Ventura Capital GP Limited & Anor. v DnaNudge Limited

Costs ordinarily follow the event. A successful party should receive its costs in full unless an issue of conduct has affected how those costs were incurred. A discrete claim that ultimately fails does not automatically justify an issues-based reduction, particularly where the claim provided proper interim protection and substantially overlapped with the successful claim. Any reduction should reflect the limited additional evidence and submissions attributable to the unsuccessful issue. Permission to appeal should be refused where there is no real prospect of success and no other compelling reason for an appeal.

Following the substantive judgment in Ventura Capital GP Limited & Anor. v DnaNudge Limited, the court had declared an attempted conversion of Series A Preferred Shares invalid and ordered rectification of the company’s register. At the consequential hearing, the defendant accepted that the claimants had succeeded on construction of the articles but sought a substantial reduction in costs because the claimants had failed on an alternative claim under s. 633 of the Companies Act 2006.

The defendant also sought permission to appeal the construction decision. The issues were the appropriate costs order and whether there was a real prospect of success, or another compelling reason, justifying an appeal.

1. Costs. The normal rule is that costs follow the event. The court should discount the successful party’s costs only where some issue of conduct has affected the way in which the costs were incurred.
2. The claimants had obtained all the relief sought. Although the s. 633 claim had failed on unfair prejudice, the claim had properly provided interim protection against implementation of the variation. Much of the evidence and many of the submissions would have been required in any event. The additional work attributable to s. 633 was relatively minor.
3. Exercising its costs discretion, the court ordered that the claimants recover 90 per cent of their costs. A 50 per cent or 20 per cent reduction was excessive.
4. Permission to appeal. There was no real prospect of the Court of Appeal reaching a different conclusion on the true construction and application of articles 9.2(a) and 10.1. No other compelling reason for an appeal had been shown. Permission to appeal was therefore refused, subject to the defendant’s ability to renew the application to the Court of Appeal within 21 days.

• High Court: The substantive judgment, [2023] EWHC 437 (Ch), declared the share conversion invalid, ordered rectification of the register, and directed a consequential hearing on costs and permission to appeal.
• High Court: In the present ruling, the court ordered payment of 90 per cent of the claimants’ costs and refused permission to appeal.