Keller (Samuel) (Holdings) Ltd v Martins Bank Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,LORD JUSTICE EDMUND DAVIES,LORD JUSTICE CROSS |
| Judgment Date | 29 July 1970 |
| Judgment citation (vLex) | [1970] EWCA Civ J0729-5 |
| Date | 29 July 1970 |
| Court | Court of Appeal (Civil Division) |
[1970] EWCA Civ J0729-5
Lord Justice Russell
Lord Justice Edmund Davies
Lord Justice Cross
In The Supreme Court of Judicature
Court of Appeal
On Appeal from an Order of Mr Justice Megarry
MR JOKATHAN PARKER (instructed by Messrs Gibson & Weldon, Agents for Messrs William Attwood & Son, Cradley Heath, Woros.) appeared on behalf of the Appellant (Applicant).
MR STANLEY BRODIE (instructed by Messrs Alan George & Sacker, Agents for Messrs Maurice Putsman & Co.,Birmingham) appeared on behalf of the Respondent (First Plaintiff).
MR SIMON GOLDELATT (instructed by Messrs Compkins & Co., Birmingham) appeared on behalf of the Respondent (Claimant).
We need not trouble you, Mr Brodie.
The claimant company (which I will call "Lawton") in January, 1967, brought from the Plaintiff (Keller) all the issued shares of two companies, A. Seazell & Company and Harris Metal Wares, Limited, the price agreed being £77,220. The contract provided that Keller would lend Lawton £31,000 on a third mortgage on a factory belonging to Lawton on completion - a trans action commonly described as leaving part of the purchase price on mortgage. The mortgage was in a fairly common form and it provided, in accordance with the terms of the sale and purchase contract, for repayment in three instalments of £10,000, £10,000 and £11,000 on the 23th January, 1966, 1969 and 1970 with interest at the rate of 9% per annum.
There was failure on the part of Lawton to pay the 1968 instalment or any interest and as a result, on the 30th January, 1966, Keller issued a writ in the Birmingham District Registry against Lawton suing for £10,000, the first instalment, and a sum of some £1,600-odd net interest up to the 28th January, 1968.
The contract for the sale and purchase of the shares contains a number of conditions and warranties which are conveniently set out in the Defence and Counterclaim in the Birmingham action.
Clause 1(b)(12): "that all information supplied with regard to assets, liabilities and trading of Seazell and Harris was true and correct in every respect and that there had been disclosed in writing prior to the signing of the share Contract such facts, information and matters as were material or proper for disclosure to an intending purchaser of the shares and rights attaching" — that is, in effect, a condition or warranty by the vendor that there had been full and accurate disclosure to the purchaser of the shares of all relevant matters.
Clause 1(B)(25): A warranty by Keller "that neither Harris nor Seazell had since 30th June 1966 incurred anyliabilities otherwise than in the ordinary course of carrying on their business".
Clause 1(B)(25): "that to the best of the Plaintiffs' knowledge and belief no litigation was threatened or pending with respect to either company".
Clause 1(B)(23); "that since" the last balance sheet date "the assets of each company had not been depleted by subsequent losses in the course of trade or business".
Clause 1(B)(29): "that all debts due to either company would be paid in the ordinary course of business".
In that action Keller sought judgment under Order 14; but Lawton successfully resisted that, and got unconditional leave to defend and counterclaim on the ground that they had a substantial counterclaim for unliquidated damages for breach by Keller of the warranties and conditions to which I have referred, which damages, it is said, would or might exceed even the whole sum secured by the mortgage let alone the first instalment which was sued for under the writ.
The granting of the unconditional leave to defend in that case seems to me to be in accordance with the case to which our attention was drawn. Accordingly, Lawton delivered a defence and counterclaim on the 19th April, 1968, and a reply was subsequently delivered denying any claim. I need not go in any way into the details of the alleged claim for unliquidated damages for breach of conditions and warranties: but, for example, it was said that one of the two companies whose shares had been bought by Lawton was already in serious trouble in that one of its main customers was cutting down on its orders and ultimately put an end to...
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