Litigation Letter
Company schemes of arrangement
In the matter of Peninsular & Oriental Steam Navigation Code [2006] ChD 6 October
Prior to the CPR, special rules had been developed in cases concerning company schemes of arrangement that displaced the ordinary
approach to costs of the unsuccessful party paying the costs of the successful party. Under CPR rule 44.3(2)(b) the discretion
exists to depart from the ordinary approach of costs following the event, having regard to the overriding objective. The considerations
that had led the court to develop special rules in the schemes of arrangement cases prior to the CPR were equally applicable
when it came to giving effect to the overriding objective under the CPR and therefore the authorities were of continuing assistance
in deciding how the court’s power to award costs should be exercised. The authorities establish that the courts do not generally
make costs orders against objecting shareholders or creditors in shareholders’ or creditors’ schemes when their objections
were not frivolous and had been of assistance to the court.