Tokyo Industries (Live) Limited v Orbit Tickets Limited

Where a party provides substantial benefits in anticipation of a contract which never becomes binding, restitution may be available for failure of basis. The fact that negotiations were subject to contract does not automatically place all expenditure at the provider’s risk. The court must distinguish preparatory expenditure from performance of the contemplated arrangement, and ask whether the defendant was enriched, whether the enrichment was at the claimant’s expense, whether it was unjust, and whether any defence applies.

In assessing enrichment, the court may treat a benefit as direct where the parties negotiated specifically for it and it flowed immediately from the claimant’s expenditure. Informal ticketing arrangements may also preserve the ticket agent’s obligation to account for ticket proceeds until event settlement, despite physical payments being advanced as loans.

Tokyo Industries funded and took over the operation of the Bingley Weekender 2022 after negotiations with Ticketline, the ticketing agent and substantial funder of the festival’s associated companies. The parties reached agreement in principle on an option under which Tokyo would fund completion, acquire specified assets and receive ticket proceeds, but formal heads of terms were never completed.

The festival proceeded. Tokyo paid approximately £746,081 towards festival costs but received no corresponding payment of ticket proceeds. It claimed restitution for Ticketline’s alleged enrichment, principally the retention of ticket-sale proceeds and the promoter’s share of booking fees. An alternative fiduciary claim was also advanced.

The central issues were whether Ticketline had been enriched at Tokyo’s expense, whether the enrichment was unjust because the anticipated contractual basis failed, and whether Ticketline remained liable to refund or account for ticket proceeds.

1. Disposition. The restitutionary claim succeeded. Judgment was entered for £605,503.75, with interest of £117,709.92, totalling £723,213.67. Ticketline was ordered to pay Tokyo’s costs, with a payment on account. The alternative fiduciary claim was not determined.
2. Ticket proceeds and refunds. The informal arrangements preserved Ticketline’s obligation to account to the promoter for the face value of ticket sales and the promoter’s rebate share of booking fees. Advances made by Ticketline were loans, not payments discharging that accounting obligation. Set-off was to occur on settlement of the relevant festival, and had not occurred when Tokyo intervened. Ticketline therefore had a contingent obligation to refund ticket purchasers where the promoter authorised refunds and either Ticketline was put in funds or had not discharged its obligation to account for the ticket proceeds.
3. Enrichment. Applying the structured approach identified in Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 and Investment Trust Companies v Revenue & Customs Commissioners [2017] UKSC 29; [2018] AC 275, the four questions were signposts to areas of inquiry, not statutory tests. Ticketline was enriched because Tokyo’s funding prevented cancellation, avoided the need to refund ticket purchasers and enabled Ticketline to retain or set off ticket proceeds. The benefit was at Tokyo’s expense because those consequences were the direct and intended object of the negotiated arrangement.
4. Failure of basis. The parties shared the basis that Tokyo would fund the festival in return for the agreed commercial benefits. The anticipated formal contract did not materialise. The subject-to-contract context did not defeat restitution because Tokyo had performed the contemplated obligations rather than merely incurred preparatory costs, and its expenditure was not intended to be gratuitous.
5. Amount. The claim succeeded in respect of £600,878 of ticket proceeds. The recoverable booking-fee rebate required further agreement or argument, particularly as to the time when the relevant fees were received.