Peter Waddell Holdco Ltd v Bluebell Cars Holding Ltd

Written Submissions filed on: 16 and 20 December 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on 15 January 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

This judgment is concerned with the costs of the applications determined by a judgment I handed down on 28 November 2024 ( [2024] EWHC 3040 (Ch)) (the “November Judgment”). I shall use the same abbreviations I used in the November Judgment. It is not necessary for me to describe the underlying dispute, or the course which the Part 7 claim and the petition have taken in any detail because these matters are described in the November Judgment.

In light of the way in which TopCo, MidCo, BidCo and BMW (the “BIG Parties”), Investor, Mr Vaughan and Mr Fardad have presented their submissions, I shall deal both with the basis (standard or indemnity) on which costs should be awarded and the question of whether I should make a summary assessment later in this judgment. The remaining costs disputes can most conveniently be determined separately in relation to each of the applications determined at the November hearing. I shall do so in the order in which they are dealt with in the version of the draft order prepared by PWHL and Mr Waddell. They are as follows:

i) The application by PWHL as part of the Petition Application for permission to amend the petition and points of claim, with consequential directions for the service of amended points of defence and replies (the “Petition Amendment Application”), which was contested in part at the November hearing by TopCo, Mr Fardad and Mr Vaughan.

ii) The application by PWHL as part of the Petition Application for a direction that TopCo be prevented from filing and serving points of defence in the petition (the “Debarring Application”), which was contested at the November hearing by Topco.

iii) The application by PWHL and Mr Waddell as part of the Part 7 Application for permission to amend the claim form and to file and serve re-amended particulars of claim, with consequential directions for the service of amended defences and replies (the “Part 7 Amendment Application”), which was not contested at the November hearing.

iv) The application by PWHL and Mr Waddell as part of the Part 7 Application for a stay of the Part 7 claim until after resolution of the petition (the “Stay Application”), which was contested at the November hearing by the BIG Parties and Investor.

It is unnecessary for me to address the costs of the application relating to expedition because the parties are agreed that these be Investor's costs in the petition. It is also unnecessary for me to deal with the costs of PWHL's application for permission to join Mr Fardad and Mr Vaughan as respondents to the petition (the “Joinder Application”). PWHL's initial position in relation to the costs of the Joinder Application was that the right order was costs in the petition, while TopCo, Mr Vaughan and Mr Fardad said that there should be no order for costs. There is no longer an issue because, in its reply submissions on costs, PWHL accepted that the right order was for there to be no order as to costs. I also understand it to be common ground that general case management costs be costs in the petition and the Part 7 claim as the case may be.

The Petition Amendment Application

The parties' positions in relation to the costs of the Petition Amendment Application are as follows:

i) TopCo and Mr Vaughan seek an order that PWHL pay their costs of contesting the amendments which were not allowed, to be summarily assessed on the indemnity basis. TopCo also seeks an order that PWHL pay its costs of and occasioned by the amendments to the petition on the standard basis.

ii) Investor was neutral on the Petition Amendment Application and seeks no order as to costs, while Mr Fardad seeks an order that PWHL pay his costs to be summarily assessed on the standard basis. Investor also seeks an order that PWHL pay its costs of and occasioned by the amendments to the petition on the standard basis.

iii) PWHL's primary position is that the costs should be reserved to the further CMC to be listed on the first convenient date after 7 April 2025. Its alternative position is that the costs of contesting the amendments should be costs in the case as between PWHL and TopCo and that PWHL should pay 75% of Investor's and TopCo's costs consequent on the amendments.

The first issue is whether I should decide any questions of costs at all at this stage. PWHL says that it would be appropriate for both the costs of contesting amendments to the petition and the costs consequential on those amendments to be reserved to the next CMC on the grounds that TopCo's response (when it comes) will be relevant. It is said that, if the case pleaded in TopCo's defence were to be amended in a manner which demonstrated that PWHL's original criticisms of TopCo's partiality in favour of Investor might have been well-founded, this would show that a proportion of the costs of the contested amendments should be paid by TopCo. It was also said that TopCo might plead matters in its amended points of defence which should have been pleaded earlier, which might result in wasted costs.

In my view, none of these reasons provides a proper justification for reserving costs to a future CMC after the stage at which the parties' pleaded cases have crystalised. The Petition Amendment Application was concerned with drafts of an amended petition and amended points of claim which PWHL sought permission to file and serve. No alternative version was advanced before or at the November hearing and I refused permission on the grounds that the case as formulated either raised allegations which were not arguable or, to the extent that they alluded to arguable allegations, they were not in a form for which permission to amend could properly be granted. As to this latter point, I agree with TopCo's submission that it was not for TopCo to reformulate PWHL's draft amendments into an appropriate form for it to pursue.

I also think that this latter point is an answer to PWHL's alternative position, which gives rise to the second issue. It seeks by way of alternative an order that the costs of contesting the amendments should be costs in the case because it was successful in the element of its proposed amendments which were concerned with the manner in which the points of defence were pleaded. It relies on [58] of the November Judgment in which I concluded that “PWHL has a prospect which is more than fanciful of establishing that TopCo's approach to the form of its defence to the petition is capable of being stigmatised as conduct amounting to unfairness or breach of duty by its directors”. However, I went on to explain in [59] that the existing form of PWHL's petition was inadequate and refused the relief sought on those grounds. In these circumstances, it is not to the point that, if the case had been appropriately pleaded in the first place, permission might have been granted.

It follows that the costs in relation to the Petition Amendment Application, which were incurred at and in preparation for the November hearing, ought to be determined at this stage. It also follows that, because TopCo was the successful party on those aspects of the application which were opposed and because it is not suggested that TopCo delayed in consenting to those amendment which were not disputed, TopCo's costs of the Petition Amendment Application should be paid by PWHL as the unsuccessful party.

The next question is whether Mr Fardad and Mr Vaughan should also be entitled to their costs. PWHL submitted that it would be wrong in principle for such an order to be made because Mr Fardad and Mr Vaughan were not yet parties to the petition, even though they had consented to being joined. It was also said that Mr Edward Davies KC (acting for TopCo and Mr Vaughan) had emphasised that fact when explaining why it was proper for TopCo itself (rather than Mr Vaughan) to be disputing the TopCo Defence Allegations, while Mr George Spalton KC (for Investor and Mr Fardad) made no submissions on the Petition Amendment Application at the November hearing.

Mr Fardad submitted that it would be absurd to deny him his costs because, if he had not opposed the Petition Amendment Application, it would have been possible for PWHL to serve the amended petition and points of claim on him, even if permission...