Vadim Perelman v George Kerr

The Claimant (“Mr Perelman”) and the Defendant (“Mr Kerr”) drew up and each signed two documents – one headed “Share Purchase Agreement” (the “SPA”) and the other headed “Right of First Refusal Agreement” (the “ROFR”) – on 19 June 2021. This dispute is about whether those two documents were legally binding and, if they were, whether they should now be performed.

In some ways, this is an odd case to have reached trial. Central to the dispute is the SPA, an agreement for the sale of shares by Mr Perelman to Mr Kerr. Mr Perelman seeks specific performance of the agreement, so he can complete the sale of shares to Mr Kerr and receive the agreed purchase price (there being effectively no liquid market for the shares). Mr Kerr still wants to buy the shares in question, and says he remains happy to pay the agreed price. One may wonder why, therefore, the relatively simple transaction has not completed. The core of the dispute between the two is how the shares should be transferred by Mr Perelman to Mr Kerr. Although there is nothing on the face of the SPA restricting how they are to be transferred, Mr Kerr has insisted that Mr Perelman has to convey the shares to him electronically (e.g. via CREST). Mr Perelman maintains he can convey them by way of delivery of a share transfer form (with the share certificates). This has led to entrenched positions, and to a number of other issues being raised, including whether the SPA (and the ROFR) are legally binding at all.

Mr Perelman and Mr Kerr are both businessmen, who are both shareholders in a Guernsey company called Pyne Gould Corporation (“PGC”). Mr Kerr is the Managing Director and controlling shareholder of PGC. PGC is listed on The International Stock Exchange (“TISE”) in Guernsey.

Their relationship goes back some years and the history of how Mr Perelman acquired his shares was referred to by both parties as part of the background to the arrangements subsequently reached in 2021. I therefore set out a brief summary:

In around April 2021, Mr Perelman and Mr Kerr discussed the potential sale of Mr Perelman’s shares in PGC to Mr Kerr. They were able to reach agreement on the sale and the price, and sought to reduce their agreement to writing. Around the same time, they also discussed and agreed that, in return for a fee, Mr Perelman would grant Mr Kerr a right of first refusal over future investment opportunities identified by Mr Perelman. Drafts of two documents were then exchanged and ultimately agreed as the SPA and the ROFR. The documents were dated 18 June 2021, but were both signed, by each of Mr Kerr and Mr Perelman, on 19 June 2021.

In brief, the documents provided as follows:

Following the signing of those documents on 19 June 2021, there followed a series of exchanges, largely by WhatsApp, between Mr Perelman and Mr Kerr as to the logistics for settlement, including in particular the method by which the shares would be transferred by Mr Perelman to Mr Kerr. I set out some of those exchanges in more detail below. The key point was that, as set out above, Mr Perelman held his shares by way of paper certificates, which could not be traded electronically without having first been de-materialised. Mr Kerr did not want to accept the shares by way of transfer of the paper certificates – he wanted to receive the shares electronically through a transfer on CREST (which, as is well-known, is a computer based system called a central securities depository enabling title to securities to be evidenced and transferred without a written instrument). There were therefore discussions about how that might be carried out and, later, discussions around whether Mr Perelman might, instead of transferring to Mr Kerr rather transfer them to PGC (discussions which also involved Mr Kerr’s colleague, Mr Russell Naylor, another director of PGC). These various exchanges continued into December 2021.

Ultimately, however, the transfer did not take place. In short, Mr Kerr was unwilling to accept a transfer of the paper shares certificates and Mr Perelman did not convert the shares into electronic form. Payment for the shares was not made by Mr Kerr under the SPA, nor was the payment under the ROFR made by Mr Kerr.

By January 2022, Mr Perelman had run out of patience and instructed lawyers to issue these proceedings (a letter before action having been sent in mid November 2021), in which the primary relief claimed is an order for payment of the agreed sum under the ROFR and an order for specific performance of the SPA (with claims for damages in the alternative). By his Defence in these proceedings (served on 18 March 2022), Mr Kerr contended (in the alternative to his primary case that the SPA and the ROFR were not binding), among other things, that Mr Perelman was in repudiatory breach of the SPA (on a number of bases) and Mr Kerr sought to accept that alleged repudiation and terminate the SPA.

Most of the factual evidence at trial concerned the exchanges that took place after the signing of the agreements as Mr Perelman and Mr Kerr discussed points relating to settlement of the share sale transaction. I will therefore summarise the main relevant exchanges during that period. The exchanges between Mr Perelman and Mr Kerr all took place by WhatsApp message except where stated otherwise.

Shortly after the SPA and the ROFR had been signed, Mr Perelman sought to engage Mr Kerr in a discussion about how they would settle the transaction. On 19 June 2021, after the documents had been signed, Mr Perelman sent a WhatsApp message to Mr Kerr asking “how do we settle mechanically – I have the paper share certificates”, to which Mr Kerr responded “JP Morgan can receive with a share transfer. But will get settlement instructions well ahead of time.”

On 29 June 2021, Mr Perelman followed up in a message to Mr Kerr saying that they should “figure out logistics for settlement.” In response Mr Kerr said Mr Perelman should “hold fire until Jpm sorted". Mr Perelman told Mr Kerr that if he needed the physical certificates, he would need to figure out getting them from California. The share certificates were kept at Mr Perelman’s mother’s house (in California), and Mr Perelman at this time was in Israel.

On 14 July 2021, Mr Perelman messaged Mr Kerr asking to “talk logistics”. Mr Kerr said he would “get an email from JPM with details on where you need to send a scan and the original share certificate.” Mr Perelman asked if JP Morgan were going to “handle escrow for the share sale / wire etc” to which Mr Kerr responded that “To them it’s a normal off market physical settlement” and explaining that Mr Perelman would send a scanned share certificate and share transfer form to JP Morgan, who would load it into the system, but that JP Morgan would not send him the cash until they received the physical documentation from him. Mr Kerr mentioned there was “a way of avoiding the physical but required kyc which would extend beyond time”.Mr Perelman asked who he could speak to at JP Morgan, as he did not want to end up in a situation where JP Morgan had his physical documentation, but did not send him the cash. Mr Kerr said he would arrange a conference call for Friday afternoon (i.e. 16 July). The next day (15 July), Mr Perelman asked whether they had a time for the conference call with JP Morgan, and Mr Kerr said they were still aiming for the following day. That did not take place. Mr Kerr said in various WhatsApp messages that his contact at JP Morgan had caught Covid-19 and was off work.

On 16 July, Mr Perelman again said he would have to arrange to get the share certificates sent by FedEx from California. The two of them also briefly referred to the possibility of using “Link” for settlement. That was a reference to Link Market Services, a global share registry and financial services provider. Link Market Services (Guernsey) Limited (“Link”) was the administrator of PGC’s share register.

Mr Perelman called Link on 20 July and reported to Mr Kerr in a WhatsApp exchange that they could facilitate the trade and would be getting back to him with details. On 21 July, Mr Perelman asked Mr Kerr if “the funding” (i.e. to meet Mr Kerr's obligations under the SPA) was ready. Mr Kerr responded later that day saying his contact at JP Morgan who had had Covid was now back, and they would have a call the following day. He said he did not envisage problems. Mr Perelman responded that they had very little time and needed to “figure it out”.

On 22 July, Mr Perelman asked to speak. Mr Kerr stated that: “My preference is JPM” and suggesting speaking at 4pm. Mr Perelman responded that there would be no issue if JP Morgan could act as an escrow agent.

On 23 July, Mr Perelman again asked Mr Kerr for details for a call with JP Morgan, which Mr Kerr said he would organise, but no call took place. Mr Perelman, now getting frustrated, asked whether Mr Kerr could set up an email thread with the JP Morgan personnel so they could organise a call. Mr Kerr said he would email his contact, Louis Greig, copying Mr Perelman. Mr Perelman asked Mr Kerr whether JP Morgan knew the transaction needed to be done by the end of the following week. Mr Kerr did not reply to that message.

Also on 23 July, Mr Perelman told Mr Kerr in a series of messages that he had spoken to Mr Shaun Hand at Link, who explained that there were two options, the first being the use of an independent lawyer as an “intermediary/escrow” or second for Link to settle both parts of the trade. Mr Kerr also did not respond to those messages.

Mr Perelman chased Mr Kerr for responses on 25 and 26 July, to no avail. On 26 July, Mr Perelman also stated to Mr Kerr that he had spoken to a UK lawyer who had acted as an intermediary for the purpose of settlement.

Mr Perelman chased again on 27 July, including noting they were “just a few days away from closing” at which point Mr Kerr responded, and said that he would “be in touch tomorrow with details”. Mr Perelman pointed out that they had said they would connect with JP Morgan, which had never happened, and that he had been in touch with a lawyer in the UK who could facilitate the settlement.

On 28 July, Mr Perelman asked to speak to Mr Kerr. It appears Mr Perelman called at the time they had ultimately agreed, though did not get hold of Mr Kerr. Further messages followed, including Mr Perelman suggesting he come over to London to facilitate the settlement of the SPA (although it would require isolation due to the Covid restrictions then in place). Mr Kerr replied that he did not think that it would help and asked Mr Perelman to “wait till I fwd the settlement email”, suggesting that JP Morgan would be sending him something to forward on to Mr Perelman.

On 29 July, Mr Perelman noted in a message that he had not received anything, and that “Today is my last opportunity to fly out”, to which Mr Kerr responded “Why would you fly out? This is a straightforward settlement in London”, and saying it made no sense for Mr Perelman to be there. Mr Perelman noted that the certificates for the PGC Shares were still in California. Mr Kerr asked why Mr Perelman had not yet given instruction for the share certificates to be sent to London. Mr Perelman responded that he had not yet done so because he did not yet know how they were going to settle the transaction or to whom to send the certificates. Mr Kerr stated that JP Morgan were confirming the mechanics and would put them in writing. Also on 29 June, Mr Kerr confirmed to Mr Perelman that he had “shifted cash into position and awaiting confirmation from my very sick Jpm guy on how to settle.”

Later on 29 July, Mr Kerr confirmed to Mr Perelman that JP Morgan would pay out the funds on receipt of the share certificate, asking where Mr Perelman wanted the money sent, and saying JP Morgan would then put things in writing. Mr Perelman confirmed that the money should be transferred to his own bank account at JP Morgan, and asked for precise details of to whom to send the certificates, what JP Morgan needed for KYC checks, etc. He asked to be connected to the relevant person at JP Morgan for exact details. Mr Perelman also suggested having a lawyer to assist, saying he had spoken to a lawyer who explained that a transfer lawyer to lawyer would be easy because the firms would effectively act as escrow agents and hold and release the funds. Mr Kerr responded (the next day) to that suggestion, saying that the “share certs will take ages to be converted to my ownership via lawyers.”

The first written communication in evidence from Mr Kerr to JP Morgan regarding the transfer of Mr Perelman’s PGC shares was an email he sent to Louis Grieg, of JP Morgan, on 29 July at 12:22. Mr Kerr’s email stated as follows:

“I have a contract to buy the principle of Baker Streets Pgc shares for 2m nzd.

If I send the 2m to you tomorrow morning is it possible for you to arrange settlement on receipt of the share certificate from him. Which would arrive late Friday or Monday?

He is a JP Morgan client in ny – Vadim Perelman.

Please advise.

Alternatively I have to use a lawyer as an escrow agent.”

He followed up with an email providing Mr Perelman’s bank account details. Mr Greig copied in Nigel Langridge of JP Morgan London, who asked some questions about the shares, which Mr Kerr answered, and Mr Langridge asked whether it would be possible to get a copy of the front and back of the share certificates to check. These email exchanges on 29 July appear, at least to some extent, to have been overlapping with Mr Kerr’s WhatsApp messages with Mr Perelman of the same date summarised above.

On 30 July 2021 (a Friday), Mr Perelman informed Mr Kerr that he understood that it could be done through Link with “the physical + transfer form” which should be “seamless”, and the lawyers would acknowledge that payment had been made and would hand over the certificates. He said he had instructed a UK lawyer (who he later identified as David Haffner, of the firm Asserson) to help coordinate and was having the share certificates FedEx’d to them in London, asking who they should be in touch with, and saying they could also facilitate with JP Morgan. Mr Perelman confirmed in his oral evidence that he arranged for the certificates to be couriered on an overnight basis to Asserson on 29 or 30 July.

Mr Kerr responded later on 30 July with the contact details of Mr Langridge, of JP Morgan in London, and then asked Mr Perelman to send scans of the share certificates for the PGC Shares to Mr Haffner or Mr Langridge. Mr Perelman sent scans to Mr Langridge via email, coping Mr Kerr as well Mr Haffner and Mr Trevor Asserson, another lawyer from the same firm. Mr Perelman also asked in a WhatsApp message to Mr Kerr if there was a different contact for the “second agreement”, meaning the ROFR. Mr Kerr responded “Credit Suisse – but they pay as soon as the first is settled”.

It is clear that the exchanges that day were envisaging settlement on the following Monday (2 August 2021). They signed off their messages on the Friday evening with Mr Kerr saying “Let’s get this out of the way ASAP” and Mr Perelman responding “Let’s do it. This has my undivided attention.” They were both contemplating settlement on the Monday.

On Monday 2 August 2021, Mr Perelman messaged Mr Kerr saying he had just spoken with Mr Langridge, who said JP Morgan had only just learned of this transaction the previous Friday (30 July), and asking Mr Kerr to impress on JP Morgan the urgency of settling (given that “settlement is already late”).

Also on 2 August, Mr Langridge stated by email that the shares being in physical form added further complication, and suggested that Mr Perelman convert his share certificates into an electronic form and that JP Morgan would then set up a receipt versus payment transaction. Mr Perelman responded explaining why he could not do that – his account at JP Morgan was “just a checking account relationship (not brokerage)” and that his brokers (which he identified as Interactive Brokers) did not accept the PGC shares. He asked: “Why don’t we have lawyers act as escrow, to release shares to your side and hold cash to be released to me simultaneously?”

Mr Perelman also messaged Mr Kerr saying that Mr Langridge’s proposal was not possible with his JP Morgan account and that it “would take forever”. After Mr Kerr responded saying that he thought he had another solution and that they would speak, Mr Perelman sent a message to him saying it would be easier to instruct the lawyers to coordinate the settlement, with the lawyers to obtain the share certificates and payment, and to agree to exchange them between each other.

On 3 August, Mr Langridge emailed Mr Perelman saying that because the shares were held in physical form, and not electronic form, JP Morgan had concluded that they were unable to support the transaction.

Also on 3 August, Mr Kerr messaged Mr Perelman to say there was an “easy solution” and “can settle today with it”, suggesting they call, though that was difficult to achieve as both appear to have been in and out of bad phone reception.

On 4 August, Mr Perelman confirmed to Mr Kerr that the certificates were in London and asked him if he had the revised documentation for settlement. Mr Kerr said he would send through documents “in an hour, max 90m”, but no documents were sent through despite Mr Perelman following up. Mr Perelman also asked whether they could at least settle the ROFR transfer that day.

On 5 August, Mr Perelman and Mr Kerr started to get tetchy with each other in their messaging about why the SPA had not completed. Mr Kerr was blaming Mr Perelman for not having electronic trading capability and the shares not being held on CREST. Mr Perelman explained that the firms he had a brokerage relationship with were not willing to take the PGC shares electronically, and that he did not have a brokerage relationship with JP Morgan (only a banking relationship).

By this time, it appears that Mr Kerr had contemplated that, rather than have the shares transferred to him, it might work better if they were sold by Mr Perelman to PGC. Mr Kerr brought Mr Naylor into the picture to assist, and told Mr Perelman that Mr Naylor was preparing documentation. Mr Perelman asked Mr Kerr about the documents on 5 August, and was told Mr Naylor had to speak first with (the law firm) Carey Olsen. When Mr Perelman chased on 6 August, Mr Kerr told him Mr Naylor was about to get on a plane. The pattern of chasing but no documents continued. Mr Perelman spoke to Mr Naylor on 8 August, who told him he would try to get it sorted in the next few days. Mr Perelman then asked Mr Naylor for an update on 11 August, but did not hear back.

Mr Perelman messaged Mr Kerr on 12 August saying that Mr Naylor had told him there was a “long list of issues to work through for pgc”, and suggesting that they could settle it “easily between you and me as documented”. Mr Kerr’s response was to say “You haven’t got the cert on a platform” (i.e. the shares were held in paper, not electronic, form) and that PGC could do it far more quickly. Mr Perelman explained it was easy to do it with paper certificates, saying “its done lawyer to lawyer as an undertaking” and asking to put his lawyer in touch with Mr Kerr’s lawyer. Mr Kerr disagreed that transfer was possible in that way. Mr Perelman pointed out to Mr Kerr that all that was needed to transfer the shares was a transfer form and the certificates, and lawyers could be used to “facilitate payment to remove risk”. They both decided to get on a call with Link to discuss it.

Accordingly, the same day, Mr Perelman emailed Mr Hand at Link, copying Mr Kerr and Mr Naylor asking to set up a call to discuss settlement mechanics. However, Mr Naylor responded saying that a call would be premature and that there was a raft of issues to work through before PGC would be in a position to enter into a transaction.

Later that day, Mr Kerr messaged Mr Perelman to say that he needed to speak to Mr Naylor, who he said had a solution. Mr Perelman asked for an update on 13 August, but received no response. Then he asked again on 16 August, in response to which Mr Kerr said he was flying to London and would call late afternoon. He did not do so. Mr Perelman tried calling Mr Kerr on 17 August, but did not get him. On 18 August, Mr Kerr said that he would call Mr Perelman but did not do so. On 19 August, Mr Perelman and Mr Kerr spoke by telephone, following which Mr Kerr stated that he would call Mr Perelman back within an hour but did not do so.

On 20 August, in a WhatsApp exchange Mr Kerr raised, for the first time, what he referred to as an “item” that Mr Naylor had identified “by working through the words for Market compliance In window” (though did not explain what that meant), but he did not suggest it would cause a problem.

On 23 August and 25 August, Mr Perelman sought updates from Mr Kerr, and suggested he would hand it off to his lawyers to sort out, to which Mr Kerr responded that would not help and he was confident they could resolve it. On 30 August, Mr Kerr said he would revert that day with a “settlement mechanism that will work and is signed off.”

On 31 August, Mr Perelman messaged Mr Kerr saying he had received nothing, and reminding him they had negotiated an interest rate for delayed settlement under the SPA.

Mr Kerr responded on 2 September, stating “Vadim – you cant deliver the stock in the way I nominated” (by which he was referring to electronic transfer), but that he had found another path which he would get to Mr Perelman “ASAP”. Mr Perelman in his reply pointed out that “the nomination relates to who the buying party is” (i.e. not to the mode of transfer of the shares), as well as rehearsing some of the history, and saying that the transfer should take 24 hours using a lawyer to lawyer transfer as an escrow arrangement.

On 10 September 2021 (a Friday), Mr Kerr said he would revert with his proposed settlement mechanism at 9am on Monday morning. Mr Perelman messaged on Monday 13 September to say he had “received nothing”, in response to which Mr Kerr said “coming today”. But nothing was sent, despite further chasing from Mr Perelman.

On 15 September 2021, Mr Kerr stated that there was a specific issue that was being resolved, the only question being whether that occurred tomorrow or took another 10 business days. But Mr Perelman heard nothing further over the next few days. He therefore instructed his lawyers, Mishcon de Reya LLP, to write to Mr Kerr’s lawyers, Bryan Cave Leighton Paisner LLP (“BCLP”), which they did on 20 September 2021.

On 21 September 2021, Mr Perelman queried what Mr Kerr had meant by "specific issue" in his message of 15 September 2021. Mr Kerr explained that the specific issue was the “trading window” and that he had a call with his lawyers to discuss.

The exchanges between Mr Perelman and Mr Kerr thereafter became more sporadic, and the lawyers were now also in contact. However, no real progress was made. On 17 November 2021, Mishcon de Reya sent Mr Kerr a letter before action. Between 30 November 2021 and 9 December 2021, Mr Kerr and Mr Perelman exchanged messages discussing a proposed lawyer-to-lawyer settlement, but this did not bear fruit.

The first issue that arises is whether the ROFR and the SPA are each legally binding agreements. If (as Mr Kerr contends) they are not, the claims fail.

If the ROFR is legally binding, Mr Kerr contends that its performance is conditional upon the completion of the sale and purchase of the PGC shares under the SPA. If (as Mr Perelman contends) its performance is not so conditional, then there is no other defence to the claim under the ROFR.

In relation to the SPA, if it is legally binding, there are a number of issues, which can be summarised as follows:

Throughout these proceedings until 30 May 2025 (shortly before trial, though after the PTR), Mr Kerr was represented by BCLP. He therefore had the assistance of BCLP at the stages of pleading his case (his Defence, as well as the amendments and re-amendments to it, were drafted by counsel), of disclosure, of drafting and serving his (and Mr Naylor’s) witness statements, of instructing experts, and at three interlocutory hearings (at which he was represented by counsel) including the PTR. I mention this simply to note that, although Mr Kerr acted in person at the trial, he did so with the benefit of the material which had been prepared by and with the benefit of BCLP and counsel when they were engaged.As for the trial itself, Mr Kerr conducted it himself (with the occasional assistance and prompting from Mr Naylor, who attended with Mr Kerr) and did so with commendable skill, clarity and courtesy.

Mr Perelman and Mr Kerr both gave evidence at trial, and Mr Kerr also called Mr Naylor. Expert evidence was given in the fields of i) the valuation of PGC’s shares and ii) Guernsey law. I will refer to the experts when dealing with their evidence, below.

There was a sustained complaint made in relation to Mr Kerr’s conduct regarding his disclosure. In particular, although he had received a letter from Mishcon de Reya in November 2021 making clear he was required to preserve documents relevant to the subject matter of these proceedings, Mr Kerr said that during December 2021 he had lost all of his WhatsApp messages and text data for 2020 and 2021. His account of this, in a witness statement and in his oral evidence, was inconsistent in some of its details (e.g. in relation to dates), but the gist was that he had transferred all his WhatsApp content and data from his phone to a temporary phone for a trip to Australia (deleting it from his phone in the process), then after his trip to Australia lost his temporary phone on the way to or at Singapore airport, then when setting up a new phone accidentally selected the wrong option such that he deleted, rather than transferred across to the new phone, his historic WhatsApp data and text messages. He said he did not back up his mobile phone. On Mr Kerr’s account, this loss was therefore the result of a series of unfortunate accidents. Mr Lemer (who appeared from Mr Perelman) submitted that was quite hard to accept, but did not ask me to reject the account.

What was difficult to understand in this context was how Mr Kerr could have made statements in section 2 of his DRD, in July 2022, that “The Defendant is not aware of sources that are unavailable but may host relevant documents” (Footnote: ¹) and that “The Defendant is not aware of any irretrievable documents” (Footnote: ²) in circumstances when he knew, at that point, that he had lost access to the data. In cross-examination, Mr Kerr said that at the time he prepared the statement he thought that, with forensic assistance, BCLP might have recovered or found the material, such that he did not know at that point that they were permanently irretrievable. If that was the case, that made the answers in the DRD at best incomplete.

Mr Perelman disclosed all of the relevant WhatsApp messages between him and Mr Kerr. So the upshot of the lost data was the absence of WhatsApp and text messages between Mr Kerr and others, including Mr Naylor (Mr Naylor also having lost both the WhatsApp and text data stored on his previous mobile phone when he acquired a new one in around September 2021). There may have been interesting and illuminating content in such messages, or there may not have been. It was not suggested that it would have been directly relevant to the issues I have to determine, or that I should draw any specific negative inference from the absence of the data. Accordingly, whilst the position (including how it was presented in the DRD) was somewhat unsatisfactory, I say no more about it in this judgment.

There were certain points at issue between the parties at the trial which it is convenient to deal with out the outset.

The first of these concerns the mechanics for the transfer of PGC shares. The Court directed (first in an Order of Foxton J dated 22 July 2022, and later in an Order of Andrew Baker J dated 23 February 2024) that the parties exchange letters setting out their position in relation to a number of points concerning the transfer of PGC shares. From this, a fair degree of common ground emerged.

Mr Kerr’s then solicitors, BCLP, set out his case as to the process for transferring Mr Perelman’s PGC shares, in circumstances where the shares existed as paper share certificates and if the paper share certificates were to be dematerialised, as follows:

In response, Mr Perelman’s solicitors, Mishcon de Reya, agreed that the details of the processes of dematerialisation and electronic transfer were as thus set out. They in turn set out Mr Perelman’s case on the process for transferring his PGC shares on a paper basis as follows:

BCLP subsequently (by their letter dated 7 February 2025) confirmed on behalf of Mr Kerr that he did not dispute the above as a summary of the process to transfer paper shares in PGC.

BCLP did initially suggest that the process of transferring paper shares would require an escrow arrangement. However, BCLP subsequently clarified Mr Kerr’s position in this respect, to the effect that it was said that an escrow arrangement was not required as a matter of Guernsey law when transferring paper shares, but rather as a matter of practicality. It is clear that an escrow arrangement is not necessaryfor the transfer of paper shares to take place. What Mr Kerr was suggesting was that it (or something similar) would in practice be needed in the case of a sale of shares when the share transfer would be in paper form, to ensure both sides performed their respective obligations.

It was, therefore, common ground that it was (and remains) possible for Mr Perelman to transfer his shares in PGC to Mr Kerr either electronically or in paper form. It was also common ground that the only step Mr Perelman needed to take in relation to a paper transfer of his PGC shares was to sign a share transfer form and deliver it to Apex together with his share certificates. The rest of the steps to complete the transfer would be taken by PGC.

It is also the case that, if the shares were transferred to Mr Kerr in paper form, he could arrange for them to be dematerialised after they had been transferred to him if he preferred to hold them in electronic form. Indeed, given that it appeared that Mr Kerr already held other PGC shares in electronic form, the process of dematerialising the PGC Shares would potentially be faster than it would be for Mr Perelman to dematerialise them before transfer, because Mr Kerr would already have an intermediary in place.

Mr Kerr also made certain points by reference to the Listing Rules of TISE (“the Listing Rules”), which was (and is) the exchange on which PGC’s shares are listed. He made particular reference to the model code for security transactions by persons discharging managerial responsibilities in respect of issuers (“the Model Code”) which appears at Schedule 6 to the Listing Rules. Pursuant to rule 3.1.4 of the Listing Rules, an issuer must comply with the Model Code.

As it sets out in its opening words, the Model Code imposes restrictions on dealing in the securities of an issuer beyond those imposed by law. Its purpose is to ensure that Persons Discharging Managerial Responsibilities (“PDMRs”) do not abuse, and do not place themselves under suspicion of abusing, inside information which they may be thought to have, especially in periods leading up to an announcement of the issuer’s results. There was no dispute that Mr Kerr was, due to his position as Managing Director of PGC, a PDMR in respect of PGC.

Mr Kerr argued that the restrictions placed on a PDMR in dealing in securities in a “prohibited period” were relevant to the question whether he and Mr Perelman could have intended to be legally bound by the SPA. The parties were given permission, in an order of Knowles J dated 7 April 2025, to rely on expert evidence from a Guernsey lawyer addressing certain issues relating to this. I will refer to their respective views later in this judgment. It is convenient to set out at this point some of the relevant provisions of the Model Code and the common ground between the parties in relation to them.

In summary, under the Model Code, a PDMR must not deal in any securities of the issuer without obtaining clearance to deal in advance in accordance with the requirements of the code. That clearance must be sought and obtained from an individual or a body internal to the company, depending on the identity of the PDMR seeking the clearance. That may, for example, be the chair or the chief executive, a designated director or (where the PDMR seeking clearance is both the chair and chief executive) the board of directors. A PDMR who is given clearance under the code must deal as soon as possible and in any event within 2 business days of clearance being received.

A PDMR must not be given clearance to deal in any securities of the issuer during a prohibited period, save for identified exceptional circumstances. Those exceptional circumstances include if the PDMR is in severe financial difficulty or there are other exceptional circumstances, in which case clearance may be given for the PDMR to sell securities, and in that event the “Authority” (i.e. the International Stock Exchange Authority Limited, also known as TISEA) has to be consulted at an early stage regarding an application so to deal. The ability to give clearance to deal in a prohibited period in exceptional circumstances does not extend to giving clearance to purchase securities in the issuer.

For these purposes, a “prohibited period” means any “closed period” or any period when there exists any known inside information in relation to the issuer by a PDMR. A closed period, in turn, means a period of 30 calendar days immediately preceding certain identified announcements or publications by the issuer, for example the publication of its annual accounts.

The above is all clear from the Model Code, and there was no dispute between the parties, or their Guernsey lawyers, as to the above matters. Mr Bamford, who was Mr Kerr’s expert in Guernsey law, also explained that in the event of breach of the Model Code, i) the only party against which the Authority could take action was the issuer of the securities, under paragraph 4 of the Operational Matters section of the Listing Rules; and ii) there would be no sanction against a PDMR for breach of the Model Code. That point was adopted in Mr Perelman’s closing submissions.

I refer below to the key issue between the Guernsey law experts, which was whether the execution/settlement of a previously agreed contract to sell shares fell within the definition of “dealing” under the Model Code.

One other related point of background to mention at this stage is that Mr Kerr also relied upon the Share Trading Policy of PGC. This was a two page document, which explained it had been adopted by the PGC board, and developed in accordance with the Model Code “to provide guidance on when it is likely to be in order to trade and in what circumstances directors cannot trade in the Company’s shares.” The key point in it which Mr Kerr relied upon was that it required him, before dealing in PGC shares, first to notify the board and to receive clearance to deal from the board.

I now turn to deal with the issues between the parties.

As I have already noted, Mr Kerr contends that neither the SPA nor the ROFR were legally binding agreements. He says they were no more than indicative heads of terms in respect of each proposed agreement. The two main points that Mr Kerr made in support of that contention were (i) the parties had no intention to create a legal relationship through either the SPA or the ROFR and (ii) the SPA was too uncertain to constitute a binding agreement.

There was no real dispute as to the applicable legal principles.

In relation to the issue whether there was an intention to create legal relations:

As to uncertainty and vagueness:

Before moving to deal with the facts of this case, I should also add that there was no suggestion in any pleading, or otherwise before or at the trial until Mr Kerr’s written closing submission, that the Court should apply anything other than English law to the issue of what was required for a contract to binding. Permission was given for evidence to be given on a narrow issue relating to the interpretation of the Model Code appended to the TISE Listing Rules as a matter of Guernsey law, (Footnote: ³) but not more generally. However, in his written closing submission, Mr Kerr suggested that the court should be “guided by the applicable laws of formation and settlement of contracts under Guernsey law”, suggesting that certain answers he contended had been given by the Guernsey law experts in the course of addressing questions focussed on the Model Code should be taken as evidence of the law of Guernsey in relation to the “formation and settlement” of a contract. That was not a course open to him in closing, given that it had not been pleaded, or previously suggested at all. What Lord Leggatt termed the “default rule” in Brownlie v FS Cairo (Nile Plaza) LLC [2022] AC 995 “treats English law as applicable in its own right where foreign law is not pleaded” (paragraph 112). It is up to each party to choose whether to plead a case that a foreign system of law is applicable, but if neither party does so the Court will apply its own law (see paragraphs 113-115). Here, the only matters in relation to which the law of Guernsey was mentioned in the parties’ statements of case were (i) the point of interpretation of the Model Code, where expert evidence was permitted, and (ii) the question what was sufficient under Guernsey law to transfer the PGC Shares (on which, as I have set out above, the parties exchanged positions, which turned out to demonstrate a large measure of agreement, such that permission to rely on expert evidence was not sought). There was no suggestion in any statement of case that the law of Guernsey was the governing law of the SPA or of the ROFR, or indeed that the law of Guernsey as it relates to the formation (or settlement) of contracts was any different from the law of England. In addition, permission for expert evidence was not sought or given in relation to any such issue.

I should also say that, in any event, the short passage of Mr Bamford’s evidence relied upon by Mr Kerr in this respect did not support a contention that the law of Guernsey was any different from English law on the question of formation of contracts. Mr Bamford said that what he referred to as the “formalities” of entering into a contract under Guernsey law were “similar to English law”, but in doing so he was not suggesting any particular degree of formality was required under Guernsey law; rather, he was referring to the necessary elements of an agreement that had to be in place, and that elements such as the identification of the parties had to be sufficiently certain. I did not understand him to be suggesting that the law of Guernsey requires anything different from the law of England in such respects. Nor, for the sake of completeness, did anything Mr Cordle said suggest there was any material difference between Guernsey law and English law on such an issue.

The parties clearly intended the SPA to be legally binding.

The SPA is a short document, which I will set out in full:

“SHARE PURCHASE AGREEMENT

George Kerr or Nominee (the "Buyer") hereby agrees to purchase from Vadim Perelman (the "Seller") 5,337,334 shares of Pyne Gould Corporation Limited ("PGC") ordinary stock at the purchase price of NZ$0.39 per share for a total net proceeds of NZ$2,081,560.26.

Trade date (T):

18 June 2021

Settlement term:

30 business days

Additional terms:

1.

The Seller agrees to refrain acquiring PGC stock, on or off market, directly or indirectly, for a period of 24 months without specific written consent of the Buyer. If any are acquired, they will be transferred to the Buyer or Nominee at cost.

2.

Nil announcements unless compelled to do by regulation.

3.

If the net proceeds are not paid in a timely manner the obligation shall remain the obligation of Kerr and shall accrue interest at an annual interest rate of 14 (fourteen percent) and all other terms of this agreement shall remain in full force and effect.

………………………

George Kerr

Nominated buyer: to be provided prior to settlement

……………………..

Vadim Perelman”

Each of Mr Kerr and Mr Perelman signed above their typed names.

First, it is clear from the terms of the SPA that it was intended to be a binding legal agreement.

Second, messages exchanged in the lead up to the signing of the SPA (and the ROFR) confirmed that the parties intended to be bound. For example:

Third, there was no suggestion, following the signing of the SPA, that it was not a binding agreement (until the service of Mr Kerr’s Defence in these proceedings in March 2022). During the course of July and August 2021, and into the autumn, Mr Kerr and Mr Perelman exchanged numerous messages about the logistics of the transfer of the shares, and at no stage did Mr Kerr suggest that he was not legally bound to purchase the shares, and nor did either party suggest that a formal agreement remained to be entered into.

In fact, messages sent by Mr Kerr show that he believed he had contracted to purchase the shares by the SPA. For example, in his email to Louis Grieg of JP Morgan dated 29 July 2021, Mr Kerr said:

“I have a contract to buy the principle of Baker Streets Pgc shares for 2m nzd. If I send the 2m to you tomorrow morning is it possible for you to arrange settlement on receipt of the share certificate from him. Which would arrive late Friday or Monday?” [underlining added]

Fourth, there is nothing in Mr Kerr’s point that the parties cannot have intended the SPA to be a binding agreement because of his status of a PDMR who could not deal in PGC shares during a prohibited period. Even if (which I return to below) the settlement of a trade (as opposed to be the agreement to trade) constituted “dealing” for the purposes of the Model Code, that would not suggest that the parties had had no intention to enter into a binding agreement on the terms of the SPA:

The position is similar in relation to Mr Kerr’s argument that he could not have intended the SPA to be a legally binding contract because, under PGC’s share trading policy, he needed the approval of the board to trade in PGC shares, which was not something he had sought. The plain fact is that Mr Kerr simply seems to have had no regard to that policy at the time. Even when he was contemplating completion imminently (as he was, for example, when he wrote his email to JP Morgan on 29 July 2021) there is nothing to suggest he sought board approval for the trade or even considered doing so. Moreover, Mr Perelman did not know about the particular terms of the PGC share trading policy, and it formed no part of any discussion between the two of them. Mr Perelman (quite reasonably) assumed that Mr Kerr would have obtained any approvals that he required. The existence of the policy, and the fact that Mr Kerr did not obtain clearance under it, does not mean that there was no intention to create legal relations in entering into the SPA.

One further point was advanced in Mr Kerr’s written closing submission in relation to this issue, which was that “the fact that the share certificates were not in [Mr Perelman’s] possession at the time (and that [he] made no attempt to make them available within the 30 day period) supports the proposition that the SPA Term Sheet was not a binding agreement.” The background to this was that Mr Perelman kept his share certificates at his mother’s house in California. He did not want to get them sent somewhere for the purpose of transferring the shares to Mr Kerr until he knew he was sending them, physically, to the correct location. Ultimately, he had them couriered to his lawyers in London on 30 July 2021. None of this has any effect on the binding nature of the SPA. The fact that Mr Perelman did not have the share certificates physically with him when he signed the SPA is irrelevant to whether he considered it to be a binding agreement. Once signed, he conducted himself only consistently with the agreement being binding and he was clearly seeking to get it completed. The fact that he only had the certificates sent to London at the end of or even (slightly) outside the 30 day period for completion is entirely explicable given the communications that were taking place between the parties over that period as to how they were going to complete the transaction.

The evidence, therefore, entirely supports Mr Perelman’s case that there was an intention to create legal relations when he and Mr Kerr entered into the SPA. As noted above, the onus of proving that there was no such intention is on Mr Kerr, and that onus is a heavy one – he has not come close to discharging it.

On the face of it, the SPA contained the key terms necessary for there to be a valid contract for the sale of shares, including a) identification of the parties, b) identification of the number of shares being sold, and c) the price to be paid for the shares. Mr Kerr, however, advanced a number of points relating to uncertainty. His two main points, which I will deal with first, were i) that there was uncertainty as to the identity of the buyer, and ii) there was uncertainty as to the method of settlement.

The first of these points, as to uncertainty of the buyer, was based on the fact that, under the terms of the SPA, Mr Kerr had the right to nominate another party to purchase the shares. This point goes nowhere:

The second point was Mr Kerr’s contention as to the uncertainty as to the method of settlement. He argued that, to be binding, the agreement should have identified how the transaction would be settled. In his presentation at trial, this point tended to bleed into his point that, if (in the alternative to his primary case) the SPA was binding, it contained an implied term that settlement should be carried out through CREST (which was clearly what he thought should happen). I deal with that point separately below. In relation to the point that the absence of an expressly set out mechanism gives rise to sufficient uncertainty that the SPA could not be legally binding, I reject the argument. The key terms necessary had been agreed (including parties, price, and number of shares), such that Mr Kerr had to pay the agreed price, and Mr Perelman had to transfer the agreed number of shares. As set out above, it was common ground between the parties that there were two possible ways for Mr Perelman to transfer his shares: i) through the delivery of a stock transfer form (together with the paper certificates), or ii) through Mr Perelman dematerialising his PGC shares and then transferring them electronically. There is no doubt that the parties could have agreed, in the SPA, which of these routes was to be followed. But they did not do so. And nor did they need to do so. The existence of two possible methods of performance for Mr Perelman to transfer his shares simply means that he could adopt either method in order to fulfil his obligations. It does not mean that the obligations were too uncertain to be enforceable.

Other points going to uncertainty were made in Mr Kerr’s pleaded Defence, which at trial Mr Kerr said he continued to rely upon, though he did not develop them to any great extent. None of them render the SPA incomplete or uncertain in any material respect such that it could not be a binding agreement:

I should also add that, in his written closing submission, Mr Kerr relied upon the case of Cooper v Dnata Catering Services Limited [2022] EWHC 2216 (Comm), in which HHJ Klein (sitting as a High Court Judge) had concluded (although preferring not to finally determine the case on this basis – see paragraph 97) that an alleged agreement was too uncertain to be a contract (at paragraphs 95-96). That was, however, a somewhat different case from the present one. As HHJ Klein said, in that case, a “fundamental element” of the agreement, namely the price to be paid, had not been agreed, and the price could not be established by the application of any formula. Here, by contrast, there is no dispute as to the price, which was clearly agreed between the parties. Nor was there here any other fundamental element lacking from the agreement. That is not to say that there were not other elements or matters that could have been agreed, but that does not mean that the failure to agree them renders what was agreed unenforceable.

In respect of an intention to create legal relations, the position is even clearer in relation to the ROFR. This is apparent from the terms of the ROFR itself.

By contrast there is nothing in the ROFR to suggest that the parties did not intend it to be legally binding. Mr Kerr’s pleaded position (at paragraph 76 of his Defence) that it “was a non-binding term sheet and/or there was no intention to create legal relations” is simply not a credible position given the terms of the document he signed.

In his oral closing submissions, Mr Kerr advanced a new point. He said that, at some earlier date, he had entered into an agreement with Mr Perelman to the effect that any new investments he (Mr Kerr) undertook had to be entered into through Torchlight Fund LP (“Torchlight”) (a fund which he had described in his witness statement as “PGC’s current principal business”). This, he said, meant that he and Mr Perelman could not have intended to be bound by the ROFR, because Mr Kerr’s exercise of his right of first refusal under his own name under the ROFR would have put him in breach of that prior agreement.

Not only had this point not been previously advanced, but Mr Kerr had not disclosed any copy of this agreement (nor did he seek to do so during his closing submissions), nor had he put this point to Mr Perelman in cross-examination. In those circumstances, it is not open to Mr Kerr to advance it. I was not told what terms were in that other alleged agreement, and am not able to assess whether or not Mr Kerr’s exercise of rights in his own name under the ROFR would have breached them. It may well be there would have been a defence to a claim by Mr Perelman for breach of that other agreement in circumstances where Mr Perelman had entered into the ROFR (whether that be by way of implied amendment or of waiver or estoppel or some other route). But in any event, even on Mr Kerr’s account of matters, the point does not work, because clause 7(k) of the ROFR stated:

“Right of Nomination. Kerr may at his election … assign the rights and obligations to this deed to another party or parties. In this event, Perelman agrees to execute a refreshed agreement in the name of the party or parties.”

If the potential problem that Mr Kerr had identified had arisen and there had been no other way round it (which, as I say, seems unlikely), Mr Kerr could have assigned his rights and obligations under the ROFR to Torchlight. (Footnote: ⁵)

In summary, this new point did not suggest that the parties had not had an intention to create legal relations in entering into the ROFR.

There was no separate point taken by Mr Kerr in relation to the ROFR that it was too vague or uncertain to be enforceable, and certainly no specific points were advanced in relation to any of the terms of the ROFR as to any alleged vagueness. If any such point had been advanced, I would have rejected it. The terms were obviously sufficiently clear and detailed to be legally enforceable, particularly bearing in mind the court’s reluctance to find as too vague a contract that the parties had intended to be legally binding (as they clearly did in relation to the ROFR). In his written opening, Mr Kerr stated, in support of his submission that the ROFR (which he referred to as the “ROFR Term Sheet”) was not a binding and legally enforceable contract, that it “was negotiated at the same time and subject to the same uncertainty as the SPA Term Sheet.” The fact that it was negotiated at the same time as the SPA does not make it unenforceable (even if I had concluded that the SPA was unenforceable, which I have not). The suggestion that the ROFR was “subject to the same uncertainty” as the SPA does not follow – they were different documents with different terms such that, even if I had concluded the SPA was too uncertain to be binding (which I have not), the same conclusion would not necessarily or automatically follow for the ROFR.

As I have explained above, the parties intended to create legal relations in respect of both the SPA and the ROFR, and neither agreement was too vague, uncertain or incomplete to be enforceable. Both agreements were legally binding.

As noted above, each side contended that the SPA contained an implied term.

Mr Kerr argued there was an implied term that settlement of the SPA was to be effected electronically using CREST (the “Electronic Settlement Implied Term”). In his written opening, he said that this was “as per the standard market practice” and that it was the only way that he could be satisfied that Mr Perelman “had good title to the shares and had not already sold them on”.

Mr Perelman contended there was an implied term relating to co-operation between the parties. As expressed in his written opening, it was a term that the parties to the SPA would not frustrate settlement of the SPA occurring and/or would co-operate to take reasonable steps to ensure settlement occurred (the “Co-operation Implied Term”).

There was no argument about the legal approach to the implication of terms, which was authoritatively restated in Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742. By way of useful summary, Mr Lemer drew attention to:

In addition to contending that the term was (to use a shorthand) necessary / obvious, as a basis for the Electronic Settlement Implied Term, Mr Kerr also relied on the fact that a term can be implied into a contract on the basis of custom and usage. Such a term may be implied where the usage or custom is “invariable, certain and notorious” (see Crema v Cenkos [2011] 1 WLR 2066, Aikens LJ at paragraph 6; Lehman Brothers International (Europe) (in administration) v Exotix Partners LLP [2019] EWHC 2380 (Ch), Hildyard J at paragraph 158. The following summary is set out in Chitty on Contracts (35^th ed.) at paragraph 17-036:

“If there is an invariable, certain and general usage or custom of any particular trade or place, the law will imply on the part of one who contracts or employs another to contract for him upon a matter to which such usage or custom has reference a promise for the benefit of the other party in conformity with such usage or custom; provided there is no inconsistency between the usage and the terms of the contract. To be binding, however, the usage must be notorious, certain and reasonable; and it must also be something more than a mere trade practice.”

There is no doubt that transfer of ownership of the PGC shares could be achieved by a paper transfer. That was accepted by BCLP, when they were on the record for Mr Kerr, (Footnote: ⁶) and at least at some points when giving his oral evidence Mr Kerr accepted it. (Footnote: ⁷) Moreover, PGC’s registrar, Link, made it clear to Mr Perelman that the shares could be transferred through paper transfer – in an email to Mr Perelman on 3 August 2021, Mr Hand of Link stated that “A transfer form and the certificate are all we need to transfer the shares.” Consistently, the share certificates held by Mr Perelman stated in the bottom right hand corner: “Any change in the ownership of the above (either in total or in part) will be registered only if both the transfer and this certificate are lodged with the Company’s Registrar.” Indeed, as Mr Kerr knew, Mr Perelman had obtained his PGC shares in the first place through a paper transfer from Baker Street, and continued to hold his shares by way of paper share certificates – e.g. Mr Perelman messaged him on 10 June 2021 confirming “My stock held in 2 certificates” and asking if Mr Kerr needed the certificate numbers, then the same day sent images of his share certificates to Mr Kerr.

However, at the trial Mr Kerr contended that transferring shares by way of paper transfer did not constitute the giving of “good title” to the shares. What I understood him to mean by this was not that good title to the shares could not be transferred through a paper transfer (and, as set out above, BCLP, when they were on the record for Mr Kerr, had accepted that ownership of the shares could be transferred through a paper transfer), but rather that a paper transfer gave the transferee less assurance (or, as Mr Kerr put it from time to time, “security”) that they were getting good title to the shares. In a paper transfer, his point was, for example, that the transferee was at higher risk of fraud on the part of the transferor having already sold the shares to someone else.

There may well be advantages in a transfer of shares taking place electronically, rather than by way of paper transfer, and they may include those identified by Mr Kerr. Of course, given his position in PGC, Mr Kerr was in a position to check the share register to confirm that Mr Perelman remained a shareholder in PGC, diminishing the potential risk of fraud that he referred to. It may well be, as Mr Kerr also said, that it is more convenient for other reasons for share transfers to take place electronically, for example in a sale when the parties are looking to exchange the shares for an electronic funds transfer and they are looking for security of performance on the part of each other.

However, even if what Mr Kerr said in this respect were correct, it would not mean that it was necessary that the shares be transferred electronically. The SPA works without the alleged implied term – it is possible to transfer PGC’s shares through a paper transfer – and it is not necessary to imply the term to give the contract business efficacy. The SPA does not lack commercial or practical coherence without the alleged term. Also, the alleged term is not so obvious that it goes without saying. The authorities emphasise that the concept of necessity is not to be watered down. The alleged implied term does not meet the relevant test.

Mr Kerr’s alternative basis for the implication of the term, on the basis of custom and usage, also fails. Such a term may be implied where the usage or custom is “invariable, certain and notorious”. There was no evidence that the alleged term had any of those characteristics. Evidence given by Mr Kerr and Mr Naylor to the general effect that, in their experience, electronic transfers are usual is insufficient for this purpose.

Mr Kerr also advanced a case at trial based upon rule 1.4.6 of the Listing Rules of TISE, which states as follows:

“If it is proposed that an issuer’s security be deposited in a clearing and settlement system, such settlement system must be disclosed in the Listing Document and be acceptable to the Authority. Alternatively, if the securities are not to be settled through a settlement system, disclosure as to how the securities will be settled must be disclosed in the Listing Document.”

Mr Kerr said that this required an issuer to nominate a platform for exchange, that PGC nominated CREST in its issuing document, and that CREST was therefore the “default mechanism” for settlement. This was not a point that had been pleaded or otherwise previously advanced, and there are a number of problems with it:

I should also add that, after the trial had finished, Mr Kerr sought to rely on some additional material, by way of a government report published in July 2025, that related to this point. The report was the Final Report of the Digitisation Taskforce, which was published on 15 July 2025. Mr Kerr sent this report to the Court on 31 July 2025, along with some additional submissions, and the parties then engaged in a further exchange of submissions about the report and its relevance. The nature of the report appears from the start of its introduction, written by its Chair, Sir Douglas Flint:

“The Digitisation Taskforce was established with two main aims - to drive forward the full digitisation of the UK shareholding framework by eliminating the use of paper share certificates, and to improve the UK’s intermediated system of share ownership. These are important goals which will help UK capital markets become more modern, efficient and transparent, while improving the service that shareholders receive. We published an interim report in July 2023 with some initial proposals and received strong engagement from a wide range of stakeholders on these. … ”

The report goes on to explains that the UK should take the necessary steps to implement digitisation across the market, and sets out the proposals of the Digitisation Taskforce as to what the steps should be and what process should be followed to deliver them. Among other things, it recorded almost “universal support” from those who had provided views for “the removal of paper shares and paper processing for trading, settlement and record keeping”.

Mr Kerr contended that the report supported his case that “settlement via CREST was mandatory as a matter of industry standard, and that settlement by paper certificate was neither viable nor compliant.” In fact, the report did not do so:

The report does not, therefore, provide a basis for the implication of the Electronic Settlement Term contended for by Mr Kerr. It does not suggest paper transfers could not be effected for PGC’s shares (indeed, as I have set out, it was common ground between the parties that a paper transfer of shares in a Guernsey company is possible). Nor does it establish or support a contention that there was a custom in the market for shares in Guernsey companies (or even for shares in UK companies), which was “invariable, certain and notorious”, that shares were to be transferred via electronic means.

In support of his argument that the SPA contained the alleged “Co-operation Implied Term”, Mr Perelman relied on a number of authorities, including the following:

Mr Lemer also acknowledged that where the implication of the term is not necessary to make the contract workable, it will not be implied. It is, therefore, an application of the requirements set out in Marks v Spencer plc v BNP Paribas (above), not an exception to it. As Cooke J put it in James E McCabe Ltd v Scottish Courage Ltd [2006] EWHC 538 (Comm) at paragraph 18:

“A duty to co-operate in, or not to prevent, fulfilment of performance of a contract only has content by virtue of the express terms of the contract and the law can only enforce a duty of co-operation to the extent that it is necessary to make the contract workable. The court cannot, by implication of such a duty, exact a higher degree of co-operation than that which could be defined by reference to the necessities of the contract. The duty of co-operation or prevention/inhibition of performance is required to be determined, not by what might appear reasonable, but by the obligations imposed upon each party by the agreement itself.”

The term contended for was that parties to the SPA would not frustrate settlement of the SPA occurring and/or would co-operate to take reasonable steps to ensure settlement occurred. That there was an obligation on Mr Kerr not to frustrate settlement of the SPA occurring is relatively straightforward. The parties had agreed that the transaction would complete on the terms they had agreed, and it was implicit in that, and necessary for business efficacy and obvious, that neither party would block or frustrate completion on the agreed terms.

The alleged obligation to co-operate, though, cannot be taken too far. The contract here is a relatively straightforward share sale agreement. For example, it was not up to Mr Kerr to supply Mr Perelman with the facilities to transfer the shares to him (which appeared at some points to be Mr Kerr’s understanding of the case being advanced against him). It was Mr Perelman’s obligation to transfer the shares, and it is not necessary, to make the contract work, for there to be an obligation on Mr Kerr to put in place what was required to arrange the transfer. Similarly, there could not be an obligation upon Mr Kerr, for example, requiring him to give advice to Mr Perelman as to the different ways in which Mr Perelman could transfer the shares or as to the pros and cons of each possible way.

However, that does not mean that there was no obligation not to frustrate the settlement of the transaction or to fail to co-operate in relation to the logistics. In particular, what the parties did need to liaise over, and therefore co-operate in relation to, was timing of settlement and confirming that each would accept the other’s performance. This was important because the central obligations in the SPA (Mr Perelman’s obligation to transfer the shares on the one hand, and Mr Kerr’s obligation to pay the price on the other) were both dependent ones. In other words, Mr Perelman had to transfer the shares in order to be entitled to the money, and Mr Kerr had to pay the money in order to be entitled to the shares. As it was put by Sir Colin Rimer in Doherty v Fannigan Holdings Limited [2018] EWCA Civ 1615 at paragraph 42: “Neither party was entitled to enforce the performance of the other’s except against a performance of his/its own.” Although not expressly so stated in the SPA, this arises from the nature of the transaction, and neither party disputed it. Mr Lemer expressly accepted this was the position in his submissions. It was also inherent in much of Mr Kerr’s presentation of the case and in his evidence, including where he emphasised the need for the obligations of each party to be performed simultaneously.

Here, it was clear from their contemporaneous exchanges and their evidence that neither party anticipated performing unilaterally. Rather, each anticipated a form of completion where each had some form of assurance of the other’s performance. This required liaison and confirmation that each was prepared to accept what the other was tendering by way of performance. If one party was offering performance he was contractually entitled to make, the other needed to co-operate by confirming he would carry out his own performance in return. There was, therefore, an implied term as Mr Perelman contended, though what the “reasonable steps” might be for a party to take in co-operation in this context are likely to be relatively limited.

Mr Kerr contends that the time for settlement under the SPA was of the essence, in other words that the term of the SPA that settlement occur within 30 business days was a condition of the contract, such that a failure to comply with it by one party in principle entitled the other party to terminate further performance of the contract.

As explained in Chitty on Contracts (35^th ed.) at paragraph 28-029:

“Time is of the essence:

(1)

Where the parties have expressly stipulated in their contract that the time fixed for performance must be exactly complied with, or that time is to be “of the essence”.

(2)

Where the circumstances of the contract or the nature of the subject matter indicate that the fixed date must be exactly complied with, e.g. [examples are given] ... Whether a time limit is of the essence of a contractual provision is a question of interpretation of the provision in the context of the contract as a whole. The question is whether the time specified in the particular clause was (expressly or by necessary implication) intended by the parties to be essential, e.g. because they needed to know precisely what were their respective obligations...”

Here, there was no express provision in the SPA making time of the essence. However, among the list of examples given in Chitty where the circumstances of the contract or the nature of the subject matter indicate that the fixed date must exactly be complied with are “mercantile contracts” such as those “for the sale of shares liable to fluctuate in value (where the contract stipulated a time for payment).” A number of cases are referred to in the footnote to this passage in Chitty, including Hare v Nicoll [1966] 2 QB 130, where a claimant sought to exercise a repurchase option under a share purchase agreement but did not make payment within the period specified by the agreement. The Court of Appeal held that, on the true construction of the agreement, the term as to the date had to be strictly complied with, otherwise the option ceased. Although Willmer LJ concluded that the wording of the agreement showed that the time stipulation was a condition, he added at p.142:

“As to the nature of the property, the subject-matter of the option consisted of shares of a highly speculative nature, liable to considerable fluctuation in value. Even without the assistance of authority, I should have been disposed to say that that of itself was a reason for holding that time was of the essence of the contract.”

Similarly, in Re Schwabacher (1908) 98 LT 127 at 129, Parker J said:

“With regard to contracts for the sale of shares, I think that time is of the essence of the contract both at law and in equity. Shares continually vary in price from day to day, and that is precisely why courts of equity considered such a contract to be one in which time is of the essence of the contract, and not like a contract for the sale and purchase of real estate, in which time is not of the essence of the contract.”

The breadth of both of those statements was questioned by Judge Weeks QC in Grant v Lapid Developments [1996] BCC 410 at 415:

“These dicta may be too wide, and a property company may be different from a trading company, and a company in one line of business may be different from a company trading in another less dynamic market.”

Ultimately, whether time is of the essence in respect of any particular obligation in a contract is a question of construction of the particular contract. It is not a question of a fixed rule in either direction. As Davis J explained in MSAS Global Logistics Ltd v Power Packaging Inc [2003] EWHC 1393 (Ch) at paragraph 43, in a case dealing with the sale of shares, the question is one of the interpretation of the particular contract, “the words used being set in the factual context in which the contract is made and regard being had to the subject matter of the contract.” The same view was also taken by HHJ Hodge KC (sitting as a Judge of the High Court) in Aymes International Ltd v Nutrition 4U BV [2023] EWHC 1452 (Ch) at paragraph 104, a case where the Judge held that time was not of the essence in relation to a call option agreement (see paragraphs 105-108).

The SPA here referred to the “Settlement term” being “30 business days”. That, in the context of the agreement, set out a term of the SPA that the transaction would settle (i.e. that the shares would be transferred and the purchase price be paid) within 30 business days of the trade date. The issue is whether time was “of the essence” in respect of those obligations, such that if one party failed to complete within that period of time, in breach of that term, the other party would have an automatic right to terminate the agreement. In the context of this agreement, it seems to me it was not:

Mr Kerr contended (in his pleading) that one of the reasons time was of the essence was because the contract was for the sale of shares in a publicly listed company subject to regulatory control including by way of restrictions on trading during prohibited periods. I can see why such a point may show the parties must have intended that time be of the essence on other cases, however in the circumstances and on the facts of this case it does not assist Mr Kerr. On his case, the effect of the Model Code was that the trade could not be settled in a prohibited period (whenever the parties had contractually committed themselves to the trade) and that the 30 business days ended in a prohibited period. If, as I have held, there was a binding contract, Mr Kerr’s case therefore is that it could not be settled on the 30^th business day at all (or, at least, if it could be that would constitute an immediate breach of the Model Code), something which it is unlikely the parties intended when making the SPA. Accordingly, the point Mr Kerr makes about the application of the Model Code, if he is right about its application to the SPA in the circumstances of this case, in fact supports the argument that time was not of the essence in relation to the settlement obligations in the SPA. In fact, as I note towards the end of this judgment, the Model Code did not work in the way Mr Kerr suggested in relation to the SPA, and would not have prevented settlement of the transaction in a prohibited period (assuming the SPA had been entered into outside a prohibited period), and so it does not seem to me to bear either way on the question of whether time was of the essence in relation to the settlement obligations in the SPA.

Mr Kerr pleaded that, subsequent to the SPA being entered into, he and Mr Perelman entered into an agreement that settlement was to be effected electronically using the services of JP Morgan, or alternatively that the terms of the SPA was varied to the effect that settlement was to be effected electronically using the services of JP Morgan. The pleaded bases for this were (i) “oral discussions on dates unknown during June and July 2021” and (ii) certain WhatsApp messages in the same period.

This point was not expressly pursued by Mr Kerr in his submissions at the trial. There was, in any event, no basis for it. The allegation based on oral discussions was, as set out above, vague, and there was no reference to any such discussions in Mr Kerr’s witness statement. There was, in short, no evidence of any alleged oral discussion in which such an agreement, or variation, was reached.

As to the WhatsApp messages identified in the pleading, they do not support the allegation. There is no doubt that, in those messages, Mr Kerr and Mr Perelman were discussing potential modes of settlement, and that Mr Kerr proposed using JP Morgan. Mr Perelman indicated he was content to use JP Morgan in principle, but that did not constitute an agreement that settlement could only be done through JP Morgan, still less an agreement that settlement would be effected electronically through JP Morgan. In fact, in one of the messages on which Mr Kerr relied, dated 14 July 2021 (at 15:36), Mr Kerr described the proposed JP Morgan process to Mr Perelman as: “To them it’s a normal off market physical settlement” (underlining added) and saying it would involve Mr Perelman sending the certificate and share transfer form to JP Morgan. Similarly, in an exchange on 19 June 2021, in response to Mr Perelman asking (at 15:26) “how do we settle mechanically – I have the paper certificates”, Mr Kerr responded (at 15:31) “JP Morgan can receive with a share transfer.”

Also, when Mr Kerr emailed JP Morgan on 29 July 2021 asking whether they could arrange settlement on receipt of the share certificate from Mr Perelman, he also said “Alternatively I have to use a lawyer as an escrow agent”. That is inconsistent with the suggestion that he and Mr Perelman had come to a binding agreement that the transfer would be done electronically through JP Morgan.

In short, there was no variation to the SPA (or otherwise an agreement) either that the transaction had to be settled through JP Morgan or that it had to be settled electronically.

Mr Kerr contends that in his original Defence (served on 18 March 2022) he terminated the SPA by accepting what he alleged was Mr Perelman’s repudiatory breach of the SPA, or that Mr Perelman by his conduct renounced the SPA and/or disabled himself from performing his contractual obligations. The grounds on which it was said Mr Perelman was in breach of the SPA entitling Mr Kerr to terminate it were:

As to the allegation that, by his conduct, Mr Perelman renounced the SPA or disabled himself from performing, that has no basis on the facts of the case. A renunciation requires a party to have expressed an intention to break the contract, or to have acted in such a way as to lead a reasonable person to the conclusion that he does not intend to fulfil his part (see Chitty at paragraph 28-070). Mr Perelman never expressed any intention to break the SPA, and his conduct could not have led a reasonable person to believe that he did not intend to fulfil his part. To an extent, Mr Kerr’s case in this respect relied upon what he said was Mr Perelman’s obligation to transfer his shares electronically (e.g. by saying Mr Perelman failed to establish a brokerage relationship with a financial investment intermediary which could facilitate the dematerialisation of Mr Perelman’s PGC shares), which I have already rejected. However, Mr Kerr also made various allegations about Mr Perelman’s failure to take steps to transfer to him the PGC shares in any form.

It is right that, to an extent, Mr Perelman was open to exploring the modes of settlement suggested by Mr Kerr. But that itself is not a reason to criticise him, in particular where as I have explained the parties needed to liaise in relation to settlement of the transaction. It was clear that, from shortly after the SPA was entered into, Mr Kerr expressed his desire for settlement under the SPA to be managed by JP Morgan, and Mr Perelman waited for him to provide details of what that would require of him. (For example, in response to Mr Perelman’s request on 29 June to figure out the logistics for settlement, Mr Kerr said “Please hold fire until Jpm sorted…”). However, it appears that Mr Kerr did not contact JP Morgan about this transaction until 30 July 2021 and, when he did, they were not willing to facilitate a settlement including transfer of Mr Perelman’s physical share certificates. Mr Perelman suggested, on a number of occasions, other ways of settling, including each instructing lawyers through whom the exchanges could take place, with which Mr Kerr did not engage.

Mr Kerr made something of the point that Mr Perelman’s share certificates were in California, and not in his physical possession, and that he did not have them delivered to the UK until the end of July 2021. However, Mr Perelman did not need to have the share certificates physically in his possession in order to arrange for the transfer of his shares, and in any event Mr Perelman had always made it clear that he would arrange for the certificates to be couriered as soon as it was clear where they needed to go.

It was clear throughout that Mr Perelman wanted to complete the transaction. He was the one that was pressing for action throughout the period. Even if Mr Kerr were able to identify there was more Mr Perelman might have done, Mr Perelman’s words and conduct as a whole demonstrate that he wanted to complete the transaction. No reasonable person would have been led to believe that Mr Perelman did not intend to transfer the shares or otherwise not to perform his obligations under the SPA.

The allegation that Mr Perelman disabled himself from performing appeared largely based upon Mr Kerr’s case that the shares had to be transferred electronically, which is not correct. Mr Perelman has not disabled himself from performing his obligations, and remains ready, willing and able to transfer the shares.

None of the bases upon which Mr Kerr contended he was able to terminate the SPA was therefore made out. That being the case, the other points taken by Mr Perelman as to why Mr Kerr was not entitled to terminate the SPA do not need to be considered. However, I will deal with them relatively briefly.

First, it was contended by Mr Perelman that Mr Kerr was not able to terminate the SPA on the ground that it had not completed by 30 July 2021 because it was Mr Kerr’s own conduct that had led to the non-completion by that date.

The issue of why the transaction did not settle, either within the 30 business days or at all, took up much of the evidence at trial. I have set out above a number of the exchanges over the relevant period. It is clear, from those exchanges and the evidence as a whole, that the reason the transaction did not complete was Mr Kerr’s refusal to accept a transfer of the PGC shares by way of paper, as opposed to electronic, transfer.

It is clear that both parties anticipated a method of settlement involving simultaneous exchange, or something similar that gave each the security of the other performing his obligation, and they were discussing how to achieve that. At an early stage, Mr Kerr suggested settling using JP Morgan, and made it clear that was his preference, which was something Mr Perelman was content to explore. The parties, to this extent, needed to co-operate in completing the contract.

I should make it clear that the fact that the parties needed to co-operate to this limited extent, and did seek to have such discussions about settlement, does not mean that the SPA itself was only an agreement to agree, or was too uncertain to enforce, as Mr Kerr suggested. I have already dealt with that issue above, and explained that the obligations on each had been agreed in terms of sale and purchase.

It may be the case that Mr Perelman could have performed by delivering the share transfer form and then claiming the price, but in the circumstances where the obligations on each party were dependent, it is understandable why he did not do so, in particular where he and Mr Kerr were in the process of discussing how completion ought to be carried out in a mutually acceptable way.

The reason why the transaction did not complete within the 30 business days was because of those discussions, and in particular, because of Mr Kerr’s insistence that his preference was to use JP Morgan to settle the transaction (even though it does not appear that he even approached them to see if that would be possible until 29 July 2021). There was obvious sense in Mr Kerr and Mr Perelman seeking a mode of settlement they were both content with. However, the ultimate reason the transaction did not complete was because Mr Kerr was unwilling to accept a paper transfer of shares.

It is clear from the exchanges I have set out above that Mr Kerr was not prepared to accept a simple transfer of the shares by way of share transfer form, with lawyers holding the form and certificates in escrow whilst funds were sent. Mr Perelman suggested that numerous times. Mr Kerr never accepted it. However, Mr Perelman needed Mr Kerr’s co-operation to complete in that way, not because he could not have completed the forms and delivered them – he could have done – but because he needed Mr Kerr to confirm that he was going to pay the funds on Mr Perelman’s so acting.

The ultimate reason for the transaction failing was, in fact, illustrated by Mr Kerr in one of his questions in cross-examination to Mr Perelman:

“…in fact it was your [Mr Perelman’s] inability to accept my [Mr Kerr’s] settlement requirement for electronic, which is a very normal thing to do, that actually delayed the transaction and actually didn’t allow it to settle.”

Mr Kerr had no contractual right, under the SPA, to “require” Mr Perelman to transfer his PGC shares via electronic means. Mr Perelman was entitled to transfer his shares through a share transfer form. It was Mr Kerr’s insistence upon an electronic transfer which was the reason the transaction failed to complete.

In those circumstances, Mr Kerr cannot rely on the failure of Mr Perelman to transfer the PGC shares to him as a breach of contract, still less a repudiatory breach, where (a) the parties were continuing to discuss options for completion with no insistence (at least from Mr Kerr’s side) that it complete on time, and where Mr Perelman was allowing Mr Kerr to explore whether his preferred option of completion through JP Morgan would be possible, and (b) where Mr Kerr made it clear that he would not accept performance by way of paper transfer of the shares (which I have held would have been valid and adequate contractual performance by Mr Perelman).

It was, in other words, Mr Kerr’s own fault (through his failure to accept a paper transfer of the PGC shares) that the SPA did not complete. His refusing to accept a paper transfer of PGC shares, which would have been a proper contractual performance by Mr Perelman, also constituted a frustration of the performance of the SPA (and/or a failure to co-operate in completing the transaction) such as to amount to a breach of the co-operation implied term. Mr Kerr cannot, therefore, rely on the fact that the transaction did not complete (or did not complete within the 30 business days) as a ground for terminating the SPA.

Second, it was contended by Mr Perelman that Mr Kerr had lost through affirmation any right to terminate the SPA on the ground that it had not completed by 30 July 2021. (Mr Lemer confirmed in opening that his point was confined to affirmation, and that he was not making any point based on estoppel). Affirmation was not, however, a point that had been expressly pleaded by Mr Perelman with the result that the particular matters relied upon had not been identified, nor had the evidence been prepared with such an argument in mind. At trial, Mr Kerr did not take an objection to the point, but he would be the first to recognise that he was not (as a litigant in person) on top of all the points set out in the parties’ respective pleadings or in command of their full scope. In any event, the point as run at trial does not assist Mr Perelman.

Mr Lemer, in his submissions, accepted that the normal test for affirmation required proof of knowledge, on the part of the person said to have affirmed, that he had been aware of the relevant facts and of his right to terminate the contract. Although in his opening he suggested that knowledge was a point he would explore with Mr Kerr in his evidence, he did not do so. In his oral closing submission, Mr Lemer accepted that he had a difficulty in establishing that Mr Kerr knew that he had a right to terminate the SPA (in particular given Mr Kerr’s case that there was never any binding agreement) such that he said he could not establish an actual election (which requires such knowledge), but he instead sought to rely upon the suggestion that, after a reasonable time has passed, a party will be regarded as having exercised his election. In other words, it was contended that the passage of time between 30 July 2021 and the service of the defence in March 2022 was itself sufficient for the court to regard Mr Kerr as having affirmed the SPA, whatever his state of knowledge.

However, the authorities cited on behalf of Mr Perelman did not support the suggestion that the usual requirement for proof of knowledge in relation to affirmation was not applicable in such a situation. The authority on which particular reliance was placed was Kosmar Villa Holidays Inc v Trustees of Syndicate 1243 [2008] 1 CLC 307 where Rix LJ said this at paragraph 74:

“However, there will be some circumstances where, even in the absence of an actual election, the party with the choice created by relevant knowledge, actual or obviously available, will be regarded as having exercised it after a reasonable time has passed: see Lord Goff in The Kanchenjunga at 398 LHC, and Clough v L & N W Ry (1871) LR 7 Ex 26 at 34-35. This is, I think, part of the rationale of a doctrine which seeks to give a pragmatic response to parties in contractual relations who need to know where they stand.”

However, Rix LJ said nothing in that passage to suggest that, in the case where what was relied upon was that a reasonable time has passed, there was no requirement of knowledge on the part of the party being said to have affirmed the contract. On the contrary, he referred to “the party with the choice created by relevant knowledge, actual or obviously available”. There is nothing to suggest that by the phrase “actual or obviously available” Rix LJ was intending to advance a different test for knowledge than would otherwise apply in relation to the test for affirmation. In fact, immediately before the passage quoted above that Mr Perelman relied upon, Rix LJ had emphasised that “on the whole it is necessary for the election to be exercised and to be exercised with sufficient knowledge” and that “[i]t is only in the case of estoppel that the representee is entitled to rely on an apparent promise or choice conveyed by the representation irrespective of the actual knowledge and decision of the party with the choice”. It therefore seems to me that what Rix LJ was dealing with in the passage relied upon by Mr Perelman was not a situation where the party said to be affirming did not have the requisite knowledge, but rather one where they (having the requisite knowledge) did not actually make a choice and where the law may treat them as nonetheless having made a choice due to the passage of time.

The passage from Lord Goff’s judgment in The Kanchenjunga [1990] 1 Lloyd’s Rep 391 at 398 which Rix LJ cited is to similar effect. Whilst Lord Goff also drew attention to sections 34 and 35 of the Sale of Goods Act 1979 as an example of where the party said to have elected would not need to have been aware of the facts giving rise to the existence of the right to elect, he did so as an exception to the general principle that he stated (that knowledge was a prerequisite of election), rather than as an illustration of a competing principle.

As a result, given there was no attempt to prove the requisite knowledge on Mr Kerr’s part, an argument based on affirmation could not have succeeded. I do not, therefore, deal with the point further.

I have concluded above that the SPA was not terminated by Mr Kerr. It therefore remains on foot and can be enforced by Mr Perelman. Mr Perelman’s primary case is that he is entitled to, and seeks, an order for specific performance.

The court will generally not make an order for specific performance where damages would be an adequate remedy for the claimant. Chitty notes, at paragraph 31-018, that some cases ask whether specific performance was the most appropriate remedy in the circumstances of the case. It was noted, in a case dealing with an interim injunction:

“The standard question …, ‘Are damages an adequate remedy?’ might perhaps, in the light of the authorities in recent years, be rewritten: ‘Is it just, in all the circumstances, that a plaintiff should be confined to his remedy in damages?’”

Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349 at 379.

This was referred to by Foxton J in the context of specific performance in Gravelor Shipping Limited v GTLK M5 & GTLK M6 [2023] EWHC 131 (Comm) at paragraph 98. There, Foxton J also noted that the relevant date for assessing whether an order for specific performance should be made is the time when the remedy is sought.

Mr Perelman acknowledged that specific performance will generally not be granted in relation to shares that are readily available on the market. In such a case, damages are generally an adequate remedy. However, he contended that specific performance will be ordered where shares are not readily available. He relied upon the following passage from the judgment of Lewison J in Mills v Sportsdirect.com Retail Limited [2010] EWHC 1072 (Ch) at paragraphs 74-75:

“74.

In Lysaght v Edwards (1876) 2 Ch D 499, 506 Sir George Jessel MR said:

“It appears to me that the effect of a contract for sale has been settled for more than two centuries; certainly it was completely settled before the time of Lord Hardwicke, who speaks of the settled doctrine of the Court as to it. What is that doctrine? It is that the moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase-money, a charge or lien on the estate for the security of that purchase-money, and a right to retain possession of the estate until the purchase-money is paid, in the absence of express contract as to the time of delivering possession.”

75.

Thus the effect of the contract is that the buyer acquires the beneficial interest in the property and the seller retains a vendor’s lien. This was said in the context of a contract for the sale of land which is a species of contract that is usually specifically enforceable. However, it is common ground that the same principles apply to a contract for the sale of shares, if that contract is specifically enforceable. In general a contract for the sale of shares in a publicly quoted company will not be specifically enforceable. This is because damages will generally be an adequate remedy. From the seller’s perspective a buyer’s failure to pay sounds in money only, and thus damages will adequately compensate him. From the buyer’s perspective if the seller fails to deliver the shares, he will normally be able to go into the market and buy more shares himself, with the result that again he can be adequately compensated in damages. However, where the shares are not readily available in the market the position is different. In such a case the contract is specifically enforceable. Shares will not be readily available in the market if, for instance, the company is a private unquoted company. But even if the company is a quoted company whose shares are listed on a recognised stock exchange, a contract for the sale of shares may be specifically enforceable if the quantity of shares contracted to be sold cannot readily be acquired in the market...” (Footnote: ⁸)

Whilst the last sentence of the quotation set out above is perhaps most applicable to where the buyer of shares is seeking the order for specific performance, the position seems to me to be similar where it is the seller seeking the order where the quantity of shares the subject of the contract cannot readily be sold in the market.

As I have already noted, the market for shares in PGC is illiquid. Although they are listed on TISE, there appears to be no real market for them. The sales of PGC shares in the past 5 years have been share buybacks by the company (and, at least at the time of trial, there had not been any buyback since April 2024). The result is that an award of damages, that awards to Mr Perelman the difference between the agreed price for the shares and their current value (as I determine that to be), would leave Mr Perelman with shares whose value he cannot easily realise. In fact, it seems that his ability to realise value in the shares would be entirely in the hands of PGC, which seems to be the only potential buyer in the market.

Mr Perelman agreed, in the SPA, to sell his shares and to receive the agreed price. An award of damages would provide him with an equivalent to part of the price (if indeed the shares are worth less than the sale price that was agreed), but would leave him with a potential difficulty in recovering the balance through a sale of his shares. In most cases of an agreement to sell shares, the disappointed seller will be able to realise the value in his shares through a sale in a relatively short space of time. That is not the case here. And whether or not Mr Perelman is able to do so at all is likely something that will be in the hands of PGC and, therefore, largely in the hands of Mr Kerr, the unsuccessful party in this dispute. That would seem to be a somewhat unsatisfactory outcome.

The remedy of damages would not, therefore, be an adequate one for Mr Perelman, because with no degree of certainty could it be said that he was going to be able to realise the value in the shares, if they remained with him, via a sale (or otherwise).

Mr Perelman also contended that a reason for awarding specific performance was the difficulty in calculating damages in this case, pointing out the significant difference in the valuations provided by the two experts (being on the one hand NZ$0.06 per share, and on the other hand NZ$1.12 per share). Whilst there may be cases where the difficulty of quantifying damages might be such as to render damages an inadequate remedy (some examples are given in Chitty at paragraph 31-021), the difficulty here is not that the shares cannot be valued, or that there is no realistic way of valuing them and therefore of assessing damages, it is that the expert share valuers are so far apart in their valuations and so vehemently disagree on how to conduct the valuation. But such disputes as to valuations, conducted through expert evidence, are not unusual in this court, and the court will generally grapple with the issue and with the expert evidence that is given as best it can. This does not seem to me to be a case where the difficulty of assessing the value of the shares itself renders damages an inadequate remedy.

In his pleading, Mr Kerr suggested that there could be no order for specific performance because under the Model Code clearance for the transfer could not be given during a prohibited period. However:

I will come to the order that Mr Perelman seeks by way of specific performance, but as will be seen it is a relatively straightforward order, requiring payment on the one hand and delivery of the signed share transfer form on the other. Mr Perelman recognised that perfection of the share transfer will require a PGC directors’ resolution, but contended that did not stand in the way of an order for specific performance because:

I accept those points. Mr Kerr did not take issue with the first of those points, and in relation to the second there was no evidence or submission that PGC could or would not take the necessary steps to perfect the transfer.

Mr Kerr contended that there should be no order for specific performance because a transfer of the PGC shares is subject to the requirement set out in the Model Code, and the PGC share policy, that clearance be given, and no such clearance has been given. However:

In terms of appropriateness of the order for specific performance, I also note that this is not a case where Mr Kerr no longer wants to buy the shares, or would now only want to do so at a lower price. On the contrary, Mr Kerr said at various points throughout the trial that he did still want to buy the shares, at the price that he agreed in the SPA.

I should also emphasise that Mr Perelman is seeking an order for specific performance of the SPA; he was not bringing a claim in debt, for payment of the price. The reason why, as explained by Mr Lemer in his oral opening submissions, is that he recognises that the obligations of the buyer and the seller under the SPA are dependent: Mr Perelman has to transfer the shares in order to be entitled to the money. See the quotation from Sir Colin Rimer’s judgment in Doherty v Fannigan Holdings Limited at paragraph 123 above.In that case, Sir Colin Rimer went on to explain (at paragraph 43) that the consequence of the obligations being dependent was that, whilst the buyer (Mr Doherty) breached the contract by failing to make the £2m payment of the price, he did not thereupon become a debtor for the price; the seller could sue him for specific performance or damages, but could not sue for the price. Mr Lemer accepted that was the position here.

Mr Kerr contended that specific performance could not be granted in circumstances where, as he put it, his conduct (under the SPA) would be “subsequent to” Mr Perelman’s conduct. In other words, he said it was for Mr Perelman first to dematerialise the shares, or to sign and provide a share transfer form, and then deliver the shares “with good title” before Mr Kerr could complete. The gist of his point was that it was for Mr Perelman to perform first, and then for him to pay the price. I do not accept that. The SPA did not identify that one party’s obligations would be carried out first, followed by the other. Indeed, at other points in his submissions, Mr Kerr emphasised the need for the obligations to be performed simultaneously. They were dependent obligations.

Moreover, the fact that the SPA allowed Mr Kerr to nominate another person or entity to buy the shares does not prevent an order for specific performance. The reference to the buyer being Mr Kerr or a nominee is, on its true construction, an option for Mr Kerr to nominate another person or entity to receive the shares as buyer. The SPA, however, is clear that it is Mr Kerr that is party to the SPA, and he retains the obligation to pay the price if it is not paid on time. Moreover, given that the SPA identified a date for settlement of the transaction (being after 30 business days), and the SPA stated that the “Nominated buyer” was to the “provided prior to settlement”, that 30 business days period was the time period in which Mr Kerr was to nominate another party as the person or entity to receive the PGC shares if he wished to avail himself of his option to do so. At the expiry of those 30 days, absent such a nomination, it was his obligation to take the shares. The SPA is therefore specifically performable with Mr Kerr as the buyer of the shares. Even, however, if that analysis was wrong, and it was not correct to say that Mr Kerr had 30 business days to make any nomination, such that he retained the ability to nominate another party to whom Mr Perelman was to transfer the PGC shares, Mr Kerr’s failure to make such a nomination (or to confirm that he is making no such nomination) could not stand in the way of an order for specific performance. That would not be a condition outside the control of the contracting parties of the sort which would prevent a contract being specifically performable. Under such an analysis, Mr Kerr could still nominate another party to receive the PGC shares within the framework of an order giving directions for the specific performance of the contract.

In relation to the form of the order, Mr Lemer noted that the order for specific performance often contains two parts, an order stating that the relevant contract is to be specifically enforced, and then consequential orders designed to give effect to the order for specific performance: Hasham v Zenab [1960] AC 316 at 329. In terms of consequential orders the court may give, its powers are broad. In Gill v Tsang [2003] 7 WLUK 271 Geoffrey Vos QC (sitting as a Deputy High Court Judge) explained that:

“...The court is not limited, in working out the order for specific performance, to the strict and precise terms of the contract. The court is giving effect to an equitable remedy on equitable principles. By so doing, it is indeed enforcing and giving effect to the substantive elements of the contract, of which specific performance has been ordered.”

Mr Perelman’s primary position was that the directions the Court should make were (i) that Mr Kerr should pay the price (plus interest) by a specified date, and (ii) following receipt of that payment, Mr Perelman be required to deliver to Mr Kerr, within a specified timeframe, the relevant executed share transfer form and his PGC share certificates. Mr Perelman acknowledged that the reason for his seeking the order in that form was because he did not want to be in a position in which he was ordered to transfer the shares before Mr Kerr had paid the price.

However, Mr Perelman’s way of proceeding gives rise to a similar issue for Mr Kerr, namely that Mr Kerr would not want to pay the price before the shares had been transferred. Mr Perelman contended that he could be trusted to transfer his shares, there was no reason he would not do so, and that if he failed to do so the Court had powers of enforcement at his disposal. Of course, something similar could be said on behalf of Mr Kerr in respect of his obligations.

It seems to me that the order for specific performance should reflect the fact that the parties’ obligations are dependent on each other, and some measure of assurance of performance can be given to the party who will be performing first. I floated during the course of oral closing submissions that it might be appropriate for Mr Perelman first to complete the transfer forms, and for his solicitors (Mishcon de Reya) then to hold the transfer form and the share certificates to the order of the Court, and once Mr Perelman’s solicitors had confirmed to Mr Kerr they were holding the forms and the certificates, Mr Kerr would then pay the price to them, followed by the delivery of the form and certificates to Mr Kerr. Mr Lemer confirmed that would be an acceptable way to proceed from his client’s point of view.

Mr Kerr took no particular point on the suggestion that the forms and certificates should be held by Mishcon de Reya, however he said that if specific performance was to be ordered at all (which, in principle, he opposed) it should be an order for the PGC shares to be delivered via the CREST system. That was, he said, necessary to ensure what he called “risk-free delivery”. I do not think that is appropriate. I have already rejected Mr Kerr’s case that there was an implied term that the PGC shares had to be delivered via an electronic system. The SPA did not oblige Mr Perelman to deliver the shares via CREST and to make that part of an order for specific performance would be to impose on Mr Perelman an obligation, or a condition for his receipt of the price, that he did not agree to.

As I have noted above, Mr Perelman’s position was that Mr Kerr should pay the price identified in the SPA (of NZ$2,081,560.26) plus interest, at the rate of 14% pursuant to clause 3 of the SPA. That clause stated as follows:

“If the net proceeds are not paid in a timely manner the obligation shall remain the obligation of Kerr and shall accrue interest at an annual interest rate of 14 (fourteen percent) and all other terms of this agreement shall remain in full force and effect.”

The issue of what was meant by “in a timely manner” and whether (if the price was not paid) clause 3 had the effect that interest ran only from the time when the shares were transferred or from an earlier date was not explored in any great detail at the trial (although Mr Kerr made it clear he thought interest ought not to be paid). Interest generally (as often happens) got slightly short shrift in the parties’ written and oral closing submissions. In addition, following the circulation of this judgment in draft those acting for Mr Perelman raised some points about interest to which Mr Kerr ought to have an opportunity to respond before I make a final determination as to interest. It is therefore right that both parties should have the opportunity to consider and address the point in relation to interest under clause 3 of the SPA, along with any other matters relating to interest that are said to arise, after handing down of judgment.

I therefore anticipate making an order stating that the SPA is to be specifically enforced, and give consequential directions to the following effect (subject to the question of whether interest should be paid, which (if it is to be paid) may be incorporated into (or require modification to) these directions or dealt with separately, to be determined following further argument on the matter):

The precise form of wording in relation to these matters will have to be set out, in due course, in a draft minute of order, which will also have to include dates for the steps to be completed (on which I did not hear submissions) and any matters relating to interest (following further argument).

Mr Kerr also ran a defence to the claim under the ROFR (in the alternative to the primary case that it was not a binding contract) that performance of the ROFR was conditional upon performance of the SPA. As he expressed it in his written closing submission: “Upon the SPA Term Sheet being either unenforceable or breached by either party so as to render it terminated, the ROFR Term Sheet cannot be enforced.”

Even if Mr Kerr was right that performance of the ROFR was conditional in the way he contended, this would not have afforded him any defence to the claim under the ROFR given that I have held that the SPA was enforceable and has not been terminated. However, even if that had not been the case, it is clear that Mr Kerr was not right in his contention.

There were no words in the ROFR referring to the SPA at all, or to the PGC shares, or even to PGC. The rights and obligations that arose under the ROFR were, on the language of the document, entirely independent of the rights and obligations arising under the SPA. There is no basis on which to construe the words of the ROFR to contain such conditionality.

In his oral closing submissions, Mr Kerr confirmed that, in support of this contention, he was not relying on anything that was written in the ROFR or in the SPA, but rather in the surrounding documents. However, those messages that were relied upon in Mr Kerr’s Defence as demonstrating the conditionality alleged did not go that far. The most that could be said is that they suggested the parties had an understanding that the two documents would be executed simultaneously.

It is right that there were some exchanges referring to payments being made in parallel. For example, on 18 June 2021, Mr Perelman sent Mr Kerr a message saying:

“The thing I care about is that the ROFR payment is made in parallel so that theres no way to close one and not the other.”

However, Mr Kerr’s response was not to agree to such a mechanism, but to say that once signed each agreement would be binding:

“Well I am the name on each obligation – so as soon as signed you have a locked up [deal] with a real counterparty and egregious late payment terms.”

Also, a few days earlier, on 13 June 2021, Mr Perelman had sent a message asking whether there was “an issue with having a clause in share purchase agreement that makes it effective only if the other one satisfied” which was relied on in Mr Kerr’s pleading in support of this point. However, Mr Perelman had immediately followed that up with another message that continued: “if not – can use law firm or escrow to have both execute simultaneously.” His concern here, as in other of his messages, was about having the two documents executed at the same time. In any event, the parties did not agree to have a clause making one agreement effective only if the other was satisfied.

The exchanges did not support the contention that there was an agreement or understanding between Mr Kerr and Mr Perelman that performance of the ROFR was conditional upon performance of the SPA.

Moreover, the ROFR contained an express “Entire Agreement” clause stating:

“Entire Agreement. This Agreement is the entire Agreement among the parties and, when executed by the parties, supersedes all prior agreements, understandings, and communications, either verbal or in writing, between the parties with respect to the subject matter contained herein.”

Even if, therefore, there had been some prior understanding between Mr Kerr and Mr Perelman consistent with the conditionality that Mr Kerr alleged, it would have been superseded by the executed ROFR.

Furthermore, even if performance of the ROFR was conditional upon performance of the SPA, as alleged by Mr Kerr, Mr Kerr ought not to be able to rely upon that to avoid performance of the ROFR in circumstances where the reason why the SPA has not been performed is the result of Mr Kerr’s own conduct and, indeed, his breach of the SPA. It might also be put (as Mr Perelman did in his pleading) that a further head of damages resulting from Mr Kerr’s breach of the SPA was, on the assumption that there was the conditionality Mr Kerr alleged in respect of the ROFR, the loss to Mr Perelman of the sum otherwise due to him under the ROFR. However, it does not need to be taken that far. Mr Kerr would not be able to rely on his own wrong (viz. breach of the SPA and/or his conduct in failing to perform the SPA) as a reason why his payment under the ROFR was not due.

This additional point taken by Mr Kerr in response to the claim under the ROFR therefore fails on a number of grounds.

There was no other defence to the claim under the ROFR. The result is that Mr Perelman’s claim for payment of the sum due under the ROFR (US$400,000) succeeds. Mr Perelman also claimed interest at the rate specified in clause 7(i) of the ROFR which stated as follows:

“Settlement. Kerr undertakes to make the Right of First Refusal Consideration payment within thirty (30) days of the execution of this Agreement. If the Right of First Refusal Consideration payment is not timely made, the Right of First Refusal Consideration shall be an obligation of Kerr and shall accrue interest at an annual interest rate of 14 (fourteen) percent and all other terms of this Agreement shall remain in full force and effect.”

No separate point was taken by Mr Kerr about the claim to interest under the ROFR. Mr Perelman is clearly entitled to interest as a matter of contract at the rate specified (i.e. 14%).

The above determines the claims that were brought at trial. However, there were two other matters raised on which evidence, including expert evidence, was called, and which interact with some of the matters I have determined above, and about which I should therefore say something further: i) the dispute about the application of the Model Code, and ii) valuation of the PGC shares as part of the alternative claim to damages.

Mr Kerr relied on what he said was the proper interpretation of the Model Code (viz. that the act of settlement of a previously agreed contractually binding transaction constituted “dealing” for the purposes of the Model Code and was therefore a breach of the Model Code if it took place during a prohibited period) primarily in relation to his case that the SPA was not intended to be legally enforceable, though as I have noted it is also potentially relevant to the question of specific performance as an appropriate remedy. As I have explained above, even if Mr Kerr was right in relation to the proper interpretation of the Model Code, I would have held that the SPA was intended to be legally enforceable, and also that specific performance was an appropriate remedy. The point on the meaning of the Model Code in this respect therefore does not affect the outcome on these issues.

The experts called by the parties were:

Mr Cordle was, as I have noted, a corporate lawyer, who has advised on the application of the Model Code. He gave his evidence in a straightforward and professional manner, and had an obvious familiarity with the Model Code. Mr Bamford is a litigator, who (by contrast with Mr Cordle) appeared to lack the same degree of familiarity with the Model Code and the Listing Rules more generally.

That having been said, the evidence given by the Guernsey lawyers was of relatively limited relevance. They each gave their opinion on whether “dealing” under the Model Code included the settlement of a trade (as opposed to the date when the agreement to trade was made). However, neither suggested there was any particular canon of interpretation arising from the law of Guernsey, or that a particular approach to interpretation of the Model Code was required under the law of Guernsey. Neither did either of them refer in their written reports to any material outside the Model Code itself which was said to bear upon its meaning or scope, such as any case-law, any guidance from any regulatory authority or any commentary. Rather, each of them simply gave their interpretation of the words of the Model Code.

I have already identified, at paragraphs 64 to 70 above, the framework of the Model Code insofar as it is relevant to the issue, and set out what it defines as a prohibited period. Mr Kerr contended that in the period from PGC’s 2021 balance date (30 June 2021) to the date on which PGC’s annual results were published (22/23 November 2021) he had inside information, the effect of which was that the period 30 June 2021 to 22/23 November 2021 was a prohibited period and that, accordingly, in that period, he was not entitled to deal in PGC shares. The issue between the parties was whether the settlement of the SPA would constitute “dealing” within the meaning of the Model Code or not.

The definition of “dealing” included:

“i.

any acquisition or disposal of, or agreement to acquire or dispose of, any of the securities of the issuer;

ii.

entering into a contract (including a contract for difference) the purpose of which is to secure a profit or avoid a loss by reference to fluctuations in the price of any of the securities of the issuer;

iii.

the grant, acceptance, acquisition, disposal, exercise or discharge of any option (whether for the call, or put or both) to acquire or dispose of any of the securities of the issuer;

iv.

entering into, or terminating, assigning or novating any stock lending agreement in respect of the securities of the issuer;

v.

using as security, or otherwise granting a charge, lien or other encumbrance over the securities of the issuer;

vi.

any transaction, including a transfer for nil consideration, or the exercise of any power or discretion effecting a change of ownership of a beneficial interest in the securities of the issuer; or

vii.

any other right or obligation, present or future, conditional or unconditional, to acquire or dispose of any securities of the issuer.”

The definition is certainly broad, and the language of sub-paragraph (i) might well be read as encompassing not only the agreement to acquire, but also the actual acquisition under a pre-existing agreement. There was, however, something to be said for Mr Cordle’s explanation, given in his oral evidence of the rationale for the rule as follows:

“My opinion is that there has to be some sort of investment discretion being exercised in order for dealing to take place. The reason being is that the code is there, has been put in place to prevent people from seeking to trade on inside information. So if there is no inside information at hand at the time when the investment decision is made, then the code doesn't bite, it doesn't bind anyone. So if say, you are, seeking to settle a transaction which was agreed several months before when it was actually written up into the company's books, that would not be part of the dealing definition, because the dealing that happened at the time when the investment agreement, the agreement to sell was actually binding on the parties.”

It is also fair to say that Mr Bamford’s interpretation would have potentially odd results. During his oral evidence, Mr Bamford accepted that the definition of “prohibited period” is such that a prohibited period could arise at any time because a PDMR could obtain inside information at any time, and that there could be a gap between the date on which a contract for the sale of shares is entered into and the date on which the transfer of title required by the contract occurs. He also accepted that, as a result, on his interpretation of “dealing”, there could be a position in which parties (one of whom is a PDMR) enter into a share purchase agreement with no idea that there might be a prohibited period before settlement, only to find that one has arisen before the contractually agreed transfer takes place meaning that no transfer, or execution of the contract, could take place without a breach of the Model Code. If it was the purchaser that was the PDMR, the problem could not even be solved by a request for clearance.

The answer to this point may be one with far reaching consequences if one was considering all situations where shares listed on TISE were sold. However, I do not need to determine what the general position is in relation to the meaning of “dealing” under the Model Code in respect of most share transactions, and as a result I do not set out here the parties’ or their experts’ arguments in full. Not only (as I have already stated) does the point not matter to the analysis of the legal enforceability of the SPA, but also in the circumstances of this case, it is clear that whatever the scope of “dealing” generally, it does not apply to the settlement of the SPA here. That is because under the sub-heading “Dealings not subject to the provisions of this code”, the Model Code identifies “dealing where the beneficial interest in the relevant security of the issuer does not change”. As I have held, the SPA is specifically enforceable (perhaps unusually for a contract for the sale of shares in listed securities) with the result that beneficial title passed to Mr Kerr when the SPA was entered into: see e.g. Mills v Sportsdirect at paragraphs 74-75. As a result, settlement of the SPA will not change the beneficial interest in the shares (which has already passed), such that the Model Code states expressly that it will not constitute a “dealing”.

The fact that Mr Kerr might have, before settlement, nominated another entity as the buyer does not disturb that analysis. That took effect as an option for Mr Kerr to replace himself with another party as the buyer (though Mr Kerr would retain the ultimate obligation to ensure payment of the price was made) which, if he had exercised it, may have had the effect that the beneficial interest then passed to the newly nominated buyer. But unless and until he made such a nomination (which he has not done), he was the buyer under the SPA.

As a result, although I was attracted by Mr Cordle’s analysis (which, as I say, I have not set out in full), I do not need for the purposes of this case to determine or consider further the more general point as to whether “dealing” generally, or in other situations, includes the settlement of a transaction as well as the entering into the contract.

Given the conclusions I have reached above as to the remedy of specific performance, it is not necessary to deal with the alternative claim for damages or with the expert evidence of valuation that was given in relation to it. However, given that it was fully argued, I set out my views below.

The claim for damages was brought on the basis of the alleged breach by Mr Kerr of the Co-Operation Implied Term. The gist of the point was that Mr Kerr has refused to complete the transaction by way of a paper transfer of the PGC shares, insisting that they be transferred to him electronically. As set out above, I have held that Mr Kerr was not entitled to insist on such a transfer, and that Mr Perelman could properly perform his obligation to transfer the shares by way of a share transfer form. Mr Kerr, in refusing to engage with such a transfer, was in breach of the Co-Operation Implied Term. If he had not been in breach, the transfer would have completed – Mr Kerr would have had the shares and Mr Perelman the contract price. Damages are therefore assessed by reference to the difference between the contract price and the value of the PGC shares that Mr Perelman still holds.

The parties each adduced expert evidence from valuers. Mr Perelman’s expert was Mr Jim Davies of FRP Advisory Trading Limited. Mr Kerr’s expert was Mr Michael Weaver, of Kroll.

The question that both experts had been asked to opine on was: “What is the current value to Mr Perelman of the 5,337,334 shares (the “Shares”) in Pyne Gould Corporation Limited (“PGC”) currently registered in the name of Mr Perelman.” There was, therefore, no dispute between the parties as to the date at which the valuation was to be taken. They both agreed it was a “current” value, and neither party suggested any other date was appropriate.

It was also common ground between the parties (and was recorded as such in the experts’ joint statement) that:

“The Valuation Experts have been instructed to value Mr Perelman’s shares based on public information only. This means that any information that is not available in the public domain cannot be used or considered in the valuation exercise.”

I mentioned that at this stage because there were points in Mr Kerr’s submissions on valuation where he sought to place weight on information that was not in the public domain. I will return to this below.

In broad terms, by the time that the experts came to give their oral evidence, there remained only two main points of disagreement between them, as follows:

The dispute relating to whether the market approach was appropriate related to the buybacks of its shares that PGC has undertaken over the last few years. Mr Weaver produced the following table in his report providing an overview of the company buybacks:

Those figures were not controversial. The experts recorded in their joint statement that PGC had bought back numerous shares from minority shareholders over the preceding few years, and that:

“In theory, therefore, a holder of a minority shareholding in the Company has a route to liquidity by waiting for the next Company Buy-Back and selling shares to the Company at the offered price, which has been NZD 0.29 for most of the share buybacks made by the Company.”

Mr Weaver considered that, based on the buybacks, the price of NZD 0.29 reflected a minimum price for PGC shares. He drew attention to what was stated in the PGC Directors’ Report dated 5 December 2024:

“Share BuyBack

Capital management remains an ongoing focus for the Board and we expect to continue to allocate capital to facilitate buyback of shares.

[…]

PGC shares trade at a considerable discount to the market value of the underlying assets and buying them back is consistent with our value creation strategy.”

Mr Weaver concluded that, consistently since 2020, PGC had determined that it made commercial sense to repurchase its own shares at around NZD 0.29 per share, referring to a “considerable discount” to the market value of its assets, and therefore determining that its shares represented considerably more value to it than that price.

He also considered that the history of recurrent company buybacks, in which PGC had brought back over 17.5 million of its own shares between February 2020 and April 2024, provided a strong indication that there would be future buy backs, providing access to a market for Mr Perelman to sell his shares.

He recognised that market value is defined as the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, but stated that any third party buyer in a hypothetical arm’s length transaction would be aware that PGC is a willing buyer of PGC shares at the typical historical buyback price of NZD 0.29, such that the market of all potential buyers would know that they could sell the shares back to PGC at this buyback price. He therefore considered that the liquidity provided by PGC was a feature of the market, rather than being reflective of a Special Purchaser.

Mr Davies, by contrast, did not regard the company buybacks to provide a reliable route to liquidity in respect of PGC shares. He pointed out that an arm’s length transaction (as defined in the IVS) is one between parties who do not have a particular or special relationship and that a market value transaction is one presumed to be between unrelated parties, each acting independently. He drew attention to the IVS definition of Special Purchaser, which is “A particular buyer for whom a particular asset has a special value because of advantages arising from its ownership that would not be available to other buyers in a market” and noted that market value “ignores any price distortions caused by special value (an amount that reflects particular attributes of an asset that are only of value to a special purchaser).”

In Mr Davies’ view, given that Mr Kerr is (and at all material times was) the managing director and controlling shareholder of PGC, and that PGC is the legal entity in which the PGC shares are a shareholding, both Mr Kerr and PGC should be considered special purchasers. He therefore considered that share prices quoted or offered to shareholders by PGC and/or Mr Kerr (including via company buybacks) potentially contained price distortions caused by special value.

In relation to the buybacks, Mr Davies raised a further point in his reports:

None of this was put to Mr Kerr as a factual allegation, and Mr Weaver’s view that the dispute was irrelevant given the revenue streams to PGC’s business was not challenged in cross-examination. Mr Lemer’s closing submissions did not refer to the point (either in writing or orally). In the circumstances, I do not take it into account in considering whether the buybacks were a potential route to liquidity.

As I have already noted, Mr Davies’ preferred valuation approach (which Mr Weaver also adopted in addition to or in the alternative to his reliance on the buyback prices) was the “summation method” within the costs approach to valuation. This involved valuing each of the assets held by PGC and adding up their value. The experts agreed a number of the elements of PGC’s value on this basis:

The dispute between the experts on the cost approach turned entirely on their approaches to valuation of the RCL assets. This made a huge difference to their respective valuations of the PGC shares. On Mr Davies’ valuation, each PGC share was worth NZ$0.06. (Footnote: ¹⁰) On Mr Weaver’s valuation, each share was worth NZ$1.12. In summary, their respective approaches were as follows.

Mr Davies considered a basket of companies with publicly listed shared which hold assets similar to the RCL assets to identify an appropriate market price to book value ratio (P/BV), which he found to be 1.0x, which ratio he then applied to the book value of the RCL assets. In other words, he calculated that companies with assets similar to the RCL assets are valued in the market at the book value of their assets, thus he concluded that the RCL assets should also be valued at their book value. (Footnote: ¹¹)

Mr Weaver estimated the market value of the inventories belonging to RCL by applying an assumed loan-to-value ratio by reference to the bank debt secured on RCL’s inventories. He identified a list of comparable companies, calculated the loan-to-value ratio for the borrowing undertaken by those companies, from which he derived a 50% ratio. He noted that the RCL assets had been used to secure debts of £153m, to which he applied the 50% ratio, deriving the value of RCL’s assets therefore to be £306m.

Each had substantial criticisms of the other’s methodology. Mr Davies did not consider a loan-to-value ratio to be a recognised or commonly adopted valuation metric, and did not consider taking an average of the observed range (as Mr Weaver did) to be a meaningful valuation approach. He noted that the size of a company’s loans compared to the value of its relevant assets was a function of factors which are specific to the company in question, its assets and its financing needs. He noted that the loan-to-value figures for Mr Weaver’s comparable companies ranged from 23% to 93%, suggesting that the ratio was company specific in each case.

Mr Weaver in turn noted that of the companies in Mr Davies’ listed peer group (from which his P/BV ratio was derived) most of them either (unlike PGC) capitalised their finance costs as part of their inventories (thereby increasing their assets’ book value compared to PGC) or they recognised their assets as investment properties (not as inventories) and reported their book value as fair value (not cost). He said the group was therefore not comparable to RCL.

In response to Mr Weaver’s observations on his listed peer group, Mr Davies revised the list and adjusted his calculation, which he said did not materially change the observed average P/BV ration of 1.0x. Mr Weaver countered by saying this would require further detailed analysis of the various companies’ financial statements over several years.

Mr Weaver also noted that, on Mr Davies’ conclusion, PGC had managed to raise £153m of secured debt against RCL’s inventories with a value of £134m, therefore achieving a loan-to-value ratio of over 114%, which he said would be extraordinary (including the lenders being apparently content with over £19m of their loaned funds being unsecured). In his view £134m could not have reflected the lenders’ view of the value of the RCL assets.

Reliance on the buybacks, as evidence of market value, by Mr Weaver and Mr Kerr was criticised by Mr Davies, as set out above, and by Mr Lemer in his closing submissions. The three particular criticisms were:

Those criticisms were not entirely without foundation. Indeed, I have already pointed out the lack of liquidity for PGC shares, and as I have explained it seems to me to be the key reason why a damages remedy would not be an adequate one in this case. However, if what I have held above regarding specific performance is correct, then this issue is not reached. It would only be necessary for the shares to be valued for the purpose of an award of damages if I were wrong about specific performance being appropriate, which would seem likely to involve my having been wrong to regard the market in PGC shares as illiquid in the way I have previously described. That is particularly relevant to the second of the points identified above.

As to the first point, whilst the last buy-back was not very recent, it was not suggested that the value of the PGC shares was likely to have substantially declined in the period since the last buy-back, and indeed the pattern of buy-backs and prices over the period 2020-2024 demonstrates a relatively stable and consistent value that was being attributed to PGC shares (at least by PGC and the sellers of those parcels of shares). In relation to the third point, there was no evidential support for the suggestion that the buyback prices incorporated an element of special value (being an amount that reflects particular attributes of an asset that are only of value to a special purchaser) in the PGC shares, or that PGC was otherwise prepared to pay above the market price. The general suggestion, for example, that someone in Mr Kerr’s position valued PGC shares higher than other market participants because “their life and soul is in that business” was little more than speculation on the facts of this case, where there was nothing to support the suggestion that Mr Kerr was other than a hard-nosed businessman with a focus on the ultimate bottom line.

As a result, the buybacks do provide relevant evidence of market value of the PGC shares. They demonstrate a reasonably consistent level at which shareholders and PGC were willing to sell and buy the shares respectively.

That is not to say that I should entirely ignore what was said by the experts based upon the costs approach using the summation method. However, both experts’ approaches, in relation to the valuing of the RCL assets, had their flaws.

Mr Davies’ approach was based on identifying a P/BV ration based upon a basket of what were said to be listed companies similar to RCL. In response to some criticisms from Mr Weaver, he had adjusted that basket in his supplemental report. However, although he had removed two of the original companies and replaced them with others because those two had been identified as holding their assets on their balance sheets at fair value (rather than at the lower of cost or net realisable value, as PGC does), he accepted in his oral evidence that he had not investigated whether or the extent to which the companies in his basket, other than the two in question which he had removed, held their assets at fair value. Although Mr Weaver had only identified those two particular companies as raising this issue, one would have thought it was a point Mr Davies would have checked, given this was his valuation. Moreover, one of Mr Weaver’s criticisms of the approach was that it would require further detailed analysis of the financial statements of the companies in the basket which had not been done. A similar point was that Mr Weaver noted that eight of the companies in Mr Davies’s basket capitalised their finance costs, whereas RCL did not. Mr Davies sought to reverse that out of his calculations for four of the eight companies, but said he was not able to analyse the other four for this purpose. This supported Mr Weaver’s point that more work needed to be done in understanding the companies said to be comparable and their accounting practices.

It was also the case that on Mr Davies’ valuation of the RCL assets, PGC would have managed to raise £153 million worth of secured long term debt against assets valued at £134 million. Mr Weaver said that would have been extraordinary. There was no real explanation for it. In addition, it is difficult to understand (in the absence of any evidence of special value) why PGC would have paid the price it did in the buybacks – consistently around NZ$0.25 and NZ$0.29 – if the shares were only worth NZ$0.06 (as Mr Davies valued them), and given the history of the buyback prices it is difficult to see a PGC shareholder being prepared to sell their shares for NZ$0.06.

As for Mr Weaver’s valuation, based upon a derived debt to capital ratio of 50%, that was (as the results of his own exercise demonstrated) an unreliable way in which to value the RCL assets. The range of debt to capital ratios for the comparator companies was very wide (23.1% to 92.7%), itself suggesting that there are a variety of different factors that can affect a company’s debt to capital ratio (as Mr Weaver accepted in his oral evidence). From the information presented in Mr Weaver’s report, it was difficult to know which part of the range was likely to be more appropriate for PGC, and there appeared to be no particular reason why it should have been the average. The one metric that was tested in cross-examination was the interest rates paid on their debt by the comparator companies, which ranged between 3.4% and 8%, whereas the interest rates being paid by PGC on its debt were suggested to be around 13.75% to 14% (which, if anything, would point to PGC having a loan to value ratio at the higher end of the range, and thus resulting in a lower value of the RCL assets than taking an average at 50% suggested).

It is also difficult to understand why, if on the basis of publicly available information, PGC shares are worth NZ$1.12, a large number of investors have been prepared over a period of years to sell their shares at NZ$0.29 or less in the buybacks.

Standing back, each of the experts’ approaches to the cost approach/summation method have their flaws, as I have noted. Both were based on combinations of incomplete information and assumption. Each led to what it is fair to say was an extreme valuation, entirely at odds with the only transactions in PGC shares that have actually taken place. It seems to me that both are unreliable. The market approach, on the basis of the buybacks is also not without its difficulties, but it seems to me to be a more reliable guide to the value of the PGC shares, for the reasons I have given above (including bearing in mind that I would only be undertaking this valuation exercise if I had not reached the conclusions that I have done as to the liquidity of the market in PGC shares and the resulting appropriateness of the remedy of specific performance in this case).

Mr Perelman accepted that, if the market approach based on the buyback prices was to be used, the value to be attributed would be NZ$0.29 per share. Mr Weaver suggested that this would only represent the minimum price, not itself the market value. However, there is no basis for that using the market approach. It seems to me that Mr Weaver employed that suggestion in order to leave room for his valuation of NZ$1.12, the basis for which I have rejected above. As a result, the value I would have found the PGC shares to have, if damages had been in issue, would have been NZ$0.29 per share.

Before leaving valuation I should also record that, during the course of his oral closing submissions, Mr Kerr sought to put before the court a further report which he said ought to be taken into account. This was a report from Kroll, authored by Mr Weaver, dated 21 June 2025, entitled “Report Summarising Kroll’s Estimation of Fair Value for RCL Group Limited held by Torchlight Fund GP as of 31 March 2025”. It had not been disclosed, nor had it been referred to previously in the proceedings (including by Mr Weaver himself). It estimated an Enterprise Value of RCL based on an income approach using a Free Cash Flow to the Firm method, discounting the projected free cash flows to present value at a discount rate that was said to reflect the relative risk associated with the cash flows as well as the rates of return that security holders would reasonably expect to realise on similar investment opportunities. It calculated the enterprise value of RCL to be AUD 728 million. (Footnote: ¹²)

Mr Kerr said that he was not seeking to rely on this as a further report from Mr Weaver as an expert in the proceedings, but as a report that valued RCL (which happened to have been produced by Mr Weaver at Kroll) and which came to a valuation which showed that Mr Weaver’s calculation of a 50% loan to debt ratio was entirely reasonable (if not conservative). Mr Perelman objected to reliance on this report, in particular given the stage at which it was produced. Having considered both what Mr Kerr said about this report, and its contents, not only would it not be fair to Mr Perelman for this to be relied upon, given the stage at which it was produced, but also it does not advance the points between the experts or otherwise:

In the circumstances, I have not placed any weight on the Kroll report dated 12 June 2025 that was produced to the court during Mr Kerr’s oral closing submissions.

Mr Kerr contended that Mr Perelman had failed to mitigate any loss he had suffered because he should have sold his PGC shares to PGC through a share buy-back. Given the conclusion I have reached on value of the PGC shares, even if the question of assessment of damages was live, this point would have made no difference. The highest price PGC had paid in any buy-back was NZ$0.29 per share, and no case was advanced that PGC would have bought back Mr Perelman’s shares at any higher price. Accordingly, even if Mr Perelman had sold to PGC in a buy-back, it would have been (at most) at NZ$0.29 per share, which is the value I would have held his shares had. This would not therefore have affected Mr Perelman’s loss.

In any event, had it been relevant, I would not have held that Mr Perelman had failed to mitigate his loss. In brief summary:

As I have noted, the question of damages does not arise given my conclusions on the remedy of specific performance. However, if I had concluded specific performance was not appropriate in this case, I would have valued Mr Perelman’s PGC shares at NZ$0.29 per share, giving him a loss per share of NZ$0.10 per share (being the difference between NZ$0.29 and the contract price in the SPA of NZ$0.39). The number of shares he contracted to sell was 5,337,334, with the result that his loss would have been NZ$533,733.40. Whether interest should have been added to that figure and, if so, at what rate and for what period, are matters on which I would have sought further submissions at a consequentials hearing had damages been a live issue.

As set out above, Mr Perelman succeeds in his claims. I will therefore order i) specific performance of the SPA, including directions to the effect set out at paragraph 185 above (subject to further argument relating to interest), and ii) payment of the US$400,000 due under the ROFR plus interest at the contractual rate of 14%.