Re Fi Call

The court considered applications by the 3rd to 5th respondents to set aside permission to serve a petition under section 994 of the Companies Act 2006 out of the jurisdiction. The judge applied the established three-part test for service out (a serious issue to be tried, a good arguable case on any applicable gateway and that England and Wales is the appropriate forum) and examined whether relief under section 996 could properly be granted against non-member respondents.

The court rejected the suggestion of material non-disclosure and held that, on the material before it, there was a serious issue to be tried that the company's affairs had been conducted in a manner unfairly prejudicial to the petitioner (section 994) and that, if proved, relief under section 996 could and should in principle be granted against one or more of the 3rd–5th respondents. The Practice Direction 6B 'necessary or proper party' gateway (paragraph 3.1 Ground 3) was satisfied so as to permit service out on the Princes and Mr Ayshih. The order permitting service out was therefore upheld.

Background and parties: Apex Global Management Limited (the petitioner), a Seychelles company controlled by Mr Almhairat, brought a petition under section 994 of the Companies Act 2006 against Fi Call Limited, Global Torch Limited and certain individuals (the Princes and Mr Ayshih). Apex alleged unfairly prejudicial conduct including misuse of company funds, involvement in unlawful money‑laundering transactions and coercive conduct to obtain Apex's shares. Global Torch is a BVI company whose shares are held by the Princes and by Mr Ayshih.

Procedural posture: Apex presented its section 994 petition on 12 December 2011 and obtained permission from registrars to serve the petition out of the jurisdiction. The 3rd–5th respondents applied to set that permission aside on grounds of want of jurisdiction, that the court should not exercise jurisdiction, and alleged material non‑disclosure. The hearing before Vos J addressed whether the individuals could properly be joined and served out of the jurisdiction.

• Nature of the claim: An unfair prejudice petition under section 994 seeking relief under section 996 (including a share purchase order and compensation) arising out of alleged breaches of statutory duties, alleged use of company monies for improper/unlawful purposes and alleged threats and extortion aimed at acquiring Apex's shares.
• Issues framed by the court: (i) whether relief under section 996 could be granted against the 3rd–5th respondents if Apex's facts were established; (ii) whether there was a serious issue to be tried under section 994; (iii) whether each individual was a necessary or proper party for the purposes of PD6B paragraph 3.1 Ground 3; (iv) whether the claims could be brought under an enactment (Ground 20); and (v) whether the contract gateway (Ground 6) applied.
• Court’s reasoning and conclusion: The judge concluded that material non‑disclosure was not established. Authorities show that section 994/996 provide a broad, flexible remedy and that non‑members may be joined where they are sufficiently connected to the unfairly prejudicial conduct. It was possible, if the pleaded facts were proved, for relief (including orders to restore sums or to purchase shares) to be made against the individuals. The alleged transactions (notably the US$5m bankers’ draft and the Nairobi-related payments) and the disputed transcripts/emails raised a serious issue to be tried. The 'necessary or proper party' gateway was satisfied because there was a real issue between Apex and Global Torch which it was reasonable to try and Apex wished to serve the individuals who were alleged to be responsible; accordingly the registrar's permission to serve out was upheld. The judge did not finally determine merits or valuation issues; he emphasised that trial and disclosure were necessary to resolve factual disputes.

Wider observations: The judge reiterated the need for proportionate conduct of jurisdictional hearings and that complaints of unfair prejudice should not be truncated by artificial limitations on relief against non-members where the statutory regime contemplates flexible remedies.

The applications of the 3rd to 5th Respondents to set aside permission to serve the section 994 petition out of the jurisdiction were dismissed. The court held that, as a matter of law, if the facts alleged were proved relief under section 996 could be granted against one or more of those respondents; there was a serious issue to be tried under section 994; and the 'necessary or proper party' gateway in PD 6B paragraph 3.1 was satisfied, so service out on them should stand. The court therefore upheld the registrars' orders permitting service out and declined to disturb them.

Proceedings began with Apex's petition issued 12 December 2011. Permission to serve out was granted on paper by Mrs Registrar Barber (14 February 2012) and by Mr Registrar Baister (24 February 2012). The 3rd–5th respondents applied to set aside; interlocutory applications concerning privacy were heard by Morgan J (who refused privacy applications in judgment of 13 February 2013). Vos J heard the jurisdiction challenge; on 19 March 2013 Vos J refused the Princes' sovereign immunity application. The Princes appealed and the Court of Appeal dismissed their appeals against the immunity and privacy rulings in May 2013 (dates recorded in the judgment: 15 and 16 May 2013). This judgment (Vos J) determined the interlocutory jurisdictional challenges and upheld the registrar's permission to serve out.