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IVY Technology Ltd v Mr Barry Martin

Judgment Cited authorities 84 Cited in 7 Precedent Map Related
Vincent
JurisdictionEngland & Wales
JudgeMr Justice Henshaw
Judgment Date20 May 2022
Neutral Citation[2022] EWHC 1218 (Comm)
Docket NumberCase No: CL-2019-000477
CourtQueen's Bench Division (Commercial Court)
Categories
Between:
IVY Technology Limited
Claimant
and
(1) Mr Barry Martin
(2) Mr Paul Bell
Defendants

[2022] EWHC 1218 (Comm)

Before:

THE HONOURABLE Mr Justice Henshaw

Case No: CL-2019-000477

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Rolls Building, Fetter Lane,

London, EC4A 1NL

Edward Levey QC and Nick Daly (instructed by Malvern Law Ltd) for the Claimant

The First Defendant acting in person

Adam Solomon QC and David Lascelles (instructed by Hill Dickinson LLP) for the Second Defendant

Hearing dates: 6–20 December 2021, 10 January 2022 Draft judgment circulated to the parties: 9 May 2022

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Henshaw

(A) INTRODUCTION

5

(B) PROCEDURAL BACKGROUND

6

(C) WITNESSES

7

(1) Claimant's witnesses of fact

7

(2) First Defendant's witnesses of fact

8

(3) Second Defendant's witnesses of fact

8

(4) Experts

8

(D) FACTS

9

(1) 666Bet and investigations against Mr Bell

9

(2) Establishment of 21Bet

9

(3) Involvement of Simplify

10

(4) 21Bet's financial difficulties and the Viktra liquidation

11

(5) Initial negotiations with Ivy/Tabella

18

(6) Initial Ivy offers

21

(7) Due diligence questionnaire

24

(8) August 2018 negotiations

26

(9) Ivy's 27 August 2018 revised offer

34

(10) Prague Meeting 1 October 2018

39

(11) Aftermath of the Prague Meeting

53

(12) Draft information memorandum

54

(13) Alan Spence

54

(14) Early November 2018 negotiations

57

(15) Late November/December 2018 meetings

59

(16) 21Bet's financial difficulties in late 2018

59

(17) January 2019 – March 2019 negotiations

61

(18) Pre-sale discussions between Mr Martin and Mr Bell in early 2019

61

(19) Finalisation of the sale and terms of the SPA

62

(20) Division of the sale proceeds

66

(21) Mr Bell's role in relation to the sale of the business

67

(22) Post-sale events

80

(23) 21Bet's actual financial position

84

(a) Experts' reports

84

(b) Liquidation of Viktra

85

(c) Aureate's financial statements

86

(d) Cash injections

87

(e) Cross-examination of Mr Davidson

87

(f) Contemporaneous emails

91

(g) Evidence of Mr Bell

92

(h) Evidence of Mr Martin

93

(i) Conclusion

96

(24) Premier Punt and the Incentive licence

96

(E) DECEIT

104

(1) Introduction

104

(2) Principles

106

(i) Deceit: general requirements

106

(ii) Existence of an agency relationship

113

(iii) Liability of a principal for representations by his or her agent

117

(iv) Contractual liability of principal not named in contract

137

(3) Application

142

(i) Representations made

142

(a) EBITDA Representation

142

(b) Profitability/Sustainability Representation

146

(c) Prague Representations

148

(d) Duration of representations

150

(ii) Falsity

156

(iii) Mental element

156

(iv) Intended inducement

157

(v) Actual inducement

157

(vi) Agency: liability under the SPA

163

(vii) Agency: authority to make representations

169

(4) Loss and damage

170

(i) Principles

171

(ii) Application

171

(5) Deceit: conclusions

174

(F) CLAIMS UNDER THE SPA

174

(1) Introduction

174

(2) Whether Ivy can claim against Mr Bell under the SPA

174

(3) Breach of warranty claims

174

(4) Breach of non-compete covenant claims

178

(i) Principles

178

(ii) Application

179

(5) Loss and damage

184

(i) Breach of warranty

184

(ii) Breach of non-compete covenant

188

(6) Claims under the SPA: conclusions

189

(G) UNLAWFUL MEANS CONSPIRACY

189

(1) Introduction

189

(2) Principles

190

(i) Combination

190

(ii) Intention

191

(iii) Knowledge

191

(iv) Unlawful means

191

(3) Application

192

(i) Conspiracy to make fraudulent representations

192

(ii) Conspiracy to breach non-compete covenant

193

(4) Loss and damage

195

(i) Principles

195

(ii) Application

196

(5) Conspiracy claims: conclusions

196

(H) OVERALL CONCLUSIONS

196

(A) INTRODUCTION

1

This judgment follows the trial of the Claimant's (“ Ivy”)'s claims against the First and Second Defendants (“ Mr Martin” and “ Mr Bell” respectively) for (i) fraudulent misrepresentation, (ii) breach of warranty, (iii) breach of covenant and (iv) unlawful means conspiracy.

2

With the exception of the breach of covenant claim (in respect of which it is alleged that Mr Bell is liable in conspiracy only), Ivy seeks to establish primary liability on the part of both Mr Martin and Mr Bell for each of the causes of action. Ivy relies inter alia on the allegation that Mr Martin was acting as Mr Bell's agent at material times.

3

The claims relate to the purchase by Ivy of 21Bet, an online gambling business (“ the Business”) made up of various corporate entities:

i) Aureate Gaming Solutions Limited (“ Aureate”), incorporated in Malta;

ii) City Support Services Limited (“ City Support”), incorporated in the UK;

iii) Alibaba Services Limited (“ Alibaba”), incorporated in Bulgaria;

iv) Viktra Limited (“ Viktra Belize”), incorporated in Belize, and

v) Tristate Solutions Limited (“ Tristate”), incorporated in Montenegro.

The purchase took place by a sale and purchase agreement dated 4 April 2019 (“ the SPA”).

4

Ivy is part of the Tabella group, which is based in Prague and runs an online betting business.

5

Mr Martin is a businessman with experience in the gambling sector. Mr Martin was a signatory to the SPA and was defined in the SPA as the “ Shareholder” of the companies sold thereunder. Mr Martin negotiated the sale with Ivy between May 2018 and the execution of the SPA in April 2019. Prior to the execution of the SPA, Mr Martin was the beneficial owner of 50% of the shares sold thereunder (“ the Shares”).

6

Mr Bell is a wealthy businessman and investor. Mr Bell had previously worked with Mr Martin in relation to other business ventures including 666Bet, a gambling business which was liquidated in 2015 after accumulating substantial debts. Mr Martin and Mr Bell set up 21Bet in 2016 after Mr Martin approached Mr Bell with the idea and Mr Bell facilitated an initial payment (described as a loan) of £1 million for the purpose. It is common ground that Mr Bell beneficially owned 50% of the shares in the companies comprising the 21Bet business.

7

Mr Bell was not named on the face of the SPA. Mr Bell said in his first witness statement that Mr Martin “ kept [him] up-to-date on the sale of the Business to [Ivy] at a high level” and that “ as a 50% shareholder, [he] expected to receive [his] share of the balance of the sale proceeds”. Mr Bell attended one meeting with representatives of Ivy in Prague in early October 2018 (“ the Prague Meeting”) but did not otherwise communicate directly with them during the negotiation of the SPA.

(B) PROCEDURAL BACKGROUND

8

By a claim form dated 31 July 2019, Ivy claimed against Mr Martin for fraudulent misrepresentation, breach of warranty and breach of a ‘non-compete’ restrictive covenant under the SPA. It claimed against Mr Bell for the torts of unlawful means conspiracy and inducing breach of contract. Ivy also claimed against AXL Media Limited (“ AXL”), a separate company owned by Mr Martin's daughter, on the basis that it was involved in procuring the breach of the restrictive covenant and/or had conspired to use unlawful means to cause Ivy damage.

9

This matter first came before the court in the context of an application for a freezing order. That order was granted by Knowles J on 29 July 2019, with the result that Mr Martin and Mr Bell (along with AXL) were prohibited from removing from the jurisdiction or disposing of assets up to the value of £4 million. I discharged the freezing order insofar as concerned Mr Bell on the return date, 26 September 2019. In my judgment ( [2019] EWHC 2510 (Comm)), I explained that I did not consider that Ivy had provided solid evidence of a risk of dissipation of assets by Mr Bell such as to justify the continuation of the freezing order against him.

10

On 11 November 2019, Ivy applied for permission to amend the claim form and Particulars of Claim to allege that: (i) the SPA was made by Mr Martin on his own behalf and on behalf of Mr Bell, so that Mr Bell was also liable to pay damages for breach and to repay sums paid under the SPA; and (ii) the warranties contained in the agreement were relied on as and were intended to be representations by Mr Martin on his own behalf and/or as agent on behalf of Mr Bell.

11

The amendment application came before the court on 17 January 2020. In his judgment ( [2020] EWHC 94 (Comm)) and order dated 28 January 2021, Teare J granted permission for the first amendment. He refused permission for the second on the basis that he had no reason for thinking that such a case would succeed against Mr Bell.

12

Mr Bell appealed against Teare J's order granting permission for the first amendment. Mr Bell advanced three grounds of appeal: (i) that the express terms of the SPA excluded any liability of Mr Bell; (ii) that Ivy and Mr Martin expressly contracted in the SPA on the basis that Mr Martin was the sole beneficial owner of the Shares, and therefore that Ivy was estopped from contending to the contrary; and (iii) that Ivy irrevocably elected to bring its claim for breach of the SPA against Mr Martin, to the exclusion of Mr Bell, when it commenced the proceedings.

13

Judgment was given by the Court of Appeal on 19 November 2020 ( ...

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