England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		ROYAL COURTS OF JUSTICE STRAND, LONDON, WC2A 2LL
		22 January 2009

INTRODUCTION

1. The primary issue which arises in this Action is whether a concluded contract was ever entered into between the Claimant ("Mr Grant") and the Defendant ("Mr Bragg") for the purchase by Mr Bragg from Mr Grant of the whole of Mr Grant's shareholding in Premier Resorts Limited ("the Company") at the price of £346,760. The secondary issue (and one far easier of resolution) is a counterclaim brought by Mr Bragg against Mr Grant whereby Mr Bragg seeks damages for breach of a written Shareholders' Agreement (undated but signed by Mr Grant and Mr Bragg on or about 14 October 2003).
2. The contract, if it arose at all, was concluded in January or early February 2007. Since 20 January 2007 Mr Bragg has entirely excluded Mr Grant from participation in the Company, leading Mr Grant to set up his own competing business (Resort Group International Limited) which has traded from early February 2007. Mr Grant still retains his shareholding in the Company however, since Mr Bragg denies that any contract for the purchase of Mr Grant's shares was ever created. Hence the present Action brought by Mr Grant to enforce the contract which he says exists.
3. Originally the Company also brought a counterclaim against Mr Grant for alleged breaches of his fiduciary duties as a director of the Company. However, the Company is now insolvent and entered into administration on 25 September 2008. By letter dated 17 October 2008 the joint administrators indicated that the Company was not in a position to participate in the proceedings nor to pursue its counterclaim.
4. Mr Grant has been represented by solicitors and counsel (Mrs Galley) throughout. Originally Mr Bragg and the Company were represented by the same firm of solicitors and counsel. However on 15 August 2008, and no doubt because of funding difficulties, those solicitors ceased to act for both Mr Bragg and the Company and, accordingly, Mr Bragg has presented his case to me in person. I must say immediately that he did so with impeccable courtesy and not inconsiderable ability. Mrs Galley also more than fulfilled her duties to the Court by assisting me, and Mr Bragg, as appropriate in the circumstances. It is, however, more than a little unfortunate in a case such as the present – where there is much to be said on Mr Bragg's behalf on issues both of fact and law - that I do not have the benefit of hearing from counsel for Mr Bragg. That is unfortunate not merely from Mr Bragg's point of view but also from that of Mr Grant. As any Court seeks to ascertain and investigate the case of a litigant in person, especially where that litigant in person clearly has something of substance to say, there is a clear danger that a person such as Mr Grant might perceive that the judicial process is weighted against him in some way.
5. This is a case where the underlying merits (in non-legal terms) would lead me strongly to wish to find that the contract for which Mr Grant contends was, indeed, entered into between himself and Mr Bragg. Whether, however, that contract was entered into as a matter of law (or more correctly mixed fact and law) is a more difficult issue. The problem facing me is that the issue I have to decide is stark – either there was a contract or there was not. This is not a case where the claim is one of "unfairly prejudicial" conduct under sections 459 to 461 of the Companies Act 1985 (now sections 994 to 999 of the Companies Act 2006). Not merely, therefore, do I have no general discretion to make a share purchase order because of unfairly prejudicial conduct but, also, I must be careful to remind myself that conduct which might be classed as unfairly prejudicial should not be utilised to find the existence of a contract where such unfairly prejudicial conduct is not directly relevant to the narrow issue as to whether a contract was, in fact, created into at all.

THE COMPANY:

6. It is common ground that the Company was a quasi-partnership with each of Mr Grant and Mr Bragg holding 50% of the shareholding. They were both directors, albeit that they were not the sole directors (but nothing turns on this latter point). The Company was incorporated on 1 March 1997 and operated as a sales and marketing company for holiday and time share developments, many but not all of them abroad. Almost from the outset there were tensions between Mr Grant and Mr Bragg, hardly surprising granted their differing personalities.
7. Mr Grant was born in 1944 and served in the Army before leaving with the rank of Major in 1976. Thereafter he ultimately developed a career as a sales and marketing consultant for various holiday resorts. Mr Bragg is younger (he was born in 1957) and had experience as a sales and marketing consultant for timeshare developments (Mr Grant does not appear to have dealt with timeshares). In 1996 when Mr Grant was working as the marketing consultant for the Celtic Manor Resort in Wales he offered Mr Bragg a one year contract as the consultant marketing manager for that development. Following the conclusion of that development Mr Grant and Mr Bragg decided to establish the Company.
8. In fact, Mr Grant and Mr Bragg were like oil and water. Not only is Mr Grant older than Mr Bragg but his attitude to life is fundamentally different. I have no doubt but that Mr Grant regards his word as his bond and expects others to behave in this way. It seems to be common ground that Mr Grant is a workaholic and, from the start, this gave rise to tensions. I think that Mr Grant may well have been intolerant of those who worked less than he did (and Mr Bragg fell into that category). I think that because of their age and background differentials Mr Grant may well, on occasions, have treated Mr Bragg as if he were the "junior" partner. Conversely, however, Mr Bragg's mistake throughout seems to have been to fail to appreciate quite how important Mr Grant was to the success of the Company. Mr Grant was an old and wise head, with many contacts in the industry, most of whom would be likely to follow him were he to leave the Company and set up business on his own.
9. I have no doubt but that Mr Grant gave his evidence honestly (notwithstanding one incautious answer he gave in the witness box concerning his motive in January 2007 in changing the name of his new company to Premier Resorts International Limited – an answer which he subsequently corrected on more mature reflection). Equally, and although certain aspects of Mr Bragg's conduct may seem unattractive, I have no doubt that he too is a man who gave his evidence honestly. The problem, in Mr Bragg's case, is that his honest recollection and perception on any issue is, quite clearly, arrived at through a strong prism of self-interest and self-justification. It is, however, only right to record that on numerous occasions in 2006 he was obviously genuinely concerned about Mr Grant's state of health and he postponed the pursuit of his own self interests to avoid further damage to Mr Grant's health. Equally, and after he had been subject to detailed cross-examination by Mrs Galley, he was prepared to say that now matters had been put to him in a different way he could see the issues (such as Mr Grant's entitlement to commission on direct sales) in a new way. Indeed he very fairly opened his closing submissions to me by saying that, as a result of the trial process, he could now for the first time see matters from Mr Grant's perspective.
10. I treat, therefore, both Mr Grant and Mr Bragg as honest witnesses but I will have to examine carefully their respective recollections and perceptions as to what was occurring in respect of the negotiation of the alleged contract.

The Shareholders' Agreement:

11. The alleged contract, if it were created, could only have arisen in January or early February 2007. It is impossible, however, to understand what was then occurring without considering the terms of the undated Shareholders' Agreement ("the SA"). The context for the SA was difficulties which had arisen since the inception of the business of the Company over Mr Grant and Mr Bragg's respective contributions in terms of time and, more particularly, continuing income which was being generated from projects with which Mr Grant and, more particularly, Mr Bragg had been involved before the commencement of the business of the Company. Whilst it would appear that Mr Grant's prior projects had quickly stopped producing further income, that was not the case for Mr Bragg. Very substantial sums were continuing to be received which Mr Bragg was of the view that he (or his company - Bragg & Co Limited) was entitled to retain. It does seem as if there continuing income streams were not properly addressed before the commencement of the business of the Company – hence the very differing perceptions as to what should occur.
12. The SA was drafted by a Mr Christopher Jenkins who, at all material times, was a director and company secretary of the Company. Mr Jenkins had originally been the financial adviser to Mr Bragg and it was Mr Bragg who introduced him to Mr Grant. Subsequently, Mr Grant utilised Mr Jenkins' services for the purposes of his own personal tax affairs. Mr Jenkins was a Chartered Company Secretary. He gave evidence before me. He was a forceful, indeed flamboyant, character. He told me that he had received some legal training when qualifying as a Chartered Secretary. Unfortunately, it is very clear that Mr Jenkins was not as good a lawyer as he perceived himself to be, nor was he able subsequently to appreciate (as a lawyer would) various of the conflicts of interests in which he was becoming involved. In fairness, he may well have regarded his primary duty as being to the Company and, hence, to the survival of the Company in difficult circumstances. This may well have led him in 2006 and early 2007 to do what he did. Mr Grant regards Mr Jenkins as having in 2006/2007 acted solely in the best interests of Mr Bragg. I think that may be a little over simplistic. Mr Jenkins was his own man, most certainly not Mr Bragg's poodle. But, making his own decisions, Mr Jenkins on occasions sided with Mr Bragg, and advised Mr Bragg against Mr Grant, as I shall detail below.
13. The SA was drafted by Mr Jenkins in, apparently, October 2003 and, undoubtedly, signed by each of Mr Grant and Mr Bragg. That seems to have occurred on or about 14 October 2003. The SA is not an easy document. It starts by reciting that each of Mr Grant and Mr Bragg own 50 shares in the Company and that Mr Jenkins is the Company Secretary. It then continues as follows:-

"SHARES

In the event that either intends to sell some or all of his shares to a third party he must first offer that quantity of shares at the planned selling price to the other shareholder to whom he shall allow thirty days to complete the purchase. Only in the event of the other shareholder failing to complete the purchase of such shares may he make the sale to a third party.

Consideration for such a sale of any quantity of shares to a third party must include an obligation upon that third party to simultaneously make an offer to the other shareholder to purchase an equivalent quantity of shares from the other shareholder at the same price and under the same terms, although there shall be no obligation upon the other shareholder to accept such an offer.

In the event of their own death, mental incapacity, service upon them of a Bankruptcy Petition not set aside within thirty days, criminal conviction, or long-term sickness preventing work for more than six months or unexplained absence from the business for more than three months [Mr Grant] and [Mr Bragg] each hereby appoints irrevocably [Mr Jenkins] as his Agent with instructions to sell his shares in the Company to the other shareholder (or to a third party as herein provided), and each hereby undertakes to use every best endeavour to complete such a purchase from the other in such circumstances. Such sale shall be at the price which reflects proportionally a value of the whole of the Company as being equivalent to 50% of the aggregate gross income (being Fees and nett retained commissions invoiced) of the Company for the period of twelve months commencing six months prior to the date of death or start of absence and ending six months thereafter. It is hereby agreed that the consideration for such sale shall be payable to [Mr Grant], [Mr Bragg] or their estates or successors in eight equitably balanced monthly instalments the first being payable upon the date of sale".

14. The SA then went on to make further provision regulating the relationship between Mr Grant and Mr Bragg in respect of the Company including:-

(1) obligations on both to work "full time" in the business of the Company (a provision somewhat negated by a subsequent provision authorising both to participate in other business activities unrelated to the business of the Company subject to prior agreement but such prior agreement was not to be unreasonably withheld);

(2) obligations on both to use their best endeavours to introduce clients and assignments to the Company and not at any time to encourage work or assignments over which they had any influence to be placed with another business which was in competition with the Company;

(3) obligations on both to use their best endeavours to support the best interests of their Company;

(4) obligations on both to ensure that all fees and commissions negotiated or generated by them through any contracts or relationships in the property, leisure and related industries should be invoiced by or through the Company;

(5) obligations on both to ensure that the corporate opportunities of the Company were retained for the Company (my précis not Mr Jenkins' wording).

15. The SA also contained certain "Retirement Provisions" which applied "In the event that either shareholder wishes to reduce his quantity of working time regularly devoted to the Company". In that event there was imposed an obligation on the retiring shareholder to sell to the other a certain quantity of his shares at a formula which produced a different price from that payable under the heading "Shares" which I have set out above.
16. At one point Mr Bragg saw benefit in seeking to rely upon these Retirement Provisions because, thereby, he perceived that the price that he would have to pay for Mr Grant's shares was nil or virtually nil. However, it seems clear that the triggering event for the operation of these Retirement Provisions never occurred and this argument was not, ultimately, pursued by Mr Bragg at trial.
17. I return to the substantial extract from the SA which I have set out in italics above under the heading "Shares". What occurred was that in March 2006 Mr Grant was taken gravely ill with cancer. Ultimately, and despite Mr Grant's return to work, Mr Bragg took the view that "long-term sickness had prevented work for more than six months" and, accordingly, on 2 January 2007 he claimed that these provisions of the SA had been triggered. Both Mr Bragg and Mr Grant appear to have regarded the provisions of the SA applicable on (inter alia) long-term sickness as being ones where an automatic trigger did not apply. Rather, they seem to have regarded these provisions as being akin to an option, giving the "innocent" party the option to trigger the same if they so wished. But what is undoubtedly the case is that the effect of triggering (be it automatic or optional) was merely that Mr Jenkins was irrevocably appointed as Mr Grant's agent with instructions to sell his shares. The SA therefore contemplated that there would be a subsequent contract for the sale of such shares (with Mr Jenkins acting as Mr Grant's agent in such sale) and with each shareholder undertaking to use their every best endeavours to "complete" a purchase from the other in such circumstances. Mr Jenkins, as Mr Grant's agent, never sold Mr Grant's shares to Mr Bragg. In these circumstances Mrs Galley on behalf of Mr Grant does not allege that the mere triggering of the relevant provisions of the SA gave rise to a contract. Rather, she says that it is what the parties did after triggering which gave rise to an independent contract (that is one outside the terms of the SA) which Mr Grant now seeks to enforce.
18. Nevertheless, I think that I should examine some of the problems which arise on the provisions of the SA since it does seem clear that neither Mr Grant nor Mr Bragg (nor Mr Jenkins as the draftsman) ever fully understood quite how the SA worked. I would identify the following as some (but hardly all) of the problems which arise under the SA:-

(1) is the trigger for the relevant provisions an automatic trigger or, as the parties seem to have thought, more akin to an option?;

(2) what does "long-term sickness preventing work for more than six months" actually mean? Thus in the present case I am satisfied that Mr Grant, whilst very ill, did work on behalf of the Company to the best of his limited abilities during his illness but never attended its offices. Does that qualify?;

(3) does Mr Jenkins, as agent, merely have power to negotiate a sale of the shares or can he conclude a sale of the shares in the name of (even against the wishes of) his principal?;

(4) what are to be the terms of the sale? What if the purchaser requires certain restrictions on the future activities of the seller? If the seller objects, does Mr Jenkins have power as his agent to bind the seller to restrictive terms relating to the seller's future activities? If not, does the best endeavours obligation require the seller to agree to such terms?;

(5) how far does the best endeavours obligation go as against the purchaser? What if he does not have the money to purchase the shares? What if the seller wants to impose terms (for example that the shares should transfer only after payment of the final instalment or that the shares should transfer in tranches equivalent, pro rata, to the value of each instalment)? Does the purchaser have to agree to this under the best endeavours obligation? And can the purchaser insist that Mr Jenkins, as his agent, incorporates such terms in the sale?;

(6) what is the true nature of the relationship between the seller and Mr Jenkins? The agency is irrevocable, but to what extent does Mr Jenkins have to act on instructions from his principal?

19. The important point, however, is that it is tolerably clear that mere triggering of these provisions does not, of itself, create a contract between Mr Grant and Mr Bragg. Triggering merely creates an agency in Mr Jenkins which may lead, perhaps may be bound to lead if the machinery in these provisions is enforced, to a subsequent contract.

THE CYPRUS MONEY:

20. By March 2006 there were severe tensions between Mr Grant and Mr Bragg. One major cause of further tension was Mr Grant's activity in causing certain money due to the Company from the sale of a property in Cyprus to be paid to himself personally. The sum involved was 30,000 Cyprus pounds. Mr Bragg saw this conduct as fraudulent, a view he persisted in until, I think, it had been tested in cross-examination. I do not see this conduct as fraudulent but I can understand why Mr Bragg did. The relevant facts are as follows:-

(1) as early as 13 August 2002 the directors of the Company had all agreed that where an individual director acted directly as a sales agent on site then that individual director should be entitled personally to the relevant commission. At a board meeting of the Company on 20 November 2002 it was noted that Mr Grant would be on site at Tobago Plantations during the Christmas/January sales period and that, accordingly, he would be eligible personally for all sales commissions earnings during his period on site;

(2) by July 2003 the Company owed Mr Grant some £64,174 in sales commissions under these board authorisations. Mr Bragg, quite simply, did not want this money to be paid to Mr Grant by the Company and most conveniently forgot about the earlier board authorisations. This was undoubtedly money which he had agreed should be paid to Mr Grant (indeed the Company was receiving money which Mr Grant may well have been entitled to receive directly without it going to the Company at all);

(3) Mr Bragg's unwillingness to allow this money to be paid to Mr Grant formed a sub-dispute to the major concerns which Mr Grant had that far greater sums of money (for projects which had commenced before the inception of the Company's business) were continuing to be paid to Mr Bragg or his company;

(4) in an attempt to resolve all these issues Mr Jenkins drafted an Equalisation Agreement. That was signed by Mr Bragg on 6 June 2005. It involved, in effect, Mr Grant writing off his claims to the commissions I have identified, plus all his other claims for monies received personally by Mr Bragg, or his company, in return for the payment by Mr Bragg, of £40,000 into the Company. From Mr Grant's point of view this was a ridiculous deal commercially and he refused to sign the Equalisation Agreement. However, Mr Jenkins told Mr Bragg that Mr Grant had "agreed" to the Equalisation Agreement. I find as a fact that Mr Grant told Mr Jenkins no such thing. So Mr Bragg put £40,000 into the Company;

(5) having refused to sign the Equalisation Agreement Mr Grant still wanted to receive his outstanding commission payments. I accept his version of events that he discussed the matter with Mr Jenkins and between them it was agreed that 30,000 Cyprus pounds out of the total proceeds of sale of the Cyprus Property could be received by Mr Grant personally in reduction of his outstanding commissions;

(6) Mr Grant made no secret whatsoever of what had happened. The payment to Mr Grant's account was recorded in an e-mail dated 5 April 2006 sent by the Cyprus agent to the Company and that was then forwarded by the relevant employee (Lisa Basire) to various people (including Mr Jenkins). Sadly it does not seem to have been forwarded to Mr Bragg. He started to make enquiries as to where the missing 30,000 Cyprus pounds had gone and was infuriated to discover that it had gone to Mr Grant. At a meeting between Mr Bragg and Mr Grant held on 6 May 2006 Mr Grant protested that he had agreed with Mr Jenkins that the 30,000 Cyprus pounds should be treated in this way. At this point Mr Bragg drew Mr Grant's attention to the fact that Mr Grant had waived any entitlement to commission under the Equalisation Agreement. It is quite clear from what then occurred that Mr Bragg honestly believed, based upon what Mr Jenkins had told him, that Mr Grant had signed the Equalisation Agreement back in June 2005. Of course, Mr Grant had not.

21. When he was able to see all the matters in the round, following cross-examination, this was one of the areas where Mr Bragg was able to see things from Mr Grant's perspective. But it is important to realise that, at the time, it caused considerable irritation to Mr Bragg and gave him suspicions of Mr Grant.

MR GRANT'S ILLNESS:

22. In March 2006 Mr Grant fell gravely ill with cancer. He entered hospital on 29 March 2006, undergoing surgery on 31 March 2006 and leaving hospital some three weeks later. He had to re-enter hospital on 12 June 2006 for further major surgery and remained there until 23 July 2006. Radiotherapy then followed which ended on 16 August. On 30 September 2006 he underwent a third major operation. As if this were not enough, he then contracted MRSA which delayed his departure from hospital until 5 November 2006. Fortunately, Mr Grant has now recovered his health.
23. I do not think I was given the precise date on which Mr Grant returned to work but it was clear, from early November, that he would be returning soon. On 2 November 2006 he sent an e-mail to (amongst others) Mr Bragg and Mr Jenkins indicating that he would be returning soon, perhaps as early as within 2 weeks.
24. From March to November 2006 Mr Grant had either been at home or in hospital. However, I entirely accept his evidence that during this period he had done what he could to assist the Company's business. When able, he had sought to communicate with his clients by e-mail and telephone and held meetings with some of his clients at his home. He had kept in touch with the various Account Directors who had previously reported to him and he had received a number of client briefings and updates at his home.
25. That said, the practical reality was that Mr Bragg was more than happy to find himself in sole charge at the offices of the Company and more than grew to like that set of circumstances. The business of the Company did not prosper during Mr Grant's absence (in my view hardly surprisingly). This resulted in severe cash flow difficulties which, in turn, exacerbated the difficulties between Mr Grant and Mr Bragg. It became clear that the Company's bankers would be unwilling to continue to support a business where there was no clear direction and where there were such difficulties between the two shareholders. By the time of Mr Grant's return in late November or December 2006 both he and Mr Bragg accepted that there had to be some parting of the ways between them.
26. As early as 25 May 2006 Mr Jenkins had been advising Mr Bragg that he could oust Mr Grant under the terms of the SA. To his credit, Mr Bragg told Mr Jenkins that he was not prepared to act on that advice at that time because of the state of Mr Grant's health. Later, as the cash flow crisis for the Company became more acute, Mr Jenkins was advising Mr Bragg (on 16 November 2006) to dilute Mr Grant's shareholding through a rights issue made for the purposes of funding further capital for the Company. It is crystal clear from the terms of the e-mail in which he gave this advice to Mr Bragg that Mr Jenkins, at that time, was acting in Mr Bragg's best interests with a view to out-manoeuvring Mr Grant.
27. At this time Mr Bragg favoured striking off on his own and was, therefore, favouring the sale of his shareholding to an investor introduced by Mr Grant (a Mr Ganney). Mr Grant's intention was that, with Mr Ganney's investment, he (Mr Grant) would continue the business of the Company once Mr Bragg's shares had been purchased. Negotiations continued throughout November and December. The price payable to Mr Bragg was to be £185,000. It is, however, important to note that Heads of Agreement were produced (but never signed) which whilst allowing Mr Bragg to carry on a competing business sought to protect the business of the Company as at the date of sale by restricting, to a degree, Mr Bragg's future activities. The precise nature of the restrictions do not matter, the very fact that there were intended to be some restrictions does. Mr Grant's essential point is that the nature of the Company's business was such that clients of the Company had a deep, and long standing, personal relationship either with himself or with Mr Bragg. Whoever left, their respective clients would be likely to follow them. And there was nothing in the SA requiring a departing shareholder not to carry on a competing business. But the fact that the Heads of Agreement imposed some, however limited, restraints on Mr Bragg's future activities if he were to sell his shareholding sets the context for some of the issues which arose in January/February 2007.
28. At this time I accept that it was Mr Bragg's primary intention to sell, but his mind was not fully made up. On 8 December 2006 Mr Jenkins sent an e-mail to Mr Bragg advising him, in somewhat unattractive terms, how to out-manoeuvre Mr Grant so as to exclude him from the Company. One of the pieces of advice given was to "change the locks" and to insist on a medical certificate before Mr Grant could return. All this was described by Mr Jenkins as being "harsh insidious, but probably the more reliably effective. Your 100% dedication – undistracted and not overshadowed by [Mr Grant] – should make the Company strong next year!". This advice was being given in response to a revealing e-mail from Mr Bragg in which he wrote to Mr Jenkins "In small Caribbean islands the solution would be a military coup. What would be the acceptable equivalent under UK company law?!".
29. By 13 December 2006 Mr Jenkins was providing Mr Bragg with figures as to what the price would be for Mr Grant's shares under the formula contained in the SA. The suggested prices varied dependant upon what months were taken for the purposes of the calculation, but the lowest price was £294,000 and the highest £386,000. Clearly by this time Mr Bragg was having considerable doubts about selling his shareholding in the Company to Mr Ganney and by e-mail of 16 December 2006 he told Mr Ganney's agent that he no longer wished to complete before Christmas. On 2 January 2007 Mr Bragg sent to Mr Grant an e-mail advising that he no longer wished to sell his shares. Further, staying together on a 50/50 ownership basis was no longer attractive to him granted Mr Grant's inability to contribute fully to the "partnership". In the circumstances, Mr Bragg wrote that the Company [sic] was left with little alternative but to instigate the buy out clause in the SA. Mr Bragg wrote that Mr Jenkins had instructed the Company's lawyers who had written to Mr Grant that day.
30. This forms the starting point for the issues which arise as to whether or not a contract was created. It is quite clear that sometime over Christmas Mr Bragg has been considering his position carefully and had decided to oust Mr Grant from the Company under what he regarded as the "buy out" clause in the SA. In context, it seems extremely unlikely that he reached this decision without advice and assistance from Mr Jenkins. The absence of any proper understanding of the true workings of the relevant provisions of the SA, as contained in this e-mail, adds considerable credence to that perception.

JANUARY/FEBRUARY 2007: THE ALLEGED CONTRACTS

31. On 2 January 2007 Dixon Ward, solicitors, wrote to Mr Grant indicating that they had been consulted by the Company (I stress the Company) with regards to the terms of the SA. They recorded their instructions that Mr Grant had been prevented from working for the business for more than six months due to his long-term sickness. They recorded that, in those circumstances, Mr Jenkins was appointed irrevocably by Mr Grant as his agent with instructions to sell his shares in the Company to Mr Bragg. They recorded their instructions that Mr Grant's absence from the business had commenced on 21 March 2006. The letter then went on:-

"The shareholders' agreement provides that the company is to be valued at 50% of its aggregate gross income for the period of twelve months commencing six months prior to that date [21 March 2006] and ending six months thereafter.

We have spoken with Mr Jenkins. He suggests that whilst he can provide the figure for that period from which the value of your 50% holding in the company will be calculated, it may be more transparent and certain for both parties to use the company's accounting period from 1^st January 2006 to 31^st December 2006 for the purposes of the period for which the aggregate gross income of the Company is to be calculated. We understand from Mr Jenkins that the value of your shares during the period of 1^st January 2006 to date would be £274,750."

32. Whilst I entirely absolve Dixon Ward from any fault whatsoever (they could not have known the true position) I find Mr Jenkins' suggestion as contained in this letter deeply unfortunate. He had already, as I have indicated, worked on the relevant figures for Mr Bragg and knew full well that the price payable under the provisions of the SA, if it were calculated according to the formula in the SA, was substantially in excess of £274,750. This seems to me to be nothing more than a cheap attempt to persuade Mr Grant to sell his shares at a value below the one which would be placed on them by the formula in the SA. And this from a man who, under the SA, had been allegedly been appointed agent for Mr Grant for the purpose of the sale of his shares. It seems to be clear in all this that, if the SA had been properly triggered, Mr Jenkins had no perception whatsoever of his duties as an agent towards his principal.
33. Dixon Ward's letter concluded:-

"Kindly confirm your agreement to such sale and that you will be prepared to complete the necessary documentation to effect that sale. If you do not agree to do so, the Company Secretary will have to consider proceeding with the sale without your co-operation".

34. Mr Grant's initial response was by letter of 5 January 2007 to Dixon Ward. He denied that the provisions of the SA had been triggered because of his illness (granted the work which he had done in hospital and at home) but recognised the benefits of entering into negotiations for a sale of his shares. He asked to receive "a draft share sales agreement" as soon as possible. As he saw it, this document need not be particularly lengthy. He also indicated that he required to be released from his guarantee of the Company's account with its bankers (that guarantee being limited to £30,000).
35. On 6 January 2007 Mr Jenkins emailed Mr Bragg marked "Your eyes only" to consider Mr Bragg's options as against Mr Grant. It is clear that Mr Jenkins had doubts as to the strength of Mr Bragg's legal position. He wrote that if "we" forge ahead with the transfer of his shares, "we" could face six to twelve months of legal wrangling and uncertainty during which time "management focus would be severely distracted". On the other hand, Mr Jenkins said, Mr Grant might just give up and accept.
36. On 8 January 2007 Mr Bragg sent an e-mail to Mr Grant confirming that he (Mr Bragg) was not willing to sell his shares nor to split the business. Accordingly, there was no option but to invoke the buy-out clause in the SA. It was Mr Grant's view at the time that the SA was not enforceable against him (he so said in an e-mail of 8 January 2007 to Mr Bragg) but, equally, he seems to have become persuaded at this stage that Mr Bragg would not sell his shares to Mr Ganney (which had remained Mr Grant's preferred option up to this time). Mr Grant, therefore, decided that he would be better striking off on his own in a new business and so on 9 January 2007 he delivered, by hand, a letter to Dixon Ward. He wrote that, without prejudice to his contention that the SA had not been triggered, he had resolved to agree to Mr Bragg's requirement that he should sell his shares in the Company to Mr Bragg in accordance with the provisions of SA. He wrote that his letter should be accepted as confirmation for the purposes of the paragraph Dixon Ward's letter of 2 January 2007 which I have quoted in paragraph 33 above. He recorded that his understanding was that, properly calculated, the price for his shares under the SA would be circa £375,000. That price, however, was an empirical exercise which Mr Jenkins would be able to undertake as the logistics for completing the transaction were concluded. He then indicated, most importantly:-

"In the circumstances, I look forward to receiving a draft share vending agreement as soon as possible".

37. Mrs Galley's first submission to me is that a contract for sale arose by virtue of the acceptance contained in the letter of 9 January 2007 of the offer as contained in the letter of 2 January 2007. I entirely reject that submission. I stress, immediately, that the problem is not some disparity in the perception of price. I agree with Mr Grant that ascertainment of the price in accordance with the formula contained in the SA was an empirical exercise and that, therefore, the price although not identified was easily ascertainable (as it subsequently was in the sum of £346,760). The real problem is that the two letters cannot be put together to create offer and acceptance for a concluded contract. The following points seem to me to be of particular relevance:-

(1) I see no reason to doubt Dixon Ward's express contention that they wrote their letter of 2 January 2007 on behalf of the Company. It was not written by, or on behalf of, Mr Bragg;

(2) even if written on behalf of Mr Bragg, the letter of 2 January 2007 contains no independent offer by Mr Bragg to sell his shares at a price ascertained in accordance with the formula contained within the SA. Rather, objectively analysed, the letter of 2 January 2007 seems to me to be more akin to an "invitation to treat". It seeks Mr Grant's agreement to a sale, on the terms of the SA, but outside the machinery of the SA. Indeed, the express threat is made that if such a sale is not effected then the Company Secretary would have to consider proceeding with the sale without Mr Grant's co-operation under the SA machinery. In effect the letter invites Mr Grant to take steps to sell his shares but does not amount to an irrevocable offer by Mr Bragg to buy those shares on the terms set out in the SA;

(3) even if the letter of 2 January 2007 contained an irrevocable offer by Mr Bragg, the letter of 9 January 2007 cannot be regarded as an unequivocal acceptance of that offer. All that Mr Grant does is to accept Mr Bragg's requirement that the shares should be sold to Mr Bragg in accordance with the provisions of the SA. It is, I think, particularly significant that Mr Grant concludes his letter by indicating that he looks forward to receiving a draft share vending agreement as soon as possible. Objectively analysed, both parties still regarded the fine details as remaining open for negotiation and discussion.

38. Whether a contract has, or has not, been entered into is of course a matter of objective analysis. But it is not insignificant that, at this stage, Mr Grant appears not to have believed that a contract was entered into. He was well aware, at this time, of what he describes in his witness statement as "Mr Bragg's true resolve, or lack of resolve" and still thought that matters might pan out by Mr Bragg selling his shares, not vice versa. Not until after the events of 19 January 2007 does Mr Grant begin to protest that there is, indeed, a contract in place.
39. Clearly, at this stage, a major issue for Mr Bragg was financing the purchase of Mr Grant's shares. And he was not happy with the price he was going to have to pay under the SA formula. On 13 January 2007 he sent an e-mail to Mr Jenkins indicating his concerns about the price and suggesting that the Retirement Provisions in the SA should be invoked so as to dilute Mr Grant's shareholding. Mr Jenkins responded by e-mail on 14 January 2007 indicating that "my view is that our chances of succeeding with this "part-time" clause are about 60/40".
40. By 15 January 2007 Mr Grant was re-involving himself in the business which was clearly a matter of great annoyance to Mr Bragg. On 15 January 2007 he wrote an e-mail to Mr Jenkins marked "Your Eyes Only please" complaining of this and seeking to identify steps which could be taken. By this time the price payable under the formula contained in the SA had been identified by Mr Jenkins at £346,760, and this was recorded in an e-mail from Mr Jenkins to Mr Bragg of 16 January 2007.
41. On 17 January 2007 Mr Bragg sent an e-mail to Mr Jenkins indicating that Mr Bragg proposed to "cut his phone and e-mail this Friday [the 19] and make announcements this Monday [22]". The ostensible justification for this was to control Mr Grant's actions against the Company. I am wholly unpersuaded that prior to 20 January 2007 Mr Grant had taken any actions which could be regarded as prejudicial to the business of the Company. It is true that he had acquired an off the shelf company and that at or about this time he made application to change its name to Premier Resorts International Limited. I have no doubt but that, at this time, Mr Grant intended, if and when his shares had been purchased, to set up a competing business which would trade under the name Premier Resorts International Limited. But, over and above this, prior to 20 January 2007 he had taken no meaningful steps to establish the business of his new company – if only because he was still of the view that Mr Bragg might well not complete the purchase of his shares and so the reality would be that it would be Mr Grant who would be trading through the medium of the Company. All the more reason, therefore, to preserve its business. All this changed on 20 January 2007.
42. I cannot, therefore, accept Mr Bragg's contention that it was Mr Grant's activities against the Company which caused Mr Bragg to exclude Mr Grant from the offices of the Company, and terminate his e-mail connection, on 20 January 2007. The reality of what occurred was this. By 19 January 2007 Mr Bragg had decided that he would go ahead with the purchase of Mr Grant's shares at the price of £346,760. He so confirmed to Mr Grant during the course of a taxi journey in the late evening of Friday 19 January 2007. I shall return to what was said during the course of that taxi journey below. He had also, by 19 January 2007, decided that it was in his own best interests to exclude Mr Grant from the Company. He confirmed that he intended to do this during the course of a telephone conversation which Mr Jenkins referred to in his oral evidence. Mr Jenkins recalls receiving a telephone call from Mr Bragg at Southampton Airport on Friday 19 January 2007. Mr Jenkins can date this because he was on the way to a holiday in Gleneagles. Mr Bragg told Mr Jenkins that he intended to change the locks at the Company's offices and to exclude Mr Grant. I cannot, therefore, accept Mr Bragg's version of events as to why he acted as he did on 20 January 2007. He says that this was on the basis of information provided to him by a fellow director, Mr Dawson, on the morning of 20 January 2007. That information related to an intended meeting which Mr Grant was to have with another employee, a Mr McClure. I heard Mr Dawson give evidence and I have no hesitation whatsoever in accepting his version of events. His evidence is that he informed Mr Bragg about the McClure issue on the morning of Saturday 20 January. But when Mr Bragg says that it was this information which caused him to act as he did he is wrong. On the contrary, he had already decided so to act a few days earlier when, as I have said, Mr Grant had taken no hostile steps against the Company.
43. I return, now, to what happened in the taxi. It is common ground that the conversion occurred. It is also common ground that it was very short and occurred only as the taxi was turning into the road in which Mr Grant lived. I am satisfied that, during the course of this brief conversation, Mr Bragg confirmed to Mr Grant that he (Mr Bragg) was going ahead with the purchase of Mr Grant's shares under the terms of the SA. I also find that Mr Bragg asked Mr Grant if he agreed to this and Mr Grant said yes. I also accept that Mr Bragg then said that he would be in touch with Mr Jenkins the next day to instruct solicitors to draw up a suitable share transfer agreement. Over and above this, no terms were discussed as to the sale and purchase of the shares.
44. What occurred in the taxi was a strong statement of intent by Mr Bragg but it did not, in my judgment, amount to a concluded contract. To the extent that what occurred is said to be an acceptance of the offer as made by Mr Grant in the letter of 9 January 2007 then, clearly, the parties were contemplating that a share vending agreement would be entered into. So the "acceptance" would be on that basis, namely that matters remained in negotiation until a share vending agreement were entered into or at least the terms thereof agreed. If what occurred in the taxi be looked at entirely independently, I cannot accept that either party intended to make themselves contractually bound during the course of such a short and informal conversation. As far as Mr Bragg was concerned there were still certain outstanding issues. Whilst it was common ground that following purchase of his shares Mr Grant could set up a competing business, and it was a common expectation that many of his clients would leave the Company accordingly, and whilst there were no restrictions on future activities expressly set out in the SA, Mr Bragg was still concerned to receive some limited protection (such as that contained in the Heads of Agreement with Mr Ganney). He would therefore have wanted to see some form of share vending agreement regulating the position for the future and Mr Grant must have understood this (especially as, at the time, Mr Grant was intending to carry on his new business through a company named Premier Resorts International Limited albeit that I am not satisfied that, on the evening of 19 January 2007, Mr Bragg was aware of that fact). To analyse what occurred in the taxi as anything other than a statement of intent, albeit a firm statement of intent, by Mr Bragg simply defies commercial sense and logic.
45. That analysis is supported by an e-mail which Mr Bragg sent to Mr Grant on 20 January 2007. Mr Bragg wrote:-

"It was also good to be able to talk to you in the cab coming back and I am confirming that I will now buy your 50% shareholding according to the terms of the shareholding agreement to which you have already agreed. Dixon Ward are preparing a short heads of terms and I will bring the stock transfer form around at some time next week for signing and a cheque for the first payment".

This, to my mind, confirms that matters remained in the realm of intent, not contractual obligation, until either the heads of terms were agreed or the stock transfer form executed.

46. However, on 20 January 2007 Mr Bragg jumped the gun by excluding Mr Grant from the business of the Company in manner I have described. Also, Mr Grant (perhaps understandably) from this date began to inform his clients that he would be leaving and to give them information about his intended new business. As from 20 January 2007 Mr Grant may well have been in breach of his fiduciary duties to the Company in respect of its existing, and maturing, corporate opportunities (albeit that I am less than satisfied on the evidence before me that, in causation terms, he did any major damage to the Company. Quite simply, many if not most of Mr Grant's clients would have been unlikely to have stayed with the Company once he had departed therefrom).
47. By e-mail sent on the late evening of 20 January 2007 Mr Jenkins wrote to Dixon Ward to confirm to them that the two shareholders had agreed that the 50 shares held by Mr Grant should be transferred to Mr Bragg or, possibly, his company Bragg & Co Limited at the earliest opportunity for a consideration of £346,760 - such sum to be paid by way of eight equal instalments, the first to be paid immediately upon execution by Mr Grant of the Stock Transfer for the shares. Mr Jenkins identified the only Terms and Conditions to be:-

(1) resignation by Mr Grant as a director of the Company with effect from the date of completion;

(2) co-operation from Mr Grant in the publication of a suitable Press Release announcing his retirement from the Company; and

(3) an undertaking from Mr Grant that, whilst he might be establishing a new business in competition with the Company, he would not make any statements or observations deleterious to the reputation or standing of the Company, its performance, or professional competences.

Mr Jenkins proposed a completion date of Monday or Tuesday 22/23 January 2007. Mr Jenkins concluded by asking whether Dixon Webb were able to act in the matter of the Share Sale Agreement.

48. It is quite clear that Mr Jenkins did not believe that there was a concluded contract because he refers to certain Terms and Conditions and to a Share Sale Agreement. It also appears that, at this time, Mr Jenkins did not appreciate that Mr Grant intended to run his competing business under the name Premier Resorts International Limited. A copy of this e-mail was sent to each of Mr Bragg and Mr Grant (but Mr Grant did not receive it at the time because Mr Bragg had cut off his e-mail).
49. On 21 January 2007 Mr Grant e-mailed Mr Bragg protesting about the disconnection of his e-mail facilities and his exclusion from the offices of the Company. This is the first occasion on which Mr Grant alleges that there is a binding agreement between himself and Mr Bragg for the purchase of the shares. However, even this e-mail is instructive in that having said that he expects to receive the first instalment for his shares by close of business on Thursday he goes onto say that on that occasion "we" can both execute whatever other paper work is needed to give effect to our agreement.
50. Dixon Ward produced a brief Share Sale Agreement running to four pages. The parties were identified as Mr Grant and Mr Bragg (not Bragg & Co Limited) and the draft Agreement ("the Dixon Ward Draft") provided for sale of all of Mr Grant's shares at the price of £346,760 payable by 8 equal instalments, the first of which was to be paid on completion and each subsequent instalment thereafter was to be paid on the first each consecutive calendar month commencing 1^st March 2007. Completion of the transfer of all the 50 shares was to take place immediately following execution of the Agreement. Dixon Ward extended the undertakings to be given by Mr Grant over and above the Terms and Conditions set out in Mr Jenkins' e-mail of 20 January 2007 to include:-

(1) an undertaking by Mr Grant that he would not at any time after completion use the name "Premier Resorts Limited or any name including the words Premier Resorts or likely to be mistaken for or confused with the name of the Company (clause 7.2); and

(2) an undertaking by Mr Grant not to utilise any trade secrets or confidential information concerning the business or finances of the Company (clause 7.3).

51. On 22 January 2007 Mr Grant, having belatedly received a copy of Mr Jenkins' e-mail to Dixon Ward but not, at this time, a copy of the Dixon Ward Draft, e-mailed Mr Bragg saying that the suggestion that the purchaser would be any entity other than Mr Bragg personally was a nonsense. He indicated, however, that the other Terms and Conditions set out in the e-mail of 20 January 2007 were acceptable. A copy of this e-mail was sent to Mr Jenkins on 22 January 2007 who advised Mr Bragg thereon by e-mail of the same date. Mr Jenkins makes two important points:-

(1) he accepts what Mr Grant has to say about the entity purchasing. Mr Bragg would need to accede to this point. "B Co was, as we discussed, a device worth floating: we failed!";

(2) he advises Mr Bragg, in graphic and forceful language, that Mr Grant's contention that Mr Bragg is already contractually obliged to purchase Mr Grant's shares without any Terms and Conditions being imposed on Mr Grant (because no Terms and Condition were identified in the SA) as being wrong. "You can walk away even now and until he has agreed the Share Sale Agreement and executed the Stock Transfer Form!". For once it seems to me that Mr Jenkins has got the law right.

52. The Dixon Ward Draft was sent to Mr Grant on either 22 or 23 January 2007. By e-mail of 23 January 2007 Mr Grant wrote to Mr Jenkins indicating that he would respond thereto as soon as he had a chance to discuss it with his appropriate advisor.
53. On 25 January 2007 Mr Grant returned the Dixon Ward Draft heavily amended to Mr Bragg and Mr Jenkins. Mr Grant described his changes/comments as designed both to represent the terms and conditions contained in the SA and also the spirit of the Terms and Conditions that Mr Bragg had requested when he was selling his shares to Mr Ganney. The amendments to the Dixon Ward Draft included (amongst others) provisions designed to ensure that the shares did not transfer until payment of the purchase price in full (the stock transfer form being delivered in escrow until that time), the deletion of clause 7.3 and the amendment of clause 7.2 (apparently to enable Mr Grant to use the words "Premier Resorts" in his new business).
54. The amendments were, understandably, entirely unacceptable to Mr Bragg and matters then reached an impasse. However, Mr Bragg's "take over" of the Company had been continuing and on the 23 January 2007 he issued a Press Release saying that Mr Grant had retired from the Company. Whilst Mr Grant had been consulted about the form of that Press Release, it was issued in a form which took no account whatsoever of Mr Grant's suggested amendments. As far as the outside world was concerned, as from 23 January 2007, Mr Grant had left the Company. Further, on 26 January 2007 Mr Bragg met all the staff of the Company and told them that Mr Grant had left and was no longer involved with the Company. It appears that, at this meeting, Mr Bragg also accused Mr Grant of fraud in respect of his dealings with the Cyprus money.
55. Despite what he was doing with and in the Company, on 26 January 2007 Mr Bragg e-mailed Mr Grant to indicate that he would not be able to complete the deal in the way in which it was currently drafted i.e. with Mr Grant's amendments. In the face of this, Mr Grant returned to his original theme that there already existed a binding agreement between himself and Mr Bragg and that the present negotiations were, in fact, akin to a re-negotiation. Also, at or about this time Mr Grant accepted that he could not use the words "Premier Resorts" in his new business and, in fact, he did not do so. As the impasse continued, so the affairs of the Company were deteriorating with its bankers obviously concerned about the ongoing lack of direction. On 28 January 2007 Mr Grant, still asserting a concluded contract and granted his exclusion from affairs of the Company, resigned as a director with immediate effect.
56. I turn against this background to the final way in which Mrs Galley says that a contract was created for the purchase of Mr Grant's shares. On 30 January 2007 Mr Jenkins sent an e-mail to Mr Grant (copy to Mr Bragg) which was obviously designed to seek to bring the situation to a head. Mr Jenkins recorded that Mr Grant had now told him that Mr Grant no longer intended to make use of the words "Premier Resorts" in his new business.
57. Mr Jenkins described that assurance as crucially helpful. Mr Jenkins records that he had asked Mr Grant whether Mr Grant was prepared to proceed in accordance with the Dixon Ward Draft and records that Mr Grant had said that he would revert to Mr Jenkins on that point. Mr Jenkins then wrote this:-

"I therefore sought to make certain that [Mr Bragg] is still willing to proceed subject to your agreement to that wording [i.e. the Dixon Ward Draft] - and he has so confirmed.

Thus, everything now hangs on your decision – to accept the Dixon Ward wording – or not. Please could you advise this morning, as promised?"

58. Under cross-examination Mr Jenkins confirmed that before writing this e-mail he had specifically asked Mr Bragg whether he had Mr Bragg's authority to write in the terms in which he did. Mr Bragg had so confirmed. Mr Jenkins' belief was that if Mr Grant accepted the Dixon Ward wording then a contract would arise. Mr Jenkins' subjective perceptions are, of course, not the touchstone for the question whether a contract arises but his subjective perceptions throw some light on his dealings with Mr Bragg and underline that Mr Jenkins did, indeed, have Mr Bragg's authority to make an offer to Mr Grant to proceed with the sale of the shares if Mr Grant would accept the wording of the Dixon Ward Draft.
59. In my judgment, therefore, this e-mail constitutes an offer by Mr Bragg (written through Mr Jenkins as his agent) to purchase Mr Grant's shares (so long as Mr Grant accepted the terms set out in the Dixon Ward Draft) an offer which was not withdrawn before its acceptance by Mr Grant by e-mail of 2 February 2007 sent to Mr Jenkins (with copy to Mr Bragg). In that e-mail Mr Grant wrote:-

"I confirm that I am prepared to enter into that agreement [i.e. the Dixon Ward Draft] in its original form, however inappropriate it might be.

On the above basis, there can be no further objections to completion [my underlining] and I look forward to hearing from either you or [Mr Bragg] accordingly, without further delay".

60. The parties were now at one. The terms of the sale and purchase were agreed (as set out in the Dixon Ward Draft). There is no suggestion of the negotiations having, at any stage, been made expressly, or implicitly, "subject to contract". That said, however, the Dixon Ward Draft was a document which, ex hypothesi, contemplated that it would be signed by both parties. Is a contract negated, therefore, because the parties' true intentions, objectively analysed, were that a contract would arise only when the document (the form of which had been agreed) was actually signed by both parties. That is Mr Bragg's submission and he says that he would not become contractually bound notwithstanding all that had occurred unless and until both he and Mr Grant formally signed the Dixon Ward Draft.
61. No authority was cited to me on this point by either Mrs Galley or Mr Bragg and there are, of course, always dangers in a Judge engaging in his own legal research. That said, certain principles are well established. Where parties are proceeding in anticipation of execution of a formal document then the normal inference will be that the parties will not be bound unless and until both of them sign that document. However, that inference will change if the facts change so that it can be objectively ascertained, on a balance of probabilities, that the continuing intention of the parties is, now, to be contractually bound immediately and not following formal execution of the document (see, for example, paragraph 2-116 of Chitty on Contracts 30^th Edition and paragraph 46 of the judgment of the Chancellor in Whitehead Mann Limited –v- Cheverny Consulting Limited [2006] EWCA Civ 1303).
62. I am prepared to accept in Mr Bragg's favour that up to 30 January 2007 both Mr Bragg and Mr Grant (despite his protestations to the contrary) – objectively analysed – were contemplating execution of a formal document (the Dixon Ward Draft or some variant thereof) and that the normal inference that the parties would not be bound unless and until that document were signed would apply. But whether, objectively analysed, that intention changed is, as I see the position, a matter of fact for me. The e-mail of 30 January 2007 has to be seen in its context. Matters with the company's bankers were, as Mr Jenkins records in that e-mail, critical and acute. Mr Bragg had taken control of the Company and, effectively, forced Mr Grant into resigning as a director (so taking all the benefit of Mr Grant's shares except the very shares themselves). The e-mail of 30 January 2007 was a clear attempt to resolve a difficult impasse. Nowhere does it require Mr Grant formally to execute the Dixon Ward Draft. It merely requires him to accept the Dixon Ward wording. If he did, in my judgment a contract would be in place on the terms of the Dixon Ward Draft. I reiterate that this is not a case where there was the additional requirement of overcoming a "subject to contract" stipulation earlier imposed. As Mr Jenkins so pertinently said, everything hung on Mr Grant's decision – and that decision was to accept the Dixon Ward wording – or not. It did not hang on Mr Grant's decision to execute the Dixon Ward Draft. Hence the offer as contained in the e-mail of 30 January 2007 cannot be regarded as being conditional on not merely acceptance of the Dixon Ward wording but, also, execution of the Dixon Ward Draft by each of Mr Grant and Mr Bragg.
63. I find some further assistance from the decision of the Court of Appeal in G. Percy Trentham Limited –v- Archital Luxfer Limited [1993] 1 Lloyd's Law Reports 25. I accept, of course, that that case was different on its facts from the present in that the alleged contract there had been fully executed. But, in the present case, Mr Bragg had unilaterally appropriated to himself by 30 January 2007 the rights and benefits which went with Mr Grant's shares – he simply had not obtained the shares themselves. I do, therefore, think that the comments of the Court of Appeal (the judgment being delivered by Steyn L.J.) are of some assistance in the present case. Steyn L.J. indicated:-

(1) English law generally adopts an objective theory of contract formation (ignoring the subjective expectations and the unexpressed mental reservations of the parties). The governing criterion is the reasonable expectation of honest men. In a case such as the present that means that the yardstick is the reasonable expectations of sensible businessman;

(2) the fact that the contract in question was executed, rather than executory, was a consideration of the first importance on a number of levels. In a case where the transaction was fully performed the argument that there was no evidence upon which the Judge could find that a contract was proved was implausible. Having referred to the decision of the House of Lords in Brogden –v- Metropolitan Railway (1877) 2 App. Cas. 666 Steyn L.J. said that, in 1992, the Courts ought not to yield to Victorian times in realism about the practical application of rules of contract formation. One must not lose sight of the commercial character of the transaction.

64. Following Steyn L.J.'s injunction, I do not lose sight of the commercial realities of the present matter. As I have emphasised, Mr Bragg (by protesting his intention to purchase Mr Grant's shares) had already obtained for himself all the practical benefits of the rights attributable to those shares. All that was outstanding were the shares themselves. Whilst there might have been scope for argument as to the terms (but not the price) on which those shares were to be acquired, that scope was put to rest when Mr Bragg and Mr Grant agreed to abide by the terms of the Dixon Ward Draft. What was needed on 30 January 2007 was mere regulation of the de facto position as it existed on the ground. All obstacles to that regularisation were removed when Mr Grant accepted the undoubted offer contained in e-mail of 30 January 2007. Nothing at that point remained to be agreed. It seems to me to defy commercial reality and the intention of the parties objectively analysed (including an objective analysis of the offer as contained in the e-mail of 30 January 2007) to say that, in the circumstances of this case, the parties still intended that they should not be contractually bound unless and until a document in a form which was entirely agreed (the Dixon Ward Draft) were executed. As execution could, on this analysis, be entirely dependant on the whim of Mr Bragg then such an analysis would take all force, and contractual seriousness, out of what was quite clearly intended to be a most serious offer as contained in the e-mail of 30 January 2007 (a fortiori when that offer is seen against the difficult impasse on the ground and the increasing problems of the Company as against its bankers).
65. There is one further point which I need to consider. As indicated above Mr Jenkins asked for a reply to his e-mail that morning. Having adverted to the difficulties which the Company was having with its bankers, he ended the e-mail "Decision time TODAY!" I do not, however, regard these matters as imposing a time limit on acceptance of the offer as contained in the e-mail of 30 January 2007. Rather they are encouragements for an early response, the first couched in terms of "please" and the second by way of demotic emphasis of the urgency of the situation. In my judgment, the offer as contained in the e-mail of 30 January 2007 remained open for acceptance by Mr Grant on 2 February 2007.
66. Whilst, therefore, I reject the two other ways in which Mrs Galley says that a contract arose as between Mr Grant and Mr Bragg, I find that through the e-mail of 30 January 2007 and Mr Grant's e-mailed response of 2 February 2007 a contract arose for the sale of Mr Grant's shares to Mr Bragg on the terms and at the price set out in the Dixon Ward Draft. I shall refer to this contract as "the February Contract". Mr Bragg took no steps to complete the February Contract but continued (until administration supervened) to run the business of the Company to the total exclusion of Mr Grant. Hence the present proceedings commenced by Claim Form issued on 6 August 2007.

AMENDMENT:

67. Mrs Galley opened this case to me on Monday 27 October 2008 on the basis that the contract was entered into (1) with the letter of 9 January 2007 (2) by what occurred in the taxi on 19 January 2007 and (3) by the events which I have found to have created the February Contract. At that early stage I queried with her whether she wished to re-address the Particulars of Claim. She took no steps to do this, however, until the middle of her closing submissions on Friday 31 October. During the course of her closing submissions, when again arguing for the February Contract, she accepted that she was unable to demonstrate to me how the Particulars of Claim raised the allegation of the February Contract. She therefore applied for permission to amend the Particulars of Claim to add a claim in respect of the February Contract. She produced a brief draft amendment raising the February Contract. Accordingly, even though I have found that the February Contract exists, I must now consider whether or not to grant permission to allow the February Contract to be raised as an issue.
68. At no stage during the course of the trial did Mr Bragg suffer any forensic prejudice as a result of the February Contract not having being raised in the Particulars of Claim. Naturally enough, as a litigant in person, he did not concentrate on the precise wording of the Particulars of Claim and, from the inception of Mrs Galley's opening, he knew that the February Contract was in issue. He conducted his case accordingly and I cannot see that he would have done anything differently had an application for permission to amend being made at the commencement of, or before, trial. Accordingly, the proposed amendment would, in my clear judgment, cause no detriment to Mr Bragg (there would, for example, be no additional disclosure required over the issue of the February Contract and the February Contract is but a different way of analysing the factual issues which arose all of which Mr Bragg was more than capable of dealing with at trial). But not to allow the amendment would grant a substantive windfall to Mr Bragg, namely that Mr Grant would be unable to enforce a contract which I have found, as a fact, to exist. However this is, of course, a very late amendment. I fail to understand why Mrs Galley did not make it until the middle of her closing submissions. I also fail to understand why Mrs Galley did not appreciate, before trial, that the existing Particulars of Claim did not cover the case which she wished to present on Mr Grant's behalf. Ultimately, however, this amendment is merely a different way of identifying how the substantive allegation (namely that of contract) is established. It involves a different way of analysing facts which were fully before the Court at trial and on which full disclosure has been given.
69. Taking all these factors into account, and in particular the fact that Mrs Galley opened the case by making it very clear that she relied on the February Contract, it would, in my view, be wholly wrong not to allow the proposed amendment to raise the February Contract. I therefore grant permission to amend the Particulars of Claim in the form proposed. However, the simple fact remains that this Action proceeded to Trial without the February Contract being identified as part of Mr Grant's case. It seems to me that, in these circumstances, Mr Bragg is entitled to major costs protection for what has occurred. The fact that I can give him such costs protection is a further factor which justifies permission to amend being granted. I will hear detailed submissions on precisely what costs order I should make so as to protect Mr Bragg on hand down of this judgment.

COUNTERCLAIM:

70. The Company no longer pursues its counterclaim for breach of fiduciary duties as against Mr Grant. Had that counterclaim been pursued, I would have required considerable persuasion that what Mr Grant did between 20 and 28 January 2007 had caused any major loss to the Company.
71. Mr Bragg pursues, however, his independent claim for breach of the SA. In principle, it seems to me to be clear that he can pursue that claim only to the extent that the S A imposed obligations upon Mr Grant stricter than the obligations which Mr Grant owed to the Company by way of fiduciary duties as a director and, then, only to the extent that Mr Bragg has suffered loss in the value of his shareholding over and above the loss in the value of the shareholding which would have been caused by the conduct of Mr Bragg which amounted to breach of his fiduciary duties. In other words, it is only loss in the value of Mr Bragg's shareholding directly attributable to the stricter obligations imposed upon him under the SA (i.e. stricter than his fiduciary duties) which would be recoverable. In this context I need refer only to a short paragraph from the speech of Lord Bingham of Cornhill in Johnson –v- Gore Wood & Co [2002] 2 AC 1 at 35 E:-

"These authorities support the following propositions. (1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss….(2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. This is supported by Lee –v- Sheard [1956] 1 QB 192, 195 – 196, George Fisher (Great Britain) Ltd –v- Multi Construction Ltd [1995] 1 BCLC 260 and Gerber Garment Technology Inc –v- Lectra Systems Ltd [1997] RPC 443. (3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. I take this to be the effect of Lee –v- Sheard, at pp 195 – 196, Heron International –v- Lord Grade [1983] BCLC 244, particularly at p262, R P Howard Ltd –v- Woodman Matthews & Co [1983] BCLC 117, particularly at p123, Gerber and Stein –v- Blake [1998] 1 All ER 724, particularly at p726".

72. Mr Bragg has failed, on the evidence, to establish any loss whatsoever caused to him through breach by Mr Grant of the SA to the extent that the provisions of the SA imposed duties upon Mr Grant stricter than his fiduciary duties as a director. In any event, I am entirely unpersuaded that Mr Grant did anything before 20 January 2007 which could be said to be a breach of the SA or his fiduciary duties as a director. On my findings, he had no interest whatsoever in harming the Company before 20 January 2007 since he thought that he might well be continuing to carry on business through the medium of the Company if Mr Bragg did not purchase his shares. Further, it seems to me that what Mr Bragg did on 20 January 2007 was a clear repudiatory breach of the SA by excluding Mr Grant from the Company. In these circumstances, anything which Mr Grant did thereafter would, in my judgment, amount to an acceptance of that repudiatory breach preventing Mr Bragg from suing under the SA therefor. As it happens, whilst between 20 and 28 January 2008 Mr Grant may, understandably, have jumped the gun and taken certain steps to establish his competing business, anything he did which was wrongful would have been a breach of his fiduciary duties as a director. I strongly suspect that no great loss was caused to the Company thereby but, if it were, Mr Bragg has wholly failed to prove what that loss was (let alone going further and proving what his independent loss would have been under the SA if the same had continued).
73. Mr Bragg's counterclaim seems to me, therefore, to be entirely without merit and I dismiss the same.

CONCLUSIONS:

74. I therefore:-

(1) grant permission to Mr Grant to amend his Particulars of Claim to raise the February Contract;

(2) find that Mr Bragg and Mr Grant entered into the February Contract; and

(3) dismiss Mr Bragg's counterclaim.

75. I will hear further submissions, on hand down, as to the costs protection which should be granted to Mr Bragg granted the permission to amend which I have granted, and as to the appropriate form of relief granted my findings that the February Contract was entered into.