London’s Court of Appeal was this week asked to order Portsmouth Football Club to pay an extra £1.1m for a plot of land crucial to its plans to build a new 35,000-seat stadium.
Last September, the club paid £900,000 to Irvine Sellar’s Sellar Properties (Portsmouth) for the five-acre (2ha) site, after the High Court rejected the vendor’s claim to be entitled to £2m.
On Wednesday, Sellar Properties – which argued in the High Court that even £2m was only a fraction of the land’s true value when development potential was taken into account – is asking the Court of Appeal to overturn the High Court ruling and order the club to pay extra.
The case centres on the interpretation of an October 1999 contract under which the club took an option to buy the land, with the purchase price to depend on how much money the council required to allow a vital spine road to be built across a right of way on Milton Lane.
Sellar claims that it thought that, because of the club’s local standing, it would be able to negotiate a better price with the council, so the purchase price for the land for the new ground was set at £2m, minus whatever discount the club could achieve from the basic figure of £1.1m.
In the event, the council diverted the Milton Lane right of way, and sold the physical land which had previously been part of that right of way to Sellar, along with other land, in a package for £4,255,000.
When it came to purchase its land, the club claimed that there had been no consent as such for the spine road to cross Milton Lane and that the council had therefore required no sum, so the full figure of £1.1m should be deducted from the basic £2m purchase price.
Mr Justice Lawrence Collins agreed, and set the purchase price at pounds £900,000.
Challenging that decision this week, Michael Barnes QC, for Sellar, argued that the High Court judge’s approach was wrong, and that the Appeal Court should apportion a figure from £4,255,000 that it paid to the council, to be paid to Sellar by the club.
Arguing that any such apportionment should exceed £1.1m, he argued that the club should therefore pay the full £2m.
The Appeal Court is expected to reserve its decision in order to give it in writing at a later date.
In the High Court, Sellar, which carried out the massive Pompey Centre development on a former railway goods yard and other land near the stadium, argued that, if the club paid only £900,000 it would make a large “windfall gain”.
The High Court defeat also left the developer facing a legal costs bill estimated at £260,000.
References: EGi News 11/03/04
