Jeffry Ross Blue v Michel James Wallace Ashley (Commercial Case Number CL/2015/000691)
On 24th of January 2013 Mr Blue and Mr Ashley went to the Horse and Groom public house in Great Portland Street, London. Mr Blue already had a management services agreement with one of Mr Ashley’s companies and at that meeting in the pub he introduced Mr Ashley to three colleagues who wanted to be Sports Direct’s corporate broker.
The meeting involved much beer. Mr Blue left after about 2 ½ hours having drunk three and a half pints of lager. The group moved on to other locations and one of the witnesses estimated that both he and Mr Ashley had consumed at least 8 pints of beer each during the evening.
In the early part of the evening at the Horse and Groom there was a discussion about Sports Direct’s market capitalisation and share price. They were discussing the value of Mr Ashley shareholding should the company’s share price rise to £8 pounds per share. Mr Ashley made a statement to the effect that he should incentivise Mr Blue if he could get the share price to move to £8 per share and there was a discussion about what incentive would be appropriate. Mr Blue claimed the figure arrived at was £15 million.
Mr Blue claimed that that sequence of events when put in context gave rise to a contract, that is a legally binding agreement that he could enforce through the courts. The judge who heard the case in the Commercial Court dismissed the claim on 26 July 2017 after a long hearing.
Mr Justice Leggett gave eight grounds for his decision:
In the judge’s words “an evening of drinking in a pub with three investment bankers is an unlikely setting in which to negotiate a contractual bonus arrangement”. There was evidence that Mr Ashley liked to conduct business in informal settings where alcohol was consumed, but the no evidence that he concluded contracts in such places, although it was accepted that he could have done had he wanted to.
The meeting was intended to introduce new potential service suppliers and not to negotiate Mr Blue’s pay.
The conversation was of a jocular nature and tone; suggestions about Mr Blue’s remuneration were mere ‘banter’.
It made no commercial sense for Mike Ashley to make the offer, which would be out of character.
It was fanciful to suggest Mr Blue could do anything to move share price to £8 per share.
The offer was too vague to take seriously. There was no discussion what work Mr Blue would do to earn payment or how that work would be measured.
None of the witnesses, including the one who didn’t drink alcohol all evening, thought Mike Ashley was being serious.
Mr Blue didn’t appear to think the offer was serious until Sports Directs share price began to climb.
So Mr Ashley held on to his £14m although the case is likely to have cost him a substantial sum.
I expect his pub talk will be a little more guarded in future, though I hope it does not spell the end of the working, liquid, dinner.
Andrew Shipley
