![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales High Court (Commercial Court) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just Β£5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Laminates Acquisition Co v BTR Australia Ltd. [2003] EWHC 2540 (Comm) (31 October 2003) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2003/2540.html Cite as: [2003] EWHC 2540 (Comm) |
[New search]
[Context]
[View without highlighting]
[Printable RTF version]
[Help]
![]() ![]() ![]() ![]() ![]() ![]() |
||
QUEENS BENCH DIVISION
COMMERCIAL COURT
NEUTRAL CITATION NO. [2003]
EWCH
2540
(Comm)
Strand, London, WC2A 2LL |
||
![]() |
B e f o r e :
____________________
Laminates Acquisition Co |
Claimant |
|
- and - |
||
BTR Australia Ltd |
Defendant |
____________________
Elizabeth Gloster, Q.C. and Michael Fealy (instructed by Slaughter & May, London) for the Defendant
Hearing dates : 27th, 28th and 29th October
____________________
Crown Copyright ©
Mr Justice Cooke:
Introduction
"Whether the claimant is precluded, in the events that have happened, from bringing a claim in respect of BTR's alleged breach of the Agreed Assurance at paragraph 10(D) of Schedule 7 of the SPA by any failure to comply with the requirements of paragraph 2 of Schedule 8 to that Agreement."
"10. Contracts
(A) No contract to which any of the Companies is a party:
(iv) is unusual in the context of the business;
(D) No Company is a party to an agreement or arrangement:
(i) which has been notified to any competition or authority;
.
(iii) which is prohibited by competition law in any jurisdiction and which is any case material to the Business or the separate Businesses of any one or more of: ..
(c) Formica North America (which included Formica).
15 Litigation
(D) Except in relation to Intellectual Property or Proprietary Know-how so far as the vendor is aware no Company conducts or has conducted its Business or deals or has dealt with its assets in a manner which is not in accordance with all applicable legal and administrative requirements in any jurisdiction where such conduct or dealing is reasonably likely to have a material adverse effect on the Business.
(E) Except in relation to Intellectual Property or Proprietary Know-how there is and has in the last five years been no governmental or other investigation, inquiry or disciplinary proceeding concerning any agreement, arrangement or conduct (by omission or otherwise) of a Company in any jurisdiction and none is pending or threatened. So far as the vendor is aware, no fact or circumstances exists which might give rise to an investigation, inquiry or proceeding of that type."
"2. Time limits for bringing claims
No claim shall be brought against the Vendor in respect of any Agreed Assurances unless the Purchaser shall have given to the relevant Vendor written notice of such claim specifying (in reasonable detail, to the extent that such information is available at the time of the claim) the matter which gives rise to the claim, the nature of the claim and the amount claimed in respect thereof (detailing the Purchaser's calculation of the loss thereby alleged to have been suffered by it or the relevant member of the Purchaser's Group): . .. on or before 31 March 2000.
.
PROVIDED that .. the liability of the Vendor in respect of such claim shall absolutely determine (if such claim has not been previously satisfied, settled or withdrawn) if legal proceedings in respect of such claim shall not have been commenced within 12 months of the expiry of the relevant limitation period referred to in (i), (ii) and (iii) above and for this purpose proceedings shall not be deemed to have been commenced unless they shall have been properly issued and validly served upon the Vendor."
"3. Conduct of Litigation
(A) Upon the Purchaser or any member of the Purchaser's Group becoming aware of any claim, action or demand against it or any other matter likely to give rise to any claim in respect of any of the Agreed Assurances (other than under the Tax Warranties (in which case the provisions of the Tax Covenant will apply) or under the Environmental Covenant), the Purchaser shall:
(i) within 30 days thereof notify the Vendor by written notice that such assessment or claim of a third party received by or coming to the notice of any director or other officer of any member of the Purchaser's Group may result in a claim under the Agreed Assurances;
(ii) take such action and give such information and access to personnel, premises, chattels, documents and records to the Vendor and its professional advisers as the Vendor may reasonably request (and the Vendor shall reimburse the Purchaser's out of pocket costs in doing so) and the Vendor shall be entitled to require any relevant member of the Purchaser's Group to take such action and give such information and assistance in order to avoid, dispute, resist, mitigate, settle, compromise, defend or appeal any claim in respect thereof or adjudication with respect thereto;
(iii) at the request of the Vendor, allow the Vendor to take the sole conduct of such actions as the Vendor may deem appropriate in connection with any such assessment or claim in the name of the Purchaser or any member of the Purchaser's Group and in that connection the Purchaser shall give or cause to be given to the Vendor all such assistance as it may require
(iv) make no admission of liability, agreement, settlement or compromise with any third party in relation to any such claim or adjudication without the prior written consent of the relevant Vendor; and
(v) take all reasonable action to mitigate any loss suffered by it or any member of the Purchaser's Group in respect of which a claim could be made under the Agreed Assurances.
(B) If the Purchaser fails to give the Vendor notice of a claim, action or demand in accordance with paragraph (A)(i) then, to the extent that the Vendor's defence of such claim has been prejudiced or its liability in respect of such claim increased as a result thereof, the liability of the Vendor in respect of such claim, action or demand shall be reduced to compensate it for any such increased liability.
(C ) In relation to matters to which paragraph (A)(i) applies, the Vendor shall be entitled at any stage (i) at its absolute discretion to settle any such third party assessment or claim for which they have accepted liability and (ii) with the prior written consent of the Purchaser (not to be unreasonably withheld or delayed) to settle any other such third party claim or assessment."
The Facts
"The Company is unable to determine at this time the effect, if any, that this matter may have on its financial statements".
On 27th March 2000 Formica filed form 10-K with the Commission in respect of the period ending 31st December 1999, with information to the same effect, stating that the Company had provided information in response to the subpoena in the shape of documents and testimony but concluding with the same sentence as set out above. This filing took place one day before the letter on which Laminates relies as the major item by which Notice was given to BTR in compliance with paragraph 2 of Schedule 8 of the SPA.
"Any price fixing or other agreement or arrangement in breach of U.S. Antitrust Laws by Formica ("Antitrust violations") has been denied by Formica in the DOJ investigation, the Federal actions, the State actions and the Consolidated actions. However, to the extent that Antitrust violations against Formica are true, the Defendant has breached Clause 9(A) of the Agreement in that:-
(a) The Antitrust Warranty (defined as Schedule 7, paragraph 10D) was untrue; and
(b) No reference to Antitrust violations was made in the Disclosure Letter or Disclosure Files."
From this paragraph and from the absence of any evidence on the part of Laminates to the contrary effect, I was invited to infer that allegations of price fixing had been made against Formica in the DOJ Investigation. It seems to me that this is a proper inference to draw from the terms of paragraph 7 of Mr Gizzi's statement and his denial of knowledge of any facts which underpinned any such allegations, as well as from the terms of paragraph 25 of the Particulars of Claim. There is however no material upon which I can form any conclusion as to the specificity of any such allegations.
The relevant correspondence
"NOTICE OF CLAIMS
. In accordance with paragraph 3(A)(i) of Schedule 8 (Limitations on liability) of the Share Sale and Purchase Agreement between BTR Australia Limited and Laminates Acquisition Co. dated 16 March 1998 (the "Agreement"), we notify you of the claims on the attached list.
We further notify you that these may result in claims under the Agreed Assurances.
All terms used in this letter, unless otherwise defined, shall have the same meaning as defined in the Agreement.
Yours faithfully ..".
The enclosed list scheduled a series of claims made by third parties against Formica except for a reference to "claims previously noticed" under which appeared a reference to "US DOJ". Under the heading "Claim type" appeared "Grand Jury Investigation". The status was described as "pending" and the costs to date were listed as $1,236,610.63. All the other items in the list were third party claims which had not been previously notified.
"NOTICE OF CLAIM
. In accordance with paragraph 3(A)(i) of Schedule 8 (Limitations on liability) of the Share Sale and Purchase Agreement between BTR Australia Limited and Laminates Acquisition Co. dated 16 March 1998 (the "Agreement"), we notify you that:
(i) Formica Corporation has received a grand jury subpoena seeking the production of documents in respect of a criminal investigation by the U.S. Justice Department Antitrust Division into possible price-fixing activities; and
(ii) This investigation may result in a claim under the Agreed Assurances.
All the terms used in this letter, unless otherwise defined, shall have the same meaning as defined in the Agreement.
Yours faithfully, ".
Did Laminate' notice comply with Paragraph 2 of Schedule 8?
"The clear commercial purpose of the clause includes that the vendors should know in sufficiently formal written terms that a particularised claim for breach of warranty is to be made so that they may take such steps as are available to them to deal with it . The commercial purpose may not be sensibly served if an uninformed and uninformative notice is given .."
The notice provision here does not require "particulars" of the grounds of claim for breach of warranty but some information relating to the claim, as set out in the paragraph, which can be seen as equivalent, or analogous to that required in Senate Electrical.
i) There must be a notice of a claim against BTR in respect of a Warranty or an Agreed Assurance see the words "such claim".
ii) It must be a claim in writing "written notice".
iii) The Notice must specify "the matter which gives rise to the claim". This must mean the underlying facts, events or circumstances, which constitute the factual basis upon which the claim is posited.
iv) The Notice must specify "the nature of the claim". The parties agree that this must mean notification of what is being claimed and the basis of it by reference to the SPA - namely the form and substance of the claim.
v) The Notice must set out the "amount claimed". This specifically requires a calculation on the part of Laminates of the loss which is allegedly suffered.
These last three elements in the Notice are qualified by the passage in parenthesis which states that these matters have only to be specified "in reasonable detail, to the extent that such information is available at the time of the claim". This brings in two further inter-relating factors, namely, the concept of reasonableness and Laminates' knowledge.
Information Available at the time of the Claim
Conclusion