M L Technology v BEAT Sam: £4m Costs but No Overall Winner [2026]
Detailed Assessment — 2026-08-14
In M L Technology Limited v BEAT Sam Limited [2026] EWHC 2142 (Ch), the High Court held that neither side was the overall winner after intellectual property litigation which generated total costs of about £4 million. Mr Daniel Alexander KC made no order as to costs, refused a retrospective costs budget increase and explained why any payment on account would have required a substantially more conservative approach than the usual percentages.
Overview
Date: 14 August 2026
Judge: Mr Daniel Alexander KC, sitting as a Deputy Judge of the Chancery Division
Court: High Court of Justice, Business and Property Courts, Intellectual Property List (ChD)
Citation: [2026] EWHC 2142 (Ch)
Hearing date: 21 July 2026
Nature of Proceedings: Consequentials judgment following trial of intellectual property and related commercial claims
Key Issues:
- Whether either side was the overall winner for the purposes of CPR 44.2
- Whether the parties' mixed successes justified an issue-based or percentage costs order
- Whether a retrospective increase of £259,069.67 to the claimants' disclosure budget should be approved
- The court's role in scrutinising agreed budget variations
- The appropriate payment on account where costs of about £4 million appeared potentially disproportionate
In M L Technology Limited v BEAT Sam Limited [2026] EWHC 2142 (Ch), the High Court held that neither side was the overall winner after intellectual property litigation which generated total costs of about £4 million. Mr Daniel Alexander KC made no order as to costs, refused a retrospective costs budget increase and explained why any payment on account would have required a substantially more conservative approach than the usual percentages.
---
The Litigation and Its Outcome
The proceedings arose from a wider commercial dispute concerning the Naurex business, intellectual property rights and sums said to remain payable under a share purchase agreement. The court delivered its main judgment on 18 June 2026, reported as [2026] EWHC 1483 (Ch). The later judgment dealt with consequential relief, damages procedure, the incidence of costs, a costs budget variation and a possible payment on account.
The outcome was mixed. M L Technology Limited succeeded on its trade mark infringement claim, but only for a shorter period than it had contended. Its website copyright claim failed. A claim concerning a consultancy contract produced an agreed payment of £4,000, while the joint tortfeasance and passing off claims failed. The defendants also failed on their principal case that they owned the relevant rights or enjoyed an unlimited right to use them.
The value of the remaining trade mark damages was unresolved. The court directed a streamlined summary procedure without further disclosure or expert evidence. It considered £50,000 a more realistic reference point on the material then available than the claimants' pre-trial settlement proposal of £1.6 million, but did not determine the award.
The costs stood in stark contrast to the financial value obtained. The claimants had spent more than £1 million, while the defendants had incurred more than £2 million. By the consequentials judgment, the combined costs were about £4 million.
---
The Retrospective Costs Budget Variation
The Proposed Increase
At the costs and case management conference, the claimants' agreed or approved budgeted costs were £452,268. Their total costs, including incurred and budgeted costs, were £716,239.24. The defendants' corresponding figures were £584,738 and £840,229.20. The combined costs already incurred and budgeted in March 2024 therefore exceeded £1.5 million.
The claimants subsequently applied to increase their disclosure phase by £259,069.67, together with increases of £29,500 for witness statements and £29,500 for trial preparation. They relied on additional data sources and a larger disclosure exercise than anticipated. Their proposed total costs would have risen to £1,034,308.91.
The defendants had made their own application for a £470,747.25 disclosure increase. Each side had broadly accepted the other's disclosure variation by the pre-trial review. The court nevertheless postponed the issue until after trial and ultimately refused the claimants' retrospective application.
Agreement Between the Parties Was Not Decisive
At [88], the court stressed that costs control is not solely a matter between the parties. The court does not merely approve whatever figures opposing solicitors are prepared to accept. Significant agreed increases may require closer scrutiny because reciprocal agreement can remove the usual adversarial challenge.
The proposed increases were substantial in both absolute and relative terms. The court also considered the existing expenditure high for the nature of the dispute. It applied the distinction drawn in Persimmon Homes Ltd v Osborne Clarke LLP [2021] EWHC 831 (Ch): a development may have costs consequences without being significant, and a significant development does not necessarily warrant the whole variation sought.
The Additional Disclosure Had Not Been Justified
The court had seen the disclosure at trial and was not persuaded that the additional exercise had materially assisted the resolution of the central issues. No focused evidence explained why more than a quarter of a million pounds in further disclosure costs had delivered proportionate value.
The judgment placed a heavy burden on a party seeking a retrospective increase where the existing budget already appeared disproportionate. That burden had not come close to being discharged. The timing also prevented the court from deciding, before the expenditure was incurred, whether the proposed work was likely to justify its cost.
At [94], the court captured the point succinctly:
> "Costs budgeting is intended to act as a constraint on future costs."
Budgeting is therefore not ordinarily a process for approving expenditure after the event. Earlier scrutiny allows the court to control whether anticipated work is justified and may also support settlement by limiting further cost escalation.
The limited provision for ADR reinforced the court's concern. Despite the scale of the dispute, only £5,000 had been budgeted by the claimants for ADR and settlement discussions. The court had not been shown evidence of serious third-party assisted attempts to resolve the matter before costs rose further.
The court therefore refused the retrospective variation even though the defendants did not actively oppose the disclosure increase. It noted that departure from the approved budget might remain possible in limited circumstances, but that was a separate matter from approving the variation.
---
Neither Side Was the Overall Winner
Success Required a Commercial and Realistic Assessment
The court began with CPR 44.2 and the general rule that the unsuccessful party pays the successful party's costs. In intellectual property litigation, the usual approach is to identify the overall winner before considering whether discrete issues justify deductions or costs in the other direction.
The judgment reviewed authorities including Lifestyle Equities CV v Royal County of Berkshire Polo Club Ltd [2023] EWHC 2923 (Ch), Roache v News Group Newspapers Ltd [1998] EMLR 161 and Rotam Agrochemical Co Ltd v GAT Microencapsulation GmbH [2018] EWHC 3006 (Comm). The question is who, as a matter of substance and reality, has won. Receipt of money is an important indication, but it is not conclusive where the sum is a small fraction of the relief pursued or the litigation had wider commercial objectives.
At [112], the court concluded that:
> Neither party can be said to be the “overall winner”.
Why the Claimants Had Not Won Overall
The trade mark claim succeeded only for a limited period. The defendants were already moving away from the Naurex brand and could have accelerated that process. The litigation did not achieve the wider commercial objective of forcing payment of the disputed tranches under the share purchase agreement.
Other parts of the claim failed or produced little value. The website copyright claim failed, the consultancy contract claim resulted in £4,000, and the joint tortfeasance and passing off claims were unsuccessful. The court regarded the success achieved as potentially Pyrrhic when measured against more than £1 million in the claimants' own costs and the possible exposure created elsewhere.
The claimants' open offer before trial also showed the gulf between the result sought and the result obtained. They had proposed settlement at £1.6 million plus all their costs. The modest relief eventually secured fell far short of that benchmark.
Why the Defendants Had Not Won Overall
The defendants could not be treated as the overall winners either. Their central case that BEAT owned the relevant rights, or had an unlimited right to use them, failed. BEAT was also held liable for trade mark infringement after the reasonable notice period expired.
Although some defendants defeated the joint tortfeasance allegations completely, the defendants had presented their costs case collectively. The court did not consider a more granular order in favour of individual defendants realistic on the material provided.
An Issue-Based Percentage Was Too Artificial
The court cross-checked its conclusion by asking what order might result if either side were treated as the winner subject to issue-based reductions. That exercise exposed two problems.
First, the evidence and argument on passing off, title, licences and joint tortfeasance overlapped. The issues were not readily separable for costs purposes. Secondly, neither side had supplied reliable evidence showing what proportion of its expenditure related to each issue. The defendants' estimate that 20 to 25 per cent concerned joint tortfeasance was given for the first time at the hearing and was unsupported by evidence.
An order giving either side an arbitrary percentage of its costs would not have reflected the litigation accurately. The court therefore made no order as to costs, leaving each side to bear its own costs of the proceedings. The costs of the future summary damages procedure were separate and left for the judge conducting it.
---
No Payment on Account Was Ordered
The absence of a costs order meant that no payment on account arose. The court nevertheless gave guidance in case the decision went further.
Where the court awards a percentage of costs in a costs-managed case and there is no apparent proportionality concern, a possible rule of thumb is 90 per cent of the remaining proportion of budgeted costs and 75 per cent of the remaining proportion of incurred costs. The judgment referred to Irwell Riverside Developments Ltd v Arcadis Consulting (UK) Ltd [2024] EWHC 2110.
Those percentages would not have been suitable here. The combined costs were about £4 million, and there was a real prospect that substantial incurred and some budgeted costs would be irrecoverable as disproportionate. One copyright claim was said to be worth no more than £17,000 and another £4,000. Even one per cent of the parties' total expenditure would have exceeded those values.
Had the claimants been treated as the overall winners, the court would not have ordered more than 50 per cent of the budgeted and incurred costs, and probably would have ordered less. It considered that the circumstances might even have justified no payment on account. These were observations only: the court did not order an interim payment or determine what either party would recover on assessment.
---
Practical Implications
For Costs Lawyers
1. Test success against the commercial objective. A monetary award or injunction does not necessarily make a party the overall winner. Compare the relief obtained with the case advanced, the offers made and the value which the litigation was intended to secure.
2. Support issue-based submissions with evidence. A percentage proposed for a discrete issue should be grounded in phase records, time analysis or other reliable material. An unsupported estimate given at the hearing may carry little weight.
3. Do not treat an agreed variation as automatic. Reciprocal acceptance of substantial Precedent T applications does not remove the court's responsibility to scrutinise significance, timing, causation, reasonableness and proportionality.
4. Apply before the work is done. A retrospective application loses the central benefit of costs management: allowing the court to control future expenditure. Evidence should identify the development promptly and explain why the proposed work is likely to deliver proportionate value.
5. Adjust payments on account for proportionality risk. The usual percentages are only starting points where the likely recovery is reasonably secure. Apparent disproportionality in incurred or budgeted costs may justify a much larger margin, or no payment at all.
For Litigation Practitioners
1. Define what winning means before trial. The costs result may depend on the real commercial objective, not simply the number of issues won. Offers and pleaded relief can provide powerful evidence of what the litigation sought to achieve.
2. Keep costs proportionate to the relief at stake. Limited intellectual property or contractual relief may not justify multi-million-pound litigation. The court will examine the relationship between expenditure, outcome and the value of individual claims.
3. Invest in resolution as well as disclosure. Heavy expenditure on document review will attract scrutiny where little has been allocated to mediation or other assisted settlement processes.
4. Make realistic offers early. Offers made after most costs have already been incurred provide less protection and may carry less weight in the final CPR 44.2 exercise.
5. Preserve issue-level costs information. If mixed success is likely, contemporaneous records of work by issue may enable the court to make a principled percentage order instead of treating the proposed figures as arbitrary.
---
Conclusion
M L Technology v BEAT Sam demonstrates that the search for an overall winner is a commercial and evaluative exercise. Both sides obtained limited successes, but neither achieved the result for which it had fought. Against approximately £4 million in combined expenditure, the court considered no order as to costs the just outcome.
The costs budget ruling is equally practical. Party agreement does not bind the court, and a substantial retrospective variation requires compelling evidence of both justification and value. Costs budgeting is intended to control future expenditure, not routinely to legitimise an overspend after the work has been completed.
The payment-on-account observations must be read with care. No interim payment was ordered. The decision instead shows why apparently disproportionate expenditure can displace familiar percentage starting points and require a far more cautious estimate of the irreducible minimum likely to be recovered. This analysis is published by Mackenzie Costs for practitioners dealing with costs management, mixed success and payments on account.
---
Citation: M L Technology Limited and Naurex Limited v B.E.A.T. SAM Limited trading as Naurex B.E.A.T. SAM and Others [2026] EWHC 2142 (Ch)
Full judgment available at: The National Archives
Related Specialist Support
Related Cases
View all case law updates | Our services | Contact us