Soundwave Studios v Visage Cinema: High Court sets aside statutory demand over total failure of consideration dispute

A High Court judge has set aside a statutory demand served on a music production company, finding that the £78,000 restitutionary claim advanced by a film production company raised a genuine and substantial dispute requiring determination at trial.

In Soundwave Studios Music Group Ltd v Visage Group Management Ltd & Visage Cinema Ltd [2026] EWHC 1068 (Ch), I.C.C. Judge Jones (sitting in retirement) granted a restraining order against presentation of a winding-up petition, concluding that the Music Production Agreement ("MPA") at the heart of the dispute could not be construed, at this stage, as a simple "finished product delivery" contract.

Background

Visage Cinema Ltd ("VCL") served a statutory demand on Soundwave Studios Music Group Ltd ("SWSMG") for £78,000, representing the full contract price paid under a November 2022 agreement for music production services relating to the film Enter the Furnace. VCL's case was straightforward: it had paid in full; no deliverables, including the original score and soundtrack, had been received; and the entire consideration had therefore failed.

SWSMG, represented at the hearing by its director Mr Jonathon Altham, disputed both the characterisation of the claim and the suitability of insolvency procedure to resolve it. The company asserted the MPA formed part of a broader multi-contract relationship with VCL's sister entity, Visage Group Management Ltd, and that substantial services had in fact been rendered, notwithstanding the absence of a finished musical product.

The jurisdiction question

The court first addressed whether a restitutionary claim grounded in total failure of consideration could properly found a statutory demand. Rejecting the company's suggestion that such claims are inherently unsuitable for insolvency procedure, Judge Jones held that Rule 14.1 of the Insolvency (England and Wales) Rules 2016 is broad enough to encompass liabilities arising from an obligation to make restitution, whether or not the sum is liquidated. The demand was therefore not jurisdictionally defective.

A wider contract than first appeared

The substantive dispute centred on whether the MPA was properly characterised as a contract for delivery of a finished musical product, or one encompassing an ongoing suite of management, advisory, and administrative services. After examining the recitals, the exclusivity provisions, the phased payment structure, and the detailed deliverables schedule, the judge concluded the contract was "geared more towards the concept of the music being delivered having been produced under the guidance of the Company" and that the consideration was not paid "purely for the finished product."

A retainer element within the payment structure, approval obligations at the end of each production phase, and wide-ranging services including music department management, supervision, and IP management all pointed to obligations extending beyond mere delivery of the final score. As it was not disputed that some services had been rendered, a genuine and substantial dispute as to total failure of consideration was established.

The instalment argument

VCL raised a late alternative argument, drawing on the Privy Council's decision in Goss v Chilcott [1996] AC 788, that even if the overall consideration had not wholly failed, restitution should be available in respect of the third payment instalment (40%, triggered upon commencement of the music production recording phase) on the basis that nothing had been provided referable to that phase.

The court accepted the underlying legal principle: that restitution may be available for failure of one contractually compartmentalised element, provided the relevant consideration can be identified and a liquidated sum attributed to the unjust enrichment. However, the argument was rejected on the facts at this stage for three reasons: the scope of the third instalment's consideration could not be determined without examining commercial context and drafting history; the company had no reasonable opportunity to address the point in evidence, having been taken by surprise; and the absence of any claw-back provision in the MPA was consistent with a broader dispute existing.

Set-off and abuse of process

The court gave short shrift to the set-off and counterclaim arguments. The majority of the cross-claims related to agreements with Visage Group Management Ltd, not VCL, and the contracts expressly stated they were "entirely separate" from one another. A royalty claim under the Production Waterfall Agreement fell away on the evidence that the production had been unprofitable. The abuse of process allegation was equally dismissed.

The restraining order was nonetheless granted on the basis of the genuine and substantial dispute identified in respect of the total failure of consideration claim.