Hampson Industries and an investor consortium led by industrialist David Grove have started their High Court clash over the sale of an ailing engineering firm last year.
Erlson Precision Holdings, a firm owned by David Grove and a group of other investors, claimed it agreed to pay £3.1 million to buy Hampson Precision Automotive (HPA) on the basis of “fraudulent misrepresentations” – and is now asking a judge to untangle the deal.
The court case pits big names in the West Midland manufacturing world against each other – the London Stock Exchange-listed Hampson Industries and former Hill & Smith chairman David Grove as well as his fellow director at Grove Industries Les Litwinowicz, also one of the investors.
Erlson says it didn’t get what it bargained for in June last year when it agreed to buy the entire share capital of HPA, a company which specialises in making turbochargers and other components for the motor industry.
Just two weeks later, on July 6, Erlson protested that it had been lured into the deal by “fraudulent misrepresentations” and has since been fighting to get HPA off its hands.
Now the bitter corporate dispute has made its way to the High Court in London, where HPA’s former parent company Hampson Industries “vehemently denies” the fraud accusations and insists none of its executives did anything wrong.
Gregory Mitchell QC, for Erlson – which is claiming substantial damages as well as the right to rescind the share purchase – said it was his primary case that Hampson Industries “made representations as to HPA’s relationship with customers and forecast sales which it knew to be false”.
The barrister claimed Hampson’s then chief executive, Kim Ward, had known by the end of April last year that HPA’s second most important customer – Cummins – “had given notice of termination”.
And he accused Mr Ward of “deliberately suppressing that information because he knew that it was likely to stop the proposed deal dead in its tracks”.
Mr Mitchell claimed Mr Ward “knew only too well the disastrous effect such termination would have” on HPA’s business, and said that Erlson asserted its right to rescind the shares purchase “almost immediately upon discovering the truth”.
