Lotus vs Lotus - Proton says Tony’s demands are unreasonable

Settlement offer includes returning Team Lotus name to Group Lotus but does not prevent Tony from using it in F1, subject to terms

While 1Malaysia Racing Team (1MRT) boss Tony Fernandez told AFP that the GBP6 million offer Group Lotus made for the Team Lotus name was too small, the other side says that it is fair compensation for the purchase price of Team Lotus Ventures, the company that allegedly had the rights to the name.

In a statement, Group Lotus parent company, Proton Holdings Berhad said that for all intents and purposes, 1MRT cannot now demand for Group Lotus to compensate them for a problem, which they got themselves into.



“1MRT entered into a relationship with Team Lotus Ventures with full prior knowledge that Group Lotus are already in a long standing legal dispute with Team Lotus Ventures.

Group Lotus and Proton have always held the view that this matter should be resolved as soon as possible in the interests of Formula 1 and the fans. Thus, we remain open to reasonable and justified proposals.

According to Proton, in November 2010, 1MRT proposed a settlement of between GBP22mil to GBP37mil which included the purchase of the Team Lotus name (purportedly for GBP5mil) and other indirect costs that they have incurred such as development of a new brand, loss of income from produced merchandise, loss of sponsorship etc.

“We agreed to only consider paying for the Team Lotus name subject to due diligence being conducted and not be made responsible for the indirect costs which could have been avoided by 1MRT

“Our proposed settlement sum was to settle only the purchase price, allegedly GBP 5million for the "Team Lotus" name, subject to due diligence and confirmation from 1MRT and other related parties including Team Lotus Ventures and David Hunt.

“Once settlement is agreed by both parties, the "Team Lotus" name shall unequivocally vest with Group Lotus.

“From our perspective, this is fair as 1MRT could have continued to use the "Lotus Racing" and not incur additional charges allegedly in excess of GBP30 million for the establishment of a new team.

“PROTON and Group Lotus cannot be made liable for their commercial misadventure.

Earlier in the week Fernandez told AFP that he has rejected the out of court settlement worth GBP6 million offered by Group Lotus.

“It was six million pounds for an out-of-court settlement. Of course I would like to end it but the proposal by Proton would have bankrupted the company. We could not accept it,” the AirAsia chief told AFP, adding that 250 jobs and huge investments by shareholders are at stake.

Fernandez had bought the rights to Team Lotus from David Hunt, brother of former F1 World Champion James who had bought the defunct team some 13 years ago.

The decision to purchase the team came on the tail of Proton’s decision to terminate the licensing agreement with Fernandez.

Proton had cited multiple breach of contract and refusal to cooperate as the reason for terminating the licensing agreement.

Lotus vs Lotus: So what happened on Monday and who actually won?

• Justice Peter Smith declined to give summary judgment
• Full-blown trial to start in March 21

When Justice Peter Smith decided that a summary judgment for Lotus vs Lotus will not do and told both parties that they should suit up for an all-out legal battle starting March 21, both teams of barristers  were stunned, there is barely enough time to organise themselves for the Monday before the Australian Grand Prix.

According to The Telegraph's Formula One correspondent, Tom Cary, who was in court at the material time of the proceedings on Monday both sides were shocked but that did not seem to alter Justice Smith's decision, he gave them 20 minutes to consult their clients.



1Malaysia Racing Team's lawyers told the judge they could not get in touch with Tony Fernandez and expressed reservation that they could get prepared in eight weeks.

Smith said that both teams are not exactly resource starved and should get on with it, he added that bringing forward the trial date will probably be a good thing.

“There are no resource issues,” the judge noted. “I find a speedy trial tends to focus the minds. Let’s get it all sorted in one go.”

Well that was the scene in the courts but what was the case all about in the first place?

The case before Justice Smith was an application for a summary judgment on the Lotus trademark dispute between Group Lotus, the car manufacturer and 1-Malaysia Racing Team, Tony Fernandez's outfit which campaigned the green and yellow team Lotus Racing in the 2010 season.

Group Lotus in their effort to prevent a costly all-out legal battle had requested for a summary judgment to be delivered by the court but because the case is far too complicated for judge to make a decision based on whatever documents that were submitted, Justice Smith said that a full trial is necessary to settle this dispute once and for all.

Justice Smith's decision is not surprising, given that David Hunt had faced numerous efforts in the past to pry away the Lotus name from his hands after he bought Team Lotus from team founder, Colin Chapman's family.

Those familiar with the British legal system said that Justice Smith is a bot of a Maverick and his decision to give both sides just eight weeks is typical of him and it is now up to both sides to try and move the dates back.

Well, things are going to get interesting now that both sides have said that they are happy with the decision, ready or not, like it or not they are going to trial and the first to ask for a postponement loses this game of 'chicken'.

Fernandez and Team Lotus CEO Riad Asmat are both active residents of twitterville and had both made it clear that they had triumphed with the decision.

I am not sure that is an accurate description of their position but the decision did deny a speedy and less costly resolution to the case.

Does that mean that Fernandez and Riad both thought that a summary judgment would have gone against their interests?

On the other hand Group Lotus must also be nervous about the prospects of the case going to full trial.

While the considerable legal expense is something they probably want to avoid, the company is probably more worried about the negative publicity that the case would attract to a brand they are desperately trying to rebuild and lift to a higher level.

Partners and Genii Capital, the present owner of Renault F1 team would also be looking closely at what may happen to their partnership with Hethel.

Renautl itself may be interested in the outcome, Group Lotus bankers and financiers are also making their assessments of the situation.

Cary also  raised an interesting question about what is happening: He wondered why David Hunt was never consulted during the proceedings for summary judgment.

When 1Malaysia were impressing upon the judge how difficult it would be to get people up to speed on the finer points of the case in the time available, Mr Justice Peter Smith asked if they were using Hunt – who was sitting just behind me in the court room – as a witness. “After all, hasn’t he fought off many other such cases since 1995?” he inquired.

The 1Malaysia barrister admitted that he had not yet consulted with Hunt but might yet do so. It begs the question: why hasn’t the man who sold the Team Lotus name to 1Malaysia, who has fought off many attempts to prise the marque from him, who must know more than almost anyone about the rights that name carries, whose arguments you would imagine to be instrumental to 1Malaysia’s case, been asked to assist? It struck me as odd.

Perhaps they think they can do a perfectly good job without him? Perhaps they think he is untrustworthy? Either way, it seems to me that they will be arguing largely the same points that he has made in numerous court cases down the years.

I guess it will all come out in due course – or maybe not, if they agree to settle out of court.

Meanwhile former Lotus Formula One driver and now TV commentator, Martin Brundle said that Fernandez should just let go of the name. He said Tony had done well for himself with the Lotus name in the first year of racing and now should just go on with a different name.

Brundle pointed out that Red Bull Racing had no historical name and still managed to be double champion.

Meanwhile ESPN-F1 said that they will refer to Lotus_Renault as Renault and Team Lotus as Lotus. Score one for Fernandex there.

So who really won on Monday? The lawyers, because the case will now go mega and their bills will balloon.