Council fails in action against former football club chairman

Northampton Borough Council has failed to gain summary judgment against a former chairman of Northampton Town Football Club in a dispute over loans totalling £10m made by the council to the club.

The council, as assignee of the club, argued that there was no reasonable prospect of ex-chairman David Cardoza defending its claim for £180,000.
But the judge noted that he had been paid his salary by reducing the amount owing to him on his loan account.

“Each payment thus served both to discharge in part the club's indebtedness on the loan account and to represent salary by the club by reducing the amount due to him on his loan account.”

The judgment - referring to Mr Cardoza by his first name to distinguish him from his father, who is also involved in the case - said this arrangement meant: “Were the club somehow to have established…that David had acted in breach of duty in relation to the £180,000 he had received from it that year, and to have obtained repayment of that amount from David, the club's indebtedness to him would have been increased by £180,000. Of course, the club has since assigned any cause of action against David to the council, but that cannot of itself bar David from reviving his claim to the £180,000.

“Other things being equal, David could surely look to one or both of the council and the club for the £180,000 if he were required to return the money he was paid and, since the club continues to trade, questions of pointlessness and circuity of action might arise.”

The judge also said David Cardoza had the possibility of relief being granted under section 1157 of the 2006 Act, which was “a further reason for declining to grant summary judgment”.

Law firm Mishcon de Reya, which represented David Cardoza, said the club was never formally declared insolvent and, “in any event, David  was owed millions of pounds by NTFC when the payments were made to him.

“Justice Newey handed down his decision earlier today and dismissed the application. Northampton Borough Council will also be paying David’s costs.”

A council statement said: “We accept the court's decision however, this matter must now go to trial."