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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Mr H TV Ltd v ITV2 Ltd  EWHC 2840 (Comm) (08 October 2015)
Cite as:  EWHC 2840 (Comm)
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QUEEN'S BENCH DIVISION
7 Rolls Building
London EC4A 1NL
B e f o r e :
| MR H TV LIMITED
(Formerly known as CAN ASSOCIATES TV LIMITED)
|- and -
Mr Deepak Nambisan and Mr Daniel Edmonds (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Defendant
Hearing dates: 7-9, 13-16 and 20-23 July 2015
Crown Copyright ©
The Honourable Mr Justice Flaux :
The contractual framework
The ITV2 Production Agreement
"We refer to the separate agreement entered into by [ITV2] with PJA Promotions Limited ("Lender") of even date but effective as of 1st December 2010 ("the PA Agreement") relating to the services to be provided by Peter Andre ("PA") with respect to various series of programmes to be produced for ITV2 (and in any event not less than twenty two (22) hours each year in accordance with the terms of the PA Agreement) ("the PA Programmes") during the period of three (3) years commencing 1st December 2010 and expiring on 30th November 2013 ("the Term").
We also refer to the separate agreement ITV2 has reached with CATV (as detailed herein) regarding ITV2's commitment to commission CATV to develop and produce a minimum of an additional sixteen (16) hours (each year) of additional observational documentary programmes featuring Kerry Katona ("the KK Programmes") for the first two (2) years of the Term and CATV's commitment to procure the exclusive television services of Kerry Katona ("KK") during the Term so as to enable CATV to produce and deliver the KK Programmes."
"2 Production Role
2.1 It is agreed that, unless ITV2 and CATV agree otherwise in writing, CATV shall act as the production company in respect of each of the following Programmes: [the Agreement then set out the various series to be produced to which I have already referred at  above].
In accordance with the Terms of this Agreement provided always that CATV's production obligations shall be conditional upon and in respect of sub-clause 2.1.1 ITV's commissioning obligations shall be conditional upon:
2.1.1 with respect to the PA Programmes, the PA Agreement remaining in full force and effect;
2.1.2 ITV2 having paid all remuneration to PA in accordance with the terms of the PA Agreement;
2.1.3 ITV2 having paid CATV in accordance with the terms of this Agreement;
2.1.4 the provisions of clause 2.2 below.
2.2 CATV shall use reasonable endeavours to procure that Kerry Katona shall not during the Term (i) commit any criminal act or (ii) commit any action which is in breach of Ofcom rules or (iii) make any statement or do anything which is derogatory of ITV or likely (in the reasonable opinion of ITV2) to bring ITV or KK into disrepute or damage the good name and standing of ITV (or any of its officers, directors, agents or employees) or Kerry Katona. In the event of the occurrence of any of the above, ITV2 shall be entitled to immediately terminate this Agreement but only with respect to the production of future KK Programmes…In the event of any such termination of this agreement by ITV2 with respect to the KK Programmes for the reasons set out above, CATV shall not be deemed to be in breach of this agreement and this agreement shall remain in full force and effect with respect to the PA Programmes and the Other Programmes.
2.3 ITV2 confirms to CATV that it will commission and fully finance CATV by means of payment of the licence fees referred to in clause 2.4 below:
(i) to develop and produce twenty two (22) hours of the PA Programmes for each year of the Term as detailed in the PA Agreement and as further detailed in clause 2.1 above; and
(ii) to develop and produce sixteen (16) hours of the KK Programmes for the first two years of the Term (or any extension thereof, as agreed between the parties in accordance with clause 4.1 below) as detailed in clause 2.1 above (subject always to clause 2.1.4 above).
It is intended that the Programmes to be produced under this Agreement during the first year of the Term will be produced and transmitted by ITV2 in accordance with the dates set out in the First Schedule.
2.4 It is agreed that, unless ITV2 and CATV agree otherwise in writing, CATV shall act as the production company for all of the Programmes. CATV shall enter into a separate production and commissioning agreement with ITV2 with respect to each series of the Programmes to be produced under the agreement and the PA Agreement in the form attached hereto as the Second Schedule ("the ITV2 Licence Agreements") whereby ITV2 shall pay a licence fee to CATV for each of the Programmes in an amount of [£120,000 for each of the PA Documentary Programmes, £145,000 for each of the PA Format Programmes and £130,000 for each of the KK Programmes].
2.6 …Furthermore, CATV acknowledges and agrees that ITV2 shall require CATV to produce and deliver the Programmes in HD…and CATV shall submit a budget to ITV2 in respect of the HD costs for each of the Programmes to be approved in advance by ITV2 (such approval not to be unreasonably withheld or delayed)…ITV2 agrees that the extra HD costs for all series of KK Programmes and PA Programmes in 2011 are …£11,500 per episode and that, accordingly, ITV2 shall pay CATV the difference between such amount and the …3% figure referred to above.
8 Publicity and Sponsorship
8.3 …It is intended that PA and KK shall for so long as ITV2 continues to commission and exhibit the …Programmes be some of the faces of the services known as ITV2 and CATV acknowledges and agrees that such artists' image may be used by ITV2 to promote the ITV2 services or platforms…
9.7 Save for any ITV Licence Agreement and/or separate licence agreements which ITV and CATV may conclude relating to any of the Programmes, this agreement constitutes the entire agreement between ITV2 and CATV relating to the Programmes and the agreements at the date hereof and any variation to this agreement is valid only if it is in writing and is signed by or on behalf of each party."
"18.1.16 the Producer will not at any time do or say anything which is or may be considered by ITV2 (acting reasonably) to be detrimental or prejudicial to or to affect adversely the name, image, reputation or business of ITV2 or any member of the ITV Group or otherwise to bring ITV2 or any member of the ITV Group into disrepute.
23 TERM AND TERMINATION
23.2 Any one or more of the following events shall be an "Event of Default":
23.2.1. a party [here the claimant] commits a material breach of this Agreement or is in breach of any material term of this Agreement either of which is incapable of remedy or, if capable of remedy, is not remedied within 14 days of notice being given by the party not in breach to remedy such breach;
23.2.4 any of the Specified Persons [i.e. Mr Andre and Ms Katona] shall… be unable or unwilling fully and properly to render his or her services on the Programmes as contemplated herein and the Producer is unable to procure the engagement of a substitute approved by ITV (such approval not to be unreasonably withheld or delayed) within 14 days of notification from ITV.
23.3 If the Producer suffers or commits an Event of Default which in the reasonable opinion of ITV has or may:
23.3.1 affect the Producer's ability to deliver any Delivery Materials by the applicable Delivery Date;
ITV may…terminate this Agreement with immediate effect by notice to that effect to the Producer."
The PA Agreement
"2.1 KK shall provide the Company with access to KK on an exclusive basis for the purposes of the filming of KK with respect to the production of the Programmes in accordance with the production schedule and details set out in Annex 2 and/or on such other dates as shall be jointly agreed in good faith by the Company and KK. KK shall make herself exclusively available for filming during the period [12th March 2010 until 4th September 2010 in the case of series 1 and 4th October 2010 and 22 April 2011 in the case of series 2]. It is acknowledged that KK's children and family and friends will also be filmed and that they will be featured in the Programmes."
The Exclusivity Term
Implied terms of the Production Agreement
"It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean. It will be noticed from Lord Pearson's speech that this question can be reformulated in various ways which a court may find helpful in providing an answer – the implied term must "go without saying", it must be "necessary to give business efficacy to the contract" and so on – but these are not in the Board's opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?"
"26 Furthermore, as this court made clear in Mediterranean Salvage and Towage Ltd v Seamar Trading and Commerce Inc ...The Reborn)  EWCA Civ 531, and Mr Dowding submits on this appeal, the court will not imply a term as a matter of interpretation following the Belize approach unless it is necessary that the agreement should contain such a term to achieve the parties' express agreement, purposively construed against the admissible background. Lord Hoffmann also made this point in Belize:
'An unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract: it is not enough for the court to find that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, though tacit, formed part of the contract which the parties made for themselves.'
27 Mr Fetherstonhaugh accepts this but points out that the word "necessary" is imprecise, and that courts have not always applied this test strictly (see per Lord Wilberforce in Liverpool City Council v Irwin  AC 239). I agree that what is necessary must depend on the particular type of contract. So, for example, the House of Lords implied a term that directors should use their power under their company's articles to pay bonuses so as not to frustrate the expectations of holders of annuity policies which contained a guaranteed annuity rates (Equitable Life Assurance Co Ltd v Hyman  1 AC 408). In this case, however, there is little admissible evidence of communications between the parties beyond that contained in the lease, and so the exercise admits of less room for argument than might otherwise have been the case.
28 However, I would accept that a party does not show that a term is unnecessary simply by showing that the parties' agreement could work without the implied term. That approach overlooks the fact that as part of the process of interpretation the court seeks to find the parties' common aim in entering into the agreement. A term may be implied if it is necessary to achieve the parties' objective in entering into the agreement."
"…the court should in any event be very slow to imply into a contract a term, especially one which is couched in rather general terms, where the contract contains numerous detailed express terms such as the contract in this case. In my judgment, in such a case, the court should only do so where there is a clear lacuna. The parties in this case took a great deal of trouble to spell out with precision and in detail the terms that were to govern their contractual relationships. The alleged implied term is expressed in broad and imprecise language. I can see no justification for grafting such a term onto a carefully drafted contract such as this."
"Accordingly, Malik v Bank of Credit and Commerce International SA  AC 20 is authority for the proposition that there may be implied by law as an incident of all contracts of a certain description (in that case, contracts of employment) mutual obligations that each party will not conduct itself in such a way as, assessed objectively, is likely to destroy or seriously damage the trust and confidence that is required if their relationship is to continue in the manner that the contract implicitly envisages.
In my judgment, that is a far cry from the implied term for which Mr Choo-Choy contends in the present case, which (a) does not relate to a class of contract in respect of which any such implication has previously been recognised in any decided case to which I have been referred, (b) does not depend upon one party conducting itself in breach of an implied promissory obligation, and (c) would give rise to a right to terminate the contract not on the basis of any objective criteria but instead on the subjective basis that the other party genuinely considers that trust and confidence has broken down. In this regard, in argument Mr Choo-Choy made clear that the test for which he contended was that loss of trust and confidence had to be genuine or honest, but did not have to be reasonable."
"I am in any event very sceptical about the suggested implication. It seems to me that arguments to like effect as many of the submissions made by Mr Choo-Choy could be made with regard to the implication of a duty of good faith. However, although a duty of good faith is implied by law as an incident of certain categories of contract (including contracts of employment), the general rule in commercial contracts is that 'If the parties wish to impose such a duty they must do so expressly' (see Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (t/a Medirest)  EWCA Civ 200, Jackson LJ at ). I consider that the case is stronger still for saying that if the parties wish to produce the result that each of them has the right to terminate the contract in the event that it loses trust and confidence in the other, even when the other party is not in breach of contract and if that may be unreasonable, then they should do expressly."
(1) Reality television programmes are underpinned by the concept of exclusivity, in that they provide exclusive access to both public and behind the scenes aspects of the subject's daily life.
(2) The subject necessarily agrees to provide access to his or her daily life, including to interaction with family members and friends.
(3) The subject must be sufficiently comfortable with the people who film, edit and produce the programmes in question.
(4) Image and "brand" are of central importance in return for allowing the intimate access and the subject expects and is entitled to expect the programmes to portray him or her in a sympathetic light.
(5) Content must be up to date maintaining relevance.
The witness evidence
The history of the relationship with Peter Andre and Claire Powell before 2011
Negotiation of the Kerry Katona agreements
Events up to the end of May 2011
"…we need to be careful when doing articles in magazines. All that, I am an animal in the bedroom will damage his family/image/brand. I know you won't agree with [me] about this, but you should ask yourself the question, would David Beckham do an article along those lines? The answer would be no, so I am just flagging it."
Claire Powell's scheme to replace the claimant as Mr Andre's production company
"I still have no news for Pete and his itinerary. I need July/August…anything. Can you let me know when I'll receive something. I have a meeting with the new controller at ITV on Mon for which I'll need some kind of heads up on series 5. They will expect me to know something".
"Claire would like to continue with ITV but no longer wants to use CAN TV as the filming production company and this is one of the topics she wishes to discuss with you when she comes in to see you at 3.30 pm today."
"I am sorry that Claire decided to air to you what she thinks are problems between CAN Associates and CAN TV. Actually there are no problems between the companies and no problem with the talent. There is however a major problem with Claire. Below is the email [the one referred to at  above] that I sent this morning before I received your text.
This is the issue. Nothing else. Everything that you have been told is just a smoke screen to cover what is outlined below. Peter has not complained about CAN TV, this is just Claire thinking that she can act like a lovesick teenager without thinking of the damage it will do."
"surely this should help with the ITV situation as he [i.e. Mr Hendricks] hasn't done this in the best interests of Peter show….whenever I was standing next to Drew. Peter and I had a conversation last night saying this is exactly the point we are making saying that because he had editorial control he has the power to do this.
Claire Zolkwer hasn't come back to me on a meeting but I was thinking in the meantime if you knew any TV production companies that they would be happy to work with me that has shot reality TV shows before as we are due to start filming his next series."
"Seeing that CP has gone to ITV stating that PA working relationship is untenable, which is an outright lie. CP is just using PA as leverage to damage CATV and myself. If we don't bring her to heel immediately the damage at ITV will be terminal".
"I have been informed by ITV that you have stated that Peter Andre has some issues with Can TV. I am not aware of any issues with Peter and Can TV and I am somewhat surprised that you have raised these issues with ITV and not informed us of them first.
Please outline exactly what the issues are, so that we can look into them and try and resolve them."
"On the Peter Andre situation, to enable me to advise my client in relation to the contractual aspects that you raised, please urgently send over a copy of the CAN TV Agreement with ITV2.
I have also been advising Claire's company in relation to its management contract with Kerry Katona, who has indicated to Claire that her management is now going to be taken over by your client. Do you have any instructions on this separate matter?"
The alleged death threats
The meetings on 20 June 2011
From the setting up of the Twitter account to the Quinn Emanuel letter of 14 July 2011
"I can no longer work with Neville due to the breakdown of our personal relationship last year and also the breakdown of our business over the last few weeks. Peter and myself feel that he will make things difficult [illegible] filming and [illegible] the final edit.
Neville has a lot of issues with people surrounding Peter's show and Pete is now worried about how this will be edited. He blurred a face of someone on the show…and Peter worries if he doesn't like someone he will edit them out or show them in a bad light.
My relationship with Nicola Partridge has broken down beyond repair and she is the client liaison at Can TV. We refuse to work with her…
Pete has been finding out many things about Neville in the last few days and has no longer got any trust in him. I don't think you need to add this in Simon but I just wanted to put that.
The only way it could work is if I deal with Danielle at Can TV and another person in the middle and Nev isn't anything to do with it otherwise we go back to ITV and suggest a JV [joint venture]."
"Your letter indicates that ITV have made express suggestions concerning the filming and programming going forward. Please provide full details of such, as I am unaware of the same. You refer to one particular suggestion of ITV of an independent third party dealing with editorial and other programming issues. If ITV has made that suggestion, I do not know the basis upon which your client, Peter Andre's agent, believes it is in a position to 'accept' or reject it; this point is reiterated in respect of your client not accepting the ongoing involvement of Nicola Partridge and regarding the continued involvement of Daniella Berendsen.
While my client is keen to maintain a suitable framework for the smooth operation of these matters, it is wholly inappropriate to request that Neville Hendricks should have no personal role or involvement with any of the series, particularly when he is the owner and director of the company contracted to deliver the programmes. This is plainly an unsustainable position, however my client is willing to put in place practical arrangements such that Neville Hendricks and Claire Powell's interaction can be appropriately limited."
"The first of Peter's requests was that Nicola Partridge should not be involved in the show in any way at all and/or referred to as his manager. This request has simply been ignored.
The second and principal request was that past editing practices be replicated. This could be achieved if CATL were to agree contractually to provide first and second 'cuts' to Claire for her comments and to agree to incorporate the suggested amendments into the final cut sent to ITV2.
The third request was to have sight of the CATL Agreement…
Peter's primary concern is the continued quality of the programme and that the filming and editing process goes smoothly. He feels that the requests referred to above are an essential part of making sure that happens. You will understand his reluctance to begin filming unless these are put in place."
"…personally I am very happy, but I have staff jobs to protect and I will not let CP or PA put people's jobs on the line over CP mission of revenge. Not on my watch. I will do whatever it takes and take down whoever stands in my way because we have done nothing wrong other than not want to be part of CP bullshit circus. Ask you yourself you started all this with a pack of lies".
Allowing for the somewhat emotive language which is explicable as indicative of Mr Hendricks' anger, this tweet was an understandable reaction to what Mr Hendricks rightly saw as a spiteful act of revenge on Ms Powell's part, with which Mr Andre was prepared to go along.
From the Quinn Emanuel letter until the first mediation on 27 July 2011
"Our client takes issues with some of the contentions in relation to the letter of 14 July and particularly with the suggestion that our client is unwilling to continue working with Can TV. Our client welcomes not only the sentiment in your letter but also your willingness to take an active role in achieving a workable solution.
It would be disingenuous not to say that our client hoped that ITV would take a firmer line with Can TV and expressly acknowledge the shocking and deplorable conduct of Neville Hendricks and Nicola Partridge on Twitter over the last week…
[Their] postings on Twitter since 12 July 2011 have not only been personally offensive to and defamatory of both our client and his manager Claire Powell, they are also extremely damaging to the programme. We attach screen grabs of their most recent 'contributions'. We cannot conceive of a clearer example of conduct designed to destroy this necessary relationship of trust and confidence."
[The letter then goes on to say that if there is an agreement between the claimant and Mr Andre, the claimant has repudiated it. Mr Andre's rights are reserved.]
"The fact of the matter is that despite the difficulties with Can TV, our client remains willing and able to render his services to ITV. The contractual provision in the ITV agreement which specified that Can TV had are to be the producer do not come close to having the status of a warranty or condition and therefore the inability to use Can TV should not be an impediment to the production of the programme. It will certainly not be from our client's perspective an impediment to him providing his services to ITV.
Historically of course Mr Andre's agreement with ITV made no specific reference to which production company would be entrusted with the filming of the programme. We suspect that in the normal course of events, the vast majority of such agreements do not. The fact is that our client did not realise that such an insertion had been made. We are currently investigating the circumstances that allowed the insertion of such a provision into the ITV agreement, to the detriment of our client. We trust that it will not prove necessary, but it is right that we put you on notice that our client may in due course require information from your client as to the facts and circumstances surrounding the negotiation of the ITV agreement. For the record, this firm neither advised Mr Andre in relation to his agreement with ITV or his previous agreements with Can TV."
"I take on board that I should not have tweeted about them acting being nice to Nicola Partridge, but I was really angry when I found out that they did not want Nicola working on any of Peter's shows after Nicola had worked so loyally and professional for the last 7 years with Claire plus Nicola has been in my employment for the last 16 years and does not deserve to be treated so badly. Please excuse my long-winded reply, but I still don't know what the issues [are] that Peter Andre has with Can TV and I am not going to allow them to use Twitter traffic that has nothing to do with me or my company as an excuse, seeing that they seem to have brought these Twitters upon themselves.
I confirm that I will not tweet anything relating to the shows, but I will not give any undertakings not to tweet to protect my reputation if called upon to do so."
From the first mediation to termination
Kerry Katona and Celebrity Big Brother
The termination letter and events post termination
Were ITV2 entitled to terminate the Production Agreement?
Alleged loss of trust and confidence
Expansion of ITV2's case and alleged endorsement of @LLuke33 and @KMaddock tweets
A renunciation of a contract occurs when one party by words or conduct evinces an intention not to perform, or expressly declares that he is or will be unable to perform, his obligations under the contract in some essential respect. The renunciation may occur before or at the time fixed for performance. An absolute refusal by one party to perform his side of the contract will entitle the other party to treat himself as discharged, as will also a clear and unambiguous assertion by one party that he will be unable to perform when the time for performance should arrive. Short of such an express refusal or declaration, however, the test is to ascertain whether the action or actions of the party in default are such as to lead a reasonable person to conclude that he no longer intends to be bound by its provisions. The renunciation is then evidenced by conduct. Also the party in default:
'… may intend in fact to fulfil (the contract) but may be determined to do so only in a manner substantially inconsistent with his obligations.'"
Breach of the Kerry Katona exclusivity term
"Does the occurrence of the event deprive the party who has further undertakings to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?"
"Frustration of a contract takes place when there supervenes an event (without default of either party and for which the contract makes no sufficient provision) which so significantly changes the nature (not merely the expense or onerousness) of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution that it would be unjust to hold them to the literal sense of its stipulations in the new circumstances; in such case the law declares both parties to be discharged from further performance."
The claimant's claim for damages
"None of the cases I have referred to has or could have questioned the principle laid down by the majority of the Court of Appeal in Abrahams which is set out most clearly in the judgment of Atkin LJ. The court, in my view, has to conduct a factual inquiry as to how the contract would have been performed had it not been repudiated. Its performance is the only counter-factual assumption in the exercise. On the basis of that premise, the court has to look at the relevant economic and other surrounding circumstances to decide on the level of performance which the defendant would have adopted. The judge conducting the assessment must assume that the defendant would not have acted outside the terms of the contract and would have performed it in his own interests having regard to the relevant factors prevailing at the time. But the court is not required to make assumptions that the defaulting party would have acted uncommercially merely in order to spite the claimant. To that extent, the parties are to be assumed to have acted in good faith although with their own commercial interests very much in mind."
Income under the Production Agreement
Actual costs and unused advance
"I consider that the authorities establish the following propositions: (a) The fact and, if so, the extent of the diversion of staff time have to be properly established and, if in that regard evidence which it would have been reasonable for the claimant to adduce is not adduced, he is at risk of a finding that they have not been established. (b) The claimant also has to establish that the diversion caused significant disruption to its business. (c) Even though it may well be that strictly the claim should be cast in terms of a loss of revenue attributable to the diversion of staff time, nevertheless in the ordinary case, and unless the defendant can establish the contrary, it is reasonable for the court to infer from the disruption that, had their time not been thus diverted, staff would have applied to activities which would, directly or indirectly, have generated revenue for the claimant in an amount at least equal to the costs of employing them during that time."