High Court rules on termination of film acquisition

West is West Distribution Ltd v Icon Film Distribution Ltd [2015] EWHC 838 (Comm)

The claimant brought a claim against its film distributor for breach of a film acquisition agreement.

It was held that the claimant had validly terminated the agreement for the defendant’s failure to produce monthly accounting statements for four consecutive months. The obligation was material and fundamental; the fact that the sums were small was immaterial. It was also held that the contractual duty to hand over or destroy materials following termination was enforceable, although this did not entitle the claimant to resell or claim entirely as its own those materials acquired by the defendant.

The defendant’s failure to hand over the master copies of the film resulted in the claimant losing potential profits and caused a gap in supply. It was held that the fact that it was technically possible to create new masters was irrelevant, as the defendant had not made the claimant aware of this possibility.

The judge dismissed the claim that the defendant had a fiduciary duty to the claimant to hand over all receipts from unauthorised sub- distributors, on the basis that these dealings were in the claimants interests and that they caused no damage to the claimant.