Case No:  CR-2015-006989
Neutral Citation Number: [2018] EWHC 254 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTIES COURT OF ENGLAND AND WALES
CHANCERY DIVISION
COMPANIES COURT

Rolls Building
Fetter Lane
London
EC4A 1NL

5 February 2018 

BEFORE:
The Honourable Mr. Justice Marcus Smith

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BETWEEN:
	VB Football Assets (VBFA) 	Petitioner	
	
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	 (1) Blackpool Football Club (Properties) Limited (formerly Segesta Limited)
(2) Owen Oyston 
(3) Karl Oyston 
(4) Blackpool Football Club Limited	

Respondents	

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Andrew Green QC and Fraser Campbell (instructed by Clifford Chance LLP) appeared on behalf of the Petitioner
Matthew Collings QC (instructed by HHB Solicitors) appeared on behalf of the First to Third Respondents

Hearing date: 5 February 2018 

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Judgment
Ruling

Mr. Justice Marcus Smith

1.	Almost three months ago to the day, I handed down judgment in a section 994 petition. I do not summarise that judgment or its terms for purposes of this Ruling, save to say that the consequence of that judgment was to order a buyout of the shares held by the Petitioner in Blackpool Football Club Limited – the Fourth Respondent – for a consideration of some £31m odd. On top of that came the question of costs, interest and other matters.
2.	When I handed down judgment, on 6 November 2017, I was met with an application that the obligation to make a payment of the sums due pursuant to the judgment and the order consequential upon it be staggered, and I acceded to that application in the manner set out in the order I made on that occasion.
3.	The matter came before me again on 18 December 2017. By that stage, an initial payment of some £10m had been made by the First to Third Respondents (hereafter, the “Respondents”) to the Petitioner, leaving a balance of just under £25m. That figure, I should say, is something of a moveable (albeit generally increasing) feast because there are interest obligations and costs accruing in relation to that sum, but I shall refer to the figure as amounting to roughly £25m.
4.	At the hearing before me on 18 December 2017, I considered various options for the future. Having heard from both the Petitioner and the Respondents, I ordered that a sum of £10m be paid before 4.00 pm on 31 January 2018; that a sum of £7.5m be paid by 4.00 pm on 30 March 2018; that a further tranche of £7.5m be paid by 31 May 2018; and that there be a rump payment, which I did not seek to calculate, payable by the end of June 2018.
5.	It is common ground that the bulk of the monies owed by the Respondents to the Petitioner will be payable, on this timetable, by the end of May 2018. The June 2018 payment envisaged by my order will be very much a minor balancing payment to sweep up the remaining obligations.
6.	The payment of £10 million, due on 31 January 2018, was not made by the Respondents. I am now met by a narrow application on the part of the Respondents to extend the time for paying this tranche to 19 February 2018. It is contended by Mr. Collings, Q.C., who appeared for the Respondents, that payment by that date could confidently be expected, and that the Respondents had done their level best to realise assets, had failed to do so, and needed this additional time in order to put in place what he called a bridging loan, so as to enable the tranche due last week to be paid.
7.	I should record that this application narrowed significantly during the course of the hearing before me. The Respondents’ initial application was one which sought to remove the various stages of payment, that is to say, the 31 January 2018 and 30 March 2018 stage payments, simply obliging the Respondents to pay the full amount due on or before 31 May 2018 as and when they were capable of realising their assets.
8.	A liberty to apply to extend this time frame was included in this proposal.

9.	That application was not pursued after certain exchanges between the court and Mr. Collings and, as I have indicated, the application on the Respondents’ part is a relatively narrow one, simply to extend time for the January 2018 tranche by some two weeks to 19 February 2018, but to leave the rest of the regime as ordered by me on 18 December 2017 unchanged.
10.	Mr. Green, Q.C., who appears with Mr. Campbell on behalf of the Petitioner, submits that I should revisit the order that I made on 18 December, and rewrite it in what Mr. Collings says is fairly swingeing terms. What he submits is that there has been a breach of the order that £10 million be paid on 31 January; that the conduct of the Respondents in terms of complying with the regime that this court imposed last year, shows that, to coin a phrase, every inch that is given by the court will be taken by the Respondents and that, therefore, so Mr Green's reasoning goes, no more inches should be given.
11.	What Mr. Green seeks on behalf of the Petitioner is the continuation of the freezing order regime that I imposed as the price of the staged payments of last year, that that stay in place, but that the staged payments set out in my order of 18 December 2017 effectively be abrogated and that the Petitioner be entitled at its discretion to take whatever steps it considers in its own interests best to enforce the judgment debt that it has.
12.	I consider that I made it sufficiently clear in my judgment of 18 December 2017 (specifically in paragraph 6) that I regarded the sums due pursuant to my judgment in payment of the Petitioner’s interest in Blackpool Football Club as due as at the date of the judgment. In short, it is a present obligation that I found to exist, not a future one, and the effect of my orders has been to stay enforcement in respect of that present obligation rather than kick off the obligation itself to the future. I underline the holding that I made in paragraph 6 of my judgment of 18 December 2017.
13.	Throughout the post-judgment hearings before me, I have had in mind the need to conduct a balancing exercise. The Petitioner self-evidently is entitled to payment of the sums articulated in my judgment and consequential order. The Respondents are, it has been said on a number of occasions before me, an asset-rich but cash-poor group. I have been shown lists of assets, mainly real property, which, so it is said, in value exceed by multiples the sums due pursuant to my judgment. What has been said on behalf of the Respondents, both in the past and before me today, very ably, by Mr. Collings, is that the Respondents to the petition need time to realise assets. In particular, both today and in the past, the risks of a fire sale of assets have been underlined to me.
14.	These factors all remain pertinent, but the balance insofar as the Petitioner’s interests are concerned have changed in two material respects.
15.	First, there is the fact that the timetable that I imposed last December has not been complied with; secondly, there is the fact that, as Mr. Steinfeld, Q.C. (who then acted for the Respondents) very fairly made clear to me on the last occasion, the Respondents were seeking to appeal my judgment, and that is a factor that I bore in mind. I read from paragraph 14(a) of my judgment of 18 December 2017, which refers to three options. Paragraph 14(a) refers to the first of those options:

“The first option, and to be fair to him, Mr. Green did not advocate for this, is simply to say that the monies due consequent upon my judgment should simply be paid now. That would involve an acknowledgment that the course that I strived to achieve on handing down judgment, which was to balance the interests of the Respondents, to give them time to pay, and the interests of the Petitioner to ensure security of payment, had failed. I have to say that the absence of satisfactory evidence is a very strong pointer to simply cutting the Gordian knot and leaving Mr. Green and his clients to their remedies. But I have very much in mind that there is an application for permission to appeal and there is an attempt to expedite it. It does seem to me, accepting as I do, in the abstract, that there are cash flow difficulties, even without any assurance on the evidence as to the particular state of the Oyston Group, that it would be wrong to take this course.”
16.	As I have indicated, Mr Green’s client now advocates this option, which was not so last time Mr. Green was before me.
17.	Furthermore, and this is the second material change, the application for permission to appeal has been dealt with and dismissed, and it is now the case that my judgment stands without the prospect of a reversal on appeal. Just as the prospect of appeal was a matter which I bore in mind when considering the desirability of the first option, so too I bear in mind now that there is a clear obligation on the Respondents pursuant to my judgment that is not susceptible of appeal to a higher court.
18.	In these circumstances, it is obviously right that I re-execute, or re-assess, the balancing process that I conducted on 18 December 2017. The position of the Respondents to the petition is much as it was before. I have some more evidence from the Respondents regarding their efforts to dispose of assets, but it is right to say that although there has been a great deal of mention of future, even future imminent, sales, in particular in relation to the Travelodge, these are all future sales. No sales have in fact occurred in the period since the judgment.
19.	What is more, in a very helpful schedule compiled by the Petitioner’s solicitors, there is there set out a list of properties indicating aspirational valuations in the past, valuations as they stand now, and offers that have been declined. 
20.	I take just one example. This is Item 9 from Annex A of the third witness statement of Mr. Christopher Yates of the Petitioner’s solicitors. Item 9 of this Annex refers to 27 Wood Street, one of the properties owned by the Oyston Group, estimated value £252,350 (by Mr Owen Oyston) offered on the market at £600,000 from an unknown date. An offer was received for various properties, including this particular one, but also others, to be fair, in the amount of £750,000.  The offer was rejected as being too low.
21.	The example is not clear-cut because there is, I regret to say, even at this stage, a lack of transparency in terms of the manner in which the Oyston Group is proceeding to seek to realise the assets that it has.  
22.	There are other indicators that the balancing exercise that I sought to undertake has changed.  

23.	There are, as I have indicated, certain difficulties in relation to transparency. The assets that are actually held by the Oyston Group, and more importantly, the encumbrances on those assets, are less than clear-cut. The flow of assets, in particular the flow of assets out of the group, is not clear-cut, and I do bear in mind the fact that on the last occasion there was the question of whether the obtaining of a loan to pay the first tranche of £10m was, in fact, obtained in breach of the freezing order that I had imposed. I found, on that occasion, that the freezing order had been breached, but I retrospectively validated the transaction that enabled the payment to be made.
24.	There is, as I have mentioned, also the non-sale of assets, with only future, and perhaps future imminent sales being clear. There is no marketing plan.
25.	There is also, as I find, considerable uncertainty regarding the present bridging offer that has been made in relation to the funding for the second tranche that was due last week. I have before me the evidence of Mr. Alan Andrews, a senior manager of KIS Finance and, as I accept, someone unrelated to the Oyston Group and Mr. Owen Oyston.  I have before me two statements from Mr. Andrews, describing his attempts to obtain finance for the Oyston Group, and in particular, for the Respondents to meet their obligations pursuant to this court’s orders.
26.	I shall only refer to the first statement of Mr Andrews, which in paragraph 11 says this:
“I have now obtained terms for a loan of 10 million from a company that manages loan activities for an offshore investor.  I attach a copy of that loan offer as exhibit AMA 1.  This is a formal offer, which we are proceeding with now.” 
27.	Now, I take, as I should, this statement entirely at face value, but I must also have regard to the formal offer, as it is described by Mr. Andrews, that is exhibited to his statement. It is evident from the face of this document that what the Respondents have is very far from a formal offer of finance. In particular, the “formal offer” says:
“You should not enter into any financial commitments based on this in principle offer.”
28.	Now, it may very well be, as Mr. Collings suggested, that Mr. Andrews, knowing his job, is confident that this offer going to translate into money that can be used to pay the obligations imposed upon the Respondents by the order I made on 18 December 2017. But Mr. Collings, very properly, had to confine himself, and did confine himself, simply to the evidence of Mr. Andrews. Accepting what Mr. Andrews says, as I do, I nevertheless am left with a considerable degree of uncertainty whether, even if I were to grant an extension of time to 19 February 2018, as urged by the Respondents, that would be enough time, and we would not find ourselves in a similar situation with the Respondents seeking a further extension in a few weeks’ time.
29.	It seems to me that the balance has significantly changed for all these factors. I summarise them now. 
30.	First, there is the failure on the part of the Respondents to progress the sale of assets over the time period since I handed down judgment.

31.	Secondly, there is the increased prejudice, simply caused by the effluxion of time, to the Petitioner of being kept out of its money, combined with the fact that -- and this is the third factor -- the judgment is effectively now writ in stone because of the order of Lady Justice Asplin dismissing an application for permission to appeal.
32.	I therefore find that the order that I made last December does need to be revisited, but not in the manner urged upon me by the Respondents. It seems to me that to grant a further extension of time, even if it is only a matter of two or three weeks, would be entirely wrong.  It seems to me that the time has now come for this court to acknowledge, as I adverted to in paragraph 14(a) of my judgment of 18 December 2017, that the attempt on the part of the court to hold the ring and to control the enforcement process has failed, and that is my conclusion.
33.	It therefore seems to me that the only correct course in all the circumstances is to vary the order that I made on 18 December so as to keep in place the freezing order as it stands, and I should stress that by “as it stands” I include the freedom to use the money in the accounts that I identified on that date -- I do not want to change the freezing order regime to the Respondents’ disadvantage from one day to the next -- but apart from that (the keeping of the freezing order regime in place), I consider that it is now appropriate to remove the limits on enforcement that I imposed, to remove the stages, and to permit the Petitioner to act at the Petitioner’s discretion in terms of enforcing the obligations that have accrued and that arise out of my judgment of last year.
34.	I, simply for the avoidance of doubt, want to make clear that although Mr. Green made certain indications about the manner in which the Petitioner might or might not proceed as regards the Respondents’ assets, and I have in mind in particular what he said as regards the football club, it seems to me that it would be wrong to regard that as anything more than an aspirational statement, and I make clear that the Petitioner’s hands are completely untied so far as the assets of the Respondents, including the football club, are concerned.