Koza Ltd & Anor v Akcil & Ors [2017] EWHC 2889 (Ch) (16 November 2017)

Koza Ltd & Anor v Akcil & Ors [2017] EWHC 2889 (Ch) (16 November 2017)

The court held that the test for 'ordinary and proper course of business' is objective and context-specific; proposed expenditures must be assessed by whether an objective observer would view them as proper business expenses for Koza Limited. The court found that the proposed expenditures (including funding the ICSID arbitration) were not in the ordinary and proper course of Koza Limited's business, as they primarily benefited Mr Ipek and his family, not the company. There were no sufficient grounds to vary the undertaking to permit the expenditures, as the circumstances did not justify such a variation in the interests of justice.

Citation
[2017] EWHC 2889 (Ch)
Parties
Claimant: Koza Limited; Claimant: Hamdi Akin Ipek; Defendant: Mustafa Akçil; Defendant: Hayrullah Dağistan; Defendant: Mahmut Hikmet Keleş; Defendant: Hamza Yanik; Defendant: Arif Yalçin; Defendant: Koza Altin İşletmeleri AS
Jurisdiction
England and Wales
Judgment Date
16 November 2017
Procedural Posture
Chancery Division Civil Claim / Interlocutory Application for Declaratory Relief And/or Variation of Undertaking
Outcome
Application dismissed
Legal Topics
Freezing Injunctions, Variation of Undertakings, Corporate Governance, Authority of Directors and Shareholders, Interpretation of 'ordinary and Proper Course of Business', Jurisdictional Challenges
Company Law Civil Procedure Injunctions Freezing Injunctions Variation of Undertakings Corporate Governance Authority of Directors and Shareholders Interpretation of 'ordinary and Proper Course of Business' +1 more

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Parties

Koza Limited

Claimant

Hamdi Akin Ipek

Claimant

Mustafa Akçil

Defendant

Hayrullah Dağistan

Defendant

Mahmut Hikmet Keleş

Defendant

Hamza Yanik

Defendant

Arif Yalçin

Defendant

Koza Altin İşletmeleri AS

Defendant

Procedural Posture

Chancery Division Civil Claim / Interlocutory Application for Declaratory Relief And/or Variation of Undertaking

Legal Issues

  1. 1 Whether proposed classes of expenditure fall within the 'ordinary and proper course of business' exception to an undertaking not to dispose of assets
  2. 2 Whether the undertaking should be varied to permit the proposed expenditure
  3. 3 Interpretation of undertakings in the context of freezing injunctions

Ratio Decidendi

The court held that the test for 'ordinary and proper course of business' is objective and context-specific; proposed expenditures must be assessed by whether an objective observer would view them as proper business expenses for Koza Limited. The court found that the proposed expenditures (including funding the ICSID arbitration) were not in the ordinary and proper course of Koza Limited's business, as they primarily benefited Mr Ipek and his family, not the company. There were no sufficient grounds to vary the undertaking to permit the expenditures, as the circumstances did not justify such a variation in the interests of justice.

Court Disposition

Application dismissed

Orders

  • The application for declarations that the proposed expenditures are within the ordinary and proper course of business is refused.
  • The application to vary the undertaking to permit the proposed expenditures is refused.