IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(HIS HONOUR JUDGE COWELL)
B e f o r e :
LORD JUSTICE TUCKEY
LORD JUSTICE SEDLEY
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MISS M KENNEDY-MCGREGOR (instructed by Messrs Georgiou Nicholas, London WC1N 2BY) appeared on behalf of the Respondent
(AS APPROVED BY THE COURT)
Crown Copyright ©
"the value of the net assets (including but not limited to the Leasehold Property) of the Company as at 31 January 1998 as set out in the Completion Statement;"
"The determination of the Adjusted Net Asset Value ... as stated in the Completion Statement shall be final and binding on the Purchaser and the Vendor in the absence of manifest error."
The agreement required Rosewild to pay £275,000 into an escrow account on 3rd February 1998. The balance, if any, of the adjusted net asset value was to be paid after production of the completion statement.
"I refer to our telephone conversation earlier today and would confirm the following-
1. The completion statement prepared by Chantry Vellacott is agreed.
2. Arrangements have been made to remit a further sum of £70,902 to the Escrow account [and then details of where that was are given].
3. The Escrow account is to be closed and the capital sums of £275,000 and £70,902 together with interest on the account [be] paid to Denware.
4. The further amount of £32,809 will be paid to Denware Limited upon agreement by the Inland Revenue of the tax computations of Handella Limited to 31st January 1998 and repayment of corporation tax recoverable based thereon has been received."
"Please signify your agreement to the above by signing and returning a copy of this letter by fax."
That is what Mr Vazanias did, signing under the words "agreed for and on behalf of Rosewild Limited". Rosewild subsequently paid the £70,902 in accordance with the terms of this letter.
"because, as he understood it, in some way his signature was needed if anything was to be recovered from the Inland Revenue ..."
"The amounts now due from debtors will be recoverable in full in the ordinary course of business, and in any event not later than twelve weeks from the date of this Agreement."
As a matter of construction it seems to me that this is referring to trade debtors. The words "now due" and "in the ordinary course of business" support this construction. But more importantly, this warranty cannot be used to restrict or alter the unqualified meaning of "asset" in the main part of the agreement. Warranties are the machinery by which purchasers in contracts such as this obtain relief from the primary obligations in the agreement. They are not intended to alter those primary obligations.
"I reject the argument that the inclusion of this item was not a manifest error within the meaning of clause 8.3. It simply did not fit the mechanics of the agreement. I have in mind the provision about payment within twelve weeks."
With respect, I think he was wrong about this, although I suspect he might not have reached this conclusion if he had not been so certain about whether the refund was an asset for the purposes of the agreement. If, as I think, the £32,809 was due under the sale and purchase agreement, it was due under that agreement upon receipt of the completion statement.
ORDER: Appeal allowed with costs here and below; permission to appeal to the House of Lords refused.
(Order not part of approved judgment)