SALLY ELIZABETH JOHNSON v HOWARD DUNCAN SPOONER & Anor.

This is an expedited first-instance trial of a claim under section 125 of the Companies Act 2006 for rectification of the register and of a counterclaim that the claimant agreed to sell her share in Quay Street Ltd. The judge applied the principles of contract formation set out in RTS Flexible Systems Ltd v Molkerei Alois Muller and related authorities, in particular the approach to negotiations conducted "subject to contract" and the role of objective communication and conduct in determining whether an agreement exists.

After a detailed assessment of credibility and contemporaneous communications and documents, the court found that the claimant did agree on 2 July 2020 to sell her single share to Mr Spooner and that the agreement was varied (or, alternatively, concluded) on 8 July 2020. Key factual findings included acceptance of Mr Spooner’s account of the meetings, the presence and marking of the handwritten deal notes given to the claimant, her removal of personal items in performance of the agreed separation, and post‑meeting conduct consistent with a concluded sale. The court noted payments made and that a balance remained in solicitors’ hands.

Background and procedural posture

• This was an expedited trial of Mrs Johnson’s 17 March 2021 application under section 125 of the Companies Act 2006 for rectification of Quay Street Ltd’s register to record her as the holder of one fully paid ordinary share. The earlier order of ICCJ Jones on 12 August 2021 had restored her share subject to it being marked as "disputed"; the present trial focussed principally on Mr Spooner’s counterclaim that Mrs Johnson had agreed to sell her share.

Factual matrix

The George Hotel business was carried on by Quay Street Ltd (QSL). An informal investment agreement in early 2019 led to the issue of one share to Mrs Johnson and one to Mr Spooner. Disputes arose over alleged unpaid investment and ownership of items placed in the hotel, leading to bitter communications and litigation steps including statutory demands and a costs award.

Nature of the claim and relief sought

• The claimant sought rectification of the register. The first defendant counterclaimed that Mrs Johnson agreed to sell her share on 2 July 2020, or that a binding agreement was reached in email exchanges on 8 July 2020, or that the 8 July correspondence constituted the agreement.

Issues framed by the court

1. Whether there was a concluded sale agreement on 2 July 2020.
2. Whether any later correspondence on or about 8 July 2020 varied or constituted the binding agreement.
3. How the legal principles governing contracts made "subject to contract" and the authorities cited (notably RTS) applied to this factual matrix.
4. Credibility of the principal witnesses and the weight to be given to contemporaneous documents and communications.

Legal principles and reasoning

The court applied the objective test of agreement from RTS and related authorities, considering whether parties intended to create legal relations and whether all terms regarded as essential were agreed, while recognising that parties may intend to be bound even though some formal document is to follow. The judge emphasised that an express "subject to contract" label is important but not necessarily fatal: the court must examine conduct and communications to see if parties waived or altered that understanding.

Findings

After assessing witness credibility and documentary material, the judge accepted Mr Spooner’s account of the meetings of 2 and 4 July 2020, found that handwritten deal notes were given to and annotated by Mrs Johnson, and found that she thereafter removed personal items and that both sides acted consistently with a concluded separation agreement. The judge concluded that Mrs Johnson agreed to sell her share on 2 July 2020 and that the agreement was varied (or concluded) on 8 July 2020. The court recorded that certain sums had been paid and that the balance was held by Mr Spooner’s solicitors, and reserved determination of the precise terms of relief and arrangements for return of any remaining personal items.

Wider context: the judgment applies mainstream contract-formation principles to a commercial shareholder separation and emphasises the role of credibility, contemporaneous documents and performance in determining whether heads of agreement or handwritten notes amount to binding deals, even where parties used "subject to contract" language.

First instance: the court found that Mrs Johnson agreed to sell her single share in Quay Street Ltd to Mr Spooner at a meeting on 2 July 2020, and that the agreement was varied (or alternatively made) on 8 July 2020. The finding rested on application of the objective test in RTS and related authorities, documentary and post‑meeting conduct (including removal of personal items and subsequent communications), and credibility findings in favour of Mr Spooner. The court noted that some purchase payments have been made and that the balance remains with the first defendant’s solicitors, and directed that parties be heard on the form of relief and arrangements for any remaining personal items.