4 Eng Ltd v Harper & Simpson [2007] EWHC 1568 (Ch); [2008] EWHC 915 (Ch), [2008] All ER (D) 400

Fraud - Misrepresentation

Ian Smith acted for the Claimant at both hearings.

Alan Gourgey QC acted for the Claimant on the summary judgment application.

C was, in the words of Lord Denning, ‘sold a pup'. The business it bought had been built on corrupt practices perpetrated on its major customer a fact concealed by the Defendant-sellers of the business. C claimed deceit, breach of S 2(1) Misrepresentation Act 1967 and breach of contract in respect of the fraudulent representations and warranties from Ds. The Court awarded C damages of in excess of £8 million.

The case was unusual and of note for two reasons:

  1. In an attempt to strike out C's contract and S 2(1) claims (but not the fraud claims), the Ds had sought to rely on a (typical) limitation clause in the contract, to the effect that C was obliged to provide ‘written particulars' of any claim within 2 years of the sale of the business. The Court (Mr Justice Briggs) refused, for the purposes of strike out (and indicating that if it were necessary he would decide the same at trial), to allow the Defendants to rely on this limitation clause stating that a limitation clause of this kind was not ‘applicable to warranties fraudulently given in circumstances where the truth and thereby the breach of warranty is deliberately concealed'. The Court relied upon the decision of the Court of Appeal in Granville Oil v Davies Turner [2003] EWCA Civ 570.
  2. The majority of the damages awarded to C by the Court (Mr Justice David Richards) were for its lost opportunity to invest in a business other than that which had bought from the Ds. C showed that but for Ds false representations it would have invested in an alternative business worth many millions of pounds both in lost revenue and capital value. C proved its loss by reference to the actual profits and value of the alternative business it would have acquired. The case has applied and illustrates the potential of East v Maurer [1991] 1 WLR 461.