High Court Examines Damages in Share Purchase Agreement Dispute: Ruth Munn & Anor v ETL Holdings (UK) Limited

Citation: [2023] EWHC 2998 (Ch)
Judgment on


In the High Court case of Ruth Munn & Anor v ETL Holdings (UK) Limited, the court grapples with complex issues surrounding damages in the context of a share purchase agreement. The proceedings revolve around an appeal against the decision made by Deputy Master Arkush, which awarded ETL Holdings substantial damages for breaches of warranty discovered post-acquisition. The case draws on various legal principles, including the compensatory damages principle, the impact of hindsight in the valuation of shares, and the significance of a ‘single transaction’.

Key Facts

The Munns sold 40% of the shares in Carston Holdings Limited to ETL Holdings under a share purchase agreement (SPA) that contained warranties. Post-acquisition, it was discovered that significant debts, including a debt to Dormco Candco Ltd (Dormco), were not disclosed. ETL Holdings was awarded damages reflecting the diminution in value of the shares as warranted versus actual value.

Subsequently, the Company enforced a lien on the retained shares of the Munns due to Mr Munn’s breach of director’s duties, which included his part in the unlawful declaration of dividends and Dormco’s debt. These shares were forfeited and sold, with the proceeds satisfying the liens and ETL and an associated company acquiring them.

The appeal challenges the Deputy Master’s approach to damages, arguing that it led to ETL being overcompensated and that the enforcement of the lien effectively addressed the issues arising from the breach of warranty.

Compensatory Damages Principle

The compensatory damages principle aims to put the claimant in the position they would have been had the contract been properly performed. This case tests the principle’s application when a subsequent event potentially mitigates the loss originally claimed for.

Impact of Hindsight

The case delves into whether hindsight should affect the valuation of damages for breach of warranty in a share purchase agreement. The general rule precludes the use of hindsight; however, exceptions may arise where ignoring hindsight would result in a ‘windfall’ to the claimant.

Significance of ‘Single Transaction’

Another pivotal aspect is whether multiple closely linked transactions should be considered as a singular event for legal purposes. This could influence liability and the assessment of whether multiple actions effectively address the same underlying legal harm.

Assessment of Damages

The question of when and how damages should be assessed arises, particularly whether the date of breach or a subsequent date should be used to determine the quantum of loss.


The court’s decision to allow the appeal was rooted primarily in the failure of the Deputy Master to consider the single transaction argument and the valuation of the Retained Shares. The court found that the Deputy Master did not adequately address:

  • The association and intentions behind the companies and individuals benefitting from the Retained Shares.
  • The potential single transaction nature of the forfeiture of shares and the settlement of the Dormco debt.
  • The ‘windfall’ argument as established by legal precedents.

Moreover, the Deputy Master’s decision contradicted the consensus of the expert witnesses without sufficient explanation. The court remanded the matter for re-hearing to assess these unresolved questions.


The Ruth Munn & Anor v ETL Holdings (UK) Limited case reaffirms important legal principles while foregrounding the nuanced application of compensation damages, particularly in share purchase disputes. It underscores the challenges courts face in awarding damages that accurately reflect a party’s loss, without overcompensating, in light of post-contractual events. The High Court’s decision to remit the case for re-hearing indicates a careful consideration of these principles and their complex interplay, seeking to ensure that justice is delivered with a thorough understanding of the facts and applicable legal guidelines.

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