Case No. EWHC-932-(IPEC)

72.Design & Display is controlled by Mr Lloyd and his wife, Virginia. They are the only two directors and together they own 90% of the shares. Mr Chasmer said that all payments by the company to the directors, by way of directors’ emoluments, contributions to their pensions, payments to shareholders and similar expenses are, in fact, a means of distributing profits to directors. The extent of that profit is presumably decided by Mr and/or Mrs Lloyd. Mr Chasmer stated that it cannot be assumed that the money received by the directors in this way bore any proportion to the contribution they made to any particular part of the business, including the infringing business.73.I have to say that without some more detailed information, I am dubious about treating these costs as just another overhead. Although Mr Lloyd responded to Mr Chasmer’s evidence on a number of points, he chose to say nothing about that.74.Mr Aikens relied on what Judge Birss said in Hollister Inc v Medik Ostomy Supplies Ltd [2011 EWPCC 40; [2012] F.S.R. 17 at [93] to [97], where he refused to allow a deduction for directors’ emoluments, relying on Le Plastrier v Amstrong-Holland (1926) 26 S.R. (NSW) 585. Mr St Quintin took me to the judgment of the Australian High Court in Dart v Decor, which concluded that Le Plastrier was not persuasive authority for the proposition that directors’ emoluments should be disallowed. Moreover, in Jack Wills HHJ Pelling QC said that in principle directors’ emoluments are part of the general overheads of a trading limited liability company and an allowable deduction, at [66].75.The company in question in Jack Wills was House of Fraser (Stores) Limited. There is a difference between a large public company, widely monitored by financial analysts, shareholders and others, and a company such as Design & Display where the emoluments are very much at the private whim and control of the directors.76.I think that in the present case Design & Display was under an obligation to make a reasonable attempt to justify payments to the directors and proportionality between such payments and the contribution made by the directors to the infringing business, alongside the rest of the business. Absent such evidence I do not allow the apportionment of any payments to the directors by way of overheads. The exception is rent, to which I turn next.