Scottish Court of Session Decisions

[1] The defenders were prior to October 1999 the owners in equal shares of the whole share capital of Teelux Ltd, a company incorporated under the Companies Acts and having its registered office at an address in Bonnybridge ("the Company"). By an agreement in writing dated 29 October 1999 ("the Agreement") the pursuers (therein referred to as "the Purchaser") agreed to purchase and the defenders (therein referred to as "the Vendors") to sell all the defenders' shares. In Part IV of the Schedule to the Agreement there was set out a series of statements ("the Warranties"). Clause 6 of the Agreement provided:-

Clause 4.5 provided for the payment by the Purchaser at Completion (on 29 October 1999) of the consideration for the shares. A Disclosure Letter, to the terms of which I shall return, was delivered by the defenders and accepted by the pursuers prior to the execution of the Agreement.

[2] In this commercial action the pursuers seek payment from the defenders of various sums to which they maintain they are entitled under clause 6.2. The case was sent to debate for argument on certain questions of interpretation of the Agreement, the answers to which, it was hoped, would determine the appropriate scope of further inquiry into the facts. The issues fall under two broad heads, the first concerning the consequences of certain capital commitments made by the Company shortly before Completion and the second concerning certain debts owed to the Company but which were not recovered within certain periods referred to in the Agreement.

[3] Paragraph 4.1 of Part IV of the Schedule provided:-

The "Accounting Date" (at which certain audited accounts were drawn) was 30 June 1999.

[4] In September 1999, it is averred, the Company entered into a hire purchase agreement in respect of what is described on the relative agreement with the supplier as "2 x Citroen Berlingo Van". Prior to 12 October 1999, it is averred, the Company entered into a separate arrangement for the acquisition of a Peugeot Boxer diesel van. This latter transaction was originally envisaged as being financed by a hire purchase agreement and a leasing agreement but those arrangements were not completed. In the event the Company became liable under a purchase contract for the price of that vehicle, the relative invoice being dated 12 October. It is not disputed that these two arrangements constituted capital expenditure or capital commitments within the meaning of Warranty 4.1. The pursuers assess the liability of the Company arising from the Citroen transaction at £9,959.53. The purchase price of the Peugeot was £18,848.99. These sums are claimed by the pursuers against the defenders under clause 6.2.

[5] In respect of the two Citroen vehicles, the defenders maintain that there was due disclosure in the Disclosure Letter. Paragraph 8 of that letter stated:-

The defenders maintain that the two Citroens fell within the description "All cars". I have serious doubts whether, as a matter of modern linguistic usage, "cars" would readily embrace those vehicles. The description "van" suggests a type of road vehicle, usually with an enclosed rear section, designed primarily for the carriage of goods; the description "car" suggests a road vehicle designed primarily for the carriage of persons. However, Mr Upton for the defenders maintained that the design of modern vehicles was such as to render the distinction less than sharp and submitted that the defenders should be afforded the opportunity of proving that the design of the Citroens in question was such as to bring them within the category of "cars" as disclosed. With some hesitation, and subject to production in early course of supporting documentary material, I am prepared to allow them to do so.

[6] In respect of the Peugeot van the defenders contend that, in determining any amount payable under clause 6.2(a), it is necessary to bring into account a figure representing the value and benefit to the Company of its having acquired that vehicle. The pursuers dispute that contention. They rely in that respect on the Warranty specified in paragraph 7.2 of Part IV of the Schedule. It is in the following terms:-

The pursuers do not assert that there was a breach of Warranty 7.2 but argue that, in determining the amount payable by reason of breach of Warranty 4.1, is it to be assumed that all other Warranties, including that specified in paragraph 7.2, had been complied with.

[7] It is not, in my view, possible to give a definitive ruling on this issue at this stage; but certain observations may assist. The general purpose of clause 6.2 of the Agreement is, in my view, clear. It is to compensate the Purchaser for any loss or damage sustained by it by reason of breach of warranty. The reference in clause 6.2(b) to "any other loss or damage suffered by it" confirms that purpose. Calculation of the relevant amount involves a comparison being made between the position as it is found to exist (the actual position) and the position which would have existed had there been compliance (the hypothetical position). The hypothetical position posits "the Warranty in question" being true and accurate and not misleading or "the matter or thing which occurred" not having occurred. These expressions take one back to the phrase "any of the Warranties" in the opening part of the clause. They are also reflected in the definite article appearing before "Warranty" and "matter or thing" in paragraph (b). It is natural and appropriate that, where a breach of warranty is found to have occurred, the measure of the amount payable to the Purchaser by way of compensation should be determined by a comparison between the actual and the hypothetical positions relative to that warranty. But it may be necessary, in determining the appropriate amount payable under clause 6.2, to take into account the position in relation to other warranties. If, for example, a single loss had occurred but it could be said to have flowed from breach of more than one warranty, it would be inappropriate to take each separately and assume for the purpose of each exercise that the other warranty had been complied with; this would be likely to lead to over-compensation. It would also be inappropriate, in determining the amount due for breach of a particular warranty, to ignore its potential interrelationship with other warranties. It may be that in certain circumstances some breach of warranty resulting in loss and damage has (undoubtedly) occurred but which particular warranty is to be regarded as having been breached may turn on the approach taken to the relevant facts.

[8] Warranty 7.2 (although its grammar is somewhat odd) appears to be concerned with the sufficiency, as at the date of the Agreement, of the assets owned or held by the Company for the purpose of the continuation of its business as then carried on. If an asset were acquired shortly before that date which, if it had not been acquired, would have rendered the total assets insufficient for continuing the business as at the Agreement date, any capital expenditure or commitment incurred in respect of such acquisition (and not disclosed in the Disclosure Letter) would without modification, in my view, represent the proper measure of compensation under clause 6.2. If, on the other hand, an asset had been then acquired which, while appropriate for the Company's business, could properly be said not to be necessary for the continuation of the business as at the Agreement date, any benefit to the Company (as at the Agreement date) by reason of it having acquired such an asset would, in my view, fall to be taken into account in determining the amount payable under clause 6.2 in respect of the undisclosed capital expenditure or commitment. That is because in these circumstances the net amount would truly represent the amount necessary to put the Company into the hypothetical position. Any amount due in respect of the Peugeot van cannot be determined until the facts relevant to those matters have been ascertained.

[9] A further issue touching on the interrelationship of the Warranties arises with respect to expenditure averred to have been incurred on the installation of a Paint Extraction System. The background, as averred, is as follows. On 30 July 1999 an inspector, acting under powers conferred by the Health and Safety at Work Etc. Act 1974, served on the Company an improvement notice requiring that certain steps be taken by 25 August in relation to spray painting arrangements at the Company's premises. The period for compliance was subsequently extended. On 5 October the Company entered into a contract with an engineering company for the installation of a Paint Extraction System to satisfy the improvement notice. The system was installed on 26 October. The contract price was £6,340. The pursuers claim this amount under clause 6.2 in respect of an undisclosed capital expenditure in breach of Warranty 4.1. They maintain under reference to Warranty 7.2 that that system was necessary for the continuation of the business of the Company. They also maintain that the system was required in order to comply with a statutory obligation and referr to Warranty 5.9 which is in the following terms:-

[10] In my view the pursuers' pleadings are relevant to instruct a liability in the defenders for the cost of installation of the Paint Extraction System. The improvement notice was served under section 21 of the 1974 Act which empowers an inspector to take such action if he "is of the opinion that a person- (a) is contravening one or more of the relevant statutory provisions ...". The relevant statutory provision referred to in the improvement notice was regulation 10(2) of the Highly Flammable Liquids and Liquefied Petroleum Gases Regulations 1972. It is not suggested that any appeal was taken by the Company under section 24 of the Act in respect of that notice. Prima facie, accordingly, the Company acknowledged that it was at the time when the notice was served contravening the relevant regulation and put in place expenditure to obviate continuing contravention. That was apparently effected shortly before the Agreement date. There is force in Mr Upton's submission that, as at the Agreement date, there was not "any act or thing the commission or omission of which is or could be in contravention of any ... regulation ... giving rise to any fine [etc.]" within the meaning of Warranty 5.9.1; by that date the contravention had, it seems, been cured. But Warranty 5.9.2 is in more general terms. By it there is warranted that "[the] Company has conducted and is conducting ... its business in all respects in accordance with all applicable laws and regulations". That imports past compliant conduct as well as such conduct as at the Agreement date. While as at the Agreement date the Company may have been conducting its business compliantly, on the averments it had not been doing so over a period shortly earlier and had since the Accounting Date incurred relevant capital expenditure in order to render itself thereafter compliant. That, in my view, is a class of expenditure which, if not duly disclosed, is prima facie recoverable in full for breach of warranty. It is not expenditure of a kind in respect of which the Company can readily be thought of as receiving in exchange any corresponding economic benefit. Moreover, in the absence of the incurring of such expenditure, it would appear at least likely that the assets of the Company would not have been in such a condition as to be sufficient for the continuation of its business as carried out at the Agreement date. Prima facie Warranty 7.2 is, accordingly, also relevant.

[11] Mr Upton further submitted that, if the pursuers' argument on the interpretation of clause 6.2 (as read with the Warranties relied on) was correct, that clause was unenforceable because it required payment of a penalty that necessarily bore no relationship to the actual loss to the Company nor to any want of consideration in the hands of the pursuers. He cited in that connection Chitty on Contracts (28^th Edition) para 27-103, including the classic summation by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] A.C. 79 at pp 86-8. Mr Cormack for the pursuers submitted that, on an interpretation and application of the provisions, no over-compensation arose. In any event, it was insufficient to render clause 6.2 a penalty that its application in some circumstances might result in recovery of more than the actual loss. He cited Philips Hong King Ltd v The Attorney General of Hong Kong [1993] 61 B.L.R. 41, especially at pp 55-9.

[12] I do not regard it as appropriate to express any concluded view at this stage on these submissions. That is best done when the issues of interpretation have been resolved against the relevant facts. I observe only that, if clause 6.2 is to be struck down as a penalty clause, it will require to be struck down in all its applications. Prima facie that is a substantial hurdle for the defenders to surmount. Even if in a number of applications the provision would result in a larger sum being recovered by the injured party than his actual loss, that of itself will normally be insufficient to establish that the provision is objectively penal (see advice as given by Lord Wolffe at pp 58-9).

[13] It is convenient at this point to discuss a subsidiary issue relating to the Citroen vehicles. The defenders aver that in November 1999 the first defender spoke with a director of the pursuers and offered to return those vehicles to the supplier and to arrange for the Company to be relieved of any further obligations in respect of them. That offer was not taken up. Any subsequent burden to the Company has, the defenders aver, accordingly been caused or in any event materially contributed to by the pursuers' unreasonable refusal to accept that offer. Mr Cormack submitted that these averments were irrelevant and should be excluded from probation. The parties, he argued, had by clause 6.2 provided contractually a procedure whereby the damage arising from a breach of warranty was to be made good, namely, by payment of a sum of money arrived at by applying that clause; it was irrelevant for the defenders to aver that there was an alternative (albeit less expensive) solution to remedying that damage. In any event, the offer made did not truly provide an alternative solution because, while relieving the Company of the financial obligations to the supplier it also deprived the Company of the possession and use of the vehicles. For the reasons advanced by the pursuers in response to the defenders' contention (in relation to the Peugeot van) that the benefit of the possession and use of the vehicle fell to be taken into account, the offer if accepted would not have put the Company in the position it would have been in by the application of clause 6.2. The defenders, it appeared, were not now contending that such benefit should be taken into account in relation to the Citroen vans. If that were so, they could not properly maintain that the Company's refusal to accept the offer constituted a failure to mitigate its loss. Mr Upton in response submitted that these averments remained relevant for inquiry. Mitigation of loss applied equally to a claim for payment under clause 6.2 as it did to a claim for damages for breach of warranty. The clause provided for calculation of the payment, by comparing what had happened with what would have happened had there been no breach, in the same way as damages would fall to be calculated at common law; this included rules on mitigation of loss. It was not readily to be supposed that a contractual provision had excluded a common law right. Reference was made to Mars Pension Trustees Ltd v County Properties & Developments Ltd 2000 S.L.T. 581, especially per Lord Prosser at pp 588K-L and 589J-K. The issue of mitigation remained relevant in so far as the pursuers relied in this regard on Warranty 5.16.2(j) which provided that the "Company is not party to any contract, transaction, arrangement or liability which ... is a contract for hire or rent, hire purchase or purchase by way of credit sale or periodical payment". If the pursuers had unreasonably declined to accept an offer which would have relieved them of the financial obligations under the hire purchase contract, they had failed to mitigate their loss.

[14] In my view it is not appropriate at this stage to reach a concluded view on this issue. In relation to the Citroen vehicles the pursuers rely on breaches both of Warranty 5.16.2(j) and Warranty 7.2 (the latter discussed above in the context of the Peugeot van). If the pursuers establish that the Citroen vehicles were as at the Agreement date assets necessary for the continuation of the business of the Company as then carried on, the offer to relieve it of the financial obligations under the hire purchase contract but at the same time also of the vehicles themselves may well not have been one which the Company ought reasonably to have entertained. On the other hand, if breach of Warranty 7.2 is not made out, an issue of mitigation may well arise. In these circumstances I prefer not at this stage to express any concluded view on the more general question as to whether rules devised in the context of claims in damages apply equally to contractual provisions for payment such as clause 6.2.

[15] The second broad head of the discussion largely concerned the interpretation and application of Warranty 9.6. It provides as follows:-

The twelve week period referred to in Warranty 9.6.2 expired on 21 January 2000. The pursuers aver that as at that date certain debts remained unrecovered by the Company. The total averred to have been due as at Completion but remaining unrecovered by the Company as at 21 January exceeds £300,000. The pursuers' claim under clause 6.2(a) payment from the defenders of that total.

[16] Mr Upton submitted that the pursuers' claim was irrelevant. It was perilled on the proposition that "recoverable" meant "recovered". That proposition was unsound. "Recoverable" meant "capable of being recovered", such as by reason of the insolvency of the debtor or the existence of a good defence or contra-claim to the claim of debt. The defenders, on a sound construction of the provisions, had not warranted that debts due at Completion would in fact be recovered by the Company, now under the control of the Purchaser. The circumstance that a debt had not been recovered might be attributable to the attitude adopted by the Company towards the debtor. The expression "in the ordinary course of business" might involve more than the Company simply waiting to see whether a debt came in without effort on its part. It would be necessary to analyse the debts into (1) those which in fact had been recovered by 21 January, (2) those which as at that date had not been recovered but remained recoverable and (3) those which as at that date were irrecoverable. The defenders were liable only for category (3). The ordinary meaning of "recoverable" supported the defenders' construction. Reference was made to the Oxford English Dictionary and, by way of illustration, to sections 22 and 38 of the Rent Act 1968. Mr Upton also cited Gloag on Contract (2^nd Edition) at p 399 and Chitty on Contracts (28^th Edition) at paras 12-045, -049 and -050. Moreover, business common sense supported the defenders' interpretation. The commercial purpose of this provision was to provide, in effect, a warranty of the solvency of the Company's debtors, not a guarantee that a debt would in fact be recovered within the twelve week period whatever the action or inaction of the Company in the meantime. Reference was made to principle of construction (5) as enunciated by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 W.L.R. 896 at p 913. Moreover, in Warranty 9.6.1 the word "irrecoverable" plainly meant "not capable of being recovered" (or "not reasonably capable of being recovered"). It would be extraordinary if in those circumstances "recoverable" in Warranty 9.6.2 meant anything other than "capable of being recovered" (or "reasonably capable of being recovered"). Reference was made to Smith v Lindsay & Kirk 2000 S.L.T. 287, especially per Lord President Rodger at p 290C-D.

[17] Mr Cormack accepted that the pursuers' primary contention (and that reflected in their present averments) was that it was sufficient to found a claim for breach of Warranty 9.6.2 that amounts due from debtors at Completion had not been recovered within the twelve week period expiring on 21 January; the effect of such non-recovery was that the Vendors were liable under clause 6.2 in an amount equivalent to the unrecovered amount. If, however, the Court were against the pursuers on that primary contention, Mr Cormack indicated that he would in that event propose an amendment modifying their position on this warranty. Mr Cormack further accepted that the ordinary meaning of "recoverable" was "capable of being recovered" and that if Warranty 9.6.2 had referred simply to "recoverable ... in the ordinary course of business", it would have been necessary for the pursuers to establish what had happened in that course of business, including any steps taken by way of debt recovery. However, there was an important disjunction in Warranty 9.6.2 between "in the ordinary course of business" and "in any event not later than twelve weeks after Completion". The latter amounted to an unqualified representation that the Company would have recovered the debts by not later than the expiry of that period - and that irrespective of consideration of any steps taken in the ordinary course of business. Mr Cormack referred in this connection to Warranties and Indemnities on Share and Asset Sales (4^th Edition) by Neil Sinclair, in which at pp 183-4 a very similarly worded clause is discussed. The author there states:-

The author gives certain advice as regards additional provisions which might serve better to protect the position of warrantors. Mr Cormack submitted that a guarantee of outstanding debts made commercial sense in circumstances where the purchase price had been struck on the basis that due payment of outstanding debts owed to the Company would be made by the debtors. If necessary, evidence of that contractual matrix might require to be introduced. If the defenders' contention was correct, he argued, the Vendors would escape responsibility for a debt which happened, due to the particular circumstances of the debtor, at some point within the twelve weeks, to be recoverable but otherwise was not recoverable and was in the event not recovered. That would not make business sense.

[18] I have found the interpretation of Warranty 9.6.2 to be not without difficulty. It is, however, necessary to construe that specific warranty in the context of Warranty 9.6 read as a whole. The opening words of Warranty 9.6.1 provide that:-

That constitutes, in relation to past events, a representation that no amount entered in the books as owing by any debtors is, in accordance with the Company's terms and conditions, overdue for payment by more than twelve weeks. Warranty 9.6.2 then deals with events at and after Completion. A further reference to a twelve week period there occurs. It again provides a terminus in respect of amounts overdue for payment by debtors. Although the language used is not particularly happy, I have come to the view that that part of Warranty 9.6.2 constitutes in effect a parallel representation that debts due to the Company at Completion will be paid to it not later than twelve weeks thereafter. In the context of warranty 9.6 read as a whole, this part does not, in my view, call for an evaluation, as at the expiry of the period, of whether or not a debt or debts is or are then capable of being recovered. That is, it is not a warranty as to the quality of the debts as at the expiry of that period. It envisages that something will have occurred by the expiry of that period, namely, recovery of these debts. This construction may involve construing "recoverable" in Warranty 9.6.2 (at least in so far as referable to the twelve week period) as other than strictly the antonym of "irrecoverable" in Warranty 9.6.1. But "irrecoverable" is used in the latter with reference to the past or the present while "recoverable" is used in the former with reference to the future and envisages some result as having been achieved by a particular time. This construction may involve some extension of the ordinary use of the word "recoverable" but the suffix "able" appended to a verb is not necessarily restricted to the primary sense of "capable of"; it is not uncommonly used to denote "liable to" or "bound to" (as in "accountable" or "answerable"). In some such extended use is "recoverable" used in the context of Warranty 9.6.2. The use of "recoverable" rather than "recovered" does, however, in my view, render breach of the warranty open to rebuttal by the demonstration by the Vendors of circumstances precluding the Purchaser relying on this provision. Such circumstances might include a waiver by the Company of a relevant debt or a moratorium, general or specific, granted by it to its debtors. I do not exclude the possibility that other action (or possibly even inaction) on the part of the Company might preclude it from relying on this warranty. But these are matters for the defenders to raise after making appropriate enquiry of the relevant debtors (who have all been identified and with whom the Company under their ownership had until Completion business dealings). The fact that such matters are possible does not render the pursuers' averments irrelevant, the non-recovery in fact (which will itself, if disputed, require to be proved by the pursuers) being prima facie evidence, in my view, of breach.

[19] I should add that the defenders accept that the Company will have a liability to account to the defenders for any debts unrecovered as at 21 January 2000 but in the event subsequently recovered. This does not, however, affect the proper construction of Warranty 9.6.

[20] A number of subsidiary points were argued in relation to the warranty in respect of debts. The defenders aver that "on 21 January 2000 of the debts listed by the pursuers only about £10,000 were not recoverable". That averments was attacked as to its relevancy and specification. Mr Upton offered, if appropriate, to give further specification of the debts there referred to. If, however, as appears, "not recoverable" in the averments means "not as at 21 January capable of being recovered (or not reasonably capable of being recovered)", then the averment is, on the basis of my interpretation of Warranty 9.6.2, irrelevant and further specification will not save it.

[21] The defenders further aver that a proportion (amounting in total to about £18,000) of the debts referred to by the pursuers were not "amounts due ... as at Completion" within the meaning of Warranty 9.6.2 and accordingly were not warranted. The ground for that contention is that for the purposes of the "Completion Accounts" they were deemed to be irrecoverable or were subject to credits due to the relative debtor. Mr Cormack submitted that these averments were irrelevant in the absence of any statement that those debts had been disclosed in the Disclosure Letter. The Completion Accounts (defined in clause 1.1 of the Agreement and prepared and agreed under clause 5 after Completion) were intended to express retrospectively a true and fair view of the Company's financial position as at Completion and that in light of accounts prepared on the basis of investigations made thereafter. If such provision or reserve had not been disclosed in the Disclosure Letter, then it fell to be ignored for the purposes of Warranty 9.6.2. Mr Upton submitted that there was nothing in Warranty 9.6.2 to the effect that a relevant provision or reserve was restricted to one referred to in the Disclosure Letter. The amounts due from debtors at Completion were the amounts shown in the Completion Accounts made up as at that date following a joint exercise by the parties.

[22] In my view Mr Cormack's argument on this aspect is to be preferred. The Completion Accounts were prepared in accordance with the Agreement after Completion and following a bilateral exercise of investigation of the Company's finances. Warranty 9.6.2 was, in my view, designed to protect the Purchaser against non-recovery of debts in fact due as at Completion. The Vendors' responsibility in a question with the Purchaser for those debts was, however, subject to such provision or reserve against non-recovery as had been disclosed to the Purchaser at or prior to Completion (and against which, no doubt, the purchase price was fixed). Such disclosure might have appeared on the face of the Accounts (i.e. the audited accounts of the Company as at 30 June 1999) or might have been disclosed in the Disclosure Letter. But the appropriate making of a provision or reserve against recovery discovered by the Purchaser only subsequently to Completion gave it no protection against non-recovery of such doubtful debts. The amount truly due from a debtor as at Completion was unaffected by whether or not a provision or reserve was made against recovery of it or any part of it; but the qualification of the Vendors' responsibility for such debts applied only to the extent that a provision or reserve had by Completion been disclosed.

[23] The defenders further question whether the amount of money necessary to put the Company into the position which would have existed had the various warranties been accurate may not depend on inter alia the extent to which the Company's actual liability to tax is now less than it otherwise would have been. They do so by making certain calls on the pursuers. In argument Mr Upton cited Levison v Farin [1978] 2 All.E.R. 1149, especially per Gibson J. at p 1159g. He also referred to Walker on Damages at p 118. Mr Cormack submitted that this line of defence was irrelevant because the defenders did not offer to prove that the Company's liability to tax was now or would be less than it would have been. The onus was on the defenders (Levison v Farin, per Gibson J. at p 1161). Moreover, it could not immediately be ascertained whether the Company's tax liability was or would be reduced. The parties, he argued, cannot have had in mind that such matters would be taken into account; clause 6.2 provided for payment "on demand". A reduction for tax would be appropriate only if the defenders were able to establish that some particular amount would, had any related warranty been true, have been brought into charge to tax - and that only if they additionally demonstrated that the amount to be paid to the pursuers under clause 6.2 would not itself be subject to tax.

[24] In Levison v Farin the plaintiffs were found liable to the defendants in a counterclaim by reason of breach of warranty in a share purchase agreement, that breach having had an adverse affect on the net asset value of the acquired company. By the time the action came on for trial a subsidiary of that company had traded profitably and the defendants had been in a position to cause part of the reduced asset value to be set off as a trading loss against the profits subsequently earned. Gibson J. held that the quantum of the defendants' claim for breach of warranty fell to be reduced by the tax saved on the subsequent profits. Applying dicta from the speech of Viscount Haldane LC in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London [1912] A.C. 673, he held that the tax benefit received by the defendants satisfied the relevant requirements in that:

Gibson J. also held that the tax benefit did not fall to be disregarded as being too remote.

[25] In the present case it is as yet unclear whether any tax benefit will accrue to the pursuers and, if so, its extent. Mr Upton accepted that the onus of establishing any such advantage rested on the defenders. In my view the defenders are entitled to an opportunity of establishing that if they can. I note, however, that in Levison v Farin sufficient time had passed between the share acquisition and the trial for it to be demonstrable that the tax benefit had actually been realised. I reserve my view as to the appropriate treatment when a tax benefit has not at the time of judicial decision actually been realised. However, I do not consider that the circumstance that clause 6.2 provides for payment "on demand" indicates that the parties must have intended that any tax benefit accruing subsequent to Completion was necessarily to be disregarded in computing any amounts due under that clause. Subject to a prima facie basis with appropriate specification being given by the defenders, the issue of any tax benefit may be relevant for inquiry.

[26] Certain potentially complex issues concerning recovery of debts delayed by the absence of relative fiscal documentation were by agreement deferred due to the absence of sufficient time for discussion. In light of my decision on the principal issue relative to debts these issues may or may not still be live.

[27] In the whole circumstances I shall now put the case out By Order for consideration of further procedure against the views expressed by me above.