Ning & Anor v Dearing & Ors

Permission to amend a petition should be granted where the proposed allegations are properly pleadable and their plausibility or quantum depends on evidence for trial. Strike-out and reverse summary judgment are inappropriate where material facts remain disputed or an unresolved legal issue would benefit from determination on established facts.

For s.994 of the Companies Act 2006, a nominee shareholder may rely on the economic and contractual interests of the beneficial owner, while retaining its own beneficial interest in a personal claim for loss. Security for costs requires the court to assess the applicable condition and evidence separately. A mere possibility that a company may be unwilling to pay costs does not establish that it will be unable to do so.

The petitioners, shareholders in ASA Resource Group PLC, brought an unfair-prejudice petition under s.994 of the Companies Act 2006. They alleged invalid removal of directors, breaches of duty, unlawful conspiracy, loss caused by a forced sale of shares, and loss suffered by the company. They also issued an insolvency application challenging the validity of the administrators’ appointment.

The first five respondents sought permission to strike out both proceedings, reverse summary judgment, and security for costs. The petitioners sought permission to re-amend the petition. The central issues were whether the proposed claims were properly arguable, whether the alleged prejudice and loss could be resolved summarily, and whether the conditions for security for costs were established.

1. Amendment. Permission to re-amend the petition was granted. The amendments were not impermissibly late in the context of the litigation. The allegations were properly pleadable, and their plausibility depended on evidence. The mechanism of loss was adequately pleaded even though detailed quantum had not yet been particularised.
2. Strike-out and summary judgment. The petition and insolvency application were not struck out, and reverse summary judgment was refused. Whether the petitioners could have remedied the alleged prejudice by calling a general meeting, acting through RPI, or approaching the administrators involved disputed facts. The appointment of the administrators was itself challenged and required determination at trial.
3. Unfair prejudice. The petitioners retained standing under s.994 of the Companies Act 2006. A nominee shareholder could rely on the economic and contractual interests of the beneficial owner. However, the petitioners did not hold their personal claim to damages or compensation on trust for RPI. The court declined to determine provisionally the wider issues concerning prejudice after a shareholder had sold shares at a reduced price where the alleged prejudicial effect continued.
4. Security for costs. The application under CPR 25.13 was refused. As to the foreign-residence condition, the court could not quantify the additional enforcement costs relating to CIMGC in the Cayman Islands. As to the company condition, the evidence did not establish reason to believe that CIMGC would be unable to pay an adverse costs order. Alleged unwillingness to pay was insufficient without evidence of likely dissipation making payment impossible.
5. The respondents were ordered to pay the petitioners’ costs of the unsuccessful security application. The petitioners recovered 50 per cent of the costs of the strike-out and amendment applications, subject to detailed assessment. Permission to appeal was refused because the proposed appeal had no real prospect of success.