William Hill Plc, Re

Costs in scheme proceedings under Part 26 of the Companies Act 2006 remain in the court’s discretion. The ordinary costs rule under CPR 44.2 will ordinarily not apply to an application for scheme meetings or sanction, because the company seeks the court’s approval rather than relief against another party. Individual applications within scheme proceedings may engage the ordinary rule. Objectors should not generally face adverse costs orders where their non-frivolous objections were timely and assisted the court, but there is no presumption that the company must pay their costs. The court must consider all the circumstances, including the nature of the objector’s interest, the commercial purpose of the objection and the extent to which it assisted scrutiny of the scheme.

This was a supplemental judgment following the sanction of a scheme of arrangement in [2021] EWHC 967 (Ch). William Hill plc sought an order requiring HBK Investments LP to pay the additional costs caused by its opposition to sanction. HBK sought payment of its own costs of opposing sanction and seeking a further scheme meeting.

The central issue was the appropriate costs order, applying the principles recently reviewed in Re Virgin Active [2021] EWHC 991 (Ch).

1. The court made no order as to costs. HBK’s token shareholding was not material. Its real interest arose from a substantial economic position acquired after the bid announcement.

2. The principles summarised in Re Virgin Active [2021] EWHC 991 (Ch) were the starting point. Costs in scheme proceedings are discretionary. CPR 44.2 ordinarily does not govern an application for scheme meetings or sanction, although it may apply to individual applications made within scheme proceedings.

3. The court should avoid deterring members or creditors from raising genuine issues which assist scrutiny of a scheme. It should also avoid encouraging objections on the assumption that someone else will pay. There is no principle or presumption that an unsuccessful opposing member or creditor receives its costs.

4. HBK had a genuine interest in the precise terms of the termination rights and its objection was not frivolous. However, the issue was of limited significance to ordinary scheme members and the examination did not greatly assist the court’s overall scrutiny. The company’s disclosure decisions increased the risk of a challenge, but did not justify an adverse costs order against HBK.

5. HBK was not to be treated more severely merely because it alone appeared at the sanction hearing; other objectors had made written criticisms of the disclosure.

This was a supplemental first-instance judgment following the court’s earlier sanction judgment in [2021] EWHC 967 (Ch).