, Carter Ruck, and Bates' barrister, Ronald Thwaites QC.
Leeds supporters, in the days since, have been asking whether that money will be paid by Bates himself or whether the League One club itself will be made to pay out. Bates said during the trial that he does not have access to much cash, because his wealth is tied up in assets, and had not put his own money into Leeds, despite selling Chelsea to Roman Abramovich for a reported £17m in 2003. Mark Taylor, Bates' solicitor and a Leeds United director, declined to answer that question yesterday, saying they are currently making no comment at all about the case.
Bates' most profound defeat
This is the most profound and public legal defeat which keen followers of Bates' long, characteristically belligerent career can recall. He was the chairman of Oldham Athletic as long ago as the 1960s, featured in Arthur Hopcraft's classic book, The Football Man, as an impatient entrepreneur, adamant that football could make money, among the blazers in boardrooms elsewhere. After stints, periodically marked by controversies, in the British Virgin Islands, Ireland and the travel business here, Bates returned to football in 1982, famously buying a grievously indebted Chelsea for £1.
Although remembered by many for his proposal to install an electrified fence around the Stamford Bridge pitch to deter fans from invading, Bates could claim credit into the 1990s for building Chelsea into a top Premier League club, and commercial development around the ground until, with Chelsea again heavily in debt, he sold the club to Abramovich six years ago. Bates had also become a senior figure in football, a dominant voice in the Premier League where he was known as the principal backer of Dave Richards, the former Sheffield Wednesday chairman, to become Premier League chairman, a position Richards still holds. Bates was also a vocal main board director of the Football Association until July 2002 and until February 2001 chairman of the FA company developing the new Wembley, where he secured the agreement by Australian contractors Multiplex to build the stadium at a fixed cost.
Bates had retired to the tax haven of Monaco after selling Chelsea to Abramovich, and he told the court in Levi's libel action what his motivation was for returning to football just 18 months later, aged 73, to take control of Leeds. It was, he said, a similar situation to that of Chelsea in 1982: "Hopelessly insolvent; it did not own its ground, but was a big club, and there was a chance to rebuild it."
It was Bates' opportunity for a last hurrah, a defiant final success at a club whose enormous potential had been sapped by mismanagement, but the course of his time at Leeds United has not run smoothly at all. The judgment in the libel trial, which runs to 28 pages, can be read as a narrative of events at the club which had sunk into financial meltdown after the over-borrowed, "live the dream," high-spending era under Peter Ridsdale and manager David O'Leary.
Not living the dream
Melvyn Levi was one of the "Yorkshire Consortium," local businessmen, chaired by the insolvency accountant, Gerald Krasner, who opted to have a go at rescuing Leeds as it teetered at risk of going completely bust. They were not hugely wealthy by the standards of the international rich list currently taking over English clubs, and they personally put around £4m into the club, in loans, to try to stabilise it. They sold Mark Viduka, Paul Robinson, Alan Smith and all other high-earning players they could; sold and leased back Elland Road and the Thorp Arch training ground, but still, particularly after Leeds were relegated out of the Premier League in 2004, none of it was enough to stay financially afloat and stave off demands for unpaid taxes from HM Revenue and Customs.
Bates arrived in January 2005 offering to provide investment in the club which was then desperately needed. In the course of the trial, Bates confirmed that he personally put no money in. Leeds were bought not by Bates, but by a fund registered in the Cayman Islands and run from Switzerland: the Forward Sports Fund, FSF. Questioned by Myerson during almost a full day of giving evidence, Bates said he "did not know" who the investors were in FSF. The fund had been marshalled by Bates' associate, Patrick Murrin, an accountant in Guernsey who Bates said had helped him with his financial activities in offshore places for 30 years. Murrin was a director of Chelsea during Bates' time there and representative of Swan Management, a Guernsey-based fund, whose owners have never to this day been identified, which had a large shareholding in Chelsea.
By the time Bates took over at Leeds, Levi and Weston, and two other members of the Yorkshire Consortium, had put significant amounts of their own money in. Levi and Weston, the judgment says, had loaned £1.65m, via their company, Cope, into the company which owned Leeds United itself. Bates agreed that his company, which would take over from the Yorkshire Consortium and hold the shares in Leeds, would repay £207,000 immediately to Levi, then £1.4m fully four years later.
The "call option"
The Yorkshire Consortium agreed to sell Leeds to Bates and his anonymous offshore backers on that basis. For technical reasons, both sides agreed that the Yorkshire Consortium would transfer half their Leeds United shares to Bates' company immediately, and the other half after 12 May 2005. The agreement was that after that, Bates' consortium had to formally "call" for the Yorkshire Consortium to transfer the other 50% of the shares over, and Bates had to do that, exercise the "call option", by 31 May 2005, after which it would lapse. When he did "call" for the shares, Bates had to provide a guarantee that the Yorkshire Consortium's outstanding loans would still be repaid, together with a valid legal opinion from suitably qualified lawyers, that the guarantee was indeed binding.
Bates agreed that while Levi and the two other Yorkshire Consortium members were still owed money by his company, they would each be entitled to three tickets to the directors' box and boardroom for every home match, and a car parking space at Elland Road, and one ticket for every away game.
Mark Taylor wrote to Krasner on 19 May 2005, saying he wanted to exercise the "call" option for Yorkshire Consortium to transfer to Bates' company the other 50% of their Leeds shares. Taylor asked Krasner to send him a draft of the guarantee, for the repayment of the Yorkshire Consortium's loans, which would be acceptable to them, and this was done on 27 May 2005. However, it was not until July 5, almost five weeks after the 31 May deadline for exercising the "call option," that Taylor sent to the Yorkshire Consortium the draft legal opinion which was required by the agreement. Even then, according to the judgment, it had a page missing.
Levi said in his evidence – which the judge said Levi gave "in a reliable and credible way" – that he became concerned about whether his and Weston's £1.4m outstanding loans really were being guaranteed by these arrangements. His lawyers advised him "there are risks associated" with it, and on 4 August 2005, Levi's solicitors told Mark Taylor that as it was all complex, they were going to ask for full legal advice from a barrister.
It was during this pause, while Levi was waiting to take advice about his position, that Bates, and Shaun Harvey, Leeds United's chief executive, suddenly moved to take Levi's match tickets away from him and ban him from Elland Road. On 17 August, Harvey wrote to Levi, claiming that at a pre-season friendly at Harrogate Town Levi had criticised Bates and said he was opposed to the new board. Harvey's letter concluded that the board had been left with no alternative but to take away Levi's tickets to home and away games and his car parking permit.
"Mr Harvey added," the judgment says, "that he was 'compelled' to inform Mr Levi that he would not be welcome at club matches either home or away and that Mr Levi might consider himself 'banned' from the stadium and the surrounding area controlled by the club."
Levi said in court that Harvey's letter "came as a complete and utter shock, since he [Levi] had made no criticism of Mr Bates nor insulted him or the club." Andrew Thirkill, Harrogate Town's deputy chairman, who had been Levi's host at the game, wrote to Bates saying Levi had made no such comments.
Kevin Blackwell
Three weeks after the match, Kevin Blackwell, then Leeds' manager, who had joined Levi and Thirkill for the second half, had provided Bates, then his chairman, with a statement saying Levi "had made many derogatory remarks towards the club and had said that he was going to make it as hard as he could for Mr Bates." Now Sheffield United's manager after being sacked by Bates in September 2006, Blackwell gave evidence at the trial to say he "had no recall of Mr Levi making any personal statements against Mr Bates" and that Levi's comments were mostly about the club.
Sir Charles Gray did rule on this question, about whether Levi did in fact make derogatory remarks about Bates and the club at that Harrogate game, and he ruled that Bates had encouraged Harvey to blow the incident out of all proportion, quite deliberately, to engineer a ban of Levi from Elland Road: "I find myself unable to accept Mr Harvey's denial," the judge decided, "that he had exaggerated the problems being caused by Mr Levi at the bidding of Mr Bates, in order to construct a case for withdrawing his [Levi's] entitlement to tickets and banning him from the stadium and surrounding area."
This was how Bates treated Levi, a former director who, with his partner, Weston, had loaned £1.4m to the club which was still outstanding. And Bates did so while Levi was taking advice about whether repayment of those loans was being validly guaranteed, as agreed, by Bates' company, and therefore whether he should transfer the other 50% of the club shares to Bates' company.
The judgment records Levi's feelings about this: "Bearing in mind that Cope [Levi's and Weston's company] was still owed in excess of £2m, he [Levi] was extremely distressed by Mr Bates' actions. Nearly four years later, Mr Levi remains extremely upset at his treatment."
Conflicting advice to Levi
Nevertheless, Levi continued to take legal advice about whether he was obliged to transfer the shares to Bates. The advice conflicted, one barrister saying the option had lapsed, but another, Michael Crystal QC, ruling that despite the delay from Bates' side, it was still valid and Levi should still transfer the shares. However, the judge said Crystal appeared to have been unaware that even then, the necessary satisfactory legal opinion, to confirm repayment of the loans was guaranteed, had not been received. Sir Charles ruled that, in fact, the "call option" had not been validly exercised by Bates, because even by September 2005 no satisfactory legal opinion had been provided.
In the libellous articles which Bates wrote in the match programmes many months later, in October 2006 and March 2007, he repeatedly said that the "call option" had been valid and Levi had been duty bound to complete. It was Levi's failure to do that, specifically, which led to Bates writing that Levi was "a shyster" trying to "blackmail the club." Yet in an extraordinary revelation at the trial, it emerged that Mark Taylor had himself taken advice from a senior barrister, David Philips QC, who said he was "not optimistic" that the "call" option was valid. Philips believed the prospects of Bates being able to argue that it had not lapsed "at well below 50%." Yet still, Bates repeatedly attacked Levi, in print, for not transferring the shares over.
Instead, Levi had approached Taylor in early September to seek a settlement, and he was most concerned not with the money but getting his tickets for Elland Road reinstated. Weston was keener to make sure their loans would definitely be repaid, and he took over the negotiations with Taylor, acknowledging in court that he also looked to take "modest financial advantage" of the situation. Weston put to Taylor that as the "call option" had lapsed, they would still transfer the shares over in return for Levi having his tickets reinstated, their loans being repaid immediately, and for 10% of Leeds United being given to them. Taylor rejected that, telling Weston he was being greedy. Weston said in his evidence that the conversation, on 9 September 2005, was "amicable," he told Taylor he was open to a counter offer – making it clear, in other words, that this was a negotiation – and Taylor had said he would talk it through with Bates and come back to Weston.
Bates makes his move
He never did. Instead, Bates made his move a week later, on 16 September 2005. Bates and Taylor had considered raising new money for Leeds by holding a rights issue – issuing new shares to existing shareholders – in the Bates company which owned 50% of Leeds and owed Levi and Weston the £1.4m. However, they decided to abandon it – for which Bates blamed Levi's refusal to transfer the shares. Instead, they decided to issue 2.5m new shares in Leeds United, the club itself, directly to FSF. FSF would also convert £2m of their loans into shares in the club.
That was agreed in a telephone call on one day, 22 September 2005. The effect of it was to make FSF 94% owners of Leeds United. Bates' other company, which owed Levi and Weston the £1.4m, now had just 4.5% of the club. The Yorkshire Consortium's 50% share was reduced to 1.5%. By doing this, Bates' company skipped free of having to repay Levi and Weston their loans, because it no longer owned the club and had no other assets.
Levi's argument, set out in Sir Charles' judgment, was: "Far from [Levi] having prevented the rights issue going ahead, it was Mr Bates who, with the assistance of advice from Mr Taylor, changed his mind about having a rights issue and instead decided to use the company he controlled, FSF, to effectively take over [Leeds United] while at the same time blaming Mr Levi for the change of plan. The result was very satisfactory for Mr Bates and FSF: they gained total control of [Leeds United] and avoided having to pay the £1.4m owed to [Levi and Weston]."
In effect, the judge agreed with that view of what Bates and Taylor had done: "I am not persuaded that Mr Bates has established that it was the dispute with Mr Levi which caused the rights issue to be abandoned," Sir Charles ruled. "Rather it was the decision of Mr Bates, assisted by advice from Mr Taylor, that FSF should purchase shares in [Leeds United] instead. Blaming Mr Levi was a convenient strategy for them."
The first programme notes
Bates blamed Levi for the rights issue being abandoned, for not transferring the shares over and accused him of acting against Leeds' interests in other ways in articles in three match programmes which Sir Charles ruled were false and libelous. The first that Levi complained of was written by Bates more than a year later, in the programme for Leeds' Tuesday night match at home to Leicester City on 17 October 2006 – which Leeds lost 2-1. Bates wrote in his chairman's notes about the fact that Levi had not executed the "call" option: "Regular readers of this column will recall that [Levi] refused to transfer the shares to me claiming that I had not exercised the option to acquire them, despite both his solicitors and barrister telling him that I had."
Bates had come by Levi's legal advice because it had been leaked to Shaun Harvey by David Richmond, Levi's former Yorkshire Consortium partner. Sir Charles ruled that it was "improper" for Richmond to have leaked it, and for Harvey and Bates to have made use of it in the way they did.
"Here we are working night and day to make Leeds United a creditable club once again," Bates wrote in those notes, "and we are distracted by this shyster (no, that is not anti-Semitic) trying to blackmail us into paying him money to buy him off for not honouring his obligation."
The second programme notes
The second article on which Levi sued Bates for libel was contained in the programme of 3 March 2007, a home match against Sheffield Wednesday – which Leeds, bottom of the Championship by then, lost 3-2. Now almost 18 months after the events, Bates raised the issue of the "call option" again. Headlined "The Enemy Within," it included the following: "FSF complied with all the requirements [of the "call" option] and duly exercised the option on the due date. Levi claimed that the option had not been validly exercised and refused to transfer the shares. …
"I understand that [Levi's father] was highly respected and a pillar of the local community. He must be turning in his grave at the antics of his offspring.
"Leeds United need further investment and FSF are quite happy to welcome further participants. However, for some time Melvyn Levi has been making demands which are little short of blackmail.
"His behaviour, including telephone calls and conversations, some of which are totally scurrilous, have deterred at least two would-be serious investors from proceeding. Some of his remarks are so serious that they have been reported to the police.
"This unpleasant and dishonourable man will not succeed in his attempt to obtain money in an unscrupulous way. … Perhaps you would like to ask Mr Levi some questions and ask him to justify his behaviour which is damaging Leeds' prospects of advancement."
The programme then printed Levi's home address. In court Bates was asked why he printed Levi's address, what he thought might happen. He answered that he thought Leeds fans might "write letters" to Levi.
The third programme notes
The third article Levi complained about was written a week later, in the programme on 10 March 2007, a home game against Luton Town which Leeds won 1-0, but which left them still marooned by 11 points at the bottom of the Championship. Again, Bates' chairman's notes attacked Levi. First there was a series of questions, including: "Why did you refuse to complete the share option in 2005?" And "Are you trying to blackmail me into paying you money to go away?"
He also blamed Levi for putting off a potential investor, he claimed, with £100m in the bank, from investing in the club. This time Bates pointed out that Levi's telephone number was in the phone book.
Turning in his grave
In court, Myerson, acting for Levi, persistently took issue with Bates about the fact that these articles were written so long after the discussions had taken place over the "call option," which Bates had resolved, back in September 2005, by means of new shares being issued to FSF. Myerson put to Bates that he had written the articles to deflect Leeds' fans attention from how badly Leeds were faring, heading for relegation and administration, under the Bates' chairmanship. Bates denied that, claiming he was still frustrated by Levi's conduct even then.
"You were trying to escape the mess you put Leeds United in by conveniently blaming somebody else, weren't you?" Myerson put to Bates.
That, the Leeds chairman replied, was "absolute nonsense."
"You were lying to the fans of Leeds United," Myerson said.
"That's absolute rubbish," Bates insisted.
Myerson also focussed on Bates' comment, in the 10 March 2007 article, that Levi's father must be "turning in his grave at the antics of his offspring."
"Mr Bates, that is a thoroughly unpleasant thing to have written," Myerson said.
During the pause before Bates answered that charge, Levi, in court, sitting on one of the public benches with his wife beside him, was blinking hard. Bates replied: "I think it is a reasonable speculation."
Sir Charles asked him what he meant, what was a reasonable speculation. Bates replied: "That his father must be turning in his grave."
Myerson then asked: "Do you have no reflection or consideration over the last two and a half years that makes you want to say that is going a bit too far, and you are sorry for saying it?"
Bates answered: "I suppose with the benefit of hindsight I regret saying it. I thought it, and still do, but perhaps I shouldn't have written it."
The unequivocal judgment
Sir Charles Gray's judgment on this series of events at Ken Bates' Leeds between his 2005 takeover and the club's relegation, and administration, in 2007, was unequivocal. Levi, he found, was not blackmailing the club, not indulging in scurrilous or dishonourable behaviour, had not deterred potential investors whom Bates had been talking to. The description of Levi as a "shyster " was "substantially unjustified."
Concluding, the judgment says: "I cannot accept that any of the … publications complained of are defensible as being fair comment. I say that because what Mr Bates wrote in those articles was riddled with material inaccuracies."
Bates had written a letter to Leeds Club members which Levi had claimed was also libellous but the judge ruled that the letter was protected by legal privilege.
Making the award of £50,000, plus costs, Sir Charles ruled that it reflected: the "gravity of the libels: the allegation of blackmail is particularly serious"; the fact that the libels were repeated "on several occasions over a period of 10 months"; the fact that Bates sought "unsuccessfully to justify his statements about Mr Levi and continued to do so in a public trial lasting many days."
"Perhaps most important of all," the £50,000 award took into account "the obvious distress and injury to Mr Levi's feelings caused by the libels. In this regard, I take account of the gratuitous inclusion … of Mr Levi's home address in Leeds and the reference … to his home telephone number being in the telephone book which was in effect an invitation to Leeds fans to pester Mr Levi."
Bates' and Levi's reaction
Levi said of the judge's comments that he was pleased Sir Charles had recognised that he, Levi, had not been motivated by seeking money; he had wanted to remove the damage to his reputation caused by Bates' attacks. Before the trial, Levi had offered to settle for £15,000, an apology, and payment of his costs, which at the time are understood to have been less than £100,000. Bates refused. He is now liable for damages of £50,000 and costs of £1.5m.
So far, Bates has issued no apology for the words he used, or retraction of any of the allegations he made in those match programmes, which the judge found to be grave libels. Instead, Bates issued an unbowed statement, saying he was "disappointed in the judgment, some aspects of which we find rather extraordinary," and saying he is considering an appeal. He said then, and Taylor confirmed today, that they are making no further comments for now.
Bates' statement was put out on the official website of Leeds United Football Club. Under the chairmanship of Peter Ridsdale, Leeds pledged to become the very model of a modern, enlightened football club, and O'Leary's dashing young side reached the semi-final of the 2001 Champions League. Barely a year later, the club imploded, under the unpayable weight of its borrowings under that regime. On 8 August this year, Leeds, owned by FSF, a company of unnamed investors registered in the tax haven of the Cayman Islands, will embark on a third season in League One, with the 77-year-old Ken Bates still the chairman, still in control.