Ning & Anor v Dearing & Ors

There are two sets of proceedings now being considered by the court. The first set of proceedings is brought by a petition under s.994 of the Companies Act 2006. This petition was issued on 27 June 2017. The second set of proceedings is pursuant to an Insolvency Act Application Notice issued on 24 October 2017.

In the petition the petitioners are Mr Ning and China International Mining Group Corporation ("CIMGC"). In the application the applicants are, again, Mr Ning and CIMGC. In both proceedings the respondents are as follows: The first five respondents are individuals who are directors of ASA Resource Group PLC ("the Company"). The sixth respondent is the Company, and the seventh and eighth respondents are persons whom I will describe for the moment as the administrators of the Company. I will need to describe the position of these two respondents in more detail later in the judgment.

At the date of the issue of the petition Mr Ning and CIMGC were shareholders in the Company. At that time they were the legal and beneficial owners of some 22.5 per cent of the issued share capital of the Company. The total number of the issued shares in the Company has been, and is, about 1.69 billion shares. In the petition Mr Ning and CIMGC complained that the first five respondents as directors of the Company had unfairly prejudiced the petitioners' interests in the Company. The petition makes detailed allegations as to unfair prejudice. It is sufficient for present purposes to refer to some of the headings to the matters pleaded in the petition.

The paragraphs beginning at paragraph 19 have the heading: "The purported removal of Mr Ning, Mr Hu and Mr Kwan as directors". The paragraphs beginning at paragraph 23 have the heading: "Conduct of the Second to Fifth Respondents after the Removal", those paragraphs continue to paragraph 29. The heading to paragraph 30 is: "Mr Ning and Mr Kwan's protests at their removal". Those paragraphs continue to paragraph 34. There then begin a number of allegations made under the heading: "Matters of Complaint". These allegations are pleaded in detail but I will take the subheadings to identify the broad character of the allegation being advanced. In this way the matters of complaint are:

The petition as originally issued then pleaded the fact of loss and damage caused by the matters complained of. The essential allegation was that the Company had suffered loss and damage as a result of those matters. The petition then dealt with the subject of unfair prejudice. It was asserted that the affairs of the Company have been and/or are being conducted in a manner unfairly prejudicial to the interests of the petitioners as members of the Company.

The prayer for relief sought six heads of relief and in view of some of the arguments that have been raised, I ought to read the relief originally claimed. The petitioners claimed the following:

There have been certain events after the issue of the petition which are said to be relevant. First, a company called Rich Pro Investments Limited ("RPI") made a cash offer to acquire the shares in the Company at a price of 2.1 pence per share. RPI's offer was supported by Mr Ning and CIMGC. In the event Mr Ning sold all of his shares bar one to RPI and CIMGC sold all of its shares bar one to RPI. The transfers of the shares by Mr Ning and CIMGC to RPI have not been completed by registration of RPI as a shareholder of the Company. I should add that, in addition to RPI acquiring a block of shares from Mr Ning and CIMGC, representing some 22.5 per cent of the issued share capital of the Company, RPI is altogether the beneficial owner of some 60 per cent of the issued share capital of the Company. I understand that in relation to some of these shares representing the block of 60 per cent, RPI is a registered shareholder but in relation to the others it is a transferee of the shares and has not yet been registered as a shareholder.

Another event after the issue of the petition is that the directors, who are the respondents to the petition, appointed – or purported to appoint – the seventh and eighth respondents as the administrators of the Company. If the appointment were effective, it took effect on 1 August 2017.

On 24 October 2017 Mr Ning and CIMGC issued the application notice, to which I have referred, claiming a declaration that the administrators had not been validly appointed. Since that date, Mr Ning and CIMGC have also amended the petition to join the administrators (the seventh and eighth respondents) and, again, to claim a declaration that the administrators had not been validly appointed. On 30 November 2017 His Honour Judge Pelling QC, on the application of a creditor of the Company, made an administration order appointing the seventh and eighth respondents and a third person, Mr Fleming, as administrators of the Company; thus there is no doubt that from 30 November 2017 at the latest, the Company is in administration.

Finally, I mention one further event which is that, in recent days, Mr Ning has acquired further shares in the Company. In particular, he has bought some 21 million shares at a price of 2.1 pence per share; on my calculations 21 million shares represents some 1.25 per cent of the issued share capital of the Company.

There are three applications before me. The first application is an application by the first five respondents to the petition. The application was made on 26 January 2018. By that application the first five respondents seek an order striking out the petition as against them. Alternatively, they seek reverse summary judgment in their favour. In the further alternative they seek an order for security for costs to be provided by the petitioners. The second application is made by the same persons, this time as the first five respondents to the Insolvency Act application notice. This application by those respondents was also made on 26 January 2018. The application seeks similar relief in relation to the Insolvency Act application notice as was sought in relation to the petition. The third application is made by Mr Ning and CIMGC. By their application they seek permission to re-amend the petition.

I need to consider the order in which to address these three applications. If I were to strike out the petition, then there would be nothing to be re-amended. However, Mr Todd QC, who appeared with Mr Shaw for the first five respondents, accepted that I should consider the draft re-amended petition and the issues raised by it. If I held that it would be appropriate to grant permission to re-amend the petition, then that would have a bearing on the application to strike out the petition. I agreed that was a sensible course to adopt. I do not think that I need to refer to all of the proposed amendments for which permission was sought, instead I will refer to the matters which are of principal importance.

In that way, I start by referring to paragraphs 42AA, 42AB and 42AC. In summary, in those paragraphs the petitioners wish to allege that the first five respondents conspired to injure the petitioners by unlawful means, that they carried their conspiracy into effect, and they caused loss and damage to the petitioners. In other words, the claim is put on the common law tort of conspiracy to injure by unlawful means. The unlawful means alleged overlap with, if they are not identical to, the acts of unfair prejudice alleged elsewhere in the petition. The loss and damage allegedly suffered as a result of the conspiracy to injure was that the petitioners were forced to sell their shares, bar two shares, in the Company to RPI for 2.1 pence per share which did not represent the full value of those shares. As will be seen, this way of calculating loss and damage for the tort of conspiracy substantially overlaps, if it is not identical to, the compensation which is claimed by the petitioners as an appropriate head of relief under section 996 of the Companies Act 2006.

The next paragraph to which I refer in the draft re-amended petition is paragraph 42C. This paragraph relates to the position of seventh and eighth respondents in particular. They are described in the paragraph as the "Purported Administrators". This paragraph deals with the position prior to Judge Pelling's order of 30^th November 2017. It is said that the actions of the purported administrators were not authorised because the purported administrators had not been validly appointed. It is also said that the Company has suffered loss as a result of the actions of the purported administrators, and it is also said that the fees which have been paid to the purported administrators, which are said to have amounted to £600,000 as at 10 November 2017, were not authorised. The consequence is said to be that the Company is entitled to recover those sums.

Paragraph 43 of the original petition pleaded the case as to loss and damage and, as pleaded, it was asserted that the Company had suffered loss and damage. Paragraph 43 is to be extended in the proposed re-amended petition. It is repeated that the Company suffered loss and damage. It is also stated that the Company would not have paid fees, costs and expenses in accordance with what was described as the purported administration prior to 30^th November 2017. It is also said that the Company would not have lost its listing on the Alternative Investment Market of the London Stock Exchange, and further particulars are given. Paragraph 44 pleads other respects in which the Company has suffered loss and damage.

I now need to refer to para. 44A which introduces a new claim, which is that CIMGC has suffered loss and damage as a result of the breach of the Relationship Agreement to which I earlier referred. It is said that CIMGC has been deprived of its rights under the agreement which had substantial value and, further, CIMGC lost in relation to the value of its shares which resulted from the matters complained of.

Paragraphs 44B and 44C turn to the question of losses allegedly suffered by the petitioners themselves. The paragraphs refer to some of the earlier matters complained of. The paragraphs go on to say that the petitioners were forced to sell their shares in the Company and they did so by selling them to RPI at 2.1 pence per share, and the loss resulting from this forced sale is said to be the difference between the price of 2.1 pence per share and the true value of the shares in the Company. It is said that the true value was higher than 2.1 pence per share, in particular reference is made to an additional value or premium attaching to those shares as a strategic shareholding in the Company.

Turning then to the re-amended prayer for relief, the earlier paragraphs of the prayer for relief are retained but, in addition, there are various claims for monetary relief. For example, the petitioners' claim against the first five respondents, compensation is to be paid to the petitioners rather than to the Company. The petitioners for this purpose rely on paragraphs 44B and 44C. Further, the petitioners claim damages for the alleged tort of conspiracy to injure by unlawful means. Again, the claim is made against the first five respondents. It is the petitioners' claim not the Company's claim. There are further claims for monetary relief. There is a claim against the administrators for all sums which they have received from the Company. There is a claim against the Company by CIMGC alone. The claim is for damages for breach of the Relationship Agreement. So, what has been added, amongst many other things, are claims by the petitioners for personal losses distinguished from claims to recover the losses of the Company for the Company and, significantly, there is a claim against the Company for damages for breach of contract.

Assuming that the petition were not struck out, I have to ask myself whether it would be appropriate to grant the petitioners permission to re-amend in accordance with these draft amendments. I need to consider what is said against that course. First, it is said that the amendments are late. , Without going into the procedural history I conclude that the amendments are not late in the context of the litigation as a whole although they were brought forward at a late stage in preparation for the strike out applications which the first five respondents had made. Then it is said that the idea of a forced sale by the petitioners of their shares in the Company is implausible in view of the fact that the petitioner supported the offer made by RPI to buy the shares. Then it is said that the quantum of loss has not been particularised, and the draft amendments are objectionable on that ground. Finally, it is said that the petitioner should not be allowed to re-amend the petition, but they should instead be allowed to bring new proceedings making these further allegations.

Assuming that the petition is not to be struck out, I consider that it would be appropriate to grant permission to re-amend. I do not think that permission should be refused on the ground of the timing of the amendments. The plausibility of the matters alleged turns on matters of fact and evidence which I cannot realistically assess at this stage. The proposed allegations are pleadable and are not liable to be struck out on the grounds of defective formulation or expression. As to the amount of the loss claimed, the mechanism whereby loss was allegedly suffered is adequately pleaded, and I would not refuse permission to amend on the ground that particulars have not been given at this stage of the detailed calculation of the loss which is claimed. Finally, it appears to me to be sensible to have these allegations made and considered in the context of the allegations made elsewhere in the petition having regard to the significant degree of overlap between the sets of allegations. For the sake of completeness, I add that it was not submitted to me that I should refuse permission to re-amend on the basis that the claim to damages based on the alleged reduction in the value of the petitioners' shares was simply loss which was reflective of the Company's loss. Accordingly, I have not given any further consideration to that point.

It follows from the above that I should consider the application to strike out the petition and the insolvency application on the basis that the petitioners have identified proper amendments to the petition which are appropriate for the grant of permission to amend.

I now consider what is said by the first five respondents as to the case which the petitioners wish to advance both in the original petition and in what will be the re-amended petition. Certain matters are common ground. It is accepted that the petitioners had, and retain, standing to petition under s.994 of the Companies Act 2006. In this case Mr Ning and CIMGC are the registered shareholders in relation to about 22.5 per cent of the shares in the Company. Apart from two shares, they hold those shares on trust for RPI. As regards two shares they hold those shares beneficially i.e. one each. However, I take the view that two shares out of 1.69 million shares is truly de minimis and I will disregard those two shares for present purposes. Accordingly, Mr Ning and CIMGC were members of the Company when they issued their petition and they remain members of the Company. If the transfers of their shares to RPI were registered by the administrators on behalf of the Company then Mr Ning and CIMGC would cease to be members of the Company, but RPI have not yet been registered in relation to those transfers and, on the material before me, it does not seem that any such registration is imminent.

As regards the 21 million shares which were recently bought by Mr Ning, the transfer to him has not been registered and so he is not a member of the Company in relation to those shares. However, by section 994(2) he can rely on section 994 as if he were a member of the Company although there would be an important separate question as to whether he could satisfy the other requirements of section 994(1) by reason of buying in in this way in relation to these further shares.

There is also some common ground as to the approach to be adopted in relation to the fact that 22.5 per cent of the shares which are held by the petitioners are held as trustees for RPI. It was accepted that for the purposes of section 994 the interests of a nominee shareholder can include the economic and contractual interests of the beneficial owners of the shares. I add to that common ground, by way of contrast, that although the petitioners hold the relevant shares on trust for RPI they do not, in my judgment, hold their claim to damages or compensation on trust for RPI. Their claim to damages or compensation is based on them being forced to sell to RPI at a reduced price. The petitioners remain the beneficial owners of that cause of action and any sum awarded to them pursuant to that claim would be held by them beneficially.

I will now address the specific submissions made on behalf of the first five respondents. They submitted that prejudice will not be unfair to a shareholder within the meaning of section 994 where the shareholder has available to him a method of bringing the prejudicial state of affairs complained of to an end. The first five respondents relied for this proposition on Re Legal Costs Negotiators Limited [1999] 2 BCLC 171 at 197E per Peter Gibson LJ. I accept that proposition. It was then submitted to me that after the allegedly prejudicial events had occurred in this case, it had been open to relevant persons to bring the prejudicial state of affairs to an end. This submission was developed in three separate ways. The first way the point was put was that although the first five respondents were the directors who carried out the allegedly prejudicial conduct, they did not control the shareholders of the company and, indeed, they only had between them 2.36 per cent of the shares in the Company. It was therefore argued that what the petitioners should have done was to call a general meeting of the shareholders and bring about a situation whereby the prejudicial conduct was reversed, and the prejudicial effect was undone. It is clear that the petitioners did not call a general meeting, and did not seek, thereby, to reverse the actions of the first five respondents. Instead, the petitioners sold their shares to RPI, and the petitioners say that they suffered loss accordingly. I did not understand it to be suggested that the course which the petitioners should now take in relation to that loss should be the calling of a general meeting with a view to the shareholders resolving to make good the petitioners' loss. Instead, this point would seem to be that the petitioners' loss was avoidable in the first place. If the point were to be put that way , the point would be about the alleged causation of loss and would turn on disputed matters of fact. Having considered the material before me, I am not persuaded I could give the first five respondents reverse summary judgment on a disputed matter of fact of this kind and much less could I strike out the petition as an abuse of the process of the court.

It was then said that because the petitioners are nominees for RPI, and because RPI now holds, beneficially, some 60 per cent of the shares, RPI should call a general meeting and bring about a situation whereby the prejudicial conduct was reversed, and the prejudicial effect was undone. Again, on the material before me it is certainly not clear that RPI will wish to call the general meeting to seek a resolution providing for compensation to the petitioners. It is also not clear that RPI is in any position to call a general meeting to reverse the continuing prejudicial effect of the alleged unfair conduct of the first five respondents. Indeed, while the Company is in administration, it seems most unlikely that RPI could remedy unfair prejudice in that way. Again, I am not persuaded I should grant the first five respondents reverse summary judgment or strike out the petition on this ground. Then it was said that because the Company is under the control of the administrators, and as the administrators have various powers, the petitioner should ask the administrators to take all necessary action to bring about a situation whereby the prejudicial conduct was reversed and the prejudicial effect was undone.

On the material before me it is far from clear that the administrators will take any such action. Part of the allegedly unfair prejudicial conduct is the purported appointment of the administrators on 1^st August 2017. The administrators are now respondents to the petition and various heads of relief are claimed against them. The administrators have not admitted the matters alleged against them, nor have they applied for reverse summary judgment on those matters. Those matters will have to go to trial where the issues of petitioners and the administrators will be in severe conflict. I will, therefore, not grant the first five respondents reverse summary judgment, nor will I strike out the petition on this ground.

Having proceeded this far, it is now instructive to look at the facts alleged in the petition as it is proposed to be reamended, and at the relief claimed to see to what extent those facts and that relief will have to go forward for determination at a trial in any event. Having carried out that exercise I consider that all of the facts as to the alleged prejudicial conduct and as to the appointment of the administrators will have to be investigated at a trial for the purpose of determining the issues which, on any view, cannot be struck out or determined at this stage.

The petition also seeks relief in relation to the removal of three directors. The dispute about the removal of the directors is an inherent part of the dispute which will have to go forward to trial. I suspect that in the light of certain statements made by RPI that by the time of the trial, if not very long before, there will be no question of these three directors again acting as directors of the Company. However, there is no real point at this stage in requiring amendments to the precise way in which the prayer for relief is expressed in the petition in relation to the question of the removal of directors.

The first five respondents have raised a more substantial point in relation to the allegation in the petition that the Company suffered loss and damage and the petitioners seek an award of damages or equitable compensation in favour of the Company as well as an award of damages in favour of the petitioners personally. I think I can summarise the essential point made by the first five respondents concisely as follows. The first five respondents say:

The petitioners have sold their shares and no longer have any interest in a remedy for the benefit of the Company; and

Following the logic of the petitioners' own case RPI has bought a 22.5 per cent stake at a reduced price, the reduced price reflecting to the full the damage done to the Company so that it cannot be said that RPI has suffered prejudice in that respect. Accordingly, the first five respondents say if one takes into account the interest of the petitioners personally, and also the interests of RPI, these parties have not been unfairly prejudiced by the damage to the Company and the claim that the Company has suffered loss should be struck out.

At this point I will refer to the wording of s.994(1) which provides as follows:

It is clear that the petitioners were and are members of the Company.

The petitioners allege that the Company's affairs have been conducted in a certain manner.

The petitioners allege that the relevant manner of conduct "is unfairly prejudicial" (I stress the present tense) because the matters complained of have had a prejudicial effect which has not been remedied.

The unremedied prejudicial effect is said to be at least twofold. First, the harm done to the petitioners when they sold their shares to RPI and, secondly, the harm done to all the shareholders, and for this purpose the petitioners rely upon the current interests of RPI for whom they hold a 22.5 per cent stake on trust.

The first five respondents submit that I can now hold that RPI has not suffered any prejudice because of the price it paid for its shares. I do not agree that, on the material before me, which is very limited in this respect, I am able to form that assessment at this stage. In the course of interesting submissions on this point, counsel for both sides considered various possible cases and how section 994 might apply in relation to them. They also cited a number of authorities, but I do not consider that any one of these authorities is determinative of the particular submission now put forward by the first five respondents. Insofar as there are important differences of principle between the parties as to how section 994 operates in a case where a shareholder sells his shares at a price which is reduced by reason of unfairly prejudicial conduct, but where the effect of the conduct is continuing, those differences of principle are better explored in a case where the court has determined the relevant facts as a to prejudice and the court can then apply the appropriate principles to the actual facts of the case before it.

I have given some consideration to the interesting submissions made to me, and I have formed certain provisional views in relation to them, but on reflection I have considered it would not be helpful to the parties in this case and may be very unhelpful to other parties in other cases for me to express what would only be provisional views on these matters at this stage. It follows from the above reasoning that I will not grant to the first five respondents reverse summary judgment in relation to any part of the relief claimed in the petition. Further, I will not strike out any part of the claim to relief. The same reasoning applies to the insolvency application notice.

I now turn to the further application made by the first five respondents for an order that the petitioners provide security for costs up to a certain future point in the litigation. The court's power to order security for costs in this case is conferred by CPR 25.13(1) and (2). The rule provides:

I need to refer to an authority relevant to the application of paragraph (a), and also one authority relevant to the application of paragraph (c). Paragraph (a) was considered in Nasser v United Bank of Kuwait [2002] 1WLR 1868. I need not set out in any detail the reasoning in the judgment of Mance LJ, with whom Simon Brown LJ agreed. It is sufficient to go to paragraph 67 of the judgment of Mance LJ, where he says this:

A number of points were argued before me. Perhaps unfortunately this application was taken somewhat as a footnote to the main application to strike out or for summary judgment, and there are matters which, perhaps, did not receive the detailed attention which they ought to have received. First, I draw attention to the fact that the application notice does not specify the ground on which the application for security for costs is made. That is contrary to the advice given in the notes in the White Book. When Mr Shaw presented the application orally, in the first place he relied only on paragraph (a), although when I inquired whether paragraph (c) was relied upon he indicated he would wish to so rely. I note that in the skeleton argument prepared on behalf of the petitioners by Mr Thompson QC and Mr Griffiths, there is a footnote on p.28, which I will read:

I will now state my conclusions on the points which have been argued. Both petitioners are within paragraph (a). As regards Mr Ning, although the matter was very much in dispute, I am persuaded that it is more likely than not that the first five respondents could not enforce an award of costs against Mr Ning in China. If he were the only petitioner that would justify an order for security for costs against him not limited to the costs of enforcement in China which, on the balance of probabilities, will not occur. As regards CIMGC, an award of costs against it can be enforced in the Cayman Islands. That conclusion would normally lead me to make an order for security under paragraph (a) against CIMGC, but not against Mr Ning, the order being in relation to the extra costs of enforcement in the Cayman Islands. However, so far as I can see, I was not given any evidence as to the extra cost of enforcement in the Cayman Islands. Until that evidence is provided I am not able to identify the figure which would be appropriate to be the subject of an order for security for costs under paragraph (a). Therefore, I am not prepared to make such an order at this stage. I therefore need to consider paragraph (c) with some care. As I have indicated, paragraph (c) was just about relied upon by the first five respondents.

I need to refer to the evidence before me on which I am asked to form a view as to whether I have reason to believe that CIMGC will be unable to pay costs if ordered to do so. I go first to the third witness statement of Mr Mecz, filed on behalf of the first five respondents. He deals with security for costs from paragraph 8. Relevantly, at paragraph 10(b) he says this:

Next, I go to the first witness statement of Mr Magnin, served on behalf of the petitioners. Relevantly, he says at paragraph 32.5 the following:

I refer next to the fourth witness statement of Mr Mecz. At paragraph 14(b) of that witness statement he says:

That is the evidence, as far as it goes, relating to paragraph (c). So, based on that evidence I have to ask myself whether there is reason to believe that CIMGC will not be able to pay costs ordered against it. It may well be that CIMGC will be unwilling to pay costs ordered against it. What has to be shown is there is reason to believe it will be unable to pay such costs. Of course, if I had adequate evidence to persuade me that CIMGC would dissipate its assets so that it would not have assets when the time came for it to honour and order for costs, I would have to consider that evidence carefully. There are certainly suggestions that that is something that might occur. However, in considering the possibility of an inability to pay by reason of dissipation of assets I bear in mind the established law which is relevant when one considers an application for a freezing injunction based on the risk of dissipation of assets. The court needs evidence on which it can act to make a finding as to the reality of such a risk. It is not sufficient simply to allege that the risk exists, it has to be supported by evidence sufficient to satisfy the court. It may be that if the point had been better considered, or better addressed, that there would be material on which the first five respondents could put forward a sufficient risk of dissipation turning from a case where CIMGC would be unwilling to pay the costs into a case where it would make itself unable to pay the costs, but with some hesitation and very much on balance I do not consider that the evidence in the present case is adequate for that purpose. I will therefore not make an order for security for costs on the present application. I do not rule out, however, the possibility that the first five respondents could reflect upon what is needed to demonstrate a case under paragraph (c) or, indeed, to put forward evidence as to the costs of enforcement in the Cayman Islands for the purpose of paragraph (a).

To assist the parties, having heard argument on other matters, I will express my conclusions on those matters. These conclusions would be material if I had been persuaded to make an order for security for costs under paragraph (c). I would have ordered security in the sum sought. I do not think that sum is excessive. I think the present case is one where the security should include security for past costs. I would not have accepted as security an undertaking by Mr Ning not to dispose of his 21 million shares in the Company, I am simply not clear enough on the material before me as to the current value of those shares, nor as to the likely value of those shares at the end of this litigation which would be the relevant time.

That concludes my judgment on the applications before me.

I am going to take the two applications to strike out and the application for permission to amend together. The reason I do that is that so far as the outcome of these applications is concerned, and so far as the reasons which I have thought about and expressed are concerned, the fate of the applications to strike out were certainly influenced by the application for permission to amend.

I am going to say that the petitioners should have 50 per cent of their costs of the unsuccessful applications to strike them out and 50 per cent of their costs of the application for permission to amend. Obviously, the costs of and occasioned by the amendment, and consequential on the amendment are to be paid by the petitioners in any event in the ordinary way.

The petitioners have, so far as today's outcome is concerned, wholly succeeded on the applications to strike out and the applications for permission to amend, and I think that some part of their costs will, therefore, follow those events. However, the particular form of the pleading, which influenced by reasoning to produce that result only came very late. It came very late, it was obviously designed to improve the petitioners' position on the applications to strike out, and I have no doubt that it did improve their position. I am asked by both sides to put the amended pleading to one side and then try to reconstruct what my reasoning would have been if I had considered only the original pleading, or the amended but not draft re-amended pleading. I am not sure it is quite as easy to do that as has been suggested, not least because the two sides have suggested radically different outcomes to that counterfactual. Certain it is that the first five respondents made a lot of points that failed, which would have failed in any event, but they also made points which, in the event failed, but which may have had more cogency in the absence of the final version of the amendments. So, without formally giving a judgment which addresses the counterfactual and determines who would have won and who would have failed, it seems to me that in the exercise of a broad discretion as to costs justice is done by giving the petitioners 50 per cent of the applications which I have described. I am taking the applications to strike out and for permission to amend together for that purpose.

So far as the application for security for costs is concerned, I will give the petitioners their costs of that application which has failed in its entirety. My only concern is that it may have been an application which may have made more progress if certain fairly limited things had been done and I do not rule out the possibility that there might be a successful application presented in a different way. Indeed, some of the evidence that has been prepared could be useful on a further application of that kind, but I cannot tell the future and I cannot deal with the costs of future applications, so I fear that I am constrained to say that the first five respondents should pay the petitioners' costs of the unsuccessful application for security.

In relation to the security for costs application I will do a summary assessment. Having regard to the various points that have been made on both sides, my conclusion is that the reasonable and proportionate sum is £14,000.

As to the costs of the strike out application, and the application for permission to re-amend the petition I think the fair course to adopt is to send that for detailed assessment, which is what I will do.

I will make an order for payment on account of costs. Adding the two bills together the total is £148,000. The next matter to factor in is that I have ordered that the petitioner should recover 50 per cent only of that figure, or of the appropriate figure; that brings it down to £74,000. I then have to stand back and consider the extent to which the costs are reasonable and proportionate, and what sort of discount should be allowed. My own approach would have been to say 50 per cent. Mr Thompson, in his submissions did not urge me to go above 50 per cent, so I will settle on 50 per cent. So, the payment on account will be £37,000.

I have to answer the question in the rules, namely 'Would an appeal have a real prospect of success?' My conclusion is it would not have a real prospect of success. I think the Court of Appeal will take the view that in support of my approach it is not appropriate to decide this much deeper issue in the present case, certainly not at this stage.

The appeal would have to be not only that I was essentially wrong not to address the issue that Mr Shaw identified – I should have addressed it, I should have ruled on it, and if I had ruled on it, I would have been in the respondents’ favour. We are very much in case management territory as to how one decides points of law or principle, which might or might not arise, and I think for those reasons there is not a real prospect of the Court of Appeal taking a different view on a case management point.

As to the underlying point, I have not decided it. I have decided very little, and I was deliberate about doing that. So, I will refuse permission to appeal.