Reeves v Sprecher & Ors

The Defendants have applied for summary judgment on the claim made in these proceedings that there was a partnership between the Claimant, Mr Reeves, and the First Defendant, Mr Sprecher, alternatively that the relevant paragraphs of the Amended Points of Claim be struck out ("the summary judgment application"). The Claimant has applied for permission to re-amend his Amended Points of Claim ("the amendment application").

On 13 March 2008, I gave my decision to dismiss the summary judgment application, with reasons to follow in writing. On 17 March 2008, I gave my decision on the amendment application refusing permission for Mr Reeves to re-amend on the principal allegation now sought to be introduced by the Claimant (the redemption issue) and giving permission for certain other proposed reamendments, also with reasons to follow in writing. I now give my reasons for those decisions.

Other applications which were originally before me (one by the Defendants for security for costs and one by Mr Reeves for specific disclosure) have been resolved by consent.

For the background to the underlying claims made by Mr Reeves in these proceedings, I gratefully adopt the summary given by Mr Justice Lewison in a judgment delivered earlier in these proceedings on various interlocutory applications, [2007] EWHC 117 (Ch) reported at [2006] 2 BCLC 614, and which for ease of reference I set out below:

Mr Justice Lewison refused permission for Mr Reeves (i) to carry on his derivative claims on behalf of PTM and (ii) to amend the particulars of claim to claim an injunction restraining Mr Sprecher from applying the assets of PTM otherwise than in the ordinary course of business and a related complaint by Mr Reeves that as a director of PTM he had been refused information about PTM's business. He did so on the grounds that these matters concerned the internal management of the company and that, applying the principles laid down by Lawrence Collins J in Konamaneni v Rolls Royce Industrial Power (India) Ltd [2002] 1 BCLC 336, Nevis was the appropriate forum for dealing with these complaints.

Claims had also been asserted in contract that Mr Sprecher's conduct in taking steps designed to bring about the dilution of Mr Reeves' interest in PTM amounted to a breach of the agreement between him and Mr Sprecher and a breach of the obligation of good faith alleged to be owed to him by Mr Sprecher. Mr Justice Lewison gave summary judgment against Mr Reeves on the ground that these claims had no real prospect of success because there had been no damage and there was insufficient evidence to support an injunction preventing Mr Sprecher from taking such steps.

These aspects of Mr Justice Lewison's judgment are relevant to the amendment application which I will need to consider further later.

Mr Justice Lewison also dealt with summary judgment applications in respect of tort claims against Mr Sprecher and Ms Sanghvi which are not directly relevant to the applications before me.

Of direct relevance to the summary judgment application was Mr Justice Lewison's decision to grant Mr Reeves permission to amend the particulars of claim to allege that the agreement between himself and Mr Sprecher amounted in law to a partnership. I will need to consider his judgment on this aspect in detail later in this judgment.

Before doing so, I should complete the background to the applications before me. By Mr Justice Lewison's order made on 23 March 2007, which gave effect to the judgment I have referred to, directions were given for the trial to be expedited, for disclosure and for exchange of witness statements by 30 July 2007. The trial has now been fixed to come on for hearing on 16 June 2008 with an estimated length of 4 weeks. Disclosure has taken place but it has been a prolonged and cumbersome process which has generated much dispute. I am told that the documents disclosed amount to about 125 files, although it seems to be accepted on all sides that much of that disclosure will not be relied on at trial. Despite a subsequent direction made by Deputy Master Hoffman on 13 August 2007 extending the time for exchange of witness statements to 14 November 2007, witness statements have yet to be exchanged.

There have also been significant developments in Nevis. Mr Reeves says that these developments show that Mr Sprecher was taking underhand advantage of the decisions made by Mr Justice Lewison. On 13 April 2007, PTM issued proceedings in Nevis against Mr Reeves claiming damages or equitable compensation against Mr Reeves in the amount of some US$13 million for breach of fiduciary and director duties, self dealing and misrepresentation and other relief. Many of the allegations repeat allegations made by PCM in the English proceedings.

On 1 May 2007, Mr Sprecher, as the majority shareholder of PTM, procured the passing of a shareholders' resolution altering PTM's Articles of Association enabling PTM to redeem outstanding shares for "such amount as determined by the directors… in their discretion". Mr Sprecher, Guna Mahalingam and Delano Bart QC (a former Attorney General of Nevis) were appointed directors.

On 2 May 2007, the directors of PTM resolved that all the shares in PTM held by Mr Reeves be redeemed by PTM for US$3.5 million. That amount is based on a valuation of Mr Reeves' shares from Turnkey Capital LLC ("the Turnkey Valuation"). Following service of notices, Mr Reeves' shares were redeemed on 21 May 2007.

Mr Reeves says that that the redemption process was instigated in bad faith by Mr Sprecher as a means of illegitimately depriving Mr Reeves of his shareholding at a gross undervalue. The Turnkey Valuation is said by Mr Reeves to be fundamentally flawed.

On 26 May 2007, PTM issued an amended claim form in the Nevis proceedings which claimed the following additional relief:

On 29 June 2007, PTM obtained an order that US$3,500,000 be paid into court.

On 1 June 2007, the Eastern Caribbean Supreme Court in the High Court of Justice ("the Nevis Court") gave permission to PTM to serve the Amended Claim Form and Amended Statement of Claim out of the jurisdiction on Mr Reeves. On 23 July 2007 Mr Reeves made an application to the Nevis Court challenging the order for service out of the jurisdiction, alternatively for a stay of proceedings on forum non conveniens grounds. The application was supported by a lengthy affidavit from Mr Reeves to support his argument that there was no arguable case. I was told by Mr Lowe that there has been no affidavit in response. Mr Reeves' applications were dismissed by the Nevis Court on 31 October 2007. Mr Reeves appealed against this decision to the Eastern Caribbean Supreme Court in the Court of Appeal ("the Nevis Court of Appeal"). During the course of the hearing, and when I gave my decision on the amendment application, the outcome of that appeal was not known. I have this morning received a copy of the Order of the Nevis Court of Appeal dated 17 March 2008 dismissing the appeal.

On 23 July 2007, PTM filed an application for summary judgment on that part of the claim which sought orders as to the validity of the redemption of Mr Reeves' shares. That application was stayed until the stay was lifted by the Nevis Court of Appeal in its order dated 17 March 2008.

Having summarised the background, I now turn to the applications before me.

By the summary judgment application, the Defendants seek summary judgment on the claim that there was a partnership between Mr Reeves and Mr Sprecher, alternatively that the relevant paragraphs of the Amended Points of Claim be struck out. Those paragraphs were introduced by way of amendment pursuant to the permission granted by Mr Justice Lewison after a contested hearing. Mr Justice Lewison dealt with the matter as follows in his judgment:

When Mr Justice Lewison made his order on 23 March 2007 giving effect permission to amend, Paragraph 15A had been altered slightly to include the following subparagraph after the first subparagraph quoted in his judgment:

At the hearing on 23 March 2007, the Defendants applied for permission to appeal against the order allowing the amendments relating to the partnership allegation. The application was refused by Mr Justice Lewison for the following reasons:

The Defendants applied to the Court of Appeal for permission to appeal, which was refused by Lawrence Collins LJ on 25 June 2007.

By the summary judgment application, the Defendants want to have a "second bite at the cherry". They say that the partnership allegation is bound to fail or has no realistic prospect of success. They say that this should be decided now because, in short, Mr Reeves' applications to re-amend and for specific disclosure ride on the back of the partnership allegation and the continued existence of the partnership allegation will disrupt the case management of the claim to trial and massively increase the costs. It is said that the court in the exercise of its case management powers should look again at the partnership allegation now that disclosure has occurred and will be able to conclude that it is bound to fail or has no real prospect of success.

What should the court's approach be to such an attempt by the Defendants in substance to relitigate a matter already decided earlier in the same proceedings? Mr Sher QC, who appeared for the Defendants, relied on Woodhouse v Consignia plc [2002] 1 WLR 2558, where the following is stated in the judgment of the Court of Appeal:

Mr Sher QC relied in particular on the example given in Paragraph 57 and pointed out that in the Consignia case the "second bite at the cherry" succeeded. (Although the application before Mr Justice Lewison was made by Mr Reeves for permission to amend and not an application by the Defendants for summary judgment, the issue considered by Mr Justice Lewison was whether the partnership claim had a real prospect of success at trial, which was similar to the test to be applied on a summary judgment application, and Mr Sher did not suggest that the test was materially different.) Nevertheless, the last sentence of paragraph 57 does suggest that I should first consider the "new material" relied upon in support of the present application.

In summary, the following new matters were relied upon by Mr Sher QC:

The challenge to the concession made by Mr Higham QC (who then appeared for the Defendants) before Mr Justice Lewison was a central plank of Mr Sher QC's oral and written submissions, in order to support the argument that the court can now safely conclude that terms of the entire agreement reached between Mr Reeves and Mr Sprecher was recorded in writing - namely a shareholders' agreement incorporated in minutes of a board meeting of PCM held on 30 September 1999 signed by both Mr Reeves and Mr Sprecher and an agreement in similar terms also so signed dated "as of 1 September 1999" in which PTM is also shown as a party but which was prepared much later. Mr Sher candidly recognised that his task would be more difficult if he could not show that the entire agreement was made in writing

I am of the clear view that the court cannot reach the conclusion before trial that the entire terms of the agreement were recorded in writing. There are numerous reasons for this view, the principal reasons being as follows.

In paragraph 2 of the Amended Points of Claim, it is alleged that agreement was reached between Mr Reeves and Mr Sprecher "between March and August 1999, in the course of numerous discussions". Terms of the agreement are then pleaded. The facts and matters relied upon in support of the partnership allegation pleaded in Paragraph 15A relate back to a material extent to the matters pleaded in Paragraph 2 (and subsequent paragraphs dealing with the alleged agreement). Paragraph 2 (and those subsequent paragraphs) are not the subject of the summary judgment application. Mr Reeves also relies on a number of documents prepared before the September board minute which he says supports his allegations as to the terms of the agreement reached between Mr Reeves and Mr Sprecher. One example is a "Proposed Deal Outline" sent by Mr Sprecher in early August 1999 to Mr Reeves and initialled by the latter. It is to be noted that the agreement is said to have been reached before the September board minute was signed. These are matters which will have to be investigated at trial whatever the outcome of the summary judgment application.

In paragraph 2(1A) of the Amended Points of Claim, Mr Reeves alleges that it was a term of the agreement (ie the agreement reached between March and August 1999) that:

In paragraph 4.4 of his Defence dated 30 April 2007, the statement of truth being signed by Mr Sprecher himself, the following is stated:

Mr Sher QC accepted that this agreement was not one that was recorded in writing. What he says is that this agreement was made much later when the business started to make profits and this is supported by a witness statement from Mr Sprecher made in support of the summary judgment application. Nevertheless on the face of the Defence as it currently stands there is an acceptance that an agreement as to equivalence of benefit (albeit more limited than that suggested by Mr Reeves) was made before the September board minute was signed, and it is not suggested that that agreement was made in writing.

I was shown the passage in the transcript of the hearing before Mr Justice Lewison where Mr Higham QC made the alleged concession. The concession is an acceptance by Mr Higham that the "equivalence of benefits principle" was not recorded in writing. Although it is now said that the concession was wrongly made, there was no attempt made by the Defendants before Mr Justice Lewison to correct the position after he had given judgment (whether at the hearing on 23 March 2007 or otherwise) and the concession appears to accord with the defence of Mr Sprecher signed by him subsequently on 30 April 2007.

Mr Sher also accepted that the September board minute, upon which he so heavily relied, was a document which was not professionally drafted and that some of its terms were "unhappily drafted". That is another reason why there needs to be a trial with oral evidence and cross examination to determine the terms of the agreement that was reached.

I therefore conclude that the court cannot before trial proceed on the basis that all the terms of the agreement between Mr Reeves and Mr Sprecher were recorded in writing. The position on that aspect is in substance no different to the position before Mr Justice Lewison.

I then turn to deal with the point that no documents have been disclosed which support the partnership allegation. Mr Sher QC said that this represents a change of circumstances from those existing at the time of the hearing before Mr Justice Lewison and he referred to passages in the transcript where Mr Martin QC (who then appeared for Mr Reeves) suggested that proceedings were at an early stage.

Mr Lowe suggests that the fact that no documents have emerged on disclosure to support the partnership allegation would have come as no surprise to Mr Justice Lewison. He points to the underlying allegation (discussed above) that the agreement was made orally, at least in part. He also refers to the following in the second witness statement of Mr Reeves dated 11 December 2006 which was before Mr Justice Lewison:

I am not in a position to say whether or not the lack of disclosure on the partnership allegation would have come as a surprise to Mr Justice Lewison. However, it is clear to me from his judgment that the emphasis which he laid on the agreement being made partly orally, which still applies, was a key factor in his decision that the matter should proceed to trial (see paragraph 41). The lack of disclosure on this point is in my judgment far from conclusive and does not represent a significant change of circumstances since the decision of Mr Justice Lewison.

As to the few documents disclosed which are said to be inconsistent with the partnership allegation, I am of a similar view that they are far from conclusive and do not represent a significant change of circumstances since the decision of Mr Justice Lewison, particularly in the light of the passage in Mr Reeves' witness statement which I have cited. Mr Sher QC did not develop this point in his oral submissions, but in reaching this view I have considered the detailed skeleton argument which he submitted.

For these reasons, applying the last sentence of Paragraph 57 of the judgment of the Court of Appeal in Consignia, I conclude that I am entitled to dismiss the summary judgment application "without ceremony".

Mr Sher QC nevertheless invited me to embark on a consideration of the evidence now available to the court, which he said would represent the evidence available to the judge at trial, to decide now that the partnership allegation had no real prospect of success or was bound to fail. He said that I had all the relevant documentation available and that, although witness statements for trial had not been exchanged, Mr Reeves has said all he can say on the subject in his various witness statements already served. A lengthy skeleton argument (76 pages in total, single spaced, of which about half addresses the summary judgment application) has been submitted by the Defendants, although I would add that in developing his submissions orally on this aspect, and showing me the underlying documents and evidence, Mr Sher QC acted with commendable efficiency, taking only just over two hours in opening the summary judgment application.

To embark on this exercise would in my view involve conducting a "mini-trial" of the type deprecated in Three Rivers DC v Bank of England [2003] AC 2 1 at paras 93 - 96 in the speech of Lord Hope and the authorities there cited. I have already mentioned a number of reasons why I consider the matter should proceed to trial, with cross examination, and cannot be determined on a summary basis.

In this respect, I should also comment on the case management reasons advanced by the Defendants to decide the issue now, to which I have alluded earlier. On analysis, it seems clear that Mr Reeves' application for specific disclosure did not depend on the continuation of the partnership allegation. Disclosure on that aspect is, according to Mr Lowe, complete. The application for specific disclosure was made in respect of other allegations already made (and also the redemption issue which I consider below). Further, the application to make the proposed reamendments would not have fallen away if the partnership allegation had been summarily disposed of in favour of the Defendants: the matters proposed to be pleaded would at least arguably have constituted breaches of contractual duties already pleaded. The assertion that the continuation of the partnership claim will disrupt the case management of the claim to trial and massively increase the costs seems to me to be a gross overexaggeration. I consider that there are therefore no sound case management reasons for addressing the issue now, with the trial due to take place in only three months time.

There is another reason why it is inappropriate to embark on this exercise. No underlying material of any significance was shown to me which was not before Mr Justice Lewison. All the salient documents and matters referred to in Mr Reeves' witness statements now relied on by the Defendants were before Mr Justice Lewison. An application for permission to appeal against his order on the partnership allegation was refused by himself and the Court of Appeal. In view of my finding that there has been no significant change of circumstances, the attempt by the summary judgment application to have a "second bite at the cherry" in my judgment borders on an abuse of process.

I should deal with one matter which was particularly relied on by Mr Sher QC. He relied on paragraphs 72 and 73 of Mr Reeves' sixth witness statement dated 7 March 2008 in which Mr Reeves makes it clear that it is not his case that the shareholdings in the various Platinum entities formed part of the assets of the alleged partnership. However, this was also relied upon by the Defendants before Mr Justice Lewison (see eg para 38(d) of their skeleton argument for the 23 March 2007 hearing).

In view of the fact that there will have to be a trial of the partnership allegation, it would be inappropriate for me to comment in any detail on Mr Sher's submissions on the merits. I should nevertheless state that nothing in those submissions has caused me to doubt the findings of Mr Justice Lewison that it would not be right at a summary stage to hold that the partnership allegation has no real prospect of success and that the outcome will depend on the facts as found at trial. The case of Chahal v Mahal [2005] EWCA 898 (CA), relied upon by Mr Sher QC, shows the fact sensitive nature of the types of matters in issue. In that case the issue was whether an existing partnership was dissolved when all the partnership assets and business were transferred to and then carried on by a limited company. That issue arose at the trial of the action and then on appeal from the orders made following the trial. Neuberger LJ in his judgment indicated that the normal commonsense commercial approach would suggest that a partnership is dissolved when the assets and the business are transferred to a limited company. However, that was not the outcome in that case because of the unusual facts. Although Mr Sher submitted that the facts here are significantly different and invited me to adopt a robust commercial and commonsense approach, the decision in Chahal illustrates the need to establish the full facts and the dangers of adopting such an approach at a summary stage where these are in issue.

For these reasons, I dismiss the summary judgment application. I should record that the Defendants applied in the alternative for the partnership allegation to be tried as a preliminary issue but this was not pursued by Mr Sher QC when it became apparent that this could not be done without jeopardising the trial date which has been fixed. It would clearly not be appropriate to use that fixture for the trial of such a preliminary issue, leaving all the other matters in issue to be dealt with at a later date.

I now turn to deal with the amendment application by which Mr Reeves seeks to re-amend the Amended Points of Claim. Most of the argument on the amendment application was directed towards the proposed reamendments concerning the purported redemption of Mr Reeves' shares in PTM.

Before dealing with this aspect, it is convenient to dispose first of the proposed reamendments in paragraphs 20 and 21 which allege fiduciary duties owed by Mr Reeves and Mr Sprecher to each other. I can deal with these quite shortly. The fiduciary duties alleged are duties to deal with the other in good faith, to work loyally in their mutual best interests, to promote the fund management business and not to use powers to operate such business so as to undermine their mutual interests in such business. It is alleged that these duties arise from the agreement already pleaded in paragraph 2 "and/or the relationship of trust and confidence created between them as a result of [that] agreement or understanding as to how the business described in paragraph 2 above was to be operated and/or their mutual dealings."

With the possible exception of the reference to "mutual dealings", the matters sought to be relied on to support the alleged fiduciary duties are matters which are already pleaded. (If and to the extent that "mutual dealings" is intended to refer to the steps taken in Nevis concerning the redemption of Mr Reeves' shares, I deal with this below). A contractual duty of good faith is already pleaded. The introduction of these allegations will not in my view significantly extend the factual investigation which will have to be undertaken at trial and will largely turn on the findings at trial as to what was agreed in 1999. In essence, what is sought to be introduced is a question of the legal characterisation of the duties thereby arising i.e the legal consequences of the factual enquiry which will in any event have to be undertaken at trial. There are no case management reasons why these proposed reamendments should not be allowed.

The Defendants submitted that these proposed reamendments have no real prospect of success. The argument on this point to some extent echoed the arguments on the partnership allegation. It was said that this was essentially a shareholders' dispute and that fiduciary duties are not imposed on shareholders in respect of the exercise of their powers. However, as I have already found, the nature of the relationship agreed between Mr Reeves and Mr Sprecher cannot be conclusively determined before trial. At this stage I do not consider that these proposed reamendments have no real prospect of success. The outcome will depend on the facts as found at trial.

Mr Lowe made it clear that the principal purpose of the proposed reamendments to plead fiduciary duties was to plead breaches by reference to the steps taken in Nevis to redeem Mr Reeves' shares. But he also pointed out, it seems to me correctly, that breaches of duties which are already pleaded would also constitute breaches of the alleged fiduciary duties. Accordingly, I give Mr Reeves permission in principle to make the proposed reamendments in paragraphs 20 and 21, provided that these are tied in to existing breaches alleged or relief claimed based on facts and matters already pleaded. Whether Mr Reeves should be also given permission to introduce the allegations relating to the redemption of his shares in PTM is the issue which I now have to consider.

The proposed reamendments in question are principally those contained in Section (iv) from Paragraph 41A - 41K, and in Paragraph 54 of the proposed Re-amended Points of Claim. In summary, Mr Reeves seeks to rely on the steps taken by Mr Sprecher from about May 2007 onwards relating to the redemption of his shares in PTM which I have mentioned earlier in this judgment. He wishes to allege that Mr Sprecher was in control of the board of PTM and that none of the directors exercised independent judgment about the resolution that was passed; that the Turnkey valuation was at a manifest undervalue and that no reasonable valuer would have produced such a figure; that Mr Sprecher must have known that the Turnkey valuation was fundamentally wrong; and that Mr Sprecher's purpose all along in taking the steps he did was to redeem Mr Reeves' shares at a substantial undervalue. In the proposed Paragraph 54, the allegation is sought to be made that Mr Sprecher thereby acted in breach of the term of the agreement between Mr Reeves and Mr Sprecher that the ownership of shares in Platinum entities would not be altered without the consent of 80% of the shareholders and in breach of his contractual and fiduciary duties of good faith and other alleged fiduciary duties.

In his oral submissions, Mr Lowe made it clear that it would be said at trial that Mr Sprecher acted dishonestly and fraudulently in causing the redemption of Mr Reeves' shares to be made in the manner that it was made. He accepted that the alleged impropriety of the redemption was a matter that could be considered in the Nevis proceedings and that, albeit not without some difficulty, Mr Reeves could seek appropriate relief in Nevis. But he said that the allegations fall most logically to be considered in the English proceedings where the relationship between Mr Reeves and Mr Sprecher will have to be explored. He points out that the Nevis proceedings have not reached an advanced stage and may never go forward if Mr Reeves' challenge to the jurisdiction is upheld. He pointed to the limited means available to Mr Reeves, who had obtained funding from a third party to bring these proceedings but was now funding them himself. By contrast he said that PTM or PCM, with the considerable resources available to them, were funding Mr Sprecher in both sets of proceedings. It would therefore be oppressive for Mr Reeves to have to litigate in Nevis. Mr Lowe also submitted, with considerable force, that if the reamendments are not allowed, the judge at trial may only have to consider half the picture and that it would accordingly be unjust to Mr Reeves not to allow the proposed reamendments.

The Defendants submitted that to allow the proposed reamendments would contravene the principle laid down by Lawrence Collins J in Konamaneni v Rolls Royce Industrial Power (India) Ltd [2002] 1 BCLC 336 that questions of internal management are governed by the law of the place of incorporation and that the courts of that place are best suited to give decisions concerning those questions and the validity of the company's decisions (see also Base Metal Trading v Shamurin [2005] 1 WLR 1316 (CA). However, as Mr Lowe pointed out, the reamendments seek to introduce a personal claim against Mr Sprecher relating to his alleged personal obligations of good faith (and other personal obligations) owed to Mr Reeves. It is perhaps not without significance that Mr Justice Lewison gave summary judgment in favour of the Defendants in relation to the claims for breach of the contractual duties owed to Mr Reeves by Mr Sprecher personally relating to the dilution of Mr Reeves' shares in PTM (see paragraph 6 above) on the grounds of lack of evidence but did not suggest that the principle in Konamaneni applied to these claims. For these reasons, I do not consider that the principle in Konamaneni strictly applies to the proposed reamendments. In any event it is clear that the principle is not absolute and the court retains a discretion. However, if and to the extent that issues arising from the proposed reamendments involve questions of internal management and the validity of the company's decisions, it seems to me I need to take into account, as part of my more general discretion as to whether to allow the proposed reamendments, that these are matters best suited to the courts of Nevis.

Although Mr Lowe says that he could advance the proposed claim on the basis that all steps regarding the redemption were valid as a matter of Nevis law, the allegations sought to be pleaded are not in terms advanced on this basis. Indeed certain of these allegations seem to challenge the validity of these steps or raise questions of internal management (see eg paras 41C, 41F, 41G;). These are matters which I consider I can take properly take into account in the context of the wider question of whether, in the light of all the circumstances, I should give permission for the proposed amendments to be made.

The Defendants also submit that the fact that there are now proceedings in Nevis which concern the same subject matter as the proposed reamendments is a highly material factor against permitting the proposed amendments. I was shown the affidavit of Mr Reeves in those proceedings dated 20 July 2007 and written submissions dated 22 November 2007 from which it is clear that Mr Reeves there challenges the validity of the change to PTM's articles and the validity of the redemption. He also challenges the fairness of the valuation of his shareholding. I recognise that Mr Reeves challenged the jurisdiction of the Nevis Court and that the written submissions were made to respond to the summary judgment application. However, the Nevis Court has found that it has jurisdiction and, now that Mr Reeves' appeal has been dismissed, these matters are to be litigated in the Nevis proceedings. I take these matters into account in the exercise of my discretion.

In this context, Mr Lowe referred to me to two cases concerning an application to stay proceedings or the determination of certain issues in proceedings where there were concurrent proceedings (Reichhold v Goldman Sachs [1999] 2 Lloyds Rep 567 and Curtis v Lockheed Martin UK Holdings Ltd [2008] EWHC 260 (Comm)). He said that these showed that, if Mr Sprecher had sought a stay of the issues raised in the proposed reamendments, he would have had to show very strong reasons for the stay and that no such evidence had been put forward by Mr Sprecher.

The premise for advancing this argument was that a claimant is ordinarily allowed to amend his pleadings if that causes no prejudice which cannot be cured in costs and, provided the claim is reasonably arguable, a claimant such as Mr Reeves should be allowed to include it. I accept the premise which I fully take into account in the exercise of my discretion but I do not think it follows that I should therefore treat the principles in these two cases as directly applicable. It would in my view be wrong to equiparate a claimant such as Mr Reeves who seeks to introduce a claim by way of amendment with a claimant who has already brought and is pursuing that claim. Different case management considerations come into play and the legitimate interests of the claimant in these two situations is not the same. But in any event, one of the relevant factors taken into account in these two cases in deciding whether or not to grant a stay was the risk of inconsistent decisions. Where there are concurrent proceedings, there is such an inherent risk. But as Mr Sher points out, the allegations relating to the redemption issue have already been raised by Mr Reeves in the Nevis courts. It may be that Mr Reeves' appeal will succeed, or that even if it fails, he may, as Mr Lowe points out, choose to play no part in those proceedings. Mr Sher says that on the basis of matters as they now stand, to allow the proposed reamendments would create the risk of inconsistent decisions. He says that this court should avoid that possibility by refusing to allow the redemption claim to be introduced.

Mr Lowe says that the Nevis proceedings are not in an advanced state whereas the English proceedings are set down for a 4 week trial commencing on 16 June this year. He says that this is a material consideration for having the redemption claim determined in these proceedings. I accept that this is a material consideration if I am satisfied that the claim can fairly and justly be dealt with at the trial, the issue to which I now turn.

I have already mentioned that Mr Justice Lewison, when ordering an expedited trial, directed that witness statements be exchanged by 30 July 2007. Witness statements have not yet been exchanged even though a trial estimated to last four weeks is only some three months away. It is clear that, on the basis of the existing allegations, the preparation of agreed trial bundles, to be collated from some 125 files of documents disclosed, will be no easy task (a view reinforced by the problems encountered on the preparation of bundles for the applications before me). I was faced with an application by Mr Reeves for specific disclosure for documents relating to existing allegations (with the exception mentioned below). That application has sensibly been compromised as a result of which there is to be certain further disclosure by the Defendants. The work that will be required to bring this case into a state of preparedness for a trial due to start in some three months, even on the basis of the existing issues, is a matter which I have to take into account in the exercise of my case management powers.

What would be the case management implications of permitting the redemption claim to be introduced? First, there is the question of disclosure. In the normal course, if the redemption claim were introduced, disclosure would be required and it seems clear from the materials I have seen that the main burden of disclosure would fall on Mr Sprecher. I have already mentioned that the disclosure exercise which has already occurred has been cumbersome and prolonged. I have no doubt that it would be wholly impractical for the normal process of disclosure to take place to enable a trial of the redemption claim to go ahead in June, taking into account the task of collating and reviewing documents which would be required and the current state of unpreparedness for trial. In the face of this obvious difficulty, Mr Lowe suggested to me that I could exercise the court's powers under CPR r 31.5 to dispense with or limit disclosure on the part of the Defendants. However, it has to be borne in mind that the redemption claim includes allegations of bad faith on the part of Mr Sprecher. If I were to limit or dispense with disclosure on the part of Mr Sprecher, there is a real risk that a fair trial of the redemption claim will not be possible since there may be documents not before the court which have a material bearing on the issues raised.

Further, in order to defend the claim Mr Sprecher is entitled in any event to produce relevant documents to support his defence and for this purpose it would be necessary for him and his legal advisers to undertake the burdensome review of a substantial number of documents. Partial and one sided production of documents by Mr Sprecher (on the assumption that I limited or dispensed with his disclosure obligations) could well lead to further applications for specific disclosure by Mr Reeves on the grounds that this is required for a fair trial of the issues before the court.

The difficulties with regard to disclosure if the reamendment were permitted are illustrated by Mr Reeves' application for specific disclosure. In its original form, Mr Reeves sought an order for disclosure of "all documents relating to Mr Sprecher's intention to amend PTM's Articles of Association and then immediately cause PTM to redeem Mr Reeves' shareholding in PTM, including [certain identified classes of document]". This was potentially far reaching. Other orders sought relating to the financial position of PTM (linked to the equivalency of benefits allegation) might also have a bearing on the redemption issues. In the course of the hearing, Mr Lowe narrowed the requests to the identified classes of documents. But it would seem that the wider order was originally sought because it was contemplated that this would be required for the fair determination of the issues raised by the redemption claim.

Similar difficulties arise with the second consequence of allowing the proposed reamendment. If the reamendment is allowed, Mr Reeves applies for permission to adduce expert evidence in the field of forensic accountancy. In his sixth witness statement, Mr Whittingham (Mr Reeves' solicitor) explains why expert evidence is required in paragraphs 73 - 75. In paragraph 74.2 he says:

In the course of his opening submissions on the amendment application, Mr Lowe suggested that the consequences on disclosure of allowing the reamendment would be limited. However, in connection with the disclosure that he said would be required for the purposes of preparing the expert report on behalf of Mr Reeves, he did suggest that it would be necessary for disclosure to be given of all the financial information given to Turnkey Capital LLC for the purpose of the Turnkey valuation (included as one of the identified classes of documents in the specific disclosure application - see para 1.3.2) and, in addition, updated financial information relating to PTM from that appearing in the schedules to the Turnkey valuation together with certain other financial information about PTM including its accounts. In his submissions in reply, Mr Lowe backtracked on this position and suggested that what had been said by Mr Whittingham in the passage in his witness statement which I have emphasised was a mistake. He said that the purpose of the expert evidence was simply to establish the flawed process of valuation undertaken by Turnkey Capital LLC and for this purpose updated financial information was not required.

The fluidity in the stance adopted by Mr Lowe illustrates the problems which would flow from allowing the proposed reamendment. Mr Lowe in his reply suggested that the issues raised by the proposed amendments were of relatively narrow compass, but it is equally clear from the stance previously adopted that those issues are at least potentially capable of being much wider. I consider it improbable that the fair determination of the issues raised by the proposed reamendment can be dealt with in the narrow manner suggested by Mr Lowe. I accept the submission of Mr Sher that to allow the amendments will likely result in a far wider ranging inquiry, including issues as to the financial position of PTM and the valuation of Mr Reeves' shares in PTM.

I was told by Mr Sher QC that the Defendants have yet to instruct an expert but I attach little weight to this. Mr Lowe pointed out that PTM is likely to have instructed an expert for the purpose of the Nevis proceedings, who could be instructed in these proceedings. Mr Sher did not demur from this, and a representative of PTM was in court at the hearing who passed on certain other information relating to the Nevis proceedings through Mr Sher. But I cannot disregard the difficulties that would be involved for the Defendants in collating the information which an expert would require for the purposes of producing a report in these proceedings in the limited time available. And although Mr Lowe sought to downplay the width of the issues which Mr Reeves' expert would be required to consider, it does not follow that the Defendants should be similarly so constrained when instructing an expert as part of their defence to the allegations sought to be made.

Mr Lowe suggested that expert evidence could be properly and fairly produced by both sides in time for the trial in June. In view of the information that would be required to be collated for that purpose and the potentially wide ranging nature of the issues covered (including the value of Mr Reeves' shareholding), together with the task faced by the parties in any event to get the case ready for trial, I consider that this suggestion is over optimistic.

The third consequence of allowing the proposed reamendment will be the broadening of the issues which will need to be covered by the witness statements. In his seventh witness statement signed on 14 March 2008 (during the course of the hearing), Mr Horrocks, the Defendants' solicitor, suggests that additional witness statements would need to be obtained from Turnkey Capital LLC and the other directors of PTM if the reamendment is allowed. Were the parties' preparedness for trial on the existing issues more advanced, I would not have attached significant weight to this aspect, bearing in mind the resources available to the Defendants, but there is no doubt that the result of allowing the proposed reamendment will be to add considerably to the burdens already facing the Defendants to get this case ready for trial.

There is one further matter for me to take into account in exercising my discretion, namely the delay on the part of Mr Reeves in making his application to reamend. In the proceedings in Nevis, Mr Reeves alleged that the redemption process was improper as long ago as 20 July 2007 in his witness statement submitted in support of his challenge to the jurisdiction. Yet the application to reamend was not issued in these proceedings until 24 January 2008, the proposed reamendments having been sent to the Defendants only some two days beforehand. When I asked Mr Lowe whether there was any explanation for the delay, he said that Mr Reeves and his advisers were "overwhelmed" by other matters and in particular the disputes over disclosure. I do not regard this as a proper justification for the delay in making the application. It is clear to me, and Mr Lowe did not suggest otherwise, that the application now made could have been made as long ago as July last year when the case management consequences of allowing the proposed reamendments would have been very different.

I should record that no suggestion was made to me that the June trial date should be vacated.

Weighing up the matters to be taken into account which I have described above, I come to the conclusion that the application to reamend to raise the redemption claim should be refused. In short, for the reasons which I have already given in some detail, I consider that it is likely that a fair determination of the issues raised, which include allegations of bad faith, will not be possible at the trial in June. To allow the proposed reamendments will distract the parties from the considerable trial preparation which is already required to get the case ready for trial. Mr Reeves has accepted that he could litigate the issues in Nevis, so he will not be completely shut out from making his claims. The underlying allegations sought to be made as to the impropriety of the redemption process have already been raised by Mr Reeves in the Nevis proceedings and fall to be litigated there. To allow the proposed reamendments will create a risk of inconsistent decisions. Certain of the allegations sought to be made would seem to bring into issue matters of internal management and the validity of PTM's acts which are matters best suited to the courts of Nevis.

I recognise that my decision will cause prejudice to Mr Reeves. The court at the trial in June may not have the full picture, there will inevitably be a delay in the resolution of the redemption claim and Mr Reeves with his limited resources may now be forced to litigate these issues in Nevis. But as regards the first point, it seems to me that this is a real risk even if the proposed reamendments were to be allowed simply because of the extremely limited time available between now and the trial. The court would be forced to try the allegations sought to be made on what is likely to be an incomplete and unsatisfactory basis without the normal process of disclosure. The court is also unlikely to have had the full picture before it if the issues were to be narrowed in the manner suggested by Mr Lowe in the course of the hearing. In any event, the Defendants accept that at trial Mr Sprecher can be cross examined about the redemption process.

As regards the prospect of Mr Reeves having to litigate in Nevis, the decision of Mr Justice Lewison had the consequence that certain claims which Mr Reeves wished to pursue in these proceedings would have to be pursued, if at all, in Nevis. Echoing what Mr Justice Lewison said in paragraph 19 of his judgment, Mr Reeves, having chosen to incorporate PTM in Nevis to take advantage of the favourable regulatory and taxation regime, must also be prepared to take the burdensome consequences of that choice of jurisdiction and cannot overly complain about having to litigate there.

More generally, to the extent that Mr Reeves does suffer prejudice as a result of my decision, he is to a large extent the author of his own misfortune as a result of the delay in making the application to reamend.

I finally have to deal with proposed re-amendments to Paragraph 40E of the Amended Points of Claim which relate to Mr Reeves' removal as a director of PTM in November 2006. There is already an existing allegation of a meeting of the board of directors on 26 July 2006 at which the directors agreed to convene an extraordinary general meeting to move a resolution to remove Mr Sprecher as a director of PTM. The matters sought to be introduced do no more than seek to complete the picture and are not objected to on case management grounds. Accordingly, I give permission for paragraph 40E to be reamended in the manner proposed.

It is unnecessary for me to deal with the other proposed reamendments which turn on the decisions I have already made. After I gave those decisions there was no dispute as to the consequences on the other proposed reamendments.