Neutral Citation Number: [2011] EWHC 1161 (Ch)
Case No: HC08C00626
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 11 May 2011

Before :

MRS JUSTICE PROUDMAN
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Between :

	FRANBAR HOLDINGS LIMITED	Claimant	
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	CASUALTY PLUS LIMITED	Defendant	

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David Matthias QC (instructed by Richard Howard & Co, solicitors) for the Claimant
Stephen Moverley Smith QC (instructed by Magwells, solicitors) for the Defendant

Hearing date: 12 April 2011
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Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

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Mrs Justice Proudman : 

1.	The issues before me arise out of the exercise of a call option by Casualty Plus Limited, the defendant, to buy the shares of Franbar Holdings Limited, the claimant, in Medicentres (UK) Limited (“the Company”).  The dispute is as to the price payable by Casualty for the shares.  
2.	Like the lion and the unicorn, the claimant and the defendant have waged war all over town.  They fell out at the end of October 2007 and the claimant commenced this action against the defendant in March 2008, alleging several breaches of a Shareholders’ Agreement made between them on 28th July 2005 (“the Agreement”).  The claimant also presented an unfair prejudice petition in relation to the company, alleging minority oppression arising out of the same facts.  The petition and the action were ordered to be heard together.  Directions for trial were given in 2008 by Mr Trower QC sitting as a Judge of this Division.
3.	On 1st April 2009 the defendant served a notice exercising the call option.   The defendant had thus elected to buy the claimant’s shares in the Company.  Under the terms of the Agreement (clause 12 and Schedule 2 para 4) the price was payable within thirty days, that is to say by the beginning of May 2009.   
4.	To some extent the proceedings were therefore overtaken by events and the trial window, fixed for 2nd to 24th July 2009, was vacated. However the parties were in further dispute about the method prescribed by Schedule 3 to the Agreement for determining the price to be paid for the claimant’s shares.  The claimant applied to amend its action to raise the issues about the price.
5.	The matter came before Master Price on 13th July 2009. He permitted the amendment, ordered two preliminary issues to be heard and accepted undertakings from the claimant. He stayed the petition until after determination of the preliminary issues.  
6.	The first preliminary issue was whether the price payable for the shares should be calculated (as the claimant alleged) by reference to the Company’s accounts for the year ended 31 December 2005 or (as the defendant alleged) by reference to the Company’s accounts for the year ended 31st December 2006.  The second preliminary issue was only to arise if the first was determined in favour of the 2005 accounts.  It was “whether the EBITDA [earnings before interest charges, taxation, depreciation and amortisation] for the year 2005 is as set out in the chairman’s statement to the 2005 accounts in the sum of £524,830.”  
7.	The question underlying this second issue was whether, as the claimant alleged, the parties had agreed the basis for the valuation of the Company or whether, as the defendant then alleged, the matter ought under the terms of the Shareholders’ Agreement (“the Agreement”) be referred for expert determination.  Para 7 of Schedule 3 to the Agreement  provides:
“If there is any disagreement about any amount that falls to be calculated under this Schedule 3 then the disagreement shall be referred to the Independent Accountant who will, acting as expert and not as arbitrator, determine such amount.  The Independent Accountant’s costs in performing this role shall be shared equally between the [claimant and the defendant].  The Independent Accountant’s decision will, in the absence of manifest error or illegality, be final and binding upon the parties to this agreement.”
Clause 13 of the Agreement provides (subject to certain requirements as to his qualifications and independence) for the Independent Accountant (“IA”) to be appointed by the claimant alone.
8.	The undertakings given to Master Price were in the following terms:
“to apply to seek to discontinue the Shareholders’ Action and the Petition in the event that the first preliminary issue ordered hereunder is decided such that the 2005 accounts of [the Company] apply to determine the price to be paid…  ”

9.	The claimant believed that the issues in the action would not need to be resolved if the shares were sold at a substantial price.  It was thought that resolution of the preliminary issues would enable the parties to resolve outstanding price issues.  The undertakings were only given in the event of the first issue being resolved in favour of the claimant, since the 2006 accounts would have resulted in an EBITDA of only £1.  However it was necessary to have both issues resolved to determine whether a binding agreement had been reached.  Without resolution of the second preliminary issue the dispute as to the option price could not be resolved.  Nevertheless, if the second issue was determined adversely to the claimant, the undertaking was still to bite.  In such an event it was believed, by the claimant at least, that the outstanding issues would be referred to the IA under the terms of the Agreement.

The hearing of the preliminary issues 
10.	The two preliminary issues came before me in April last year.  I resolved the first issue in favour of the claimant, that is to say, I found that the option price was to be determined by reference to the EBITDA set out in or determined by reference to the Company’s 2005 accounts.    The defendant unsuccessfully appealed that decision to the Court of Appeal.   
11.	However there was a problem with the second preliminary issue.  The real issue between the parties was not whether the EBITDA was the sum set out in the Chairman’s statement, but whether that sum was an agreed Adjusted EBITDA, to which the purchase price formula fell to be applied.  Indeed the sum mentioned in the 2005 accounts was expressed to be the Adjusted EBITDA.   The dispute lay in the manner of the adjustment.
12.	Mr Matthias QC for the claimant proceeded on the basis that the second preliminary issue related to an agreement as to the Adjusted EBITDA.  Mr Moverley Smith QC did not.  There was no application to amend the terms of the second preliminary issue.  I was at first minded to make a finding about whether or not there had been agreement as to the Adjusted EBITDA.  However Mr Moverley Smith persuaded me that this was not an issue which had been directed to be tried.  For the reasons I gave at the time I decided that I could and should not proceed on the basis that there had been some implied or understood amendment to the preliminary issue.  
13.	I therefore decided the second preliminary issue strictly according to its terms in favour of the defendant.  However I directed the trial of a third preliminary issue in the terms which, rightly or wrongly, I believed Master Price had intended to order.   This was as follows:
“…whether [the claimant and the defendant] reached a binding agreement as set out in the Chairman’s Statement to the 2005 accounts of [the Company], that the Adjusted EBITDA as defined in the Shareholders’ Agreement dated 28th July                                                             2005 (“the Agreement”) for [the Company] for the year 2005 and for the purposes of the option price formula in the Agreement was £524,830”
14.	If the claimant won on this issue it would result in a purchase price of some £1.18m for the shares in the company.  If the defendant won, it was contemplated (as Mr Moverley Smith expressly submitted on behalf of the defendant) that the calculation of the Adjusted EBITDA would be determined by the IA on a reference under the terms of the Agreement.
15.	My attention was not drawn at that point to the undertakings, but the obvious effect of my Order was to defer the requirement for the claimant to comply with its undertakings to discontinue until after determination of the third preliminary issue.
16.	In all the circumstances of the case I ordered an expedited hearing of the third preliminary issue and certified it as fit for vacation business.  It was contemplated that it would be heard in September 2010. However, in the events which happened, it was not.
17.	The defendant was given permission to appeal my determination of the first preliminary issue by Mummery LJ.  Accordingly, and in my view understandably, the parties did not wish to incur the costs of the further preliminary issue while there was a chance that the appeal would be successful and the third preliminary issue rendered academic.  The appeal was heard on 25th January 2011 and dismissed.  It was then contemplated that the third preliminary issue would proceed to a hearing but I understand that there were difficulties with availability of the defendant’s witnesses. 
18.	By the beginning of March 2011, the claimant was getting impatient and decided to refer the matter to an IA without prejudice to its argument that the Adjusted EBITDA had already been the subject of a binding agreement between the parties.   Mr Matthias has told me that the claimant did not want the delays inherent in a determination of the third preliminary issue, then (if the claimant won) a further appeal, and then (if the claimant failed at first instance or on appeal) a further delay while the matter was referred to the IA.  I quote from the claimant’s solicitors’ letter to the defendant’s solicitors of 11th March,
“If you are right, and we are wrong, the independent accountant will be required to determine the disagreement and it does not matter whether that determination occurs before or after the trial of the third preliminary issue, which, although it was given expedited status, has taken nearly a year to come on by reason of your client’s appeal and your client’s witness unavailability.
Our reference to the independent expert was expressly stated to be without prejudice to the third preliminary issue were our client successful in it and that is the basis on which our client has appointed the independent expert.  It is not to be inferred, and indeed cannot be inferred from that, that we have abandoned the third preliminary issue.
Please confirm whether you wish the independent accountant to receive any further documents from you…and any further comments…”
19.	However the defendant refused to engage with the reference to the IA on the basis that there could not conceptually be a without prejudice appointment.  The letter from its solicitors dated 11th March 2011 says,
“The whole point of the process is that it does indeed prejudice, i.e. it is intended to be final and binding.  
In these circumstances, if your client continues with a reference to the independent accountant without our client’s consent or agreement, we can only infer that your client has chosen to abandon its third preliminary issue.  Your client cannot have it both ways.”
20.	The claimant went ahead with the appointment and reference and Mr O’Beirne FCA, the IA, a partner in Chantry Vellacott, produced his determination of the Adjusted EBITDA on 30th March 2011. He determined the price payable for the shares subject to the option as £935,034.
21.	Although this amount is lower than the amount payable pursuant to the agreement alleged by the claimant, the claimant indicated that it was willing to abide by the determination to avoid further delays.  It therefore said that on that basis it did not wish to proceed with the third preliminary issue.  Instead it issued an application for summary judgment based on the expert determination of the IA to be heard on the day appointed for the hearing of the third preliminary issue.  That is what is now before me.
22.	Mr Matthias indicated that he wished the question raised by the third preliminary issue to be put back to trial, or at any rate until after the hearing of the summary judgment application, on which the claimant was confident of success.
23.	The skeleton arguments demonstrate that both parties came prepared to argue the question of summary judgment instead of the third preliminary issue.  Mr Moverley Smith however submitted that it was not open to the claimant to reserve the right to litigate whether the Adjusted EBITDA had been agreed and at the same time proceed to summary judgment on the IA’s report. 
24.	 His objection was made broadly on three grounds.  First, it was incumbent on the claimant to elect whether to rely on the expert determination of the IA or not.  It had elected to do so by issuing the summary judgment application and the application to amend the pleadings to raise it.   Secondly, the claimant is bound by the undertakings which it gave to the court as the price, in effect, of having an order for the preliminary issues.  Thirdly, the court had ordered the third preliminary issue and it was not open to the claimant to say, unilaterally, that it was not to be heard as such but was to be put back to a different date or to trial.   Mr Matthias however argued that the court should exercise its case management powers and apply the overriding objective by re-constituting the action in the light of events subsequent to my order, namely the delays to which the claimant has been subjected.
25.	Mr Moverley Smith initially asked me to determine as a preliminary matter the status of the allegation that the Adjusted EBITDA had been agreed.  However, as both parties came to court prepared to argue the issue of summary judgment and the defendant did not oppose the amendment of the pleading I decided that the best use of time would be to deal with that matter first.  Further submissions will be made after this judgment is handed down on whether it is still open to the claimant to litigate the subject-matter of the third preliminary issue.

Summary judgment
26.	The test for summary judgment is that the defendant has no real prospect of defending the claim: see CPR 24.2 (a) (ii).  “Real” means a case that is better than merely arguable.  However the defendant does not have to show that it is a case which is more likely than not to succeed at trial as that would be determining the issue.  If the application gives rise to a short point of law or construction the court should decide the point provided that it is satisfied that it has before it all the evidence for a proper determination and the parties have had an adequate opportunity to address the point in argument. If the case is better than merely arguable but improbable, the court may make a conditional order: see the note at CPR 24.6.6.
27.	The claimant’s contention is a simple one.  The defendant’s case as presented at the trial of the first and second preliminary issues was that there was no agreement as to the Adjusted EBITDA and that the issue should go for expert determination by the IA.  The claimant obtained the determination of the IA at an early stage so that, if it were to fail on its primary contention, the amount payable would have been determined and the claimant would not have to wait any longer.  The IA’s determination would be final and binding in that event.
28.	The defendant has three objections to the expert determination by the IA.

Final and binding
29.	The first is that an expert determination could not be made by the IA while the claimant relied on a binding agreement as to the Adjusted EBITDA.  In short, it is trite law that an expert determination is only capable of operating in accordance with the terms of the contract between the parties.  Para 7 of Schedule 3 to the Agreement requires that the determination of the IA should be final and binding.  The appointment was not final and binding because, in the claimant’s solicitors’ letter of 4th March 2011, it was to be without prejudice to the argument that there had already been a prior agreement on the issue binding on the parties.  It is said that the claimant was having it both ways in that it was putting itself in a position where it could decide whether or not to accept the determination of the IA.
30.	This raises a point of law and I can decide it at this stage.  While Mr Moverley Smith’s submission has a superficial logic it does not in my judgment bear examination. The claimant’s position was that the IA’s determination would be final and binding under the terms of the Agreement if there was anything left for expert determination.  The claimant could not ignore the determination in the event that it lost in its argument that the Adjusted EBITDA had already been agreed.  There is no approbation and reprobation, although if the claimant had won its argument that there was a prior agreement the IA’s determination would have been otiose and the defendant could not be expected to pay half the cost of the IA’s engagement.  
31.	On that basis, all the claimant was doing was bringing forward the IA’s determination so as not to have to wait indefinitely for its money.  Now that the first preliminary issue has been concluded in favour of the claimant it has been owed a substantial sum whatever the outcome of the action.
32.	In my judgment the defendant’s argument under this head fails.  Put another way, the defendant has no real prospect of success in arguing it.

Manifest error/ failure by the IA to act in accordance with his instructions
33.	According to the defendant’s primary submission as formulated in Mr Moverley Smith’s skeleton argument, the IA made two manifest errors in his determination.  The defendant’s secondary argument is that the IA went outside the scope of his authority in the determination he purported to make.
34.	However, logically the court has to consider the scope of the IA’s authority as a matter prior to the issue of manifest error.  This proposition became apparent during the course of the hearing and I think (although I may be wrong) that Mr Moverley Smith accepted it.
35.	By the Agreement, the price for the shares was to be determined through the application of a formula to the Adjusted EBITDA.  That expression was defined in Schedule 3 as,
“the EBITDA adjusted to take account of the factors in paragraphs 4, 5 and 6 of this Schedule 3.”
	  EBITDA was defined as,
“Earnings before interest charges, taxation, depreciation and amortisation as determined by GAAP as amended or updated from time to time.”
	  Earnings was defined as,
“The total profit generated by the Company in the ordinary course of business, excluding exceptional and extraordinary revenues and costs.”
Paragraphs 5 and 6 are not applicable in the events which happened.  Para 5 applied where the Company opened new premises within four months of a relevant financial year, and required the EBITDA to be increased by the amount of the cost of opening such premises.  Para 6 determined how to deal with the costs of premises operated by the company at the date of the Agreement but then re-branded as premises of the defendant. 
36.	It is common ground that only paragraph 4 was relevant to adjustment of the EBITDA.  This provides,
“A management fee for providing head office functions and services is to be charged by Casualty to the Company and deducted from the EBITDA for the relevant financial year.  Such management fee will be in respect of such periods and in such amounts as set out in the Business Plan [annexed to the Agreement].”

37.	What the IA did was this.  He had before him the Reports of the experts instructed by the claimant and the defendant, Mr Sacker and Mr Andrews respectively.  The IA noted that they had agreed that the EBITDA for 2005 was £415k, subject to an amount of £259 which both agreed was immaterial.  The IA then set out his own determination of Adjusted EBITDA.  He started with a table in which he agreed with Mr Sacker’s figure “in arriving at Adjusted EBITDA”.  He then made three crucial comments, as follows:
“5.5	The accounts for the 2005 financial year show an expense for management fees of £109, 366.  Both experts have treated this charge as an expense chargeable in arriving at Adjusted EBITDA.
5.6	The Chairman’s Statement in the 2005 accounts that the Adjusted EBITDA was £524,830 was clearly wrong in that it added back the management fee in arriving at Adjusted EBITDA, rather than deducting it.
5.7	Mr Andrews suggested in his report that on the wording of the …Agreement, the management fee should be deducted from the EBITDA a second time.  That is to say that having been charged as a deduction in arriving at EBITDA in the first place, the charge should then be further deducted from the resultant EBITDA, having the net effect of deducting the amount twice.  However, in the agreed figure for Adjusted EBITDA in the joint statement both experts agree that the management charge should be deducted once.
5.8	In my opinion there is no logic in deducting the management fee twice and in the absence of express wording to the effect that it should be deducted twice, I put this interpretation down to some imprecise drafting of paragraph 4 of Schedule 3 to the Agreement.”

38.	Mr Matthias relied on Jones v. Sherwood Computer Services plc [1992] 1 WLR 277 as laying down the general propositions applying to an expert determination under the terms of a contract.  Namely, where the parties have agreed to be bound by an expert’s report, the report could not be challenged on the ground of mistake (Jones was not a case where the contract excluded manifest error) unless the expert had departed from his instructions.
39.	As I have said, Mr Moverley Smith relied on manifest error as his first argument and departure from instructions as his second.  However, that is the wrong way round.  If there is a departure from instructions that is an end of the matter as the determination is vitiated in any event.  If however the expert acted within the scope of his instructions, his determination will only be vitiated by “manifest error”, that is to say, “oversights or blunders so obvious and obviously capable of affecting the determination as to admit of no difference of opinion”: see Veba Oil Supply & Trading GMBH v. Petrotrade Inc [2001] EWCA Civ 1832 at [33].  
40.	The first step is therefore to see what the parties have contractually agreed to remit to the expert.  Then one goes on to examine whether the expert departed from those instructions in a material respect, that is to say in a respect which the parties would reasonably have regarded as invalidating the determination.   As Dillon LJ said in Jones v. Sherwood (at 287):
“Any number of issues could arise under the various sub-paragraphs [of the contract] as to the application of the wording of those sub-paragraphs to particular facts.  All these issues are capable of being described as issues of law or mixed fact and law, in that they all involve issues as to the true meaning or application of wording in [the relevant paragraph].  I cannot read the categorical wording of paragraph 7 as meaning that the determination of the accountants or of the expert shall be conclusive, final and binding for all purposes ‘unless it involves a determination of an issue of law or mixed fact and law in which case it shall only be binding if the court agrees with it.
Accordingly, in my judgment, because Coopers did precisely what they were instructed to do, the plaintiffs cannot challenge their determination of the amount of the sales.”
41.	Again, at 290, Balcombe LJ said,
“The parties clearly intended by this clause to empower the named accountants- and in default of agreement by them, the experts- to decide all matters necessary to determine the amount of the sales, and not just to leave to them matters of mathematical calculation.  There was good reason for the parties to take this course…and therefore a speedy method of determining this figure made sound business sense.  In my judgment, therefore, Coopers did exactly what the parties had contracted they should do…”

42.	The present case was different, submitted Mr Matthias, from the situation in Veba Oil, where the expert had ignored the mandatory method specified in the contract for determining quantity.  In the present case, the IA was required to determine the amount of the Adjusted EBITDA, which was the only outstanding matter in dispute between the parties.  Paragraph 4 of Schedule 3 to the Agreement required a management fee for providing head office functions and services to be charged by the defendant to the company and deducted from the EBITDA for the relevant financial year.
43.	Mr Andrews’ report points out that the Agreement requires that the amount of the management fee must be (a) as set out in the Business Plan, and (b) deducted from the EBITDA.  However (at 3.3.6 of his report) he also points out that he cannot identify any management fees set out in the Business Plan.  He therefore performs an alternative calculation: one, of a deduction of the amount in the accounts and two, of the amount specified by the defendant in a letter of 11th June 2009 based on four captions from the schedule attached to the Business Plan.  However it appears that Mr Andrews’ final position was that the amount to be deducted was the actual amount of the management charge in the 2005 accounts.
44.	Mr Moverley Smith accepts, as he must, that the Business Plan did not in terms refer to anything as “a management fee”.   However he also says that such a fee can be extracted as a matter of interpretation of the schedule attached to the Business Plan, although he concedes that there is an issue as to the meaning of management fee for the purposes of paragraph 4 of Schedule 3 to the Agreement.  He argues first that the IA had no authority to resolve the dispute as to the meaning of Adjusted EBITDA in this regard and, secondly, that he went outside his remit in the Veba Oil sense in that he did not follow the methodology prescribed by Schedule 3 and deduct the management fee from the EBITDA.  In any event these two failings were manifest errors within para 7 of schedule 3 to the Agreement.
45.	Mr Moverley Smith goes on to argue that in this case the scope of the IA’s authority was spelt out in paragraph 7 itself.  Thus the disagreement to be resolved by the IA is “any disagreement about the amount that falls to be calculated under this Schedule”.  It follows that the authority given to the IA was to carry out the calculation of the amount, not to determine what the Agreement meant.  The defendant relies on the decision in Menolly Investments 3 Sarl v. CEREP Sarl [2009] EWHC 516.  It follows, says Mr Moverley Smith, that if the IA’s construction of the Agreement is wrong, his determination cannot be binding.  Construction is a matter for the Court, not the IA.
46.	Mr Matthias retorts that this would leave the IA with nothing but a bare arithmetical calculation, for which an expert is not required at all.  Mr Moverley Smith’s answer is that this is not necessarily the case since there could have been, but was not, a dispute under paragraphs 5 and 6 of the Schedule which would have required a determination which was within the IA’s expertise.  However he was forced to admit that on the present facts there is nothing for the IA to decide.
47.	I have a great deal of sympathy with Mr Matthias’s contention that the claimant faces a moving target as a consequence of this submission.  At the last hearing Mr Moverley Smith argued forcefully for determination of the Adjusted EBITDA, on the facts of the present case, by the IA.  When asked to explain how his present argument is consistent with his previous position, and indeed the defendant’s position right up until Mr Moverley Smith’s current skeleton argument, his response was to shrug the matter off.  He said it had not then occurred to the defendant that there was no role for the IA on the facts of this case.  
48.	I agree with Mr Moverley Smith that the authority of an expert to decide an issue is a question of interpretation of the contract in question.  The issue is whether the determination of that question of construction was, under the Agreement, a matter within the remit of the IA.
49.	Mr Moverley Smith submitted that the IA was necessarily acting outside the scope of his authority because he did not follow the instructions contained in the Agreement for adjusting the EBITDA.  First, he failed to deduct the management fee from the EBITDA as he was required to do by paragraph 4 of Schedule 3.  Secondly, the management fee had to be deducted not in the real amount expended but “in such amounts as set out in the Business Plan”.
50.	I perceive a number of possible defects in Mr Moverley Smith’s arguments.  First the IA’s remit was to calculate the Adjusted EBITDA.  The EBITDA and the Adjusted EBITDA are so closely linked as concepts that it is sophistry to say that the IA could only deduct the management fee from the EBITDA as agreed by the two experts and also set out in the IA’s table in his Report.  In arriving at the Adjusted EBITDA the IA reckoned that the management fee had to be deducted once, and it mattered not whether it fell to be deducted at the stage of calculating the EBITDA or adjusting it.  I do not agree with Mr Moverley Smith that just because the experts had agreed a sum for EBITDA (and the IA approved their calculation) that sum was written in stone for the purposes of the overall determination.  On a question from the Court both claimant and defendant accepted that GAAP rules do not require a management fee to be treated as a deduction in arriving at EBITDA.
51.	Secondly, no management fee is specified in the Business Plan.  It is only on the defendant’s say-so that “the relevant amounts” are the items with C+ set out next to them in the schedule attached to the Business Plan.  The lack of reference to a management fee is underlined by the fact that the defendant’s expert (a) relied on what he was told in the defendant’s letter of 11th June 2009 rather than solely on matter contained in the Business Plan and (b) eventually deducted the actual amount which appeared in the accounts.
52.	I find the argument that the IA has gone beyond his remit by construing the Agreement a thin one, particularly in the light of Mr Moverley Smith’s own repeated assertions at the last hearing that the adjustments to the EBITDA were a matter for the IA to decide.  I cannot help but suspect that, as Mr Matthias asserts, the moving target presented by the defendant may indeed be intended to keep the claimant out of its money for as long a period as possible.
53.	I now turn to manifest error. As I have said, manifest error is more than just patent mistake.  The test is an exacting one.  In this case the determination of the management fee and its treatment were at the heart of the dispute.  The experts themselves disagreed on the treatment of the management fee and there was an inconsistency of approach even within the defendant’s expert’s opinion.  It is therefore hard to see how it could be said that there was a blunder so obvious and obviously capable of affecting the determination as to admit of no difference of opinion.
54.	However, I cannot find that there is no real prospect of success in any of these arguments such that summary judgment ought to be granted.  I have considered whether I ought to bite the bullet and determine all the issues of construction myself, but it seems to me that this would be premature as the defendant has not had a proper opportunity of addressing the relevant issues.  For example, Mr Moverley Smith has said that there may be logic in deducting the management fee from the EBITDA, even where the management fee has already been deducted in arriving at the EBITDA, depending on the manner of calculation of the price/earnings ratio inherent in the formula for calculating the option price.  He has not addressed me on that issue. Nor has any evidence been adduced by either party which might form part of the factual matrix.  In short, I am not satisfied that I have before me all the evidence for a proper determination or that the parties have had an adequate opportunity to address the construction issues in argument.
55.	However while I believe that the defendant’s arguments pass the threshold test for summary judgment they are, in my judgment, at the lower end of the probability scale.  It is possible that the defence may succeed but improbable that it will do so.  I am therefore minded (subject of course to evidence of means) to exercise my jurisdiction under CPR 24.6.6 to order that the defendant pay a sum of money into court as a condition of pursuing its defence.    As I understand the position, the defendant has as yet paid nothing for its shares, while even on its own case a substantial sum must be due.  
56.	I am therefore minded to make a conditional order.  I will ask for further submissions as to the amounts to be paid into court and on what basis.
57.	I will also hear further argument on the issue whether the claimant must elect as to its remedies and, if not, as to whether the third preliminary issue should still be tried as such.