Recorded Picture Company Ltd v Alfama Films Production & Anor

A contractual restriction preventing a grantor from dealing with rights during an exclusive option period is breached by granting a competing option over the same rights, even where the parties believed that the original option had expired.

Where causation depends on hypothetical conduct by third parties, damages are assessed on a loss-of-a-chance basis. The claimant must prove a substantial, rather than speculative, chance of the beneficial outcome. Each material hypothetical event must be assessed separately, and the value of the outcome discounted according to the likelihood that the chance would produce it.

The Producers held an option from Recorded Picture Company Ltd to produce a film. The deed prohibited RPC from disposing of or dealing with the relevant rights during the option term.

RPC granted a further option to Tornasol after believing that the Producers’ option had expired. In earlier proceedings, that option was held to remain in force because contractual force majeure provisions extended the option period during related litigation.

The Producers counterclaimed for breach of contract and damages, contending that they had lost the chance to produce the film and earn production-related sums. The central issues were whether RPC had breached the deed and, if so, whether the Producers had a substantial chance of making the film and obtaining the claimed benefits.

1. Breach. RPC breached clause 7.1.1 of the deed by granting Tornasol an option over the rights during the Producers’ option term. The relevant rights included the licence to develop, produce and exploit a film based on the defined work. The parties’ mistaken belief that the option had expired did not assist RPC. The purpose of the deed was to secure the Producers’ exclusive right to exploit the work until expiry of the option term.
2. Loss of a chance. Applying the approach in Sprint Electric Ltd v Buyer’s Dread Ltd [2020] EWHC 2004 (Ch), the assessment of damages depended on hypothetical conduct by third parties, principally the director and potential financiers. The Producers had to establish a substantial chance of the beneficial outcome, assess the value of that outcome, and apply a discount reflecting the likelihood that the chance would have produced it. The hypothetical events in the causal chain had to be assessed separately.
3. No substantial chance. Although the director was keen to make the film and might have accepted a delay and some changes to the production arrangements, there was only a very low chance that he would have accepted the producer’s principal demand for complete control over all decisions. Further, the evidence did not establish that the producer could have replaced the lost Amazon financing or raised sufficient funds. The Producers therefore had no more than a speculative chance of making the film in the no-breach counterfactual.
4. The counterclaim for damages failed on causation. The court would have accepted the claimed pre-production costs and producer’s fee as figures, but no damages were recoverable because the required substantial chance was absent.

• High Court (Chancery Division): In earlier proceedings, RPC’s claim for a declaration that the Producers’ option had expired was dismissed. The Court of Appeal dismissed RPC’s appeal. The present counterclaim was then tried as a separate issue.