Ultraframe UK Ltd v Clayton & Ors

The usual rule that costs follow the event remains subject to the court’s discretion. Where preliminary issues form only part of a complex, interlinked dispute, the court may reserve costs until the remaining proceedings have been determined, particularly where later findings of fraud or dishonesty could materially affect the justice of an immediate costs order. The court should consider whether postponement would cause substantial prejudice to the successful party. If no such prejudice exists, reserving costs may better enable the judge who sees the whole dispute to reach a just conclusion.

Ultraframe brought several interconnected proceedings concerning ownership and infringement of design rights in conservatory components. Preliminary issues had been ordered concerning ownership, subsistence and infringement. The claimant’s pleaded ownership case failed, although design right subsisted in nearly all the relevant parts and infringement was found.

The court was required to determine the consequences for costs. The London proceedings would be struck out because the claimant’s pleaded ownership case had failed. The claimant argued that costs should be reserved because the remaining proceedings raised allegations of fraud, forgery and dishonest conduct which might affect the eventual costs outcome.

1. Costs discretion. The CPR establishes the primary approach that costs follow the event, but the court retains a discretion to make a different order where the circumstances justify it. That discretion exists to achieve justice in the individual case.
2. Interlinked preliminary issues. The preliminary issues were an important skirmish within a much larger and interconnected dispute. The remaining actions were likely to be heard together, and the eventual trial judge would be better placed to assess the wider allegations and their relevance to costs.
3. Prejudice. An immediate order in favour of the defendants was not required merely because the claimant had lost the ownership issue. The court should consider whether reserving costs would severely prejudice the receiving party. On the evidence, the defendants would not suffer that degree of prejudice. The Burnden Group was not shown to be financially embarrassed, and the Fieldings were not shown to be in severe financial difficulty.
4. Disposition. The London Action was struck out because the claimant’s pleaded ownership case had failed. Nevertheless, the costs of that action and the costs relating to the preliminary issues were reserved for determination in the Leeds Actions, pending resolution of the wider litigation.