Films Rover International Ltd v Cannon Film Sales Ltd

JurisdictionEngland & Wales
Date1986
CourtChancery Division
[CHANCERY DIVISION] FILMS ROVER INTERNATIONAL LTD. AND OTHERS v. CANNON FILM SALES LTD. [1986 F. No. 1283] 1986 Aug. 20, 21, 22, 26, 27, 28 Hoffmann J.

Injunction - Mandatory - Interlocutory - Film distribution agreement - Plaintiffs seeking to enforce agreement pending trial - Whether appropriate to order defendant to perform contractual obligation

The fourth plaintiff negotiated with the defendant, an English film distribution company, an agreement between the defendant and the first plaintiff for the sub-distribution in Italy of a number of English language films. Subsequently, the defendant, in a attempt to renegotiate the contract, alleged that the plaintiffs were in breach of contract and refused to perform certain of its obligations under the contract including supplying, inter alia, the internegatives and music and effects tracks for three films. The items were needed so that the plaintiffs could arrange to have those films dubbed into Italian in time for their release in Italy. They brought an action to enforce the agreement.

On the plaintiffs' summons for, inter alia, an interlocutory mandatory injunction requiring the defendant to supply the necessary material:—

Held, granting the application, that in considering whether to grant an interlocutory injunction a court was primarily concerned not with whether the injunction was mandatory or prohibitory but with whether the injustice suffered by the defendant if the injunction was granted and the plaintiff later failed at trial was greater than the injustice to the plaintiff if the injunction was not granted and he later succeeded at trial; that an order requiring the defendant to deliver the material to the plaintiffs was simple to perform and, if the defendant succeeded at the trial, its compliance with the order would not cause it a loss that could not be compensated for whereas the plaintiffs without the order would suffer a loss that would be difficult to quantify and the commercial pressure on them to comply with the distribution dates might be such as to force them to renegotiate the contract with the defendant; and that, since the risk of injustice to the plaintiffs was greater, the court would grant a mandatory injunction in the terms sought by the plaintiffs (post, pp. 680D–681B, 682F–G, 686B–C).

Shepherd Homes Ltd. v. Sandham [1971] Ch. 340 and Locabail International Finance Ltd. v. Agroexport [1986] 1 W.L.R. 657, C.A. considered.

The following cases are referred to in the judgment:

American Cyanamid Co. v. Ethicon Ltd. [1975] A.C. 396; [1975] 2 W.L.R. 316; [1975] 1 All E.R. 504, H.L.(E.)

Associated Portland Cement Manufacturers Ltd. v. Teigland Shipping A/S [1975] 1 Lloyd's Rep. 581, C.A.

Cayne v. Global Natural Resources Plc. [1984] 1 All E.R. 225, C.A.

Continental Grain Co. v. Islamic Republic of Iran [1983] 2 Lloyd's Rep. 620, C.A.

Evans Marshall & Co. Ltd. v. Bertola S.A. [1973] 1 W.L.R. 349; [1973] 1 All E.R. 992, C.A.

Locabail International Finance Ltd. v. Agroexport [1986] 1 W.L.R. 657; [1986] 1 All E.R. 901, C.A.

Shepherd Homes Ltd. v. Sandham [1971] Ch. 340; [1970] 3 W.L.R. 348; [1970] 3 All E.R. 402

The following additional cases were cited in argument:

Acrow (Automation) Ltd. v. Rex Chainbelt Inc. [1971] 1 W.L.R. 1676; [1971] 3 All E.R. 1175, C.A.

Decro-Wall. International S.A. v. Practitioners in Marketing Ltd. [1971] 1 W.L.R. 361; [1971] 2 All E.R. 216, C.A.

Esso Petroleum Co. Ltd. v. Kingswood Motors (Addlestone) Ltd. [1974] Q.B. 142; [1973] 3 W.L.R. 780; [1973] 3 All E.R. 1057

Perry (Howard E.) & Co. Ltd. v. British Railways Board [1980] 1 W.L.R. 1375; [1980] I.C.R. 743; [1980] 2 All E.R. 579

Regent International Hotels (U.K.) Ltd. v. Pageguide Ltd. (unreported); Court of Appeal (Civil Division) Transcript No. 164 of 1985, C.A.

Sky Petroleum Ltd. v. V.I.P. Petroleum Ltd. [1974] 1 W.L.R. 576; [1974] 1 All E.R. 954

Smith v. Smith (1875) L.R. 20 Eq. 500

MOTION

The plaintiffs, Films Rover International Ltd., Monitor TV and Merchandising S.R.L., Proper Film Ltd. and Luigi de Rossi, brought an action against the defendant, Cannon Film Sales Ltd. (formerly Thorn-EMI Film Distributors Ltd.) to enforce an agreement between the first plaintiff and the defendant for the plaintiffs to have the exclusive right to distribute a number of films in Italian cinemas. They issued a summons seeking, by paragraph 1, an injunction restraining the defendant whether by itself, its servants or agents or otherwise howsoever from causing or permitting the distribution, exhibition or other use of the scheduled films the subject matter of an agreement dated 5 December 1985 made between the first plaintiff and the defendant in Italy and/or in any manner inconsistent with the terms of the agreement and/or other than in proper compliance with the agreement; and, by paragraph 2, an order that the defendant do forthwith deliver to the plaintiffs' solicitors or otherwise to the order of the plaintiffs the scheduled materials. The schedule listed 17 films and the materials referred to included, inter alia, internegatives and music and effects tracks for the feature films and trailers of the “Highlander,” “The Hitcher” and “Link.”

The facts are stated in the judgment.

Roderick Cordara and David Joseph for the plaintiffs.

Alan Pardoe for the defendant.

HOFFMANN J. This is a motion for an interlocutory mandatory injunction ordering the defendant to deliver up to the plaintiffs or to the order of the plaintiffs certain materials required for producing the master prints of the Italian versions of three feature films. In my judgment the motion succeeds.

Cannon Film Sales Ltd., the present name of the defendant, is an English company which under various successive names has been engaged for many years in film production and distribution. When the material events in this action began, it was known as Thorn-EMI Film Distributors Ltd., and I shall call it “Thorn-EMI.” It does not nowadays produce films itself but finances and acquires rights in films made by others. These are then distributed all over the world through sub-distributors in different countries.

In Italy film distribution to cinemas (known in the trade as “theatrical” distribution) is largely in the hands of a company called S.p.A. Consorzio Italiano Distributori Indipendenti Film (“C.I.D.I.F.”) which, as its name might suggest, is a consortium of independent distributors and exhibitors. It has been engaged in film distribution for about 30 years and has very considerable expertise. Thorn-EMI has had a number of films distributed through C.I.D.I.F. in the past and when, in June 1985, it had a package of 17 films made or to be made which it wished to be distributed in Italy over the next two or three years, it entered into negotiations with C.I.D.I.F.

It appears however that Thorn-EMI was unable to negotiate acceptable financial terms with C.I.D.I.F. It therefore decided to contract with an intermediary who would be willing to make the advance and other payments Thorn-EMI required but would use C.I.D.I.F. as agent to effect the actual distribution. The chosen intermediary was the fourth plaintiff, Mr. Luigi de Rossi. He and his brother Angelo are well established in the business of distributing films in Italy for television and he also has close links with C.I.D.I.F.

The de Rossi brothers operate through a number of companies. Angelo is managing director of the second plaintiff, Monitor TV and Merchandising S.R.L., which is engaged in film distribution for television and has a separate contract for the distribution of the same 17 films after they have been shown in the cinemas. For the purposes of this motion I am not concerned with this contract; it stands in the background as a contract dependent on the contract for theatrical distribution. For this latter purpose, another company called Monitor S.R.L. has been formed with Mr. Luigi de Rossi as managing director. It is this company which acts as Italian intermediary between Thorn-EMI and C.I.D.I.F.

A further complication was introduced into the contractual structure by Italian exchange control. The advances were payable in U.S. dollars. It seems that consent could not be obtained to the payment of advances in foreign currency by an Italian company except against delivery of the films. The arrangements with Mr. de Rossi contemplated delivery of the films at various times over two years but payment of advances from the commencement of the contract. It was therefore necessary to introduce a non-Italian company as the party contracting with Thorn-EMI and to finance its payment of advances from outside Italy. There was a similar problem over the television contract and for this purpose the de Rossi brothers had introduced the third plaintiff, a Guernsey company called Proper Film Ltd. Its arrangements are solely concerned with television rights and again are not in the forefront of this motion. For the purpose of contracting for theatrical distribution, Mr. Luigi de Rossi decided to incorporate a new Guernsey company, the first plaintiff, Films Rover International Ltd. (“Films Rover”).

This is how Mr. Victor Bateman, who negotiated the agreement on behalf of Thorn-EMI, explained the structure of the transaction in an affidavit sworn on 31 July 1986, during the hearing of this motion:

“Mr. Luigi de Rossi is very well known to us and trusted by us. He is a man who operates through a variety of corporate vehicles, to suit his own purpose, but as long as Mr. Luigi de Rossi is in the driving seat the defendants have normally been happy to do business with his companies … My concern was that C.I.D.I.F. should be the actual physical distributors of the films: if we were unable to deal with them directly, and had to deal with them indirectly then so be it: the object was, one way or the other, to secure their services … If Mr. Luigi de Rossi wanted to do the deal through [Films Rover] … I felt that was entirely up to him.”

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