On 1 May 2026, the Commercial Court handed down judgment in Veranova BidCo LP v Johnson Matthey Plc & Ors [2026] EWHC 1021 (Comm), a hard-fought and “high-stakes” fraud claim which was pursued by the Claimant with “relentless aggression”.
The proceedings arose from the sale of the Johnson Matthey Group’s pharmaceutical business to the claimant, a subsidiary of the private equity fund Altaris. The claimant’s core complaint was that it was not told, prior to the transaction, that one of the business’s customers had triggered a price review mechanism in its contract with the business in relation to a particular pharmaceutical product. Two types of claim were initially brought: for breach of warranty, and for deceit, although the deceit claim was dropped by the time of trial.
Because the share purchase agreement between the parties (the “SPA”) excluded liability for all claims against Johnson Matthey other than those arising from fraud or wilful misconduct, the question of fraud was, as noted in the judgment, the “major battleground” between the parties even in relation to the remaining breach of warranty claim.
The Claimant ended up putting its claim in broadly two ways. First, it contended that in order to prove a fraudulent breach of warranty on the part of corporate defendants, all that needed to be shown was that (i) the defendants gave the warranty and (ii) knowledge of the facts that made the warranty false were present in an individual (or a collection of individuals) whose knowledge could be attributed to the defendants. The Claimant relied for this purpose on knowledge on the part of four senior individuals within the Johnson Matthey Group (the “JM Executives”). Second, it contended that the JM Executives had actually acted dishonestly in relation to the sale, and knew that the warranties being given were false or were reckless as to whether they were true or false.
Following a five-week trial in November and December 2025, Dias J dismissed the claim in its entirety in a judgment handed down on 1 May 2026. Dias J rejected the Claimant’s primary case as a matter of law and construction, and also held that none of the JM Executives had acted dishonestly.
The case raises a number of issues of general importance, including: the circumstances in which it is appropriate to draw adverse inferences from the absence of particular witnesses ([56]-[60]); how the Court should deal with unpleaded allegations of dishonesty ([45]-[51]); how one should (and should not) conduct cross-examinations and treat evidence given orally by witnesses ([52]-[55]); and the standard of fair disclosure in an SPA ([96]-[104]).
Significantly, in relation to the first way that the Claimant ended up putting its case, Dias J affirmed and applied in this context the longstanding principle that it is not possible to add an innocent state of mind to an innocent state of mind to obtain a dishonest state of mind ([124]-[144]).
David Caplan KC and Ruihan Liu appeared for the successful Defendants, instructed by HSF Kramer LLP.
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