Claim No: IL-2024-000036 - [2025] EWHC 2172 (Ch)

Mrs Lish denies both bases on which the strike out is put: she says that the Unpaid Royalty Claim was not expressly in issue in the Newcastle Claim and therefore cannot have been compromised, and, further, that the claim is not an abuse of process under Henderson v Henderson.

In relation to the first basis for the Defendants’ strike out, Mrs Lish says that the underpayment of royalties was not pleaded in the Newcastle Claim. There was nothing to that effect in the Particulars of Claim or draft Amended Particulars of Claim, nor in the (unamended) Defence. Her counsel pointed me to correspondence from the Defendants’ former solicitors refusing to provide information about royalties on the express basis that no such issue was pleaded. Further, pursuant to Rule 36.2(3)(a), a Part 36 offer can only be made in respect of an issue in the claim.

In relation to the Henderson v Henderson claim, Mrs Lish says that she did not know prior to the receipt of the draft Amended Defence and Counterclaim that she had not been paid the 60% royalty under the 2012 Agreement. Her solicitors wrote to the Defendants’ former solicitors on 23 May 2023. As no response was received, they wrote again on 7 June 2023.

The Defendants’ former solicitors responded on 7 June 2023 stating “[t]here is no allegation in the draft Amended Particulars of Claim that any payment is due to your client relating to the period between September 2012 and 20^th September 2022”, noting further “no issue arises between the parties in relation to [those payments]”.

The Part 36 Offer was accepted shortly thereafter.

Mrs Lish submits that the unpaid royalties are not pleaded in the Particulars of Claim or the draft Amended Particulars of Claim in the Newcastle Claim. Therefore, she says that the Unpaid Royalties Claim could not have been compromised by acceptance of the Part 36 Offer, and, in fact, was not.

Further, Mrs Lish submits that the present action does not fall foul of the rule in Henderson v Henderson as applied in Dexter. She says that the earliest she and her advisers were in fact aware that a claim could be brought for unpaid royalties was once the draft Amended Defence and Counterclaim had been received and reviewed. It was only then that she had all the information she needed to formulate the Unpaid Royalties Claim. Mrs Lish’s counsel submitted that there was no general principle that, prior to that time, she was under a duty to exercise reasonable diligence to find out facts as to whether or not she might have a claim.

Mrs Lish further submitted that the pre-action correspondence was reasonably understood by her to assert the Defendants’ position in the Newcastle Claim that Mrs Lish was an employee, rather than an independent contractor. She understood, she says, the references to “increased salary” to be consistent with her understanding that these covered the 60% royalties owed to her.

Mrs Lish says that the letter of 15 July 2022 “caused her to wonder” whether she had been properly paid. She says she did not have any other basis for suspecting that she had not properly been paid the royalties she says were owed to her. She says that she did not understand the Defence as arguing otherwise – she understood the reference to “salary and period bonuses” to refer to the monthly payments of the 60% royalty, with a top-up at the end of the year for any underpayment.

Mrs Lish accepts that the draft Amended Defence and Counterclaim did give her grounds to believe that she had not been properly paid. She says that, at that point, she had sufficient information to bring this claim. However, she says that, once the draft Amended Defence and Counterclaim had been received, she acted quickly to discover the extent of any underpayment, and would have sought to add that allegation to the Newcastle Claim had it not been settled shortly thereafter by acceptance by the Defendants of the Part 36 Offer. She submits that she cannot be criticised for not bringing that claim prior to the acceptance of the Part 36 Offer.

Further, she says that this claim is not abusive because her solicitors’ letter of 9 June 2023 put the Defendants on notice that she intended to bring a claim in respect of the unpaid royalties. Mrs Lish says that the Defendants knew before they accepted the Part 36 Offer that they would still have to face the Unpaid Royalties Claim, and that it cannot be said that she kept that claim “up her sleeve” for deployment at a later stage. Further, she says, the Defendants were wrong to accept the Part 36 Offer in the hope that the Unpaid Royalties Claim would go away.