Tactus Holdings Limited v Philip Mark Jordan & Ors

On an application for reverse summary judgment, the court must assess the claimant’s real prospects of success and should determine documentary issues which can properly be resolved without a trial. A mini-trial is impermissible, but complexity alone does not justify refusing summary judgment.

Representations must be construed objectively and cumulatively, having regard to the full documentary context. An opinion may carry an implied representation of a reasonable basis in an appropriate case, but such implications require clear words or conduct and should not be readily inferred. A qualification that the buyer must form its own view may materially limit the representation.

The claimant acquired Box Holdings (BHAM) Ltd from the first to fifth defendants. It later alleged that the management accounts and related disclosures misrepresented the stock provision and other accounting matters.

The defendants applied for reverse summary judgment or strike out. The claims comprised breach of warranty, deceit, unlawful means conspiracy, procuring breach of contract and unlawful interference with contractual relations. The central issues were whether the alleged representations were arguable, whether they were arguably false or dishonest, whether the associated tort claims could stand, and whether the residual warranty allegations were adequately particularised.

1. Application of summary judgment principles. The court applied the established approach to summary judgment. It was inappropriate to conduct a mini-trial, but the court had a duty to decide documentary questions where the claimant had no real prospect of success. Written representations could therefore be construed at this stage where no further factual matrix or evidence could affect their meaning.
2. Warranty claim. The warranty that the management accounts had been prepared on a basis consistent with the previous accounting year was at least arguably false. The 2021 stock provision had been brought forward arbitrarily rather than calculated using the prior methodology. The disclosure letter did not clearly and sufficiently disclose that distinction. The warranty claim concerning the stock provision therefore remained arguable.
3. Deceit. Representations had to be assessed cumulatively. The communications did not arguably represent that the 2020 provision was arbitrary or that the 2021 provision had been calculated consistently with it. The sellers did represent that they honestly believed the provision sufficient, but there was no arguable basis that they lacked that honest belief. Any implied representation of an objectively reasonable or legitimate basis was too vague and was contradicted by the references to gut feeling and the qualification that the buyer would form its own view.
4. Consequential claims and residual allegations. The conspiracy, procuring breach and unlawful interference claims depended on knowingly false representations and therefore were not arguable. The residual warranty allegations were inadequately particularised, but fairness required an opportunity to amend rather than immediate strike out.

Reverse summary judgment was granted on the deceit, unlawful means conspiracy, procuring breach of contract and unlawful interference claims. It was refused on the stock-provision warranty claim. Consideration of the residual allegations was adjourned pending proper particularisation and consequential directions.