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

The applications concerned whether orders for security for costs should be made under CPR 25.13. The judge held that condition (g) of CPR 25.13(2) (steps taken in relation to assets making enforcement of a costs order difficult) applied in relation to Apex and, on balance, to Mr Almhairat, because Apex had received and paid away some US$16.7 million and no evidence showed it retained those funds. However, exercising the court's discretion, the judge declined to order security because the proceedings comprised rival unfair prejudice petitions and cross-claims raising largely the same issues. Ordering security against Apex would risk one-sided litigation and effectively give Global security for the costs of its own claim; for those reasons both applications for security for costs were dismissed.

Background and parties:

• Fi Call Limited was a VoIP company. Main shareholders were Apex Global Management Limited (Apex) and Global Torch Limited (Global). Apex is owned by Mr Faisal Almhairat; Global is partly owned by HRH Prince Abdulaziz bin Mishal bin Abdulaziz Al Saud and others.
• Global presented a petition under section 994 of the Companies Act 2006 alleging unfairly prejudicial conduct and seeking, among other reliefs, a buy-out or winding up. Apex presented a cross-petition under section 994 making similar allegations and seeking similar reliefs.

Procedural posture and relief sought:

• Global and Mr Ayshih applied for security for costs from the Apex Parties in the sum of £2 million. The Apex Parties cross-applied for security against Global but primarily opposed any security order.
• Vos J had earlier rationalised the proceedings so that Apex and Mr Almhairat were claimants and Global, Fi Call, Mr Ayshih and the two Princes were defendants. Norris J had ordered compliance by Prince Abdulaziz and judgment was entered against him on a money claim; an appeal was pending.

Issues for decision:

1. Whether any of the conditions in CPR 25.13(2) applied in respect of Apex and/or Mr Almhairat (the judge concentrated on condition (g): steps taken in relation to assets making enforcement difficult).
2. If a condition applied, whether it was nevertheless just, in the exercise of the court's discretion, to order security for costs.

Court's reasoning and conclusions:

• The judge inferred from the evidence that Apex had received US$16.7 million in April 2011 and had paid the money away such that it no longer held the funds; on that basis condition (g) was satisfied as to Apex. Because Mr Almhairat is Apex's sole shareholder and director and there was no clear evidence of other available assets, condition (g) was found to apply to him on balance.
• Despite finding condition (g) applicable, the judge exercised his discretion against ordering security. The consolidated proceedings comprised rival unfair prejudice petitions and counterclaims that raised essentially the same issues; ordering security would risk one-sided litigation and could amount to giving the respondent security for the costs of its own claim. The judge relied on authorities concerning cross-claims and one-sided litigation (including Crabtree) and concluded that the appropriate course was to refuse security for costs to both sides.
• Accordingly, both applications for security for costs were dismissed.

The court dismissed both applications for security for costs. Although condition (g) of CPR 25.13(2) applied to Apex and, on balance, to Mr Almhairat because Apex had paid away funds which would make enforcement difficult, the court declined in its discretion to order security because the proceedings comprised rival unfair prejudice petitions and cross-claims raising largely the same issues; an order would risk one-sided litigation and effectively provide the respondents with security for their own costs.