Success in High Court for Augean

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12/12/2014

Walker Morris advises Augean on successful litigation

Walker Morris has advised Augean plc on its High Court success against the previous owners of HiTech Limited, a business that Augean acquired in 2008.

Augean had lodged a claim against the previous owners (“the Defendants”), in the Commercial Court of the Queen’s Bench Division, based on alleged breach of warranties contained in the sale and purchase agreement for the HiTech transaction.

The Defendants lodged a counterclaim relating to non-payment of a potential earn-out of up to £0.7million following the transfer of the business.

Judgment followed a trial which lasted almost three weeks at the High Court in London.   The previous owners have been ordered by the court to pay Augean in the region of £840,000, along with substantial interest and a proportion of its legal costs, to be assessed if not agreed.  Augean also obtained an additional sum of damages due to the Defendants’ failure to accept a Part 36 Offer made by Augean to resolve the litigation at an early stage. The counterclaim was dismissed in its entirety.

Augean was advised on the purchase of HiTech limited by John Hamer, Head of Corporate and on the litigation by Lynsey Oakdene, Director in the Commercial Dispute Resolution Team.

Commenting on the judgment John Hamer said:

“Corporate deals rarely end in litigation because we seek to ensure that issues are identified before the deal is done.  However, this case demonstrates why warranties are a crucial element of corporate acquisitions.”

Lynsey Oakdene commented

“Whilst court litigation is always the last resort, it is important for companies to take action against such breaches when required and where the sellers dispute that a reduction in price is appropriate. The Judgment shows that a strong suite of warranties and appropriate responses by the purchaser of a business are effective to adjust the value of a company to address undisclosed issues.”

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