Thursday 12 – Friday 13 May 2022
The Defendants below, appeal paragraph 1 of the Order of HHJ Keyser QC (High Court, Chancery Division), dated 4 May 2021 whereby he ordered that there be judgment for the claimant against the defendants, jointly and severally, for £382,600. The appeal is against the reasoning and order following the judge’s main judgment handed down on 4 May 2021. A separate judgment dealing with outstanding consequential matters was handed down on 23 July 2021.
Brief factual background: By a share purchase agreement dated 14 October 2015 (the SPA), the claimant, MDW Holdings Limited, purchased the entire share capital of G.D. Environmental Services Limited (GDE) from the three defendants for £3,584,224. Completion of the purchase took place on the date of the SPA. MDW alleged that GDE had been systematically breaching environmental law and unlawfully avoiding the costs of environmental compliance, thereby increasing its profits to levels that would not have been achieved if it had acted lawfully; and that, in consequence, MDW paid substantially more for the shares in GDE than they were worth. There were three categories of breaches which were said to cause loss: (1) ) leachate operations, namely the discharge of treated trade effluent into the public sewer containing high levels of amonia; (2) discharge of trade effluent directly into a public sever rather than through a sewage undertaker; (3) mixing hazardous wet waste and non-hazardous dry waste. The claim was prosecuted on the basis that the material period for assessing those breaches was in the two years preceding completion of the SPA. In respect of the three categories of breach which were said to deliver loss, it was alleged that GDE had in that material period unlawfully avoided the costs of environmental compliance, thereby increasing its profits to levels that would not have been achieved if it had acted lawfully. MDW claimed against the defendants damages for breach of warranty, for misrepresentation and, against one defendant alone, for deceit. The judge found that the defendants were in breach of warranty in relation to the sale of GDE on 14 October 2015, with the relevant breaches concerning the discharge of leachate as part of its trade effluent as a result of which it was in breach.