Starbev Gp Ltd v Interbrew Central European Holdings BV
2014
COMMERCIAL COURT
United Kingdom
CORAM
- MR JUSTICE BLAIR
Areas of Law
- Contract Law
- Corporate Law
2014
COMMERCIAL COURT
United Kingdom
CORAM
AI Generated Summary
The case concerns a dispute arising from the sale of a brewing business by ICEH to Starbev, involving complexities around deferred considerations under a CVR. Key issues included the proper construction of the Investment Amount, alleged estoppel over its interpretation, anti-avoidance provisions regarding transaction structuring, and the applicable threshold for payments. The court held that the correct Investment Amount is €717,489,388.03 and found no estoppel. It also held that the transaction structuring had the purpose of avoiding payments to ABI, and future payments must be assessed based on the threshold at the time of their receipt.
Judgment
Mr Justice Blair :
The court has now to give rulings consequential on the judgment in this case, which is set out at [2014] EWHC 1311 (Comm) . I need not recapitulate the facts which are set out there. To avoid cluttering the text, where appropriate I have set out the references to the judgment in footnotes. The issues I have to decide are as follows.
(1) Breach of warranty point
This has to do with Issue 3 of the four issues I decided at trial. This claim is pleaded on both sides as a claim for declaratory relief. Prior to oral closing arguments, I asked both parties to submit the text of the declarations they were seeking, which they did. I found in favour of ICEH on Issue 3, which is the anti-avoidance issue, and concluded that ICEH is entitled to the declarations which it seeks in that respect.
Starbev argues that to give effect to the court’s judgment, the declaration should read differently. In essence, it argues that the amount deemed to be an Equity Return on 18 June 2012 should be limited to exclude potential breach of warranty claims together with the upside on the Note linked to the Molson Coors share price. According to Starbev’s calculations submitted at this hearing, this potentially has a significant effect, reducing the amount due from about €129m to about €74m.
The factual basis of Starbev’s contention was not explored at trial, but is relatively straightforward. Its skeleton argument refers to section 8 of the Note, sections 22.3 and 7.9 of the Share Purchase Agreement, and sections 3 and 16.2 of the Management Warranty Deed. The latter agreement was not in the trial bundles, but was produced for this hearing.
Starbev says that:
the effect of those provisions is that it was agreed between Starbev and Molson Coors that:
Starbev’s aggregate liability for Claims under the Share Purchase Agreement was limited to €100m (save for breach of clauses 5.13 or 7.7), and Starbev’s aggregate liability in respect of all Deed Claims was, under the Management Warranty Deed, limited to €50m.
Molson Coors was thus entitled to withhold the total amount of €150m in respect of warranty claims.
Further, the warranty claim period under both the Share Purchase Agreement and the Management Warranty Deed did not expire until 16 March 2013 (after the Investment Threshold stepped up in December 2012), and no amounts could become payable to Starbev under the Note before this date.
Given the terms of the judgment, Starbev’s case is that the Note