Ashdown v Griffin

The Court of Appeal allowed an appeal against a costs order in proceedings under section 994 of the Companies Act 2006. The court held that, as a matter of substance and reality, the appellants were the successful parties because the petitioners failed to realise any monetary value from the share purchase order even though unfairly prejudicial conduct and breach of fiduciary duty (section 172 Companies Act 2006) had been established at first instance. The court applied the principles in CPR 44.2 when assessing costs, giving material weight to settlement offers made by the appellants and limiting the weight to be attached to the personal conduct of Mr Griffin where it had not caused distinct procedural inefficiencies.

Background and parties:

• The proceedings concerned Addbins Limited (later Advertising Bins Limited) and a dispute among its shareholders. The three petitioners held 13 of 100 shares; the first, second, third, fourth and sixth appellants held the balance. The petition under section 994 Companies Act 2006 alleged unfairly prejudicial conduct by the appellants.

Nature of the claim and relief sought: The petitioners sought relief under section 994, principally an order requiring the appellants to purchase the petitioners' shares.

Procedural history: Liability was tried before Mr Edward Bartley Jones QC (judgment 3 November 2015) who found that Mr Griffin had acted in breach of his duties (section 172) and made a share purchase order; valuation was reserved and later re-heard before His Honour Judge Paul Matthews (valuation judgment and costs decisions in 2017). Judge Matthews ordered Mr Griffin to pay the petitioners' costs; the appellants appealed to the Court of Appeal.

Issues before the Court of Appeal:

• Who was the "successful party" for costs purposes under CPR 44.2?
• What weight should be given to settlement offers made by the appellants?
• What relevance should be given to the conduct of Mr Griffin and other appellants when making a different costs order?

Court's reasoning and disposition: The Court of Appeal reviewed authorities on costs discretion and success in litigation (including Roache, Adamson and related decisions) and emphasised an evaluative, common-sense approach to identify who had won in substance. Although the petitioners succeeded on liability by establishing unfair prejudice and a share purchase order, the valuation hearing established that the petitioners' shares were of no real monetary value. The court held that the appellants were, as a matter of substance, the successful parties because the petitioners obtained no financial recovery. The appellants' repeated and substantial settlement offers were relevant and should have been given weight by Judge Matthews; those offers materially exceeded the petitioners' eventual recovery and so pointed to an order that the petitioners pay the appellants' costs. The court gave limited weight to criticisms of Mr Griffin's conduct for costs purposes where that conduct had not produced distinct procedural waste.

Wider context: The judgment cautioned against treating petitioners who obtain non-remunerative relief as automatic winners for costs and noted the risk of encouraging uncommercial petitions.

Appeal allowed. The Court of Appeal concluded that the appellants were the successful parties for costs purposes because the petitioners obtained no monetary recovery from the share purchase order; offers made by the appellants should have been given material weight and the personal conduct of Mr Griffin did not justify departing from the general rule that the unsuccessful party pays costs.

Appeal to the Court of Appeal from the High Court of Justice, Chancery Division (His Honour Judge Paul Matthews) arising from the trial before Mr Edward Bartley Jones QC. Liability judgment given by Mr Bartley Jones (3 November 2015); valuation reheard and costs decided by Judge Matthews (costs decision 30 October 2017; valuation judgment 19 October 2017) ([2017] EWHC 2694 (Ch)). Appeal heard 19 July 2018; Court of Appeal judgment delivered 30 July 2018 ([2018] EWCA Civ 1793).