Lloyd stands accused on two fronts. Firstly, the damages claimed relate to suggestion that she broke the rules of the competition by posing topless for men's magazine Playboy. Secondly, bringing the contest into disrepute by the "secret relationship" she had by dating one of the competition's judges, West Ham forward Teddy Sherringham. It is a relationship that Lloyd has always insisted started at the aftershow party for the competition.
However, it has since been revealed that she started her relationship with Sherringham before the competition ended.
Lloyd was stripped of her title in November after the accusations by the organisers.
This is not the first scandal to hit the house. Earlier this week, broadcast watchdog Ofcom said it was to investigate a number of complaints it has received about the alleged censorship of practising Muslim contestant Jermaine Jackson's five-times daily prayers on 'Celebrity Big Brother'. This claim has been denied by the broadcaster.
Last night, Jade Goody's mother, Jackiey, became the first person to be evicted and either Carole Malone or Cleo Rocos now face being evicted for earlier discussion nominations.
Two housemates have already gone, after Donny Tourette and veteran film director Ken Russell walked out of the house.
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