Railtrack investors in cash plea after judge backs Government

Click to follow
The Independent Online

Small shareholders in Railtrack appealed for a "sugar daddy" to come forward and keep alive their court action against the Government over the collapse of the company four years ago.

Small shareholders in Railtrack appealed for a "sugar daddy" to come forward and keep alive their court action against the Government over the collapse of the company four years ago.

Last night's move followed the refusal by a High Court judge to place a cap on the amount the shareholders must pay into court to meet the Government's legal costs should their compensation claim fail.

The 55,000 members of the Railtrack Shareholders Action Group now have to find an extra £900,000 on top of the £2.5m they have already raised to keep the action going. The case is due to be heard in June.

The action group's committee will meet today in the offices of its solicitors, Edwin Coe, to decide whether to press ahead with the case amid indications that it is split down the middle.

Geoffrey Weir, a semi-retired Railtrack engineer and spokesman for the committee, said: "We are very disappointed. We may have to abandon our action. We have always operated within a fixed budget but the Government has unlimited resources. This is the UK's biggest-ever class action on behalf of nearly 50,000 small shareholders and if we do have to abandon the action what hope is there for other groups in similar circumstances?"

The group's advisers said its best hope probably lay in a millionaire philanthropist coming up with the money. Amongst the names mentioned were the IG Index founder and prominent Tory supporter Stuart Wheeler, the Harrods chairman, Mohammed al Fayed, and the former Tory treasurer Lord Ashcroft.

The action group had offered to put up £1.35m to cover the Government's legal costs until the end of the trial. But lawyers for the Secretary of State for Transport, Alistair Darling, had asked for £2.25m.

Mr Justice Lindsay ruled in the Government's favour saying the extra money that the 47,940 shareholders named in the writ would have to find worked out at £18.77 each. "Such a cash call is not manifestly unobtainable," he added.

During the two-day hearing, the action group argued that the Government had inflated its own costs by deliberately hiring the most expensive QC in the country, Jonathan Sumption, to defend it. But the judge ruled there was no evidence that the Government's costs had spiralled out of control given the gravity of the charges it is facing. The writ accuses the Secretary of State of "misfeasance in public office" - abusing his powers - by putting Railtrack into railway administration in October 2001 and breaching shareholders' human rights.

If the action group withdraws the action, it will have to bear the Government's legal costs to date - about £1.5m. But if it presses ahead, then it would need to seek a 12-month delay in the trial in order to raise the extra £900,000, during which time the Government's own legal costs and those of the action group will continue to rise.

Comments