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

There is no doubt that transfer of ownership of the PGC shares could be achieved by a paper transfer. That was accepted by BCLP, when they were on the record for Mr Kerr, (Footnote: ⁶) and at least at some points when giving his oral evidence Mr Kerr accepted it. (Footnote: ⁷) Moreover, PGC’s registrar, Link, made it clear to Mr Perelman that the shares could be transferred through paper transfer – in an email to Mr Perelman on 3 August 2021, Mr Hand of Link stated that “A transfer form and the certificate are all we need to transfer the shares.” Consistently, the share certificates held by Mr Perelman stated in the bottom right hand corner: “Any change in the ownership of the above (either in total or in part) will be registered only if both the transfer and this certificate are lodged with the Company’s Registrar.” Indeed, as Mr Kerr knew, Mr Perelman had obtained his PGC shares in the first place through a paper transfer from Baker Street, and continued to hold his shares by way of paper share certificates – e.g. Mr Perelman messaged him on 10 June 2021 confirming “My stock held in 2 certificates” and asking if Mr Kerr needed the certificate numbers, then the same day sent images of his share certificates to Mr Kerr.

However, at the trial Mr Kerr contended that transferring shares by way of paper transfer did not constitute the giving of “good title” to the shares. What I understood him to mean by this was not that good title to the shares could not be transferred through a paper transfer (and, as set out above, BCLP, when they were on the record for Mr Kerr, had accepted that ownership of the shares could be transferred through a paper transfer), but rather that a paper transfer gave the transferee less assurance (or, as Mr Kerr put it from time to time, “security”) that they were getting good title to the shares. In a paper transfer, his point was, for example, that the transferee was at higher risk of fraud on the part of the transferor having already sold the shares to someone else.

There may well be advantages in a transfer of shares taking place electronically, rather than by way of paper transfer, and they may include those identified by Mr Kerr. Of course, given his position in PGC, Mr Kerr was in a position to check the share register to confirm that Mr Perelman remained a shareholder in PGC, diminishing the potential risk of fraud that he referred to. It may well be, as Mr Kerr also said, that it is more convenient for other reasons for share transfers to take place electronically, for example in a sale when the parties are looking to exchange the shares for an electronic funds transfer and they are looking for security of performance on the part of each other.

However, even if what Mr Kerr said in this respect were correct, it would not mean that it was necessary that the shares be transferred electronically. The SPA works without the alleged implied term – it is possible to transfer PGC’s shares through a paper transfer – and it is not necessary to imply the term to give the contract business efficacy. The SPA does not lack commercial or practical coherence without the alleged term. Also, the alleged term is not so obvious that it goes without saying. The authorities emphasise that the concept of necessity is not to be watered down. The alleged implied term does not meet the relevant test.

Mr Kerr’s alternative basis for the implication of the term, on the basis of custom and usage, also fails. Such a term may be implied where the usage or custom is “invariable, certain and notorious”. There was no evidence that the alleged term had any of those characteristics. Evidence given by Mr Kerr and Mr Naylor to the general effect that, in their experience, electronic transfers are usual is insufficient for this purpose.

Mr Kerr also advanced a case at trial based upon rule 1.4.6 of the Listing Rules of TISE, which states as follows:

“If it is proposed that an issuer’s security be deposited in a clearing and settlement system, such settlement system must be disclosed in the Listing Document and be acceptable to the Authority. Alternatively, if the securities are not to be settled through a settlement system, disclosure as to how the securities will be settled must be disclosed in the Listing Document.”

Mr Kerr said that this required an issuer to nominate a platform for exchange, that PGC nominated CREST in its issuing document, and that CREST was therefore the “default mechanism” for settlement. This was not a point that had been pleaded or otherwise previously advanced, and there are a number of problems with it:

I should also add that, after the trial had finished, Mr Kerr sought to rely on some additional material, by way of a government report published in July 2025, that related to this point. The report was the Final Report of the Digitisation Taskforce, which was published on 15 July 2025. Mr Kerr sent this report to the Court on 31 July 2025, along with some additional submissions, and the parties then engaged in a further exchange of submissions about the report and its relevance. The nature of the report appears from the start of its introduction, written by its Chair, Sir Douglas Flint:

“The Digitisation Taskforce was established with two main aims - to drive forward the full digitisation of the UK shareholding framework by eliminating the use of paper share certificates, and to improve the UK’s intermediated system of share ownership. These are important goals which will help UK capital markets become more modern, efficient and transparent, while improving the service that shareholders receive. We published an interim report in July 2023 with some initial proposals and received strong engagement from a wide range of stakeholders on these. … ”

The report goes on to explains that the UK should take the necessary steps to implement digitisation across the market, and sets out the proposals of the Digitisation Taskforce as to what the steps should be and what process should be followed to deliver them. Among other things, it recorded almost “universal support” from those who had provided views for “the removal of paper shares and paper processing for trading, settlement and record keeping”.

Mr Kerr contended that the report supported his case that “settlement via CREST was mandatory as a matter of industry standard, and that settlement by paper certificate was neither viable nor compliant.” In fact, the report did not do so:

The report does not, therefore, provide a basis for the implication of the Electronic Settlement Term contended for by Mr Kerr. It does not suggest paper transfers could not be effected for PGC’s shares (indeed, as I have set out, it was common ground between the parties that a paper transfer of shares in a Guernsey company is possible). Nor does it establish or support a contention that there was a custom in the market for shares in Guernsey companies (or even for shares in UK companies), which was “invariable, certain and notorious”, that shares were to be transferred via electronic means.