England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN AN INTENDED ACTION

		Royal Courts of Justice Rolls Building, Fetter Lane London, EC4A INL
		06/03/2017

Mr Justice Marcus Smith:

The factual background

1. The Racing Partnership is a company established in May 2016 to create, produce and exploit live audio visual broadcast coverage of horse races and live on-course data from certain racecourses situated in Great Britain. Essentially, the visual coverage and on-course data is sold or licensed to interested parties, generating revenue.
2. One of the shareholders in The Racing Partnership is Arena Racing Corporation Limited, together with various racecourses, whose identities do not matter for present purposes, but to whom I shall refer as the "Arena Racecourses". Arena Racing Corporation is the parent company of the Second Applicant, Arena Leisure Limited. Arena Racing Corporation is also a shareholder (with Sky plc) in the First Applicant, AtTheRaces Limited.
3. Arena Leisure Limited engages the Ninth Respondent – the Ninth Respondent is a subsidiary of the Eighth, and they are referred to collectively herein as "Sports Information Services" – to capture and produce a live feed, which essentially comprises the visual coverage of races at the Arena Racecourses. This is done pursuant to a contract or contracts between Arena Leisure Limited and Sports Information Services. Naturally, the ownership of the rights in the coverage so produced is strictly regulated by the contract(s), as is their use.
4. One of the uses to which this coverage is put is that it is broadcast on the "At the Races" channel on the Sky platform operated by Sky plc or an associated company of Sky plc (variously and collectively, "Sky"). It is possible to subscribe to this channel, on payment of a licence fee. AtTheRaces Limited operates this subscription channel. The precise manner – in terms of licensing – in which "At the Races" is broadcast on the Sky platform has not been disclosed to me, and is not directly relevant to this application.
5. The coverage is also made available – on entry into a contract, which involves paying a fee – to licensed betting offices (or "LBOs"). Apart from Sports Information Services – the Eighth and Ninth Respondents – the First to Seventh Respondents fall into two groups:

i) The "Ladbrokes/Coral Group", comprising (for present purposes) the First to Fifth Respondents; and

ii) The "Betfred Group", comprising (for present purposes) the Sixth and Seventh Respondents.

Although they do other things (like on-line betting), both the Ladbrokes/Coral Group and the Betfred Group operate licensed betting offices. During the course of this year – the relevant period for present purposes – none of the Ladbrokes/Coral Group nor any of the Betfred Group have had any right to use the course coverage. That is simply because they have chosen not to take a licence.

6. From 1 January 2017 the Ladbrokes/Coral Group and the Betfred Group have nevertheless provided commentaries of races taking place at the Arena Racecourses. The Applicants believed that these were "off-tube" commentaries, as is plain from the terms of the draft order that accompanied the Applicants' application notice. By "off-tube" commentaries, what is meant is that the commentary for an event is provided by a commentator watching televised pictures of that event, rather than being present at the live event itself. As will be seen, the Applicants were only half right in this belief.

The Ladbroke/Coral Group and Betfred commentaries

7. There has been a great deal of communication and correspondence about precisely how the Ladbrokes/Coral Group and the Betfred Group have created their commentaries. The first witness statement of Mr. Mark Kingston ("Kingston 1") – served on behalf of the Applicants – identifies five possible sources in paragraph 80. Mr. Kingston claims, in paragraphs 81 and 82 of Kingston 1 (and in particular the heading above these paragraphs: "Source of Course Coverage Unknown"), that the Applicants do not know how the Ladbrokes/Coral Group and the Betfred Group have produced their "off-tube" commentaries.
8. This lack of knowledge was said to be critical to formulating a claim against what was also said to be a wrongful infringement of the Applicants' rights. Thus, paragraph 37 of Kingston 1 states:

"…the Respondents have, so far, and despite requests, failed to reveal the source of the live coverage being misused and/or explain how they say they are entitled to produce or facilitate the production of "off-tube" commentaries…thus necessitating this urgent application."

9. The "urgent application" that Mr. Kingston refers to is an application against all of the Respondents for pre-action disclosure under section 33(2) of the Senior Courts Act 1981 and Part 31.16 of the Civil Procedure Rules. It will be necessary to refer in greater detailed to the specifics of this application in due course.
10. For present purposes, however, Mr. Kingston's ignorance as to the source of the off-tube commentaries has been relieved by the evidence of the Respondents. (I say nothing about whether this information was made available to the Applicants prior to this: I have no desire to venture into what has been a somewhat protracted correspondence. I base myself on the witness statements that have been served.) Thus:

i) The Ladbrokes/Coral Group. In his first statement filed on behalf of the Ladbrokes/Coral Group ("Chambers 1"), Mr. Mark Chambers states:

"5. Since 1 January 2017, Ladbrokes Coral has produced off-tube commentaries of races from Arena Courses and such commentaries have been made available in Ladbrokes Coral LBOs. Ladbrokes Coral has never denied that it makes such commentaries available.

6. As has been made clear by Ladbrokes Coral from the outset of this dispute, the Applicants have no right to prevent Ladbrokes Coral from producing such off-tube commentaries: Ladbrokes Coral is not infringing any rights (whether by way of copyright or otherwise) of the Applicants nor any obligations (in contract or otherwise) which are owed to them…

…

9. Since 1 January 2017 Ladbrokes Coral have not shown pictures of races from the Arena Courses. However, off-tube commentary from such courses has been made available within our LBOs.

10. As the term suggests, "off-tube" commentaries are taken from off the tube i.e. from the TV, and that is exactly what Ladbrokes Coral has done in relation to our commentaries from the Arena Courses. By way of further detail, I set out below how off-tube commentaries from the Arena Courses have been made since 1 January 2017.

10.1 Ladbrokes Coral has available to it a number of subscriptions to Sky TV, the well-known satellite broadcaster. One of the channels available on the Sky TV platform is "At the Races". "At the Races" includes live coverage of races from the Arena Courses.

10.2 Ladbrokes Coral uses freelance broadcasters to watch "At the Races" on Sky TV using one of the subscriptions I refer to above. These broadcasters commentate on the races and that commentary is subsequently broadcast into Ladbrokes Coral LBOs…"

In his second statement ("Chambers 2"), Mr. Chambers confirms (at paragraph 8) that the Sky TV subscriptions used for this purpose were subscriptions of the Ladbrokes/Coral Group. It is worth noting that this use of Sky TV subscriptions has now ceased.

Mr. Kingston pointed out (at paragraph 78 of Kingston 1) that this use of the Sky TV subscription was (in his view) likely a breach of the terms of the subscription agreement. On 20 February 2017, Sky wrote to the Ladbrokes/Coral Group complaining of this practice and alleging breach of their Sky subscription agreement. On 22 February 2017, the Ladbrokes/Coral Group responded, stating that, without any admission of liability, they would not use "At the Races" for the purpose of creating "off-tube" commentary broadcast in the LBOs.

ii) The Betfred Group. In his first witness statement filed on behalf of the Betfred Group ("Siers 1"), Mr. Philip Siers states:

"18. On 2 January 2017, and for that one day alone, we provided sound commentary (but no video) in our LBOs in respect of three or four Arena Races on the basis of having a commentator watch the ["At the Races"] channel (under a normal subscription agreement with Sky which included ["At the Races"] in the package) and to produce the commentary in that way (but of course not showing any of the underlying video). I was not aware on 2 January 2017 that we had used off tube commentaries in this way and on hearing of this activity, I ensured that this activity ceased after this one day.

19. We continue to have synthesised commentary on Arena Races in our LBOs although such commentaries as we have are very limited, and could not be construed in any way as a professional commentary, normally delivered to LBO. These synthesised commentaries contain very limited content and detail, and are used only for the closing stages of each race, and it is not our intention to provide this for every race. The manner in which we now create this commentary is a matter of commercial sensitivity and I am not prepared to disclose how this is done. However, I can say:

(a) we are not using any ["At the Races"] content…;

(b) we are not using any material provided by the Eighth or Ninth Respondents in order to produce this commentary; and

(c) I would be prepared to disclose information regarding the means by which we produce the commentary to named individuals within the solicitors and counsel for the Applicants provided they in advance enter into a confidentiality ring under which they undertake not to disclose that information to their clients or any third party. That information could then also be available to the Court."

In his second statement ("Siers 2"), Mr. Siers provided further detail of how a "synthesised commentary" is produced for the Betfred Group. I heard submissions of the Applicants in relation to their application against the Betfred Group in private in order to preserve the confidence in Siers 2. It has been possible to write this Judgment without referencing the confidential material in Siers 2, and accordingly this Judgment is public.

iii) Sports Information Services. In his first witness statement filed on behalf of Sports Information Services ("Graham 1"), Mr. Andrew Graham explained that the off-tube commentaries used by the Ladbrokes/Coral Group and by the Betfred Group have not been produced by Sports Information Services.

The application

11. Since the beginning of the year, the Applicants have been concerned about the commentary at LBOs of the Ladbrokes/Coral Group and the Betfred Group on races taking place at Arena Racecourses. They claim not to have had sufficient information to enable proceedings to be commenced, and hence have made an application for pre-action disclosure under section 33(2) of the Senior Courts Act 1981 and Part 31.16 of the Civil Procedure Rules.
12. I consider that I should determine this application not on the basis of the pre-application communications between the Applicants and the Respondents, but on the basis of the evidence as it stands now. I should say that I fully appreciate that the parties are at odds on the adequacy of what the Respondents have told the Applicants in the past, and on whether this application was ever warranted. As I have already said, I do not consider that engaging in this pre-application history will, at least in this case, assist in dealing with the application.
13. Part 31.16 of the Civil Procedure Rules provides:

"(1) This rule applies where an application is made to the court under any Act for disclosure before proceedings have started.

(2) The application must be supported by evidence.

(3) The court may make an order under this rule only where –

(a) the respondent is likely to be a party to subsequent proceedings;

(b) the applicant is also likely to be a party to subsequent proceedings;

(c) if the proceedings had started, the respondent's duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d) disclosure before proceedings have started is desirable in order to –

(i) dispose fairly of the anticipated proceedings; or

(ii) assist the dispute to be resolved without proceedings; or

(iii) save costs.

(4) An order under this rule must -

(a) specify the documents or classes of documents which the respondent must disclose; and

(b) require him, when making disclosure, to specify any of those documents –

(i) which are no longer under his control; or

(ii) in respect of which he claims a right or duty to withhold inspection."

14. As matters stand now, the Applicants have a far better understanding of how the Ladbrokes/Coral Group and the Betfred Group obtain their commentaries. It is clear from the evidence of Mr. Chambers and Mr. Siers that, whilst the approaches of the two groups are very different, Sports Information Services is not involved in the creation of the commentaries. As a result of the Applicants and Sports Information Services agreeing terms, Sports Information Services played no further part in the hearing before me.
15. The evidence of Mr. Chambers and Mr. Siers also affected the nature and scope of the application being made by the Applicants as against the Ladbrokes/Coral Group and the Betfred Group. As to this:

i) As is clear from Kingston 1 (in particular paragraphs 80ff), the Applicants' initial position was that they did not know how the Ladbrokes/Coral Group and the Betfred Group had produced their commentaries.

ii) This, so it was said, prevented a claim being pleaded even in draft form. That may have been the case when the application was made: but was not the case after the evidence of Mr. Chambers and Mr. Siers had been received. It may be that that evidence came so late as to preclude the formulation of draft particulars of claim, and I make no criticism of the Applicants in this regard. But the consequence was that the court had no particularly clear idea of how the Applicants were planning to put their case in the anticipated proceedings.

iii) Indeed, it is fair to say that the basis of the Applicants' claim against the Ladbrokes/Coral Group and the Betfred Group underwent significant change over time:

a) As against the Ladbrokes/Coral Group, the case was originally said to be based on breach of contract, copyright infringement, inducing or procuring a breach of contract and/or conspiracy. By the time the application was heard, the Applicants' claim was confined to an alleged unlawful means conspiracy. What is more, the nature of the loss suffered by the Applicants as a result of this conspiracy was, to say the least, nebulous. Loss appears to be predicated on the Ladbrokes/Coral Group purchasing the commentary or the right to use the commentary from Sky or some other party, which financial benefit would (in the end) trickle down to the Applicants.

b) As against the Betfred Group, the case is now said to be based on unlawful means conspiracy and on passing off. In the latter case, it appears that the Applicants were maintaining their claim even if the commentary produced by the Betfred Group was produced lawfully and not (as alleged for the purposes of the conspiracy claim) in breach of contract. Again, the loss sustained by the Applicants was not clearly put.

iv) Given these developments after the applications had been issued, the documents sought by the Applicants by way of pre-action disclosure underwent significant change. The application by the Applicants appended a draft order, seeking disclosure of material (by class of document) relating to the manner in which the off-tube commentaries had been produced. In light of the evidence of the Ladbrokes/Coral Group, the disclosure sought had to be substantially modified; and it was, in the form of a draft order produced by the Applicants on the day of the hearing.

v) In light of the evidence of the Betfred Group, the entire basis of the disclosure sought had to be revisited, given that the commentaries were not off-tube (except in relation to a short period in early 2017). Again, this was addressed by the Applicants, in the form of a draft order produced on the day of the hearing.

Are the changes to the application fatal to it?

16. The Respondents contended that these dramatic shifts were fatal to the application. The application now being made, so it was said, was entirely different to the application as originally framed, and should be rejected on that ground alone.
17. By contrast, the Applicants contended that all that they were doing was adjusting what they sought pursuant to their application in light of the evidence adduced by the Respondents in response to that very application. The Applicants were, so they said, confining the scope of what they were seeking by reference to the information provided by the Respondents.
18. I do not accept the Respondents' submission that the changes to the scope of the application made by the Applicants are fatal to it. But I do consider that the evidence of Mr. Chambers and Mr. Siers either answered or went a long way towards dealing with the essential basis for the application as it was described in Kingston 1, the original statement in support of the application. This evidence having been provided, the Applicants were faced with a choice: they could either take stock, and decide whether, and if so what, pre-action disclosure might be needed in light of that evidence, at some later date; or they could persist in an application whose essential basis had changed.
19. In the event, the Applicants chose the latter course, and they were entitled to do so. But they are not entitled to any lessening of the standard to be applied in their application for that reason; and, to the extent that the late shift in the nature of their application means that things were not done that might – given more time – better have been done, they must suffer the consequences.
20. I turn to consider the requirements of CPR Part 31.16.

CPR Part 31.16(3)(a) and (b)

21. By CPR Part 31.16(3)(a), the respondent to the application must be likely to be a party to the subsequent proceedings. By CPR Part 31.16(3)(b), the applicant must be likely to be a party to the subsequent proceedings.
22. These requirements are not especially onerous: see Black v.Sumitomo Corporation [2001] EWCA Civ 1819 at [70] to [73]. In essence, the applicant needs to show that if proceedings were to be issued, it is likely that the applicant and the respondent would be parties, "likely" meaning no more than "may well".
23. In this case, whilst it was common ground that some of the Respondents (e.g. the Second Respondent and the Fifth Respondent) would not be joined in any proceedings, there was at least one party within each of the Ladbrokes/Coral Group and the Betfred Group that was likely to be a defendant in any subsequent proceedings.
24. Equally, although the Applicants spoke of other parties – notably The Racing Partnership – being a claimant, I consider that the Applicants are themselves both likely parties (as claimants) in any subsequent proceedings.
25. I find these requirements, therefore, satisfied.

CPR Part 31.16(3)(c)

26. By CPR Part 31.16(3)(c), the disclosure sought must fall within the respondent's duty by way of standard disclosure, had the proceedings started.
27. It is incumbent on the Applicants to show that it is more probable than not that the documents would be within the scope of standard disclosure: Hutchison 3G UK Limited v. O2 (UK) Limited [2008] EWHC 55 (Comm) at [44]. Where disclosure is sought of a class of documents, the court must be satisfied that each document in the class would fall within the obligation of standard disclosure: Hutchison at [38] and [50].
28. It is for this reason that an application for pre-action disclosure should be crafted with great care, and should be limited to what is strictly necessary. Infelicities or flaws in the scope of documents sought should not be left to be corrected after judgment. In Snowstar Shipping Company Limited v. Graig Shipping plc [2003] EWHC 1367 at [35], Morison J. stated:

"…I regard the ambit of the disclosure sought as wide and woolly. Mr. Eder suggested that if there were flaws in the application notice then they could be dealt with after this judgment. I do not regard that as satisfactory. It is, I think, important, if not essential, that every application for pre-action disclosure should be crafted with great care, so that it is properly limited to what is strictly necessary…"

29. It is here that the Applicants begin to pay the price for the absence of any clear formulation of their case against the Ladbrokes/Coral Group and the Betfred Group. I say nothing about the arguability or otherwise of the causes of action adverted to by the Applicants: but the fact is that a properly articulated conspiracy and passing off claim against the Respondents – even if it had gaps or blanks or square brackets – would have been enormously helpful in determining whether the documents within the classes of disclosure sought by the Applicants fell (on the balance of probabilities) within standard disclosure.
30. The problem is compounded by the fact that the classes of document sought by the Applicants are undoubtedly widely drawn. Thus, as against the Ladbrokes/Coral Group, the following draft order (framed on the day the application was heard) was sought (quoting from paragraph 2):

"The First, Third and Fourth Respondents shall each give disclosure and inspection of the following documents within 7 days of this Order:

a. documents evidencing the details (including the card number, the identity of the subscriber, and the date of the subscription) of each Sky TV viewing card which has been used for the production of Commentaries;

b. documents evidencing the location(s) at which each such card has been used since 1 January 2017, and the details of any change in location(s);

c. copies of the Sky subscription terms and conditions applicable in respect of each such card;

d. documents evidencing the identity of each commentator engaged by any of those Respondents to produce and/or facilitate the production of Commentaries, and their employer (if any);

e. copies of the terms on which any of those Respondents have engaged each such person and/or entity."

31. As against the Betfred Group, the draft order was framed (again, on the date the application was heard) in response to the evidence contained in Siers 2, which had been served on 23 February 2017, only a few days before the hearing of the application. I shall not quote from it, because it makes use of the confidential material contained in Siers 2.
32. The Respondents did not contend that all of the documents sought by the Applicants fell outside the scope of standard disclosure. Given the width of the classes of documents sought, that would have been a tall order. But it is undoubtedly the case that the scope of the classes of disclosure sought could have been refined and improved: indeed, Mr. Mill, Q.C. (leading counsel for the Applicants), on his feet, accepted as well made some suggestions on the scope of the draft order sought against the Betfred Group made by Mr. Stanley, Q.C. (leading counsel for the Betfred Group) during the course of his submissions.
33. I find that the Applicants' request for pre-action disclosure is like the curate's egg, good in parts. Had I been minded to grant the application, which for the reasons I give below I am not, the difficult question would have arisen as to whether I should have rejected the application on this ground alone or whether I should have permitted the Applicants a yet further attempt at defining, with precision, the documents they seek by way of pre-action disclosure.
34. For the reasons given by Morison J. in Snowstar and Steel J. in Hutchison, clarity and specificity in the documents sought by way of pre-action disclosure in CPR Part 31.16 applications is important. I do not go so far as to say that it is essential, for that would entail rejection of all badly drawn applications, whatever the reason. Whether an applicant should be permitted to refine and redraw the scope of pre-action disclosure sought, so as to render it compliant with CPR Part 31.16(3)(c) must depend on all the circumstances.
35. In this case – had the issue arisen – I would not have been minded to permit the Applicants to go back to the drawing board, for the reasons given in paragraphs 16 to 20 above and because this would have likely entailed a yet further contested application.

CPR Part 31.16(3)(d)

36. CPR Part 31.16(3)(d) has a jurisdictional and a discretionary element. As Rix L.J. stated in Black v.Sumitomo Corporation [2001] EWCA Civ 1819 at [79] "[t]his is a difficult test to interpret, for it is framed both in terms of a jurisdictional threshold ("only where") and in terms of the exercise of a discretionary element ("desirable").
37. There is thus a two-stage process.

i) At the first stage – the jurisdictional stage – "the court is only permitted to consider the granting of pre-action disclosure where there is a real prospect in principle of such an order being fair to the parties if litigation is commenced, or of assisting the parties to avoid litigation, or of saving costs in any event": Black at [81] per Rix L.J.

ii) At the second – discretionary – stage – "the court should go on to consider the question of discretion, which has to be considered on all the facts and not merely in principle but in detail": Black at [81] per Rix L.J.

38. For both stages of the inquiry, the court must have in mind the three touchstones or objectives set out in CPR Part 31.16(3)(d), namely that the pre-action disclosure:

i) Dispose fairly of the anticipated proceedings;

ii) Assist the dispute to be resolved without proceedings;

iii) Save costs.

39. I do not consider that the Applicants can show that there is a real prospect of any of these three objectives being met, and accordingly consider that this is a rare case where the application fails at the jurisdictional stage. If I am wrong, then for the same reasons as I give below, I do not consider (as a matter of discretion) that the application should be granted.
40. As regards the Ladbrokes/Coral Group, the Applicants do not need the pre-action disclosure sought in order to commence proceedings and plead a case against entities within the Ladbrokes/Coral Group. I say nothing about the strength or arguability of such claims: all that I find is that whatever the strengths and weaknesses of the Applicants' anticipated claims, these strengths/weaknesses will not materially be changed whether the pre-action disclosure is given or not. The most that this disclosure would achieve would be:

i) To enable the Applicants to commence proceedings not merely against entities within the Ladbrokes/Coral Group, but also against the commentators used by the Ladbrokes/Coral Group to produce their off-tube commentaries during January and February 2017.

ii) To enable the Applicants to plead more specifically what they can, already, plead, namely that the off-tube commentaries were produced using a subscription from Sky to "At the Races", which conduct was arguably in breach of the Sky subscription terms.

41. I fail to see any realistic basis for this disclosure to achieve any of the objectives stated in CPR Part 31.16(3)(d). The Applicants already know quite enough to engage in settlement discussions with the Ladbrokes/Coral Group, if they were minded to do so. The addition of the commentators employed by the Ladbrokes/Coral Group to the discussions or to the proceedings will, in my judgment, add nothing: it is the Ladbrokes/Coral Group that was the prime mover in obtaining the off-tube commentaries; it derived the benefit of these commentaries in their LBOs; and it decided to cease using such commentaries.
42. For the reasons I have given, it is perfectly possible for the Applicants to commence proceedings against the Ladbrokes/Coral Group without the pre-action disclosure they seek: it is therefore impossible to see how this disclosure can be needed to dispose fairly of the anticipated proceedings.
43. Finally, I do not understand how there can be any real prospect that costs will be saved:

i) If these proceedings are commenced – as, clearly, they can be – there will doubtless be need for interlocutory argument about the pleadings and disclosure. I do not consider that there is any real prospect that granting this application would render the proceedings any less expensive or protracted.

ii) Indeed, I consider that there is a real prospect of this application protracting the proceedings, and making them even more expensive. As I have already indicated, I would not have been minded to grant the applications as framed. Had I granted them, it would have been on the basis of a tightening of the classes of document sought. There would, therefore, have been further time and cost spent in ensuring that the applications – in terms of the pre-action disclosure sought – were precisely and properly drawn. Then, time would have to be allowed to enable the Ladbrokes/Coral Group to produce the pre-action disclosure ordered.

iii) Not only would this cost time and money (I appreciate, but discount, that the cost of pre-action disclosure would not be for the respondent: my focus must be on the overall costs of the proceedings), but it would also serve to delay the issue of proceedings by the Applicants. To my mind, the single most important step, in terms of fairness, achieving settlement and for the saving of costs is for the Applicants to put their claim, properly pleaded, so that the Ladbrokes/Coral Group know where they stand, and can respond appropriately.

44. So far as the Betfred Group is concerned, the position is much the same. The causes of action relied upon by the Applicants comprise passing off, in addition to conspiracy. There is no reason why pre-action disclosure is needed to bring a claim alleging passing off; as regards the conspiracy claim, it was suggested that because the Applicants did not know whether the persons involved in producing Betfred's commentaries were "in house" or not, this rendered (at least to that extent) pre-action disclosure desirable, at least to dispose fairly of the anticipated proceedings. I do not agree: who can and who cannot be a party to a conspiracy involves extremely difficult questions of law and fact, which the application did not begin to grapple with. I see distinct advantages in these matters being debated after the claim has been properly framed and commenced; I see no reason why the fact that the identity and status of the alleged conspirators is unknown should prevent a claim being framed.

Disposition

45. For these reasons, the application is dismissed.