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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bottin (International) Investments Ltd. v Venson Group Plc & Ors [2004] EWCA Civ 1368 (22 October 2004) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2004/1368.html Cite as: [2004] EWCA Civ 1368

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Peter Smith J.
HC03C01009

		Royal Courts of Justice Strand, London, WC2A 2LL
		22 October 2004

Lord Justice Peter Gibson:

1. We have before us an appeal and a cross-appeal from the order made by Peter Smith J. on 3 February 2004 in a dispute between the parties to, and arising out of, a share purchase agreement. The Claimant, Bottin (International) Investments Ltd. ("Bottin"), appeals against parts of that order, and the First Defendant, Venson Group plc ("Venson", in which term I will include the other companies in the group of companies of which it is the parent) by a Respondent's Notice, cross-appeals against another part of the order. The judge refused Bottin permission to appeal. Such permission was given by Arden L.J.

The facts

2. Bottin is an investment company owned by Dermot Desmond. His corporate investment adviser was John Bateson.
3. Venson is an English company which specialises in the outsourcing of vehicle maintenance and fleet servicing. Its most important customer from April 1999 onwards was the Metropolitan Police. In 1990 and 2000 the Second Defendant, Grant Scriven, was the Chairman and Chief Executive Officer of Venson, the Third Defendant, Clive Lawson Smith, the Deputy Chief Executive Officer and Simon Frost the Finance Director.
4. In September or October 1999 an approach was made to Bottin to invest in Venson. On 14 October Mr. Bateson met Mr. Scriven, Mr. Lawson Smith and Mr. Frost. Mr. Bateson was given a 5-year financial summary for the years 1996 to 2000. This single sheet included a forecast of pre-tax profits for the calendar years 1999 and 2000 ("the October forecast"). The summary showed that Venson had been loss-making but forecast that in 1999 it would more than double the turnover achieved for 1998 and that it would make a pre-tax profit of £1,051,000. In 2000 its turnover would go up from £11,633,000 to £21,451,000 and Venson would make a profit that year of £2,674,000. On the basis of that, Mr. Bateson valued Venson, before an investment was made in it, at between £21.7 million and £25.5 million, and so reported to Mr. Desmond on 25 October 1999, suggesting that a 25%-35% stake in Venson was available for around £10 million.
5. On 5 November 1999 Mr. Bateson was supplied with a document called the Information Memorandum containing detailed information about Venson. This included, in a section headed "Financial Performance", a statement that the budgeted profits for 2000 were forecast at £2,585,000, and this was supported by an elaborate break-down of the figures involved in reaching that figure.
6. In December 1999 Mr. Bateson carried out a due diligence exercise in respect of Venson. He was supplied with an extract from Venson's profit and loss account for 1999 showing that at 31 October 1999 profits thus far achieved totalled £566,544. This was confirmed by way of a single sheet headed "Forecast Outline for 1999" ("the December forecast") which was handed to Mr. Bateson by Venson on 8 or 9 December. This showed as the "Results to October 1999" a profit of £567,000 and forecast for November and December 1999 a profit of £170,000. The total for the year was said to be a profit of £717,000. Those figures in fact add up to £737,000. It may be that the forecast profit for the last two months should have been £150,000. Certainly under "Reconciliation" three specified one-off adjustments to the 5-year profit for 1999 of £1,051,000 contained in the October forecast were quantified which would leave a total of £711,000 as the profit for that year and that is close enough to £717,000 to suggest that £717,000 was intended to be the correct forecast for the year rather than a total £20,000 higher.
7. On 20 December 1999 Mr. Bateson was also given the management accounts for the period ended 31 October 1999. This compared the actual results achieved up to the end of October 1999 with the budgeted profit, and repeated that the actual profit thus far was £566,544.
8. Mr. Bateson sent what he called a Pre-Investment Report to Mr. Desmond, plainly relying on the December forecast and on the budgeted forecast for 2000 contained in the Information Memorandum. The reduction in the forecast profit for 1999 did not affect Mr. Bateson's valuation of Venson.
9. Bottin decided to proceed with the proposed investment. Two documents came into effect on 22 December 1999. One was the share purchase agreement ("the Agreement") entered into by Bottin (therein called "the Investor") and Venson (therein called "the Company"), Mr. Scriven and Mr. Lawson Smith. The other was a Disclosure Letter signed by or on behalf of the Defendants, receipt of which was acknowledged by Bottin.
10. By the Agreement, Bottin agreed to subscribe for one million A Preference shares in Venson for £10 million. The shares are convertible shares, and the formula for conversion into ordinary shares meant that Bottin would eventually have 28.57% of Venson's equity.
11. By cl. 3 of the Agreement, each of the Defendants (called in the Agreement "the Warrantors") gave warranties to Bottin in terms set out in Sch. 3 to the Agreement. The following provisions of cl. 3 are relevant:

"(a) Subject to the following provisions of this clause, each of the Warrantors warrants in the terms set out in Schedule 3 to the Investor …. The Warrantors acknowledge that the Investor is entering into this Agreement in reliance upon the Warranties and agree that the Investor may treat them as representations inducing them to enter into this agreement.

(b) Each of the Warranties is without prejudice to any other of them and no paragraph or sub-paragraph of Schedule 3 shall limit or govern the extent or application of any other paragraph or sub-paragraph.

(c) Each of the Warranties shall be construed as a separate and independent warranty to the intent that the Investor shall have a separate right of action in respect of each of them.

….

(g) Where any Warranty is qualified by the expression 'to the best of the knowledge, information and belief of …' or 'as far as … is aware' or any similar expression it shall be deemed to include an additional statement that it has been made after due and careful enquiry of appropriate officers, employees and such of the Company's professional advisors as the Warrantors consider appropriate in the circumstances.

(h) A Warrantor shall be liable for breach of a Warranty …. only if notice of a claim is given to him, specifying such details of the event or circumstance giving rise to such claim as are available to the Investor and estimating (if capable of estimation by the Investor) its quantum, prior to the third anniversary of Completion.

….

(j) No liability shall arise under the Warranties if and to the extent that the matter giving rise to the claim is fairly disclosed in the Disclosure Letter….

….

(o) No claim under the Warranties shall be deemed to have been made unless notice of such claim was made in writing to the Warrantors specifying such detail of the event or circumstances giving rise to such claim as are available to the Investor and an estimate (if capable of preparation by the Investor) of the total amount of the Warrantors' liabilities therefor claimed."

[The word "detail" should obviously be read as "details": see the similar wording in cl. 3(h) and the plural verb "are".]

"(p) Any claim in respect of which notice shall have been given in accordance with Clause 3(o) above shall be deemed to have been irrevocably withdrawn and lapsed (not having been previously satisfied settled or withdrawn) if proceedings in respect of such claim have not been issued and served on the Warrantors not later than the expiry of the period of 12 months after the date of such notice.

….

(u) The Investor shall upon it becoming aware of any event or matter ("the Matter") which gives rise to a claim under the Warranties give notice in writing to the Warrantors of the Matter provided that any notice pursuant to this Clause 3(u) shall not be deemed to be notice for the purposes of Clauses 3(h), …., 3(o) …."

12. Limits were imposed on the liability of the Warrantors in other paragraphs of cl. 3. The maximum aggregate liability was fixed at £10 million, Venson being solely liable up to that sum and Mr. Scriven and Mr. Lawson Smith up to lesser amounts.
13. The warranties set out in Sch. 3 were the following so far as relevant:

(1) (under para. 1(a)) to the best of the Warrantors' knowledge, all written information given to Bottin by the Warrantors or their professional advisers in the course of the negotiations leading up to the Agreement as listed in Sch. 1 to the Disclosure Letter was, at the date when given and at the date of the Agreement, true and accurate and not misleading and, so far as such information was expressed as a matter of opinion, such opinions were at those dates, truly and honestly held;

(2) (under para. 1(b)) the Budget for 2000, as set out at document 8 of Schedule 1 to the Disclosure Letter, and the Outline Strategic Plan as set out in document 7 of that Schedule, had been carefully and diligently prepared on a basis consistent with that adopted and on the same assumptions as those made in preparing Venson's accounts for 1998;

(3) (under para. 3) to the best of the Warrantors' knowledge, information, and belief the management accounts for the period ended 31 October 1999 fairly reflected the trading position of Venson for that period and were not affected by any extraordinary, exceptional or non-recurring item;

(4) (under para. 5(c)) since the date of the last accounts (31 December 1998) the business of Venson had not been materially affected by the loss of any important customer or source or by any abnormal factor not affecting similar businesses to a like extent and none of the Warrantors was aware of any facts likely to affect Venson in such manner and there had been no deterioration in either the turnover, financial or trading position of Venson;

(5) (under para. 6) all accounts, books, ledgers, financial and other records of whatsoever kind of Venson had been fully properly and accurately maintained and contained true and accurate records of all matters required to be entered therein by the Companies Act 1985 and did not contain or reflect any material inaccuracies or discrepancies and gave and reflected a true and fair view of the trading transactions and of the financial and contractual position of Venson and of its assets and liabilities;

(6) (under para. 13(a)) to the best of the knowledge, information and belief of the Warrantors, there existed no material fact or circumstance relative to the business or affairs of Venson which had, or was likely to have, a material adverse effect on the business of Venson taken as a whole and which (i) should have been but was not disclosed to Bottin, and (ii) would render any of the information given in the Disclosure Letter by or on behalf of Mr. Scriven or Mr. Lawson Smith to Bottin during the negotiations leading to the Agreement untrue or misleading; and, in the case of (i) and (ii), if disclosed would have affected or would be likely to affect the decision or intentions of a reasonable and prudent person proposing to acquire the A Preference shares; and

(7) (under para. 13 (b)) the disclosures contained in the Disclosure Letter and the details contained in the documentation comprising the Disclosure Letter were true, complete and accurate in all respects and fairly disclose every matter to which they related.

14. Cl. 8 of the Agreement gave Bottin the right to appoint an independent consultant to Venson in the event of breaches of certain provisions of the Agreement, including those relating to the provision to Bottin of financial and other information.
15. Cl. 16 (d) of the Agreement was in this form:

"The Investor acknowledges that it has not relied on any warranty, representation or information in entering into this Agreement other than as expressly set out in this Agreement. This Agreement (and the documents and other information referred to in or annexed to it) constitute the entire agreement between the Parties. No investigations made by or on behalf of the Investor in relation to any of the Group Companies shall in any way affect or be deemed to be a waiver of any of the Warranties."

16. Cl. 19 of the Agreement provided:

"Any notice, request instruction or other document to be given under this Agreement to any of the Parties by any of the others shall be in writing and delivered personally or sent by prepaid recorded delivery post to their addresses set out in this agreement. Any Party may change the address to which notices are to be sent to it by giving written notice of the change of address to the other Parties in the manner provided for in this clause for giving notice. Any notice delivered personally shall be deemed to be received when delivered and any notice sent by prepaid recorded delivery post shall be deemed received 5 business days after posting."

17. Cl. 21 of the Agreement was in this form (so far as relevant):

"This Agreement together with the Articles of Association represent the entire agreement of the Parties concerning the subject matter thereof and this Agreement supersedes all previous agreements, arrangements or understandings of the Parties in relation to the subject matter hereof …. and each of the Parties waives all rights, entitlement or claims that it may have thereunder against any of the other Parties with effect from Completion as defined in this Agreement."

18. Cl. 25 provided for any dispute or difference between the parties concerning the construction of the Agreement or the rights and liability of the parties which could not be resolved between identified agents of the Warrantors and Bottin respectively to be the subject of an ADR notice served by one party on the other "stating that in its opinion a dispute has arisen and identifying the reason" (cl. 25(a)). If the parties did not resolve the dispute themselves, it was to go to mediation, and if the dispute was not settled within 90 days from the ADR notice the parties were free to issue proceedings.
19. The Disclosure Letter stated that the warranties given in the Agreement were subject to the disclosures in that letter. General disclosure was made of (amongst other things) all matters of a factual nature in what was called the Financial Information (being the budget for 2000 and the Outline Strategic Plan for 2000 – 2004) and all matters disclosed in the management accounts for the period ended 31 October 1999 and "All matters contained in the various documents provided to [Bottin] …. a schedule of which is set out in Schedule 1 below". However the 27 documents listed in that schedule did not contain all the documents which at the date of the Disclosure Letter had been supplied by the Defendants to Bottin: they did not include the October and the December forecasts. However, they did include the management accounts for the period ended 31 October 1999 and the profit forecast for 2000.
20. After completion of the Agreement on 22 December 1999 Mr. Bateson joined the Board of Venson. On 23 March 2000 he was informed by Mr. Scriven that Venson's results would be substantially less than had been forecast. Mr. Bateson requested further information and details. Mr. Scriven on 27 March sent Mr. Bateson a memorandum explaining briefly the variances. He said that a "worse [sic] case scenario" would show a loss of £1.5 million but added that most of the items were non-recurring costs related to accounting issues. On 3 May 2000 Mr. Bateson was supplied with a written summary of what were to be said to be the results for 1999 showing a loss of £1,486,436. The constituent figures making up those results were shown compared with two other sets of figures: one headed "Forecast" and the other headed "October". The "Forecast" figures had never been produced before to Bottin and, remarkably, we were told by Mr. Glick Q.C., appearing for the Defendants, on instructions that the only document recording such "Forecast" figures for 1999 was that summary, handed over, as it was, to Mr. Bateson more than 4 months after the end of 1999. The summary showed the variation between the "Forecast" figures and what were then thought to be the actual results. The variation between the "Forecast" turnover and the actual results was £330,000; that between the "Forecast" overheads and the actual results was £1,265,000; and that between the "Forecast" profit of £550,000 and the actual loss of £1,486,436 was £2,036,000. I say "the actual loss", but we are told by Mr. Wardell Q.C., appearing for Bottin, that the audited pre-tax loss for 1999 exceeded £2.2 million so that the true variance exceeded £2.7 million.
21. On 17 April 2000 Mr. Bateson in a fax to Mr. Scriven described the then current budgeted figures for 2000 as "fiction". Instead of the forecast profit for 2000 in excess of £2.5 million, as Bottin subsequently was told, the actual results show a loss of £4 million. Not surprisingly the relationship between the parties deteriorated. Mr. Bateson sought to obtain further explanations but was not satisfied with what he was told.
22. In March 2002 Bottin attempted to serve ADR notices. Objection was taken to that service and on 10 April 2002 Venson was re-served by the notice being handed to Mr. Scriven's personal assistant. Mediation took place on 12 December 2002 but to no avail.
23. With the 3-year period under cl. 3(h) of the Agreement on the point of expiring, Bottin on 20 December 2002 attempted to serve each of Venson, Mr. Scriven and Mr. Lawson Smith personally with notices under cl. 3(o). Apart from recording that Peter Smith J. found that good service on Mr. Scriven and Mr. Lawson Smith was not effected (and that is not challenged on this appeal), I need say nothing further about the service of the notice on each of them. Personal service of the notice dated 20 December 2002 ("the December notice") on Venson was sought to be effected by the notice being left with the receptionist at Venson's registered office.
24. The December notice took the form of a 6-page letter from Bottin's solicitors. It was stated that pursuant to cl. 3(o) notice was given to the Defendants as Warrantors of Bottin's claim for breach of certain warranties. Reference was made to cl. 3 and Sch. 3 and to the contractual limits on the maximum aggregate liability and on the liability of each Warrantor. The warranties relevant to Bottin's claims were then set out largely verbatim. Paras. 9 – 17 then identified the claim in relation to each warranty. I need not cite paras. 9 and 10 relating to the warranty in para. 1(a) of Sch. 3 as the alleged breach is in respect of the December forecast, a document which is not listed in the Disclosure Letter and so is not the subject of a warranty. Mr. Wardell accepts that he cannot rely on those paragraphs. Paras. 11 – 17 of the December notice are in this form:

"11. Further or in the alternative in breach of paragraph 1(b) of schedule 3, the budget for the year ended December 2000 had not been carefully and diligently prepared but contained assumptions and forecasts and opinions as to the future prospects of the business and affairs of Venson and its subsidiaries that were unreasonable. In particular:

11.1 The budget for the year forecast a profit before tax of £2.57 million when in the event Venson and its subsidiaries sustained a loss before tax on a comparable basis of £4.02 million (a variance of £6.59 million); and

11.2 Whilst exceptional items accounted for about £3 million of this variance, a substantial proportion of the balance related to costs of sales and overhead overruns the existence of which were or should have been known by the Warrantors as at 22 December 1999.

12. Further or in the alternative, in breach of the warranty in paragraph 3 of schedule 3, the management accounts for the period ended 31 October 1999 did not fairly reflect the trading position of Venson and its subsidiaries at that time since they wrongly showed a year to date profit before tax of £587,000 when in fact a loss had been made during that period. By the date of completion, the Warrantors knew or should have known that the management accounts for the period ended 31 October 1999 gave an unrealistic view of the trading position of Venson and its subsidiaries.

13. Further or in the alternative in breach of paragraph 5(c) of schedule 3, as a result of a substantial unrecorded increase in overheads, there had been a deterioration in the financial and/or trading position of Venson and/or its subsidiaries.

14. Further or in the alternative in breach of paragraph 6 of schedule 3, the accounts, books, ledgers and financial records contained material inaccuracies and discrepancies and did not give a true and fair view of the financial position of Venson and its subsidiaries at the time of Bottin's investment.

15. In addition, in breach of paragraph 13(a) of schedule 3, the Warrantors failed to disclose to Bottin the significant divergence in the actual and forecast financial position for the year ending 31 December 1999 which information they knew or should have known and which should have been disclosed to Bottin and/or would have rendered the information in the Disclosure Letter concerning the management accounts to October 1999 and/or the forecast for the year to December 1999 and/or the budgets for 2000 untrue and misleading.

16. Further or in the alternative, in breach of paragraph 13(b) in schedule 3, the following specific disclosures made in the Disclosure Letter were untrue and misleading:

16.1 Mr. Scriven had emoluments of £250,000 plus car;

16.2 Mr. Lawson Smith had emoluments of £150,000 plus car.

17. In fact Mr. Scriven's and Mr. Lawson Smith's total emoluments substantially exceeded those disclosed."

25. Mr. Wardell accepts that he cannot rely on that part of para. 15 of the December notice which refers to the October or December forecast for 1999.
26. The December Letter then refers to breaches of other provisions of the Agreement and to Bottin's claim that they entitled it to appoint an independent consultant under cl. 8 of the Agreement. In paras. 21-23 under the heading "Loss in respect of breach of Warranty" this is said:

"21. If Bottin had been given accurate information as to the then current trading position of Venson and, in particular, as to the profitability of Venson as at 31 December 1999, it would not have invested £10 million or any other sum in Venson.

22. As a result of the breaches of warranty by the Warrantors, Bottin has suffered loss and damage in the amount of its investment of £10 million plus the value of the alternative investment opportunities lost (including interest) and the additional costs incurred.

23. Alternatively, Bottin has suffered loss and damage equivalent to the difference between the current value of its investment and the value that it would have had had there been no misrepresentation and/or breach of warranty."

The proceedings

27. Proceedings were commenced in the Chancery Division on 19 March 2003. In its Particulars of Claim Bottin claimed £10 million damages for breach of warranty. It relied on a breach of the warranty in para. 1(a) of Sch. 3 in relation to the October and December forecasts, but it also complained of breaches of the other warranties referred to in the December notice and said that if it had been given accurate information as to Venson's current trading position it would not have invested in Venson. Bottin also sought a declaration that it was entitled to appoint an independent consultant pursuant to cl. 8 of the Agreement.
28. On 20 May 2003 the Defendants served their Defence, averring that the various claims of Bottin should be struck out. On 3 June 2003 they applied for summary judgment against Bottin, alternatively for the striking out of Bottin's claims.
29. On 22 October 2003 Bottin applied (1) to add another Claimant, (2) to amend the Particulars of Claim and (3) for summary judgment on its claim for a declaration. Among the new matters sought to be introduced by the draft Amended Particulars of Claim were claims of misrepresentation and misstatement. Fraud was not then sought to be alleged.
30. On 4 November 2003 Master Moncaster ordered the trial of a preliminary issue relating to the service by Bottin of the notice under cl. 3(o) on Mr. Scriven. Bottin appealed against the order.
31. Thus Peter Smith J. had before him three matters: (1) the Defendants' application for summary judgment or striking out Bottin's claims, (2) Bottin's threefold application of 22 October 2003, of which permission to amend was the significant relief sought, and (3) the preliminary issue.
32. There was a 3-day hearing before the judge. In his reserved judgment of 3 February 2004 the judge criticised, rightly, the reliance placed by Bottin in its Particulars of Claim on the December forecast for its claim of breach of warranty. But the judge, without hearing oral evidence and although he was deciding a summary judgment/striking out application, expressed strong doubts as to Mr. Bateson's credibility and as to the bona fides of Bottin.
33. The criticism of Mr. Bateson appears to stem from his evidence that his valuation of Venson after the meeting with Venson on 14 October 1999 was based on the October forecast and that the December forecast contained information critical to Bottin's decision to invest in Venson. The judge thought these two documents too slender for the purposes of any meaningful valuation exercise. He found it surprising that Mr. Bateson did not attribute critical significance to the October management accounts. However, Mr. Bateson, who is experienced in valuing companies, made his initial valuation before the management accounts for the period ended 31 October 1999 even came into existence. They were only made available to him in December 1999. On the face of it, it was entirely credible that Mr. Bateson should value Venson on the figures obtained in the October forecast at between £21.7 million (based on a price/earnings ratio) and £25.5 million (based on a price/sales ratio). The October management accounts, purporting to show actual results to 31 October 1999, when received in December, must have lent credibility to the October forecast and the £567,000 profit achieved up to 31 October 1999 which was shown in the management accounts was repeated in the December forecast. The reduction in the forecast of the profit for 1999 was explained to Mr. Bateson by Mr. Scriven as attributable to one-off adjustments, and could reasonably be taken by Mr. Bateson to indicate that the Defendants were taking care to provide accurate figures.
34. The judge (in para. 39 of his judgment) records Mr. Bateson as saying in para. 22 of his first Witness Statement that the October forecast as well as the December forecast were the two documents critical in Mr. Bateson's thought process. In fact Mr. Bateson in that paragraph said that the Information Memorandum, containing a detailed financial forecast and budget for 2000, and the December forecast were the two documents provided to him during the due diligence exercise which contained information critical to Bottin's decision to invest in Venson. As already noted, a key ingredient in the December forecast was the profit up to 31 October 1999 appearing in the October management accounts and those accounts and the Information Memorandum were documents subject to a warranty.
35. The judge's expression of great doubts about the good faith of Bottin follows a criticism of its pleading. Inadequacies of pleading must normally be laid at the door of the lawyers rather than their client. With respect to the judge, such a comment casting aspersions on the good faith of Bottin, not after a trial but at an interlocutory stage without hearing witnesses, is not merely unnecessary but is only apt to excite a complaint of judicial unfairness, as it has done, and was inappropriate and not justified.
36. The substantive decisions reached by the judge were these. First, he dealt with service of the cl. 3(o) notices in December 2002. He found that Mr. Lawson Smith and Mr. Scriven had not been properly served, and also that the December notice was bad as failing to provide sufficient detail of the claim as required by cl. 3(o). In consequence he held that the essential prerequisites to the commencement of proceedings for breach of warranties had not been made out and that the original Particulars of Claim should accordingly be struck out in their entirety. Then he held that both the original and the draft Amended Particulars of Claim, a draft of which was before the judge, did not provide a proper pleading, especially in regard to the question of the knowledge of the Defendants, sufficient to show that the warranted documents were actionable, notwithstanding that leading counsel then appearing for the Defendants had accepted that the amendments cured the pleading defects. Next, the judge considered the misrepresentation/misstatement claim sought to be added by the draft Amended Particulars of Claim. The judge saw difficulties in the way of Bottin in relation to that claim. He then turned to cl. 16(d) and cl. 21 and the authorities in which similar clauses had been considered. He saw force in the Defendants' submission that Bottin was prevented by those clauses from making the new claim and said that Bottin's case was weak but not so fanciful as to enable the Defendant to obtain summary judgment. He pointed to the fact that disclosure had not yet taken place and said that after disclosure Bottin should be required to put in a proper pleading accompanied by an expert report and evidence. He said that Bottin's application to amend based on misrepresentation succeeded, but that that was not on the basis that the Amended Particulars of Claim were a proper pleading but that they were the best pleading that Bottin could put forward at that stage.
37. At a further hearing on 27 February the judge, we are told, gave further explanation of his judgment, although not in the form of another judgment or with reasons. He said that Bottin could not introduce a claim based on any misrepresentation which mirrored an express warranty.
38. The perfected order which the judge in fact made did not entirely reflect what the judge said in his judgment. By para. 1 certain paragraphs of the original Particulars of Claim and the Prayer relating to the breach of warranty claim were struck out although he had said that the Particulars of Claim should be struck out in their entirety. By para. 2 Bottin's applications (viz. to add a new claimant, to amend the form of the draft Amended Particulars of Claim, and for summary judgment on its claim for a declaration) were dismissed, even though the judge had said that the application to amend to plead misrepresentation had succeeded. By para. 3 Bottin's appeal from the Master's order was dismissed. The order recited that it was no longer necessary to proceed with the preliminary issue. By para. 4 Bottin was given permission to serve Amended Particulars of Claim limited to bringing proceedings against Venson in negligent misrepresentation and/or misstatement arising out of Venson's provision to Bottin of the October forecast and/or the December forecast, subject to serving the amended pleading together with all factual and expert evidence by 26 May 2004. By para. 5 disclosure, relating to what were called "Key Financial Documents" (being the October and December forecasts, the summary for 1999 handed to Mr. Bateson on 3 May 2000, the October management accounts, any management accounts for the period ended 30 November 1999 and the budget for 2000), was ordered to be given by the Defendants by 26 March 2004.
39. I have to say that the order made by the judge in relation to the misrepresentation claim is a most unusual one. The court's normal practice is not to give permission to amend without approving the actual amendment, and I have never before seen an order allowing amended pleadings to be filed after disclosure to a party but requiring evidence in support of the amendments to be filed at the same time. The judge's order in relation to the misrepresentation/misstatement claim left both sides seeking to appeal it.
40. Bottin by its Appellant's Notice challenges the conclusion reached by the judge on the inadequacy of the contents of the December Notice, on the inadequacy of the pleadings on the breach of warranty claim and on a number of aspects relating to the misrepresentation/misstatement claim including the exclusion of any claim based on warranted documents.
41. The Defendants by their Respondent's Notice cross-appeal on para. 4 of the judge's order and say that cl. 16(d) prevented Bottin from making any claim in negligent misrepresentation or misstatement based on representations or information other than as expressly set out in the Agreement. They say that cl. 16(d) created a contractual obligation on Bottin which is enforceable by them. They also say that the judge was wrong to conclude that the December notice was delivered personally to Venson.
42. Bottin lodged a further draft Amended Particulars of Claim with the court on 11 June 2004. We have not been taken to them but we understand that the amendments go beyond what had been indicated by the judge and include the addition of Mr. Frost as a further Defendant and a claim of fraud. At a Case Management Conference on 28 July 2004 the judge made the unusual order of referring to this court on this appeal the applications to amend and to join Mr. Frost without ruling himself on those applications.
43. Mr. Wardell and Mr. Glick before the start of the appeal put their heads together and sensibly concluded that whatever the outcome of the appeal, Bottin was likely to wish to reconsider how to plead its case. They helpfully joined in identifying for us the three issues which they ask us to decide in the first place and to leave, until after our decision, any question of amendment. The draft Amended Particulars of Claim put before the judge in July may, they recognise, need further amendment. The 3 issues are:

(1) Whether Bottin's claims for breach of warranty are barred by its alleged failure to comply with the notice provisions set out in the Agreement. This includes the questions of whether the notice was properly delivered to Venson and whether it contains sufficient particulars of the breaches of warranty so as to satisfy clause 3(o).

(2) If such claims are barred, whether the bar extends to claims for (non-fraudulent) misrepresentation or misstatement based on warranted matters (it being accepted by the Defendants that the bar would not extend to a claim for fraudulent misrepresentation/misstatement).

(3) Whether clause 16(d) of the Agreement operates as a matter of contract to prevent Bottin from asserting (otherwise than in a claim for fraud) that it relied in entering into the Agreement on any warranty, representation or information not expressly set out in the Agreement, or whether it can only operate as a representation capable of founding an estoppel.

(1) The breach of warranty claim

(i) Service on Venson

44. I start with the question whether the December notice was properly served on Venson in accordance with cl. 19.
45. The judge rightly held that the requirement in cl. 19 of personal delivery did not mean that Bottin personally had to effect the delivery but that the adverb "personally" qualified the delivery to the recipient of the notice. The judge said that he obtained no assistance from CPR 6.4(4), to which the Defendants had referred, providing for personal service of a document on a company by leaving it with a person holding a senior position in the company, nor from s. 725 Companies Act 1948, to which Mr. Wardell had referred, providing for service of a document by leaving it at or sending it to the company's registered office. As the judge said, neither of those provisions had been incorporated in the Agreement. But he said (in para. 77 of his judgment) that personal service on a company under cl. 19 must be effected by leaving it at the registered office of the company. He appears to have been of the view that a document is personally served on a company if the document is simply left at the registered office without any need to consider into whose hands, if any, it is delivered.
46. Mr. Glick submitted that the judge erred in that view. I agree. Cl. 19 provides for two modes of serving notices on a party: by delivery personally or by sending by prepaid recorded delivery post to the party's address set out in the Agreement. We are not concerned with sending by post. There is nothing in cl. 19 to require that the personal delivery to a party which is a company has to be at the company's registered office, still less anything to suggest that personal delivery can be effected merely by leaving the document in question somewhere in the building which is the registered office. That gives no meaning to "personally".
47. The judge went on to say that service at the registered office by leaving it with the receptionist was sufficient. Apart from the superfluous reference to the registered office, on the particular facts that conclusion is in my judgment correct. I agree with Mr. Glick when he says that personal delivery of a notice to a company is effected by delivering the notice to somebody authorised to receive it. I disagree with him when he says that the only person to have such authority is somebody in a senior position in the company. The function of a receptionist ordinarily is to receive people visiting, and letters or parcels being delivered to, the employer of the receptionist. In the present case there was in evidence the witness statement of the process server, Mr. Greenman, who delivered the December notice to the receptionist; that was accepted on the receptionist's express assurance that it would come to the attention of a director. As the judge pointed out, the Defendants did not adduce any evidence as to what happened to the December notice after it was left with the receptionist. It is to be inferred that it did come to the attention of a director. In my judgment, the December notice was delivered personally to Venson.

(ii) Contents of the notice

48. The judge thought it plain that the December notice was defective in not complying with the requirements of cl. 3(o). He set out the wording of paragraph (o), stressing the words "available" and "estimate". He gave three reasons why the notice failed: (1) it did not specify the detail of the event or circumstances then available to Bottin; (2) it did not explain how the Defendants had the requisite knowledge; and (3) no estimate had been provided. He said that it was impossible for the recipients of the notice to understand what was being said against them except in very general terms by reference to the movement between the figures in the December forecast and a loss figure of £1.4 million, the basis of which was unexplained. He emphasised the length of the period over which Bottin had been complaining and said that the summary in the December notice of Bottin's complaints made it a wholly inadequate document. He criticised para. 12 of the December notice for containing a bald assertion of knowledge and paras. 14 and 15 as containing bald assertions of breaches of the warranty in para. 3 (he meant para. 6) and para. 13(a) of Sch. 3 to the Agreement. He said that the only attempt to quantify the loss for breach of warranty was in para. 22 of the December notice and that he did not accept that as a genuine attempt at quantification because there was no evidence to show that Mr. Bateson or anybody else had gone through an exercise and arrived at that figure, and in the absence of any explanation as to how the £10 million figure was calculated the judge made the assumption that Bottin "simply put an obvious figure in". The judge rightly noted that in para. 22 there was an additional claim for the loss of investment opportunities. That was not quantified. He also rightly noted that there was no quantification of the alternative claim in para. 23 of the December notice.
49. The judge, in reaching these conclusions, made no attempt to analyse cl. 3(o) or to reflect on the commercial purpose behind it. He gave it a very literal construction. In the course of the argument before him the judge expressed the view that the notice had to be at least as detailed as the particulars of claim. Mr. Glick, in supporting the judge on this, submitted that if Bottin had details of the event or circumstances giving rise to the claim which were not set out in the notice, then (de minimis omissions apart) the notice would be bad. It would follow that because it is not necessary to plead evidence, the notice would need to be more elaborately detailed than the pleadings in the proceedings which, it was contemplated in cl. 3(p), would follow unless the claim was satisfied, settled or withdrawn, subject only to the required details being what were then available to the party making the claim. Moreover, unlike pleadings which may be further particularised as provided for in the procedural rules, the notice, on this approach, stands or falls without the opportunity to give further particulars if they were available at the time of the notice. The matter does not stop there. In subsequent proceedings, as Mr. Glick submitted, it would be open to the addressee of the notice to cross-examine the giver of the notice to ascertain whether at the time of the service of the notice further details of the event or circumstances giving rise to the claim had in fact been available such as would render the notice bad.
50. I cannot help but think that a construction of cl. 3(o) which gives rise to such consequences cannot have been the intention of these commercial parties. The purpose of cl. 3(o) is plainly to put the Warrantors on notice that a particular claim under the Warranties is being made against them. It must be in writing to avoid any dispute as to whether a claim is being made and in what terms. It is the initiating step in a process which may lead to the claim being satisfied, settled or withdrawn as contemplated by cl. 3(p), but, as is also contemplated by that paragraph, if that does not happen the claim will be followed by proceedings. It would be bizarre if the parties were contracting for greater specification of details for the preliminary notice of a claim than is required in subsequent formal proceedings under the procedural rules. The notice would be a trap into which the unwary giver of the notice could easily fall. There are two indications in the language of cl. 3(o) that the parties recognised the preliminary nature of the notice. One is the use of the words "such detail …. as are available to the Investor", which is an acknowledgement that full details may not be available, and the other is the recognition, in the words "an estimate (if capable of preparation by the Investor)", that the Investor serving the notice may not even be capable at that time of estimating the total claimed liability of the Warrantors.
51. It is important to note what it is of which the details are to be specified, viz. "of the event or circumstances giving rise to the claim". The details required are not the details of or in respect of the claim but of what has happened to cause the claim to be made. The judge nevertheless interpreted cl. 3(o) as requiring, for example, full particulars of any allegation by Bottin of knowledge on the part of the Warrantors. I do not agree. They would not be particulars of the event or circumstances giving rise to the claim. There are three other examples in cl. 3 of what is said to give rise to a breach of warranty claim. The first in cl. 3(h) simply mirrors the language of cl. 3(o) and the third in cl. 3(v), referring to "any event or matter …. which gives rise to a claim", uses similar language. But the second, cl. 3(j), shows that "the matter giving rise to the claim" may be fairly disclosed in the Warrantors' Disclosure Letter. That suggests that what is required in cl. 3(o) is identification of what it is that is claimed to be the breach of the warranty rather than the details of how Bottin seeks to establish that a warranty has been breached.
52. I accept that what is required for a notice under cl. 3(o) differs from what is required for a notice under cl. 3(u) or cl. 25(a). I also accept that a notice may be so unspecific as to fail in its purpose of notifying the recipient of what claim is being raised against him. The notice given in Senate Electrical v STC [1999] 2 Lloyds Rep 423 is an example of such failure. In that case an agreement provided for a notice to be given of a claim by a purchaser against a vendor for breach of warranty "setting out such particulars of the grounds on which such a claim is based as are then known to the Purchaser". The notice took the form of a letter in which it was only said:

"It is now clear that the Management Accounts were manifestly inaccurate and did not take into account certain matters which they should have taken into account. Further it appears that by [the date of completion] there had been a severe downturn in the trading position of the Business. The purpose of this letter is to notify you …. that a substantial claim is likely to be made against STC for breach of warranties contained in the Agreement."

May J. held that the notice requirement was satisfied. However, on STC's appeal on this point this court took a different view. Stuart-Smith L.J., giving the judgment of the court, agreed with May J. that the notice should be informative but added (in para. 91):

"Certainty is only achieved when the vendor is left in no reasonable doubt not only that a claim may be brought but of the particulars of the ground upon which the claim is to be based. The clause contemplates that the notice will be couched in terms which are sufficiently clear and unambiguous as to leave no such doubt and to leave no room for argument about the particulars of the complaint."

Those remarks were made in the context of the different wording of the agreement under consideration in that case and against the background of the wholly uninformative notice.

53. The question in the present case is whether paras. 11 – 17 and paras. 21 – 23 of the December notice satisfied the requirements of cl. 3(o) by being sufficiently informative of the claim being made against the Warrantor for breach of warranty. By reason of cl. 3(b) and (c), that requires an examination of the notice given of the claimed breach of each warranty relied on. The judge did not consider the breaches claimed in respect of all the warranties relied on.
54. As already explained, Bottin no longer relies on paras. 9 and 10 of the December notice nor on the references in para. 15 to the forecast for the year to 31 December 1999 and to that extent the notice was bad and the pleadings relating thereto in the original Particulars of Claim were correctly struck out.
55. In relation to the claim for breach of the warranty in para. 1(b) of Sch. 3, para. 11 of the December notice specifies the warranty claimed to have been breached and why that claim was made, by reference to the substantial variance between the forecast for 2000 and the actual loss and to the costs of sales and overheads overruns, the existence of which, Bottin suggests, was or should have been known to the Warrantors at the date of the Agreement. Mr. Glick submitted that insufficient particulars were thereby given, for example of which assumptions were unreasonable and what sums related to those overruns and why the Warrantors knew or should have known those matters. However, the Warrantors do not produce evidence to show that Bottin did have the further knowledge suggested by Mr. Glick. The evidence of Mr. Bateson is that he sought, but was not satisfied with, the explanations given. In my judgment this paragraph was sufficient notice of the claim in respect of that warranty. The Warrantors must have realised from para. 11 that Bottin was relying on the sheer magnitude of the variance to which it points in that paragraph as raising the case which the Warrantors would need to answer.
56. In relation to the claim for breach of the warranty in para. 3 of Sch. 3, para. 12 of the December notice specifies the warranty and asserts that the profit shown in the October management accounts did not fairly reflect the trading position of Venson because a loss had been made. Again Mr. Glick complained of the lack of particulars, especially in relation to the actual or constructive knowledge asserted, and contrasted the notice with the Amended Particulars of Claim in which by amendment additional averments of a general nature as to the knowledge of Mr. Scriven and Mr. Lawson Smith were made by way of amendment in draft paras. 25A, 25B and 29, such as by reference to their senior positions in the management of Venson and their ability in consequence to have access to relevant financial documents and information. He said that if those parts of the draft Amended Particulars of Claim had been included in the December notice, the requirements of cl. 3(o) would have been met. I cannot accept that notice of a breach of the warranty in para. 3 requires details of an allegation of knowledge. For the reasons already given, I do not think that that is necessary for a specification of the details of the event or circumstances giving rise to the claim. The Warrantors must have realised from para. 12 of the December notice that Bottin was relying on the contrast between the profits which Mr. Bateson was told were actually achieved for the period ended 31 October 1999 as shown in the October management accounts and the large loss actually incurred for 1999 as raising the case which the Warrantors would need to answer.
57. In relation to the claim for breach of the warranty in para. 5(c), the warranty is specified in para. 13 and the part of it which is alleged to be breached is identified, viz. that there had been no deterioration in the financial or trading position of Venson. Further, para. 13 gives the reason alleged by Bottin for that deterioration, viz. that there had been a substantial unrecorded increase in overheads. I do not accept Mr. Glick's submissions that Bottin must have had further information and that the notice relating to this paragraph is open to the same criticism as was made in the Senate case. More information is given than in the notice in the Senate case and the paragraph must be read in the context of the previous two paragraphs of the December notice. Nor is there any evidence that Bottin did have further information. Again, as it seems to me, the Warrantors must have been aware from para. 13 of the substance of the complaint.
58. Similar comments are appropriate to the claim for breach of the warranty in paragraph 6. The warranty is identified in para. 14 of the December notice as is the part of it claimed to be breached, viz. that the accounts, books, ledgers and financial records did not contain any material inaccuracies or discrepancies and gave a true and fair view of the trading position of Venson. Again I reject Mr. Glick's submission that this was a bare assertion of breach which was inadequate and should not have been made. Again I say that the paragraph must be read in the context of paras. 11 and 12.
59. In relation to the claim for breach of the warranty in para. 13(a), the position is complicated by the references in para. 15 of the December notice to the October and December forecasts on which Mr. Wardell accepts he cannot rely. Those references are not confined to the words "and/or the forecast for the year to December 1999" which, Mr. Wardell accepted, should be treated as deleted, because there is also an earlier reference to the "forecast financial position for the year ending 31 December 1999". Nevertheless it is apparent from the paragraph that it contains a claim that in breach of the para. 13(a) warranty the Warrantors failed to disclose information, which they knew or should have known falsified the information in the October management accounts and the budget for 2000. Read benevolently in the context of the earlier paragraphs and having regard to the commercial purpose of cl. 3(o), in my view para. 15 contains sufficient notice of that claim.
60. Finally, in relation to the claim for breach of the warranty in para. 13(b) of Sch. 3, paras. 16 and 17 of the December notice specify the warranty and identify which details in the Disclosure Letter were not true, viz. Mr. Scriven's and Mr. Lawson Smith's emoluments, and why those details were untrue and misleading, viz. that the emoluments substantially exceeded what had been disclosed. Mr. Glick submitted that at the time of the December notice Bottin had more knowledge of that claim and pointed to the further details given by Bottin in para. 32 of the Amended Particulars of Claim. Mr. Wardell accepts that Bottin did have that further knowledge, but he submits that such further specification of details was unnecessary on the true construction of cl. 3(o). I agree with Mr. Wardell. The notice sufficiently informed the Warrantors of the substance of the claim.
61. Did the December notice contain an estimate of the total amount of the Warrantors' liabilities claimed, there being no statement by Bottin that such estimate was not capable of preparation by it? I can see no justification whatever for the judge's view that the £10 million stated in para. 22 of the December notice to be the loss and damage suffered by Bottin, being the amount of its investment which it was saying was valueless, was not a genuine estimate. Cl. 3(o) does not require evidence in support of an estimate nor proof that a valuation exercise has been undertaken. It is not incredible that an investment in a company which had been loss-making prior to 1999 and which incurred increasingly substantial losses in 1999 and 2000, when substantial profits had been forecast, had turned out to be valueless in the honestly held view of a purchaser, and the judge, with respect, was in no position in the interlocutory proceedings to say otherwise.
62. Mr. Glick submitted first that an estimate of the liability for each breach of warranty was necessary. I do not agree. Cl. 3(o) specifically states that the estimate is to be of the total amount of the liabilities claimed. It is, however, clear that neither para. 21 nor para. 23 of the December notice contains any such estimate. Further, para. 22 contains no estimate of the value of the alternative investment opportunities claimed to have been lost nor of the additional costs claimed to have been incurred. However, I am not prepared to treat the references in para. 22 to these additional matters as invalidating what is, in my opinion, the clear estimate of £10 million, particularly when that sum is the maximum amount that can be recovered under cl. 3.
63. For these reasons, therefore, I conclude that the judge, with all respect to him, did err in treating the December notice as wholly bad and that, whilst paras. 9 and 10 and those parts of para. 15 which are dependent on the October or December forecast are bad, the remainder of the notice is good.

(2) Claims for misrepresentation/misstatement based on warranted matters

64. This issue turns on a short point of construction of cl.3(a) of the Agreement. Mr. Wardell points to the last sentence of the paragraph and the express acknowledgement that Bottin might treat the warranties, in reliance on which it entered into the Agreement, as representations inducing it to enter into the Agreement. He submits that the references in the Agreement to warranties, such as in the provisions requiring notice to be given of a breach of warranty and imposing time limits for giving such notice and for commencing proceedings and limiting liability for breach of warranty, have no application to a claim made by Bottin treating the warranties as representations. He drew our attention to authorities to the effect that contractual provisions which limit the right of a party to bring proceedings should be construed strictly. Accordingly, he submits, the judge was wrong to indicate that Bottin could not sue the Warrantors for misrepresentation arising out of the warranties.
65. I cannot accept Mr. Wardell's submissions on this point. To my mind it makes no commercial sense for the Agreement to impose conditions as to the giving of notice of a breach of warranty and as to the commencement of proceedings for such breach and limiting the maximum liability if Bottin was intended to be left free of those conditions and those time limits and the limits on liability by treating the same warranties as representations. Mr. Glick was, in my judgment, plainly right to submit that the obvious commercial purpose in the conditions and limits was to enable the Warrantors to know that they would not be sued on the warranties if no notice was served in time and proceedings were not brought in time and that, if they were sued, there was a quantified limit to their liability. That purpose would be frustrated if the claim for breach of warranty could be regarded as a claim in misrepresentation. The final words of cl. 3(a) would permit a claim for rescission of the Agreement. That gives sufficient effect to those words, without having to give them the meaning contended for by Mr. Wardell which flouts commercial good sense.

(3) Cl. 16(d)

66. The third issue relates to Mr. Glick's submission that the first part of cl. 16(d) should be understood not as a mere acknowledgment operating as a representation capable of founding an estoppel but as a contractual provision preventing Bottin from asserting (save in a claim for fraud) reliance on any warranty, representation or information not set out in the Agreement.
67. Mr. Glick invited us to decide this issue on this appeal, notwithstanding that, in the light of the conclusion on the first issue, the main, if not the entire, focus of the trial would be on the breach of warranty claim. If the amendment to plead fraud were allowed, to that main focus would be added the fraud claim. The issue on cl. 16(d) would only become important if both those claims failed. He asked that the issue be determined now, even though the judge had prudently taken the view that the facts need to be found first. Mr. Glick sought to say that the answer to the question raised was sufficiently clear as a matter of construction of the Agreement, read in the context of its matrix of fact. He asked this court to allow Venson to adduce in evidence a Letter of Confidentiality, which had not been put before the judge and had not been mentioned in the Respondent's Notice or skeleton argument, so that the fact of that Letter and its contents could be treated as part of that matrix. In that letter, which was Venson's document, Bottin had agreed with Venson prospectively at the start of the negotiations in October 1999 that it understood that neither Venson nor any of its representatives would make or be authorised to make any representation in respect to the accuracy of any financial information relating to the business of Venson other than as expressly set out in any agreement subsequently entered into between the parties. Mr. Glick sought to use that matrix of fact as a way of distinguishing what this court said obiter in E.A. Grimstead and Sons. Ltd. v McGarrigan, an unreported decision of 27 October 1999. In that case a share purchase agreement contained provisions not substantially different from c. 16(d) and cl. 21 of the Agreement, and Chadwick L.J. said that an acknowledgement of non-reliance in that form was capable of operating as an evidential estoppel if that was pleaded and proved. In Watford Electronics v Sanderson CFL Ltd. [2001] 1 All ER (Comm) 696 this court, with Chadwick L.J. again giving the lead judgment, approved what had been said on this point in Grimstead. I would add that although the judge said that the remarks in Watford were obiter, Mr. Glick, rightly in my opinion, did not feel able to support the judge on that.
68. The issue raised is one of some general importance, given the apparent prevalence of provisions like cl. 16(d) and 21 in purchase agreements. I do not think it appropriate for this court to determine it on this appeal in the circumstances which I have outlined in the last paragraph. No doubt Mr. Glick's wish to add the Letter of Confidentiality, not seen by the judge, to the matrix of fact correctly implies that emerging facts can affect the answer to the issue. That emphasises the fact that the whole matrix should be considered before a definitive answer is attempted. The issue should await determination by the judge at the trial in the light of all the evidence, should it then prove necessary for it to be determined.

Conclusion

69. For these reasons I would allow Bottin's appeal only to the extent indicated in para. 63 and I would dismiss Venson's cross-appeal.

Lord Justice Longmore:

70. I agree.

Mr. Justice Lindsay:

71. I also agree.
ORDER:

Appeal allowed to the extent indicated in paragraph 63 of the Judgment;

cross-appeal dismissed; the costs orders in favour of the individual defendants

made by the judge below to stand; Venson to pay 85% of the costs of Bottin in this

court; Venson to pay 50 % of the costs of Bottin below, to include all the costs

of the individual applications and orders made by the judge, including that relating

to the application for an independent consultant and the pre-action disclosure

which the judge ordered; the £175,000 the judge ordered by way of interim

payment below to be repaid with interest 1% over LIBOR

(Order does not form part of approved judgment)