Blundell & Anor v Davies & Ors [2026] EWHC 176 (Ch)

Stephen Hackett (instructed by Furley Page LLP) for the Defendants

DEPUTY MASTER SCHER :

Introduction

• This is my judgment on the three principal issues raised by the Defendants’ application for summary judgment on, or to strike out, the Claimants’ claim.

Background

• The claim concerns the affairs of Centec International Limited (Centec).

• Centec was incorporated on 29 September 1994. It was owned by John Blundell and his wife Jean Blundell (the First Claimant) in equal shares. John Blundell died in 2017. Jean Blundell then became sole shareholder, until she sold her shares to BIP Chemical Holdings Ltd (BIP) on 5 March 2019.

• Centec’s core business was in the mixed fuel market. It would buy mixed fuels (for example, petrol and diesel which had been accidentally combined). It would separate and purify those fuels, and sell them on for a profit. At the material time, Centec would regularly purchase tanker-loads of mixed fuel from Refuels Limited, the Fourth Defendant.

• Before the sale to BIP, Centec’s directors were (i) Jean Blundell, (ii) her son Christopher Blundell (the Second Claimant), (iii) Christopher’s wife Svetlana Blundell, (iv) Graham Williams, and (v) Lucian Davies (the First Defendant).

• The management of Centec was predominantly by Mr Williams, Mr Davies, and a management consultant David McGreal.

• In October 2018, Mr McGreal led a proposed management buy-out. He was granted an option to purchase Centec. The price was agreed in principle at £500,000. By the end of January 2019, Mr McGreal and the management team became aware of financial shortcomings: in particular, a reduction of revenue brought EBITDA down from £146,000 to £-203,000. The management team reduced their offer to £250,000, some of which would be deferred.

• At the same time, another potential purchaser was interested: BIP, owned and managed by Mr Michael Bennett. BIP had premises adjoining Centec’s, and was in the business of chemical manufacturing and chemical waste disposal. BIP had been interested in acquiring Centec for some years.

• When the management team reduced their offer from £500,000 to £250,000, the Blundells approached Mr Bennett to discuss selling Centec to BIP. There was a meeting on 26 February 2019 at which the Blundells’ solicitor Mr Ali told Mr Bennett that Centec was predicted to make a profit of £200,000 in the following financial year. Mr Bennett was shown management accounts up to date as at May 2018. Those management accounts did not include the revised profit forecasts which reduced EBITDA to £-203,000.

• BIP completed the purchase of shares in Centec on 5 March 2019. It had not been provided with up-to-date financial information, and relied on the accounts prepared in May 2018. BIP paid £1.4m for the shares in Centec.

• The Share Purchase Agreement dated 5 March 2019 (the SPA) contained a warranty by Mrs Blundell that there had been no material adverse change to the financial position of the business since the May 2018 accounts (the Accounts Warranty). It also contained a warranty that Centec was not engaged in any arrangement of an unusual, onerous or abnormal nature (the Abnormal Arrangement Warranty).

• Following completion of the SPA, BIP became aware of Centec’s true financial position. It issued proceedings against Mrs Blundell, alleging breach of warranty and fraud (the BIP Litigation). There was a trial in Manchester before HHJ Cadwallader, sitting as a judge of the High Court. In a judgment given on 9 September 2021 (the Judgment) with neutral citation number [2021] EWHC 2590 (Ch), the Judge found:

a. There had been no misrepresentation.

b. There had been a breach of the Accounts Warranty, because there had been undisclosed material adverse developments in Centec’s business since the May 2018 accounts.

c. There had been a breach of the Abnormal Arrangement Warranty. The Judge found that Centec had (on the balance of probability) been defrauded by Refuels Ltd, in conspiracy with Mr Lucian Davies (director of Centec). He found that Refuels Ltd had for many years systematically overcharged Centec for mixed and contaminated fuel, and Mr Davies and Refuels Ltd had an agreement to split the excess. I will refer to this herein as the Alleged Arrangement. The Alleged Arrangement is denied by the Defendants in the present proceedings, who were not party to the BIP Litigation.

• The Judge entered judgment in favour of BIP against Mrs Blundell in the sum of £875,000. Mrs Blundell says that her total loss in the BIP Litigation was £1,655,237.39 (including damages, interest, BIP’s costs, and her own costs).

Continue reading this Judgment here.