Appeal over B&C sale begins

This week the Court of Appeal will hear appeals by Quadrex Holdings and Samuel Montagu & Co arising out of their long running litigation with British & Commonwealth Holdings (B&C). The appeal is expected to occupy the court for at least three months.

The appeals arise out of the abortive sale by B&C to Quadrex of the wholesale money broking division of Mercantile House Holdings in 1987 for u280 million. Samuel Montagu acted as Quadrex's merchant banking advisers in the transaction.

The trial at first instance was split between liability and quantum. The liability trial was heard in 1990 and lasted 64 days and that on quantum was heard in 1992 and lasted 83 days.

At the trial, B&C succeeded in its claim for breach of contract against Quadrex arising out of Quadrex's inability to complete the deal and in its claims against Samuel Montagu for negligent misstatement.

B&C claimed that in entering into the transaction with Quadrex it relied on statements by Samuel Montagu that Quadrex had funds available to complete the deal and that those statements were made negligently.

The total sums awarded in favour of B&C at first instance were approximately u188 million. Quadrex's defence and counterclaim related to misrepresentations made by B&C to Quadrex in the negotiations immediately preceding the signing of the deal. That counterclaim was partially successful, Quadrex being awarded u20 million against B&C.

B&C is represented by Slaughter and May partner John Hine, assisted by John Bramhall. They have briefed Anthony Grabiner QC of 1 Essex Court, Nicholas Stadlen QC, Simon Browne-Wilkinson, Craig Orr and Jeffrey Chapman of Fountain Court.

Quadrex is represented by Herbert Smith partners Harry Anderson and John Ogilvie, who are assisted by Ciara McDonald. They have briefed Lord Irvine of Lairg QC and Philip Sales of 11 King's Bench Walk.

Samuel Montagu is represented by Clifford Chance partner Christopher McGonigal, assisted by Ian Walker. Ian Moulding, Stephen Balmer and David Hall. They have briefed George Newman QC and Peter Knox of 1 Crown Office Row and Richard Southwell QC and James Eadie of 1 Hare Court.