Saxby & Ors v UDG Healthcare (UK) Holdings Ltd

In a commercial misrepresentation claim, a statement about future performance is actionable only where, in context, it conveys a representation of present fact, such as the representor’s present belief or reasonable basis for the prediction. A representation must be materially untrue when acted upon and must have caused the claimant to enter the contract. The claimant bears the burden of proving reliance, although materiality may raise an evidential inference of reliance. Fraud requires proof that the representor did not honestly believe the representation. In assessing disputed conversations after a long period, contemporaneous documents, undisputed facts and overall probabilities may carry greater weight than recollection. The claim failed because the established misrepresentations were not relied upon.

The claimants sold their shareholdings in World Events Group Ltd to the defendant under a share purchase agreement. Part of the consideration was contingent on the combined businesses achieving specified EBIT targets. The claimants alleged that statements and financial information presented before the agreement constituted fraudulent and non-fraudulent misrepresentations and negligent misstatements.

The trial concerned liability only. The court considered alleged representations about forecast net revenue, booked business, Lilly income and the achievability of the earn-out targets. The central issues were whether representations were made, whether they were false and fraudulent or negligent, and whether the claimants relied on them when entering the agreement.

1. Applicable principles. The meaning of an alleged representation is assessed objectively in context, by asking how a reasonable person in the representee’s position would have understood the words or conduct. An implied representation requires clear words or conduct. A statement about future events is ordinarily a prediction, but may contain an actionable representation of present fact concerning the representor’s present belief, intention or reasonable basis for the prediction.
2. A representation must be materially untrue when acted upon. A correction will defeat reliance only if it fairly and sufficiently brings the true position to the representee’s knowledge. Reliance is necessary. The claimant bears the legal burden, although materiality may raise an evidential inference that the representation was relied upon.
3. For fraudulent misrepresentation, the representor must not honestly believe the representation to be true and must intend the representee to act upon it. The civil standard remains the balance of probabilities. The seriousness or inherent improbability of fraud is relevant to the assessment of evidence, not to the standard of proof.
4. In resolving the disputed account of a meeting held ten years earlier, the court attached little weight to unsupported recollection and relied principally on contemporaneous documents, undisputed facts and probabilities. The court found that the presentation misrepresented: the forecast UniversalProcon net revenue for FY2011 as £11.197 million; the forecast as between £9 million and £10 million; UPUS booked business as $3.31 million; and the FY2011 Lilly budget as equal to FY2010 actual Lilly revenue. None was proved fraudulent.
5. The court rejected the allegations that the earn-out target was described as soft, easy to achieve, or a breeze. It also rejected the claimants’ wider allegations concerning the attribution of the budget bars and other matters.
6. The established misrepresentations were points of detail in a much larger presentation. The claimants did not have them in mind and were not influenced by them when entering the SPA. The necessary reliance was therefore absent. The claim was dismissed, subject to further submissions on the precise consequential order.

First-instance decision following a trial of liability issues. The judgment states that the claim was begun on 11 November 2016 and that quantum was excluded by consent order.