Apex Global Management Ltd and Another v Fi Call Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hildyard |
| Judgment Date | 11 November 2015 |
| Neutral Citation | [2015] EWHC 3269 (Ch) |
| Docket Number | Petition No: 10850 OF 2011 |
| Court | Chancery Division |
| Date | 11 November 2015 |
[2015] EWHC 3269 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF FI CALL LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Hildyard
Petition No: 10850 OF 2011
Matthew Collings QC and Oliver Phillips (instructed by HCLS LLP in the Petition and Set Aside Application only) for the Claimants
Justin Fenwick QC, Daniel SaoulandMichael Ryan (instructed by Mishcon de Reya) for the Defendants
Hearing dates: 26 – 30 January 2015 and 23 – 24 April 2015
These much-publicised and complex consolidated proceedings, involving cross-petitions under the Companies Act and other claims between the parties, bundled together for the purposes of their management and trial by order of Vos J (as he then was) made on 30 July 2013 (sealed on 30 September 2013, "the Vos Order"), have been bedevilled by an extraordinary litany of procedural follies and failures, first on the part of one side and then the other. These have ultimately left the court with no option but to make a series of "unless" orders culminating in default judgments, so that in the end these proceedings have imploded, with all claims except the Counterclaim having been disposed of by such judgments in default.
After all this, all that remains for resolution is:
(1) the petition and counterclaim ("the Counterclaim") brought by the Second Respondent, Global Torch Limited ("Global Torch") seeking (a) the winding-up of Fi Call Limited ("Fi Call Limited") on the just and equitable ground, and (b) an account of monies paid out of Fi Call Limited at the instance of Apex Global Management Limited (singly, "Apex") or Faisal Abdel Hafiz Almhairat (individually "Mr Almhairat" and, together with Apex, "the Apex Parties") and equitable compensation or damages, which the Apex Parties have been debarred from defending;
(2) an application ("the Set Aside application") by the Third Respondent, HRH Prince Abdulaziz Bin Mishal Bin Abdulaziz Al Saud ("Prince Abdulaziz") to set aside a judgment in default which was entered against him by Norris J on 14 October 2014 and which also debarred him from defending the cross-petition of Apex after he had failed to comply with a provision of the Vos J order requiring him personally to certify compliance with certain disclosure obligations by a Statement of Truth; and
(3) an application by Apex to resurrect its petition ("Apex's application" and "Apex's Petition" respectively) pursuant to section 994 of the Companies Act 2006 in respect of Fi Call Limited, notwithstanding an order providing for it to be struck out which I made on 18 December 2014 (sealed on 19 December 2014) after repeated failures on the part of the Apex Parties to comply with earlier orders.
Furthermore, in the event, even that Counterclaim has had to be determined unopposed and without testing of evidence and adversarial argument, since by the same order of 18 December 2014 the Apex Parties were debarred from defending the Counterclaim also.
To describe the position that has been reached as unsatisfactory is a considerable understatement. The burden on the court at every level in terms of the deployment of its resources has been prolonged and substantial: a plethora of interlocutory applications, which have travelled repeatedly to the Court of Appeal and once to the Supreme Court, attest to this. The costs to the parties have been enormous.
Further, the result of the various procedural debacles, though it has led to a shorter trial, has been greatly to increase the burden of fairly adjudicating the remaining claims. Ferris J made a similar observation in his judgment in Re Full Cup International Trading Ltd [1995] BCC 682, a case which also involved a petition which the respondents were debarred from defending. In an adversarial system, the absence of opposition, and of the elucidation brought by oral argument, makes for obvious difficulties.
That is particularly so in a case such as this. At all stages of the proceedings it has been recognised that the allegations of forgery and fraud which each side maintained against the other could only properly be resolved after full disclosure, expert evidence and cross-examination at a full trial. When there is added to this the fact that the primary relief sought in the Counterclaim, the winding-up of Fi Call Limited, has never really or plausibly been resisted, the position moves beyond being remarkable.
Nevertheless, Global Torch has pressed for adjudication; and the primary purpose of this judgment is to provide that, so far as is fair, possible and necessary to do so in the peculiar and unsatisfactory circumstances.
Since there are other matters also inextricably connected, and with a view to finality, I deal with them also.
Parties
Fi Call Limited, the company which has been the subject of cross-petitions pursuant to section 994 of the Companies Act 2006 and which Global Torch now seeks to have wound up, was incorporated in England on 23 October 2009 as a private company limited by shares.
Fi Call Limited was conceived to be a corporate vehicle for the exploitation of telecommunications technology, and in particular a system designed to be installed in smartphones and to enable users to make free calls over the internet to other users with the same software. This system was known as Voice Over Internet Protocol Application (or "VoIP App").
Fi Call Limited has a nominal capital of £300m divided into 180 million A shares of £1 each and 120 million B shares of £1 each. Apex was initially registered as the owner of the A shares and Global Torch was registered as the owner of the B shares. The Articles of Association of Fi Call Limited provided for A shares to have one vote, and for B shares to have 1.6 votes.
Fi Call Limited's Articles of Association also provide for Prince Abdulaziz to be the Chairman (removable only on death or resignation). The quorum for board meetings was a Global Torch nominee and Mr Almhairat, or Prince Abdulaziz and Mr Almhairat with Prince Abdulaziz having a casting vote. However, the only de jure directors of Fi Call Limited since its incorporation have been Mr Almhairat and Mr Emad Mahmoud Ahmed Abu-Ayshih ("Mr Abu-Ayshih", the Fourth Respondent): Prince Abdulaziz was never formally appointed as a director and never de jure became one, even though he was designated to act, and did occasionally purport to act, as Chairman at board meetings.
The shares in Fi Call Limited are no longer held only by Apex and Global Torch. They are held by additional investors, as follows:-
i) Apex holds not more than 165,800,680 A shares (55.27% of the shares and 44.57% of voting rights).
ii) Global Torch holds not more than 114,646,851 B shares (38.22% of the shares and 49.31% of voting rights).
iii) Mr Al Masoud holds at least 4,400,000 A shares and 2,933,333 B shares (2.44% of the shares and 1.99% of the voting rights). The Third to Fifth Respondents suggest that he bought a further 4.6 million A shares and 3,066,666 B shares between May and July 2010.
iv) Prince Saud holds 399,660 A shares and 266,440 B shares (0.22% of the shares and 0.18% of voting rights).
v) Prince Turki holds 399,660 A shares and 266,440 B shares (0.22% of the shares and 0.18% of voting rights).
vi) Mr Abdulrahman Al Shehri ("Mr Al Shehri") holds at least 9 million A shares and 1,886,966 B shares. Apex contends that Mr Al Shehri purchased a further 4,113,034 A shares on 29 th March 2011, and the Third to Fifth Respondents contend that he purchased an additional 4,113,034 B shares on that date instead.
Unusually, not all the registered shareholders have been joined as parties; by contrast, neither Prince Abdulaziz nor his father HRH Prince Mishal Bin Abdulaziz Al Saud ("Prince Mishal") is (or has ever been) a shareholder in Fi Call Limited and yet each is joined as a party. However, I understand that all shareholders have been notified of these proceedings.
The shares as originally allotted and purportedly issued to Apex and Global Torch were not paid for in cash, but were treated as fully paid up as follows:
(1) the A shares allotted to Apex were treated as paid up by non-cash consideration in the form of goodwill and property rights in the VoIP App (see below);
(2) the B shares allotted to Global Torch were treated as paid up by non-cash consideration in the form of goodwill and contacts which it was said Prince Abdulaziz brought in through his reputation and his ability to attract further investment.
The adequacy of that non-cash consideration appears to me uncertain; and although none of the parties has ever taken a point in this regard, it seems to me that any liquidator appointed if Fi Call Limited is wound up may wish to examine the true position.
Apex is a body corporate incorporated in the Seychelles. Apex is wholly owned and controlled by Mr Almhairat.
Global Torch is a body corporate incorporated in the British Virgin Islands. Its shares are held by Prince Abdulaziz (who owns 50% of its shares), Mr Abu-Ayshih and a Mr Yasin Sabha ("Mr Sabha", a Jordanian lawyer, who is not a party).
The Fifth Respondent, Prince Mishal, was never a shareholder or a director in Global Torch or Fi Call Limited. Global Torch and Mr Abu-Ayshih contend that Prince Mishal...
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