Quick Draw LLP v Global Live Events LLP & Ors (2012)
A limited liability partnership which had provided a bridging loan to finance a concert was entitled to recover the full amount due from the concert organiser. Under the terms of a debenture, the lender was entitled to existing and future copyright in sound and film recordings of the concert as security for the loan.
The claimant limited liability partnership (Q) sought to recover a loan made to finance a concert and a declaration that it was the beneficial owner of rights in sound and film recordings of the concert and that any legal rights should also be assigned to it.
The first defendant limited liability partnership (G) had been set up by the second and third defendants (C and H) as a vehicle to produce a Michael Jackson tribute concert. H's company (X), the fourth defendant, was engaged by G to produce film and sound recordings of the concert. Q had provided a short-term bridging loan to G on terms contained in a loan agreement and debenture. The debenture provided for G, as chargor, to assign to Q, as chargee, its title and interest in the concert rights as security for the loan. G was unable to repay the loan and went into administration. It took no part in Q's claims to recover the loan and for declaratory relief. Q was granted an interim injunction preventing C, H or X from dealing with the film and sound recordings of the concert pending trial.
C and H contended that at the time of the debenture, no rights in respect of the concert had then existed, and that the rights in the sound and film recordings of the concert had later vested in X, not G.
(1) There could be no doubt and it was not disputed that G was liable in respect of the full amount due under the loan agreement and to provide the appropriate accounts and indemnities to which Q was entitled. G's administrator had indicated that it was content that an order be made against it save in relation to costs (see para.152 of judgment). (2) Copyright in artistic words including sound and film recordings might be mortgaged. On its proper construction, the debenture should be construed as a mortgage rather than a mere charge and in relation to copyright it operated as an assignment subject to reassignment on satisfaction of the secured obligations. It was clear that the debenture was to be construed in a way which encompassed future copyright and future debts. In the light of the circumstances in which the debenture was executed, it would fly in the face of business reality to conclude otherwise. When Q agreed to provide finance to G, the majority of revenues, debts and intellectual property rights in relation to the concert were yet to arise and inevitably Q had sought full security over all of G's rights from time to time for the advance it was about to make. The debenture operated so that future debts were assigned in equity and held on trust for Q by G. As soon as copyrights came into existence they vested in Q. The film and sound recordings at the concert were made by X, but rights in them passed to G at the moment of their production. Thereafter, as a result of the debenture which operated generally or in respect of future copyright by virtue of theCopyright, Designs and Patents Act 1988 s.91(1), the rights passed to Q (paras 135, 160, 162-164, 170, 213).
Judgment for claimant