Shua Ltd v Camp And Furnace Ltd

The court determined preliminary issues about ownership of the Bongo's Bingo (BB) goodwill and the copyright in two logos, the effect of an alleged 15 June 2015 agreement and whether the management of Shua was subject to equitable constraints pleaded under section 994 of the Companies Act 2006. The judge found that the BB goodwill originally belonged to Mr Lacey in his personal capacity and was assigned to Shua on 22 May 2019; Shua also owns the copyright in the Logos. The 15 June 2015 meeting and subsequent emails produced only agreements in principle and did not form a binding contract; the vague references to a 15% "stake" were inchoate. The court concluded that the conduct of Shua's affairs is not subject to the equitable constraints pleaded in paragraph 28 of the petition and that C&F is not entitled to hold BB events in Liverpool nor to 15% commission for events outside Liverpool. Shua is prima facie entitled to injunctive relief for passing off, subject to finalisation of undertakings, but not to a standalone injunction solely to restrain copying of the Logos.

Background and parties:

• Shua Limited (Shua) is a company promoting Bongo's Bingo (BB); Messrs Burke and Lacey are principal operators and shareholders; Camp & Furnace Limited (C&F) is a venue operator and a minority shareholder of Shua.
• Disputes arose about who owned the BB goodwill and copyright in two logos, and whether a 15 June 2015 agreement and subsequent share arrangements gave C&F continuing rights (including 15% of profits and exclusivity in Liverpool) or placed equitable constraints on Shua's management.

Nature of the claims and relief sought:

• Shua sued for passing off, copyright infringement and injunctive relief to restrain C&F from promoting BB events or displaying the Logos.
• C&F counterclaimed and presented a section 994 petition alleging unfair prejudice and claiming equitable constraints, a 15% stake on the road, and rights to hold BB events in Liverpool.

Issues tried:

1. Ownership of BB goodwill.
2. Ownership of copyright in the Logos.
3. Whether the 15 June 2015 meeting/email created a binding contract and the meaning/effect of any "15% stake" provision.
4. Whether Shua's management was subject to the paragraph 28 equitable constraints relied on in the petition.
5. Whether C&F is entitled to hold BB events in Liverpool and to 15% commission for events outside Liverpool.
6. Whether injunctive relief should be granted.

Court's reasoning (concise):

• The court accepted the factual evidence that BB was created and driven by Mr Lacey and that customers associated the show with him; consequently the goodwill vested in Mr Lacey until assignment to Shua on 22 May 2019.
• Copyright in the Logos, having been created by Mr Murphy and assigned via deeds, is owned by Shua.
• The 15 June 2015 meeting produced agreements in principle only; the email used vague terminology (eg a 15% "stake") that required further detail and did not evidence a concluded binding contract. The parties expected formal contracts to be drawn up.
• Even if a binding obligation had existed, the subsequent allotment and transfer of shares to C&F operated, on the evidence, as an implied acceptance of those shares and amounted to waiver/estoppel of enforcement of the putative 15% on-road rights.
• The paragraph 28 equitable constraints were not supported by the factual matrix or the elements described in re Westbourne Galleries and O'Neill v Phillips and therefore do not restrict Shua's management.
• On the issues tried C&F had no enforceable right to hold BB events in Liverpool or to a 15% commission for events outside Liverpool; Shua was prima facie entitled to injunctive relief for passing off but not to a standalone copyright injunction at that stage.

First instance: The court determined the preliminary issues. It held that Shua is the owner of the BB goodwill and the copyright in the Logos; the 15 June 2015 meeting and email produced only agreements in principle and did not form a binding contract; in any event C&F is estopped/has waived enforcement of any putative 15% on-road entitlement arising from subsequent share dealings; the conduct of Shua's affairs is not subject to the paragraph 28 equitable constraints. Consequently C&F is not entitled to hold BB events in Liverpool nor to 15% commission for events outside Liverpool. The court found Shua prima facie entitled to injunctive relief for passing off and dismissed C&F's claim for injunctive relief; the precise form of injunctions against C&F was left to further hearing concerning undertakings.