Ning & Anor v Dearing & Ors [2018] EWHC 1102 (Ch)

"The purported removal of Mr Ning, Mr Hu and Mr Kwan as directors"

"Conduct of the Second to Fifth Respondents after the Removal", those paragraphs continue to paragraph 29. The heading to paragraph 30 is: "

"Matters of Complaint"

"(1) The purported board meeting on 16 April 2017 was invalid. (2) Further or alternatively, the purported removal of Mr Hu was invalid. (3) Further or alternatively, the purported removals of Mr Ning and Mr Hu as directors was a breach of the Relationship Agreement."

"a. a declaration that the board meeting of the Company held on 16 April 2017 and any resolutions purportedly passed thereat were invalid and ineffective; b. a declaration that the removal of Mr Ning, Mr Kwan and Mr Hu as directors of the Company and/or the termination of the contracts of employment of Mr Ning and Mr Kwan were invalid and ineffective; c. an injunction reinstating Mr Ning, Mr Kwan and Mr Hu to the board of the Company; d. as against the First to Fifth Respondents, damages and/or equitable compensation to be paid to the Company for breach of their duties under sections 171(b), 172(1) and/or 175(1) of the Act; e. alternatively, to subparagraph (d) authorisation for proceedings in the name of the company against the First to Fifth Respondents. f. such further or other relief as to the future conduct of the company's affairs or otherwise as the Court shall in the premises consider just and appropriate."

"A member of a company may apply to the court by petition for an order under this Part on the ground— (a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial."

" A member of a company may apply to the court by petition for an order . . . on the ground that the company's affairs . . . have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself) . . . "

"(1) The court may make an order for security for costs under rule 25.12 if – (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and (i) one or more of the conditions in paragraph (2) applies, or (ii) an enactment permits the court to require security for costs. (2) The conditions are – (a) the claimant is – (i) resident out of the jurisdiction; but (ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention, a State bound by the 2005 Hague Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982; (c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so . . ."

"The risk against which the present defendants are entitled to protection is, thus, not that the claimant will not have the assets to pay the costs, and not that the law of her state of residence will not recognise and enforce any judgment against her for costs. It is that the steps taken to enforce any such judgment in the United States will involve an extra burden in terms of costs and delay, compared with any equivalent steps that could be taken here or in any other Brussels/Lugano state. Any order for security for costs in this case should be tailored in amount to reflect the nature and size of the risk against which it is designed to protect."

"The test in Rule 25(13)(2)(c) of 'Reason to Believe' is not one of balance of probabilities. The court has to look at the evidence put forward by the applicant for security as a whole and form an assessment on the basis of that evidence as a whole as to whether there is reason to believe that the company will not be able to pay costs ordered against it. The jurisdiction is not triggered simply by the evidence of one party only, it is open to the company to rebut the applicant's evidence."

"There is a tentative suggestion in the Respondent's evidence that, as regards CIMGC, they seek to rely also on condition (c) (namely that the petitioner is a company and there is reason to believe that it will be unable to pay the respondents' costs if ordered to do so). That condition is plainly not satisfied, as CIMGC has net assets of approximately £5.78 million (reference given). However, since there is no dispute that condition (a)(i) is satisfied, it is unnecessary for this issue to be considered further."

"CIMGC is a company registered in the Cayman Islands. A company report obtained by my firm provides limited information but appears to confirm that the sole shareholder of CIMGC is Mr Ning . . . Mr Ning also signed the letter of intent to accept the RPI Offer on behalf of CIMGC . . . Therefore, in addition to being resident out of the jurisdiction, there must be considerable doubt over whether CIMGC would or could comply with an order for costs at the end of the proceedings (within CPR 25.13(2)(c)) as further discussed below."

"I am informed by Mr Ning that CIMGC has no liabilities, and therefore has substantial net assets and is well able to meet any order for costs which the court may make against it. The petitioners do not understand the basis on which it is asserted by Mr Mecz that there is 'considerable doubt' as to whether CIMGC could comply with an order for costs at the end of the proceedings. Insofar as the Respondents rely on their allegations against Mr Ning in support of this assertion, those allegations are addressed in Mr Ning's Second Witness Statement."

"In the case of CIMGC, it is said that its only substantial asset is a cheque for £5.78 million (which was received on or about 8 January 2018 but has not yet been deposited), reflecting the purchase price for all but one of its shares in the Company. It is also suggested that CIMGC has another asset, namely the shares in the Company that it has agreed to sell to RPI, but as those shares have been sold it cannot possibly be said that this is an additional asset of CIMGC over and above the cheque for £5.78 million. The fact that CIMGC is in possession of a cheque for £5.78 million, which has not yet been deposited, is no basis on which an order of security should be refused and, in fact, is a basis for ordering security: the cheque is not an asset over which a costs order can be enforced, and it is open to CIMGC to cash that cheque and to pay a portion of those proceeds into Court as security for the Director Respondents' costs in these proceedings. The fact that the cheque has not yet been cashed is further evidence for the need for security in this case – my understanding is that a cheque normally cannot be cashed after six months (two of those months have already passed), and it is not clear whether CIMGC will have any assets over which any costs order can be enforced at the time when the Director Respondents seek to enforce that order. To the extent that is suggested that the cheque for £5.78 million represents a debt due from RPI to CIMGC, this again does not obviate the need for security – RPI is a company incorporated in the British Virgin Islands and is itself owned by a Chinese company (Hailang)."