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

It was headed “Share Purchase Agreement” rather than “heads of terms” or “term sheet.”

The opening words were of agreement (“hereby agrees …”).

It set out clearly the basic terms of the agreement, namely the purchase of a specific number of shares in a named company at a specific price; it identified a “Trade date” and time for settlement of the trade.

The “Trade date” was identified as 18 June 2021, the date upon which the parties had intended to execute the SPA (though in the end they executed it on the following day). There would have been no reason to include this if the SPA had not been intended to be binding and the true intention was that a binding agreement would be entered into on a later date. Moreover, the fact that the “Trade Date” was the same as the date on which the parties intended to execute the SPA, indicates that the parties intended the SPA to be immediately effective.

The third of the “Additional terms” referred expressly to the payment “obligation”, and noted that if the payment was not made, “all other terms of this agreement shall remain in full force and effect”, suggesting it was the intention that the terms of the SPA would indeed have legal force and effect.

There was a formality to the document, including formal signature blocks, redolent of an agreement intended to be legally binding.

There was no language in the SPA stating that it was not, or was not intended to be, binding. There was, for example, nothing saying “subject to contract” or otherwise suggesting that legal enforceability was dependent upon a further formal agreement being drawn up and executed.

On 18 June 2021, in response to a message from Mr Perelman saying he wanted there to be no way to close one agreement but not the other, Mr Kerr said by WhatsApp:

“Well, I am the name on each obligation – so as soon as signed you have a locked up desk [deal] (Footnote: ⁴) with a real counterparty and egregious late payment terms!”

Both parties clearly saw the signing of the documents as an act which would legally bind them. There was co-ordination in advance to ensure that both parties would sign both agreements (and not just one of them). For example, on 16 June 2021, Mr Kerr had confirmed to Mr Perelman “I will sign both based on your text undertaking to sign”, which would not have been necessary if the agreements were not going to be legally binding. Similarly, when Mr Kerr had signed the ROFR he emailed it to Mr Perelman on 19 June 2021 stating: “This is provided strictly [on] the basis that the share purchases [sic] agreement made on this date is executed and sent back to myself. Unless both agreements have been signed by both parties then this agreement falls away.”And on 19 June 2021, as Mr Perelman was signing the agreements, he noted that the documents were dated 18 June, even though they were being signed on 19 June, and messaged Mr Kerr asking whether they could agree that the date of execution was 19 June without having to redraft the documents, and that he would send both documents signed once Mr Kerr had so confirmed. Again, this suggests the execution of the documents was seen as a formal process with legal consequences.

It is right that there were a small number of references to a “term sheet” in a couple of the exchanges before draft documents were circulated. On 7 April 2021, Mr Perelman messaged Mr Kerr saying:

“Let’s at least get a term sheet going so we can move to something concrete … otherwise never going to happen.”

There was no discussion between Mr Kerr and Mr Perelman of the matters now relied on in this respect (i.e. the rules of the Model Code or PGS’s share trading policy, or any similar matters) either before the SPA was entered into or in the period immediately after the SPA had been signed when they were discussing the logistics of settlement. Nor was there any discussion about PGC’s balance date, the date when PGC’s accounts might be published or information that Mr Kerr might come to possess which would constitute inside information triggering a prohibited period. Mr Kerr did not suggest at that stage that he was constrained by any rule from acquiring the PGC shares in the period required by the SPA. Rather, he conducted himself during July on the basis that he would be acquiring the shares on or around the date identified in the SPA (see for example his email to JP Morgan dated 29 July 2021 referred to above). There is nothing to suggest that Mr Kerr had any such restriction in mind when he agreed the SPA.

Mr Perelman was not aware of the details of the rules of the Model Code as they applied to PGC or of PGC’s share trading policy, and was not aware that any such rules affected the SPA. He gave clear evidence to that effect in his witness statement, and no contrary suggestion was made to him in cross-examination. Given Mr Perelman’s lack of knowledge, and the fact that there was no mention or discussion of any restrictions on Mr Kerr’s ability to purchase the shares between the two men, it is difficult to see how this issue could have any material bearing on the parties’ intentions to create legal relations.

More broadly, the existence of the Model Code was not an obstacle to the parties reaching the agreement that they did in the SPA. Even if Mr Kerr is correct in his (and his expert’s) interpretation of the operation of the Model Code, the consequence would be that the transaction might breach the Model Code (depending on when certain dates fell, when completion took place, and whether Mr Kerr nominated another entity to be the purchaser (and if so, who)), not that it could not take place. Or, Mr Kerr might refuse to complete rather than there be a breach of the Model Code, in which case he would be liable for breach of contract. But neither of those outcomes suggests that the parties could not come to the agreement that they did in the SPA. In any event, as I say above, there is no evidence that either Mr Kerr or Mr Perelman had any aspect of the Model Code or any restriction on trading in PGC shares in mind when negotiating and agreeing the SPA.

(In any event, as I set out towards the end of this judgment, in the circumstances of this case the Model Code did not, in fact, prevent completion of the SPA because, in respect of the SPA, the date of dealing was the date the SPA was entered into, not a later date on which it might have completed.)