#6806 - Rover International V. Canon Film Sales Rover's Claim - Restitution of Unjust Enrichment BCL

Rover International v. Canon Film Sales (Rover’s Claim)

Facts

During the autumn of 1985 there were discussions between them and a Mr. Batemen on behalf of Thorn EMI about the dubbing and distribution in Italy of what ultimately became 17 films in which Thorn EMI had, or were to acquire, the necessary rights. The de Rossi brothers and Mrs. Karlin were connected with Monitor, a well established film distributor in Italy, and it appears that similar ventures had previously been successfully carried out between Monitor and Thorn EMI. In broad outline, the joint venture was to take the following form. Thorn EMI would supply master prints of the films and all othernecessary materials, which would remain their property, and Monitor would arrange for the dubbing of the films into Italian and all the related artwork and other matters. Thereafter Monitor would arrange the distribution of the films to Italian cinemas, but in all respects subject to the approval and control of Thorn EMI. An important feature of the deal was that substantial advances were to be pre-paid to Thorn EMI by instalments in U.S. dollars on account of their ultimate share of the gross receipts. Since this would have involved complications with Italian monetary or fiscal regulations it was envisaged from the outset that a non-Italian company would have to be interposed as a “front” for Monitor. This was to be Rover, a company to be incorporated in the Channel Islands and presumably to be funded from non-Italian sources to pay the advances to Thorn EMI. Unfortunately, however, as subsequently held at the trial, the theatrical agreement ante-dated the incorporation of Rover by about a month, and this fact did not become apparent to either side until some six months later.

Thorn EMI were to deliver all the necessary prints and other materials within a stated time from Rover's readiness to receive them, and they were to remain the property of Thorn EMI at all times. The films were then to be dubbed and treated ready for release in Italy by Rover at their expense, but the release dates, release patterns, and marketing strategy were all to be dependent on from the exhibition of the films were to be the property of Thorn EMI as soon as they were generated, but subject to division as mentioned hereafter. Meanwhile Rover were liable to pre-pay $1,500,000 to EMI in The first instalment was to be paid on 1 January 1986 (or upon prior approval of the agreement by the Italian authorities), and the remaining 23 on the last business day of each subsequent month.

At the end of the term of the agreement, which was to be basically for two years expiring at the end of 1987, Thorn EMI were to repay to Rover any excess in the total advance paid by Rover over the net receipts recouped by them.

Issues

The first concerns Rover's claim for repayment of the installments of the advance paid afterRover's incorporation but before the escrow agreement.

Secondly, Rover claim a quantum meruit on account of the distribution expenses incurred in relation to the films which were released (plus one, “Link,” which was dubbed but not released), together with reasonable remuneration for the work done in purported pursuance of the agreement.

Holding

Kerr lj

Failure of Consideration

Rover claim repayment of the intervening five installments on the grounds that these were paid for a consideration which has wholly failed and/or under a mistake of fact.

The important point is that in my view the judge could not have expressed himself in this way if his attention had been directed to the correct approach in principle. The question whether there has been a total failure of consideration is not answered by considering whether there was any consideration sufficient to support a contract or purported contract. The test is whether or not the party claiming total failure of consideration has in fact received any part of the benefit bargained for under the contract or purported contract.

The position of Rover in the present case is a fortiori to these cases. Admittedly, as the judge said, they had several films from Cannon. But the possession of the films was merely incidental to the performance of the contract in the sense that it enabled Rover/Monitor to render services in relation to the films by dubbing them, preparing them for release on the Italian market and releasing them. These were onerous incidents associated with the delivery of the films to them. And deliveryand possession were not what Rover had bargained for. The relevant bargain, at any rate for present purposes, was the opportunity to earn a substantial share of the gross receipts pursuant to clause 6 of the schedule, with the certainty of at least breaking even by recouping their advance. Due to the invalidity of the agreement Rover got nothing of what they had bargained for, and there was clearly a total failure of consideration.

It follows that in my view Rover's claim for the repayment of the five instalments of the advance totalling $312,500 succeeds on the basis of a total failure of consideration.

Quantum Meruit for expenses incurred – conceded

The first became...