Owen Oyston must wait to hear the outcome of his second legal action in two days at London’s Royal Courts of Justice.
On Tuesday in the High Court he won an injunction to stop bailiffs seizing any of his assets to meet a £24 million debt he owes minority shareholder in the club, Latvian Valeri Belokon, until a final ruling on whether their actions were lawful.
Today Mr Oyston went to the Appeal Court challenged a decision by a judge in Manchester early last year concerning an investment agreement between his and Mr Belokon’s companies over improvements to the South Stand and South West Corner and the building of a hotel at the ground.
Now three of the country’s top judges - Lords Justice Longmore and Newey and Lady Justice Asplin – have reserved their decision to a later date which has not yet been fixed.
In February 2017 Judge Jane Moulder, sitting at Manchester Civil Justice Centre, found in favour of Mr Belokon. He had disputed the validity of various “deductions” that were applied to income generated by the development and claimed they had reduced profits available to be distributed on a 50/50 split.
Judge Moulder ruled that he had not agreed to the hotel at the site being built and the July 2008 investment agreement had not provided for losses suffered by the hotel to be deducted when calculating income. She also ruled that there was no subsequent agreement between the parties that such losses could be deducted.
Mr Belokon has since been paid the £950,000 plus £425,000 legal costs.
Mr Oyston’s Blackpool Football Club (Properties) Ltd, formerly Segesta Ltd – which owns the club’s ground – appealed her decision on the grounds of how the contract with VB Football Assets (VBFA) and JSC Baltic International Bank should be interpreted.
The High Court heard that the cost of the whole scheme was about £9m to £9.5m. Mr Belokon , a 20 per cent shareholder in the club, advanced £4.75m for the first and second phases, work on and fitting out the South Stand and SW Corner, and Segesta committed £1m.
The third phase was put at about £3.25m to £3.75m and involved a casino and/or hotel.
It was anticipated money for phase three would be borrowed from a third party and VBFA’s written consent was required.
In fact, Mr Oyston used money from the club to start work on phase three and build the hotel.
Both sides aimed to recoup their investments and earn profits by sharing the income from the stand and SW Corner equally after expenditure had been deducted from gross income.
Matthew Collings QC, for Segesta (Mr Oyston), described the investment agreement as “not beautifully crafted” and added: “It’s slightly homely – Latvian meets Lancashire”.
He commented: “This agreement reflected the position when the parties were in much greater harmony than they are today and a degree of trust between them as to the development taking place.”
He argued that parts of the relevant clause are “not contractual requirements.”
“We say they are an expectation or even an aspiration,” he told the court.
“It’s all aspirational by way of expectation and not a straitjacket.”
“We say that this agreement reflects a bargain between the parties whereby the parties were each bringing one thing to the party. Segesta was bringing the property which it owns and a £1m investment and VBFA was bringing a £4.75m loan.
“That’s what they bring in order to buy an income stream, 50/50 each of the net income.”
Mr Collings argued it didn’t matter whether the extra money for the hotel came from Blackpool FC or anybody else.
The wording in the agreement “could not be any wider” he said.
He submitted that: “Anything in excess [of the£1m and £4.75m loan] comes out of the top slice before you work out what the net income is.”
He added that Segesta was the developer and therefore in charge of the development.
“When the hotel is running at a loss, it’s plainly an item of expenditure which should be deducted because it’s a ‘benefit and burden argument’ in relation to this agreement,” he said.
He accepted that the matter was complicated by the fact that a separate company, Blackpool FC Hotel Ltd, was set up as a 100 per cent subsidiary of Segesta.
Andrew Green QC for Mr Belokon’s companies, argued that only rent paid by the hotel, not any profit or losses, came within the agreement as it was owned by a separate company.
He claimed Segesta’s interpretation was “nonsensical” and untenable. The language of “where expenditure is to be deducted from income” had its natural meaning and was not meant to mean “recoupment” of sums advanced to fund expenditure.
The agreement prevented VBFA’s income being reduced in order to pay off amounts of borrowing it never authorised.
Mr Green, pointing out that the Oyston companies had acted unilaterally, said: “They have only got to come to talk to us but even that they could not do. It’s not unfairness. They are victims of their own behaviour.
“This is not a one-off. This is what Owen Oyston does. He does unilateral action and then complains.
“What he is now complaining about is it’s all totally unfair in circumstances where this is the contract. There are two key clauses and he knew only too well what was expected of him and was just not prepared to do that.
“We say it’s nonsensical for anyone to suggest when the investment agreement was concluded it was intended Segesta could subvert this protective mechanism in the way it’s happened.”
Mr Green added that the agreement had not envisaged that the hotel would be built partly inside and partly outside the South Stand and SW Corner and it would be operated for the benefit of a separate Oyston company, Blackpool Football Club (Property) Ltd.
But he said that in any event the hotel was not covered by the agreement.
Mr Belokon had been paid £181,832 as his share of income in 2011 and nothing since despite the stands generating ticket income and rent from offices hired to the primary care trust.
Mr Green added that the appeal was “academic” as all agreements between Mr Oyston and Mr Belokon had been “unscrambled retrospectively” by the judgement of Mr Justice Marcus Smith on 6 November last year in VBFA’s Unfair Prejudice Petition.