Grant v Bragg

The Court addressed whether a concluded contract existed for the sale by Mr Grant of his entire 50% shareholding in Premier Resorts Limited to Mr Bragg at a price ultimately calculated at £346,760. The court analysed the Shareholders' Agreement, the role and conduct of the company secretary (Mr Jenkins) as agent, and a series of communications in January 2007.

The judge rejected that a binding contract arose from (a) the letter of 2 January 2007 and the reply of 9 January 2007, and (b) the short conversation in the taxi on 19 January 2007, on the grounds that those communications were statements of intention or invitations to treat and left essential formalities and terms open. Instead the court found that an offer was made by Mr Bragg through Mr Jenkins' 30 January 2007 e-mail and was accepted by Mr Grant's e-mail of 2 February 2007, thereby creating a binding contract (the "February Contract") to sell the shares on the terms of the Dixon Ward draft agreement (price £346,760 payable in eight instalments).

The court also dismissed Mr Bragg's counterclaim for breach of the Shareholders' Agreement for failing to prove loss distinct from loss to the company and because Mr Bragg had repudiated the SA by excluding Mr Grant from company affairs.

Background and parties: The dispute concerned a quasi-partnership company, Premier Resorts Limited, held equally by Mr Graeme Grant and Mr Russell Bragg. Mr Grant alleged that Mr Bragg had agreed to buy his 50% shareholding in January/February 2007 at a price derived under the Shareholders' Agreement (SA). Mr Bragg denied that any contract had been concluded and counterclaimed for breach of the SA.

Nature of the claim and relief sought: Mr Grant sought to enforce a sale contract for his shares; Mr Bragg counterclaimed for damages for alleged breach of the SA.

Procedural posture: First instance trial before Edward Bartley Jones Q.C.; the Company ceased to participate (entered administration) and the company counterclaim was dropped. The trial heard oral evidence and documentary communications from late October 2008.

Issues framed:

• Whether a binding contract for sale of the shares was formed and, if so, when and on what terms.
• Whether the Shareholders' Agreement had been triggered, the scope of Mr Jenkins' agency, and whether the SA or fiduciary duties gave rise to recoverable loss for Mr Bragg.

Court's analysis and reasoning: The judge examined the SA and identified ambiguities (triggering of long-term sickness provisions, scope of Mr Jenkins' authority, and the intended mechanics of sale). The court analysed the sequence of communications:

• The 2 January 2007 letter from solicitors acting for the company was treated objectively as an invitation to treat rather than an irrevocable offer by Mr Bragg.
• The 9 January 2007 letter from Mr Grant did not amount to unequivocal acceptance because both parties continued to treat the detailed sale terms as open and expected formal documentation.
• The short taxi conversation on 19 January 2007 was held to be a firm statement of intent but insufficiently detailed and too informal to constitute a contract.
• The e-mail of 30 January 2007 from Mr Jenkins (with Mr Bragg's authority) was treated as an offer to proceed on the Dixon Ward draft terms; Mr Grant's e-mail of 2 February 2007 accepted those terms, creating the "February Contract". The court applied an objective test of agreement and commercial common sense to conclude the parties intended to be bound despite the absence of immediate formal execution of the draft document.

The court allowed a late amendment to the Particulars of Claim to plead the February Contract, because no prejudice arose to Mr Bragg and to avoid denying enforcement of a contract found to exist. The counterclaim was dismissed: Mr Bragg failed to prove separate loss recoverable under the SA and had effectively repudiated the SA by excluding Mr Grant, preventing recovery.

Other findings: The court criticised Mr Jenkins' conduct and partiality in advising and acting without properly observing agency duties, and noted practical shortcomings and ambiguities in the SA. The judge observed the remedy sought was not an unfair prejudice order but a straight contract enforcement claim.

The court granted permission to amend the Particulars of Claim to rely upon the February Contract; found that a binding contract (the February Contract) was formed by the e-mail of 30 January 2007 (offer through Mr Jenkins with Mr Bragg's authority) and Mr Grant's acceptance of 2 February 2007, for the sale of Mr Grant's 50% shareholding at £346,760 on the Dixon Ward draft terms; and dismissed Mr Bragg's counterclaim for breach of the Shareholders' Agreement. The rationale was an objective analysis of the parties' communications and commercial reality: earlier communications were invitations to treat or statements of intent, whereas the 30 January/2 February exchange evidenced an offer and acceptance leaving no essential term outstanding.