Hodgkinson & Corby Ltd (t/a Raymar) & Anor v Wards Mobility Services Ltd

The abuse-of-process branch of the Henderson v Henderson rule is not engaged merely because a point could have been raised in earlier proceedings. The court must examine what properly belonged to the earlier litigation, the circumstances in which it was conducted, and whether the point could and should fairly have been litigated then. Parties may agree, with the court’s concurrence, to an expedited and deliberately limited trial. Where that arrangement excludes a related issue for sensible practical reasons, the issue need not have been expressly reserved. It may later be raised in an inquiry on a cross-undertaking in damages, provided doing so is neither an abuse of process nor unjust.

The plaintiffs obtained an interlocutory injunction against the defendants’ competing cushion. The proceedings proceeded to an expedited trial limited to passing off, although the plaintiffs had also raised a possible design-right infringement claim under the Copyright Designs and Patents Act 1988. The passing-off claim failed before Jacob J, reported at 22 FSR 169, and an inquiry into damages on the cross-undertaking followed.

On a preliminary issue, Neuberger J held that the plaintiffs could not rely on the copyright claim because raising it was an abuse of process. The central question was whether the Henderson v Henderson rule barred reliance on copyright in the damages inquiry when the parties had deliberately pursued a limited earlier trial.

Appeals allowed. The judgment was unanimous. Hobhouse LJ and Pill LJ gave the substantive reasons, and Mummery LJ agreed with both judgments.

1. Nature of the rule. The rule in Henderson v Henderson [1843] 3 Hare 100 has two aspects. Points actually decided engage strict res judicata. Points which were not raised, but which could properly and with reasonable diligence have been brought forward, engage the separate abuse-of-process jurisdiction directed against multiplicity of litigation. The rule must be applied so as to prevent abuse and injustice, not mechanically. The court referred to Talbot v Berkshire County Council [1994] QB 290, Brisbane v Attorney General for Queensland [1979] AC 1 425 and Fidelitas Shipping Company Ltd v V/O Exportchleb [1966] 1 QB 630.
2. Application to the agreed procedure. Whether the rule applies depends on the circumstances in which the earlier action was contested and on what properly belonged to its subject matter. The parties had jointly adopted, and obtained the court’s approval for, a speedy trial confined to passing off before 1 August 1994. This was a sensible arrangement, reflecting the defendants’ prospective licence of right under the Copyright Designs and Patents Act 1988 and the parties’ shared wish to avoid disproportionate copyright litigation. The reasoning was analogous to Barrow v Bankside Agency Ltd [1996] 1 WLR 257, where managed litigation meant that a later claim was neither an abuse nor unjust. An express reservation of the copyright point was unnecessary. Pill LJ also relied on Carl Zeiss Stiftung v Rayner & Keeler Ltd No 2 [1967] 1 AC 853 and Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581.
3. Result and future conduct. The plaintiffs were not shut out from relying on copyright in the inquiry into damages on the cross-undertaking. Raising the issue was neither an abuse of process nor unjust. Mummery LJ observed that the plaintiffs bore the burden of proving the copyright claims. Fresh directions were required on pleading, discovery and trial, with liability and quantum determined before the effect on the damages inquiry was finally addressed.

1. Court of Appeal (Civil Division): Appeals allowed. The plaintiffs were permitted to rely on the copyright issue in the inquiry on the cross-undertaking.
2. High Court, Chancery Division: Neuberger J, on 6 November 1996, held that raising the copyright issue at that stage was an abuse of process and that the defendants should not be liable to have it relied on.
3. High Court: Jacob J dismissed the passing-off claim, discharged the interim injunction and ordered an inquiry into damages on the cross-undertaking.