Share Agreement
). 2.D’s case is that no agreement for the sale and gift of his shares was ever reached in May 2016; if it was, despite the Company paying over the sum of £360,000 to D, it was subject to contract and not binding. It is also accepted that on 30 May 2016, D signed a document the form of which being commonly known by transactional lawyers as a stock transfer form.3.In due course C sought to regularise the position and complete a valid transfer of the shares pursuant to the Share Agreement. D declined to assist. D also sought to conduct himself as a continuing member of the company, going so far as to convene meetings and to seek to appoint himself as a director and change the Registered Office of C. This activity spawned an application by C to Mr Justice Leech, who on 7 September acceded to Cs request for injunctive relief to restrain the complained of behaviour of D, the essence of the order being that, “The Defendant shall not exercise, or purport to exercise, any rights or purported rights as a member, director, officer, representative, employee or agent of the Claimant until final disposal of the Part 7 Claim or other further Order of the Court.”4.Pleadings have now closed in C’s action, and also in the cross-claim issues by D. A window for trial has been intimated as March 2023. Against this backdrop, C comes to me to ask that three paragraphs of D’s Defence be struck out. If the test for a strike out is not met, C invites me to grant summary judgment in respect of the same three limbs of the Defence on the basis that D has no real prospect of successfully defending the claim on the basis of what is therein pleaded.5.I heard the application on 30 November. C and D were represented by Mr Crossley and Mr Wright, respectively, both of counsel. As I mentioned at the conclusion of the hearing, I am indebted to them both for their clear and helpful skeleton arguments delivered to me in good time prior to the hearing.The Applications6.C invites the court to strike out paragraphs 26.2, 27 and 28 of the Defence pursuant to CPR r.3.4(2)(a), because it is said that they disclose no reasonable grounds for defending C’s claim for specific performance of the Share Agreement.7.In the alternative, C asks for summary judgment against D on paragraphs 26.2, 27 and 28 of the Defence, on the ground that D has no real prospect of successfully defending the claim for specific performance by what is pleaded in those paragraphs, and there is no other compelling reason why the issues raised by those paragraphs should be disposed of at trial. The Pleading8.The paragraphs at issue provide as follows:“26.Further or alternatively, if (i) there was a concluded agreement between Mr Kennedy and the Company and (ii) Mr Kennedy is in reach of any such agreement, it is denied that the Company is entitled to specific performance of the same:…26.2 It would be unfair to Mr Kennedy to grant specific performance of the agreement. Any agreement on Mr Kennedy’s part to sell his shares to the Company at an undervalue was motivated by the goodwill felt by Mr Kennedy towards the Company which he had founded and grown, and which had had sustained success thanks to the hard work of Mr Kennedy. In circumstances set out below at paragraph 27, that goodwill has substantially dissipated thanks to the actions of the Company.”27.As set out above, Mr Kennedy left his role as CEO of the Company on good terms. Thereafter, Mr Kennedy set up a business known as Weather Factory, through which he continued his work writing and creating games. Thereafter, from around late 2017, the relationship between Mr Kennedy and the Company soured: 27.1. In December 2017, Mr Kennedy was approached for comment by the trade press on the Company having made a number of members of staff redundant, as set out at paragraph 26.1 above. Mr Kennedy stated that he was disappointed and thought the redundancies unnecessary. Mr Kennedy were contrary to assurances he had been given in May/June 2016. These comments were published and, it is to be inferred, caused the Company (or to the extent different its officers) to seek to damage Mr Kennedy’s reputation; 27.2. The professional rivalry between the Company and Weather Factory grew, in particular when in 2019 Weather Factory was nominated for two BAFTA awards and won a number of Develop Star Awards. As to the latter, while the Company was nominated in four categories but failed to win any of them;27.3. In 2019, an anonymous tweet included Mr Kennedy’s name in a list of industry figures who mistreated women, and two individuals associated with the Company (one an employee and the other a contractor) made allegations that – in broad terms – Mr Kennedy had abused his position of authority while at the Company. Without contacting Mr Kennedy, the Company posted on social media that it believed and stood by the accusations against Mr Kennedy, leading to further baseless allegations against Mr Kennedy and substantial online abuse; 27.4. Mr Kennedy responded with a lengthy post on social media setting out his position on 16 September 2019. This had the effect of reducing the abuse received by Mr Kennedy online;27.5. However on 13 September 2019, Mr Myers, a director of the Company, posted a blog entitled “About Alexis Kennedy”. The blog-post was a personal attack on Mr Kennedy, drawing on information which can only have been obtained through the Company, albeit containing a number of baseless and inaccurate accusations and statements;27.6. The Company accordingly propagated and encouraged an online hate campaign against Mr Kennedy, seemingly for reasons of personal or professional rivalry;27.7. More recently, the Company has contained to encourage or facilitate online abuse of Mr Kennedy. To Mr Kennedy’s knowledge: 27.7.1. On 15 October 2021, two of the Company’s directors re-tweeted and endorsed a post containing baseless allegations of sexual harassment and grooming against Mr Kennedy; and27.7.2. Also in or around October 2021, the Company allowed a discussion, hosted on one of its moderated online social spaces, identifying Mr Kennedy by name and speculating as to the extent to which the participants might be willing to defecate on Mr Kennedy’s corpse. Complaints to the Company about this conduct went unanswered, and the posts remained available online for a period of weeks.9.Paragraph 28 asserts that:“In the premises, the circumstances of any sale of shares by Mr Kennedy at an undervalue to the Company are entirely different from those that pertained as of the date of any agreement (which is in any event denied) in 2016. It would in the current circumstances be unfair to compel by way of an order for specific performance Mr Kennedy to sell his shares to the Company at an undervalue now.”The Law relating to the Applications10.As to the application to strike-out the paragraphs of Defence, C relies on CPR r.3.4(a) and says that the averments “disclose no reasonable grounds for bringing or defending the claim”. Reliance is placed upon CPR PD3A, para.1.6, which states that a defence may fall within CPR r.3.4(2)(a) where the “facts it sets out, while coherent, would not even if true amount in law to a defence to the claim”.11.As matters transpired before me, there was no disagreement between the parties that the approach set out by Court of Appeal in Hughes v Colin Richards & Co [2004] EWCA Civ 266, [2004] All ER (D) 172, in terms that the court must be certain that the claim (or defence) is bound to fail, was the correct one. Quite properly it seems to me, Mr Crossley supplemented his elucidation of the relevant test by adding that if the court is concerned with a legal issue in a developing area of jurisprudence, the court may conclude that the issue is best determined against the facts found at a trial in order that it is decided against actual rather than hypothetical facts. In short, Mr Crossley invited me to proceed on the basis that paragraphs 26.2, 27 and 28 are true.12.As I have already indicated, by way of a second bite at the cherry, in the alternative C asks for summary judgment pursuant to CPR r.24.2 on the basis that D has no real prospect of successfully defending the claim by what is set out in paragraphs 26.2, 27 and 28, and there is no other compelling reason why the issues raised by those paragraphs should be disposed of at a trial. 13.Again there was no disagreement before me as to the approach to the summary judgment application, my attention being invited to the well-known principles set out by Lewison J (as he then was) in