The warranties and indemnities in the Share Purchase Agreement (SPA) for the 2019 sale of Centec International Limited to BIP Chemical Holdings Limited for £1.4m have generated significant litigation. The latest development is the High Court’s decision in Blundell and another v Davies and others [2026] EWHC 176 (Ch). The claim was brought by a former shareholder (both in her own capacity and as assignee of Centec’s claims) against third parties alleged to have participated in a dishonest scheme that, she says, rendered the warranties untrue and exposed her to substantial liability under the SPA. She seeks to recover the losses she and Centec incurred as a result of the earlier breach‑of‑warranty litigation.

The first round of litigation was brought by BIP for alleged breaches of warranty in the SPA. In BIP Chemical Holdings Ltd v Blundell [2021] EWHC 2590 (Ch), the court found for the buyer, holding that the seller had breached the abnormal or unusual transactions warranty. The judge found, on the balance of probabilities, that there was a profit‑share arrangement between the target’s director and a key supplier. This was treated as an “abnormal arrangement” that materially affected the “as was” valuation of the shares. Issues arose regarding the buyer’s knowledge and whether the knowledge of certain individuals could be attributed to it. Ultimately, the court held that the buyer did not know about the profit‑share arrangement. Damages of £875,000 were awarded against Mrs Blundell, subject to contractual limitations, together with interest and costs. Permission to appeal the factual findings on the abnormal arrangement was refused by the Court of Appeal in December 2024.

Mrs Blundell now seeks to recover those damages, interest and costs from parties she alleges were involved in a fraudulent scheme that caused the warranties to be inaccurate and led to her liabilities in the earlier proceedings.

The defendants applied to strike out the claim on various substantive and procedural grounds. The application succeeded only in part, and several elements of the claim will proceed to trial. The court held that Mrs Blundell had a real prospect of showing that the alleged dishonest arrangement contributed to the damages she paid in the BIP litigation, at least to the extent that it affected the “as was” value of the shares compared with their value had the warranties been true.

Although complex, this recovery claim highlights potential avenues for W&I insurers where third‑party conduct has caused or contributed to a warranty claim, both in relation to liability and quantum.

The judgment also contains useful commentary for W&I insurers on the reflective loss principle and whether it applies where a seller seeks to recover losses awarded for breach of warranty. The defendants argued that, as a shareholder, Mrs Blundell could not recover loss suffered by the company itself. The court found it arguable that the reflective loss principle did not apply to these damages, interest and costs, because the damages were awarded after she had sold her shares, and because the interest and costs were not sufficiently connected to the valuation of the shares. Those parts of the claim were therefore allowed to continue.