Mohammed Saleem Khawaja v Stela Stefanova & Ors

Summary judgment is rarely appropriate in an unfair-prejudice petition under Companies Act 2006, because the court has wide powers to fashion a remedy suited to the particular unfair prejudice. A case-management decision attracts appellate interference only where it is plainly wrong. Permission to appeal requires real prospects of success. A different judge’s factual assessment, made in a different procedural context, does not establish that the summary-judgment decision was plainly wrong. Where summary judgment is refused because a hearing is required to determine the appropriate remedy, the usual costs principle may be displaced, particularly where both parties’ litigation conduct and positions justify making no order as to costs.

The petitioner had applied for summary judgment on a petition under section 994 of the Companies Act 2006. The application had been dismissed in an earlier judgment. The court was then required to determine consequential costs and the petitioner’s application for permission to appeal.

The proposed appeal challenged findings concerning the diversion of company business, the likely remedy, alleged misappropriation of company money, interim payment, transfer of related County Court proceedings, and costs. Subsequent developments included a further section 994 petition by the first respondent and a County Court judgment refusing recusal and addressing the overlapping proceedings.

1. Costs. The successful-party principle ordinarily provides the starting point. However, the court made no order as to costs. The refusal of summary judgment was not based on a finding that the first respondent had a good defence. Rather, the breadth of the court’s powers under section 996 of the Companies Act 2006, and the need for a hearing to fashion an appropriate remedy, made the case unsuitable for summary determination. The parties’ respective positions and litigation conduct also supported departing from the usual order. (see paras [5]–[9])
2. Summary judgment in unfair-prejudice proceedings. Summary judgment is rarely appropriate in a section 994 petition where the court may fashion a range of remedies. It was not appropriate to make declarations binding the judge who would conduct the substantive hearing. An assertion that damages were the only possible remedy was rejected; the petition sought several forms of relief. (see paras [8], [13])
3. Permission to appeal. The relevant question was whether the proposed grounds had real prospects of success. Several grounds depended on overturning the central conclusions concerning summary judgment. The decision was a case-management decision involving the court’s discretion, and an appeal required a showing that it was plainly wrong. (see paras [11]–[13])
4. Application of the appellate threshold. A different judge had been persuaded that there was a diversion of business after examining the bank statements in greater detail and in a different context. That decision was not binding and the evidence before the court did not establish that the first respondent had no realistic prospect of defending the allegation. The issue required a mini-trial. (see para [14])
5. The later petition and comments concerning overlapping proceedings did not materially improve the prospects of appeal. The County Court proceedings remained stayed, and the judge who had made the initial decision was best placed to address the remedy. Permission to appeal was therefore refused. (see paras [15]–[17])

The judgment records that the court had previously dismissed the petitioner’s application for summary judgment. It then refused permission to appeal that decision. No citation for the earlier judgment is stated.