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

The alleged injustice relied upon is the “failure of basis” upon which Tokyo paid the relevant sums to or for SSD Music. I was referred to a number of cases and a number of passages in Goff & Jones on Unjust Enrichment (10^th edition). I did not understand the general principle to be contested. At paragraph 16-01 it is stated as follows (footnotes excluded):

“ 16-01:

Where benefits are transferred in anticipation of a contractual agreement which is intended to provide for payment for those benefits, and the contractual agreement does not materialise, the general principles of failure of basis apply. The same principles that govern liability where the contract is void or unenforceable would seem to be equally applicable where the contract does not come about. As Barry J commented in William Lacey (Hounslow) Ltd v Davis [[1957] 1 WLR 932 at 939]:

“I am unable to see any valid distinction between work done which was to be paid for under the terms of a contract erroneously believed to be in existence, and work done which was to be paid for out of the proceeds of a contract which both parties erroneously believed was about to be made.””

Mr McGarry submitted that the case failed primarily because: .

As regards the first two points of Mr McGarry, it follows from what I have already said that I disagree with them. First, Option 1 was clear and was agreed to. Mr Betesh tried (almost constantly) to chip away at what had been agreed and to vary the agreement but Mr Mellor always stood firm. The key point is that Mr Betesh agreed in terms to Option 1. As regards the involvement of SSD Music (and I would add IG Industrials, though Mr McGarry did not refer to the latter company in this context), it is clear from my findings that SSD Music was aware of what had been agreed between Mr Mellor and Mr Betesh (i.e. Option 1) and that it would join in the legal documentation to give effect to Option 1. IG Industries was even more directly controlled by Mr Betesh and the same findings apply to it.

As regards the issue of “subject to contract”, Mr Stubbs denied that the deal was subject to contract. I do not agree with his analysis in this respect. Although the magic “subject to contract” formula was not used it is clear that the parties intended the agreement to be embodied in formal legal documentation. The position is similar in this respect to the position in the case of Cobbe v Yeoman’s Row Management (where a claim in restitution did succeed) where the parties could be taken to have known that oral contracts for the sale of land (as they had entered) were unenforceable. Indeed, if in this case there was a binding agreement (rather than an agreement which was not binding) it is not clear to me that there could be a failure of basis claim in restitution.

Mr McGarry relied upon the well-known dicta of Rattee J in Regalian Properties Limited v London Docklands Development Corporation [1995] 1 WLR 212 that, by entering negotiations that were expressly subject to contract, each party:

“[M]ust be taken to know..that pending the conclusion of a binding contract any cost incurred by him in preparation for the intended contract will be incurred at his own risk in the sense that he will have no recompense for those costs if no contract results”.

As Goff & Jones points out, even if Regalian is correct, it does not follow that there will never be a claim in restitution in respect of any benefit conferred on a Defendant at the expense of a Claimant where there is a shared basis at the time (or a that a specific contract will be entered into in valid legal form). Whatever the precise limits of the principle stated in Regalian in this case the benefit conferred by the Claimant arose from the Claimant performing its side of the putative contractual obligations, not mere “preparatory works” to put it in a state to do so. Further, that performance was a performance that was made in circumstances where emails from Mr Mellor made absolutely clear that the payments were not being made gratuitously and at Tokyo’s risk of a contract did not materialise. Further, as I find, the payments were made at the encouragement of Mr Betesh/Ticketline supported by statements, as asserted by Mr Mellor in evidence and which I accept, that he was told at the time that he need not worry about the delay in production of the heads of terms (initially because, it was said, Mr Betesh’s lawyers was away on holiday) because there was an agreed deal.

In this context, Mr McGarry relied on Mr Mellor’s agreement in cross-examination that he had taken a risk in proceeding without an agreement being formally signed off by way of appropriate legal documentation. However, in my judgment that answer has to be considered in context. What Mr Mellor was saying was that he accepted the risk that there might not be a legally binding agreement entered into. Obviously if there had been one, there would be no need for claims in restitution. The risk accepted was the risk of there being no legally binding agreement not an acceptance that in the event there was no legally binding agreement then Tokyo would have paid the relevant sums gratuitously with no recourse at all. Indeed, the contemporaneous emails show very clearly that was not the risk that Mr Mellor accepted.

As regards the total failure of consideration point, this was not pleaded nor the subject of disclosure. It is based on Mr Mellor’s evidence in cross-examination that in fact Tokyo (or a Tokyo company(ies), the position was not pinned down), had been in control of the 2023 festival at Bradford. He did not enlarge upon the legal position in this regard. Nor did he deal with the crucial question of whether, and if so how and when, Tokyo received any of the relevant consideration that it would have received under the agreed “deal” (which I understand is said by Mr McGarry to be intellectual property rights relating to the festival, otherwise to be transferred to Tokyo under Option 1). The fact of the 2023 Festival must have been well-known to Ticketline and, if that was the case, that it was not operated by SSD. In the circumstances I am not prepared to allow this case to be run and, in any event, do not accept that, on the balance of probabilities, Ticketline has established that there was not a total failure of consideration because some of the intellectual property promised to be transferred to Tokyo under Option 1 was in fact transferred. It is unclear to me that there was such a transfer or, if there was, that it was not transferred at a later date under some separate contract/arrangement.

No defences to an unjust enrichment claim were raised. It follows that the unjust enrichment claim succeeds regarding the enrichment that I have identified.