Auden MckEnzie (Pharma Division) Ltd & Ors v Patel & Anor [2019] EWHC 1257 (Comm) (17 May 2019)

Auden MckEnzie (Pharma Division) Ltd & Ors v Patel & Anor [2019] EWHC 1257 (Comm) (17 May 2019)

Summary judgment is granted against the First Defendant for the net amount of payments made under false invoices, as the Re Duomatic principle cannot ratify dishonest, unlawful conduct and no real prospect of defence exists. The First Defendant's arguments regarding alternative lawful extraction and tax consequences do not defeat liability. The claim for unpaid earn-out and other issues are not suitable for summary determination and must proceed to trial. The Second Claimant's deceit claim is not struck out as loss is arguable on the pleaded facts.

Citation
[2019] EWHC 1257 (Comm)
Parties
Claimant: Auden McKenzie (Pharma Division) Limited; Claimant: Actavis Holdings UK Limited; Claimant: Chilcott UK Limited; Defendant: Amit Patel; Defendant: Meeta Patel; Non Cause of Action Respondent: Jolanta Patel; Third Party: Allergan plc
Jurisdiction
England and Wales
Judgment Date
17 May 2019
Procedural Posture
Commercial Court Proceedings (qbd) / Interlocutory Applications for Summary Judgment, Strike Out, Interim Payment, and Amendment
Outcome
Summary judgment granted in part; other applications dismissed or reserved for trial.
Legal Topics
Summary Judgment, Strike Out, Fiduciary Duties, Deceit, Misrepresentation, Share Purchase Agreement, Earn Out Arrangements, Implied Terms, Equitable Compensation
Commercial Law Contract Law Company Law Equity and Trusts Summary Judgment Strike Out Fiduciary Duties Deceit +5 more

Case Brief

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Parties

Auden McKenzie (Pharma Division) Limited

Claimant

Actavis Holdings UK Limited

Claimant

Chilcott UK Limited

Claimant

Amit Patel

Defendant

Meeta Patel

Defendant

Jolanta Patel

Non Cause of Action Respondent

Allergan plc

Third Party

Procedural Posture

Commercial Court Proceedings (qbd) / Interlocutory Applications for Summary Judgment, Strike Out, Interim Payment, and Amendment

Legal Issues

  1. 1 Whether summary judgment should be granted for recovery of payments made under false invoices against the First Defendant for breach of fiduciary duty
  2. 2 Whether the Re Duomatic principle applies to ratify dishonest conduct by directors/shareholders
  3. 3 Whether the First Defendant is entitled to summary judgment for unpaid earn-out under the SPA

Ratio Decidendi

Summary judgment is granted against the First Defendant for the net amount of payments made under false invoices, as the Re Duomatic principle cannot ratify dishonest, unlawful conduct and no real prospect of defence exists. The First Defendant's arguments regarding alternative lawful extraction and tax consequences do not defeat liability. The claim for unpaid earn-out and other issues are not suitable for summary determination and must proceed to trial. The Second Claimant's deceit claim is not struck out as loss is arguable on the pleaded facts.

Court Disposition

Summary judgment granted in part; other applications dismissed or reserved for trial.

Orders

  • Summary judgment for the First Claimant against the First Defendant for £13,149,479 (i.e. £13,763,452 less £613,973) for breach of fiduciary duty.
  • Declaration that the Second Claimant is in breach of obligation to provide a Yearly Earn-out Statement for Year Two under the SPA.