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Key points from the final day of the Judicial Review between Coventry City Football Club and Coventry City Council

12 June 2014

Here are the key points from the final day of the Judicial Review at Birmingham Crown Court today...

Coventry City Football Club’s Judicial Review against Coventry City Council moved into its third day at Birmingham Crown Court.

The Coventry City Council (CCC) QC started the day by continuing his case for defence before the ACL QC started the defence for ACL.

The SISU QC responded to the case for defence from both CCC and ACL before the Judge concluded by saying he will reserve his judgement until the week commencing the 30th June.

The key points are done in chronological order. The full court transcripts from the Judicial Review will be available at tomorrow.

Here are the key points from the third day at the Judicial Review:-

- CCC QC started proceedings by continuing the case for defence. CCC QC said that the SISU QC had introduced new grounds for argument which aren’t covered by the pleaded case and therefore not admissible.

- CCC QC referred to a council presentation which said ‘CCFC stopped paying rent – unlawfully’ and said that the SISU QC failed to point this out. The SISU QC responds referring to another page in the presentation which he said showed ACL were misleading their councillors on the rent negotiations.

- CCC QC said that the decision to buy-out ACL’s debt made ‘commercial sense’  and the ACL statement that a private investor wouldn’t go over £5-6m to buy ACL’s debt with the Yorkshire Bank (YB), wasn’t a statement but said in negotiations with the YB.

- CCC QC says the escrow account which ACL took £500k out of when CCFC stopped paying rent was funded by the Football Association. 

- CCC QC said that SISU hoped to get ACL into a ‘distressed financial position’ to gain an interest in the Ricoh Arena and that these were ‘damaging actions.’

- ACL QC stated the case for state aid defence for ACL after the CCC QC finished his submissions. ACL QC says this hearing isn’t a matter for the EU but a national court. 

- ACL QC refers to a number of EU state aid cases. ACL QC refers to a previous stadiums case in Copenhagen, Denmark which the SISU QC raised on day two. ACL QC said that, ‘with respect, Copenhagen can’t be compared to Coventry’ and therefore the EU state law can’t be applied.

- SISU QC opened his response by saying the ACL shares were “underwater” and that there was no investment to protect. Coventry North Regeneration Limited had been repaid (in 2006) the £21m it had borrowed to fund the construction of the stadium.

- Judge suggested that the council was acting in the interest of a shareholder when the £14.4m council loan was made. SISU QC responded that the bank was in the position of having already lost its money and doing its best to recover the position. The council’s holding in ACL was negative equity and therefore wasn’t an asset worth protecting. It was in an entirely different position of being faced with letting the bank off the hook by putting public money in.

- SISU QC said that the council buy-out ‘sabotaged’ the rent talks with CCFC and the CCC was aware of this. This was in response to CCC QC’s submission that the council buy-out improved chances of a rent deal.

- SISU QC responds to the CCC QC’s submission that the rent deal ‘was dead.’ SISU QC raised e-mails which show rent negotiations where still taking place. SISU QC says Mr. Chris West and Mr. Harris were ‘running the show’ and they took the main decision to double the offer from £6m to £12m, despite clear financial advice from Pricewaterhouse Coopers that the value of the debt was £5-£6m 

- SISU QC read out an e-mail from Mr Harris of Higgs that said “it would be difficult to get approval from the councillors if CCC increased the offer from £6m for the ACL debt with the YB”. SISU QC said that the e-mails show it would be ‘ridiculous’ to increase the offer for ACL’s YB loan. Judge says he understands the point.

- SISU QC questions Mr. Hastie’s independence following his financial report for CCC councillors on ACL and that he also helped write John Mutton’s speech to councillors. It was he says “unusual” for the independent advisor to also be the advocate for his own recommendation to the members.

- SISU QC said that it shouldn’t be a surprise that CCFC continued to try and secure a rent deal at the Ricoh Arena after the council loan deal was made. Judge says that CCFC were only interested in a deal which ‘provided them an interest in the Ricoh Arena.’ SISU QC responded by saying that CCFC were interested in a deal which provided them with match-day revenues, not an interest in the stadium.  He recited that the issue which faced the Club was access to a share of revenue generated from the match days.

- SISU QC said that CCFC paid the highest rent in the Football League and got the lowest match-day revenues - ‘nothing.’

- SISU QC said that the EU state law cases show that where a loan to a stadium is concerned it is to be assumed that there will be an effect of competition and the documents cross that threshold easily, he needed take the matter further.

- SISU QC said the case clearly fully falls into EU state aid law and that Mr. West and Mr. Hastie should have considered that when deciding on the ACL debt buy-out.

Judge says he will hand the judgement down on the week commencing the 30th June. 

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