Mr Paul Cooper v VB Football Assets
| Jurisdiction | England & Wales |
| Judge | Mr Justice Marcus Smith |
| Judgment Date | 05 June 2019 |
| Neutral Citation | [2019] EWHC 1599 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2015-006989 |
| Date | 05 June 2019 |
[2019] EWHC 1599 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES (ChD)
INSOLVENCY AND COMPANIES LIST
Rolls Building
7 Rolls Building
Fetter Lane
London, EC4A 1NL
THE HONOURABLE Mr Justice Marcus Smith
(Sitting in private: the Judgment itself is open for publication)
Case No: CR-2015-006989
and
Mr Mark Phillips, QC and Mr Andrew Shaw (instructed by Stephenson Harwood LLP) appeared for the Applicants.
Mr Fraser Campbell (instructed by Clifford Chance LLP) for the Petitioner.
Mr Matthew Collings, QC and Mr GC Darbyshire (instructed by Haworth Holt Bell LLP) appeared for the Second Respondent
Hearing date: 5 June 2019
Approved Judgment
This action originated in an unfair prejudice petition under section 994 of the Companies Act 2006. The petition was brought by the Petitioner, VB Football Assets (“VBFA”), against four respondents. The Fourth Respondent was Blackpool Football Club Limited, which was joined simply in order to ensure that it was bound by the result. VBFA owned, and perhaps still owns, some 7,500 ordinary shares in the Fourth Respondent, amounting to some 20% of the shareholding. Apart from some very minor shareholdings held by third parties, the rest of the shares in the Fourth Respondent are held by the First Respondent.
The First Respondent is a company formerly known as Segesta Limited. It has since changed its name to Blackpool Football Club (Properties) Limited, but I shall continue to refer to it (as I have done throughout these proceeedings) as “Segesta”.
The Second Respondent is Mr Owen Oyston, who owns 97.2% of Segesta, the First Respondent. The Third Respondent is Mr Owen Oyston's son, Mr Karl Oyston. Mr Karl Oyston does not play an active role in this present matter and I need not refer to him any further. I shall therefore refer to the Second Respondent as “Mr Oyston”.
In this ruling, save where the contrary is stated or the context otherwise requires, “Respondents” refers to the First, Second and Third Respondents only.
In a judgment dated 6 November 2017, Neutral Citation Number [2017] EWHC 2767 (Ch), I determined the petition. I shall refer to that judgment as the “Judgment”. It will be necessary to refer to parts of the Judgment in due course. I should, however, make it clear that I take the Judgment, as well as all my subsequent rulings in these proceedings, as read.
The order that I made consequent upon the Judgment (also dated 6 November 2017) contained a number of provisions. Paragraph 1 of the order provided:
“The First to Third Respondents shall purchase the 7,500 ordinary shares of £1 each in the capital of [the Fourth Respondent], presently registered in the name of the Petitioner, for a sum of £31,270,000.”
In addition to this sum of £31 million-odd, there was an obligation on the Respondents to pay both costs and interest, which increased sum due to VBFA.
In terms of when payment should be made by the Respondents, my order provided as follows
“7. The First to Third Respondents shall pay the Petitioner the sum of £10 million by 4 pm on 4 December 2017 which will represent satisfaction in full of the payment on account of costs ordered in paragraph 6 above, with the balance being a payment on account of the purchase price ordered in paragraph 1 above.
8. The First to Third Respondents shall, by 4 pm on 20 November 2017, apply for a further order specifying the dates for payment of the balance of the purchase price ordered in paragraph 1 above, and of the sums ordered in paragraphs 2 and 3 above, such application to be reserved to Mr Justice Marcus Smith. In the event that no such application is made by the First to Third Respondents, the First to Third Respondents shall pay all such outstanding sums by 4 pm on 4 December 2017.”
The payment timetable was addressed with greater particularity in a later order. In an order sealed on 22 December 2017, a timetable was set out in paragraph 1 which provided for payments in instalments: £10 million by 4 pm on 31 January 2018; £7,500,000 by 4 pm on 30 March 2018; and £7,109,054 by 4 pm on 31 May 2018. This payment timetable took into account the fact that, as required by paragraph 7 of my order 6 November 2017, the Respondents did indeed pay the sum of £10 million by 4 pm on 4 December 2017.
However, the Respondents did not make any of the following instalments as directed by my order sealed 22 December 2017. As a result, after the January 2018 instalment had not been paid, by an order dated 6 February 2018, I set aside or varied the terms of my previous orders and directing that the unpaid balance of the purchase price be immediately due and payable to VBFA, who might pursue enforcement steps in respect of it and any accrued interest as at the date of enforcement as so advised.
So much for the orders as regards payment by the Respondents to VBFA. There are other provisions in the orders that I made that it is necessary to refer to. My order of 6 November 2017 contained, in paragraph 25, a general liberty to apply. The scope of that liberty was itself later clarified by an order dated 6 December 2017, which made clear (in paragraph 5) that paragraph 25 of the 6 November 2017 order was varied by the addition of the following sentence:
“For the avoidance of doubt, the foregoing includes permission for the Petitioner to apply for the payment of sums by the First to Third Respondents otherwise than as specified above.”
As I noted earlier, in December 2017, the Respondents paid some £10 million to VBFA, reducing the sum outstanding as at the 9 May 2019 to £25,693,958.23. No further sums have been paid voluntarily by the Respondents, and the Respondents are clearly in breach of the obligation to pay the balance of the £31 million-odd that was, and is, outstanding.
Since the Respondents' breach of the orders of this court, various efforts at enforcement have been made, culminating in the appointment of receivers by way of equitable execution (the “Receivers”). Apart from the appointment of the Receivers, which I will have to refer to in greater detail, it is unnecessary for me to summarise these efforts at enforcement, save to note that they were substantially unsuccessful.
It was because of that lack of success that VBFA sought the appointment of the Receivers. When that application was in due course made, I granted it for the reasons set out in my ruling of 13 February 2019, Neutral Citation Number [2019] EWHC 530 (Ch). The order appointing the Receivers is similarly dated 13 February 2019.
Essentially, the Receivers were appointed over what I termed the “footballing assets”, by which I meant the assets related to or relating to the Fourth Respondent. It is necessary to use a term as elliptical as “assets related to or relating to the Fourth Respondent” because the Fourth Respondent does not itself actually own all of the assets it needs to operate as a football club. It does not, for instance, own the ground at which it plays, which is owned by Segesta. I explained the somewhat convoluted circumstances in which the Fourth Respondent operated in [37] ff of the Judgment.
The order appointing the Receivers contains a list of receivership interests, set out in the annex to the order, which identifies the assets which the receivers are entitled to get in and sell. These assets are all linked, essentially, by the fact that they are needed by the Fourth Respondent to operate as a football club. So, despite their disparate nature, the assets that the Receivers have authority to get in and sell, is the football club, which is something more than, but obviously includes, the Fourth Respondent.
The order appointing the Receivers contains, as it were, an element of double counting in the annex listing the receivership interests. Thus, the shares in Segesta, the First Respondent, owned by Mr Oyston, the Second Respondent, can be sold (Item 1 in the annex), but so too can the assets of Segesta (e.g. Item 4). Such a sale would naturally affect the value of Mr Oyston's shareholding in Segesta. So, there is obviously a nexus between the assets listed in the annex. Equally, as we shall see, not all of the assets that the receivers have authority to get in and sell in fact need to be sold in order to enable the Fourth Respondent to operate as a football club. As will be seen, the Receivers are proposing a sale of assets that does not in fact include Mr Oyston's shares in Segesta.
I am going to refer to the assets that the Receivers are selling (and which sale they are seeking the court's approval for) as the “Club”. That is because this is the reality of the matter. It has always been felt, as my ruling of 13 February 2019 makes clear and as the Receivers' evidence before me today confirms, that a better price could be obtained by selling the Club as a going concern rather than by selling the receivership assets separately in an asset sale.
The Receivers have, since their appointment, been active and have brought the Club to a point where it can be sold. I do not intend to describe the sale process in detail, but it is necessary to set out in broad terms how the process has operated. I shall begin with the description of that process in...
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