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By brocs1, Dec 10 2020 10:23AM

The recent decision in the case of Bell v Ivy Technology Ltd [2020] EWCA Civ 1563, If anything, reminds us of how crucial the drafting of a Share Purchase Agreement can be and how the facts should marry up with reality.

In April 2019, Ivy Technology Ltd entered into a share and purchase agreement for the purchase of shares in five companies. Prior to the completion of the share purchase agreement, it was disclosed that although Mr Bell (second defendant) was not a party to the share purchase agreement, he did in fact, beneficially own 50% of the shares along with Mr Martin (first defendant) who owned the remaining 50%. This was of course significantly different to what the share purchase agreement stated, in that, Mr Martin held “all beneficial rights, title and interest in and to” the individually held shares, and that no other person was entitled to any right in and to such shares – such disclosure to Ivy Technology Ltd was not undisputed.

Ivy Technology Ltd brought a case claiming it was fraudulently misrepresented by Mr Martin; breach of warranty and a claim in restitution argument was also advanced. As Mr Bell was not named on the share purchase agreement, a claim against Mr bell was initially founded in tort rather than contract.

The claimant, Ivy, issued an application for permission to amend its claim form and particulars to include Mr Bell in its breach of warranty claim. The application at first instance concluded that the claimant had real prospect of succeeding in its contention that Mr Bell was liable for breach of the share purchase agreement, even though he was not named as a party and permission to amend was given.

The second defendant, being Mr Bell appealed this decision and the Court of Appeal dismissed each of the 3 grounds and upheld the earlier decision that the Claimant was granted permission to amend its claim to include a claim for breach of warranties against the second defendant. Amongst the reasons the CoA gave, they stated that they could not rule out the possibility of Mr Bell being held liable under the contract at trial once a factual investigation had taken place and the reasons why he was not named as a contracting party becomes known. The court contended that an explanation was required as to why the share purchase agreement failed to name Mr Bell as a party to the contract.

If you are looking to sell your shares or make a purchase and you are unsure about how you are affected or what your rights may be then do contact our specialist team at Summerfield Browne Solicitors on 0800 567 7595 or email [email protected]

By sfb solicitors, Feb 6 2018 03:23PM

Strangely enough the main legal framework that governs partnerships is still encompassed in an Act of Parliament over 127 years old, namely the Partnership Act 1890 (the Act).

The definition of what it means to be “in partnership” is found at paragraph 1(1) of the Act where the Act states that a “Partnership is the relation which subsists between persons carrying on a business in common with a view of profit”. This can include relatively new businesses where two friends decide to begin importing goods and selling them for a profit (but without starting a company). The Act will also include informal business relationships for example when two individuals pool together their savings to buy a dilapidated building and with a view to redeveloping the building into flats to sell at a profit.

Many people believe that they are experienced in the ways of business and but fail to formally record a number of key details when they enter into a partnership such as:

• Who exactly they are in partnership with

• The liabilities of each respective partner

• What profit must go through the partnership accounts

• How a partner may leave the partnership and what happens to the partnership monies on dissolution

A common issue that can arise between individuals is when a new business partnership is doing well financially but the partners have not recorded in a written agreement that they are in a partnership. One partner may be under the impression that they are doing the majority of the work for the partnership and resentment can build. The problem is that without a written partnership agreement there can be a misunderstanding about how much time each partner must dedicate to the business and one partner ends up doing the majority of the work. This can be especially galling when it comes to the end of the month and the profits are split 50/50!

Setting up a partnership with a friend can be exciting but as experienced Partnership Law solicitors we can advise you on the benefits of having a well thought out Partnership agreement and let you know the risks involved before a dispute arises.

Unlike companies that have a separate legal entity the partners in an informal, unwritten partnership will generally have unlimited liability. If you are unsure of the risks involved, we can assist you in the drafting a robust partnership agreement that will give you piece of mind and put you on the path to success.

By sfb solicitors, Jan 23 2018 02:07PM

It may seem obvious but if you are to embark on the risky business of litigation, you must get the basics right. One basic requirement when going to trial is to have the evidence to prove your claim. There have been several recent cases that highlight the obvious point that if you are seeking damages, then you must have evidence to prove your loss! The Judge in the recent case of Khan v Stockton-On-Tees Borough Council [2017] UKUT 432 (LC) was particularly unimpressed by the lack of any evidence to prove the damages claim. The applicant made a claim for loss of rental income on a property that had been derelict for some time. The Judge stated:

“There is no evidence that, after a long period of the property lying empty, the claimant had decided to refurbish it and would have done so had it not been for the scheme. Secondly, the details of the claim were entirely speculative. There was no evidence in support of the rental income level (whichever it was), or choice of deduction for management costs and voids. I make no award of loss of rent in this claim.”

This problem is an issue that a litigator faces when a client, for example, gets very excited by the other party’s breach of contract and starts to see pounds signs. This will often cloud the fundamental requirement to produce sufficient evidence to prove the loss. Some litigants think that if they assert a claim that is very is enormous, that will make their opponent cave in. It may be thought that this a problem confined to unrepresented litigants, but even some lawyers get caught in the trap of starting proceedings without having any evidence of the loss being claimed.

Before stepping onto the litigation train, which only goes in one direction towards increasing costs, always ask yourself some basics questions:

1. Do you have a cause of action? (Do you have some ground in law, eg. breach of a contract, for holding the other party responsible?)

2. Do you have evidence to prove your cause of action, for example, if you are claiming damages from a builder for not completing the work to a satisfactory standard, do you have evidence that it was shoddy work?

3. Can you prove that you have suffered the losses being claim? So if you had to spend £X amount to rectify the defects in the building work, ensure you have the documentation of what the new contractors did and what you paid them.

There are many forms of evidence; it can be physical objects, documentation or the oral testimony of witnesses. Oral evidence from witness can on its own be sufficient to prove your case. However, there is a much better chance of convincing the judge to find in your favour if that oral evidence is backed by contemporaneous documents, or at least documents that were created shortly after the event. A case that rests entirely on the oral evidence will always be difficult to predict because it will be a case of who the judge prefers.

It is never wise to you play a game of hoping something will emerge during the court of the proceedings. So before litigating, always be objective and consider what actual evidence you have and what you are able to prove.

By sfb solicitors, Jan 11 2018 01:41PM

On 9 July 2017, you were driving your brother’s car, along the narrow street in front of your detached home. You were learning to drive, so you choose a very quiet and early Sunday morning for your training.

The law requires that, while training, you are provided with (i) a Provisional Driving license and (ii) a supervisor (as a driving instructor or as a family or friend with a UK/EU Driving License). So, you collect your Driving Licence and asked Mark, your US friend, and Florence, his French girlfriend to supervise you; you drove for 1-hour, meeting no one, and come back to your home, confident and relaxed.

Too relaxed, perhaps…

Consequently, while parking near your neighbour’s Jaguar, you hit its right side causing deep more paint scratches and a dented bumper. The very day you sent an email to your Insurance Company, summarizing the facts; you forgot to inform them that Florence was in the car. One month later it turned up that the Jaguar damages amounted to £20,000; your neighbour asked for compensation but you Insurance Company refused to provide indemnity.

According to the Insurance Company, you were driving your vehicle without a qualified supervising driver: Mark was provided with an International Driving Permit, which is not valid in the UK. You thought Mark could be your qualified passenger but he could not.

This means you were driving outside of the terms of your licence, so you were in breach of General Exception 1 of your policy which states “… You will not be covered for any liabilities you may have for any of the following: Any accident, injury, loss, theft or damage which happens while your car is ….driven by you if you do not hold a valid Driving Licence or are breaking the conditions of your Driving Licence”

Later you amended your statement and wrote to the Insurance Company that Florence, which owns an EU Driving License, was supervising you. Consequently, you asked the Insurance Company to revise its conclusions; so, the Company did but not as you expected.

The Insurance Company complained that you provided false information and accused you to have committed fraud, so not only denied indemnifying you but also terminated the Insurance Policy and asked you to pay £20,000 with no delay.

Could be argued that the Insurance Company has been too harsh and not totally fair in its refusal, as I will explain hereto.

The ABI (Association of British Insurers) Statement of General Insurance Practice requires firms not to repudiate a claim on the grounds: (i) of the customer's failure to disclose a material fact, if that fact was one that a customer could not reasonably be expected to disclose; or (ii) of misrepresentation, unless it is a deliberate or negligent misrepresentation of a material fact.

The same Statement also requires insurers: (i) to include clear questions on application forms about matters insurers have commonly found to be material; and (ii) not to ask questions requiring knowledge which the signatory could not reasonably be expected to possess. The insurer is entitled to forfeit these only if there is straightforward evidence of fraud.

In conclusion, in all case of innocent misrepresentation, in which you should ask a solicitor’s advice, you should have some argument against the Insurance Company which reject your indemnity request.

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