Millionaire to sue after losing Ally Pally fight

A millionaire entrepreneur plans to sue the owners of Alexandra Palace after his three-year attempt to turn the building into a £55 million hotel failed.

Firoz Kassam had tried to secure a 125-year lease on the fire-damaged structure through his company Firoka, taking it over from Haringey council to develop the palace into a 150-bed complex with bars, an ice rink and casino.

But the plans by Mr Kassam, who has a £275 million fortune, stalled last October after a High Court judge found the public consultation "fatally flawed".

The businessman withdrew his interest this year, blaming a lack of progress in talks with Alexandra Palace and Park Charitable Trust - which runs the site for the council - on a second public consultation.

The leisure company boss is believed to be seeking compensation and has confirmed legal action against the trust is "in the pipeline". He said: "The matter is in the hands of my solicitor. It is not appropriate for me to comment further at this stage." It is not known how much Mr Kassam would claim. But insiders fear it could stretch into millions of pounds.

Council sources said legal action was under way but details were unclear. One senior councillor added: "A lot of people have heard that is the case. We have been expecting it for a while, but there has been no formal announcement yet. The feeling is he will try to go for as much as he can get - what has he got to lose?"

Jacob O'Callaghan, of the Save Ally Pally Campaign which launched last year's High Court battle, said: "Kassam was saying it was all the trust's fault the deal had fallen through. The council may need me as a witness against him now." First opened as "The People's Palace" in 1873, Ally Pally was built to provide Londoners with a quality recreation centre.

In 1935, the BBC took over part of the site and Britain's first public TV transmissions were made there in 1938. But in 1980, a huge area of the structure was destroyed by fire.

The news of an impending lawsuit comes after an independent review attacked decisions made by the palace's board of trustees. It criticised their relationship with Firoka, sparking calls for senior figures to resign.

The report also concluded there had been "no justification" for a licence granted last year to Firoka allowing it to operate from the buildings and run the ice rink.

Authors of the report said it was simply an attempt to keep Firoka interested in maintaining its bid to redevelop. The palace generates around £6 million a year in revenue through various exhibitions and through the ice rink. The licence meant the profit, thought to be about £1.5 million a year, went straight to Firoka.

Former trust chairman, and current council head of finance, Labour councillor Charles Adje, was picked out for particular criticism.

Robert Gorrie, Liberal Democrat opposition leader on the council, said Mr Adje should resign.

"He has been intimately involved in the saga which has cost the council and Haringey residents something like £2 million, and is still the man responsible for Haringey's financial resources, said Mr Gorrie.

Mr Adje has insisted he was not solely to blame and that the decision was made collectively by the board of trustees.

The trust said it had produced an action plan to tackle the issues raised in the report, while Haringey council said it had not yet received a formal claim for damages from Firoka.