Home Information Cases Grand Metropolitan PLC v The William Hill Group Ltd (1996)

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Grand Metropolitan PLC v The William Hill Group Ltd (1996)

Summary

Grounds for rectifying a sale and merger agreement fulfilled and order for rectification to be made.

Facts

Claim for rectification of Sch.5 to an Agreement dated 5 September 1989 made between the plaintiff, Grand Metropolitan, the 1st defendant and the 2nd defendant whereby the 2nd defendant purchased two subsidiaries of the plaintiff for £685m. The purchase price was subject to a price reduction by reference to profits shown in accounts ('the 1989 Accounts'). The dispute concerned how these accounts were to be drawn up.

Held

Having considered the negotiations which led to the execution of the Agreement, the court was satisfied that Grand Met and Brent Walker shared a common intention that the 1989 Accounts should be drawn up on the basis which reflected the reorganisation of the William Hill Group and the Mecca Group following the acquisition of William Hill from a third party, Sears. They intended that the periods covered by those accounts should be those mentioned in Sch.5 part.1 para.2(C)(1) and that the 1989 Accounts should be drawn up applying the provisions of Sch.5 part.1, para.2(C)(2),(3) and (4). These were not the private intentions of the parties but the intentions which they had in common. Brent Walker gave its assent to Grand Met's proposal and outward accord was expressed orally and in the defective amendments made to the draft agreement on 29/8/89. In all the circumstances the test of convincing proof was met in the case. It was submitted for the defendants that the court ought not to exercise its discretion to order rectification because the Agreement did not reflect the common intention of the parties and because of the delay in seeking relief. Both these objections would be rejected.

The court made the order for rectification sought.

Chancery Division
Arden J
Judgment date
18 January 1996
References

LTL 23/1/96 : [1997] 1 BCLC 390