CL-2022-000025 - [2025] EWHC 2331 (Comm)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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