Apex Global Management Ltd v (Fi Call Ltd & Ors

Sections 994–996 of the Companies Act 2006 provide a wide and flexible remedy for unfair prejudice. Non-members alleged to be responsible for the conduct may be joined and, in an appropriate case, ordered to purchase shares or restore loss caused to the company. At the service-out stage, the court considers whether there is a serious issue to be tried, a good arguable jurisdictional gateway and an appropriate forum. It should not conduct a mini-trial on disputed evidence. Individuals may be necessary or proper parties where they may be personally responsible and relief against the company alone may be insufficient. Section 994 is an enactment allowing proceedings for the purposes of Practice Direction 6B, although the contract gateway issue was left undecided.

This was an interlocutory jurisdiction challenge in Apex’s petition under section 994 of the Companies Act 2006. Apex sought permission to serve the petition outside the jurisdiction on three individuals associated with Global Torch, alleging that they had participated in unfairly prejudicial conduct affecting Fi Call and the relationship between the quasi-partners.

The respondents argued that there was no serious issue to be tried, that relief could be obtained against Global Torch alone, and that the individuals were not necessary or proper parties. They also challenged reliance on the enactment and contract gateways. The central questions were whether relief under section 996 could be granted against non-members, whether the allegations met the jurisdictional threshold, and whether the individuals could properly be joined.

The applications by the third to fifth respondents were dismissed. The permissions previously granted to serve Apex’s petition out of the jurisdiction were upheld.

1. Scope of the unfair-prejudice remedy. Sections 994–996 of the Companies Act 2006 confer a wide and flexible remedy. A petition is appropriate where trust and confidence in a quasi-partnership has broken down. A non-member alleged to be responsible for the conduct may be joined and, in an appropriate case, made primarily or secondarily liable to purchase the petitioner’s shares. Relief may also require restoration or compensation for loss caused to the company. The court applied the approach in Re a Company (No. 005287 of 1985) [1986] 1 WLR 281, Gamlestaden Fastigheter AB v Baltic Partners Ltd [2008] 1 BCLC 468 and related authorities. Artificial limits should not be imposed.
2. Serious issue to be tried. The court should not conduct a mini-trial on a service-out application. The allegations were extraordinary and the transcripts and emails were disputed, but they were supported by material which, if proved, could establish misuse of company assets, improper transactions and attempts to obtain Apex’s shares without payment. That was sufficient to constitute a serious issue to be tried.
3. Necessary or proper parties. Each individual satisfied the gateway. There was a real issue against Global Torch, and each individual was alleged to have been responsible for the conduct complained of. A real practical advantage could result from joining them because the proper person liable after trial might be an individual rather than Global Torch, and relief against Global Torch alone might not be satisfied. An undertaking by one respondent did not resolve that issue.
4. Other gateways. Section 994 expressly permits a member to petition the court, while section 996 permits appropriate relief. Claims for relief against non-members were therefore claims under an enactment allowing proceedings within paragraph 3.1(20) of Practice Direction 6B. The court left open whether the contract gateway applied, since the necessary or proper party gateway was sufficient.

This was a first-instance jurisdiction decision. Earlier, registrars granted permission to serve Apex’s petition outside the jurisdiction. The judgment records that the Court of Appeal dismissed separate appeals concerning immunity and privacy, but no appeal from this decision is stated.