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Laurence Bassini’s “claim” against Charlton – more ridiculous than a Partygate denial

By now most readers will be aware of Bassini’s claim , revealed by an outlet we were previously unaware of, –the Jewish Telegraph – that he is allegedly owed £1.7 million by the club, and should the statutory demand which he has served not be met or set aside, he could then proceed to issue a petition seeking to wind up CAFC Limited.

Lauren Kreamer, the Charlton supporting barrister, has already issued a succinct Tweet explaining why in legal terms his proposed action is bound to fail. However, the Dossier has a wealth of information about the detail of Bassini’s claim, and we think that everyone should have a chance to see it, and realise just how ridiculous it is.

Bassini first made this claim against the club back in March 2020; in fact very shortly after Matt Southall had been removed as chairman of the club by Chris Farnell. The Dossier has received a copy of the letter from Bassini’s lawyers at the time, which helpfully fully sets out his supposed case and the documents available to support it. Since this has been in the public domain for some time it is perfectly reasonable for us as ordinary citizens to examine his case, and take a view as to what a reasonable person might conclude about it.

The claim relates to an apparent agreement between Bassini and Southall for Bassini’s assistance to Southall to gain control at Charlton. His lawyers then go on to argue that because Southall did not have the means to pay the fee, he effectively promised Bassini that once he was in control of Charlton, it would be the club which would pay Bassini’s fee. 

Some previous commentaries have referred to the service Bassini supposedly provided as a “finder’s fee”. Within our team we do have some experience with mergers and acquisitions (M&A) work, and we would judge that to be an inaccurate description of what Southall supposedly wanted Bassini to do. “Finder’s Fee” generally describes how an external consultant seeks an M&A target for a client from a number of possible options in the market, and that target is eventually successfully acquired. In this case Southall actually knew the target already. So it’s more accurate to talk about a consultancy project which assists the client in successfully completing the purchase of the target company. Such work usually starts with the consultant contacting the target company on behalf of the client to persuade the company that their client is a serious potential buyer worth meeting. Once that happens the consultant may also assist the client in negotiating the transaction. That might include responsibility for all the due diligence that a buyer should carry out before agreeing the price of the purchase. For all this work a fee of £1.2 million would only be charged by the biggest consultancies for a purchase of a very large company. The fee would cover payment of many hours of work by experienced financial and legal specialists who are part of the consultancy team. Typically such work could last six months before the buyer concludes the transaction. Neither Bassini nor Southall appear to have any record of experience in this kind of work so this will all be news to them. We may conclude though that Bassini has vaguely heard of such fees being charged, and therefore plucked it out of the sky. If it were accepted that Bassini and Southall did make an agreement for such services, a court could consider whether the fee is realistic, and it might consider the nature of the paperwork normally produced by a consultancy for the client to agree to its terms of business (including in particular such a material fee) before any work even commences. No such paperwork is presented by Bassini’s lawyers. However that’s probably irrelevant anyway because it’s very hard to envisage that a valid contract of sufficient detail and certainty would have existed between Bassini and Southall to befit the payment of such a sum, and harder still to envisage that documentation of sufficient detail and certainty exists to evidence that Southall successfully (and with authority) transferred responsibility for payment of the sum from him personally to Charlton. Fortunately for us Bassini’s lawyers Brandsmith’s letter attaches the “agreement” and some invoices relating to it, as well as some emails which they claim have relevance in proving liability for the fee. 

So let’s take a closer look. The agreement is Annex A,  attached to the lawyers letter. It has a couple of legal problems which Brandsmith are aware of and which they try to deflect in their letter.

One is that the agreement does not bear any signatures, so they take a paragraph to explain why in law this still may not matter. OK. Another which they point out is that according to them, “the Client was defined as “Matt Southall, (East Street investments Ltd).

The agreement carries the date “ 18th August 2019”. That is contractually a very big problem, because Companies House records show that East Street Investments Ltd was only incorporated in November 2019. Furthermore in several emails which are attached as annexes, Southall signs them in the name of another company which he owned, “Sports Investment Group”. It begs the question as to how and why a document drawn up in August 2019 could carry the name East Street Investments when it did not exist then, and according to some reports about the actual takeover, the name itself was only adopted at the last minute.

The agreement also states that “Bloom Properties Limited, (Bassini) acted as the introducer and conduit between the above name Client and the property known as CAFC”. Note the use of the past tense in a document dated August 2019; it implies that the introduction already took place.

Lee Amis strongly disputes that Bassini had anything to do with the ESI takeover; not least because he says he himself introduced Southall to Richard Murray, whom Duchatelet had appointed to be the official conduit for sale enquiries. Amis says that his “success” in bringing ESI to the table was the basis for his own fees charged to the club, which totalled £60,000, a far cry to put it mildly from what Bassini claims to be owed, and was supposed to include other work which Amis did after ESI had taken over. Amis also says that the name E Street Investments was only thought of a matter of days before the actual incorporation of the company, certainly long after August 2019. He says that it resulted from the appointment of Paul McCarthy as PR advisor, who stressed the need for a name which might resonate positively with supporters. Amis’ remarks suggest that not only was East street Investments not a legal entity in August 2019, but the name had not even been thought of at that point. 

These are all issues that ought to be clarified even before we get to the question of what an earth this agreement has to do contractually with Charlton Athletic Football Club. Brandsmiths have used a posh word new to the Dossier, novation, which apparently describes a process whereby Southall having installed himself as CEO would have been able to assign Bassini’s fee to the club to pay, and thus excuse himself from the liability which he created. (see Background notes, below, for a  legal explanation of “novation”.) The problem with this scenario is that Brandsmith’s letter does not refer to any documentation which Southall would have needed to create to satisfy Charlton’s financial department of the need to take on such a large new liability. We will leave the reader to consider Brandsmith’s argument that this novation actually happened; from our perspective they appear to have no documentation to support the claim, and it would be odd if they held any such documentation back from the letter, given the other documents such as emails they have included which appear to be only tangentially relevant. They speak rather hopefully of Southall providing his mobile phone for inspection, to prove the novation happened.

Back in 2020, this claim was sent to Southall at Charlton, and nothing more was heard about it. But beyond any reasonable doubt, this claim was known about, and would have caught the attention of Thomas Sandgaard and his team of professionals from Freshfields when they did due diligence before purchase. Since then Sandgaard has reached legally binding agreement with Southall and Tahnoon Nimer for the purchase of Charlton, and for sure legal clauses exist to deal with any outstanding claims on the business from outside parties. This is standard practice for any major business acquisition. So why then has Bassini decided to appoint new lawyers (Will Osmond of Osmond& Osmond) to pursue this case by serving a statutory demand requiring payment of what appears to be a disputed debt within 21 days which if unmet could be used to support a petition to wind up CAFC under the Insolvency Act??

There are at the moment several theories going around to answer those questions. The Dossier is in possession of information which might shed some light on them, but for now we think it prudent to keep our powder dry and watch for developments, if any, over the next two weeks or so…

Some background notes…

What is “novation”? 

“Our Team legal advisor has informed us that novation is effectively a transfer of rights and obligations under a contract by extinguishing the original contract and immediately replacing it with a new contract under which a third party (the new counterparty) acquires rights and incurs obligations identical to those which the party whose shoes it has stepped into had under the original contract. Accordingly, a novation is a tripartite document – party A & B extinguish and in tandem party B & C re-contract. For a novation to have occurred in this scenario, it would have to be the case that Matthew Southall entered into a novation of the MS/Bassini contract both in his capacity as an individual (the original debtor) and separately as a director acting under authority to bind CAFC Limited (the new debtor). Given the obvious conflict of interest in Southall transferring his own purported personal liability to pay £1.5m to a company in which he was merely a director and minority shareholder, such a transaction would usually be supported by comprehensive board resolutions and shareholders’ resolutions (which would ensure all parties had comfort that the transaction had been effected properly and with due authority). It would also be expected to be evidenced by a formal deed of novation (again for the sake of propriety, usually agreed by an alternate director or representative of the new debtor). The articles of association of CAFC Limited at the time of the alleged novation require directors to disclose to the full board contracts or arrangements with the company in which they have a personal interest and subject to such disclosure being made, the director is permitted to have his vote (on a matter of approval of such contracts or arrangements) counted. It would of course be very interesting to see the full documentation suite which would support claims that novation occurred (including the relevant disclosure and authority papers) and one would hope that this is significantly more comprehensive than a suggestion that novation would be evidenced upon inspection of Matthew Southall’s mobile phone.”