Neutral Citation Number: [2012] EWHC 2105 (Ch)

Claim No: HC11C04064
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
Royal Courts of Justice 
Rolls Buildings
London EC4A 1NL
Date: 30 July 2012

Before :

SARAH ASPLIN QC (Sitting as a Deputy High Court Judge)
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Between :

	QUICK DRAW LP	Claimant	
	-	and –

(1) GLOBAL LIVE EVENTS LLP
(2) CHRISTOPHER HUNT
(3) MICHAEL HENRY
(4) IAMBIC MEDIA LIMITED
		
		Defendants	

  Mr Siward Atkins and Mr Jonathan Hill (instructed by Wiggin LLP) for the Claimant 
The Second and Third Defendant appearing in person and the Fourth Defendant appearing by its sole director, the Second Defendant
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Hearing dates: 22, 23, 24, 25, 28, 29 and 30 May 2012
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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

MISS SARAH ASPLIN QC

Sarah Asplin QC: 
1.	 The Claimant, Quick Draw LLP (Quick Draw) is a limited partnership registered in the Cayman Islands which provides gap finance to the media industry including the provision of urgent finance for media events and projects. It provided short term bridging finance to Global Live Events LLP (GLE), the First Defendant, in relation to the Michael Jackson Forever tribute concert at the Millennium Stadium in Cardiff on 8 October 2011 (the Concert).  The finance was provided on the terms contained in a Loan Agreement and Debenture both dated 22 September 2011 to which I shall refer in detail below. 
2.	GLE is in administration and was not represented before me. However, before the end of the hearing I was informed that the administrator was content that any order of the court be made against it save for an order as to costs. The Claimant readily agreed.
3.	Mr Hunt, the Second Defendant, and Mr Henry, the Third Defendant, were the prime movers in organising the Concert. Mr Henry set up GLE as a special purpose vehicle to produce the Concert and it was incorporated by registration as a limited liability partnership on 29 March 2011. It was governed by the terms of the Event Company Agreement dated 4 April 2011 and made between GLE, JA-TAIL Enterprises LLC, referred to as the US Member, Limelight Media Events Limited (Limelight) referred to as the UK Member, and Mr Bailey, referred to as the First Ordinary Member. 
4.	Mr Hunt and Mr Henry were GLE’s Designated Members until the date of the Concert. On that date, they were replaced by two corporate entities one of which was Limelight which they controlled. 
5.	Mr Henry, the Third Defendant, is a solicitor specialising in entertainment and intellectual property law and is the editor of certain books of media law precedents. Of late, he has worked primarily as a film financier. GLE is a collective investment scheme within the meaning of s235 Financial Services and Markets Act 2000. Park Place Financial Strategy LLP (Park Place), of which Mr Henry is the founder, is the FSA authorised promoter and operator of GLE.  Mr Henry was responsible for all the contractual arrangements which were made by GLE in relation to the Concert and either drafted or was actively involved in the negotiations in relation to the drafting of the relevant contractual documentation between Quick Draw, GLE and Iambic. 
6.	Mr Hunt is also the sole director and shareholder of Iambic Media Limited, the Fourth Defendant (Iambic). Iambic specialises in the production and distribution of music programmes. It was engaged by GLE to produce the film and sound recordings of the Concert required for GLE to carry out the Business referred to in the Event Company Agreement, by virtue of the Commissioning Agreement dated 18 April 2011.  The precise nature of the arrangement between GLE and Iambic and the ownership of the rights arising in the sound and film recordings of the Concert are at the heart of part of the dispute. 
7.	Mr Henry appeared before me in person as did Mr Hunt. I also gave permission that Mr Hunt as sole director of Iambic should represent the company before the court. 
8.	This matter arises from the fact that GLE was unable to repay the loan made to it by Quick Draw in relation to the Concert. In addition to the claims in relation to the financing of the Concert, Quick Draw also makes claims in relation to the intellectual property rights and materials which it says it acquired from GLE by way of security for the loan. It makes an alternative claims for procuring breaches of the Loan Agreement and in deceit against Mr Henry and Mr Hunt. Mr Hunt and Iambic counterclaim in malicious falsehood. 
Interim Relief
9.	This matter came before the court on 20 to 23 January 2012 when Nicholas Strauss QC sitting as deputy judge in the Chancery Division granted Quick Draw an interim injunction to prevent the Defendants from dealing with the film and sound recordings in relation to the Concert, pending trial. Applying Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900, he found that Iambic’s argument that irrespective of whether it was paid or not, Iambic owned the copyright in the sound and film recordings either outright or jointly with GLE as a result of the Commissioning Agreement and in particular, clause 5, clearly failed. He also held that Iambic’s argument that copyright did not pass to GLE until GLE had paid for Iambic’s services failed in the light of clauses 3.1 and 3.2 of Commissioning Agreement. He also rejected the argument that the rights in the sound and film recordings were not acquired by GLE because the Concert was not broadcast live as hopeless because the sound and film recordings were still produced under the Commissioning Agreement and were subject to it.  
The Witnesses
10.	Before turning to the facts, I should state that I found both Mr Henry and Mr Hunt to be extremely evasive and unreliable witnesses who changed their explanations in relation to important matters on a number of occasions. Accordingly, unless their evidence is consistent with the contemporaneous documents I prefer the oral evidence of others where it differs from their account of events. I should add that in coming to this conclusion I have taken account of the fact that both Mr Hunt and Mr Henry represented themselves at the trial and therefore did not have professional assistance throughout in formulating their defences or making their submissions. (They were professionally represented by solicitors and counsel before Mr Strauss QC on the hearing of the application for an interim injunction and, in the case of Mr Hunt and Iambic, when drafting their original defences.)
11.	I found Mr Gillard, Quick Draw’s solicitor, to be a careful, reliable and truthful witness. When weighing his evidence, I take into account that his competence as a solicitor engaged in media work was being called into question. Although I found Miss Giles on behalf of Quick Draw generally to be a reliable witness there were certain aspects of her evidence in relation to which I prefer the evidence of others and the documentary evidence available.  Lastly, Mr Bailey (who was called at short notice to give evidence for the Defendants) gave his evidence in a cavalier manner and I found his testimony in relation to the expectation of profits from GLE to be lacking in credibility. Accordingly, I attach relatively little weight to it. 
Background facts prior to the provision of finance by Quick Draw
12.	Mr Hunt and Mr Henry had conceived the idea of the Concert at least by the beginning of 2011, if not long before. The budget for the Concert was in the region of US $25 million. Mr Henry drafted all of the central documentation in relation to the Concert including the Event Company Agreement dated 4 April 2011. It was made between GLE, JA-TAIL Enterprises LLC, Limelight and David Bailey. 
13.	The Event Company Agreement provided the structure for the governance of GLE and its role in relation to the Concert. It set out the manner in which the parties were to be remunerated, divided their responsibilities and made clear that the initial term of the venture was intended to be seven years. It also set out the nature of GLE’s business at clause 2.1 as:
“The Business of the Event Company shall be the contracting production staging filming and exploitation of a tribute concert for Michael Jackson to take place at the Millennium Stadium in Cardiff (“the Venue”) on 8 October 2011 (“the Event Date”) and exploitation of all films and recordings made of the tribute concert in any and all media throughout the world for the full period of copyright and after that so far as permissible in perpetuity (the preceding tribute concert and all embodiments and adaptations of it together constitute the “Event”).  . . .” 

14.	“Films” was widely defined in clause 19 as “the audiovisual recordings of the Event to be made by the Event Company” and “Net Revenue” was defined as:
“100% of all sums received by or credited to the Event Company in relation to the exploitation of the Event from any source in relation to the exploitation by the Event Company of any film or sound recordings or intellectual property of any nature associated with the Event  . .. .  such exploitation to be by any manner or means whether now known or in the future invented throughout the world for the full period of protection conferred by intellectual property rights now or in the future.”
15.	In addition, by clause 3.3 of the Event Company Agreement the UK Member, which was Limelight, agreed to be responsible for:
“all aspects of the audio and audio-visual recording of the Event in such manner as is suitable for exploitation in all available media including all means of television such as pay-per-view, relays to international stadiums. global television or home entertainment including DVD and / or Blu-Ray, download, streaming or radio to be filmed in 2-D High Definition and 3-D Including performance concert programme plus behlnd·the-scenes documentary and negotiation and organisation of International distribution of the Event on an international basis both in real-time and in recorded media;
procurement and raising of the agreed Event Budget in accordance with agreed cash-flow schedule and production schedule on terms approved by the parties; and 
securing the Venue and liaison between the Venue the US Member and others to ensure the smooth running of the Event.”

16.	It is also important to note that clause 5 made provision for its members to share in future Net Profits and clause 1.4 provided that:
“No substantial or significant change may be made in the nature of the business of the Event Company and no arrangement may be made to dispose of any material part of the assets of the Event Company otherwise than in the ordinary course of business . . . without the prior written consent of the Designated Members and the Operator.” 

As I have already mentioned, until the date of the Concert, Mr Hunt and Mr Henry were the Designated Members of GLE and Park Place, of which Mr Henry was the founder, was its Operator. 
17.	In cross examination it became clear that Mr Henry had inserted pages at different times into the Event Company Agreement and he accepted that he may well have inserted Mr Bailey’s signature from an earlier draft of the agreement, although he stated that it would have been with Mr Bailey’s consent.  The Event Company Agreement was also amended on 4 July 2011, a matter to which I shall return. 
18.	Under the Event Company Agreement GLE was responsible therefore for hiring the venue for the Concert, engaging the artists and a script writer, contracting with ticket sales agencies, commissioning the logo and the artwork for the Concert and many other matters. 
19.	Next came the Commissioning Agreement dated 18 April 2011 made between Mr Henry for and on behalf of GLE and Mr Hunt for and on behalf of Iambic. Under this agreement Iambic was engaged to produce the film and sound recordings for the Concert on behalf of GLE. 
20.	The Commissioning Agreement left a number of central matters to be decided including the Budget, Cash-flow Schedule and the price for Iambic’s services. However, GLE and Iambic were defined respectively as “the Event Company” and “the Producer.” The relevant provisions of clause 1 are in the following form: 
“1.	Commissioning production delivery and principal elements
1.1	Subject to the fulfilment of the conditions precedent contained in Clause 2 of this Agreement and provided no Event of Default shall have occurred the Event Company undertakes with the Producer to provide or cause to be provided to the Production Account the amounts referred to in the Budget in accordance with the Cash-flow Schedule.
1.2	In consideration of the undertaking of the Event Company in Clause 1.1 and subject to the fulfilment of the conditions precedent contained in Clause 2 and the performance by the Event Company of its obligations in Clause 1.1 the Producer undertakes to produce or procure the production of the Production for the cost specified in the Budget in accordance with the Production Schedule and with all the terms and conditions of this Agreement . . .
1.7	the Event Company irrevocably grants the Producer the exclusive licence to make one cinema film (namely the Production) based on the Approved Screenplay . . . ” 

In fact, “the Production” was defined in clause 17.1 in the following way: 
“The live television broadcast of the “Michael Forever” tribute concert to be held at the Millennium stadium in Cardiff on 8 October 2011 together with an edited version of between 90 and 120 minutes duration.”

21.	The Commissioning Agreement also provided for the ownership of the intellectual property rights in relation to the Concert, in the following way: 
“3 	Rights and Sales Agency appointment
3.1 	The Producer [Iambic] confirms that ownership of all material in relation to the Production produced or acquired by the Producer or the Production Personnel specified in the Production Contracts shall belong to the Event Company [GLE] absolutely free from encumbrances other than the Permitted Encumbrances with effect from the moment of production or acquisition of any such material. 

3.2 	The Producer irrevocably and unconditionally assigns to the Event Company [GLE] and the Producer the entire copyright including all vested contingent and future rights all Performers’ Property Rights all rights of action and all other rights of whatever nature to which the Producer is now or may at any time after the date of this Agreement be entitled by virtue of or pursuant to any of the laws in force in any part of the world in and to the Production and the Delivery Material . . . . .TO HOLD the same unto the Event Company [GLE] and its permitted successors assignees and licensees absolutely for the full period of copyright throughout the world including all renewals revivals reversions and extensions.
 . . . . . 
3.4	The Producer shall obtain releases permissions or licences in a form satisfactory to the Event Company signed by all relevant persons in relation to all quotations text illustrations pictures sound recordings films performances and other material in which rights are controlled by third parties if such material is included or incorporated in any way in the Delivery Material or is incorporated directly or indirectly in the Production. The Producer undertakes to deliver copies of all relevant documentation to the Event Company and/or Sales Agent by the Delivery Date. The Producer irrevocably confirms that the benefit of all assignments licenses consents releases and permissions obtained by the Producer shall extend to the Event Company and the Producer throughout the world for the full period of such rights.

22.	The Commissioning Agreement also contained warranties in the following form:
“5. Warranties 
5.1	The Producer warrants undertakes and agrees with the Event Company so that such warranties undertakings and agreements shall continue to remain in full force and effect after delivery of the Production that . . . . . . .

5.1.5	the Producer is and shall be (together with the principal director of the Production) the “author” of the Production and all associated sound recordings within the meaning of the Copyright Designs and Patents Act 1988 section 9(2)(aa) and (ab)
……….
5.1.6 	the Event Company [GLE] and the Producer [Iambic] shall be the first owners of the copyright in the Production;
. . . .  
5.1.8 	the ownership of all material in relation to the Production produced or acquired by the Producer or the Production Personnel specified in the Production Contracts  (including the Delivery Material . . .) shall belong to the Event Company and the Producer absolutely  . . . . . with effect from the moment of production or acquisition of any such material   . . . . subject only to any restrictions imposed by the Relevant Union Agreements and any other agreement which has been executed by the Producer with the prior written consent of the Event Company and the rights of the PRS in respect of the music and lyrics contained in the Production but expressly excluding within limitation to the generality of the above any interest of the PRS in respect of the right to use any of the music and lyrics in synchronisation with or in timed relation to the Production or any other right restriction or interest of any nature whatever; . . .”

Further, “Delivery Material” was defined in clause 17.1 as “such material as may be agreed by the Event Company” and clause 19.3 contained a complete agreement clause in the following form:

“the Agreement contains the full and complete understanding between the parties and supersedes all prior arrangements and understandings whether written or oral appertaining to the subject matter of the Agreement and may not be varied except by an instrument in writing signed by all the parties to the Agreement.”
      
23.	Thereafter on 4 July the Event Company Agreement was amended. The line up of artists was brought up to date and the date of the Concert itself was changed. However clause 2.1, which defined the Business of GLE remained unchanged despite the fact that Mr Henry now contends that the effect of the Commissioning Agreement executed in April was to leave some of the rights in relation to film and sound recordings with Iambic and to leave GLE with rights in relation to live broadcasts only. When pressed in cross examination Mr Henry stated that in fact the clause had been amended but he failed to record the amendment. Given the importance of any amendment to the documentation relating to the Concert and in particular (i) the division of rights between GLE and Iambic, (ii) the care taken by Mr Henry in relation to documentation, (iii) the form of the Revenue Projections for GLE provided in the due diligence exercise in September 2011 which include, for example, DVDs, CDs, Itunes etc, (iv) the form of the GLE offer for subscription which made no reference to its rights being limited to live broadcasts only and (v) the fact that the Event Company Agreement was submitted for due diligence purposes in purportedly un-amended form, I find his evidence in this regard highly implausible and I reject it. I do so also on the basis that in cross -examination Mr Henry offered another inconsistent explanation as to the division of rights between GLE and Iambic to which I refer at paragraph 86. 
24.	Next, a letter dated 27 July 2011 was sent by Iambic to Mr Henry of GLE stating: 
“MICHAEL FOREVER TRIBUTE CONCERT
Thank you for the opportunity to quote for this. I attach a budget and purchase order which when countersigned by you will be binding between us. 
The job as agreed is to film the concert in 2DHD and 3D, create a live feed for broadcasters to take, make an edited version, and also produce a “making of” documentary in HD, the latter two both at duration to be advised.
Iambic Media Limited will use its secondary music licences to obtain International TV sync (music copyright) rights at advantageous rates and the cost thereof is included in the price. Any other rights necessary for filming and exploitation remain the responsibility of Global Live Events to procure.”  
 
25.	The obligation to produce a “making of” documentary was new and had not appeared in the Commissioning Agreement.  The Purchase Order specified “Supply of filming and transmission package, as detailed in the budget (totalling $2,519,800) at an agreed price of $2,500,000.”  This compares with a full budget for the Concert which was in excess of US$25 million. The budget included a payment of $1,079,500 to obtain a Mechanical-Copyright Protection Society (MCPS) secondary music licence for “sync rights’. The deliverables were listed as “2DHD Live to air including uplinks, 3DHD record, line cut, recorded rushes of all concert camera, 5:1 and stereo mix, Music/vocal/ambient channels in a live environment making of documentary package and title”. The Defendants submitted that the deliverables which were set out were merely by way of internal note whereas Quick Draw contends that they amounted to a variation of what was required from Iambic under the Commissioning Agreement, a matter to which I will return. 
26.	In fact, the letter with the attached purchase order and budget was countersigned by Mr Henry on behalf of GLE on 5 September 2011 just before it was sent to Quick Draw and their lawyers, Wiggin, as part of the due diligence exercise necessary to secure the loan monies from Quick Draw to which I shall refer. 
27.	In accordance with the agreements, GLE hired the venue for the Concert, the Millennium Stadium, Cardiff, entered into contracts with ticket sales agencies, commissioned the logo and artwork for the Concert, engaged a script writer and hired the artists. Under the relevant agreements, the rights in the works or performances were all to vest in GLE. The artwork provider confirmed the same in relation to the logo and artwork by a letter dated 25 July 2011. 
The Need for Finance
28.	As the Concert drew nearer, GLE became concerned about finance and the first approach to Quick Draw was made in mid August 2011. Although Mr Henry and Mr Hunt had met with Ms Giles previously, their first contact with her acting on behalf of Quick Draw was on 15 August 2011 when she received an email from Mr Henry stating that they were interested in obtaining financing by way of bridging ticket sales and discounting contracts for television sale and sponsorship for the Concert. 
29.	During their initial email correspondence Ms Giles made clear that Quick Draw would require “first position” in respect of ticket sales and by his email of 27 August 2011 Mr Henry confirmed that Quick Draw would be provided with priority over the ticket income. 
30.	On 2 September 2011 a conference call took place between Mr Gillard and his partner Mr Ketley from Wiggin, Ms Giles on behalf of Quick Draw and Mr Hunt and Mr Henry. During the call it is Mr Gillard’s evidence that Mr Henry explained the background of the Concert and that GLE owned all the rights in respect of the Concert. This is consistent with Mr Henry’s written explanation in his email of the following day and I accept Mr Gillard’s evidence in this regard. Quick Draw’s standard terms and conditions in relation to short term finance were also discussed.  
31.	On 3 September 2011, Mr Henry sent an email to Quick Draw and Wiggin explaining GLE’s position and that of Park Place in some detail. The email was copied to Mr Hunt. It had a list of documents attached and Mr Henry promised to send those documents separately so as not to overload Wiggin’s and Quick Draw’s inboxes. In his explanation Mr Henry stated: 
“Park Place is owned and run by myself and Chris. We therefore control the finances of GLE and GLE owns all the concert “assets”, the rights in the art work, the artists’ contracts and the copyright in all audio and audio visual recordings of the Concert (subject to necessary rights clearances with record companies and music publishers).” 

32.	In section 2 of the email, Mr Henry gave details of the rights which he said GLE had obtained including the necessary rights to produce the Concert. In section 6, he also explained the details relating to the ticket sales stating that WorldPay had a charge over ticket receipts in order to protect itself from having to provide refunds.
33.	Mr Gillard, Quick Draw’s solicitor who was engaged in relation to the due diligence exercise, stated in cross examination that, although he appreciated that he had to carry out the due diligence exercise, he had relied upon the content of Mr Henry’s email. It is also Ms Giles’ evidence that she relied upon the assertion as to the ownership of all audio and visual rights by GLE contained in the 3 September 2011 email when deciding to loan it the monies for the Concert. In their Amended Defences and submissions, Messrs Henry and Hunt suggest that this is unlikely given the extensive due diligence undertaken at considerable expense by Quick Draw’s solicitors. 
34.	In cross examination, Mr Henry explained that he put together the documents and provided the narrative in order to assist with the due diligence which Wiggin would have to undertake before the loan could be provided. He said, however, that given the large fees which were being charged for the due diligence exercise, he did not expect Wiggin, and Mr Gillard in particular, to rely upon his narrative in the email. He also placed reliance upon the last two sentences of the footer to his email which read as follows: 
“This email contains no legally binding commitments or representations. Where we intend to create legally binding commitments these will be made through hard copy correspondence or documents.”

35.	Mr Henry says that the footer makes clear that the content of the email was never intended to have any legal effect and that it could not be relied upon. Mr Gillard said that he never read this part of the footer and that he never reads them as a rule.
36.	Amongst the large number of documents listed in Mr Henry’s email were the Event Company Agreement, the Commissioning Agreement, a full budget and cash flow, a Revenue Projection an expired MCPS Iambic secondary exploitation agreement. 
37.	In an email to Douglas Conn, Mark Burnell, Toby Eady and Michael Woodward headed “Concert Update” and dated 4 September 2011, Mr Henry reported:
“I spent most of yesterday assembling a set of due diligence information which I managed to send out just before midnight. I have dealt comprehensively with all corporate information, including demonstrating compliance with all relevant provisions of the Financial Services and Markets Act 2000. I have also provided all necessary information in relation to intellectually property rights including written confirmation from the LA lawyers that no personality rights have been infringed and that they have not received service of legal process or any threat of litigation. In addition I have supplied copies of all Term Sheets and also evidence that we have cleared secondary rights through Iambic Media Limited’s blanket licence agreement with the MCPS. This last point is a bit of a coup as it means we do not now need to negotiate synchronisation licences with Warner-Chappell and Sony ATV. We are using Iambic Media as the production company for the television programme so the chain of title is perfect.”  

38.	Putting the effect of the footer, on which I was not addressed, to one side for the moment, I accept Mr Gillard’s evidence that he relied to some extent upon Mr Henry’s narrative whilst appreciating that he was required to review the documentation itself as part of the due diligence exercise. I also accept his evidence that he did not read the footer. I find Ms Giles’ assertion that she too relied upon Mr Henry’s statement as to GLE’s rights less convincing given that she had employed Wiggin and Mr Gillard in particular to look into the matter. 
39.	I also find that Mr Henry’s reliance at trial upon the footer is inconsistent with the implication to be derived from his email of the following day to which I referred at paragraph 37, to the effect that he had dealt comprehensively with all the necessary aspects of the due diligence information which he expected to be relied upon. I find, therefore, that contrary to his evidence, he intended that the narrative should be relied upon. 
40.	The assertion by Mr Henry in the email of 3 September 2011 and the reliance placed upon it is of relevance for two reasons. First, although not an aid to construction, given the numerous explanations put forward by Mr Henry and Mr Hunt as to the position as to intellectual property rights between GLE and Iambic and how they may have arisen, the assertion itself may at least provide an indicator of Mr Henry’s understanding at that stage of the position between GLE and Iambic at least as understood by Mr Henry, as a result of the Event Company Agreement, the Commissioning Agreement and the 27 July email countersigned very shortly thereafter. Secondly, if the Concert assets and rights were not owned in the way described by Mr Henry in the email, Quick Draw contends that they relied upon the assertion and that he is liable in deceit, a matter to which I shall return.   

41.	On 8 September 2011, Neil Gillard of Wiggin emailed Mr Hunt and copied in Mr Henry, Ms Giles and his partner Miles Ketley. He had a number of queries on the cashflow/budget which had been provided to him including the manner in which the costs of production would be met and was keen to ensure that all the proceeds of ticket sales (other than those charged to WorldPay would end up in the account charged to Quick Draw. Mr Henry answered his queries half an hour later, including that about ticket receipts. He confirmed that all such receipts other than the Worldpay monies would be paid into GLE’s general account at Barclays and would be charged in favour of Quick Draw. He stated that they would include irrevocable payment directions in all contracts and also insert Notice of Assignment wording. 
42.	In an email on 17 September 2011 to Mr Gillard and copied to Ms Giles, Mr Henry was concerned about producing a Notice of Assignment for ticket receipts received by Ticketmaster which complied with the requirements of section 136 Law of Property Act 1925 so that the legal title to those ticket receipts would be transferred to Quick Draw. The Notice of Assignment as redrafted by Mr Henry made clear on its face that GLE had assigned to Quick Draw all its rights under the Retail Ticketing agreement. 
43.	On 19 September 2011, a draft agreement with British Sky Broadcasting (BskyB) the satellite TV broadcaster, in relation to the broadcasting of programmes made from the films and sound recordings of the Concert within the UK, was provided to Wiggin. On its face it named Iambic, not GLE, as a party. Mr Gillard says that nevertheless he assumed that the final agreement would be with GLE or made on its behalf because he understood that GLE owned the rights referred to in Mr Henry’s email of 3 September 2011 and for the reasons set out at paragraph 47 I accept his evidence in this regard. 
44.	Meanwhile, on 13 September the Black Eyed Peas had agreed to perform at the Concert and set out their terms in a memorandum of that date. One of the terms was the payment of a deposit sum of US $2m less withholding tax which was repayable to GLE if the band withdrew without cause. This is in fact what happened and is what led to the sum of US $1.6m being repaid to GLE (the BEP Refund). 
The Loan Agreement and the Debenture
45.	Following the negotiations between Mr Henry and Mr Hunt on the one hand and Sara Giles and Quick Draw’s lawyers, Wiggin, on the other, Quick Draw agreed to make the loan to GLE which GLE was seeking. Accordingly on 22 September 2011 the Loan Agreement and the Debenture were executed.
46.	The Loan Agreement was made between Quick Draw and GLE being the “Funder” and the “Borrower” respectively. Mr Henry signed as a designated member of GLE. The authorised signatory on behalf of Quick Draw was someone other than Ms Giles, a matter to which attention was drawn by Mr Henry and Mr Hunt when contending that Ms Giles had insufficient authority to bind Quick Draw. It is a matter to which I attach no significance, in the light of the fact that there was no evidence before me to support the contention that Ms Giles lacked the authority which she stated she had. It is clear both from her oral evidence and the contemporaneous documents that she made clear at certain points that she needed to present proposals to Quick Draw’s funders. 
47.	In any event, the Loan was described in Recital A as required to fund budgeted costs of the Concert. The Loan consisted of three tranches, each of which was subject to different sets of conditions whether precedent or subsequent. One such condition subsequent was the provision of a fully executed and binding BskyB Deal Memo Notice of Assignment. This was a reference to the notice of assignment to Quick Draw of the benefit of the agreement with BskyB which was being negotiated at the time.  
48.	Under the Loan Agreement, there was a Dollar Advance and a Sterling Advance and each was required to be paid into GLE’s Dollar and Sterling accounts respectively. Under Clause 3.4 upon the drawdown of part of the Dollar Advance forming part of the First Tranche, a payment of US $1.6m was to be paid direct to a particular account in Beverly Hills, and was payable under the BEP Agreement. This was the money due as a deposit for the performance of the Black Eyed Peas. Clause 3.4 provided that: 
“Once the payment specified in this clause 3.4 has been made by the Funder, the Funder shall be deemed to have advanced a portion of the Advance in the amount of such payment.” 
49.	Under Clause 5 the full Debt was required to be repaid by GLE by the Maturity Date which was 28 October 2011, some twenty days after the Concert. It was to be repaid to Quick Draw in first position from the Repayment Revenues and without set off. A premium of 15% of the amount of the loan was payable and Quick Draw was also entitled to 1% of the net receipts as well as further premiums in the event of default. 
50.	Further, clause 6 of the Loan Agreement contained the following warranties by GLE as the Borrower:
“. . . . . 
(e) the Advances shall be used solely to defray budgeted production cost of the Concert;

(f) it [GLE] shall use all reasonable endeavours to fulfil all Conditions Subsequent in the time frames detailed in the Schedule 2, part B;

(g) it shall use all reasonable endeavours to conclude sponsorship merchandising and broadcast licence deals from the Concert prior to 8th October 2011 and shall generally use all reasonable endeavours to maximise revenues from the exploitation of the Concert   
 	. . . . . 
(i) The Borrower shall provide to the Funder weekly reports relating to ticket sales, sponsorship deals, merchandising deals and revenues and broadcast and other exploitation agreements and revenues relating to the Concert;
. . . . . .
(l) The Borrower is exclusively entitled to all rights in and to the Concert and to all necessary rights in all musical compositions, sound recordings, performances and all other copyright works to be incorporated into the Concert for the purposes of the production and exploitation of the Concert by way of live broadcast, re-broadcast, exploitation of the kind envisaged by the Ridgeline Agreement and (with the exception of Beyonce) merchandising and furthermore the Borrower shall, subject to obtaining all necessary consents from record companies and music publishers (which the Borrower hereby undertakes to do) be entitled to exploit the Concert in all other media;
 	. . . . 
(n) the information set out in this agreement, the Funder Security and all documents and other information supplied to the Funder hereunder is true and accurate in all material respects and that it has fully disclosed and shall hereafter disclose to the Funder all facts and information which it knows or ought to know are material to the Funder’s interests hereunder and the Funder in inducing the Funder to enter into this Agreement  and to make available the Loan;
……..

(q) it will not make any payment in connection with sunk costs or producer’s fees or any other financing of the Concert prior to full and unconditional repayment of the Loan nor use any part of the Loan to repay any or all of the Borrower’s debt in relation to pre-production or production financing from any other lender including the other Concert Financiers;
. . . . . . . .

(t) that all Repayment Revenues (other than those receipts relating to the Social Events Ticketing Service Agreement which shall be paid into the Designated Accounts) and other amounts derived from the exploitation of the Concert will be paid either; (a) in the case of ticket receipts, to the GLE Account which shall be charged solely to the Funder pursuant to the Funder Security and paid to the Funder in the first position before the payment to any other party including the Sales Agent and any other Concert Financier; or (b) in respect of all other receipts to the Funder Account;
. . . . . .
(u) the GLE Account is the sole trading account in respect of the Concert and the only account through which Concert related expenditure is incurred and into which Repayment Revenues shall be paid and the Borrower shall not permit any amounts to be withdrawn form the GLE Account without the prior approval of the Funder.”

51.	The “Advances” were defined to mean the Dollar Advance and the Sterling Advances, the aggregate maximum principal amount thereof (being $3,000,000 and £3,000,000 respectively) being the Initial Advances Limit and “Repayment Revenues” were defined as “all amounts derived from exploitation of the Concert in all media including all amounts payable to the Borrower pursuant to the Relevant Agreements including for the avoidance of doubt  . . . . all ticket sales receipts  . . . .” In addition, “Debt” and “Relevant Agreement” were defined in the following way respectively:
“Debt” means all amounts due or outstanding to the Funder under this Agreement or pursuant to the other Relevant Agreements including without limitation the Loan, the Premium and the Closing Fees” 
“Relevant Agreement” means this Agreement, the Funder Security and all other agreements concluded in relation to the production and exploitation of the Concert including all conditions precedent documentation.” 
One of the conditions precedent documents listed in Schedule 2 of the Loan Agreement was a fully executed and binding copy of the BEP Agreement, being the agreement with the Black Eyed Peas for their performance at the Concert. 
52.	By clause 9:
“On the happening of any Event of Default, without prejudice to its other rights hereunder, the Funder shall have no obligation to make the Loan available, the Debt shall immediately become due and payable and the Funder may exercise any or all of the powers, rights or remedies granted pursuant to the Funder Security and all other rights and remedies pursuant to this Agreement and the other Relevant Agreements.” 

Events of Default were defined in clause 8 to include a reasonable belief that a petition for an administration order may be presented. 

53.	The Funder Security in the Loan Agreement took the form of the Debenture executed by Mr Henry and Mr Hunt on behalf of GLE and by Quick Draw on the same day as the Loan Agreement. Recital A of the Debenture was in the following form: 
“Pursuant to a loan agreement dated on or about the date hereof (the “Loan Agreement”) the Chargor made certain undertakings, agreements and indemnities in favour of the Chargee in consideration of the Chargee agreeing to make available a loan facility to the Chargor for the purposes of the Michael Jackson Tribute Concert taking place at the Millennium Stadium in Cardiff on October 8th 2011, (the Concert).”
54.	Recital B to the Debenture made clear that GLE had agreed to execute the Debenture “as security for the performance payment and discharge of the Secured Obligations.” They were in turn, defined to mean:
“at any time, all present and future obligations and liabilities (actual or contingent) of the Chargor [GLE] (whether or not for the payment of money and including any obligation to pay damages for breach of contract, any obligation to make restitution and all liabilities acquired by the Chargor from any third party) which are, or are expressed to be, or may become, due, payable or owing to the Chargee under or in connection with the Loan Agreement and this Deed, together with all costs, charges,  taxes or expenses incurred by the Chargee which the Chargor is obliged to pay under the Loan Agreement and this Deed.” 

55.	The Debenture contained at clause 2, a covenant to pay “the Secured Obligations and to indemnify Quick Draw against any losses, costs, charges, expenses and liabilities arising from any breach or failure to pay, discharge and satisfy the Secured Obligations in accordance with their respective terms.”  Clause 3 was in the following form: 
“All the security created under this Deed is made:
3.1.1	as continuing security for the payment, performance and discharge of the Secured Obligations
3.1.2	with full title guarantee in accordance with the Law of Property (Miscellaneous Provisions) Act 1994 (UK);
and 
3.1.3	(only to the extent applicable) by way of present assignment of future copyright pursuant to Section 91 of the Copyright, Designs and Patents Act 1988 (UK), 
In each case for the Chargee to hold absolutely on the terms of this Deed throughout the universe and in perpetuity or otherwise for the full period of the Chargor’s rights, wherever subsisting or acquired, as renewed and extended from time to time, subject only to clause 21 (Release and Reassignment). “

56.	By clause 4.4 GLE charged by way of fixed charge its interest in inter alia, all Intellectual Property Rights, all Concert Rights, all Concert Materials and any money “now or at any time after the date of this Deed standing to the credit of the Account, ” or “any money now or at any time after the date of this Deed standing to the credit of any other present and future account with a bank or financial institution.”  The Account was defined as the GLE Dollar Account, the GLE Sterling Account and the Designated Accounts. “Concert Rights” was extremely widely defined to include amongst other things:
“ (a) all rights of every kind and nature in and to any and all music and musical compositions created for, or from time to time used in, the Concert, including all rights to perform, copy, record, rerecord, produce, publish, reproduce or synchronise all of such music or musical compositions and all record, soundtrack recording and music publishing rights;

(b) all rights including all copyrights , rights in copyrights, interests in copyrights and renewals and extension of copyrights, domestic and foreign, common law and statutory heretofore or hereafter obtained in the Concert or any part thereof . . . . .

(c )	the Exploitation Rights; 
 . . . . 
(g) the benefit of those of the Relevant Agreements to which the Chargor is a party and any other contracts entered into or made by or assigned to the Chargor relating (whether directly or indirectly) to the Concert, including all rights granted and all amounts payable thereunder and the benefit of all undertakings, covenants, representations and warranties made therein;
 . . .. 
(i)	all other accounts receivable, contract rights, general intangibles intellectual property investment property letter of credit rights and supporting obligations which are related to or used in connection with the Concert.  
(j) all rights in and to the Accounts;

(k) the products and proceeds of any or all of the foregoing.”  

In turn, Concert Materials and Exploitation Rights were defined as:
“Concert Materials . . . .
(a)	all physical properties of every kind or nature of or relating to the Concert and all versions thereof, including all physical property relating to the completion and exploitation of the Concert and all versions thereof or any part thereof
. . . . . .

“Exploitation Rights
 . . the following in respect of the Concert throughout the world for the full period of copyright and thereafter (so far as is possible) in perpetuity: (a) all rights to distribute, lease license, sell or otherwise exploit or deal with the Concert in all media (whether now known or hereafter invented or devised by any and all means including all rights to communicate the Concert to the public (b) all ancillary rights and (c) all such other rights in and to the Concert or any material on which the Concert is based or which is incorporated in the Concert and as are needed for the full exploitation of the rights described in (a) and (b) above;” 

and “Relevant Agreements” was defined by adoption of the definition contained in the Loan Agreement referred to at paragraph 51 above.

57.	By clause 4.5, GLE also charged its interest in the Debts by way of fixed charge. The “Debts” were defined as:
“all book debts, other debts, royalties, fees and other amounts due to the Chargor from any other person including without limitation, amounts due in respect of Exploitation Rights, under letters of credit in its favour and under bills of exchange, negotiable and bearer instruments held by it (whether present, future or contingent and whether acquired from a third party) together with all collateral, security, guarantees or other rights connected with them.” 

58.	Clause 5 of the Debenture states: 
“The Chargor [GLE] assigns and agrees to assign absolutely with full title guarantee to the Chargee as security for the payment and discharge of the Secured Obligations all the Chargor’s rights, title and interest from time to time in and to each of the assets, property and rights referred to in clause 4 of this Deed.” 
For good measure, clause 6 contained a floating charge over the whole of GLE’s assets to the extent that they were not already mortgaged, charged or assigned. 
59.	Clause 6.3 provided that the floating charge would automatically convert into a fixed charge over all of GLE’s rights and assets if an administrator were appointed or Quick Draw received notice of an intention to appoint an administrator. This of course occurred after the Concert, in October 2011. 
60.	By clause 7.8.2 GLE held on trust for the benefit of Quick Draw absolutely:
“the entire interest and benefit of the Chargor [GLE] in and to all the Charged Assets and all other rights and assets intended to be subject to a security interest under this Deed (or any part of thereof) which are not or cannot be effectively assigned or charged by the Chargor under this Deed.”
61.	Quick Draw’s powers should the security become enforceable were set out at clause 12 and included the power to sell, call in, collect or convert into money or otherwise deal with or dispose of the Charged Assets. The “Charged Assets” were defined as “the property, assets and interests (whether present or future) which are the subject of any security created by this Deed (and includes all income generated thereby, all proceeds of sale thereof and any present and future property, assets and interest of that type)”.  
62.	Clause 8 contained a negative pledge. The clause quite clearly in my judgment contained a typographical error. The word “not” was omitted from the phrase, “The Chargor shall without the prior written consent of the Chargee”. At one stage, the Defendants had suggested that this clause should be construed literally without the “not”.  In my judgment this would make no commercial sense at all and applying the principles of construction set out in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900, to which I shall refer, cannot be the correct construction. The insertion of “not” therefore, cures the obvious mistake and the clause should be construed accordingly: Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 per Lord Hoffmann at paragraph 22. 
63.	Clause 8.1.2 makes clear that the prior written consent of Quick Draw was necessary before GLE could “sell, transfer, licence, lease, dispose or otherwise part with any Charged Property.” 
64.	It is also important to note that clause 13.10 of the Debenture provided expressly that GLE undertook to “hold the Charged Assets upon trust to convey, assign or otherwise deal with the same in such manner and to such person as the Chargee [Quick Draw] shall direct . . . .”  Clause 18 is a repetition in favour of Quick Draw of the warranties, representations, undertakings and covenants contained in the Loan Agreement. Clause 19 contained further covenants and undertakings by GLE including the following:
“19.1.6  if required by the Chargee execute a legal assignment of any Debt to the Chargee in such terms as the Chargee may require and give notice of such assignment to the Debtor; 

19.1.7	pay the proceeds of realisation of any Debt into a Designated Account and pay or otherwise deal with such proceeds in any Designated Accounts in accordance with any direction given by the Chargee from time to time.”	

65.	Clause 21.3 contained the provisions necessary to release the Charged Assets from the “assignments, mortgages and charges” contained in the Debenture, once the Secured Obligations had been met. Lastly, I should mention that clause 24, a term inserted at Mr Henry’s suggestion, reads as follows:
“The Chargee [Quick Draw] grants the Chargor [GLE] a revocable and conditional licence to produce the Concert and to exploit and licence third parties to exploit the Exploitation Rights conditional upon the Chargor giving notice to such third parties of the security created by this Deed and irrevocably directing such third parties to pay all revenues from exploitation of the Exploitation Rights to either (a) in the case of ticket receipts, to the GLE Dollar Account or the GLE Sterling Account (other than those receipts relating to the Social Events Ticketing Service Agreement which shall be paid into the Designated Accounts); or (b) in respect of all other revenues from exploitation of the Exploitation Rights, to the Funder Account. The Chargee may terminate such licence on the happening of an Event of Default.”  

Post draw down
66.	The funds were drawn down by GLE between 23 and 29 September 2011. Almost as soon as that had happened things started to go wrong. On 29 September 2011 itself, the Black Eyed Peas, who had been intended to be one the headline acts for the Concert, pulled out. The BEP Refund Agreement had already been paid directly to them under the terms of the Loan Agreement. 
67.	Their withdrawal in turn led to the withdrawal of certain sponsors resulting in a financial shortfall of US $1million or more. On 30 September Mr Hunt emailed Ms Giles to say that he was close to agreeing a $5m television deal and that Motorola were the closest to agreeing a sponsorship deal. However, he omitted to say that the Black Eyed Peas had pulled out of the Concert. He did email to tell her on 3 October. The BEP Refund was made to GLE around this time. 
68.	Thereafter on 4 October it was acknowledged by Mr Hunt that there was a funding hole, that the TV deal would now be worth $3-4m and that Ubisoft was still likely to sponsor the event. As a result Ms Giles sought more financial information including a breakdown of all confirmed revenues and revised projection figures. She also stated on 4 October by email “suggest that you take emergency action with your investors to get the funds as I can give you no guarantee with Quick Draw”. She also added “also can you get the BEP’s funds returned to us today copying Neil and I on the email and ensure that is sent for value today.” This was a reference to the BEP Refund.  In fact, to Mr Hunt’s knowledge, the monies had already been returned to GLE’s Dollar Account. In his email to GLE’s accountant (copied to Mr Henry) and sent shortly before Ms Giles’ request for the BEP Refund to be returned to Quick Draw, Mr Hunt said, “The Peas dosh is back. Nick of time!” 
69.	It is clear both from her evidence in this regard, which I accept, and from the emails which she instructed Mr Gillard to send that afternoon, that Ms Giles was unaware that the BEP Refund had already been received by GLE.  It was not until just after 6pm that evening that Mr Hunt emailed Mr Gillard to say that the BEP Refund had already been returned and added that “it did not count as repayment revenues under the Agreement” and was needed to meet production costs for the Concert. 
70.	Such a construction was swiftly refuted by Mr Gillard on Quick Draw’s behalf and it was made clear that Ms Giles’ expectation was that the BEP Refund would be remitted to Quick Draw. Mr Gillard also pointed out in an email to Mr Hunt that in any event under the Loan Agreement monies could not be withdrawn from the GLE Account without Quick Draw’s approval. Lastly, Mr Gillard drew attention to the agreed position in relation to a shortfall in the budget which he set out in full. In short, that position made clear that Quick Draw was under no obligation to make any Advance to meet any shortfall and that recourse would have to be had to third party financiers. By a return email Mr Hunt disputed the position under the Loan Agreement and stated that such monies, by which he meant the BEP Refund, “can of course be withdrawn from the GLE account.” Nevertheless, he asked if they could talk the following day and Mr Gillard confirmed that he was free to discuss the matter the following morning. 
71.	It is not disputed that the call did not take place at the intended time and Mr Henry and Mr Hunt were unable to make a rescheduled time that day. Throughout the remainder of that day and late into the night, the emails reveal that Ms Giles was trying to contact Mr Hunt and Mr Henry for an update. Mr Henry had replied at 10.45pm that they had too much to do and would be able to update her the following day.  
72.	In fact, on 5 October 2011, Warner Chappell brought proceedings for an injunction to restrain GLE from infringing copyrights in about half of the songs which were intended to be used at the Concert (the Warner Chappell Songs”). As a result, GLE gave an undertaking on 6 October not to exploit any film or recording of the Concert insofar as it contained any of the Warner Chappell Songs, except for the purpose of the proposed agreement between Iambic and BSkyB which was to be concluded the following day, pursuant to which Iambic was to provide three edited TV programmes made from the films and sound recordings of the Concert, of 44 minutes, 204 minutes and not less than 4 hours, for a fee of £70,000. As a result of this the planned live broadcast of the Concert (by broadcasters other than BskyB, outside the UK) had to be abandoned.   
73.	In the early hours of 6 October Ms Giles emailed Messrs Hunt and Henry to say that she had had a couple of ideas which might assist. She went on to add, “I simply can’t afford for this not to work and need to ensure we have a failsafe back up which is in our control – can we discuss, the whole chain of events sickens me - it is disgraceful.”  
74.	Ms Giles did not manage to make contact with Mr Hunt again until later that day when he emailed her to explain that there was a serious crisis with suppliers threatening to take their equipment away from the Concert venue unless paid up front and asked that she contact him as a matter of urgency. Mr Hunt made reference to a VAT repayment of £500,000 which he said was due to GLE at the end of the month and asked to borrow against it. He also went on, “Neil’s letter this week said you could only lend against solid collateral – this is.” 
75.	Having received his email, on 6 October, Mr Gillard of Wiggin responded to Mr Hunt and Mr Henry on Quick Draw’s behalf seeking an urgent update call.  He listed five key issues which needed to be discussed including the Warner Chappell position, the status of ticket sales and the budget/cashflow situation since the Black Eyed Peas’ cancellation. He added that the BEP Refund also needed to be discussed. It is clear from Mr Gillard’s reference to the Warner Chappell situation that contrary to her witness statement, Ms Giles must have spoken to Mr Henry and/or Mr Hunt before lunchtime on 6 October, something which she did accept in cross examination. 
76.	In any event, Ms Giles telephoned Mr Hunt during the afternoon of 6 October. It was during this conversation that Mr Hunt says that he raised with Ms Giles the urgent need to use the BEP Refund to defray budgeted production costs for the Concert and that she told him to breach any agreement he had to in order to ensure that the Concert went ahead. This became known as the “Giles Instruction” and was relied upon by the Defendants as authority to use the BEP Refund for the purposes of the Concert. 
77.	Ms Giles strongly disputes Mr Hunt’s account. Her evidence is that she told Mr Hunt that he would have to work out a solution in accordance with their understanding before the execution of the Loan Agreement that further funding would need to come from other investors or deferments. In cross examination she stated that she told him to reach any agreement necessary, by which she meant with third parties, not to breach any agreement. 
78.	In this regard, I prefer the evidence of Ms Giles to that of Mr Hunt. In the light of the content of the emails which had already passed between Ms Giles and Mr Gillard and Messrs Hunt and Henry to which I have referred, the fact that Ms Giles had already refused the use of £1million of “TV money”, Quick Draw’s stated position in relation to the BEP Refund, the attempt to arrange a telephone conference to discuss it and Ms Giles’ insistence on further collateral which had yet to be supplied, on the balance of probabilities I find it inherently improbable that Ms Giles orally would have given Mr Hunt open ended authority whether to breach agreements as necessary or impliedly to use the BEP Refund as he thought fit.    
79.	It was also suggested by Mr Hunt that consent was in fact given for the use of the BEP Refund because there was no reply to his email of 4 October to Mr Gillard in which he asserted that he could not find anything in the agreements to support Mr Gillard’s position and that the BEP Refund could not be used to defray budgeted production costs.  Such an argument is in my judgment unsustainable in the light not only of the further emails but also the fact that the assertion was made in the context of a request for a conference call to which Mr Gillard responded by saying that he was available at 11am the following day.  
80.	In fact, it was during a call on 7 October that Mr Hunt admitted for the first time that the BEP Refund had already been spent on production costs. It is not suggested that he made reference on that occasion to the purported Giles Instruction which would have been natural if, in fact, it had been given.
81.	The BskyB agreement referred to in paragraph 72 above was finally entered into on 7 October 2011 by Mr Hunt on behalf of Iambic. This was the agreement the notice of assignment of which was referred to as a condition subsequent in the Loan Agreement albeit that it had been understood by Mr Gillard that it would be entered into by GLE. It enabled Iambic to benefit from the BskyB blanket agreement in relation to copyright. 
82.	In this regard, the Defendants contend that the copy of the draft BskyB Agreement provided to Mr Gillard of Wiggin at the due diligence stage had clearly been between BskyB and Iambic and that therefore Quick Draw had known or ought to have known all along that the contracting party was Iambic and not GLE and that as a result there would be intellectual property rights vesting in Iambic and not GLE and that there would be work carried out which was outside the definition of “Production” in the Commissioning Agreement. In cross examination Mr Gillard stated that the draft of the BskyB Agreement he was provided with was just that and was out of date and that he believed that the actual agreement would be made with GLE or alternatively on GLE’s behalf.  This evidence is consistent with the definition of GLE’s “Business” in the Event Company Agreement set out at paragraph 12 above and the form of the Commissioning Agreement and I accept that it was understood by Mr Gillard that the BskyB agreement would at least be entered into on GLE’s behalf. This is consistent with the BskyB Deal Memo NOA having been made a condition subsequent to the Loan Agreement because Mr Henry had told Mr Gillard that the deal and the paperwork could not be completed in time for it to be a condition precedent to the draw down of the funds, something which is not disputed.
83.	With regard to clause 2.1 of the Event Company Agreement, Mr Henry stated in his witness statement that despite its form, it was not intended that GLE would exploit all of the footage of the Concert, merely the live broadcast and the 90 to 120 minute film version and that Iambic would also have the right to exploit on its own account, including by agreements such as the BskyB agreement. In fact, the BskyB agreement was not concluded until long after the Event Company Agreement had been executed. He also stated that it was not intended that GLE exploit all the film and sound recordings for the full period of copyright. Of course, the live broadcast had had to be abandoned as a result of the Warner Chappell order. 
84.	He also asserted that the members of GLE had no interest in future revenue from secondary exploitation as opposed to the immediate revenue from the live broadcast itself and, accordingly, that there was no difficulty in Iambic having substantial intellectual property rights and that this had been confirmed by Mr Bailey. Mr Bailey’s evidence in this regard was that future profits were not the incentive for the investors in GLE but only a possible “cherry on the top”.  I found both Mr Henry and Mr Bailey’s evidence in this regard to be implausible and I reject it. In my judgment on the balance of probabilities, given the enormous billing given to the Concert and the calibre of the performers, it is inherently unlikely that it was not expected and anticipated that there would be considerable future profits to be derived from exploitation of the rights. In this regard, I also rely upon the definition of Net Profits in clause 5 of the Event Company Agreement which included future profits and the fact that GLE was established for an initial period of seven years. 
85.	As I have already mentioned, when pressed in cross examination about why therefore, Clause 2.1 of the Event Company Agreement had not been amended on 4 July 2011 or at any other stage before it was submitted to Wiggin and Quick Draw for the purposes of due diligence, Mr Henry had no answer save that he did not consider it material, that it was an oversight and that GLE did not have the capacity to carry out the functions itself. I have rejected that evidence for the reasons given in paragraph 23. In addition, in this regard, Mr Bailey stated in cross examination that he had not understood that GLE was only entitled to exploit rights in the Concert in relation to the day itself and the investors would have cared if any rights had passed to Iambic which would have impaired those of GLE. 
86.	I should also mention that in addition it was suggested by Mr Henry for the first time in cross examination that he had been asked by Mr Hunt to reserve some of the material from the rushes of the Concert for Iambic and that he had agreed to Mr Hunt’s request. This may or may not have been supposed to have happened on the same occasion as an agreement Mr Hunt described for the first time in cross examination. Mr Hunt stated that it had been agreed with Jeffre Phillips on behalf of JA-Tail and Mr Henry in April 2011 that Iambic would retain intellectual property rights relating to the Concert. However, there was no other evidence of either of these agreements having been reached and even if they had been, they would have been  inconsistent with all of the other relevant documentation and with Mr Bailey’s evidence to which I have referred above. Accordingly, I reject Mr Henry and Mr Hunt’s evidence in this regard. 
The Concert
87.	The Concert itself took place on 8 October. It was not possible to make a live broadcast but nevertheless, the performance was recorded and filmed by Iambic. Some of the Jackson family including Michael Jackson’s children appeared. It was suggested by Mr Hunt that they may have diverged to some extent from the written Script and for the first time, at trial, he suggested that the words which the Jackson children used were written by La Toya Jackson. There was no written evidence to support such an assertion and I reject it. (In fact the Defendants provided no disclosure whatever in relation to the Script).  However, it was not suggested by Mr Hunt that the Script was not used at all although in relation to films produced by Iambic to which I shall refer, he contended that only generic elements of the Script, insufficient to amount to a breach of copyright, had been used.  In the absence of any documentary evidence and on the balance of probabilities, I reject Mr Hunt’s contention that substantial parts of the Script were not used. The Concert logos also appeared on the screens at the Millennium Stadium and, accordingly, in the film recordings. This was eventually accepted in cross examination by Mr Henry and by Mr Hunt. I should add that in about November 2011, Mr Hunt obtained different logos which he used in the films produced by Iambic. 
88.	Ms Giles states that during the Concert she made her objection to the use of the BEP Refund very clear to Mr Henry, saying that GLE had no right to use it and that GLE was in breach of the Loan Agreement. Mr Henry’s evidence on the other hand is that she said that she would have preferred it if it had been returned to Quick Draw. Mr Henry’s evidence in cross examination was that although Mr Hunt had not told him in so many words that Ms Giles had consented to the use of the BEP Refund, Quick Draw had consented otherwise the Concert could not have gone ahead. 
89.	When pressed in cross examination, Ms Giles stated that both she and Mr Henry knew that GLE was in breach of the Loan Agreement and that they were working together to seek to protect the commercial asset. She said however, that she had been thinking of enforcing under the Loan Agreement as a result of the breach but had decided that it was not in Quick Draw’s best interests. She had not however, consented to the use of the BEP Refund. Mr Gillard’s evidence on this point is that he too confirmed that consent had not been given but that a pragmatic approach had been adopted, all rights having been reserved.
90.	In this regard, given the email correspondence which had preceded it to which I have referred, I accept Ms Giles’ evidence that she told Mr Henry that she objected to the use of the BEP Refund. I also accept Mr Gillard and Ms Giles’ evidence that at that stage, all rights had been reserved in relation to the BEP Refund. 
Iambic’s Rights Confirmation
91.	It was also on 8 October that GLE purportedly gave Iambic a licence dated 8 October 2011 to make a film and television programme of the Concert. The terms of the Rights Confirmation which was signed by Mr Henry on behalf of GLE was as follows: 
“Michael Forever Tribute Concert (the Concert)
GLE now grants and confirms the grant to Iambic of the right to make film and sound recordings of the performances of all artists at the Concert and to make other film and sound recordings in relation to the Concert (such as behind-the-scenes footage etc) and to cut copy edit and reproduce the same for the purposes of completing such edited film and television programmes as Iambic shall make and for the purpose of making the same available to distributors and licensees of such film and television programmes:”

It has since become clear and is not in dispute that the Rights Confirmation was in fact drafted and signed by Mr Henry on 17 October, the day on which the SEL Amount to which I shall refer, was used to meet expenses. Neither Ms Giles nor Mr Gillard became aware of the purported licence until 25 October 2011 by which time the relationship between Quick Draw and GLE had already broken down. It was brought to Wiggin’s attention by the solicitor for one of the facilities houses producing footage for delivery to BskyB. 

92.	In cross examination, Mr Henry stated that the Rights Confirmation was put in place to enable Iambic to demonstrate to BskyB that it had the right to film at the Concert. Given that the Rights Confirmation was drafted some nine days after the Concert took place and there is no documentary evidence to support this, I reject it. This is also contrary to Mr Henry’s other submission that Iambic had such rights under the Commissioning Agreement in any event, which I also reject.  
93.	At about this time, Mr Henry also drafted further Rights Confirmations for the Artists which were stated to have effect from 8 October and which provided that the artist in question consented to Iambic making and editing a film of the Concert and making it available for live broadcast, rebroadcast and exploitation in all other media throughout the world. In my judgment, both sets of Rights Confirmations were contrary to the terms of the Loan Agreement and Debenture and therefore were invalid. It is said on behalf of Quick Draw that both sets of Rights Confirmations were part of Mr Henry and Mr Hunt’s attempt to subvert the effects of the Loan Agreement and the Debenture by re-directing rights away from GLE to Iambic. In the light of my finding at paragraph 92 and the nature of the events in and around 17 October 2011 to which I refer below, I accept Quick Draw’s submission in this regard. 
94.	On the same day, the day of the Concert, Mr Henry and Mr Hunt also resigned as the Designated Members of GLE. 
Finance for Exploitation 
95.	By an email on 10 October Mr Henry provided a copy of the Warner Chappell order to Quick Draw and stated that GLE could not complete production of the footage from the Concert without further finance and that despite what was said prior to closing, the investors in GLE would not consent to assigning the proceeds of ticket sales to Quick Draw. He also said that if the film of the Concert was not completed GLE would be in breach of its agreement with BskyB and that GLE would not be able to take advantage of the BskyB blanket with a result that the footage and sound material of the Concert would be infringing material. Mr Henry said that the solution was to use the ticket sales monies to finish the film.  Of course, it was in fact Iambic which had entered into the BskyB Agreement and the Defendants now contend that Iambic did so solely on its own behalf.
96.	In cross examination, Mr Henry described his references in the various emails to GLE being in breach of the agreement with BskyB as merely slips. Given the detailed knowledge of all the documentation and the relationships involved between the various participants in the Concert project displayed by Mr Henry in cross examination, on the balance of probabilities I find it highly improbable that Mr Henry would have made slips about such an important issue and cannot accept his evidence in this regard.
97.	At this stage, Ms Giles and Mr Gillard on her behalf were demanding full details of outstanding creditors, budget and cash flow. Mr Hunt provided a provisional list of outstanding costs on the evening of 10 October and promised ticket and merchandising sale figures for the following day. It is clear from Mr Henry’s email to Ms Giles of 12 October that the full details had not yet been provided by that stage. 
98.	This was followed by a proposal on 13 October put forward by Mr Henry as a compromise that Quick Draw should agree to the monies held by Worldpay being released and Quick Draw would be entitled to an additional 15% premium on them. This was not acceptable and Mr Gillard emailed Messrs Hunt and Henry to that effect that evening. However, he added, “Quick Draw will issue a consent to Worldpay to transfer funds to the GLE account provided that Barclays countersign the document to state that they will not permit any funds to be withdrawn from the GLE without Quick Draw’s written approval.”   Mr Henry responded that he had tried without success to contact Barclays to ask them to comply. He added: 
“There does, however, need to be practical solution as to how this is undertaken without causing delay or arguments about every single invoice that needs to be settled to enable the production to be completed.” 

99.	By an email shortly afterwards, Mr Hunt told Mr Phillips of JA-Tail, “we are trying to get our hands on the ticket income to finish the film and pay people. Sarah Giles, the bridge funder, has a lien over the account and has been refusing to let us do this. Today she agreed – 10 minutes ago – but has demanded that she countersign every payment made.” 
100.	It is Ms Giles’ evidence that it was completely untrue that she had agreed to the use of the ticket monies. In this regard, I accept her evidence. In my judgment on the balance of probabilities, such an agreement would not have been consistent with her email of 7.11pm that evening in which she was still calling for revenue information and all collateral available which was described as having been discussed on the phone. It would also have been inconsistent with the tone of Mr Henry’s response in which he suggested that he had answered her outstanding questions but was happy to answer further queries. In my judgment, it would be equally inconsistent with Mr Hunt’s response later that evening to which he attached current revenue forecasts and referred to collateral in the form of a VAT reclaim of £567,000 and the detailed queries Ms Giles raised in relation to potential future revenue and the nature of the VAT reclaim. 
101.	Ms Giles also stated that she did not agree to the release either during a telephone conversation with Mr Henry on the evening of 14 October. By this time Mr Henry had emailed Ms Giles and Mr Gillard stating that the production needed the WorldPay monies urgently. Immediately after the call, Mr Henry emailed Mr Hunt and the GLE accountant stating that he had had a constructive call and that Ms Giles would like to see a calculation of the anticipated VAT refund “as she feels that this is the only basis on which she can release further funds.” It also stated that she required a schedule of essential payments and all other payments for artists and other essential payments. Although he recorded that Ms Giles recognised the need to make essential payments and was prepared to be constructive, he did not state that any agreement had been reached, nor in my judgment is the content of his email consistent with such an agreement having been reached. 
102.	Furthermore, on 15 October, a schedule of urgent payments was provided by Mr Hunt which included sums necessary for Iambic to be able to deliver the versions of the film of the Concert. Very late that evening, Ms Giles emailed Messrs Henry and Hunt in the following terms: 
“I need to know there is sufficient collateral in order to push your requirements through, at the moment as I see it you don’t have this – I am working 24/7 using all my contacts to get this coverage – where have you got to in securing anything that is watertight?”  

103.	It was Mr Henry’s case that Ms Giles had already agreed to release the ticketing monies on Friday 14 October and it was only the precise amount that was under consideration. He submits that she then sought to make herself unavailable possibly because she had changed her mind or had overstepped her authority. This is flatly denied by Ms Giles. Even if Mr Henry were correct that Ms Giles had agreed in principle on 14 October, something which, in my judgment, is inconsistent with the contemporaneous documentation including Ms Giles’ email of 15 October to which I have referred, and therefore, on the balance of probabilities, is improbable, the argument does not get him home. As Mr Atkins submitted on behalf of Quick Draw, I find that it is clear from the surrounding documentation, together with Ms Giles’ evidence, that the precise detail of any release of funds was never agreed or alternatively, that even if Ms Giles had agreed in principle on Friday 14 October, it was absolutely clear by the beginning of the following week that she no longer agreed. 
104.	In my judgment, Mr Henry’s repeated requests for further funds on Monday 17 October are also inconsistent with his version of events. If he considered that he had already secured Ms Giles’ agreement, even in principle, in my judgment, his requests would have been framed completely differently and he would have referred expressly to the agreement reached.  He made no such assertion in his email on the morning of 17 October. In fact he stated, 
“As you are aware, there are a number of urgent payments which need to be made today in order to permit GLE to preserve the rights etc.
Please can you advise the amount of the transfer you are organising today   . . .”

It is also important to note Mr Henry’s reference to GLE preserving the rights, particularly in the light of the fact that it is accepted that it was on 17 October that he drafted the Rights Confirmation in Iambic’s favour to which I referred above.

105.	At this stage, Ms Giles was on her way to see her grandmother who had been taken ill. It is her evidence that she still awaited the necessary information before being able to determine whether to release the ticket sales monies and, if so, in respect of which essential payments. This is consistent with her email at the time. Mr Henry sent a further copy of the schedule of urgent payments and sought a transfer of monies urgently. She also says that she made clear that if further monies were released, Quick Draw would require more collateral. 
106.	By early afternoon Mr Henry had emailed Mr Gillard of Wiggin to make clear that he was coming under pressure from Mr Hunt on behalf of Iambic and that Mr Hunt had stated that Iambic’s solvency was threatened and that he in turn was threatening GLE unless it made full payment of the monies due to it from GLE. Later in the afternoon he also reiterated by email that unless some ticket money was released as a matter of urgency things would fall apart. By email on the evening of 17 October Mr Gillard was seeking to progress matters and stated that “Sara want to understand exactly what is on offer as collateral.”  In my judgment, such a stance is inconsistent with any concluded agreement having been reached.
107.	In cross examination Mr Henry made much of the records of Miss Giles’ mobile phone account which showed that despite dealing with a family emergency which she said had made it difficult for her to contact Mr Henry on 17 October, she had in fact, used her mobile phone regularly throughout the day. He therefore submitted that in fact she was avoiding him and that she knew that she had agreed at least in principle. I found her evidence in relation to 17 October unsatisfactory in this regard and I reject her contention that her ability to make calls was as restricted as she suggested. However, once again, in my judgment, even if that were the case, it does not assist the Defendants. It was clear that there was no agreement or insufficient agreement. Furthermore, even if such an agreement had been given, it could not have amounted to a variation of the Loan Agreement. 
108.	At about the same time in the late afternoon of 17 October Neil Gillard sent a draft third party charge to Mr Henry for execution by Iambic. He stated that this was necessary because Iambic was a direct party to the MCPS arrangements and that Mr Hunt should execute it. In cross-examination he described this as belt and braces measure and accepted that the way in which the request was framed in the email was inaccurate. Mr Henry’s evidence on the other hand is that the provision of the draft charge was because Mr Gillard realised that in fact the intellectual property rights in the Concert were held differently from the way they were described in the Loan Agreement and the Debenture and that in fact, he, Mr Gillard had failed to complete his due diligence properly and ought to have known from the outset that the rights vested in Iambic. He also relies upon the BskyB Agreement which was executed by Iambic. In this regard, I accept Mr Gillard’s evidence that on or about 17 October he had appreciated that a belt and braces exercise in the form of a third party charge from Iambic would be a prudent step to put in place.
109.	Mr Gillard also stated in his email of late afternoon on 17 October that he hoped that Barclays would sign the necessary written instruction shortly. In my judgment the fact that steps were still being taken to obtain such a document from Barclays was not inconsistent with Ms Giles having yet to agree on the terms of any release. In fact, it is consistent with an email Mr Gillard and Mr Ketley sent to Mr Hunt and Mr Henry later that evening in which they state that they wish to discuss the various possibilities by way of exploitation deals and added, “Sara wants to understand exactly what is on offer as collateral.”  
110.	It was not until 18 October that Mr Henry emailed Ms Giles stating that she had actually agreed on Friday 14 October to release funds to allow GLE to make essential payments. In response, it was made clear yet again in an email sent by Miles Ketley in the afternoon of 18 October that Ms Giles was not going to release funds until she was given comfort on a number of issues and a conference call was requested. It was later in the afternoon of that day that Ms Giles responded stating “as you know I have been repeatedly asking for information so I could speak to the fund to get approval to release some of the ticket revenue for essential payments and it was my intention to collaborate with you to protect everyone’s interests in the absence of this information I have been unable to initiate this.” 
111.	Very shortly afterwards, Mr Henry nevertheless drafted and forwarded confirmation of a payment instruction in relation to ticket revenues. Despite having done so, he emailed Ms Giles afterwards asking to speak the following day in order to determine the best way to proceed. Very late that evening Ms Giles responded: 
“ . . . Neil and I outlined what information we needed in order to approach the fund to release ticket revenues to make essential payments but despite numerous requests this has not been forthcoming. I simply can’t release any funds without the necessary information that guarantees an income stream. The projected revenues provided by Chris do not tally with the information I have received independently and there are no agreements in place that guarantee a return.
 . .. . 
I can only conclude that you have no interest in working with me to protect the substantial investment that has been made in the concert and on that basis you are leaving me with no choice but to take the necessary steps to safeguard my funds exposure.”  

112.	Matters escalated quite rapidly thereafter. On 19 October 2011, Mr Henry emailed Ms Giles, Mr Gillard and Mr Ketley and stated: 
“ . . . Chris has provided all the information he has available to him  . . . . .
When we spoke last week you agreed to release income from the sale of tickets to make essential payments on the basis that this money would be covered by the VAT rebate. Chris explained to you at the time that there were no guarantees and your requirement is one that cannot be complied with, as you must surely know. This requirement represents a fundamental change in your position and your refusal [not] to release the cash is placing immense strain on the finances of both GLE and Iambic and is threatening to cause the various grants of rights to unravel. . . .”  

	This was followed by an email to Ms Giles from Mr Hunt which made clear that he had provided all the information that he could. He referred to what he termed Ms Giles’ “perverse refusal” to apply ticket revenue to pay the costs of keeping the film alive and reiterated Mr Henry’s request for a telephone discussion.  With regard to the VAT reclaim, Ms Giles’ evidence was that she was never provided with anything which was sufficiently concrete in relation to the reclaim upon which she could rely. It is not suggested by the Defendants that anything other than the extent of the possible reclaim was ever provided. 

113.	On 19 October Ms Giles took part in a conference call with Messrs Hunt and Henry, Gillard, Ketley and Alexander Ross of Wiggin. Thereafter, Mr Gillard sent an email stating that Ms Giles had spoken to the Quick Draw funders and could report that despite the absence of guaranteed revenues, she could release essential monies provided that six identified matters were dealt with.  
114.	In fact, even before the call, Mr Hunt had used the confirmation of payment directions drafted by Mr Henry to direct Stadium Events Limited to remit the ticket receipts they were holding being £115,828.19 direct to Iambic (the SEL Amount). The instruction was given in writing by Mr Hunt but it followed a phone call from Mr Henry. In his first witness statement, Mr Hunt stated that he had caused the payment to be made under “extreme economic duress”. He did not suggest at that stage that the payment had been authorised. 
115.	Mr Hunt also resigned from GLE on 19 October. The same day he sent an email to GLE asserting that GLE’s failure to pay Iambic in full under the Commissioning Agreement was a repudiatory breach.  There is no evidence of any dispute in this regard and Mr Henry on behalf of GLE appears simply to have accepted the assertion. 
116.	The following day Mr Hunt sent a further email purportedly accepting the breach and GLE’s repudiation of the Commissioning Agreement leading to what he described as a rescission ab initio. That email referred to the unreasonable refusal of Quick Draw to release the income derived from ticket sales. In fact the SEL Amount had already been taken. That same day, 20 October 2011, Mr Henry emailed Quick Draw informing it that GLE was being put into administration. 
117.	On 23 October 2011, Mr Henry emailed Mr Hunt stating that he had given some thought to Mr Hunt’s position inter alia as a director of Iambic and had concluded that he might want to “take certain steps to eliminate any conflict of interest which could arise to a claim of breach of fiduciary duty.” He pointed out that he was not advising Mr Hunt and that he should take independent advice. Mr Henry then set out what he saw as the consequences of the repudiation and the consequent “loss by GLE of its main asset.” He enclosed a draft security assignment and charge in favour of Dragonfly Television Sales Limited, giving that company security over certain tax credits and divisible receipts. He also enclosed a draft security agreement between Iambic and Limelight in which it was recited that the repudiation/rescission of the Commissioning Agreement had terminated the rights of GLE in relation to the Concert but that Iambic agreed to covenant to pay Limelight the sums which had been due to it from GLE. 
118.	In cross examination, Mr Hunt stated that he had taken advice about whether the Commissioning Agreement had been repudiated by phoning a barrister friend of his. This was the first occasion on which he made any mention of such advice and in the absence of any documentary evidence to support it I reject his evidence in this regard. There was no documentary or other evidence to suggest that any advice had been taken by Mr Henry or Mr Hunt in relation to the repudiation/rescission, the rights confirmations or any other matter. 
119.	Mr Hunt also asserted in cross examination that, on the rescission or repudiation of the Commissioning Agreement, all rights in relation to the Concert and therefore the film and sound recordings made at the Concert, as well as the rights in the edited programme later made by or for Iambic which became known as the Iambic Edit, vested in Iambic. Although I have found that the Rights Confirmations were ineffective because they were in breach of the Loan Agreement and Debenture, in my judgment, Mr Hunt’s view is consistent with a concerted effort at that stage to seek to recover all rights to Iambic in an attempt to exploit them outside the terms of the Loan Agreement and Debenture. It is also inconsistent with the Defendants’ other submissions to the effect that, one way or another, Iambic already had exploitation rights in relation to the Concert. 
120.	In the meantime, it seems that on 21 October, the MCPS had granted a licence to Iambic, backdated to 1 October, in respect of certain specified uses of musical works within the MCPS repertoire as part of a music TV programme which did not extend to its first terrestrial broadcast in the UK.  The rights under this licence were what Mr Gillard referred to when putting forward the draft third party charge to Iambic. 
121.	Thereafter, Wiggin took various steps. It is alleged by Mr Henry in particular that it did so without any authority from Quick Draw which I reject.  On 20 October, Quick Draw through Wiggin contacted the facilities houses which held the recordings of the Concert. For example, on 21 October Mr Gillard wrote to On Sight Limited, one of the facilities houses, stating that Iambic had wrongfully purported that its agreement with GLE was void and that it was the sole owner of the rights in the recordings of the Concert. He made clear that he considered Quick Draw to be the “beneficiary” of the materials in relation to the Concert. In cross examination Mr Gillard said that the correspondence had been drafted by his litigation department and that he had not chosen to characterise Quick Draw merely as a “beneficiary”, which I accept. 
122.	Mr Gillard also wrote to BSkyB that day stating that any broadcast of the programme in relation to the Concert would be an infringement of Quick Draw’s copyright. The programmes were withdrawn from the schedules. Mr Hunt and Iambic contend in their counterclaim that this letter contains malicious falsehoods.  
123.	On 28 October 2011, Quick Draw’s solicitors Wiggin gave notice to GLE terminating its revocable licence under clause 24 of the Debenture, a clause which Mr Henry had inserted in the Debenture. On the same day they wrote to all of the Defendants threatening proceedings unless they undertook not to exploit the recordings. 
The Funds Claims 
124.	The Claimant seeks to recover the full amount of the loan being US$ 3,450,000 and £3,450,000, as well as an amount being the default premium due under Clause 4.3 of the Loan Agreement, an account of what further sums may be due under Clause 4.4 and an order for their payment and an indemnity for the costs of the claim and any previous costs incurred in dealing with the alleged breaches of the Debenture and Loan Agreement. 
125.	There are also claims in relation to two specific sums. The first is US $1.6million being the BEP Refund. Quick Draw seeks an order that GLE account for those monies on the basis that they were applied in breach of trust and an order that Mr Hunt account for those monies also on the basis of dishonest assistance in that breach of trust. There had been a claim for dishonest assistance and knowing receipt against Iambic with respect to the BEP Refund but this was not pursued at trial.    
126.	The second sum, the SEL Amount is £115,828.19, being the ticket receipts for the Concert.  Quick Draw seeks an order that GLE, Mr Hunt, Mr Henry and Iambic account for that sum on the basis of breach of trust on the part of GLE, dishonest assistance in the breach of trust on the part of Mr Hunt, Mr Henry and Iambic and knowing receipt by Iambic. 
127.	Mr Hunt, Mr Henry and Iambic deny any breach of trust by GLE and all the component parts of the claims in dishonest assistance and knowing receipt and all the other claims against them in relation to the financing of the Concert, which I shall refer to together as the Funds Claims. 
128.	In the alternative, but based upon the same facts, in relation to the BEP Refund and the SEL Amount, Quick Draw claims against GLE for breach of contract and against Mr Hunt, Mr Henry and Iambic for inducing breach of contract by GLE, having procured the relevant breaches, knowing of the relevant contractual terms and realising that their conduct would result in breach of those terms.
The Rights Claims
129.	Quick Draw also seeks relief in relation to the intellectual property rights arising in relation to the Concert to which it contends it became entitled under the Debenture. It seeks a declaration that it is the sole proprietor of the Materials, is the sole proprietor of the copyright in the Works and is the equitable proprietor of that copyright. It also seeks an order that GLE and Iambic assign to it any legal interest they may have in the copyright in the Works. Quick Draw also seeks extensive injunctive relief in relation to the various component parts of the intellectual property arising from the Concert and the recordings of it. 
130.	In summary, the Defendants contend that the intellectual property rights were and are owned by Iambic and were not caught by the terms of the Commissioning Agreement and the Debenture, alternatively that they were owned solely or jointly by Iambic as a result of clause 5 of the Commissioning Agreement, that copyright did not pass to GLE until Iambic was paid, that the rights reverted to Iambic as a result of the “repudiation/rescission ab initio”, that the film and sound recordings were not acquired by GLE because the Concert was not broadcast live, or that they existed as a result of the Rights Confirmations. 
131.	If the Defence succeeds in relation to the Rights Claims, Quick Draw claims damages for breach of contract against GLE, damages for procuring breach of contract by GLE against Mr Henry and Mr Hunt, and in relation to his narrative in the email of 3 September 2011, damages in deceit against Mr Henry and Mr Hunt. 
The Counterclaim
132.	Mr Hunt and Iambic, the Second and Fourth Defendants, counterclaim against Quick Draw in malicious falsehood alleging that as a result of false statements made maliciously by Wiggin on Quick Draw’s behalf that Quick Draw was the owner of the copyright relating to the Concert, BskyB cancelled the programmes in relation to the Concert, refused to commission Mr Hunt and Iambic to make a film version of South Pacific and refused to have any further dealings with Mr Hunt in the foreseeable future causing the loss of the £70,000 fee for the programme of the Concert and an estimated further £200,000 and US $400,000 in respect of the film of South Pacific.

Legal Principles
(i)	Approach to construction of commercial documents
133.	Before turning to the Funds Claims, the Rights Claims and the Counterclaim, I should set out the applicable legal principles to which I have been referred. First, in relation to the construction of the documentation which is central to Quick Draw’s case, I was referred to Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 and in particular to an extract from the speech of Lord Clarke: 
“THE CORRECT APPROACH TO CONSTRUCTION
[14] For the most part, the correct approach to construction of the Bonds, as in the case of any contract, was not in dispute. The principles have been discussed in many cases, notably of course, as Lord Neuberger MR said in Pink Floyd Music Ltd v EMI Records Ltd [2010] EWCA Civ 1429, [2011] 1 WLR 770 at para 17, by Lord Hoffmann in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, [1997] 3 All ER 352, [1997] 2 WLR 945, passim, in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98, [1998] 1 BCLC 493, [1998] 1 WLR 896, 912F-913G and in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] AC 1101, paras 21 – 26, [2009] 4 All ER 677. I agree with Lord Neuberger (also at para 17) that those cases show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant. As Lord Hoffmann made clear in the first of the principles he summarised in the Investors Compensation Scheme case at p 912H, the relevant reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
 . . . . .
[21] The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the Appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.
. . . . . . . . .
[25] In 1997, writing extra-judicially (“Contract Law: Fulfilling the reasonable expectations of honest men”) in 113 LQR 433, 441 Lord Steyn expressed the principle thus:
“Often there is no obvious or ordinary meaning of the language under consideration. There are competing interpretations to be considered. In choosing between alternatives a court should primarily be guided by the contextual scene in which the stipulation in question appears. And speaking generally commercially minded judges would regard the commercial purpose of the contract as more important than niceties of language. And, in the event of doubt, the working assumption will be that a fair construction best matches the reasonable expectations of the parties.”
I agree. He said much the same judicially in Society of Lloyd's v Robinson [1999] 1 All ER (Comm) 545, 551, [1999] 1 WLR 756:
“Loyalty to the text of a commercial contract, instrument, or document read in its contextual setting is the paramount principle of interpretation. But in the process of interpreting the meaning of the language of a commercial document the court ought generally to favour a commercially sensible construction. The reason for this approach is that a commercial construction is likely to give effect to the intention of the parties. Words ought therefore to be interpreted in the way in which a reasonable commercial person would construe them. And the reasonable commercial person can safely be assumed to be unimpressed with technical interpretations and undue emphasis on niceties of language.”
. . . . . .
[30] In my opinion Longmore LJ has there neatly summarised the correct approach to the problem. That approach is now supported by a significant body of authority. As stated in a little more detail in para 21 above, it is in essence that, where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense.” 

134.	Accordingly, it is necessary to construe the Event Company Agreement, the Commissioning Agreement, the Loan Agreement and the Debenture in accordance with the contextual scene, with regard to their commercial purpose, favouring a commercially sensible construction.
(ii)	Mortgage or charge 
135.	With regard to the central question as to the nature of the Debenture as it applies to the intellectual property rights arising from the Concert, I was reminded by Mr Atkins on behalf of Quick Draw that a mortgage as opposed to a charge, conveys a right to property and that in relation to copyright it is achieved by way of an assignment with provision for re-assignment once the secured obligations have been met whereas a charge is merely the appropriation of property whether real or personal without giving the creditor either a general or special property in or possession of the subject of the security. He referred me to Fisher and Lightwood Law on Mortgages 13th ed at paragraphs 1.3 and 1.5 in this regard.  He also drew my attention to paragraph 17.29.  It states that the copyright in every original literary, dramatic, musical or artistic work and in sound recordings films, broadcasts, cable programmes may be mortgaged. Two further points which are relevant here, are explained:
‘A legal mortgage of copyright takes the usual form of a mortgage of a thing in action: a covenant to pay, an assignment of the copyright with a proviso for redemption and the appropriate covenants and provisions. The assignment must be in writing and signed by or on behalf of the assignor, but does not require to be expressed in a particular form  . . .. 
Where there has been a purported assignment of future copyright then, if on the coming into existence of the copyright, the assignee or a person claiming under him would be entitled to require the copyright to be vested in him, the copyright on its coming into existence, vests in the assignee or his successor in title without further assurance.”
This last proposition arises as a result of s91 Copyright Designs and Patents Act 1988. 
136.	It was also explained at paragraph 3-030 of Snell’s Equity 32nd ed that at common law assignments of future choses in action were void, for no one could assign what he had not got. But in equity any such purported assignment made for valuable consideration has always been treated as a contract to assign in the future if and when the chose comes into existence. In this regard, Mr Henry also referred me to Halsbury’s Laws volume 11 at paragraph 30 where it is stated that: 
“A contract for valuable consideration to assign a future chose in action if and when it comes into existence and comes into the hands of the assignor is, however, valid and a purported present assignment of such a chose in action will be construed and given effect as such a contract in equity provided valuable consideration is present.”
137.	Mr Henry submits that in this case, there was no valuable consideration for such assignments of future intellectual property rights or for that matter future debts because the Loan Agreement pre-dated the Debenture. Mr Atkins and Mr Hill contend that the Loan Agreement and the Debenture were simultaneous and are to be treated as a package.  
138.	Mr Atkins also referred me to paragraph 3-023 in Snell’s Equity, which makes clear that where there is an equitable assignment of a legal chose the original creditor still owns the chose in law holding it in trust for the assignee. Accordingly, in the case of future debts, for example, once the debt comes in, the assignor holds the legal title on trust for the assignee.
(iii)	Copyright Designs and Patents Act 1988
139.	Sections 5A and 5B Copyright Designs and Patents Act 1988 (1988 Act) make clear that copyright does not subsist either in a sound recording or a film which is a copy taken from a previous sound recording or film. This is relevant to the various edits made by Iambic of the sound and film recordings made at the Concert. 
140.	Further, the “author” in relation to a work means the person who creates it and in relation to a sound recording it is taken to be the producer and in the case of a film, the producer and the principal director: s9(1) and (2)(aa) and (ab) 1988 Act. The author is the first owner of any copyright and a film is treated as a work of joint authorship unless the producer and the principal director are the same person: ss11 and 10(1A) 1988 Act. This is relevant to the warranties in clause 5 of the Commissioning Agreement. Further, section 17(6) provides that copying in relation to any description of work includes the making of copies which are transient or are incidental to some other use of the work and section 16(2) provides that copyright in a work is infringed where a person without the licence of the copyright owner does, or authorises another to do, any of the acts restricted by the copyright. 
141.	Section 90(3) of the 1988 Act provides that an assignment of copyright is not effective unless it is in writing signed by or on behalf of the assignor and as I have already mentioned, section 91(1) provides:
“where by an agreement made in relation to future copyright, and signed by or on behalf of the prospective owner of the copyright, the prospective owner purports to assign the future copyright (wholly or partially) to another person, then if, on the copyright coming into existence, the assignee or another person claiming under him would be entitled as against all other persons to require the copyright to be vested in him, the copyright shall vest in the assignee or his successor in title by virtue of this subsection.”
                 
Section 191B provides that a performer’s property rights are transmissible by assignment and by virtue of s182A-CA are infringed if recordings of the performances protected by the rights are copied or issued or made available to the public without the right holder’s consent. Section 191C provides as follows:  
“ (1) This section applies where by an agreement made in relation to a future recording of a performance, and signed by or on behalf of the performer, the performer purports to assign his performer’s property rights (wholly or partially) to another person. 
(2) If on the rights coming into existence the assignee or another person claiming under him would be entitled as against all other persons to require the rights to be vested in him, they shall vest in the assignee or his successor in title by virtue of this subsection.“ 

(iv)	Dishonest assistance in a breach of trust and knowing receipt in breach of trust
142.	The basic requirements for dishonest assistance in a breach of trust are the existence of a trust in the first place, a breach of that trust by its trustee, and assistance in that breach of trust by the defendant, with the defendant acting dishonestly in giving that assistance. If these requirements are satisfied, the defendant is liable personally to account in equity in respect of the breach of trust as if he were a trustee. There is no need for a trust in the formal sense. It is sufficient that there is a fiduciary relationship in relation to the property in question. It is a question of fact whether the defendant assisted in the breach of trust: Lewin on Trusts 18th ed paras 40-09 + 40-15 + 40-21.   
143.	As a result of the speech of Lord Hoffmann in Barlow Clowes Ltd v Eurotrust Ltd delivered on behalf of the Privy Council, [2006] 1 WLR 1476, the elements for the mental state necessary to establish a claim for dishonest assistance are to be found in the dissenting judgment of Twinsectra Ltd v Yardley [2002] 2 AC at 202 per Lord Millett at para 135: 
“The question here is whether it is sufficient that the accessory should have actual knowledge of the facts which created the trust, or must he also have appreciated that they did so? It is obviously not necessary that he should know the details of the trust or the identity of the beneficiary. It is sufficient that he knows that the money is not at the free disposal of the principal. In some circumstances, it may not even be necessary that his knowledge should extend this far. It may be sufficient that he knows that he is assisting in a dishonest scheme. 
		. . . . . . .
and at 137
“. . . . .The gravamen of the charge against the accessory is not that he is handling stolen property, but that he is assisting a person who has been entrusted with the control of the money  and that his authority to deal with the money was limited, and participates in a dealing with the money in a manner which he knows is unauthorised. I do not believe that the man in the street would have any doubt that such conduct was culpable.” 

144.	More recently, the matter has been considered in Starglade Properties Ltd v Roland Nash [2010] EWCA Civ 1314. The position was explained by Lord Hutton with whom the majority agreed in paragraph 36 in these terms:
“………………Therefore I consider that the courts should continue to apply that test and that your Lordships should state that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people, although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct.” 
28 There is no suggestion in any of the speeches in Twinsectra Ltv Yardley that the standard of dishonesty is flexible or determined by any one other than by the court on an objective basis having regard to the ingredients of the combined test explained by Lord Hutton. 
32 For my part, I consider that the deputy judge’s comments are part to mislead, The relevant standard described variously in the statements I have quoted, is the ordinary standard of honest behaviour. Just as the subjective understanding of the person concerned as to whether his conduct is dishonest is irrelevant so also is it irrelevant that there may be a body of opinion which regards the ordinary standard of honest behaviour as being set too high. Ultimately, in civil proceedings, it is for the court to determine what that standard is and to apply it to the facts of the case.”
  
145.	In this regard, I was also referred to Snell’s Equity 32nd ed at 30-078 which states:
“The defendant’s assistance in the breach of trust must have been given dishonestly. This is an objective standard which implies a more serious degree of fault than ordinary negligence. . . . . .. . 
When the test of dishonesty is applied, the defendant is not free to be judged according to his own standards. He is judged according to the standards of an ordinary honest person, who would have the same knowledge of the circumstances as he does, and sharing some of his personal characteristics, such as his age and experience.  . . . 
A finding that the defendant is dishonest only involves an assessment of his participation in the impugned transaction, judged in the light of his motives and his knowledge of the facts.  . . . . The defendant need not appreciate the precise legal significance of the transaction as amounting to a breach of trust. It is enough that he realises that the person whom he assists is misappropriating money over which he does not have a right of free disposal. (ref to Twinsectra and Barlow Clowes)” 

146.	 Accordingly, it is not necessary to know that the monies in question are held on trust. It is sufficient that the individual knows or strongly suspects that he is not free to dispose of those monies. 
147.	In relation to knowing receipt, the defendant must receive trust property in breach of trust for his own benefit and not as a bona fide purchaser for value. He must know enough of the facts surrounding the trust property to make it unconscionable for him to retain the benefit of his receipt. At paragraph 30-071 of Snell’s Equity to which I was referred it is stated that the degree of knowledge which might make the defendant’s conduct unconscionable varies with the context. “The essential distinction is between knowledge implying that the defendant was in some degree subjectively aware of the wrongful or unauthorised source of the property he received, and knowledge that would put a reasonable person in his situation on inquiry about the origins of the property.”  It was not disputed that the knowledge of Mr Hunt as director of Iambic can be imputed to the company. 
(v)	Procuring Breach of Contract
148.	In the alternative to the trust based claims, Quick Draw contends that GLE breached the terms of the Loan Agreement and the Debenture and the other Defendants procured those breaches. It claims damages therefore, in the same amount. The applicable principles are set out succinctly at paragraph 101 of the judgment of Lewison J in Thames Valley Housing Association & Anor v Elegant Homes (Guernsey) Ltd & Ors [2011] EWHC 1288b(Ch) in the following way:
“Liability under this head is a form of secondary or accessory liability. Its ingredients are found in the speech of Lord Hoffmann (which commanded the agreement of the majority) in OBG Ltd v Allen [2008] 1 AC 1. I can summarise them as follows: 
(i)	The defendant must actually know that he is inducing a breach of contract. It is not enough that they ought to have realised that ($39)
(ii)	Actual knowledge, “blind eye” knowledge and recklessness are all sufficient states of mind ($41)
(iii)	The breach of contract must be either an end in itself or the means to an end. If it is merely a foreseeable consequence that is not enough ($43)
(iv)	It is not necessary that the defendant intended to cause damage to the claimant: an intention to cause a breach of contract (in the sense described above) is both necessary and sufficient ($8)
(v)	There must be an actual breach of contract; merely hindering performance of a contract is not enough ($44)
(vi)	 The defendant’s encouragement, threat, persuasion, and so forth must have a sufficient causal connection with the breach by the contracting party ($36)” 

(vi) 	Deceit 
149.	With regard to Quick Draw’s alternative claim, in deceit, Mr Atkins referred me to chapter 18 of Clerk & Lindsell on Torts 20th ed. The tort is established where a defendant makes a false representation knowing it to be untrue, or being reckless as to whether it is true, and intends that the claimant should act in reliance on it, then in so far as the latter does so and suffers loss, the defendant is liable. The statement must be made with the intention that it will be acted upon: paragraphs 18-01 and 18-30. In addition, the claimant must show that he acted in reliance on the misrepresentation, although it is not necessary for the representation to be the sole cause. It is sufficient that he was partly influenced by the misstatement.  If the claimant would have done the same thing even in the absence of the misstatement, the claim will fail: paras 18-34 and 18-35.  In this regard, Mr Henry referred me to extracts from the judgment of Ramsey J in BskyB Ltd and Another v HP Enterprise Services UK Ltd (formerly Electronic Data Systems Ltd) and Another [2010 EWHC 86 (TCC) in which the basic principles in relation to the law of deceit are set out at paragraph 304. 
(vii) Malicious Falsehood
150.	Lastly, Mr Hunt and Iambic’s counterclaim is based upon malicious falsehood allegedly committed by Ms Giles and Mr Gillard on behalf of Quick Draw in the days after it became clear that Iambic was seeking to exploit the sound and film recordings of the Concert outside the ambit of the Loan Agreement and Debenture. 
151.	The essentials of the action set out at paragraph 23-10 of Clerk & Lindsell on Torts are false words which are maliciously published and which are calculated to cause and do cause the claimant pecuniary loss. Malice is the key ingredient and the onus of proving it lies upon the claimant. Good faith is always a defence even though the statement causes damage: 23.12. In the case of Greers Ltd v Pearman and Corder Ltd (1922) 39 RPC 406 at 417, Scrutton LJ said:
“Honest belief in an unfounded claim is not malice; but the nature of the unfounded claim may be evidence that there was not an honest belief in it.” 
The Claims
152.	First, in my judgment, there can be no doubt and it is not disputed that GLE is liable in respect of the full amount due under the Loan Agreement and to provide the appropriate accounts and indemnities to which Quick Draw is entitled as a result. As I mentioned, it was confirmed before the end of the hearing that the administrator of GLE was content that an order be made against it save in relation to costs.  
153.	However, in order to determine the Funds Claims relating to the BEP Refund and the SEL Amount, the Rights Claims and the alternative claims for breach of warranty and in deceit and the Counterclaim, it is necessary first to construe the Loan Agreement and the Debenture in the light of the Event Company Agreement and the Commissioning Agreement and the relevant surrounding circumstances in accordance with the principles set out in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900. 
154.	 In summary, Quick Draw contends that good consideration was given for the Debenture in the form of the advances under the provisions of the Loan Agreement, that the Debenture was in the form of a mortgage rather than a mere charge and both it and the Loan Agreement encompassed both future debts and intellectual property rights including copyright arising after the date of their execution. Mr Atkins and Mr Hill submit that as a result of the Commissioning Agreement GLE owned the copyright in the sound and film recordings made at the Concert and all the related physical material, that the Rights Confirmation was of no effect and that these rights passed to Quick Draw by way of a combination of the Loan Agreement and the Debenture. 
155.	Despite the fact that at the hearing of the interim injunction, at which the Defendants were represented, Mr Henry accepted that the Debenture transferred all GLE’s present and future rights in respect of the Concert and all Concert materials to Quick Draw, the Defendants now contend that in fact the Debenture was ineffective in relation to all future rights and debts because there was no consideration for it and that it operated merely as a charge and not by way of assignment whether legal or equitable. Accordingly, they contend that the BEP Refund and the SEL Amount were not held on trust in the first place and therefore the claims in dishonest assistance and knowing receipt must fail. They also contend that they were not dishonest, acted under what became known as the Giles Instruction and were otherwise motivated to save the Concert and the exploitation of the rights in it by delivery of the films under the BskyB Agreement. 
156.	Mr Henry places particular reliance upon the tense used in the recital in the Debenture as evidence that the Loan Agreement was entered into before the Debenture for which he contends there was no consideration and accordingly, he says that the Debenture could not be effective in relation to future debts and intellectual property. 
157.	As I have already mentioned, Mr Henry, Mr Hunt and Iambic also say that the intellectual property rights in relation to the films and sound recordings of the Concert were in Iambic in any event, for a variety of reasons relating to the construction to be placed upon clauses 3 and 5 and the definition of “Production” in the Commissioning Agreement, the effect of the PSMPLA licence and the BskyB Agreement, the effect of the purported Rights Confirmation dated 8 October 2011 but prepared and signed by Mr Henry on 17 October and the purported repudiation of the Commissioning Agreement by Iambic in October 2011.
158.	Mr Henry, Mr Hunt and Iambic contend that in the definition of “Debts” in the Debenture “(whether present, future or contingent and whether acquired from a third party)” applied solely to “negotiable and bearer instruments” and not to the entire phrase and that this is another reason why the Debenture does not extend to future debts and as a result does not bite on the BEP Refund and the SEL Amount.

159.	They also contend in the alternative that there was an implied term in the Loan Agreement and the Debenture that consent should not be unreasonably withheld and that all reasonable steps should be taken in order to safeguard the Concert and as a result, they were entitled if not obliged to use the BEP Refund and the SEL Amount in the way they did.  

(i)	Construction of the Debenture and Loan Agreement and their ambit
160.	 In accordance with the principles which are set out in Rainy Sky to which I have referred, taking into account the background knowledge which would have been reasonably available to a reasonable person in September 2011, the relevant surrounding circumstances including the terms of the Event Company Agreement and the Commissioning Agreement and given the express terms of the Debenture including clauses 4 and 5, in my judgment, the Debenture should be construed as a mortgage rather than a mere charge. Clause 4 makes express reference to legal mortgage, equitable mortgage, assignment and fixed charge where applicable and clause 5 contains both an express assignment and an agreement to assign absolutely as security for payment of the Secured Obligations, “all the Chargor’s right, title and interest from time to time in and to each of the assets, property and rights referred to in Clause 4.” 

161.	This is also consistent with the provisions for re-assignment on satisfaction of the Secured Obligations under clause 21.3 and the licence in clause 24 granted by the Chargee, Quick Draw, to enable GLE to produce the Concert, a clause inserted at Mr Henry’s suggestion.

162.	As I have already mentioned, until trial the nature of the Debenture had been conceded and in my judgment such a concession reflects the true construction of the Debenture. Therefore, in relation to copyright it operates as an assignment subject to reassignment on satisfaction of the secured obligations. 

163.	Should the Debenture also be construed to encompass future copyright and future debts and if so, what is the effect? Applying the same Rainy Sky test and seeking to prefer a construction which is consistent with business common sense, in my judgment it is clear that the Debenture is to be construed in a way which encompasses future copyright and future debts. In the light of the circumstances in which the Debenture was executed it would fly in the face of business reality to conclude otherwise.  In fact clause 3.1.3 set out at paragraph 55 makes express reference to present assignment of future copyright pursuant to section 91 of the 1988 Act.

164.	On 22 September 2011, the majority of the revenues, debts and intellectual property rights in relation to the Concert were yet to arise and inevitably Quick Draw sought full security over all the Chargor’s rights from time to time for the advances it was about to make. These are the very words used in clause 5. Express reference was also made in that clause not only to assignment but an agreement to assign which is apt to describe the circumstances in relation to future choses in action. It would be extraordinary had it been intended by Ms Giles and Mr Gillard on her behalf and by Mr Henry and Mr Hunt, both of whom were experienced in such matters, that the Debenture should not be intended to catch future debts and intellectual property rights flowing from the Concert which was yet to take place. 

165.	Further in this regard, clause 4 contains express reference amongst other things to Intellectual Property Rights, Concert Rights, Concert Materials, Debts, all of which are widely defined, and to “any money now or any time after the date of this Deed standing to the credit of the Account.” Furthermore, the definitions of both Concert Rights and Debts which are set out at paragraphs 56 and 57 above expressly encompass amounts payable or arising in the future, as does “Charged Assets” which is defined to mean:

“ . .the property, assets and interests (whether present of future) which are the subject of any security created by this Deed (and includes all income generated thereby, all proceeds of sale thereof and any present and future property assets and interests of that type)”

166.	In this regard, therefore, I reject Mr Henry’s submission that in the definition of “Debts” the phrase in parenthesis “(whether present, future or contingent  . . .)” should be restricted to “negotiable and bearer instruments” which immediately precedes it. To restrict the phrase in such a way neither makes sense within the definition itself nor in the context of the definitions and the Debenture as a whole. 

167.	In my judgment, it would have made no sense at all, nor would it have been consistent with the words actually used, to have intended to execute a debenture in the limited form suggested by Mr Henry on his own behalf and that of Mr Hunt and Iambic, nor in my judgment is such a construction applicable to the Debenture. 

(ii)	Consideration?
168.	Was there consideration for the Debenture and therefore, is it capable of catching future debts or intellectual property rights in any event? As the passage in Halsbury’s Laws to which Mr Henry referred me makes clear, a contract for valuable consideration to assign a future chose in action when it comes into existence is valid and will be construed as a contract in equity. 

169.	As I have already mentioned, Mr Henry relied on the tense of Recital B of the Debenture in order to contend that the consideration was past and therefore, the Debenture was ineffective in relation to future debts and copyright.  However, in my judgment, it is absolutely clear from the background leading up to the execution of the documentation to which I have referred and from the face of the Loan Agreement and the Debenture themselves, the content of both of which Mr Henry had an active hand in negotiating, that they were intended to take effect together and that the Debenture was made pursuant to the Loan Agreement and in consideration of Quick Draw making the loan facility available to GLE. The Loan Agreement and the Debenture were executed on the same day and were clearly part of a single package. They should be treated as simultaneous. Neither one would have been executed without the other. The loan was drawn down after both documents had been executed. In my judgment therefore, such an argument cannot succeed. 

170.	Accordingly, in my judgment, the Debenture operated so that future debts were assigned in equity and held on trust for Quick Draw by GLE.  This is also reflected in the terms of clause 13.10 of the Debenture set out at paragraph 64 above. Further, by virtue of s91(1) and 191(C) of the 1988 Act and the Debenture as soon as the future copyright and performer’s property rights came into existence it would vest in Quick Draw. This is a matter to which I shall return. 
(iii)	Implied term?
171.	Lastly, as I have mentioned, it is said by Mr Henry, Mr Hunt and Iambic that a term should be implied into the Debenture that Quick Draw would have to consent to release monies to enable the Concert and/or its exploitation to go ahead or that the monies were needed and that such consent could not be unreasonably withheld. I am unclear as to the precise formulation of the suggested implied term. However, Mr Henry, Mr Hunt and Iambic seek to rely upon such an implied term as a defence in relation to the use of the BEP Refund and the SEL Amount. In my judgment, this is a hopeless argument. Such an implied term, whatever its precise terms, would completely undermine the security provided by the Debenture in the first place. In the circumstances, it is impossible to see how it would be necessary to give business efficacy to the Debenture or would represent the obvious but unexpressed intention of the parties. 
(iv)    What was the status of the BEP Refund and the SEL Amount? 
172.	Although the precise sequence of events in relation to the withdrawal of the Black Eyed Peas from the Concert and the repayment of the BEP Refund is not clear, there can be no doubt but that the BEP Refund was effected after the Loan Agreement and the Debenture had come into effect.  What was the character of the BEP Refund therefore, on its repayment to GLE at some time in late September or early October 2011? 
173.	It is said that, as a result of Clause 3.4 of the Loan Agreement, the BEP Refund was part of the Advance and therefore once it was returned it could be used in whatever way GLE thought fit. In this regard, I prefer the submissions of Mr Atkins. The definition of “Concert Rights” in the Debenture, and in particular paragraph (g) of that definition set out at paragraph 56 above, is in my judgment sufficiently wide to cover the BEP Refund and the SEL Amount which represented ticketing receipts. “Relevant Agreements”  . . . “and all amounts payable thereunder”, which are expressly included in paragraph (g) of the Concert Rights definition, are in turn defined for the purposes of the Debenture in terms of its definition in the Loan Agreement. That definition, which is set out at paragraph 51 above, includes “all  . . . agreements concluded in relation to the production and exploitation of the Concert . . .” and by reference to the documentation in Schedule 2 to the Loan Agreement makes express reference to the BEP Agreement. In any event, in my judgment the reference to “any other contracts entered into  . . by the Chargor  . . relating to the Concert . . . and all amounts payable thereunder” contained in paragraph (g) to the Concert Rights definition is sufficiently widely drawn to cover both the BEP Refund and ticketing receipts such as the SEL Amount. 
174.	If I am wrong about that, in my judgment, both the BEP Refund and the SEL Amount would nevertheless fall within any or all of paragraphs (i), (j) and/or (k) of the definition of Concert Rights, each of which is set out at paragraph 56 above. 
175.	The effect of this is that both the BEP Refund and the SEL Amount were “Charged Assets” as a result of that definition set out at paragraph 61 above and clauses 4.4.2 and 5 of the Debenture. 
176.	In any event, if such an analysis is wrong, in my judgment, both the BEP Refund and the SEL Amount were either within the definition of “Debts” set out at paragraph 57 above and were charged and assigned at least in equity, as a result of clauses 4.5 and 5 of the Debenture or fell within clause 4.4.6 by which “any money  . . at any time after the date of this Deed standing to the credit of the Account” was charged. I have already mentioned that Mr Henry submitted that the reference in parenthesis to “whether present, future or contingent” in the definition of Debts should be confined so that it did not apply to “ . . all book debts, other debts, royalties, fees and other amounts due to the Chargor from any other person  . . . .”. In my judgment, and applying the test set out in Rainy Sky, such a construction is unsustainable. 
177.	Even if I am wrong about that, once the monies were returned to GLE’s account they were caught by the Debenture in any event. As a result of clause 6(t) and (u) of the Loan Agreement set out at paragraph 50 above, no amount could be withdrawn from that account without the consent of Quick Draw. This was the point which Mr Gillard made in his email response to Mr Hunt on 4 October 2011 to which I referred at paragraph 70 above. 
178.	Furthermore, as a result of clauses 8.1.2 and 13.10 of the Debenture set out at paragraphs 63 and 64 respectively, both the BEP Refund and the SEL Amount were held by GLE on trust for Quick Draw and could not be dealt with without its prior written consent. In this regard, Mr Hunt contended that those clauses were meaningless or of no effect because consent was neither sought nor given for each and every withdrawal from the Account. In my judgment, that cannot undermine the force of the clauses themselves. As Mr Atkins submitted, a specific instruction could have been given at any time. 
179.	One way or another, therefore, in my judgment, the BEP Refund was caught by a combination of clauses 4.4, 4.5 and 5 of the Debenture and, accordingly, on its return to the GLE Account was the subject of an equitable assignment in favour of Quick Draw. Equally, there is no doubt that where a debt is the subject of an equitable assignment, the assignor holds it on trust pending a legal assignment if required. This is entirely consistent with clauses 13.10 and 19.1.6 of the Debenture. In this regard, I was also referred by Mr Atkins on behalf of Quick Draw to paragraph 3-023 of the 32nd edition of Snell’s Equity which confirms the principle.  
180.	 In my judgment, the same is true in relation to the SEL Amount. The SEL Amount was the proceeds of sale of tickets by SEL for the Concert.  It is not entirely clear when the debts in relation to the ticket sales arose but in any event, as there was no notice for the purposes of s136 Law of Property Act 1925, any assignment will have been in equity only. The SEL Amount is equally caught by a combination of clauses 4.4, 4.5 and 5 of the Debenture.    
181.	Accordingly, as Mr Atkins submitted, as a result of clauses 8.1.2, 13.10 and 19.1.7 of the Debenture, both the BEP Refund and the SEL Amount belonged in equity to Quick Draw until all Secured Obligations had been repaid when they would be assigned back to GLE under clause 21.3 of the Debenture.  
182.	The more difficult questions arise in relation to the claims made against Mr Henry and Mr Hunt personally in relation to the BEP Refund and the SEL Amount. Quick Draw contends that GLE held both sums on trust for it and therefore acted in breach of trust for which it is liable to account when allowing the BEP Refund and the SEL Amount to be used in the case of the former for Concert expenses and the latter in order to assist in the completion of the film for delivery under the BskyB Agreement. It follows from what I have already said that in my judgment both sums were held on trust by GLE for Quick Draw and that their use without prior approval (to which I shall refer) was in breach of trust. 
183.	Quick Draw contends that Mr Hunt is liable for dishonest assistance in GLE’s breach of trust in relation to the BEP Refund and that all of Mr Henry, Mr Hunt and Iambic are liable for dishonest assistance in GLE’s breach of trust in relation to the SEL Amount. In addition, a claim is made against Iambic for knowing receipt of the SEL Amount.  
BEP Refund – breach of trust by GLE?
184.	 It is common ground that Mr Hunt procured GLE to use the BEP Refund to defray production costs for the Concert. Given my findings of fact, in my judgment it is clear that the BEP Refund was used in this way before a conference telephone call could take place in order to discuss the use of those monies and that it was absolutely clear, prior to that call, that Quick Draw had not consented to the release of the BEP Refund, whether to defray production costs or for any other purpose. Mr Gillard’s email of 4 October at 18.57 can have left GLE, Mr Hunt and Mr Henry in no doubt that Quick Draw did not consent to the use of the monies. 
185.	Accordingly, the use of the BEP Refund held by GLE on trust for Quick Draw, without Quick Draw’s prior approval or consent, was a breach of trust on its part. 
Dishonest assistance by Mr Hunt in relation to the BEP Refund?  
186.	Before turning to this issue, I remind myself that, in accordance with the authorities to which I have referred, it is not necessary for Mr Hunt to have had knowledge of the details of the trust in respect of the BEP Refund. It was sufficient that the monies were not at the free disposal of GLE and that Mr Hunt participated in dealing with the BEP Refund in a manner which he knew or strongly suspected to be unauthorised. An objective standard is applied in order to determine whether Mr Hunt was dishonest. He is to be judged against the standard of the ordinary honest person with the same knowledge of the circumstances, personal characteristics, age and experience as he has. 
187.	Given the string of emails which began with Ms Giles’ request for the return of the BEP Refund to Quick Draw on 4 October and ended with Mr Gillard’s clear statement of Ms Giles’ expectation that the monies would be returned, his analysis of their status and the clear statement that the monies could not be withdrawn from the GLE account to which I refer in paragraph 70 above, there can be little doubt that Mr Hunt was aware of Quick Draw’s view. He admitted in cross examination that he took no advice in relation to the point and he accepted that the funds had been used before the telephone conference call to discuss the matter, which he had suggested on 4 October, could take place. In fact, Mr Hunt omitted to tell anyone at Quick Draw that the monies had been used for production costs until 7 October.  I have rejected his evidence that he relied upon the Giles Instruction and also take account of the fact that, despite the fact that he had asked for a telephone conference to discuss the matter, he contended that silence on 4 October amounted to consent. 
188.	Taking into account the matters set out paragraphs 66 – 80, in my judgment in the light of Mr Hunt’s knowledge at the time, there can be no doubt but that he strongly suspected if not knew that GLE was not entitled to use the BEP Refund without Quick Draw’s express consent and that applying an objective test he did so dishonestly.  
189.	I should mention that when cross examining both Mr Henry and Mr Hunt sought to suggest that in fact Quick Draw through Miss Giles and Mr Gillard had in fact acquiesced in the use of the BEP Refund and had waived any right to it. Mr Gillard’s response was that there had been no waiver but that he had taken a pragmatic view and was reserving Quick Draw’s rights. In my judgment, the facts as found do not amount to a waiver and in any event occurred after the BEP Refund had been used at the behest of Mr Hunt. Although I was not addressed on this point, I should add that even if there had been a waiver on the facts, in my judgment it would not amount to a defence to the claim against GLE in breach of trust and Mr Hunt in dishonest assistance unless there were consideration for it, of which there is no evidence whatever.  
190.	It was also suggested, belatedly, that Mr Hunt relied upon the Giles Instruction in relation to the use of the BEP Refund. On the balance of probabilities, I have decided that the Giles Instruction was never given. Even if it had been, it seems to me that reliance on such a general instruction in the face of the string of express emails denying authority to use the BEP Refund and an impending conference call to discuss the subject would be insufficient. 
191.	I therefore find that all the components of the claim in dishonest assistance in relation to the BEP Refund against Mr Hunt are made out. 
SEL Amount – breach of trust by GLE? 
192.	I have already found that the SEL Amount was held on trust by GLE in favour of Quick Draw. If follows that in the circumstances the use of those monies without prior authorisation by Quick Draw was a breach of trust by GLE. 
Dishonest assistance by Mr Hunt and Mr Henry in GLE’s breach of trust in relation to the SEL Amount and knowing receipt by Iambic of SEL Amount 
193.	 It is common ground that Mr Hunt on behalf of GLE gave a written direction to SEL to remit the SEL Amount to Iambic. Mr Henry also accepts that he drafted the written direction to SEL following a telephone call he had with SEL. Furthermore it is not in dispute that the SEL Amount was received by Iambic and that Mr Hunt’s knowledge as its sole director and shareholder is to be imputed to Iambic itself. 
194.	The payment direction came at a time when there was a heated debate about whether the ticket receipts could be released in order to complete the BskyB programmes and Mr Hunt and Mr Henry were imploring Ms Giles to release the monies. Ms Giles’ evidence was that she was willing to release the monies if sufficient information and collateral was provided but that neither the information nor the collateral was ever made available.  In cross examination, Mr Henry and Mr Hunt sought to suggest that in fact Ms Giles had already agreed to the release and then made herself uncontactable as the deadline approached because she had overstepped her authority. My findings in this regard are at paragraphs 97 – 107 above. 
195.	In fact, in cross examination Mr Henry accepted that he knew that, even if Ms Giles had agreed generally to release monies to meet essential payments, such an agreement would not have been binding because it was not in writing. There was no suggestion that he believed that there had been specific agreement about the SEL Amount. 
196.	Mr Hunt’s evidence was that he was not clear about what had been agreed or not on 14th October 2011. However, it is clear from the tenor of his emails, for example on 19 October, that he was well aware that he had not provided what it was that Ms Giles was looking for in order to provide sufficient comfort to release the ticket monies. 
197.	In cross examination, Mr Hunt suggested that, in fact, although his witness statements make no reference to him having understood that he was entitled to redirect the SEL monies, it had appeared in earlier drafts. I reject such a contention. Such a suggestion was made for the first time under pressure in cross examination and in my judgment, had it been the case, on the balance of probabilities Mr Hunt would have taken pains to have made the point much earlier. 
198.	In their Amended Defence in relation to the SEL Amount Mr Henry, Mr Hunt and Iambic seek to rely upon the Giles Instruction as authority for the release. However, as I have already mentioned, I prefer Ms Giles’ evidence in this regard, and on the balance of probabilities consider that such an instruction was not given. Even if I am wrong about that, it is difficult to see that a general comment allegedly made on 6 October 2011 could be sufficient authority for release of a specific sum in relation to which express and detailed negotiations were taking place in the period from 14 to 19 October.
199.	In my judgment, on the balance of probabilities Mr Hunt and Mr Henry both knew or strongly suspected that the monies were subject to the Debenture and the Loan Agreement and could not be released or used without consent. As a result of the email correspondence they also knew that that consent had not been given.  In coming to this conclusion, I take have taken account of the fact that I have found that there was no agreement by Ms Giles and that the emails reveal that Mr Henry and Mr Hunt went on requesting the release of the ticket monies long after they contend that she had agreed. It is also telling that Messrs Hunt and Henry did not tell Ms Giles that they were going to release the funds but continued in their emails to give the impression that the matter was still the subject of discussion even after they had already had the monies released. 
200.	Mr Hunt’s reference to what he termed Ms Giles’ perverse refusal to release the SEL Amount is another indicator, when coupled with his evasive evidence when cross examined about whether he had checked the Loan Agreement and the Debenture, that Mr Hunt knew or strongly suspected that GLE was not entitled to, and that he had no authority to use the monies. His evasiveness leads me to the conclusion that either he looked at the documentation and knew or suspected that GLE had no right to deal with the SEL Amount or was afraid to do so for fear of what he might find. In my judgment, when applying an objective test, neither leads to the conclusion that he was honest. Furthermore, the reference to “perverse refusal” is in my judgment quite clearly inconsistent with Mr Hunt, Mr Henry and Iambic’s present position that in fact they were either entitled to use the SEL Amount under the Loan Agreement and Debenture or were relying on the Giles Instruction. 
201.	 It is also relevant to their state of mind that around this time, Mr Hunt and Mr Henry had purportedly taken steps to enable Iambic to exploit the sound and film recordings of the Concert on its own behalf free from GLE and in effect, were using monies upon which Quick Draw had first call in order to facilitate that end. 
202.	Accordingly, in my judgment their conduct fell short of that expected of ordinary honest individuals with their knowledge and experience and they were both guilty of a dishonest assistance in breach of trust by GLE. Furthermore, given that it is not disputed that the knowledge of Mr Hunt should be attributed to Iambic, it is guilty of knowing receipt of the SEL Amount.

Rights Claims 
203.	Quick Draw’s claims in relation to the intellectual property relating to the Concert break down into three sections. The first relates to the artwork and script relating to the Concert, the second is in respect of the performers’ property rights which GLE owned by virtue of the agreement with the performers at the Concert and the third is films and sound recordings made at the Concert by Iambic. 

204.	Quick Draw contends that all of the intellectual property rights relating to the Concert were in the ownership of GLE as a result of the Commissioning Agreement and were assigned to Quick Draw as a result of the Debenture. Mr Hill on behalf of Quick Draw submits that that position was not affected by the BskyB Agreement, the film and sound recordings having been made under the Commissioning Agreement in any event, or by the effect of the Warner Chappell order which prevented the live broadcast of the Concert. Mr Hill also submits that the Iambic Rights Confirmation was ineffective because it did not comply with the conditions on sublicensing set out in clause 24 of the Debenture and was entered into after the Concert and that as a result the intellectual property rights in film and sound recordings made of the Concert, together with the Script and artwork and the performers’ property rights in relation to it, were vested in GLE, so that they became the property of Quick Draw under the Debenture. He goes on to say that as a result of the ineffectiveness of the Iambic Rights Confirmation, the revocation of the licence contained in clause 24 of the Debenture and the conduct of GLE and Iambic as part of a plan by Mr Henry and Mr Hunt in relation to what became known as the Iambic Edit, the rights were infringed. 

205.	In relation to the general principles governing the respective rights in the copyright of a work commissioned in such a way, I was referred by Mr Hill to Robin Ray v Classic FM plc [1998] FSR 622 per Lightman J at page 15:
“The general principles governing the respective rights of the contractor and client in the copyright in a work commissioned by the client appear to me to be as follows:
(1)	the contractor is entitled to retain the copyright in default of some express or implied term to the contrary effect;
(2)	the contract itself may expressly provide as to who shall be entitled to the copyright in work produced pursuant to the contract. Thus under a standard form Royal Institute of British Architects (RIBA) contract between an architect and his client, there is an express provision that the copyright shall remain vested in the architect.  
(3)	the mere fact that the contractor has been commissioned is insufficient to entitled the client to the copyright. Where Parliament intended the act of commissioning alone to vest copyright in the client, eg. in case of unregistered design rights and registered designs, the legislation expressly so provides  . . . . . In all other cases the client has to establish the entitlement under some express or implied term of the contract.
(4)	The law governing the implication of terms in a contract has been firmly established  (if not earlier) by the decision of the House of Lords in Liverpool City Council v Irwin [1977] AC 239 (“Liverpool”). . . . . 
(5)	Where (as in the present case) it is necessary to imply the grant of some right to fill a lacuna in the contract and the question arises how this lacuna is to be filled, guidance is again to be found in Liverpool. The principle is clearly stated that in deciding which of various alternatives should constitute the content of the term to be implied, the choice must be that which does not exceed what is necessary in the circumstances. . .”
206.	In relation to the construction of the Commissioning Agreement, I take the same view as Nicholas Strauss QC on the hearing of the application for interim relief. In my judgment, applying the Rainy Sky test it is necessary to determine which construction would make better commercial sense whilst also taking account of the principles in Robin Ray v Classic FM. Clause 3 of the Commissioning Agreement quite clearly provides for all material in relation to the Production to belong to GLE and unconditionally assigns to GLE the entire copyright in the Production and the Delivery Material. Such a construction is perfectly consistent with the principles in Robin Ray v Classic FM. Further, in the context of the Event Company Agreement and an overall budget of US$25 million for the Concert, a construction under which the warranties in clause 5 of the Commissioning Agreement, which provide for joint ownership of copyright, to override the effects of clause 3 would create no commercial sense. I reject such a construction.  If I am wrong about that, in any event I accept Mr Hill’s submission that the warranties in clause 5 reflected the position before the terms of the agreement took effect and clause 3 sets out the position once it had taken effect and the services rendered.

207.	I also reject the argument that the intellectual property rights in the Concert did not vest in GLE until Iambic was paid, if it is still being relied upon, which is unclear. In my judgment, both clauses 3.1 and 3.2 are in unconditional and absolute terms. 

208.	Next it is said that the film and sound recordings made by Iambic at the Concert were not within the definition of Production in the Commissioning Agreement and therefore were owned by Iambic rather than GLE. In addition, or as part of this argument, it is submitted that either as a result of the fact that the Concert could not be broadcast live and/or as a result of the BskyB Agreement, the rights were owned by Iambic. 

209.	In my judgment the definition of the works to be carried out by Iambic under the Commissioning Agreement were varied by means of the letter of 27 July (but actually signed on 5 September) 2011 and the Purchase Order, including by means of the reference to “deliverables” to which I referred at paragraph 25. If the description of “deliverables” was no more than an internal note, as the Defendants suggest, it is difficult to see why it would have been set out in the detail in which it was. In any event, in my judgment, the terms of the Commissioning Agreement as varied or amplified by the 27 July letter and Purchase Order left no room for Iambic to have retained any rights in relation to the sound and film recordings of the Concert.  

210.	This is consistent with Mr Henry and Mr Hunt’s attempts to recover or clear the necessary intellectual property rights for Iambic by means of the Rights Confirmation and other artists’ rights confirmations and the subsequent attempt to do so by contending that the Commissioning Agreement had been rescinded ab initio for non-payment by GLE. 

211.	Further, in my judgment, the submission that as a result of the Warner Chappell order, the raw rushes being the sound and film recordings made at the Concert could only be produced under the BskyB Agreement and therefore fell outside the Commissioning Agreement and were owned by Iambic, makes no sense at all. It is also inconsistent with the numerous emails from Mr Henry and Mr Hunt in which they repeatedly state that they were seeking to preserve GLE’s asset. I accept Mr Hill’s submission that clearly the rushes could be produced for more than one purpose and therefore could be used to satisfy the BskyB Agreement without their falling outside the Commissioning Agreement. Furthermore, they were expressly referred to in the “deliverables” set out in the Purchase Order attached to the 27 July letter. Accordingly, as I have already said, in my judgment, they fell within the Commissioning Agreement and it would have been commercially extremely surprising had they not. 

212.	Lastly, in relation to the submissions made by Mr Henry in relation to the BskyB Agreement, based upon all the surrounding contemporaneous documentation including emails from Mr Henry himself and the Commissioning Agreement as varied, in my judgment, the agreement was made by Iambic on GLE’s behalf and not for itself. Not only is this consistent with the Event Company Agreement, the Commissioning Agreement, the Loan Agreement and the Debenture, it is also consistent with all of Mr Henry’s written explanations of the situation including his offer of the BskyB Agreement as a condition subsequent in his email to Mr Gillard of 19 September 2011 at 17.08.

213.	Accordingly, in my judgment, the films and sound recordings when produced at the Concert were made by Iambic pursuant to the Commissioning Agreement and the rights passed to GLE under clause 3 at the moment of their production. Thereafter, as a result of the Debenture, which I have already decided operated by way of assignment whether generally or in respect of future copyright by virtue of section 91(1) of the 1988 Act, the rights passed to Quick Draw. 

214.	It is clear that both the Script and the artwork consisting of the original logos were inevitably used by Iambic when making the raw film and the sound recordings of the Concert, when making the programmes delivered to BskyB and during the editing process for making the Iambic Edit. In fact, Mr Hunt suggested that he had changed the original logo for the purposes of the BskyB programme although he admitted that the original was in what was called the sizzle reel. As I have already mentioned at paragraph 87, a new logo obtained by Mr Hunt in or around November 2011, was used in the final version of the Iambic Edit. There is no dispute however, but that the copyright in the Script and the original logo used at the Concert was vested in GLE. 

215.	In relation to the Performers’ Property Rights I was referred to sections 180(2), 191A, 191B and 191C of the 1988 Act. Whether the rights passed to GLE under the artists’ agreements is a matter of construction. The only point now taken by the Defendants in this regard is that one of the artists’ agreements was not signed and therefore, s191C of the 1988 Act would not be satisfied in relation to the relevant artist, and that the performer’s property rights in that artist’s performance would therefore not pass to GLE. Mr Hill accepted this in relation to the unsigned agreement at least in relation to the passing of the legal title.  The performer’s property rights which did pass to GLE passed on to Quick Draw by way of future assignment under s191C of the 1988 Act, pursuant to the Debenture.  

216.	In my judgment it is clear that there was no licence given to Iambic by GLE which would be sufficient to cover what would otherwise be the copyright infringement committed as a result of the production of what became known as the Iambic Edit. The only document which could satisfy such a requirement is the Iambic Rights Confirmation which I have already decided was ineffective. Mr Henry was liable for infringement of copyright as, contrary to s16(2) of the 1988 Act, he sought to authorise infringing acts, by executing the Iambic Rights Confirmation. “Authorise” is explained at paragraph 90 of the judgment of Kitchin J in Twentieth Century Fox Film Corp v Newzbin Ltd [2010] FSR 512. He held that it meant the grant or purported grant of a right to do the act complained of.

217.	In relation to the performer’s property rights, as there is no infringement by “authorisation”, it is necessary for Quick Draw to establish direct infringement or a common design. The approach to common design was set out in L’Oreal SA v Ebay International AG [2009] RPC 21. The legal principles were summarised by Arnold J at paras 346-352. The application of those principles in the case of a company director is explained in MCA Records v Charly Records [2001] EWCA Civ 1441. In my judgment, those principles are equally applicable to a designated member of a limited liability partnership as they are to a director of a company. 

218.	In my judgment, Iambic committed a direct infringement of the performer’s property rights contrary to s182A of the 1988 Act when it made copies of the recordings of the performances at the Concert when making the Iambic Edit. It is not disputed that such copies were made. The fact that such copies may only have been transient or incidental is irrelevant: s182A(1A) of the 1988 Act. Equally, a direct infringement of the performer’s property rights was committed, contrary to s182B of the 1988 Act when Iambic issued copies of the recordings of the performances at the Concert to the public when marketing the Iambic Edit. 

219.	Further and in any event, I accept Mr Hill’s submissions that there was clearly a common design between Mr Hunt, Mr Henry and Iambic to infringe the copyright and performer’s property rights owned by Quick Draw. In cross examination Mr Hunt admitted that the intention was to see GLE’s creditors who had been involved in the Concert paid or at least those whom they had chosen. In my judgment Mr Henry was involved in the implementation of that plan, not least by drafting the Rights Confirmation and further artists’ rights confirmations purportedly in favour of Iambic, advising Mr Hunt in the manner set out at paragraph 117 and drawing up further security documents between Limelight and Iambic after the purported rescission of the Commissioning Agreement. Furthermore, the acceptance of Mr Hunt and Iambic’s purported rescission of the Commissioning Agreement without the least demur and the fact that quite clearly neither Mr Hunt nor Mr Henry took any external advice about such a serious step all suggest that there was a common design in which Iambic was also involved as a result of Mr Hunt’s position as its sole director.  

220.	In relation to the artwork in the form of the original logo and the Script for the Concert, the only defence put forward by Mr Hunt and Iambic is that they did not use a substantial part of the Script or artwork in producing the “Iambic Edit” which was the programme they tried to sell through PopTwist. 

221.	With regard to substantiality, I was referred by Mr Hill on behalf of Quick Draw to The Newspaper Licensing Agency Ltd v Meltwater Holding BV [2012] RPC 1, a decision of the Court of Appeal concerning amongst other things whether a headline and extracts from an article attracted copyright being a substantial part of the article for the purposes of s16(3)(a) of the 1988 Act . In that context the Chancellor at paragraph 24 stated:
“It is well established that the test of substantiality is one of quality not quantity, see Newspaper Licensing Agency Ltd v Marks & Spenser plc [2003] 1 AC 551, [2002] RPC 4.”

At paragraph 29 of his judgment, he added: 
“I have, as the judge did, considered the possibility of the extracts consisting substantial parts separated from the headlines. The proper question is whether the relevant part of Meltwater News comprising both the headline and the extracts is such as, when copied by the clients, prima facie, to infringe the Publishers’ copyright in the original work. In my view the probability of that occurring on a [regulator] basis and to a significant extent is substantial.” 

222.	It is clear therefore, in my judgment that use of the logo from the Concert in the BskyB programmes and the original materials used to produce the Iambic Edit (albeit not the final version) and the use of large parts if not all of the Script in the rushes of the Concert, the BskyB programmes and the materials used to produce the Iambic Edit are sufficient to be treated as substantial. As I have mentioned, with regard to the Script, it was suggested in cross examination that some of what was actually recorded at the Concert may have been written by La Toya Jackson or may have been impromptu by the Jackson children which I have rejected. Even if this were the case, and there is no documentary evidence to that effect, in my judgment, that would not detract from the fact that the remainder of the Script as commissioned by GLE is likely to have been substantial. 
223.	An argument that the agreements could not convey the performers’ property rights based upon the fact that the agreements were concluded under Californian law which does not recognize performers’ rights, was not pursued before me. 
224.	Mr Henry does not deal with these rights in his Amended Defence and did not make submissions in relation to them. Accordingly, he must be taken to admit them. 
Conclusion
225.	It follows therefore, that I find in favour of Quick Draw’s Rights Claims. Accordingly, it is unnecessary to consider Quick Draw’s alternative claims in breach of contract, inducing breach of contract and deceit. However, were that necessary, based upon my findings of fact and applying the principles in Thames Valley Housing Association & Anor v Elegant Homes (Guernsey) Ltd & Ors and the principles set out at paragraph 149 above respectively, I would have found that the claims in breach of contract, inducing breach of contract and deceit were made out.
226.	Lastly, I must deal with Iambic’s counterclaim. It follows from my conclusions about the Rights Claims that the counterclaim must fail. Even if that were wrong, there is no evidence that the content of Wiggin’s letter to BskyB of 21 October 2011 was stated maliciously. Although both Mr Gillard and Ms Giles were cross examined as to whether in fact they had tried to damage and ruin Mr Hunt and Iambic out of spite, once it became clear that the project to exploit the Concert had come off the rails, they flatly denied such an intention and I accept their evidence. In my judgment, there is no evidence to support such a contention or which would support the contention that anything contained in the Wiggin letter was included with any kind of malice. It was clear from the tenor of his evidence that Mr Gillard was throughout taking all proper and necessary steps on behalf of his client and went no further.        
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