Arlington Productions Ltd. & Anor v Pinewood Studios Ltd.

A bailee who accepts possession of goods bears the burden of proving their return to the owner or to a person authorised by the owner. General evidence of careful storage, a good record, or the small proportion of goods missing will not discharge that burden without evidence connecting the missing goods to an authorised return.

Damages must be proved by evidence appropriate to the nature of the loss. Expenditure incurred to investigate whether a breach occurred is not necessarily expenditure caused by the breach. A statement of truth attached to a pleading or application notice does not convert that document into evidence. Late documentary evidence may be refused where its earlier absence resulted from inadequate disclosure and admission would prejudice procedural fairness.

The claimant film-production companies alleged that the defendant studio, which stored their film stills as bailee, had failed to return a number of negatives and colour transparencies. The defendant accepted that it had received the material but contended that the missing items had been returned to the claimants or otherwise dealt with on their authority.

The claim also included damages for verification and inspection work, replacement and transport costs, damage to returned material, and alleged lost or postponed licensing revenue. The central issues were whether the defendant had proved due return, whether the claimants’ late documents should be admitted, and which heads of loss had been proved and were recoverable.

1. Liability. The defendant was a bailee of the negatives and transparencies. The burden lay on it to establish that the missing material had been returned to the claimants, their predecessors, or someone authorised by them. Evidence concerning the defendant’s general storage practices, the small percentage of missing material and customer satisfaction did not discharge that burden. The absence of documentary records of return was significant. The defendant was therefore liable for the missing material.
2. Late evidence and disclosure. Under Civil Procedure Rules 1998 Part 22, a statement of truth is a formal requirement and is not evidence. The claimants’ failure to search for and disclose relevant documents before trial, followed by an application to introduce supportive documents after written submissions, justified refusing admission of documents which existed before trial. A later invoice was admitted, subject to the consequences for costs. The duty of disclosure remained continuous until judgment.
3. Damages. The distinction drawn in Admiral Management Ltd v Para-Protect Europe Ltd [2002] EWHC 233; [2002] 1 WLR 2722 between expenditure caused by a tort and loss of revenue was applied. Verification and inspection costs were incurred to investigate whether a breach had occurred and were not recoverable as damages. A salary-based revenue-loss claim also failed because it was not pleaded and there was no evidence of lost revenue.
4. The cost of replacement transparencies was proved and recoverable. A limited transport cost was allowed, but insurance and alleged licensing losses were not proved. Costs of repairing damaged returned negatives and transparencies were recoverable because the defendant had not shown that the damage occurred without fault.
5. Judgment was entered for the claimants in the sum of £2,545.19. Interest and costs were reserved for further submissions.