Hipgnosis Music Limited v Merck Mercuriadis & Ors

A split trial is exceptional. The court should begin from the position that as many issues as possible should be determined on the same occasion. Delay, duplicated evidence and increased aggregate costs are strong reasons against separating liability, causation and quantum. An account of profits may conventionally be dealt with separately because the claimant may elect between compensation and an account. That approach is not automatic. Where the account is sufficiently straightforward, it may be taken at the principal trial before the election, enabling the claimant to make an informed choice.

The claimant, acting in liquidation and as assignee of a related company’s claim, alleged that the first defendant diverted a business opportunity to the second and third defendants. It claimed accounts of profits and compensation for alleged breaches of statutory and contractual duties, together with dishonest assistance claims.

The claimant applied for liability and causation to be tried separately from quantum. The first defendant proposed that all issues be tried together, with only the account of profits dealt with later. The second and third defendants opposed a split trial altogether. The central issue was whether the court should order a staged trial at this early case-management stage.

1. The split-trial application was refused. The court was unable at this early stage to conclude that separating liability and causation from quantum was either necessary or desirable.
2. The starting point under Civil Procedure Rules 1998, rule 1.4(2)(i), is that as many issues as possible should be dealt with on the same occasion. The default position discussed in Daimler AG v Walleniusrederierna Aktiebol [2020] EWHC 525 (Comm) is that splitting a case into stages is out of the norm and should be avoided where possible.
3. Relevant disadvantages of a split trial included likely delay of about a year between hearings, the probable need for witnesses of fact to give evidence twice, and greater aggregate costs. The uncertainty at this early stage about how the counterfactual loss case would develop did not justify separation.
4. It was accepted that an account of profits is conventionally hived off because the claimant may elect between compensation and an account. Nevertheless, the court considered that the account in this case appeared relatively simple. It was therefore desirable, if practicable, for it to be addressed at the principal trial before the election, so that the claimant could choose its remedy with the benefit of the evidence.
5. The court left open the possibility that, after disclosure, exchange of witness statements and accountancy expert evidence, the account might prove sufficiently complicated to warrant a later hearing.