This is a judgment on the papers in an inquiry as to damages.  By an order dated 2 July 2024 the Claimant (‘Duadata’) obtained judgment in default of service of an acknowledgment of service or defence by the Defendant (‘TCL’).  Points of Claim were served on 11 September 2025.  No formal Points of Defence have been filed, but the sole director and shareholder of TCL, Qin Lin, has filed a witness statement dated 18 April 2026 in response to the Points of Claim.  The parties asked for judgment to be given based on the Points of Claim, Ms Lin’s witness statement (I understand that Lin is the family name) and the documents exhibited by the parties.

Duadata is in the business of operating retail stores which sell bubble tea. Bubble tea is a tea which contains small chewy balls, usually made from tapioca, plus flavouring of many alternative kinds. The drink originated in Taiwan in the 1980s and has been sold in the UK since the early 2000s, initially to Taiwanese and other Asian students. Since the 2010s bubble tea has become widely available across the UK.

Duadata began trading in 2012, offering bubble tea from stores trading under the name MOOBOO. In 2014 it started to offer franchises to entities and sole traders, allowing them to open bubble tea outlets under the name MOOBOO. As of May 2024 Duadata had 14 stores of its own and 96 franchise stores spread across the UK.

MV&LL Ltd became a franchisee on 8 April 2021. It shortly thereafter opened a MOOBOO outlet in Gateshead with Ms Lin as manager. There followed complaints about the running of the store including an allegation of an offence under s.111 of the Water Industry Act 1991. The franchise agreement was terminated on 23 January 2024.

Before termination, on 22 August 2023, Ms Lin incorporated TCL and began to offer bubble tea from an outlet in Gateshead. On 24 May 2024 Duadata filed a claim form alleging that TCL was passing off its business as being connected with Duadata by reason of TCL’s adoption of Duadata’s menu design, menu products and signature drinks, recipes and prices. Judgment in default was granted on 2 July 2024. The Order made on that date included an injunction restraining TCL from passing off and more specifically from using stated names for its drinks and from presenting its menu in a manner which suggests that it uses the same recipes as used by Duadata.

There is no suggestion that TCL is in breach of the injunction. Duadata’s claim for damages is based on an assumed period of passing off between the date of incorporation of TCL and the date of the order giving judgment in default.

Duadata bases its calculation of damages on the assertion that because of TCL’s trading it has been unable to offer a licence to a franchisee in South Shields, which is about 12 km away from Gateshead as the crow flies.  The Points of Claim say that potential franchisees have been reluctant to sign up because TCL has been offering the same drinks at the same prices using the same recipes.

Loss is quantified by hypothesising a franchise agreement for South Shields having been entered into on 22 August 2023 and ended on 2 July 2024, a period of 315 days. It is unlikely that TCL started trading on its date of incorporation but on the other hand I have no reason to suppose that it stopped its acts of passing off on the day of the grant of the injunction. I will assume, as Duadata apparently did, that one approximation balances out the other. No point has been taken on that assumption by Ms Lin.

Duadata calculates its loss under four heads, each being a sum that would have been paid by a hypothetical franchisee in South Shields in accordance with Duadata’s standard franchise terms at the relevant date:

The total claimed is £14,349.11, which with VAT comes to £17,218.93.

Ms Lin makes six points in her witness statement.  First, the similarity in menu design was limited in duration.  Secondly, TCL acted promptly to replace the menu complained of.  Thirdly, TCL’s business was small and not profitable.  Fourthly, there is no evidence of loss suffered by Duadata.  Fifthly, there is no evidence of a causal link between TCL’s conduct and the loss claimed.  Sixthly, there was no contractual relationship between Duadata and TCL and so Duadata is relying on a hypothetical agreement which did not exist.

Ms Lin’s first and second points come to the same thing. She does not say when TCL’s menu changed and says nothing about the date on which TCL stopped using the same names for the various flavours of bubble tea. The Points of Claim assume it was on the date of the grant of the injunction. I have no reason to believe otherwise.

The state of TCL’s finances is not relevant.  As to the fourth point, Ms Lin is right if she means that there is no direct evidence that the sum claimed was lost and in fact no evidence in the usual sense at all from Duadata.  In this court parties commonly rely on pleadings as evidence, see CPR PD63 31.1.  The Points of Claim have a statement of truth signed by Chuan Hong Khaw who is a director of Duadata.  The order of 7 May 2025 does not expressly say that statements of fact in the pleadings shall stand as evidence in the inquiry, but the order does state, as requested by the parties, that following service of any amendments to the Points of Claim and comments on the Points of Claim by TCL the court would give judgment in writing.  It is a necessary inference that the parties could rely on facts alleged in the pleadings, or in the case of TCL their comments made on the Points of Claim, in each case taken with documents exhibited by the parties, and that this was with the consent of the parties.

In inquiries as to damages loss is frequently inferred from the facts with necessary assumptions made by the party claiming costs in relation to quantum. The issue tends to be whether those assumptions are reasonable. Ms Lin has not suggested that potential franchisees in South Shields have been reluctant to sign up. I have no reason to doubt that this was the case.

Nor has Ms Lin suggested that it is unreasonable to assume that this reluctance was connected with TCL’s manner of trading, although under her fifth point she says, in effect, that there is no evidence to support such a connection. As I have said, the Points of Claim signed by Chuan Hong Khaw say that there was a connection and I have no basis on which to doubt that he is correct in this.

As to Ms Lin’s final point, Duadata is indeed relying on a hypothetical franchise agreement with a party in South Shields, more accurately on the absence of one, but Duadata is entitled to raise such a hypothesis for the purpose of quantifying its loss.

On the evidence and submissions made available, I take the view that Duadata has done its best to assess the loss suffered by reason of the acts of passing off by TCL and that the sum claimed is reasonable, save for one matter.  VAT would not normally be recovered from HMRC on an award of damages. It is appropriate to deduct it from the sum claimed.

I will order that TCL shall pay to Duadata the rounded-up sum of £14,350.  I will hear submissions on costs and any other matters which should be dealt with in the order.