IFE Fund SA v Goldman Sachs International
2007
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
- LORD JUSTICE WALLER
Areas of Law
- Banking and Finance Law
- Commercial Law
- Contract Law
- Tort Law
- Conflict of Laws
2007
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
AI Generated Summary
The Court of Appeal dismissed IFE’s appeal from Toulson J’s judgment rejecting their claim against Goldman Sachs International (GSI), the arranger and underwriter of Autodis SA’s syndicated financing for acquiring Finelist plc. IFE invested EUR 20 million on 30 May 2000 relying on the SIM and two pre-acquisition Arthur Andersen reports. GSI later received two Arthur Andersen updates (19 and 26 May 2000) which, according to the trial judge, suggested possible material inaccuracies in prior information. IFE alleged implied representations and a duty to disclose the later reports, and challenged a clause 16.4 covenant not to sue in a Bondholders’ Agreement under French law. The Court held the SIM’s Important Notice confined implied representations to good faith, imposed no duty to verify or update, and negated any duty of care absent assumption of responsibility. It further upheld the validity of clause 16.4, finding IFE had essential knowledge for waiver and that a unilateral reservation letter could not vary the agreement.
Judgement
Lord Justice Waller :
Introduction
This is an appeal from a judgment of Toulson J (as he then was) by which he dismissed a claim for damages by the appellants (IFE), based on an alleged failure by the respondents (GSI) as arrangers and underwriters of a syndicated loan to disclose to them information, obtained after the Syndication Information Memorandum (SIM) had been sent out, but before IFE completed their purchase of bonds from GSI.
The Facts
There is on the appeal no challenge to the judge’s findings of fact and the full history can be found in his judgment. For the purposes of the appeal the basic facts can be described fairly shortly. GSI were the underwriters of credit facilities made available to Autodis SA (Autodis). They were also the arranger for syndication of an intermediate tier of credit provided to Autodis for its purchase of shares in a UK listed company, Finelist plc (Finelist). GSI produced a SIM subject to certain standard wording which was distributed on or about 30 March 2000 to possible participants including IFE. The expectation was that all participants and GSI would finally commit themselves during April 2000, but in fact GSI committed themselves as underwriters on 27 April 2000 and there was some delay before other participants committed themselves.
IFE invested Euros 20 million purchasing bonds and warrants issued by Autodis from GSI on 30 May 2000 in reliance on the information in the SIM and on two reports from Arthur Andersen relating to Finelist dated 21 December 1999 and 11 February 2000 which, although they were sent separately, later it is common ground can be treated as if incorporated in the SIM.
Between the sending out of the SIM and 30 May GSI received other information from Arthur Andersen by what are described as reports dated 19 and 26 May 2000. Those reports, on the findings of the judge, disclosed information which showed “that the statements about Finelist’s financial performance in the SIM and Arthur Andersen’s pre-acquisition reports were or might have been incorrect in [a] material way” [ see paragraph 77 of the judgment].
In September 2000 following discovery of accounting frauds committed by the management of Finelist a receiver was appointed over Finelist. The appointment occurring so soon after May 2000, IFE were concerned as to whether they had received all relevant information, and during their inquiries discovered in January 2001 that Arthur Andersen had produced a report to GSI