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The claims and these proceedings
The claims and these proceedings
On 5 April 2022, Cedar Mundi began writing to its former portfolio companies alleging fraud and asserting that Cedar Mundi was “currently initiating all necessary…legal actions” to reverse the transfers. However, Cedar Mundi did not then follow up with a claim against Cedar II to impugn the SPA and recover the assets transferred thereunder. Nonetheless, the Defendants say that the fact it had publicly voiced those allegations made third parties reluctant to deal with Cedar II.
It is not clear what exactly happened between April 2022 and October 2023, but on 25 October 2023 Cedar II issued proceedings against Cedar Mundi in this court seeking two declarations: (1) that the SPA was valid; and (2) that it acquired title to the assets purchased thereunder.
After some months had elapsed during which, as I was told, Cedar II served its claim out of the jurisdiction and some extensions of time were agreed, on 14 June 2024 Cedar Mundi served its Defence and Counterclaim which ran to some 40 pages. It was then significantly amended and extended on 23 October 2024 and runs to some 64 pages. Cedar Mundi’s case was that:
The PPC Agreement was unauthorised in the absence of a board resolution or shareholders’ resolution. The SPA was unauthorised in the absence of a shareholders’ resolution.
The PPC Agreement and the SPA were in any event part of a fraud perpetrated on Cedar Mundi by the First and Second Defendants (using the Third to Fifth Defendants) and so were unauthorised for that reason. The Defendants (and others) are alleged to have committed various BVI law and Lebanese law crimes.
Cedar Mundi counterclaimed against Cedar II for declarations that the PPC and SPA were not binding or were void, an order that Cedar II return the assets it received under them, an account of profits and equitable compensation or compensation for Lebanese law torts.
On 21 August 2024, Cedar Mundi issued a fresh claim against all Defendants. The Particulars of Claim essentially repeated what had been its Defence and Counterclaim in the first action as against Cedar II but now also brought claims for an account and compensation (under English and Lebanese law) against the First to Fourth Defendants.
On 10 October 2024, Cedar Mundi applied for a proprietary injunction restraining Cedar II from freely dealing with the portfolio assets. That was resolved by consent by which Cedar II gave undertakings, which were recorded in an order dated 19 March 2025. Cedar Mundi gave the usual cross-undertaking in damages and agreed to fortify it. Cedar Mundi provided an on-demand guarantee drawn on JP Morgan Bank (in London) to pay £100,000.
On 14 October 2024 Cockerill J consolidated the two claims into the present proceedings with Cedar Mundi as claimant, following which, on 23 October 2024, Cedar Mundi served a consolidated PoC.
On 10 December 2024 the Defendants then served a composite Defence and Counterclaim. The counterclaim included what had originally been Cedar II’s claim for declarations in its own claim, namely that the SPA was valid and it had acquired title to the portfolio assets. Cedar II and IFAC brought a further counterclaim, contingent on the SPA being set aside, for restitution to Cedar II of the cash consideration and payment of their costs and expenses incurred in maintaining the portfolio. MABIL counterclaimed for certain capital contributions it had made to Cedar Mundi which it says are repayable if the SPA is set aside.
On 27 January 2025 Cedar Mundi served its Reply and Defence to Counterclaim.
On 26 February 2025 the Defendants’ solicitors, Pinsent Masons, demanded security for costs in the amount of £2.5 million. On 10 March 2025 Cedar Mundi’s solicitors refused to give it on the basis that there was complete overlap between the Defendants’ counterclaims and Cedar Mundi’s claims and that therefore, pursuant to the principle in B J Crabtree (Insulations) Ltd v GPT Communications Systems Ltd (1990) 59 BLR 43 (“the Crabtree principle”) no security for costs should be ordered. There then ensued correspondence, running up to and past the case management conference, culminating in the Defendants’ issuing their application on 1 April 2025.