UPDATED: Owen Oyston suffers another court defeat

Owen Oyston has been left with another hefty court bill
Owen Oyston has been left with another hefty court bill
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Owen Oyston has failed in his latest court move and been left with another hefty legal costs bill.

READ MORE: Oyston v Belokon battle resumes: Here’s what you need to know

Oyston had challenged a decision by a judge in Manchester

Oyston had challenged a decision by a judge in Manchester

Mr Oyston, who owes £24 million to Mr Belokon, had appealed to three of the country’s top judges at London’s Court of Appeal over interpretation of a 2008 investment contract between the two men’s companies.

The contract involves the £9 to £9.5-million scheme for redeveloping the South Stand and South West Corner – completed in 2009 - and the building of a Travelodge.

Mr Belokon claimed that Mr Oyston, without agreement, used money from the club to build the hotel and that profits and losses from the hotel could not be deducted before the agreed 50/50 split of income.

Mr Oyston’s Blackpool Football Club (Properties) Ltd, formerly Segesta Ltd – which owns the club’s ground – had appealed the decision of a judge in Manchester last year who found in favour of Mr Belokon interpretation of how the contract with VB Football Assets and JSC Baltic International Bank should be interpreted.

Today, Lady Justice Asplin announced the unanimous decision of herself, and her fellow judges, Lords Justices Longmore and Newey, that Mr Oyston’s appeal should be dismissed and that he must pay Mr Belokon’s costs.

She ordered Mr Oyston to pay £50,000 on account by 4pm on April 26. The full amount has yet to be assessed but court insiders estimate the bill will come to well over £100,000.

At the hearing last month, Matthew Collings QC, for Segesta (Mr Oyston), argued that parts of the relevant clause were not contractual requirements: “It’s all aspirational by way of expectation and not a straitjacket.”

Mr Collings submitted it didn’t matter whether the extra money for the hotel came from Blackpool FC or anybody else.

Mr Collings 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” and not meant to mean “recoupment” of sums advanced to fund expenditure.

Mr Green said the Oyston companies had acted unilaterally. “This is what Owen Oyston does. He does unilateral action and then complains.”

Mr Oyston “knew only too well what was expected of him and was just not prepared to do that”, he claimed.

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 h argued that in any event the hotel was not covered by the agreement.

In today’s written appeal decision, Lady Justice Asplin said she agreed with the Manchester judge’s conclusion that the natural and ordinary meaning of the relevant clause in the agreement “would not permit the deduction from income of sums expended by Segesta on the third phase with the aid of monies borrowed from Blackpool FC”.

She added that the cost of the third phase - £3.25m to £3.75m – was expected to be borrowed from a third party.

She continued : “At the time the parties did not contemplate that Segesta itself would put in monies over and above the commitment to fund the third phase or that Blackpool FC would be in a position to advance funds for that purpose.

“Promotion to the Premier League [in 2010] and the consequent increase in revenue came as a surprise to all parties.”

She said it was also clear that another clause in the agreement “was intended to provide VB Football Assets with a level of protection by preventing Segesta, which was the owner of the football ground itself and was the developer of the South Stand and South West Corner Stand, from deciding unilaterally to borrow monies for the development.”

She added : “In my judgement therefore it cannot be the natural and ordinary meaning of the words [in the clause], read in the context of the investment agreement as a whole, that sums borrowed by Segesta unilaterally can be deducted from income.”

The Court today also took the view that at the time of the agreement it was neither envisaged that the hotel would be run by a company associated with Segesta, nor that the hotel would be built in part on land outside the South Stand and the South West Corner,

It ruled that the real difficulty in relation to hotel losses issue arose because Blackpool FC Hotel Ltd had been created and was a separate legal entity.

“The income and losses of the hotel business are those of BFC Hotel. The income from its hotel business is not the ‘income of the South Stand’ and the losses of the hotel business cannot fall within the phrase ‘revenue expenditure....in relation to the South Stand and the South West Corner’,” said Lady Justice Asplin.

“Any dividends which are eventually declared in favour of Segesta will already have had losses taken into account in their calculation. As the [Manchester] judge found, it is a proportion of such dividends declared by BFC Hotel, if any, which may well be ‘income of the South Stand’ with the clause.”

She also dismissed Mr Oyston’s claim that deduction for a “notional rent” should be allowed.