Koza Altin İşletmeleri AŞ v Koza Ltd & Anor

On summary judgment, the court may determine a legal or discretionary issue where the underlying facts are sufficiently established, but it must withhold final relief if fuller evidence may affect the exercise of discretion. The “just and equitable” winding-up jurisdiction is broad and is not confined to recognised categories or quasi-partnership cases. However, a winding-up is unnecessary where a shareholder has a realistic alternative means of controlling the company’s lawful affairs. An undertaking by a director not to challenge the shareholder’s authority may therefore remove the deadlock relied upon. Motive does not itself make a winding-up petition abusive where the petitioner genuinely seeks the relief and the alleged disadvantage is its natural consequence. The court struck out the company’s defence, but left the individual respondent’s defence intact.

Koza Altin, the holder of all economically significant ordinary shares in Koza Ltd, applied for summary judgment on a petition to wind up the company on the just and equitable ground, alternatively to strike out the defences. The company’s sole director, Mr Ipek, held an “A” share giving him significant veto rights, including over changes to the board and a winding-up.

The parties had engaged in prolonged litigation and operated under an interim regime regulating the company’s expenditure and management. During the hearing, Mr Ipek undertook not to challenge the authority of Koza Altin’s directors to act for it as shareholder, subject to specified reservations. The central issue was whether that undertaking supplied a realistic alternative to winding-up and prevented summary judgment.

1. Application dismissed. The undertaking materially changed the position. It created a realistic, more than fanciful prospect that Koza Altin could use shareholder directions under Article 4 of the Model Articles to control lawful aspects of the company’s affairs, including a possible wind-down of its assets. The court therefore could not conclude summarily that the conditions for a just and equitable winding-up existed.

2. The “just and equitable” jurisdiction under section 122(1)(g) of the Insolvency Act 1986 consists of broad general words. It is not limited to quasi-partnership cases, deadlock at shareholder level, or established categories such as loss of substratum. A breakdown of confidence coupled with an inability to remove the director could, in an appropriate case, justify relief even where the company’s constitutional structure was unusual.

3. Section 125(2) of the Insolvency Act 1986 requires consideration of whether another remedy is available and whether the petitioner acts unreasonably in refusing it. Koza Altin was not unreasonable in declining Mr Ipek’s share-purchase offers because it relied on credible legal advice that accepting them might breach Turkish criminal law.

4. The court assumed, without deciding, that particular shareholder directions might be challenged if plainly contrary to the company’s interests, unlawful, or inconsistent with Article 26. Those issues were fact-sensitive and unsuitable for final determination on the application. Nevertheless, the possibility that lawful Article 4 directions could resolve the dispute defeated summary judgment.

5. A petition is not abusive merely because it is motivated by animosity or produces adverse consequences for another shareholder. The relevant question is whether the process is being misused to obtain relief not properly available. The alleged “expropriation” was simply the legal consequence of a lawful winding-up, and the unclean-hands argument failed because Koza Altin was not shown to be the sole cause of the breakdown or deadlock.

6. Mr Ipek’s defence was not struck out because some issues remained realistically arguable. Koza Ltd’s defence was struck out under CPR r.3.4(2)(a), since its collateral-purpose and clean-hands arguments disclosed no reasonable grounds for resisting the petition. A further summary-judgment application was not precluded if new facts showed that Article 4 directions could not provide an effective alternative.