Virgin Media Communications Ltd v British Sky Broadcasting Group Plc

JurisdictionEngland & Wales
Judgment Date06 June 2008
Neutral Citation[2008] EWCA Civ 612
Docket NumberCase No: A3/2008/0815
CourtCourt of Appeal (Civil Division)
Date06 June 2008

[2008] EWCA Civ 612

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

The Hon Mr Justice Lewison

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Lord Chief Justice Of England And Wales

The Right Honourable Lord Justice Jacob and

The Right Honourable Lord Justice Lloyd

Case No: A3/2008/0815

HC07C00978

Between
(1) British Sky Broadcasting Group Plc
(2) British Sky Broadcasting Limited
Appellants
and
(1) Virgin Media Communications Limited (formerly Ntl Communications Limited)
(2) Virgin Media Television Limited (formerly Flextech Television Ltd
(3) Virgin Media Limited (formerly Ntl Group Ltd)
Respondents

Ian Glick QC and Kelyn Bacon (instructed by Messrs Herbert Smith LLP) for the Appellants

Sir Sydney Kentridge QC and Gerard Rothschild (instructed by Messrs Ashurst LLP) for the Respondents

Lord Phillips of Worth Matravers LCJ:

This is the judgment of the Court.

Introduction.

1

This appeal is an incident in a battle between two groups of companies that compete in the provision of pay TV in the United Kingdom. It is common ground that, for present purposes, no distinction falls to be made between individual members of each group. Accordingly we will describe the protagonists simply as Sky and Virgin, without attempting to identify which individual companies are involved.

2

The battle is being conducted in three separate sets of proceedings. In each Virgin is alleging that Sky is offending against rules designed to ensure, for the benefit of consumers, that competition is fair. They are as follows:

i) ' The High Court Proceedings': the Action in which this appeal is brought. It was commenced on 12 April 2007 when Virgin brought a claim alleging that Sky was abusing a dominant position contrary to Article 82 EC and section 18 of the Competition Act 1998. One issue in these proceedings is the motive for and the effect of the acquisition by Sky in November 2006 of a 17.9% shareholding in ITV.

ii) ' The Ofcom Review': an investigation being carried out by Ofcom (the Office of Communications) into the Pay TV industry. This was initiated pursuant to a request made on 16 January 2007 by Virgin and three other pay TV operators. They have alleged anti-competitive behaviour by Sky. Ofcom is carrying out a consultation in relation to these allegations, and in particular to the allegations made by Virgin in the High Court Proceedings, and may decide to make a market investigation reference to the Competition Commission ('CC').

iii) 'The CAT Proceedings': The CC investigated the acquisition by Sky of the 17.9% interest in ITV and made a Report. In accordance with recommendations in that Report the Secretary of State for Business, Enterprise and Regulatory Reform decided to impose a partial divestment of Sky's shareholding to a level below 7.5%. Both Sky and Virgin have, pursuant to section 120 of the Enterprise Act 2002, each made an application for a review of the CC's Report and the Secretary of State's decision. Each has been granted permission to intervene in the other's application. Sky is contending that the requirement that it be divested of part of its shareholding in ITV is unjustified. Virgin is contending that the divestment should be total.

3

Sky and Virgin have been required to make disclosure of relevant documents in the High Court Proceedings pursuant to the provisions of Part 31 of the CPR. This was done by electronic exchange of a large number of documents on 25 March 2008. CPR 31.22 provides:

“(1) A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where-

(a) the document has been read to or by the court, or referred to, at a hearing which has been held in public;

(b) the court gives permission; or

(c) the party who disclosed the document and the person to whom the document belongs agree.”

Many of the disclosed documents are, however, of such commercial sensitivity ('the sensitive documents') that the parties have agreed to put in place exceptional measures of a kind now well established where disclosure of commercial secrets is concerned. Disclosure of the sensitive documents will be restricted to identified external legal advisers who will give express undertakings not to disclose them or their contents to anyone, including their own clients, and only to use them for the purpose of the High Court Proceedings. It has been implicit in the argument of counsel for both parties that these undertakings will be subject to the power of the court to give permission for a document, or the information in it, to be used for a purpose other than that for which it was disclosed, in accordance with CPR 31.22(1)(b).

4

Sky contend that this agreement does not go far enough. They submit that if lawyers acting in the High Court Proceedings, who have seen the sensitive documents, act in either of the other sets of proceedings they will be unable to avoid, in the manner in which they represent their clients or in the advice that they give to their clients, being influenced by the knowledge that they have acquired from the sensitive documents. This alleged problem does not arise in the case of Sky's lawyers, for Sky have chosen to instruct different lawyers to represent them in the High Court Proceedings from those instructed in relation to the CAT Proceedings. Virgin, however have instructed the same solicitors, Ashurst, to represent them in all three sets of proceedings. Of that firm, two partners, Ben Tidswell and Nigel Parr, are currently acting in both the High Court Proceedings and the CAT Proceedings. The same is true of one of their counsel, Nicholas Green QC. These lawyers have not yet seen the sensitive documents. Virgin have made it plain that there are also individual lawyers who are representing them both in the High Court proceedings and the Ofcom Review, although they have not disclosed the identity of these.

5

On 19 March 2008 Sky applied for an order restricting inspection of their sensitive documents, which amount to 89% of the documents disclosed in the High Court Proceedings, to lawyers who are not acting for Virgin in the Ofcom Review or the CAT Proceedings. On 4 April 2008 Lewison J dismissed this application. He gave permission to appeal, however, because of the unusual nature of the facts of this case and of the order sought. We heard the appeal on 14 May and, at the end of the hearing, dismissed it, stating that we would give our reasons later. These are those reasons.

The implications of the order sought

6

Not only is the order sought unusual it is, so far as we are aware, without precedent in this jurisdiction. Its effect would be that Virgin would be prevented from continuing to use the individual lawyers of their choice in more than one set of proceedings. The timing of the application would make this particularly serious. The High Court Proceedings are far advanced. Witness statements are due to be exchanged on 20 June 2008. Sky and Virgin's applications to the CAT are due to be heard, concurrently, early next month. The Ofcom Review may lead to a reference to the CC which may last for up to two years. The partners of Ashurst common to the High Court Proceedings and the CAT Proceedings, are their senior litigation partner and their senior competition partner. Mr Green is counsel who enjoys a high reputation in the field of competition law. If these three lawyers are to play a meaningful part in the High Court Proceedings, they must see the sensitive documents that have been disclosed. Yet, if they do so, the order sought will preclude them from further providing the benefit of their services to Virgin in relation to the other two sets of proceedings.

The judgment

7

Lewison J was referred by counsel for Sky to a number of authorities, but was not persuaded that they supported Sky's entitlement to the relief claimed. He held that Sky were adequately protected by the Civil Procedure Rules and the additional safeguard which would be imposed by the confidentiality undertakings that Virgin's lawyers were prepared to enter into. He did not consider that there was any other than a fanciful risk that those lawyers would make any unauthorised use of the information that they might glean from the disclosed documents. The order sought would be “extremely disruptive” of trial preparations in the High Court Proceedings and it would be disproportionate to require Virgin to change their legal team.

Sky's submissions

8

Mr Glick QC submitted, on behalf of Sky, that the duty not to use disclosed documents for any purpose other than that for which they are disclosed is a duty of confidence that does not differ in principle from that which arises in other situations of confidentiality. That duty could have the effect of precluding a solicitor or other agent from acting for a party whose interests were in conflict with those of the party who had given disclosure.

9

Mr Glick referred us to a number of authorities in support of this proposition. The earliest, and the most relevant of these, was Riddick v Thames Board Mills Ltd [1977] 1 QB 881. That action was one of a series brought by a disgruntled ex-employee against the company that had employed him. He had been summarily dismissed and had been escorted from the premises of his employers. In the first action he claimed damages for wrongful arrest and false imprisonment based on the latter conduct. That action was settled on terms that included the withdrawal of the allegations of wrongful arrest and false imprisonment. The plaintiff then brought a second action...

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