Australian TV producer must pay Greenstone TV founders $555,000, Court of Appeal rules

High Court in Auckland. Photo: John Sefton

The Court of Appeal has backed the High Court's ruling that the Australian producer which bought Greenstone TV in 2013 must pay the television production company's founders about $555,000.

Greenstone TV, which has produced shows such as Border Patrol, Neighbours at War and Motorway Patrol, was bought by Cordell Jigsaw Zapruder Productions through GTV Holdings Ltd from interests associated with its founder, John Harris, for a total of $6.05 million.

Of that, $4.8 million was paid when the sale was completed in November 2013, and the remaining $1.25 million was payable within six months, with a potential adjustment of up to $555,000 dependent upon Greenstone licensing Highway Cops 2 to the Australian Seven Network.

Greenstone, by then operated by CJZ, received A$360,000 for the 20 episodes of Highway Cops 2 in July 2014. However, CJZ said the former owners weren't entitled to the deferred portion of the payment, as they said the series hadn't been licensed according to the requirements of the contract the two had signed. CJZ argued that because the series had been licensed for four years, not three, they had lost money.

In 2016, the High Court rejected CJZ's arguments and ruled Harris' interests were entitled to about $555,000, plus contractual interest of 5 percent per year from June 9, 2014. CJZ appealed the High Court's findings on liability last year, but the Court of Appeal reinforced its judgment issued earlier this month. The appeal court said quantum was an issue for the High Court to rule on, but said CJZ must now also pay the Harris interests' legal costs for the appeal.

In the appeal court judgment, the bench rejected a claim by Nick Murray, managing director and co-owner of CJZ, that the one-year delay in being able to relicense the show cost it between $50,000 and $100,000. The court said the revenue would be simply deferred a year, so would actually cost between $2,500 and $5,000, which was "immaterial in the context of this transaction. By no means is it such a difference as to trigger a reduction in purchase price, as the appellants assert, of $554,720."

GTV Holdings' lawyer argued that Greenstone had never given Seven a licence for over three years, and it was outside its ordinary course of business, but the appeal court said that this series was unusual as it had double the episodes of a normal series, and "mutually beneficial variation" was a feature of the course of business between Greenstone and Seven.