Council secures order requiring ex-directors of football club to repay £2m+

Northampton Borough Council has secured a High Court ruling requiring former directors of Northampton Town Football Club to repay more than £2m.

The local authority had loaned more than £10m to the club to help with a stadium redevelopment but the scheme was never completed.

Following a 10-day trial in July last year, His Honour Judge Simon Barker QC ruled this week in Northampton Borough Council v Cardoza & Ors [2019] EWHC 26 that:

1. Both Anthony Cardoza and his son David Cardoza acted in breach of their fiduciary duties as directors of the football club;
2. Anthony Cardoza was liable to pay the council £2.79m (subject to reduction for amounts shown to have been repaid) by way of compensation under the claim assigned by the football club to the council;
3. David Cardoza was liable to compensate the council for the cost or value of works carried out at Cheriton, his former family home, effectively funded by the football club and further submissions might be made as to his liability for the sums for which Anthony Cardoza was liable;
4. The council was entitled to compensation under the principle of restoring to the trust estate monies misapplied by the trustee (in this case a director);
5. Neither Anthony Cardoza nor David Cardoza qualified for the court to grant relief from liability under s.1157 of the CA 2006;
6. The transfer by David Cardoza of his interest in Cheriton to his wife, Christina Cardoza, on 3 July 2015 was an actionable transfer at an undervalue.

The defendants had argued in answer to the money claims made and relief sought against them was that they were, or honestly and reasonably believed that they were, entitled to, or entitled to treat, all monies they received and payments for their benefit as repayments of their respective director's loans to the football club, and, further, that the club suffered no loss as a result of their actions.

Cllr Jonathan Nunn, leader of Northampton Borough Council, said: “It is good news that the Court has found in our favour, and we are now focused on the enforcement options available to us."

Law firm Osborne Clarke acted for the council on the claim, instructing James Morgan QC, Head of St Philips Business & Property Group.