Shua Ltd v Camp And Furnace Ltd

Goodwill in an entertainment business belongs to the person who created and developed the distinctive service and with whose business the public most closely associates it. A venue’s expenditure, facilities and receipt of revenue do not, without more, confer ownership of that goodwill. An agreement in principle, containing vague provisions intended for later contractual drafting, will not ordinarily be binding. Equitable constraints in a Companies Act 2006 unfair-prejudice petition require an identifiable agreement or understanding concerning the company’s management. Ordinary legal duties and contractual rights do not themselves constitute such constraints. A passing-off claimant must establish goodwill, a misrepresentation and damage or likely damage. A company that later acquires goodwill by assignment may enforce those rights from the date of assignment.

Shua promoted the entertainment concept known as Bongo’s Bingo. Camp & Furnace operated the venue where the first events were held and held a minority shareholding in Shua. The proceedings comprised Shua’s claims for passing off and copyright infringement, Camp & Furnace’s counterclaim, and a petition under section 994 of the Companies Act 2006.

The court determined preliminary issues concerning ownership of the goodwill and logos, the effect of discussions and emails exchanged on 15 June 2015, alleged equitable constraints on Shua’s management, Camp & Furnace’s entitlement to hold Liverpool events and its claim to commission from events outside Liverpool.

1. Goodwill. The goodwill was created and developed principally by Mr Lacey, whose persona, stage name, prior following and presentation of the events attracted the relevant custom. The public associated Bongo’s Bingo more closely with him than with the venue. Camp & Furnace’s expenditure, facilities and bar revenue did not give it an interest in the goodwill. Mr Lacey remained the sole owner until the assignments of 22 May 2019, after which Shua owned the goodwill.
2. Copyright. The logos were created by Mr Murphy at Mr Burke’s request outside the scope of Mr Burke’s employment duties. The assignments established Shua’s ownership of the copyright.
3. 15 June 2015 arrangements. The meeting and subsequent emails produced only an agreement in principle. The parties contemplated further drafting and left material matters, including the alleged 15% stake and exclusivity, vague and inchoate. They did not intend to be immediately bound. Camp & Furnace therefore had no contractual entitlement to a 15% stake or commission from events outside Liverpool. Alternatively, any alleged stake had been waived or was subject to estoppel following the allotment and transfer of shares.
4. Unfair prejudice. Equitable constraints under section 994 require an identifiable agreement or understanding concerning the management of the company, assessed by reference to the parties’ understanding when the company was formed or at a material later time. The alleged constraints were either contractual claims against Mr Burke or ordinary legal duties, not equitable constraints of the relevant kind. The management of Shua was therefore not subject to them.
5. Relief. Shua was exclusively entitled to hold Bongo’s Bingo events in Liverpool and Camp & Furnace was not entitled to hold them without Shua’s consent. Shua established the elements of passing off in relation to the events advertised by Camp & Furnace. Further submissions were directed on the form of relief; Camp & Furnace’s claim for injunctive relief was dismissed.