Case Law
Columbia Tristar Home Video
(International) Inc. v Polygram Film International BV
[2000] EWCA Civ 32
Information and Communications Technology: Case Note - Columbia Tristar Home Video (International) Inc. v Polygram Film International BV
9 Aug 2001
This case note first appeared on the Old Colony House website
A
provision frequently to be found in licences requires the licensee
or occasionally some other party to "maintain complete books and
records" in order to calculate royalties or other payments. It is
often coupled with a duty to permit inspection or audit by the other
party or its representatives. The extent of this obligation was
considered by Walker J on the 13 March 1998 and his lordship
concluded that the duty was limited to the preservation of records
in the possession of the party concerned. In his judgment, it did
not extend to obtaining documents from any other party or to
providing access to such documents. The obligation could be
performed even if the records in the accounting party's possession
were incomplete.
Obligation to maintain complete Books and Records
The Court of Appeal disagreed. The ambit of the obligation was to be
ascertained, first, by looking at its immediate context and,
secondly, at the purpose of keeping such books and records. The
context of the obligation was the computation of certain costs,
which would be evidenced by invoices, receipts and other vouchers.
Its purpose was to protect the party that had to contribute towards
those costs. Access to those documents was essential to the
verification of the accounting party's costs. The meaning of the
obligation to maintain full and complete records required the
accounting party to maintain or cause to be maintained by itself or
through others such books and records as an auditor might require
for such verification. Nothing in the circumstances in which the
agreement was made pointed to the narrower construction favoured by
the trial judge.
