CoA throws out £400m Northern Rock appeal

Brick Court Chambers’ Mark Howard QC has been successful in knocking out an attempt to force the Northern Rock to pay compensation to shareholders who lost out when the bank was nationalised in 2008.


Mark Howard QC
Mark Howard QC

The ruling gives victory to Mayer Brown partner Stuart Pickford who instructed Howard.

The Court of Appeal (CoA) today rejected a challenge by Hedge fund Harbinger Capital Partners to the Independent Valuer of Northern Rock, Andrew Caldwell, who determined that there was no value in the shares at the point when the bank was nationalised.

Brown Rudnick partners Louise Verrill and Neill Shrimpton led the case for the appellants, Harbinger Capital, with South Square’s Mark Phillips QC and Blackstone Chambers’ Pushpinder Saini QC leading the appeal.

They had argued that Harbinger’s shareholding in Northern Rock could have been worth as much as £400m.

Mummery LJ stated: “According to the independent valuation produced by Mr Andrew Caldwell (the Valuer) in his revised assessment notice dated 1 October 2010 no compensation is payable by HM Treasury (the Treasury) to the Northern Rock shareholders for the shares taken into “temporary” public ownership on 22 February 2008 (the valuation date).

“The Upper Tribunal found no error of law in his valuation of the shares at zero, nor can I.”

The judge added: “When, in a case like this, you are faced with detailed arguments on interpretation and they range widely, there is a risk of straying further and further from the few words on which the case really turns.

“It is reasonable to assume that when s.5(4) was drafted and debated in the midst of a serious crisis and under considerable pressure of time it was with nothing like the amount of energy and ingenuity that have been invested by the parties in their efforts to persuade the Upper Tribunal and this court what it means.”

Some 440 shareholders appealed to the Upper Tribunal, but those appeals were dismissed and the valuation was upheld.

For the appellant Harbinger:

South Square’s Mark Phillips QC and Blackstone Chambers’ Pushpinder Saini QC, instructed by Brown Rudnick partners Louise Verrill and Neill Shrimpton

For the respondent Independent Valuer:

Brick Court Chambers’ Mark Howard QC, Martin Chamberlain QC and Jonathan Dawid, instructed by Mayer Brown partner Stuart Pickford