Here Comes The Judge: Coventry City & The Judicial Review

By on Aug 6, 2013 in Finance, Latest | 4 comments

It has been another long few days for the supporters of Coventry City Football Club, but this evening, as the club’s team plays its second competitive match of the season at Leyton Orient in the Football League Cup, there are, for the first time, signs that the balance of power in terms of the future of the club might even be starting to tilt back into the balance for the first time. At the end of last week, the CVA that had been proposed by administrator Paul Appleton and the Otium Entertainment Group, one of the myriad of SISU-related companies that have come to be indistinguishable to such an extent that we will, for the purposes of brevity, refer to them all as “SISU”, was rejected by the owners of The Ricoh Arena, ACL, and HMRC.

The overblown statements made by Tim Fisher last week, one of which, “They’ve run us up against a cliff edge of liquidation and they’ve moved to tip us over,” was such that it was almost impossible to read without collapsing into a fit of giggles, then had no effect, and now Coventry City Football Club Limited will be liquidated. This didn’t stop the Football League from approving the transfer of ownership of the “Golden Share” – which transfers the right to play in the League from one entity to another – into Otium’s name, and they also applied a ten point deduction to the club at the same time, which was a lower amount that many had anticipated would be applied.

The following day, to coin a phrase from elsewhere, hostilities briefly ceased and a football match broke out. Almost eleven hundred Coventry supporters made a trip to West Sussex for the team’s opening League One match of the season, and after going two goals down early on, Steven Pressley’s team showed more than a little gumption in drawing back to level terms before a late goal saw Crawley win by three goals to two. It was, however, an afternoon marked by protest from the travelling supporters which culminated in a small pitch invasion by some. Some form of intervention on the part of FA may or may not now follow, somewhat ironically, considering their absolute silence on everything else that has been going on at the club since it stopped paying its rent at the end of March 2012.

This morning there followed a further blow to SISU, when its application for a judicial review against Coventry City Council over the purchasing of the mortgage that had been agreed to ease the financial burden on ACL in January of this year was thrown out by a High Court judge at the first hurdle. The case, brought by Arvo Master Fund, Sky Blue Sports and Leisure Ltd and Coventry City Football Club (Holdings) Limited (all SISU-related companies, for the avoidance of doubt), had argued that the council had acted unlawfully in agreeing to this, but the judge, Mr Justice Males, thought otherwise. We reproduce his summing up below as follows:

I am not persuaded that there is an arguable case that the loan by the council constituted an unlawful state aid. It was made on commercial terms, in order to protect the council’s investment in ACL, in circumstances where ACL’s bank was threatening to hold ACL in default.

The alternatives would appear to have been either the insolvency of ACL which (largely because the claimants had caused rent to be withheld as a means of exerting pressure in the commercial negotiations, which had led to an unsatisfied judgment of the High Court in ACL’s favour) was not in a position to pay the loan, or acceptance of the claimants’ proposals which the council did not consider to be in its commercial interests.

It is clear from public statements made by members of the council, in particular councillor Mutton, that at least some members (of the council) have a strong animosity towards the claimants. However, I do not accept that this demonstrates that the council made its decision to offer a loan to ACL for an improper purpose or in bad faith. Its purpose was the legitimate commercial purpose of protecting investment in ACL.

The claim that the decision was ultra vires (unlawful) is dependent on a showing of an improper purpose and therefore has no independent life once it is determined that the council’s purpose was not improper.

Those who had sought the review have  a right to appeal, but considering how emphatic – and swift – the verdict has been in this case, whether this would have any merit is obviously open to question, especially when we consider that costs may be liable to rise for those who brought the action in the first place. The club, for its part, couldn’t have been more perfunctory in its response to the verdict with an official statement released early this afternoon which almost bristled with discontentment: “Coventry City Football Club has noted the ruling by Mr Justice Males on the Judicial Review and will consider the decision before taking its next steps.”

But what significance does all of this hold? Well, perhaps most significantly – and presuming that there is no appeal that ends up somehow being successful – it shores up ACL’s financial position, and if, as has been widely suggested over recent weeks to the point that it has come to be regarded as the only rational reason for their behaviour over their last few months or so, the intention of the SISU-related companies has been to financially distress the stadium owners to a point at which they have to surrender The Ricoh Arena for next to nothing, then such a plan is, if not quite dead, then it is very much now on a life-support machine. It is understood that, since the remortgage that secured its future, ACL has been out of the financial woods. Even if it might have had before, it certainly now seems to have no great need to sell the stadium. Should there be any room for negotiations over renting the stadium, then ACL’s position is much stronger for today’s verdict.

The nature of the Judge’s comments could also reasonably be believed to call still further into question the claims made by SISU at the time of the Football League’s acquiescence to their desire to move to Northampton for the new season that they had somehow been “forced” into it. ACL have made repeated offers to the club to continue to rent the stadium at rates which would make considerably more financial sense than moving thirty-five miles away to play in front of a few hundred die-hards. The case that “both sides” of this argument are equally to blame for this state of affairs having come to pass feels more and more like an absurdity with each passing day. The Football League should, as a matter of urgency, review their agreement to Coventry City playing in Northampton this season. There has been little to suggest that they will do, though, further engendering the increasing feeling amongst many supporters that they are, frankly, not fit for purpose in their current condition.

Next Sunday, Coventry City play their first “home” league match of the season at home against Bristol City. An hour before this match kicks off, back in Coventry, a team of club legends is set to play a Midlands All Stars XI in aid of Cancer Research and Acorn’s Children’s Hospice. It is expected that only a few will make that trip to Sixfields, whilst thousands may well turn out for this charity match instead and, whilst the main aim of this day should be to raise money for two excellent causes, it may also prove to be an opportunity for supporters of the club to show, in the clearest terms possible, where the heart and soul of Coventry City Football Club truly lays, in the city of Coventry, far away from Northampton and the clutching grabs of those whose actions put them in the sorry position in which they find themselves today.

Details of ticket availability for Sunday’s charity match at The Ricoh Arena can be found at this thread on the Coventry City supporters forum, Sky Blues Talk.

You can follow Twohundredpercent on Twitter by clicking here.

Share Button

    4 Comments

  1. Keep up the excellent work. I hope the FA (and any judges who end up on or near this case) are subscribed to this blog!

    Iain

    August 6, 2013

  2. Excellent article that helps define the issues clearly. Thank-you very much.

    Dave S

    August 6, 2013

  3. Fantastic article. A sad comment on the mainstream media that all the best articles on this subject have come from bloggers. David Conn at the Guardian told me that they’ve “been unable to find room” for the story this summer. Yeah right.

    Tim

    August 8, 2013

  4. yes thanks for your continuing coverage ,blogs ,comments etc on the sad saga at ccfc..with the charity game this weekend and tv coverage at both ricoh& sixfields it will show the nation just how the fans & other teams supporters feel (as Bristol fans are thought to be boycotting game at sixfields in UNITY with sky blues fans)also the continuation of the SKY BLUE RIBBON flying until contry return home is growing day by day

    graham williams

    August 8, 2013

Trackbacks/Pingbacks

  1. The Sky Blue Daily | Sky Blue Daily Digest 9 August 2013 - […] http://twohundredpercent.net/?p=23903 […]

Post a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>