Sky successful in deceit claim against EDS

27/01/10

Sky has successfully proved deceit in its long-running fraud claim against EDS, recovering significant damages from the IT solutions provider (now part of the Hewlett Packard group).

In 2000, EDS was selected as Systems Integrator to design, build and implement an advanced customer service system at Sky's customer contact centres in Scotland. Following poor performance of the contract by EDS, Sky took over the project itself in 2002. Although proceedings were commenced in 2004, the new system did not "go live" until March 2006. The trial before Ramsey J in the Technology and Construction Court began in the autumn of 2007, and occupied the entire court year, notably featuring, amongst other things, a dog with a degree.

Amongst the allegations made, Sky claimed that EDS, in its desire to win the competitive tender process, had fraudulently misrepresented that they had carried out a proper analysis of the amount of elapsed time needed to complete the initial delivery and go live of the contact centre and that they held the opinion that, and had reasonable grounds for holding the opinion that, they would and could deliver the project within the timescales referred to. In a lengthy judgment handed down yesterday afternoon, Ramsey J found EDS's then head of the CRM practice to have "demonstrated an astounding ability to be dishonest" and to have given "perjured evidence over a prolonged period" and concluded that he had made fraudulent misrepresentations to Sky which had induced EDS' selection and award of a letter of intent and a contract. In particular, Ramsey J concluded that he "approached the whole question of the time to achieve go-live in a cavalier fashion", that he "proffered timescales which he thought were those Sky desired, without a having a reasonable basis for doing so and knowing that to be the case" and that he "acted deliberately in putting forward timescales knowing that he had no proper basis for those timescales".  Ramsey J also found EDS to have made certain other negligent misrepresentations and to have been in breach of contract.

The trial was one of the largest and lengthiest of recent times. It involved not only extensive factual evidence (and in particular careful cross-examination of the personnel involved in preparing EDS' bid), but also voluminous technical IT expert evidence (concerning in particular the assessment of what would have happened had EDS not been appointed), together with complex expert evidence on the customer churn reduction and telephone call rate reduction that the new system had achieved - and would have achieved if implemented earlier - for the purpose of assessing the quantum of the Sky's loss.

Whilst the final figure for damages is yet to be calculated, in light of the findings made, it is expected comfortably to exceed £200 million.

The judgment is here.