Man Nutzfahrzeuge Ag & Ors v Freightliner Ltd.

Man Nutzfahrzeuge Ag & Ors v Freightliner Ltd.

Freightliner (as successor to Western Star) is vicariously liable for fraudulent misrepresentations made by Mr. Ellis during negotiations for the sale of ERF, as he was held out as having authority to speak on Western Star's behalf. MAN was induced to purchase ERF by these fraudulent statements and is entitled to recover all losses directly flowing from the transaction, including post-acquisition losses up to the completion of restructuring, less the value of ERF at that time. Claims under the Share Purchase Agreement for misrepresentation and breach of warranty are limited to the contractual indemnity, except for fraud, which was not established against Western Star for contractual...

Parties
Claimant: MAN Nutzfahrzeuge AG; Claimant: MAN AG; Claimant: ERF Limited; Claimant: ERF (Holdings) PLC; Claimant: MAN ERF UK LTD; Defendant: Freightliner Ltd; Part 20 Defendant: Ernst & Young (Canada); Part 20 Defendant: Ernst & Young (UK); Part 20 Defendant: Individuals listed in Schedule A to the Pt.20 claim
Jurisdiction
England and Wales
Judgment Date
28 October 2005
Procedural Posture
Commercial Fraud and Contract Dispute / Judgment After Full Trial
Outcome
Judgment for the claimants (MAN group) against Freightliner for damages for deceit; claims under the Share Purchase Agreement succeed only as to the tax indemnity; all claims against Ernst & Young (UK) and (Canada) dismissed; contribution claims dismissed; quantum to be determined at a later hearing.
Legal Topics
Fraudulent Misrepresentation, Vicarious Liability, Auditor Negligence, Damages for Deceit, Share Purchase Agreements, Attribution of Knowledge, Contribution Claims
Commercial Law Contract Law Tort Law Company Law Fraudulent Misrepresentation Vicarious Liability Auditor Negligence Damages for Deceit +3 more

Case Brief

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Parties

MAN Nutzfahrzeuge AG

Claimant

MAN AG

Claimant

ERF Limited

Claimant

ERF (Holdings) PLC

Claimant

MAN ERF UK LTD

Claimant

Freightliner Ltd

Defendant

Ernst & Young (Canada)

Part 20 Defendant

Ernst & Young (UK)

Part 20 Defendant

Individuals listed in Schedule A to the Pt.20 claim

Part 20 Defendant

Procedural Posture

Commercial Fraud and Contract Dispute / Judgment After Full Trial

Legal Issues

  1. 1 Whether Freightliner (as successor to Western Star) is vicariously liable for fraudulent misrepresentations made by Mr. Ellis during the sale of ERF to MAN.
  2. 2 Whether MAN was induced to purchase ERF by fraudulent statements and is entitled to damages for deceit.
  3. 3 Whether MAN can recover under the Share Purchase Agreement for misrepresentation and breach of warranty, and the scope of indemnity under Article 12.

Ratio Decidendi

Freightliner (as successor to Western Star) is vicariously liable for fraudulent misrepresentations made by Mr. Ellis during negotiations for the sale of ERF, as he was held out as having authority to speak on Western Star's behalf. MAN was induced to purchase ERF by these fraudulent statements and is entitled to recover all losses directly flowing from the transaction, including post-acquisition losses up to the completion of restructuring, less the value of ERF at that time. Claims under the Share Purchase Agreement for misrepresentation and breach of warranty are limited to the contractual indemnity, except for fraud, which was not established against Western Star for contractual...

Court Disposition

Judgment for the claimants (MAN group) against Freightliner for damages for deceit; claims under the Share Purchase Agreement succeed only as to the tax indemnity; all claims against Ernst & Young (UK) and (Canada) dismissed; contribution claims dismissed; quantum to be determined at a later hearing.

Orders

  • Freightliner to pay MAN damages for deceit, to be assessed, including losses incurred in buying, operating, and restructuring ERF up to 31 March 2003, less the value of ERF at that date.
  • Freightliner to indemnify MAN under section 4.1(oo) of the Share Purchase Agreement for losses relating to ERF's tax position, limited to amounts due for VAT, penalties, and related expenses.