Mr Dowie (left) and Mr Jordan are involved in a �1m lawsuit

The club filed a �1m lawsuit against Mr Dowie accusing him of "fraudulent misrepresentations" which led it to waive a penalty if he joined a rival.

In a written defence statement Mr Dowie, who is now managing Coventry City, said the case is "without merit".

The chairman of the south London club, Simon Jordan, is also testifying.

'Dislike of Charlton'

Last year Mr Dowie parted ways with the club saying he wanted to be close to his family in Bolton.

This led Mr Jordan to waive a clause about a �1m contract penalty which Mr Dowie had to pay if he joined a rival club.

Iain Dowie was managing Crystal Palace when they were relegated

But days later he joined their rivals Charlton Athletic Football Club in south-east London, the prosecution stated.

The club alleges that Mr Dowie made "representations of fact which were knowingly false" and that the clause would not have been waived if the club knew he was planning to join its rival.

Mr Dowie denied the accusations saying despite wins which promoted the club to the Premiership for the 2004-05 season Mr Jordan had "repeatedly suggested" he should resign.

He added that the club made a "clean break" and avoided paying him contractual entitlements as a result of the waiver.

"In reality, Mr Jordan's dislike of Charlton and a desire to damage that club, given that Mr Dowie became their team manager, was a particular motivation for Mr Jordan and Crystal Palace bringing this action," the statement said.

Mr Dowie parted company with Charlton in November after only 12 league games.

The case is expected to last eight days.