English High Court refuses to wind up deadlocked Isle of Man company

Background

In APL Holdco Ltd v Apple Properties Ltd [2026] EWHC 2245 (Ch) (08.09.26), Philip Rainey KC, sitting as an English Deputy Judge, has dealt with the English sequel to a notable 2024 Isle of Man decision, Buksh v Bush & others (ORD 21/0010) (29.05.24).

He set out applicable principles in winding-up claims where there is said to be functional deadlock and also considered the “clean hands” doctrine.

At the heart of both cases is an Isle of Man company, Apple Properties Ltd.

Apple has two issued shares. It owns a portfolio of 11 London rental properties.

In his 2024 decision, Acting Deemster Gough held that one Apple share was held by Lake Limited, an Isle of Man company, on trust for Mr Shafe Buksh. Mr Buksh had unsuccessfully sought an interim injunction in 2020 before Zacaroli J in the English High Court.

Acting Deemster Gough was critical of the defence of Shafe’s Isle of Man claim by Mr Habib Bush (Shafe’s brother), supported by Habib’s sons, after a hearing lasting five days. That defence was: “totally manufactured” (§ 277).

At § 272, he held:

“There is a legal maxim “falsus in uno; falsus in omnibus” which broadly means that if a person lies in one thing it may be assumed he lies in other things as well. The doctrine does not need to be deployed in this judgment because I would hardly know where to start with Habib’s lies…”.

The Acting Deemster even referred his judgment to the Attorney General to consider whether the evidence of Habib and his sons should be investigated.

In July 2025 APL Holdco Ltd (“Holdco”), controlled by Habib, filed a winding-up petition at the English High Court.

There was said to be functional deadlock in the management of Apple due, amongst other things, to the irretrievable breakdown of the brothers’ relationship.

Independently of Acting Deemster Gough, Deputy Judge Rainey KC formed (at § 24): “a similarly negative view of the credibility and truthfulness of Habib and Omar” (one of Habib’s sons).

Functional deadlock / breakdown of trust and confidence

Deputy Judge Rainey KC applied Chu v Lao [2020] UKPC 24, in which Lord Briggs had held:

“14. A just and equitable winding-up may be ordered where the company’s members have fallen out in two related but distinct situations, which may or may not overlap. First, a winding-up may be ordered to resolve what may conveniently be labelled a functional deadlock. This is where an inability of members to co-operate in the management of the company’s affairs leads to an inability of the company to function at board or shareholder level…

15. Secondly, where the company is a corporate quasi-partnership, an irretrievable breakdown in trust and confidence between the participating members may justify a just and equitable winding-up, essentially on the same grounds as would justify the dissolution of a true partnership…

17. The important potential distinction between the two types of breakdown case is this. If there is a complete functional deadlock, then a winding-up may be ordered regardless whether the company is a corporate quasi-partnership. But if the company is of that type, then a breakdown of trust and confidence may justify a winding-up even where there may not be a complete functional deadlock. In the former case winding-up is a remedy for paralysis. In the latter it is the response of equity to a state of affairs between individuals who agreed to work together on the basis of mutual trust and confidence where that trust and confidence has completely gone. But of course both may exist together, and a complete breakdown in trust and confidence may well be the cause of functional deadlock, in a two party quasi-partnership like the present…” [underlining added].

Quasi-partnership

It was agreed between the parties that Apple was a ‘quasi-partnership’.

Whilst not in dispute, at § 41, Deputy Judge Rainey KC referred to the well-known principles in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (at §§ 379-380) (also cited in Chu v Lau):

“… The ‘just and equitable’ provision does not, as the respondents suggest, entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way.

It would be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise. Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence—this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be ‘sleeping’ members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members’ interest in the company—so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere…” [underlining added].

Ebrahimi appears often in Manx Courts: see the Appeal Division in Excalibur Almaz & others v Horie (2DS 2018/16) (25.03.19) (Judge of Appeal Storey QC & Acting Deemster Moran QC at § 40); and Deemster Needham in D4 Doors Ltd v Cauldwell (SUM 19/55) (10.09.21) (at § 25).

Factors to be taken into account

At § 43, Deputy Judge Rainey KC held:

43. It is well-settled that the concept of what is just and equitable is a wide one, highly fact-sensitive, and not to be limited to categories defined by previous case-law. In [Chu v Lau], at [§] [43], Lord Briggs JSC made clear that:

    “[43]… The court has to ask itself, at the time of the hearing, whether it is just and equitable that a liquidator should be appointed … it naturally follows that the court should consider all relevant matters as at the date of the hearing…this is entirely in accordance with the court’s ordinary practice when considering whether to grant discretionary relief of an equitable nature…”.

Winding-up also remained (at § 45): “a remedy of last resort and an “exceptional remedy to grant in the context of disputes between shareholders”” (see Fulham Football Club (1987) Ltd v Richards [2012] Ch 333, per Patten LJ at § [56]) (see also Deemster Doyle in Belgravia Corporate Services Ltd v B3 Group Ltd (CLA 2005/16) (11.08.05) at § 78).

Conduct of the petitioner

At § 47, Deputy Judge Rainey KC cited the following from Chu v Lau:

“[15]… It is clear… that a dissolution of a partnership might be ordered even where both parties were to blame for the breakdown in mutual trust and confidence…

[19] The Ebrahimi case reinforces the principle that an applicant for a just and equitable winding up is not barred from his remedy merely because the breakdown or deadlock upon which he relies has been caused to some extent by his own fault. As Lord Cross put it, at pp 383—384:

    “People do not become partners unless they have confidence in one another and it is of the essence of the relationship that mutual confidence is maintained. If neither has any longer confidence in the other so that they cannot work together in the way originally contemplated then the relationship should be ended – unless, indeed, the party who wishes to end it has been solely responsible for the situation which has arisen.”

At § 53, he also cited Lord Cross in Ebrahimi:

“A petitioner who relies on the ‘just and equitable’ clause must come to court with clean hands, and if the breakdown in confidence between him and the other parties to the dispute appears to have been due to his mis-conduct he cannot insist on the company being wound up if they wish it to continue.”

The ‘clean hands’ principle was addressed by Deemster Doyle in Belgravia Corporate Services Ltd, above (at §§ 70-74) (in the context of a winding-up petition) and in Gulf Hibiscus Ltd v Lime Petroleum PLC (ORD 2016/1) (31.05.16) (at §§ 20-21) (upheld on appeal) (in the context of an application under s 175 Companies Act 2006 to bring a derivative claim).

Concluding on ‘clean hands’, Deputy Judge Rainey KC stated:

“208. Habib, assisted by Omar, attempted to exclude Shafe entirely from the Company for a period of 4 years, sustained forensically by an industrial scale of lying to the courts and sustained financially by plundering the Company’s liquid assets, and having lost, seeks immediate winding up on the basis that in vindicating his interest Shafe has obtained a court order creating a deadlock in corporate governance which he (Habib) had regarded as irrelevant for 30 years and which he (Habib) has caused by failure to provide information reasonably required by Shafe in breach of the IOM Order.

209. All in all, I regard Habib’s conduct, assisted by Omar (and others as found by Deemster Gough)…  as “beyond the pale” and sufficiently and directly connected to the relief sought to that it would, on the face of it, be unjust and inequitable to make an order to wind up the Company on this petition…”.

Forum-shopping

At § 76, Deputy Judge Rainey KC noted that: “the powers of the Manx Courts will be wider than the powers of this Court with regard to an unregistered (foreign) company; for example, the Manx Courts could entertain a cross-petition based on minority oppression and/or claims for injunctive relief against the directors”.

At §§ 202-203, he considered:

“202. … the present claim as a fairly obvious piece of “forum shopping”…  I infer that Habib is seeking to avoid having to address the non-payment of £250,000 on account of indemnity costs in the IOM Costs Order. He is avoiding having directly to address in the court which made the order compliance with the injunctions made in the IOM Order by Deemster Gough. He is avoiding having to explain to the Isle of Man courts how it is that he and Omar paid for their mendacious defence of the IOM Claim out of the Company’s money and cannot, they say, repay it (notwithstanding that money can be found to pay for Holdco to be represented by Solicitors and Counsel to bring this Petition)…

203. In my judgment these particular facts are good reasons why, if a just and equitable Petition were to be pursued by Holdco as contributory, it should have been pursued in the Isle of Man…”.

No winding-up as petitioner’s own conduct to blame for breakdown / deadlock

Deputy Judge Rainey KC concluded (at § 299):

“299… (1) There being no dispute that there is a complete breakdown in trust and confidence in what is a quasi-partnership company, and as I accept that there is functional deadlock, Holdco would prima facie be entitled to some relief but for the fact that Habib (whose conduct is to be attributed to Holdco) is the sole cause of the breakdown in trust and confidence and functional deadlock;

(2) It would clearly be unjust and inequitable to grant relief on this Petition because Habib (whose conduct is to be attributed to Holdco) is the sole cause of the breakdown in trust and confidence and functional deadlock, because he lacks clean hands, because the Isle of Man Courts have already made extensive findings as to conduct and made orders concerning the constitution of the Company and affecting Habib, Omar and Shafe, and for the other reasons identified above;

(3) It also unreasonable for Holdco not have pursued the alternative remedy of proceeding in the Isle of Man.

230. In all the circumstances, I do not consider that it would be just and equitable to make a winding up order in respect of the Company on this Petition…”.

Note for practitioners: The English High Court’s decision’s in Apple Properties is of particular interest to future “deadlock” winding-up scenarios in the Isle of Man; on the issue of ‘clean hands’; and as a sequel to the notable 2024 Isle of Man decision. It comes on top of recent Isle of Man decisions in FSA v Montpelier (Trust and Corporate) Services Ltd (in liquidation) (CHP 20/0005) (23.06.26) (see Coren Law, Standing to challenge liquidator’s conduct: test revisited in Montpelier (26.06.26); Grover v Wilton Group Ltd (CHP 26/0007) (07.07.26) (see Coren Law, Enforcing foreign judgments in the Isle of Man: decision in Wilton (11.07.26)) and HSBC Bank Middle East Ltd & others v Allana International Ltd (CHP 26/0057) (04.09.26) (see Coren Law, IOM Court cannot appoint provisional liquidators purely for rescue plan (05.09.26) – and the Supreme Court’s decision in Drelle v Servis-Terminal [2026] UKSC 29 (27.07.26).

Disclaimer: professional advice should be sought before applying any information in a given case.

For advice on litigation relating to Isle of Man company law or insolvency, contact Coren Law.

See also Coren Law’s Isle of Man civil procedure portal: Click On | Coren Law.

Photo credit: Hassan Pasha