Reaching for the Sky

EDS failed to fulfil the contract and the dispute reached the Technology and Construction Court in  October 2007. The original contract was worth £54m, but BSkyB’s claim against the IT supplier for misrepresentation stood at £700m.

Mr Justice Ramsey yesterday upheld just one of five claims from BSkyB in a 468-page judgment, but that was enough to the company a minimum £200m payout.

The matter took 110 court days to be heard and involved nine barristers, more than 500,000 documents and 70 witnesses and a dog with a degree.

Is it any wonder that legal costs for the case are thought to be in the region of £70m.

Counsel for BSkyB argued that EDS had fraudulently misrepresented claims over how long it would take them to install the CRM system.

Fraudulent misrepresentation by its very nature is a difficult notion to prove – after all the onus is on the claimant to illustrate that the defendant set out to deliberately mislead.

In this particular instance there must have been little doubt in Ramsey J’s mind that Joe Galloway, who was head of EDS’s CRM Solutions when the contract was negotiated, was guilty of telling a few fibs.

Galloway, who was presented as a main witness for EDS, claimed in his statement to have received an MBA qualification from Concordia College, which is based in St Johns in the US Virgin Islands. He said he had attended classes at the college between 1995 and 1996. He also claimed to have worked for Coca Cola at the same time.

When cross examined Mark Howard QC, who led for BSkyB, he gave a description of the college building.

It was only natural then that Galloway recognised an MBA certificate from the college when Howard produced one in court. Unfortunately for the witness, it turns out that the degree belonged to Howard’s miniature Schnauzer dog Lulu and had been bought online.

This despite the fact that Galloway had described the college to the court in some detail: “There were a number of buildings that I went to. I can remember three distinct buildings that we went to. Block, office block buildings in and around the locations of the commercial area that I was working in for Coca Cola.”

In his judgment Ramsey J states that while Galloway “had quite evidently obtained a fake degree from the Concordia Collage website” he maintained throughout the cross examination that he had studied for the MBA.

In reality, Coca Cola had never had a building on the island and Concordia College & University did not exist. The claimant’s lawyers had produced a witness statement from US Virgin Islands’ Senator Liston Davis supporting this.

BSkyB’s legal team contended that Galloway had a “wholesale disregard for the truth” and in the end EDS was forced to agree.

Weeks after Galloway took to the stand DLA Piper partner Matthew Saunders, who represented EDS, wrote to BSkyB’s lawyers at Herbert Smith informing them that he Galloway had been dismissed from his job immediately after giving evidence.

It could be argued that Galloway’s lies have just cost EDS £200m. He will also leave a legacy for all IT suppliers, who will be rushing to re-examine the legality of their customer contracts to make sure that agreed liabilities are watertight.

BSkyB may have won just one out of five claims against EDS, but in super claims such as these all it requires is the first card to slip before the whole house collapses.


BSkyB: Herbert Smith partner Ted Greeno instructed Brick Court’s  Mark Howard QC and 4 Pump Court’s Alex Charlton QC leading Brick Court’s Alec Haydon and Fionn Pilbrow and 4 Pump Court’s Matthew Lavy.

Electronic Data Systems: DLA Piper partner Matthew Saunders instructed One Essex Court’s Mark Barnes QC (now retired), who led Alan Gourgey QC and Stephen Tudway of 11 Stone Buildings and One Essex Court’s Zoe O’Sullivan.