VB Football Assets (Petitioner) v Blackpool Football Club (Properties) Ltd (formerly Segesta Ltd) and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Marcus Smith |
| Judgment Date | 06 November 2017 |
| Neutral Citation | [2017] EWHC 2767 (Ch) |
| Docket Number | Case No: CR-2015-006989 |
| Court | Chancery Division |
| Date | 06 November 2017 |
[2017] EWHC 2767 (Ch)
THE HONOURABLE Mr. Justice Marcus Smith
Case No: CR-2015-006989
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice Strand, London, WC2A 2LL
Mr. Andrew Green, Q.C. andMr. Fraser Campbell (instructed by Clifford Chance LLP) for the Petitioner
Mr. Alan Steinfeld, Q.C. andMr. Eric Shannon (instructed by Haworth Holt Bell Solicitors) for the Respondents
Hearing dates: 12 to 16, 19 to 23, 26, 28 to 30 June 2017, 3, 7 July and 6 November 2017
APPROVED JUDGMENT
| A. | INTRODUCTION | Paragraph 1 |
| (1) | Factual overview | Paragraph 1 |
| (2) | The allegations of unfair prejudice made in the Petition | Paragraph 21 |
| (3) | The structure of this Judgment | Paragraph 25 |
| B. | THE FACTUAL WITNESSES | Paragraph 28 |
| (1) | VB Football Assets' witnesses | Paragraph 29 |
| (2) | The Respondents' witnesses | Paragraph 30 |
| C. | FACTUAL NARRATIVE | Paragraph 36 |
| (1) | The original ownership of shares in Blackpool FC | Paragraph 36 |
| (2) | The Oyston Group | Paragraph 37 |
| (3) | Blackpool FC's use of the football ground | Paragraph 39 |
| (4) | Financial support by Mr. Owen Oyston | Paragraph 46 |
| (5) | Mr. Belokon is introduced to Mr. Owen Oyston | Paragraph 47 |
| (6) | The Subscription Agreement | Paragraph 48 |
| (7) | The First Vlada Loan Agreement | Paragraph 49 |
| (8) | The Second Vlada Loan Agreement | Paragraph 51 |
| (9) | The nature of the agreement reached between the parties | Paragraph 53 |
| (i) | The rival contentions | Paragraph 53 |
| (ii) | Analysis: was there a wider agreement; and, if so, what was its nature and what were its terms? | Paragraph 57 |
| (10) | The First South Stand Agreement | Paragraph 96 |
| (11) | The Second South Stand Agreement | Paragraph 99 |
| (12) | Ms. Beinare's email regarding the ownership of Blackpool FC | Paragraph 101 |
| (13) | The player trust | Paragraph 104 |
| (14) | The board meeting of Blackpool FC on 12 November 2009 | Paragraph 105 |
| (15) | The Zabaxe debt | Paragraph 106 |
| (16) | Blackpool FC's promotion into the Premier League | Paragraph 110 |
| (17) | The Enterprise Investment Scheme case | Paragraph 111 |
| (18) | Post-promotion meetings | Paragraph 112 |
| (19) | The Dorchester meeting: 23 May 2010 | Paragraph 114 |
| (i) | The minutes | Paragraph 115 |
| (ii) | Mr. Belokon's recollection | Paragraph 116 |
| (iii) | Mr. Malnac's recollection | Paragraph 118 |
| (iv) | Mr. Owen Oyston's recollection | Paragraph 120 |
| (v) | Mr. Karl Oyston's recollection | Paragraph 122 |
| (vi) | Synthesis | Paragraph 124 |
| (20) | Getting money out of Blackpool FC | Paragraph 127 |
| (21) | The tax meeting | Paragraph 140 |
| (22) | Preparing to put the matter to the board of Blackpool FC | Paragraph 143 |
| (23) | The Blackpool FC board meeting of 25 June 2010/Dinner at Claridge's | Paragraph 146 |
| (i) | Introduction | Paragraph 146 |
| (ii) | The evidence in Belokon 1 | Paragraph 148 |
| (iii) | The evidence in Malnacs 1 | Paragraph 149 |
| (iv) | The evidence in OJO 1 and KO 1 | Paragraph 150 |
| (v) | The "aide memoire" attached to Mr. Owen Oyston's email of 22 September 2010 | Paragraph 151 |
| (vi) | Evidence given in cross-examination | Paragraph 154 |
| (vii) | Synthesis | Paragraph 159 |
| (24) | Preparations for making payments out | Paragraph 161 |
| (25) | The meeting on 12 August 2010 | Paragraph 170 |
| (26) | Mr. Karl Oyston's position as chairman | Paragraph 172 |
| (27) | Mr. Malnacs' query regarding the liabilities of Blackpool FC | Paragraph 173 |
| (28) | The payment of the £4.2 million Protoplan debt and the initial response of the Belokon Side | Paragraph 176 |
| (29) | The meeting in Riga, Latvia, on 7 October 2010 | Paragraph 186 |
| (30) | Debate regarding the nature of the Protoplan payment | Paragraph 192 |
| (i) | Communications between the Oyston Side and the Belokon Side | Paragraph 192 |
| (ii) | Debate internal to the Oyston Side | Paragraph 195 |
| (31) | A (further) proposal from the Belokon Side | Paragraph 198 |
| (32) | The Belokon Side inquiries about corporate governance | Paragraph 203 |
| (33) | The meeting on 17 December 2010 | Paragraph 205 |
| (34) | The proposal to discharge the mortgage over the Travelodge | Paragraph 209 |
| (35) | Payment of £4.9 million in respect of the Travelodge | Paragraph 215 |
| (36) | Discovery of the payment | Paragraph 218 |
| (37) | Further progression of the Travelodge transaction | Paragraph 221 |
| (38) | The meeting at Grange St Paul's in May 2011 | Paragraph 226 |
| (39) | Mr. Owen Oyston's reaction after the meeting | Paragraph 237 |
| (40) | The meeting at the Savoy in June 2011 | Paragraph 241 |
| (41) | Mr. Belokon seeks to exit Blackpool FC | Paragraph 246 |
| (42) | The "tax meeting" on 27 July 2011 | Paragraph 254 |
| (43) | Conclusion of the Travelodge loan agreement by Blackpool FC and further payments in respect of the Travelodge and payment of the Zabaxe debt | Paragraph 256 |
| (44) | The "Global Witness" letter | Paragraph 260 |
| (45) | Mr. Belokon's letter of 4 October 2011 | Paragraph 261 |
| (46) | Mr. Malnac's inquiry about payments away | Paragraph 264 |
| (47) | A proposal that "certain bonuses" be paid | Paragraph 267 |
| (48) | Mr. Malnacs' view of matters appears in a "draft note to new [Blackpool FC] members" | Paragraph 269 |
| (49) | The 20 January 2012 board meeting | Paragraph 271 |
| (50) | Further signs of a deteriorating relationship and a failure to provide information | Paragraph 275 |
| (51) | The 2 February 2012 board meeting and aftermath | Paragraph 279 |
| (52) | The £11 million payment proposal | Paragraph 284 |
| (53) | The 17 February 2012 board meeting | Paragraph 292 |
| (54) | The payment of £11 million is made | Paragraph 297 |
| (55) | Publicity surrounding the payment | Paragraph 298 |
| (56) | Exit Mr. Malnacs; enter Mr. Varpins | Paragraph 300 |
| (57) | 2013 onwards | Paragraph 301 |
| D. | UNFAIR PREJUDICE: SECTION 994 | Paragraph 304 |
| (1) | Introduction | Paragraph 304 |
| (2) | Standing | Paragraph 306 |
| (3) | The acts and omissions of which VB Football Assets complains consist of the management of the affairs of Blackpool FC | Paragraph 307 |
| (4) | "Prejudice" to "interests" which is "unfair" | Paragraph 310 |
| E. | THE GENERAL OPERATION OF BLACKPOOL FC | Paragraph 324 |
| (1) | Duties on directors | Paragraph 324 |
| (2) | Transfers of money between entities within the Oyston Group | Paragraph 329 |
| (3) | Classification of the payments | Paragraph 341 |
| (4) | Unfair prejudice | Paragraph 349 |
| F. | UNFAIR PREJUDICE: SPECIFIC PAYMENTS AWAY AND THE FAILURE TO PAY DIVIDENDS | Paragraph 353 |
| (1) | The payments in question | Paragraph 353 |
| (2) | Payment of the £4.2 million in respect of Protoplan | Paragraph 356 |
| (3) | The payments in respect of the Travelodge | Paragraph 361 |
| (4) | Payment of the Zabaxe debt | Paragraph 368 |
| (5) | Payment of "directors' remuneration" of £11 million | Paragraph 371 |
| (6) | Non-payment if dividends | Paragraph 375 |
| G. | UNFAIR PREJUDICE: EXCLUSION FROM THE COMPANY | Paragraph 380 |
| H. | UNFAIR PREJUDICE: THE ALTERATION OF THE ARTICLES OF ASSOCIATION | Paragraph 388 |
| (1) | The facts | Paragraph 388 |
| (2) | The parties' contentions | Paragraph 407 |
| (3) | Conclusion | Paragraph 413 |
| I. | RELIEF SHOULD BE DENIED BECAUSE OF THE CONDUCT OF MR. BELOKON | Paragraph 416 |
| (1) | The contentions of the Respondents | Paragraph 416 |
| (2) | The law | Paragraph 417 |
| (3) | Analysis and conclusion | Paragraph 420 |
| J. | RELIEF | Paragraph 423 |
| (1) | The applicable principles | Paragraph 423 |
| (2) | Approach | Paragraph 426 |
| (3) | The value of Mr. Belokon's share in Blackpool FC | Paragraph 427 |
| (i) | The expert evidence | Paragraph 427 |
| (ii) | Assessment of the opposing expert viewpoints | Paragraph 432 |
| (iii) | The approach to be adopted | Paragraph 435 |
| (4) | The appropriate order for relief | Paragraph 446 |
| (i) | Factors militating against buyout | Paragraph 446 |
| (ii) | A bespoke arrangement? | Paragraph 448 |
| (iii) | Conclusion | Paragraph 452 |
| K. | DISPOSITION | Paragraph 455 |
| Annex 1 | Terms used in the Judgment | |
| Annex 2 | Chronology of the development of the Blackpool stadium |
A. INTRODUCTION
(1) Factual overview
The Fourth Respondent, Blackpool Football Club Limited ("Blackpool FC" 1), was formed on 26 July 1887, and became a limited company in May 1896. It played its first league match in 1896.
English football has five national leagues. 2 From the top, they are:
i) The Premier League;
ii) The Championship;
iii) League One;
iv) League Two; and
v) The National League.
For the season just finished, Blackpool FC played in League Two, and has secured promotion to League One, where it will play in the 2017–2018 season. The history of Blackpool FC's performance in English football, since 2007–2008 is as follows:
| Season | Division |
| 2007–2008 | Championship |
| 2008–2009 | Championship |
| 2009–2010 | Championship |
| 2010–2011 | Premier League |
| 2011–2012 | Championship |
| 2012–2013 | Cham... |
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