The Court of Appeal has today handed down its first judgment on the private investor principle in State aid. In R (Sky Blue Sports and Leisure Ltd) v Coventry City Council [2016] EWCA Civ 453 the Claimants, who are companies associated with Coventry City Football Club, sought judicial review of the Council’s decision to make a loan of £14.4m to its (then) half-owned subsidiary, ACL, which operates the Club’s stadium, the Ricoh Arena. The Claimants argued that the Council made the loan for reasons of public policy, and that it had not been made on commercial terms. On 30 June 2014, Mr Justice Hickinbottom rejected those claims, and today the Court of Appeal has emphatically approved of his judgment.
Lord Justice Tomlinson, giving the only judgment for the Court of Appeal, approved of the Judge’s summary of the relevant legal principles governing the private investor test (at [16]). In particular, His Lordship restated the principle that a public authority considering whether or not to make any investment has a ‘wide margin of judgment’ (at [25]). On the facts, His Lordship upheld the Judge’s findings that there was ‘significant value’ in ACL (at [38]), that the loan charged a commercial interest rate (at [40] and [50]), and that, ‘it was reasonable to believe that ACL could both increase revenue, particularly from its non-football related sources, and decrease costs’ (at [49]). In conclusion, His Lordship paid tribute to the Judgment below, finding that:
‘63. The Appellants have not in my view come close to demonstrating that the judge reached an impermissible conclusion. I would dismiss the appeal. In doing so I would pay tribute to the judge’s impressive judgment. My reasons are simply those which the judge developed in much greater detail with a sure eye to the principles by which his decision-making should be informed.’
James Goudie KC and Ronnie Dennis acted for the Council, instructed by Helen Lynch of the Council.
