Sycamore Bidco Ltd v Breslin & Anor

Sycamore Bidco Ltd v Breslin & Anor

The court held that the inclusion of the Liberata and AXA sums in turnover in the 2007 accounts was a material breach of warranty 4.1, as they did not represent turnover under UK GAAP and their inclusion rendered the accounts not true and fair. The absence of a related party transaction note was also a breach. The court found no actionable misrepresentation, as the warranties were not representations. The rebate and commission practices gave rise to a limited breach of warranty 2.3 but were not material to the business. Damages were assessed as the difference between the purchase price (£16.75m) and the true value of the company (£12m), resulting in a damages award of £4.75m.

Parties
Claimant: Sycamore Bidco Limited; Defendant: Sean Breslin; Defendant: Andrew Dawson
Jurisdiction
England and Wales
Judgment Date
30 November 2012
Procedural Posture
Civil Commercial (share Sale, Warranties, Misrepresentation) / High Court Judgment
Outcome
Claim for breach of warranty succeeds in part; claim for misrepresentation fails; damages awarded.
Legal Topics
Share Sale Agreement, Warranties, Misrepresentation, Damages, Accounting Standards, Disclosure, Due Diligence
Commercial Law Contract Law Company Law Share Sale Agreement Warranties Misrepresentation Damages Accounting Standards +2 more

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Parties

Sycamore Bidco Limited

Claimant

Sean Breslin

Defendant

Andrew Dawson

Defendant

Procedural Posture

Civil Commercial (share Sale, Warranties, Misrepresentation) / High Court Judgment

Legal Issues

  1. 1 Whether the inclusion of certain sums in turnover in the 2007 accounts breached warranties in the SPA
  2. 2 Whether the warranties in the SPA also amounted to actionable representations
  3. 3 Whether the accounts presented a true and fair view and complied with UK GAAP

Ratio Decidendi

The court held that the inclusion of the Liberata and AXA sums in turnover in the 2007 accounts was a material breach of warranty 4.1, as they did not represent turnover under UK GAAP and their inclusion rendered the accounts not true and fair. The absence of a related party transaction note was also a breach. The court found no actionable misrepresentation, as the warranties were not representations. The rebate and commission practices gave rise to a limited breach of warranty 2.3 but were not material to the business. Damages were assessed as the difference between the purchase price (£16.75m) and the true value of the company (£12m), resulting in a damages award of £4.75m.

Court Disposition

Claim for breach of warranty succeeds in part; claim for misrepresentation fails; damages awarded.

Orders

  • Judgment for Sycamore Bidco Limited for £4.75 million in damages for breach of warranty, subject to further adjustment if necessary on the headline price or tax gross-up.
  • Judgment for claimants in the LTIPs claim for the amount claimed (£322,920), with set-off excluded by contract.