Apex Global Management Ltd and Another (Claimants/Petitioners) v Fi Call Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 19 March 2014 |
| Neutral Citation | [2014] EWHC 779 (Ch) |
| Docket Number | Case No: 10850 of 2011 |
| Court | Chancery Division |
| Date | 19 March 2014 |
[2014] EWHC 779 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Justice Newey
Case No: 10850 of 2011
In the Matter of Fi Call Limited and in the Matter of the Companies Act 2006
Mr Justin Fenwick QC and Mr Daniel Saoul (instructed by Irwin Mitchell LLP) for the Second and Fourth Defendants/Respondents
Mr Daniel Lightman and Miss Emma Hargreaves (instructed by Howard Kennedy Fsi LLP) for the Claimants/Petitioners
Hearing dates: 12 and 13 February 2014
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.
The question raised by the applications with which I am now concerned is whether orders for security for costs should be made.
Some procedural history
The proceedings concern a company called Fi Call Limited ("Fi Call"), which was set up to provide "VoIP" (or "Voice over the Internet Protocol") telephony services. Fi Call's main shareholders are the first claimant, Apex Global Management Limited ("Apex"), and the second defendant, Global Torch Limited ("Global"). Apex is itself owned by the second claimant, Mr Faisal Almhairat, who is a Jordanian national. As for Global, 50% of its shares are held by HRH Prince Abdulaziz bin Mishal bin Abdulaziz Al Saud ("Prince Abdulaziz"), a member of the Saudi royal family. The remainder of Global's shares are registered in the names of the fourth defendant, Mr Emad Abu Ayshih, who is Prince Abdulaziz's private adviser, and a Mr Yasin Sabha, who is a Jordanian lawyer.
On 2 December 2011, Global presented a petition to which the respondents were Apex, Mr Almhairat and Fi Call. Global sought relief under section 994 of the Companies Act 2006 on the basis that Fi Call's affairs had been conducted in an unfairly prejudicial manner. In the alternative, it asked for an order that Fi Call be wound up. The relief claimed under section 994 included an order for one or other of the respondents to buy Global's shares in Fi Call.
Within a fortnight, Apex had presented a petition of its own. The respondents to this petition were Fi Call, Global, Prince Abdulaziz, Mr Ayshih and Prince Abdulaziz's father, HRH Prince Mishal bin Abdulaziz Al Saud ("Prince Mishal"). Like Global, Apex alleged unfairly prejudicial conduct and claimed relief under section 994 of the Companies Act 2006. In particular, it sought an order requiring one or more of the respondents to purchase its shares in Fi Call.
The procedural position was complicated further when Apex and Mr Almhairat ("the Apex Parties") served points of defence to the Global petition. The document included both a counterclaim and additional claims against Prince Abdulaziz and Mr Ayshih.
Vos J took steps to rationalise the litigation in the middle of last year. He concluded that the Apex Parties should serve amended points of claim reflecting both (a) the petition Apex had presented and (b) the counterclaim and additional claims asserted in the proceedings brought by Global. Global, Prince Abdulaziz and Mr Ayshih were then to serve a single defence which could also include a counterclaim against the Apex Parties. Vos J further provided for the Apex Parties to serve a reply and defence to counterclaim and for Global to serve a reply to defence to counterclaim. The Apex Parties were to be treated as the claimants (or petitioners) and Fi Call, Global, Mr Ayshih and the two Princes as the defendants (or respondents).
Vos J also ordered Prince Abdulaziz to provide a statement containing certain information. The statement was to be verified by the Prince personally. What in the event happened was that a personal assistant made a witness statement in which he said that a royal conduct protocol precluded the Prince from making statements in litigation himself. In September 2013, Norris J ordered that Prince Abdulaziz should be debarred from defending unless he complied with what Vos J had ordered, and, when the Prince still did not do so, judgment was entered against the Prince on a money claim made by Apex. As things stand, therefore, Prince Abdulaziz has been ordered to pay $5,984,000 plus interest to Apex. An appeal is, however, due to be heard by the Court of Appeal in May of this year.
The trial of the proceedings was at one stage going to begin last month, but it is now due to start on 27 October of this year, with a time estimate of five weeks.
Prince Mishal has not taken any active part in the proceedings since June of last year.
The present applications
Global and Mr Ayshih ("the Global Parties") ask that the Apex Parties be ordered to provide security for costs in the sum of £2 million. The Apex Parties have made a cross-application for security for costs against Global, but their primary position is that none of the parties to the proceedings should be required to give security. In contrast, the Global Parties' position is essentially that there should be security from both sides: they maintain that an order for security should be made against the Apex Parties and say that, if it is, they would be happy to furnish security themselves.
CPR Part 25
CPR 25.13 empowers the Court to make an order for security for costs where it is satisfied that it is just to do so and one or more of the conditions set out in CPR 25.13(2) applies.
The conditions listed in CPR 25.13(2) include these:
"(a) the claimant is—
(i) resident out of the jurisdiction; but
(ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982;
…
(c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so;
(d) the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation;
…
(g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him."
Application of the conditions in the present case
Mr Justin Fenwick QC, who appeared with Mr Daniel Saoul for the Global Parties, relied on a number of the conditions set out in CPR 25.13(2). In relation to Apex, conditions (a), (c) and (g) were all said to be satisfied. As regards Mr Almhairat, the Global Parties invoked conditions (a), (d) and (g).
I can concentrate, I think, on condition (g). As Park J noted in Chandler v Brown [2001] CP Rep 103 (at paragraph 17), three requirements emerge from the wording of the condition:
"(1) the claimant must have 'taken steps'; (2) the steps must have been taken in relation to his assets; (3) the steps must be steps which would make it difficult to enforce an order for costs against him."
A defendant "is not required to show that the steps were taken with the specific intention of defeating enforcement ( Aoun v Bahri [2002] EWHC 29 (Comm); [2002] 3 All E.R. 182) or that those steps were taken during the litigation or in contemplation of it ( Harris v Wallis, [2006] EWHC 630 (Ch); The Times, May 12, 2006)" (see the White Book, at paragraph 25.13.18).
In the present case, Apex received a payment of some $16.7 million in April 2011. There is an issue between the parties as to whether part of this sum should have been paid on to Global, but it is common ground that Apex was entitled to keep upwards of $10 million for itself. It appears, however, that Apex no longer holds any of this money. In a letter dated 13 May 2013, the Apex Parties' solicitors stated that Apex's assets comprised its claims in these proceedings, its shareholding in Fi Call and a 60% shareholding in a Seychelles company also called Fi Call Limited. There was no mention of Apex still having all or any of the $16.7 million, and it was explained that Apex's legal costs were being met by Mr Almhairat. Further, there is nothing in the evidence put in on the Apex Parties' behalf for the present applications to suggest that Apex now has any of the $16.7 million. In the circumstances, I agree with Mr Fenwick that the evidence indicates that Apex has taken steps in relation to its assets that would make it difficult to enforce an order for costs against it. It can be inferred that, for whatever reason, Apex has paid away the $16.7 million, including the $10 million to which it was entitled even on the Global Parties' case, and that that would make it difficult to enforce an order for costs against it. In the course of submissions, Mr Daniel Lightman, who appeared with Miss Emma Hargreaves for the Apex Parties, accepted that it was open to me to draw this inference, and I do so. In the circumstances, I am satisfied that condition (g) applies as regards Apex.
On balance, I also consider condition (g) to apply in relation to Mr Almhairat. Since Mr Almhairat is Apex's only shareholder and director, he must be responsible for the fact that the company has paid away the $16.7 million. Had Apex retained the money, the Global Parties could have been expected to be well-placed to enforce against Mr Almhairat's shares any costs order that they might obtain against him. The position has, however, changed as a result of the steps that Mr Almhairat would appear to have taken to cause Apex to part with...
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