£150m Sheffield United FC Negligence Claim Fails

04/04/23

Mrs Justice Bacon has dismissed a claim by the former owners of Sheffield United FC against their former solicitors Shepherd & Wedderburn LLP (S&W). The case was one of The Lawyer magazine’s Top 20 cases for 2023 and involved a claim for over £150m.

In 2013, the owner of Sheffield United Football Club, Kevin McCabe, a wealthy construction entrepreneur who owned the Scarborough Group, sold 50% of his shares in the club to Prince Abdullah, a Saudi Prince, under an Investment and Shareholders Agreement (the ISA) on terms that if the Prince thereafter acquired a total of more than 75% of the shares, he would be obliged to exercise options to purchase a series of properties associated with the football club. The parties duly fell out and in 2017 McCabe served a “roulette option” notice giving the Prince the option either to sell or buy the other 50% shares for £5m. The Prince served a counternotice to purchase McCabe’s shares but then tried to get out of the resulting obligation to exercise the property options. McCabe decided in consequence that he did not want to sell his shares to the Prince after all and brought a series of claims against the Prince to that end. A four week expedited trial took place before Fancourt J in 2019 UTB LLC v Sheffield United Limited [2019] EWHC 2322 (Ch) at the end of which Fancourt J  held that the Prince was obliged to exercise the property options and that McCabe was obliged to sell his shares to the Prince.

McCabe sued his solicitors, S&W for negligence and breach of fiduciary duty in relation to the drafting of the ISA and the advice given as to its effect. He claimed that had he been properly advised, the ISA would have been drafted differently and as a result the Prince would never have served a counternotice, he would have obtained the Prince’s shares, and sold on to an investor at a huge profit. He also sued two of the S&W partners personally alleging personal duties of care under the principle in Williams v Natural Life [1998] 1 WLR 830.

Whilst the judge found that the solicitors had been negligent, she concluded that as a matter of causation, none of it would have made any difference and exactly the same events would have occurred. She dismissed the claim for breach of fiduciary duty against S&W and also dismissed the action against the partners on the basis that there was no evidence of any acceptance of personal responsibility.

The judgment can be found here.