BL-2023-NCL-000014 - [2025] EWHC 2074 (Ch)

A draft Heads of Terms (v3) to be made between SSD Music (the “Borrower”), Ticketline (“Lender One”) and “Tokyo Industries [] Limited” (with blank detail under registered number and registered office and being defined as “Lender Two”) (the “HoT”) had been provided by Mr Betesh to Mr Mellor and Steve Davis by email dated 28 July 2022 at 11:58 (ie. before completion of the email exchanges on the Three Options which took place that day). The draft has a typed date of “[] day of July 2022”. Mr Mellor accepted that the proposals there set out were “significantly different” from Option 1 and Option 2 previously set out and discussed in emails.

The HoT, among other things, recited at recital one, that SSD Music was the organiser and host of the musical concert and event known as Bingley Weekender (ie the 2022 Festival) (the “Event”), scheduled to proceed on the weekend 5, 6 and 7 August 2022.

Recital two confirmed that SSD Music was legal owner of all intellectual property rights associated with the Event and the contracting party with performers and providers of services to the Event (“the Assets”) and was entitled to “all ticket income, proceeds of bar takings and other revenue as generated by the Event less suppliers’ costs” (“Other Revenues”).

Recital three was to the effect that Ticketline had, as at the date of the agreement, retained a sum of or about £550,000 of ticket sales and the proceeds of such ticket sales were held in reserve with them pending completion of [the 2022 Festival], defined as “Ticket Sales Revenue” and that further tickets “are and continue to be sold” (defined as “Future Ticket Revenue”.)

Recital four was to the effect that the 2022 Festival had cash flow problems and was required to secure further funding, failing which the 2022 Festival would fail. Lender Two was said to be prepared to lend up to £1milllion to manage and complete the 2022 Festival (the “New Loan”).

Recital 5 was to the effect that if the 2022 Festival were cancelled, all ticket monies would have to be refunded and SSD Music would be exposed to further and wider financial claims. As such it was not in the interests of the parties to cancel the Event.

Recital 6 was to the effect that Lender One recognised and accepted that it would not recover all of its Loan to the Borrower which exceeded the amount of £550,000.

Clause 1 provided that SSD Music thereby consents to and Lender Two thereafter would assume conduct and responsibility for completion of the Event, Lender Two paying such reasonable costs as were or may be required to facilitate the opening and completion of the Event.

Clause 2 provided that on completion of the Event, Ticketline would agree to pay directly to Lender Two, the Ticket Sales Revenue (also dealt with in clauses 7 and 8).

Clause 3 provided that SSD Music authorised Ticketline to pay over any additional sales made from the date of the contract to Lender Two in partial satisfaction of the New Loan.

Clause 4 provided that Lender Two would not withhold any reasonable payment required by SSD Music to complete the event and do nothing to cause the Event to be cancelled.

As security for the New Loan, SSD Music was, if required, to transfer all rights and entitlement to the Assets to Lender Two (clause 5). As further security SSD Music was to transfer rights of intellectual property and rights of and associated with the Tomorrow Festival to Lender Two (clause 6).

Clauses 7 and 8 dealt with payment by Ticketline of Ticket Sales Revenue, on completion of the event, to Lender Two in 6 equal monthly instalments (less any refunds required in consequence of cancellation of all or part of the Event) with interest.

Clauses 9, 10, 11, 12 and 13 and dealt with non-competition by Lender Two with SSD Music; confidentiality; continuation of normal trading (of an unidentified “Company” by SSD Music); Advisors (use of and allocation of costs and fees) and Governing Law and jurisdiction.

In cross-examination, Mr Betesh accepted that it was envisaged that Mr Mellor would insert into the heads of terms the name of the relevant company that he wished to use in the deal. As such he accepted that the Defence was inaccurate in saying:

“ At all material times, the Defendant believed that the “unnamed” entity [In the heads of terms] was either Mr Mellor himself, or and by consequence of the Non-Disclosure Agreement as entered into between he parties on the 8 July 2022, Tokyo Group Limited as the only communication that was sent to the Defendant was from an email address signed by Mr Mellor himself but deriving from the Tokyo Group email.”

I conclude that the Defence was deliberately put in these terms to counter a case on unjust enrichment based upon (in part) an anticipated contract with the Claimant not having materialised.

Perhaps more significant was Mr Betesh’s evidence that the Heads of Terms had been carefully prepared with the benefit of assistance from the same firm of solicitors who acted for the Defendant in the proceedings, Aticus Law.

When asked why the third recital to the Heads of Terms was inconsistent with (one could fairly say flatly contradictory to) his evidence and the case put by the Defendant as regards retention of ticket sale proceeds, his answers were variously that he was “trying to get a deal done” and that he didn’t think it was “material”. However, as he also accepted, the recital in effect stated the point that Mr Mellor had made by email dated 28 July (by inserting comments into Mr Betesh’s earlier email). As I have said, in response to Mr Betesh’s comment that “Ticket monies have already paid across” Mr Mellor had replied:

“ we have to stop thinking the ticket money is yours it’s not legally it’s the customers that you are holding on escrow for the customer will until the show maturity then to the promoter - it’s never Ticketline’s ???”.

As regards recital five, relating to the ticket monies “shall have to be refunded” if the Event is cancelled, this, he said, was also simply “untrue”.

As I explain later, I do not accept Mr Betesh’s oral evidence on these points about recitals three and five. Those recitals were, in my judgment, reflective of the true legal position. Although at the time of the draft heads of terms ticket monies may not have been held in escrow it was probably intended that they would be by the time of execution (whether through a loan to Ticketline from Tokyo to enable Ticketline to re-establish an escrow account or through some other route). In any event however, and even if I am wrong about the escrow account point, the refund obligation point remains good.