William Hill Plc, Re

The court considered competing applications for costs following sanction of a scheme of arrangement under Part 26 of the Companies Act 2006. Applying the principles summarised by Snowden J in Re Virgin Active [2021] EWHC 991 (Ch), the court exercised its discretion as to costs in scheme proceedings. The judge assessed whether HBK Investments LP, an opportunistic purchaser with a small registered holding but a large economic interest, should be awarded its costs of opposing sanction or whether the company should be awarded the extra costs caused by that opposition.

The court found relevant factors were HBK's timing of acquisition, its commercial objective to improve the consideration, the limited assistance HBK's objections gave to the court's overall scrutiny of the scheme, and the company's three risky disclosure decisions (summarising rather than quoting the termination rights, declining further public disclosure before the meeting, and not announcing new information given at the meeting). Balancing those factors, the court concluded that HBK's objections were not frivolous but had not significantly assisted the court, and made no order as to costs.

Background and parties:

• The supplemental judgment follows a main sanction judgment ([2021] EWHC 967 (Ch)) and records reasons on costs in proceedings concerning the proposed scheme of arrangement for William Hill plc.
• The competing parties on the costs applications were the company (William Hill plc) and HBK Investments LP, an entity holding 100 registered shares but asserting an economic exposure equivalent to interest in approximately 100 million shares.

Nature of the applications:

• The company sought an order that HBK pay the additional costs incurred because of HBK's opposition to sanction. HBK sought an order that the company pay the costs it incurred in opposing sanction and seeking a further scheme meeting.

Issues framed:

1. What principles govern costs in Part 26 scheme proceedings; specifically the relevance of Snowden J's statement of principles in Re Virgin Active [2021] EWHC 991 (Ch).
2. Whether the court should order one party to pay the other’s costs given the nature and conduct of the parties and the utility of the objections to the court's consideration of sanction.

Court’s reasoning:

• The court adopted Snowden J's summary as the starting point: costs are in the court's discretion; the usual CPR 44.2 barometer does not ordinarily apply to Part 8/Part 26 scheme applications; nevertheless individual applications within scheme proceedings may attract the ordinary costs rules.
• The judge analysed HBK's position: its token registered holding, post-announcement acquisition (sometimes above the offer price), its commercial objective to improve consideration or see a competing bid, and the consequential genuine interest in the precise terms of the mutual termination rights disclosed in the explanatory materials.
• The court concluded HBK’s focus was a legitimate commercial interest but that HBK’s challenge did not materially assist the court’s overall scrutiny of the scheme; the company’s advisers and the company had in substance made the correct assessment about the level of disclosure required.
• The company’s decisions to summarise rather than substantially quote the termination right, to refrain from further public announcement before the meeting despite HBK’s enquiries, and to make no public announcement of the new information provided at the meeting were identified as risky but not culpable conduct sufficient to justify an award of costs against HBK.

Result: The court declined to make any order as to costs, exercising its discretion in light of the factors above and the public policy considerations set out in Re Virgin Active.

No order as to costs. The court exercised its discretion under the principles summarised in Re Virgin Active [2021] EWHC 991 (Ch) and, having balanced HBK’s commercial motives, timing of acquisition, limited assistance to the court’s overall scrutiny, and the company’s risky disclosure decisions, concluded that neither party should recover costs from the other.