The Appeal - Lish v The Northern Block

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Jane Lambert

Court of Appeal (Lords Justices Moylan, Coulson and Arnold) Lish v The Northern Block Ltd and another [2026] EWCA Civ 497 (27 April 2026)

This was an appeal by the claimant, Mariya Vasiliyevna Lish, against the order of David Stone on 22 Aug 2025 in which he struck out two of her claims as an abuse of process of the court for the reasons given in his judgment (see Lish v The Northern Block Ltd and Another [2025] EWHC 2172 (Ch) 33 Aug 2925).   I discussed that judgment in Copyright - Lish v The Northern Block Ltd. on 30 Aug 2025.

Background

The first defendant, The Northern Block ("TNB"), was a type foundry which supplied typefaces or fonts in various alphabets to graphic designers, printers, manufacturers and others.  It was founded by the second defendant, Jonathan Hill. Mrs Lish was a typeface designer who created typefaces in the Cyrillic script for TNB between 2012 and 2022.  The parties fell out over the ownership of the copyright in Mrs Lish's typefaces. The foundry claimed that Mrs Lish had been its employee.  She contended that she had been a self-employed contractor. 

She started proceedings in the County Court in Newcastle for (a) a declaration that she was the owner of the intellectual property rights in various typefaces; (b) injunctions to restrain further infringement of her rights; (c) financial remedies for past acts of infringement; and (d) an account for sums TNB had received after termination of the 2012 Agreement.   That litigation came to an end when TNB and Mr Hill accepted a Part 36 offer from Mrs Lish. Their acceptance of that offer created a new contract between the parties.

The parties disagreed over their respective obligations under that contract, which led to Mrs Lish issuing new proceedings in the High Court claiming:

• An account and payment of Outstanding Royalties: Mrs Lish sought 60% of the sums that TNB had received for the exploitation of the typeface designs that she had designed ("the Unpaid Royalties Claim");
• Licensing Revenues: She also sought 60% of the revenues from licensing a font known as the "Neusa Next typeface", which she argued should have been disclosed to her under the terms of the settlement of the Newcastle litigation ("the Neusa Next Claim"); and
• Damages for Continuing Copyright Infringement: She alleged that TNB continued to infringe her copyrights in 4 typefaces and the Cyrillic extensions of 4 more ("the Infringements Claim").

The Application

TNB and Mr Hil sought summary judgment of the Neusa Next Claim pursuant to CPR 24.3 and a strikeout of the Unpaid Royalties and the Infringements Claims as an abuse of process under CPR 3.4 (2) (b).   The applications came on before Mr Stone, sitting as a judge of the High Court on 15 July 2025.   He dismissed the summary judgment application but struck out the Unpaid Royalties and Infringement Claims.

The Appeal

Mrs Lish appealed on four grounds:

Ground 1:  In his reasoning at paras [81] to [82] of his judgment, the deputy judge had made four errors in his analysis with respect to the Unpaid Royalties Claim.

Ground 2: The learned deputy had made five findings between paras [79] and [80] which were not properly open to him. 

Ground 3: The deputy judge had been wrong to find that the Unpaid Royalties Claim was abusive. 

Ground 4: The deputy judge had been wrong to find that the Infringements Claim was abusive.

TNB and Mr Hill contended by way of a respondents' notice that the learned deputy judge's decision in relation to the Unpaid Royalties Claim should be upheld for the reasons he gave at paras [79] to [80] of his judgment in the alternative to the reasons he gave at paras [81] to [82].

The Hearing

The appeal came on before Lords Justices Moylan, Coulson and Arnold on 15 April 2026.  Their lordships handed down judgment in  Lish v The Northern Block Ltd and Another [2026] EWCA Civ 497 on 27 April 2026.  Lord Justice Arnold delivered the lead judgment with which Lord Justice Moylan and Lord Justice Coulson agreed.  Their lordships allowed the appeal in relation to the Unpaid Royalties Claim but dismissed it in relation to the Infringements Claim. 

The Unpaid Royalties Claim

Ground 1

Lord Justice Arnold said that so far as the Unpaid Royalties Claim was concerned, the key ground of appeal was Ground 1.  In para [81] of his judgment, Mr Stone had held that the Unpaid Royalties Claim involved the same issues and the same remedies as the County Court action.  The Court of Appeal agreed with the claimant's contention that neither the issues nor the remedies were the same.  Lord Justice Arnold said:

"[46] As explained above, the Newcastle Claim was primarily a claim for copyright infringement. The principal issues between the parties concerned Mrs Lish's claim to ownership of the relevant copyrights: was she an employee of TNB, and if so did the 2012 Agreement have the effect that she nevertheless owned the copyrights? The remedies claimed were the normal remedies for copyright infringement: an injunction to restrain further infringements and either an inquiry as damages or an account of profits in respect of infringing acts after termination of the 2012 Agreement. The only contractual claim was in respect of post-termination revenues received by TNB from pre-termination sub-licences. As the Defendants' solicitors correctly pointed out in their letter dated 7 June 2023 (paragraph 23 above), there was no claim for unpaid royalties prior to termination of the 2012 Agreement.
[47] By contrast, the Unpaid Royalties Claim is a purely contractual claim for unpaid royalties prior to termination of the 2012 Agreement. This is a different cause of action in respect of a different time period to the causes of action asserted in the Newcastle Claim. The principal issues are purely contractual ones: did Mrs Lish supply finished Typefaces within the meaning of the 2012 Agreement, what was agreed between Mrs Lish and TNB in March 2015 and did TNB pay Mrs Lish all the sums due to her under the 2012 Agreement as varied by the 2015 Variation? The remedy claimed is an account of the unpaid royalties, which is a different remedy to any remedy claimed in the Newcastle Claim."

The defendants conceded that the issues and remedies were similar and submitted that that was enough.  Lord Justice Arnold did not accept that submission.  He said at para [49] of his judgment:

"The judge did not say that the issues and remedies were similar, he said that they were the same. When considering whether a second claim is an abuse of process, this difference is significant. Furthermore, I do not agree that the issues and remedies are even similar. In my view, they are entirely distinct, although arising out of much of the same factual background."

Lord Justice Arnold said that the deputy judge had erred in holding that the defendants' acceptance that Mrs Lish owned the copyrights in the typefaces in issue in the Newcastle action as part of the settlement agreement was an admission which they might not have made had they known that they would face a claim for unpaid royalties, as it adversely affected their ability to defend that claim. His lordship pointed out that TNB and Mr Hill had been warned by Mrs Lish's solicitors on 23 May, 7 June and 9 June 2023 that she would try to recover unpaid royalties.  There was no condition in the settlement agreement that Mrs Lish would give up her claim to those monies. In any case, the ownership of the copyright was not an issue in the Unpaid Royalties Claim.   Mrs Lish's cause of action subsisted in contract.

The learned Lord Justice also agreed with the claimant that Mr Stone had been wrong to rely on the possibility that Mrs Lish could have withdrawn her Part 36 Offer "to provide her with sufficient time to regroup and, if appropriate, replead the Newcastle Claim". His lordship pointed out that Lord Bingham had emphasized in Johnson v Gore Wood & Co [2001] CPLR 49, [2000] UKHL 65, [2001] BCC 820, [2001] PNLR 18, [2001] 1 All ER 481, [2001] 2 WLR 72, [2002] 2 AC 1, [2001] 1 BCLC 313 that it is not sufficient that a new claim could have been brought before.  There is only an abuse if it should have been.  There was no reason for Mrs Lish to withdraw her Part 36 Offer and amend her Particulars of Claim to introduce the Unpaid Royalties Claim. The Part 36 Offer was an offer to settle the claims pleaded in the Newcastle Claim. It was not an offer to settle an action which had not yet been pleaded.

Finally, the Lord Justice agreed that Mr Stone had been wrong to hold, in the alternative, that Mrs Lish "ought to have been clear to the Defendants that the Unpaid Royalties Claim was not included in the Part 36 Offer."  The defendants must have been aware of what was included in the settlement offer and what was not.  There was no obligation on the claimant to say or do more.

Ground 2

Both the claimant and defendants referred to paras [79] and [80] of Mr Stone's judgment:

"[79] Turning to the submissions under Henderson v Henderson and applying a broad merits-based approach as I was urged to do, ultimately, I do not need to reach a concluded view on whether Mrs Lish ought to have known the Defendants' position on unpaid royalties based on the pre-action correspondence or the early pleadings in the Newcastle Action. It seems to me unlikely on the face of it that Mrs Lish would not have noticed that her payments, for a period of 7 years, were in rounded numbers. Further, having been caused to wonder in July 2022 whether she was being underpaid (as she admitted) an amount I am now told could be as high as £300,000, I am not convinced that an objective person in Mrs Lish's position would not have taken further steps to ascertain the true position, particularly as she later commenced the Newcastle Claim against Northern Block. I do not understand Lloyd LJ's comments at [59] of Stuart v Goldberg Linde to rule out examining whether a claimant ought to have looked into their affairs. Lloyd LJ rules out a general duty to exercise reasonable diligence, but leaves open a consideration of lack of reasonable diligence in the circumstances of a particular claimant 'in order to decide whether he knew enough to put him on inquiry as to try to find out more'. The Defendants' counsel urged on me that, having been caused to wonder, Mrs Lish ought to have taken further steps to find out the position of any underpayment. There is force in that submission, particularly as it enhances the objective of Henderson v Henderson of the public (and the parties) not being abused by multiple proceedings.
[80] It does seem to me that it is likely that Mrs Lish was on notice from as early as 2022 that, since 2015, she had not been paid the 60% royalties under the 2012 Agreement. The Defendants' counsel describes as "entirely fanciful" Mrs Lish's position that she was first on notice of the alleged underpayment when she received the draft Amended Defence and Counterclaim. That may put matters too highly, but it does seem to me that all the dots were there, and a reasonable person in Mrs Lish's position would have taken steps to join them."

The defendants argued that Mr Stone's findings in the above paragraphs provided an alternative ground for his decision that the Unpaid Royalties Claim was an abuse of process. The claimant contended that those findings did not justify the conclusion that the Unpaid Royalties Claim was an abuse of process.  She also submitted that the deputy judge made five findings that he was not entitled to make.

The first finding challenged by Mrs Lish was that it was "unlikely … that Mrs Lish would not have noticed that her payments, for a period of seven years, were in rounded numbers".   Mrs Lish did not dispute that her payments had been rounded, but she did not accept that the rounding should have put her on notice.  TNB had always rounded its payments to her, and its counsel could offer no reason why it should have put Mrs Lisk on notice.

The second finding that Mrs Lish challenged was Mr Stone's statement that Mrs Lish "ha[d] been caused to wonder whether she was being underpaid (as she admitted) an amount which I am now told could be as high as £300,000". He suggested that Mrs Lish should have suspected that she was being very substantially underpaid.  Lord Justice Arnold pointed out that Mrs Lish learned about the possible extent of the alleged underpayment only after the settlement of the County Court claim. There was no basis for suggesting that she had any reason to suspect an underpayment of that size before.  The defendants argued that the deputy judge was not suggesting that she did.   In the learned Lord Justice's view, it was difficult to avoid the impression that Mr Stone was influenced by hindsight knowledge that was not available to Mrs Lish until after the acceptance of the Part 36 offer.

The third finding to which Mrs Lish objected was Mr Stone's statement, "I am not convinced that an objective person in Mrs Lish's position would not have taken further steps to ascertain the true position." It led him to conclude that there was force in the submission that "Mrs Lish ought to have taken further steps to find out the position".  It amounted to a finding that she failed to take further steps to ascertain the true position.   She submitted that such a finding was not open to the deputy judge, because in fact she did take further steps to ascertain the true position, but was stonewalled by the defendants.

The fourth finding was that it was "likely that Mrs Lish was on notice from as early as 2022 that, since 2015, she had not been paid" the 60% royalty.   She argued that it was not properly open to Mr Stone to make that finding because it was contrary to her evidence that she did not believe that she had been underpaid until receipt of the draft Amended Defence and Counterclaim, adding that her evidence on that point had not been tested in cross-examination.  While not appearing to reach a conclusion on the issue, Lord Justice Arnold observed at para [61] that it was questionable whether the finding was open to the deputy judge on the evidence.

Fifthly, his lordship agreed with Mrs Lish that, for the reasons canvassed above, it was not properly open to the deputy judge to find that "all the dots were there, and a reasonable person in Mrs Lish's position would have taken steps to join them".   Lord Justice Arnold concluded at para [65] that the judge's conclusion could not be supported by his findings at paras [79] to [80] because those findings were not properly open to him.

Ground 3

The claimant contended that the deputy judge had been wrong to conclude that the Unpaid Royalties Claim was an abuse of process. In oral argument, she submitted that if the Court of Appeal concluded that the deputy judge's assessment at paras [81] to [82] was vitiated by one or more of the errors relied upon in Ground 1, it should make its own assessment and conclude that the Unpaid Royalties Claim was not an abuse of process. Since his lordship had concluded that the deputy judge's assessment at [81]-[82] was vitiated by a number of errors, it was necessary to reconsider the issue.

In his lordship's judgment, the Unpaid Royalties Claim was not an abuse of process. It was not a pleaded claim in the Newcastle Claim. It was a distinct claim involving different issues and different remedies. The defendants settled the Newcastle Claim in the knowledge that Mrs Lish had recently asserted this claim and that it had not been pleaded in the Newcastle Claim. Thus, Mrs Lish's pursuit of the Unpaid Royalties Claim does not undermine the finality of the settlement agreement. Nor do the defendants' private interests require protection from the Unpaid Royalties Claim. There is nothing which amounts to unjust harassment or oppression of the defendants in Mrs Lish pursuing this claim. On the contrary, striking it out would prevent Mrs Lish from pursuing a claim which has neither been adjudicated nor settled. It had never been suggested that it did not have a real prospect of success. Striking it out would be a denial of justice.

The Infringements Claim

Ground 4 was that the deputy judge had been wrong to conclude that this was an abuse of process. Mrs Lish argued that he had held that this claim "can be in no better position" than the Unpaid Royalties Claim. She added that if the judge reached the wrong conclusion in relation to the Unpaid Royalties Claim, it would undermine his conclusion in relation to the Infringements Claim.   

Lord Justice Arnold did not accept that argument.   The Infringements Claim involved the same issues and remedies as the copyright cause of action in the Newcastle Claim. Mrs Lish admitted that she had been aware of the additional claims before the settlement of the Newcastle Claim, but did not alert the defendants to those additional claims before the settlement. When the defendants agreed to accept the Part 36 offer, they had no reason to suppose that they were not settling all of Mrs Lish's copyright claims and every reason to think that they were doing so. Had Mrs Lish wished to preserve additional claims for copyright infringement that she had not yet raised, the onus was on her to make that clear to the defendants, but she failed to do so. By acknowledging her ownership of copyright in the pleaded typefaces, the defendants are handicapped in defending her claim to copyright in the additional typefaces, at least to the extent that they have given up one of their negotiating cards. If Mrs Lish wished to pursue those additional claims, she should have raised them before settling the Newcastle Claim. Raising and pursuing them for the first time after settlement of the Newcastle Claim undermined the finality of the settlement and amounted to unjust harassment of the defendants.

Comment

This is an important decision which addresses issues raised in such cases as Henderson v Henderson (1843) 3 Hare 100, 67 ER 313, Johnson v Gore Wood & Co [2001] CPLR 49, [2000] UKHL 65, [2001] BCC 820, [2001] PNLR 18, [2001] 1 All ER 481, [2001] 2 WLR 72, [2002] 2 AC 1, [2001] 1 BCLC 313 and Kooltrade Ltd v XTS Ltd [2001] FSR 344.  The contrast between the situations in the Unpaid Royalties Claim and the Infringements Claim is particularly instructive in that it illustrates what matters should be brought forward to fall within the rule and what need not.  Anyone wishing to discuss this case should call me on +44 (0)20 7404 5252 during UK office hours or send me a message at any time through my contact form.