Lowry Trading Ltd v Musicalize Ltd & Ors [2024] EWHC 142 (Comm) (29 January 2024)

Facts · 事实

HTML VERSION OF APPROVED JUDGMENT ____________________ Crown Copyright © This judgment was handed down remotely at 10.00am on 29 January 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives. ............................. HIS HONOUR JUDGE PEARCE SITTING AS A JUDGE OF THE HIGH COURT His Honour Judge Pearce: INTRODUCTION By this application, the Claimants seek summary judgment as follows: a. The First Claimant, for the sum of �500,000 plus interest as against the First to Third and Fifth Defendants in respect of the First Claimant's claim in deceit as set out in paragraphs 72 to 75 of the Particulars of Claim and paragraph (a) of the Prayer, insofar as it relates to the Third Lowry Payment, as defined in paragraph 33 of the Particulars of Claim. b. The Second Claimant for the sum of �5,151,259, alternatively �2,864,064, as against the Second to Fifth Defendants in respect of the Second Claimant's claim in deceit as pleaded in the Particulars of Claim, insofar as it relates to sums advanced from October 2019, alternatively 6 July 2021. They rely on statements from Mr Robert Nugent, director of the First Claimant, dated 24 August 2023, and Mr Stephen McConnell, director of the Second Claimant, dated 25 August 2023. The Defendants each oppose the application. They seek to rely on statements from the Second and Third Defendants, each dated 10 November 2023. The application was heard before me on 20 November 2023, following which I reserved judgment. At the beginning of the hearing on that day I granted permission to the Defendants to rely on the evidence contained in statements of the Second and Third Defendants, notwithstanding their non-compliance with orders for the service of evidence made by HHJ Pelling KC on 10 August 2023 and 30 October 2023. I gave reasons for that decision orally at the time. BACKGROUND The Claimants are companies that operate investment business. The Second and Third Defendants purport to be music promoters. (Whether they are genuinely so is a matter of hot dispute in this case.) They are the sole directors of the First Defendant, purportedly a concert and events promotions company, and have been directors of a number of other companies said to operate in the same sphere, including the Fourth and Fifth Defendants and a company now dissolved called Musicalize Entertainment Limited. Following the style of the Claimants' skeleton argument, I shall refer to the various Defendants as follows: a. The First Defendant, Musicalize Limited - Musicalize b. The Second Defendant, Benjamin Delano Anderson � Mr Anderson c. The Third Defendant, Sophie Kate Anderson � Mrs Anderson d. The Fourth Defendant, Musicalize Touring Limited - MTL e. The Fifth Defendant, Musicalize Touring Events Limited - MTEL f. Musicalize Entertainment Limited � MEL Where reference is made in this judgment to "the Defendants," this includes MEL as well as all five named Defendants. It is the Claimants' case that Mr and Mrs Anderson have, through the vehicle of various limited companies, falsely portrayed themselves as concert promoters to potential investors, including the Claimants. The Claimants say that all of the monies that they have advanced to the Defendants by way of loan (�1,591,200 in the case of the First Claimant and �6,699,659 in the case of the Second Defendant) together with additional contractual liabilities in the case of the First Claimant and interest in respect of both Claimants is recoverable on various bases including deceit; unlawful means conspiracy; a contractual liability to repay the loans; inducement of breach of contract; a Quistclose type trust of the monies; and/or pursuant to guarantees of the loans. For the purpose of this application, the Claimants limit themselves to the monies that they say can be shown to have been paid in respect of claims where the Defendants are unable to show any real prospect of successfully defending the claim: in the First Claimant's case, that is the sum of �500,000 said to have been paid as a result of what are called the "First 2021 Lowry Representations". In the Second Claimant's case, this is the sum of �5,151,259, said to have been paid as a result of what are called the "Snoop Dogg Projection Representations" and the "Snoop Dogg Sales Representations". In the case of each Claimant, the difference between the gross amount of the claim referred to in the previous paragraph and the amount in which summary judgment is sought, is that the Claimant seeks summary judgment only on the payments made after the representations referred to in this paragraph. Of course, a payment made before any particular representation was made could not have been induced by that representation. On the other hand, it is each Claimants' case that all payments made after the representations referred to in this paragraph were induced by those representations, even if the payments related to a different putative event than that to which the representation related. THE NATURE OF THE DEFENDANTS' BUSINESS The Defence makes several important points about the Defendants' business generally and the particular issues in play at the time of their dealings with the Claimants. As to their business model generally, paragraph 18 of the Defence pleads: "(8) In line with industry practice, Musicalize events are organised as follows: (a) The Andersons identify an artist that is of interest (based on their fanbase, reputation, whether they have been in the relevant jurisdiction recently, whether they released new music recently, have an anniversary for a previous project coming up etc). Alternatively, half of the time, artist agents or managers will approach the Andersons to inform them that they are in the market for a tour/live show and ask if they would like to discuss this further or make an offer. (b) The Andersons will do some background checks on previous shows, venues, and sales. If possible, they will look at the online following of the artist and will request details of their production and hospitality riders. Then they will put together a predicted profit and loss sheet based on costing up the information on their rider (if that is available) and adding a reasonable estimate of other costs, such as staffing, security, any production elements not quoted by the production team and marketing. The profit and loss sheet will indicate the amounts that could be offered to the artist for Musicalize to generate profit. (c) If a project needs external funding, the Andersons will approach their contacts/investors and, after signing non-disclosure agreements, share the information about the events and schedule a meeting/conversation. If an investor were interested in working together, then a loan/investor agreement would be put together confirming the terms. (d) The Andersons would request deposits from investors before making any formal offers to artists to save jeopardising the relationships with the artists and agents if an investor pulled out. (e) If the artist is happy with the offer, they will negotiate a contract, with redlined versions going back and forth until agreement is reached. Payment terms would be agreed, usually with 50% payable to the artist on a signing. After signing the agreement with the artist, the Andersons would confirm the venue and complete the venue paperwork. (f) The ticket prices are calculated by working alongside ticket companies such as Ticketmaster to look at previous price data and also using dynamic pricing based on the venue layouts. (g) Artwork will then be created to start the marketing rollout plan, including adding support acts to be announced. The artist will agree on a social media/online rollout plan in line with our marketing so that the maximum impact can be made on announcement. On the announcement day, the artist, venue, corresponding ticket companies, and Musicalize will announce at a scheduled time across all platforms and mailing lists. (h) While a show/tour is on sale, the logistics are being planned in the background, including flights, hotels, ground transport, running order, soundcheck times, and schedules. The production manager will liaise with all parties to confirm all production needs. On show day, the Musicalize team will look after the artists and ensure a smooth running of the event alongside the production and venue teams. (i) If/where the previously discussed artist is not available, or terms cannot be agreed, or they decide not to do a tour, all of which commonly happen in the industry, the Andersons would review what other opportunities have been presented to them by the relevant agent (who would usually offer alternatives) and/or look to identify similar artists/returns and use the investment monies accordingly. This is an accepted and established business practice with the investors in the industry. (9) The above is the basis on which the Lowry and SAS contracts were negotiated and agreed and were going to be performed. Both Lowry and SAS had been explained the process by the Andersons and had, expressly or impliedly, agreed with it." The Defendants' case, that this reflected their usual practice, is qualified in the case of their dealings with both Claimants by a combination of restrictions consequent upon COVID-19 and family events, including the premature birth by Mrs Anderson of twins in April 2019 who tragically died and complications in a later pregnancy, which caused specific difficulties in progressing the organising of events and led to considerable delays in projects coming to fruition. The Claimants do not accept that this is a genuine business at all (and therefore they do not accept this description of the business model), but, for the purpose of this application, they do not seek to persuade me that the Defendants have no real prospect of success in showing that there was a genuine underlying business; that simply seek to persuade me that the specific representations relied on were fraudulent. I accept for the purpose of the Claimants' applications that the Defendants have a real prospect of success in showing that the underlying business is genuine and that their usual practice was to follow the model described in paragraph 18 of the Defence. THE DEALINGS BETWEEN THE FIRST CLAIMANT AND THE DEFENDANTS IN SUMMARY It is common ground that, in late 2018 or mid 2019 (the date being in dispute between the parties but not relevant to the issues on this application), Mr and Mrs Anderson had contact with representatives of the First Claimant. This contact led to more detailed discussions about the First Claimant investing in a proposed concert tour by a well known American rapper, Andre Romell Young, better known as Dr Dre. As a result of the First Claimant's interest in this proposal, Mr Anderson sent to the First Claimant profit and loss forecasts for proposed concerts involving Dr Dre in January and February 2020 at the O2 Arena in London, the Manchester Arena, the Birmingham Arena and the SSE Hydro Glasgow. On 30 October 2019, the First Claimant and MEL entered into a facility agreement for the provision of a loan for the purpose of funding Dr Dre concerts and on 31 October 2019, the First Claimant paid over �766,200 by way of loan pursuant to that agreement. The First Claimant contends in the Particulars of Claim that representations made by the Defendants prior to it entering into this agreement and advancing this loan were false and that it was induced into entering the agreement and making the advance by such misrepresentations. It does not pursue that allegation in the instant application. In early 2020, Mr and Mrs Anderson stated that the Dr Dre concerts would have to be rescheduled because of the spread of COVID-19. There was some discussion of another American musician, Marshall Bruce Mathers (better known as Eminem), appearing as a special guest at the re-arranged events. On 6 February 2020, the First Claimant advanced a further

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