Pub operator JD Wetherspoon has agreed to accept a payment of £400,000 from property investor Jason Harris to settle a legal claim. This finally brings to a close the series of legal cases which started with the Van de Berg case in 2005 and was followed by the Ferrari, Lyons and Harris cases.
H & C News hopes to return to the implications of this series of cases for those in the hospitality industry, and to indicate the questions or procedures to follow to avoid such situations arising. The details of this specific case are outlined below.
Wetherspoon alleged that Mr Harris, formerly of First London and now of First Urban Group, was an accessory to frauds committed by its former retained property agents Van de Berg.
The claim was contested and liability was denied by Mr Harris.
This claim stemmed from an earlier legal case in which Wetherspoon successfully sued Van de Berg and its directors Christian Braun, George Aldridge and Richard Harvey for fraudulently diverting freehold properties to third parties, while recommending that Wetherspoon took leases at rents which created an immediate increase in the freehold values.
The properties in dispute in the case against Mr Harris were The Rhinoceros pub in Rotherham and The Lord Burton pub in Burton-on-Trent, both of which are still operated by Wetherspoon.
Mr Justice Peter Smith had found, in the earlier Van de Berg case, that Van de Berg (but not Mr Harris, who was not a party to the case) had not informed Wetherspoon of the availability of the freeholds of Rotherham and Burton and had fraudulently diverted the freeholds to companies linked to Mr Harris.
Wetherspoon chairman Tim Martin said:
“I am pleased to have received a substantial payment from Mr Harris.
“This case follows the settlement of previous legal claims against Anthony Lyons, formerly of Davis Coffer Lyons, for £1.25 million and against Paul Ferrari, of Ferrari, Dewe and Co, for approximately £500,000.
“Although liability was denied by all of the defendants in each of the cases which followed the Van de Berg judgement, I believe that these cases contain an important message for agents and property investors: if you are offered very profitable back to back freehold deals by the retained agent of a retailer or other principal, it is advisable to verify in writing from the retailer itself that it has consented to the transaction.
“This is especially true if money, or other benefits flow from your business to the retained agent for any reason whatsoever, since all payments may come under close scrutiny where back to back deals are concerned.”