British Sky Broadcasting Group Plc v Sky Home Services Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BRIGGS,Mr Justice Briggs |
| Judgment Date | 08 December 2006 |
| Neutral Citation | [2006] EWHC 3165 (Ch) |
| Docket Number | Case No: HC 05 C01651 |
| Court | Chancery Division |
| Date | 08 December 2006 |
[2006] EWHC 3165 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Briggs
Case No: HC 05 C01651
Mr Tom Moody-Stuart and Mr Jasbir Dhillon (instructed by Herbert Smith LLP) for the Claimants
Mr Ashley Roughton (instructed by Johnson Sillett Bloom) for the 1 st—3 rd, 5 th—7 th, & 11 th Defendants
Guy Burkill QC and Mr Geoffrey Pritchard (instructed by DMH Stallard) for the 8 th—10 th Defendants
Hearing dates: 7 – 10, 13 – 16, 20–24 & 27 November 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
There are before me two claims which have been ordered to be tried together, for the purpose of determining liability only. The first is a passing off action in which, in summary, companies within the group headed by British Sky Broadcasting Group plc ("PLC") claim that two allegedly related groups of defendants have been passing off extended warranty contracts relating to the equipment upon which the claimants' broadcasts are viewed as if they were made or approved by the claimants. The second is a claim by one of the defendants for compensation from one of the claimants under the Commercial Agents (Council Directive) Regulations 1993 (S.I. 1993 No 3053).
The reason why the two claims have been ordered to be tried together is that one of the defences to the second claim is that the passing off alleged in the first claim amounted to a sufficiently serious breach of the relevant agency contract to have justified its immediate termination, and that this was why the contract was terminated. It is submitted that compensation would then be excluded by Regulation 18(a). Apart from that link, and the overlap in parties, the two claims are largely distinct.
The late introduction into the agency claim of an issue as to the validity of the Schedule to the Regulations necessitated the joinder of the Secretary of State and a substantial adjournment of the hearing of that issue until next term. As a result I have been obliged to confine this judgment to the issue of liability in the passing off claim only.
The Parties
The first claimant PLC is the holding company for the Sky group of companies ("the Sky Group"). The other claimants are among PLC's direct and indirect subsidiaries. Collectively, the Sky Group operates the Sky digital satellite broadcasting platform, the Sky television channels (broadcast by satellite, cable and mobile phone networks) and either directly or through authorised contractors it provides various related ancillary products and services. One of those services is an extended warranty contract for the satellite broadcast reception equipment, now provided by Domestic and General Services Ltd ("D&G") under the name "Sky Repair Protection Plan", but formerly provided by Aon Ltd under the name "Skycare". I shall refer to the extended warranty contract provided by D&G as the SRPP.
The second claimant British Sky Broadcasting Ltd ("BSB") provides a digital satellite broadcasting service to its subscribing customers. I shall refer to that service as Sky Digital. This service can only be received by customers on their televisions by the use of reception equipment specifically designed for the purpose consisting of a dish shaped aerial ("minidish") a low noise block converter ("LNB") attached to the minidish and one of (currently) a choice of three set top boxes. To avoid confusion with names given to this equipment by the parties I shall refer to it collectively as "the Hardware".
The Hardware will only work (in the sense of converting an encrypted satellite broadcast signal into an input capable of being turned by the customer's television and any related audio equipment into picture and sound) when a smart card supplied to the customer is inserted into the set top box after it has been installed and "enabled" by an authorised installation engineer. That smart card is supplied to customers by the third claimant Sky Subscriber Services Ltd ("SSS") together with certain other related services such as technical support.
The fourth claimant Sky In-Home Service Ltd ("SHS") supplies the Hardware to some but by no means all of BSB's subscribing customers. It also supplies an installation service and a repair service for the Hardware. I shall in due course have to describe the means whereby the Hardware is manufactured, guaranteed, marketed and maintained in greater detail. Thus far I have been concerned only to identify the relevant roles of each claimant within that structure.
The defendants can best be divided for the purposes of analysis into two groups. The first, which for convenience I shall call the Crane defendants, consists of five companies, their beneficial owner and at least de facto controller the seventh defendant John Harold Crane, together with the sixth defendant his brother Peter James Crane, a shareholder in and director of one or more of the Crane defendant companies from time to time.
Taking the Crane corporate defendants in turn, the first defendant Sky Home Services Ltd ("D1") was incorporated in February 2002. It never prepared accounts and was dissolved in January 2006.
The second defendant Skycare Service Agreements Ltd ("D2") was incorporated in April 2003. It never lodged accounts and is likely shortly to be struck off the companies register for failure to lodge annual returns.
The third defendant Subscriber Service Agreements Ltd ("D3") was incorporated in April 2004, never lodged accounts and was also dissolved in January 2006.
There was originally included a fourth defendant Sky+ Ltd ("D4"), but it had already been dissolved before the passing off claim was commenced and has been deleted by amendment.
The fifth defendant Sky Support Services Ltd ("D5") was incorporated in April 2003, and otherwise had an identical corporate history to that of D1. By contrast the eleventh defendant Say It Loud Marketing Limited ("D11") has from its incorporation in 2001 been and remains an active trading company run by John Crane.
The seventh defendant John Crane is a businessman whose dealings with the Sky Group began in the mid 1990's. He was an Authorised Sky Agent ("ASA") from 1994, trading initially under the acquired trading name Starvision, then as Metrosat from 1995. He continued to be an ASA, latterly trading as Indigital Satellite Services until his agency was terminated by the Sky Group in February 2005. He has been the governing mind and will of all the corporate Crane defendants throughout. He has also been the sole director and shareholder of all the Crane corporate defendants, except between August 2002 and May 2005.
The sixth defendant Peter Crane is John Crane's brother. From August 2002 until May 2005 he was a director of and shareholder in each of the corporate Crane defendants, as his brother's nominee. He has throughout been resident in New Zealand. He played no more than a purely formal role in the affairs of those companies at his brother's request, in circumstances connected with John Crane's bankruptcy proceedings, which led to a bankruptcy Order in December 2002 which was annulled in the following year. The accounts of D11 suggest that he may have been for a time a substantial lender to that company.
The second group of defendants, which for convenience I shall call the Reynolds defendants, may be more quickly described. It consists of two companies and their owner and controller the tenth defendant David Alan Reynolds. The first, namely the eighth defendant Satcover Ltd ("D8") was incorporated in December 2003. The second, namely the ninth defendant Satellite Direct UK Ltd ("D9") was incorporated in June 2000. Mr Reynolds has been their sole shareholder and director throughout. Both companies offer extended warranties and repair services to the end-users of satellite television equipment. The evidence did not suggest any significant business with users of any such equipment other than the Hardware (i.e. the equipment used by Sky Digital subscribers for receiving Sky Digital broadcasts). Mr Reynolds himself did not purport to carry on any separate business in his own right, but is sued as an alleged joint tortfeasor with the two companies which he controls.
The Issues
The claimants' case is that collectively they enjoy substantial goodwill associated in particular with the word SKY both on its own and as part of words and phrases such as SKYCARE, SKY PLAN and SKY REPAIR PROTECTION PLAN, and that the defendants both singly and collectively have been passing off their extended warranty and repair services as if the defendants and their businesses were either part of the Sky Group and its businesses, or authorised, endorsed or approved by the Sky Group as extended warranty providers.
The defendants are alleged to have achieved this objective in three main ways, first, by the use of corporate names which either include SKY or the related phrases which include SKY, or by the use of a name (that of D3) confusingly similar to SSS, albeit without the use of the word SKY. A similar complaint is made of the use of "Subscriber Services" as a trading name by a number of the corporate...
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