Key Facts
- •OSR, a scrap metal merchant, sold a majority stake to CGR in 2019.
- •CGR alleged breach of warranties and misrepresentation by the Birds (OSR's previous owners).
- •OSR claimed equitable compensation for wrongful dividend payments by the Birds.
- •The Birds denied the claims and made counterclaims.
- •A central issue was the operation of OSR's invoice discounting facility with Bibby.
- •Allegations included Fresh Air Invoicing (fabricating invoices) and Advance Invoicing (invoicing before delivery).
- •The Completion Accounts process led to a significant price reduction for the shares.
- •The Birds' dismissal from OSR led to further disputes.
Legal Principles
Creditor duty of directors under section 172 of the Companies Act 2006.
Sequana SA and others [2022] UKSC 25
Breach of warranty claims under a share purchase agreement (SPA).
SPA clauses 6 and Schedule 3
Misrepresentation claims, including fraudulent misrepresentation.
Common law principles
Estoppel.
Common law principles
Outcomes
CGR's breach of warranty claim dismissed.
Insufficient evidence to prove significant Fresh Air Invoicing; allegation regarding Purchase Reserve Ledger failed due to pleading issues.
CGR's misrepresentation claim dismissed.
Insufficient evidence to support alleged misrepresentations; CGR did not rely on the representations in entering the SPA.
OSR's breach of duty claim dismissed.
Insufficient evidence to show OSR was insolvent when dividends were paid; even if there was a breach, it caused no actual loss to OSR.
Birds' counterclaim allowed in part.
CGR ordered to procure release from remaining personal guarantees; estoppel claim dismissed due to insufficient evidence of assurance.