To prepare for this unit you should:
1. Read Chapters 2, 13 (excluding. 13.17), 14 (paras 14.49, 14.61,
14.73-74), 15 (paras 15.04-05 including fig. 15.1), 16, 22 (paras
22.01-07, 22.10-13 and 22.15), 23 (paras 23.01-07), 24 and 25 of
The Jackson ADR Handbook.
2. Civil Procedure Rules 62.2-62.4 and 62.8 in Section 2E of Volume 2
of The White Book
3. The commentary on section 9 of the Arbitration Act 1996 at para 2E-
107 (first three sub-paragraphs ending “…secondary nature of the
claim against the guarantor”), 2E-111 (first two sub-paras to “…
only conditionally on their stay application failing”), 2E-112 (first
sub-para to “The standard of proof if the balance of probabilities”) of
Vol 2 of The White Book
4. Read the Gero Trains brief
TASK 1
1. Identify the features of the different forms of dispute resolution including their
respective advantages and disadvantages;
2. Identify the power of the court to order ADR;
3. Appreciate that the parties to a dispute will have differing needs and desires
and that there may be common ground between the parties which could form
the basis of settlement.
,1. early 2021,
- Gero Trains was exploring the possibility of introducing high-speed bullet
trains onto rail routes into London.
- At that time, Rapidlinc was developing electromagnetic technology with a
view to producing a prototype bullet train.
2. late 2021
the Claimant entered into negotiations with the Defendants for the purchase
of the entire share capital of Rapidlinc
3. 1 July 2022
they entered into an agreement to purchase the shares for £10,000,000
4. Prior to completion of the Agreement
the Defendants provided financial statements for Rapidlinc dated 29
December 2021 (“the Accounts”). The Defendants also provided a disclosure
letter (“the Letter”).
Claim
5. damages for breach of contract - Defendants have breached clause 9.1.1 of
the Agreement:
(i) the Accounts contained a list of the debts owed to Rapidlinc, the
largest of which was a debt of £1,000,000 owed by Rail España SA.
(ii) September 2022,
Gero Trains discovered that Rail España SA had been put into
liquidation
(iii) Defendants had not indicated at any time during the negotiations that
the debt would have to be written off.
, (iv) Claimant has discovered e-mails amongst Rapidlinc’s documents
which show that Mr Witika and Mr Taro were aware of Rail España’s
financial difficulties before the Agreement was completed.
(v) Defendants warranted that the amounts due from debtors would be
recoverable in full within 12 weeks of the agreement, namely by 24
September 2022. Clearly the debt from Rail España was not
recoverable within this time.
(vi) Defendants warranted that none of the debts identified in the accounts
were unrecoverable and that any bad or doubtful debts had been
disclosed to the Claimant. The Defendants failed to disclose in the
Letter or at all that the Rail España debt was a bad or doubtful debt.
(vii) The Defendants warranted that there had been no material adverse
change in the overall net asset value of Rapidlinc between the date of
the Balance Sheet and completion of the agreement. The Defendants
knew before completion that the Balance Sheet should be adjusted to
reflect the bad debt, but they did not disclose this to the Claimant.
(viii) 13 January 2023
Rapidlinc had to abort its development of the bullet train following
scientific research which revealed that the electromagnetic fields
generated by the technology affected fertility in both sexes. The
cessation of the bullet train project has caused the following losses:
(a) In the Accounts, the research and development costs ascribed to
the development of the bullet train were identified as £1,000,000.
This sum has now, in accordance with standard accounting
practices, been written off.
(b) When valuing Rapidlinc, the Claimant calculated the goodwill it was
prepared to associate with the bullet train at £2,000,000. Since the
project has had to be aborted, the value of Rapidlinc has been
diminished by this sum
1. Read Chapters 2, 13 (excluding. 13.17), 14 (paras 14.49, 14.61,
14.73-74), 15 (paras 15.04-05 including fig. 15.1), 16, 22 (paras
22.01-07, 22.10-13 and 22.15), 23 (paras 23.01-07), 24 and 25 of
The Jackson ADR Handbook.
2. Civil Procedure Rules 62.2-62.4 and 62.8 in Section 2E of Volume 2
of The White Book
3. The commentary on section 9 of the Arbitration Act 1996 at para 2E-
107 (first three sub-paragraphs ending “…secondary nature of the
claim against the guarantor”), 2E-111 (first two sub-paras to “…
only conditionally on their stay application failing”), 2E-112 (first
sub-para to “The standard of proof if the balance of probabilities”) of
Vol 2 of The White Book
4. Read the Gero Trains brief
TASK 1
1. Identify the features of the different forms of dispute resolution including their
respective advantages and disadvantages;
2. Identify the power of the court to order ADR;
3. Appreciate that the parties to a dispute will have differing needs and desires
and that there may be common ground between the parties which could form
the basis of settlement.
,1. early 2021,
- Gero Trains was exploring the possibility of introducing high-speed bullet
trains onto rail routes into London.
- At that time, Rapidlinc was developing electromagnetic technology with a
view to producing a prototype bullet train.
2. late 2021
the Claimant entered into negotiations with the Defendants for the purchase
of the entire share capital of Rapidlinc
3. 1 July 2022
they entered into an agreement to purchase the shares for £10,000,000
4. Prior to completion of the Agreement
the Defendants provided financial statements for Rapidlinc dated 29
December 2021 (“the Accounts”). The Defendants also provided a disclosure
letter (“the Letter”).
Claim
5. damages for breach of contract - Defendants have breached clause 9.1.1 of
the Agreement:
(i) the Accounts contained a list of the debts owed to Rapidlinc, the
largest of which was a debt of £1,000,000 owed by Rail España SA.
(ii) September 2022,
Gero Trains discovered that Rail España SA had been put into
liquidation
(iii) Defendants had not indicated at any time during the negotiations that
the debt would have to be written off.
, (iv) Claimant has discovered e-mails amongst Rapidlinc’s documents
which show that Mr Witika and Mr Taro were aware of Rail España’s
financial difficulties before the Agreement was completed.
(v) Defendants warranted that the amounts due from debtors would be
recoverable in full within 12 weeks of the agreement, namely by 24
September 2022. Clearly the debt from Rail España was not
recoverable within this time.
(vi) Defendants warranted that none of the debts identified in the accounts
were unrecoverable and that any bad or doubtful debts had been
disclosed to the Claimant. The Defendants failed to disclose in the
Letter or at all that the Rail España debt was a bad or doubtful debt.
(vii) The Defendants warranted that there had been no material adverse
change in the overall net asset value of Rapidlinc between the date of
the Balance Sheet and completion of the agreement. The Defendants
knew before completion that the Balance Sheet should be adjusted to
reflect the bad debt, but they did not disclose this to the Claimant.
(viii) 13 January 2023
Rapidlinc had to abort its development of the bullet train following
scientific research which revealed that the electromagnetic fields
generated by the technology affected fertility in both sexes. The
cessation of the bullet train project has caused the following losses:
(a) In the Accounts, the research and development costs ascribed to
the development of the bullet train were identified as £1,000,000.
This sum has now, in accordance with standard accounting
practices, been written off.
(b) When valuing Rapidlinc, the Claimant calculated the goodwill it was
prepared to associate with the bullet train at £2,000,000. Since the
project has had to be aborted, the value of Rapidlinc has been
diminished by this sum
