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

I have concluded above that the SPA was not terminated by Mr Kerr. It therefore remains on foot and can be enforced by Mr Perelman. Mr Perelman’s primary case is that he is entitled to, and seeks, an order for specific performance.

The court will generally not make an order for specific performance where damages would be an adequate remedy for the claimant. Chitty notes, at paragraph 31-018, that some cases ask whether specific performance was the most appropriate remedy in the circumstances of the case. It was noted, in a case dealing with an interim injunction:

“The standard question …, ‘Are damages an adequate remedy?’ might perhaps, in the light of the authorities in recent years, be rewritten: ‘Is it just, in all the circumstances, that a plaintiff should be confined to his remedy in damages?’”

Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349 at 379.

This was referred to by Foxton J in the context of specific performance in Gravelor Shipping Limited v GTLK M5 & GTLK M6 [2023] EWHC 131 (Comm) at paragraph 98. There, Foxton J also noted that the relevant date for assessing whether an order for specific performance should be made is the time when the remedy is sought.

Mr Perelman acknowledged that specific performance will generally not be granted in relation to shares that are readily available on the market. In such a case, damages are generally an adequate remedy. However, he contended that specific performance will be ordered where shares are not readily available. He relied upon the following passage from the judgment of Lewison J in Mills v Sportsdirect.com Retail Limited [2010] EWHC 1072 (Ch) at paragraphs 74-75:

“74.

In Lysaght v Edwards (1876) 2 Ch D 499, 506 Sir George Jessel MR said:

“It appears to me that the effect of a contract for sale has been settled for more than two centuries; certainly it was completely settled before the time of Lord Hardwicke, who speaks of the settled doctrine of the Court as to it. What is that doctrine? It is that the moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase-money, a charge or lien on the estate for the security of that purchase-money, and a right to retain possession of the estate until the purchase-money is paid, in the absence of express contract as to the time of delivering possession.”

75.

Thus the effect of the contract is that the buyer acquires the beneficial interest in the property and the seller retains a vendor’s lien. This was said in the context of a contract for the sale of land which is a species of contract that is usually specifically enforceable. However, it is common ground that the same principles apply to a contract for the sale of shares, if that contract is specifically enforceable. In general a contract for the sale of shares in a publicly quoted company will not be specifically enforceable. This is because damages will generally be an adequate remedy. From the seller’s perspective a buyer’s failure to pay sounds in money only, and thus damages will adequately compensate him. From the buyer’s perspective if the seller fails to deliver the shares, he will normally be able to go into the market and buy more shares himself, with the result that again he can be adequately compensated in damages. However, where the shares are not readily available in the market the position is different. In such a case the contract is specifically enforceable. Shares will not be readily available in the market if, for instance, the company is a private unquoted company. But even if the company is a quoted company whose shares are listed on a recognised stock exchange, a contract for the sale of shares may be specifically enforceable if the quantity of shares contracted to be sold cannot readily be acquired in the market...” (Footnote: ⁸)

Whilst the last sentence of the quotation set out above is perhaps most applicable to where the buyer of shares is seeking the order for specific performance, the position seems to me to be similar where it is the seller seeking the order where the quantity of shares the subject of the contract cannot readily be sold in the market.

As I have already noted, the market for shares in PGC is illiquid. Although they are listed on TISE, there appears to be no real market for them. The sales of PGC shares in the past 5 years have been share buybacks by the company (and, at least at the time of trial, there had not been any buyback since April 2024). The result is that an award of damages, that awards to Mr Perelman the difference between the agreed price for the shares and their current value (as I determine that to be), would leave Mr Perelman with shares whose value he cannot easily realise. In fact, it seems that his ability to realise value in the shares would be entirely in the hands of PGC, which seems to be the only potential buyer in the market.

Mr Perelman agreed, in the SPA, to sell his shares and to receive the agreed price. An award of damages would provide him with an equivalent to part of the price (if indeed the shares are worth less than the sale price that was agreed), but would leave him with a potential difficulty in recovering the balance through a sale of his shares. In most cases of an agreement to sell shares, the disappointed seller will be able to realise the value in his shares through a sale in a relatively short space of time. That is not the case here. And whether or not Mr Perelman is able to do so at all is likely something that will be in the hands of PGC and, therefore, largely in the hands of Mr Kerr, the unsuccessful party in this dispute. That would seem to be a somewhat unsatisfactory outcome.

The remedy of damages would not, therefore, be an adequate one for Mr Perelman, because with no degree of certainty could it be said that he was going to be able to realise the value in the shares, if they remained with him, via a sale (or otherwise).

Mr Perelman also contended that a reason for awarding specific performance was the difficulty in calculating damages in this case, pointing out the significant difference in the valuations provided by the two experts (being on the one hand NZ$0.06 per share, and on the other hand NZ$1.12 per share). Whilst there may be cases where the difficulty of quantifying damages might be such as to render damages an inadequate remedy (some examples are given in Chitty at paragraph 31-021), the difficulty here is not that the shares cannot be valued, or that there is no realistic way of valuing them and therefore of assessing damages, it is that the expert share valuers are so far apart in their valuations and so vehemently disagree on how to conduct the valuation. But such disputes as to valuations, conducted through expert evidence, are not unusual in this court, and the court will generally grapple with the issue and with the expert evidence that is given as best it can. This does not seem to me to be a case where the difficulty of assessing the value of the shares itself renders damages an inadequate remedy.

In his pleading, Mr Kerr suggested that there could be no order for specific performance because under the Model Code clearance for the transfer could not be given during a prohibited period. However:

I will come to the order that Mr Perelman seeks by way of specific performance, but as will be seen it is a relatively straightforward order, requiring payment on the one hand and delivery of the signed share transfer form on the other. Mr Perelman recognised that perfection of the share transfer will require a PGC directors’ resolution, but contended that did not stand in the way of an order for specific performance because:

I accept those points. Mr Kerr did not take issue with the first of those points, and in relation to the second there was no evidence or submission that PGC could or would not take the necessary steps to perfect the transfer.

Mr Kerr contended that there should be no order for specific performance because a transfer of the PGC shares is subject to the requirement set out in the Model Code, and the PGC share policy, that clearance be given, and no such clearance has been given. However:

In terms of appropriateness of the order for specific performance, I also note that this is not a case where Mr Kerr no longer wants to buy the shares, or would now only want to do so at a lower price. On the contrary, Mr Kerr said at various points throughout the trial that he did still want to buy the shares, at the price that he agreed in the SPA.

I should also emphasise that Mr Perelman is seeking an order for specific performance of the SPA; he was not bringing a claim in debt, for payment of the price. The reason why, as explained by Mr Lemer in his oral opening submissions, is that he recognises that the obligations of the buyer and the seller under the SPA are dependent: Mr Perelman has to transfer the shares in order to be entitled to the money. See the quotation from Sir Colin Rimer’s judgment in Doherty v Fannigan Holdings Limited at paragraph 123 above.In that case, Sir Colin Rimer went on to explain (at paragraph 43) that the consequence of the obligations being dependent was that, whilst the buyer (Mr Doherty) breached the contract by failing to make the £2m payment of the price, he did not thereupon become a debtor for the price; the seller could sue him for specific performance or damages, but could not sue for the price. Mr Lemer accepted that was the position here.

Mr Kerr contended that specific performance could not be granted in circumstances where, as he put it, his conduct (under the SPA) would be “subsequent to” Mr Perelman’s conduct. In other words, he said it was for Mr Perelman first to dematerialise the shares, or to sign and provide a share transfer form, and then deliver the shares “with good title” before Mr Kerr could complete. The gist of his point was that it was for Mr Perelman to perform first, and then for him to pay the price. I do not accept that. The SPA did not identify that one party’s obligations would be carried out first, followed by the other. Indeed, at other points in his submissions, Mr Kerr emphasised the need for the obligations to be performed simultaneously. They were dependent obligations.

Moreover, the fact that the SPA allowed Mr Kerr to nominate another person or entity to buy the shares does not prevent an order for specific performance. The reference to the buyer being Mr Kerr or a nominee is, on its true construction, an option for Mr Kerr to nominate another person or entity to receive the shares as buyer. The SPA, however, is clear that it is Mr Kerr that is party to the SPA, and he retains the obligation to pay the price if it is not paid on time. Moreover, given that the SPA identified a date for settlement of the transaction (being after 30 business days), and the SPA stated that the “Nominated buyer” was to the “provided prior to settlement”, that 30 business days period was the time period in which Mr Kerr was to nominate another party as the person or entity to receive the PGC shares if he wished to avail himself of his option to do so. At the expiry of those 30 days, absent such a nomination, it was his obligation to take the shares. The SPA is therefore specifically performable with Mr Kerr as the buyer of the shares. Even, however, if that analysis was wrong, and it was not correct to say that Mr Kerr had 30 business days to make any nomination, such that he retained the ability to nominate another party to whom Mr Perelman was to transfer the PGC shares, Mr Kerr’s failure to make such a nomination (or to confirm that he is making no such nomination) could not stand in the way of an order for specific performance. That would not be a condition outside the control of the contracting parties of the sort which would prevent a contract being specifically performable. Under such an analysis, Mr Kerr could still nominate another party to receive the PGC shares within the framework of an order giving directions for the specific performance of the contract.

In relation to the form of the order, Mr Lemer noted that the order for specific performance often contains two parts, an order stating that the relevant contract is to be specifically enforced, and then consequential orders designed to give effect to the order for specific performance: Hasham v Zenab [1960] AC 316 at 329. In terms of consequential orders the court may give, its powers are broad. In Gill v Tsang [2003] 7 WLUK 271 Geoffrey Vos QC (sitting as a Deputy High Court Judge) explained that:

“...The court is not limited, in working out the order for specific performance, to the strict and precise terms of the contract. The court is giving effect to an equitable remedy on equitable principles. By so doing, it is indeed enforcing and giving effect to the substantive elements of the contract, of which specific performance has been ordered.”

Mr Perelman’s primary position was that the directions the Court should make were (i) that Mr Kerr should pay the price (plus interest) by a specified date, and (ii) following receipt of that payment, Mr Perelman be required to deliver to Mr Kerr, within a specified timeframe, the relevant executed share transfer form and his PGC share certificates. Mr Perelman acknowledged that the reason for his seeking the order in that form was because he did not want to be in a position in which he was ordered to transfer the shares before Mr Kerr had paid the price.

However, Mr Perelman’s way of proceeding gives rise to a similar issue for Mr Kerr, namely that Mr Kerr would not want to pay the price before the shares had been transferred. Mr Perelman contended that he could be trusted to transfer his shares, there was no reason he would not do so, and that if he failed to do so the Court had powers of enforcement at his disposal. Of course, something similar could be said on behalf of Mr Kerr in respect of his obligations.

It seems to me that the order for specific performance should reflect the fact that the parties’ obligations are dependent on each other, and some measure of assurance of performance can be given to the party who will be performing first. I floated during the course of oral closing submissions that it might be appropriate for Mr Perelman first to complete the transfer forms, and for his solicitors (Mishcon de Reya) then to hold the transfer form and the share certificates to the order of the Court, and once Mr Perelman’s solicitors had confirmed to Mr Kerr they were holding the forms and the certificates, Mr Kerr would then pay the price to them, followed by the delivery of the form and certificates to Mr Kerr. Mr Lemer confirmed that would be an acceptable way to proceed from his client’s point of view.

Mr Kerr took no particular point on the suggestion that the forms and certificates should be held by Mishcon de Reya, however he said that if specific performance was to be ordered at all (which, in principle, he opposed) it should be an order for the PGC shares to be delivered via the CREST system. That was, he said, necessary to ensure what he called “risk-free delivery”. I do not think that is appropriate. I have already rejected Mr Kerr’s case that there was an implied term that the PGC shares had to be delivered via an electronic system. The SPA did not oblige Mr Perelman to deliver the shares via CREST and to make that part of an order for specific performance would be to impose on Mr Perelman an obligation, or a condition for his receipt of the price, that he did not agree to.

As I have noted above, Mr Perelman’s position was that Mr Kerr should pay the price identified in the SPA (of NZ$2,081,560.26) plus interest, at the rate of 14% pursuant to clause 3 of the SPA. That clause stated as follows:

“If the net proceeds are not paid in a timely manner the obligation shall remain the obligation of Kerr and shall accrue interest at an annual interest rate of 14 (fourteen percent) and all other terms of this agreement shall remain in full force and effect.”

The issue of what was meant by “in a timely manner” and whether (if the price was not paid) clause 3 had the effect that interest ran only from the time when the shares were transferred or from an earlier date was not explored in any great detail at the trial (although Mr Kerr made it clear he thought interest ought not to be paid). Interest generally (as often happens) got slightly short shrift in the parties’ written and oral closing submissions. In addition, following the circulation of this judgment in draft those acting for Mr Perelman raised some points about interest to which Mr Kerr ought to have an opportunity to respond before I make a final determination as to interest. It is therefore right that both parties should have the opportunity to consider and address the point in relation to interest under clause 3 of the SPA, along with any other matters relating to interest that are said to arise, after handing down of judgment.

I therefore anticipate making an order stating that the SPA is to be specifically enforced, and give consequential directions to the following effect (subject to the question of whether interest should be paid, which (if it is to be paid) may be incorporated into (or require modification to) these directions or dealt with separately, to be determined following further argument on the matter):

The precise form of wording in relation to these matters will have to be set out, in due course, in a draft minute of order, which will also have to include dates for the steps to be completed (on which I did not hear submissions) and any matters relating to interest (following further argument).