SNC to take appeal over shares to Lords

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The Independent Online
SMITH New Court intends going to the House of Lords after the Appeal Court yesterday cut the damages payable to it by Citibank from pounds 10.76m to pounds 1.19m, over a disputed transaction in Ferranti shares.

The market maker said it welcomed the fact that the Court of Appeal had confirmed that SNC was defrauded by Citibank in connection with the purchase of 28 million Ferranti shares in July 1989.

'Smith New Court is naturally disappointed that the Court took a different view of the law to that taken by the judge below and as a result of this reduced the damages awarded. Smith New Court will be seeking leave to take this point to the House of Lords.'

Citibank, a division of American bank Citicorp, had no comment.

In March 1992 the High Court made an award to SNC of the difference between the pounds 23m it paid for Ferranti shares at 82p each, and their true value, which Mr Justice Chadwick decided was only 44p.

Yesterday the Appeal Court found that the judge was wrong in setting the true value on the basis of share price reductions caused by a gigantic fraud on Ferranti by American arms dealer James Guerin, which did not come to light until months after the SNC purchase.

Lords Justices Nourse, Rose and Hoffmann said the ruling wrongly assumed 'omniscience' on the part of the market. That was an arbitrary and irrational assumption.

The true value at time of purchase was 78p - the price SNC would have been willing to pay for a 'bought deal' if it had not been led to believe there were other bids. In its damages action, SNC complained that it was induced to buy the shares at 82p in July 1989 by false representations from the then head of private banking at Citibank, Christopher Roberts.