Recorded Picture Company Ltd v Alfama Films Production
| Jurisdiction | England & Wales |
| Judge | Hacon |
| Judgment Date | 17 December 2020 |
| Neutral Citation | [2020] EWHC 3481 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2017-001094 |
| Date | 17 December 2020 |
[2020] EWHC 3481 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Hacon
(Sitting as a Deputy High Court Judge)
Case No: HC-2017-001094
Andrew Scott (instructed by Lee & Thompson LLP) for the Part 20 Claimants
John Critchley directly instructed by the Part 20 Defendants
Hearing dates: 23–26 June 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Hacon
Introduction
This is the trial of a counterclaim brought by the Defendants. The First Defendant (“Alfama”) is a French film production company. The Second Defendant (“Mr Branco”) is Chief Executive Officer and a director of Alfama, through which he acts as a film producer. Alfama and Mr Branco are referred to collectively as “the Producers”. The Claimant (“RPC”) against which the counterclaim is brought is a film production company based in London.
The counterclaim concerns “The Man Who Killed Don Quixote” (“the Film”) a film directed by Terry Gilliam starring Adam Driver and Jonathan Price which was released in 2018. A very similar film was at one time due to be made under the terms of a deed of agreement dated 31 March 2016 (“the Deed”) by which RPC granted an option to the Producers to make the Film. Relations between the parties soured. By a written agreement dated 14 October 2016 RPC granted an option to a Spanish production company, Tornasol Films SA (“Tornasol”), on substantially the same terms as contained in the Deed. It was this option that resulted in the making and release of the Film.
The Producers' case is that by entering into negotiations with Tornasol, by concluding the agreement of 14 October 2016 and by performing its terms, RPC acted in breach of the Deed. The Producers seek damages and interest.
The Deed
The idea of making what became the Film dates back at least to 2000 and has at all times been a project close to Mr Gilliam's heart. Shooting started in 2000 with Johnny Depp and Jean Rochefort as principal actors. Mr Rochefort became unwell and the project had to be abandoned. This ill-fated enterprise was recorded in a documentary called “Lost in La Mancha” released in 2002.
The insurer of this first Don Quixote project paid out compensation and acquired the rights. The rights were subsequently sold to RPC in May 2009. Having granted options to three successive production companies, none of which took the project forward, on 31 March 2016 RPC entered into the Deed with the Producers. For simplicity I will refer to the film which was the subject of the Deed as “the Film”, as does the Deed, even though it was not strictly the same thing as the Film finally released.
The Deed refers to RPC as “Grantor” and the Producers as “Company”. The recitals set out its background and purpose:
“WHEREAS:
(A) Pursuant to an option and assignment agreement between Hachette Premier et Cie (‘Hachette’), HDI-Gerling Industrie Versicherung AG (‘Gerling’) and the Grantor dated 14 May 2009 as amended by an amendment agreement dated 30 June 2011 and a further amendment agreement dated 18 September 2014 (together ‘the Gerling Option’) attached hereto at Exhibit 1, the Grantor is the legal and beneficial owner of an exclusive option to acquire all right, title and interest in and to a feature film project provisionally entitled ‘The Man Who Killed Don Quixote’ written by Tony Grisoni and to be directed by Terry Gilliam (‘the ‘Work’);
(B) The Company intends but does not undertake to produce a theatrical feature film provisionally entitled ‘The Man Who Killed Don Quixote’ based on the work (the ‘Film’);
(C) The Grantor has agreed to grant to the Company the sole and exclusive option to purchase a one picture licence to produce the Film upon and subject to the terms and conditions of this Deed.
(D) If the Company exercises the Option (as defined below) in accordance with Clause 3 below, the Grantor will licence the Rights to the Company by executing the Licence (as defined below) in the form attached to this Deed as Exhibit 3.”
Clause 1.2 contains the following definitions:
“(l) ‘ Option’, i.e. ‘the exclusive and irrevocable option for the Company to acquire the Rights from the Grantor upon the terms of the Licence’.
(2) ‘ Licence’, i.e. ‘the agreement (the form of which is attached hereto as Exhibit 3) to be entered into between the Grantor and the Company which shall be effective upon the exercise of the Option by the Company pursuant to the terms of this Deed whereby the Grantor irrevocably licences to the Company the Rights in the Work for the Term’.
(3) ‘ Rights’, i.e. ‘as defined in the Schedule to the Licence’, i.e. ‘a licence to develop, produce and exploit (l) feature length film based on the Work (in whole or in part) which licence includes without limitation all rights of exploitation md communication of the Film (together with all allied and ancillary rights in and to the Film) in all media now known or hereafter devised in any and all languages in any part of the Territory for the Term EXCLUDING ONLY the Reserved Rights’ (such reserved rights being defined in sub-clauses (i) to (iii) of Part 1 of the Schedule).
(4) ‘ Film’, i.e. ‘the feature film which the Company proposes but does not undertake to produce based in whole or part on the Work and which is intended for theatrical release and/or television broadcast’.
(5) ‘ Work’, i.e. ‘the meaning given in Recital (A). In addition, reference to the Work shall be deemed to include a reference to any part or parts of the Work and to the title, themes, plots, schemes, sequences, articles, incidents, formats, characters, character names and characterisations thereof and any other material contained therein or related’.
(6) ‘ Option’, i.e. ‘the period of six (6) months from the Effective Date’ (such date being l April 2016 as set out in the title to the Deed).
(7) ‘ Option Price’, i.e. ‘either (i) the sum of twenty five thousand Euros (€25,000) payable in respect of the Option in the event this Deed is executed on or before the Effective Date, this sum being on account of the Purchase Price;…”
Clause 2.1 granted the Option:
“Upon the Company paying the Option price the Grantor irrevocably grants to the Company the Option.”
RPC assumed obligations under clause 7.1 including the following:
“7. OBLIGATIONS
7.1 The Grantor warrants, undertakes and agrees with the Company that:
7.1.1 the Grantor will not dispose of nor deal in any way with any of the Rights during the Option Term;
…
7.1.4 … the Grantor … will not during the Option Term make, any arrangement (whether written or oral) which might inhibit or restrict the Company's rights under this Deed or the Licence.”
Clause 16 allowed for the extension of time periods in certain circumstances, materially as follows:
“16. FORCE MAJEURE
… if there is any litigation or claims affecting the Work, the Rights or the Film, then any dates or time periods in this Deed shall be extended automatically until the Deed can be performed or its obligations fulfilled plus an additional thirty days. …”
In brief, the Producers bought the option for €25,000 It was to last for a term of six months from 1 April 2016. Upon exercising the option they would acquire an exclusive worldwide licence to make the Film. Clause 7 prevented RPC from disposing of or dealing with the Rights during the option term. Clause 16 allowed for the extension of time in the event of litigation or claims affecting the Work, the Rights or the Film.
The Director Agreement
Mr Gilliam remained on board as a producer and on 29 April 2016 he entered into a director's agreement with Alfama (“the Director Agreement”), set out in a letter of that date signed by the parties. Mr Gilliam was to provide directing services in connection with the Film (defined in the Director Agreement as “the Picture”).
Clauses 7 and 8 state:
“7. Creative Approvals and Designations: Director and Producer will mutually approve all key creative matters with respect to the Picture including the final script, cast, locations and production and post-production schedules, with Director's decisions to contro1 in the event of a failure to agree and provided that any and all Director's decisions shall be made in a manner consistent with the final approved budget and with a delivery of answer print (or digital equivalent) no later than 15/08/2017. Director will have the right to designate all creative department heads, including Director of Photography, editor, costume designer, art director/set designer, composer, music supervisor, hair and makeup, provided Director's designees agree to render services for compensation consistent with the final budget.
8. Budget; Financial and Business Controls: The final budget for the Picture will be mutually approved by director and Producer, provided that if the budget is at least 16,000,000€ (Sixteen Million Euros), Producer will have a tie-breaker right commencing eight (8) weeks prior to commencement of principal photography. Director will be consulted fully and meaningfully with respect to all major financial decisions regarding the Picture, prior to Producer entering into any material financing-related agreements (including rights sales, sales agency agreements, distribution agreements, investment agreements, loan agreements, etc.). Producer will provide Director and/or Director's representatives (at Director's option) on a regular basis with copies of all finance and expenditure related documents...
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