Uitspraak
judgment
AMSTERDAM DISTRICT COURT
Netherlands Commercial Court
NCC District Court
Case number: C/13/747331
Judgment
17 July 2024
Claimant in the main proceedings
Defendant on the motion:
WELTEN GROUP B.V.,
‘s-Hertogenbosch (the Netherlands)
represented by A.R.J. Croiset van Uchelen and G. Straub, lawyers,
Defendant in the main proceedings
Claimant on the motion:
ONE TWO WORK B.V.,
Amsterdam (the Netherlands),
represented by T.S. Jansen, L.M. Veth and J. van Hemel, lawyers.
The parties are referred to below as Welten and OTW respectively. They are jointly referred to as the ‘Parties’. The term ‘lawyer’ has the meaning as defined in Article 3.1.1 NCC Rules of Procedure (NCCR).
1.Procedural history
1.1.
Welten submitted a writ of summons (dagvaarding), with exhibits, dated 1 March 2024, setting out its claims against OTW.
1.2.
The Court assigned three judges to the case, as a panel. The panel delegated case management and any motion proceedings to Judge Frakes.
1.3.
On 26 March 2024, Judge Frakes and Mr Visser (court clerk) held a case management conference by videoconference. The Parties expressed their views as to the language of the proceedings and any motions that OTW might wish to submit.
1.4.
On 29 March 2024, the Court ruled that the language of the proceedings is English and allowed OTW to raise a motion on (a) document disclosure and CEO/CFO interviews before its defence on the merits and (b) OTW’s inadmissibility for claims/arguments. The Court decided to deal with document disclosure at this stage of the proceedings and to review OTW’s motion and then rule on when the inadmissibility issues would be dealt with. The Court also set a timetable for the next steps in the matter.
1.5.
OTW submitted a statement of claim on the motion on 1 May 2024.
1.6.
On 3 May 2024, the Court moved OTW’s inadmissibility for claims/arguments to the main proceedings for further consideration and declined to deal with them in the motion proceedings.
1.7.
Subsequently, Welten filed its statement of defence on the motion on 29 May 2024.
1.8.
On 10 June 2024, Judge Frakes and Mr Visser held a courtroom hearing on the motion. Judgment on the motion was set for today.
2.The claim in the main proceedings
2.1.
Although this is a judgment on the motion and not on the main proceedings, the Court will include a summary of Welten’s claim below, as the motion seeks to obtain information that is relevant to this claim.
2.2.
In summary, Welten seeks a declaration that (a) OTW breached certain warranties and pre-completion undertakings under the Share Purchase Agreement (SPA, Exhibit 1 Welten) agreed upon by OTW as the Seller and Welten as the Purchaser, and (b) OTW is liable for approximately USD 40 million in damages resulting from these breaches.
To substantiate these claims, Welten alleges that OTW:
- withheld from Welten that the Group (Welten
- provided incorrect information regarding profitability of the Group in the final quarter of 2022, as this information contained impermissible deferral bookings and other accounting irregularities,
- withheld information regarding material changes to the Group’s recruitment process,
- provided incorrect and incomplete information during the due diligence on the accounting practices and policies and the Group’s operational targets, concealing the downward trend in the profitability of the Group in the final quarter of 2022.
Welten argues that OTW – by so doing – committed fraud, which entitles Welten to claim damages under the SPA.
3.The motion
3.1.
OTW’s demand in these motion proceedings is that the Court order Welten:
to disclose the information/documents as set out under 5.1 and 5.2 below (numbered (i) through (xx)), (claim xx including email correspondence between Purchaser and the insurer),
to allow OTW to interview [the former CEO] (former CEO of the Group) and [the former CFO] (former CFO of the Group) to investigate Welten’s claim, and
to pay the costs of these motion proceedings, plus statutory interest.
3.2.
At the hearing on the motion, OTW amended and expanded its claim under 5.2 (iii) (below) to include all email correspondence between Deloitte and Welten regarding ‘leakage’ (changes in the financial situation of the Group between the locked box date and closing) as well for claim (xx) to include all email correspondence between Welten’s insurance broker and the warranty and indemnity liability insurer (W&I Insurer). Welten objected to the amendment of claim under (a)(iii).
4.Discussion
Jurisdiction and applicable law
4.1.
Before turning to the motion at hand, the Court must first, on its own initiative, determine whether the requirements for the Court’s jurisdiction have been met (Article 1.3.4 NCC Rules of Procedure).
4.2.
The Amsterdam District Court has personal jurisdiction to deal with this case, as OTW did not raise any defence on this point (Article 110 of the Dutch Code of Civil Procedure, DCCP). The Parties chose the Netherlands Commercial Court as the appropriate chamber to deal with all disputes arising from the SPA (Article 21.2). Although this case is between two companies domiciled in the Netherlands, the internationality requirement (Article 32a DCCP) is fulfilled, as Welten is a subsidiary of a company domiciled outside of the Netherlands (i.e. Straco Holding NV, seated in Ghent, Belgium). See the NCC Rules, Article 1.3.1 (b), and Annex I, Explanatory Notes. Accordingly, the NCC District Court is the appropriate chamber to deal with this dispute.
4.3.
Article 21.1 of the SPA provides that the agreement shall be governed by and construed in accordance with the laws of the Netherlands. Therefore, the Court will apply Dutch law.
On the motion
Amendment of claim
4.4.
Welten objected to OTW’s amendments to its claim under (a)(iii), taking the view that the amendments would make the scope of the claim too broad and result in Welten having to disclose documents which are not relevant to the claim.
4.5.
The Court notes that the legal framework for allowing or disallowing an amendment of claim is (a) whether the amendment is made prior to the Court giving its final judgment and (b) whether the amendment violates due process (Article 130 DCCP).
The Court observes that OTW submitted its amendment in a timely manner and cannot identify any prejudice to Welten, since the amendment concerns the same subject matter (‘leakage’) and is an obvious reply to Welten’s denial (in the statement of defence on the motion) that a leakage report exists. The Court therefore allows the amendment.
The claim for access to or disclosure of documents (claim a)
4.6.
The Court will refer to the documents specified under claim (a) as ‘claim i’,
‘claim ii’, etc.
‘claim ii’, etc.
4.7.
In its statement of defence on the motion, Welten offered to voluntarily provide OTW with some of the information requested by OTW. Welten’s offer was to provide the information in full (re claims under (a) x, xi, xii, xvi and xviii) or in part (re claims under (a) vii, viii, ix, xix, and xx). The Court allows the motion to the extent the claims are not contested.
General observations
4.8.
As to the remaining information requests, the Court will first – before going into the specific document requests – make several general observations.
1. The standard under Dutch law is that construction of a contract is not solely guided by a text-based interpretation of the provisions of the contract, but also by (a) what meaning a reasonable person of the same kind as the parties would have given to the language of these provisions in the same circumstances and (b) what a reasonable person of the same kind as the parties would expect the adverse party to do under these provisions in the same circumstances. This enquiry may focus on matters such as who the parties are and the legal expertise that similarly situated parties may reasonably be expected to have (
Haviltex). [1] Additional guidance clarifies that certain circumstances (such as the nature of the transaction, the size of the contract and the amount of detail, the way the contract was concluded, and the existence of an entire agreement clause) may make it appropriate for the court, as a rule, to give decisive weight to the most obvious text-based meaning of the provisions of the contract, in conjunction with the other provisions of the contract which may be relevant for its interpretation. [2]
Haviltex). [1] Additional guidance clarifies that certain circumstances (such as the nature of the transaction, the size of the contract and the amount of detail, the way the contract was concluded, and the existence of an entire agreement clause) may make it appropriate for the court, as a rule, to give decisive weight to the most obvious text-based meaning of the provisions of the contract, in conjunction with the other provisions of the contract which may be relevant for its interpretation. [2]
2) The parties here disagree on the interpretation of Article 12.1.2 of the SPA. This Article reads – insofar as relevant – as follows:
“Upon receiving notification of a Claim ([…]) or any fact, matter or circumstance potentially giving rise to a Claim notified pursuant to Clause 12.1.1, the Purchaser shall:
a)
allow the Seller or its representatives access to books, records and to the CEO or the CFO as the case may be of the Purchaser and the Group as the Seller may reasonably request and with due notice to investigate the Claim;
allow the Seller or its representatives access to books, records and to the CEO or the CFO as the case may be of the Purchaser and the Group as the Seller may reasonably request and with due notice to investigate the Claim;
b)
disclose to the Seller or its representatives all information and documents relevant to the Claim; […]”
disclose to the Seller or its representatives all information and documents relevant to the Claim; […]”
3) The Court considers these circumstances:
a) The parties are private equity firms and instructed professional advisors to assist in the acquisition of the Group and the drafting of the SPA.
b) The SPA is of considerable size (70 pages) and sets out the parties’ obligations in detail.
c) The draft SPA was prepared by OTW’s counsel at the time (De Breij advocaten) who expanded the standard clause regarding Welten’s disclosure obligations (Article 12 of the draft [3] ) to include an obligation to provide access to the Group’s (a) books and records and (b) CEO and CFO. Welten accepted this expansion without any discussion.
d) The SPA contains an entire agreement clause (Article 20.13).
4) In light of these circumstances, the Court gives decisive weight to the most obvious text-based meaning of Article 12.1.2 SPA. Two issues arise as to what this means and the Court addresses these issues below.
a)
Are emails “books and records”?
Are emails “books and records”?
The term “books and records” is not defined in the SPA. Welten thinks this term is commonly used in international financial and legal transactions to refer to a defined set of documents, such as accounting data, financial administration and formal records, but does not include emails. OTW disagrees and argues that the term “books and records” should include modern communication technologies such as emails.
The Court notes that Article 12.1.2 of the SPA lists two options: (a) “books and records” and (b) “all information and documents” that are relevant to the claim. The Court is aware that there has been litigation in other English-language jurisdictions regarding the proper scope of “books and records requests” and that courts have recognised a right to obtain electronic communications under such requests. Welten and OTW have not identified any particular aspects of this SPA or any SPA, or any relevant market practices, that would justify one interpretation or another. Usage of the term “books and records” in relevant circles (such as private equity, mergers and acquisitions, and corporate practice) may be evolving rapidly and more debate may be needed to fully explore the issue and determine the proper construction of this clause. But there is no need to decide the issue as to whether emails are books and records today since the emails must be disclosed if they are relevant to the claim (see below) and OTW’s motion does not seek
accessto emails (which would only be allowed if emails are books and records), but only
disclosureof emails that are relevant to the claim (which is allowed regardless of whether emails are books and records). And OTW’s motion does not seek access to email inboxes of all Welten or Group employees generally, but only disclosure of certain sets of emails. For these reasons, the order under 5.1 below, focusing on access to books and records, will not include emails. Accordingly, the issue as to whether emails are books and records is a matter for another day.
accessto emails (which would only be allowed if emails are books and records), but only
disclosureof emails that are relevant to the claim (which is allowed regardless of whether emails are books and records). And OTW’s motion does not seek access to email inboxes of all Welten or Group employees generally, but only disclosure of certain sets of emails. For these reasons, the order under 5.1 below, focusing on access to books and records, will not include emails. Accordingly, the issue as to whether emails are books and records is a matter for another day.
To be clear, the SPA does not demarcate any strict boundary between (a) access and (b) the disclosure obligation. Where access to books and records leads to the discovery of documents that are relevant to the claim, Welten must provide a copy of these documents to OTW.
b)
Is the term “relevant to the Claim” limited to specifically identified disclosures in work on the Transaction and does this term include exculpatory evidence?Welten alleges that the term “relevant to the Claim” is limited to information/documents which were provided by either party to the other during work on the Transaction (through the date of Completion, which was 23 February 2023), and Welten suggests that OTW must specifically identify certain information/documents it wishes to obtain.
The Court disagrees with Welten’s positions. Article 12.1.2(ii) requires Welten to provide “all information and documents” that are relevant. The most obvious meaning here is that Welten must disclose all relevant information and documents and that, therefore, OTW need not specifically identify any specific information/documents. Unlike clause (i) of the same Article, there is no express reasonableness requirement in Article 12.1.2(ii). The only requirement is relevance. This requirement does not refer to the party generating the information/documents or to the timeframe the information or document was generated in. On this basis, the Court’s decision is that the disclosure obligation applies where the information/document is related to a third party or to the time period post-Completion. The Court notes that the claim is post-Completion (by definition) and that Welten has hired third-party advisors to help prepare the claim. This shows that information/documents produced in that time period or exchanged with such advisors may be relevant. As a bare minimum, this is true where Welten relies on such information/documents to substantiate its claims. But the obligation goes further. The obvious purpose of the information/document rules is to enable OTW – which lost control of the information by transferring Welten Holding B.V. and its subsidiaries to Welten – to defend the claim including Welten’s allegation of fraud, using all relevant information/documents available within the Group. Therefore, any exculpatory evidence within the Group’s custody or control must be disclosed to OTW.
Is the term “relevant to the Claim” limited to specifically identified disclosures in work on the Transaction and does this term include exculpatory evidence?Welten alleges that the term “relevant to the Claim” is limited to information/documents which were provided by either party to the other during work on the Transaction (through the date of Completion, which was 23 February 2023), and Welten suggests that OTW must specifically identify certain information/documents it wishes to obtain.
The Court disagrees with Welten’s positions. Article 12.1.2(ii) requires Welten to provide “all information and documents” that are relevant. The most obvious meaning here is that Welten must disclose all relevant information and documents and that, therefore, OTW need not specifically identify any specific information/documents. Unlike clause (i) of the same Article, there is no express reasonableness requirement in Article 12.1.2(ii). The only requirement is relevance. This requirement does not refer to the party generating the information/documents or to the timeframe the information or document was generated in. On this basis, the Court’s decision is that the disclosure obligation applies where the information/document is related to a third party or to the time period post-Completion. The Court notes that the claim is post-Completion (by definition) and that Welten has hired third-party advisors to help prepare the claim. This shows that information/documents produced in that time period or exchanged with such advisors may be relevant. As a bare minimum, this is true where Welten relies on such information/documents to substantiate its claims. But the obligation goes further. The obvious purpose of the information/document rules is to enable OTW – which lost control of the information by transferring Welten Holding B.V. and its subsidiaries to Welten – to defend the claim including Welten’s allegation of fraud, using all relevant information/documents available within the Group. Therefore, any exculpatory evidence within the Group’s custody or control must be disclosed to OTW.
5) It is helpful at this stage to state unequivocally that no issues arise in this matter regarding legal privilege because all information/documents sought by OTW belong to the Group. No one has argued that lawyer-client or similar communications might be disclosed as a result of this judgment (except for the documents pertaining to the Damage Quantification Calculation report, which will be dealt with below at 4.16).
6) Welten’s next argument is that the disclosure must be proportional as it contains personal data under the General Data Protection Regulation (GDPR) and that the fulfilment of its disclosure obligation must not be unduly burdensome.
a) As to the undue burden issue, the Court emphasises the general rules on abuse of right
(misbruik van recht), which apply here as they do to obligations. Within this boundary, the Court notes there is no contractual duty for OTW to limit its requests so as to avoid a certain workload for Welten. On the contrary, the absence of a reasonableness test in Article 12.1.2(ii) shows that the disclosure obligation is not limited to requests that generate only a moderate workload for Welten.
(misbruik van recht), which apply here as they do to obligations. Within this boundary, the Court notes there is no contractual duty for OTW to limit its requests so as to avoid a certain workload for Welten. On the contrary, the absence of a reasonableness test in Article 12.1.2(ii) shows that the disclosure obligation is not limited to requests that generate only a moderate workload for Welten.
b) As to the GDPR, Welten’s argument has merit up to a point. Indeed, the Court must assess whether the requested information or documents include personal data as meant in the GDPR, and if so, whether the disclosure of the information or documents to OTW is “is necessary and proportionate” to the objective pursued by the disclosure obligation. The Court rejects OTW’s assertion that disclosure here does not involve the processing of personal data, since OTW’s request to disclose certain emails (which are stored on Welten’s server) entails a sender’s personal data (sender’s name and opinion on a certain issue) being sent to OTW (and that is “processing” as meant in the GDPR). No issues arise here as to special categories of personal data as meant in Article 9 GDPR, but there must be a legitimate objective for the processing of the personal data, and the proportionality test must be met.
c) The Court’s conclusion here is that the processing is necessary for the purposes of the legitimate interests (a defence against the processing party’s claim) pursued by a third party (OTW). This is an legitimate interest guaranteed by international law (Article 6 ECHR and Article 47 of the EU Charter of Fundamental Rights) and Dutch domestic law (Article 843a DCCP).
d) The Court has no doubt that the requirement of proportionality is met. The dispute here focuses on emails. The request relates to emails sent by Welten’s current or former employees or by third parties engaged by Welten. The emails are professional and work-related (not personal) and they by the terms of the request concern issues regarding business activities, such that the sender has no reasonable expectation of privacy. This is especially true where the emails were drafted after the dispute arose, as the dispute itself increases the likelihood of Welten being obligated to disclose emails to OTW. The privacy interests of the persons involved are furthermore safeguarded by the confidentiality obligation in the SPA (Article 18), which effectively prohibits OTW from using, outside of these proceedings, any of the information derived from the documents. The Court rejects Welten’s suggestion to take witness testimony first and finds that the information OTW seeks for its defence cannot be reasonably collected by less intrusive means. First, testimony would be required from more than just a few witnesses, and second, witness testimony depends in part on contemporaneous documents, where available.
4.9.
The above leads to the conclusion that Welten’s defences against the information requests listed in the motion are rejected and Welten must provide the requested documents, except where the Court rules otherwise below.
Books and records (claims vii, viii, ix)
4.10.
There is no dispute here that where the requested documents relate to books and records, such as the minutes of board meetings (claim vii), ledger accounts (claim viii) and AFAS accounting data (claim ix), OTW’s right to information is limited to access and does not include disclosure. Welten raised three issues.
4.11.
Welten’s first argument is that only the minutes of one board meeting (held on 1 August 2023) are relevant “to investigate the Claim”. The Court rejects this view and finds that – given the broad access obligation – it is up to OTW to review all relevant information/documents and make its own determinations, and OTW has “reasonably” requested such materials. However, the Court emphasises that if the minutes contain any commercially sensitive material, Welten may redact that specific information prior to giving access to OTW. The same applies to the ledger accounts and the AFAS 2022 accounting data.
4.12.
Welten’s next point concerns the year 2021. Whilst it is true that the claim pertains to actions allegedly taken or omitted by OTW in 2022, the accounting data for 2021 may be relevant for OTW’s defence, in the Court’s view. This may, for example, be the case if OTW wishes to substantiate a defence that the accounting practices and policies did not change in 2022, but were the same as in earlier years. Welten will therefore be ordered to allow access to the AFAS accounting data for 2021.
4.13.
Welten’s final objection is that two limitations (time and copies) should be imposed on on-site access. The Court rejects this objection. As for timing, Welten’s proposed one-day maximum may be too short, so Welten should be flexible. As for copies, OTW cannot be prohibited from making copies or taking photos of the financial information it comes across during the on-site access. Again, OTW is subject to the confidentiality obligations in the SPA. The Court emphasises that the purpose of allowing access is to provide OTW with the information it needs for a proper defence. Given the request and the parties’ debate in the case, the Court sees no risk that OTW will come across any sensitive information which it did not already have when it was in control of the Group. Therefore, this risk is negligeable and does not warrant the prohibition requested by Welten.
Reports prepared by third parties and emails relating to the investigations leading up to the reports (claims i, ii, xiii, xv, xvii, and xix)
4.14.
Welten engaged several third parties to draft reports after the transaction under the SPA was completed. These reports were prepared:
- to investigate the allegedly impermissible capitalization of certain costs by Welten Holding B.V. or the Group (by Eight Advisory [4] and Crowe Foederer [5] ) and
These reports are relied upon by Welten to support its claim. As a result, these reports are “relevant to the Claim”, but – given the broad scope of the disclosure obligation – so is any information leading up to the report, such as correspondence regarding the engagement of the third party as well as the information reviewed by the third party.
4.15.
Along these lines, OTW is entitled not only to the documents specifically mentioned in the reports (some of which have been sent to OTW or submitted as exhibits in these proceedings), but also to the information reviewed by the third parties but not used to support the reports’ analysis or conclusions. OTW must be able to verify that the investigations were not client-driven and that no exculpatory evidence was left out. This means that the emails relating to these reports must be provided to OTW. This includes any emails by Welten’s counsel instructing Deloitte on the categories of damages that may be claimed under Dutch law.
4.16.
Again, the Court points out that no one here has suggested, with the requisite substantiation, that there is any issue relating to information within the scope of lawyer-client privilege, and the Court would carefully review a claim of privilege if made. The Court notes Welten’s brief reference to privilege in its defence on the motion, but that reference did not provide any specific information or detail and is therefore unsubstantiated. At the hearing, in response to enquiries by the Court, Welten explained briefly that its lawyers’ exchange of information with Deloitte contains privileged legal advice on the types of damages available under Dutch law. The Court finds that this is not communication to an expert engaged to assist a lawyer in confidential deliberations with a view to advising a client (which may be privileged); instead, it is instructions to an expert engaged to prepare a report that was submitted in this litigation for the purpose of substantiating and proving a claim. Accordingly, it is not within the scope of the lawyer-client privilege and, since it is relevant to the claim (so as to understand the expert’s report in context), it must be disclosed to OTW under the SPA.
Email correspondence relating to leakage, financial reports, management reports, financial outlooks, capitalization of costs, accounting errors, accounting practices and the insurance claim (claims iii, as amended, iv, v, xiv, xviii and xx)
4.17.
Welten’s allegations in the main proceedings focus on topics such as leakage, financial reporting and accounting practices. Given the broad scope of Welten’s disclosure obligation and OTW’s right to mount a proper defence, the Court is convinced that Welten is required to provide OTW with any email correspondence that took place between the relevant persons on these topics in the relevant time period, as requested.
4.18.
However, the position is different regarding the insurer. Welten cannot in the Court’s view be ordered to submit all correspondence with regard to the claim notice it submitted to the W&I insurer. The position of the insurer and/or Welten regarding this claim is irrelevant to OTW’s defence, as Welten is entitled under the SPA to claim against both the insurer and OTW (Article 11.5.2 clause v). The only insurance-related information that is relevant to Welten’s claim is the claim notice (which Welten offered to provide to OTW) and information on payments made by the insurer to Welten pursuant to this claim notice (which Welten also offered, if any such payments are made). Claim xx will therefore be denied in so far as it relates to correspondence with the insurer.
Full internal Straco presentation (vi)
4.19.
Welten submitted part of this presentation as Exhibit 15 to the writ of summons in order to substantiate that the 2022 EBITDA was used for the calculation of the purchase price. It refuses to submit the remaining slides, arguing they are not relevant to the claim.
The Court disagrees and finds that it is not up to Welten to decide which parts of a document it relies on in its writ of summons are relevant for the defendant and the Court. Under Article 85 DCCP a copy of such document must be submitted in its entirety. If the presentation includes commercially sensitive information which is not relevant to these proceedings, the Court allows Welten to redact that information.
Timeline for access to and disclosure of documents
4.20.
Welten asked for 4 weeks after the judgment to comply, or 8 weeks for a review of employee inboxes. OTW did not express a specific view on this proposed timeline, but the timeline in its claim on the motion was 10 days after the judgment.
4.21.
In the interest of speedy and expeditious proceedings, the Court will set two deadlines:
- 8 weeks after this judgment where the order relates to Welten or Group employee email inboxes;
- 4 weeks after this judgment for any other documents.
This will allow OTW to start its review as soon as possible in preparation of its defence.
Access to the CEO and CFO (claim b)
4.22.
Under Article 12.1.2(i) Welten is obliged to allow OTW or its representatives access to the Group’s and Welten’s “CEO or the CFO” as OTW “may reasonably request and with due notice to investigate the Claim”. The parties disagree on the interpretation of the terms “CEO” and “CFO”. Welten argues that these terms designate the current CEO and CFO and stresses these are not the persons OTW wishes to interview (OTW would like to see [the former CEO] and [the former CFO], but they have left the company). OTW suggests the terms “CEO” and “CFO” refer to both the former and the current CEO and CFO of Welten and the Group.
4.23.
The Court refers to paragraph 4.8 of this judgment for the framework for interpretation of the SPA. In the Court’s opinion, the most obvious meaning of the terms “CEO” and “CFO” is the CEO/CFO serving at the time of the interview, because these officers are authorised to represent the company and talk about the business, organisation and practices, books and records, and the company’s views. The Court’s reasoning is simple: once a CEO/CFO leaves the company, the person is no longer a CEO/CFO. However, the Court believes the most obvious meaning is not decisive here. The context is important. The goal is to investigate alleged issues in the past. That’s what the claim is about. Along these lines, the purpose of the access obligation is to “investigate the Claim” and this only makes sense if the CEO/CFO being interviewed has knowledge of the facts and circumstances underlying the claim. Accordingly, a reasonable similarly-situated party would have given a broader meaning to the terms CEO/CFO and would have understood these terms to include the officers serving at the time of the relevant facts (within Welten’s reasonable ability to set up the interview; see below). This is the correct interpretation of the SPA. Incidentally, the Court notes that OTW’s first request to interview [the former CEO] and [the former CFO] dates back to when [the former CEO] and [the former CFO] were serving as CEO and CFO (23 November 2023). Welten should have co-operated in scheduling an interview at that time without undue delay.
4.24.
Welten is of course generally right that it cannot compel former officers to attend an interview (no one has suggested an agreement to the contrary), but Welten did not dispute OTW’s point that [the former CEO] and [the former CFO] are bound by non-disclosure agreements with Welten. In the Court’s view, under Article 12.1.2(i) Welten must release its former officers from these agreements to the extent required for an interview with OTW. Therefore, the Court will order Welten to allow OTW to interview [the former CEO] and [the former CFO].
4.25.
The Court acknowledges Welten’s objection that the former officers may at some future time be heard by the Court as witnesses in the course of these proceedings, but this possibility in the Court’s view does not warrant Welten’s proposal to deny the claim or schedule a witness hearing now. Dutch procedural law authorises a party to interview a witness in preparation of its claim or defence and nothing has been said that suggests the interview will impair future fact-finding in any way. A witness hearing by the Court at this stage would be premature, as OTW first should be allowed to shape its defence on the basis of the interviews. The Court encourages OTW to allow Welten and its attorneys to attend the interview, as OTW said it intends to do.
4.26.
As to the conditions and rules for the interviews, Welten presented several ideas. The Court’s ruling follows:
( a) The interviews will be held at the offices of OTW’s lawyers.
(b) The date and time of the interviews are to be agreed by the parties within 4 weeks after this judgment and the interviews will be held no later than 8 weeks after this judgment, subject to [the former CEO] and [the former CFO]’s availability.
(c) Communications with the interviewees before and after the interviews should be transparent (copies being sent to opposing counsel, with copy to the Court).
(b) The date and time of the interviews are to be agreed by the parties within 4 weeks after this judgment and the interviews will be held no later than 8 weeks after this judgment, subject to [the former CEO] and [the former CFO]’s availability.
(c) Communications with the interviewees before and after the interviews should be transparent (copies being sent to opposing counsel, with copy to the Court).
( d) OTW has agreed that Welten’s representatives (as well as any lawyers the interviewees would like to bring) should be able to attend the interviews and should be kept up to speed on OTW’s correspondence with the interviewees.
( e) The interviews should be recorded (audio/video). There was no objection on this point.
( f) If software is available to create a verbatim transcript of the interviews without undue burden or if other arrangements can reasonably be made to this end, the lawyers should discuss and make the appropriate arrangements (perhaps assigning this work to a trusted third party if there are objections to one side or the other doing the work). If no appropriate arrangements can be made, it is not required to create a verbatim transcript.
(g) OTW and Welten are free to prepare their own report (preferably jointly) of the interviews. The interviewees are not required to review or approve such reports, but are free to do so.
(g) OTW and Welten are free to prepare their own report (preferably jointly) of the interviews. The interviewees are not required to review or approve such reports, but are free to do so.
( h) Questions during the interviews should be limited to subjects reasonably required “to investigate the Claim”, including exculpatory evidence. Questions outside this scope and solely intended to investigate any potential counterclaim by OTW are not allowed. All objections raised by Welten during the interviews should be noted and included in any written record that is made of the interviews.
Costs (claim c)
4.27.
As a rule, the unsuccessful party must bear the costs of the motion. Welten argues that OTW should in this case pay the costs of the motion, as it already offered to provide (or provide access to) large parts of the requested information prior to these proceedings, and is still offering to produce parts of the requested documents voluntarily.
4.28.
The Court disagrees with Welten’s argument. Welten so far has not made good on its offer to provide the documents voluntarily. It chose to await the Court’s judgment on OTW’s motion to do so. Furthermore, Welten objected to much of the requested documentation, which left OTW little choice but to raise this motion. Welten will therefore be ordered to pay the costs of the motion, plus statutory interest.
On the main proceedings
4.29.
The next step in the main proceedings is for OTW to submit a statement of defence on the merits. As OTW first should have a reasonable opportunity to review the information to be provided by Welten under this judgment, the Court will allow more time than usual to submit this statement. Therefore, the time limit for OTW to submit its statement is as set out in the decisions below.
4.30.
The Parties are requested to submit their availability for a hearing on the merits to be held, tentatively, in November or December 2024.
5.Decisions
on the motion
5.1.
The Court orders Welten pursuant to Article 12.1.2(i) SPA to allow OTW access to the following information:
(vii) the minutes of Purchaser's non-executive board meetings in which the relevant claims against OTW are discussed from May 2023 to February 2024,
(viii) the Group's 2022 ledger accounts, including all invoices charged in 2022 with respect to study costs, training costs, recruitment and marketing costs and external/ZZP recruitment costs, which form the basis for the capitalization of the respective costs,
(ix) all AFAS accounting data for financial years 2021 and 2022,
5.2.
The Court orders Welten pursuant to Article 12.1.2(ii) SPA to disclose to OTW the following information:
(i) Deloitte's buy side financial due diligence report dated 19 December 2022,
(ii) Deloitte's buy side tax due diligence report,
(iii) Deloitte's (or any other advisor's) leakage report, and all email correspondence between Deloitte and Welten regarding ‘leakage’,
(iv) all email correspondence including attachments between [the former CEO], [the former CFO], the Group's finance employee(s) and or the Group's auditor(s) (Crowe Foederer) regarding the capitalization of costs and or accounting errors relevant to this case,
(v) all email correspondence including attachments between [the former CEO], [the former CFO], [employee X], [employee Y], Purchaser, and/or the Group's auditor(s) (Crowe Foederer) and/or Straco regarding financial reports, management reports, management outlooks, capitalization of the costs concerned, and/or accounting errors, between August 2022 and February 2023,
(vi) the full internal Straco presentation regarding Project Wallace dated 22 December 2022,
(vii) [see 5.1 above]
(viii) [see 5.1 above]
(ix) [see 5.1 above]
(x) all email correspondence including attachments between [the former CFO] and the Group's finance controller dated on or about 23 January 2023 asking to update file "2022-2023 samenvatting" showing an FC EBITDA of €10.6m as per September forecast and €10.2m as per update,
(xi) email correspondence between [the former CFO] and [the former CEO] dated 23 January 2023 stating that the overall direction is on course including a file named "current outlook Welten group",
(xii) email correspondence between the Group's finance employee(s), EY and [the former CFO] including its attachments dated 26 January 2023,
(xiii) all email correspondence resulting from the email review performed by Eight Advisory (based on a search of key words around the transaction ("Straco", "Trading update", "activering", "reservering", "tweak", "EBITDA", etc.,), as noted on page 15 of the Eight Advisory report),
(xiv) all email correspondence between Crowe Foederer and the Group's finance manager and [the former CFO] with respect to 'richtlijn 315 van de Nadere Voorschriften Controle- en overige standaarden (NV COS)' dated on or about 21 April 2023,
(xv) email correspondence between Crowe Foederer and Purchaser regarding the "Position Paper Deferral of expenses Welten Group B.V." dated 14 July 2023 (the Position Paper),
(xvi) all Excel attachments to the Position Paper,
(xvii) all email correspondence and other documentation regarding Crowe Foederer's engagement in relation to its note dated 31 August 2023,
(xviii) the email correspondence between [the former CFO] and Purchaser regarding [the former CFO]'s questions sent by email on 16 October 2023,
(xix) all sources of information received and used by Deloitte in its Damage Quantification Calculation report of 27 February 2024, except where such documents have already been submitted (Exhibit 5 Welten) or where there is no document (“phone calls”),
(xx) a copy of the claim submitted to the W&I insurer on 28 February 2024,
5.3.
The Court sets the deadline for access to the documents referred to at 5.1 and 5.2 at
4 weeks after this judgment, except where the order relates to Welten or Group employee email inboxes, in which case the deadline is
8 weeks after this judgment.
4 weeks after this judgment, except where the order relates to Welten or Group employee email inboxes, in which case the deadline is
8 weeks after this judgment.
5.4.
The Court orders Welten to allow OTW to interview [the former CEO] and [the former CFO] to investigate Welten’s claim against OTW, subject to the conditions set out at 4.24 through 4.26.
5.5.
The Court determines that the interviews will be held within
8 weeks after this judgmentand under the conditions laid down at 4.26 of this judgment.
8 weeks after this judgmentand under the conditions laid down at 4.26 of this judgment.
5.6.
The Court dismisses any other claims presented in the motion.
5.7.
The Court orders Welten to pay the costs of the proceedings, quantified up to this judgment at € 4,000, with the provision that if these costs are not paid within seven days after the date of this judgment, statutory interest will be due from the eighth day after the date of the judgment.
5.8.
The Court declares that this judgment is enforceable notwithstanding appeal.
in the main proceedings
5.9.
The Court directs OTW to submit its statement of defence on
16 October 2024.
16 October 2024.
5.10.
The Court directs the Parties to submit – no later than
24 July 2024– their availability for a hearing on the merits to be held tentatively in November or December 2024.
24 July 2024– their availability for a hearing on the merits to be held tentatively in November or December 2024.
5.11.
The Court refers the case back to the full panel.
Done by L.S. Frakes, Judge, assisted by W.A. Visser, Clerk of the court.
Issued in public on 17 July 2024.
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