Al-Hasawi v Nottingham Forest Football Club Ltd [2019] EWCA Civ 2242 (17 December 2019)

Al-Hasawi v Nottingham Forest Football Club Ltd [2019] EWCA Civ 2242 (17 December 2019)

The Court held that 'Liabilities' under SPA clause 7.1 must be calculated on an accruals basis consistent with FRS 102 and the Trial Balance, including all liabilities incurred before 31 December 2016 regardless of when services are rendered. The parenthetical wording in the SPA does not alter this approach. The clause 7.4 indemnity requires proof of causation; losses must be shown to be 'due to' non-disclosure of Material Contracts in the Data Room. The appeal on clause 7.1 succeeded, allowing set-off for undisclosed liabilities; the appeal on clause 7.4 failed due to lack of causation.

Citation
[2019] EWCA Civ 2242
Parties
Claimant/first Respondent: Fawaz Al-Hasawi; Defendant/first Appellant: Nottingham Forest Football Club Limited; Third Party/second Appellant: NF Football Investments Limited; Fourth Party/second Respondent: NFFC Group Holdings Limited
Jurisdiction
England and Wales
Judgment Date
17 December 2019
Procedural Posture
Appeal / Court of Appeal Judgment
Outcome
Appeal allowed in part; clause 7.1 appeal succeeds, clause 7.4 appeal dismissed.
Legal Topics
Share Purchase Agreement, Indemnity, Loan Repayment, Set Off, Material Contract Disclosure, Accounting Standards
Commercial Law Contract Law Corporate Law Share Purchase Agreement Indemnity Loan Repayment Set Off Material Contract Disclosure +1 more

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Parties

Fawaz Al-Hasawi

Claimant/first Respondent

Nottingham Forest Football Club Limited

Defendant/first Appellant

NF Football Investments Limited

Third Party/second Appellant

NFFC Group Holdings Limited

Fourth Party/second Respondent

Procedural Posture

Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Proper construction of 'Liabilities' under SPA clause 7.1
  2. 2 Entitlement to indemnity for undisclosed liabilities
  3. 3 Scope and causation requirements for indemnity under clause 7.4

Ratio Decidendi

The Court held that 'Liabilities' under SPA clause 7.1 must be calculated on an accruals basis consistent with FRS 102 and the Trial Balance, including all liabilities incurred before 31 December 2016 regardless of when services are rendered. The parenthetical wording in the SPA does not alter this approach. The clause 7.4 indemnity requires proof of causation; losses must be shown to be 'due to' non-disclosure of Material Contracts in the Data Room. The appeal on clause 7.1 succeeded, allowing set-off for undisclosed liabilities; the appeal on clause 7.4 failed due to lack of causation.

Court Disposition

Appeal allowed in part; clause 7.1 appeal succeeds, clause 7.4 appeal dismissed.

Orders

  • Defendants entitled to set-off for undisclosed liabilities under clause 7.1 against Completion Loans.
  • Appeal on clause 7.4 dismissed; no indemnity for non-disclosure without proof of causation.