England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/03/2009

Mr Justice Mann:

Introduction

1. This is a professional negligence action brought by the claimant ("Tamlura") against a firm of solicitors CMS Cameron McKenna ("CMS") in respect of the latter's retainer when acting in a sale of Tamlura's shareholding in Tamlura International Holdings BV ("TIHBV"). The sale was to a quoted English company called the Innovation Group plc ("TIG"). Put briefly, the dispute arises in the following circumstances. The total consideration for the sale of the shares was put at £40m. £21m was to be paid in cash. £19m was to be paid by the allotment of shares in TIG having that value. The present action arises out of the date by reference to which that value was attributed. There was to be a retention out of the consideration, put at £4m, for two years from the date of completion, out of which any liabilities on indemnities and warranties were to come. Accordingly, on completion only £15m worth of shares, valued as at the date of completion, were allotted. The agreement provided for the remaining shares to be allotted two years later when the amount of the liabilities had been calculated. The share sale agreement provided that the number of shares which were to pass on this later occasion was to be determined by reference to the market value of shares in TIG as at the date of the original completion (i.e. two years previously). In the intervening two years, the value of TIG shares fell substantially. Accordingly, when shares were allotted on the subsequent date, to make up the consideration, the actual market value was much less than the £4m which had been "retained", so fewer shares were allotted than would have been allotted had they been valued at the final allotment date. Tamlura says that the agreement ought to have contained a provision valuing the non-allotted shares as at the date of their allotment. Had that been the case, then Tamlura would have received (in substance) £4m at the later date (there were in fact no deductions in respect of the warranties and other matters). It is said that the fact that the agreement had the disadvantageous earlier valuation date was due to the negligence of CMS, and Tamlura claims £3.9m odd by way of damages.
2. The pleaded claims included a claim of negligence in relation to a failure to correlate the price of shares between the shares which Tamlura was to sell and shares which were outstanding in another shareholder (called PPG). That claim was abandoned on day 2 of the trial. The trial of this action was due to be heard with another claim for professional negligence which Mr Vlotman, one of the principal participants in these events, had brought against CMS as a counterclaim to a claim by CMS for fees. However, before the trial was opened, it was indicated that that counterclaim was not being proceeded with and was effectively abandoned, and I made an order dealing with the consequences of that. Thus the issues before me were more refined than they would otherwise have been.

Dramatis personae

3. Tamlura is a Netherlands Antilles company. At the date of the transaction in question, it was owned as to 60% by Janute Limited, a company which, via a trust, was the family vehicle of Mr Clive Vlotman. Mr Vlotman was an experienced businessman who had formerly held a senior position in the Dixons group. Apart from a small shareholding in an employee trust, which can be ignored for these purposes, the other 40% of Tamlura was owned by Malvern Trust, a trust vehicle of the family of Mr Graham Kresfelder, a business colleague of Mr Vlotman. Throughout the relevant matters Mr Vlotman gave instructions on behalf of the Janute side, and Mr Kresfelder gave instructions from the Malvern side. They can be treated for practical purposes as the principals behind the vendor.
4. In September 2000 Tamlura held 80.5% of TIHBV. An American paint company known as PPG Industry Securities Inc ("PPG") held the remaining shares. The business of TIHBV was the provision of services to motor insurance companies, which I will call the Motorcare business. That business made the necessary arrangements when motorists made claims, those arrangements being made with the insurance companies, the insured and repairing garages. It was apparently a very successful business.
5. TIG was, as I have said, a quoted English company. It acquired other companies and its businesses included supplying software. It was interested in producing software to assist the business of TIHBV. However, in 2000 it turned its attention to buying Tamlura's shareholding in TIHBV. In 2000 its chairman and chief executive officer was Mr Robert Terry.
6. When Tamlura instructed CMS, the partner acting was Mr Mark Aspery. He was assisted from time to time by Mr Tom Page, an assistant solicitor in the firm. On the other side of the transaction, TIG instructed Messrs DLA, and the solicitor principally acting for them was Miss Fiona Walker (now Mrs Fiona Mares – I shall use her married name in this judgment).
7. While there was some contact between CMS on the one hand and Mr Vlotman and Mr Kresfelder on the other, most of the instruction that was necessary took place via Mr Kevin Christie, a chartered accountant who had formerly worked for Investec Bank and who had previously been part of a team instructed by Tamlura to assist in the negotiation and completion of the investment by PPG in TIHBV.

Witnesses

I heard from the following witnesses.

8. Mr Vlotman. Mr Vlotman originally came from South Africa, where he was a chartered business secretary. In the 1980's he came to this country and in due course achieved a senior managerial position in Dixons, the electrical retailer, with responsibility for opening their out of town stores. He is an intelligent man, capable of understanding legal documents (at least when they were explained to him), and he has a clear understanding of where his commercial interests lie. He was capable of seeing the benefits, and detriments, of the structure of the share sale deal with which this action is concerned, and of pursuing them. He would be capable of identifying, and pursuing, the commercial objectives of a transaction without a lot of assistance from others. I think that he could not always be bothered with detail, and in the present transaction was prepared to engage Mr Kevin Christie to deal with it (see below), but he would be likely to focus on anything perceived to go to commercial matters. Mr Terry expressed the view that Mr Vlotman was not a detail man, and I agree with him. While I do not think that he came to this court to lie, I think that some of his evidence was somewhat tailored to his case. The principal manifestation of that was a form of pretence that he did not understand the effect of some of the drafts of the documents even to this day. In the witness box he sought to give the impression that he was understanding them for the first time, as they were put and explained by counsel. That would be an unlikely state of affairs for an intelligent man who would want to understand his litigation and how matters had (from his perspective) gone wrong, and later in his evidence he said (not surprisingly) he had become aware of the effect of the SPA in 2002, contrary to his earlier answers. I think that he had misguidedly thought that professing ignorance of these matters might assist his case. I therefore treat his evidence with some caution. I think that he is capable of, and has been guilty of, reconstruction based on wishful thinking. His recollection of detail of this case is, like that of most of the participants, understandably hazy where it exists at all. That is not surprising.
9. Mr Harvey QC, for CMS, invited me to find that the abandoned actions and claims which I have referred to above demonstrated a propensity to advance and pursue claims without considering whether they were properly justified. That point was never really canvassed in cross-examination. Such a cross-examination would have required at least a partial investigation of substantial claims which were no longer being pursued, so a decision not to go down that route was an entirely realistic one. However, it does mean that I was left in a position of not being able to form any views at all about those other matters and what their abandonment said about Mr Vlotman. I therefore do not take this point into account at all.
10. Mr Graham Kresfelder. He, too, was of South African origin. He now lives in Italy. He met Mr Vlotman when they worked together at Dixons. He has a degree in business economics. He struck me as an intelligent man who gave his evidence in a very careful, focused and considered manner. I think that he would have brought the same attention to matters of business in 2000. Like others, his real recollection of detail was very slight.
11. Mr Kevin Christie. He is a chartered accountant by training. Before branching out in his own business shortly before the events of this case, he was employed by Investec Bank as part of a team involved in buying and selling companies. He was therefore experienced in the sort of agreements involved, and in the concepts involved. In my view he was fully capable of grasping the sort of structural, commercial and valuation concepts involved on both the commercial and legal side of the deal. He was engaged by Tamlura, having met Mr Vlotman and Mr Kresfelder when conducting a transaction for Motorcare, to act for it in its sale of TIHBV to TIG. His functions were to conduct the day to day aspects of the matter, and his involvement was considerable. He was paid about £70,000 in fees on this matter. I think he is likely to have conducted his retainer with care, and as a witness he struck me, again, as being careful. He was doing the best he could with very historic events of which he had little detailed recollection, but from time to time he was guilty of the same thing as Mr Vlotman, namely pretending to a previous lack of understanding that he did not really have. The impression one had of some of his evidence was that he was having aspects of the documentation explained to him for the first time. He himself admitted, in answers to me, that that was not an impression he would have wished to give. Until that point he had given it, and I do not think that that was accidental. I am sure he is a basically truthful man, but I think that some of his evidence was affected by concern at the commercial outcome of this deal, and his reconstruction has led him into evidence tinged with wishful thinking. I certainly do not doubt his capabilities. He was capable of following detailed trails through the documents in cross-examination, and having seen him I consider that he would have been well capable of doing much of that for himself back in 2000. He had some of his own notes to assist him (not many and mainly on drafts of documents), but had to indulge in a lot of reconstruction.
12. Mr Mark Aspery. He was the partner at CMS instructed to deal with this matter; he is no longer with CMS. He had previously worked with Mr Christie, and was Mr Christie's choice of solicitor to act in this matter. Yet again, he had little detailed recollection of events, and none whatsoever of a crucial meeting on 10^th October 2000. He did keep some attendance notes of meetings and telephone calls, and made other notes on drafts of documents. He was criticised by Mr Cakebread for not having kept notes of developing matters other than by marking up drafts, but I think that that criticism was unfair. This was a fast-moving transaction which required speedy responses, and the making of detailed attendance notes of absolutely everything was not practicable. No adverse inference can be drawn as to his abilities from his note-taking. Having heard his evidence and seen his handiwork I consider that he was a skilled and careful solicitor (which was also Mr Christie's opinion of him at the time), and an honest witness. He did not seek to fabricate, and approached the giving of his evidence conscientiously and carefully. In cross-examination he was accused by Mr Cakebread of pretending to a non-recollection of the meeting on 10^th October when in fact he had a real recollection of events which favoured the claimant's case. This was a somewhat implausible accusation, and I can say at this stage that I acquit him of it entirely. He was also accused, in essence, of covering up what was said to be his mistake when he realised that he had made one, and of not telling the truth to me on the point. He did not strike me as a man who was prepared to lie (or as a man who was lying), and I do not think he was covering up as alleged (or at all). I shall deal with that point in more detail in due course. I found Mr Aspery to be a man whose evidence I could rely on.
13. Mr Thomas Page. He was Mr Aspery's assistant, brought in when the main sale and purchase agreement was being drafted. At the time he was of two years' qualification. He participated in the crucial meeting, and carried out the critical drafting. Yet again he had little detailed recollection, and like Mr Aspery was always ready to say when he remembered and when he was reconstructing. As a witness he was careful, measured and conscientious, and I consider that I can rely on his evidence. He took notes, which were helpful and important. Unlike Mr Aspery, he was not accused of fabricating a non-recollection of the meeting (despite what seemed at one stage to be a foreshadowing of such an attack).
14. Mrs Fiona Mares (formerly Walker). She was the assistant solicitor working on this deal for TIG at DLA. She gave her evidence without the benefit of any contemporaneous notes. Indeed, virtually no DLA notes, and relatively little other DLA material, were produced at the trial despite the fact that both parties had had full access to the DLA files (there was one potentially highly relevant note of 9^th October 2000 that was available). Her recollection of detail was as poor as most of the other witnesses, and she was frank about that. She was plainly a conscientious, careful and honest witness, doing her best to reconstruct.
15. Mr Stephen Hallam. He was another partner at CMS who was consulted at a later date by Mr Vlotman. He gave short evidence going to the point of time at which Mr Vlotman first indicated that he had a claim. He was a credible witness.
16. Mr Robert Terry. He was, as I have said, the chief executive officer of TIG and gave evidence about his dealings in relation to this matter and as to TIG's thinking in relation to germane issues (going to both liability and damages). He had to sustain a very hostile cross-examination (both in content and tone) and sometimes (understandably) bridled at that and became a little combative. I do not hold his attitude against him. He came over as a man with some commercial arrogance about him, which was not entirely engendered by his cross-examination. He professed to more direct recollection of some points in this case than other witnesses, but that is not surprising bearing in mind how this transaction would have ranked in his dealings at the time, though some of the matters which he spoke of in cross-examination did not appear in his witness statement. I think that he would have kept a very firm line in business negotiation, where necessary. So far as his evidence went, I do not think that he came to court to tell untruths, though his response to hostile cross-examination was sometimes to take a slightly firmer position than might have been appropriate. Apart from anything else, he had no motivation for lying (he is no longer involved in TIG) and he gave his evidence voluntarily. He told me that his witness statement was prepared recently, and in haste, and that may well explain some apparent omissions from it. Despite Mr Cakebread's attempts to convince me otherwise, I think he was, on core events, and in particular as to his attitude to the elements of the bargain, a reliable witness.

The quality of the evidence generally

17. From what I have said about the witnesses, and from what will appear below, it will be apparent that most of them lacked detailed recollection, and sometimes any direct recollection, of events. A very large amount of reconstruction has gone on. Even witnesses who made notes had little or no real recollection of the events which the notes encapsulated. All this is understandable, since the relevant events were now, mainly, over 8 years ago. Accordingly, this judgment itself has to rely to a large extent on reconstruction based on probabilities. Certain events and matters are recorded in documents, and they are the only sure indicia of what was happening, followed then by the probabilities.
18. At one stage Mr Cakebread seemed to be making much about the absence of documents which he said ought to have existed, particularly if CMS had been as assiduous in making and keeping attendance notes and other documentary records as their manuals and other considerations would normally have required. I was addressed on the nature of the absence of documents by Miss Levy, who was Mr Cakebread's junior, and in due course an extensive schedule of documents was produced with Mr Cakebread's final submissions which listed documents which it was said ought to have existed but which did not exist, and gave some details of requests for further disclosure which had been made by Tamlura. The schedule from time to time complained of a failure by CMS to comply with search obligations, but the submissions were never backed up by an application for disclosure, and I was never quite sure why I was being told of these things. Despite the production of the extensive schedule, Mr Cakebread told me that he did not rely on it for the purposes of his final case, so I have not taken it into consideration. It remains the fact that some documents which might have been thought to exist have not been available. However, that turns out to be just one of those things.

The facts - the end

19. Although it is unusual to do so, I shall start with the end, because it will be useful to be aware of the final result of the drafting process when trying to understand the route taken to get there, which is the basis of the criticism of the lawyers in this case. It will also enable me to introduce some useful terminology.
20. The relevant legal document in this case is a share and purchase agreement ("SPA") dated 17^th October 2000. It is this document which contains the agreement between TIG and Tamlura for the sale of all the TIHBV shares. As foreshadowed in the Introduction section of this judgment, it provided for the consideration to be paid in cash, by the allotment of Initial Consideration Shares, and the allotment of Deferred Consideration Shares (the capitals represent defined terms in the SPA). These latter shares are the shares which represented the retention of £4m. They bore other descriptions during the negotiation process – I shall refer to them as the deferred allotment shares, or deferred consideration shares, indiscriminately.
21. The Initial Consideration Shares were defined to mean:

"Such number of the Purchaser's Shares [ie TIG shares], rounded down to the nearest whole number, as shall have an aggregate Value of £15,000,000"

"Value" was a defined term, defined as follows:

"the value of [a TIG share] being (a) for the purposes of the Initial Consideration Shares and clause 6.2 (V₁) the lesser of (i) the average middle market price of [a TIG share] over the five Business Days prior to Completion or (ii) £10 per [TIG share]; and (b) for the purposes of clause 6.2 (V₂) and 6.3 the average middle market price of [a TIG share] over the five Business Days prior to the Relevant Date."

The significance of the cross-references, and the "V" references will become clear shortly. For present purposes it is important to note that the value of the Initial Consideration Shares was determined by reference to their value at the date of completion (which was to be about a month after the SPA). I shall call this a "completion date valuation". The shares had been trading at slightly below £10 per share during the negotiations, and there was a cap on the valuation which meant that if the shares went above £10, Tamlura got the benefit of that in that the shares would not be valued at more than £10 for the purposes of calculating how many it got at that point in time.

22. The detail of the deferred consideration was provided for in clause 6, which provided that at the Relevant Date (defined as 30^th November 2002) TIG would allot the Deferred Consideration Shares. The number of shares to be thus allotted was set out in a formula in clause 6.2:


where

D = the number of Deferred Consideration Shares

A is (paraphrasing) the amount by which the value of TIHBV and its net profits fall short of certain specified targets (the details do not matter).

And B (again paraphrasing) is the aggregate amount by which TIG is entitled to reduce the deferred consideration under the warranty provisions (again the detailed wording does not matter).

V₁ and V₂ are as defined in the definition set out above; V₁ is a completion date valuation, and V₂ an allotment date valuation.

23. Thus, at the risk of labouring the point, the first step in the calculation is to divide £4m by the value of a TIG share using a completion date valuation; that yields a number of shares; then you calculate the amounts due under the NAV/profits shortfall and the warranty claims, and divide that by an allotment date value to find the shares to be subtracted in order to give effect to those claims (I shall call these "subtraction shares"), and arrive at a total to be allotted. The point at the heart of this case is whether the first part of that calculation (the part involving V₁) should be based on an allotment date valuation. At the date of the allotment the share price in TIG shares had collapsed. The first part of the calculation was based on a share price of £10 per share, yielding 400,000 shares with a market price of something like one hundredth of the original retention. Thus Tamlura claims to have lost out. It says it has done so because CMS should have left it with a first part of the equation which was essentially £4m worth of shares at then current prices. Whether that is right or not is what I have to decide.

The facts – the beginning

24. In this narrative I will set out the main facts without always making findings at that stage about the main disputed facts though I will do so where the sense of the narrative requires. I will return in a later section to some further findings. In what follows, any recitation of fact by me should be treated as a finding of fact unless the contrary appears.
25. In September 2000 there was a prospect that TIG would supply TIHBV with software. Mr Vlotman had a meeting with, inter alia, Mr Terry at which the latter in fact made an offer for Janute's interest in TIHBV. It was demonstrated to Mr Vlotman that TIG put a value of £40m on the whole of TIHBV. Mr Vlotman was prepared to recommend to Janute an offer which comprised a minimum of £10m in cash. Mr Terry's offer in fact amounted to £20m in a 50/50 cash/share split – i.e. £10m cash and £10m of shares in TIG. This represented a higher value for Mr Vlotman than he had expected; earlier in the year a valuation of TIHBV had been carried out which put the value of the company at £30m.
26. Because of a pre-emption clause in another agreement, Mr Vlotman had to consult Mr Kresfelder. He met Mr Kresfelder in the company of Mr Christie, and asked him if he wanted to sell his interest in Tamlura and if so, at what price. He mentioned a figure of £4m cash. Mr Kresfelder suggested that they go back to TIG and try to persuade them to buy the whole of Tamlura. Mr Vlotman considered that that sort of structure would not work and that it would be necessary to sell 100% of TIHBV. However, that made life complicated because PPG had a right to sell its shareholding, and in the circumstances Mr Terry would have to be persuaded to join in a sale of 100% of TIHBV.
27. On or about 7^th September 2000, a further meeting took place between Mr Vlotman and Mr Terry at which Mr Vlotman explained that Janute and Malvern were interested in selling, and that that would necessitate a sale of the entire share capital of TIHBV. An agreement was reached in principle with Mr Terry based on the valuation of TIHBV at £40m, and the split was to be £21m in cash and £19m in shares in TIG. Mr Christie was to be brought on board to carry out the day to day affairs relating to the sale on behalf of Tamlura. On about the same day, namely 7^th September 2000, CMS were appointed by Mr Christie to act for Tamlura in the transaction. Mr Christie and Mr Aspery had previously worked together in major acquisitions.
28. Also on 7^th September Mr Christie met Mr Aspery and he outlined the proposed transaction to him. He told Mr Aspery that £21m would be paid in cash and £19m in "paper" and there were to be no warranties or indemnities. The project was to be known as "Project Omega". Heads of terms were to be agreed before the final and formal share agreement. There is a note to the effect that Mr Christie expected a "lock in" for "management".
29. On about the same day, TIG must have instructed DLA. On the next day (8^th September) Mr Scott of TIG emailed Mrs Mares, and her supervising partner Mr Mark Taylor, stating that "we hope/expect/need to sign [heads of agreement] today". Mr Taylor responded that heads of terms (and a confidentiality agreement) would be with TIG shortly and in any event before midday, and he commented that he had already spoken to Mr Aspery, whose instructions were "extremely vague at the moment".
30. By the end of the day Mrs Mares was able to fax the first draft of heads of agreement to Mr Aspery. Clause 10 of that document provided that nothing in it should be capable of creating a contract or other legal relationship between the parties except that there were enforceable clauses relating to exclusivity, the bearing by each party of its own costs, and as to confidentiality. The main terms of the deal obviously remained subject to contract. The heads of agreement recorded an agreement by TIG to purchase all the shares in TIHBV for a consideration described in clause 3:

"3. The consideration.

The consideration for the purchase will be £40,000,000 payable as follows:

3.1 £21m in cash payable on completion of the purchase ("Completion"); and

3.2 The allotment of new ordinary shares of 2p each in TIG as shall when valued at the lesser of (i) the average middle market price of TIG's shares over the five business days prior to Completion, or (ii) £10 per share have an aggregate value of £19m. The recipient(s) of the shares in TIG will be subject to certain restrictions on transfer and/or sale in respect of those shares.

3.3 A retention of £ will be made from the consideration and paid to the Vendor [as security for any adjustment to the consideration following the finalisation of completion accounts and as security for any warranty or deed of indemnity claims until 200• whereupon provided no warranty or deed of indemnity claims are outstanding the retention will be paid to the Vendor.]"

This apparently represented DLA's first attempt to encapsulate the commercial terms which had been discussed between the parties to date. Throughout the whole of the negotiation of the terms of the heads of agreement the commercial terms were dealt with between principals (including Mr Christie), or at least were not such as to involve Mr Aspery. At this point the Tamlura side was hoping to avoid any retention, and a subsequent writing of the word "negotiable" by this clause on the first draft supports this. Mr Christie told me that the idea of a retention first surfaced in this document, as did the idea of the vendor's being locked in for a period of time in respect of its shares.

31. Mr Christie had his own copy of this draft on which he made various manuscript comments showing a close attention to detail and to the operation of this document, and an apparent understanding of it. A marking by the reference to £10 in clause 3 indicated an intention to try to negotiate a lower figure. This shows that he must have appreciated how clause 3.2 worked. He has marked "shares not cash" against 3.3 indicating an intention (pursued throughout the transaction) that any retention should be out of the share part of the transaction rather than the cash part. He sent a copy to Mr Vlotman under cover of a note saying that he would discuss it with "Mark" (Mr Aspery) "today" (probably meaning the 9^th, when he probably faxed it on) "and attempt to get into better shape".
32. The next working day (Monday 11^th September) Mrs Mares sent through another draft of the heads of agreement. She had filled in the blanks in clause 3.3, and introduced the word "negotiable" before the word "retention" – this had presumably been picked up from some communicated negotiation between the parties, though no-one was able to give any details about that. The date proposed in that clause for the release of the retention was September 2003. Other alterations were made which are not material to this case other than as demonstrating an ongoing and developing drafting and negotiation process.
33. Mr Aspery had this draft put on to his firm's own system, in a manner which affected the formatting but not the content of the draft. He faxed it to Mr Christie and Mr Vlotman at the Curtis Cup Room at Wentworth Golf Club. There was some uncertainty as to whether Mr Christie was in Wentworth or in Guernsey on this day, but I think it more likely that he was at Wentworth. Mr Aspery must have been told to send it there, and since Mr Christie had most of the contact with Mr Aspery it must have been Mr Christie who told him. It is hardly likely that he would tell him to send a fax to somewhere where he wasn't going to be, and Wentworth was somewhere where Mr Vlotman (who was a member) used to have meetings with him. So the probabilities are that he was there, with Mr Vlotman, to receive it.
34. The cover sheet for the fax merely invited the recipients' attention to "the attached", which was the heads of agreement. No explanation of any of its terms was offered in writing, but Mr Aspery had raised various points on the draft by making manuscript markings. Among those markings were his bracketing of the £10 figures in clause 3.1. Mr Aspery said, and I accept, that this was probably to remind himself to check with the client that that amount had been agreed. He wrote the words "shares or cash" against clause 3.3, obviously inviting consideration of, and instructions on, the point. The probabilities are, and I find, that this draft was considered by Mr Christie and Mr Vlotman, and discussed by them, and was sent to both to keep them informed and to enable them to give Mr Aspery further instructions.
35. It seems that another slightly different version of this document was sent and worked on by Mr Aspery, because such a version bears some more "thoughts" of his. I do not need to deal with this detail; nothing turns on it save to observe that Mr Aspery plainly continued to give the drafting his attention.
36. Further instructions seem to have come from the client the next day. Mr Aspery made an attendance note on 12^th September of a meeting with someone unspecified for Tamlura. His note does not record who that was, but it is likely to have been Mr Christie. Mr Vlotman says that by this time Mr Christie was "driving the bus", because Mr Christie had an expertise in share sale transactions which he (Mr Vlotman) did not have.

"Mr Vlotman and I normally agreed all terms before we did things." (Day 5 page 34)

I am satisfied that that is how this transaction worked – Mr Christie had most of the material dealings with Mr Aspery on behalf of his principals, and discussed matters with them, and got his own instructions, before he did.

37. It is likely, and I find, that Mr Christie had the relevant conversation with Mr Aspery having discussed the relevant matters with Mr Vlotman and, so far as necessary, Mr Kresfelder. Mr Christie accepted it was likely that he had more than one conversation with Mr Aspery that day.
38. Mr Aspery's notes record, amongst other things, the following:

i) There would be tax problems if the individuals (ie Mr Vlotman and Mr Kresfelder) were guarantors, which is what most forms of the heads of agreement had hitherto proposed and recorded.

ii) There was discussion about a deduction based on net asset values and/or earnings. This reflected provisions which later appeared in the draft heads of agreement.

iii) The retention should be in the form of shares. His note says "Retention = shares ( delay the issue of shares – how much and how long? 2 yrs for warranties". By the side of that he has written "10% of total consideration for 2 yrs". Further up the page there is an indication that DLA were wanting a 15% retention. There was doubt as to the route taken by this last piece of information, but it is plain enough that the first two bits came from instructions from the client, probably communicated by Mr Christie. The client wished the retention to be in shares, for it to be 10% of the consideration, not 15%, and for it to last for 2 years (the drafts had hitherto proposed 3). Mr Christie was liaising with his two principals sufficiently to enable him to give these instructions – that sort of liaison was one of his main functions in this matter.

39. There are two records of telephone messages from Mr Christie to Mr Aspery on this day. The first is timed at 11.37 and records a request for Mr Aspery to ring him 5 minutes before "the conference call". It is not clear what this call was, and there is no record of it. Mr Aspery does not seem to have participated in it. Since it was apparently something of some significance to Mr Christie, it was presumably a conference call, or an intended conference call, involving at least Mr Christie, and concerning this deal. This shows the extent to which Mr Christie was active in the matter. The second record is of a message timed at 14:05, in which the message left is:

"He has agreed the Heads of Terms on Project Amiga [sic]. Can you call him on his mobile."

Again, this demonstrates that Mr Christie was dealing with the commercial terms. He cannot have agreed a final form because there was no such form yet, so he must have agreed the general nature of the provisions with the other side at this stage.

40. It seems that Mrs Mares must have prepared a further form of the heads of agreement and transmitted them to Mr Aspery later in that day. It contains some further amendments to the heads, marked by "track changes" underlining, strikethrough and side-barring. It does not look as though it arrived by fax, because such copies as there are do not contain any fax headers. Some of the alterations that she has made bear a correspondence to the manuscript note of Mr Aspery of that same day, to the extent that it looks as though the contents of that note must have been discussed with her over the telephone and that he proposed, and possibly agreed, changes. This is a technique which seems to have been adopted at a later stage of the transaction in relation to the SPA. Thus the retention amount is now marked in as being 10%, and the period is 2 years (to 30^th November 2002). An express limitation on the liability under warranties has been added, some of Mr Aspery's comments about the NAV/profit deduction have also been incorporated, and some (but not all) of previous references to Mr Vlotman and Mr Kresfelder being guarantors have been deleted. All those reflect Mr Aspery's note. According to Mr Vlotman, the fact that the retention would be for two years, and would be taken over shares (and not cash), was agreed between Mr Vlotman and Mr Scott of TIG.
41. Having received that document, Mr Aspery carried out some more marking up, and at this point introduced an express and explicit reference to the valuation date for the deferred consideration shares as being a completion date valuation. He deleted the opening words: "A negotiable retention of 10 per cent of [sic] will be made from the consideration will be made" and in the side margin, in manuscript, provided for the substitution of:

"The allotment of the number of shares which has an aggregate value (determined in accordance with paragraph 3.2 above) of £4,000,000 will,"

The actual drafting does not quite work, because he should not have deleted the words "be made", but the intention is clear enough – an allotment of £4m worth of shares would be made, and the cross-reference back to clause 3.2 (which was still in substantially the same form as that referred to above) had the effect of imposing the completion date valuation.

42. This document was faxed to Mrs Mares at 19:07 on the 12^th September, and copied to Mr Christie. The fax cover sheet says:

"Herewith my comments on the revised heads which I have discussed with Kevin but have yet to be seen by him."

It bears Mr Christie's fax, home and mobile telephone numbers. Fax records show that it was successfully transmitted to Mr Christie. Mr Vlotman told me that he would have expected Mr Christie to send it on to him – that was his practice. He told that he would have expected to have read it, and I find that he did (both on the basis of what he said, and that Mr Christie must have expected him to have done so, because otherwise there was no point in sending it on to him).

43. Not only did Mr Vlotman read the clause, he accepted that it encapsulated what he wished to see. During the course of his cross-examination he accepted that the heads of agreement with this wording represented the agreement that he had made. It is not clear how and when he agreed with TIG that the valuation basis for the deferred consideration shares would be a completion date valuation but he must have agreed that, and I find he did. It is likely to have been before Mr Aspery wrote the relevant amendment on the 12^th September, because it is likely that Mr Aspery would have had instructions before writing it. He told me that his practice was that matters appearing in travelling drafts which had not yet been agreed with his own client would usually appear in square brackets. There are no such brackets round those words in his draft, so he must have cleared at least the idea with his client. What probably happened is that the principles (2 year retention, in shares, with a completion date valuation) were agreed between the principals at some stage on the 12^th, or perhaps by the 12^th, and that this was communicated to Mr Aspery. Hence his reference to having discussed the amendments with Mr Christie.
44. I also think that Mr Christie read it. He told me that he did not recollect doing so, and he only sometimes read documents sent to him by Mr Aspery, but I think that he was conscientious enough, and skilled enough, to have read the document (and in particular the amendments to clause 3.3) and to have understood their effect. This is so because it was his job to do so, the amendments are clear enough, there had been prior negotiations and because of what he did on signing the document. Mr Christie was to sign the final form of the heads of agreement under a power of attorney granted by Tamlura. He signed it on the 13^th September. The heads were re-typed by DLA into a final form, incorporating Mr Aspery's amendments (or so it was intended). When Mr Christie signed the final form he made a manuscript addition to write into the heads some wording that ought to have gone in but which was omitted by accident. He must have taken the prior draft (understanding that it represented the final agreed form) and then compared it with what he was being asked to sign. He noticed that words had been accidentally omitted and wrote them in and signed the insertion. That shows a commendable attention to detail. It also shows that he read the important manuscript amendments made by Mr Aspery. Of course, it does not necessarily follow that he understood them and their effect, but I consider he must have done. They were not that difficult and he was an experienced man in relation to deals such as this.
45. Mr Christie actually signed the heads of agreement on 13^th September, but asked that they be not dated until his form of power of attorney came through. This it did on 14^th September and the heads of agreement were dated on and with that date.
46. Throughout this phase of the deal Mr Kresfelder's direct personal involvement was probably less than Mr Vlotman's. The former was responsible for running the day to day operations of the Motorcare business, and he left the deal to Mr Vlotman and Mr Christie to sort out. He accepted he probably read the first draft of the heads of agreement. Whether and to what extent he read the others is not clear, but I think it likely that the nature of the deal was explained to him. If the effect of some of the provisions did not fully come home to him, that was because he did not seek the information.
47. Thus the heads of agreement came to represent the outline, non-binding agreement between the parties, whose core terms were agreed and understood by the principals. Furthermore, they were the subject of clear instructions given to Mr Aspery at the time, and became part of the content of further instructions. No complaint is made in these proceedings about Mr Aspery's conduct in relation to heads of agreement. It is not alleged that he did something that he should not have done, that he failed to explain anything, or that he did anything of whose legal consequences his clients were unaware. In his final speech Mr Cakebread sought to suggest that somehow the wording added to clause 3.3 of the heads of agreement, and which provided for a completion date valuation of deferred consideration shares, was added by Mr Aspery off his own bat. I find that that was not the case. I do not think it remotely likely that Mr Aspery would have done this without some process of consultation with his client, and it is highly likely that he spoke to either Mr Christie or Mr Vlotman or both about it, and got instructions on it. That is not actually recorded, but it is very probable.
48. This is the very important starting point for the phase of the transaction in which it is said that the negligence arose. It is important because the heads of agreement represent and embody the genuine, and understood, agreement between the parties to the transaction. No complaint was made about the activities of Mr Aspery in relation to the heads of agreement – no such claim was ever pleaded, and allegations in opening that there was negligence in this phase were withdrawn and abandoned (albeit not until after Mr Christie's evidence). Mr Aspery was entitled to take, and I find he did take, the heads of agreement as being the arrangement which he was instructed to take forward and implement in the next phase. Mr Cakebread submitted that there had been no discussion of the commercial principles (in the sense of the more abstract principles) underlying this deal between Tamlura representatives on the one side and Mr Aspery on the other. He may well be right about that, but that does not mean the heads of agreement did not represent the commercial bargain between the parties, that Mr Aspery was not entitled to assume that it did, or indeed that Mr Vlotman and Mr Christie did not understand the significance of the method of valuation of the deferred consideration shares by reference to the completion date. They may not have thought through all the potential consequences of that in the event of every eventuality, but they were capable of doing so, and Mr Aspery was entitled to work on the assumption that they were.

The facts – the middle

49. There was little or no relevant inter partes activity for a couple of weeks. Mrs Mares set about drafting a first draft of the SPA (it indicates a first creation date of 22^nd September). By this time Mr Vlotman had left for a holiday in Australia (on about 21^st September, to attend the Olympic Games), where he joined Mr Kresfelder. A first draft of the SPA was sent by Mrs Mares to Mr Aspery on 29^th September, and on the same day he sent it, apparently by post, to Mr Christie.
50. This first draft corresponded with the heads of agreement so far as the deferred consideration shares, and the valuation of those shares, were concerned. It achieved this by defining "Value" in clause 1.1 as follows:

"'Value' means the lesser of (i) the average middle market price of the Purchaser's shares over the five Business Days prior to Competion or (ii) £10 per Purchaser's Share."

The "Purchaser" was TIG. Clause 4 provided for 3 elements of consideration - £21m in cash payable on completion, the allotment of the Consideration Shares, and:

"subject to clause 6, the allotment by the Purchaser to the Vendor of the Unalloted Consideration Shares credited as fully paid."

Consideration Shares was defined as:

"Such number of the Purchaser's Shares, rounded down to the nearest whole number, as shall have an aggregate Value of £15,000,000 or thereabouts"

"Unallotted Consideration Shares" was defined as meaning:

"such number of Purchaser's Shares, rounded down to the nearest whole number, as shall have an aggregate Value of £4,000,000 or thereabouts"

51. Clause 6 was headed "Unallotted Consideration Shares". I do not need to set out its terms, but its effect was to deal with the deduction of shares from the number of Unallotted Consideration Shares so as to reflect the value of claims made under the warranties and indemnities contained in the SPA (subtraction shares). The number of those shares was to be ascertained by taking the value of the claims, and then turning that value into shares by applying the "Value", that is to say the value of TIG shares at the date of completion. The number of shares thus identified and valued is then deducted from the number of Unallotted Consideration Shares. Clause 5 provided for a similar deduction of subtraction shares in respect of shortfalls from projected net asset figures. The details do not matter, but the value of subtraction shares corresponding to that shortfall was to be determined by reference to their "Value". Thus the valuation of the deferred consideration shares and the subtracted shares was to be determined by reference to the same date – it is a completion date valuation. This exercise would be done at or around November 2002, at which point the deferred consideration shares would be allotted.
52. Mr Aspery did not advance any explanation of this to Mr Christie (and, since Mr Vlotman and Mr Kresfelder were in Australia, he could not explain to them in person), but in my view the way this worked, albeit involving a bit of a definitions chase through the document, would have been reasonably apparent to those gentlemen, and especially Mr Christie, had they chosen to read the documents. So far as valuing the Unallotted Consideration Shares was concerned, it would not have come as a surprise to them because of the correspondence with the heads of agreement.
53. On receipt of the SPA, Mr Christie sent it by fax to Mr Vlotman on 30^th September. Just before he received it Mr Vlotman had sent Mr Christie a fax, raising some questions about doing a deal with PPG and asking, in a PS: "Where is the S&P contract?". This latter remark suggests that he was anxious to receive it, and indeed was expecting to receive it. That supports the inference that he read it when he received it, and read it with some attention. I think it likely that he did so, despite his attempt in cross-examination to suggest that his engagement with the Olympics and with his concerns about PPG would make it less likely he would do so. I also consider it likely that he showed it to Mr Kresfelder, who also read it. They would have understood its effect in terms of the valuation date adopted for the deferred consideration shares.
54. On 4^th October a meeting took place between Mr Christie and Mr Aspery. It is Tamlura's submission that at or about this point in time instructions were given to Mr Aspery to change the method of valuation to ensure that Tamlura would receive shares worth £4m in November 2002, that is to say at 2002 values (subject, of course, to deductions for warranty and similar claims). It is therefore necessary to pay particular attention to the evidence in relation to this.
55. Mr Vlotman said, and I accept, that he had become concerned about the effect that PPG's entitlement might have on his (or more precisely his trust's – I shall treat them as one for the purposes of this narrative, purely for the sake of convenience) receipts from any sale. He had thought that the agreements in place with PPG had the effect that PPG could, in essence, be bought out for the £5.5m that it had put in (partly by way of share capital and partly by way of loan). It was becoming apparent to him that he was mistaken and that there was a risk that Janute and Malvern might have to pay as much as £10.8m in all. That sum, and indeed any sum significantly greater than £5m, would mean that Mr Vlotman would receive much less in cash than he had intended, particularly bearing in mind the amount of cash that he would have received if TIG's original proposal just to buy out Janute had been pursued.
56. These considerations were said to give a particular direction to Mr Vlotman's and Mr Christie's views and conduct thereafter. It made it more important, Mr Christie said, that the £4m future consideration should be guaranteed. Mr Christie's witness statement deposed to a telephone conversation between him and Mr Aspery in which he made it very clear that the £4m due in November 2002 should be guaranteed, and that was not negotiable. He believed that Mr Vlotman had spoken to Mr Aspery from Australia to make the same point. I do not accept that any such call from Australia took place; Mr Vlotman did not give any evidence of it, Mr Aspery has not noted anything like it, it did not trigger anything in the drafting and it is highly unlikely, bearing in mind the working relationships between the parties (and in particular the fact that Mr Christie was liaising with Mr Aspery) that Mr Vlotman would have done any such thing. Whether Mr Christie said any such thing to Mr Aspery at this time (or at all) is something I deal with below.
57. In order to deal with the PPG difficulties, Mr Christie and Mr Vlotman considered trying to restructure the share sale deal. They thought about proposing a cash deal at £25m, with a lock in and bonus structure which would generate another £15m if the Motorcare group fulfilled certain bonus targets. Mr Vlotman believed that this structure would mean that only £5m would be payable to PPG. It is plain that such a thing was being considered, because Mr Aspery made a note of a restructuring proposal to that effect on 3^rd October. In due course the idea of increasing the cash element was floated with Mr Terry of TIG. Mr Vlotman referred to such an event in his witness statement, though he did not put a date on it. In his cross-examination he indicated more uncertainty as to whether it happened or not. Mr Christie was not wholly clear about whether it was proposed. Taking Mr Terry's evidence on this in the round, it seems that he had some sort of recollection of some sort of proposal. He certainly referred to Mr Vlotman as demonstrating a keenness to increase the cash element of the deal, and that he was rebuffed. I think that such an approach happened. It is not clear when – it may have been on 10^th October, at an all parties meeting; it may have been before then. However, it was, I find, rejected by TIG.
58. There is clear evidence that a meeting took place on 4^th October between Mr Christie and Mr Aspery, and I find there was one. Mr Aspery had no specific recollection of this meeting, and relied on a note for prompts about what it contained and dealt with. On the previous day Mr Aspery had told Mrs Mares, in a letter, that he was meeting with Mr Christie the next day to discuss the draft SPA, and there is a note of Mr Aspery dated 4^th October which clearly evidences a form of contact with Mr Christie; it does not say it was a meeting as opposed to a telephone call, but I find that it was the former.
59. This note, which is short, shows that there was some sort of discussion about "Value". It records:

"'Value', at time of making adjustment with no £10 floor."

Mr Aspery's evidence was that this was a reference to the calculation of subtraction shares, and not to the valuation of the deferred consideration shares. In the end he was not significantly challenged on that particular point, and in any event I found his evidence convincing. The reference to "adjustment" tends to support the idea that it is a reference to subtraction shares, not the deferred consideration shares. In the case documentation two of the copies of the then existing SPA draft bear copies of manuscript annotations by Mr Christie and Mr Aspery respectively. A comparison of those drafts and Mr Aspery's note indicate a certain amount of common ground, or correspondence, between the matters thus annotated and the note such as to suggest strongly that the two drafts were before the meeting participants and the note reflects discussion at the meeting. No annotation or note suggests that Mr Christie required, at that meeting, that the SPA should reflect an allotment date valuation for the deferred consideration shares. Mr Christie's draft does contain some markings against "Value", including the word "change" but Mr Christie went out of his way to rebut any suggestion that those were made at the meeting, to such an extent as to cast serious doubt on whether those particular notes are at all contemporaneous (as opposed to having been made some significant time after the event). He said he did not know when they were made. Against the word "Value" in clause 5.7.2 he had written "Defn" (meaning definition), but that does not suggest that he was requiring a different definition for the purposes of this clause. (The annotation does, however, again suggest an attention to detail in relation to these matters.)

60. Accordingly, nothing in this documentation clearly suggests any instructions were given to procure a change of basis of the valuation of the deferred consideration shares to an allotment date. Such a change would be an important one, and would be likely to have been recorded. The only candidate is Mr Aspery's separate note, but that is not clear and, as I have said, I prefer his explanation. I think a clear instruction would have generated a clearer note, either as a separate note or as a mark on Mr Aspery's draft.
61. It is also not plain how such an instruction can have come about. If Mr Christie gave instructions at that meeting then either he must have discussed the point with Mr Vlotman or he must have raised it off his own bat. I regard the latter as unlikely – it was potentially an important point, and I doubt if Mr Christie would simply have taken it on himself to make a fundamental change in the bargain in this way. Furthermore, it would have required a renegotiation of commercial terms, and there is no real evidence that that occurred. While details of individual telephone conversations can have been lost in the mists of time, there was no real indication in the evidence that Mr Vlotman gave instructions from Australia for such a change to take place, and no indication that anyone had any commercial negotiations with TIG about it. Mr Vlotman said that he was getting concerned about the cash available to his trust, in the light of what might have to be paid to PPG, but that is not the same thing, and there is no real evidence that leads from this to a change in the instructions alleged at the 4^th October meeting. In his re-examination, Mr Christie said that he had not appreciated by 4^th October that the completion date valuation for the deferred consideration shares posed risks if the share price moved the wrong way. If that is right then again that is inconsistent with the change of instructions alleged. There is no evidence from the Tamlura side that Mr Christie had any commercial negotiations with the other side about this point at this time, let alone that he reached an agreement on it. All this is a substantial impediment to a finding that instructions were given at this meeting.
62. However, Mr Cakebread submits that the evidence does not stop there. He invites me to look at what happened next in the process. That was a new draft created by Mr Aspery, or rather the old draft with his marked amendments. Both sides say that if one looks at what Mr Aspery introduced, it demonstrates that it supported their particular respective cases as to what happened (or did not happen) at the 4^th October meeting. The point turns on what the draft should be taken as meaning, and it is therefore necessary to set it out at some length. In what follows I shall adopt the convention of underlining words that Mr Aspery added in manuscript, and of showing in strikethrough words which he deleted. That convention will also be applied to the narrative of later amendments by later draftsmen to various drafts so far as relevant.
63. Mr Aspery worked on the draft he had received from Mrs Mares. On the front he put "CM" (CMS's initials) and the date "6/10/00", which enables us to date it. It contains many manuscript additions, most of which I do not need to reproduce. He removed the words "or thereabouts" from the definitions of Consideration Shares and Unallotted Consideration Shares – that was logical and sensible on any footing – but those definitions are otherwise unchanged. The first important alteration (for the purposes of this action) comes when he amends the definition of Value in clause 1.1. He added words, so as to split it into three elements. His draft is done by adding a caret, and an asterisk, so as to include wording. The effect was to make it read as follows:

"'Value' means the value of a Purchaser's Share, being (a) for the purposes of clause 4, the lesser of (i) the average middle market price of the Purchaser's Shares over the five Business Days prior to Completion or (ii) £10 per Purchaser's Share; (b) for the purposes of clause 5.7, the average middle market price of the Purchaser's Shares over the five Business Days prior to the date on which the Completion Accounts are delivered to the Vendor pursuant to clause 5.6, and (c) for the purposes of clause 6, the average middle market price of the Purchaser's Shares over the five Business Days prior to each date on which the Purchaser becomes entitled to subtract Unallotted Consideration Shares in accordance with that clause."

The layout of this drafting was such that it was not immediately apparent how the words knitted together, but a short study made the knitting clear enough.

64. Clause 4 was still a clause dealing with Consideration. Mr Aspery amended it so that it now read as follows.

" 4.1 The Consideration for the Shares will be:

4.1.1 the payment by the Purchaser to the Vendor of £21,000,000 in cash at Completion; and

4.1.2 the allotment by the Purchaser to the Vendor of the Consideration Shares credited as fully paid; and

4.1.3 subject to clause 6, the allotment by the Purchaser to the Vendor of the Unallotted Consideration Shares credited as fully paid.

4.2 For the purposes of this clause:

4.2.1 the Consideration Shares and the Unallotted Consideration Shares (when allotted) shall rank pari passu with the existing ordinary shares of 2 pence each in the capital of the Purchaser; and

4.2.2 the value of each Consideration Share shall be the Value as defined in paragraph (a) of the definition of 'Value'."

65. Clauses 4.3 and 4.4 contain a restriction in disposing of any of the shares to be allotted which the original draft proposed should be 2 years but which Mr Aspery amended down to a period related to the publication of interim accounts of TIG and which amounted, in essence, to 6 months. It is unnecessary to set out those precise terms; the reduction of the period was something that Tamlura managed to negotiate into the deal.
66. Clause 5 is headed "Completion Accounts". It provides for the preparation of completion accounts for Tamlura and for the resolution of any disputes as to their accuracy. Clause 5.7 continues to provide, in its former terms, for the reduction of the number of Unallotted Consideration Shares in respect of a shortfall in net assets and pre-tax profits. The relevant numbers were still blank and Mr Aspery noted that they would have to be completed. Clause 5.7 reads:

"In the event that:

5.7.1 the Net Assets are less than £ , such number of the Unallotted Consideration Shares as shall have an aggregate Value equal to the shortfall shall be subtracted from the Unallotted Consideration Shares …

5.7.2 the Pre-tax Profits are less than £ , such number of the Unallotted Consideration Shares as shall have an aggregate Value equal to the shortfall multiplied by shall be subtracted from the Unallotted Consideration Shares ….. "

[ and there is then a proviso which I do not need to set out]

67. Clause 6, headed "Unallotted Consideration Shares" was significantly amended. Its amended form became (showing amendments):

"On 30 November 2002 ("Relevant Date") the Purchaser shall allot and issue to the Vendor (or as it may direct) the Unallotted Consideration Shares and procure the delivery within [ ] Business Days of the Relevant Date of definitive certificates in respect of such Unallotted Consideration Shares to the Vendor provided that in the event that prior to 30 November 2002 the Relevant Date the Purchaser shall have made become entitled to assert against the Vendor any claim for breach of the Warranties (in accordance with clause 10.2 or 10.3) or and Tax Covenant or any other provision of this agreement ("Relevant Claim(s)") the following provisions shall apply:

6.1 if the Relevant claims have been settled by the Relevant Date but not satisfied in full by the Vendor the Purchaser shall be entitled to subtract from any Unallotted Consideration Shares due to the Vendor on the Relevant Date such number of Unallotted Consideration Shares as shall have an aggregate Value equal to the sum remaining due to the Purchaser in respect of the Relevant Claim(s) …

6.2 if the Relevant Claim has not been settled by the Relevant Date the Purchaser shall be entitled to subtract from any Unallotted Consideration Shares due to the Vendor on the Relevant Date such number of Unallotted Consideration Shares as shall have an aggregate Value equal to the amount(s) claimed which shall be a genuine pre-estimate by the Purchaser acting reasonably of the Vendor's liability in respect of the Relevant Claims …"

I do not need to set out the rest of the clause.

68. Thus Mr Aspery has split up the concept of Value and provided for different definitions to be applied to different clauses – (a) applicable to clause 4, (b) applicable to clause 5 and (c) applicable to clause 6. The completion value was now only applicable to clause 4. An allotment date value was applicable to clause 6. Mr Cakebread's submission (which was also tested with witnesses, to see their understanding of the provisions) was that the effect of this was that part (a) (a completion date valuation) was applicable only to the Consideration Shares, that is to say the £15m-worth to be allotted on completion. That was the effect of combining clause 4.2.2, the new definition (a) and the explicit cross-reference back to definition (a) in clause 4.2.2. The Value of Unallotted Consideration Shares was not referred to in clause 4, so definition (a) did not apply to it. Clause 6 now deals with allotment and actually provides the obligation to allot via the introductory words (newly introduced – there had been no express obligation before), and since part (c) of the definition applied to clause 6 then it was that part that governed the basis on which you valued the deferred consideration shares (or Unallotted Consideration Shares) on allotment by reference to the market price at that time (and not at completion). Thus one applied definition (c) of Value for the purposes of valuing the Unallotted Consideration Shares, both for the purposes of ascertaining the number of them prior to deductions, and for the purposes of valuing the subtraction shares. That, said Mr Cakebread, must have come from somewhere, and it actually came from the instructions given at the meeting on 4^th October; Mr Aspery was fulfilling his instructions, albeit in a manner that was not wholly clear.
69. Fortunately, I do not have to give a definitive ruling on the true legal construction of this form of the drafting, because it did not survive into the final form of the SPA. What is important is what this form tells us about what Mr Aspery was trying to achieve, to see if that sheds light on what he was told to achieve. If the drafting had contained a clear provision to make an allotment date applicable to the value of the deferred consideration shares then it would be useful material to support Mr Cakebread's preferred version of events. Unfortunately it is not clear. What this draft certainly achieves is the application of a later date than completion for the purposes of valuing subtraction shares. To that extent it is consistent with what Mr Aspery said his note of the 4^th October meeting meant. However, it is not clear in relation to the point that Mr Cakebread seeks to make. One of the things that clause 4 does is to provide what the Consideration is to be. Part of it "subject to clause 6" is the allotment of "the Unallotted Consideration Shares credited as fully paid" (clause 4.1.3). The term Unallotted Consideration Shares is defined by reference to "Value" (see above), which throws one into the new definition. Since the new definition (a) applies "for the purposes of clause 4", it is arguable that one allots by reference to element (a) of the definition (a completion date value). Doubt is then cast on that by the explicit reference to the Value of the "Consideration Shares" (the initial £15m-worth) as being calculated in accordance with element (a), which might be said to be intended to exclude the Unallotted Consideration Shares. If one goes to clause 6 for clarification, one does not find it, because the only express references to the concept of Value are in relation to subtraction shares. So there is a problem of construction. If one pushes the point, clause 9 (which deals with rescission) contains at least one provision which assumes that the number of Unallotted Consideration shares can be calculated at or about the date of completion, which requires a completion date valuation (ie definition (a) would have to apply to their Value), which supports Mr Aspery's version of events as to what he intended. Overall, the draft lacks the clarity necessary to give Mr Cakebread's submission as much force as he would like. As a matter of evidence Mr Aspery did not accept that his intention was to create a draft with Mr Cakebread's proposed effect, and Mr Page said he could see the point but had not read the draft, or at least understood the situation, in that way. Since I am not actually having to construe the document for these purposes, and since I have to assess the draft to see what it says about the subjective intention of the draftsman, I can take their subjective views into account. I accept their evidence on this – I accept that Mr Aspery did not intend to change the valuation date basis for the deferred consideration shares, and Mr Page understood that it was the same as for the initial consideration shares. So far as Mr Aspery's evidence is concerned, there is a small amount of corroboration in the terms of a letter he wrote to Mrs Mares on 6^th October 2000 in which he refers to issues relating to adjustments in the event of the issue of bonus shares which is more consistent with his understanding of what he had done than with Mr Cakebread's submissions.
70. The net effect of this evidence is that this draft does not provide clear corroborative evidence that Mr Aspery had received the instructions that Mr Cakebread submits he received on 4^th October. I acknowledge that there is material for believing that Mrs Mares may have understood the draft in the sense contended for by Mr Cakebread (see below) but that does not make it clear.
71. The other piece of contemporary evidence that I am invited by Mr Cakebread to rely on in this respect is a handwritten diagram drawn by Mr Christie at about this time. It is hard to describe, but it consists of a crude timeline with three stages – "Day 0", "Day Completion" and "Day + 2 years". Below these are boxes with some figures in. It was relied on by Mr Cakebread as demonstrating Mr Christie's thinking at the time, in a manner which supported the case that he wished, or had given instructions for, or had agreed, or assumed, that the deferred consideration shares would be valued as at the allotment date. Mr Christie could give little helpful evidence about this document, and could not actually explain the significance of all the elements on it. I find that it was indeed probably some attempt to aid a consideration of the matter, done at some stage before the SPA was signed, but beyond that it is not possible to make any relevant findings. The end result of his questioning on the topic was that he did not really understand the diagram himself, and was not able to reconstruct very much. It does not assist either party in this case.
72. Mr Aspery's mark-up of 6^th October was sent to Mrs Mares on the same day under cover of a letter which said:

"I now enclose two copies of the draft Sale and Purchase Agreement on which I have marked my initial comments and suggested changes. Please note that I have discussed the Agreement with Kevin Christie but have not yet had the opportunity to take instructions from anyone else. Accordingly, I reserve the right to make further changes."

A marking on the letter indicates that it was couriered to Mr Christie, and also to Mr Simon Airey, who was the financial controller of the Motorcare group. Mr Airey discussed financial matters with Mr Vlotman and others. The main part of it (minus the schedules, which contained detail such as the warranties) was faxed to Mr Kresfelder on 10^th October. Mr Christie accepts that on receipt he would have read it, and indeed there are some markings in his handwriting on one copy of it which indicate that he must have done, and in some detail. He said that it was likely that he discussed it with Mr Vlotman at some point; I find that he did. I also think it likely that Mr Kresfelder looked at it, but unlikely that he looked at the detail. However, reading is one thing; fully understanding it is another. I do not find that Mr Christie (or Mr Vlotman or Mr Kresfelder) read the document in such a way as to amount to the sort of analysis that I referred to above. If they had they might have been uncertain as to what its effect was in relation to the valuation basis of the deferred consideration shares. It is a complicated document, and it is much more likely that they understood just that the subtraction shares were being valued as at the allotment date (or the other date referred to in clause 5, which was again later than the completion date), in line with what Mr Aspery had been instructed on 4^th October. They would not have appreciated, if it were the case, that the draft achieved anything different from the already established basis of valuation of the deferred consideration shares, that is to say a completion date valuation.

73. The 6^th October was a Friday. Mr Vlotman returned from Australia on the 9^th (Monday). Mr Aspery's letter of 6^th October had anticipated an all-party meeting on that date, as did the DLA note to which I am about to refer, but it seems it did not happen on that date. Instead there was a meeting on 10^th October. This is a crucial meeting for the purposes of the case that Tamlura makes.
74. Before that meeting Mrs Mares prepared a note (which I will call the DLA note). It was found only very shortly before the trial, and came to be one of main foundations of the claim. It is headed "Main Outstanding Points on Sale and Purchase Agreement at 9 October", and its word-processing name is "outstanding points.doc". It bears Mrs Mares' initials in the footer, and it is to be assumed that she drafted it, but she had no recollection of it. The only copy of it that was found on the DLA file is a copy indicating that it is itself a copy of the pieces of paper faxed to TIG at 11.44 am on 10^th October – that appears from the fax header. It is two pages, and the header indicates that they were the second and third pages of the fax transmission, but page 1 (the cover sheet) does not survive on the DLA file (or at least it was not found and produced). Mr Terry could not remember seeing it at the time, and said that it would have been reviewed by Mr Scott, his colleague in TIG, though it is likely that any points materially affecting the transaction would have been discussed with between them.
75. The document takes the form of a list with items numbered 1 to 8, bullet points within some of the lists and a "General" point at the end. The main numbered points were, verbatim, as follows:

"1. Identity of the vendor ie Tamlura NV or Tamlura NV and PPG Industries.

2. valuation of further consideration shares -- contrary to heads of agreement, middle market value to be fixed at allotment at November 2002.

3. length of lock-up for vendors' shares, second anniversary of the allotment as their heads or date of publication of interim account to 31 March 2001.

4. no comments yet received in relation to IP, IT, property or restrictive covenants.

5. warranties* [there is then a list of matters]

6. warranties refused in the following areas [there is then a list of matters]

7. Tax. We are still assessing the implications of the comments in relation to the tax deed and warranties.

8. Vendor protection -- aside from the usual points to be battered about among lawyers, the key area relates to conduct of claims. The vendor wishes to retain the right to conduct litigation which purchaser will obviously resist.

General. There are obviously a different number of drafting points which can be picked up in the revised draft after tomorrow."

Mrs Mares described this as a sort of checklist which she would make, as a matter of her general practice, prior to important decisions being made. That is certainly what it looks like. It therefore looks as though there was a question-mark in her mind about the basis of valuation of the deferred consideration shares. In her cross-examination she wondered whether it was a reference to the valuation of the subtraction shares, but I think that is unlikely. I think that it is more likely that she had read Mr Aspery's mark-up and had thought it was, or might be, proposing to shift the valuation date for the deferred consideration shares. Hence the reference to "contrary to heads of agreement". So either someone on the DLA side of the transaction (probably Mrs Mares) had read the Aspery draft in the manner in which Mr Cakebread says it should be read, and noted that the point needed to be dealt with, or there had been some other suggestion or request from Tamlura for a change which had been communicated to her and which she flagged as needing resolution. I think that the former is more likely than the latter. It is possible that there had been some prior communication between the clients, and some of Mr Terry's evidence suggested that there might have been (though it is not clear, and it is not clear whether or not he was reconstructing or recollecting) but I think it likely that if there had been a request at client level to change the basis of valuation it would have been rebutted by Mr Terry for the reasons that he gave and which will appear below, so that it would not have got back as far as DLA. So I think that Mrs Mares was flagging the point as a result of her reading of the Aspery mark-up.

76. Meanwhile Mr Aspery had involved Mr Page. This had happened on the afternoon of the 9^th October or even the morning of the 10th; Mr Page had had no involvement before then. He had no actual recollection of being brought in, but he had worked with Mr Aspery before on a number of transactions. He said that Mr Aspery's normal practice would have involved Mr Aspery telling him what the transaction was about, who the clients were, and to have supplied him with the heads of agreement and his latest draft (the 6^th October mark-up); that is highly plausible, and I find that it happened. He was obviously being briefed in anticipation of his attending the forthcoming meeting on 10^th October. His job was to be learning what the parties were agreeing at the meeting, keeping a record and preparing for the further pursuit of the transaction.
77. The meeting of 10^th October was in the evening of that day, at the offices of DLA. Mr Page had a vague recollection of it, but not of detail. Mr Aspery had none; nor did Mrs Mares. She was not even sure she was there, but I find that she was (it is overwhelmingly likely). Mr Vlotman had a vague, generalised recollection, as did Mr Christie. They were both there, although Mr Vlotman (and Mr Kresfelder, who was also there) withdrew after a short time to let the lawyers, and Mr Christie, get on with resolving outstanding disputes which did not (apparently) require their attendance. Mr Kresfelder had had no recollection of the meeting until his memory was jogged by the evidence at the trial, at which point he realised he had some generalised recollection. Mr Terry had some sort of recollection of the beginning of the meeting, involving a side-meeting (a "breakout meeting") direct with Mr Vlotman, but (if he stayed) no material recollection of much else. All those people gave evidence to me. The meeting was also attended by a DLA partner Mr Sherratt, who had stepped into the shoes of Mr Mark Taylor for this meeting and, it seems, for at least some of the drafting afterwards, because Mr Taylor had gone off to a conference. Mr Sherratt did not give evidence to me.
78. Thus all the principal players had no solid recollection of the meeting. Nonetheless, Tamlura's primary case is that before, or very conceivably at (and if before, then confirmed at) this meeting there was an agreement between the parties that the valuation date for the deferred consideration shares would be the allotment date. The meeting is therefore very important. Mr Aspery and Mr Page both took notes at the meeting, and their notes have survived. There are also notes of Mr Page endorsed on his copy of the 6^th October mark-up. If Mrs Mares took notes then they have not survived; they were certainly not produced to me. Thus the notes of Mr Aspery and Mr Page are very important.
79. It seems that at an early stage of the meeting Mr Vlotman and Mr Terry had a separate breakout meeting in order to deal with outstanding commercial points on which the lawyers needed instructions and which it was felt the principals should sort out amongst themselves. It seems from the evidence that one of those points was the period for which disposals of the initial consideration shares should be restricted – point 3 on the DLA note. Mr Vlotman wanted 6 months; TIG had proposed 2 years. Mr Terry gave way on that point; he said he had intended to in order to be able to give way on something to Mr Vlotman. Whether anything else was discussed was not the subject of clear evidence. It may be that the valuation date for the deferred consideration shares was also discussed, and since it was a point flagged up for discussion that is plausible. However, no-one could remember whether it was actually discussed between them at that stage. What is plain, however, is that the point was the subject of at least part of the overall meeting, so the more important question is what, if anything was agreed in that respect. Mr Vlotman and Mr Kresfelder left the meeting after the breakout meeting and retired to a wine bar, though they were said to be available for consultation if necessary. They left Mr Christie behind to deal with matters.
80. The notes of Mr Aspery and Mr Page deal with the question of the valuation of the deferred consideration shares. Those notes, in their manuscript form, were available to me. It was not disputed that they were made at the meeting. The relevant parts of the notes were as follows.
81. First, Mr Aspery's notes. At the foot of page 1 is a heading "Delayed allotment", below which he has written:

"Consid 2 hits

Comp + [2 yrs] out no. less comp a/c adjustment less claims adjustment wording"

The square brackets are his; "comp" means completion. "no." means "number". This is apparently a reference to the subtraction shares, and has no direct bearing on the point currently in issue. At the foot of the next page and going on to the top of the following one he has the following:

"Consideration shares

calculate no of deferred shares at the outset.

each adjustment by ref to market price at time you make the adjustment.

ie cash equivalent to be satisfied by no of shares calculated at the then price.

If shares held back in 2002 no of shares calculated at the then price and when claim settled no of shares to be issued = %age of total claim which is successful"

This part of the note is more germane. Mr Aspery was clear in his interpretation – the "outset" was completion, and no other date. This was the "outset" in the sense of the beginning of TIG's ownership of the company. This part of the note was said to reflect an agreement at the meeting (which involved an agreement by the principals) that the deferred consideration shares would have that valuation date. The rest of this second part of the note referred to the allotment date – the warranty and other claims would be subtracted at their then cash value, which required an allotment date valuation of the subtraction shares. Mr Cakebread suggested, and put, that "outset" meant the outset of the calculation in question, and since the calculation was taking place at the allotment date, then it required a valuation at that allotment date. Mr Aspery did not accept that that was what he meant, and to my eyes it is a very forced reading of the word. Apart from the unnaturalness of this construction, there is apparently some contradistinction with "the then price", which plainly refers to the allotment date, and that distinction can only exist if the "outset" means some other date, which, in turn, can only mean completion. This document is, after all, not a carefully crafted legal document. It is a note of a meeting taken at the meeting as events were unfolding, and one has to put oneself back in that meeting to see what it is likely to be encapsulating. In that context "outset" is much more likely to bear the meaning that Mr Aspery ascribed to it. By way of reinforcement, it has to be remembered that Tamlura's case is that this meeting was finalising an agreement which was contrary to the heads of agreement. If that were the case then one would have expected more positive wording than Mr Aspery's note in order to record that.

82. But the matter does not stop there, because there is also Mr Page's note. His note is a much neater thing. It is a tidy one, made up in the main of headings on the left hand side of the page (with numbers attached) and bullet points on the right hand half, falling under those headings. I confess that it gave the appearance to me of a note that was made by way of a summary note, made after the meeting in order to bring together, in a tidy form, points that had been made at the meeting and probably recorded elsewhere. However, Mr Page was quite clear that he made this note at the meeting itself, and that each heading was made at the end of the discussion on each point, in order to summarise where the parties had got to. In the light of his clear evidence, and in the light of the view that I have formed as to his credibility, I accept his evidence on that point.
83. His note, at the relevant point, reads:

(Page 1) "4. Deferred Consideration - add reorganisation wording for consolidation/subdividing".

That is a reference to a point that arises as to the effect of consolidation or subdivision of shares by the time of any relevant allotment. That is not the most relevant part. The most relevant part is on the next page:

"8. Def. Consid

– fix no of shares now at the lesser of mkt value + £10

– If adjustments made in 2002 then at 2002 price

- If disputes at 2002 then withhold shares representing claim at 2002 price

– When claim agreed, issue shares to extent claim not successful at 2002 price."

The key point is what is meant by "now". Mr Page was quite clear that it meant at completion, and not at the future date of allotment. Mr Cakebread suggested that note 8 described a process and that "now" described the beginning of the process, which was to take place at the allotment date. It seems to me that Mr Cakebread's construction is forced to the point of being almost unsustainable. While one might observe that "now" is not wholly accurate, it cannot really be taken to mean a point of time some 2 years away. The only realistic meaning is that it meant at that stage in the transaction, which for practical purposes meant completion. Again, one has to bear in mind this is a note of a meeting. If it is right that the DLA note formed the background for this point, so that there was some doubt at least in DLA's mind as to what the appropriate valuation date was, then if the point had been resolved in favour of the allotment date (2002), contrary to the heads of agreement, one would have expected Mr Page to have written something very different. He did not. In my view what Mr Page was apparently recording was the resolution of the query about the valuation date of deferred consideration shares and was confirming that would be a completion date valuation.

84. If events had stopped there that would be fatal to Tamlura's case which was that there was an agreement at, or before, the 10^th October meeting to the effect that the allotment date would be taken. However, what happened next is the other significant point in Tamlura's case. The meeting on the 10^th probably went on late into the night. DLA were to produce the next draft – a note of Mr Page indicates that one of the next things he would have to do is review that next draft. Mrs Mares apparently worked through the night to produce it, because it was emailed by her to Mr Aspery at 4.48 am. The covering letter stated:

"Further to our meeting on this transaction, I enclose a copy of draft 2 of the Sale and Purchase Agreement for your review and comments. The agreement is still subject to any comments that my client may have. We have tried to incorporate all the agreed changes in the timescale and therefore any omissions are an oversight …

"If possible, your comments on this second draft would be welcome early this evening. If there are any issues that require a further meeting then provisionally we could keep late Thursday afternoon free for that."

The new draft was her first draft with alterations shown by strikeout and underlining. Many of her amendments accepted many of the detailed amendments proposed by Mr Aspery in his 6^th October mark-up. Some of them can be traced back to matters recorded in the notes of the 10^th October meeting. In addition, she re-cast the provisions as to the consideration in the following manner which, as will be seen, provided for an allotment date valuation for the deferred consideration shares. It is not necessary for me at this point in the narrative to reproduce her mark-up markings so I shall not do so.

85. She introduced new definitions, or amended definitions, as follows:

"'Consideration' means the Initial Consideration and the Deferred Consideration (if any)

'Deferred Consideration' the deferred consideration (if any) payable in accordance with clause 6 [sic]

'Deferred Consideration Shares' means such number of Purchaser's Shares, rounded down to the nearest whole number, as shall have an aggregate Value equal to the Deferred Consideration"

'Initial Consideration' means that part of the Consideration payable at Completion in accordance with clause 4

'Initial Consideration Shares' means such number of Purchaser's Shares, rounded down to the nearest whole number, as shall have an aggregate Value of £15,000,000.

'Value' means the value of a Purchaser's Share being (a) for the purposes of the Initial Consideration Shares the lesser of (i) the average middle market price of the Purchaser's Shares over the five Business Days prior to Completion or (ii) £10 per Purchaser's share; (b) for the purposes of clause 6.2 the average middle market price of the Purchaser's shares over the five Business Days prior to the allotment of the Deferred Consideration Shares.'

Pausing there, what she has done is to create new definitions of similar (though not identical concepts), and to have a two-pronged valuation provision in place of the three-pronged provision of Mr Aspery.

86. Clause 4 still dealt with Consideration:

"4.1 The Consideration shall be the Initial Consideration and the Deferred Consideration (if any) of which:

4.1.1 £ being the cash element of the Initial Consideration shall be paid at Completion by the Purchaser to the Vendor; and [ Note: Cash element is equal to £21,000,000 less principal and accrued interest in relation to PPG Loan Stock.]

4.1.1 [sic] the Initial Consideration Shares shall be allotted to the Vendor by the Purchaser credited as fully paid at Completion; and

4.1.2 subject to clause 6, the Deferred Consideration Shares credited as fully paid

…"

The italicised passage is Mrs Mares' own note.

87. Clause 5 still dealt with completion accounts and included a largely unamended version of what had gone before regarding their finalisation and certification. Clause 5.7 now provided:

" 5.7 In the event that:

5.7.1 the Net Assets are less than £ , the Deferred Consideration shall be reduced by an amount on a £1 for £1 basis as regards the shortfall; and/or

5.7.2 the Pre-tax Profits losses greater than £ the Deferred Consideration shall be reduced by an amount on a £1 for £1 basis as regards the excess …"

The asset and profits amounts preceded by pound signs were blank in this draft. Nothing turns on that. The clause continued to contain a proviso which I do not need to set out.

88. Paragraph 6 now had its heading changed from "Unallotted Consideration Shares" to "Deferred Consideration", in line with the amended definitions. It had undergone a profound transformation, so that the relevant parts read as follows:

"6.1 On 30 November 2002 (" Relevant Date") the Purchaser shall allot and issue to the Vendor (or as it may direct) the Deferred Consideration Shares (if any) representing the Deferred Consideration and shall procure the delivery within 5 Business Days of the Relevant Date of definitive share certificates in respect of such Deferred Consideration Shares

6.2 The number of Deferred Consideration Shares to be issued pursuant to clause 6.1 shall be calculated by reference to the following formula:

where

D = the amount of the Deferred Consideration

A = the amount (in pounds sterling) derived from the operation of clause 5.7

B = the aggregate amount (in pounds Sterling) of any Relevant Claim(s) (as defined in clause 6.3)

V = Value (as defined herein)"

89. Clause 6.3 defined Relevant Claims as being claims that the Purchaser was entitled to deduct from the Deferred Consideration in respect of warranties, indemnities and the net asset value/pre-tax profit provisions. The precise details do not matter.
90. Mrs Mares's evidence in cross-examination was that the formula was not likely to be hers - she did not work that way. She thought it more likely to have been Mr Sherratt's supplied to her for insertion into her other drafting. I accept her evidence on this point. It can be seen from other evidence that Mr Sherratt was in Manchester by 10.30am the next day, so his contribution was done in some haste to allow him to get away, get some sleep and travel to Manchester (though haste would have been apparent from the fact that Mrs Mares was able to put his formula in her early morning draft anyway).
91. The nature and effect of this equation is such as to produce a valuation of the deferred consideration shares as at the date of allotment. Its effect is clearly worked through in other provisions, and Tamlura relies on this heavily as demonstrating what must have been agreed at the 10^th October meeting, particularly bearing in mind the fact that the covering letter said that the draft was intended to deal with agreed matters. Tamlura obviously has a point.
92. CMS's case is that this formula was a mistake. That mistake might have been contributed to by the fact that Mrs Mares was working under some pressure, through the night, and relying on contributions from others (Mr Sherratt) which she did not fully consider at the time. It relies on the notes of Mr Aspery and Mr Page as being better and proper records of what was agreed, on the evidence of Mrs Mares and Mr Terry as to what they believe their intentions and views would have been, on what happened next in the drafting procedure, and on various other provisions in the drafting which demonstrate that Mrs Mares' approach was not wholly internally consistent. It also relies on other things that were going on at the time and parallel activities relating to a stock exchange circular that was under preparation. I do not think that the drafting inconsistencies help much (or not nearly as much as the other matters) and I will not deal further with them. I will, however, deal with the other matters, starting with what happened as the drafting developed.
93. It fell to Mr Page to review the Mares draft. He did so, and says that he spotted what he viewed as an error in the contents and effect of the new formula. He revised it so that it took a form similar to the form which it took in the final engrossment (set out above), with the necessary amendments to the definitions. He worked in manuscript on a copy of Mrs Mares' draft. By means of carets and handwriting he created and included references to V₁ and V₂ in the definition of Value, with cross-references to clauses 6.2 and 6.3, so that it would read as it read in the engrossment. The form of his amendment is such that it would have been quite apparent, at a glance, that he had done something significant, and introduced new elements, even if it took a bit of work to ascertain precisely what he had done. In clause 6.2 he deleted the formula and wrote the final form, with its clear two denominators. He also inserted references to V₁ and V₂, with cross-references back to the definitions, and amended the other defined terms so that they got closer to their ultimate final form – the detail of these last amendments does not matter. What is significant about the form of these amendments is that it is plain that the Mares formula has been deleted and replaced by something else, and that there were two denominators; a clear reference back shows that each of the denominators refers to different points of time. The carets and the reset of the presentation of the emendations mean that the proposals take some working out to follow through, but it does not take long to work out what has changed.
94. Mr Page's mark up was sent to Mrs Mares on the evening of the 11^th October. His covering letter refers to an intention to meet with his clients "tomorrow to go through it with them and will let you have any further comments resulting from that meeting." He did not make any special reference to the amendments to the deferred consideration valuation. In particular, he did not ask why she had changed them, explain why he was changing them back, or make any form of protest that her draft had not reflected his understanding of what had happened at the meeting. He says he simply went about his drafting to give effect to what he considered was agreed at the meeting. I find that it is plain that he did indeed think that the meeting had agreed that the deferred consideration shares were to have a completion date valuation.
95. Mr Christie and Mr Kresfelder had been sent a copy of DLA's draft of 11^th October. In Mr Christie's case it was expressly on the basis that it had not yet been reviewed by Mr Aspery. Mr Aspery carried out his own review on 11^th October, working on a copy with Mr Page's mark-ups on it. He seems to have done it in two stages. A marking by him indicates that he first reviewed only the first 12 pages (which included definitions and part of clause 4 but not any later parts), but it is clear from his additions to later pages that at some later stage he went on to review those as well.
96. On the morning of 12^th October Mr Page sent a copy of his amended draft to Mr Vlotman, Mr Kresfelder and Mr Christie. Mr Harvey submitted that the formula was legible and clear, and the definitions of V₁ and V₂ were readily understandable. I think that they were understandable by someone with a general mathematical understanding (which all three men, and particularly Mr Christie, had) but I am not prepared to find that, on receipt of that document, those three individuals all read and fully mastered the new provisions of the formula. The presentation on paper was perhaps too confusing for that. However, I do consider that the interests of Mr Vlotman and Mr Christie (though perhaps not Mr Kresfelder, who was a little more distanced) were such that they are likely to have read the document and spotted that there were two different bases for valuing the consideration shares. It would not take an intelligent businessman long to spot that, even if he then got a bit lost in working out precisely what was happening.
97. On the same day (12^th October) there was a meeting at CMS's office attended by at least Mr Aspery and Mr Christie. There is a note in Mr Aspery's handwriting, bearing that date and Mr Christie's name and which says (at item 2) "Take clients through contract". It also refers to "Disclosure letter", and a letter of the next day to Mrs Mares in relation to such a letter refers to "a meeting I had last night with our clients" about it. So it looks as though this was a note of, or in anticipation of, such a meeting. There is also a manuscript note of Mr Christie with the date 12^th October which Mr Christie thinks was both a note of, and a note for, a meeting on that date. It is clear enough, and I find, that there was such a meeting. Mr Harvey invites me to find that Mr Vlotman and Mr Kresfelder attended that meeting too. Mr Vlotman thought that he attended a meeting in that week, which he himself called so that the formula could be explained to him. It would be consistent with that evidence that he had at least noted the formula. He may have been at the meeting on that day. I make no particular finding about Mr Kresfelder's presence.
98. I think it likely that at that meeting, which will have been attended by both Mr Aspery and Mr Page, the SPA in its then form will have been explained to the attendees, and therefore to at least Mr Christie (and Mr Vlotman if his recollection of a meeting is this one). Neither Mr Page nor Mr Aspery deposed to a recollection of this meeting, but it must have had some valuable content. If Mr Aspery's note is a note of what he intended to do, then I think it likely he did it. If it is a note of what he did, then it records an explanation of the contract. The state of negotiations is such that it is highly likely that the contract in its then form will have been explained. That being the case, it is equally highly likely that reference will have been made to the valuation basis for the deferred consideration shares because of the shift in drafting that had taken place. What is quite inconceivable is the suggestion made on behalf of Tamlura that something equivalent to a positive assertion was given to the effect that the deferred consideration shares would, when issued, have a then value of £4m. I make this finding because it is part of Tamlura's case that it may have been at this meeting that such an assurance was given by Mr Aspery. Given the shift in drafting, and the notes of the two solicitors, and the new formula which Mr Page had deliberately created (which will have been apparent to Mr Aspery) and which deliberately and conspicuously reinstated an allotment valuation date for those shares, it is very difficult to imagine that the solicitors would have said any such thing. By the same token, if Mr Vlotman is right that he called a meeting to have the formula explained to him, and if this is the meeting, then it is very difficult to see how he can have been given an explanation which can have said that deferred consideration shares had that later valuation date. Mr Page would have had to have taken leave of his senses if he had said any such thing, or allowed Mr Aspery to say any such thing, and having seen him in the witness box I am satisfied that he will have done no such thing. Similarly, Mr Aspery would not have misunderstood the formula to the extent necessary for him to have said it in the first place. I therefore find that CMS gave an accurate description of the relevant parts of the then draft of the contract to Mr Christie and anyone else who might have attended the meeting, and no inaccurate statement or assurance was given.
99. I make it clear that in making this finding I am not saying "For Mr Aspery to have said such a thing would have been negligent; he is not likely to have been negligent; therefore he did not say it." I am making a finding about the probabilities, taking into account what would have had to have happened if events were as Tamlura allege. Realistically speaking, Mr Page cannot have forgotten what he had just done, or why he had done it. The effect of what he had done was plain enough to him, and to any other experienced lawyer. What Mr Aspery is alleged to have done, in the presence of Mr Page, is so strikingly at odds with that that it would require some firm evidence to establish it. That evidence does not exist, so the strong probabilities favour CMS's case, not Tamlura's.
100. I have referred above to the fact that Mr Aspery worked on Mr Page's mark-up. We have that document. It shows both details of further actual proposed amendments and (at some points) his own comments by way of an aide-memoire. He does not seek to indicate any alteration to the V₁ and V₂ formula, either in clause 6 or in the definition of Value, but Mr Cakebread seeks to rely on certain of his notes against the definition of Value. In particular he wrote "the Deferred Shares" connected to a caret in element (b), perhaps indicating a thought that Deferred Consideration Shares fell within that element and thus should carry an allotment valuation date. He also, however, crossed out those words. Other words have been added and crossed out against this draft, and there is a circle round "V₁" with a question-mark. Mr Aspery's explanation (by way of reconstruction, not recollection) was that these manuscript additions (including the deletions) were made while he was reading the document and trying to work out what its effect and significance was. Mr Cakebread's suggestion was that these were additions of significance (particularly the reference to "Deferred Shares"), and in this latter case the added words were of more significance than the crossing-out. I think that Mr Aspery's explanation is rather more plausible than Mr Cakebread's suggestion. The crossing-out is plainly as significant, if not more significant, than the addition of the words. It demonstrates a later position in the thinking. These emendations do not provide strong support, if indeed they provide any support at all, for Mr Cakebread's case that Mr Aspery did not understand properly what it was that Mr Page had done.
101. The next passing draft of which there is clear evidence of its passing is one coming back from Mrs Mares. It was sent at 4.34 am on 13^th October, so again it seems that Mrs Mares had been working through the night. The covering e-mail said:

"I attach the draft 3 of the sale and purchase agreement having incorporated the changes we discussed most recently. The draft is still subject to any comments that my client may have …

"I will raise the dividend/interest issue with TIG later today."

Yet again Mrs Mares has indicated her amendments by word-processing mark-up techniques. A comparison of her latest draft with the earlier draft with the manuscript markings of Mr Aspery on Mr Page's mark-up demonstrates a fairly close correspondence between the two. Since there is no record of Mr Aspery's markings being passed to Mrs Mares in written form (and in truth, since his document contained both detailed drafting suggestions and personal notes, it would be inappropriate for such a document to be sent), and since there is a record of a discussion between Mrs Mares and Mr Aspery before she sent her draft, it is an almost inevitable inference (and I find) that he communicated his suggestions to her, and she incorporated such of them as she thought fit (which was most of them). Her draft also incorporated Mr Page's V₁/V₂ amendments.

102. Having received Mrs Mares' draft, Mr Aspery then carried out further amendments. The most significant of those for present purposes is the addition of provision into clause 6 for the payment to Tamlura, on allotment, of a cash sum equivalent to the gross amount of dividend that would have been payable on the Relevant Date in respect of the deferred consideration shares had they been issued and allotted at the date of dividends declared between the completion and allotment. Mr Harvey relies on this as further evidence that the deferred consideration shares were to be valued with a completion date valuation. That would give certainty as to the amount of that dividend, because the maximum number of shares to be allotted in due course would be known. If the shares were to be valued as at the allotment date then dividends could be payable on a much greater, or much smaller, number of shares, depending on the movement of TIG shares in the meanwhile. I agree with Mr Harvey that that point provides support for the inference that the parties were contemplating a completion date valuation, which would give much greater certainty. This is probably the dividend point that had been discussed between Mr Aspery and Mrs Mares and referred to in her e-mail.
103. Mr Aspery suggested further amendments to clause 6.4, which dealt with adjustments for the settling of warranty and other claims occurring after the Relevant Date (the allotment date). His amendments show close attention to detail, and there is an express reference to V₂ on his draft which makes it highly unlikely that he misunderstood the effect of Mr Page's drafting.
104. These amendments were accepted by Mrs Mares, and a further draft incorporating them (shown marked up) was sent by her to Mr Aspery on 13^th October. This draft, like the previous one, contained the V₁/V₂ formula but with an error in the way it was set out in clause 6.1. Instead of there being two fractions, each with a different denominator, there was ostensibly only one, because the fraction line is one continuous one with two denominators underneath it. This would not have misled anyone who had seen Mr Page's drafting, because he expressed it correctly, and Mr Christie admitted it would not have confused him. While it might have caused minor puzzlement to a newcomer, there were no relevant newcomers in this transaction by now. The error in setting out the fraction was remedied by the time of the final engrossment.
105. Arrangements were made for delivery of this latest draft to Mr Vlotman, Mr Christie and Mr Kresfelder, and I find it was sent to them. Mr Vlotman said he would have read it, and I find that he did. Mr Kresfelder did not recall reading it, and I find he probably did not read it in detail. I doubt, however, that he would have totally ignored it – it was a draft of a document of some personal financial significance and he is likely at least to have cast an eye over it. Mr Christie probably did read it – again, it was his job to consider the documentation and structure of the deal on behalf of his principals.
106. Further drafts were prepared and discussed. I do not need to set out much detail of these, but the following events are relied on by one side or the other as providing evidence of the intention of the parties or their representatives.
107. On 14^th October Mr Sherratt faxed Investec (who were promoting a public share issue which was being done in conjunction with the purchase of TIHBV), with a copy to Mr Aspery, enclosing a copy of a circular to shareholders seeking approval of the deal with Tamlura and authority for the allotment of shares. His fax raised a question about authority for the allotment of shares. It was intended to get the authority of TIG shareholders for the allotment under section 80 of the Companies Act 1985. He was concerned about the proposed formulation of the proposed resolution and expressed himself thus:

"The Act is quite clear that the authority must state the maximum amount of securities that may be allotted which, obviously, cannot exceed the authorised but unissued share capital at the time that the authority is exercised. Because the formula for the deferred consideration shares to be issued in 2002 operates by reference to middle market value is only (and no fixed value per share) there is a theoretical possibility that were the company share price to fall spectacularly, the £4 million worth of the deferred consideration could result in the issue of a disproportionately large number of ordinary shares and possibly the need for listing particulars. This I think needs to be recognized in the drafting of the resolution by the imposition of some form of cap on the authority."

He raised a similar question in a fax to Mr Aspery of the same date:

"… it occurs to me that we ought to contemplate the unlikely position in the Agreement that there is a "bombing out" of the company share price. Would it be appropriate to include a provision that gave the company the right to elect to settle the deferred consideration in cash to the extent, for example, that the number of deferred consideration shares to be issued would be sufficient to constitute 10 per cent of the diluted share capital after their issue? We ought also, I suppose, to make it clear that our obligation to issue deferred consideration shares is subject to having all necessary authorities (e.g. authorised share capital and, theoretically, if the company hit rock bottom shareholder approval)….

Your thoughts would be appreciated."

Those extracts are said by Mr Cakebread to demonstrate that Mr Sherratt thought that the valuation provisions in the SPA would produce £4m worth of shares valued at the time of allotment, and that a decline in the share price would mean that an excessive number of shares would have to be issued in order to deal with that. He must therefore have thought that his formula was still operative, and must have believed that it reflected the agreement at the meeting. It is said that this would have been apparent to Mr Aspery, and since Mr Aspery did not correct Mr Sherratt about this (which he did not) then Mr Aspery must have held the same belief at the time.

108. Mr Aspery's explanation for this was again a reconstruction, but he said that Mr Sherratt's point applied to a fall in the share price between exchange and completion, and while he could not remember the correspondence he might have understood it in that way. Mr Cakebread invited me to find that unconvincing.
109. Mr Sherratt was not called as a witness, so his state of mind is a matter of inference. Quite what he was thinking when he wrote those faxes is not plain. It may be that he was expressing a very cautious view about a possible fall in the share price pending completion; it may be that he was thinking about the period up to the allotment date. If he was thinking about the latter, it may be that he had forgotten about what CMS say was agreed at the 10^th October meeting, or it may be that he remembered it correctly and had forgotten that the V₁/V₂ formula had changed his own first attempt at a formula. The latter seems very unlikely because there is a DLA "Master Copy" of the SPA bearing the date 14^th October on which some handwriting, which seems to be Mr Sherratt's, has corrected the wrongly expressed formula (with its single dividing line) and has written in the margin: "This should be" followed by its correct expression (which duly appeared in the next draft). If, as I find, this was indeed Mr Sherratt's handwriting, then he would have had to have taken his eye completely off the ball to be labouring under the misapprehension that the draft still contained his allotment date valuation base value for the deferred consideration shares. Since the use of a formula was his idea in the first place, he is likely to have realised the effect of the addition of a second denominator. If that was contrary to any idea that he had already had, or contrary to previous agreements, he would be likely to have said so (unless keeping quiet because he saw an interest to his client in so doing). He did not do so. It seems to me to be more likely that he realised that Mr Page's fraction was better than his at encapsulating what had been agreed at the round-table meeting.
110. But what is of greater importance to this action is what the incident says about Mr Aspery's state of mind. I do not think it would be safe to give this evidence a lot of weight in relation to that. It is far from impossible, or implausible, that Mr Aspery could have thought that Mr Sherratt's concerns were for the short period until completion. Furthermore, there is other evidence that Mr Aspery was indeed looking at completion, rather than allotment, in relation to this sort of issue. A draft of the circular had proposed getting authority for the allotment of 15m shares. By this figure, on his copy of this draft, Mr Aspery had written "2.5m = £6/share". He was obviously thinking of the effect of a fall in the share price to £6 per share as at the date of completion, because that would require authority to issue 2.5m shares to his client in respect of the initial consideration shares. Another manuscript note of Mr Aspery, made on the occasion of a conversation with Mr Sherratt on 16^th October, records some calculations of the shares which would have to be issued if the share price halved (to £4.875 per share). In that event, with a bit of rounding up, 3.1m shares would be required to pay the initial consideration, and that is the figure proposed to TIG shareholders in the circular which they ultimately received. Again, therefore, Mr Aspery's focus seems to have been on completion.
111. There are other reasons for supposing that Mr Sherratt's belief was not as Tamlura says it was. He was responsible for considering the terms of the TIG circular. In it TIG shareholders were to be invited to agree a resolution in stipulated terms permitting the allotment of 3.1m shares expressly to pay the initial consideration under the SPA. That number must have been calculated in the manner referred to above. They were also to be invited to authorise the allotment of such number of ordinary shares, not exceeding 824,000, as would have a value calculated in accordance with the SPA of £4m. As a matter of mathematics, the figure of 824,000 is a rounding up of £4m of shares calculated at £4.875 per share. It appears that the proposal was based on the same mathematical assumptions as to share values as were being applied to the initial consideration shares (though that assumption was not disclosed to shareholders). If, as is likely, Mr Sherratt was instrumental in proposing this form of resolution, it points against his believing that a different allotment date valuation could be appropriate. This is far from conclusive, because there was a cash alternative in the SPA which would still have enabled the agreement to work without a future allotment, but it is a pointer.
112. All these factors mean that the evidential position in relation to Mr Sherratt's subjective beliefs is very far from clear. Accordingly, drawing inferences from this as to what must have been agreed at or by the 10^th October meeting would be a dangerous exercise. There is rather better material for that exercise than this.
113. After various other amendments to the draft SPA with which I do not need to deal, exchange of contracts took place through a process starting on 16^th October and ending in the early morning of 17^th October. At the meeting approval was given by the board of TIG, of which by this time Mr Vlotman was proposed to be a non-executive director. He participated in this meeting, and Mr Harvey relies on what happened at it. However, before dealing with that I need to deal with some other aspects of the process of approving the shareholder circular which were also relied on by Mr Harvey.
114. The proposed acquisition of TIHBV by TIG required shareholder approval at an EGM. A circular, including a letter from the chairman, was prepared concurrently with the agreement of the SPA. Its final form was a matter for TIG and DLA, but Mr Aspery's views were sought from time to time.
115. On 11^th October (ie the day after the crucial meeting) Mr Aspery apparently reviewed a copy of this documentation (Proof No 4). The first page of the draft chairman's letter contained a sentence which, in the then draft, contained the following sentence:

"The consideration for the Acquisition is £• million payable on Completion. The consideration comprises £21 million in cash and the issue of • New Ordinary Shares."

Mr Aspery amended this so as to take out the bullet mark for ordinary shares, and so that it read:

" … issue of New Ordinary Shares having a value at Completion of £19 million."

CMS rely on that as corroborating Mr Aspery's evidence as to what had happened at the meeting the previous day, and as to what his belief was about the basis of valuation of the deferred consideration shares. This was not the final form of the letter, but this formulation did not attract protest from the TIG side that this was not what had been agreed.

116. The final form of the circular set out the terms of the acquisition and summarised its terms. It referred to the Deferred Consideration, and set out the V₁/V₂ formula. That formula had appeared in drafts at least as early as 13^th October, when Mr Aspery was able to send a copy of a draft of it to Mr Christie. The version in this 13^th October draft set the fraction out correctly, and did not repeat the error with the fraction line that the interim drafts of the SPA contained, so someone, and almost certainly Mr Sherratt, appreciated from the time when Mr Page's fraction was presented how it ought to be shown. Since this circular was Mr Sherratt's responsibility, its inclusion must have been approved by him. He therefore had reasons for considering it in that context, and it becomes even harder to see how he can have misunderstood it. The circular also presented other opportunities for Mr Christie to see and appreciate the effects of the formula. He did not protest at its inclusion, though his evidence was that he believed he did not read much of the circular.

The facts – the end revisited

117. The SPA in its final form was signed in the early hours of 17^th October. It was preceded by a board meeting of TIG. Only two people were present as directors (Mr Terry and Mr Scott) but there was a supporting cast of 11 others. They included Mr Sherratt and Mrs Mares, Mr Vlotman, representatives for Investec (including solicitors), Mr Aspery and Mr Page. The minutes record a review of the SPA (described as the Acquisition Agreement) a resolution to call an EGM for the placing and consequential matters relating to the increase in share capital and authorisation for allotment, and a review of the circular. The meeting is recorded as carefully considering the circular, with the attention of the Directors and Mr Vlotman as proposed director having been drawn to it. Particular attention is recorded as being drawn to the Material Contracts described in it (which included the SPA) and the personal responsibility of the Directors and Mr Vlotman for the accuracy of statements of fact was noted. The Directors and Mr Vlotman confirmed the accuracy of the statements of fact in the circular and approved its form.
118. The circular contained the V₁/V₂ formula, as referred to above. The notice of the EGM gave notice of an intention to propose a special recolution to allot:

"such number of New Ordinary Shares of 2p each (not exceeding 824,000) as have a maximum aggregate market value (when calculated in accordance with the terms of the Acquisition) of £4,000,000"

The circular therefore contained nothing which would have suggested an allotment valuation date for the deferred consideration shares, and would have told a reader who wished to follow it up that there would be a completion date valuation for them.

119. Mr Vlotman's witness statement says that at this meeting he was still not clear as to the meaning of the formula, and asked Mr Christie and Mr Aspery if it meant that the deferred consideration shares "would be £4m at the time of allotment" [sic]. He says that "one of them" confirmed that they would, and was not contradicted. It was, he said, the only important question he asked that day, and he remembered it clearly. This evidence is implausible. He had seen the formula before. On his own evidence he had wanted it explained, and I find that the effect of the transaction was explained on 12^th October. If that is the case, it is not plausible that he still had uncertainties on 17^th October. If he had had them he could have resolved them himself, if he was that uncertain, and is most unlikely to have left the question until this important occasion when all the documents had been finalised, the circular was ready to go out, and the deal was about to be clinched. If the issue was that important he would have raised it before. This allegedly clear recollection of something so central to the cause of action and yet which is so implausible reinforces one's doubts about the accuracy of Mr Vlotman's recollection on important matters. In re-examination Mr Christie said he could not remember being advised on the deferred consideration shares on 17^th October. I find that that is because no such advice was given on that day.
120. The SPA was then executed by Mr Christie as attorney for Tamlura and by Mr Terry and Mr Scott for TIG. Its central terms appear above. It was conditional inter alia on the passing of the relevant resolution of TIG (at a meeting to be held on 10^th November). The obligation on Tamlura was to sell its shares and to use reasonable endeavours to procure the sale of the PPG shares. Completion was to take place on 10^th November 2000.
121. To complete this phase of the story, Mr Vlotman then went off to do a deal with PPG so that their shares could be brought in and the transaction completed. He managed to do that at a price which was acceptable (if not wholly satisfactory) to him, and the sale completed on 10^th November 2000. At that time TIG shares had risen, to slightly over £10.

Events after the end

122. For the purposes of the narrative I have hitherto treated the end as being when the SPA was executed, because that is what locked Tamlura into the bargain on terms which Tamlura says arose as a result of the negligence of CMS. However, events after that are said to be relevant to an inquiry as to the states of mind of the participants, which are in turn said to be relevant to an inquiry as to what happened during the above period, so it is necessary to deal with those events before returning to make further key findings of fact in relation to the negligence issue itself.
123. Mr Cakebread relies in particular on two occasions when Mr Aspery acted in a manner which, it is said, demonstrated that he believed that the SPA had provided for an allotment date valuation for the deferred consideration shares. The first was in December 2001. Tamlura was seeking an early release of the deferred consideration shares. This was sought, but apparently rebuffed, in November. So it seems the idea changed to one of getting a release from the warranty obligations. By this time the TIG share price had declined to £2. Mr Aspery was asked to draft a letter recording such an arrangement, presumably so that it could be the basis of negotiation, amended as appropriate (there was a pattern of his being asked merely to draft letters or other documents for the clients to use and amend as they saw fit). His job was essentially to draft a letter which the client could send. He was not asked to advise. On 5^th December 2001 Mr Aspery sent a draft letter to Mr Christie which contained the following paragraph:

"Subject to the approvals of the boards of TNV and TIV (which we each agreed to seek), the Agreement will be amended to provide that the Deferred Consideration will be payable in the amount of £4m on 30 November 2002 by the issue of the Deferred Consideration Shares having that value (calculated in accordance with the Agreement) at the Relevant Date without any adjustments to that amount by reference to [the NAV or the Pre-tax Profits of the Company as shown in the Completion Accounts or] any Relevant Claim. Further TIG will confirm that it has no Relevant Claims under the Agreement and will waive all rights which it may have to bring Relevant Claims thereunder."

This paragraph is relied on as showing that Mr Aspery had a belief that £4m, at 2002 values, would be payable, and it is said that he had that belief at the time of the SPA. There might be said to be a suggestion of that, but in my view the letter is equivocal. It says "(calculated in accordance with the Agreement)", and such a calculation would provide otherwise. Mr Aspery said that the focus of this letter was a release from liabilities. He said that he got this draft wrong in its expression, but could not explain why that was. He even thought that he might have put in the £4m reference because he was told by Mr Christie that that is what would happen. I tend to doubt that - Mr Aspery did not strike me as the sort of solicitor who would casually accept his client's instructions in relation to a description of a significant transaction in which he was a participant when he had the real documents to hand. However, I do accept his evidence that the thrust of this letter was about something else. This could have led to his paying less attention than he ought to the formulation of the rest of the letter, though the reference to the calculation in the Agreement introduces the degree of equivocation to which I have referred. This letter is certainly something that has to be considered as part of the evidential picture, but it does not bear all the weight which Mr Cakebread seeks to impose on it. It may be that Mr Aspery took his eye off the valuation ball for a moment, but it was no more than that.

124. This view is strengthened by the fact that just two months previously Mr Aspery had apparently had cause to consider the valuation exercise. A manuscript note of his dated 23^rd October refers to contact with Mr Christie which records:

"£4m retention – cash or shares. Shares £2 instead of £10."

125. It is then followed by another note, which seems to be from the same time, which refers to the deferred consideration and sets out the following:

This is the V₁/V₂ formula with the correct denominator in the first fraction. It demonstrates that at that stage Mr Aspery understood the operation of the formula correctly. If he had forgotten by December then it was simply that – he had forgotten. The later event does not speak loudly as to what his state of mind (and intention) was in the previous year. It appears from other evidence on the file that in October 2001 Mr Aspery had been asked to advise on the provisions for calculation of the number of shares to be issued (amongst other things). If that is correct then he got the calculation right when his attention was specifically directed to it. It makes it more likely that the December draft, so far as it can be criticised at all, is a lapse.

126. The second principal event relied on by Tamlura is a further draft letter, provided by Mr Aspery in March 2002, to be addressed to Tamlura, in which the writer "confirms" a telephone conversation of the previous Friday about what would be required if there is an early settlement of the deferred consideration. The relevant part reads:

"Accordingly, if the deferred consideration is to be settled early and Tamlura NV is to be released from potential claims, I believe you need to address the following points:

1. Agree with the Innovation Group that the Relevant Date will be brought forward such that the deferred consideration shares can be issued now based on current market value … "

The reference to "current market value" can be seen to be wrong. In cross-examination Mr Aspery said that he thought that this arose because he was still relying on what Mr Christie had told him about the basis of valuation a few months before. Again, that seems unlikely to me. I think that on this occasion Mr Aspery got it wrong. This error as to the effect of the document is, by itself, of more weight than the December letter. It will have to be weighed with the other evidence in the inquiry as to what had happened, and what was agreed, in 2000.

127. The truth of the position is said by Tamlura to have become apparent in August 2002, shortly before the deferred consideration was due to be paid. On 29^th August Mr Christie emailed Mr Aspery asking for confirmation that:

"the share price for the retention payment is based on the price as at 30.11.2002 and not £9.00"

Mr Aspery replied:

"I will review this tomorrow. Are you asking about the Deferred Consideration payable under clause 6 such that the relevant definition is that of 'Value'?"

It is not clear that Mr Aspery reviewed anything on the next day (a Friday) but a manuscript note of Mr Aspery made on Monday 2^nd September indicates that he went back to the SPA to work out what it said – it refers to various definitions from it. Then on 4^th September he emailed Mr Christie with a copy of an e-mail that he had previously received from Mr Airey in which the latter had asked questions about dates, V₁ and V_2. It is not clear how he can have thought that this would assist in the inquiry. Then the next day he faxed first a copy of the draft heads of agreement with his manuscript amendments to clause 3.3, "as discussed". And then later on he faxed a copy of the signed version, again "as discussed".

128. As usual, the participants had little or no real recollection of these events. Mr Christie recalls a conversation with Mr Aspery in which the latter expressed surprise that Mr Christie and his clients would have understood the SPA differently to that which was its true effect, and that "it sounded like a different Mark … from his normally affable self …" though he could not put this conversation at this particular time. He also said he (Mr Christie) was extremely angry in this conversation and could not continue it. This is vague evidence, and the evidence of anger is inconsistent with what his clients did over the next two or three years, and I do not accept his recollection in that particular respect. What I find happened was that Mr Aspery reviewed the SPA (as his manuscript note shows) and that he explained the effect of the valuation provisions over the telephone. Mr Christie probably required further explanation, and there may have been a debate about how the situation had come about. To explain the history Mr Aspery sent first the draft heads of agreement, and then the final form, both "as discussed". Presumably Mr Christie had the SPA available to him so he did not need that to be sent.
129. These events are important for what they say about the then states of mind of the participants, and also because of an important challenge made to the veracity and honesty of Mr Aspery. Part-way into the trial Mr Cakebread made it clear that he was asserting that Mr Aspery had fabricated a non-recollection of the events of 10^th October 2000. He maintained that Mr Aspery remembered the meeting well enough, and that his recollection was favourable to the claimant's case. He did not make the same case against Mr Page. At that stage Mr Cakebread seemed to accept that Mr Aspery did not have a recollection in the intervening period between the transaction and this action, but that he reacquired one when he went back through the papers in this case. This was, to my eyes, a curious analysis, but it was Mr Cakebread's case. Perhaps with an appreciation of that curiousness, Mr Cakebread revised the way he challenged Mr Aspery, and wished to suggest (and did suggest, when Mr Aspery was recalled for the purpose) that Mr Aspery realised at the time of the August/September 2002 events that he had made a mistake, and decided to try to cover that up in his dealings with Mr Christie. It was put that he realised that the SPA achieved a different result for the valuation of the deferred consideration shares than that agreed at the 10^th October meeting, that he realised that he had not given effect to his changed instructions, and that in order to justify that, and to support a pretence that there was no change in instructions, he sent the heads of agreement to Mr Christie to demonstrate what those instructions were.
130. This is a very serious allegation to make. It amounts to an allegation of serious dishonesty on the part of a professional man. It is not merely an allegation of the denial of negligence. It is an allegation of deliberate cover-up, with documents being sent to clients in a deliberate attempt positively to mislead them. Frankly, I doubt if the material exists which makes it proper to make the allegation in the first place. Mr Christie has no recollection of the conversations, so the whole thing is reconstruction. According to the documents, Mr Aspery did not volunteer the two copies of the heads of agreement (as Mr Cakebread suggested he had); they were supplied following a discussion. That discussion might, of course, have been one in which Mr Aspery put forward his justification, but that is not what Mr Cakebread put. The material for reconstruction of such an act of dishonesty is very flimsy. The allegation is also implausible on at least two counts. What did Mr Aspery think he could achieve? If he had an angry or disappointed client, did he really think he could see them off in this manner? How did he know what other information the client had which might trump his attempts at dishonesty? And he actually had good material at his disposal for denying a change in instructions at the meeting in the form of his and Mr Page's notes. Why not send those, if he was engaged in some sort of dishonest attempt to cover up his failure to implement the change in instructions? And what would he gain from this risky activity? No solicitor likes findings of negligence, but at the end of the day they have insurance policies, and there is no evidence that Mr Aspery was particularly tender about his own reputation in a manner which would have led him to think of covering up in the positive way alleged.
131. I shall say at this stage in this judgment that, having seen Mr Aspery, and having considered all the evidence in the case, I am completely satisfied that whatever else he may have done, Mr Aspery was not guilty of the dishonest cover-up with which he was challenged. As I have indicated, the evidence is thin if there is any at all, and whatever it was that Mr Aspery conveyed represented what he honestly thought to be the truth and was the straightforward discharge of his duties.
132. As a result of the operation of the V₁/V₂ formula, Tamlura received something in the order of £40,000 for its shares. There were no deductions under the V₂ side of the transaction, for breach of warranties or otherwise. The collapse of the TIG share price is what reduced the value received to that low level.
133. What happened thereafter might be said to shed some light on what the Tamlura side of the transaction believed about CMS's conduct. According to Mr Christie, he was angry. Mr Vlotman said he was shocked (by this time Mr Kresfelder's trust had been bought out and was no longer interested). Their present case involves a clear assertion that Mr Aspery failed to implement clear instructions, as a result of which the best part of £4m was lost. One would have expected an intimation of a claim, or at least a fundamental loss of confidence which would have caused a break in the relationship with CMS. But neither of those happened, or at least not for a while.
134. Within a very few days, Mr Vlotman approached Mr Aspery for advice as to whether there was a remedy against PPG arising out of the above facts, on the basis that PPG had been overpaid. Mr Aspery said that there was no such claim. Mr Vlotman did not raise any complaint about the deferred consideration shares. On 20^th September Mr Vlotman had a meeting with the directors of Janute, at which he said there was a "drafting flaw" which had led to the problem as a result of which they were to "[look] to various cash flow methods in order to progress various matters". No reference is made to the fault of CMS.
135. In December 2002 Mr Vlotman consulted CMS in relation to a claim made against him in relation to the Motorcare group which went on for some 2 or 3 years. By his own admission in his witness statement, he did not consider at that time (in 2002) that CMS were at fault for what happened.
136. There is a dispute as to when it was that Mr Vlotman first intimated a claim against CMS. Mr Vlotman said it was at some point in mid-2003, when he read the prospectus (the circular) and noticed that it referred to a "maximum" of £4m in relation to the deferred shares, when, according to his understanding, that sum was certain, not a maximum. He had a meeting with Mr Hallam on or about 15^th May, and he put that occasion as the one on which he intimated a claim of negligence. That is a puzzling story. He must have known the sum was not certain when he did not get it in the autumn of 2002, and when he was told by Mr Aspery (through Mr Christie) that he was not going to get it. I do not understand what the prospectus adds. Mr Vlotman says that he believes that he told another partner of CMS with whom he was dealing, namely Mr Stephen Hallam, that he had a claim for professional negligence which he intended to bring.
137. CMS's case is that no claim was intimated until 2005, shortly after CMS had started a claim for fees against him. During 2003 there were 7 meetings between Mr Vlotman and Mr Hallam, during none of which was a claim intimated until it was mentioned at a meeting in September 2005, though he had made reference to it in a witness statement in June 2005. A CMS note of a meeting on 21^st September 2005 refers to Mr Vlotman's difficult financial position and says:

"CV said that either way he will be making a claim against CMCK. He has been forced to do so by the other creditors. If he has to declare himself bankrupt due to CMCK proceeding with its claim against him he would be much more aggressive in those proceedings against CMCK (but presumably only if his liquidator permits this). All other creditors are prepared to accept the best dividend possible following resolution of the Barclays claim."

138. I heard evidence from Mr Hallam, and I am quite satisfied that his evidence is accurate so far as it concerns when CMS were first told of a potential professional negligence claim; that is to say, it was not until September 2005. Had it occurred earlier I am satisfied that the relationship would have been different, and CMS would not have acted (and indeed it is unlikely that they would have been asked to act) in Motorcare-related matters. In the intervening period Mr Vlotman was, by and large, acting as man who did not have the complaint against CMS that he now claims to have. Very late in the action (after the evidential cases had closed) he produced an e-mail from a representative of a firm of solicitors called TWM Solicitors in Epsom, dated 13^th May 2003, to what looks like another representative of that firm, inviting the recipient to contact Mr Vlotman "who wishes to obtain some advice on a possible solicitor negligence claim". The nature of the claim is not identified. That is all there is. If it is relevant as showing an early awareness of a possible claim, this document ought to have been produced earlier along with any related documents. It was not. Mr Harvey did not object to my receiving it, and to my giving it such weight as it bears. I do both of those things, and the deserved weight is nothing. I was also shown, again very late, an e-mail from Mrs Vlotman to Mr Vlotman, in 2004, relating to a divorce settlement and referring to a £4m negligence claim that she had been told that he had. Again the claim is not identified, but at least the amount tallies with the present claim. Once again the date at which this document was produced meant that there was no cross-examination on it, and no real opportunity to seek the additional disclosure that it invited – if the possible claim had figured in e-mail exchanges, and in the computation of a divorce settlement, there ought to have been other disclosable documents referring to it from which one could see what the claim was, how Mr Vlotman was putting it, and, perhaps, shedding some light on whether he really thought he had one. Again, I give no real weight to this piece of evidence.
139. On any footing, for several years Mr Vlotman was not acting in a manner consistent with a man who had a negligence claim against CMS. He put this down to a period of irrational behaviour brought about by the death by suicide of his daughter, followed by an unexpected request for a divorce from his wife. He was in Africa, and not always fully in contact with the UK, during this period. I do not wish in any sense to minimise the effect, and particularly the combined effect, of those events, but he was able to function rationally in having meetings with Mr Hallam throughout 2003, and I do not accept his evidence that they affected his judgment to the extent of his not considering pursuing what he now says is a good claim. He was actually in the UK for more of the relevant period than the impression he sought to give, and was able to attend to litigation and his divorce in that period. He also needed money. I think that if he really thought that CMS had cost him £4m, he would have been more active in pursuing a claim, and would certainly not have been engaging the firm in further retainers.

The claims made

140. Having set out the central facts, I now return to make some further findings about the alleged negligence. This involves drawing some strings together from earlier parts of this judgment, and making some further findings of fact about what happened, and some determinations of whether some acts were negligent in the circumstances. In what follows I deal with Tamlura's various cases as they were advanced in Mr Cakebread's final submissions (written and oral). They did not wholly coincide with the cases that were pleaded. Where a pleaded case was not relied on in final submissions I have assumed it to be abandoned and do not deal with it.

Tamlura's primary case – an agreement, known to CMS, to value the deferred consideration shares as at a 2002 valuation which they failed to reflect in the SPA

141. Tamlura's primary case has shifted a little in the course of this case, but as propounded at the opening of Mr Cakebread's final submissions is as follows. It is alleged that it was agreed at or by the time of the 10^th October meeting that the deferred consideration shares would be valued by reference to an allotment date value as opposed to a completion date value. Its most favoured version of this case involves an agreement at the meeting itself – that is when it probably occurred. CMS were aware of this agreement and were given an instruction to put it into operation in the drafting. Had the firm done that, it would not have altered the formula in Mrs Mares' 11^th October draft, and the transaction would have completed with the benefit of that formula or an equivalent. Accordingly, 2 years later, in November 2002, Tamlura would have acquired shares worth £4m at that time – in other words, the equivalent of a cash sum of £4m.
142. Its principal points urged on me in favour of such a finding are as follows:

i) The background was Mr Vlotman's desire to have cash or a cash equivalent, which was amplified by his realisation that PPG were going to take more cash out of the deal than he had at first anticipated.

ii) Some oral evidence that instructions were given, or at least that assurances were given to the effect that the transaction had the effect which Tamlura now wishes it had had.

iii) The Mares 11^th October draft, which was said to be a deliberate piece of drafting, and not an accident, intended to give effect to what had been agreed (see the covering letter). It is said to be inconceivable that Mrs Mares and Mr Sherratt could have been mistaken about how to implement what had been agreed at the meeting, or in the drafting necessary to achieve it.

iv) Mr Christie's diagram (referred to above).

v) The DLA note of 9^th October, which indicated that achieving an allotment date valuation was intended.

vi) Mr Aspery's mark-up of 6^th October, which on its true construction had the desired effect, and deliberately so, because that accorded with his instructions.

vii) The two "after the event" letters from Mr Aspery referred to above, and which are said to demonstrate a correct recollection of what his instructions were.

viii) Other points were made; it is not necessary to set them out here.

143. If Tamlura is to propound an overall case it has to explain what happened after the Mares draft, why it was that the Page redraft (introducing the V₁/V₂ formula) was accepted, and how the transaction got to completion in the form that it did. Mr Cakebread says the explanation is as follows. First, Mr Page misunderstood what had been agreed at the meeting. He embarked on his drafting without consulting Mr Aspery, and got it wrong. Mr Aspery either did not read, or did not understand the effects of, what Mr Page had done, and therefore did not correct it. His emendations against the definition of "Value" on Mr Page's draft of 11^th October show that he had it in mind that the deferred consideration shares should carry an allotment date valuation. He did not understand that the draft achieved anything else. Nor did Mr Page really understand the significance of what he was doing. Had he really thought that Mrs Mares had made a mistake in her draft after the 10^th October meeting it is inconceivable that CMS would not have rung her to point it out and discuss it. When Mr Aspery wrote out the effects of the formula in 2002, he was demonstrating that until then he had not understood it. On the TIG side, when DLA and Mr Terry got the re-draft (introducing the V₁/V₂ formula) they decided to go along with it, taking advantage of what Tamlura was apparently now proposing. Mr Terry was prepared to take advantage of the situation and the reverter to what the heads of agreement had proposed.
144. In my judgment this suggested version of events lacks any real plausibility when measured against what is known. The starting point for ascertaining its likelihood is the heads of agreement. That agreement contains a provision for completion date valuation of the deferred consideration shares. No complaint is made about that, and it reflected the bargain at the time. Any change from that would require a renegotiation of the bargain. There is no clear evidence that that was achieved by direct dealings between the two clients, and indeed there are good reasons to suppose that there were no such negotiations. Such a change in position would then have to be communicated to Mr Aspery. Again, there is no direct evidence that that was done – nothing in the form of a note, or anything like that, which records such a change. One would have expected such a note. Nor is it easy to see when that can have been done. If Mr Vlotman did it, it cannot have been before 9^th October, which is when he arrived back from Australia. There is no indication of negotiations involving him then, until we get to the 10^th October meeting. Mr Christie did not claim to have been involved in any such negotiations. Nor is there any indication of any contact between solicitors explicitly discussing the point.
145. Mr Aspery's draft of 6^th October is relied on as giving effect to such an intention. It is said that on its true construction it would provide an allotment date valuation to the deferred consideration shares. I have considered that point above. If one had to construe it one might just arrive at such a conclusion, but not with any enthusiasm. If Mr Aspery was seeking to give effect to such a change in the original plan, one might have expected something with greater clarity. It is not very compelling evidence of a change of instructions, and again it is not easy to see how they can have come about.
146. It may be that Mrs Mares thought that that is how that draft should be construed, and that that explains her note of 9^th October. However, if that is right, then her note does not indicate that she had been told the valuation provisions were to be changed. Her note remarks on a difference between something and the heads of agreement. If she had been told that the deferred consideration shares were now to be valued differently, and had understood the Aspery mark-up as achieving that, then her note (if made at all) would have been different. It smacks more of something that she had got in mind but in relation to which she needed instructions.
147. Then we have the meeting of 10^th October. On one version of this primary case of Tamlura, the agreement was reached at this meeting. It is possible that there was some discussion about this between Mr Terry and Mr Vlotman at their breakout meeting, but if there was then no-one has a clear recollection of it. If it was resolved at such a meeting, it would have been reported back to the meeting. We have two separate notes of the body of the meeting. Neither clearly records a change from the position in the heads of agreement. I think it can be safely inferred from those notes that there was some talk of the issue, because they both refer to the question of the valuation of the deferred consideration shares. However, neither of those notes is in the sort of terms that one would expect if they were recording a clearly (and newly) agreed different position in relation to those shares. They both apparently record the opposite. While Mr Aspery's might leave room (but not much) for debate with his use of "outset", it is in my view little short of fanciful to try to get Mr Page's to refer to an allotment date valuation. Whatever else might be meant by "now", it cannot mean 2 years after completion, and therefore over 2 years in the future. The suggestion that Mr Cakebread's agreement was reached at the meeting is flatly contradicted by those notes.
148. I pause at this point to consider other evidence given by Mr Terry and which I have not hitherto fully dealt with. His evidence was that Mr Vlotman had been seeking to increase the cash element of the deal. That was rejected. His evidence was understandably vague about precisely what was being negotiated and when, but he seemed to accept there may have been some sort of discussion about the number of deferred consideration shares at one point. He was, however, firmer about what his view was, or would have been, as to suggestions that it should be agreed to value the shares by reference to their allotment date value. His evidence was that that would never have been agreed. Such a deal would have adversely affected the class of the deal for UK listing purposes, and would have required a renegotiation of the terms of the circular with the UK Listing Authority (who were being consulted on the draft). Nor would the idea have been acceptable to Investec, who also had to be happy with the terms of the deal. He could himself see the real possibility, and indeed the likelihood, of a fall in TIG's share price over the ensuing period, and he would not have agreed a deal which led to uncertainty as to the number of shares that would have to be issued, because that would impact on the other shareholders and he would not know what portion of the shareholding he was going to have to provide. He had rebuffed attempts to increase the cash content, and attempts to change the valuation date for the deferred consideration shares, and was firm in his views about that. Mr Terry said that if the issue was outstanding at the beginning of the 10^th October meeting, which he believed it was, then he gave clear instructions to his solicitors at the meeting that the valuation date should be the completion date.
149. I accept his evidence about his attitude, his instructions to his solicitors (before if not at the meeting) and the firmness of this stance. Although, as referred to above, Mr Terry was a sometimes truculent and opinionated witness, I accept he was telling the truth about this. In addition to assessing his credibility, I find this evidence to be entirely credible. Mrs Mares made similar observations in her witness statement, though since she was not the client her evidence is of lesser direct effect. Nevertheless, it adds to the plausibility and compelling nature of Mr Terry's evidence. The new bargain alleged by Tamlura would lead to too much uncertainty over the future shareholding to be attractive to TIG, its directors, its shareholders, Investec and the UK Listing Authority.
150. That evidence provides further support for the proposition that it is unlikely that Mr Vlotman and Mr Terry reached an agreement for an allotment valuation date at, or indeed before, the 10^th October meeting.
151. However, the evidence does not stop there. Mrs Mares drafted a provision which is contrary to the Aspery and Page notes, ostensibly doing so to record what had been agreed. Her draft has its own status as an indication of what was agreed at the meeting. How did it come about? Either she made a mistake, or she got it right and Mr Aspery and Mr Page made a mistake, both at the meeting and subsequently when Mr Page "corrected" her draft by modifying the formula. I have to choose who was mistaken. I find that it was Mrs Mares. The formula was not, apparently, provided by her. That, and the lateness of the hour, make it more likely that a mistake was made. The contemporaneous notes of Mr Aspery and Mr Page are more likely to be a reliable reflection of what was agreed.
152. What happened afterwards reinforces that. Her draft was not accepted, and it was altered. It is inconceivable that Mr Page thought he was merely improving on the formula, but leaving it with the same effect. It would have been obvious to Mr Page that his formula, with two denominators and not one, was doing something different. If Mr Aspery failed to spot the difference first time round (which is unlikely) he can hardly have failed to spot it on subsequent reviews of the SPA, and of the circular (which contained the same formula). So Mr Page and Mr Aspery intended something different from Mrs Mares (and Mr Sherratt). So either they were mistaken, or Mrs Mares and Mr Sherratt were (in terms of what the bargain required). Mr Page had "corrected" the position in his 11^th October mark-up. It was accepted without comment by DLA, despite the fact that there were conversations about drafting thereafter. Is it more likely that DLA accepted that they had made a mistake, or is it more likely that DLA thought that they had got it right and that CMS were themselves making a mistake in proposing something more complicated that reversed the recent bargain, without commenting on it? It seems to me that the former is very much more likely, just as a matter of probability.
153. There is further support for that conclusion. Mr Christie, Mr Vlotman and Mr Kresfelder each had later drafts which showed the V₁/V₂ formula. The drafting refinements might have been lost on the latter two, and in particular the manuscript form on Mr Page's 11^th October draft will not have been easy to follow, but typed up versions were available, from which the actual wording would have been easier to follow. Mr Christie at least was able to work through documents such as this, and he told me that fractions such as those in the drafts "held no terror" for him. It would have been apparent to Mr Christie that there were two denominators in the calculation, and I think that he would have been capable of working out how the fraction worked. He had the opportunity to do so, and I think it likely that he would have read the document with sufficient attention to have done so. He raised no objection. Furthermore, I have already found that an explanation had been given to Mr Christie and probably Mr Vlotman on 12^th October. Again, that explanation attracted no apparent protest.
154. Mr Harvey would have me rely on the events at the signing of the SPA and would say that Mr Vlotman must have been aware of the formula and its effect on that date, because the minutes record that attention was drawn to the SPA and its terms. I am not convinced that that is a likely turn of events. It may well be that this was a largely choreographed event, and not the sort of occasion when Mr Vlotman would have become sufficiently informed about how the formula worked to realise its effect if he had not previously understood the tenor of the transaction. However, I do not think that this matters, because I find that he had not previously requested, agreed, authorised or sanctioned a departure from the terms of the heads of agreement in respect of the valuation basis for the deferred consideration shares, and understood well enough what was going to happen from his previous dealings with CMS, Mr Christie and Mr Terry.
155. In reaching this conclusion I have borne in mind the post-SPA events that are said to reflect on the understanding of Mr Aspery, and therefore on what the drafting ought to have contained. I do not think that any of them are of sufficient weight to outweigh the clear conclusions that flow from the more contemporaneous events. So far as they are relied on by Tamlura, they are either equivocal or represent mistakes by Mr Aspery at the time. I think that Mr Vlotman's acts (or rather his lack of them) weigh more significantly against Tamlura's case. His case is that he had expected to get at least £4m in November 2002 (subject to deductions). He agreed that with the other side, and CMS were told that and instructed to achieve it in the drafting. He even said that he had been assured that the drafting had achieved that (see below). Then he is told he is not going to get it. The natural reaction of a man who is in the position that Mr Vlotman said he was in would have been at least to query the position. Yet he did not make any query of, or complaint to, CMS until over 6 months later on his own evidence, and actually on my findings until 2005. Indeed, he went further, and continued to instruct the firm which, if his version of events were correct, was the very firm that had let him down. Nor is there any evidence that Mr Christie took the point up with CMS, despite what he professed to be his anger. As I have indicated, I do not accept that Mr Vlotman's personal circumstances are such as to explain what would be, on his version of events, irrational behaviour.
156. One form of Tamlura's primary case additionally involved assurances given by Mr Aspery that Tamlura would receive £4m of value as at 2002 valuations, at the time of the allotment of the deferred consideration shares. In his cross-examination Mr Vlotman said he recalled a meeting in the week after the 10^th October meeting, which (on the basis of Mr Christie's note) he accepted would logically have been on 12^th October. He said that he called a meeting so that he could understand the formula and asked whether the formula would guarantee him £4m in 2 years time and it was confirmed to him that it would. Mr Christie said that he had a meeting or meetings at which it was said to him that the retention was £4m in the absence of warranty claims – the retention was worth £4m. Such an assurance, if given, would have supported the evidential case that that was the intention of Mr Aspery in the drafting, which would in turn have supported the evidential case in favour of the express instruction to change the valuation date. In Mr Christie's evidence he put the meeting or meetings where this happened at the weekend of 14^th/15^th October, though he also suggested there were other meetings where this was said.
157. There are difficulties in accepting this evidence. First, it was vague. It does, at one level, have plausibility on its side (to an extent) because it is plausible that Tamlura would want to be sure that its deferred consideration had as great a value as possible, particularly bearing in mind Mr Vlotman's desire to have as much cash (or equivalent) as possible. However, it lacks plausibility in other respects. First, it is plain what the drafting had achieved, which is not the guaranteed receipt of £4m. Mr Page knew precisely what he had done, and Mr Aspery knew too. It is inconceivable that, having done that, they would have given the assurances alleged. For them to have done so would have required a degree of legal schizophrenia that I do not consider they would have been capable of. Second, it is not plausible that Mr Christie would have accepted any such assertion. He was intelligent and skilled enough to have questioned any such assertion on the basis of his reading of the drafts of the SPA, and indeed could probably have worked out the correct position for himself. This evidential prop is therefore not available to Tamlura.
158. Mr Kresfelder's witness statement contained a claimed recollection of two occasions when he and the others were assured by Mr Aspery that "the [£4m] sum was guaranteed". He gave some further detail of one of them, with Mr Aspery sitting looking uncharacteristically ill. When probed in cross-examination his evidence became confused and less consistent with known facts. He claimed that one of the relevant meetings was a round table meeting at CMS's office when there had been a break-out meeting. There never was a meeting of that nature at CMS's offices. There was one at DLA's offices – the 10^th October meeting. But at that point the matter was being discussed in different terms, and it is impossible to see how that advice can have been sought, let alone given, bearing in mind the state of the drafting, and the transaction, at that stage. In fact Mr Kresfelder's recollection was said to relate to a time after the fraction came into existence, so the relevant meeting cannot have been the 10^th October meeting. All in all, Mr Kresfelder's recollection was vague and implausible in the terms of the timing of events.
159. I have considered this evidence of the giving of assurances carefully. The fact that if given they would have been inaccurate is not, of itself, a reason why they could not have been given. Negligent advice is a fortiori wrong, but that fact does not stand in the way of a finding of negligence. But sometimes the facts of the case, both in terms of timing and other known facts, and the nature of the alleged advice itself, can render the allegation of wrong advice so implausible as to make it impossible to find, on a balance of probabilities, that the advice was given. The present is such a case. A finding that those representations were made would have to involve their being made at a time when Mr Aspery and Mr Page had carefully and deliberately removed from the drafting a provision which might have had that effect. They, or Mr Aspery, might in strict theory have said that the position was the opposite of that which had carefully been achieved, and of what he apparently believed to be the case, but that is highly unlikely in all the circumstances.
160. Tamlura therefore fails in its primary case. There was no agreement between the parties to the SPA transaction that the deferred consideration shares should have an allotment date valuation. The agreement was to the contrary. It was accurately captured in the heads of agreement, and was never changed.

Tamlura's secondary case – failure to implement an agreement at the 10^th October meeting

161. Mr Cakebread ran a secondary case which was, with all due respect to him, not easy to follow, not least because it shifted as the submissions developed. I think that its final form was this. Assume that there was no prior instruction from Tamlura to ensure that £4m was available (in current value) at the time of allotment. Nevertheless, at the meeting there was a clear agreement to that effect, as foreshadowed by the DLA note of 9^th October and by the subsequent DLA draft, and indeed by the two contemporaneous notes as interpreted by Mr Cakebread.
162. This case fails on the facts for reasons which will be clear from the above. I find that there was no such agreement at the 10^th October meeting that the valuation date for the deferred consideration shares should be the allotment date. The arrangements were clarified otherwise – the date was to be the completion date. This case is not materially different from the primary case.

Tamlura's tertiary case – a failure to point out and explain the terms of the DLA draft of 11^th October

163. It was not always clear that, by the end of the case, Mr Cakebread was running this case, but I think that the end result is that he was, notwithstanding that it was not pleaded, or at least not quite in the form finally relied on. No pleading point was taken on this, and I should deal with it.
164. The case is as follows. Assume that by the end of the October 10^th meeting the subject to contract arrangement between the parties provided for a completion date valuation for the deferred consideration shares. Nevertheless, the DLA draft provided for the later date. The effect of that new draft was not explained to Tamlura, and that was negligent. There was an obligation to explain this new draft, and to take instructions on it. To fail to do either, which CMS did, was negligent, and they proceeded without instructions on it and contrary to the client's interests. I assume that it is said to be contrary to the client's interests to proceed in this way because they thereby lost an opportunity to conclude a form of the SPA which would be in their interests because an allotment date valuation would obviously have been more beneficial, though that was not articulated in final submissions. In addition, there was a subsequent failure to explain the effects of the SPA in its final form. I am not sure why this was added to the facts under this tertiary head, but it was.
165. There is no doubt that the first line of basic facts can be established. The form and effect of Mrs Mares' draft of 11^th October was clear, and it is apparent that Mr Page, with the concurrence of Mr Aspery, set about altering it so as to re-introduce the completion valuation date for the deferred consideration shares, and that phase of the operation was never, in terms and as such, explained to the client. It was never suggested by CMS that the DLA draft and its effect was pointed out to Tamlura's representatives, save that it was said (and I find) that they had a draft with Mr Page's amendments on which, if penetrated, would have revealed what Mrs Mares had provided. Was that a breach of duty on the part of Mr Aspery and/or Mr Page?
166. I have little hesitation in finding that it was not. The background to this piece of drafting must be borne in mind. This tertiary case only becomes relevant if this draft fails to represent the bargain hitherto. So the background is as follows. The original bargain between the clients was encapsulated in the heads of agreement, and those terms plainly provided for a completion date valuation for the deferred consideration shares. As Mr Cakebread realistically accepted, Mr Aspery was entitled to assume (and I would say right to assume) that the implementation of those terms, and in this context that term in particular, represented his instructions. Those instructions did not change up to the time the Mares draft arrived. Indeed, on the factual hypothesis of this case, they were reinforced when the 10^th October meeting agreed, in the presence of Mr Christie, that the mechanism for ascertaining the number of shares involved ascertaining £4m worth by applying a completion date valuation, and then ascertaining the subtraction shares by applying an allotment date valuation. This was a meeting called, in part, to sort out any outstanding commercial disputes so that the matter could be taken forward. At the end of the meeting his instructions were still to ensure that the drafting achieved that. He was expecting a draft agreement from the other side which achieved that. The draft which he received was sent under cover of a letter which described the draft as setting out what had been agreed. In fact the draft, in this respect, did not do so.
167. What does the reasonable solicitor think and do in those circumstances? Those circumstances included the fact that there was some urgency about this matter, although I doubt if that affects the proper outcome much. It is an entirely natural inference, if not the only inference, that the drafting solicitor has made a mistake which requires correcting. It is not a natural inference that the solicitor is proposing a very material change to the commercial bargain. I find that Mr Page and Mr Aspery must have assumed that Mrs Mares had made a mistake.
168. That being the case, is the solicitor under a duty to tell the client about the apparent mistake, in case the client wishes to take advantage of it? I think it is clear that, at least on the facts of this case, he is not. He had his instructions, and on this point they had been clear for some time. They had been reinforced the day before. The responsible solicitor gets on with his job of implementing his client's instructions, particularly bearing in mind the time pressures involved. He is not obliged to take advantage of an apparent mistake on the part of the other side, and on the facts of this case was not obliged to contact Mr Christie and Mr Vlotman to see if they wished to do so either. Had he gone along with Mrs Mares' drafting, knowing that it might have been a mistake, it could have involved his client in a rectification action in the future (potentially based on an allegation of sharp practice), it could have involved re-drafting the circular, and it might even have involved the circular being tricky and misleading to other shareholders. If they had sought to exploit the situation and been caught out, it might even have imperilled the transaction. I am not saying that any of these matters actually occurred to Mr Page and Mr Aspery. I am sure they simply got on with making sure the draft reflected what had been agreed, and what their instructions were, and they were perfectly entitled to do that. But there are additional matters which demonstrate why they were not negligent in failing to go back to the client to invite him to consider taking advantage of an apparent mistake in an allotment transaction in relation to the shares in a publicly listed company. The position might have been otherwise if there had been some doubt as to whether DLA were really proposing some change in the commercial aspects, but that is not the case in this matter, and Mr Cakebread accepted that it was unlikely that this was a new proposal coming out of the blue. It was an apparent mistake, which Mr Page and Mr Aspery were entitled to correct in the fulfilment of their instructions, and that is what they did.

Tamlura's quaternary case – a failure to explain the final form of the SPA

169. After a bit of probing and reorganisation of final submissions, this came as a fourth way of putting the case. It was said that Mr Aspery was negligent because he did not explain the final form of the SPA to his client, and did not explain the effects of clause 6 bearing in mind it had "important ramifications" (Mr Cakebread's words). He particularly relied on the fact that the interaction between the two methods of valuation to be used on allotment would lead to a "magnification" of the effect of the warranties if the share price went down. By this he meant that if the share price went down, the number of subtraction shares would go up while the deferred consideration shares remained constant in number (because they were fixed by reference to the value at completion).
170. The evidence does not always disclose precisely what was explained to Tamlura or its representatives at any particular point in time. However, I have found that an explanation of the then state of the drafting was given to at least Mr Christie and Mr Vlotman on 12^th October, and they can be treated as being the client for these purposes. I consider it likely, and I find, that the overall effect of clause 6 would have been explained, or that at least it would have been explained (correctly) that it implemented the arrangements reached in the presence of Mr Christie at the meeting on 10^th October. Such an explanation, even if generalised, would not have been negligent in the circumstances, since the client, in the form of Mr Christie, had been present at the meeting when the shape of this part of the deal had been agreed or confirmed. Drafts were sent to the client's representatives from time to time, as the above story shows, and while the sending of drafts will not necessarily substitute for an explanation where an explanation is necessary, a combination of the nature of the original instructions, the discussions and explanations that were given from time to time, the events of the 10^th October which refined the commercial elements, the sending of drafts, the ability of clients to understand the drafts and the speed of the transaction all combined to make it unnecessary for there to be a session at which the final form of the SPA was explained line by line or provision by provision (if that is what this allegation involves).
171. So far as the commercial effect is concerned, I do not think that CMS were under any duty to explain that. This was a deal in which the principal commercial terms were agreed by the clients. The main principals (Mr Vlotman and Mr Kresfelder) were experienced men of commerce, and they had engaged an experienced finance expert (Mr Christie) to advise and act for them in matters of his commercial expertise. Outstanding commercial terms were agreed at the meeting of 10^th October. I do not think that in the circumstances of this case it fell to solicitors in the position of CMS to start pointing out the commercial effects of this particular aspect of the deal. Mr Aspery was entitled to assume that the clients had worked that out for themselves. He was implementing their clear instructions.
172. I would add one thing for the sake of completeness, anticipating a later heading slightly. I am quite satisfied that if there had been an explanation of the final form of the draft SPA to Mr Christie, Mr Vlotman and Mr Kresfelder, they would have approved it and the transaction would have gone ahead in precisely the same form. The explanation would not have told them anything which they had not previously known and which they had not previously indicated acceptance of.

Conclusions on liability

173. I therefore find that there was no negligence in the part of CMS in this transaction, in any of the forms in which the allegations came to be made at the end of the trial.

Post-script on liability

174. I would add one further matter in relation to how this claim came to be brought, because Mr Vlotman seemed to think that he had a real case and I have not found that either he or Mr Christie have acted dishonestly in bringing it. I think that this is a case in which Mr Vlotman and Mr Kresfelder, and probably Mr Christie, made and accepted the deal that they did without themselves foreseeing the full scale of what might happen to the consideration. They made the deal with their eyes open in relation to the main aspects of the deal, without perhaps fully thinking everything through, but at the same time being satisfied with a bargain which gave them potentially a lot of money. They probably thought that TIG shares would continue to rise, and if they had done so then a completion date valuation would give them a good deal. When things turned sour, their first reaction was not to accuse CMS of letting them down, because CMS had not done so. CMS had implemented their bargain, as they were instructed to do. However, as is not unfamiliar in litigation, regret over what happened has led to a search for those who might be blamed, and has tinted the spectacles through which the events are now viewed. It is a form of "litigation wishful thinking". So they have forgotten that they were content with the original deal, and meetings at which they discussed things with Mr Aspery have turned into false recollections of advice that was not given. This does not amount to a deliberately fabricated case, but it does not create a good one either.

Damage and causation

175. Since I have not found liability to exist I do not need to consider what damage has been caused. I therefore do not have to embark on a consideration of whether this is a loss of a chance case, and if so what effect that has on damages, or whether there was contributory negligence, and will not lengthen an already lengthy judgment by considering matters which have been rendered irrelevant.

The result

176. It follows that this claim must be dismissed.