King & Ors v Kings Solutions Group Ltd & Ors (Costs)

Costs following a partially successful strike-out application are determined by considering the issues and events separately, rather than treating the result as wholly won or lost. The court may order costs in the proceedings where allegations survive strike-out only because they are arguable and may ultimately fail. The reasonableness of pursuing the application remains relevant.

Permission to appeal requires both a real prospect of success or another compelling reason. A case-management decision involving the direct application of an accepted legal analysis will not ordinarily justify permission merely because a party disagrees with the factual assessment or alleges wider undesirable consequences.

The court had earlier struck out three of fourteen passages in an unfair prejudice petition under Companies Act 2006, section 994, while allowing the remaining passages to proceed. The parties disputed costs and each claimed to have been successful in part.

The court also considered the respondents’ application for permission to appeal the earlier judgment. The proposed appeal challenged the pleaded causal connection between private conduct and the company’s affairs, the treatment of the allegations as a composite campaign, and the absence of further clarification of the law.

1. Costs. The general rule under Civil Procedure Rules 1998, Part 44.2(2)(a), is that the unsuccessful party pays the successful party’s costs, but the court must consider all the circumstances, including conduct, partial success and admissible settlement offers under Part 44.2(4).
2. The application was properly treated as involving two events. The petitioners were ordered to pay the costs relating to passages (1), (3) and (5), because those allegations breached Part 38.7 and proceeding against the relevant respondent would be unjust and an abuse of process. For the remaining passages, the petitioners had shown only an arguable connection with the conduct of the company’s affairs. Their ultimate success remained uncertain, so those costs were ordered to be costs in the petition.
3. The applicants’ pursuit of the application was reasonable. The court therefore ordered the petitioners to pay 25% of the applicants’ costs, with 75% being costs in the petition. A payment on account of £40,000 was ordered within 28 days. No VAT was ordered on that payment, leaving any recoverability issue to detailed assessment.
4. Permission to appeal. The court rejected the proposed grounds. The applicants accepted the court’s analysis of Graham v Every [2015] 1 BCLC 41, so no issue of legal error arose. The court remained satisfied that the Points of Claim adequately pleaded the necessary causal connection and rejected the challenge to treating the campaign as composite conduct. The decision was a case-management exercise involving a direct application of that authority. The alleged need for clarification did not establish a compelling reason for an appeal.

This was a first-instance costs and permission-to-appeal judgment following the court’s substantive decision in the same proceedings: [2020] EWHC 2861 (Ch).