Tactus Holdings Limited v Philip Mark Jordan & Ors
[2024] EWHC 399 (Comm)
Finsbury Food Group Plc v Axis Corporate Capital UK Limited & Ors
26 June 2023
[2023] EWHC 1559 (Comm)
High Court
Finsbury bought a bakery, but claimed it was worth less than they paid because of secret price cuts. The judge said either the price cuts weren't secret or Finsbury knew about them anyway, so they can't get their money back. They also got in trouble for hiding important documents.
Key Facts
- •Finsbury Food Group Plc (Finsbury) acquired Ultrapharm Limited (Ultrapharm), a gluten-free baked goods manufacturer.
- •The acquisition was subject to a Buyer-Side Warranty and Indemnity Insurance Policy.
- •Finsbury claimed that Ultrapharm breached warranties in the Sale and Purchase Agreement (SPA), leading to a reduced business value of £3,194,370.
- •The key warranties in dispute were the Trading Conditions Warranty (TCW) and the Price Reduction Warranty (PRW).
- •The breaches alleged by Finsbury were a recipe change and price reductions agreed with Marks & Spencer (M&S).
- •Finsbury's disclosure of documents was significantly deficient, leading to trial adjournments and cost orders against them.
- •Much of Finsbury's witness testimony was deemed unreliable by the judge.
Legal Principles
Contractual interpretation requires determining what a reasonable person would have understood the parties to have meant, considering the natural and ordinary meaning of the clause, other provisions, the contract's purpose, known facts and circumstances, and commercial common sense, while disregarding subjective intentions.
Rainy Sky v Kookmin [2011] 1 WLR 2900; Arnold v Britton [2015] AC 1619; Wood v Capita Insurances Services Ltd [2017] AC 1171
The burden of proof is on the underwriter when relying on an exception or exclusion clause in a policy.
Bond Air Services LD v Hill [1955] 2 QB 417
Actual knowledge, for the purposes of warranty exceptions, requires the relevant person to have been aware that the circumstances would be reasonably likely to give rise to a warranty claim, even without explicit awareness of the legal implications.
None explicitly stated, but inferred from analysis of the case
Outcomes
Finsbury's claim was dismissed.
The judge found that the alleged breaches of the TCW and PRW did not occur, or if they did, the Knowledge Exception in the SPA applied because Finsbury's representatives had sufficient information to be aware of the potential warranty claims.
Cost orders were made against Finsbury.
Finsbury's inadequate disclosure of documents resulted in significant delays to the trial.