Ageas (UK) Ltd v Kwik-Fit (GB) Ltd & Anor [2014] EWHC 2178 (QB) (04 July 2014)

Ageas (UK) Ltd v Kwik-Fit (GB) Ltd & Anor [2014] EWHC 2178 (QB) (04 July 2014)

Damages for breach of warranty in a share purchase agreement should be assessed at the date of breach using information available at that time, unless it is necessary to use subsequent events to give effect to the compensatory principle and avoid a windfall. In this case, the contractual allocation of risk in the SPA means that any benefit or detriment from post-acquisition trading, including changes in TOCBD, falls on the buyer (Ageas). There is no justification for departing from the breach date rule, and the claimant is entitled to damages calculated on the conventional basis.

Citation
[2014] EWHC 2178
Parties
Claimant: Ageas (UK) Limited; First Defendant: Kwik-Fit (GB) Limited; Second Defendant: AIG Europe Limited
Jurisdiction
England and Wales
Judgment Date
04 July 2014
Procedural Posture
Commercial Contract Dispute / Judgment After Trial
Outcome
Judgment for the claimant
Legal Topics
Breach of Warranty, Damages Assessment, Share Purchase Agreement, Warranty and Indemnity Insurance, Valuation of Companies, Compensatory Principle, Allocation of Risk
Contract Law Insurance Law Commercial Law Breach of Warranty Damages Assessment Share Purchase Agreement Warranty and Indemnity Insurance Valuation of Companies +2 more

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Parties

Ageas (UK) Limited

Claimant

Kwik-Fit (GB) Limited

First Defendant

AIG Europe Limited

Second Defendant

Procedural Posture

Commercial Contract Dispute / Judgment After Trial

Legal Issues

  1. 1 Whether damages for breach of warranty in a share purchase agreement should be assessed with reference to subsequent events (hindsight) or only by reference to information available at the date of breach
  2. 2 Whether the compensatory principle requires the use of actual post-acquisition data to avoid a windfall to the claimant
  3. 3 Whether the contractual allocation of risk in the SPA precludes reliance on subsequent events in the assessment of damages

Ratio Decidendi

Damages for breach of warranty in a share purchase agreement should be assessed at the date of breach using information available at that time, unless it is necessary to use subsequent events to give effect to the compensatory principle and avoid a windfall. In this case, the contractual allocation of risk in the SPA means that any benefit or detriment from post-acquisition trading, including changes in TOCBD, falls on the buyer (Ageas). There is no justification for departing from the breach date rule, and the claimant is entitled to damages calculated on the conventional basis.

Court Disposition

Judgment for the claimant

Orders

  • AIG to pay Ageas the principal sum of £12,635,000, subject to further argument on tax treatment and interest.