Quick Draw LP v Global Live Events LLP & Ors

Factual and Procedural Background

The Claimant, Quick Draw LP, a Cayman Islands limited partnership providing short-term bridging finance to the media industry, loaned funds to Global Live Events LLP (GLE), the First Defendant, to finance the Michael Jackson Forever tribute concert held at the Millennium Stadium in Cardiff on 8 October 2011 (the Concert). The financing was governed by a Loan Agreement and Debenture dated 22 September 2011.

GLE, now in administration, was not represented at trial but its administrator consented to orders being made against it except for costs. The Second and Third Defendants, Mr Hunt and Mr Henry, were principal organisers of the Concert, with Mr Henry also acting as solicitor and drafter of key agreements. The Fourth Defendant, Iambic Media Limited (Iambic), controlled by Mr Hunt, was engaged by GLE to produce film and sound recordings of the Concert under a Commissioning Agreement dated 18 April 2011.

The dispute arose because GLE failed to repay the loan, and Quick Draw claimed ownership of intellectual property rights and materials it contended were secured under the Debenture. Alternative claims for procuring breaches of contract and deceit were made against Mr Henry and Mr Hunt, while Mr Hunt and Iambic counterclaimed for malicious falsehood.

An interim injunction was granted in January 2012 to prevent the Defendants from dealing with the film and sound recordings pending trial, rejecting Iambic’s claims to ownership of copyright independent of payment.

The court found Mr Henry and Mr Hunt to be evasive and unreliable witnesses, preferring the evidence of Quick Draw’s solicitors and other witnesses where discrepancies existed.

The background includes a complex contractual framework comprising the Event Company Agreement governing GLE’s business and governance, the Commissioning Agreement engaging Iambic as producer of the Concert’s audiovisual materials, and the Loan Agreement and Debenture securing Quick Draw’s loan with broad assignments of rights and assets related to the Concert.

During the lead-up to the Concert, financial difficulties arose including the withdrawal of the Black Eyed Peas, leading to a refund (the BEP Refund) and a shortfall in funding. Disputes ensued over the use of these funds and the ticket receipts (the SEL Amount), with Quick Draw objecting to their use without consent.

After the Concert, issues arose concerning the ownership and exploitation of intellectual property rights, including the validity of licenses and rights confirmations given to Iambic, and the effect of broadcasting agreements and injunctions related to copyright infringement claims.

The proceedings involved detailed examination of contractual construction, security interests, intellectual property law, breach of trust, dishonest assistance, knowing receipt, procuring breach of contract, deceit, and malicious falsehood.

Legal Issues Presented

1. Whether the Debenture operates as a mortgage or a mere charge over present and future intellectual property rights and debts related to the Concert.
2. Whether the BEP Refund and the SEL Amount were held on trust for Quick Draw and whether their use without consent constituted a breach of trust.
3. Whether Mr Henry, Mr Hunt, and Iambic were liable for dishonest assistance or knowing receipt in relation to the BEP Refund and SEL Amount.
4. The proper construction of the Event Company Agreement, Commissioning Agreement, Loan Agreement, and Debenture, particularly regarding ownership and assignment of intellectual property rights arising from the Concert.
5. Whether the intellectual property rights in the film and sound recordings, script, artwork, and performers’ property rights belonged to GLE and consequently to Quick Draw under the Debenture.
6. The validity and effect of the Rights Confirmations purportedly granting rights to Iambic.
7. The applicability of claims in breach of contract, procuring breach of contract, deceit, and malicious falsehood related to the financing and exploitation of the Concert.

Arguments of the Parties

Claimant's Arguments

• The Debenture constitutes a mortgage assigning present and future intellectual property rights and debts to Quick Draw as security for the loan.
• The BEP Refund and SEL Amount were charged assets held on trust for Quick Draw; their unauthorised use was a breach of trust.
• Mr Hunt dishonestly assisted GLE’s breach of trust regarding the BEP Refund; Mr Henry, Mr Hunt, and Iambic dishonestly assisted or knowingly received the SEL Amount.
• All intellectual property rights arising from the Concert, including film, sound recordings, script, artwork, and performers’ property rights, vested in GLE and then passed to Quick Draw under the Debenture.
• The Rights Confirmations granted to Iambic were ineffective and contrary to the Loan Agreement and Debenture.
• Alternative claims for breach of contract, procuring breach of contract, and deceit arise from the Defendants’ conduct.

Defendants' Arguments

• The Debenture was ineffective as an assignment of future rights due to lack of consideration and should be treated as a mere charge.
• The intellectual property rights in the film and sound recordings were owned by Iambic under the Commissioning Agreement and the BskyB Agreement, not GLE.
• The rights did not pass to GLE until Iambic was paid, and the purported repudiation of the Commissioning Agreement returned rights to Iambic.
• The BEP Refund and SEL Amount were properly applied with implied consent or under the so-called Giles Instruction.
• The Rights Confirmations were valid and granted Iambic rights to exploit the recordings.
• Quick Draw’s solicitors made false malicious statements causing loss to Mr Hunt and Iambic, giving rise to a counterclaim for malicious falsehood.

Table of Precedents Cited

Court's Reasoning and Analysis

The court undertook a detailed construction of the Loan Agreement, Debenture, Event Company Agreement, and Commissioning Agreement applying established principles favoring commercially sensible interpretations consistent with the parties' reasonable expectations.

The Debenture was held to operate as a mortgage rather than a mere charge, effecting an assignment of present and future intellectual property rights and debts, including those arising after execution, supported by express contractual language and the commercial context of the loan facility.

The BEP Refund and SEL Amount were found to be charged assets held on trust for Quick Draw and could not be used or released without its prior written consent. Their unauthorised use by GLE constituted breaches of trust.

Mr Hunt was found to have dishonestly assisted GLE’s breach of trust in relation to the BEP Refund, knowing or strongly suspecting that the use was unauthorised. Mr Henry, Mr Hunt, and Iambic were similarly liable for dishonest assistance and knowing receipt concerning the SEL Amount, with Mr Hunt’s knowledge imputed to Iambic.

Regarding intellectual property rights, the court concluded that the Commissioning Agreement and its variations vested all material and copyright in the Production in GLE, which then passed to Quick Draw under the Debenture. The purported Rights Confirmations granted to Iambic were ineffective and contrary to the Loan Agreement and Debenture.

The Defendants’ arguments that rights remained with Iambic due to non-payment or repudiation were rejected as inconsistent with the agreements and commercial reality.

The court found that the Warner Chappell injunction preventing live broadcast did not negate GLE’s ownership of the film and sound recordings, nor did the BskyB Agreement alter ownership, which was entered into by Iambic on behalf of GLE.

The Defendants’ contention that implied terms permitted use of the BEP Refund and SEL Amount without consent was dismissed as undermining the security and contrary to the express terms of the agreements.

Claims for breach of contract, procuring breach of contract, and deceit were supported by the facts and legal principles, although the court’s findings on trust and intellectual property rights rendered alternative claims unnecessary to decide.

The counterclaim for malicious falsehood by Mr Hunt and Iambic was dismissed for lack of evidence of malice, with the court accepting that Quick Draw’s solicitors acted properly in protecting their client’s interests.

Holding and Implications

The court held in favour of Quick Draw on all substantive claims.

GLE was held liable for repayment of the loan and breaches of trust related to the BEP Refund and SEL Amount. Mr Hunt was personally liable for dishonest assistance in relation to the BEP Refund, and Mr Henry, Mr Hunt, and Iambic were liable for dishonest assistance and knowing receipt concerning the SEL Amount.

Quick Draw was declared the sole proprietor of the intellectual property rights in the Concert materials, including films, sound recordings, script, artwork, and performers’ property rights, with the Rights Confirmations granted to Iambic held invalid.

The counterclaim by Mr Hunt and Iambic for malicious falsehood was dismissed.

This decision enforces the commercial purpose and security intended by the Loan Agreement and Debenture, affirming the assignment of future intellectual property rights as valid and emphasizing the strict requirements for consent in the use of charged assets. No new precedent was established beyond the application of established principles to the facts.