There is caveat emptor and there is wilful deceit (SGH mentions the "tort of deceit").
There is a natural asymmetry between the buyer and seller in a transaction, and often the line is unclear as to what constitutes misrepresentation and what falls under "caveat emptor".
For example if you buy washing powder which is advertised as "will clean your clothes", you use it in your washing machine and it turns out its actually acid, and dissolves everything and ruins your machine, would you think, oh well, caveat emptor, no one forced me to buy this powder..? Or perhaps you do lab tests on every product you buy in the supermarket before you use it ..?
Having read the full PDF, whilst I am not a lawyer, if SGH do indeed have the email trails that they reference it certainly appears that they have a very strong case, where the Quindell CEO misrepresented the dilution rates materially - not to mention did not disclose material information in the form of the PWC report.
You could argue things like "staff attrition rates" would fall under caveat emptor, but misrepresentation of key assumptions when determining the sale price of an asset is criminal fraud.
6 months is not long enough to make a valid conclusion regarding the misrepresentation of dilution rates, given cases span 3++ years. 6 months is close enough to "immediate" when it comes to the distribution of circa AUD $1 billion...
SGH Price at posting:
9.2¢ Sentiment: Sell Disclosure: Not Held
