British Sky Broadcasting Group Plc v Digital Satellite Warranty Cover Ltd & Ors

Sky, as I shall collectively refer to the four claimants, is the well-known pay television satellite broadcaster and communications service provider. Its business includes the supply, installation, servicing and repair of satellite television reception equipment. At all material times the business has been conducted under and by reference to the marks SKY, SKY+ and SKY HD (“the Sky marks”).

It is not necessary for the purposes of these proceedings to distinguish between the claimants. I mention simply – and this was not in dispute – the following matters concerning them. The first claimant is the non-trading holding company of the Sky group of companies and the registered proprietor in the United Kingdom of the Sky marks, the use of which has been licensed to the other claimants. The second claimant, which is a wholly owned subsidiary of the first claimant, trades in the provision of satellite television broadcasting services under and by reference to the Sky marks. The third claimant, which is an indirectly owned subsidiary of the first claimant, manages and controls subscriber access to Sky services broadcast by the second claimant. It is also a qualifying body within the meaning of regulation 18 of the Copyright and Rights in Databases Regulations 1997 (SI 1997/3032) (the “Database Regulations”). This means that the various customer databases maintained in the course of Sky’s business are databases in which database right subsists for the purposes of regulation 13 and that the third claimant is the owner of the rights in question. The fourth claimant, which is a wholly owned subsidiary of the second claimant, supplies, licenses and controls the supply by others of installation and maintenance services for Sky equipment under and by reference to the Sky marks. This has been the position at all times material to these proceedings.

Satellite television equipment supplied by Sky comes with a standard 12 month warranty. Sky’s authorised provider markets “extended warranty” service plans to cover Sky equipment once the standard warranty expires. Prior to late 2006 the second defendant (“Nationwide”) and from early 2007 until the summer of 2010 the first defendant (“Digital”) traded in the provision of service plans for Sky satellite television equipment. They did so in competition with Sky’s authorised provider. I mention, although this has no bearing on any of the issues I have to decide, that Nationwide had itself conducted its business in succession to an earlier company with a very similar name, Nationwide Digital Satellite Services Ltd (sometimes referred to in the evidence as “Nationwide1”). From about August 2010 to 16 November 2010 the third and fourth defendants carried on the same or more or less the same business as Digital had done. They did so trading in partnership as Satellite Services. On 16 November 2010 Digital, Nationwide and Satellite Services were placed in provisional liquidation. On 31 January 2011 they were ordered to be wound up. This was on public interest grounds. An appeal against the winding-up orders was dismissed by the Court of Appeal on 29 November 2011. Permission was later given to Digital and Satellite Services to take the matter to the Supreme Court. That further appeal is due to be heard towards the end of this year.

Sky’s claims concern (1) the use in the businesses of Digital, Nationwide and the partnership of customer data which Sky claims was unlawfully obtained from its confidential customer databases and (2) the infringement of the Sky marks and passing off through the use of deceptive marketing activities. Its claims under (1) lie against all of the defendants; those under (2) lie against the first to fifth defendants (“the principal defendants”) only. In essence Sky’s complaint is that Nationwide and, later, Digital and, yet later, Satellite Services unlawfully came into possession and made use of confidential customer data taken from Sky’s customer databases for the purpose of marketing extended warranty service plans for Sky satellite equipment and that in the course of so doing they infringed Sky’s database right contrary to regulation 16 (“regulation 16”) of the Database Regulations. Sky further alleges that Digital and Nationwide (“the two companies”) infringed the Sky marks and passed themselves off as connected with, or authorised by, Sky. It alleges that Mr Freeman, Mr Sullivan and Mr Marrow are jointly and severally liable with the two companies for the acts of those two entities on the basis either that they procured the two companies, acting by others, to carry out the acts complained of, or that they personally carried out, on behalf of the two companies, the acts complained of or that they committed the acts complained of pursuant to a common design. In so far as the complaint lies against Mr Freeman and Mr Sullivan trading as Satellite Services the claim is that, as partners in that enterprise, they are personally liable for the acts complained of.

The case against the other defendants, other than the tenth defendant (“Mr Lee”), is that they, or some of them, participated in the supply of the data in question to the two companies. In so far as they did participate in such supply, Sky alleges that they are each liable for database infringement contrary to regulation 16 (based upon “re-utilisation” of the database right) and for breach of confidence. Relevant to this is that, by regulation 16(1), database right is infringed by a person “if, without the consent of the owner of the right, he … re-utilises all or a substantial part of the contents of the database.” Relief is also claimed against them as intermediaries in the supply of data to the two companies. This turns on the application of article 11 (headed “Injunctions”) of Directive 2004/48/EC on the enforcement of intellectual property rights.

The position of Mr Lee is slightly different. Between 1 August 2005 and 10 November 2010 he was employed by the fourth claimant. He is alleged to have supplied confidential data relating to Sky customers to Digital in that the data ended up in Digital’s possession. It is alleged that, in so acting, Mr Lee infringed Sky’s database rights contrary to regulation 16, breached the contractual duties of confidentiality, good faith and fidelity which he owed to the fourth claimant and breached the equitable duty of confidentiality which he owed to Sky in relation to Sky’s confidential information and trade secrets in the data.

Sky has appeared by Thomas Moody-Stuart.

Because the two companies are both in compulsory liquidation, the proceedings against them have been stayed. Neither entity has therefore been represented before me.

I can take the third, fourth and fifth defendants (respectively “Mr Freeman”, “Mr Sullivan” and “Mr Marrow”) together. They, with a Mr John Sullivan (who, I was told, is Mr Sullivan’s father), were at all material times the registered holders, each with a 25% share, of the issued shares in Digital. Mr Freeman was also the registered holder of the sole issued share in Nationwide. They and Mr Marrow (together again with Mr John Sullivan) were at all material times the equal beneficial owners of that one issued share. In addition the public records show Mr Freeman to have been the sole director of both Digital and Nationwide and Mr Sullivan to have been the company secretary of both companies. Mr Freeman and Mr Sullivan were represented before me by Aubrey Craig. Mr Marrow was originally jointly represented with Mr Freeman and Mr Sullivan but from 21 December 2011 he has acted in person. He appeared in person before me.

The sixth defendant (“Mr Steele”) appeared by Kelly Pennifer. He has had legal representation throughout this action.

The seventh defendant (“Mr Waters”) was previously jointly represented with Mr Steele but had ceased to be by the time of the trial. He claimed that his poor health meant that he was unable to take part in the trial. Following a direction made at the pre-trial review, he made an appearance on the second day of the trial (when he was in a wheel-chair) but otherwise took no part in the trial except that he submitted written closing submissions. In those submissions he stated that he had been able to follow the trial by reading the daily transcripts.

The eighth defendant (“Mr Sibbald”) was unrepresented before me. Apart from a one-line defence stating that he had no dealings with anyone named in the case and had so informed Sky’s solicitors and a signed witness statement, purporting to be by him but without stating his address, in which he claimed that as a result of a death threat on his life and “possibly” other members of his family he had been advised by the Merseyside Police to move from the Southport area to an address “known to the claimants’ solicitors” but otherwise undivulged to the other parties (or to the court) he has taken no part in these proceedings. I was told that he had changed his name and that Sky had been unable to locate him.

The ninth defendant (“Mr Reynolds”) was represented before me by Genevieve Parke. Until shortly before the trial he had acted in person. I will come later to his rather unusual circumstances.

Mr Lee (the tenth defendant) has acted in person throughout. I understand that he had assistance from counsel, acting on a pro bono basis, notably in the preparation of his defence. He appeared in person before me. He failed to appear on the last day of the trial. I was told that he had a medical appointment that day.

The result of all this was that Mr Marrow, Mr Waters (during his brief appearance on the second day) and Mr Lee acted in person at the trial, Mr Sibbald did not appear and the other individual defendants were all represented by counsel. Neither corporate defendant took any part as a consequence of the statutory stay against them.

It is now appropriate to recite what has happened in these proceedings and what the stance is of each defendant in relation to the complaints which Sky makes.

The claim form was issued on 13 April 2010. The two companies, Mr Freeman and Mr Sullivan were the only defendants at that stage. On 15 April 2010, Sky applied for and was granted a search order against those four defendants. It was executed the following day when an independent forensic computer expert took an electronic copy of the Digital database. Part of the evidence used in support of the application related to a disclosure which Digital had earlier made, in response to a number of data subject access request under the Data Protection Act 1998, identifying “Daltons Data” with an address on Acropolis Street in Paralimini, Cyprus as the source of the data relating to those subjects. Sky believed, rightly as it turned out, that, despite its name, this source was connected with Mr Freeman and Mr Sullivan. The respondents to the order were subjected to secrecy provisions to prevent them from disclosing the existence of the order to any third party.

The next material step was an order made on 26 April 2010 granting Sky permission to analyse the Digital database obtained on execution of the Search Order. It also required the four defendants to identify within 14 days all supplies of data made to them since November 2006, the persons who made the supply, the payments made for such data and the size of the database acquired in each case (with particular reference to the contact details of four named persons) and provide details of the identity of “Daltons Data” together with details of transactions concerning supplies of contact data involving Daltons Data and Digital. The order directed them to give disclosure in respect of the information to be supplied and gave Sky permission to add any other persons as defendants it considered necessary in the light of the resulting information and disclosure.

On 10 May 2010 Mr Sullivan served a sworn statement in purported compliance with the order. The statement was made on behalf of himself and the two companies. In a sworn statement of the same date Mr Freeman stated that he had read and confirmed the contents of Mr Sullivan’s statement. In his statement Mr Sullivan disclosed that, when it started trading in early 2007, Digital used the same database that Nationwide had used and that it had acquired the database when Nationwide had ceased to trade the previous November. He stated that neither he nor Mr Freeman had acquired any contact data used, or acquired for the purpose of being used, for marketing purposes after November 2010 (i.e. when Digital was placed in provisional liquidation). He identified Daltons Data and Mr Waters (referred to in the statement as “Michael Watters”) as the sources from which the data had come. He gave their addresses. He exhibited a schedule of the payments made for the supplies and confirmed its accuracy stating that it had been produced from records available to him. The schedule referred to two lists of invoices: one headed “Daltons Data” and the other headed “London Data”. He said that his understanding was that Daltons Data was the trading name of Mr Steele (spelled “Steel” in the statement). The inference was that London Data referred to Mr Waters. The following week Mr Freeman and Mr Sullivan provided disclosure of, inter alia, invoices in the names of Daltons Data and “Michael Watters” and cheque book stubs in respect of the supplies said to have been made by those two sources.

On 20 May 2010, in response to the information provided by Mr Freeman and Mr Sullivan, Sky applied for and obtained Norwich Pharmacal relief against Mr Steele and Mr Waters (as their names are correctly spelled), and also against Mr Marrow. It required the three of them to provide broadly the same information as Mr Freeman and Mr Sullivan had been earlier required to supply and, in addition, required Mr Steele to identify the person or persons running Daltons Data and required Mr Waters to do likewise in the case of London Data. They were required to provide disclosure of any supporting material and subjected to secrecy orders to avoid tipping off parties further up the data supply chain. The next day they were added as defendants to the proceedings.

Mr Steele served a witness statement in which, while denying that he had ever traded as Daltons Data or that he had rendered invoices in that name, admitted having met Mr Sibbald in Cyprus. Believing, he said, that Mr Sibbald ran a data processing company called Viper Global Solutions which could supply data connected with users of satellite TV systems which he knew was data that Mr Sullivan wanted, Mr Steele stated that he acted as a courier between Mr Sibbald and Mr Sullivan. He did so, he said, by taking delivery of a sealed jiffy bag from Mr Sibbald which he delivered to Mr Sullivan. In exchange for the jiffy bag he handed to Mr Sibbald “an envelope of cash” which he had previously received from Mr Sullivan. He stated that he acted in this way for some time and that Mr Sullivan paid him for doing so. I do no more than summarise Mr Steele’s statement.

A few days later Mr Waters served a witness statement in which he admitted to having delivered data from Mr Reynolds (or one of his companies) in return for a commission. He stated that he did so at the request of Mr Reynolds. He stated that he would collect from Mr Reynolds a sealed envelope or occasionally a jiffy bag in which (he assumed) was a CD ROM containing the data in question, that he would then deliver the envelope or jiffy bag to “a representative of the Purchaser” (whom he does not identify but assumed it was “the Defendants or one of them”) in exchange for an envelope for Mr Reynolds and that this exchange would take place usually “at Warwick services” (meaning the service area on the M40). This was because it was roughly half way between Bognor Regis (where he lived) and Liverpool (from which he understood the purchaser operated). He denied having traded in data of any kind or having traded as London Data. Again I do no more than summarise Mr Waters’ statement.

Mr Marrow also served a witness statement in accordance with the order to do so. In it he confirmed as accurate the contents of Mr Sullivan’s witness statement of 10 May 2010.

On 15 June 2010, as a result of the identification by Mr Steele and Mr Waters of Mr Sibbald and Mr Reynolds as suppliers of data, Sky sought and obtained Norwich Pharmacal relief requiring Mr Sibbald, Mr Reynolds and two companies controlled by Mr Reynolds (which Mr Waters had named in his witness statement) to give information (relating to data sources) similar to what Mr Steele and Mr Waters had earlier been ordered to provide, together with disclosure of any supporting material. Similar secrecy orders were made and permission given to add those two persons as defendants to the proceedings. They were joined as defendants on 21 June 2010.

Mr Reynolds and Mr Sibbald served witness statements as each had been required to do. In his, Mr Reynolds stated that he knew the principal defendants from earlier business dealings but denied that he or any of his companies had ever sold data to them or to Mr Steele or Mr Waters, denied that he had ever asked any of his employees to supply or deliver data to any of them and denied any knowledge of London Data. I have already mentioned Mr Sibbald’s witness statement. In it Mr Sibbald denied owning a property in Cyprus or even having visited that island, admitted that he had been a director of Viper Global Solutions (but stated that it had not traded in data but in a wholly unrelated field and had been dissolved), denied knowing either Mr Steele or any of the other defendants, and stated that he had never supplied data to any of the defendants and had no involvement of any kind with the subject matter of the proceedings.

Faced with conflicts in the evidence as to the source of the data which it claimed had come wrongfully into the possession of the two companies and doubting the accuracy of the information disclosed in Mr Sullivan’s witness statement of 10 May 2010 (which had been confirmed as accurate by Mr Freeman and Mr Marrow), Sky applied for and on 20 August 2010 was granted an order that Mr Freeman, Mr Sullivan and Mr Marrow attend for cross-examination on their evidence as to the source of the data. Directions were given for this and for an expedited trial of the action.

At that point without prejudice discussions took place between Sky and those three persons in the course of which, as I was told without objection, Mr Freeman identified Mr Lee as a source of the data used by Digital. It was agreed that they would cooperate with Sky to enable “seeded” data to be sent to Mr Lee so that its later use could be traced. The seeded data was found to have been supplied to Digital. It led to the termination of Mr Lee’s contract of employment (with the fourth claimant) and, on 3 February 2011, his joinder as a defendant to the proceedings.

On 29 September 2010 Mr Sullivan served a further witness statement identifying additional sources of the data supplied to Nationwide. Two of them, he said, had worked for one of Sky’s preferred installation providers. He claimed that another, John Bromley, had previously worked for another of Sky’s preferred installation providers. In confirmation of what Mr Freeman had already said, he identified Mr Lee as a source of data supplied to Digital. He sought to explain why he had failed to mention him in his earlier statement. There was no suggestion at this stage that his earlier statement was otherwise in error, merely that it needed supplementing.

In the meantime, enquiries by the police into the conduct of some of the defendants and delays caused by the separate proceedings to wind up the two companies meant that a new trial date had to be fixed. (The police enquiries led to my making an order, on the application of the Commissioner of the City of London Police at the start of the trial, designed to ensure that their investigations are not put at risk by anything said in the course of the trial.) Also, by February 2011, Mr Freeman, Mr Sullivan and Mr Marrow were each made subject to worldwide freezing injunctions up to a maximum of £6.7 million. I was told that assets to the value of £4.3 million have been frozen as a result.

In April 2011 Sky applied for summary judgment against Mr Freeman, Mr Sullivan and Mr Marrow on its claims against them. The application came on for hearing before Arnold J in October 2011 but not before that judge had heard and dismissed an application by those three persons for a stay of the proceedings against them on the ground that a settlement had been reached during the course of a telephone conversation in September 2010.

In a reserved judgment delivered on 27 October 2011 ([2011] EWHC 2662 (Ch)), Arnold J held that the two companies and Satellite Services had each committed the wrongful acts alleged against them. He therefore granted Sky a declaration, as against the three individuals, that the two companies and Satellite Services were liable for (i) breach of confidence (ii) infringement of Sky’s database rights (iii) infringement of one of the Sky marks, namely UK Registered Trade Mark No. 2386970 SKY (it was common ground that it was only necessary to consider that one mark) and (iv) passing off. The judge recorded (at [10]) that counsel for the three individuals conceded in the light of the evidence that the two companies and Satellite Services were each liable for breach of confidence. He went on to say that it was not therefore necessary for him to describe the evidence relied on although he noted that it demonstrated convincingly that large quantities of the confidential customer data used by those businesses emanated from Sky’s customer databases. There was a like concession (recorded at [50]) in respect of the claim in passing off once Sky succeeded (as it did) on its claim for trade mark infringement. He dealt at some length with the other two heads of claim. He also heard, but dismissed, a cross-application by the three for summary judgment in their favour on one of Sky’s claims against them.

He went on to give judgment against Mr Freeman and Mr Sullivan in respect of their acts when trading in partnership as Satellite Services and granted consequential injunctive and delivery up relief (and for that purpose, although not for the purpose of any financial recovery against the partnership assets, lifted the statutory stay of proceedings to enable such relief to be granted). It is to be noted that, in contrast to the claim against the partnership, the judge did not grant any relief against the two companies. I understand that this was in view of the statutory stay against them consequent upon them being in compulsory winding-up. It is not clear to me why this was felt to be an obstacle as, of course, it was open to the court to lift the stay (as had happened in the case of the claims against the partnership), especially as, between them, the three individuals who were before him represented 75% of the beneficial share ownership of the two companies and were their only officers. It is theoretically possible, if the appeal against the winding-up orders to the Supreme Court should succeed, that the two companies may later seek to argue that they (as distinct from the personal defendants) are not bound by Arnold J’s findings.

However, Arnold J declined to give Sky summary judgment against the three individuals on the basis of their joint liability for the wrongful acts of the two companies. The claim against them is founded on the contention that each of the three of them “intended, procured and shared a common design” to commit the wrongful acts alleged against those companies. He held (at [59]) that although the evidence before him established a strong case that each of them was jointly liable for at least some of the wrongful acts of the two companies, it did not follow that Sky should be granted summary judgment. He then gave his reasons for this.

The next noteworthy event is the service in early January 2012 by Mr Freeman and Mr Sullivan of witness statements in which they each retract as inaccurate earlier evidence to the effect that data supplies had been made by either Mr Steele or Mr Waters to either of the two companies. Each ascribed this to an “error of judgment”. Their revised position, to which they adhered when cross-examined before me, was that neither of those two persons had any involvement in the subject matter of this litigation and that their earlier evidence was concocted to put Sky on a false trail. Mr Marrow also served a further witness statement at this time. He too stated that his earlier witness statement (incorrectly identified as having been made on 10 May 2010 when in fact it was made on 18 June 2010) was inaccurate. He put this down to the fact that for family and personal reasons his mind was “not on working” at the time. He set out a fuller account of his involvement in the affairs of the two companies. All three deponents have made yet further witness statements.

Notwithstanding this retraction, Mr Steele has stuck to his account that he acted as a courier for the delivery to Digital of what at the time he understood, but could not be certain, was data of some kind. Mr Waters, by contrast, equivocated: in a second witness statement he disclaimed the contents of his first (relying on his medical condition at the time) and implied that it was inaccurate. Mr Reynolds has consistently maintained his stance of having had nothing to do with the subject matter of these proceedings and thus of having been falsely implicated by Mr Waters. As I have mentioned, Mr Sibbald, having denied any involvement, has declined to participate in this action. Mr Lee, while admitting that, during his employment by Sky, confidential Sky customer data found its way from his personal laptop to Digital, has denied that this happened as a result of any misconduct on his part.

Before I consider whether and to what extent Sky establishes its claims against the defendants it is appropriate to make clear that I am not concerned with the two companies in respect of each of which, as I have mentioned, there is in force a statutory stay of proceedings resulting from its liquidation. Moreover, I am only concerned with liability and not with quantum of loss if liability is established. It is also appropriate to say something on the relevant law and on the trading history of the two companies.

As regards the liability of Mr Freeman, Mr Sullivan and Mr Marrow for the wrongful acts which Arnold J found the two companies to have committed, the question (which must be considered separately in respect of each of those three persons) is whether he intended, procured and shared a common design that the acts in question should take place. I make no distinction in this regard between breach of confidence, infringement of database right, trade mark infringement and passing off.

The law was put thus by Lord Templeman in CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013 at 1058E:

“…a defendant who procures a breach of copyright is liable jointly and severally with the infringer for the damages suffered by the plaintiff as a result of the infringement. The defendant is a joint infringer; he intends and procures and shares a common design that infringement shall take place. A defendant may procure an infringement by inducement, incitement or persuasion.”

That principle is not confined to infringement of copyright.

In the later case of Unilever Plc v Gillette (UK) Ltd [1989] RPC 583 Mustill LJ stated, at 609, in reference to the words “common design”, that:

“…there are other expressions in the cases, such as ‘concerted action’ or ‘agreed on common action’ which will serve just as well. The words are not to be construed as if they formed part of a statute. They all convey the same idea. This idea does not, as it seems to me, call for any finding that the secondary party has explicitly mapped out a plan with the primary offender. Their tacit agreement will be sufficient. Nor, as it seems to me, is there any need for a common design to infringe. It is enough if the parties combine to secure the doing of acts which in the event prove to be infringements.”

That was a case of patent infringement.

Following on from this is whether it makes any difference that the “secondary party” (as Mustill LJ described him) is a director (or other officer) of the “primary offender”. This brings into play what was said in MCA Records Inc v Charly Records Ltd [2002] FSR 26; [2001] EWCA Civ 1441 which, in a nutshell, is that a person does not escape liability as a joint wrongdoer merely because he is a director or other officer of the company in question unless he did no more than carry out his constitutional role as such director or other officer.

I did not understand anyone to take issue with these principles although Mr Craig submitted that there could be no joint liability for breach of confidence, which is an equitable obligation, unless it can be shown that the defendant in question knowingly and intentionally induced the breach. He submitted that the defendant in such a case must, if he is to be liable, be under the same or some similar obligation as that to which the primary offender is subject. The right being equitable in nature and, thus, one which binds on the conscience, the conscience of the defendant must likewise be affected. A defendant without actual or constructive knowledge of the breach of equitable obligation is not to be held liable.

I consider that Mr Craig is seeking to draw a distinction between equitable obligations such as the duty of confidence (that is to say, obligations which have their origin in equity) and others when in substance is there is none. The secondary party, in the case of joint liability for, say, trade mark infringement or passing off committed by the primary offender (to use once more the language adopted by Mustill LJ in Unilever), must, if he is to be liable, have at least that degree of knowledge and intention which would suffice to bind his conscience if the wrong in question were breach of confidence. The language of equitable obligation must not obscure the nature of what it is that fixes the secondary party with liability.

The extended warranty and repair business which first Nationwide and then Digital conducted had its origin in a company called Omega (Services) Installations Ltd which was run by Mr Marrow and Mr Sullivan’s father. Established in 1999, it started as an installer of Sky equipment. In early 2000 it became one of Sky’s preferred installation providers (or PIPs). This status continued until sometime in 2001. It was Mr Marrow who claimed the distinction of deciding to set up the business of providing extended warranties to Sky customers after the idea had been suggested to him by another. He realised that it offered the prospect of profit. The new business established to provide the service was Nationwide1 (i.e. Nationwide Digital Satellite Services Ltd) which had been incorporated in July 2003. It operated from premises in a trading park in Kirkby (just north of Liverpool). It did so, I was told, using the database which had previously belonged to Omega. Its business, including the database, was later transferred to Nationwide which had been incorporated in October 2005. Nationwide traded from the same premises in Kirkby and also used premises in Southport. It operated for no more than a few months until November 2006. Its business, again with the database, was later transferred to Digital which, although incorporated in early November 2006, did not start trading until February 2007. It was not clear to me what was happening between November 2006 and February 2007. Digital traded until November 2010. It did so from the same Kirkby trading park, albeit at a different unit on the estate. As I have already explained, Mr Freeman and Mr Sullivan were the only officers of Nationwide and Digital but, as I shall explore later, Mr Marrow, in addition to being a 25% shareholder in each, was heavily involved in the activities of both companies until sometime around May/June 2010.

The evidence demonstrated that, over time, the database which each business started with was supplemented from at least three sources: a Mr John Bromley, a Mr John Webley and a Mr Tom Hicks. Quite where Mr Bromley, who was recruited and managed by Mr Sullivan, sourced the data he supplied was not established. Similar is the case of Mr Webley who was recruited and managed by Mr Freeman. The likelihood is that the data supplied by Mr Hicks, who was also recruited and managed by Mr Freeman, came from Mr Lee. Like Mr Lee, Mr Hicks had been previously employed by Sky. The evidence as to precisely what the period was during which each of these three carried on delivering data to the businesses (predominantly to Digital, given Nationwide’s short trading life) was unclear. What seems to have happened is that by mid-2008 (it might just have been mid-2009) both Mr Bromley and Mr Webley ceased to supply and Mr Hicks replaced them. It was said that for a while supplies came from all three but it was found that Mr Hicks’s supplies largely duplicated those of the other two (and, I think, were found to be better) and it was thought more sensible (as doubtless it was) to use just the single source. Mr Hicks continued to supply data to Digital until it ceased trading in November 2010. It appears that neither Mr Bromley nor Mr Webley provided invoices for their supplies and that each was paid in cash. There is some suggestion that Mr Hicks invoiced for his supplies. A major issue for decision in these proceedings has therefore been whether, in addition to these three sources, data supplies also came from Mr Sibbald (through Mr Steele) and Mr Reynolds (through Mr Waters).

The two companies, more especially Digital which had a much longer trading life, operated in a substantial way. I was given to understand that, at its peak, Digital had 40 to 50 people working in administration and telesales management, used the services of up to 150 telesales staff and had 120,000 customers. Digital’s unaudited financial statements for the year ended 31 January 2009 disclose a turnover of £5.1 million. Sales costs are shown in the figure of £3.26 million of which £415,000 is described as “data purchases”. Wages exceed £1 million. In the unaudited statements for the year ended 31 January 2010 (Digital’s last full year of trading) turnover increased to £8.1 million and data purchases appear in the sum of £348,376. Wages for that year are shown at £767,000.

The two companies (I am not concerned with Nationwide1) operated by soliciting Sky customers, either by telephone or by post, whose names and other details were contained in the database. It was obviously necessary that the database should be kept up to date and, importantly, that the database should indicate when the Sky customer’s twelve-month warranty with Sky was due to expire (I reject Mr Marrow’s suggestion to the contrary) so that the marketing could be accurately targeted. In evidence were examples of the typical mail shot used in the postal marketing which was carried out by an outside contractor called Sunline Solutions to which the necessary customer data was sent. Also in evidence was the script for use by the telesales staff employed in the two companies. It was the use of these mail shots and the texts of the scripts used by the telesales staff in their approach to Sky customers whose business they wished to solicit that formed the basis of the claims in trade mark infringement and passing off against the two companies and which resulted in the grant of summary judgment against Mr Freeman, Mr Sullivan and Mr Marrow in respect of those matters (see in particular [2011] EWHC 2662 (Ch) at [24] to [50]).

It is convenient to deal with these three together.

As Mr Moody-Stuart pointed out in his closing submissions, Mr Freeman accepted, indeed volunteered, that his original account of the sources of the data given to Sky in response to the court’s order of 26 April 2010 had been false. He accepted that he was aware that the same false information had been given to the FSA in May 2010 and to the ICO in June 2010. He claimed that he was aware that the story put forward by Mr Sullivan in his first witness statement about Mr Steele supplying data was false (a matter I explore when I come to consider Mr Steele’s position) and knew that Mr Sullivan had arranged for the fabrication of the Daltons Data and London Data invoices. Retraction had to await his witness statement of 4 January 2012 when further information about data sources was proffered. He said that on being served with the order of 26 April 2010 he spoke to Mr Waters to arrange for a false account to be told by Mr Waters (a matter I also deal with later). He said that he agreed with Mr Waters to prepare the false account and helped Mr Waters to put together his false story.

Despite confessing to past misconduct Mr Freeman was not wholly forthcoming in his oral evidence. For example, I do not accept his assertion not to have known more about Tom Hicks and his companies. It seems that it was through Mr Hicks that Digital had been supplied with much confidential Sky customer data. (The suspicious circumstances in which such data found its way to Digital are linked with the activities of Mr Lee and, so far as I need to deal with them, I do so when I come to consider Mr Lee’s position.) It is not surprising therefore that I have approached Mr Freeman’s oral evidence with caution and have been reluctant to rely on it unless supported by credible evidence from other sources.

As Mr Moody-Stuart’s closing submissions emphasised, Mr Sullivan’s record for truthfulness was no better. He accepted that he was responsible for fabricating invoices and that to his knowledge the writing on one set of them had been added to make them look “better” (i.e. to give them a false air of authenticity). It was his first witness statement, as will be explored in greater detail when I come to the position of Mr Steele and Mr Waters, that sought to suggest, falsely as he was much later to say, that the data which the two companies had used for marketing purpose after November 2006 had come from Daltons Data in Cyprus and from Mr Waters. In cross-examination he volunteered that he had conspired with Mr Steele to put forward the false story concerned with the Daltons Data source of supply. The falsity (to his knowledge) of the matters set out in his first witness statement was maintained and reinforced by his subsequent statements until retracted in his statement of 6 January 2012. Over and above such dishonest and misleading conduct his statements failed, in a variety of respects (Ms Pennifer set many of them out in her written closing submissions), to make the full disclosures required by the court’s orders. Nor, like Mr Freeman’s, was his oral evidence full, frank and trustworthy. In her closing submissions, Ms Pennifer described his dishonesty, not confined to his conduct in these proceedings, as “pervasive”. That is a description with which I find it hard to disagree. Unsurprisingly I was not able to place reliance on his oral testimony any more than I felt able to do so in relation to Mr Freeman’s.

It is worth setting out in a little more detail the discreditable episode of the invoices. It illustrates the cynical lengths to which Mr Freeman and Mr Sullivan were prepared to go, no doubt with the assistance of others in Digital, to mislead Sky and the court and conceal the truth. It shows that theirs was no passing or fleeting lapse from honesty.

There were two sets of fabricated Daltons Data invoices. The first, according to later disclosed metadata, was created in the early afternoon of 7 May 2010. That was a few days after the court’s disclosure order of 26 April and a mere three days before Mr Sullivan’s first witness statement in which he referred to a schedule of Daltons Data and London Data payments the dates of which coincide with the dates of the Daltons Data invoices (and the London Data invoices dealt with in the next paragraph). The first set of Daltons Data invoices comprised 27 invoices with dates running from 30 March 2007 to 2 September 2009. They were disclosed on 17 May 2010, which was ten days after they were created. They carry bogus handwritten notes, such as “Pd” (suggesting that the invoice had been paid). A further set of Daltons Data invoices, this time 16 in number ranging in dates from 4 June 2008 to 2 September 2009 (a different start date but the same end date), was created, according to the relevant metadata, on 14 May 2010 with a modified/sent date of 16 June 2010. Although there is some correlation between these two sets the amounts on some of them differ from the earlier set and the overall totals differ. They bear the same invoice numbers starting from D0001 as the earlier set except that, being just 16 in number, they terminate at D00016.

The London Data invoices are as follows. A run of 59 invoices dating from 2 November 2007 to 23 September 2009 was disclosed on 17 May 2010. Some of them possess handwritten annotations, much as was the case with the disclosed Daltons Data set. A separate run of 7 invoices was disclosed in January 2012. It bears the same dates and amounts as the first 7 of the 59 disclosed on 17 May but with more zeros in the invoice numbering, a persistent misspelling of “warrantys” and one or two other minor differences. There exists a quite separate set, in the sense that the number of them (48), date range (25 February 2008 to 23 September 2009), amounts and formatting differ from the earlier run. The relevant metadata indicate that this set was created on 14 May 2010 at the same date and time as the second set of Daltons Data invoices. There was some but not complete correspondence between the amounts on the two sets. There was also in evidence a schedule of 65 London Data invoices attached to an email dated 25 June 2010. This schedule (the invoices themselves were not in evidence) indicated a date range from 29 October 2007 to 23 September 2009 and set out dates and amounts different from the other sets.

Mr Sullivan, who was the only witness put forward to explain the origin of these various invoices, was quite clear in his evidence that they were fabricated long after the transactions to which they purport to relate. But he was otherwise unable (or possibly unwilling) to explain why the different versions had been created. It looks as if different versions were produced to suit different needs (whether the court in these proceedings, the ICO or for tax reasons): the court was left to speculate. Their purpose can only have been to misrepresent and conceal and thereby to mislead. On any view much trouble had been taken to produce them and, in the case of those disclosed early in the proceedings, furnish them with handwritten annotations in order to give to them an appearance of authenticity. Such things do not happen without an instruction from those in ultimate charge. In so far as they were produced to meet the requirements imposed on both Mr Freeman and Mr Sullivan by the disclosure terms set out in the court’s order of 26 April 2010 it is overwhelmingly likely that their production resulted from a joint decision by the two of them.

Mr Marrow was joined as a defendant only after these proceedings had been started against the other principal defendants. Initially he was jointly represented with Mr Freeman and Mr Sullivan but, by the time of the trial, was acting in person. He was not formally an officer of either of the two companies, a circumstance probably not unconnected with the fact that for a period of 8 years from 24 March 2003 he was disqualified from being directly or indirectly concerned in the promotion, formation or management of a limited company except with the court’s leave. In his third witness statement he said that he was Digital’s Business Development Manager, was “employed…only” and “therefore” with no access ever afforded to him to records of that company. By repeated references to the “Directors” of Digital, namely Mr Freeman and Mr Sullivan, as the persons to approach for information of one kind or another he sought in his statement, as he sought to do by similar references in his subsequent statement and also in his oral evidence (it was also a constant refrain in his written closing submissions), to distance himself from the operation of the two companies and portray himself as really no more than an underling who carried out the instructions of others. This appears to have been as much out of concern not to be in breach of the disqualification order (a matter which is not before me) as with the mistaken belief that, as a mere employee, he could not be (or would be much less likely to be) found to have intended, procured and shared a common design that the two companies should act in the way that Arnold J found them to have done.

It is clear to me that Mr Marrow wielded considerable influence within Digital’s business (and Nationwide’s too) and was, for all practical purposes, as important in the running of the business as either of Mr Freeman or Mr Sullivan. Indeed, he came across as the kind of man who would not take lightly to being pushed around by colleagues or who would live comfortably with being at the beck and call of others in a business in which he shared equally with each of those others. When asked in cross-examination what he did when he worked in Omega, his answer was telling. He said that he did what he did in every other company: “try and inspire people”. Mr Marrow was clearly a leader and not merely a foot-soldier.

He was involved in the wider aspects of the defences to these proceedings than simply his own position. This is well illustrated by the following incident. It concerns the circumstances in which Mr Waters came to make his first witness statement. (This was the statement that Mr Waters later retracted and which Mr Sullivan claimed had been concocted with Mr Waters to mislead Sky.) In early June 2010 Mr Waters had been sent by his (then) solicitors a draft of the statement. On 6 June he emailed Mr Sullivan for his comments on the draft. Mr Sullivan replied the next day saying simply “Like it mike” (referring to the draft). The following day, 8 June, Mr Sullivan emailed a copy of the draft statement to Mr Marrow. When Mr Marrow was asked why he was sent the draft, he replied that he had no idea, was not in any event in the country when it was sent and had not even seen the email until it was produced in the course of the proceedings. But it turned out from an earlier witness statement he had made that he had indeed been in this country on 8 June, having arrived back three days earlier. When that was pointed out, Mr Marrow simply denied having read the email saying that he was not at work on 8 June. It is tolerably obvious that whether or not Mr Marrow bothered to read the email and the attached draft statement the very reason Mr Sullivan sent it to him was so that he could be kept in the picture as to what was happening (and possibly so that he could offer his comments on the draft before it was finalised) and the reason for that was because Mr Marrow had been intimately involved in Digital’s affairs. There is no reason why he should have been sent the draft if, as he claimed, he was no more than a lowly employee of the company and, as such, distant from matters concerned with Mr Waters and this litigation.

I draw attention to this incident as it throws a telling light on Mr Marrow’s role. It illustrates how he sought to distance himself from what was happening, on this occasion by falsely or recklessly claiming that he was abroad at the time. The incident also serves therefore to demonstrate the unreliability of Mr Marrow’s evidence. As a witness he was less than convincing: he was at times self-congratulatory and at other times on the look-out for the drift of the questioning, willing to make an admission if he thought it would do him no harm but otherwise hesitant and sometimes evasive. Occasionally he simply avoided answering the question put to him. He had no good excuse for having confirmed as accurate Mr Sullivan’s first witness statement once Mr Sullivan had admitted that it was untrue in various important respects. In his third witness statement he sought to explain away his earlier endorsement of it by stating that at the time he did so his mind, for various personal reasons, was “not on working”. That seemed to me to be a very feeble and unconvincing reason for his uncritical confirmation of that misleading statement and it failed to explain why his confirmation of it went uncorrected until he was confronted with Mr Sullivan’s retraction 18 months later.

What then was Mr Marrow’s position within the two companies? He was overall manager in the areas of the marketing and data processing for which he had responsibility within the businesses. He accepted that he would take important decisions affecting them and, if appropriate, would do so after discussing and reaching agreement on them with Mr Freeman and Mr Sullivan. It was Mr Marrow who built up the telesales capabilities of both companies: he recruited the sales team, sorted out the scripts they were to use when soliciting for business over the telephone, set up their training and put in place the necessary infrastructure. Once the team was established he had the responsibility of managing it. Postal marketing, as I have mentioned, was sub-contracted to an outside company called Sunline. But Mr Marrow controlled the strategy that Sunline was to follow. The marketing material had originally been copied by Mr Marrow and Mr Sullivan’s father from another, unrelated, business for use by Nationwide1. It was then simply adapted for use by the successor businesses. On the data processing side he would arrange to have the data “cleaned up” (i.e. remove details of persons who had died or moved away and details which were duplicated) after it had been received from the suppliers and, when that process had been completed, ensure that it was passed to the telesales staff and made available for postal marketing.

Against that background I have to determine the extent to which the three of them are personally answerable for the wrongful conduct of the two companies which was established against them by the judgment of Arnold J given on 27 October 2011. As I have mentioned, I am not concerned to determine the personal liability to Sky of Mr Freeman and Mr Sullivan trading as Satellite Services. That was also established by the judgment of Arnold J.

The two companies were run wholly informally. There were no board meetings (and, as Mr Freeman was the only director of both companies, there was no meaningful sense in which a board meeting could have taken place) and therefore no board minutes. Indeed, so far as I was able to discern there was no formal structure through which the companies operated. I had no sense that there were persons concerned in the running of the companies at a senior managerial level other than those three. Instead, as the evidence made plain, decision making was informal and, where important matters were concerned, by discussion and agreement between Mr Freeman, Mr Sullivan and Mr Marrow. I had the strong impression that nothing of importance would happen in either company without the knowledge and agreement of all three. That is not to say that each did not have his own area of responsibility within the overall business although I had some difficulty in understanding what Mr Freeman’s particular role was. I have already set out what Mr Marrow did. All company cheques had to be signed by either Mr Freeman or Mr Sullivan; no one else had any delegated authority to do so. Each of the three had a separate personal account (referred to as “trading as” accounts) into which, from the available evidence, large amounts of company money (it was unclear whether it was Nationwide or Digital money, probably both) was paid. In short the companies were run on a basis of such informality that no clear distinction was made between the corporate and the personal. In addition, all three received substantial payments (a figure of over £900,000 was mentioned) from Digital. Although paid as dividends it was reasonably clear that they were at least as much to reward the recipient for his work in the business as to provide a dividend. How precisely the payments were to be recorded did not seem to matter to them.

In these circumstances it is unreal to suppose that the purchase of Sky customer data by the two companies occurred without that fact and the circumstances in which it happened being fully known to and approved by the three of them. The acquisition of the data was central to the companies’ success. Without its steady replenishment the business could scarcely operate. All three said that with the exception of some test data the only sources of fresh customer data reaching the two companies from around 2006 were Mr Webley, Mr Bromley and Mr Hicks and that Mr Hicks was effectively the sole source for the period up to the time that Digital ceased trading. The supply of data by Mr Webley was managed by Mr Freeman who had recruited him; it was Mr Sullivan who recruited and managed Mr Bromley. Mr Sullivan paid for the deliveries by Mr Bromley (or arranged for them to be paid) in cash rather than by cheque and not to him in person but straight into his bank account. Mr Webley too was paid in cash – and not by cheque - when he attended at the premises in Kirkby. Their names did not appear in the internal business records. Instead the payments to them were recorded simply as Daltons Data (in the case of Mr Webley) and London Data (in the case of Mr Bromley and Mr Hicks). With the agreement of Mr Sullivan and Mr Marrow (at any rate according to Mr Freeman) Mr Freeman had made the decision to cease obtaining supplies from Mr Webley and to use Mr Hicks instead. In the event Mr Hicks replaced Mr Bromley as well as Mr Webley as a source of supply. It was Mr Freeman who managed him. The payments to Mr Webley took place at Warwick motorway services area in exchange for the data. Mr Marrow too had a hand in the inflow and outflow of customer data: he said that it was he who had negotiated the sale of data to Mr Reynolds. And to him fell the task, acting on behalf of the companies, of managing the processing of the data once it had been received.

These being the unconventional, secretive and informal circumstances in which the data was sourced and paid for (I leave aside for the moment whether Mr Sibbald acting via Mr Steele and Mr Reynolds acting via Mr Waters were also sources), I find that it must have been plain to Mr Freeman, Mr Sullivan and Mr Marrow that what was happening involved something underhand. Why else would Mr Sullivan have signed his first witness statement suggesting that the sources were quite different if he thought that there was nothing to conceal and that all was regular and above board? And why else would Mr Freeman and later Mr Marrow have made statements confirming as accurate what Mr Sullivan had stated? And why else would they have allowed what they claimed was the truth to remain concealed for so many months? The obvious conclusion to be drawn was that each was aware that the supplies that the companies were receiving had been unlawfully sourced and that they wished to conceal that fact and the sources from Sky.

Mr Craig submitted that the fact that Mr Freeman and Mr Sullivan had reservations about how the information the companies were receiving was obtained and where it came from is not sufficient to fix them with liability for the finding of breach of confidence by the two companies. If that were indeed the extent of their knowledge there might be something in the submission. But it is clear that their knowledge and involvement went much further than this and that the reason the companies’ actions in sourcing and then using the Sky customer data took place in the way that I have described was because this was what they and Mr Marrow intended.

I therefore find that the three of them each intended, procured and shared a common design that the various acts should occur which, as Arnold J held, amounted to breaches of the obligation of confidence which the two companies owed to Sky as owner of the data in question.

Infringement of database right, trade mark infringement and passing off (the other wrongs of the two companies established before Arnold J) go hand in hand. The liability of the three individuals as joint tortfeasors for these wrongs turns on their knowledge of and participation in the two companies’ marketing activities where these wrongs occurred. Mr Marrow’s responsibility is clear beyond any doubt: it was he who had charge of the marketing side and approved the scripts and material that were used. He intended and procured that the two companies should operate in ways that Arnold J found to have infringed the Sky marks and constituted passing off. He also arranged for and had charge of the processes whereby the data was transferred from one medium to another to enable the data to be used in the companies’ marketing activities.

There is no basis for Mr Freeman or Mr Sullivan to contend either that these things occurred without their knowledge or, to the extent that they were aware of and assented to what happened, that they were acting purely in their roles as officers of the company. Mr Freeman knew and must have intended that customer data supplied by Mr Webley and the others would be loaded on to the companies’ databases and used for marketing purposes: that was precisely why it had been obtained. Moreover he dealt with complaints from trading standards officers over the companies’ marketing in the course of which he would have known, if he did not already, how the companies targeted their customers. Mr Sullivan too handled marketing complaints and was aware of the manner in which the companies approached their customers. And he too knew that the only purpose of acquiring the data was so that it could be transferred to the companies’ own databases and used for marketing. I therefore reject Mr Craig’s submission that the evidence did no more than show that his two clients merely facilitated the infringement of Sky’s database right and that in law responsibility for the companies’ actions, in particular the extraction of the data, lay with others. I also reject his further submission that the involvement of Mr Freeman and Mr Sullivan in the companies’ trademark infringement and passing off was, in his words, “even more remote and passive than in relation to database right infringement” in that they had little or nothing to do with direct sales or telesales, did not write the scripts and had no hand in settling the language of the mail shots. They cannot escape responsibility by distancing themselves from the actions of those lower down the corporate order. It is obvious that the companies carried on their business in the way they did – sourcing, processing and then using the customer data in the ways set out above – with the full knowledge and approval of these two and not just of Mr Marrow and others.

In short, I find that all three agreed – it is sufficient that they did so tacitly - that the two companies should operate in such a way – receiving the customer data from sources (identified internally simply as Daltons Data and London Data) anxious not to be revealed, knowing that the data was confidential to Sky, extracting it so that it could be used in their own marketing and then using the information so extracted in the course of marketing their service plans– as to breach Sky’s right of confidence in the data, infringe Sky’s database rights in it, infringe its marks and pass themselves off as connected with, or authorised, by Sky.

His evidence was a puzzle. The key factual issue was whether, as he claimed and as Mr Sullivan and Mr Freeman had initially contended but later retracted, he had acted as a courier for the delivery of data from Mr Sibbald to Mr Sullivan in exchange for cash payments. It was Mr Sullivan’s identification in his witness statement of 10 May 2010 of Mr Steele (and Mr Waters) as suppliers of Sky data that had led to Mr Steele’s joinder as a defendant and the requirement that he state on oath what his involvement had been. This led to his witness statement (the “main statement”) of 4 June 2010.

On first reading, the main statement sets out a plausible account of his involvement in this strange affair. In it Mr Steele disclosed (1) that he was a professional body builder and gym owner whose adult life had been spent in the health and fitness industry (activities far removed from the businesses of Sky and the two companies), (2) that by the time of the events in question he had known Mr Sullivan for some years and understood that he worked in the field of satellite television repair, (3) that from November 2006 he and Mr Sullivan had jointly participated in a business promoting “supplements” and later in another venture concerned with the fitness industry, (4) that he owned an apartment in Paralimini in Cyprus which he later sold (jointly) to Mr Sullivan, Mr Freeman and Mr Marrow, (5) that during one of his many visits to Cyprus he became acquainted with Mr Sibbald (as he understood him to be) who, he later discovered, lived partly in Cyprus and partly in Preston (in Lancashire) and operated a data company called Viper Global Solutions Limited and (6) that the two of them became “fairly friendly” and used to meet from time to time when they were both in Cyprus at the same time. I take up the story in Mr Steele’s own words from his main statement:

“12.

During a general conversation between myself and Michael Sullivan on a date I do not remember with any precision I mentioned Mr Sibbald to Michael Sullivan and what he did for a living and Mr Sullivan asked me if I would inquire with Mr Sibbald next time I saw him whether or not he could obtain data for users of Satellite TV systems. On the basis that this was the business that I knew formed the basis of Mr Sullivan’s work I was not concerned at that request as he operated a company in that arena. I agreed and next time I went to Cyprus and met with Mr Sibbald I asked him if he could provide any data such as was requested by Mr Sullivan and he said yes.

13.

I do not remember how this was communicated to Michael Sullivan as I did not pay a great deal of attention, it not being in my interest to do so. I assume that Michael Sullivan contacted Mr Sibbald directly as Michael Sullivan asked me to collect data from Mr Sibbald next time I was in Cyprus which I agreed to do and which Mr Sullivan agreed to pay me £250 for.

14.

The next time I was going to Cyprus on another holiday or it may have been a long week end I advised Michael Sullivan that I was going and he gave me an envelope of cash to give to Michael Sibbald in return for some data which I was to bring back to Michael Sullivan. I went to Cyprus, met with Mr Sibbald, handed over the envelope from Mr Sullivan and was given a jiffy bag which was sealed and which I did not access as I had no interest in the contents.

15.

The jiffy bag was then delivered to Michael Sullivan upon my return to the UK. This went on for some time with me taking envelopes of cash to Cyprus, meeting Michael Sibbald, handing him the envelope of cash and receiving a jiffy bag to deliver back to Michael Sullivan in the UK. I did wonder why the transaction was not dealt with by post and bank transfer but was advised that this was a safer way.”

Mr Steele then went on to state that he could not recall the dates on which the deliveries took place but having seen the exhibit to Mr Sullivan’s 10 May 2010 witness statement could confirm that the dates relating to the invoices headed Daltons Data appeared to be “a reasonable view” of the number of times he carried a collection for Mr Sullivan but, not having kept any record himself, could not be sure. The exhibit set out details of 27 invoices between March 2007 and August 2009. Mr Steele also stated (1) that he had not traded in data of any description, (2) that he had never traded as Daltons Data, (3) that Daltons Data was “a name which was suggested to me by Michael Sullivan I presume to enable him to reconcile the £250 payments made to [m]e for each collection of a data package from Cyprus”, (4) that all payments “for onward transmission to Michael Sibbald… in Cyprus” were in cash, (5) that he never saw any invoices in the name of Daltons Data and never produced any and (6) that he had no knowledge of the amounts of any payments made except for the £250 per collection which he received.

It is to be noted that, although mentioning that he understood that Mr Sibbald lived partly in Preston, Mr Steele’s main statement refers only to exchanges of jiffy bags for cash at his meetings with Mr Sibbald in Cyprus. Yet, in response to a letter from Sky’s solicitors seeking clarification of matters in the statement, Mr Steele’s solicitors wrote on 24 June 2010 (less than three weeks after the main statement had been signed) to say, among other matters, that Mr Steele “also met with a Representative of Mr Sibbald on the Preston By Pass, generally, or in the vicinity of Preston where Mr Sibbald lived.” It seems strange that this important aspect of Mr Steele’s involvement was entirely omitted from the main statement and only ventured in response to a solicitor’s letter from the other side.

On 28 March 2012, which was shortly before the start of the trial, Mr Steele made a supplemental statement (the “supplemental statement”). In it he disclosed his UK address as being in Poulton-le-Fylde. That is only a few miles from Preston where he understood Mr Sibbald to be living when in this country. The purpose of the statement was essentially twofold: (1) to dispute the later evidence of Mr Sullivan and Mr Freeman that he had not been involved in the transmission of any data and had not acted as a courier – he stated that he did act as a courier although he had no personal knowledge of the contents of the jiffy bags which he brought to Mr Sullivan but had been given to understand that they contained “data of some description” and (2) to make clear (in reference to paragraph 15 of his main statement – set out above) that “I also met with Michael Sibbald on numerous occasions in and around Preston, Lancashire on the same basis as the meetings which took place in Cyprus i.e. taking payments to Mr Sibbald in return for a jiffy bag…” This appeared to contradict the disclosure made by his solicitors in their letter of 24 June 2010 which had made no mention of any Preston meetings with Mr Sibbald.

Mr Steele was cross-examined on his two statements. Before cross-examination began he confirmed the accuracy of his two statements. With my permission, Ms Pennifer asked him some supplemental questions concerned with the nature and duration of his limited business dealings with Mr Sullivan. There was no attempt to resolve any doubt over the question of who it was that Mr Steele met when the exchanges took place in and around Preston.

Mr Steele did not impress me as a witness. I would have expected someone acting for his friend and business colleague in this country in the highly unusual role of courier carrying quantities of cash to a casual acquaintance in Cyprus in return for a jiffy bags, believed by him to contain data of some kind, to have had a much clearer recollection of events and shown a much greater interest in the circumstances of his bizarre assignment than Mr Steele exhibited. His evidence, however, was marked by a seeming absence of curiosity about the task he had undertaken. He seemed almost indifferent to it all. He claimed not to have had any understanding of Mr Sibbald’s business except that it was concerned with satellites and data. He claimed even not to know the difference between data and satellites: he said they meant the same to him, adding, as if to underline this surprising ignorance, that “I have no idea what data or satellites is”. Nor did he claim much understanding of Mr Sullivan’s (i.e. Digital’s) business. Yet he would have me believe that he became sufficiently interested in these matters to have noted the name of Mr Sibbald’s company and, on returning to this country after the visit to Cyprus during which he said he made Mr Sibbald’s acquaintance, to have gone to see Mr Sullivan at the latter’s Kirby office to inform him of the meeting, in effect acting as the channel of communication to Mr Sullivan of what it was that Mr Sibbald could supply. It did not quite “add up”. Nor did the manner in which he said that his meetings in Cyprus with Mr Sibbald took place at which the deliveries of cash in exchange for the jiffy bags were made. Mr Steele told me, and this rather surprised me given the important purpose of the meetings, that he had no idea where Mr Sibbald lived in Cyprus and did not have his telephone number or other details which would enable him to communicate with him. Nor, he said, did he supply Mr Sibbald with his own number or address. I was asked to believe that their meetings, which all took place in the same restaurant (the name of which Mr Steele could not recall despite being a very regular visitor to it), were not pre-arranged but just somehow happened. I cannot believe, even if he was otherwise in Cyprus and had not travelled there for the purpose of meeting Mr Sibbald, that Mr Steele would have left meeting Mr Sibbald to chance in this way. For all Mr Steele knew Mr Sibbald might not even have been in Cyprus at the same time.

There were also problems with his evidence about what he understood Mr Sibbald’s business to be. Mr Steele’s recollection, based he said on what Mr Sibbald told him, was that Mr Sibbald’s company – Viper Global Solutions – was in the satellite/data business. At another stage he referred to data processing as its business. Indeed it was that “fact”, according to Mr Steele’s main statement, which led to him contacting Mr Sullivan and to his subsequent courier role with the exchanges of cash for jiffy bags starting in or around March 2007 and continuing to around August 2009. The difficulty about this is that it appears from the published records that Vipar Global Solutions was not incorporated until November 2007 and that its business was “public security, law and order, adult and other education”. This seemed very different from the kind of activity where it might have access to data of the kind that Digital wanted. Moreover, Mr Sibbald was not appointed an officer of Viper until late 2008. It also appears that Mr Sibbald’s address, according to the public records, was in Southport. The significance of this is that Southport is only a short distance from Kirby and, what is more, is where Digital had its premises. By contrast, Mr Steele lived and worked on the Fylde coast which is much further away. Why involve Mr Steele in these exchanges, and pay him £250 a time for his services, when Mr Sullivan and Mr Sibbald were so much nearer to each other than was Mr Steele with either of the other two?

When it came to his oral evidence about the meetings in or near Preston there was no question of Mr Steele seeing Mr Sibbald. They were all with the representative. That part of the supplemental statement was completely ignored. Or so I was given to understand from his cross-examination. It was only when I put some questions to him that Mr Steele claimed that his Preston meetings were on occasions with the unnamed representative and on others with Mr Sibbald. It turned out that the meetings took place mostly but not entirely in a supermarket car park just off the Preston bypass. Sometimes they were in a lay-by just off the motorway. The representative was always the same person. Inconveniently from the point of view of Mr Steele’s ability to recall the details, the representative turned up in a variety of different cars. Moreover, Mr Steele did not know his name and had no contact details for him. Yet, somehow (I was asked to believe) they managed to meet for the exchanges. The same would happen, it would seem, when Mr Sibbald turned up. It also emerged that the meetings in the supermarket car park or nearby lay-by became by mid-2008 the almost invariable place of meeting and that Cyprus ceased thereafter to be a place of exchange. The position thus reached was a long way from the impression created by the main statement.

These matters, and others, cast considerable doubt on the rationale for the exchanges which Mr Steele said that he carried out in his unaccustomed role as a courier. What, one wonders, was the sense of Mr Sibbald and Mr Steele travelling, the one with the jiffy bag of data and the other with the envelope of cash, all the way to Cyprus for the purpose of the exchange when Mr Sibbald’s business was only a few miles from where Digital operated and from where Mr Sullivan, Mr Steele and Mr Sibbald were ordinarily based? Indeed, from other evidence it appears that Mr Sibbald and Mr Sullivan both then lived in Southport, as did another director of Viper Global Solutions. (There was no suggestion that Viper or Mr Sibbald had business interests in Cyprus.) Moreover, the exercise, as Mr Steele described it, carried risk: Mr Steele would have had to pass through airport checks bearing, on his way out, an envelope containing (as he believed: he claimed never to have examined its contents) a large sum in cash, and, on the way back, a sealed jiffy bag entrusted to him by someone he knew very little about and containing what he believed to be data in some form but which, as he likewise claimed never to have examined its contents, could have been something entirely different. Mr Steele said that he only carried out the Cyprus deliveries when he happened to be there anyway. But this only rendered the whole exercise even more random and the use of Cyprus as a delivery point all the more puzzling. The fact, if fact it was, that gradually all deliveries took place in the supermarket car park near to the Preston By Pass (or occasionally elsewhere in the vicinity: Mr Steele’s evidence was vague about this) and no longer in Cyprus, while making more sense, scarcely made Mr Steele’s role more credible. Why pay Mr Steele £250 per delivery when the representative could have delivered his package to Mr Sullivan personally or to Digital’s premises? What sense, geographical or otherwise, was there in Mr Steele travelling from Poulton-le Fylde or from his gym in Blackpool to meet the stranger with the jiffy bag in the supermarket car park near Preston with a view to its onward transmission to Kirby when this elaborate rigmarole could so easily have been avoided? These matters went unanswered. I should also add that Mr Steele could produce no evidence of the many £250 payments he claimed to have received.

Another part of Mr Steele’s evidence which made little sense was his awareness of the use of the name “Daltons Data” in Digital’s internal accounting records to denote the deliveries which he had made. In fact the invoices bearing the legend “Daltons Data” make no reference to Mr Steele by name, merely to the address of the Paralimini apartment which, by 2008, Mr Steele had sold to Mr Freeman, Mr Sullivan and Mr Marrow. Nor do the invoices refer to any of the £250 payments which Mr Steele claims to have received, merely (as I understood it) to the sums – some of them as much as £10,000 – paid for the data to which they related. It puzzled me why Mr Steele should have known of this accounting ploy. I say “ploy” because, as I have already mentioned, the evidence I heard satisfied me that the invoices in question were only created in April and May 2010 and, as Mr Freeman and Mr Sullivan admitted, were dreamt up in order to add verisimilitude to their original witness statements. Mr Steele was questioned about his knowledge of “Daltons Data” as an accounting reference used within Mr Sullivan’s and his answers did not satisfactorily explain how or why he should have known of its use or, given the origin of the invoices and the existence of the secrecy provisions in the court’s order, when precisely he acquired his knowledge.

Overall, Mr Steele’s evidence throughout his cross-examination came across as vague, improbable and at times contradictory. The question I have asked myself is whether, as Mr Sullivan claimed, Mr Steele’s evidence had been fabricated at Mr Sullivan’s request to put Sky off the trail but, having once committed himself to it and despite Mr Sullivan’s confession, Mr Steele opted to adhere doggedly to it rather than admit to having been party to a conspiracy to mislead the court. Or was it essentially truthful even if, in detail, it was open to criticism?

Ms Pennifer submitted that although some aspects of Mr Steele’s evidence might at first blush seem “unlikely” (as she put it) it should be seen in context and should not be dismissed as untruthful. She was highly critical of Mr Sullivan, submitted that I should place no reliance on the evidence of someone who confessed to having lied to the court, withheld information which he should have disclosed, misled his own solicitors (let alone others), fabricated documents and, both in these proceedings and in his business dealings, displayed what she described as a total disregard and contempt for the law and its processes. She backed this up with copious references to the evidence. She pointed to the fact that the involvement of Mr Steele (and Mr Waters against whom the same is said) in the conspiracy to concoct false evidence was raised for the very first time when the matter was touched on in the course of the oral evidence, initially by Mr Freeman in cross-examination and subsequently by Mr Sullivan when he was cross-examined, and that it appeared from an intervention by Mr Craig that neither he nor his instructing solicitors had any advance awareness of what they were going to say in this regard. She submitted that it was implausible that Mr Sullivan would have identified Mr Sibbald as the source of the data when, as he stated, he did not know him and had no particular reason to “name” him, not least when Mr Sullivan knew another director of Viper and the three of them (Mr Sullivan, Mr Sibbald and the other director) all lived (at the time) in Southport. Her point was that if a false source is to be provided one would expect a name to be chosen that could not be traced, or so easily traced. She also submitted that, even if Mr Sullivan had thought that Mr Sibbald would not be traceable (there being mention of him having left this country), why bother with an intermediary at all, let alone one like Mr Steele, and why give the address in Paralimini which could so easily be checked (and, when checked, found to belong to none other than Mr Sullivan, Mr Freeman and Mr Marrow)? She further submitted that, if the story was concocted and Mr Steele was a party to the concoction, it makes little or no sense that Mr Steele did not keep to what she described as “the agreed script”, namely that Mr Steele was the supplier of the data (and not merely a courier carrying it from the actual source) and that he traded as Daltons Data from the Paralimini address. These were matters which Mr Steele denied in his main statement. And she pointed to other discrepancies. Lastly, she submitted that it was implausible that Mr Steele should have been willing to lie for Mr Sullivan (for no evident reward) and thereby expose himself to the risk of involvement in the litigation (as happened), to say nothing of other consequences hereafter, simply as a favour to Mr Sullivan, the more so when, although partners in other ventures (to which I have referred), their business relationship was by then breaking down.

These are all weighty points but even when taken together they do not make a conclusive case for Mr Steele’s innocence of complicity in a conspiracy to mislead the court. On his own account Mr Steele was lending himself to actions which, assuming they occurred, he was driven to accept were underhand. And, despite Ms Pennifer’s criticisms of him and his reprehensible conduct in these proceedings (all of which I accept), I am entitled to have in mind Mr Sullivan’s confession that he lied to the court and involved Mr Steele in this and not simply attach no weight to his evidence on the matter. I bear fully in mind that when Ms Pennifer put some of these points to Mr Sullivan in cross-examination (for example, the folly of using the Paralimini address on the Dalton’s Data invoices) he had no answer and said as much. I have nevertheless come to the view, after taking these points into account, that such are the improbabilities, inconsistencies, unanswered questions and other deficiencies in Mr Steele’s account, many of which I have identified, that I must reject it. I make it clear that I do so without placing reliance on the short witness statement from Mr Sibbald or on the contents of a letter (with accompanying metadata) to be found at trial bundle F2/12 and 13. (I was not persuaded that Mr Steele saw those documents at any material time.) I am the more willing to reach this conclusion having regard to Mr Steele’s demeanour in the witness box. Throughout his evidence he appeared very ill at ease. This went beyond the ordinary nervousness of a witness unaccustomed to giving evidence in a court of law.

It follows that Sky’s claims against him must be dismissed. I consider later whether any other action should be taken given his conduct in these proceedings.

It is convenient to take him next. In the light of my rejection of Mr Steele’s account of his dealings with this person, there is no evidence before the court to implicate him in any wrongdoing.

Like Mr Steele, he too provided a witness statement in response to the order made on 20 May 2010. Mr Waters had been named by Mr Sullivan in his statement of 10 May 2010, backed by Mr Freeman, as the supplier of data. Other evidence was supplied by them to suggest that he did so from an address in Bognor Regis on the south coast. In his witness statement in response to the order Mr Waters said that he was unemployed and in receipt of sickness benefit owing to an undiagnosed and immobilising neurological condition (and severe sight impairment) which would require hospitalisation unless diagnosed and treated. He said that previously he had been employed by Mr Reynolds in a company called Satellite Direct Limited which Mr Reynolds owned. He then said this:

“7.

On a date that I cannot remember Mr David Reynolds asked me if I would deliver some data for him although I cannot recall if this was on behalf of Satellite Direct Ltd or for one of Mr Reynolds other companies. From recollection Mr Reynolds ran over 30 companies and was a very wealthy and successful man, or so I thought at that time.

8.

I agreed to deliver the data for Mr Reynolds and for each trip which he would arrange, I was given a sealed envelope or on occasion a jiffy bag, containing what I assume was a CD Rom(s) and was told to meet a representative of the Purchaser usually half way at Warwick services. The reason for meeting halfway was that I live in Bognor Regis on the South West Coast and a round trip journey to Liverpool where I understood the purchaser to operate from would have been exhausting for me.

9.

The Purchasers representatives came from Liverpool and met me at Warwick Services usually, and were given my mobile telephone number by David Reynolds so they could call me when they arrived at Warwick Services. We would then meet I would give them the envelope from David Reynolds and they would give me an envelope to return to David Reynolds which I did.

10.

Mr Reynolds paid me a fee of 10% of the invoice value as a commission for delivery. I would be paid in cash at the end of the week that I made a delivery.

11.

I was never advised by Mr Reynolds or the Purchasers representatives of the nature of the data being delivered the content of the CD Rom. I was merely told it was data”

In paragraph 12 he stated that he could not recall the dates of the deliveries, that he had seen a list of invoices headed “London Data” exhibited to Mr Sullivan’s 10 May witness statement, thought that the dates in the list represented a reasonable view of the number of times that deliveries were made but could not be certain as he kept no records since “I was acting for my employer [i.e. Mr Reynolds or his company] at that time and had no reason to keep records of that nature.” He went on to say that he had no reason to doubt the accuracy of the list. In later paragraphs he denied having traded in data, or as “London Data”, but said that he understood (he did not say how) that Mr Reynolds produced the London Data invoices and sent one with each delivery of data in the sealed envelope which he gave him prior to each delivery. As to this he stated that Mr Reynolds had asked him not to divulge to the purchasers that the supplier of the data was Mr Reynolds or one of his companies because “he had previously had a falling out with one of them although he did not name anyone specifically” and that Mr Reynolds asked him if he could produce an invoice in his (Mr Waters’) name and send it with the data. He said that as Mr Reynolds was his employer he agreed to this, naively as he later recognised.

Like Mr Steele, Mr Waters portrayed himself as the innocent (if naïve) deliverer to the purchaser’s representative of a jiffy bag containing, as he believed but did not know for sure, data, the nature of which he was unaware, and (either in the jiffy bag or in a separate sealed envelope – his evidence was not clear as to whether they were one and the same) the invoice headed London Data which carried his Bognor Regis address. Like Mr Steele he said that he was paid in cash for his services.

On 18 April 2012, which was after Mr Sullivan and Mr Freeman had served statements retracting much of what they had originally stated (or confirmed in the case of Mr Freeman) including the assertion that they had received deliveries of Sky data via Mr Steele and Mr Waters, Mr Waters made a second statement. It is a remarkable document. After stating in the first paragraph that he had received and gone through a lot of documents from Sky’s solicitors “including my first witness statement which I have just seen for the first time since I made it” he went on to say the following:

“2.

At the time of making my first witness statement I was suffering quite extensively with the onset of my neurological condition and I think I was on a great deal of prescribed medication. At that time I had the benefit of legal advice but still did not really comprehend what was going on.

3.

I have come to realise that I cannot now be sure of any of the contents of my earlier witness statement. My present memory of events is hazy to non-existent and I would not like to think that anyone was relying on it for anything important. Some entries in these latest documents have made me doubt my earlier statement even more.

4.

One specific example is that in section 16 I say "I now understand that Mr Reynolds produced the London Data invoices". I cannot now say why that was my understanding. The way it is phrased makes it sound like it wasn't my understanding previously but for some reason, it became so. Almost as if it had been suggested to me.

5.

Another reason why I now doubt that understanding is because in section 31 of Michael Sullivan's latest witness statement, he seems to say that the invoices were printed by his company's administrative staff or by Alistair MacLennan. Which may explain why my name is spelled wrong on the sample copies that have been sent to me.

6.

Equally as confusing to me is the fact that Bernard Freeman says data was delivered by someone called Tom via a young man who was Tom's courier at the Warwick motorway services (8th Witness statement section 23.2). This clearly was not me. I am sure I must have stopped at the Warwick service station for refreshments a number of times on my journeys up down the country and I think I do remember meeting someone once in connection with the contract for the purchase of existing warranty customers. But surely I would be able to remember more if I had met someone there 59 times as seems to be suggested by the number of invoices there are. Perhaps at the time of my earlier witness statement I did remember more. I cannot now say.

7.

At section 29 of Mr Freemans latest witness statement, he says that I supplied him with only a small amount of test contact data that is hardly worth mentioning. I cannot say when or where or what in regards to that data, if at all, but if I had met them to hand over data 59 times, to the total value of all of the invoices listed in MS1, it would surely add up to more than a small amount of data.

8.

I simply cannot now be sure of the veracity of my first witness statement or how I would respond if I were to be cross examined about it. I thought I should bring this to the attention of all parties and the court.

9.

I am aware that my first witness statement contained a statement of truth and all I can say about that is at the time I think my medical condition was impairing my judgment as well as my memory. I think I just signed where the solicitors asked me to. I cannot say whether at the time I had the faculties to understand the seriousness of a statement of truth. Possibly I did and possibly it is all true. I just do not feel able now to stand by it because I simply do not know. I apologise to the court for any inaccuracies or inconsistencies it may contain and for my inability to help further.

10.

Sky's solicitors should by now have received a letter from my Doctor about my medical condition.”

This statement has all the hallmarks of a wish to retract what he had previously said but do so in a way that attempts to excuse how he could have produced that earlier statement while leaving an element of doubt about the accuracy of his earlier recollection. It relies heavily on his medical condition. The doctor’s letter referred to in the last paragraph had indeed been sent. Dated 10 April it said no more than that Mr Waters suffered from “paraparesis and sub-acute combined degeneration of the spinal cord” and that he was wheelchair bound due to his condition. It asked the reader to take this into consideration.

As I have mentioned, Mr Waters appeared on the second day of the trial. He was in a wheelchair. He addressed me briefly from the well of the court. He did so perfectly lucidly. He talked at some length about his medical condition. He said that at the time of his first witness statement he was suffering from memory loss and allowed solicitors found for him and partly paid for by the principal defendants to prepare that statement. He said that he received a draft of it through the post but did nothing about it while he waited for his sister to arrive to read it to him. Before she could do so he was pressed for its signature and return. So, he said, he got a friend to put it in the post which presumably happened after he had signed it. He claimed that this happened without him even reading it. (I notice that in his opening skeleton argument he stated that he exchanged emails with Mr Freeman and Mr Sullivan at the time of the preparation of his first statement – which, if true, was a breach by them of the secrecy provision in the order the court had made against them – and was able to correct some of the witness statement concerning his employment roles with Mr Reynolds’ company.) He now realised that what he was given to sign was not true, protested that he had not concocted anything with the principal defendants but instead had taken their word for what had happened and relied in good faith on the accuracy of the statement when he had signed it, apparently unread. He claimed to be innocent of any involvement in the matters being pursued by Sky and that Mr Reynolds whom he had named in first statement was also innocent. He left the court at the end of his brief address and did not return.

Mr Waters’ reliance on his medical condition to excuse him from responsibility for the contents of his first statement and to explain his inability to participate at the trial any more than the brief appearance on the second day was, on his own evidence, greatly exaggerated. It appears that a telephone conversation between him and Mr Reynolds took place on 10 April 2012. This was a week before he signed his second statement. Unknown to Mr Waters (and, apparently, to Mr Reynolds) the conversation was recorded. Mr Reynolds stated in his third witness statement that it was the practice where he was working at the time for all incoming and outgoing calls to be recorded and that he stumbled across the recording when he noticed that an outgoing call to a mobile phone – a practice frowned upon where he worked but which in the event turned out to be his own call to Mr Waters - had been recorded. Having listened to it and realising that it touched on matters of relevance to the trial he transcribed it and handed the transcript and a CD of the recorded call to his solicitors. This occurred on the eve of the trial. It made its appearance the following day. It is common ground that the transcript is accurate. Mr Waters had read the transcript by the time he addressed me from the well of the court. He described the conversation as “a true conversation between two blokes who had not spoken for years”. I shall return to other matters touched on in the course of the conversation. At this stage I need only mention that Mr Waters refers to being at one stage quite visually impaired but that that was before he had an operation. He continues:

“I’ve got my eyesight back now Dave [Mr Reynolds] I’m alright with that…But nobody knows that, nobody knows that nobody in, you know, like in in erm, Herbert Smith [Sky’s solicitors] or anything, you know. They don’t know any of that. So far as they’re concerned I’ve got a degenerative disease, I can’t see anything and my memory is all gone to sh*t. So anything I wrote signed or said you know I could just sit there and go well I don’t know anything you know what are you gonna do, put a half wit in, you know, into the dock…”

Earlier in the conversation Mr Waters had boasted that he was sending a letter to Sky’s solicitors to say that if they wanted him in court they would have to supply an ambulance and attendants “which I don’t really need, Dave, I can get into a car. That’s obviously between us right…” It is plain that Mr Waters was playing up the seriousness of his condition, and concealing the truth from Sky’s solicitors, in order to add verisimilitude to his second statement which appeared a few days later and which, as set out earlier, made much of his poor health. His purpose was to deflect criticism of his disavowal of responsibility for the contents of his earlier statement and justify his non-participation in the trial.

In his written closing submissions (which, given his style of expression in the recorded conversation, had all the hallmarks of having been prepared with outside assistance), after stating that he had followed the trial from the transcripts, Mr Waters continued to rely on his ill-health at the time of his first witness statement to excuse its contents. He claimed that the “cocktail of painkillers and other prescription drugs” he was then taking “affected my decision making process and cognitive abilities” and stated that he did things which he since regretted and that signing his first witness statement without reading its contents was one of them. He sought to justify his non-appearance in court after the second day and claimed that the things he said in the recorded telephone conversation of 10 April 2012 were “simply bravado on my part” and that his suggestion in that conversation that he would exaggerate his condition to deceive the court was said “tongue in cheek”. He went on to say that he had not concocted any false story that Mr Reynolds supplied data, that it was Mr Sullivan and Mr Freeman who “did that” and that they “just tricked me into agreeing with it”. He urged that Sky had failed to show any independent evidence that he supplied “unlawful data” to the principal defendants and that he was supported in this by what Mr Freeman, Mr Sullivan and Mr Marrow were now saying. He protested that the only reason why he was still being pursued by Sky was on account of the contents of his first witness statement which, he maintained, left unanswered many questions.

Mr Waters seemed to want to have it both ways: assert his innocence of any involvement in the illicit transmission of confidential Sky data and, in reliance on ill-health, excuse his earlier confession of having been involved in this but, by absenting himself from the court on the grounds of his continued ill-health, avoid having to submit himself to cross-examination where, among other matters, some of the very questions which, he complained, Sky had not asked could have been explored together no doubt with a host of other matters. As it happens I accept that Mr Waters lent himself to the false account of his involvement in the transmission of Sky data. I accept that, in return for money, he allowed the principal defendants (or one or more of them) to dictate the terms of his first witness statement. Having carefully read and re-read the transcript, I do not find in it (contrary to Mr Moody-Stuart’s submissions) any acceptance that he supplied the principal defendants (or any of them) with illicitly sourced confidential Sky data. On the other hand, I do not accept Mr Waters’ assertion that he was so medicated at the time that he had no consciousness of what he was putting his name to and only discovered what he had written when recently supplied by Sky’s solicitors with his statement and a host of other documents, whereupon he took the initiative, in his second statement, to put the record straight. Among the matters which Mr Waters was never required to explain, because he did not offer himself for cross-examination, is how it was that his solicitor was able in late June 2010, a fortnight or so after serving his first witness statement, to write to Sky’s solicitors with answers to queries the latter had raised on the contents of that statement, not least when each response required instructions from Mr Waters. At about the same time a joint defence by him and Mr Steele was served in which the same matters are alleged that are set out in his first statement as expanded upon in his solicitors’ reply to the letter from Sky’s solicitors. The transcript of the conversation with Mr Reynolds reveals him to be of an altogether more calculating and cynical frame of mind and, where it suits him, a person who is willing to distort the truth and conceal with falsehood what it would be uncomfortable for him to reveal. The more likely explanation is that, faced with the volte face on the part of Mr Freeman, Mr Sullivan and Mr Marrow as regards his (and Mr Steele’s) involvement, he had to explain where he stood. He opted for a policy of confess and avoid: admitting the inaccuracy of his first statement but seeking to excuse himself in reliance on ill-health.

It follows that he has not been guilty of any of the wrongs with which Sky charges him and that, like Mr Steele and Mr Sibbald, the claims against him must be dismissed.

Since the time he was brought into these proceedings as a result of the matters set out in Mr Waters’ first witness statement, Mr Reynolds has consistently protested his innocence. Unlike the absent Mr Sibbald, he has turned up to defend himself. Unlike the hapless Mr Lee he has done so with the assistance of solicitors and counsel.

Mr Reynolds, despite his denials, was faced with several unhelpful facts. First, he had run companies in the satellite warranty field during which he had set up a company which acquired data about, among others, Sky customers. Second, in the course of these activities Mr Waters had been a member of his warranty sales team and Mr Reynolds became known to and had dealings with the principal defendants: he was not therefore a stranger to them. Third, in proceedings brought by Sky which came on for trial in late 2006 Mr Reynolds and two companies which he controlled, together with others, were sued in (among other causes of action) passing off in connection with the provision by them of extended warranties and repair services to the end-users of satellite television equipment, mainly Sky equipment. The trial resulted, I was told, in the grant of relief against, inter alia, Mr Reynolds and his two companies. In particular, Mr Reynolds became liable to Sky for £3.75 million in damages, an amount which he was unable to pay. Fourth, between 29 March 2010 and his release in or about September 2011, initially under home detention curfew and then on licence, he was serving (and is still technically serving) a prison sentence of 3 years and 9 months after having been convicted of money laundering and VAT offences. In the meantime, his companies went into liquidation and he was bankrupted and disqualified as a director.

But, as Ms Parke pointed out, the case against Mr Reynolds depends on my view of the evidence of Mr Waters’ involvement in that, as a matter of pleading (see in particular paragraph 53 of the most recently amended particulars of claim), Sky’s allegation is that Mr Reynolds supplied data to Mr Waters who then passed it to Digital. There is no other pleaded basis. She also pointed out that in advance of the trial Sky had sought, but had been refused, permission to found a claim against Mr Reynolds based on him (or more precisely a company he once controlled) having received confidential Sky data from Nationwide or Digital, and not simply that he had been a source of supply to one or more of the principal defendants. She submitted that the case against Mr Reynolds had been formulated at a time when Sky hoped that it could amend its claims against Mr Reynolds and before this had been refused. She demonstrated this in the course of her cross-examination of Joel Smith (a partner in Sky’s solicitors with no personal involvement in the subject matter of the proceedings) whose evidence, which was very much in the nature of an overview of the issues, documents and other material which had come to light, had been framed with a view to such a claim. She submitted that, on analysis, Sky could advance no positive case against her client beyond what Mr Waters might be able to say and any admissions that Mr Reynolds might make in the course of cross-examination. There was, she said, no documentary evidence of any kind to suggest that he had supplied confidential Sky customer (or any other) data to any of the principal defendants, whether directly or indirectly. In her written closing submissions she was critical of the fact that, with the case against her client depending on the discredited first witness statement of Mr Waters and on the equally discredited invoices purporting to have come from Mr Waters (and on nothing else), Mr Reynolds nevertheless remained a defendant to the proceedings while others who had been named as suppliers of Sky data to the principal defendants were not apparently being pursued. Her cross-examination of Sky’s witnesses was in part directed to this complaint.

What then is Sky’s case against him? Five matters are relied on.

First, Mr Moody-Stuart submitted that, far from being truthful and co-operative, it was plain that Mr Reynolds fell far short of this standard. As it happens, Mr Reynolds was the one witness on the defendants’ side who impressed me as being honest, open and reliable. Mr Moody-Stuart criticised features of his first witness statement. I shall not set them out. The statement was served in compliance with the order made on 15 June 2010 (see paragraph 21 above). At the time Mr Reynolds was in prison and without immediate access to solicitors. He is not to be criticised because he confined himself strictly to answering the questions which the order required him, in very short order, to do. In any event, I do not accept that the criticisms have merit. The other matter relied on emerges from what passed between Mr Waters and Mr Reynolds during their conversation on 10 April 2012 and their subsequent conduct in the action. On this point there is substance in Mr Moody-Stuart’s criticism. I will deal with it later. At this stage I simply say that it does not cause me to take a different view of Mr Reynolds’ credibility as a witness.

Second, it was submitted that there were substantial amounts of data purchases by Digital which have not been accounted for by Mr Freeman, Mr Sullivan or Mr Marrow. I propose to deal with this very shortly. The evidence to suggest that there is this shortfall in accounting was, to say the least, open to considerable question. But even assuming that there is, and that these three persons have not yet explained where all the data came from, that can provide no basis in fact for concluding that Mr Reynolds was a source.

Third, there is the evidence of Mr Waters and the fact, which I accept, that Mr Reynolds was unable to suggest why Mr Waters should have provided a wholly false first witness statement if, as Mr Reynolds conceded, he could not show and did not suggest that Mr Waters was paid to provide his first statement naming him as the source. I have rejected Mr Waters’ first statement as a source of credible evidence. I have found that it was concocted in order to lay a false trail for Sky to follow. To hold against Mr Reynolds that he does not suggest that Mr Waters was paid to give false evidence seems neither fair nor relevant.

Fourth, there was some evidence given by Mr Freeman to suggest that in 2006 Mr Reynolds (or one of his companies) had supplied some “test contact data” to Nationwide and had done so via Mr Waters. Mr Freeman later explained that this consisted of two or three disks, was probably not confined to Sky customers, was not the data which Mr Waters had claimed to have supplied in his first witness statement and that he dealt with Mr Waters and doubted that Mr Reynolds had been involved. The matter was put to Mr Reynolds in cross-examination and he firmly denied having done so. In my judgment this episode, the precise facts of which are exceedingly obscure and a matter of considerable doubt as regards Mr Reynolds’ involvement in it, is irrelevant to the current proceedings.

Fifth, some reliance was placed on the conversation between Mr Waters and Mr Reynolds on 10 April 2012 which Mr Reynolds says that he later found had been recorded and of which he made and supplied copies and a transcript. I have already explained the circumstances in which it was found and have quoted from it in connection with Mr Waters’ assertions of incapacitating ill-health. In parts it is not easy to follow the precise sense of what is being said. Mr Moody-Stuart conceded that the conversation was consistent with Mr Waters having made up Mr Reynolds’ involvement but submitted that it was “more consistent” with the view that Mr Waters had correctly identified him as a source of confidential Sky data found to be in Digital’s possession. I have read and re-read the transcript (which was accepted as an accurate transcription of the conversation) and am of the view that, fairly understood, it contains nothing to indicate that Mr Waters’ first statement was essentially accurate or that Mr Reynolds had indeed supplied data to the principal defendants, either through Mr Waters or by other means. On the contrary there are passages, to which Ms Parke drew my attention, in which Mr Reynolds refers to his innocence of the charge. My only hesitation is that, having been landed in proceedings, falsely according to his case, as a result of what he says was Mr Waters’ concocted first witness statement, I would have expected Mr Reynolds to have been furious with Mr Waters. This was, it seems, the first conversation they had had for a very long time and the first since Mr Reynolds’ release on licence from prison. But angry he certainly was not. On the contrary, the conversation proceeds in a wholly friendly manner. (After each has said hello to the other, Mr Waters says what a nice thing it was to hear Mr Reynolds’ voice and, after laughing, Mr Reynolds asks how Mr Waters is keeping, and so forth.) The conversation is more about how to deal with the forthcoming trial. Each expresses his fears if he should be found liable. They discuss the steps each will be taking in the action. In the case of Mr Waters it is the lodging of his second witness statement in which he retracts his first and pleads his ill-health and in the case of Mr Reynolds it is the making of a summary judgment application (which, however, was not pursued although it was formally before me at the start of the trial). But there are no remarks by either to suggest that the two of them had been involved in the supply of Sky data to the principal defendants. And there are comments by Mr Reynolds to the effect that he did not supply any data.

Mr Reynolds did not strike me as an unintelligent person; on the contrary he came across as bright and alert. If he had thought that he had made any admission against his own interest in the course of that conversation (and aware, as on this assumption he would be, that he was guilty of wrongfully supplying to the principal defendants, through Mr Waters or otherwise, confidential Sky data) it seems most unlikely that he would have divulged the existence of this conversation, much less gone to the trouble of providing a copy of it and, for good measure, transcribing its contents so that everyone could follow what was being said. Be all that as it may, the fact remains that, apart possibly from the friendly nature of the conversation, there is nothing said in the course of it which supports the essential truth of Mr Waters’ first statement. And against the truth of that statement are the various matters which have led me to conclude that Mr Waters had put forward that statement knowing it to be untrue.

That brings me finally to the one matter where I consider that Mr Reynolds’ conduct was fairly open to criticism. In the course of their telephone conversation on 10 April 2012 Mr Waters disclosed to Mr Reynolds that he had exaggerated his health problems. I have already referred to the evidence. Mr Reynolds was cross-examined about this and he accepted that, as he put it, Mr Waters “glorified his condition”. Notwithstanding his knowledge of this and of Mr Waters’ intention to rely on this in his evidence to the court Mr Reynolds, when making his application for summary judgment dismissing the claim against him (which, as I have mentioned, was not in the event pursued), relied on the fact, by then set out in Mr Waters’ second witness statement, that Mr Waters suffered from memory loss. At paragraph 20 of his witness statement in support of the application Mr Reynolds makes the point that the case against him relies on Mr Waters’ first witness statement and then, in paragraph 21, states that Mr Waters’ second witness statement casts extreme doubt on its veracity and adds that the second statement “suggests that he is not able to verify any of it under cross-examination.” Mr Reynolds then goes on to say that he finds it incredible that Sky should still intend to rely on that first statement as their sole evidence against him. It is a fair criticism of this passage that it fails to disclose what Mr Reynolds knew, namely that Mr Waters’ claimed incapacity to verify his first statement was in reliance on an exaggerated claim to ill health, and therefore that his second witness statement was, to Mr Reynolds’ knowledge, misleading in so far as it relied on Mr Waters’ state of health. That said, I consider that this error of judgment (as I think it was) sprang from a desire to extricate himself from proceedings which, in his view, had been wrongly brought against him rather than from any particular wish to mislead the court. I do not think that it should incline me to regard Mr Reynolds as someone whose evidence I should reject or find unreliable.

Mr Moody-Stuart also criticised Mr Reynolds for having agreed with Mr Waters in the course of their conversation that he would not mention in his evidence in support of his summary judgment application, as he did not, that he understood that Mr Waters had been procured to lie in his first statement. I do not criticise him for this omission. It would have been irrelevant to his application if he had mentioned it. The court could not have come to a view on the matter if he had and omitting mention of it did not make it more or less likely that the application would be resolved in his favour.

In the result I find that Sky fails to establish any case for relief against Mr Reynolds.

Mr Moody-Stuart invited me to find that Mr Freeman and Mr Sullivan had failed to account for large amounts of data supplies which had come into the possession initially of Nationwide and later of Digital and, therefore, had failed to disclose all their sources. I have already touched on this in connection with Mr Reynolds at paragraph 101. I was taken to a variety of matters in support. Mr Freeman and Mr Sullivan, although unable to reconcile all the figures, maintained that they had disclosed all the sources known to them.

I do not need to reach any conclusion on this as the existence and extent of any such failure can only be a matter of guesswork (Mr Moody-Stuart submitted that the available evidence suggested an unexplained shortfall of some £535,000) and depended in large measure on documents whose authenticity is questionable. In any event, the finding he invited me to make was only material to an argument that there must have been data supply sources other than the few to which those two confessed, that those other sources could have been, or included, the suppliers to Mr Steele (whether Mr Sibbald or some other) and Mr Waters (namely, Mr Reynolds) and therefore that Mr Freeman and Mr Sullivan had falsely retracted their earlier evidence that Mr Steele and Mr Waters had acted as couriers for such supplies. My conclusions in relation to Mr Steele and Mr Sibbald and in relation to Mr Waters and Mr Reynolds cannot depend to any reliable extent on speculations of that kind but must be based on firmer grounds.

I can deal with Mr Lee fairly shortly. In cross-examination he accepted that Sky data which had been supplied to him alone (the so-called “seeded data”) ended up with Digital, in particular that a USB stick was plugged into his personal laptop on a number of occasions and contained Sky customer data which ended up with Digital. He also accepted that one of his work laptops was used to create disks containing Sky data which ended up with Digital. (He conceded that, although it may previously have been used by another Sky employee, the laptop in question was in his possession when the disks were created.) In his professionally drafted defence he also accepted that if, as Sky alleges, he supplied the data in issue to persons other than Sky employees he infringed Sky’s database rights in the data, breached the equitable duty of confidentiality he owed to Sky and breached his employment contract. Implicit in this was an acceptance that the data in issue was confidential to Sky and that database right subsisted in it. The only factual issue therefore was whether, as Mr Lee alleged, the disks and USB stick containing the Sky data reached Digital in a manner which did not involve any wrongdoing by Mr Lee.

I can take this issue shortly because it was quite obvious from the way in which he sought to explain how these matters could be, starting with his defence, next with answers given in response to a Part 18 request, then with his first witness statement (dated 1 May 2012) and, a few days later, with his second witness statement (dated 14 May 2012), and finally with the answers he gave under cross-examination, that Mr Lee was unable to offer any credible explanation. In his defence the emphasis had been on transmission by email: there was no mention of any other means of communication. This failed to deal with the disks and the USB stick. When it became apparent that the evidence implicating him derived from the disks and USB stick, he attempted to suggest that he had passed these items legitimately to others within Sky, the inference being that one or more of those others had been the transgressor. But as each attempted explanation was advanced – and shown to be exceedingly unlikely if not impossible – Mr Lee shifted his ground to venture another possibility. As this process continued, transmission by disk and USB, so far from being a one-off (or more or less one-off) event as Mr Lee had originally indicated in his response to the Part 18 request, came by the end of his cross-examination to be almost the norm. He would have had me believe that their use was a normal part of his modus operandi within Sky. Yet he was quite unable even to say, with any degree of credibility, how in the course of his employment he came to acquire the disks or the USB stick, if not at his own expense. I was quite unpersuaded by his attempts to explain any of this or the other matters. There is no point in chronicling them. It would add needlessly to the length of this judgment.

Mr Moody-Stuart invited me to conclude, as I do, that Mr Lee can provide no explanation for how seeded data, provided uniquely to him, ended up with Digital which is consistent with his claim not to have distributed it to anyone outside Sky or otherwise than for the purposes of his employment with Sky. In my view Mr Lee had no explanation and, by the manner of his answers, conveyed unmistakably that he knew that he did not. The probabilities are, but I do not need to find, that he passed the data to Mr Tom Hicks, an ex-employee of Sky and former colleague of Mr Lee, who left Sky under something of a cloud and who then set up a television satellite dish repair business. I therefore find that Mr Lee is liable for misuse of Sky’s confidential information, infringement of its database right and breach of his employment contract with the fourth claimant.

There was an issue between Ms Pennifer and Mr Moody-Stuart over the meaning of the term “the public” in the phrase “any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by on-line or other forms of transmission” appearing in the definition of “re-utilisation” contained in article 7(2) of Council Directive 96/9/EC on the legal protection of databases. It is from that Directive that the Database Regulations derive. The definition of “re-utilisation” in article 7(2) appears in regulation 12(1) in similar although not identical terms.

The issue was whether, as Ms Pennifer submitted, “making available to the public” means something wider than simply (as alleged in the case of Mr Steele) making the contents of the database available to Mr Sullivan and/or Digital. Mr Moody-Stuart, by contrast, submitted that making them available to those persons (or even to just one of them) suffices in that they and each of them are for this purpose part of the public.

In view of my conclusions concerning Mr Steele’s role this is not a matter that now arises. It is sufficient to say that if I had needed to decide the point I would have accepted Mr Moody-Stuart’s submission. According to the Court of Justice in British Horseracing Board Ltd v William Hill Organisation Ltd C-203/02 at [45] the term “re-utilisation” was intended “to protect the maker of the database against ‘acts which go beyond [the] legitimate rights and thereby harm the investment’ of the maker, as indicated in the 42^nd recital of the preamble to the directive”. The test, therefore, is whether the distribution to the “public” in issue is an act which will harm Sky’s investment in creating the database in question. In my view, in agreement with Mr Moody-Stuart, the actions of Mr Steele in collecting data in jiffy bags from Mr Sibbald or his representative and delivering them to Mr Sullivan for use by Digital – all without the consent or authority of Sky as owner of the rights in the database – amounted (or would have amounted if they had occurred) to making the contents of Sky’s database available to the public. For in so doing he would have harmed Sky’s investment in the database in question. It would have amounted to “re-utilisation” since that term covers “any form of making available to the public”, including, as here, “the distribution of copies”. It would also have been a “substantial” part of the database contents in view of the number of exchanges of disks for cash (some 27 or so) to which Mr Steele attested and the definition of “substantial” to be found in the regulation 12(1).

For the sake of completeness I should say that the same point arises in the case of Mr Lee’s action in making the contents of the Sky database available to Digital (in all likelihood through Mr Hicks). Additionally, in his case, he was engaged in the “extraction” of the data. “Extraction” for the purposes of regulation 16 (and article 11 of the Directive) means “the permanent or temporary transfer” of any contents of a database “to another medium by any means or in any form”. See regulation 12(1) (and article 7(2)(a)). This obviously includes copying the data from one form of electronic storage to another which is precisely what Mr Lee did. The evidence suggests, and I find, that the data which Mr Lee transmitted was substantial in terms of both quantity and quality.

Sky succeeds in its claims against Mr Freeman, Mr Sullivan and Mr Marrow and also against Mr Lee. It fails to recover any substantive relief against Mr Steele, Mr Waters, Mr Sibbald and Mr Reynolds. The precise terms can be discussed with counsel. There will also, I do not doubt, be issues on costs which will have to be determined.

After I had completed drafting most of this judgment, including in particular the section dealing with Mr Waters, I was informed that Mr Waters had died. I naturally regret very much that this should have happened. The fact that he has died has not caused me to alter in any way the conclusions that I had already reached in relation to him or my reasons for those conclusions; I must of course state the facts as I find them and, in so doing, put aside my sympathy for those who are left to mourn his passing. I would merely observe that the causes of his death shown on his death certificate, a copy of which was supplied to me, seem at odds with the conditions which Mr Waters said that he suffered from at an earlier stage of these proceedings.

It follows from my findings in relation to Mr Freeman, Mr Sullivan, Mr Marrow and Mr Steele that the papers in this case should be referred to the Director of Public Prosecutions with a view to any criminal proceedings against one or more of those persons that he might feel are appropriate. By their own confession Mr Freeman and Mr Sullivan deliberately laid evidence before the court which they knew to be false and which can only have been for the purpose of perverting the course of justice. In their favour is that they later confessed to having acted in this way and did not seek to excuse their behaviour when giving evidence before me. Although he sought to distance himself from events, I am of the view that consideration should also be given to criminal proceedings against Mr Marrow. He confirmed the initial and deliberately misleading witness statement of Mr Sullivan and was less than convincing in his own statement of 5 January 2012 when giving his reasons for having been wrong to do so. But I acknowledge that the case for this course is not so strong. Given my findings in relation to the part played by Mr Steele, his conduct likewise should be reviewed by the Director. I add, however, that I was left with a lingering feeling that, although he had given his assistance to Mr Sullivan to mislead Sky and the court, his involvement might not have been entirely willingly given. I may be quite wrong in this. It will be for the Director to decide whether any and if so what action should be taken.

Mr Waters’ untimely death means that there can be no point in following a similar course in his case.