This case provides another example of the Courts rejecting a claim under a share purchase agreement by following the strict terms of notice provisions agreed between sophisticated parties. In it, the Court of Appeal considered whether the agreed procedural requirements had been complied with in relation to a claim for a breach of tax warranties contained in the share purchase agreement.

The case relates to the acquisition of a target company by the purchaser in November 2013. The SPA stated that "No seller shall be liable for any claim unless" the purchaser gave notice to the sellers of such claim "setting out reasonable details of the claim (including the grounds on which it is based …)" by 31 July 2015. Prior to that date, the purchaser sent two letters to the sellers stating that certain tax liabilities had been identified in respect of which it reserved its right to make a claim but without specific detail of which provisions of the SPA the claim related to. In August 2015, the purchaser issued proceedings claiming damages for the breach of tax warranties in relation to those tax liabilities. However, when the proceedings were heard, the High Court found in favour of the sellers and struck out the claims on the basis that the purchaser had failed to provide a sufficiently detailed notice of the claim within the relevant time limits.   

The Court of Appeal has now agreed with the High Court and found in favour of the sellers on the basis that the purchaser had failed to specifically identify the tax warranties which they considered had been breached. In order to comply with the terms of the SPA, the purchaser was required to set out the grounds of the claim, which required explicit reference to particular warranties or other provisions (although the judge did note that there may be exceptional circumstances, which did not apply to this case, where reference to specific warranties would not be required).

This case highlights once again the importance of complying strictly with the notice provisions in legal agreements. Where a party is required to give notice under a legal instrument, such notice should be as clear and specific as possible and claimants should err on the side of giving more rather than less information than might be required.