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A twist in the horse's tail: Court of Appeal rules in betting and raceday data dispute

Heidi Hurdle
20/11/2020

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United Kingdom

In a complex dispute over betting and raceday data, the Court of Appeal (in a majority decision) has recently overturned the High Court's ruling that there had been a misuse of confidential information. However, the claim for the unusual tort of conspiracy to injure by unlawful means was successful (albeit also in a majority decision), so the claimants were still able to get to the finish line. 

Brief recap of the facts

As noted in our blog on the High Court ruling last year, this case concerns a complex matrix of facts and different parties, although by the time of the trial the only remaining defendant was Sports Information Services Ltd (SIS) (the others having settled with the claimants).

The Racing Partnership Ltd (TRP), the first claimant, produced live betting and horse racing data collated at racecourses under agreements with the course owners and sold it to off-course bookmakers. Its right to conduct this business had begun in January 2017 with Arena Leisure Ltd, the owner of six racecourses (and second claimant).

The dispute involved two types of horse racing data, which put simply were:

  • Betting Shows: the representative fixed price for each horse in a race. Each Betting Show is the product of an algorithm (which essentially calculates a form of average price) into which is fed a selection of the fixed odds being offered by a sample of on-course bookmakers.
  • Raceday Data: information specific to the racecourse on the day of the race, such as the weather conditions, the state of the course, the withdrawal of any horses, the start and finish time, and the result.

Until the end of 2016, SIS had been able to collect and distribute Betting Shows and Raceday Data to off-course bookmakers under an agreement with Arena Leisure. From 1 January 2017, it no longer had any contractual arrangement with Arena, but continued to provide both types of data, collecting the Raceday Data through an agreement with the Tote (one of the other original defendants).There was a lot of debate over the Tote's role in providing the data in the courts' decisions as we look at below.

High Court ruling

Zacaroli J, found that the Raceday Data obtained by SIS from the Tote constituted information confidential to the claimants and, that SIS had acted in breach of the equitable obligation of confidence by supplying it to the off-course bookmakers (see our blog for the details of this decision: A day at the races ends in tears).
The judge dismissed all TRP's other claims against SIS including infringement of copyright and sui generis database right, and the unusual tort of conspiracy to injure by unlawful means. However, the parties went on to appeal:

  • SIS appealed against the High Court's decision that it was liable for misuse of confidential information; and
  • TRP cross-appealed against the dismissal of its claim against SIS for unlawful means conspiracy.

Court of Appeal ruling

While both appeals succeeded, and TRP was therefore the overall winner, both were the result of majority decisions with the Lord Justices unable to reach a unanimous decision in either appeal. Lewison LJ and Phillips LJ allowed SIS's appeal regarding misuse of confidential information, and Arnold LJ and Phillips LJ allowed TRP's appeal regarding unlawful means conspiracy. Their judgment (which began with that of Arnold LJ) is long, like that of the High Court judgment, and in this blog we will focus on the misuse of confidential information action.

Pausing briefly to take a look at the successful unlawful means conspiracy claim. Such a tort occurs where two or more people act together unlawfully, intending to damage a third party, and do so. Suffice to say it is not often alleged. Here, after describing it as a "thorny issue of law" Arnold LJ (with whom Phillips LJ agreed) concluded that it was not necessary for SIS to have known the means were unlawful to fall foul of this tort, and therefore overturned the High Court's decision.

Returning to the claim of misuse of confidential information in this case and what happened at the appeal. Underlying all three Lord Justices' determination of this appeal was the familiar three-limb test in Coco v Clark, namely that:

  • The information must have the necessary quality of confidence;
  • It must have been imparted in circumstances importing an obligation of confidence; and
  • There must be an unauthorised use of the information to the detriment of the rights-holder.

Stage one of the test

The Lord Justices agreed with Zacaroli J that stage one of the test was met and that the information was confidential (although this was in respect of a narrower range of information than the judge had found). However, Arnold LJ and Lewison LJ reached this conclusion from slightly different angles.

For Arnold LJ, referring to Douglas v Hello (as had the trial judge) what was important was that the information could be controlled and therefore had commercial value. This was the situation here as the Tote's implied licence to enter the Arena Racecourses was limited to collecting and distributing certain Raceday Data for pool betting purposes. This implied licence did not enable other parties to access that information otherwise than through the Tote. In addition, the information obtained by SIS was both obtained for a different purpose and extended beyond that previously supplied by the Tote.

For Lewison LJ the "starting point" was freedom of speech. He considered that unless there was a "contrary obligation, a person was free to communicate what he sees or hears". To attract an obligation not to communicate information, the information must have the necessary quality of confidence about it.

Overall, the Lord Justices did not dispute that it was the commercial value of the time sensitive information that was key here, although Lewison LJ was of the view that this applied to the compilation of the data considered as a whole (not the individual pieces of Raceday Data).

Stage two of the test

The key difference between the Lord Justices was in relation to step two of the test: had the Raceday Data been imparted in circumstances importing an obligation of confidence? Arnold LJ agreed with the trial judge that this requirement had been met and that Zacaroli J had not held SIS to too high a standard. He focused on SIS's actual knowledge of all the facts; it had known that the Tote had no contractual entitlement to supply it with the Raceday Data, not merely that there was no contractual prohibition (which itself could not be equated with the right to supply the information.)

However, the two other Lord Justices disagreed on the basis of similar reasoning to each other. SIS had sought (and obtained) certain verbal assurances and a contractual warranty from the Tote regarding the Tote's ability freely to provide the relevant information. Phillips LJ said that a reasonable person receiving information on this basis from a reputable counterparty would not be on notice that it was supplied in breach of an equitable duty of confidence, unless there were clear countervailing indications, sufficient to override the contractual assurance.

Lewison LJ considered that the trial judge's error was to start with his own legal analysis of the situation, and then to ask whether that was nullified by the warranty. He said that the correct starting point should have been the warranty and assurances that the Tote had given; and then to ask whether SIS should have "second guessed" them.

Final word

As one of the Lord Justices remarked this is an "extremely difficult case" illustrated by the fact that they reached majority decisions (and a different majority for the two appeals) and produced their own judgments. It involved a complex matrix of highly specific facts which the High Court and Court of Appeal had to grapple with in their judgments.

Watch this space to see if it will be the Supreme Court's turn next!

 

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