NF Football Investments Ltd & Anor v NFFC Group Holdings Ltd & Anor, Court of Appeal - Chancery Division, June 06, 2018, [2018] EWHC 1346 (Ch)

Resolution Date:June 06, 2018
Issuing Organization:Chancery Division
Actores:NF Football Investments Ltd & Anor v NFFC Group Holdings Ltd & Anor
 
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Neutral Citation Number: [2018] EWHC 1346 (Ch)

Case No: BL-2017-000034

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 06/06/2018

Before :

MASTER BOWLES

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Between :

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Adam Baradon and Hollie Higgins (instructed by Browne Jacobson LLP) for the Claimants

Tom Hickman (instructed by Squire Patton Boggs (UK) LLP) for the Defendants

Hearing date: 24th April 2018

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Master Bowles :

  1. By an amended Claim Form issued on 7th November 2017, the Claimants, NF Football Investments Limited (NF) and Nottingham Forest Football Club Limited (the Club), seek substantial payments from the Defendants, NFFC Group Holdings Limited (NFF) and Fawaz Al-Hasawi (Mr Al-Hasawi), arising out of a share purchase agreement, dated 12th April 2017, whereby NF purchased all the shares in the Club from NFF.

  2. There are related proceedings in this court between Mr Al-Hasawi and the Club in respect of loan payments allegedly due to Mr Al-Hasawi pursuant to a deed, described as a deed of facility and variation, entered into between, inter alios, Mr Al-Hasawi and the Club and dated 18th May 2017 (the loan proceedings). Under that deed, provisions exist allowing the Club to make set offs against the loans in respect of monies said to be due to NF under the share purchase agreement which have been duly notified to NFF pursuant to a notification procedure laid down in the share purchase agreement.

  3. At the hearing in this matter, on 24th April 2018, I indicated that I would give permission to the Club to bring a Part 20 Counterclaim against Mr Al-Hasawi and NFF and to join NF as a co-claimant in that Part 20 Counterclaim; thereby bringing all relevant parties and all relevant claims into one set of proceedings I further indicated that that Counterclaim should be in substantially the same form as the draft amended Particulars of Claim then before me and that the Claimants should serve a copy of their proposed draft Counterclaim no later than seven days prior to a case management conference to be listed before me in both Claims on 6th June 2018.

  4. In so doing, I explicitly left open to the Defendants, in these proceedings, the capacity, or entitlement, in due course, to apply to strike out certain of the matters currently pleaded in the proposed amended Particulars of Claim, including, specifically, a claim to rectify the share purchase agreement such as to provide that the rights and indemnities given to the Club under that agreement were directly enforceable by the Club and averments in the amended Particulars of Claim that certain communications between the parties had constituted appropriate notifications for purposes both of liability under the share purchase agreement and in respect of the Club's entitlement to make set offs pursuant to the deed of facility and variation.

  5. The content of the Counterclaim was also subject to my determination as to whether a claim for statutory misrepresentation (that is to say a claim for damages for misrepresentation pursuant to section 2(1) of the Misrepresentation Act 1967), contained in both the original and the proposed amendment to the Particulars of Claim, was a claim with realistic prospects of success, or whether it should be struck out, as doomed to failure, or made the subject of an order for Part 24 summary judgment in favour of NFF, by reason of the provisions of the Entire Agreement clause set out in paragraph 12 of the share purchase agreement. This judgment relates to that question.

  6. The misrepresentation alleged, as set out in paragraphs 48 to 50 of the proposed amended Particulars of Claim, was said to be contained in a spreadsheet lodged in the virtual data room created by NFF in order to enable NF to carry out its due diligence in relation to its intended purchase of the shares in the Club pursuant to the share purchase agreement. That spreadsheet purported to identify the liabilities of the Club, as defined in the share purchase agreement, as at 31st December 2016 (referred to in the share purchase agreement as the Liability Statement Date), as being £6,566, 213.66. NF's case is that, as at that date, the true liabilities of the Club, as defined in the share purchase agreement, were, in fact, £10,363,395 and, therefore, that the spreadsheet, upon which it claims to have relied in entering into the share purchase agreement, misrepresented the liabilities of the Club by an amount of £3,767,706, resulting in a recoverable loss to NF in that amount.

  7. NFF's answer to this claim, other than a denial of the facts, is that the share purchase agreement provides a contractual procedure, or scheme, for dealing with any misrepresentations as to the extent of the Club's liabilities at the material date, that the Entire Agreement clause has to be read in that context and that, construed in that...

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