The combined legal costs of the High Court dispute between British Sky Broadcasting Group [BSkyB] and EDS are likely to exceed £55m, more than first thought.
BSkyB has made provisions in its accounts of £32m in legal costs. If EDS’s costs are not markedly lower, the combined legal costs of the dispute could be £55m or more.
On 2 November 2007 BSkyB made an exceptional charge in its first quarter results of £7m for this period, because of the costs of its legal claim against EDS, which provided services to BSkyB as part of the group’s investment in customer relationship management systems and infrastructure. For the full year – 2007/8 – BSkyB said it expected the legal costs to be about £16m.
“We currently expect to incur exceptional costs of around £16 million during the financial year [2007/8] in respect of this claim.”
A further £16m allowance was made in the previous year ended 30 June 2007 for “legal costs incurred to date on the Group’s claim against EDS”.
The case in the High Court is expected to last more than six months. The hearing began in October 2007.
On a single day at the High Court there were more than 20 people on the legal benches of both sides, including three Queen’s counsels.
BSkyB is claiming £709m, part of which is compensation for alleged lost ¬benefits. It claims that during the course of a competitive tender, EDS represented it had the resources, proven technology, and methodology to enable them to deliver the solution within a certain timescale and cost. “The representations are alleged to have been made dishonestly in order to win the business,” said BSkyB’s QC Mark Howard.
In EDS’s opening defence, QC Mark Barnes said, “We suggest it is an artificial claim designed to overcome the difficulties that Sky face under their contracts and to allow them to claim absurd and extravagant amounts of damages.” He said the “main problem with this project was that it was wholly unspecified”. “Sky knew it wanted a super-dooper CRM system but had little more idea of what it wanted or needed.” EDS strongly denies deceit, dishonesty, or misrepresentation