Veranova Bidco LP v Johnson Matthey PLC & Ors [2025] EWHC 707 (Comm) (25 March 2025)

Neutral Citation Number: [2025] EWHC 707 (Comm) Case No: CL-2023-000277 IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES KING'S BENCH DIVISION COMMERCIAL COURT Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL 25/03/2025 B e f o r e : Sean O'Sullivan KC (sitting as a Deputy Judge of the High Court) ____________________ Between: VERANOVA BIDCO LP Claimant - and - (1) JOHNSON MATTHEY PLC (2) JOHNSON MATTHEY INVESTMENTS LIMITED (3) JOHNSON MATTHEY INCORPORATED Defendants ____________________ TONY SINGLA KC, MICHAEL BOLDING and JESSIE INGLE (instructed by Linklaters LLP) for the Claimant SIMON RAINEY KC, DAVID CAPLAN and RUIHAN LIU (instructed by Herbert Smith Freehill LLP) for the Defendants Hearing dates: 14 March 2025 ____________________ HTML VERSION OF APPROVED JUDGMENT ____________________ Crown Copyright © This judgment was handed down remotely at 10.30am on 25 March 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives. ............................. Sean O'Sullivan KC (sitting as a Deputy High Court Judge): On 14 March 2025, I heard an application by the Defendants ("the Ds") for summary judgment/ strike out in respect of one element of the Claimant ("C")'s claim. At the end of the hearing, I refused the application and indicated that my written reasons would follow. This judgment sets out those reasons. The background The background is that, on 16 December 2021, the parties entered into a number of contractual documents pursuant to which the Ds sold a particular business ("the Health Business") to C. One of these contractual documents was a share purchase agreement ("the SPA"). Another was a disclosure letter ("the Disclosure Letter"). Completion took place on 31 May 2022. C's core complaint is that it was not told, prior to the transaction, that one of the Health Business's most important customers, Alvogen Incorporated ("Alvogen"), had triggered a price review mechanism in its contract with the Health Business in relation to a particular pharmaceutical product, Buprenorphine HCl ("BHCL"). As to that, it appears to be common ground that the supply agreement with Alvogen required Alvogen to purchase a minimum of 75% of its annual requirements for active pharmaceutical ingredients from the Health Business. That agreement contained a price adjustment mechanism whereby, upon notification by Alvogen of a bona fide offer from a third-party manufacturer to supply BHCL at a lower price, Alvogen would be entitled to purchase from that alternative supplier if the Health Business failed to match the competing offer. While the negotiations for the SPA were ongoing, the Health Business was notified by Alvogen of a competing offer from a third party that was very significantly below the existing BHCL price the Health Business charged to Alvogen. This competing offer was verified by the Health Business as bona fide on 10 December 2021 (i.e. six days before the SPA was signed). C contends that, by at least that date, the Ds were well aware that they would need to match the competing offer in order to retain Alvogen's business, resulting in a price reduction that would have a very serious consequential impact on the value of the Health Business. On 20 December 2021, two working days after the SPA was signed, the Third Defendant offered to supply BHCL to Alvogen at a price only very slightly above the competing offer. Then, on 22 December 2021, the Third Defendant agreed with Alvogen to match the competing offer. C says that it was not told about the triggering of the clause by Alvogen or the price which the third party had offered, and hence that it was misled about the price at which the Health Business was expecting to sell BHCL going forwards. That core complaint gives rise to two different, if overlapping, types of claim. The first is for breach of two warranties given in the SPA. One aspect of this complaint is that disclosures made in the Disclosure Letter are said to have been insufficient adequately to qualify the warranties. It should be noted that the allegation of breach of warranty is alleged to have been fraudulent, in the sense that the relevant individuals had actual knowledge that the content of the warranties was false as at 16 December 2021, or at least were reckless as to whether the warranties were true or false. I understand there to be a limitation on the Ds' liability for claims for breach of warranty, which is said to require that they be "in respect of the fraud or wilful misconduct of any Seller". The second type of claim is for deceit. Initially, there were a series of allegations based upon oral statements, said to have been made by representatives of the Ds in telephone calls. Those allegations have now been withdrawn. What I am concerned with on the present application is the remaining part of that deceit claim as originally pleaded: namely, an allegation that certain representations were made by the Ds in a draft of the Disclosure Letter which was circulated on 15 December 2021 (i.e. the day before signing of the SPA). The remaining deceit claim Focussing in on that allegation, it is pleaded at paragraph 87 of the draft APoC that certain passages in "the draft Disclosure Letter circulated by … HSF … to Linklaters … on 15 December 2021" contained three "express and/or implied" representations. Mr Rainey KC for the Ds emphasises that I needed to understand the purpose of the Disclosure Letter and referred me to section 9.1 of the SPA, which provides as follows: "The Sellers shall not be liable in respect of a Business Warranty Claim or a Tax Warranty Claim: (i) relating to Business Warranties or Tax Warranties made as at the date of this Agreement; and (ii) relating to Business Warranties or Tax Warranties made immediately before Completion, to the extent that the facts and circumstances giving rise to the Business Warranty Claim or Tax Warranty Claim are: 9.1.1 in the case of the Business Warranties and Tax Warranties made as at the date of this Agreement Disclosed in the Disclosure Letter or are treated as Disclosed pursuant to the terms of the Disclosure Letter…" The definition of the Disclosure Letter in the SPA was: "…the letter dated the same date as this Agreement from the Seller to the Purchaser in relation to the Seller Warranties given as at the date of this Agreement". I note that the Disclosure Letter stated at paragraph A5 that: "The disclosure of any matter hereby shall not imply any representation, warranty, undertaking, assurance, covenant, indemnity, guarantee or any other commitment of any nature whatsoever not expressly given in the [SPA] and none of the Business Warranties … shall be extended in scope by any of the disclosures." The specific passages in the draft Disclosure Letter which are relied upon have been set out at paragraph 71 of the draft APoC. Mr Rainey pointed out that this part of the letter commenced with the words: "Without limiting the generality of the disclosures referred to above, we make the following specific disclosures in relation to the Business Warranties" Then, as regards the Business Warranty in paragraph 1.4.2 "Since the applicable Accounts Date, increased competition in the market for the Businesses' buprenorphine products has adversely impacted, and continues to adversely impact, the Businesses' market share in that market and the prices that the Businesses are able to charge their customers for these products. Pricing discussions in relation to this issue are ongoing with Alvogen. The projected financial impact of this issue cannot be quantified as at the date of this letter but the impact of this issue on the financial performance of the Businesses during the relevant periods is reflected in the Q1 Accounts and the September 2021 Accounts." As regards the Business Warranty in paragraph 8.1.2 "The Businesses are engaged in pricing negotiations with Alvogen. Please see the response provided at Question ID 28960140 in the Q&A Report and document 13.1.1.19 in the Data Room for further information." In relation to that last part, I am told that the documents in the "Data Room" referred to some earlier negotiations with Alvogen, but not the competing third party offer. The three express and/or implied representations to which it is pleaded those passages in the Disclosure Letter gave rise are as follows: "although price negotiations were ongoing with Alvogen, no competing offer for the supply of BHCL below US$12 per gram had been notified to D3 by Alvogen and/or no such offer had been verified by D3 as bona fide for the purposes of the [relevant contractual mechanism]"; "it was not possible to quantify the impact of the ongoing price negotiations between D3 and Alvogen relating [to] BHCL"; and "no further disclosure was required in order to render true [the relevant warranties]". I should make clear that C contends that senior executives representing the Defendants were well aware that these facts were untrue at the time (or were, at least, reckless in that regard) and hence this is a claim for fraudulent misrepresentation or deceit. All of that is highly controversial. But the Ds say that C can never get to that stage of the analysis, because C's case that providing a draft of the Disclosure Letter involved the Ds making those representations is hopeless. Summary judgment There was no dispute about the test for summary judgment. It was expressed neatly by Henshaw J in Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden NV v Société Bengaz SA [2024] EWHC 901 (Comm) at [71]-[72]: "71. Under CPR 24.3, the court may give summary judgment "against a claimant or defendant on the whole of the claim or on an issue if — (a) it considers that the party has no real prospect of succeeding on the claim, defence or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial". 72. In The LCD Appeals ( Iiyama (UK) Ltd and others v Samsung Electronics Co Ltd and others ) [2018] EWCA Civ 220 , the Court of Appeal approved the following considerations applicable to summary judgment applications, taken from passages in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) and Swain v Hillman [2001] 1 All ER 91 at 94. I state them below in a form applicable equally to applications by claimants and applications by defendants: i) the court must consider whether the respondent has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91 ; ii) a "realistic" claim or defence is one that carries some degree of conviction. This means a claim or defence that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 § 8; iii) in reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman ; iv) this does not mean that the court must take at face value and without analysis everything that a respondent says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel § 10; v) however, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 ; vi) although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 3; vii) on the other hand, it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 ; and viii) a judge in appropriate cases should make use of the powers contained in Part 24. In doing so, he or she gives effect to the overriding objective as contained in Part 1. It saves expense; it achieves expedition; it avoids the court's resources being used up on cases where this serves no purpose; and it is in the interests of justice. If the respondent has a case which is bound to fail, then it is in their interests to know as soon as possible that that is the position: Swain v Hillman [2001] 1 All ER 91 § 94." C reminded me that, in TFL Management Ltd v Lloyds Bank Plc [2013] EWCA Civ 1415 , the Court of Appeal referred to the familiar formulation of those principles in Easyair and added (at [27]): "…the court should still consider very carefully before accepting an invitation to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross-examination in any event, or where summary disposal of the single issue may well delay, because of appeals, the ultimate trial of the action: see Potter LJ in Partco Group Ltd v Wragg [2002] 2 Lloyd's Rep 343 , para 27(3) and cases there cited. Removing road blocks to compromise is of course one consideration, but no more than that. Moreover, it does not follow from Lewison J's seventh principle that difficult points of law, particularly those in developing areas, should be grappled with on summary applications: see Partco Group Ltd v Wragg , para 28(7). Such questions are better decided against actual rather than assumed facts. On the other hand it may be possible to say that the trajectory of the law will never on any view afford a remedy: see for example Hudson v HM Treasury [2003] EWCA Civ 1612 ." Strike out There was no dispute about the test for strike out pursuant to CPR 3.4(2)(a) (a statement of case disclosing no reasonable grounds for bringing the claim) either. The test is encapsulated in the commentary in The White Book at §3.4.2, where reference is made to "those claims which contain a coherent set of facts but those facts even if true, do not disclose any legally recognisable claim against the defendant". As to this, the editors comment that: "A claim or defence may be struck out as not being a valid claim or defence as a matter of law ( Price Meats Ltd v Barclays Bank Plc [2000] 2 All ER (Comm) 346 , Ch D ). However, it is not appropriate to strike out a claim in an area of developing jurisprudence, since, in such areas, decisions as to novel points of law should be based on actual findings of fact ( Farah v British Airways, The Times, 26 January 2000, CA referring to Barrett v Enfield BC [2001] 2 AC 550 ; [1989] 3 WLR 79, HL ). A statement of case is not suitable for striking out if it raises a serious live issue of fact which can only be properly determined by hearing oral evidence ( Bridgeman v McAlpine-Brown, 19 January 2000, unrep., CA ). An application to strike out should not be granted unless the court is certain that the claim is bound to fail ( Hughes v Colin Richards & Co [2004] EWCA Civ 266 ; [2004] PNLR 35 , CA (relevant area of law subject to some uncertainty and developing, and it was highly desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts))". Mr Rainey KC for the Ds confirmed that his submission was really that there was a short, but complete, legal answer to C's misrepresentation case. Accordingly, his skeleton submitted that, in a case such as this where "the court is deciding a point of law where the court has before it all the facts it needs to make a determination, there is no practical difference between deciding whether the point is bound to fail or has no real prospect of success". That is a quotation from the decision of Master Marsh in MF Tel Sarl v Visa Europe Ltd [2023] EWHC 1336 (Ch) (at [34]), in which the Master pointed out that there will often be a difference between the two applications in that, for an application under CPR 3.4.2, the applicant is usually bound to accept the accuracy of the facts pleaded unless they are contradictory or obviously wrong, whereas the approach to summary judgment is a little more flexible. However, if the case is being put that high – i.e. that on the facts as alleged, the claim simply could not succeed as a matter of law or legal analysis – the distinction probably does fall away. Where the application is advanced in that way, it is probably best to approach it as fundamentally being a strike out application, such that one can take the case as pleaded and simply assume all of those facts are proved. When it came to it, I was not sure whether Mr Rainey really was putting his case that high. He certainly did not accept the pleaded case that express or implied representations had been made. The law: the need for a representation Ds' case as to why the claim as pleaded does not work can be seen as being founded on two propositions. The first was that in order to bring a misrepresentation claim (whether fraudulent, negligent or innocent), a claimant must be able to identify a representation on which it is entitled to rely. That did not seem to me to be controversial. If it is disputed, I accept that the Ds are correct about that. A good illustration of the principle is found in Raiffeisen Zentralbank Osterreich AG v The Royal Bank of Scotland Plc [2010] EWHC 1392 (Comm) , where Christopher Clarke J said (at [81]): "RZB must show that RBS made to it a statement which amounts to a representation, that is to say a statement of fact upon which RBS was entitled to rely". The law: representations vs warranties The second proposition was that, as a matter of construction, the draft Disclosure Letter did not give rise to any actionable representations. At least on the face of his skeleton, Mr Rainey appeared to be contending for a general proposition to the effect that a draft letter which is expressed as containing disclosures qualifying contractual warranties cannot, without some special wording suggestive of an intention to make representations, give rise to implied representations of fact on which C was entitled to rely. In any event, the Ds relied in particular on 4 cases about whether representations are given in the specific context of contractual warranties. The first is Sycamore Bidco v Breslin [2012] EWHC 3443 (Ch) . The sale in that case was alleged to have been brought about as a result of misrepresentations about the accounts of GAS that were said to have been contained in warranties given in the relevant share sale agreement. Mann J rejected the misrepresentation claim, finding that the warranties in the agreement did not amount to representations. His reasons for doing so were as follows: i) there is a clear distinction in law between representations and warranties (see [203(i)]). That distinction was in evidence in the disclosure letter, which he observed provided that "The disclosure of any matter shall not imply any representation, warranty or undertaking not expressly given in the Agreement" (see [203(iv)]); ii) the warranties were described as warranties, and those giving them as "Warrantors" (see [203(ii)]); iii) in order to make the relevant material a representation one has to find something in the agreement which is capable of doing that. It is not enough that the subject matter of the warranty is capable of being a representation (see [203(iii)]); iv) the agreement limited liability in respect of warranties, but did not deal with claims for misrepresentation: "If the warranties were capable of amounting to representations as well, then on the strict wording of this clause it would not apply to any such misrepresentation. The sellers would thus be deprived of a large part of their protection and limitation. That would be a strange and uncommercial state of affairs, and can hardly have been intended" (see [203(v)]); and v) there was a conceptual problem in characterising provisions in a contract as being representations which were relied upon when entering into that contract, as the timing does not work (see [203(vi)]). In coming to those conclusions, Mann J disagreed with the contrary approach which had been taken by Arnold J in Invertec Ltd v De Mol Holding BV [2009] EWHC 2471 (Ch) . In that case, it had been held (at [363]) that: "The warranties were negotiated between Invertec and DMH over a considerable period prior to the execution of the SPA. As a result, Invertec knew prior to signing that the agreement it was about to enter into contained those warranties. In those circumstances I cannot see any reason in principle why Invertec cannot claim that it was induced to enter into the agreement by the representations made by those warranties so as to found a misrepresentation claim if they were false, particularly if they were fraudulently made". Mann J made clear in the later case that he was not merely distinguishing that decision by reference to its facts; he disagreed with the view expressed by Arnold J. He could see no answer to the point that the answer to the question "Why have the warranty provisions been inserted into the contract?" was "they are there because they are warranted. There is nothing more to make them into representations" (see [209]). Three points are worth making about Sycamore Bidco : i) first, the allegation concerned the warranties themselves: i.e. the specific promises made in the SPA; ii) second, there was no allegation of fraud; and iii) third, in the end, what Mann J was deciding was that "on the true construction of the document in which they are contained, they are simply not representations…" (see [210]). The second case relied upon by the Ds is Parallel Media LLC v Chamberlain [2014] EWHC 214 (QB) . The claim in that case was for deceit in relation to misrepresentations allegedly made in " Exhibit A " to a share sale agreement. The transaction documentation in that case included an " Exhibit A ", various parts of which were warranted to be accurate (see [8]). HHJ Richard Seymour QC held (at [48]) that "no representations were made…". The reason was that: "Mr. Markovich [of Parallel Media] wished Mr. Chamberlain to verify propositions which Mr. Markovich himself formulated, and Mr. Chamberlain did so. In English law that amounted to the giving of warranties, not the making of representations". This analysis seems to have involved looking at the way in which Exhibit A had come to be drawn up in the form that it was, and deciding, at trial, whether the propositions relied upon by Parallel Media amounted to statements made by Mr Chamberlain to induce it to enter into the relevant agreements. As I say, the answer (that they were not) seems to me to have been largely a result of the view which the learned judge took as to how the document came to take the form which it did. There was no mention of any principle of law in that regard. The third case is Idemitsu Kosan Co Ltd v Sumitomo Corp [2016] EWHC 1909 (Comm) . In Idemitsu , Schedule 4 to an SPA set out certain warranties given by the defendant seller relating to past or present facts about the subsidiary which the claimant buyer alleged were false. The claimant accepted it was out of time to sue for breach of warranty but instead alleged that, by presenting an execution copy of the agreement for signature, the defendant had made representations, in the terms of the matters of fact contained in the warranties, which had induced the claimant to enter into the agreement. Andrew Baker QC (as he then was) held (at [14]) that "When a seller, by the terms of the contract under which he sells, 'warrants' something about the subject matter sold, he is making a contractual promise. Nothing less. But also I think (and all things being equal) nothing more. That is so just as much for a warranty as to some then present or past matter of fact as it is for a warranty as to the future. By contracting on terms by which he warrants something, the seller is not purporting to impart information; he is not making a statement to his buyer. He is making a promise, to which he will be held as a matter of contract in the sense that any breach of the warranty will be actionable as a breach of contract, subject to any other relevant terms of the contract and to general principles of the law of contract, for example as to remedies". That conclusion enabled the judge to deal with the case summarily because (as he explained at [27]): "Nothing is relied on beyond the bare fact of providing/offering to sign/signing the document, and the contents of the document. There is no factual allegation requiring to be investigated further, through pre-trial processes and a full trial hearing. Either provision of (or offer to sign, or signature of) the Execution Copy involved Sumitomo making representations of fact or it did not…". He then determined that it did not. For the reasons he had already explained, he rejected the proposition that a seller giving a warranty, in and of itself, involves making a representation of fact to the buyer. Nor did he accept that one might look at Schedule 4, the document which set out what was actually being warranted, in isolation (see [30]): "Read without reference to Clause 6.1, as if it had been sent by Sumitomo to Idemitsu without context, it is proposed that Schedule 4 is to be characterised as a series of statements of fact made by Sumitomo to Idemitsu. But I think it is artificial and wrong in principle to read Schedule 4 like that, as if it had an existence independent of its function in the Execution Copy, which was to provide content to the Warranties (as defined by Clause 1.1 and as to be given by Sumitomo under Clause 6.1, if the SPA be concluded). This is therefore a case in which Sumitomo's provision (etc.) of the Execution Copy communicated, so far as material, no more than a willingness to give a certain set of contractual warranties in a concluded contract". Having said that, it is important to record that, while the judge's final conclusion was that provision of Schedule 4 in that case communicated no more than a willingness to give a certain set of contractual warranties in a concluded contract, he observed that it was "…right in principle that language found in the communication of a negotiating position, or in draft wording for a contract, or in an entire draft contract, passing between the parties during the negotiation of a contract, might amount to or form the content of a pre-contractual representation capable of being actionable under the 1967 Act" (see [24]). As with Sycamore Bidco and indeed Parallel Media , the alleged representations in Idemitsu were specifically designated as warranties contained in an execution version of the contract. That was what Schedule 4 was: the content of the warranties. For what it adds, the Ds point out that, in Ivy Technology v Martin [2020] EWHC 94 (Comm) , Teare J refused to allow an amendment which alleged that warranties contained in an agreement were representations by Mr Martin. He referred to the decision in Idemitsu , which was not challenged before him. More importantly, the Ds also referred to the approval of the key principle in Idemitsu by the Court of Appeal in SK Shipping Europe Ltd v Capital VLCC 3 Corp [2022] EWCA Civ 231 . At [49], Males LJ expressed agreement with paragraph 14 of Andrew Baker QC's judgment and then continued (at [50]): "The deputy judge recognised the possibility that something said in the course of negotiations might amount to a representation capable of being actionable under the Misrepresentation Act 1967, but said that this would depend on the particular facts of any given case. In Idemitsu nothing was relied on beyond the bare fact of an offer to sign the proposed contractual document". The fourth case relied upon by the Ds is Arani v Cordic Group Ltd [2021] EWHC 829 (Comm) . One of a multitude of applications before the Court was for permission to amend the counterclaim which alleged fraudulent misrepresentations. The deputy judge (Andrew Hochhauser QC) held (at [162(3)]) that the unamended counterclaim, which simply relied on contractual warranties as also being representations, was unsustainable, following Sycamore Bidco and Idemitsu . In relation to the proposed amendments, he held that they had no real prospect of success and should not be allowed. His reasoning in this regard (at [167] – [168]) was a little compressed, no doubt reflecting the number of issues before him: "…the difficulty the Defendant faces is finding an actionable representation. The warranties themselves in the SPA cannot amount to representations, so as to found a separate misrepresentation claim for the reasons set out in paragraph 162(3) above. Instead, at paragraph 22C of the draft Counterclaim, the Defendant relies upon "the Transactions Documents", recited at paragraph 12(1) above. Those include "(b) the Disclosure Letter". 168. The difficulty I have with such reliance is that: (1) The Transaction Documents are those which constitute the transaction itself and therefore, following the approach taken in Sycamore , Idemitsu and Ivy Technology , it is hard to see how they can contain pre-contractual representations which induced the Defendant to enter into the transaction of which they form part; and (2) As pointed out by Mr Marshall in paragraph 8 of Marshall 2, the second page of the Disclosure Letter expressly states: "The disclosure of any matter or document shall not imply any representation, warranty, assurance or undertaking by the Vendors not expressly given in the SPA, nor will such disclosure be taken as extending the scope of any of the Warranties."". The first ingredient of this part of the decision is perfectly clear: the judge followed Sycamore Bidco and Idemitsu in concluding that the giving of a warranty will not, without more, amount to making an actionable representation. But, if he was finding (in [168(1)]) that it is impossible for contractual documents to contain representations of fact, such a conclusion would seem to be inconsistent with (among other authorities) what Andrew Baker QC said in Idemitsu . It may be that he had in mind only the problem of timing (which both Mann J and Andrew Baker QC had identified), if the defendant was saying that the content of the executed version of a contract induced entry into the same. But it is not clear. Moreover, the judge's apparent reliance in [168(2)] upon the exclusion clause in the disclosure letter, in the context of an allegation of fraud, was not explained. For its part, C drew my attention first to the decision of the Court of Appeal in Eurovideo Bildprogramm GmbH v Pulse Entertainment Ltd [2002] EWCA Civ 1235 . The parties had entered into a licensing agreement whereby the defendant granted the claimant rights to exploit certain videos in German speaking parts of Europe. In the context of the negotiation, there had been an exchange about what became clause 8, which was headed "Representation and Warranties" and read for material purposes as follows: "Licensor represents and warrants to Licensee as follows:... C That Licensor has not entered into any agreement which conflicts with the rights granted herein to Licensee. Licensee has the exclusive first exploitation right in the licensed territory." Rix LJ, with whom the Vice-Chancellor and Jonathan Parker LJ agreed, rejected (at [18] and [20]) the broad proposition that "where language is proffered as to what is intended to become a term of the contract under negotiation it cannot be relied upon as a representation of fact", and held that the trial judge had been entitled to find that representations of fact had been made in the parties' exchanges. As to this, Rix LJ explained (at [23]) that "…When now one comes to the word "first" in the phrase "first exploitation", that is not a word that has content for the future. There is nothing that can occur in the future that is going either to confirm or undermine the promise of a right of first exploitation. If that promise is going to turn out to be disappointed at all, it is because something has happened in the past to prejudice that expectation and promise. Thus a promise of first exploitation necessarily, in my judgment, contains within it a representation of fact that the relevant exploitation rights have not previously been granted. That was a representation of fact which was implicit in the language of the contract. It is not surprising therefore that the clause is headed "Representation and Warranties". It is accurately so called, even though, as Mr Flower rightly submits, the label by itself cannot be conclusive or determinate". The Ds are right to say, of course, that the wording in that case ("Representation and Warranties… Licensor represents and warrants to Licensee") is much more suggestive of a representation than anything found in our draft Disclosure Letter. That said, the Court of Appeal does not appear to have considered the label, or even the introductory wording, to have been decisive. It was thought necessary also to look at the exchange of emails, and the content of the proposed wording, in order to decide whether a representation had been made. C also relied upon the decision of HHJ Keyser QC in MDW Holdings Limited v Norvill [2021] EWHC 1135 (Ch) . In that case, statements in a due diligence document were found to be actionable misrepresentations. The judge held that the principle in Idemitsu , with which he expressed agreement, was not relevant, because MDW was not relying upon the warranties in the SPA (see [244]). That being so, it does not look as if there was any other live issue as to whether the written statements in the due diligence document could and did amount to representations (see [251] and [252]). In the context of reliance , it was observed (at [274]) that the "document was provided in response to questions specifically asked by MDW in the course of the due diligence process. Its reason for asking the questions can only have been that it wanted to know the answers, and its reason for wanting to know the answers can only have been because they would inform its decision whether to buy the shares". Mr Singla said that this revealed something about the role or purpose of the due diligence document and suggested that much the same could be said about the content of the Disclosure Letter in our case. I am doubtful as to whether this decision assists me in any important way. Just as there is a difference between a Disclosure Letter and a set of warranties in a share purchase agreement, there is a difference between a Disclosure Letter and a series of formal responses to due diligence enquiries. But perhaps that is really C's point: that once one moves away from the scenario where reliance is being placed on the fact that contractual warranties are being given, everything depends on the facts and the words. The Ds referred me to Sinclair on Warranties and Indemnities on Share and Asset Sales (12 th Ed, 2023) at §§9-02 to 9-33. That is a practical guide, rather than descending to much by way of legal analysis. It makes clear that warranties are contractual promises, and that disclosures (in disclosure letters or otherwise) are used to qualify them. To the extent that something is not disclosed, or any disclosures do not meet the agreed standard of disclosure, or any disclosure is incorrect, the disclosures will fail to qualify the warranties in the relevant respect and the purchaser will have a potential breach of warranty claim. However, that same textbook also suggests (at §9-35) that: "…the purchaser may be able to bring an action for deceit if any of the disclosures constitute fraudulent misrepresentations of the actual position that induced the purchaser to complete the transaction". There is no suggestion that there would be anything surprising to transactional lawyers about that outcome. Sinclair refers, for that proposition, to Bottin (International) Investments Ltd v Venson Group Plc [2006] EWHC 3112, which Mr Rainey points out is a case where the SPA (albeit not the disclosure letter in which the relevant representations were contained) provided that "Bottin could treat the warranties as representations inducing it to enter into the agreement". Mr Singla submitted that there was nothing in the judgment suggesting that that was the reason the disclosure letter could give rise to actionable representations. That point simply does not appear to have been in issue in that case. Mr Singla also showed me §9-03 of Sinclair , which discussed in general terms the purpose, or perhaps I should say the purposes, for a disclosure letter: "It is sometimes suggested that the main purpose and function of the disclosure letter is to bring together all relevant information that might affect the purchaser in making an evaluation of the target company or business. While this is certainly an important aspect from the purchaser's perspective as it enables it to have a full picture of the target company or business prior to it becoming legally obliged to complete the acquisition, of arguably more importance to both parties is the effect of the disclosures in relation to excepted items, namely to transfer to the purchaser the commercial risks that arise from the matters disclosed" This might be said to confirm that the "purpose and function" of such a letter depends on one's perspective. For the seller, its primary importance is no doubt to qualify warranties and transfer risks to the purchaser. For the purchaser, however, an important aspect may be to give it "a full picture of the target company or business prior to it becoming legally obliged to complete the acquisition"; in other words to provide information relevant to its decision as to whether or not to enter into the contract. That seems to me relevant to Mr Rainey's submission to the effect that what a disclosure letter is for, and all that it is for, is to interact with the warranties that are given by the seller. Stepping back from all of this, I would suggest that the simple proposition of law which emerges (especially from Idemitsu , but also from Sycamore Bidco and the various cases which have followed those two decisions) is that the giving of a contractual warranty does not, without more, amount to the making of an actionable representation. Beyond that, I would suggest, it all depends. There is no doubt that providing draft contractual documents which are not themselves warranties can involve making representations (see Eurovideo and MDW Holdings ), but will certainly not always do so (see Arani ). It seems likely that it is necessary to show that a reason for making the factual statement is to provide information to the other party, as opposed to only for the purpose of making a contractual promise (see Sycamore Bidco ). However, as Males LJ put it in SK Shipping , it "would depend on the particular facts of any given case". The Ds' submissions in outline The Ds submitted that the Disclosure Letter (and the 15 December 2021 draft thereof) can be seen, without needing to descend into the detail of the evidence, to contain no representations on which it would be open to C to rely. For that purpose, they referred to various features of the transaction documents, such as that: i) the Ds gave a number of warranties (with no language of representation): see clause 7.1 of the SPA; ii) it was agreed that the Defendants would not be liable for breach of warranty if the relevant facts or circumstances giving rise to the claim were "Disclosed" (as defined to mean " fairly disclosed with sufficient detail to allow a reasonable buyer to make an informed assessment of the nature and scope of the matter concerned ") in the Disclosure Letter or were to be treated as being Disclosed pursuant to the terms of the Disclosure Letter: see clause 9.1.1; iii) there was a "no reliance" clause: see clause 16.2 of the SPA; and iv) the Disclosure Letter provided, at paragraph A5, that "The disclosure of any matter hereby shall not imply any representation, warranty, undertaking, assurance, covenant, indemnity, guarantee or other commitment of any nature whatsoever not expressly given in [the SPA] and none of the [warranties] shall be extended in scope by any of the disclosures". On the Ds' case, on the true construction of the documents in which they are contained, the passages relied upon are not representations. They argued that, adopting the language of Andrew Baker QC in Idemitsu , it would be "artificial and wrong in principle" to read the draft Disclosure Letter "as if it had an existence independent of its function" in the transaction. Mr Rainey told me that it would simply be wrong for me to disconnect the draft Disclosure Letter from the warranties; to allow the Disclosure Letter to play any role other than to qualify the warranties. A series of points were made by the Ds in support of this contention, which might in some ways be thought to be a series of different ways of saying the same thing. For example, they argued that: i) it is clear from the contractual language in the SPA and the Disclosure Letter that the warranties being given by the Defendants were just that – warranties. There was no language of representation, in the sense of words which actively refer to the making of representations, rather than merely text which could be read as containing statements of fact; ii) the contractual language in the SPA and the Disclosure Letter made clear that the function of the latter was to qualify the warranties, not to provide a (massive) number of representations. That, the Ds say, is what was agreed the Disclosure Letter should say and what it did say; and iii) the parties are free to decide what functions a disclosure letter, or any contractual document, should have. They could have used language that made the warranties, or the matters set out (or deemed set out) in the Disclosure Letter, "double up" as representations. But they did not do so. The Ds insisted that disregarding the contractual regime that the parties agreed upon in this case would be unprincipled, and asserted that it would also create considerable and unwelcome uncertainty. If representations are held to have been made in the Disclosure Letter (or drafts thereof), that would mean that: (i) the Ds unwittingly made countless representations via the draft Disclosure Letter upon which C could have relied; and (ii) the same would be true, or at least made a real possibility, in a very large number of other M&A transactions. That would completely unbalance, and in effect render parties unable to balance, the allocation of risk between buyers and sellers. Further, they contended that the fact that the parties constructed their regime in this way does not leave any lacuna or create any injustice. If a relevant matter was not disclosed, whether adequately or at all, the Ds would not be protected against a warranty claim in relation to that matter. Mr Rainey argued that there is no need for the Court to descend into the detail in relation to the context for the draft Disclosure Letter because C is not relying upon any context which could change the basic position. He points out that the only communication that C now relies upon in its pleading as giving rise to any relevant representations is the provision of the 15 December 2021 draft. As such, the Ds say, this is a case like Idemitsu , where nothing is relied upon "beyond the bare fact of providing" the draft, and the contents thereof. Nor, the Ds submitted, can C contend that different principles should be applied because it is alleging fraud. After all, Parallel Media and Arani were both fraud claims. Put simply, an allegation of fraud cannot transform something which is not a representation into something which is. C's submissions in outline C responded that there is no universal legal principle which automatically precludes the existence of a representation simply because it is based on a draft Disclosure Letter. On the contrary, C submits that the question of whether the draft Disclosure Letter in this case contained actionable representations is a complex issue which requires an investigation of the facts, and hence should be determined at trial. C argued that there is a fundamental distinction between disclosures and warranties, as Sycamore Bidco implies. The former are statements of fact and are therefore capable of being actionable representations. Treating disclosures and warranties as having the same effect does not work as a matter of logic. C gave an example: when the Ds stated in the draft Disclosure Letter that "the projected financial impact of this issue [namely, ongoing BHCL price negotiations with Alvogen] cannot be quantified", C said, the Ds were not promising that the financial impact could not be quantified. Instead, the Ds were imparting (supposed) facts about the business. As such, C argued that the statements made in the draft Disclosure Letter were just as much capable of amounting to actionable representations as the statements made in the due diligence documents in MDW Holdings . C said that the present case is very different from Idemitsu . Its claim is based on statements made in the draft Disclosure Letter, during the course of the negotiations between the parties, and before the SPA was entered into. It suggested that, having regard to Eurovideo , it will be necessary at trial to consider the details of the negotiations in order to establish whether the statements in the draft Disclosure Letter constitute actionable representations. It pointed (in general terms) to what the witnesses have said in their statements about the disclosure process, and suggested that all of that might in theory be relevant when one comes to understand the statements made from the perspective of these parties. C sought to make a virtue of the fact that the Disclosure Letter in the present case purported to exclude representations: i.e. "the disclosure of any matter hereby shall not imply any representation". C's case is that this provision does not operate to exclude a claim in fraud , but it described the inclusion of that provision in the Disclosure Letter as "an express recognition that statements therein could constitute actionable representations". That is perhaps ambitious. A similar argument was rejected in Sycamore Bidco (at [205] – [206]). But C argued with more force that that wording cannot answer the question as to whether a representation was made, at least in the context of an allegation of deceit. My analysis I am not persuaded that I can or should grant summary judgment or a strike out in the Ds' favour. It seems to me that C's case on misrepresentation does have real prospects of success. That being so, and bearing in mind that these matters will have to be considered further at trial, I will keep my reasons for that conclusion short and avoid saying too much about the possible merits of the different arguments. In essence, as I have already indicated, it seems to me that there is no "rule" about what can or cannot amount to a representation when parties exchange what are to become contractual documents, save only that agreeing to provide a warranty will not, without more, amount to making a representation of fact. Mr Rainey's argument seeks to extrapolate from the decision in Idemitsu to a case which is not about the content of warranties per se, but rather about the content of disclosures which modify or supplement those warranties. I accept that there is a relationship between the two. But I ultimately agree with C that they are not, or at least not necessarily, the same thing. In my judgment, there is nothing inherently absurd or implausible about saying that a disclosure letter provides factual information upon which the recipient might reasonably rely, just because its primary contractual function will be to qualify the content of the warranties. If the question is "why are these words here?", it does not seem to me that the only possible answer is "in order to qualify the warranty". I cannot see why, depending on the detailed facts, a disclosure letter cannot have a dual purpose, or a secondary effect, as Mr Singla submitted it does here. The commentary in Sinclair on which Mr Rainey relied, is, put at its lowest, consistent with that possibility. Indeed, with any exchange of contractual documentation, it might be said that the contractual purpose for the exchange is to fix the terms of the contract. But that does not mean that such an exchange cannot have a secondary effect, in the form of giving rise to an actionable representation. The cases to which I have already referred show that it can. I accept that, absent fraud, the contractual scheme might well preclude the content of the Disclosure Letter giving rise to claims for misrepresentation. I also accept that, in many and perhaps most scenarios, the combination of the warranties and the qualification of those warranties, should provide the recipient with protection against the content of the Disclosure Letter being misleading. But I do not see why that should necessarily mean that nothing in the Disclosure Letter can amount to a representation of fact. Let me give a hypothetical example. Suppose the seller gave a warranty about profits in the last few years, and then the Disclosure Letter includes a disclosure about the most the recent results which suggest that profits are on an upward trajectory. The seller would not have given a warranty to that effect. But that information might still have an impact on the purchaser's decision-making. If that statement was simply a lie on the part of the seller, and it was intended to be, and was in fact, relied upon by the purchaser, why should the usual consequences, if one makes a dishonest statement which deceives another, not apply? Looking at the specific disclosures in the Disclosure Letter which are relied upon, it does seem to me that they can be understood, in their context, as factual information which was being provided by the Ds to C, notwithstanding the way in which the Disclosure Letter is used by the contractual scheme and notwithstanding the introductory and other wording in the letter. I do not need to put it any higher than that they might be factual statements which amount to actionable misrepresentations. They may not. That will depend on a full analysis of what the disclosures relied upon are properly understood to mean, which requires an understanding of the context. It is not just a matter of looking at the document in which the text is contained. Mr Rainey's pleading point seems to me to confuse the basic allegation about where the representations are found with issues as to the meaning and effect of the specific words which are used in the relevant documents. There may be force in Mr Singla's suggestion that it is relevant that the disclosures relied upon here were the product of questions asked by C of the Ds, not simply something which the Ds chose for their own reasons to say by way of qualification to a warranty. Or not. That is a matter for the trial judge. It seems to me that there might also be a difficult legal question hiding away in all of this as to whether the wording in paragraph A5 the Disclosure Letter to the effect that "the disclosure of any matter hereby shall not imply any representation" is sufficient to prevent any disclosure amounting to an actionable representation, even in the special context of an allegation of fraud. I note that the Ds' application appeared to indicate an intention to argue that the contractual scheme (i.e. clause 16.2 of the SPA and this paragraph A.5 of the Disclosure Letter) negated any possible claim for misrepresentation. In response, C dealt at some length in its skeleton with public policy in this regard, contending that English law will not permit a party to (a) "exclude or limit liability for his own fraud and a provision that purports to do so (which could include a clause that stipulates that no representations are being made or that no reliance is being placed on any representations made) will not be enforced" (see Civil Fraud (1 st Ed.) at [1-022] – note especially the content of the bracket); or (b) exclude liability for the fraud of its agent unless done in clear and unmistakable terms on the face of the contract (see FoodCo LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch) at [166]). This analysis of the law was not really challenged by the Ds, who argued that they did not need to rely upon any exclusions and hence it was irrelevant. However, if the Ds are not relying upon the "exclusion" wording in paragraph A.5 of the Disclosure Letter as negating the possibility that the same contains representations of fact, they are left with the argument that the relationship between the Disclosure Letter and the contractual warranties necessarily means that the logic set out in [14] of the decision in Idemitsu must apply equally to the former as the latter. But that seems far from obvious to me. I agree entirely with Andrew Baker QC's view that "By contracting on terms by which he warrants something, the seller is not purporting to impart information; he is not making a statement to his buyer". However, it seems to me at least possible that, by making a disclosure in a Disclosure Letter, the seller is purporting to impart information. No doubt it depends on the facts; on exactly what is said and in what context. The Ds' alarmist submissions to the effect that a decision that the Disclosure Letter could contain representations would send shivers through the market, because it would suggest that parties to M&A transactions are unable to control their exposure to claims, seems to me to lose sight of the fact that the allegation which is made, and which C will have to make good here, is an allegation of fraud . That is why contractual stipulations about the absence of representations, or excluding liability therefor, do not, or at least may not, operate. There are, as I have noted above, policy reasons why it is difficult in English law for a party to (in effect) exclude liability for its own fraud, whatever drafting device it chooses to adopt. The possibility that a fraudulent statement might be made, in the context of provisions seeking to protect against liability for misrepresentation more generally, does not seem to me to be a reason for adopting a rule that prevents such a statement being actionable. I therefore accept C's submission that there is no legal principle which would justify a summary dismissal of the misrepresentation claim on the basis that the draft Disclosure Letter could not give rise to actionable representations. Whether it did or not here is a question for trial. If the trial judge takes the view that all that was happening when that draft Disclosure Letter was communicated and negotiated was that the parties were shaping the warranties to be given in the SPA, that separate allegation of misrepresentation may fail. But that will require investigating all of the relevant facts. That is sufficient to dispose of the application, but I note that, to the extent that Mr Rainey ended up relying upon Arani as a binding extension of the principle in Idemitsu , it seems to me to be relevant that that was a first instance decision and that the relevant part of the reasoning is a little obscure. It is not clear, at least to me, to what extent the deputy judge's conclusion was premised upon the specific facts of that case. I do not need to, and do not, say that the decision in Arani , or even that small part of it, was wrong, but I certainly do not consider it an ideal jumping off point for summary disposal of the present case. To be fair to Mr Rainey, he did not end up placing very much reliance in his oral submissions upon Arani . I link that to two further points, both of which seem to me to lend further support to the conclusion I have reached. First, the trial is due to commence (with a time estimate of 6 weeks) on 10 November 2025. For all of the Ds' submissions about the streamlining of the case which would be possible if I were to accede to their application, there is no doubt that, if I were to do so, and then there were to be a successful appeal, that would be potentially catastrophic for the November trial. Second, there is a significant factual and legal overlap between C's breach of warranty claim, which will be going to trial in any event, and these issues about the role of the Disclosure Letter. I am doubtful as to whether these latter two points would rescue C if I had taken the view that, as pleaded, the allegation of fraudulent misrepresentation was simply bad in law. But they seem to me to emphasise what a high hurdle the Ds needed to clear in this regard. As the Court of Appeal made clear in TFL Management , notwithstanding the encouragement to "grasp the nettle" in appropriate cases, "the court should still consider very carefully before accepting an invitation to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross-examination in any event". Once we move away from clearcut propositions of law, towards a more nuanced consideration of the facts, the risks, no doubt always inherent if one is lured by skilful advocacy into conducting what is really a mini-trial, loom large. Ds' additional point For completeness, I note that the Ds asserted, by way of alternative or additional argument, that it is impossible to see how the first and third of the three specific representations alleged at paragraph 87 of the draft APoC could possibly arise, even implicitly, from the passages relied upon. C complained that this additional point had not been foreshadowed in Ds' witness statement in support of the application and said it was not open to the Ds to run the argument. I am not sure it matters, because it seemed to me to be a makeweight point, entering squarely into the realm of detailed evaluation of the facts and conducting a mini-trial. I was not surprised that Mr Rainey said very little about it orally. In Hamoodi v Lombard Odier Asset Management Ltd [2024] EWHC 1314 (Comm) (at [79]), HHJ Pearce pointed out that the existence of an implied representation is a matter of fact, not law, and it is "…therefore a matter which the court should be cautious about determining on a strike out or summary judgment application. It may be that a careful analysis of the discussions involving the Claimant on the one hand and representatives of the Defendant on the other would lead to the conclusion that representation was impliedly made". I respectfully agree. Moreover, an assessment of what is to be implied from the text of the draft Disclosure Letter would require a full understanding of the context against which the draft Disclosure Letter was to be read. I cannot pretend to have any such understanding on the basis of the limited material I was shown for the purposes of this application. In any event, the idea that I might reject summarily two out of three alleged implied representations, leaving the trial judge to work out where that conclusion leaves them as they decide what to make of the draft Disclosure Letter, seemed to me thoroughly unrealistic. Conclusion It follows that I reject the application for strike out/ summary judgment in relation to the remaining part of C's misrepresentation claim. That claim, as amended, has real prospects of success and must go to trial. It only remains for me to pay tribute to the skill with which the application was argued, both orally and in writing, by Counsel, and the care with which the case had been prepared more generally. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII