The Court of Appeal ruled today that Sainsbury’s lawfully terminated a £30m stadium sale agreement with football club Bristol Rovers.
This is a blow for the club, which is currently flying high in League Two and looks to have a rosy future under the ownership of the Jordanian Al-Qadi family, which bought a 92% stake in February. It had been hoping to sell its current home, the outdated Memorial Stadium, to the supermarket chain and use the proceeds to build a new, much larger stadium.
In today’s Court of Appeal ruling, three appeal judges backed Sainsbury’s on three of the club’s grounds of appeal, and said the other two “do not apply”.
“Sainsbury’s were entitled to serve the termination notice,” Floyd LJ said in the ruling.
Today’s decision backs an earlier High Court ruling by Proudman J.
The club had hoped to sell the dilapidated ground in the north of Bristol to fund a modern stadium on the Frenchay Campus of the University of the West of England. In 2011, it agreed a deal under which Sainsbury’s would buy the Memorial Stadium site for £30m, lease it back to Bristol Rovers at a peppercorn rent while the construction of the new ground was underway, and then redevelop it as a supermarket once the move took place.
However, Proudman J found that a store planning condition in the agreement – under which Sainsbury’s had to obtain an acceptable store planning permission – was “not satisfied” in time and so Sainsbury’s was entitled to terminate the agreement.
Bristol City Council did grant planning permission for the supermarket redevelopment in 2013, but it was subject to a restriction on delivery times which the club ultimately agreed was an onerous condition that effectively deemed the decision a planning refusal for the purposes of the agreement.
In an interview before today’s judgment was handed down, property law consultant Allyson Colby said that the case raises important issues about the relationship between duties of good faith and other contractual provisions.
She said: “Legal textbooks are full of examples of litigants who have found, and exploited, a loophole in their contracts. Ironically, in this case, the club complained that Sainsbury’s was trying to wriggle out of its commitment by sticking to the letter of the parties’ agreement.”
She was referring to submissions from the club’s lawyers that Sainsbury’s “was obliged to ‘adhere to the spirit of the contract’ and not resort to its black letter, and that this meant assisting Bristol to obtain planning permission for store development on Sainsbury’s behalf.”
If built, Rovers’ planned new stadium would see the club go from a capacity of just under 12,000, only 3,000 of which is seated, to a 21,700 all-seater ground.
Bristol Rovers (1883) Limited v Sainsbury’s Supermarkets Limited 17 March 2016
David Mathias QC and George Mackenzie (instructed by Burgess Salmon LLP) for the appellant. Mark Wonnacott QC and Philip Sissions (instructed by Denton UKMEA LLP) for the respondent.
