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

Table 8: Loss calculation for significant success model, comparing MGA and Cabo cost stacks (£)

For the reasons discussed above, Mr Parker’s wholesale price assumptions were reasonable and are to be preferred to Cabo’s assumed wholesale price of £1.52. The figures to consider are therefore the first and third rows of Table 8 above. Those figures show that on either Cabo’s or MGA’s cost stack, using Mr Parker’s wholesale price assumptions, even if Worldeez had enjoyed sales of the level of My Little Pony Fash’ems, it would have remained loss-making by January 2018. On Cabo’s cost stack it would have been minimally profitable if it had remained in the UK market in 2018 and beyond, but that would have been unlikely given Singleton’s lack of appetite to support a loss-making business. On MGA’s cost stack it would have been entirely loss-making in the domestic market.

Worldeez’ profitability as indicated by this model. Having addressed Cabo’s criticisms of Mr Parker’s significant success model, and corrected the model in respect of the errors in the cost and revenue assumptions, the final question is what therefore the extent to which Mr Parker’s model of significant success reflected the success which Cabo could reasonably have achieved for Worldeez in the UK and internationally, given that (like Mr Colley) Mr Parker was not qualified to opine on the likely commercial success of Worldeez as a product, on the basis of its product quality taken together with the other factors which are relevant to an assessment of likely commercial success.

The figures set out above therefore overstate the revenues that Cabo could realistically expect to have obtained in the UK, indicating that Cabo would in the counterfactual case have been even more loss-making in the domestic market than is set out in the first and third rows of Table 8 above, rendering it even less likely that Singleton would have been prepared to continue to invest beyond the end of 2017. On either Cabo or MGA’s cost stacks, therefore, Mr Parker’s significant success model indicates that Cabo would have remained loss-making and would have exited the market during 2018.

Mr Parker was therefore right, in my judgment, to disregard UK licensing revenues, on the basis that licensing would have been very unlikely on the levels of sales which his model predicted. Any significant profitability (albeit on a far lower scale than predicted by any of Mr Colley’s scenarios) would therefore have rested on international expansion, and the ability of Cabo to fund that.

As noted above, it was common ground that international revenues would likewise not have materialised if Worldeez was not profitable domestically. In any event, as discussed above, international distribution was not likely to have been viable for Worldeez given Cabo’s cost model and the competition from other similar products.