JML Direct Ltd v Freesat UK Ltd
| Jurisdiction | England & Wales |
| Judge | Mr JUSTICE BLACKBURNE,Mr Justice Blackburne |
| Judgment Date | 26 March 2009 |
| Neutral Citation | [2009] EWHC 616 (Ch) |
| Date | 26 March 2009 |
| Court | Chancery Division |
| Docket Number | Case No: HC08CO2940 |
[2009] EWHC 616 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Blackburne
Case No: HC08CO2940
Robert Howe QC and Mark Gay (instructed by DLA Piper LLP) for the Claimant
Tim Ward and Ben Lask (instructed by BBC Commercial & Regulatory/Legal Department) for the Defendant
Hearing dates: 26 th, 27 th and 30 th January 2009
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 au align="center"thentic.
Mr Justice Blackburne:
Introduction
The claimant, which I shall refer to simply as JML, provides shopping channels on the digital multi-channel satellite television service that was launched last May in the United Kingdom and is operated by the defendant. The service is called “Freesat”. For convenience I shall also refer to the defendant as Freesat.
Freesat has allocated positions to JML's two shopping channels under the shopping part (or genre) of the screen programme guide provided by the new service which are lower down the list of shopping channels than JML says that they should be. Neither channel appears on the first page (or screen view) of that part of the programme guide when accessed by the viewer. JML contends that under the relevant agreement between itself and Freesat, Freesat was obliged to comply with its (Freesat's) published policy on the matter—the so-called “Listing Policy”—and with the applicable Ofcom Code. The latter, amongst other things, requires Freesat to “publish and comply with an objectively justifiable method of allocating listings”.
This is the expedited trial—the claim form having been issued as recently as last October—of questions of liability, but not quantum, arising out of JML's complaint. Mr Robert Howe QC and Mr Mark Gay have appeared for JML. Mr Tim Ward and Mr Ben Lask have appeared for Freesat.
It is common ground between the parties that channel providers such as JML wish to be as high up the listings of their particular genre—in this case the shopping genre—as possible since, in the view of JML, a shopping channel's position on the electronic programme listings (known as the “Electronic Programme Guide” or “EPG” for short) is key to its prominence to viewers and hence to the number of people who visit the “shop” and buy articles.
JML contends that Freesat failed, in breach of contract, to comply with its contractual obligations in that (a) it failed to use certain of the listing criteria contained in the Listing Policy; (b) it used criteria which it had not published and (c) it allocated the channels irrationally, in a subjective manner, and not in accordance with an objectively justifiable, or published, method. By JML's amended particulars of claim, and in the events that have happened, the relief claimed is (1) a declaration that Freesat's listing of JML's channels was (and is) invalid and (2) a declaration that Freesat is obliged to perform its obligations by re-listing JML's channels in accordance with the applicable contractual requirements, ie the relevant provisions of the agreement between itself and Freesat, the Listing Policy and the Ofcom Code. A claim for specific performance of Freesat's applicable contractual requirements is no longer sought.
Freesat denies that it has acted in breach of its contractual obligations and denies therefore that JML is entitled to the declaratory relief claimed, or to any relief.
The parties
JML is a business which specialises in the selling of products requiring promotion at the point of sale. It does this by such things as advertising its products in newspapers and magazines and by selling its products through well-known shopping chains, by mail order, over the internet and, relevantly to these proceedings, through its television shopping channels.
The JML group was founded by Mr John Mills in 1986. Mr Mills is chairman of JML's parent company. According to his unchallenged evidence the group has grown into a very successful business with approximately 300 employees and an annual turnover in 2007 of just over £47 million (and with forecast turnover for 2008 at £62 million). It has won numerous business awards. Mr Mills gave evidence before me.
Freesat—the new multi-channel digital satellite service (or “platform”)—was launched on 6 May 2008. The service is therefore less than a year old. It is a 50/50 joint venture between the BBC and ITV (each through wholly owned subsidiaries). According to Ms Emma Scott, Freesat's managing director and, until 29 September 2007, an employee of the BBC, Freesat is run on a not-for-profit “break even” basis with all income spent on managing, developing and promoting the Freesat services to viewers. It has a staff of 22. Ms Scott was the only other witness who attended to give evidence before me.
Digital television in the United Kingdom
A little background to the new Freesat service will explain the context to this dispute. What follows is taken largely from the evidence of Ms Emma Scott, which in this respect was not challenged by JML.
Digital television, ie television by digital signal, is one of two ways in which television is currently transmitted in the United Kingdom, the other being traditional analogue television, ie by analogue signal. Analogue television pictures are received by a traditional rooftop aerial and have, historically, been the principal means by which television is transmitted in the UK. Only five television channels are transmitted and can be received by the analogue signal: BBC One, BBC Two, ITV 1, Channel 4 (S4C in Wales) and, for most of the UK, Five. Viewers who have analogue television only are restricted to these channels.
The analogue television distribution network is currently being phased out, to be gradually replaced by digital television across the UK. The “digital switchover” began in November 2008 and is due to be completed in 2012, when analogue television broadcasts in the UK will be switched off.
Digital television has the potential to allow a very large number of television and radio services to be received by the viewer, and thus offers far greater choice to the viewer. The technology also provides the potential for other benefits such as interactive services (eg digital text) and the ability for consumers to choose to subscribe to additional channels. Another benefit of digital television is that it allows the transmission of so-called “high definition” (or “HD”) television on certain digital television systems. HD, which is said to provide exceptional picture quality and greatly enhanced sound quality, is currently only available through satellite and cable distribution systems.
Digital television in the UK is broadcast through three technical distribution systems: digital terrestrial television (via an aerial), cable, and satellite. Access to it in the UK is provided by both commercial and not-for-profit operators. Each operator provides a different television “service” to consumers depending on the technology used. Access is either on a “pay TV” subscription basis, or on a “free-to-air” basis, ie at no cost to the viewer. Operators currently providing subscription-based access to digital television are BSkyB (“Sky”) via a satellite dish, Virgin Media and Tiscali via cable, two others via digital terrestrial (via an aerial) and BT Vision via a combination of cable and digital terrestrial (via an aerial).
There are three non-subscription digital television service operators: Freeview and Freesat, both of which are not-for-profit organisations, and FreesatfromSky, offered on a commercial basis by Sky. Freeview was the first free-to-air digital television service in the UK. Freeview is the brand name of DTV Services Ltd. It is owned by BBC Free to View Ltd (a company owed by the BBC), SDN Ltd (a company owned by ITV plc), Channel 4, BSkyB and Arqiva (a transmission provider).
Freeview was launched in October 2002 and is now received in approximately 9.3 million homes in the UK (out of a total of 25.5 million homes). Freeview's aim, according to Ms Scott, is to drive digital take-up in the UK ahead of digital switchover and ensure UK viewers can enjoy the benefits of greater channel choice. It offers approximately 40 television channels as well as radio stations and some interactive services. It operates via the digital terrestrial system and is received via a rooftop aerial together with a digital receiver contained either in a set-top box or in an integrated television set. Freeview, Ms Scott says, has been successful in spreading the benefits of digital television and, as a result, of paving the way for the digital switchover but is subject to technical limitations. These are, she says, that it is limited to a relatively small number of digital channels (as compared with other digital television technologies which permit hundreds of channels to be broadcast) and does not have full coverage in all parts of the UK (approximately 27% of the population cannot receive it, even if they have the necessary equipment, a proportion which rises to 39% in Northern Ireland and 46% in Wales). Currently, Freeview broadcasts no HD television services (and lacks sufficient bandwidth to broadcast more than a limited number of such services) and the interactive services that it is able to offer are relatively limited due to the same technical constraints.
In addition to Freeview, Sky's “FreesatfromSky” is offered via a satellite dish plus a Sky digital receiver. It is only available to consumers via a viewing card. According to Ms Scott, it is believed in the industry that this service is...
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