WE EXPECT TO GO TO TRIAL (A DAY LATE)!

membershipsecretary@gmst.org.uk
To:
Subject: Court case – Greenock Morton Supporters Society Limited v James Gallacher

7 October 2016

Dear fellow Morton Supporter,

At the recent AGM, the board gave notice that they proposed to hold a special
general meeting to consider and discuss the position in regard to our small
claims action against Mr Gallacher. Since then we have had legal advice that
such a meeting would be inappropriate as we would be discussing matters relating
to the case which are not really for the semi-public forum that a general
meeting inevitably is. In particular, there is the potential for everything
discussed at the meeting to reach Mr Gallacher’s defence team and it is simply
not in the best interests of the trust for that to happen.

Your board believe that that would be an inevitable consequence especially in
the light of new members who joined after the AGM and who may potentially be
sympathetic to Mr Gallacher or expelled member, Dr Ernest Newall who is leading
Mr Gallacher’s defence.

We are writing to appraise you of the background to the case, much of which has
been discussed at previous meetings

Background

As members will know, the Supporters Trust raised a small claims action against
James Gallacher in the wake of the Stars of 79 dinner in 2009. His “cause” was
taken up by Dr Ernest Newall who at the time was also a member of the trust
(since expelled) and we believe he organised funding for legal costs in relation
to the defence.

Jim Gallacher signed a trust deed for creditors in 2010 and this has had the
effect, amongst other things, of putting the proceedings in hold until recently.
Jim Gallacher, Dr Newall and a number of others are claiming that they expect to
win the case leaving the trust exposed to significant costs and figures of
£20-30,000 have been bandied about.  In response to that:

* Your board believe and have legal advice that we have a solid case and that a
successful defence of all elements by Mr Gallacher is extremely unlikely.
* Even if there were a successful defence of all elements, legal advice is that
costs that might be awarded against us are nothing like the figures being
mentioned. In a small claims action which this is, generally costs are limited
to 10% of the sums sued for which would limit our exposure to here to around
£230! A sheriff has some discretion here if he believes that either party has
acted unreasonably but it is not believed that there is any way that the trust’s
actions can be regarded in that way.

Mr Gallacher’s solicitors have averred that this should not be a small claims
action, rather an action of count, reckoning and payment. This has already been
rejected once at an earlier hearing by the court but if they were successful
this time, such an action has a higher scale of charges. That of course is a two
way street and would mean potentially higher costs awarded against Mr Gallacher
if he is found to owe the trust anything.

* Jim Gallacher through his solicitor is seeking to be indemnified against the
costs of a successful defence of this action by the operation of clause 105 of
our rules which essentially says that any officer of the society is to be
indemnified losses unless as a result of his own dishonesty or gross negligence.
He is also to be indemnified against the costs of any legal action in connection
with his duties where it is successfully defended.

In this respect, legal advice is that clause 105 is unlikely to be enforceable
both in terms of the facts of the case but also in terms of the enforceability
of such a clause in Scots Law.

Your board has considered the option of settling the case on an agreed basis
before it calls in court on 2 November next. This would involve a complete and
public exoneration of Mr Gallacher and a “substantial” payment towards his
costs. At our AGM we made enquiries of Jim Gallacher who was present as to what
“substantial” meant and had a response to the effect that his costs at the
moment were approximately £20,000 and they were pursuing full recovery. It was
for us to make an offer and it would be considered.  We have come to the view
that we cannot offer a sum which would be acceptable to both the trust and Jim
Gallacher/Dr Newall.

This means that we expect to go to trial on the case which has been set down for
2 November next. It is our view that, in all the circumstances, this is our only
realistic choice. We will, obviously keep members fully informed as matters
progress.

Lord Feeney, Chairman