RANGERS face a legal bill of up of over £400,000 after losing the latest round of a High Court fight with Mike Ashley's Sports Direct over rights to sell club merchandise.
Mr Justice Teare ruled Rangers breached the terms of an agreement made with a company in the Sports Direct group - and has granted an 'undoing' injunction that curbs the club's retail partnership with the Hertfordshire-based football merchandising firm Elite Group.
He agreed with Sports Direct that the club made a new agreement with the firm without giving Sports Direct a chance to match that firm's offer.
READ MORE: Rangers serve notice to cancel licence agreements with Rangers Retail Ltd
He ruled that Rangers was in breach of a retail agreement with Sports Direct by entering into the non-exclusive Elite agreement and by failing to offer Sports Direct the opportunity to exercise a matching right to their offer.
The judge said that the club having lost would pick up all lawyers' bills during the latest case following a further assessment. Sports Direct were said to have spent around £280,000 while Rangers's costs were at £147,000.
The judge said litigation had resulted in a retail agreement in June, last year which granted Sports Direct rights to manufacture, sell and distribute Rangers branded football kits and other merchandise.
The judge said the issue at stake was whether Rangers were free to do retail deals with third parties.
The judgment at the High Court in London reveals that the June agreement granted the Sports Direct subsidiary, SDI Retail Services Limited, the exclusive right to operate and manage retail operations and the non-exclusive right to manufacture branded products.
A clause in the agreement stated: "Rangers shall not do, nor grant any rights to any third party to do, anything that would conflict with [the Sports Direct subsidiary's] rights to use and exploit the Rangers rights in accordance with this agreement."
The court heard that bosses at Rangers wanted to sign a new deal with a third party called the Elite Group but there was an objection and Sports Direct wanted the chance to match any new offer.
Mr Justice Phillips said in July that Rangers had accepted claims made by SDI bosses and that they would get a new contract.
In September Rangers announced that the Hummel range of replica kit would finally be available for sale and could be ordered online from Elite Group.
The scramble for kit when the sales went live meant fans ended up being held in a queue.
In a new judgment, it has emerged Mr Justice Teare agreed to an injunction put forward by Sports Direct to halt the Elite agreement.
Sa'ad Hossain QC submitted that the injunction should be granted because Rangers' breach had "caused harm" to Sports Direct.
He submitted that damages would not be an adequate remedy for Sports Direct, because the grant of an injunction will "incentivise" Rangers to reach a further agreement with Sports Direct.
He also said that Rangers "may not be in a financial position" to meet a substantial damages award.
But Rangers argued that the injunction should not be granted because Sports Direct had allowed the club to grant non-exclusive rights to third parties.
It was claimed Rangers entered into the Elite agreement in circumstances where Sports Direct had been slow in reaching a decision over an agreement.
Stephen Hofmeyr QC for Rangers said the injunction was "unlikely to achieve anything" because Elite may not accept termination of the agreement.
He said damages would be an adequate remedy for Sports Direct, the firm's losses are "purely pecuniary", that they would not be difficult to assess and that they were unlikely to reach [a] contractual £1m cap. He said Rangers was "in a healthy financial position" and will be able to meet any award of damages.
The club's Hummel kit launch promo
Justice Teare said: "Given the circumstances in which Rangers entered into the Elite agreement, namely, without giving any notice of their intention to do so...and with their 'eyes open', I consider there to be a cogent case for a mandatory 'undoing' injunction.
"I do not consider that any of the circumstances relied upon by Mr. Hofmeyr explain or justify Rangers' conduct. In particular, the suggestion that the Elite agreement was necessary to ensure that supporters could buy merchandise is hollow in circumstances where Sports Direct had offered to sell replica kit without prejudice to the dispute between the parties.
"I consider that the terms of the Elite agreement make clear that both Rangers and Elite entered into that contract fully aware of the risk that Sports Direct would object to it."
The injunction states that Rangers shall "not perform the Elite agreement" or assist the company with it.
Sports Direct later called on Rangers to "accept the outcome and move on".
"We hope that Rangers will now accept the outcome, move on and put in place commercial arrangements with Sports Direct, for the benefit of the Rangers fans and the club," said a Sports Direct spokesman.
"Rangers entered into these arrangements with Sports Direct and they must honour them."
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