The applicants purchased a Finnish mining company from the respondents under a share purchase agreement containing tax indemnities.
Post-closing, the Finnish tax authority reassessed the company's pre-closing tax years, disallowing deductions and effectively eliminating tax loss carry forwards that the applicants had intended to use in post-closing years.
The applicants sought indemnification for the reassessed taxes and the resulting increased tax burden in post-closing years.
The Superior Court of Justice held that the reassessment breached the respondents' unqualified warranty that there were no grounds for reassessment.
The court further held that the increased taxes in post-closing years were a reasonably foreseeable consequence of the reassessment and fell within the scope of the indemnities.
The respondents were ordered to pay the amounts already collected by the tax authority, with the remainder to be determined after the conclusion of Finnish tax appeals.
