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

Having regard to all of the factors set out above, my conclusion is, unequivocally, that in the counterfactual case Cabo would not have traded profitably. There is no doubt that Worldeez was in principle an appealing product which had an initially successful marketing campaign (particularly online). But it was competing in a crowded market for collectibles, and needed to be more than that to succeed. Unfortunately, it is apparent that the Cabo founders and Singleton were naïve and inexperienced, and lacked the operational capabilities which would have been required to provide a better chance of commercial success. The business was launched with hopelessly unrealistic financial projections, which were never updated; there was no real inventory control or stock management system; the cost of goods was too high for the product to be profitable without extraordinarily high sales volumes; and Singleton was not willing to provide the working capital that would have been required to support a stronger UK sales campaign, let alone international distribution. It is also apparent that, ultimately, the product was simply not as popular as Cabo had hoped and predicted. Despite the promising initial sales of the globe in B&M, the 5- and 10-packs never sold particularly well, and the sales of the globe quickly dropped off after the August 2017 peak. That is indicative of a product which did not have the enduring consumer appeal required to maintain sales momentum after the initial marketing push.

In my judgment, therefore, Cabo could not in those circumstances have achieved the domestic sales volumes it needed to break even in 2017; there was no evidence that Singleton was prepared to continue to invest in the product if it remained unprofitable beyond that point; and there would therefore have been no realistic prospect of international sales.

Cabo’s claim for damages therefore fails. It follows that it is not necessary to consider the quantification of Cabo’s loss. It is, however, appropriate to address the quantum models relied on by the parties (Mr Colley’s models for Cabo, and Mr Parker’s models for MGA), not only because there was considerable debate about these both throughout the hearing and in the post-hearing submissions, but also because an assessment of those models supports the conclusion that I have reached as to the likely profitability of Worldeez in the counterfactual case.