Fit Kitchen Limited & Anor. v Scratch Meals Limited & Ors.

An election between an account of profits and an inquiry as to damages is ordinarily final. The court may permit re-election only where, having regard to finality, fairness, the balance of prejudice and the wider public interest, it would be inequitable to hold the claimant to the election. A desire to avoid the consequences of an unclean-hands allegation, or a later belief that another remedy would yield more, is insufficient without a sound and materially new justification.

Parties should ordinarily plead their entire case, including arguments concerning relief, at the liability stage. Failure to do so may prevent reliance at the quantum stage, but the consequence remains discretionary and fact-sensitive.

The claimants had succeeded on liability and had elected to pursue an account of profits. They applied to re-elect for an inquiry as to damages, principally because the defendants intended to rely on unclean hands and the claimants considered that an inquiry might produce a better result.

The claimants also sought to strike out the defendants’ pleaded unclean-hands allegation on the basis that the defence had not been advanced at the liability stage. The court considered the finality of elections, the parties’ prior knowledge of the allegation, procedural prejudice and the discretion concerning late reliance on arguments relating to relief.

1. Re-election. The application to re-elect was dismissed. The ordinary rule is that an election made when judgment is entered is final. Tang Man Sit (deceased) v Capacious Investments [1996] AC 514 establishes that procedural principles concerning election are flexible applications of fairness, but its exceptional result depended on the claimant not having made an election at all. Here, the claimants had elected for an account of profits.
2. The asserted risk that an account might produce no recovery because of unclean hands was not a proper basis for re-election. Any prejudice arising from improper conduct would be the claimants’ own responsibility. An election made under protest, an alleged lack of information, good faith, a later preference for another remedy, and a disputed saving in hearing time did not justify reopening the election. The defendants would suffer prejudice through wasted costs and loss of the opportunity to advance unclean hands.
3. Late pleading of relief-related arguments. Parties should plead their entire case at the liability stage, including arguments relating to relief. The court approved the approach stated in Kohler Mira Ltd v Bristan Group Ltd [2014] EWHC 1931 (IPEC): a failure to put all cards on the table may bar a party from advancing an argument at the quantum hearing, but this is a discretionary consequence, governed by finality, the particular facts and the balance of prejudice.
4. The defendants had raised unclean hands well before the claimants’ election, had attempted to raise it at trial, and caused no concealment of their position. The relevant evidence was within the claimants’ control, whereas striking out the allegation would deprive the defendants of an important part of their case. The application to strike out was therefore dismissed.