Curtis & Anor v Lockheed Martin UK Holdings Ltd

Fair disclosure under a share sale agreement is assessed objectively and in context. A purchaser need not be sent on a paper chase through complex documents. Contractual provisions prescribing the form of disclosure normally establish minimum requirements and do not displace the overriding obligation of fairness. A warranty claim notification clause requires sufficient detail to identify the relevant matter, the warranty said to be breached and the basis of the claim. A general reference to litigation and possible costs is insufficient where the alleged breach can be identified with precision. Damages for breach of information warranties are ordinarily assessed by the contractual measure of loss, rather than by assuming that the shares became valueless or that an indemnity would necessarily have been obtained.

The claimants sold the entire issued share capital of Stasys Limited to Lockheed Martin under a share sale agreement. Part of the consideration was retained in a holdback account. Lockheed Martin withheld the balance after Stasys became involved in Italian proceedings concerning the Pubcys project and served a notification alleging breaches of several warranties.

The issues were whether the Pubcys material had been fairly disclosed, whether the notification complied with the agreement’s time-bar provision, and whether any loss had been established. The claimants sought payment of the retained consideration and Lockheed Martin counterclaimed for breach of warranty.

1. Fair disclosure. The obligation under clause 6.3 was to be assessed objectively and in its commercial context. The second and third sentences of the clause prescribed minimum documentary requirements; they did not limit the overriding obligation that disclosure must otherwise be fair. The relevant position was the position known at the date of the agreement, not the later development of the Italian proceedings.
2. The correspondence and explanations supplied about the Pubcys project constituted full and fair disclosure for warranties 7.1 and 19. The omission of one email and of an annex to the Development Agreement was immaterial. The Exploitation Agreement was, however, a material document and its omission breached warranty 7.5.
3. Notification. The notification clause required reasonable detail of the specific matter or claim. The letter referred generally to the Pubcys agreement, possible costs and breaches of several warranties. It did not identify the Exploitation Agreement or link its non-disclosure to warranty 7.5. It therefore failed to comply with the contractual condition before the expiry of the notification period. The later letter was sufficient but out of time.
4. Loss. The existence of the Italian proceedings did not establish that the shares were valueless or had fallen to a particular value. Nor was it shown that disclosure would probably have produced an indemnity. The counterclaim therefore failed, and the claimants were entitled to judgment for the retained consideration.

First-instance judgment in the High Court (Commercial Court). The judgment records no prior appellate decision.