Northern Rock shareholders to appeal court decision
Former Northern Rock shareholders are to appeal today’s High Court decision that the Government does not have to compensate them.
Former shareholders in nationalised bank Northern Rock will appeal today’s High Court decision, which found that the Government has no obligation to compensate them.
A group of shareholders led by hedge fund SRM Capital, a White & Case client and Northern Rock’s largest investor at the time of nationalisation, last month told a hearing in the Administrative Court that they were deprived of their property when the Government seized control of the bank (13 January).
Using human rights legislation, the shareholders had hoped to convince judges Lord Justice Burnton and Mr Justice Silber that the Government’s compensation package, which effectively valued Northern Rock’s shares at zero at the time of nationalisation, was flawed.
In their judgment Burnton LJ and Silber J said: “If, on 13 September 2007, the tripartite authorities had decided not to provide financial support, Northern Rock would have had to go into administration, if not insolvent liquidation.
“If nationalisation had been decided upon at that date, the fair value of the shares of the company would have been assessed on the basis that it wasn’t a going concern: it would have been unrealistic to expect a price to be paid on the basis that it was a going concern.
“Should it have made a difference to the assessment of fair value in February 2008 that the Bank of England did in fact provide financial support? In our judgment, the answer is no.”
The claimants, who have been granted leave to appeal, said they will now take their case to the Court of Appeal.
SRM was one of three claimants against the Government, with fellow hedge fund RAB Capital and a group of small shareholders also taking part in the case.
SRM was advised by White & Case partner John Reynolds, who instructed David Pannick QC.
RAB, which turned to Nabarro partner Peter Fitzpatrick, was represented by Michael Beloff QC of Blackstone Chambers and a group of small shareholders, who turned to Edwin Coe partner David Greene, was represented by George Bompass QC of 4 Stone Buildings.
The Government was advised by Slaughter and May partner Elizabeth Barrett, who instructed Lord Anthony Grabiner QC of One Essex Court.
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Readers' comments (14)
Shay Guevara | 13-Feb-2009 12:14 pm
Cack
This is a bunch of cack. Hedge fund makes bad investment and tries to get cash out of the government when it goes wrong. What a waste of time.
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Very silly | 13-Feb-2009 3:27 pm
Absurd
I've read the judgement and the hedge funds haven't just lost, they've been totally bushwacked. White & Case and Nabarro should be ashamed to be involved in taking this any further.
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Mustapha | 14-Feb-2009 11:47 pm
decision not fair at all
If the high court was right, then each and every uk bank share is virtually wothless by now for they all have been helped by the Government since last year's decision to nationalise the lender.
Wether the court of appeal or the European court of Justice will undoubly correct this mistake and injustice.
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Who caused the leak ??????? | 15-Feb-2009 9:41 pm
Lies lies & Lies
The general public were told that Northern Rock was solvent and the Bank of England were always the lender of last resort and they were used by Northern rock but someone casused the leak whcih caused the run on the bank causing it's downfall the Goverment then nationalised becuase of this.the goverment is now trying to rip shareholders off the judge has misscalled this I hope this goes all the way to Europe
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Anonymous | 16-Feb-2009 6:46 am
crappy job by w&c
hopefully w&c won't get paid for this nonsense . . . serves them right
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playtootsieforme | 18-Feb-2009 4:56 pm
Mustapha...
It is pretty clear that every UK bank share IS virtually worthless! Do you bother to read the newspapers? The hedge funds' case is complete garabge. And the 3 judges (it wasn't just 1) were clearly right to tell W&C and their greedy clients were to sling their hooks.
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Andrew Johnstone | 12-Apr-2009 2:25 pm
Northern Rock is a going concern so it is wholly wrong for it to be valued as not a going concern.
There is a conflict of interests that the government is acting as purchaser and also setting the compenation terms.
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Anonymous | 2-Jun-2009 11:18 am
its not just hedge funds, i held my life savings in NR shares. it is day light robbery for government to take shares and then set compensation terms. besides why just northern rock. all the banks were and are still incredibly leveraged. i sense a conspiracy
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Anonymous | 14-Jun-2009 3:15 pm
Labour are thieves and liers, Brown and Darling must go before any more damage is done to this country.
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Barry Murphy | 22-Jun-2009 6:42 am
The nationalisation of Northern Rock was once described by the media as the biggest bank robbery of modern times and the thiefs were indeed the Government. I lost £5,000 in shares at the time and have never financially recovered or bought another share since. What the Government done here stinks and all people like me want is a fair deal and not treated with contempt as this Government seems to feel it has the divine right to do! Cant wait to hear the result of the appeal.
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