Why Northern Rock Shareholders need to go to the pawnbroker
When Penelope Wilson ran out of money in 1999 and hocked her BMW convertible she cannot have foreseen the ramifications.
But a decade after her wrangle with the pawnbroker over her £5,000 loan companies seeking recourse via the 1998 UK Human Rights Act often hark back to the test case she prompted.
And it will be in the minds of Northern Rock shareholders who are taking their case for compensation to the European Court of Human Rights, claiming the government imposed unrealistic and unfair assumptions on the independent valuer and they got far less than their company was worth.
They listened on Aug 8 to chief executive Gary Hoffman saying there were plans to return the business to private hands when conditions were “in the best interests of the taxpayer" but saying less about their best interests.
The Wilson case started life as a real tiddler with no apparent human rights issues to tug at the heartstrings – BMW owners and pawnbrokers are not usually considered the most downtrodden elements of society.
But it coincided with the Human Rights Act, which came into force in 2000 and made it possible to go to the UK courts for breach of a right enshrined by the European Convention rather than all the way to Strasbourg.
And after Ms Wilson argued that a technicality in the credit agreement made it unenforceable, First County claimed that an unfavourable decision infringed its rights under the new Act.
It said Article One of the First Protocol applied because the decision would deprive the pawnbroker of its ability to enjoy the benefit of the contractual rights arising from the agreement or from the delivery of the security.
Article One says every “legal person” is entitled to the peaceful enjoyment of his possessions and the UK Department for Constitutional Affairs guide to the act paints with a broad brush. “Land is property. So is… the money you use to pay your tax, or your right to a pension… So are invisible possessions such as shares, goodwill, patents, and compensation due under judgment debts or a claim for damages. Even entitlement to a social security benefit can be property. Companies, individuals, legal owners, beneficiaries, trustees and corporations can benefit from this right.”
As Lord Nicholls said in his Law Lords judgment at the time: “From these modest beginnings the County Court proceedings burgeoned into a case with wide-ranging implications. Neither Mrs Wilson nor First County Trust appeared before the House. But the Attorney General appeared on behalf of the Secretary of State for Trade and Industry. The Speaker of the House of Commons and the Clerk of the Parliaments intervened. They were represented by leading and junior counsel. The Finance and Leasing Association also intervened, as did four insurance companies which are among the largest providers of motor insurance in this country.”