England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		22nd January 2004

MR JUSTICE STANLEY BURNTON:

Introduction: the Parties

1. The Claimants are companies engaged in the businesses of producing and licensing theatrical (i.e. cinema) and television films. It has not been suggested that for present purposes it is necessary to distinguish between them. In 1995, the First Claimant, to which I shall refer as Arlington, acquired various assets of Tyburn Productions Ltd, including its rights to certain black and white negatives and colour transparencies to which I shall refer below. Tyburn Productions Ltd had been the producer of a number of horror films, some starring the celebrated Peter Cushing, made in the 1970's and 1980's. I shall refer to the Second Claimant as "TFPL".
2. The Defendant is the company that owns and operates the film production facilities at the famous Pinewood Studios. One of the facilities it offers is the storage of black and white negatives and colour transparencies, i.e. still photographs, taken during the course of the production of a film for advertising and publicity purposes. The storage facility is free: Pinewood makes its money from processing the stills, i.e. making copies, on the instructions of the party entitled to them. In legal terms, Pinewood is the bailee of the stills.

Background and Chronology

3. A number of the films produced by Tyburn or TFPL were produced at Pinewood. Negatives and transparencies from these films, and others, were stored at Pinewood. From time to time Pinewood would be asked to make copies of the transparencies, or to make photographs from them or the black and white negatives. Negatives and transparencies might also be borrowed by their owner or their licensee for processing. Normally, they would be returned to Pinewood. The bailment of the negatives and transparencies was not the subject of any written contract or special terms.
4. Until the beginning of 2002, Pinewood stored negatives and transparencies of the Claimants relating to the following films: "The Masks of Death"; "Murder Elite"; "Peter Cushing: A One-way Ticket to Hollywood"; "Persecution"; "The Ghoul"; "Legend of the Werewolf"; "The Creeping Flesh"; "Bloomfield"; "Ghost in the Noonday Sun"; and "Tales that Witness Madness".
5. Until late 2001, the Claimants rented space at Pinewood. In 2000, there was a change of ownership of Pinewood. On 22 February 2001, Pinewood sent a letter to Arlington confirming the expiration of its tenancy on 31 March 2001, and requiring possession at that date. The date for vacant possession to be given up to Pinewood was later extended, but by the end of 2001 the Claimants had left Pinewood, apart, as I understand it, from office E61.
6. Since the Claimants would no longer have premises at Pinewood, it was no longer as convenient to have their stills stored and processed there. The new management of Pinewood also proposed that alternative arrangements be made for the Claimants' stills requirements.
7. In about September 2001, Gillian Garrow, an employee of Arlington, was asked by Kevin Francis, who describes himself as an executive of the Claimants, and who runs their affairs, to verify with the Pinewood's stills department that it was holding their stills. She went to Pinewood, and asked Peter Wicks, Pinewood's Head of Stills at Pinewood, to verify the material with her. They were unable to locate all of the material, in particular the transparencies from The Masks of Death and Murder Elite, although the very great majority of the material was located.
8. On 15 February 2002, the Claimants' solicitors sent a letter to Pinewood, enclosing a letter from Arlington to Mr Wicks, and a similar letter to him from TFPL, requesting delivery of all of the transparencies and black and white negatives alleged to be in the possession of Pinewood. The Claimants' letters stated:

"Although you have recently confirmed that your records in connection with these ... titles are now in order, we nevertheless enclose for your convenience a further copy of a caption list for each of the sets marked with an asterisk.

Please advise Gillian Garrow … immediately you have the items … available for collection/transfer."

Most of the sets were marked with an asterisk, and caption lists for them were enclosed.

9. The Claimants' solicitors' letter of 15 February 2002 stated:

"We are forwarding the enclosed letters and attachments to you on our clients' behalf – as opposed to our clients dealing with the matter directly with your stills department – pursuant to your request that all matters be dealt with in writing and (save only for the simple rendition, verification and discharge of invoices) marked for the attention of Ivan Dunleavy.

Please ensure that the enclosed letters and their attachments are passed on to the head of your stills department, or otherwise actioned, without delay – as given the delays to date, the matter now requires to be dealt with on an urgent basis."

10. No reply had been received from Pinewood by 19 March 2002. On that date, the Claimants' solicitors wrote again, threatening proceedings if their clients' material was not delivered up. Again, no reply was received. As a result, these proceedings were begun on the 24 June 2002. The Claim Form and Particulars of Claim were served by letter of that date. The Particulars of Claim sought delivery up of the negatives and transparencies of the 10 films and consequential damages that the Claimant stated they were "unable to quantify to a sufficient degree".
11. Pinewood's solicitors sent a holding letter to the Claimants' solicitors dated 12 July 2002. They wrote again on 16 July 2002, confirming that "our clients have now located the items referred to by your client in his writ (sic) and would wish to return the same to your clients forthwith". They requested a withdrawal of the claim. In their reply of 18 July 2002, the Claimants' solicitors refused to withdraw the claim until the loss and damage "as pleaded in the Particulars of Claim" had been satisfactorily addressed. This was a curious stipulation, given the complete lack of particularisation or quantification of the claim.
12. On the same date, Pinewood's solicitors faxed to the Claimants' solicitors a copy of a schedule produced by them which Pinewood required the Claimants to sign to confirm the receipt of the material listed in it. Pinewood's solicitors wrote again on 19 July 2002, suggesting direct contact between clients, and asking for a schedule for the loss and damage alleged.
13. The Claimants' solicitors responded on 23 July 2002. They stated that, from the enclosures with Pinewood's solicitors' letter of 18 July 2002, it was evident that:

"i. Your client has not kept the Material in a 'fully logged, filed and safeguarded' manner;

ii. A substantial amount of the Material is missing and/or not proposed by your client to be delivered up; and

iii. Your client has not kept the Material in a conventional manner and, in consequence, conceivably not in a proper technical condition."

The letter continued:

"For (inter alia) the reasons stated in paragraphs numbered i to iii above (inclusive), together with the fact that our clients are advised that it will take approximately five, eight hour shifts merely to check the material which your client now proposes to deliver-up (against the list you have provided) and confirm (or otherwise) that the various items are actually those which your client asserts them to be (the cost of which we shall address in the matter of damages), there can be no question of our clients signing, what would in effect be, a blanket receipt and release. It is unprofessional and audacious in the extreme for your client to advance such a proposal."

The letter then made proposals for delivery of the material referred to in the enclosures with Pinewood's fax.

14. The Claimants' solicitors wrote again on 25 July 2002, referring to Pinewood's solicitors' request for quantification of damages claim. They stated:

"… it is not possible for the loss and damage which our clients have suffered (and continue to suffer) to be quantified until (inter alia):

1. Our clients are no longer wrongly deprived of the Material;

2. Such of the Material which your client has lost or damaged, or allowed to be lost or damaged, or simply fails to deliver-up, can be ascertained; and

3. The replacement or renovation costs of the lost or damaged Material (if replacement or renovation can be achieved) can be assessed."

15. Pinewood's Defence was served on 6 August 2002. It essentially put the Claimants to proof of their claim, stating that Pinewood did not hold records of what was deposited with them; it stated that Pinewood was prepared to deliver up such material as was in their possession; and denied the claim for loss and damage, putting the Claimants "to strict proof of the same".
16. By 4 October 2002, the parties had not resolved their differences as to the terms on which the material held by Pinewood would be delivered up. On that date, Master Leslie made orders for delivery up of material that Pinewood accepted to have in its possession and gave directions in the litigation. A further order was made on 22 November 2002, which among other things recorded that although Pinewood had asserted that they had 9423 "images" of the Claimants' material, only 9221 images, being 8929 black and white negatives and 292 colour transparencies, had been delivered up. It can be seen that it was accepted that about 98 per cent of the stills had been returned to the Claimants. The Claimants' case as to its transparencies and negatives stored by Pinewood and not returned was set out in a schedule that, for convenience, is reproduced as Appendix 1 to this judgment (omitting references in it to schedules). It can be seen that there is alleged to be missing material from 5 of the total of 10 films in question. Very few negatives are missing, and very little material from "Persecution".
17. There is no dispute as to the transparencies and negatives delivered up by Pinewood; nor do Pinewood allege that they did not come into possession, as bailees, of the entirety of the negatives and transparencies to which the Claimants' refer. The dispute is as to whether the missing negatives and transparencies were duly returned by Pinewood to the Claimants or to their predecessors or otherwise with their authority at some unknown date or dates before 2002.
18. The Claimants eventually gave particulars of their damages claim in a Schedule of Loss and Damage dated 6 March 2003. A Revised Schedule of Loss and Damage was served on 5 November 2003, purporting to set out their loss and damage at that date. For convenience, the Revised Schedule, as amended during the course of the trial, appears as Appendix 2 to this judgment.

Documents

19. The issues of liability in this case are straightforward, and turn almost if not completely on the onus of proof on a bailee, which Pinewood clearly was, and the documentary or other evidence, or absence of evidence, relating to the earlier return of the missing material that is alleged by Pinewood.
20. The issues on damages are also relatively straightforward. The damages claim is of a kind that could efficiently be remitted to a Master, and one would expect the Claimants to be able to vouch their claim: i.e., to produce the documents that evidence each item of their loss and damage. In the commercial context of this case, documents are almost bound to come into existence relating to expenditure or loss of income or contracts, and they should be produced. Moreover, oral evidence is often either inadmissible or of limited weight or value in establishing that expenses, paid by cheque or bank transfer against invoice, have been incurred. The documentation could conveniently be presented separately in relation to each item of loss claimed. It would also have been helpful for the parties to have pleaded their respective contentions in a Scott schedule.
21. Regrettably, the Claimants did not bear these to my mind obvious principles in mind in preparing their case. On more than one occasion, it was submitted on their behalf that a statement of truth required by CPR Part 22 of their pleading or of their application notice constituted sufficient evidence.
22. A statement of truth is an important formal requirement of the documents referred to in Part 22.1. It does not convert a document such as a pleading or an application notice into evidence.
23. Furthermore it should be obvious that neither the Defendant nor the Court can sensibly investigate a blanket statement of truth of a quantified damages claim.
24. Timely disclosure of documents is important in all claims, and obviously so in a commercial case such as the present. The parties should address the proof and the strength of their respective claims well before trial with a view to minimising the issues and saving costs. The total loss claimed in this case is not a large sum, and every effort should have been made to avoid the disproportionate expenses of a trial.
25. Master Leslie ordered standard disclosure of documents by 30 May 2003. It should have been obvious to the Claimants what documents were required to prove or were otherwise relevant to their damages claim. A proper search should have been made for those documents and they should all have been disclosed by that date. Nonetheless, important documents were produced by the Claimants during the hearing. The lateness of their production may have affected the advice given to, and the decisions taken by, Pinewood in connection with this litigation.
26. During the course of the hearing, I made a number of comments about the failure of the Claimants to produce documents relating to their damages claims. When the close of evidence was approaching, Mr Flynn for the Claimants suggested to Mr Nawbatt for Pinewood that the hearing might be adjourned after evidence was complete so that final submissions could be put into writing. Mr Nawbatt agreed with this suggestion. After the completion of the examination of the witnesses, and the close of Pinewood's case, I acceded to the parties' joint request for that adjournment. At that point, Mr Flynn mentioned that the Claimants might seek to adduce further documents in support of their claim. Mr Flynn, whose candour is to be commended, accepted at the hearing on 1 December 2003 that he had not previously mentioned to Mr Nawbatt that the Claimants might use the adjournment in order to adduce additional documents and thereby to improve their evidence. The fact that the Claimants had in mind to search for and to seek to adduce additional documents to make good the difficulties in their case should have been mentioned to Mr Nawbatt or Pinewood's solicitors when the possibility of adjourning for final submission was discussed. When the possibility of an application to adduce further documents was mentioned by Mr Flynn, I stated that the admission of any documents after the close of evidence would require the leave of the Court, which would have to be sought if and when the documents were produced. I gave directions for the exchange of written closing submissions.
27. Thus there was no application by the Claimants for an adjournment of the trial to enable them to search for and adduce further documents. If there had been, given that the oral evidence had closed, it is unlikely that it would have been acceded to.
28. Comprehensive and very helpful written final submissions were duly exchanged on 24 November 2003.
29. On 25 November, that is after the exchange of those submissions, the Claimants issued an application to adduce further documents in evidence. All but one of the ten classes of documents to which this application referred had not previously been disclosed to Pinewood. The documents included a copy of a contemporaneous note of time spent by Ms Garrow in carrying out the verification exercise which was the subject of paragraph 1 of the Revised Schedule of Loss and Damage, shipping notes/airway bills relating to transparencies alleged to have been transported from the U.S. to England, and dated between 24 January 2003 and 18 July 2003 and an invoice for insurance costs dated 21 January 2003. The application stated that "if requested by the Defendant, Ms Gillian Garrow and Mr Kevin Francis will attend the hearing on 1^st December 2003 for cross-examination in relation to the respective relevant documents".
30. At the conclusion of argument on 1 December, I stated that I would reserve my decision on the admission of the documents that were the subject of the Claimants' application, and give my decision and my reasons when I gave judgment.
31. A late application of this kind places the other party to litigation and the court in a difficult position. The Defendant was faced with the question whether to require Mr Francis and Miss Garrow to attend for further cross-examination. Mr Nawbatt stated that the decision was made by Pinewood not to do so because of the disproportionate costs involved. If cross-examination is required, the Court must find time for it, thereby in all probability displacing the hearing of other cases.
32. If the Court refuses to accept the new documents as evidence, it faces the possibility than an incorrect decision may be made on the facts of the case. On the other hand, considerations of fairness are not restricted to the completeness of evidence. Evidence may be excluded by reason of the misconduct of a party or its failure to comply with procedural rules. The fact that a special costs order may be made as a result of the late admission of documentary evidence is not a conclusive consideration.
33. The timely search for and disclosure of relevant documents by parties to proceedings in which disclosure is appropriate is of very great importance. However, the duty of disclosure is a continuous one, and applies to the parties at least until judgment has been given. It is particularly important that parties make full disclosure of documents that may be inimical to their case, whenever they may be found.
34. The documents which were the subject of the Claimants' application were not of this kind. They are documents put forward by it to prove its damages claim. There was nothing to suggest that there had been a search for documents that were objectively relevant to the issues, and the inference I draw is that their search was only for documents supportive of their case. Some of the documents called out for further cross-examination, and in some cases could not be related to the Claimants' damages claim without further oral evidence. The statement of truth of the Claimants' solicitor to the application notice, which Mr Flynn put forward as evidence, is not evidence and is no substitute for evidence.
35. Furthermore, the Claimant did not seek to put in any witness statement seeking to explain why those of the documents which were the subject of their application that had been in their possession for some time before the beginning of the trial had not been previously disclosed. The inference must be that no proper search was made before disclosure was originally made.
36. In these circumstances it would be wrong to approach the Claimants' application with any leniency. So to treat their application, in the face of the Defendant's opposition, would send out an unfortunate message to other litigants, that they can delay making proper disclosure until they see how the Judge reacts to their case, with their only risk being one of costs. Their conduct, including the circumstances in which they obtained Pinewood's agreement to the adjournment, does not justify the exercise of the discretion of the Court in their favour. The Claimants require the discretion of the Court to be exercised in their favour; I am not minded to do so in relation to the new documents that were in existence before the trial began.
37. Different considerations apply where the documents sought to be adduced come into existence after the completion of evidence, or where the party seeking to adduce the additional documents can show that the failure to produce them earlier was not due to any default on its part. One of the new documents is an invoice from Lofty's Labs dated 19 November 2003, and I shall reluctantly admit that in evidence, notwithstanding that it was not disclosed until 25 November, after the exchange of written final submissions, and despite the fact that I have no doubt that it was procured by the Claimants, there being no other explanation why an invoice for work ordered by purchase orders dated 8 August 2003 should only be submitted over 3 months later, but just after the hearing in which I had referred to the deficiencies in the purchase order that had been disclosed as evidence of the quantum of the Claimants' loss.
38. As I stated on 1 December, the admission of a late document may not only deprive a party of his own costs, but may lead to an order that he pay the other party's costs of the issue to which it relates. Questions of costs will be addressed after judgment.

Witnesses

39. Evidence was given by Mr Francis, Ms Garrow and Ms Collings, who were called on behalf of the Claimants, and by Ivan Dunleavy and Mr Wicks for Pinewood.
40. I am able to accept Mr Francis' evidence only with a considerable qualification. In some cases, if his evidence were correct, the probability of documents other than those before the court being available and yet not produced is so great that I am unable to accept his unsupported testimony. He displayed signs of stress during his testimony, at times drinking copious quantities of water, and I take that into account. He displayed a readiness to give evidence as to the effect of documents that was not borne out: I refer to his evidence that the standard form of licence of the claimants required the licensee to destroy Delivery Material at the expiration of the licence; when produced, it required, as had been suggested by the defendant, that the material be returned to the claimant or to be destroyed, and in the latter case a certificate of destruction had to be supplied. He also gave evidence about matters about which he had no direct knowledge, as disclosed by cross-examination. An example is the conclusion of the German TV licence; another is the matter of the Mirror licence. I do not accept his evidence where it is insufficiently supported by the kind of documents that would exist if his evidence were correct.
41. Ms Garrow found giving evidence somewhat harrowing. She was very nervous and excitable. I have no doubt that she was seeking to give me a truthful account of her evidence, but she found it difficult to be precise, and when giving evidence she had no written record of matters which should have been recorded in writing, and if they had been she would have been considerably assisted. Her evidence was less reliable than that of Mr Wicks.
42. Ms Collings' evidence was not the subject of any significant challenge. It was most helpful.
43. Mr Wicks was a transparently honest witness. He readily conceded matters put to him when he thought them correct. I accept his evidence in its entirety, including that which conflicts with the evidence of Ms Garrow.
44. Mr Dunleavy only took up his position with the defendant in February 2000. He has no personal knowledge of anything that happened before that date. He made a good impression on me: though called to deal with matters of which he had no knowledge, he did not pretend to be able to give evidence that he was not capable of giving. However, the factual evidence he could give was minimal.
45. Witness statements of expert witnesses were served and filed. Their evidence was uncontentious, and it was not necessary for them to be called.

Liability

46. As mentioned above, Pinewood accepted it had had in storage the material referred to in the second column in Appendix 1. It contended that the missing stills must have been returned to the Claimants or their predecessors or otherwise on their instructions. Leaving aside the transparencies which were the subject of paragraph 5 of the Revised Schedule of Loss and Damage, the only matters on which they could rely in support of this allegation were (a) the assertion that it had never before been claimed that Pinewood, in its long history going back over 50 years, had lost such material; (b) the fact that the missing material constituted such a small percentage of the total material which had been lodged with them; (c) the fact that other parties whose material is stored by Pinewood are very satisfied with their services; (d) the enormous total number of images successfully stored by it; (e) the manner of storage and the conditions of storage; and (f) the fact that the 6 missing negatives relate to 2 films and are not in sequential order.
47. Pinewood had kept records of the delivery up of stills to their owners; it was unable to produce any documentary record of the return of any of the missing material to the Claimants or their predecessors or anyone authorised by them.
48. In my judgment, the matters relied upon by Pinewood do not satisfy the burden of proof placed on them as bailees. Nor do they show why there was such delay in returning the Claimants' material, or explain the disparity between Pinewood's record of what it had and the material returned. It follows that Pinewood is liable to the Claimants in respect of the missing material, at least apart from that referred to in paragraphs 4 and 5 of the Revised Schedule, to which I now turn.
49. Both the original Schedule of Loss and Damage and the Revised Schedule refer to the cost of making dupe (i.e. duplicate) negatives from dupe transparencies in the USA. The Claimants produced a purchase order dated 8 August 2003 for the making of fine grain dupe colour transparencies, addressed to "Lofty's Lab Ltd". It, however, stated that original transparencies were to be supplied, the numbers of which matched those said to have been lost by Pinewood. Pinewood contend that the original transparencies must be those said to have been lost by them. Mr Francis's explanation was that the stills cameraman would have taken two shots of each scene, producing two sets of originals. The two original transparencies of each scene would be given the same number, although they would not be identical, because of movements of the actors or of the photographer between shots, but for practical purposes they would be the same. A master set of transparencies for each of the films was held by the licensees of the films in the USA, and a similar set was held at Pinewood.
50. I should like to have seen the documents relating to the request for the material obtained from the USA. If they showed that there had been a request for all of the transparencies held by the American licensee, and those delivered by them matched those missing from Pinewood, it would be clear that they were one and the same. If, on the other hand, the US licensee had been asked for transparencies relating to those films where not all were missing (such as "The Ghoul") by reference to specific transparency numbers, it would be likely that those had been supplied from a complete set. Regrettably, those documents, which would have been in the possession of one of the Claimant's USA parent companies, were not made available. No witness statements from the persons concerned in the USA were put in evidence. Pinewood's case is of course fortified by the unexplained description of the transparencies as dupes in the Schedule of Loss and Damage.
51. With considerable hesitation, I accept Mr Francis's explanation. If the transparencies had been duly removed from storage at Pinewood, I would expect there to be some documentation of their removal; there is none.
52. It follows that the Claimants are entitled to damages for the failure of Pinewood to return to them the material listed in the third column of Appendix 1.

Damages

53. I have not considered whether any item in the Revised Schedule is recoverable as costs in the claim. That was not argued and is not before me. I am concerned only whether the items listed in the Revised Schedule are recoverable as damages.
54. Mr Nawbatt did not suggest that any item of damages claimed by the Claimants is not recoverable as damages by reason of the fact that it was incurred pursuant to the Master's order.
55. In Admiral Management Ltd v Para-Protect Europe Ltd [2002] EWHC 233, [2002] 1 WLR 2722, I distinguished between claims for damages to compensate a claimant for expenditure caused by a tort, and claims for damages to compensate him for loss caused by the loss of revenue he would otherwise have received: see paragraph 47 of my judgment. That distinction is relevant to the claims for damages in the present case, where the claim is pleaded in tort, although the same distinction is relevant in claims for breach of contract.

Paragraph 1 of the Schedule:the cost of the verification exercise specified in paragraphs 1, 2, 3, 4 and 5 of the Order of Master Leslie dated 4^th October 2002 ("the Order"): £2.807.61

56. The exercise in question consisted of counting the images delivered up by Pinewood and verifying that that material was what Pinewood stated it to be, and serving notice on Pinewood specifying what material was missing. The Claimants also complain that the material that was delivered up was not in an acceptable order.
57. The principal item of loss claimed is the cost of employing Ms Garrow during the period this work was carried out. There is an issue as to the time she spent on this exercise, but the objections to recovery go beyond that.
58. In the first place, the Claimants did not plead any contractual or other basis for the contention that Pinewood were bound to return their material in any particular form or order; indeed, they did not plead any such obligation. There is therefore no basis for the recovery of damages because of any alleged disorder in the material on its return.
59. Secondly, on this basis Ms Garrow spent her time not in consequence of the non-delivery of material of the Claimants, but in order to ascertain whether there had been any non-delivery.
60. Thirdly, the claim in respect of Ms Garrow was pleaded as an expenditure claim, by reference to her salary (though there was no evidence as to its amount) and National Insurance and like costs (similarly not evidenced). The claim was pleaded as £2,177.61, arrived at on the basis of an hourly cost of £23.29 and a total of 93½ hours. However, there was no evidence that she was paid any overtime or that anyone had to be employed to replace her while she carried on this work. In other words, there is no evidence that either of the Claimants incurred any expenditure that it would not have incurred in any event.
61. When the difficulty referred to in the previous paragraph was pointed out to Mr Flynn, he sought to argue that Ms Garrow's salary could be recovered as a revenue loss, on the basis that she had been diverted from her normal revenue-producing work. There are two insuperable objections to a claim so based. First, the claim was not pleaded as a claim for loss of revenue. Secondly, no evidence was put before the Court on the basis of which it could conclude that there had been any loss of revenue by either of the Claimants. I do not suggest that it was necessary for the Claimants to identify with any precision their loss of revenue. If there is evidence that an employee would, but for a tort or breach of contract, have been engaged in revenue-producing work which was not carried out, the Court should readily infer that the revenue lost would at least have equalled her cost. But no relevant evidence of any kind was put before me, other than Ms Garrow's job description. That is not enough.
62. I also had difficulty with the quantum of the claim for Ms Garrow's time, and the absence of any document support for it (other than the copy document sought to be put in late) but in view of my above conclusions I need not reach any decision on that.
63. The Claimants also instructed Ms Collings to count and to verify the material delivered up by Pinewood. This was expenditure incurred to investigate whether there had been a failure to deliver up the material; her counting and verification would have been appropriate even if the material had been delivered up at an earlier date. Her fee is not recoverable as damages.

Paragraph 2 of the Schedule: the cost of undertaking the inspection specified in paragraph 6(b) of the Order: £1,440.00.

64. This item is Ms Collings' invoice for her work in inspecting the technical condition of the stills returned by Pinewood. Again, this work was carried out to ascertain whether there had been a breach by Pinewood of its duties as bailee, not in consequence of a breach. This cost is not recoverable as damages.

Paragraph 3(c) of the Schedule: estimated cost of substituting the lost negatives, re-logging, re-numbering and re-printing availability list, etc.: £600.00.

65. This item first appeared in the Revised Schedule. It is unsupported by any documentary evidence, although there has been plenty of time for the work envisaged by this item to have been carried out or at least an estimate obtained. It is not referred to in the Claimants' witness statements. Mr Francis's oral evidence was vague and unreliable. The Claimants rely on the expert evidence of Mr Howden, but he merely accepted the information given to him by the Claimants. I am not satisfied that the Claimants will incur any expenditure under this head. This item has not been proved.

Paragraphs 4(a) and 5 of the Schedule: the costs of making replacement transparencies from those in the USA, and of transport from and to the USA of the source material in question: £1,465.74 and £1,875.00.

66. In his closing submissions, Mr Nawbatt made the following points to the effect that the costs claimed under paragraph 4(a) of the Schedule had not been proved:

(a) This matter was not addressed in any of the witness statements served by the Claimants.

(b) No documentary evidence had been disclosed in support of this head prior to trial.

(c) On the first day of the trial a purchase order, dated 8 August 2003, was disclosed. However, this purchase order simply referred to the "agreed price" with no evidence adduced as to what the agreed price was.

(d) No evidence of the necessity of this exercise had been adduced. At least 12 dupe transparencies had been delivered up in respect of each of the relevant films. Further, the Claimants had known that these images were "missing" for 2 years (Gillian Garrow's oral evidence was that she informed Mr Francis which images were missing between September 2001 and January 2002) yet no evidence has been adduced that they were required in this period.

67. Taking his last point first, there may be cases in which the Court can conclude that a claimant has incurred costs unreasonably and should not be indemnified. A consideration will be whether he has incurred costs that he would not have done if he had had no claim for reimbursement, but that can be no more than a factor to be taken into account. In general, a claimant who has been deprived of something by the tort or breach of contract of another is entitled to replace it and to recover the cost of doing so. The evidence to which Mr Nawbatt referred does not satisfy me that the Claimants incurred this cost so unreasonably that they ought not to be able to recover it.
68. The other points made by Mr Nawbatt were cogent, and had the evidence remained as it was at the end of the trial I should not have held that the Claimants suffered loss in the amount claimed. However, their late application included a Lofty's Lab invoice that covered this item, in the amount claimed under paragraph 4(a) of the Revised Schedule, calculated as pleaded. It seems to me therefore that this item has been proved.
69. Paragraph 5 of the Revised Schedule consists of 2 items, shipping/courier £470 and insurance £1405 (see schedule E to that Schedule). It was conditional, introduced by the words "If such can be achieved". It would follow that the transport of the transparencies had not taken place at the date of that Schedule, i.e. by 5 November 2003. Consistently with this, no documentary evidence of the cost having been incurred was disclosed by the Claimants before trial. However, during the course of his evidence, Mr Francis produced for the first time 2 invoices, dated 23 May and 19 June 2003, from Arrowfield Services Ltd, a parent company, to Arlington, charging "Miscellaneous costs", "Costs relating to yourselves as charged to and paid by us" in the sums of £2,911.82 and £1,732.50 respectively. Mr Francis said that he had been told that one of these invoices covered this head of loss. He could not say which. In evidence, Mr Francis said that the transparencies were received by the Claimants in late July or August 2003, and consistently with this in his closing submissions for the Claimants Mr Flynn stated that "The Claimants did not receive the material from the USA … until shortly before the Consent Order dated 29 July 2003". It is impossible to relate these invoices to the claim on the basis of any document in evidence, and taking into account the ease with which proper documentary evidence could have been adduced, I do not accept that these invoices relate to the claim.
70. The documents produced late by the Claimants included 5 documents relating to the transport of unspecified goods apparently from Arrowfield Services Inc. (a parent company of Arlington) in the USA to Arlington in this country. The cost of each shipment was $72; the documents were dated between January and July 2003. There is no explanation for the separate shipments. Had these documents been admitted in evidence, they would not have taken the matter much further. There is still no explanation for the wording of the Revised Schedule, and the dates of at least 3 (if not all) of these invoices are inconsistent with the evidence of the receipt of the material at the end of July or the beginning of August.
71. Clearly a cost would have been incurred by the Claimants in transporting the transparencies to this country. They have not proved that cost. I will accept that about $70 would be the cost of a couriered transport (although I see no good reason for a courier: there was no suggestion of urgency). I allow $145 under this head, i.e. £87 at the exchange rate in the Revised Schedule.
72. There was no documentary evidence as to the insurance cost. Insurance costs cannot be incurred without documentation coming into existence. There was no sensible explanation for it absence. It is quite possible that the Claimants insure films and material on the basis of a general umbrella policy covering all shipments made by them (as in fact suggested by the invoice addressed to Arrowfield Services Inc sought to be put in evidence late, which is for the premium under an annual policy), and it is not clear that any additional premium was payable for the shipment of the transparencies in question. I am not prepared to guess that a separate insurance cost was incurred or if so what it was. I allow nothing under this head.

Paragraph 6 of the Revised Schedule: hand polishing negatives delivered up by the Defendant: 187 at £1.85p each: £345.95.

73. I accept the evidence that some negatives were delivered up with glue on them from sellotape or the like, and that the use of sellotape was not consistent with reasonable skill and care. It was for Pinewood to show that this damage occurred without fault on its part. It did not plead the exercise of reasonable care. The Lofty's Labs invoice of 19 November 2003 evidences this expenditure, and I allow it in the sum claimed.

Paragraph 7 of the Revised Schedule: hand polishing the original colour transparencies delivered up by the Pinewood in a damaged condition: 230 at £1.85p each: £425.20

74. The Lofty's Labs invoice of 19 November 2003 evidences the sum of £394 net of VAT incurred on this item, for 213 transparencies. For the reasons set out in the previous paragraph, this sum is allowed.

Paragraph 8 of the Revised Schedule: remounting original colour transparencies delivered up by the Defendant with damaged mounts or with mounts missing: 250 at £1.01p each: £252.50

75. For the same reasons, this item is allowed. I accept the evidence of Ms Collings as to the damage; and there is no plea of reasonable care.

Paragraph 9 of the Revised Schedule: Losses on licence(s) cancelled: £750.00

76. The licence alleged was to the Daily Mirror. It was alleged that the newspaper had sought a licence to reproduce a classic still from "The Masks of Death"; the Claimants say that they were unable to supply the transparency in question, and therefore lost the fee, which would have been £750.
77. The Claimants' evidence is deficient. Mr Francis did not speak to anyone at the newspaper; he merely received a message about the licence. There is no evidence that the offer from the Mirror was firm, if made at all, and no evidence as to whether they might have been satisfied by, or were offered, the supply of a dupe transparency or by the identical or similar image from "Peter Cushing – A One-Way Ticket to Hollywood". The licence was said to have been sought in about November 2001; yet its loss was not mentioned until March 2003. The item is supported by no documentary evidence at all. The Claimants have not proved this loss.

Paragraph 10 of the Schedule: losses on licences (interest only): ($66,404.35 @ £1=$1.6758 exchange rate at 4^th November 2003): £39,627.80

78. As is obvious, this is the major part of the claim. The Claimants' case is that they entered into separate licence agreements with Société TF1, Radiotelevisione Italiana and RTL Fernsehen respectively. According to Mr Francis, Heads of Agreements were entered into between Arlington and the proposed licensees; and written Heads of Agreement were initialled. Mr Francis said that the licence agreements had to be cancelled because of Arlington's inability to provide material required by the Heads of Agreement. The licences were therefore cancelled, with the agreement of each of the licensees. All three of the licensees have expressed willingness to take up new licences when the material is available (as, as a result of the reproduction of the US material it will now be). Accordingly the Claimants' claim interest on the payments deferred by reason of the cancellation, and effective postponement, of the licences.
79. The licence Heads of Agreements are dated respectively 12 December, 19 December and 31 January 2002. According to Mr Francis, the licences were cancelled soon after the Heads of Agreements were initialled. Yet the loss of the licence fees was not referred to in the original Particulars of Claim. The need for the material in question for the purposes of the licences was not referred to in correspondence. The Heads of Agreement said to have been initialled by the licensees have not been produced. It was said that they had been destroyed, by one of the American parent companies. It is curious in the extreme that they should have been destroyed if their loss constituted a claim against Pinewood. Neither the making of the licence agreements nor their cancellation is the subject of any correspondence or other documentation. All that has been produced is a print of the computer file for each of the Heads of Agreement. I find it difficult to accept that no correspondence would have come into existence. The Claimants suggested that the absence of any corroborative evidence from the licensees was to be explained by their reluctance to call witnesses from abroad, having regard to the modest sums in question and the need for costs to be proportionate. However, that does not explain the entire absence of any witness statement from anyone from the alleged licensees: a witness statement could have been put in evidence, as could a letter from the person who negotiated for the grant of each of the licences. Were it relevant, it would also be significant that, despite express reference to the lack of documentation of the kinds I have referred to during the trial, the Claimants did not seek to improve the position in this regard when they made their application for further documents to be accepted in evidence. Mr Francis accepted that he had not negotiated with the German company in respect of the heads of agreement dated 31^st January 2002. There was no attempt to negotiate any reduction in any of the licence fees said to be payable under any of the Heads of Agreement on account of the absence of some of the material called for, particularly since the licences related to television transmissions for which stills might well not be essential. The licence agreements would have been entered into after the Claimants knew of the difficulties in recovering their material from Pinewood: the conclusion of agreements in those circumstances required explanation. These defects in the Claimants' evidence must be viewed against the specific questions and request for documentation made by Pinewood's solicitors in their letter of 2 July 2003. It is again curious that this loss was not referred to until the Schedule of Loss was served on 6 March 2003.
80. In these circumstances, the Claimant has not proved that these licences were entered into. I reject the evidence of Mr Francis in relation to the Italian and the French licence. He had no real evidence to give in respect of the German licence.

Conclusion

81. The Claimants are entitled to damages in the sum of £2545.19. There will be judgment for them for this sum. I shall hear the parties' submissions on questions of interest and costs.
APPENDIX 1

Film	No. of images lodged with Pinewood	No. of missing images
"Masks of Death" Black and white original negatives Original colour transparencies.	1,411 50	50
"Murder Elite" Black and white original negatives Original colour transparencies	2,238 50	50
"Persecution" Black and white original negatives Original colour transparencies	1,772 82	5 1
"The Ghoul" Black and white original negatives Original colour transparencies	1,812 80	27
"Legend of the Werewolf" Black and white original negatives Original colour transparencies	1,762 88	1 25
Total Black and white original negatives Original colour transparencies	8,995 350	6 153

APPENDIX 2:

CLAIMANTS' REVISED SCHEDULE OF LOSS AND DAMAGE

AS AT 5 NOVEMBER 2003

(References to "the Order" are references to the Order made by Master Leslie on 4^th October 2002.)

Cost of undertaking the verification exercise specified in paragraphs

1, 2, 3, 4 and 5 of the Order: £2.807.61

Cost of undertaking the inspection specified in paragraph 6(b) of the Order £1,440.00

(a) Deleted.

OR

(b) Deleted.

(c) Estimated cost of substituting the lost negatives, re-logging, re-numbering and re-printing availability list, etc. £600.00

(a) The cost of making fine grain dupe negatives from dupe colour

transparencies situate in the USA, plus a check print of each, to replace the original colour transparencies not delivered up by the Defendant. 153 at £9.58p each: £1,465.74

OR

(b) Deleted.

If 3(a) and 4(a) above can be achieved, the cost of conveying to the U.K. and

returning to the USA the source material referred to in paragraphs 3(a) and 4(a) above: £1,875.00

Hand polishing the original black and white negatives delivered up by the Defendant in a damaged condition.

187 at £1.85p each: £345.95

Hand polishing the original colour transparencies delivered up by the

Defendant in a damaged condition.

230 at £1.85p each: £425.20

Remounting original colour transparencies delivered up by the Defendant with

damaged mounts or with mounts missing. 250 at £1.01p each: £252.50

Losses on licence(s) required to be cancelled: £750.00

Losses on licences as a result of postponement (interest only): ($66,404.35US @ £1:$1.6758. Exchange rate at 4^th November 2003.)

£39,627.80

Total loss and damage: £49,580.52p