Montreal: A group of u.k. insurers is suing Royal Bank in a matter related to the Canada/u.k. coproduction Hysteria and a us$1.6-million ($2.2-million) claim paid to the bank with some measure of fanfare more than a year ago.

A writ, the first step in the suit, was issued some 10 days ago against the Royal Bank in London, Eng.

This particular episode of the troubled Hysteria saga opens back in December ’98 when a representative of u.k.-based risk manager Screen Partners flew to Montreal and handed a cheque for us$1,583,039 to Royal.

Not sounding particularly surprised by news of yet more hassles with Screen Partners and its insurance company backers, a spokesperson for Royal told Playback there would be no comment at this time.

At that time, Royal said its loan deadline on the movie had expired, and it had not been repaid by Hysteria’s appointed sales agent, the now-defunct August Entertainment. The bank loan was insured and the risk manager duly made the payment, perhaps as much as six months after Royal initially asked for its money.

(The Royal’s insurance policy was held by its Montreal branch and, according to a u.k. court document, was for a 24-month period, effective June 7, 1996.)

The u.k. underwriting group suing Royal includes a member on behalf of Lloyds, Sphere Drake Insurance and Royal & Sun Alliance Insurance. Their initial claim was filed on Dec. 16, 1999 with the commercial court of the Queen’s Bench Division, High Court of Justice in London.

Upon paying out Royal’s claim in December ’98, the insurers and their representatives were then entitled to take control of the film asset, appoint a sales agent, and recoup their losses through eventual sales.

The insurers, through Screen Partners, then took possession of the film, with managing director Kent Walwin announcing steps would be taken to complete a partial re-edit.

The Dec. 16 court document filed by the insurers makes the noteworthy claim, ‘The insurance [paid to Royal] shall only apply on completion of the film or the television production.’

The insurers now hold the film – an Hysteria Productions thriller directed by Rene Daalder and produced by Kay Salomon – was not completed, and as such is not exploitable. The insurers further claim consent from the holders of some of the film’s musical soundtrack had not been obtained. They now claim the payment made to Royal was ‘as a result of misrepresentation and under a mistake of fact,’ and the underwriters are, in their view, entitled to retrieve the payment, with interest, made to Royal.

Tim Jeynes, business affairs manager with Screen Partners in London, says the copyright problem with some of Hysteria’s non-original music soundtrack was only discovered during the edit.

The insurers and Screen Partners, through a sales agent, had intended to exploit the film in several major international markets including the u.k., however, the protected territories did not include Canada.

‘We did not recoup any part [of the policy payment made to Royal] because [the film] is not exploitable,’ says Jeynes.

According to Jeynes, the film ‘is on sale in Canadian video stores, which is actually a federal offense.’

Jeynes says at one point last summer, Screen Partners made a recommendation to the insurers group, led by Lloyds, that Royal be asked to repay the us$1.6 million.

‘We have been trying to get [Royal] to repay the money,’ he says. ‘We got frustrated and were getting nowhere in negotiation, so the only option to the insurers was that they sue the Royal Bank.’

A judicial claim and counterclaim process aimed at sorting out the issue could extend through to June or July, at which point a judge could set a hearing date.