ClientEarth v Shell Plc & Ors

At the prima facie stage of an application for permission to continue a derivative claim, a company which volunteers submissions or attendance will not normally recover those costs. The rule is a procedural filter protecting the company from unnecessary involvement; it is not an absolute cap on the claimant’s costs exposure. The court may apply the general costs rule where unusual features make the company’s participation reasonable and proportionate. Relevant matters include the nature and seriousness of the allegations, the likely cost and impact of a substantive permission application, the real prospect that no prima facie case will be shown, the assistance the company can provide, what the claimant should have anticipated, proportionality and the balance of justice.

The court had already refused ClientEarth permission to continue a derivative claim against Shell Plc and its directors and dismissed the claim. The judgment determined the consequential costs dispute.

Shell sought all its costs, including its written submissions and attendance at the prima facie and oral renewal stages. ClientEarth relied on the usual costs protection in Civil Procedure Rules 1998, Practice Direction 19A, paragraph 2, because Shell had volunteered its participation without an express invitation from the court. The central issue was whether the circumstances justified departing from that normal approach.

1. The general rule under CPR 44.2(2)(a) is that the unsuccessful party pays the successful party’s costs, subject to the court’s discretion. Shell was the successful party because the claim had been dismissed.

2. Practice Direction 19A, paragraph 2 provides a derogation from that general rule. At the prima facie stage, a company that volunteers submissions or attendance will not normally recover the costs of doing so unless invited by the court. The provision operates as a filter protecting the company, which is not ordinarily expected to participate before the claimant has demonstrated a prima facie case. It does not impose an invariable rule or exist simply to limit a claimant’s costs risk.

3. The merits of the application have limited relevance because the normal context is an unsuccessful application. Greater significance may attach to: unusual features of the proposed application; whether those features make a substantive permission application significantly costly; the real possibility that no prima facie case will be established; the material assistance the company can give; what the claimant should have anticipated; the impact on the company; proportionality; the overriding objective; and the balance of justice.

4. This case was far from the norm. The claim was certain to attract substantial publicity, alleged serious breaches against all directors of a major international company, challenged future business strategy rather than specific loss-producing wrongdoing, sought strategic declaratory and injunctive relief, involved a very small shareholder holding, and was likely to make a full permission hearing unusually expensive and resource-intensive. Shell’s participation was proportionate, and its submissions materially assisted the court.

5. The court therefore applied the general rule to all costs of the proceedings. ClientEarth was ordered to pay Shell’s costs, to be assessed on the standard basis if not agreed. The parties were directed to submit an agreed draft order, which was also to record the refusal of permission to appeal.