Queens Park Rangers Football Club (QPR) went through a period of great transformation between 2005 and 2007, both on a sporting and financial level. During the 2005/2006 and 2006/2007 seasons, the first team played in the English Championship League, but now plays in the Premier League. Between 2009 and 2014, QPR was promoted to the top flight on two occasions, the second time after relegation to the Championship.
AC’s involvement in QPRH
According to Companies House, I was a director of QPR Holdings Limited (QPRH) from 25 November 2005 until 26 October 2007, although this date has been disputed as I signed my letter of resignation on 31 August 2007, effective immediately. From that date I was no longer involved in the management of the company.
I was also the main shareholder of QPRH through Barnaby, a US company based in New York. Barnaby has always been an investment vehicle for holding my shares in QPRH and has never operated as a trading company. As of August 2007, Barnaby owned 27.5% of the shares of QPRH, for a total of 27,648,836 common shares. I was, and am, the beneficial owner of Barnaby.

QPRH’s other shareholders before the transaction
Prior to 1 September 2007, the other major shareholders of QPRH were:

• Wanlock, whose sole beneficial owner was Zi, with 19.9% of the shares (19,900,000 ordinary shares).
• Moorbound Limited, a company owned by GP, with 14.8% of the shares (14,763,183 ordinary shares). P was also chairman of the team.
  Together, Wanlock, Moorbound and Barnaby held 62.2% of QPRH. The remaining share capital was divided between various minority investors, including H W’s Anaid Holdings Limited (3.5% of the shares) and K M’s Tring Securities Ltd (8.8% of the shares).
  QPRH’s financial situation in 2007
• In 2007, QPRH had been in financial difficulties for several years. After being relegated to the second division in 2001, the club had suffered a drastic reduction in revenue and, in 2002, had gone into receivership. To get out of it, QPRH had taken out a £10,000,000 loan from ABC Corporation, a Panamanian company. The loan carried an annual interest rate of 11.6 per cent, generating a cost of over £1,000,000 per year in interest alone, and was secured by the Loftus Road stadium, limiting its management.
• In 2005, when AC bought shares in QPRH through Barnaby, the financial situation had not improved. Between March 2005 and March 2007, AC made loans to QPRH totalling £5,506,328 (‘AC Loans’), secured by P and subject to an interest rate of 7.5%. These funds came from my personal accounts and bank loans obtained with personal guarantees. Other shareholders such as HW (Anaid), K M and V E had also lent money to QPRH.
• In addition, QPRH had accumulated other debts which I had personally guaranteed and subsequently paid:
• £264,870 to RDR
• £198,161.69 to CS
• £541,134 to C S for bank interest
• These three debts, totalling £1,004,165.69, were to be repaid to me by the team or the future owners once I sold my stake.
• The refinancing attempt with RP Capital
• From March/April 2007, AC took action to improve the team’s financial position and (AC) started to negotiate with RP Capital Group to replace the ABC loan with more favourable terms. RP Capital would provide a loan of £13,000,000, split into £10,000,000 to pay off the debt with ABC and £3,000,000 to improve working capital, secured by up to 45% of QPRH’s shares.
• However, negotiations broke down at the beginning of August 2007, when P made an alternative offer from B M. Ac did not agree with P’s management style and therefore (AC) decided to sell the stake in QPRH.
• The problems with HMRC
• In the meantime, Her Majesty’s Revenue & Customs (HMRC) had issued one or more bankruptcy petitions against several QPR group companies in April 2007. According to a letter from W to Kevin Steele dated 1 June 2007, the debts owed to HMRC amounted to:
• £1,535,000 for QPRH
• £500,000 for QPRF&A
• It is not surprising, therefore, that AC instructed and believed that Mishcons was acting on its behalf a month or so later, in August 2007, in connection with the sale of QPRH. AC never for a moment doubted that Steele himself was acting on behalf of AC/the shareholders (Barnaby and Wanlock) in the sale of the team. Indeed, Mishcons never tried to imply otherwise, i.e. that he was not acting on behalf of AC and/or that he was only acting on behalf of QPRH in the Transaction.
• In fact, in November 2007 Mishcons was still acting on behalf of AC and sending it correspondence in relation to the Turkish Case (see email sent by Kallis to me at 12:49 on 5 November 2007 on page 34 of AC 1). Although Mishcons had been acting on behalf of AC in connection with the Turkish Case since November 2006 and had incurred fees and expenses, there was no mention of a letter of engagement in connection with the Turkish Case until Kallis’ email of 5 November 2007. Consequently, it is not surprising that Mishcons did not issue any engagement letters in respect of the Settlement, especially given the speed with which it was concluded.
• It is clear from the email sent by Steele at 15:10 on 7 April 2008 (see pages 35 & 36 of AC 1) that Mishcons was still acting on behalf of AC on a number of applications and requesting payment of lawyers’ fees in relation to the Turkish Case.
• Interestingly, AC’s lawyers showed an email that Stuart McMaster of Mishcons sent to Steele at 15:26 on 10 August 2007 (see page 38 of AC 1) in which McMaster asked for and gave advice (regarding the takeover questions AC discusses below): ‘As to who is representing Mishcons, are we representing the Company or the shareholders? There are 2 distinct interests here, and we have to be careful who is given advice. The company needs independent advice in this case…’.
• Steele’s response to McMaster’s e-mail did not appear in the defendants’ declaration.
• Clearly, on the basis of Steele’s conduct (which AC will explain later), he was clearly acting on behalf of Ac, Barnaby and Wanlock in the Settlement and AC relied on him, as our lawyer, to act in our best interests at all times. He owed a duty of care to us. In the light of the e-mail above, the fact that they would also pass as the team’s representative would only represent a further conflict of interest to which Steele was prepared to submit.
• Indeed, I now understand, having seen the defendants’ submissions, that J K believed that Mishcons acted for me, Z., Barnaby and Wanlock in the Transaction as evidenced in his internal communication to Steele on 14 February 2008 (see page 40 of AC 1) which states: ’…I understand that you are in contact with Z. regarding the amounts due to aC from the sale proceeds, and, of course, our costs will be deducted before we provide him with that figure. With that in mind, you may bear in mind that I have spent quite a bit of my time, recorded on issues 1, 2 and 5 of the QPR issue, in connection with this matter….’.
• After the work Mishcons had done on behalf of AC in early 2007, De Marco, Steele and K had been offered to become non-executive directors of QPRH. A copy of the email Steele sent to P on 2 February 2007 is on page 41 of AC 1. In the e-mail Steele states: ‘I was thrilled to be asked to become a director of QPR. I thank you very much. I have to ask permission from my other partners, so I am doing that’.
• Ac was aware that Steele subsequently sought permission for the appointment from K G, the then (and current) full partner of Mishcons, (see email sent at 19:36 on 21 February 2007 on page 42 of AC 1).
• It is my understanding that although the offer of the appointment was made by QPRH, except as regards DM, it was never made and that neither Steele nor K were ever formally appointed as non-executive directors of the Board. This is evident from the Register of Directors which can be obtained from Companies House. Notwithstanding the above, this did not prevent Steele from passing himself off as a non-executive director of QPRH, as is evident in a number of documents Ac has seen, including an email sent to Joe Willcox at 12:33pm on 15 August 2007 (see page 43 of AC 1) in which Steele claims: ‘I am on the board because I am a long [sic] term QPR fan and because, with my background, I can help [sic] the team with improvement projects…’.
• The QPRH experience has been characterised by a constant struggle for financial stability. AC invested personal resources and actively sought solutions to improve the club’s financial situation, but management disagreements and the precarious financial situation led AC to the decision to sell my stake in 2007. This period represented a turning point in the history of QPRH, paving the way for future investors and the team’s subsequent rise to the Premier League.
• A complaint was lodged with Scotland Yard about the affair.