Key Facts
- •ENL sold its share capital to CPA under a Share Purchase Agreement (SPA).
- •A dispute arose concerning the ownership of intellectual property (IP) in Emperium Software.
- •Claimants (CPA and ENL) alleged that the IP belonged to ENL, while Defendants (Jethwas, Palmyra, EDE) claimed it belonged to EDE.
- •The SPA included earn-out provisions based on ENL's performance.
- •The Defendants counterclaimed for unpaid earn-out consideration, alleging wrongdoing by CPA directors.
Legal Principles
Summary judgment standard: 'real prospect' of success; not a 'mini-trial'; consider reasonably available evidence.
CPR 24.2, Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
Strike-out standard: no reasonable grounds for bringing/defending claim.
CPR 3.4(2)(a)
Amendment principles: overriding objective; balance injustice; timing crucial; real prospect of success.
CPR 17.1(2)(b), Pearce v East and North Hertfordshire NHS Trust [2020] EWHC 1504 (QB), Front Door (UK) Ltd v Lower Mill Estate Ltd [2021] EWHC 2324 (TCC)
Agency: Principal liable for fraudulent misrepresentations by agent within scope of actual or ostensible authority.
The Ocean Frost [1986] AC 717, Hockley Mint v Ramsden [2018] EWCA Civ 2480, Ivy Technology Ltd v Martin & Bell [2022] EWHC 1218 (Comm)
Contract interpretation: objective meaning to a reasonable observer with knowledge of admissible background facts.
N/A
Deceit: false representation of fact, made with intention to be relied upon, relied upon, causing loss; knowledge or recklessness as to falsity.
Bell v Singh [2022] EWHC 3272 (Ch)
Outcomes
Palmyra's application for strike-out and summary judgment dismissed; CPA granted permission to amend.
CPA has a real prospect of showing Palmyra authorized Jethwa to negotiate, and his misrepresentations were within the scope of that authority.
Jethwa's counterclaim struck out; application to amend dismissed.
Counterclaims lacked merit due to flawed interpretation of the SPA's earn-out provisions and lack of evidence supporting allegations against Gualtieri and Rowe.
Claim to recover the £200,000 directors' loan dismissed.
Insufficient evidence to support a compromise agreement; the claim was not waived or settled.
Defence to breach of warranty claim struck out.
If ENL did not own the IP, the warranties were breached; Jethwas' defense lacked merit.
Defence to deceit claim struck out.
If ENL did not own the IP, Jethwa's representations were false, and he likely knew or was reckless about their falsity.