Mariya Vasilyevna Lish v The Northern Block Limited & Anor

David Stone (sitting as Deputy High Court Judge) :

1. This is my judgment following the hearing of an application brought by the Defendants, The Northern Block Limited ( Northern Block ) and Mr Jonathan Hill ( Mr Hill ) for strike out and summary judgment of the whole of the action brought by the Claimant, Mrs Mariya Vasilyevna Lish ( Mrs Lish ).

2. Mrs Lish is a designer of typefaces. She worked with Northern Block between 2012 and 2022 designing typefaces. Mrs Lish is a native speaker of Belarusian, and worked for Northern Block on a number of Cyrillic typefaces (amongst other things) – the Cyrillic typefaces are relevant to an aspect of her claim. Northern Block is a type foundry – a business which provides designs for typefaces. Mr Hill is a director and owner of Northern Block.

3. Mrs Lish’s arrangement with Northern Block (to which I return below) was based on an agreement entered into in 2012 (the 2012 Agreement ) which was informally varied in 2015, although there is disagreement on the terms of the 2015 variation. The arrangement, whatever its terms, concluded on 20 September 2022 by notice from Mrs Lish in writing dated 17 May 2022. Northern Block continued to exploit typefaces developed by Mrs Lish, leading to complaints from Mrs Lish. Northern Block said that Mrs Lish had been an employee and therefore did not own rights in the typefaces she had developed in the course of her employment. Mrs Lish relied on the terms of the 2012 Agreement to say that she owned copyright in the typefaces she had developed, and that Northern Block was therefore infringing.

4. Shortly thereafter, on 1 November 2022 Mrs Lish commenced proceedings against Northern Block and Mr Hill in the County Court at Newcastle (the Newcastle Claim ) seeking under the terms of the 2012 Agreement: (a) a declaration that she was the owner of the intellectual property rights in various typefaces; (b) injunctions to restrain further infringement of her rights; (c) financial remedies for past acts of infringement; and (d) an account for sums Northern Block had received after termination of the 2012 Agreement. Mr Hill was said to be a joint tortfeasor with Northern Block.

5. On 5 May 2023 Mrs Lish made an offer under Part 36 of the CPR to settle the Newcastle Claim (the Part 36 Offer ). Correspondence ensued and a month later, on 13 June 2023, Northern Block and Mr Hill accepted the Part 36 Offer thus settling the Newcastle Claim.

6. On 22 March 2024, Mrs Lish then commenced these proceedings. The Claim Form for these proceedings describes the claim as “for breach of contract, namely a licence agreement [meaning the 2012 Agreement], breach of obligations following acceptance of a Part 36 offer, and copyright infringement”.

7. This application for strike out and summary judgment was issued by the Defendants shortly thereafter on 30 April 2024 and prior to filing a Defence. It was not heard for over a year for reasons that do not presently matter. For the purposes of the strike out application, the Defendants say that these proceedings should be struck out because the claims relate to matters which either were, or could have and should have been, raised in the Newcastle Claim. The Defendants say they should not be vexed twice with litigation concerning the same subject matter. The summary judgment application involves interpretation of the Part 36 Offer in relation to one typeface.

8. At the commencement of the hearing of the Defendants’ application, I asked the parties if they wished the matter to be transferred to the Intellectual Property Enterprise Court (the IPEC ), with the application then to be heard immediately but subject to the costs protections provided in the IPEC. Mrs Lish declined that invitation. I return to this issue below.

9. Mr Thomas St Quintin appeared for Mrs Lish instructed by McDaniels Law. Ms Nicole Bollard appeared for the Defendants instructed by Loney Stewart Holland. It is also relevant to note that the Defendants were represented by Harper James Solicitors until January 2025. I had the advantage of full written skeleton arguments from both sides, and nearly a full day of submissions. The parties were agreed as to the principles of law I should apply. Witnesses

10. On behalf of the Defendants, two witness statements were submitted by Mr Hill, and two by the Defendants’ former solicitor, Ms Lindsay Gledhill. On behalf of Mrs Lish, I received one witness statement from Mrs Lish, and three from her solicitor, Ms Kelly Hudson. I remarked at the hearing that much of the solicitors’ witness statements was submission and I would treat it as such. There was also significant repetition of what Mr Hill and Mrs Lish had said in their statements: this was unnecessary. Something does not become more likely to be true by having a legal practitioner repeat it. Typefaces

11. It is necessary to say something briefly about typefaces. The parties sometimes referred to typefaces as fonts – for consistency, I have used the word “typefaces”, other than where the word “fonts” appears in excerpts from documents.

12. A typeface is a body of individual glyphs that make up a language system, such as an alphabet, numbers and punctuation marks. Each character is available in multiple glyphs, representing upper and lower cases, bold, italics as well as (often) different weights (from thin to bold). A commercially marketable typeface needs more than 400 glyphs to support many of the major European languages (called Extended Latin). Whilst an Extended Latin typeface can handle, for example, French and Spanish, it cannot be used for languages such as Ukrainian which use the Cyrillic alphabet. The additional characters necessary are called a language extension. For Basic Cyrillic, this involves adding 61 characters. 17 of those characters can been automatically generated using commercially available software, but the others need to be designed. Of further importance is the concept of kerning, which is the spacing of characters within a typeface.

13. Thus, a commercially available typeface which includes a Cyrillic extension may include hundreds or thousands of characters. I was told that a typeface with eight weights can be licensed for £119.95 – and each weight licensed for £28.95.

14. Cyrillic extensions (like other language extensions) are not licensed separately – this would not provide a user with sufficient letters to be able to construct proper sentences. As noted above, some Extended Latin characters are necessary to write in a language which uses the Cyrillic alphabet.

15. Typefaces are given names – Times New Roman and Arial are well-known examples. This Claim

16. I have set out above the high-level description of this claim taken from the Claim Form. It was accompanied by Particulars of Claim drafted by specialist counsel and signed under a Statement of Truth by Mrs Lish dated 22 March 2024. Having set out the history of the matter as alleged, the Particulars of Claim detail the acts of which complaint is made as follows (adopting, in italics, the headings used in the Particulars of Claim): i) Account and Payment of Unpaid Royalties : Mrs Lish says that under the terms of her arrangement with Northern Block, Northern Block was obliged to pay her 60% of the sums Northern Block received from the exploitation of “C’s Typefaces”. “C’s Typefaces” is defined in paragraph 14 of the Particulars of Claim as “[e]ach of the designs for the typefaces provided by [Mrs Lish] to [Northern Block]”. I will call this the Unpaid Royalties Claim ; ii) Failure to Disclose and/or Account for Sublicence(s) : This claim relates only to a typeface called Neusa Next. Mrs Lish says that the terms of the settlement of the Newcastle Claim require Northern Block to provide details of any sublicences to third parties of the Neusa Next typeface, and to account to her for 60% of the revenues from any such sublicences. Mrs Lish also says that Northern Block should not currently be offering the Neusa Next typeface to third parties. I will call this the Neusa Next Claim ; and iii) Continuing Infringement by Offer of Typefaces Infringing C’s Typefaces : Mrs Lish says that contrary to the Defendants’ obligations following settlement of the Newcastle Claim, Northern Block has continued to infringe Mrs Lish’s copyright in four typefaces (Neusa, Tautz, Quiber and Stolzl), and the Cyrillic extensions of a further four typefaces (Knul, Loew Next, Oyko and Eund). I will call this the Infringements Claim .

17. When asked, Mrs Lish’s counsel indicated (on instructions) that the claim is worth in the region of £300,000. The Defendants deny liability at all, but said that, at best, even if entirely successful, the claim is worth approximately £50,000. The Application

18. The application notice dated 30 April 2024 seeks: i) summary judgment of the Neusa Next Claim pursuant to CPR 24.3; and ii) strike out of the Unpaid Royalties Claim and the Infringements Claim as an abuse under CPR 3.4(2)(b).

19. I shall deal with them in that order. Summary Judgment on the Neusa Next Claim The Law

20. CPR 24.3 provides: “The court may give summary judgment against a claimant or defendant on the whole of a claim or on an issue if— (a) it considers that the party has no real prospect of succeeding on the claim, defence or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.”

21. Counsel for both sides referred me to the judgment of Lewison J (as he then was) in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15], approved by the Court of Appeal in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098 and TFL Management Services Ltd v Lloyds Bank [2014] 1 WLR 2006 at [26]: “… the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows: (i) The court must consider whether the claimant has a ‘realistic’ as opposed to a ‘fanciful’ prospect of success: Swain v Hillman [2001] 1 All ER 91 ; (ii) A ‘realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]; (iii) In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman ; (iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel , at para 10; (v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 ; (vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63 ; (vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 .”

22. Both sides were also agreed that the usual rules of contractual interpretation apply to the Part 36 Offer: i) The court will seek to ascertain the objective meaning of the language used by the parties in the agreement, in the relevant context: Wood v Capita Insurance Services Ltd [2017] AC 1173 . ii) Where the natural and ordinary meaning of the words used is clear and unambiguous the court should apply it but where there is ambiguity the court will seek to favour commercial common sense: Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 per Lord Clarke JSC at [14-30]. iii) Commercial common sense cannot be applied retrospectively and cannot be invoked where there is no ambiguity: Arnold v Britton [2015] UKSC 36 . The Parties’ Positions

23. The Defendants say that the Neusa Next Claim involves a discrete point of interpretation of the Part 36 Offer which settled the Newcastle Claim, and is therefore suitable for summary judgment.

24. Relevantly, the Part 36 Offer provided (emphasis added): “Our client has confidence in her claim, as we have stated throughout. The only benefit realistically to our client in settlement now is to avoid the further costs of progressing to trial, a level of which will always be irrecoverable even when our client wins her case as expected. Further, our client simply wishes to move forward and progress with her own business rather than continue protracted litigation with your clients, as we have said previously. Therefore, we are instructed at this stage to make the following offer on Part 36 terms, and thus our client’s offer is as follows: • Your clients will confirm and acknowledge our client’s ownership of the IP in the relevant typefaces, as particularised in our clients [sic] draft amended Particulars of Claim served on 04 May 2023 . Please note this list sets out details of the typeface names but will include, obviously, every font/glyph within the relevant typeface family as is also clear from our client’s pleading. Your clients are aware of the full extent and ambit of each typeface, having marketed the same. • Any relevant sub-licences your clients claim they are still contractually obliged to maintain under the [2012 Agreement] will be disclosed in full to our client. Your clients will pay our client 60% of the licence fee for that licence for the remainder of its term from the date of acceptance of this offer. Any licence that continues on a rolling basis unless terminated will be terminated by your clients at the earliest time that such licence permits. • Your clients will cease offering and will not in future offer or purport to grant or renew any licence to use the typefaces or any infringing typefaces. • Your clients will pay our client’s costs on Part 36 terms.”

25. The Defendants say that the Part 36 Offer was limited only to require disclosure of sublicences and payment of future income received by Northern Block in relation to those typefaces listed in paragraphs 9 and 16 of the draft Amended Particulars of Claim in the Newcastle Claim (to which I return below). Neusa Next was not listed in paragraphs 9 and 16 of the draft Amended Particulars of Claim, and therefore, the Defendants submitted, does not fall within the ambit of the requirements of the Part 36 Offer.

26. The Part 36 Offer and the draft Amended Particulars of Claim in the Newcastle Claim use different definitions. As can be seen from the above, the Part 36 Offer refers to “relevant sub-licences” as well as “relevant typefaces, as particularised in our clients [sic] draft Amended Particulars of Claim served on 04 May 2023”.

27. The draft Amended Particulars of Claim state at paragraph 9: “9. Pursuant to the [the 2012 Agreement], between 2012 and 2015 the Claimant provided to the First Defendant for licensing, and it accepted, the designs for the Typefaces known by the following names: 9.1. Baufra 9.2. Neusa …”

28. References follow to other typeface names, but not Neusa Next.

29. At paragraph 16, the draft Amended Particulars of Claim note: “16. Pursuant to the [2012 Agreement] as amended in 2015, between 2016 and 2021 the Claimant provided to the First Defendant for licensing, and it accepted, the designs for the Typefaces known by the following names: 16.1. Erbaum … 16.14. Hefring Slab Variable 16.15. Neusa Next 16.16. Calder Script …”

30. The Defendants say that, because Neusa Next is crossed out, that is an admission that Mrs Lish did not own rights in Neusa Next. However, paragraph 17A of the draft Amended Particulars of Claim states: “17A. Further, in or around 2017, a design of a typeface called “Neusa Next” was created for the First Defendant by a person or by people other than the Claimant, in particular by Alessia Mazzarella. Neusa Next was created by copying the design of the typeface “Neusa”, and it reproduces the whole or a substantial part of the design of the typeface “Neusa”.”

31. Relevantly, the 2012 Agreement provides: “This covers all finished typefaces that [Mrs Lish] provides to [Northern Block] with intent to license.”

32. The Defendants submit that as Neusa Next was not a “finished typeface” that Mrs Lish provided to Northern Block, it is not covered by the first two bullet points in the Part 36 Offer. Rather, the Defendants say that Neusa Next is only covered by the third bullet point, which refers to both “the typefaces or any infringing typefaces”. The Defendants say that Neusa Next falls within the latter category – and the claim in relation to it was compromised by acceptance of the Part 36 Offer, but not on the basis that the first two bullet points of the Part 36 Offer had to be complied with. Thus, the Defendants say that Mrs Lish’s claim for information and payment now in relation to Neusa Next is unsupportable, as the Part 36 Offer never provided for that.

33. Counsel for Mrs Lish submitted that the Defendants’ interpretation of the various documents is not correct, and that, in any event, the issue is not appropriate for summary judgment.

34. At the hearing, Mrs Lish’s counsel took me to images of the Neusa and Neusa Next typefaces, shown here: submitting that the only difference between them was the “tail” of the capital Q. Given how close Neusa Next is to the Neusa typeface designed by Mrs Lish, Northern Block, he submitted, must have had a licence from Mrs Lish to be able to exploit Neusa Next.

35. He took me to further provisions of the 2012 Agreement, including the provision (on the last page of the 2012 Agreement) which deals with post-termination arrangements: “[Northern Block] will continue to account to [Mrs Lish] for payment on sales of disks and all other products containing Typefaces from [Mrs Lish’s] work after the time of termination.”

36. I understand because Typefaces is capitalised that it refers to the earlier definition – being finished typefaces sent by Mrs Lish to Northern Block with intent to license to Northern Block.

37. Mrs Lish’s counsel also pointed to the second page of the 2012 Agreement which provides that the typefaces provided by Mrs Lish may be used by Northern Block “in any character or form, whether in a composite, blurred, distorted, enhanced or otherwise altered by any means.” He characterised Neusa Next as the Neusa typeface “altered”, and therefore said it falls within the first and second bullet points of the Part 36 Offer – such that it is clear that Mrs Lish claimed royalties in relation to it under the terms of the Part 36 Offer. This, he says, was expressed in paragraph 23 of the draft Amended Particulars of Claim (with the underlining showing the material added by the amendments): “23. As a consequence, from the end of 20/09/2022, the First Defendant had no right to deal in articles specifically designed or adapted for producing material in C’s Typefaces or any of them or any part of them, and/or in the design of the typeface “Neusa Next” or any part of it (“Articles”), and had no right to make or to possess such Articles for the purpose of dealing with them or to authorise and/or procure any such acts. Further, the First Defendant had no right to undertake any acts restricted by the Claimant’s copyright in relation to things that are not articles specifically designed or adapted for producing material in a particular typeface within the meaning of ” s.54 of the Copyright Designs and Patents Act 1988 . Discussion

38. Having carefully reviewed the various documents to which I was taken at the hearing, I am unable to accept the Defendants’ counsel’s submissions as to the meaning of the Part 36 Offer, nor that this is an issue suitable for summary judgment in favour of the Defendants. I do not consider that the words of the Part 36 Offer clearly have the interpretation she urges on the Court such that Mrs Lish has no real prospects of success. The second bullet point of the Part 36 offer makes no references to typefaces, either those defined in the draft Amended Particulars of Claim or otherwise. It refers only to “relevant sub-licences”. That could readily apply to sub-licences of typefaces which fall within the definition of Typefaces in the 2012 Agreement, and/or the typefaces named in paragraphs 9 and 16 of the draft Amended Particulars of Claim, and/or the definition of “C’s Typefaces” from the draft Amended Particulars of Claim and/or the typefaces referred to within paragraph 17A of the draft Amended Particulars of Claim where Neusa Next is clearly put in issue. In any event, it seems to me that the Neusa Next typeface falls squarely within the first bullet point of the Part 36 Offer, being a typeface “as particularised in [Mrs Lish’s] draft [A]mended Particulars of Claim served on 04 May 2023”. Neusa Next appears in that document multiple times, within the allegations of infringement and the prayer for relief. It is not listed in paragraphs 9 or 16, but it is particularised in other parts of the document. Further, the first bullet point of the Part 36 Offer seeks to include amongst the relevant typefaces “obviously, every font/glyph within the relevant typeface family”. This clearly includes those glyphs in Neusa Next that are the same as glyphs in Neusa.

39. Whilst both parties urged me not to conduct a mini-trial, that is, in essence, what happened at the hearing, with both counsel significantly exceeding their time estimates with detailed submissions (in addition to the written submissions with which I had been provided). I was taken well into the detail of the matter, as these paragraphs demonstrate. Despite (or perhaps because of) that, it is clear to me that Mrs Lish has real prospects of success on the question of the meaning of the Part 36 Offer, and it would not be appropriate for me to determine the issue summarily in the Defendants’ favour. The issue of no other compelling reason therefore does not arise.

40. I therefore reject the Defendants’ application for summary judgment in relation to the Neusa Next Claim. The Strike Out Application

41. CPR 3.4(2)(b) provides that the court may strike out a statement of case (or part of it) if it appears to the court that the statement of case is an abuse of the court’s process, or is otherwise likely to obstruct the just disposal of the proceedings. The abuse relied on by the Defendants in their application relates to what is said to be Mrs Lish’s attempt to relitigate issues which were raised, or should have been raised, in the Newcastle Claim, under the principle in Henderson v Henderson (1843) Hare 100. The Defendants also say that parts of this claim were compromised by acceptance of the Part 36 Offer. The Law

42. The parties were ad idem as to the modern interpretation of Henderson v Hernderson , including as set out in Johnson v Gore Wood & Co [2002] 2 AC 1 and Aldi Stores Ltd v WDP Group Plc [2008] 1 WLR 748 . In the former, Lord Bingham of Cornhill set out the public policy behind the rule in Henderson v Henderson – that there is a public interest in the finality of litigation both for the public generally and for the defendant.

43. In Aldi v WDP , Thomas LJ (as he then was) approved at [6] the following summary of Clarke LJ’s comments in Dexter v Vlieland-Boddy [2003] EWCA Civ 14 at [49]. “49… i) Where A has brought an action against B, a later action against B or C may be struck out where the second action is an abuse of process. ii) A later action against B is much more likely to be held to be an abuse of process than a later action against C. iii) The burden of establishing abuse of process is on B or C as the case may be. iv) It is wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. v) The question in every case is whether, applying a broad merits based approach, A's conduct is in all the circumstances an abuse of process. vi) The court will rarely find that the later action is an abuse of process unless the later action involves unjust harassment or oppression of B or C.”

44. Counsel for Mrs Lish referred me to a series of other judgments applying the principles set out by Clarke LJ, conceding that each was an application of those principles to the particular facts of the case before each court. As Clarke LJ’s statement of the law is clear, I am not convinced that these additional authorities provide significant additional guidance – other than by way of demonstrating how other courts have applied Clarke LJ’s statement of the law to other facts. However, for completeness, I have set them out here, and have had them in mind in reaching my own conclusions on the facts before me.

45. Counsel for Mrs Lish referred me to Outotec (US) Inc and Anor v MW High Tech Projects UK Ltd [2024] EWCA Civ 844 where Coulson LJ said at [53.3]: “53.3 The burden rests on the defendant to establish that it is an abuse of process for them to be subjected to the second action ( Johnson v Gore Wood & Co , Michael Wilson [ [2017] EWCA Civ 3 ]). Because the focus is on abuse, it will be rare for a court to find that a subsequent action is an abuse unless it involves “unjust harassment or oppression” (Lord Clarke MR in Dexter and Lloyd LJ in Stuart v Goldberg Linde [ [2008] EWCA Civ 2 ]). Putting the same point another way, the courts will not lightly shut out a genuine claim unless abuse of process can clearly be made out (Lloyd LJ in Stuart v Goldberg Linde , and Simon LJ in Michael Wilson ).”

46. The following two paragraphs are also apposite: “53.4 In ongoing litigation, a party who realises that he may have connected claims which are not currently pleaded must follow the Aldi guidelines, and at least raise with the court the existence of such new claims. A breach of those guidelines will give rise to a “high risk” that the second action will be found to be an abuse of process ( Stuart v Goldberg Linde ) and will always be a relevant factor to be taken into account in any application to strike out ( Gladman [ [2013] EWCA Civ 1466 ]). 53.5 However, a breach of the Aldi guidelines does not automatically mean that the second action is an abuse of process and will be struck out. The Aldi guidelines are simply one facet of the broad merits-based evaluation ( Otkritie [ [2017] EWCA Civ 274 ]).”

47. Counsel for Mrs Lish also referred me to the judgment of Nugee LJ in Orji and Anor v Nagra and Anor [2023] EWCA Civ 1289 : “But what all the cases have in common is that the second claim is an attempt to reopen something that has already been decided. That is where the abuse lies. That does not mean there must have been a trial of the first claim. The principle is capable of applying if the previous proceedings have been settled by agreement. A settlement by the parties is just as much a final resolution of a claim as a judgment by a court, and it can be just as abusive to seek to circumvent it by putting forward a second claim. The principle is also capable of applying where there has been an interlocutory decision in the very same proceedings, as illustrated by the case referred to by Coulson LJ in paragraph 46 above of Seele v Tokio [ [2009] EWHC 255 (TCC) ] (in fact a decision of his own although he modestly does not say so). But if there has not been any previous decision, there is nothing for the principle to bite on. It cannot be said that a litigant is being abusive in seeking to have a second bite at the cherry if they have not yet had their first.”

48. Counsel for Mrs Lish also referred me to Playboy Club London Ltd v Banca Nazionale Del Lavoro SpA [2018] EWCA Civ 2025 , particularly at [51] and [53]: “51. In assessing whether it is an abuse of process for the Club to institute and maintain its deceit claim after the trial of the negligence claim, I consider it is important that the new evidence from Mr Turlon and in relation to the Les Ambassadeurs incident came into the Club’s hands after the material time, i.e. after the commencement of that trial. This is not a case in which a party has deliberately decided for tactical reasons to keep material up its sleeve in relation to a deceit claim until after it sees what happens with its negligence claim, and then institutes later proceedings in deceit relying on material which was already available to it at the earlier stage. To proceed in that way might well be an abuse of process: see Johnson v Gore-Wood at p. 31B per Lord Bingham, quoted above; and Stuart v Goldberg Linde [2008] EWCA Civ 2 ; [2008] 1 WLR 823 , [77] (Sedley LJ) and [79] (Sir Anthony Clarke MR). But in this case, the fair inference is that the Club has proceeded to bring the deceit claim by reason of new evidence becoming available which is highly material and strongly supportive of that claim. …

53. The Club was entitled to treat the new evidence as a decisive matter which justified it in bringing its deceit claim after the trial of the negligence claim. The new evidence means that the Club is in a much stronger position to allege deceit on the part of Ms Guidetti, acting for BNL, than it was in prior to that trial.”

49. Stuart v Goldberg Linde [2008] EWCA Civ 2 is referred to in the authorities above. It raised squarely the question of whether in its assessment of abuse, the court is entitled to consider the claimant’s failure to use due diligence in attending to his/her own interests. At [59], Lloyd LJ said this: “59. Failure to use reasonable diligence. As for the relevance of a claimant's failure to use what the court might consider to be reasonable diligence in finding out facts relevant to whether he has a possible claim, it may be that this could possibly be relevant to the enquiry described by Lord Bingham, depending on the circumstances. On the other hand, it does not seem to me that there can be a general principle that a potential claimant is under a duty to exercise reasonable diligence, not yet having brought proceedings asserting a particular claim, to find out the facts relevant to whether he has or may have such a claim. Moreover, I do not see how it can be relevant at all that the claimant may have failed to use due diligence in attending to his own interests at the time of the transaction or the events giving rise to the claims asserted. Unless, on the merits, that is a complete and inevitable defence to the claim, it seems to me to be entirely irrelevant to the enquiry which is necessary under Johnson v Gore Wood . Nothing in Sir James Wigram’s observations in Henderson v Henderson supports that. That, however, is the context of the Master’s comments on lack of reasonable diligence in paragraphs 70 and 72. If relevant at all, an enquiry as to any suggested lack of diligence on the part of the claimant would have to involve considering the circumstances of the particular claimant, including what knowledge he did have of the facts at any relevant stage, in order to decide whether he knew enough to put him on enquiry so as to try to find out more. In this context, as generally, it is also relevant that the onus is always on the defendant to show that the claimant’s conduct is an abuse of process.”

50. As I said, I have had these authorities well in mind in reaching my own conclusions on the facts before me. The Unpaid Royalties Claim

51. The Unpaid Royalties Claim is set out in paragraphs 38 to 42 of the Particulars of Claim in this action: “38. In the premises, the First Defendant was at all times between the agreement of the [2012 Agreement] (in September 2012) and the termination of the [2012 Agreement] (on 20 September 2022) obliged to pay to the Claimant 60% of the sums it received from the exploitation of C’s Typefaces, whether directly or indirectly, including by exploitation of the Derived Typefaces.

39. In breach of that obligation, between December 2015 and the termination of the Licence Agreement, the First Defendant failed to make such payments, or failed to make such payments in full, to the Claimant.

40. As a consequence of the foregoing matters, the Claimant is entitled to an order that the Defendants prepare an account detailing the sales it made from the exploitation of C’s Typefaces, whether directly or indirectly, and the sums due to and paid to the Claimant as a consequence thereof, prior to the termination of [the 2012 Agreement] on 21 September 2022.

41. Further, the Claimant is entitled to and claims an order that the First Defendant pays to the Claimant any amount that such account shows is due to the Claimant but has not been paid.

42. Further, the Claimant is entitled to interest on such amounts to be paid by the First Defendant at such rate as the court sees fit, from the date on which such payments should have been made to the Claimant to the date of their payment, or for such other period as the court thinks is just.”

52. The Defendants say that the Unpaid Royalties Claim should be struck out as abusive either because it was settled by virtue of the acceptance of the Part 36 Offer. It is not said that it was a pleaded issue in the Newcastle Claim, but it is said that it was a live issue in those proceedings. Alternatively, the Defendants submit that the Unpaid Royalties Claim could and should have been brought as part of the Newcastle Claim. The Defendants’ Position

53. To understand properly the Defendants’ position, it is necessary to review the inter partes correspondence, as well as various pleadings.

54. The 2012 Agreement provided: “[Northern Block] will pay [Mrs Lish] 60% of sales received by [Northern Block]’s E-Commerce Web and from other unnamed methods of licensing in [Northern Block’s] distribution network. Payment will be made 30 days following the end of each of [Northern Block’s] financial quarters and will be calculated on the number of recorded sales. [Northern Block] shall be entitled to make adjustments to subsequent payments due to [Mrs Lish] (and reduce these as appropriate) to reflect sales returns, fraudulent orders, or other costs relevant to the calculation of Net Receipts, to the extent that these arise subsequent to the calculation of the advance on payment…”

55. In 2015, Mrs Lish and Northern Block agreed to vary the payment terms in the 2012 Agreement. What that variation amounted to is hotly disputed. The Defendants say that the variation involved Mrs Lish forgoing the 60% royalties in exchange for an increased salary with a small bonus payment made each year. Mrs Lish does not agree with that interpretation: she says that, rather than receiving royalties periodically, she would receive a fixed sum each month and then a balancing payment at the financial year end if 60% of the sums received by Northern Block were more than she had been paid. Ultimately, it does not matter for the purposes of this application. It is (now) common ground between the parties that Mrs Lish was in fact paid a regular amount with a small additional amount at the end of each year – this is said by Mrs Lish to be less than the 60% she had agreed.

56. The Defendants say that they addressed this change in pre-action correspondence dated 8 July 2022 with Mrs Lish’s representatives: “The unsigned distribution agreement you referred to in your email [meaning the 2012 Agreement] ceased to have effect on 1 December 2015, when our client stopped paying your royalty and after which significantly increased your salary. You have been working under this employment arrangement and accepted the increased salary ever since. … Even if you can demonstrate that our client has been investing in, paying for and multiplying copies of fonts made to the design merely under an implied licence, it is a fully paid-up licence as there is no running royalty”

57. Mrs Lish’s representatives responded on 15 July 2022: “The only variation to which concerned our client being paid a flat yearly royalty rate, which coincidentally seems to have been a significant underpayment that has substantially benefited your client to our client’s detriment. Therefore, we suggest you revert to your client and take further instructions.”

58. A further solicitors’ letter followed on 29 July 2022: “On the basis that you have confirmed your client’s intention to infringe our client’s intellectual property, our client intends to issue proceedings against your client for infringement of those rights and to recover monies owing to it from your client. This is on the basis that your client has not properly accounted to our client for 60% of sales received from exploitation of the fonts. All of our client’s rights are expressly reserved.”

59. The Defendants submit that, even before the Newcastle Claim was issued, Mrs Lish understood the Defendants’ position – that the 60% royalty had not been paid since 2015. They say that the “significant underpayment” referred to is the same underpayment as Mrs Lish now seeks by way of the Unpaid Royalties Claim.

60. The Defendants also say that it is implausible that Mrs Lish believed she had still been receiving the 60% royalties between 2015 and 2022 because she was paid a consistent amount each month, and the bonuses she received at the end of each year were always for round amounts, such as £1000 or £2000. The Defendants say that, had Northern Block been paying royalties at 60%, the bonus payments would not have been round numbers, and Mrs Lish would have realised this.

61. Following the commencement of the Newcastle Claim, the Defendants filed a Defence, which, at paragraph 13(b) noted “the Claimant would forgo her right to the 60% Payments and would be recompensed for her work exclusively through her higher salary and periodic bonuses”.

62. On 12 May 2023, the Defendants proposed an amended Defence and Counterclaim in the Newcastle Claim. That document asserted in terms that after December 2015, Northern Block had stopped paying Mrs Lish the 60% royalties under the 2012 Agreement and instead paid her a fixed sum plus certain bonuses unrelated to the income from the typefaces she had designed.

63. The Defendants submit that there is no reason why the Unpaid Royalties Claim could not have been brought as part of the Newcastle Claim: it concerns the same parties, the same subject matter, the same agreement, the same issues and the same remedies. Mrs Lish’s Position

64. Mrs Lish denies both bases on which the strike out is put: she says that the Unpaid Royalty Claim was not expressly in issue in the Newcastle Claim and therefore cannot have been compromised, and, further, that the claim is not an abuse of process under Henderson v Henderson .

65. In relation to the first basis for the Defendants’ strike out, Mrs Lish says that the underpayment of royalties was not pleaded in the Newcastle Claim. There was nothing to that effect in the Particulars of Claim or draft Amended Particulars of Claim, nor in the (unamended) Defence. Her counsel pointed me to correspondence from the Defendants’ former solicitors refusing to provide information about royalties on the express basis that no such issue was pleaded. Further, pursuant to Rule 36.2(3)(a), a Part 36 offer can only be made in respect of an issue in the claim.

66. In relation to the Henderson v Henderson claim, Mrs Lish says that she did not know prior to the receipt of the draft Amended Defence and Counterclaim that she had not been paid the 60% royalty under the 2012 Agreement. Her solicitors wrote to the Defendants’ former solicitors on 23 May 2023. As no response was received, they wrote again on 7 June 2023.

67. The Defendants’ former solicitors responded on 7 June 2023 stating “[t]here is no allegation in the draft Amended Particulars of Claim that any payment is due to your client relating to the period between September 2012 and 20 th September 2022”, noting further “no issue arises between the parties in relation to [those payments]”.

68. The Part 36 Offer was accepted shortly thereafter.

69. Mrs Lish submits that the unpaid royalties are not pleaded in the Particulars of Claim or the draft Amended Particulars of Claim in the Newcastle Claim. Therefore, she says that the Unpaid Royalties Claim could not have been compromised by acceptance of the Part 36 Offer, and, in fact, was not.

70. Further, Mrs Lish submits that the present action does not fall foul of the rule in Henderson v Henderson as applied in Dexter . She says that the earliest she and her advisers were in fact aware that a claim could be brought for unpaid royalties was once the draft Amended Defence and Counterclaim had been received and reviewed. It was only then that she had all the information she needed to formulate the Unpaid Royalties Claim. Mrs Lish’s counsel submitted that there was no general principle that, prior to that time, she was under a duty to exercise reasonable diligence to find out facts as to whether or not she might have a claim.

71. Mrs Lish further submitted that the pre-action correspondence was reasonably understood by her to assert the Defendants’ position in the Newcastle Claim that Mrs Lish was an employee, rather than an independent contractor. She understood, she says, the references to “increased salary” to be consistent with her understanding that these covered the 60% royalties owed to her.

72. Mrs Lish says that the letter of 15 July 2022 “caused her to wonder” whether she had been properly paid. She says she did not have any other basis for suspecting that she had not properly been paid the royalties she says were owed to her. She says that she did not understand the Defence as arguing otherwise – she understood the reference to “salary and period bonuses” to refer to the monthly payments of the 60% royalty, with a top-up at the end of the year for any underpayment.

73. Mrs Lish accepts that the draft Amended Defence and Counterclaim did give her grounds to believe that she had not been properly paid. She says that, at that point, she had sufficient information to bring this claim. However, she says that, once the draft Amended Defence and Counterclaim had been received, she acted quickly to discover the extent of any underpayment, and would have sought to add that allegation to the Newcastle Claim had it not been settled shortly thereafter by acceptance by the Defendants of the Part 36 Offer. She submits that she cannot be criticised for not bringing that claim prior to the acceptance of the Part 36 Offer.

74. Further, she says that this claim is not abusive because her solicitors’ letter of 9 June 2023 put the Defendants on notice that she intended to bring a claim in respect of the unpaid royalties. Mrs Lish says that the Defendants knew before they accepted the Part 36 Offer that they would still have to face the Unpaid Royalties Claim, and that it cannot be said that she kept that claim “up her sleeve” for deployment at a later stage. Further, she says, the Defendants were wrong to accept the Part 36 Offer in the hope that the Unpaid Royalties Claim would go away. Discussion

75. I have read carefully the witness statements filed by the parties, the skeleton arguments presented by both sides, and the authorities to which I have been referred. As is usual on strike out applications, none of the witnesses was cross-examined.

76. Doing the best I can on the materials before me, I agree with the Claimant that the Unpaid Royalties Claim was not a pleaded issue in the Newcastle Claim at the time it was compromised. Whilst it had been referred to in pre-action correspondence, there is nothing in the pleadings as filed that refers to the Unpaid Royalties Claim in terms, nor can it be inferred from the text of those documents. In litigation, many allegations are, for better or worse, discussed between the parties in pre-action correspondence, with many not being pursued when a case is filed. What matters for the purposes of the Newcastle Claim is the pleadings in that case – by which I mean the pleadings as filed, not including the draft amended pleadings. These later documents were not part of the action until filed. They could have been withdrawn or amended at any time prior to filing. They may not have been permitted by the Court. Rather, looking at the pleadings as filed, in my judgment, the Unpaid Royalties Claim was not a pleaded issue in the Newcastle Claim.

77. I am less certain that it was not a “live” issue. Certainly, it had been raised in correspondence, but for the purposes of assessing this aspect of the strike out application, what matters is the Newcastle Claim as pleaded. The acceptance of the Part 36 Offer settled the pleaded case. Matters which had been discussed but not pleaded may well be relevant for Henderson v Henderson purposes, but they do not make the Unpaid Royalties Claim a pleaded issue in the Newcastle Claim.

78. This basis for the strike out application therefore fails: the Unpaid Royalties Claim was not a pleaded issue in the Newcastle Claim at the time the Part 36 Offer was accepted.

79. Turning to the submissions under Henderson v Henderson and applying a broad merits-based approach as I was urged to do, ultimately, I do not need to reach a concluded view on whether Mrs Lish ought to have known the Defendants’ position on unpaid royalties based on the pre-action correspondence or the early pleadings in the Newcastle Action. It seems to me unlikely on the face of it that Mrs Lish would not have noticed that her payments, for a period of 7 years, were in rounded numbers. Further, having been caused to wonder in July 2022 whether she was being underpaid (as she admitted) an amount I am now told could be as high as £300,000, I am not convinced that an objective person in Mrs Lish’s position would not have taken further steps to ascertain the true position, particularly as she later commenced the Newcastle Claim against Northern Block. I do not understand Lloyd LJ’s comments at [59] of Stuart v Goldberg Linde to rule out examining whether a claimant ought to have looked into their affairs. Lloyd LJ rules out a general duty to exercise reasonable diligence, but leaves open a consideration of lack of reasonable diligence in the circumstances of a particular claimant “in order to decide whether he knew enough to put him on inquiry as to try to find out more”. The Defendants’ counsel urged on me that, having been caused to wonder, Mrs Lish ought to have taken further steps to find out the position of any underpayment. There is force in that submission, particularly as it enhances the objective of Henderson v Henderson of the public (and the parties) not being abused by multiple proceedings.

80. It does seem to me that it is likely that Mrs Lish was on notice from as early as 2022 that, since 2015, she had not been paid the 60% royalties under the 2012 Agreement. The Defendants’ counsel describes as “entirely fanciful” Mrs Lish’s position that she was first on notice of the alleged underpayment when she received the draft Amended Defence and Counterclaim. That may put matters too highly, but it does seem to me that all the dots were there, and a reasonable person in Mrs Lish’s position would have taken steps to join them.

81. However, and in any event, that does not matter because Mrs Lish accepts that she had sufficient information to bring the Unpaid Royalties Claim having received and reviewed the draft Amended Defence and Counterclaim. This was, if I may say so, a sensible admission, given the clarity of that document. There was a month between service of the proposed Amended Defence and Counterclaim and acceptance of the Part 36 Offer. At the hearing, I asked Mrs Lish’s counsel if it would have been open to her once she had received the proposed Amended Defence and Counterclaim to withdraw the Part 36 Offer, to provide her with sufficient time to regroup, and, if appropriate, replead the Newcastle Claim: he accepted that Mrs Lish could have taken those steps. Alternatively, she ought to have been clear to the Defendants that the Unpaid Royalties Claim was not included in the Part 36 Offer, that is, that she no longer wished to settle the whole dispute to “move forward and progress with her own business”. In my judgment, it was not open to Mrs Lish on the basis of Dexter to allow the Newcastle Claim to settle, and then commence further proceedings against the same parties in relation to the same arrangement and the same facts. To do so places the Defendants in a very difficult position. In compromising the Newcastle Claim, the Defendants made certain admissions as to copyright ownership that ran contrary to their pleaded case that Mrs Lish was an employee: they might not have done so had they known they were facing a further claim for unpaid royalties. It is not an answer, as Mrs Lish’s counsel submitted, that the Defendants were facing the Unpaid Royalties Claim as a fresh claim when Mrs Lish was entitled to amend the Newcastle Claim to include it – the Defendants are, in effect, now facing this claim with one hand tied behind their backs given the admissions made to settle the Newcastle Claim. That underlines the abusive nature of this claim. I also do not accept Mrs Lish’s counsel’s submission that the Defendants are not vexed twice because this claim “depends on different issues that were not in dispute, or were not central to” the Newcastle Claim. I disagree – the meaning of the 2012 Agreement and any variation to it were central to the issues in the Newcastle Claim, and, as counsel for the Defendants pointed out, the Unpaid Royalties Claim involves the same parties, the same subject matter, the same agreement, the same issues and the same remedies.

82. Lord Bingham emphasised in Aldi the need for finality in litigation. I am also mindful of the need for efficient use of court resources and the needs of other users. A multiplicity of actions is not in the interests of court users generally (because it occupies additional court days that could be used by other litigants) and, in this case, is certainly not in the interests of the Defendants, who have given detailed evidence of the negative impact on them of these proceedings. In my judgment, the Defendants have established that the Unpaid Royalties Claim is unjustly harassing and oppressive. The Unpaid Royalties Claim is abusive, and should be struck out. The Infringements Claim

83. The Infringements Claim relates to eight additional typefaces which were not the subject of the Newcastle Claim. Given my findings above, I can deal with this issue briefly.

84. Mrs Lish accepts that the Infringements Claim was not included in the Newcastle Claim but could have been. She says that, at the time, she took the pragmatic decision not to include these additional typefaces because: i) For the Cyrillic extensions, Mrs Lish did not claim ownership to the whole family, only the Cyrillic extension; ii) The Cyrillic extensions were not something she could market independently of the remainder of the typeface; iii) In relation to Ordax, Mrs Lish developed the typeface from the base drawings of another designer – whilst she could likely stop third parties from using her development, she could not use or license the typeface herself; and iv) Her pragmatic decision was based on her understanding that she had been properly paid royalties for these typefaces, such that when she discovered that she had not, the basis for her pragmatic decision fell away, and it was not appropriate to claim in respect of those typefaces as well.

85. I have found above that it would be an abuse of the court’s process to allow Mrs Lish to continue with a claim for unpaid royalties in relation to typefaces which were pleaded in the Newcastle Claim. Typefaces which Mrs Lish knew she could have included in those proceedings, but decided not to (pragmatically or otherwise) can be in no better position. The Infringements Claim should therefore also be struck out. Next Steps

86. In summary, Mrs Lish’s claim should be struck out, other than the Neusa Next Claim. That is not the end of the matter. At the hearing, I had a number of discussions with counsel for the parties as to the appropriate forum for this action. It was not appropriate to make any order at that time, because, given the application to strike out and for summary judgment, it was not at that stage known what would be left of the action following this judgment. On the basis of my findings above, very little is now left – only the Neusa Next Claim. This, as noted above, is a claim for information in relation to licences granted by Northern Block in relation to one typeface only, and an account for monies owed in relation to that single typeface.

87. Without prejudging the matter, in light of the information currently before the court, it seems to me highly likely that that claim, even if entirely successful, is likely to be worth less than £10,000, and so it would be appropriate to transfer what remains of the claim to the IPEC Small Claims Track. An application to transfer the Newcastle Claim to the IPEC was refused by the County Court at Newcastle on 26 May 2023. I do not wish to comment on that decision, but what remains of this claim is now very different to what was before the County Court in the Newcastle Claim, and it seems to me (without prejudging the issue), given the issues involved and the value of the claim, that the IPEC Small Claims Track may well be the appropriate forum.

88. I will hear the parties (including in relation to the costs of the application) if the entire claim cannot now be settled having regard to my findings.

89. As noted above, Mrs Lish’s Part 36 Offer included the statement: “our client simply wishes to move forward and progress with her own business rather than continue protracted litigation with your clients, as we have said previously.”

90. Given the limited issue now in dispute, and the limited value of that issue, it is to be hoped that the parties can now move forward as was envisaged.