Decision Inc Holdings Proprietary Limited & Anor Stephen Garbett & Anor

Decision Inc Holdings Proprietary Limited & Anor Stephen Garbett & Anor

The defendants were in breach of the material adverse change warranty as there was a material adverse change in the company's prospects at the effective date, which would have led a reasonable buyer to renegotiate the purchase price. There was no breach of the records warranty as the documents in question were not 'records' within the meaning of the SPA, nor were they inaccurate. The claimants did not have actual knowledge of the breach, and the notice given was valid. Damages were assessed as the difference between the warranted and actual value of the company, adjusted for unpaid consideration.

Parties
Claimant: Decision Inc Holdings Proprietary Limited; Claimant: Decision Inc Shareco (RF) Proprietary Limited; Defendant: Stephen Garbett; Defendant: Anis El Mariesh
Jurisdiction
England and Wales
Judgment Date
16 March 2023
Procedural Posture
Commercial/civil (contract/warranty) / Judgment After Trial
Outcome
Judgment for the claimants
Legal Topics
Breach of Warranty, Material Adverse Change, Share Purchase Agreement, Damages, Disclosure, Notice Requirements
Contract Law Company Law Breach of Warranty Material Adverse Change Share Purchase Agreement Damages Disclosure Notice Requirements

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Parties

Decision Inc Holdings Proprietary Limited

Claimant

Decision Inc Shareco (RF) Proprietary Limited

Claimant

Stephen Garbett

Defendant

Anis El Mariesh

Defendant

Procedural Posture

Commercial/civil (contract/warranty) / Judgment After Trial

Legal Issues

  1. 1 Whether there was a breach of the material adverse change warranty in the SPA regarding the company's prospects and/or turnover
  2. 2 Whether there was a breach of the records warranty in the SPA
  3. 3 Whether the claimants had actual knowledge of the facts constituting the breach

Ratio Decidendi

The defendants were in breach of the material adverse change warranty as there was a material adverse change in the company's prospects at the effective date, which would have led a reasonable buyer to renegotiate the purchase price. There was no breach of the records warranty as the documents in question were not 'records' within the meaning of the SPA, nor were they inaccurate. The claimants did not have actual knowledge of the breach, and the notice given was valid. Damages were assessed as the difference between the warranted and actual value of the company, adjusted for unpaid consideration.

Court Disposition

Judgment for the claimants

Orders

  • Judgment in favour of the claimants for £1.31 million.