Harbinger Capital Partners v Caldwell (As the Independent Valuer of Northern Rock Plc) & Anor (Rev 1)

Harbinger Capital Partners v Caldwell (As the Independent Valuer of Northern Rock Plc) & Anor (Rev 1)

By majority, the Court of Appeal held that the correct statutory assumption under section 5(4)(a) of the Banking (Special Provisions) Act 2008 is that all financial assistance provided by the Bank of England or the Treasury to Northern Rock must be assumed to have been repaid as at the valuation date, not merely that a demand for repayment had been made. This requires the valuer to assume that Northern Rock realised assets (potentially at a discount) to effect repayment, and that no value attributable to taxpayer support remains. This interpretation is consistent with the legislative purpose, the wording of the statute, and is not incompatible with EU law or the ECHR.

Parties
Appellant: Harbinger Capital Partners; First Respondent: Andrew Caldwell (as the Independent Valuer of Northern Rock plc); Second Respondent: HM Treasury
Jurisdiction
England and Wales
Judgment Date
09 May 2013
Procedural Posture
Civil Appeal / Appeal From Upper Tribunal (tax and Chancery Chamber) to Court of Appeal
Outcome
Appeal dismissed (by majority).
Legal Topics
Nationalisation, Compulsory Acquisition, Valuation of Shares, State Aid, Statutory Interpretation, Human Rights (a1 P1 Echr)
Banking Law Administrative Law Compensation Law Nationalisation Compulsory Acquisition Valuation of Shares State Aid Statutory Interpretation +1 more

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Parties

Harbinger Capital Partners

Appellant

Andrew Caldwell (as the Independent Valuer of Northern Rock plc)

First Respondent

HM Treasury

Second Respondent

Procedural Posture

Civil Appeal / Appeal From Upper Tribunal (tax and Chancery Chamber) to Court of Appeal

Legal Issues

  1. 1 What is the correct statutory assumption for withdrawal of financial assistance under section 5(4)(a) of the Banking (Special Provisions) Act 2008 for the purpose of valuing compensation to shareholders of Northern Rock?
  2. 2 Does the assumption require that all financial assistance is deemed repaid (Repayment Interpretation), or only that a demand for repayment is made (Demand Interpretation)?
  3. 3 Is the Repayment Interpretation compatible with EU law and Article 1 of Protocol 1 to the ECHR?

Ratio Decidendi

By majority, the Court of Appeal held that the correct statutory assumption under section 5(4)(a) of the Banking (Special Provisions) Act 2008 is that all financial assistance provided by the Bank of England or the Treasury to Northern Rock must be assumed to have been repaid as at the valuation date, not merely that a demand for repayment had been made. This requires the valuer to assume that Northern Rock realised assets (potentially at a discount) to effect repayment, and that no value attributable to taxpayer support remains. This interpretation is consistent with the legislative purpose, the wording of the statute, and is not incompatible with EU law or the ECHR.

Court Disposition

Appeal dismissed (by majority).

Orders

  • The appeal is dismissed.
  • The decision of the Upper Tribunal and the valuer's nil valuation stand.