Fund Ourselves Limited (In Administration) v Nadeem Magdy Mostafa Siam & Ors

Service on a company director at the address nominated under Companies Act 2006, section 1140, is valid for all purposes. On an application to vary freezing or similar orders, the court should address the variation sought and the position of parties benefiting from those orders. Challenges to a mortgagee’s sale conduct, valuation or proposed commercial alternatives ordinarily require separate proceedings or negotiation. Contractual enforcement costs may be recovered and deducted from sale proceeds where reasonably incurred. Any later loss caused by orders that should not have been made may be recoverable under cross-undertakings in damages.

Close Brothers Limited, mortgagee of an aircraft owned by Woodstock 1 Limited, sought variation of three High Court orders restricting dealings with assets connected with Mr Siam and Woodstock 1 Limited. The aircraft had been taken into possession following default, and Close Brothers wished to sell it, deduct enforcement costs and pay the balance into an account held to the order of the court.

Mr Siam objected on grounds including defective service, competing freezing orders, alleged undervalue, costs, payment into a solicitor’s account, and the possibility of continued leasing. The court determined which matters could properly be dealt with on the variation application.

1. Application and service. The court accepted that service on Mr Siam at the address nominated through Companies House was valid under section 1140 of the Companies Act 2006, whether or not the documents concerned the company’s business.
2. Scope of the application. The existence of several orders did not create a relevant competition for present purposes because the parties benefiting from the orders supported the agreed variation. Allegations that the aircraft would be sold at an undervalue, or that the mortgagee had acted improperly, were outside the court’s jurisdiction on this application and would need to be pursued separately under the loan and mortgage documentation.
3. Costs. Under CPR rule 44.5, contractual costs payable to a receiving party are presumed, unless the contract provides otherwise, to have been reasonably incurred and reasonable in amount. The court accepted that a clear court-authorised paper trail was practically necessary for an orderly sale. Close Brothers was therefore entitled in principle to recover its enforcement costs and deduct them from the purchase price. The reasonableness of costs could be challenged where appropriate.
4. Cross-undertakings. If Mr Siam or Woodstock 1 Limited ultimately established that the injunctions should not have been granted and that costs had resulted from them, recovery could be sought under the applicants’ cross-undertakings in damages.
5. Sale proceeds and other arrangements. Payment of any balance into the Wedlake Bell account was not objectionable in principle. The funds should be held on terms consistent with the relevant orders, subject to any necessary amendments or further regularisation. Continued leasing or delaying the sale was a matter for commercial negotiation, not determination on this application. The agreed variation was therefore appropriate.