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http://www.coventrytelegraph.net/news/coventry-news/judge-delivers-blow-sky-blues-6263237
Judge delivers blow to Sky Blues owners' efforts to challenge Coventry council's Ricoh Arena £14.4m bail out
Sisu dealt serious blow when Mr Justice Silber today rejected demands the council disclose full details of the loan agreement with stadium company
Ricoh Arena, long-time home of Coventry City FC
The owners of Coventry City Football Club have suffered a set-back in their High Court challenge to the city council’s controversial decision to ‘‘bail out’’ the operators of the Ricoh Arena to the tune of £14.4million.
Coventry have played at Northampton Town’s ground since leaving the part council-owned arena in May after rows over its £1.3m-a-year rent with the stadium’s operators, Arena Coventry Ltd (ACL).
Club owners Sisu claim the city council loan to ACL, which is co-owned by the local authority and a charity, was “unlawful state aid”, designed to “drive them out of Coventry”.
Sisu is trying to mount a judicial review challenge to the council’s move and, although its complaints were in August rejected as unarguable by a judge who reviewed the papers, it is determined to pursue the matter to a full hearing.
However, after a preliminary hearing, Mr Justice Silber today dealt Sisu a serious blow when he rejected its demands that the council disclose full details of the loan agreement with ACL, along with professional advice it received and other documents.
Insult was added to injury when Sisu was ordered to pay more than £7,000 towards the council’s legal costs.
In his ruling, the judge said it is the council’s case that, since April 2012, no rent or licence fees have been paid to ACL for use of the arena by Coventry City Football Club Ltd (CCL).
Sisu fiercely denies that, insisting that, over that period, ACL received at least £800,000 for the club’s use of the arena from a rent deposit account and under a ‘pay-per-play’ agreement.
However, on August 13 last year, ACL obtained a default judgment against CCL for payment of outstanding rent and licence fees and, on December 5, served CCL with a statutory demand for £1.1m.
The judge added that ACL had been saddled with a £15m loan with the Yorkshire Bank, secured by a mortgage over the company’s assets.
In that month, the bank wrote to ACL expressing concern over its finances and, on January 15 this year, the council decided to loan the company £14.4m so that it could repay its debt to the bank.
ACL had entered into a ‘hedging arrangement’ with the bank and the cost of escaping from that came to about £4m.
The council, which insists that it agreed to make the loan to protect the huge public investment in the stadium, says that CCL’s refusal to pay rent or licence fees to ACL exposed it to ‘significant risk’ and had a severe impact on the value of the local authority’s share-holding in the company.
The council argues that there was “a real risk” that the bank or a third party might take control of ACL, and with it the arena, if the bank sought to enforce its security, sold the debt to a third party, or tried to put ACL into administration.
However, Mr Justice Silber said it is Sisu’s case that the loan violated European competition rules and the council “has acted in bad faith and with improper motive, namely to remove the claimants (Sisu) as owners of the club”.
Sisu, which also claims that the council “exceeded the legitimate scope” of its powers and made “irrational” use of public funds, asked the court to order the council to disclose a large number of documents - including the loan agreement itself and professional accountancy and valuation advice.
The consortium said the disclosures were necessary if its arguments were to be given a fair hearing.
However, council lawyers pointed out that Sisu’s challenge had already been rejected on paper, although it is still pursuing its right to renew its application for permission to seek judicial review before a judge in open court.
Fearing that the case would get out of hand and become “excessively expensive and burdensome”, the council insisted that a disclosure order was not warranted when Sisu’s complaints had yet to be declared even arguable.
Refusing Sisu’s disclosure application, the judge said it was unheard of for such an order to be made prior to permission for a judicial review being granted.
Sisu already had enough information in its grasp to enable it to put forward “a respectable case” on most of the issues, and requiring the council to make further disclosures could not be described as “necessary”.
The full hearing of Sisu’s application for permission to mount a full challenge to the loan will take place at the High Court in the near future.
However Sisu, made up of Sky Blue Sports Ltd, Arvo Masters Fund Ltd and Coventry City Football Club (Holdings) Ltd, will now not be armed with all the documents it wanted to see.
Rhodri Thompson QC, for Sisu, earlier told the judge that the council’s decision to make the loan was “taken for the improper purpose of forcing the companies to sell the club to a buyer of the council’s choosing and as an unlawful state aid, contrary to EU law.”
The QC said the club’s income dropped from about £11m-a-year to about £5m-a-year after relegation from the Championship to the third tier of English football and it has been docked points for its parlous financial state.
Mr Thompson claimed that the council’s decision to shore up the financial position of ACL, which it owns jointly with the Higgs Charity, had “no commercial rationale” and was a misuse of public funds.
However, James Goudie QC, for the local authority, said: “The council was protecting its own interests in the circumstances in which the football club had not paid any rent since April 2012. Its investment was threatened. It was protecting its interest. It was an entirely legitimate commercial purpose.”
The barrister attacked Sisu’s disclosure bid as a “classic fishing expedition”.
Judge delivers blow to Sky Blues owners' efforts to challenge Coventry council's Ricoh Arena £14.4m bail out
Sisu dealt serious blow when Mr Justice Silber today rejected demands the council disclose full details of the loan agreement with stadium company
Ricoh Arena, long-time home of Coventry City FC
The owners of Coventry City Football Club have suffered a set-back in their High Court challenge to the city council’s controversial decision to ‘‘bail out’’ the operators of the Ricoh Arena to the tune of £14.4million.
Coventry have played at Northampton Town’s ground since leaving the part council-owned arena in May after rows over its £1.3m-a-year rent with the stadium’s operators, Arena Coventry Ltd (ACL).
Club owners Sisu claim the city council loan to ACL, which is co-owned by the local authority and a charity, was “unlawful state aid”, designed to “drive them out of Coventry”.
Sisu is trying to mount a judicial review challenge to the council’s move and, although its complaints were in August rejected as unarguable by a judge who reviewed the papers, it is determined to pursue the matter to a full hearing.
However, after a preliminary hearing, Mr Justice Silber today dealt Sisu a serious blow when he rejected its demands that the council disclose full details of the loan agreement with ACL, along with professional advice it received and other documents.
Insult was added to injury when Sisu was ordered to pay more than £7,000 towards the council’s legal costs.
In his ruling, the judge said it is the council’s case that, since April 2012, no rent or licence fees have been paid to ACL for use of the arena by Coventry City Football Club Ltd (CCL).
Sisu fiercely denies that, insisting that, over that period, ACL received at least £800,000 for the club’s use of the arena from a rent deposit account and under a ‘pay-per-play’ agreement.
However, on August 13 last year, ACL obtained a default judgment against CCL for payment of outstanding rent and licence fees and, on December 5, served CCL with a statutory demand for £1.1m.
The judge added that ACL had been saddled with a £15m loan with the Yorkshire Bank, secured by a mortgage over the company’s assets.
In that month, the bank wrote to ACL expressing concern over its finances and, on January 15 this year, the council decided to loan the company £14.4m so that it could repay its debt to the bank.
ACL had entered into a ‘hedging arrangement’ with the bank and the cost of escaping from that came to about £4m.
The council, which insists that it agreed to make the loan to protect the huge public investment in the stadium, says that CCL’s refusal to pay rent or licence fees to ACL exposed it to ‘significant risk’ and had a severe impact on the value of the local authority’s share-holding in the company.
The council argues that there was “a real risk” that the bank or a third party might take control of ACL, and with it the arena, if the bank sought to enforce its security, sold the debt to a third party, or tried to put ACL into administration.
However, Mr Justice Silber said it is Sisu’s case that the loan violated European competition rules and the council “has acted in bad faith and with improper motive, namely to remove the claimants (Sisu) as owners of the club”.
Sisu, which also claims that the council “exceeded the legitimate scope” of its powers and made “irrational” use of public funds, asked the court to order the council to disclose a large number of documents - including the loan agreement itself and professional accountancy and valuation advice.
The consortium said the disclosures were necessary if its arguments were to be given a fair hearing.
However, council lawyers pointed out that Sisu’s challenge had already been rejected on paper, although it is still pursuing its right to renew its application for permission to seek judicial review before a judge in open court.
Fearing that the case would get out of hand and become “excessively expensive and burdensome”, the council insisted that a disclosure order was not warranted when Sisu’s complaints had yet to be declared even arguable.
Refusing Sisu’s disclosure application, the judge said it was unheard of for such an order to be made prior to permission for a judicial review being granted.
Sisu already had enough information in its grasp to enable it to put forward “a respectable case” on most of the issues, and requiring the council to make further disclosures could not be described as “necessary”.
The full hearing of Sisu’s application for permission to mount a full challenge to the loan will take place at the High Court in the near future.
However Sisu, made up of Sky Blue Sports Ltd, Arvo Masters Fund Ltd and Coventry City Football Club (Holdings) Ltd, will now not be armed with all the documents it wanted to see.
Rhodri Thompson QC, for Sisu, earlier told the judge that the council’s decision to make the loan was “taken for the improper purpose of forcing the companies to sell the club to a buyer of the council’s choosing and as an unlawful state aid, contrary to EU law.”
The QC said the club’s income dropped from about £11m-a-year to about £5m-a-year after relegation from the Championship to the third tier of English football and it has been docked points for its parlous financial state.
Mr Thompson claimed that the council’s decision to shore up the financial position of ACL, which it owns jointly with the Higgs Charity, had “no commercial rationale” and was a misuse of public funds.
However, James Goudie QC, for the local authority, said: “The council was protecting its own interests in the circumstances in which the football club had not paid any rent since April 2012. Its investment was threatened. It was protecting its interest. It was an entirely legitimate commercial purpose.”
The barrister attacked Sisu’s disclosure bid as a “classic fishing expedition”.
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