The High Court has ordered Patrick O’Sullivan to pay costs after rejecting his request that each side bear its own costs following his unsuccessful shareholder application against Conroy Gold and Natural Resources plc.
Mr Justice Max Barrett delivered the costs judgment on 10 October 2017. The court had issued its principal judgment on 26 September and heard the costs application on 4 October. The judge said the usual rule was that costs follow the event and found no reason to depart from it.
O’Sullivan advanced two reasons for seeking no costs order. First, he had expressed concern during the proceedings that a proposed share subscription could dilute his holding and undermine efforts to pass shareholder resolutions. On 29 September, Conroy Gold announced a subscription for 700,000 new ordinary shares at €0.30 (UK£0.26) each, aiming to raise €210,000.
The judge said the evidence did not establish whether the subscription related to an asset acquisition or was intended to address cash flow. Either way, he found no authority or argument showing that a share subscription announced after the principal judgment should affect costs arising from the failed application. O’Sullivan’s counsel acknowledged that any allegation of wrongdoing over the timing was not an issue before the court; Conroy Gold’s counsel said the company rejected such an allegation.
O’Sullivan also argued that the litigation, or much of it, could have been avoided if the company had advised him before an extraordinary general meeting (EGM) about deficiencies under Article 85 of its articles of association. The judge rejected this as an attempt to revive, in the costs application, an argument that had not succeeded in the substantive proceedings. The principal judgment had found no legal duty on directors to “nudge” shareholders to comply with contractual obligations in the company’s articles.
The court also noted evidence that Conroy Gold itself did not clearly understand until the EGM on 4 August that O’Sullivan had not complied with Article 85. The judge observed that O’Sullivan had not said in evidence that he would have withdrawn his motions if informed earlier.
The court distinguished a case cited by O’Sullivan, Flannery v Dean, where the judge’s assessment of a plaintiff’s conduct and evidence had informed the costs decision. Finding no comparable circumstances here, the High Court ordered costs against O’Sullivan.