Decision Inc Holdings Proprietary Ltd v Garbett and El-Mariesh

The claimants in this matter alleged 6 claims of breach of warranty in relation to their purchase of a company from the defendants. The defendants counterclaimed for unpaid consideration. Following a 7 day High Court trial in January 2023, the Judge dismissed 5 of those claims, but found that the defendants had breached a warranty that, since the date of the company’s last annual accounts, there had “been no material adverse change in the…prospects of the Company” (the “Prospects Warranty”). The defendants appealed against that finding, including on the basis that (1) the Judge had misinterpreted and misapplied the Prospects Warranty; (2) the approach taken by the Judge in relation to the Prospects Warranty was procedurally unfair, since it was not one pleaded or presented by the parties, or raised with them during the trial; and (3) the claimants had failed properly to notify their warranty claims, since the notice provision required the amount of each claim to be specified so far as reasonably practicable, and the claimants had instead notified a single figure for all their claims together.

The Court of Appeal (Newey LJ, with whom Asplin and Baker LJJ agreed) today handed down judgment in favour of the defendants, upholding the appeal on all three of these grounds. The Judge’s interpretation of the Prospects Warranty had been wrong, and his approach procedurally unfair. The Court accepted that the amount of each claim had to be individually notified, but had not been, and that the Judge had been wrong to find that it would not have been reasonably practicable to state an amount for the Prospects Warranty claim. It was not appropriate to remit the matter for a new trial where the Prospects Warranty claim had not been notified, and where, in the light of the correct interpretation of the Prospects Warranty, the pleaded claim could not proceed in any event, and it was too late to amend. The Court accordingly gave judgment for the defendants on their counterclaim in full.

David Lowe (instructed by Oli Goldman of Wallace LLP) acted for the successful defendants both at trial and on appeal.

The judgment may be found here.