Update: sport

In February 2007, Tom Hicks and George Gillett acquired the entire issued share capital of Liverpool Football Club for £174m, taking on a debt of £45m and promising to fund the construction of a new stadium.

After several refinancing packages had been implemented, Liverpool FC and its parent companies were due to repay £237m to its lenders (The Royal Bank of Scotland and Wachovia) in April 2010. The lenders agreed to extend the loan facilities for six months, but in return Martin Broughton, the chairman of British Airways, was appointed as chairman of Liverpool FC and its parent companies to realise a sale of the club, with new corporate governance arrangements, in the form of undertakings given by Hicks and Gillett to the lenders, put in place to help achieve this goal. The loan facilities would be repayable on 15 October 2010.

In early October 2010 the board of Liverpool FC accepted an offer for the club from New England Sports Ventures.

Immediately before the board meeting toratify the transaction, Hicks and Mill Hill Financial (which at this point had exercised its security over Gillett's shares) attempted to remove two directors and appoint two new directors. Broughton claimed the removal of the directors was a breach of the club's new corporate governance arrangements (under which only he was able to appoint or remove directors) as reflected in the club's revised articles of association adopted in April 2010.

Consequently, a sale agreement was signed subject to two conditions: (i) the board of Liverpool FC had the capacity to approve the transaction; and (ii) New England Sports Ventures received necessary Premier League approvals.

Premier League approvals were received and on 12 October 2010 the English High Court ruled that the board was properly constituted (that it possessed the requisite authority) when it approved the transaction. At this point, Tom Hicks applied for a restraining order against the sale of the club in a Dallas court, which he ultimately withdrew on 15 October. The sale of the club to New England Sports Ventures was completed later during the day on 15 October 2010, only hours before the expiration of the club's loan facilities.

At the time of writing, it is reported that Hicks and Mill Hill Financial are contemplating a damages claim against the club (among others) in respect of the manner in which they were forced to sell their interests. The undertakings given in April 2010 by Hicks and Gillett are likely to be examined in even closer detail.

Football creditor rule

The recent financial problems of Portsmouth FC have placed the football creditor rule under the spotlight once again.

Under the rules of the Premier League and the Football League, if a club cannot repay its debts as they fall due, priority rights are given to football creditors ahead of unsecured creditors. The Premier League and the Football League argue that the football creditor rule maintains the competitive integrity of the game by helping to ensure that a club does not obtain unfair advantage over other clubs by, for example, signing and utilising a player without paying the fees for that player when they fall due.

The football creditor rule appears unfair to many and, in particular, to HM Revenue & Customs. Pursuant to the provisions of the Enterprise Act 2002, HMRC is no longer a preferential creditor in an insolvency situation, meaning football creditors have a 'preferential' status to it when a club undergoes a formal insolvency procedure.

In HMRC v Portsmouth City Football Club & Ors (August 2010), HMRC appealed that the company voluntary arrangement put in place by the club's administrators was unfairly prejudicial as it gave preference to football creditors. The appeal was dismissed asa result of the commercial realities of thecircumstances and the validity of the football creditor rule was not considered.

It will be interesting to see whether HMRC will challenge the football creditor rule again, at a time when other sports are seeking to introduce a modified version of the rule.

Sportsmanship hit for six?

The sporting summer of 2010 became synonymous with the term 'spot-fixing'. This most recent addition to the sport fan's lexicon is the 'illegal activity in sport of fixing a specific part of a game'. It is distinct from outright match-fixing in one crucial regard '“ the 'spot-fixers', as opposed to 'match-fixers', do not seek to manipulate the entire result of a sporting contest.

In August, the News of the World alleged that Pakistan's two main bowlers had deliberately bowled three no balls at pre-agreed moments in the Lord's test match against England. A 35-year-old businessman was implicated in the scandal, after accepting £150,000 from an undercover journalist to procure the players' participation. He was later arrested on suspicion of conspiring to defraud bookmakers.

The players themselves, together with the team captain, were charged with corruption offences under the International Cricket Council's (ICC) Anti-Corruption Code for 'contriving or attempting to contrive the occurrence of any event connected with any match'. They will face an appeal hearing on 30 October 2010 and could be banned for life from cricket and/or fined.

The alleged Pakistani spot-fixing cricketers could also face criminal charges under the Gambling Act 2005. Under section 42(1)(b) of that Act, a person commits an offence if he 'does anything for the purpose of enabling or assisting another person to cheat gambling'.

The above and the recent cases in snooker (John Higgins) and horse racing (jockey Jason Behan and trainer Eamon Tyrrell) highlight the frequency with which the integrity of sporting matches is being challenged and brought into question.

The UK Gambling Commission has developed an in-house Sports Betting Intelligence Unit, which focuses upon collecting and analysing information and intelligence relating to potentially criminal activity in respect of sports betting in the UK. It is empowered to undertake investigations and bring prosecutions regarding criminal offences under the Gambling Act 2005.

It will be interesting to see how effective a combination of the revised anti-corruption codes recently introduced by many sports and sanctions under the Gambling Act 2005 in the UK is in tackling the threat that spot-fixing and match-fixing pose to the integrity of sport.

Terry's privates

Celebrities are increasingly relying on injunctions to quash negative stories being published about them in the press on the basis that their rights to privacy are being infringed. Historically, English law did not recognise a general right of tort of privacy, but limited protection was afforded through breach of confidence actions.

The introduction of the Human Rights Act 1998 incorporated into English law the European Convention on Human Rights, which included the right to privacy. The courts have effectively created a 'privacy law' by considering the values enshrined in articles 8 and 10 of the Human Rights Act 1998 '“ the right to private life and the right to freedom of expression '“ to now be part of a cause of action for breach of confidence.

The Human Rights Act 1998 has reshaped the action for breach of confidence so that it now protects the misuse of private information. The courts will prevent publication of any private information obtained in circumstances where a reasonable person would think the information should be treated as private. The test is whether the information could be said to be private, and, where the information is ostensibly private, whether there is a public interest in breaching the duty of confidence.

In privacy cases there has recently been a rise in so-called 'super injunctions' which are highly secret injunctions where the press cannot even refer to the fact that an injunction has been granted as they 'prohibit the disclosure of the fact that an order has been made and provide for sealing the whole court file'. A super injunction places a veto upon the respondent, and third parties to whom the notice of the order has been placed on, preventing them from disclosing any information which is the subject of the injunction, the existence of the information and that an injunction has been sought at all.

However, it has been widely criticised that many celebrities, especially sports stars, who seek these injunctions are primarily concerned with protecting their commercial interests and not their privacy.

On 22 January 2010, the then England football captain, John Terry, petitioned the High Court for a super injunction, relying upon the actions of breach of confidence and misuse of private information, to prevent the media from exposing that Terry had had an extra-marital relationship with Vanessa Perroncel, a French-born underwear model who was until December the long-term girlfriend of Terry's fellow England defender Wayne Bridge. A super injunction was granted temporarily; however, a week later, Mr Justice Tugendhat decided not to renew the order.

In his judgment, Mr Justice Tugendhat said he had decided to lift the injunction as he deemed it 'not necessary or proportionate having regard to the level of gravity of interference with the private life of the applicant'. He stated that the evidence showed there was a threat the mere fact of the relationship between Terry and Perroncel would be published; however, there was insufficient evidence of a threat to publish any intrusive or sensitive details or photographs relating to the relationship.

The decision was also based on the High Court not having sufficient evidence that the parties involved would suffer any distress from publication. The evidence brought to the court was collected by Terry's business advisers and Terry did not give any evidence himself or present any evidence from Perroncel. Furthermore, no notice was given to any newspaper and so the court did not have any effective opposition.

Mr Justice Tugendhat considered that no injunction could be granted having regard to the respondent's potential defence of public interest. However, he stated that even if that defence was to fail, an injunction would not be necessary or proportionate as he did not think that Terry considered the fact of the relationship to be particularly sensitive and the information had already spread among other people including sports agents.

The High Court judge added that the nub of Terry's complaint was not 'personal distress' but the impact of adverse publicity on his reputation, and, more particularly, the commercial effect in relation to his sponsorship deals. Mr Justice Tugendhat raised a question as to whether the facts should actually be regarded as constituting a cause of action in defamation where damages could be an appropriate remedy as opposed to an injunction.

Some commentators have suggested that the Terry case is a U-turn on the recently expanded privacy rights of celebrities which had in part been developed by Mr Justice Eady. For a number of years Mr Justice Eady had been accused of introducing privacy laws 'by the back door' and greatly favouring individuals over the media by stopping stories about wealthy or private individuals from being published on the basis that it would infringe their right to privacy.

However, the refusal to extend the injunction in the Terry case is not necessarily a clear indication that there is now a redirection in this area. Mr Justice Tugendhat said that 'different circumstances might lead to the court taking a different view of the gravity of any disclosure'.

In fact, following the Terry case, it has been reported that there have been three successful super injunctions granted in favour of England footballers on the basis that the information in question would breach their right to a private and family life. In August, the golfer Colin Montgomerie obtained a super injunction designed to prevent the reporting of matters dealing with his private life; however, its existence became public knowledge because a newspaper on which it was not served published a report about it.

The future of privacy law therefore still remains uncertain; however, in August, the coalition government revealed plans to introduce the UK's first explicit privacy law by reforming the law of libel with a draft defamation bill which will be introduced in March next year.