VETERAN stockbroker Barry Townsley could be forced to pay more than £2m in legal costs after a London court dismissed his claim against former business partner Guy Naggar.
Townsley, well known for getting caught up in the cash-for-honours scandal in 2006, was pursuing Naggar for losses related to the collapse of Dawnay Day – the sprawling investment firm run by Naggar that collapsed into administration in 2008.
The losses relate to a brokerage run by Townsley – in which Dawnay Day held a majority stake – that brokered huge bets on F&C Asset Management’s share price for companies linked to Naggar.
Townsley claimed Naggar, a French financier and art collector who presided over the £2bn conglomerate, acted as a shadow director of the brokerage, influencing the F&C investment without due concern for the risks.
A week after making a loss on its 20 per cent stake in F&C, Dawnay Day collapsed, with Townsley claiming Naggar should be personally liable for the £5m he invested in the brokerage arm after buying out Dawnay’s share.
Mrs Justice Rose threw out all of Townsley’s claims against Naggar last week, and ordered him to pay legal costs. An initial £950,000 was paid immediately to Naggar, with the remainder to be determined after a court assessment. The total cost of the hearing, which lasted for 12 days at the Royal Courts of Justice and during which Aberdeen Asset Management chief executive Martin Gilbert took the stand as a witness for Naggar, is estimated to be around £4.5m.
Townsley, a prominent Labour donor, was nominated for a peerage by Prime Minister Tony Blair in October 2005, shortly after lending millions of pounds to the party. Townsley withdrew his nomination in 2006, citing media intrusion.
“Justice has prevailed,” said Naggar. “The judgment clearly shows that Townsley’s case was baseless and should not have been brought to court.”
In a statement Hobart Capital, Townsley’s brokerage, said it was disappointed with the decision, but had been granted leave to appeal.