116 Cardamon Ltd v MacAlister & Anor [2019] EWHC 1200 (Comm) (15 May 2019)

116 Cardamon Ltd v MacAlister & Anor [2019] EWHC 1200 (Comm) (15 May 2019)

The defendants breached warranties in the SPA by providing accounts that materially understated liabilities and did not fairly present the company's financial position. The underprovision for claims and the failure to write off the Boomerang-Tag debt (to the extent not fairly disclosed) constituted breaches. The...

Source-derived case information.

Citation
[2019] EWHC 1200 (Comm)
Parties
Claimant: 116 Cardamon Limited; Defendant: Mr Alan Ramsay MacAlister; Defendant: Mrs Birgitt Alice MacAlister
Jurisdiction
England and Wales
Judgment Date
15 May 2019
Procedural Posture
Commercial Court (qbd) Breach of Warranty Claim / Final Judgment After Trial
Outcome
Claim substantially succeeds. Judgment for the claimant for damages, subject to SPA cap and de minimis.
Legal Topics
Share Purchase Agreement, Breach of Warranty, Damages, Disclosure, Accounting Standards
Contract Law Company Law Commercial Law Share Purchase Agreement Breach of Warranty Damages Disclosure Accounting Standards

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Summary, issues, holding and outcome

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Parties

116 Cardamon Limited

Claimant

Mr Alan Ramsay MacAlister

Defendant

Mrs Birgitt Alice MacAlister

Defendant

Procedural Posture

Commercial Court (qbd) Breach of Warranty Claim / Final Judgment After Trial

Legal Issues

  1. 1 Whether the defendants breached warranties in the SPA regarding the accuracy and fairness of company accounts and management accounts;
  2. 2 Whether the underprovision for claims, failure to write off the Boomerang-Tag debt, and accounting for brokers' remuneration constituted breaches;
  3. 3 Whether the Boomerang-Tag debt was fairly disclosed;

Ratio Decidendi

The defendants breached warranties in the SPA by providing accounts that materially understated liabilities and did not fairly present the company's financial position. The underprovision for claims and the failure to write off the Boomerang-Tag debt (to the extent not fairly disclosed) constituted breaches. The change in claims reserving methodology post-acquisition was not a substantive change in accounting policy but a correction of prior errors. Damages are to be assessed as best as possible given the evidence, subject to the SPA's cap and de minimis provisions.

Court Disposition

Claim substantially succeeds. Judgment for the claimant for damages, subject to SPA cap and de minimis.

Orders

  • Defendants to pay damages to claimant up to the purchase price of £2,386,247.50, less any applicable de minimis or set-offs under the SPA.
  • Any further quantification or ancillary relief to be determined if not agreed.