HP-2020-000016 - [2025] EWHC 1451 (Ch)

It follows from the discussion above that the starting point in considering causation of loss is to determine what heads of loss have been pleaded by Cabo.

Cabo’s primary pleaded head of loss was for lost profits in respect of lost sales to toy traders (including but not limited to the UK launch retailers), and lost sales and licensing revenues more generally, extending to lost profits in other jurisdictions. The question for the first stage of the assessment of damages (whether for the abuse of a dominant position or patent threats under s. 70 of the 1977 Act) is therefore whether Cabo has established, on the balance of probabilities, that but for MGA’s conduct it would have traded profitably. The amount of the lost profits is then a matter for the quantification stage of the assessment.

Cabo’s secondary pleaded head of loss was loss of value to the business that it would have been able to build, in so far as that loss was not already captured in the assessment of lost profits. As discussed below, the parties’ quantification models ultimately did not assess business value separately from lost profits, but considered both together under the framework of the DTM. No separate causation question therefore arises in this regard. In principle, however, I agree with MGA that if Cabo had advanced a separate and independent claim for loss of value to the business, it would have had to establish on a balance of probabilities that there would have been a valuable business in the counterfactual scenario.

During the course of the trial, Cabo relied on various other types of loss which, it argued, were actionable heads of loss. These arguments were mainly advanced in support of a premise which was not pursued by the end of the trial and which I have rejected above, namely that establishing causation of a single head of loss was sufficient for the court to proceed to the quantification of damages, without needing to show causation on the balance of probabilities for any other head of loss. In any event, none of the alternative heads of loss stood up to scrutiny.

First, Cabo claimed that it had lost revenue from orders that were cancelled by the launch retailers. That was, however, not Cabo’s pleaded case: the pleaded case was one of lost profits arising in respect of lost sales, including sales to the launch retailers. Consistent with that case, Mr Colley and Mr Parker modelled lost profits generally (with their estimates under different assumptions forming the basis of the cashflow projections in the DTM), and did not separately quantify lost revenues from cancelled orders. Indeed Mr Colley specifically confirmed in the second Colley/Parker joint expert statement that he had not considered this. Mr Parker addressed the matter only very briefly, noting that while there might have been “potential losses” from reductions in sales to the launch retailers, Cabo did in fact sell all of its stock, so any initial reduction in sales ultimately resulted in no net volume reduction. Indeed, as discussed further below, Cabo’s sales of Worldeez to B&M (as well as to several other smaller retailers) gave Cabo a larger margin than it would have made from supplying Worldeez to The Entertainer.

Secondly, Cabo relied on additional expenses incurred as a result of MGA’s intervention, arising from the cost of rewrapping the globes in a different colour packaging, and repackaging some of the stock as blind bags for sale in The Entertainer. Again, however, no such expenditure is pleaded as a head of loss. Had it been pleaded, there would have been a further problem with this claimed loss, which is that the expenses of producing the Worldeez products were defrayed by Singleton, rather than Cabo, with Cabo incurring a liability in debt to Singleton. That liability was then written off under the July 2019 settlement agreement between Cabo and Singleton. In so far as necessary, MGA sought permission to amend its defence to rely on the settlement agreement in support of its submission that any loss suffered by Cabo had been avoided, and Cabo consented to that amendment. Ultimately, however, the issue fell away because Cabo did not pursue the repackaging point as a separate head of loss in its oral closing submissions.

Finally and for completeness, there was some suggestion by Cabo during the trial that it would be sufficient (for the purpose of completing its competition law cause of action and/or establishing causation more generally) for it to show that it would have been less loss-making in the counterfactual case than it was in fact. Again, however, no such claim was pleaded or ever particularised during the trial, and Ms Kreisberger confirmed in her closing submissions that Cabo’s claim was not brought on this basis.

Cabo’s damages claim therefore stands or falls with its claim that it would have traded profitably but for MGA’s conduct. That is therefore the next question to address.