FILM CONTRACT

Southland Times, Issue 22378, 18 July 1934, Page 11

FILM CONTRACT

CLAIM FOR DAMAGES. SUM OF £6OO AWARDED. . (Per United Press Association.) Auckland, July 17. A contract between two motion picture companies was the subject of a claim for £740 damages before Mr Justice Herdman in the Supreme Court. Plaintiff was the Dominion Picture Theatres Company, Limited (Mr West), owner of the Plaza Theatre, and defendant was the British Dominions Films, Limited (Mr H. F. O’Leary, of Wellington). The parties entered into an agreement under which defendant company was to supply plaintiff with all the motion picture films it released in New Zealand between September 22, 1932, and September 30, 1933. On July 26, 1933, defendant ceased to supply any motion pictures to plaintiff. Plaintiff claimed that this was a breach of contract, but defendant claimed that it had the right to cease supplying and was justified in doing so. Mr West said the Plaza Theatre was administered for plaintiff by a company called Amalgamated Theatres, Limited. Defendant company was incorporated in Victoria, and was carrying on business there and in New Zealand, distributing sound motion pictures. It carried on its distribution business in New Zealand through Greater Australasian Films, Limited. Plaintiff undertook with defendant immediately to establish the Plaza Theatre as an all-British theatre and to expend £6O a week in advertising. In September, 1932, the Plaza Theatre was receiving and ex- | hibiting pictures from any source, and was not in any sense tied. Defendant company was conducting an “All British” theatre in Melbourne and another in Sydney, and its manager expressed a desire to establish the Plaza Theatre in Auckland immediately as an “All British” house. A new policy was accordingly started by the Plaza Theatre which agreed to accept no pictures other than those of defendant company. That, counsel submitted, must imply a continuous supply of pictures by defendant company. The agreement provided for the payment of a royalty of 30 per cent, of the gross weekly box receipts up to £4OO a week to defendant company, over £4OO defendant company was to get 60 per cent. Both parties carried out the contract until July, 1933, when there were two months of the contract still to go. Defendant then notified not plaintiff, but its agents, that it would be supplying no more pictures. Very appropriately, it stated that the last picture supplied would be “No Funny Business.” It was clear that there were any number of pictures available to defendant company with which it could have completed its contract. Whatever the motive may have been, the company gave no reason. The Plaza Theatre was naturally placed in a great difficulty. The net profit after paying royalties on a good picture that ran for two weeks was about £l4O a month. The profit on a picture that ran for one week would be between £9O and £lOO a week. The average weekly net profit for two months during which the pictures were not supplied by defendant was £26 17/6. They claimed for loss at the rate of £92 10/- weekly. Defendant company in June, 1933, entered into a contract with the Majestic Theatre to supply it with allBritish pictures after- September 30 said counsel. That was done and the only inference was that good pictures were held up for two months in order to give this competing house a good chance in starting its new policy, Mr West submitted that defendant company had entirely misconstrued its rights under the contract, even if the contract was open to the extraordinary interpretation that defendant had the right to stop it at any moment. Still, that right must be exercised reasonably and bona fide. Mr O’Leary said the defence was that there was, and had been, no breach of contract. Defendant was only bound to supply films that were released during the period and they did supply all that were released. Counsel read the evidence of Ernest Turnbull, managing director of British Dominions Films, Limited, taken on commission in Melbourne, chiefly describing the conditions under which the contract was made. Witness said defendant company had the right to cease supplying at any time. If it ceased to supply films that would determine the contract. Mr O’Leary said the contract meant that while the principal chose to release, the exhibitors had to take, but if he chose not to release, the exhibitors would be relieved from the contract. His Honour said he was satisfied, after having carefully examined the contract, that defendant was under an obligation to supply pictures for programmes, and plaintiff was under an obligation to have his theatre prepared to engage in advertising and pay over portion of his receipts to defendant. He thought that if he awarded plaintiff £6OO that would meet the ends of justice. Judgment would be for £6OO, with costs as per scale, witnesses’ expenses and disbursements to bo settled by the Registrar.