ATE FARMS LTD AGAINST (I) AW ESTATES SCOTLAND LTD (IN ADMINISTRATION) AND (II) ARJOWIGGINS SCOTLAND LTD (IN ADMINISTRATION) AND THE JOINT ADMINISTRATORS THEREOF; AND ANOTHER [2023] ScotCS CSOH_73 (17 October 2023)

ATE FARMS LTD AGAINST (I) AW ESTATES SCOTLAND LTD (IN ADMINISTRATION) AND (II) ARJOWIGGINS SCOTLAND LTD (IN ADMINISTRATION) AND THE JOINT ADMINISTRATORS THEREOF; AND ANOTHER [2023] ScotCS CSOH_73 (17 October 2023)

The administrators breached their obligation under clause 3.1.4 of the DEA by insisting on environmental indemnities not contemplated in the Heads of Terms, failing to act in good faith and to diligently progress negotiations. The pursuer validly rescinded the DEA by clear communication, entitling it to repayment of the deposit.

Citation
[2023] ScotCS CSOH_73
Parties
Pursuer: ATE Farms Limited; First Defender: AW Estates Scotland Limited (in Administration); First Defender: Arjowiggins Scotland Limited (in Administration) and the joint administrators thereof; Second Defender: Addleshaw Goddard LLP
Jurisdiction
Scotland
Judgment Date
17 October 2023
Procedural Posture
Commercial Action / Proof (trial) Before the Outer House, Court of Session
Outcome
Declarator granted; order for repayment of deposit granted
Legal Topics
Breach of Contract, Good Faith Obligations, Deposit and Exclusivity Agreements, Environmental Indemnities, Rescission of Contract
Contract Law Insolvency Law Property Law Breach of Contract Good Faith Obligations Deposit and Exclusivity Agreements Environmental Indemnities Rescission of Contract

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Parties

ATE Farms Limited

Pursuer

AW Estates Scotland Limited (in Administration)

First Defender

Arjowiggins Scotland Limited (in Administration) and the joint administrators thereof

First Defender

Addleshaw Goddard LLP

Second Defender

Procedural Posture

Commercial Action / Proof (trial) Before the Outer House, Court of Session

Legal Issues

  1. 1 Whether the administrators breached their obligations under the Deposit and Exclusivity Agreement (DEA)
  2. 2 Whether the pursuer validly rescinded the DEA
  3. 3 Entitlement to repayment of deposit due to alleged breach

Ratio Decidendi

The administrators breached their obligation under clause 3.1.4 of the DEA by insisting on environmental indemnities not contemplated in the Heads of Terms, failing to act in good faith and to diligently progress negotiations. The pursuer validly rescinded the DEA by clear communication, entitling it to repayment of the deposit.

Court Disposition

Declarator granted; order for repayment of deposit granted

Orders

  • Declarator that the administrators breached their obligations under the DEA
  • Order requiring Addleshaw Goddard LLP to repay the £300,000 deposit to the pursuer