Both Tottenham Hotspur and Leyton Orient have recently confirmed that they have commenced judicial review proceedings following the Olympic Park Legacy Committee’s (“OPLC”) recommendation to grant West Ham United tenancy of the Olympic Stadium and the subsequent ratification of that recommendation by the Government.
Currently, both Tottenham and Leyton Orient have applied for permission to claim for judicial review whereby the court will decide whether the case should proceed to a full hearing. A decision as to whether permission will be granted is expected very soon.
Permission will be decided on the basis of the written claims filed by both clubs and will involve the judge looking at the cases in order to decide whether there is an arguable case to be heard.
What is Judicial Review?
Judicial review is the challenge of a decision by a public body such as a government department or local authority.
The legal process is concerned with the way in which the decision was made and not with the actual merits of that decision. The courts will therefore only rule on whether the law has been correctly applied and that the right procedures have been followed rather than what it thinks is the correct decision. Interestingly, for Tottenham and Leyton Orient, any successful judicial review claim will not necessarily mean that a different decision will result second time around as the OPLC could once again recommend the West Ham proposal, providing it does so in a lawful manner.
Tottenham and Leyton Orient are both questioning the £40 million loan provided by Newham Borough Council, which helped fund West Ham’s bid. Newham Borough Council provided the loan to a new company specifically incorporated to manage the stadium once the Olympics have finished. This company, which seemingly has close connections with West Ham, will then lease the Olympic Stadium to the club. The exact purpose of the loan is not entirely clear but it is believed to be necessary in order to contribute to the costs of converting the Olympic Stadium for West Ham to use.
Tottenham confirmed in a statement that they have
“sought permission from the High Court to bring a claim against the London Borough of Newham for judicial review of Newham's process in providing a loan for the conversion of the Olympic Stadium after the 2012 Games. The club wrote to Newham asking it to explain its reasons and justification for its decision, but Newham has declined to respond to this request for information.”
Leyton Orient also confirmed that they are seeking judicial review of Newham Borough Council’s decision to make the loan:
"Mishcon de Reya, the club's lawyers, will be seeking permission for a judicial review on the London Borough of Newham's decision to loan £40 million to a stadium company and enter into a joint bid with West Ham United for a long-term lease of the Olympic Stadium. Our lawyers contend that the loan is unlawful and we are seeking an order that will quash the decision to make the loan."
Both Tottenham and Leyton Orient contend that the loan by Newham Borough Council amounts to a breach of European and UK competition law, which prohibits national governments, including local councils, from providing state aid which distorts competition and affects trade between Member States. Leyton Orient chairman Barry Hearn commented:
“What are they doing lending £40m to a football club? They are not allowed to be involved in commercial deals. This is state subsidy of a commercial operation, which falls foul of European competition laws. We are asking them to withdraw it. It is state aid and they don’t have the authority to make this kind of commercial investment."
The prohibition referred to is contained within Article 87 of the EC Treaty (as well as Chapter 1 of the Competition Act 1998), which states:
“any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the common market.”
Tottenham and Leyton Orient clearly feel that the £40 million loan, granted through state resources, distorted the competition process of the Olympic Stadium bid and amounted to a state aid that is prohibited under European and UK competition law.
These laws only apply where the recipient of the assistance i.e. the management company who will lease the stadium to West Ham, is engaged in an economic activity. This is clearly the case here and so the law certainly applies.
Importantly, the European Commission must be notified of any proposed state aid prior to it being made. If this is not the case, the aid is automatically unlawful.
Article 88(3) of the EC Treaty states:
"The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid... The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision."
Obviously, we do not know whether Newham Council, through the UK government, sought clearance from the European Commission before providing the loan. If the European Commission were not notified, the loan by Newham Council is likely to be contrary to European competition law due to the state aid prohibition (Article 87 of the EC Treaty) and also Newham Council’s possible failure to notify the European Commission as a result (Article 88 of the EC Treaty).
However, certain exemptions, if applicable, can relieve Member States of the need to notify the European Commission of any proposed state aid. These exemptions, known as general block exemptions set out the categories of state aid that have been declared compatible by the European Commission and exempt from the requirement to notify.
An exemption that could apply in this case is the exemption for regional state aid that is designed to assist the rejuvenation of disadvantaged areas by supporting investment projects and the creation of jobs in such areas. In an attempt to show that they acted lawfully, Newham Borough Council are likely to claim that the £40 million loan supported an investment project i.e. the continued use of the Olympic Stadium, which developed a disadvantaged area of East London and created new jobs in the process.
However, regional aid is subject to limits based on a percentage of the costs of either the new investment project or on the new jobs that have been created directly as a result of that investment project. For the area around the Olympic Stadium, the maximum limit is 15% of either the costs of the investment project or the salaries of the new jobs created. This limit can be increased by 20% for small enterprises and 10% for medium sized enterprises. It is obviously unclear as to whether the £40 million loan comes within these limits but this is certainly a possible defence that Newham Borough Council may attempt to rely upon.
The Decision Making Process
Tottenham and Leyton Orient are also seeking judicial review of the initial recommendation of West Ham’s bid by the OPLC, and the subsequent ratification of that recommendation by the central government including the Minister for Sport and London Mayor Boris Johnson.
Tottenham had previously announced that they were only intending to challenge Newham Borough Council’s decision to make the £40 million loan and not the decision making process involving the OPLC and the Government. However, the club confirmed in a statement on 9th May that they have:
“sought permission from the High Court to bring a claim against the Olympic Park Legacy Company Limited, the Mayor of London, the Minister for Sport and the Olympics and the Secretary of State for Communities and Local Government for judicial review of a series of decisions made by them to appoint a joint bid by the London Borough of Newham and West Ham United Football Club as preferred bidder in a competition for the lease of the Olympic Stadium.”
It is unclear as to precisely what issues Tottenham have with the decision making process. However, West Ham’s intention to maintain the running track at the Olympic Stadium was a vital factor that the OPLC considered when awarding the tenancy to them. This was in contrast to Tottenham’s proposal to transform the Olympic Stadium into a football only arena and to redevelop Crystal Palace for athletics purposes. Tottenham may therefore believe that their proposal was not adequately considered due to their plan of removing the running track.
Leyton Orient chairman Barry Hearn also confirmed that they would be issuing:
"judicial applications against the Government, the Minister of Sport and the Mayor of London.”
Leyton Orient feel that allowing West Ham to move to the Olympic Stadium will have “a detrimental and devastating effect on Leyton Orient Football Club" (Matt Porter, Chief-Executive of Leyton Orient) due to the Olympic Stadium being within close proximity to their home at Brisbane Road.
Leyton Orient believe that the size of the Olympic Stadium means that West Ham will undoubtedly have to provide discounted tickets in order to maintain capacity. Such a move, according to Leyton Orient, will significantly affect their ability to attract crowds to Brisbane Road and therefore generate revenue. Hearn claimed:
"The impact on Leyton Orient will be huge. The prospect of excess capacity leading to discounted tickets and the broader appeal to floating fans of a more high-profile club threatens to swamp us. It is tragic to think that the true legacy of the 2012 Olympic Games could be the death of one of football's most-established community clubs."
Barry Hearn therefore believes that he has “no choice but to fight to stop West Ham from getting this stadium because that would put Leyton Orient out of business."
Leyton Orient are also threatening to challenge the Premier League’s decision to sanction West Ham’s move to the Olympic Stadium. Premier League PL Rule I5 says “no Club shall re-move to another ground without first obtaining the written consent” of the Premier League Board. Rule I6 goes further:
“In considering whether to give any such consent, the Board shall have regard to all the circumstances of the case and shall not consent unless reasonably satisfied that such consent:
… 6.5 would not adversely affect Clubs (or Football League clubs) having their registered grounds in the immediate vicinity of the proposed location”
Leyton Orient argue that the Premier League have ignored these rules:
“it is black and white, we think they are on our patch.” (Barry Hearn)
Any successful challenge would depend on Leyton Orient proving that they are within the immediate vicinity of the Olympic Stadium and that West Ham’s move to the Olympic Stadium would adversely affect them.
Tottenham’s and Leyton Orient’s reasons for seeking judicial review has been analysed above but what grounds can both clubs rely upon in order to claim judicial review?
There are four grounds for judicial review namely:
2. Procedural Unfairness;
3. Irrationality; and
4. Legitimate Expectation
Public bodies must apply the law to any decisions that they make and such decisions may be unlawful if the public body had no power or exceeded the powers given to them. This can include:
(a) Misdirecting itself as to what the law says;
(b) Exercising a power incorrectly; or
(c) Exercising a power that it does not have (Ultra Viries)
Tottenham and Leyton Orient will clearly be relying upon this ground by claiming that Newham Council acted beyond their powers in providing the £40 million loan as it breached European and UK competition law.
2. Procedural Unfairness
Procedural unfairness will arise if:
(a) The public body has not properly observed the relevant statutory procedures, such as a failure to consult or to give reasons; or
(b) The public body has failed to observe the principles of natural justice in the decision making process such as if the decision maker has shown bias (R v Bow Street Magistrate, ex parte Pinochet (No. 2)  1 AC 119) or has failed to hear an affected party’s case (R v Secretary of State for the Home Department, ex parte Doody  1 AC 531).
Failing to consult an affected party or allowing a party to put their case forward is likely to result in procedural unfairness.
Tottenham may claim that they were not provided with sufficient opportunities in which to showcase their plan of turning the Olympic Stadium into a football only arena and redeveloping Crystal Palace for athletics. Tottenham may also feel that they have not been provided with proper reasons for the rejection of their proposal. Finally, there could be an allegation of bias against the OPLC if Tottenham believe that their proposal was prejudiced from the outset due to the Olympic legacy campaign involving the 2012 Olympics.
As for Leyton Orient, they clearly believe that they are an affected party in this case as is evident from the detrimental impact on the club that they are keen to highlight. Consequently, Leyton Orient are likely to insist that they were not properly consulted during the bidding process or allowed to voice their concerns over the project. As a result, Leyton Orient will no doubt plead procedural unfairness as a further ground for their judicial review claim.
A decision made by a public body may be challenged as irrational if:
(a) It "is so unreasonable that no reasonable authority could ever have come to it" (Associated Provincial Picture Houses Ltd v Wednesbury Corporation); or
(b) The public body took into account irrelevant matters and/or failed to consider relevant matters (Tesco Stores Ltd v Secretary of State for the Environment).
Tottenham and Leyton Orient are likely to feel that their respective circumstances have not been fully considered by either the OPLC or the Government during the bidding process and, presumably, also contend that the decision to award the Olympic Stadium to West Ham is unreasonable in the circumstances. Irrationality is therefore another ground that maybe relied upon by both clubs. It should be noted, however, that this ground is notoriously difficult to prove, hence why this ground is usually argued together with other grounds.
It might also be possible for Tottenham and Leyton Orient to claim, in addition to illegality, that Newham Council’s decision to make the £40 million loan was an irrational decision to make.
4. Legitimate Expectation
A public body may also, by its own conduct, be obliged to act in a particular way, where there is an expectation as to the way in which it will act. Such a legitimate expectation can arise:
(a) Where the public body has made a clear representation that it will adopt a particular form of procedure.
(b) Where the claimant has a particular interest in the matter in question and fairness may require them to be given an opportunity to make representations.
(c) Where the public body has a substantive right, on which it was reasonable for the claimant to rely.
This may also provide Tottenham and Leyton Orient with a further ground to rely upon if they can show that they had a particular and legitimate expectation such as being provided with reasons or an opportunity to make representations.
If Tottenham’s and Leyton Orient’s claim for judicial review is ultimately successful, the court can make one of six orders:
1. Quashing order
This is the most commonly requested remedy whereby the court overturns the decision made by the public body. If a quashing order is made, the public body must then commence the decision making process again this time applying the proper legal tests and/or following the fair procedure.
In respect of the loan, Tottenham and Leyton Orient appear to be seeking the quashing of the loan and repayment back to Newham Council. Presumably, both clubs feel that without the loan, West Ham will be unable to convert the Olympic Stadium therefore frustrating their bid and forcing the OPLC and the government to make a different decision.
Both clubs will also seek the quashing of the actual decision to award the Olympic Stadium to West Ham. If successful, the OPLC will have to restart the decision making process once again.
2. Mandatory order
A mandatory order requires the public body to carry out its legal duties. Claimants typically seek a quashing order together with a mandatory order directing the public body to make the decision again pursuant to the court’s judgment.
In addition to seeking an order quashing the decision and forcing the OPLC to commence the decision making process again, Tottenham are likely to also seek a mandatory order forcing the OPLC to this time consider their proposal more fully. Leyton Orient will also seek a similar order forcing the OPLC to consider their circumstances as well as consulting the club during the decision making process and providing them with an opportunity to make representations.
3. Prohibiting order
A prohibiting order prevents a public body from taking an unlawful decision or action.
Tottenham could seek an order prohibiting the OPLC from not fully considering their proposal and Leyton Orient could once again seek a similar order preventing the OPLC from not consulting them in any subsequent decision making process.
The court may simply make a declaration as to what the law is or the respective rights of the parties without making any other order. For instance, Tottenham and/or Leyton Orient may only seek a declaration from the court that the loan was a breach of European and UK competition law. However, this remedy is only available if the other remedies are not relevant, which is clearly not the case here.
Injunctions are sometimes granted at the permission stage of the proceedings as a temporary order to prevent a particular decision before the court considers the case fully at trial. This is not relevant in this case as the decision to make the loan and award the Olympic Stadium to West Ham has already been made.
Damages can also be sought but are only available when another established cause of action is available for which damages may be sought such as a breach of the Human Rights Act 1998.
There is no absolute right to any of the remedies listed above even though the court may rule that a public body has acted unlawfully. Any remedy is at the discretion of the court taking into account factors such as whether the applicant has acted promptly, in good faith and whether any substantial hardship has been suffered. It should be noted that there have been rare instances whereby the courts have ruled that a decision is unlawful but have chosen not to award any remedies at all.
The decision as to whether Tottenham and Leyton Orient will be granted permission to commence the full judicial review claim should be made very soon. If permission is refused, Tottenham and/or Leyton Orient may request an oral hearing where the decision will be reconsidered. If permission is granted, case management directions will be issued and the case will ultimately proceed to a full trial, which will usually be listed within a year.
Newham Council have refused to comment on the proceedings but the OPLC have issued a statement saying:
“We have been consistent, fair, objective and entirely equal in our dealings with the bidders from start to finish. We are confident that if these judicial review proceedings are pursued, our approach will be entirely vindicated by the courts.”
Many felt that Tottenham’s decision to enter into the bidding process for the Olympic Stadium was simply a stunt to force Haringey Council to provide Tottenham with more funding towards their previously planned redevelopment of White Hart Lane. However, Tottenham were keen to stress that their bid was serious and necessary in order to move the club forward:
“we are committed to taking this Club to the next level and an increased capacity stadium is central to that intention; and we have to seek a stadium solution which does not undermine the financial stability of the Club or its ability to continue to invest in the First Team.” (Daniel Levy, Chairman of Tottenham Hotspur)
Tottenham’s continued fight over the Olympic Stadium, through this legal action, appears to confirm beyond doubt their interest in the Olympic Stadium but questions still remain as to whether they are simply attempting to haggle with Haringey Council especially when the club confirms that they continue “to hold discussions with both local and national government bodies in order to seek to agree a feasible stadium solution.”
As for Leyton Orient, the ethos behind their claim is clear:
"This is an all-encompassing charge by Leyton Orient, a battle by the little man against the big forces of evil if you like, this represents a challenge to our future and we have no choice but to fight our corner, and we believe we have right on our side." (Barry Hearn)
However, it is not entirely clear what the club is attempting to achieve with this action as, if the West Ham bid fails, the only other alternative appears to be awarding the Olympic Stadium to Tottenham, which would present Leyton Orient with exactly the same concerns as with West Ham’s occupation.
The club, like Tottenham, has been openly looking to move away from their current location for some time and this legal action may potentially be a ploy by Leyton Orient to exert pressure on the OPLC, the Government, West Ham and the club’s local council to assist them in their ongoing attempt to build a new stadium. Such assistance could be financial and/or help in finding a location for such a new stadium.
It therefore remains to be seen what Tottenham and Leyton Orient seek to gain from these proceedings and how far they are prepared to go in order to achieve such objectives.
And what about West Ham’s position?
Any u-turn in the decision to award them the Olympic Stadium tenancy will have a significant financial impact on a club which, according to their co-owner David Sullivan, "is in a worse financial position than any other in the country.”
For the same reasons as Tottenham and Leyton Orient, West Ham need to move from Upton Park in order to maximise revenue and failing to secure the move to the Olympic Stadium, coupled with the ever increasing possibility of relegation from the Premier League, could have devastating consequences.