Clydebank Football Club Limited V. Charles Alexander Steedman And Others
| Jurisdiction | Scotland |
| Judge | Lord Hamilton |
| Date | 29 September 2000 |
| Court | Court of Session |
| Published date | 02 October 2000 |
| OUTER HOUSE, COURT OF SESSION | |
|
| OPINION OF LORD HAMILTON in the cause CLYDEBANK FOOTBALL CLUB LIMITED Pursuer; against CHARLES ALEXANDER STEEDMAN AND OTHERS Defenders: ________________ |
Pursuer: L. Wallace; Robson McLean, W.S.
Defenders: Currie, Q.C., Sellar; Semple Fraser, W.S.
29 September 2000
[1]The pursuer ("the Company") was incorporated on 2 June 1965 with a share capital of £30,000 divided into 30,000 shares of £1 each. Its primary object was to -
"promote, foster, develop and play in all its branches the game of association football and to promote the practice and playing of competitions and matches, including any arrangements for football competitions, contests and matches in Scotland or elsewhere, and also to promote all forms of sport, games and allied activities".
It succeeded a club known as "Clydebank Juniors". Mr Charles Steedman and Mr John (commonly known as Jack) Steedman, who are respectively the first and second defenders in this action, were original shareholders and directors of the Company. A number of local residents in Clydebank also subscribed for shares in the Company. Among them were Mr James Heggie, the sixth defender, and Mr William Howat, the seventh defender, both of whom were also original directors.
[2]The Company became a member of the Scottish Football Association and of the Scottish Football League. Its home ground was at Kilbowie Park, Clydebank. In about 1978/79 bench seating was installed at the stadium there. By 1994/95, however, the Company was in financial difficulty. Its balance sheet as at 30 June 1995, following two years of heavy losses, showed a deficit of about £120,000; the deficit as at 30 June 1994 had been about £28,000. It had been seriously affected by the Bosman decision (relative to the freedom of players to transfer to other clubs) and by the advent of the National Lottery (which had reduced its income from club lotteries). Following the Taylor Report its bench seating no longer met acceptable safety criteria.
[3]The stadium at Kilbowie Park was situated within urban Clydebank. It extended to about 2 hectares. At about the end of 1994 the directors of the Company considered the possibility of selling the stadium for development and of building a new stadium elsewhere. By missives dated 19 and 21 July 1995 the Company agreed to sell Kilbowie Park to Vico Projects Limited ("Vico"), a development company, for £2.3 million. The bargain was subject to various suspensive conditions including the obtaining of acceptable outline planning permission. Vico lodged a planning application for a mixture of leisure and retail purposes. It was strongly opposed by local residents and was refused. An appeal to the Secretary of State against that refusal was unsuccessful. In about June 1996 another development company, Castlemore Securities, offered to purchase Kilbowie Park outright for £600,000, the obtaining of planning permission not being a condition of this offer. Certain provisions were included whereby the purchase price would be enhanced in the event of planning permission for specified uses (including leisure and retail) subsequently being obtained. Further discussions took place with Castlemore Securities which resulted in its making in July 1996 an offer to acquire Kilbowie Park for £2.9 million, subject to the obtaining of planning permission for retail and leisure uses. That body also offered to advance to the Company a loan, secured over the stadium, of £600,000.
[4]The Company did not in the event enter into any bargain with Castlemore Securities but drew the attention of Vico to the proposals made by the former. In the result a new bargain was entered into between the Company and Vico. By Minute of Agreement dated 2 and 11 September 1996 Vico, now styled "Vico Securities Limited", agreed to make a loan to the Company of £600,000 (to be secured over the stadium) and to acquire the stadium from it conditionally on outline planning permission being granted to Vico for a proposed development (again for mixed leisure and retail units). The gross purchase price on purification of the conditions remained £2.3 million. The loan of £600,000 was duly made and secured. A result of this development was that in the financial statements of the Company as at 30 June 1996 it was possible (taking into account post-balance sheet events) to include a revaluation reserve of £495,221 in respect of the stadium, which together with the previous figures of £51,027 for the ground and £53,752 for the social club at it, produced an accounting value of £600,000 for that property as a whole. Having discussed inter alia this valuation with the directors, the auditors of the Company reported that the financial statements gave a true and fair view of the state of affairs of the Company as at 30 June 1996. The result was that a surplus (of £144,803) appeared in the balance sheet as at 30 June 1996, although in the year to that date the Company had again made a substantial loss (£229,915). The Company's finances remained as at 30 June 1996 precarious. A cheque drawn by it early in July 1996 in favour of the Inland Revenue had been returned by the Company's bankers on the ground of insufficiency of funds in its account. Some relief was obtained on the loan from Vico being credited to the account and the overdraft consequentially being paid off in the latter half of 1996.
[5]The directors had meantime been giving consideration to a site for a new stadium. Discussions took place with West of Scotland Rugby Football Club exploring the possibility of it and the Company sharing a stadium. By disposition dated 29 April 1996 the Company acquired 15 acres (6.15 hectares) of land, part of Braidfield Farm (otherwise known as "Moreland's Farm"), which lay in the green belt between Clydebank and Glasgow. This area of ground ("Braidfield"), which it was hoped would provide a site for a new stadium, was acquired for £75,000, the purchase price being financed by a loan from The Football Trust.
[6]In the season ending in April 1996 the Company was playing in the First Division of the Scottish Football League. Its prospects of financial viability turned importantly on its remaining in that Division. By 1996 regulations, devised following the Taylor Report, had come into force which made it impossible to continue playing matches at Kilbowie Park. Arrangements were made for the Company to have use for home matches of the ground at Bogside, which belonged to Dumbarton Football Club. The Company played there during the 1996/97 season. This change of location was not popular with Clydebank fans, many of whom deserted the club; there had long been rivalry between Clydebank and Dumbarton. The cessor of activity at Kilbowie Park had other serious consequences. The property, including the social club premises there, was seriously damaged by vandalism. Demolition orders were ultimately served in respect of several of the structures.
[7]In December 1996 and again in April 1997 certain variations were consensually made to the Minute of Agreement between the Company and Vico. None of these variations is material for present purposes.
[8]On 16 January 1997 Messrs Cowan & Co., solicitors in Glasgow, wrote to the Chairman of the Company stating that they had -
"been instructed by an overseas client to write to you in connection with the purchase of a controlling interest in your Club. Our client is a businessman with a keen interest in soccer and funds are also available for investment in the Club itself."
Mr Allan Cowan, the author of the letter, was known to the second defender as a person of repute with an interest in Scottish football affairs. Mr Cowan asked that any discussion in relation to this approach should be treated in strict confidence. The second defender, who was by this time doubtful whether the proposed co-operative arrangement with West of Scotland Rugby Football Club would ever bear fruit, responded positively to this approach. Certain correspondence and discussions followed. It was made plain from an early stage that Mr Cowan's client was not interested in acquiring any heritable property owned by the Company. The client's wish, it appeared, was to acquire the Company's playing interests - in particular its membership of the Scottish Football Association and of the Scottish Football League and its interest in respect of its players. The second defender later came to learn that the previously undisclosed client was a Dr John Hall, whom he met on one occasion (in June 1997).
[9]The second defender, who took the leading role in these discussions on behalf of the Company and those interested in it, explored with the Company's accountants and solicitors the possible mechanisms and implications (including tax and legal implications) of an arrangement under which the heritable assets and relevant loans of the Company might be transferred to a new company with the Company continuing as a going concern in respect of its football playing interests. This consultation with professional advisers, which had begun in the context of the prospect of an arrangement with West of Scotland Rugby Football Club, continued in the context of the prospect of a possible sale to Dr Hall of the Company shorn of its heritable properties.
[10]By 1997 the 30,000 £1 shares of the Company were held as follows: - 26,139 shares (87.06% of the whole) were held by D.B.I. (Glasgow) Limited ("D.B.I."), a company in which certain individual members of the Steedman family and two Steedman family trusts in turn held shares. One share in the Company was held by each of the first defender and the second defender; the third defender, a son of the first defender, the fourth defender, a son of the second defender, and the fifth defender, another son of the second defender, each held 100 shares; the sixth defender and the seventh defender, both of whom were unrelated to the Steedman family, held respectively 292 and...
To continue reading
Request your trial