Sprint Electric Ltd v Buyer's Dream Ltd & Anor

Costs in unfair prejudice proceedings remain governed by the ordinary discretionary principles. The starting point is that costs follow the event, but the court must consider all the circumstances, including conduct, partial success and admissible settlement offers.

Issues should not be treated as separate contests mechanically. Facts relevant to an unsuccessful allegation may remain relevant to the petition as a whole. Issue-based costs orders are discouraged where a proportionate order can be made instead. A generally successful party may lose costs on issues on which it failed, and may in an exceptional case be ordered to pay the other party’s costs of those issues, without proof of unreasonable conduct.

The judgment determined costs arising from two connected sets of proceedings involving Sprint Electric Limited, Buyer’s Dream Limited, Dr Potamianos, Mr Prescott and Sprintroom Limited.

The court had already determined liability and quantum in the unfair prejudice petition, and related liability and quantum issues in the source code claim. Dr Potamianos succeeded overall in establishing unfair prejudice and obtaining substantial relief, although he failed on a number of issues. The central question was how the court should exercise its costs discretion in light of the parties’ partial success, conduct and settlement offers.

1. Applicable principles. The court held that there are no special costs principles for unfair prejudice petitions. The starting point remains that costs follow the event, subject to the court’s broad discretion under section 51 of the Senior Courts Act 1981 and CPR 44.3. All the circumstances must be considered, including conduct, partial success and admissible offers.
2. Facts relied on in support of an unsuccessful allegation may remain relevant to the petition as a whole. A petitioner’s failure to establish unfair prejudice by reference to particular facts does not necessarily mean that the petitioner has lost a distinct issue for costs purposes.
3. Issue-based costs orders are available, but are discouraged. Where practicable, the court should instead order payment of a proportion of costs or costs from or until a specified date. It is not necessary for a party to have acted unreasonably or improperly before being deprived of costs on an issue on which that party failed. In a suitable exceptional case, the successful party may also be ordered to pay the other party’s costs of that issue.
4. Settlement offers are relevant but do not operate mechanically. The court must assess their terms, conditions, timing and the surrounding circumstances. The offers in this case did not defeat the petition or provide a knock-out answer on costs, but they remained relevant to reasonableness and the exercise of discretion.
5. Dr Potamianos was the successful party overall. His conduct and failures on particular issues nevertheless justified a reduction in his recovery. The court ordered that he recover 65% of his liability-stage costs and 80% of his quantum-stage costs. Further questions concerning payment on account, interest and particular hearings were left for agreement or further argument.

The judgment itself records earlier decisions in the connected litigation, including the Court of Appeal’s decision in Prescott v Potamianos & Anor [2019] EWCA Civ 932. Those decisions formed part of the procedural background but were not decisions appealed in this judgment.