Apex Global Management Ltd & Anor v FI Call Ltd & Ors

Security for costs is discretionary, even where a condition in CPR 25.13(2) is satisfied. Where opposing claims arise from substantially the same issues, the court should consider whether security would produce one-sided litigation or effectively secure the costs of the defendant’s own claim. A cross-claim does not automatically preclude security, but security may be refused where the claims cannot satisfactorily be disentangled and the applicant’s costs are equally referable to pursuing its own claim. A person named as a claimant may nevertheless be treated as a nominal claimant where, in substance, that person advances no independent claim; security then requires compliance with CPR 25.14.

The proceedings comprised cross-petitions under section 994 of the Companies Act 2006 concerning the affairs of Fi Call Limited. The Global Parties sought £2 million security for costs from Apex Global Management Limited and Faisal Almhairat. Apex and Mr Almhairat made a cross-application against Global.

The applications raised whether the conditions in CPR 25.13(2) were met, whether Mr Almhairat was in substance only a nominal claimant, and whether the existence of overlapping claims made security unjust.

1. Both applications for security for costs were dismissed.

2. Condition (g) in CPR 25.13(2) requires: (i) steps taken by the claimant; (ii) steps taken in relation to the claimant’s assets; and (iii) steps which would make enforcement of a costs order difficult. The court inferred that Apex had paid away substantial funds and held that condition (g) applied to Apex. It also applied the condition to Mr Almhairat because, as Apex’s sole shareholder and director, he appeared to have caused Apex to part with the money, thereby affecting the enforceability of a costs order against his shares.

3. Mr Almhairat no longer advanced a claim in his own right. Although he remained a named claimant, he was not a claimant in a real sense. An order against him therefore required the conditions in CPR 25.14(2), which were not established.

4. The existence of cross-claims required an assessment of substance rather than pleading form. The principles in B J Crabtree (Insulation) Ltd v GPT Communication Systems Ltd supported refusing security where the rival claims raised essentially the same issues, the claimant’s case would otherwise be pursued defensively with one hand tied behind its back, and the defendant’s costs were equally referable to its own claim. The allegations in the Apex petition were relevant to the Global petition and could not satisfactorily be disentangled.

5. The court distinguished the arbitration context of Samuel J. Cohl Co v Eastern Mediterranean Maritime Ltd (The “Silver Fir”). The appropriate order was no order for security, rather than security from both sides.