B e f o r e :
LORD NEUBERGER
(MASTER OF THE ROLLS)
LADY JUSTICE SMITH
and
LORD JUSTICE SULLIVAN
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Between:
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GRANT
|
Respondent
/Claimant
|
| |
- and -
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|
| |
BRAGG & ANR
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Appellant/
Defendant
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(DAR Transcript of
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Mr A Peto QC (instructed by Olswang LLP) appeared on behalf of the Appellant.
Ms H Galley (instructed by Messrs Brook Martin & Co) appeared on behalf of the Respondent.
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
Lord Neuberger:
- This is an appeal from a decision of Mr Edward Bartley Jones QC, sitting as a deputy judge of the Chancery Division, in which he determined that the enforceable contract had been entered into between the claimant, Mr Graham Grant, and the defendant, Mr Russell Bragg, for the sale by Mr Grant to Mr Bragg of his 50% shareholding in a company called Premier Resorts Limited ("the company") at a price of £346,760.
- The issue on this appeal is whether, as Mr Bragg contends as appellant, the judge was wrong to find that there was any such contract. The evidence and argument at first instance, both oral and documentary, were quite extensive, as is demonstrated by the fact that the trial lasted over four days. The issue raised on his appeal, however, involves concentrating on a relatively short period and turns on the effect of a few emails, although of course it is necessary to read them in their context.
- Mr Bragg and Mr Grant executed a shareholders' agreement in about mid-October 2003. It had been drafted by Mr Christopher Jenkins, and contained various provisions which envisaged -- one or other of the two shareholders transferring their shares to the other shareholder in certain specified circumstances, with Mr Jenkins being involved, as would appear, as an agent acting on behalf of one or the other.
- By March 2006 severe tensions had developed between Mr Grant and Mr Bragg. In that month Mr Grant fell seriously ill. While he was away from work the judge accepted his evidence that he had assisted the company's business in various ways.
- There were negotiations between Mr Bragg and Mr Grant, often, which culminated during the end of January and the beginning of February 2007, through Mr Jenkins. These negotiations involved various proposals, in particular Mr Bragg acquiring Mr Grant's shares. It is clear that Mr Jenkins, while acting as a facilitator in the negotiations, often going way beyond what an agent acting for either or even both parties might have done, was much more on Mr Bragg's side than on Mr Grant's side.
- Up to the beginning of the trial, Mr Grant's pleaded case was that there had been a concluded contract for the sale of his shares to Mr Bragg, either by exchange of correspondence between 2 and 9 January 2007 or orally on 19 January 2007. The judge rejected Mr Grant's case on both bases. However, he held that there had been a contract for the sale of the shares, which had the effect for which Mr Grant contended, through the medium of exchange of emails between 30 January and 2 February 2007. It appears that Mr Grant's case on this basis was raised only on the first day of the trial and was first pleaded on the last day of the trial by an amendment to his Particulars of Claim.
- (This was unfortunate, particularly because Mr Bragg conducted his case in person below, although he is represented by Mr Peto QC on this appeal. It is fair to add that the judge, who was not impressed by Mr Bragg in certain aspects of his conduct of the negotiations, nonetheless praised the way in which he conducted his case.)
- The negotiations during January 2007 had included a draft agreement providing for the sale of Mr Grant's shares to Mr Bragg, which had been prepared by a firm of solicitors called Dixon Ward. There had been fairly detailed discussions as to the contents of that document, which I will call the Dixon Ward draft, with each of the parties putting forward his own proposal.
- I now turn to the emails upon which the resolution of this appeal turns. On 30 January at 9.47 Mr Grant received an email from Mr Jenkins which was also copied to Mr Bragg. This email ("the first email") was headed:
"Your Resignation -- and Shares Sale THIS IS THE SITUATION AND THE LIMITD TIME"
This email, which was addressed to Mr Grant (although it was copied to Mr Bragg), began by referring to a conversation Mr Jenkins had had with Mr Grant, and then proceeded as follows:
"I therefore asked you whether you were prepared to proceed with the sale to Russell in accordance with the wording prepared by Dixon Ward (you will recall that it was the amendments to that wording suggested by your lawyers which were regarded by Russell as a rejection of his offer) -- and you said that you would come back to me on that point.
I therefore sought to make certain that Russell is still willing to proceed subject to your agreement to that wording -- and he has so confirmed.
Thus, everything hangs on your decision -- to accept the Dixon Ward wording -- or not. Please could you advise this morning, as promised? [
]
You both need to recognise that the future of the Company and the share sale transaction is dependent on the continuing support of the Company's bankers -- Coutts and Co. [
].
When I asked Ian [that is another person who I do not need to describe further] how long the Bank could live with the present level of facility, given the revealed circumstances, he replied "well, I can delay any action for today": I have persuaded him to hold back from anything until Wednesday lunchtime [that was the following day 31 January] IF I AM UNABLE to report back to Coutts on Wednesday with a satisfactory resolution to the ownership and control issue, I believe the Company is going to have a very difficult time trying to survive and it will certainly be of negligible value."
The final sentence of the first email was:
"Decision time TODAY!"
- The first email was followed by a telephone conversation between Mr Jenkins and Mr Grant which Mr Jenkins then referred to in an email ("the second email") dated 30 January 2007, sent at 17.09., which was in these terms:
"I think it was helpful to have our conversation this afternoon -- your position is much more clear, and I believe I ought to set out my understanding for the record:-
1. You are not ready to transfer your shares based upon the Dixon Ward wording unless Russell can show you his plans for the business and so give you comfort that 'the instalment will be safe'."
I interpose to say that that was because under the Dixon Ward document the payment for the shares was to be by instalments. The second email continues:
"As we discussed, I think it unlikely that Russell will be willing to show you plans
Before I take any further action, or publish these notes to anyone else, could you please confirm, deny, or correct this email memo? Please do bear in mind that time is running out!"
- Mr Grant replied the following morning, 31 January at 9.58, by email ("the third email") thanking Mr Jenkins for his second email, challenging the contents and then going on to say this:
"The reality is that you and Russell have created a position where Russell is contractually bound to purchase my shares for £346K, albeit for a company which might not have that worth
."
Mr Grant continued the third email as follows:
"1. The essence of the matter is that Russell is committed to purchase my shares and once he completes that purchase, he will be able to do with the company as he wishes"
I omit words:
"I am not in the slightest way interested in Russell's plans."
And in paragraph number 3 he repeats his contention that:
"Russell has agreed to purchase my shares for £346k and all that now remains is for him to complete, and pay up!"
- Mr Jenkins replied to that email by an email of the same date at 13.20 ("the fourth email") in which he said that he found much of what Mr Grant said to be "really quite concerning", and continued:
"If I continue to try to negotiate the sale of your shares (I understand that Russell will definitely require your signature to the Dixon Ward wording), but I am now going to require your positive instruction so to do.
I think, in view of what you have written me, I will put a time limit on this. If you wish me to continue to negotiate as your Agent on this matter, please let me have a positive instruction by four o' clock today, failing which I am going to tell both Russell and you that 'I have done my very best to fulfil the wishes set out in the Shareholders' Agreement -- but I have failed to achieve the required outcome'."
- As nothing significant happened after the fourth email until after 4.00 on that day, Mr Jenkins wrote an email ("the fifth email") to Mr Grant and Mr Bragg, at 16.42, saying:
"I have done my best to fulfil the obligations placed upon me by the Shareholders' Agreement [
]
However, the continuing failures to reach agreement between you lead me to the conclusion of such agreement is not possible. For me to act as 'Agent' on behalf of Graham (and yet in conflict with what I understand to be his wishes) seems wholly incompatible with Graham's stated objections to those terms of sale which I have been able to negotiate.
I therefore conclude that my 'best endeavours' have been exhausted, and advise you both that I am no longer willing to act for either shareholder in the matter for the sale of his shares under the terms of the Shareholders Agreement."
- Two days later, on 2 February 2007 at 16.38, Mr Grant sent an email ("the sixth email") to Mr Jenkins, copied to Mr Grant, saying that he was disappointed not to have heard from either of them:
"In respect of the completion of Russell's purchase of my shares"
He continued:
"I refer to your message of Tuesday last [the first email] in the third paragraph of which you stated on Russell's behalf that he would be prepared to proceed, subject only to my agreement to the original Dixon Ward wording. As I have advised throughout, Russell simply isn't in a position to impose such a condition as a prerequisite to the completion of an existing obligation (to purchase my shares £346k) albeit, in the interests only of clearing any impediments apart, I confirm that I am prepared to enter into that agreement in its original form, however inappropriate it might be."
- In his judgment the judge, having quoted the first and sixth emails but not the second, third, fourth or fifth emails, concluded that, when read together, they created a contract and in those circumstances he found for Mr Grant.
- Mr Bragg sought permission to appeal on two grounds: first, that the judge was wrong to grant permission to Mr Bragg to amend to plead the case which ultimately succeeded; and, secondly, that the judge was wrong to find that the first and sixth email gave rise to an enforceable contract. Jacob LJ refused permission to appeal on the first ground but granted permission to appeal on the second ground.
- What is said on behalf of Mr Bragg on this appeal is that there are three reasons why the judge was wrong to conclude that the sixth email amounted to an acceptance of the offer contained in the first email. First, it is said that in the telephone conversation which took place on 30 January, after the first email and referred to in the second and third emails, Mr Grant rejected the offer, and that it is trite law that an offer, once rejected, cannot be accepted.
The second reason is that the offer lapsed, or, as Mr Peto put it, time was of the essence of the offer, and, by the time Mr Grant purported to accept it on 2 February 2007, even if it had not been rejected, the offer was no longer available.
The third ground of attack is that the negotiations, and anything that would otherwise have been an agreement, were subject to an implied "subject-to-contract" proviso, in the sense that the Dixon Ward draft had to be signed, and it never was signed, and in those circumstances there was in law no contract.
- As often happens when one examines separate points, there is an extent to which they are inter-related, although they each appear, on the face of it, to be self-contained. This is not a case where one has clearly worded, let alone lawyer drafted, discussion or negotiation; and, particularly in the light of Mr Jenkins' involvement, it is not entirely easy to construe the emails. Nonetheless, I have reached the clear conclusion that the judge was wrong to find that there was a binding contract arising from the acceptance in the sixth email of the offer in the first email; I am bound to say that I think he went wrong by just ignoring the intermediate four emails.
- In my view, although I am not sure that my view on all three points is precisely the same as Mr Peto's, all three criticisms of the judge's conclusion are justified.
- The difficult issue about the first argument, namely that the offer was rejected, is that the alleged rejection that meant that it was no longer able to acceptance, took place in a conversation on 30 January as to which very little (if any) evidence was given. That is not Mr Bragg's fault. It was not an important conversation until the rather late amendment of Mr Grant's case to the effect that he was alleging an agreement made pursuant to the first and sixth emails.
- However, it seems to me that the discussions in the second and third emails do indicate that the offer was rejected. In the second email, Mr Jenkins records the fact that, in the conversation following the first email, which, it can be remembered, contains the offer, Mr Grant indicated that he was "not ready to transfer [his] shares based upon the Dixon Ward wording unless he could be shown plans, and that was unlikely to happen".
- As Ms Galley (for Mr Grant) says, there is a distinction between a counter-offer or a refusal, which does put an end to an offer, and a request for further information which does not amount to a new offer but is to an investigation of the offering party's position. It seems to me, in the context of the time-pressure under which it was clear Mr Jenkins was acting and was telling the parties they were both acting, that an indication by Mr Grant that he was "not ready to transfer" was a refusal of the offer, even if, as I am inclined to accept, time was technically not made of the essence on 30 January by the first email: nonetheless, it was clear that a very quick response was required.
- However, more importantly in many ways is what Mr Grant himself said in his email following a conversation, namely the third email. He made it quite clear that he was saying that there was already an agreement under which Mr Bragg was committed to purchase his shares, referring back to what became the original pleaded case, namely an agreement arising much earlier in January before the Dixon Ward draft was really being considered.
- That reading was also confirmed, as my Lord Sullivan LJ pointed out, by what he said in the sixth email in the passage beginning: "as I have advised throughout". He was saying that Mr Bragg was not entitled to impose a condition requiring him to sign the Dixon Ward draft which was, of course, an essential ingredient in the offer contained in the first email. On that basis the offer was rejected on 30 January in the afternoon and was not open for acceptance thereafter.
- Quite apart from this, it seems to me that in the fourth email Mr Jenkins was putting a clear time limit on acceptance -- effectively saying to Mr Grant "you have until 4.00 on 31 January to accept". Whether that is making time of the essence or imposing a term that the offer lapses at 4.00 on 31 January does not matter. They amount to the same thing, at least in the present context. Ms Galley says that what Mr Jenkins was saying in that fourth email was, not that the offer would lapse at 4pm on 31 January, but that he would cease to continue to negotiate, and the same point may be made about the fifth email, where Mr Jenkins did precisely what he said he was going to do in the fourth email. But as Ms Galley herself very fairly accepts and indeed relies on, these emails are not to be construed with the sort of precise detailed semantic analysis which might be appropriate for lawyers to make.
- Mr Grant and Mr Bragg were at daggers drawn. They in some way believed, and Mr Jenkins believed, that they were negotiating, through him, in the context of the shareholders' agreement to which I have referred, as Mr Jenkins mentions in the fourth and fifth emails. Furthermore, they were negotiating on any view under great pressure of time; and they were negotiating in circumstances where all the proposals, at least so far as Mr Grant was concerned, had come from Mr Jenkins. In those circumstances, when Mr Jenkins gave the warning in the fourth email, and when he in due course proceeded according to that warning in the fifth email, he was in my view not merely stepping down but making it clear that the negotiations which he had been orchestrating were at an end.
- In those circumstances it appears to me that the sixth email was too late, coming after the fifth email, and indeed after 4pm on 31 January, to operate as an acceptance of any offer that had been made.
- Finally, there is the subject-to-contract point, if I can put it that way. If one concentrates on the first email it seems to me that Ms Galley would be right in her answer to that point. What was being said was: "if you accept this offer there will be a binding contract which will extend to you being obliged to execute the Dixon Ward draft", and I accept that it would not be a subject-to-contract case; it would be a case where the parties were agreeing that their agreement would in due course be contained in the document.
- But it seems to me that, when one gets to the somewhat more exasperated fourth email from Mr Jenkins, the position rather changes. As my Lady, Smith LJ, said, the important part of that email for the purpose of this third point is in the second paragraph:
"I understand that Russell would definitely require your signature to the Dixon Ward wording."
- It seems to me that that is adding something to what had been said: it is making it clear that, in order for there to be a contract reflecting what had been the position as the judge himself accepted prior to the first email, there was to be no contract until there had been a formal signing of the Dixon Ward draft.
- As Mr Peto said, that is not inconsistent, as at one time I thought it might have been, with the extreme urgency, because the parties had the Dixon Ward document and it would have been easy for it to be executed by Mr Grant, or indeed for him to execute and send it, because by executing and putting in the post or sending he would have done all he could have done by 4 February.
- So in those circumstances, contrary to what I must admit was my initial impression, I think this third line of argument is also correct.
- In those circumstances it follows that this appeal must be allowed. Accordingly, I would allow this appeal.
Lady Justice Smith:
- I agree.
Lord Justice Sullivan:
- I also agree.
Order: Appeal allowed
