Inmarsat Plc, Re Companies Act

Costs in Part 8 proceedings for approval of a scheme are governed by Civil Procedure Rules 44.2, but the ordinary unsuccessful-party rule will ordinarily have no application. The court must exercise its discretion by reference to the guidelines developed in scheme cases, while retaining a case-by-case assessment of fairness. The primary consideration is the nature and substance of the objection, rather than the identity of the objector. Genuine and properly argued objections should not generally be deterred by costs concerns, but this does not create immunity for objections chiefly designed to improve the commercial terms of a scheme. The court may make no order as to costs where the objection contributed little to scrutiny, yet the circumstances do not justify requiring the objector to pay the company’s costs.

Inmarsat plc sought approval of a scheme of arrangement under which it was acquired by Connect Bidco Ltd. The court sanctioned the scheme on 3 December 2019, for reasons given in [2019] EWHC 3470 (Ch). Oaktree and Kite Lake/Rubric initially opposed immediate sanction, raising concerns about disclosure concerning the Ligado contract, alleged changes in circumstances and the possibility of a contingent value right. They withdrew their opposition when Bidco declined to extend the long-stop date or improve its offer. The issue was whether the objectors, the company or Bidco should bear the additional costs, or whether there should be no order as to costs.

1. The court’s discretion under CPR 44.2 is unfettered, but should be exercised consistently with the guidelines developed in scheme cases. Those guidelines assist consistency without becoming rigid rules or a straitjacket.
2. The general unsuccessful-party rule in CPR 44.2(2) ordinarily has no application to Part 8 proceedings seeking approval of a scheme. Such proceedings seek the court’s approval, rather than a remedy against another party, and it is generally inappropriate to describe an objector as an unsuccessful party. The court will therefore commonly make a different order.
3. Genuine objections concerning the adequacy of information should be fully articulated and properly argued. They should not be discouraged by the prospect of an adverse costs order. That principle does not confer immunity on objectors, nor does it require the company or other participants to fund objections directed substantially towards improving the commercial terms of an otherwise acceptable scheme.
4. The primary consideration is the nature and substance of the objection, not simply the identity of the objector. Relevant considerations included the late and weak disclosure objection, the speculative basis of the alleged material change, the fact that the objections sought an adjournment rather than rejection of the scheme, and the evident purpose of obtaining an enhanced offer.
5. The objectors were not acting for a collateral interest and were entitled to raise their objections. Nevertheless, they had to bear their own costs because they pursued a commercial opportunity after the prospect of an enhanced offer had disappeared. The circumstances did not justify requiring them to pay Inmarsat’s costs. Bidco’s attendance was directed to its own commercial interests and did not reveal improper conduct requiring intervention.
6. The final order was that there be no order as to costs.

The judgment was a first-instance costs decision following the court’s earlier sanction of the scheme in [2019] EWHC 3470 (Ch). No appeal is stated.