SPECIAL REPORT: Court papers reveal how deal to build Sixfields Stadium came to a bitter end

Former Cobblers chairman David Cardoza has been arrested and bailed in relation to the investigation a Sixfields.
Former Cobblers chairman David Cardoza has been arrested and bailed in relation to the investigation a Sixfields.
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Court documents have shown how Northampton Town sued the developers of Sixfields stadium by claiming a “substantial amount” of council loan money was not used for its intended purpose.

The claims came in a document submitted to the High Court against the company leading the redevelopment, the owner Howard Grossman, his son and five other individuals. All the claims were denied by the company and the individuals named in the document.

The East Stand at Sixfields.

The East Stand at Sixfields.

Back in 2013 Northampton Borough Council agreed to loan the Cobblers up to £12 million to re-build Sixfields Stadium complete with a new East Stand and a hotel.

The League Two club, which had just narrowly missed out on promotion, was then owned by David Cardoza and his father Anthony. NTFC contracted Bushey-based firm, County Group, to handle both the development of the football stadium and the hotel, through a development company, 1st Land.

But over the course of the next 18 months the development fell apart and the sub-contracted builders, Buckingham Group Limited eventually walked off the site, claiming they had not been paid for about £1.4 million of work by 1st Land, a company within County Group.

But official court documents, first revealed by the BBC and now also obtained by the Chronicle & Echo, shed more light on how the relationship between David Cardoza and the County Group began to crumble.

Papers filed by Northampton Town’s solicitor to the High Court on November 18, 2014, demanded repayment of about £5.75 million from the County Group, claiming the firm had only used around £2 million of the borough council loan to re-build Sixfields. It is understood both parties eventually settled out of court on undisclosed terms. The Chronicle & Echo requested a copy of that document as well as a copy of the defence put forward against Northampton Town’s claim. At the time of going to press, neither document had been presented to us by solicitors representing those named in the claim.

In the court papers submitted by Northampton Town FC, it states the club chose the Bushey-based firm as two of its directors Howard Grossman and Simon Patnick had “substantial experience of property development, which they could draw on to assist with both projects”.

The club claimed that on June 3, 2013, at a meeting in Bordeaux, David and Anthony Cardoza and Howard Grossman and Simon Patnick reached a verbal agreement in relation to the development of the stadium and land around the ground. They agreed to form a “joint venture” company in which the Cardozas and County Group were to be equal shareholders.

But the court documents allege there was also an informal agreement that County Group would pay “key money” consisting of “a payment between £1.5 million and £2 million to the football club and a further £750,000 for the “demolition and rebuilding of David Cardoza’s house”.

Howard Grossman and former Cobblers chairman David Cardoza shake hands at the sod-cutting ceremony for the Sixfields development back in March 2014.

Howard Grossman and former Cobblers chairman David Cardoza shake hands at the sod-cutting ceremony for the Sixfields development back in March 2014.

At that Bordeaux meeting a heads of term agreement was signed, but the court papers allege that, at the request of Howard Grossman, the agreement to demolish and rebuild Mr Cardoza’s home was not included in it.

The papers also claim that in order to finance the project it was agreed that the Cardozas would seek to borrow money from Northampton Borough Council which it would then transfer to a company in the County Group.

The papers allege that by virtue of the partnership County Group owed the football club a “duty of loyalty” and a duty to “only use the money advanced by NTFC for its intended purpose”.

The papers go on to say on or about June 28, 2013 either Howard Grossman, Marcus Grossman or Simon Patnick arranged for County Developments Northampton Limited (CDNL) to be incorporated and arranged for shares to be transferred to Marcus Grossman, Anthony Cardoza, David Cardoza and subsequently Simon Patnick.

The club alleged, however, that in breach of the June 3 agreement, rather than arrange for this company to be split 50/50 between NTFC and the Cardozas on one side and Mr Grossman, Mr Patnick and County Group on the other side - the latter gave themselves a majority share by allocating 501 shares to Marcus Grossman and Simon Patnick and 499 shares to Anthony and David Cardoza.

Following this meeting the football club entered into a series of agreements with the borough council.

The club agreed to borrow two loans of £7.5 million and £1.5 million to develop Sixfields Stadium.

In a further agreement made on July 2014, the council agreed to loan NTFC up to £4.5 million to develop a hotel on the adjoining land to the stadium.

The agreement with each of the loans is that they could be drawn down in stages.

But the court papers claim that three of the stadium loan drawdown dates agreed with Northampton Borough Council, which together provided for the release of 4.5 million to the football club for onward transfer to County Group, “pre-dated the due date for payment of any part of the contract sum under the design and build contract”.

The court papers read: “Howard Grossman, Marcus Grossman and Simon Patnick arranged for monies to be paid by NBC (Northampton Borough Council) to the County Group via NTFC (Northampton Town) at a time when such monies were not contractually due to County Group.”

The borough council told the Chronicle & Echo this week it would be inappropriate to comment on the matter until the conclusion of a number of internal investigations.

The papers then go on to say that between September 2013 and May 2014, the football club made five drawdowns of £1.5 million, four of which were transferred to the company 1st Land and one transferred to a County Group company called County (Oundle) Limited.

But what the court papers submitted by the club claimed was that “a substantial part of the £7.5 million” was used for “purposes unconnected with the development of the stadium, but for the benefit of Howard Grossman, Marcus Grossman (Howard Grossman’s son), Simon Patnick and or the companies owned or controlled by them.”

In the court papers, it was claimed Mr Grossman “now refuses to either (a) use any remaining balance for its specified purpose, or (b) return any remaining balance to NTFC.”

Within the claim, by a letter dated August 20, 2014, solicitors acting on behalf of 1st Land said the company had “subcontracted the whole of the works” under a “design and build contract” to the builders Buckingham Group Limited. In a schedule produced by Mr Grossman on October 16 that year, he said that Buckingham had only ever been paid £491,503.

In another letter, dated September 23, 2014, Buckingham wrote to 1st Land to say it was owed just over £1.4 million, and gave notice of its intention to suspend building work on the ground as a result. It later did.

That October 16 schedule by Howard Grossman also states that £465,000 was paid to “Margro,” which the court papers claims is that “it is inferred to be” his son Marcus Grossman and £581,000 was made to “Simpa”, which again the papers say “it is inferred to be” to be Simon Patnick. A total of £45,000 was also made to Hewit, which the papers again say is “inferred to be” Stephen Hewitt, a director of another County Group firm.

The court papers allege that Howard Grossman sought to disguise the misappropriation of trust money by labelling these transfers as “consultancy payments”. All the claims have been denied by Mr Grossman and those involved.

In the October 16 schedule Howard Grossman said that £1,794,309 worth of payments were made to “other suppliers”. The court papers go on to claim that the football club was “unable to determine” whether any of these payments were made for developing Sixfields.

Even if all the claims made in Howard Grossman’s October 16 schedule had a legitimate purpose in building the new ground at Sixfields, the court papers allege there would still be just over £4.1 million unaccounted for.

Of this sum, 1st Land claims to have made a loan to Anthony Cardoza of just over £2 million.

But that, the papers suggest left a balance of just over £2 million which it says was either “wrongly transferred to third parties or... wrongly withheld by County Oundle and 1st Land”.

County Group also received £1.25 million from a separate loan from the borough council towards developing the hotel at Sixfields.

Of this, the solicitors acting on behalf of Howard Grossman at the time stated that most of the money should be “returned” to Northampton Borough Council – save for

£600,000, which it claimed to have “loaned” back to Northampton Town Football Club.

The document says this money was part of the County Group’s liability to pay “key money” for the rebuilding of David Cardoza’s house in Church Brampton, agreed, it says on June 3, 2013 and is therefore not a loan.

In response to an approach by the Chronicle & Echo this week, Howard Grossman, director of County Group, said: “1st Land Limited claimed breach of contract against NTFC in September 2014.

“In accordance with the contract between the parties 1st Land instigated arbitration proceedings in September 2014. 1st Land was advised by leading counsel in this regard. Following this and clearly to frustrate the arbitration proceedings, NTFC issued the High court proceedings referred to by the BBC Inside Today on Monday, 18th November. As a consequence the arbitration proceedings had to be stayed.

“The High Court proceedings were spurious and without merit. The claims were also unsupported evidentially. The BBC report referenced the particulars of claim which is the document containing the claimant’s case, in this case NTFC. It failed to put this document into context by making reference to the defence in the proceedings and if they had done so it would have put the story in an entirely different light. The obligations of 1st Land and me as its officer were contained within the contract between 1st Land and NTFC. All of these obligations were honoured. NTFC on the other hand breached the contract and in this respect the actions of both NTFC and Mr Cardoza frustrated the contract and ultimately the development project.

“I am confident the truth will emerge from the investigations currently taking place. Whilst these investigations are proceeding and due to being bound by confidentiality undertakings it is not appropriate for me to comment any further to the media at this time.”