D & B FILMS DISTRIBUTION CO. LTD. v. FU NGAI FILM PRODUCTION CO. LTD.

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JUDGMENT

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Sir Derek Cons, V.P.:

1. By an agreement dated 14th January 1991 the defendant, who is a producer of Chinese motion picture films, granted to the plaintiff, a distributor of such films, the sole and exclusive agency to distribute one particular film in the area of Hong Kong and Macau. For the purposes of this appeal it is not necessary to go into the details of that agreement or into other transactions then current between the parties, albeit it seems that it is because of those transactions that the parties have come to be in dispute. On 16th May the defendant, by letter to the plaintiff, alleged that the plaintiff was guilty of conduct which amounted to a repudiation of the agreement and purported to accept that repudiation. On 10th June the defendant made a similar exclusive distribution agreement with the Golden Princess Amusement Co. Ltd., which has a slot in its distribution schedule whereby it could exhibit the film in question in the cinemas within its control on 19th December and the days following as necessary.

2. The plaintiff does not accept the defendant's contentions; firstly it says that it has not been in any way in breach of the agreement, and secondly, that in any event the defendant, after knowledge of the conduct said to constitute the breach, affirmed the contract prior to 16th May. On 5th November the plaintiff learned from the defendant of the agreement with Golden Princess, and on 8th November obtained ex parte from Gall, J., an injunction restraining the defendant, until the trial of the action or further order, from complying with that agreement or indeed any other distribution agreement save the one made in January with the plaintiff. At the inter-partes hearing before Keith, J., on the 3rd December the plaintiff additionally sought an order for the delivery up of all copies of the film, which would then have enabled it to exhibit it as it wished. Keith, J., refused such order, but did continue the restraining order.

3. The defendant now appeals. Its complaint as to material non-disclosure is no longer pursued, and it is accepted that there is a serious issue to be tried. The next consideration then, following the course charted by American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396, is whether, if no injunction were granted, the plaintiff could be adequately compensated in damages. The judge was satisfied that it could not. We took the view that, having regard to the fact that Golden Princess would show the film on different dates and in different cinemas from those contemplated by the plaintiff, and that the showings would follow a promotion along lines not necessarily those which would have been adopted by the plaintiff, who was responsible for promotion under its agreement with the defendant, the box office receipts of a showing now would be no guide to the damages in fact suffered by the plaintiff.

4. For my own part I would have been tempted to think otherwise. The returns of the different circuits for last year indicate no significant difference between those to which Golden Princess has access and those to which the plaintiff then had access, and would possibly continue to have in the future. I appreciate that other factors may have affected those returns, but nevertheless they do provide some indication. While I accept the evidence of Mr. Raymond Leung and, with respect, of common sense, that "the way in which the film is to be promoted would directly affect its box office sales" there is no evidence of any significant, or indeed any difference, in the approaches to promotion which the different parties might have adopted and there is little, if anything, to indicate that the plaintiff in this respect would have done a better job than the Golden Princes or the defendant. In his affirmation (at p. 94/5 of the bundle) the best that Mr. Raymond Leung could suggest is that "the defendant is likely to earn at least as much if the plaintiff distributes", and (at p. 17) the general manager of the plaintiff said the same "or probably more". But the latter must be to some extent discounted by the exaggeration obvious in the preceding paragraph (at the foot of p. 16).

5. I do not overlook the suggestion of the goodwill that would arise from the plaintiff having, as it were in this film, obtained a "major catch". But in my view the factor is as broad as it is wide. The failure to have the benefit of that "catch" now would be counterbalanced by the publicity that would inevitably follow from a successful conclusion to this action in the future. I would have thought, for my part, that damages, though perhaps not an absolutely accurate remedy, would certainly be an adequate remedy. However I am conscious of the limitations upon this court's power to interfere with the discretion of a judge in a situation of this kind and I turn therefore to the balance of convenience, for Mr. Tong, Q.C., appearing now for the defendant although not below, concedes that if damages would be inadequate for the plaintiff, then they would likewise be inadequate for the defendant.

6. In freezing the distribution of the film until after trial, which is the overall effect of his decision, the judge took the view that he was usefully preserving the status quo, a counsel of prudence suggested to some extent in American Cyanamid. With every respect to him, I would not agree. Despite the eloquence of Mr. Tong I see the position as simply this: if the injunction is continued, the showing of the film would at best be Easter and possibly not even then. I appreciate that the judge made an order for a speedy trial, and I would accept that the parties would comply with that order as best they can, but it is impossible to ignore the realities of the court lists and a showing at Easter would seem to me the very best that could possibly be hoped for. On the other hand Golden Princess is rearing to go. It has a Christmas slot starting on 19th December. It has the publicity from two festivals  which have recently been held in which the film featured, and the publicity to come to the charity premiere this Friday. Mr. Tong suggests that perhaps these things do not really produce very much, but I do take judicial notice, from reading my newspapers, that those who promote films appear to attach importance thereto. The film features, as one of its stars, a man I understand to be at the height of his popularity and I accept, as was suggested by Mr. Swaine, Q.C., who now appears for the defendant, that popularity in stardom can sometimes be as short-lived as that in politics.

7. In the entertainment world, perhaps more than in others, I would have thought that it was important to strike while the iron is hot, which in this particular circumstance, would seem to be to everybody's advantage. That is perhaps an unusual situation where, as in this instance, the court has to do its best in circumstances that will necessarily remain uncertain until the proper rights of the parties can be decided at a trial.

8. The defendant has today offered to put up a bank guarantee in the sum of $2,000,000 to cover any damages that might eventually be awarded against it. On an undertaking to that effect I would, for my part, allow the appeal and set aside the injunction which was originally granted by Gall, J., and then continued by Keith, J.

Kempster, J.A.:

9. I agree that this appeal should be allowed. The agreement relied upon by the Plaintiffs was concluded in order to secure reward rather than to enhance their reputation by distributing a particular film. On the balance of probabilities, the optimum damages which they may suffer as a result of any breach of that agreement by the defendants will be reflected in the defendants' receipts. If the defendants can pay them no interlocutory injunction will normally be granted. In my opinion the evidence shows that the plaintiffs, if successful, will adequately he compensated by an award of damages. The learned judge was, in my view, wrong to determine otherwise. In the circumstances we are entitled to interfere with his determination on this footing as well as on the basis of balance of convenience.

Clough, J.A.:

10. I agree with the conclusions in both the judgments which have been delivered and respectfully adopt the reasoning of my Lord, Cons, V.P., save that I prefer to rely primarily on the factor which has just been referred to by my Lord, Kempster, J.A., namely that damages would be adequate compensation for the plaintiff if successful in the action. I can usefully add nothing and I accordingly agree that the appeal should be allowed.