• MaddoxLegal

Share Purchase Agreements and seller protection provisions: MDW Holdings Ltd v Norvill [2021]

In a recent High Court decision, the Court considered misrepresentations relating to the acquisition of a waste management company including breaches of environmental warranties, highlighting the importance of seller protection provisions in a Share Purchase Agreement (“SPA”).


MDW Holdings took James, Jane and Stephen Norvill (the “Sellers”) to the High Court after it purchased the entire share capital of G.D. Environmental Services (“GDE”) for a sum of £3.58m in 2015.

Operating as a waste management business, GDE disposed of various types of dry and wet waste. For wet waste disposal, the company collected waste to be treated before discharge into the public sewer system. In order to do so, it was obligatory to meet certain requirements set by Dwr Cymru Welsh Water (“DCWW”), who provided consent to discharge based on a myriad of factors.

Sampling carried out by DCWW and GDE itself between 2013 and 2015 indicated an unacceptable level of contaminants in the waste discharged by GDE into the public sewer system, exceeding the limits prescribed by DCWW’s consent. Despite a series of negotiations between GDE and DCWW, a satisfactory conclusion regarding an increase of charges payable for DCWW’s consideration had not been reached as at the time of the sale to MDW Holdings, unbeknownst to the buyer.

MDW Holdings’ solicitors had submitted initial due diligence enquiries requesting all documents relating to any investigation, enquiry, prosecution, or otherwise enforceable proceedings by any regulatory, governmental or other body. The SPA was completed, and included warranties relating to GDE’s compliance record and environmental permits.

Following completion, DCWW escalated the matter and wrote to GDE (now having been successfully acquired by MDW Holdings) with a list of breaches in respect to the company’s discharge levels, warning it was considering prosecuting for a breach of its conditions of consent.

It was MDW Holdings’ view that the Sellers had unlawfully and systematically breached environmental laws, avoiding the increased costs associated with DCWW’s consent and therefore increasing its profits to a level that would not have been achieved had the company been acting lawfully. Consequentially, MDW Holdings alleged that the price paid for the shares in GDE was far greater than they were worth.

Damages were sought based on the grounds of breach of warranties in the SPA and pre-contractual misrepresentations.


The Court found the Sellers liable for a number of breaches of warranties in the SPA, as well as a series of actionable misrepresentations; damages were awarded to the sum of £382,600 payable jointly and severally by the Sellers. This sum was held to be the difference between the value of GDE as paid by MDW Holdings and the actual value given the false warranties contained in the SPA.


The case highlights the importance of including provisions expressly dealing with the exclusion of liability for misrepresentation, in both pre-contractual statements and any statements as set out in the SPA. Moreover, sellers should seek to include a non-reliance statement to acknowledge the buyer has not relied on any representations upon entering into the SPA, as well as an express waiver of non-contractual remedies.

However, the list of express provisions is not exhaustive and ought to be negotiated with the buyer based on the circumstances, and may not always be agreed. Nonetheless, a considered SPA will serve to limit or reduce any potential liabilities on the seller’s part based on a full and fair disclosure against any problematic warranties.

Azin Jafari


Could we help you with your SPA? Our Founder Partners Joss Alcraft and Mark Archer have over 40 years of combined experience between them, dealing with a variety of acquisition matters. Click here to get in touch.

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