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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> The Independent Committee for the Supervision of Standards of Telephone Information Services v Andronikou & Ors [2007] EWHC 2307 (Admin) (19 September 2007)
URL: http://www.bailii.org/ew/cases/EWHC/Admin/2007/2307.html
Cite as: [2007] EWHC 2307 (Admin)
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QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Strand London WC2A 2LL |
||
B e f o r e :
____________________
| THE INDEPENDENT COMMITTEE FOR THE SUPERVISION OF STANDARDS OF TELEPHONE INFORMATION SERVICES | Applicant | |
| v | ||
| (1) ANDREW ANDRONIKOU | ||
| (2) LADISLAV HORNAN | ||
| (LIQUIDATORS OF ALLIED COMMUNICATIONS LIMITED) | Respondents |
____________________
WordWave International Limited
A Merrill Communications Company
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
Mr Brian Kennelly and Ms Hilary Stonefrost (instructed by Taylor Wessing) appeared on behalf of the Defendant
____________________
Crown Copyright ©
- MR JUSTICE WALKER: ICSTIS Limited is a company limited by guarantee. I shall refer to it as "ICSTIS". The word ICSTIS is an acronym and stands for the Independent Committee for the Supervision of Standards of Telephone Information Services. ICSTIS says that under statutory authority it had required a company called Allied Telecommunications Limited (which I shall call "Allied") to do various things. However, Allied is now in liquidation. The liquidators are the respondents, Andrew Andronikou and Ladislav Hornan. ICSTIS notified them that it considered that it was entitled to prove in the liquidation in relation to various monetary claims which ICSTIS said arose out of Allied's failure to comply with directions given by ICSTIS.
- On 14 June 2006, ICSTIS issued an application in the Companies Court for an order directing the liquidators to admit its proof. The order sought involves an amount of more than £1.9 million. With the consent of the parties, Registrar Jaques on 10 August 2006 transferred the application to the Administrative Court.
- The hearing of the application began yesterday, 18 September 2007. Skeleton arguments were lodged which envisaged that this court would decide questions as to the type of claims which may or may not be provable in a liquidation. This caused me some consternation. After discussion with counsel at the outset of the hearing, it was agreed that the Administrative Court would answer certain specific questions of public law. The matter would then be transferred back to the Companies Court once those questions had been answered. Before setting out those questions of public law, I shall summarise the factual background.
- ICSTIS was established to lay down and enforce appropriate standards for the promotion, content and overall operation of premium rate services available through the telephone network. These services can be audio or visual, and are provided by a wide range of businesses and charities known as "service providers". The content of the services covers an equally wide range. They include advice services, competitions and other games with prizes, fund raising and charitable promotions, and sexual entertainment services.
- Specific telephone numbers are identified as being premium rate. Where telephones or modems are connected to a premium rate, the account holders will find that their telephone network operator (whom I will call "the customer network operator") has charged them for these calls at a premium -- a higher fee for these calls than would ordinarily be the case. The higher fee reflects not only the cost of the communication, but also, among other things, the price of the service. The structure for providing these services is that the customer network operator will not have contracted directly with the service provider. The customer network operator will instead have made an "interconnect agreement" with another network operator. That other network operator might usefully be called the "premium rate network operator". However, common usage is to refer to it simply as the "network operator". I shall adopt that usage. The interconnect agreement will make provision for the premium rate fees under which the customer network operator will deduct part of those fees and pass the balance on to the network operator. The network operator, in turn, makes any relevant deductions, and passes the balance on to the service provider.
- As I shall explain shortly, the current statute governing telecommunications is the Communications Act 2003. ICSTIS was established prior to the enactment of that statute, and operated as a regulatory body under the previous regime. It is entirely self-funded from a levy on premium rate telecommunications, and from fines which it imposes for breaches of its Code of Practice.
- The Code of Practice current at the time of relevant events, which as I shall explain was approved under the Communications Act 2003, was the Tenth Edition, and I shall refer to that Tenth Edition in this judgment as "the Code". In broad terms, it requires service providers to abide by the Code and, among other things, fines them if they do not. According to the Code, ICSTIS may not only direct network operators to bar services to any particular service provider, it may also direct them to withhold monies from service providers where those service providers have been found to be in breach of the Code and have been fined. The Code also says that it is open to ICSTIS to direct the payment of monies to ICSTIS. I shall look in more detail later at the precise provisions.
- In the present case, ICSTIS became concerned about a series of services provided by service providers through Allied. They involved an automated call to a household, or a text message, indicating that a guaranteed prize had been won. To claim the prize, the consumer had to call a premium rate number. The consumer was not told the cost of the call. Once the consumer made the call, there would then be a connection to a recorded message which required the consumer to complete a second process to receive the "prize". That involved either writing to another address or sending a text message. The consumers who did proceed to the second stage either received nothing or a voucher booklet in return. On investigation, ICSTIS found that the Code had been breached by the service providers.
- An adjudication panel of the ICSTIS Committee considered the main tranche of breaches on 17 March 2005, and found the service providers in serious breach of the Code because of the fraudulent nature of the services and the illegality that was employed. ICSTIS gave directions to Allied to withhold revenue from the service providers. These were followed by directions which, in terms that I shall explain further below, indicated that revenue was to be paid to ICSTIS. Allied did not pay any sums to ICSTIS.
- On 6 July 2005, joint administrators were appointed for Allied. When Allied went into administration, it had the sum of £921,557 in cash. On 15 February 2006, Allied went into liquidation and the administrators were appointed as liquidators.
- Under the Communications Act 2003, the Office of Communications ("OFCOM") is the independent statutory regulator of, among other things, the telecommunications industry in the United Kingdom. Sections 120 to 124 of the Act are headed "Regulation of premium rate services". They provide:
- It is necessary to supplement these provisions in certain respects. The first concerns the approval of the Code. On 23 December 2003, the Code was approved by OFCOM. The following condition was imposed by OFCOM on all communications providers -- a term which, as defined under the Act, includes Allied:
- Second, it is necessary to set out some of the provisions to which cross-reference is made in sections 120 to 124. Under section 123 reference is made to sections 94 to 96. Section 94 reads:
- Section 96 of the Act provides, in material part, as follows:
- Under section 124(8) reference is made to sections 102 and 103 of the Act. These are in the following terms:
- Part 2 of the Code provides, so far as material, as follows:
- Part 7 of the Code deals with procedures and sanctions, and includes the following:
- Annexe 3 makes arrangements in respect of levies, and includes the following:
- I should also refer to Part 8 of the Code, which is as follows:
- The parties agree that the questions I am to decide could be formulated in this way. Ought the court to grant ICSTIS declarations as follows:
- In relation to each of the declarations sought, ICSTIS says that it is entitled to claim the sum in question as a statutory debt. No reliance for the purposes of this case has been placed by ICSTIS upon any other possible remedy, for example an application for an injunction.
- ICSTIS seeks a declaration that it is entitled under the statutory scheme to sue in debt to recover a monetary sum that it has directed Allied to pay to it in circumstances where Allied has withheld that sum from a service provider pursuant to a prior direction to do so. When the time came for Mr Lewis, on behalf of ICSTIS, to reply in oral argument earlier today, I indicated that I had reached a conclusion favourable to ICSTIS on question 1. I now give my reasons for that conclusion.
- The arguments of Mr Lewis which I found compelling are as follows:
- It seems to me that the principles described in the passages from Halsbury's Laws to which I have referred are principles which have arisen in cases rather different from the present. This is not a case in which Parliament has expressly stated that a person such as Allied shall have an obligation to pay a sum of money to ICSTIS. What has happened is that the statute has required that there be a Code and has said that conditions in the Code are to be binding. Among other things, the Code is to be one which has adequate arrangements in force for funding of the activities of administering and enforcing the Code. The Code is a Code which has no doubt been made in the public interest, and under it the enforcement authority, ICSTIS, is to have a regulatory role. It is, in my view, within the ordinary contemplation of Parliament that, in these circumstances, an enforcement authority would ordinarily have conferred upon it powers to require monetary payments under the Code by which it is to operate.
- I turn to the arguments put forward by the liquidators on question 1. These arguments were advanced by Mr Kennelly with great care and skill. I did not, however, find them persuasive, for reasons which I shall explain. Mr Kennelly's starting point was a principle set out by Francis Bennion at page 723 of the Fourth Edition of Statutory Interpretation. At page 723 is found section 278, entitled "Statutory interference with economic interests". This falls within a part of the book which is concerned with the principle against doubtful penalisation, and section 278 explains that one aspect of that principle is that, by the exercise of state power, the property or other economic interests of a person should not be taken away, impaired or endangered, except under clear authority of law. As the author makes clear in the section headed "Comment", while the presumption against imposition of a statutory detriment to a person's property or other economic interests is well-established, as so often in statutory interpretation there may be other criteria operating in favour of interference with property. As it seems to me, the inevitable practicalities of regulation in a field of this kind involve inferences that there will be some element of interference with economic rights. In those circumstances, it does not seem to me that the presumption identified by Mr Kennelly advances the arguments on behalf of the liquidators.
- The argument was then refined by Mr Kennelly. He drew attention to the specific nature of the entitlement claimed by ICSTIS in the present case. It is an entitlement to adopt a procedure somewhat similar to a garnishee procedure in civil proceedings. Mr Kennelly submitted that section 120 did not contemplate with sufficient or any clarity the recovery from a network operator of a fine which had been imposed on a third party service provider.
- Looking at the statute as a whole, one finds in section 121(5)(a) that the provision for enforcement of the Code may include provision for the payment to a person specified in the Code of a penalty not exceeding the maximum penalty for the time being specified in section 123(2). The essence of Mr Kennelly's submission was that if Parliament had specifically identified that aspect of payments that might be contemplated by the Code, it was going too far for the Code to involve payments of an entirely different nature and having the flavour of a garnishee arrangement.
- The answer to that point as it seems to me lies within Mr Kennelly's own concession that the specific matters identified in section 121(5) are not exclusive. One can well understand why the statute identifies in relation to payments that the Code is not to provide for penalties exceeding the management under section 123(2). It does not, as it seems to me, follow from that that Parliament was concerned to exclude the possibility of the Code providing for payments otherwise than payments in the nature of a penalty.
- Third, Mr Kennelly referred to the well-known case of Attorney General v the Great Eastern Railway Company [1880] 5 APP 473. That case is concerned with the powers of companies. Adopting a commonly formulated summary of the principle in that case, Mr Kennelly submitted that a power to recover from a network operator money due to a third party was not a power consequential upon or incidental to the statutory powers of ICSTIS. There was no suggestion by Mr Kennelly that, as a company limited by guarantee, ICSTIS was under any relevant limitation on its powers to sue by virtue of its constitution or any specific statutory provision. Where ICSTIS has been identified as the enforcement authority under the present statutory provisions, and a Code has been approved under those statutory provisions which empowers ICSTIS in certain circumstances to adopt a garnishee-type of procedure, I can see no reason to think that ICSTIS is under any limitation arising under the principle in the Great Eastern case.
- Turning to the principles set out in the passages cited from Halsbury's Laws, Mr Kennelly stated the liquidator's position in this way: those principles are not in dispute. The corollary, however, of his submission in relation to Great Eastern was that the present case did not fall within the principles found in Halsbury's Laws. Mere convenience, submitted Mr Kennelly, was not a basis for implying anything into the statute.
- As regards the reliance on the Great Eastern principle, for the reasons I have given, that does not assist the liquidators. In other respects, however, Mr Kennelly drew attention to the fact that ICSTIS was not the only body with a policing role in relation to this particular industry. The obtaining of money by deception could be dealt with by the police; securing the proceeds of crime could be dealt with by the Assets Recovery Agency. It was suggested by Mr Kennelly that, in these circumstances, the statutory provision for OFCOM to play a role as set out in section 123 and section 124 indicated that Parliament did not have in mind any ability on the part of ICSTIS to give directions of the kind in issue in the present case.
- It seems to me that, taken as a whole, the provisions of sections 120 to 124 of the Act do not point to OFCOM having the exclusive role as regards enforcement. These are special provisions for premium rate services. It is in relation to such services that there is to be a special body known as "the enforcement authority". As I indicated earlier, Mr Lewis drew attention to particular parts of the statute which focus on enforcement in terms which make it clear that the enforcement that is contemplated is to be enforcement by the enforcement authority.
- There are limitations. Mr Kennelly has drawn attention to a limitation found in section 121(5)(a). It may be noted that there is a statutory limitation found in section 121(3). If ICSTIS were to seek discretionary relief, the court might refuse it on the grounds that enforcement by OFCOM or some other body would be more appropriate. But subject to limitations of this kind, it appears to me that the statute contemplates that the enforcement authority will have a primary role as enforcer. That is entirely consistent with a secondary role for OFCOM being provided by section 123. It affords in the case of premium rate services an ability for the powers of OFCOM to be invoked in a similar way to that in which they may be invoked for other contexts concerned with the regulation of communications. This does not, in my view, detract from the plain intention of Parliament that the primary enforcer should be the enforcement authority. That being the case, it appears to me that Parliament must have been taken to have intended that the resources of the courts would be available to the enforcement authority in order to ensure that the condition set by OFCOM do indeed bind the persons to whom it was applied.
- I see no reason to think that an action for debt should be unavailable to the enforcement authority. On the contrary, it appears to me that such an action will be the quickest and simplest way of recovery of monetary sums which are required to be paid under the Code. Whether they are in fact required to be paid under the Code I shall turn to when dealing with the remaining questions. Before doing so, however, I make two further observations. First, I have no doubt, and indeed it is I believe common ground, that ICSTIS is a body which would be subject to judicial review in the Administrative Court in relation to its decisions. Equally, OFCOM is a body which would be subject to judicial review in the Administrative Court in relation to its decision to approve the Code. If a Code were put forward which could legitimately be criticised as involving a failure to understand the law correctly, or as having been proposed in circumstances which involved procedural unfairness, or as involving a scheme which in some relevant respect was unreasonable, then as it seems to me a proposal to adopt the Code would be a proposal that could be the subject of review in the Administrative Court, and indeed the adoption of the Code in such circumstances might be the subject of an application for judicial review. It would not therefore be the case that it was open to ICSTIS or OFCOM simply to devise such procedures as they thought appropriate without there being any safeguard to ensure that the Code was a Code that complied with the intentions of Parliament and with ordinary principles of public law.
- Second, at various stages in his argument, with some encouragement from me, Mr Lewis made reference to what happened in practice in the present case. This was in support of a submission that the powers of OFCOM in relation to enforcement, including those incorporated by reference in sections 123 and 124, were not sufficient to prevent "fly-by-night" operators keeping their ill-gotten gains. I prefer not to rest my conclusions on these submissions. They included an account of the extent to which ICSTIS had, under Part 8 of the Code, sought to raise relevant matters with OFCOM and the limited extent to which OFCOM had in the event availed itself of its powers. I accept Mr Kennelly's submission that I have only limited material before me in that regard. I certainly do not have material which would entitle me to criticise OFCOM in the way that it handled this matter.
- More generally, I do not rest my judgment on any suggestion that Parliament itself must have contemplated that the powers afforded to OFCOM would in any relevant respect be inadequate. The crucial factor to my mind is that sections 120 and 121 plainly envisage that there is to be an enforcement authority with responsibility for enforcing the Code. That being the primary position, it seems to me that the provision of additional powers for OFCOM is entirely neutral. I turn to the second question.
- In asserting that ICSTIS has any entitlement to sue for monies which were not in fact withheld by Allied, it seems to me that ICSTIS faces two hurdles. The first concerns the terms of the direction given by ICSTIS to Allied. An example, taken from page 341 of bundle A, is found in a letter of 27 April 2005, sent by ICSTIS to Allied in relation to a particular set of premium rate telephone numbers for which the service provider was believed to be a company called Ozeano International Inc. The letter recorded that on 5 April there had been a request that a sum of £103,977.00 should be withheld from Ozeano International Inc revenue. It continued:
- Given that, under the statutory scheme, ICSTIS is entitled to recover money only when it has given a direction in relation to that money, I find it impossible to see how the letter of 27 April 2005 can be construed as referring to money which was not withheld. The direction is perfectly plain. It states that what should be forwarded to ICSTIS is "the revenue withheld".
- The second hurdle that must be surmounted is that ICSTIS' power to give directions arises only if such directions are in conformity with the Code. Paragraph 2.3.5(d) gives the power to direct that money be withheld. Paragraph 2.3.5(e) appears on the face of it to be perfectly clear. There is a power to give a direction to pay "an amount of any funds withheld". That seems quite inconsistent with there being any power to direct the payment of sums which have not been withheld.
- Mr Lewis valiantly sought to persuade me that both these hurdles could be overcome. What was appropriate, he submitted, was to read "withheld" as meaning "directed to be withheld". This, he submitted, was necessary to give sensible effect to the legislation and to achieve effective regulation. He disclaimed reliance on the equitable principle that equity regards that which ought to have been done as having been done. However, he suggested that common sense when interpreting the Code and the direction should give rise to an analogous position. Unless the construction put forward by ICSTIS were correct, he submitted that a network operator could ignore a direction to withhold with impunity. Moreover, such a construction would mean that a network operator was in a better position where its breach was more serious than a mere failure to hand over sums which have been withheld. He submitted that the intention behind the Code must have been to ensure that there would be an ability for ICSTIS to require payment to it of all sums directed to be withheld even if they were not withheld.
- Accepting that the Code could have been better expressed in this regard, he submitted that, nevertheless, those who drafted the Code could not have contemplated that one could avoid the last obligation -- the obligation to hand over money -- by disregarding the obligation immediately before it -- the obligation to withhold. The only reason for referring to amounts withheld was to limit the payable amount to the amount of the prior direction. There might well have been, he submitted, misleading information which led to ICSTIS believing that the money had been withheld when it had not. He added that there was nothing in his construction which involved any penalty on the network operator; the network operator was simply being required to fulfil the obligation imposed on it earlier.
- I see the force of all these points as indicating respects in which it might be desirable to have an arrangement under which ICSTIS was able to direct payment not merely of monies that had been actually withheld, but also of monies which had been directed to be withheld and in the event were not withheld. Nevertheless, it seems to me quite impossible as a matter of construction to read either the direction or the provision in the Code in that way. The words are clear. They serve a purpose of enabling ICSTIS to require the payment over of sums which had been withheld. Construed in that way, there is no uncertainty. Nor is there any absurdity about the result. While in the circumstances of the present case ICSTIS may wish that its direction or the provisions in the Code had been couched differently, I cannot see that the arguments advanced by Mr Lewis are such as would enable clear words to be read in a way which is substantially different from their ordinary meaning. In those circumstances, I did not consider it necessary to call on Mr Kennelly to reply on question 2.
- These two questions were dealt with together by Mr Lewis. In essence his submission was that a distinction could be drawn between a direction which was concerned to identify a specific service provider by name alone, and a direction which made it clear that it was concerned with services provided on particular premium rate telephone numbers. If a direction had been given which was confined to a company described as having a particular name, and there were in truth no company having that name, then the direction would lack any force. However, submitted Mr Lewis, that would not be the case where a direction in truth was aimed at the service provider who was responsible for material made available on specific premium rate telephone lines.
- After taking instructions, Mr Kennelly was able to respond that, from the liquidator's point of view, the issues arising under questions 3 and 4 fell away in the light of my answer to question 2. The stance of the liquidators was that they would not seek to say that Allied could have refused to pay where specific numbers were given and Allied had withheld in relation to those numbers. In those circumstances, Mr Lewis agreed that I need not deal any further with questions 3 and 4.
- Accordingly, I shall grant a declaration as sought by ICSTIS on question 1. I shall refuse the declaration sought by ICSTIS on question 2, and if so desired by the liquidators, will grant a negative declaration in that regard. I make no declarations on questions 3 and 4. I order transfer of the matter to the Companies Court for such further directions as may be considered by that court to be appropriate. I grant permission to ICSTIS, if it is needed, to amend the name of the applicant so as to include the word "Limited".
- MR LEWIS: My Lord, my learned friend wants to deal with the negative declaration first.
- MR KENNELLY: I am very grateful to my learned friend, if only to say it is so desired and we would be grateful if your Lordship would record and grant a declaration --
- MR JUSTICE WALKER: You mean simply inserting the word "not".
- MR KENNELLY: Indeed, my Lord, yes. It may be useful for the liquidators at the next stage. In fact, it will be useful.
- MR JUSTICE WALKER: I wonder whether I might ask the parties to liaise with the associate so as to draw up an order which both parties can agree upon, and it can then be e-mailed to the associate.
- MR KENNELLY: I am very grateful. We will do so.
- MR LEWIS: That leaves then the question of costs. My Lord, we do ask for our costs in the matter, notwithstanding that obviously in some sense the second issue was one that went against us, and the basis on which we do that is by drawing the court's attention to the fact that what really was in issue in this application right from the start was simply the first issue, and there are a number of references which I am not sure I need to take your Lordship to unless my learned friend disagrees with them, but when there was the initial refusal of the proof, it was on the basis that there was no provable debt. When one came to Mr Mercer's skeleton argument -- pardon me, Mr Mercer's witness statement at tab 5 and Mr Andronikou's witness statement at tab 6 -- neither of them were raising in terms the proposition that monies had not been withheld and therefore there was no entitlement to recover. There was some discussion of the factual issue as to whether or not amounts had actually been withheld, but it was not put as an argument. It was not identified as a separate issue. Consequently, in October 2006 the questions were asked in the request for further information. That request for further information was answered only shortly before this hearing, and there was no suggestion in the answers there that it was a separate issue. There was a separate issue about existence, but it was not suggested that there was a separate issue as to what would happen if monies had not actually been withheld, and for that reason in our skeleton we did not even deal with it as an issue; it had not been identified as an issue up to that point. So the point is then first raised in the skeleton argument. It is a subsidiary point. It is a specific point which applies possibly to the liquidators with more significance than it might do to ICSTIS in the general run of things. The main issue for ICSTIS is the basic point of principle. But in relation to this specific application, it defines and analyses one aspect of the potential for proving in the liquidation.
- The last point, virtually all of the time that we have spent in debate in relation to this matter has been in relation to the first issue. Very little time has actually been spent on the second issue. My submissions were relatively brief in that context and my learned friend was not called upon. So in those circumstances I would say that we have won substantially everything that was in issue and that the appropriate course would be that we should have our costs of the application or the costs of the hearing. Unless I can assist you further, my Lord, those are our submissions on costs.
- MR KENNELLY: My Lord, it will not surprise your Lordship to know that I find that submission surprising. My Lord, the reason why so little time was taken on the second issue was because I was not called upon, and my learned friend's characterisation of how the second issue -- the second question -- came to be before you, I am afraid, is quite incorrect. It is ICSTIS' fault that their case was made with a great lack of clarity such that on the eve of the hearing the liquidators themselves could not be sure that ICSTIS were still maintaining the second issue point. I can take your Lordship to the response that ICSTIS made and ICSTIS' own evidence which show how this issue did arise and was itself raised by ICSTIS.
- MR JUSTICE WALKER: I certainly recall seeing how Mr Kidd drew attention to concerns by ICSTIS as to whether the service providers in fact existed.
- MR KENNELLY: My Lord it goes further than that. Mr Andronikou's statement in September said no money has been withheld. In Mr Kidd's second witness statement, Mr Kidd said in terms: we were entitled to the money which was withheld or should have been withheld. Now, the issue was squarely --
- MR JUSTICE WALKER: Where did your clients say: if the money was not in fact withheld, it follows that you cannot prove in the liquidation? Where was that first said?
- MR KENNELLY: My Lord, we did not say that because we understood that when we saw the Part 18 response of ICSTIS, at that stage we believed that ICSTIS had dropped the point, and it is useful to see how ICSTIS described its own case in its response to our Part 18 request. In that response you will see that ICSTIS was not running this point.
- MR JUSTICE WALKER: Could you show me that?
- MR KENNELLY: I will, my Lord, yes. It is in bundle A, tab 2. My Lord, page 4 is the beginning of the Part 18 request. My Lord, your Lordship sees behind tab 2 in bundle A a response to a Part 18 request for further information. That was a request submitted by the liquidators to ICSTIS, and this was delivered to the liquidators on 3 October. Over the page at page 5 is the response to Request 3. ICSTIS state in terms that they do not seek to fine Allied. They say:
- MR JUSTICE WALKER: Where do you say, if that is the case, then a large chunk of the proof falls away?
- MR KENNELLY: My Lord, we did not say that. We understood, having seen that, that it was no longer an issue. It was only when we came to look at the papers for preparation for this hearing that we saw contradiction in ICSTIS' case. My Lord, if you turn back to page 3 of the same bundle behind the same tab --
- MR LEWIS: It possibly might be worthwhile looking at Response 1 before going on to do that in the same document.
- MR KENNELLY: My Lord, your Lordship has the Part 18 request.
- MR JUSTICE WALKER: Yes.
- MR KENNELLY: My Lord, if you turn back to page 3, you will see the letter dated 10 October 2006. This letter states that it encloses the second statement of George Kidd and the response to our Part 18 request. The difficulty which we appreciated before the hearing was that whereas the Part 18 request says that "ICSTIS seeks to recover the amounts that Allied has withheld", it also contained a statement of George Kidd which does not state squarely that ICSTIS will -- your Lordship will recall at this stage that they had seen the statement of Mr Andronikou which said no sums had been withheld. They had that statement, but a closer reading of Mr Kidd's second statement at paragraph 47 -- forgive me my Lord, it is not that, it is paragraph 10, forgive me, paragraph 10 of that statement. Mr Kidd says almost in passing that ICSTIS would be entitled to the money which has been withheld or should have been withheld, and the confusion, my Lord, arose from the fact that --
- MR JUSTICE WALKER: That was what date?
- MR KENNELLY: That was delivered on 10 October also. It came under that same letter of 10 October. So the 10 October letter delivered to the liquidators stated squarely that ICSTIS only claimed sums that Allied had withheld. But then in the statement of Mr Kidd at paragraph 10, there was a passing reference to ICSTIS' entitlement to sums which were withheld or should have been withheld, and that statement, my Lord, is behind tab 8 in bundle B. My Lord, I do not wish to be unfair. I have not taken your Lordship to the very drastic changes that ICSTIS, as the public authority, has made to its legal case in these proceedings. It has vastly added to the costs which my clients have incurred having to address points such as the allegations of trust, which they dropped, and the allegation of breach of contract, which they dropped. They never said squarely: we are entitled to sums, where we are construing this section of the Code as the term "withheld" as meaning "directed to be withheld". The submissions that Mr Lewis made to you on this point we heard for the first time today. Notwithstanding the fact that Mr Andronikou in September 2006 said that no sums had been withheld, we never heard those arguments, and never saw them articulated until we heard them in court for the first time.
- MR JUSTICE WALKER: Now, what are you asking?
- MR KENNELLY: I am not so presumptuous as ICSTIS is to ask for all of its costs, but I do ask for my costs on the second issue because that issue was before the court. It was argued by the parties on my side on paper and by Mr Lewis orally. The time taken was not lengthy because your Lordship was quite properly robust and did not call on us. These were costs that we incurred nonetheless in relation to that second question, and if there was fault, the public authority ought to have clarified its case, which was obviously for it a very important point, as Mr Lewis said, earlier so that we could have understood the position in circumstances where in September 2006 Mr Andronikou said that we have not actually withheld these sums, and that was said squarely in his witness statement. ICSTIS failed to deal with that issue and gave contradictory signals in the response to the Part 18 request and the second statement of Mr Kidd. So we ask for our costs on the second issue.
- MR JUSTICE WALKER: Mr Lewis, if I were to make on order for your side to bear the costs of the second issue, is there any way in which that order would involve unfairness to your client in the sense that it would have to pay more than it would have had to pay if, during this earlier rattling of sabres on either side, the position had become a little clearer.
- MR LEWIS: My Lord, no.
- MR JUSTICE WALKER: In those circumstances, I conclude that the appropriate order is that the costs of the proceedings, other than the costs on issue 2, should be payable to ICSTIS.
- MR KENNELLY: Forgive me, my Lord, I hesitate to interrupt your Lordship, I thought we were only dealing with issue 1. There is an important submission -- I do not wish any discourtesy -- there is an important issue on the costs of the third and fourth issues.
- MR JUSTICE WALKER: Well, Mr Lewis asked for all the costs.
- MR KENNELLY: Indeed, my Lord.
- MR JUSTICE WALKER: And you responded by saying he should not have the costs on point 2, but your client should.
- MR KENNELLY: My Lord, forgive me then, because it is very important that ICSTIS does not have the costs of the third and fourth issues because those issues, which Mr Lewis no doubt will include as their costs, he will say -- incurred in these proceedings -- they ought not properly to lie on Allied because those are points again which arose for the first time here and which were not conceded by the liquidators. Quite properly your Lordship did not refer to any concession on our part when Mr Lewis for ICSTIS very late in the day clarified their case on that point. We were happy to concur, but the case was not clear and the costs that we incurred on that ought not properly to lie. Mr Lewis can have his costs, in my submission, for the first point and we should have ours for the second. But the last two --
- MR JUSTICE WALKER: The third and fourth fell away. It was only today that I suspect there was really any analysis on either side of precisely how the structure of the argument would work its way through. I could see some possible justification for my making no order as to the costs of questions 3 and 4, but I am not going that far at the moment. Anyway, you submit that you should have them?
- MR KENNELLY: My Lord, no. I am making a very modest proposal. I think it is unfair for Mr Lewis to ask for all his costs. The costs for issues 3 and 4 should fall where they lie. I am not submitting that ICSTIS should bear our costs for those issues, but they should not fall on our client, because they were canvassed in my skeleton argument and I said in my skeleton argument that ICSTIS' case on this is not clear. We did do the thinking on this point, and the lack of clarity, in my submission, was the fault of ICSTIS, and ICSTIS' work on this point should not -- because no doubt they will be included in the costs and this will go to detailed assessment, and they should not fall on our client.
- MR JUSTICE WALKER: Mr Lewis, the submission on issues 3 and 4 is that costs should lie where they fall.
- MR LEWIS: My Lord, our submission in answer to that submission, and I do not want to be unfair to my learned friend again although I know his shoulders are broad enough so sustain it, is quite simply that the argument fell away. There was no need to resolve what had previously been an objection raised by Allied on the basis of what my learned friend said in answer to questions from your Lordship, and in my submission what flows from that is logically that we should get the costs of what limited time was spent on those particular issues.
- My Lord, what I might propose, and I do hesitate to do it because it is a little like a Dutch auction, but an easy way or a possible way to resolve this, rather than to send the parties into a detailed assessment which would involve further costs trying to split up each of these matters, would be to order ICSTIS 75 per cent of its costs of the application.
- MR JUSTICE WALKER: Well, I wonder whether Mr Kennelly would like to take instructions on that. (pause)
- MR KENNELLY: My Lord, I am afraid that that proposal from my learned friend is not acceptable to the liquidators. It is very important, my Lord, that we appreciate that on the last two issues --
- MR JUSTICE WALKER: No need to proceed further then.
- MR LEWIS: My Lord, clearly, if it is not acceptable to my learned friend, there is little that one can do. In those circumstances, I would ask for ICSTIS' costs of the first issue and of the third and fourth issue. Essentially, my Lord, the costs of everything apart from the second issue.
- MR JUSTICE WALKER: The application on behalf of ICSTIS in relation to costs was initially that it should have the entire costs of the hearing before me. Mr Kennelly submitted first that his clients should be entitled to the costs of issue 2. I am satisfied that that is so, even though it does seem to me that the parties really on both sides could have done a lot more with goodwill to try to identify precisely how the question of monies not being withheld came into play in the present case.
- Mr Kennelly then submitted that the costs of issues 3 and 4 should lie where they fall. The response from Mr Lewis was that the points in relation to issues 3 and 4 fell away only on the basis of what had been submitted orally by Mr Kennelly today. That is in part true, but on the other hand, they fell away only because by that time I had made it clear that the liquidators had succeeded on question 2. In those circumstances, it does seem to me that the appropriate order is that the costs of issues 3 and 4 should lie where they fall. Accordingly, my order on costs would be that the liquidators are to pay to ICSTIS the costs of issue 1, that ICSTIS is to pay to the liquidators the costs of issue 2, and that the costs of issues 3 and 4 should lie where they fall.
Factual background
Legislative background
"120. Conditions regulating premium rate services
(1) OFCOM shall have the power, for the purpose of regulating the provision, content, promotion and marketing of premium rate services, to set conditions under this section that bind the persons to whom they are applied.
(2) Conditions under this section may be applied either—
(a) generally to every person who provides a premium rate service; or
(b) to every person who is of a specified description of such persons, or who provides a specified description of such services.
(3) The only provision that may be made by conditions under this section is provision requiring the person to whom the condition applies to comply, to the extent required by the condition, with—
(a) directions given in accordance with an approved code by the enforcement authority and for the purpose of enforcing its provisions; and
(b) if there is no such code, the provisions of the order for the time being in force under section 122.
(4) The power to set a condition under this section includes power to modify or revoke the conditions for the time being in force under this section.
(5) Sections 47 and 48 apply to the setting, modification and revocation of a condition under this section as they apply to the setting, modification and revocation of a condition under section 45.
(6) OFCOM must send a copy of every notification published under section 48(1) with respect to a condition under this section to the Secretary of State.
(7) A service is a premium rate service for the purposes of this Chapter if—
(a) it is a service falling within subsection (8);
(b) there is a charge for the provision of the service;
(c) the charge is required to be paid to a person providing an electronic communications service by means of which the service in question is provided; and
(d) that charge is imposed in the form of a charge made by that person for the use of the electronic communications service.
(8) A service falls within this subsection if its provision consists in—
(a) the provision of the contents of communications transmitted by means of an electronic communications network; or
(b) allowing the user of an electronic communications service to make use, by the making of a transmission by means of that service, of a facility made available to the users of the electronic communications service.
(9) For the purposes of this Chapter a person provides a premium rate service ("the relevant service") if—
(a) he provides the contents of the relevant service;
(b) he exercises editorial control over the contents of the relevant service;
(c) he is a person who packages together the contents of the relevant service for the purpose of facilitating its provision;
(d) he makes available a facility comprised in the relevant service; or
(e) he falls within subsection (10), (11) or (12).
(10) A person falls within this subsection if—
(a) he is the provider of an electronic communications service used for the provision of the relevant service; and
(b) under arrangements made with a person who is a provider of the relevant service falling within subsection (9)(a) to (d), he is entitled to retain some or all of the charges received by him in respect of the provision of the relevant service or of the use of his electronic communications service for the purposes of the relevant service.
(11) A person falls within this subsection if—
(a) he is the provider of an electronic communications network used for the provision of the relevant service; and
(b) an agreement relating to the use of the network for the provision of that service subsists between the provider of the network and a person who is a provider of the relevant service falling within subsection (9)(a) to (d).
(12) A person falls within this subsection if—
(a) he is the provider of an electronic communications network used for the provision of the relevant service; and
(b) the use of that network for the provision of premium rate services, or of services that include or may include premium rate services, is authorised by an agreement subsisting between that person and either an intermediary service provider or a person who is a provider of the relevant service by virtue of subsection (10) or (11).
(13) Where one or more persons are employed or engaged under the direction of another to do any of the things mentioned in subsection (9)(a) to (d), only that other person shall be a provider of the relevant service for the purposes of this Chapter.
(14) References in this section to a facility include, in particular, references to—
(a) a facility for making a payment for goods or services;
(b) a facility for entering a competition or claiming a prize; and
(c) a facility for registering a vote or recording a preference.
(15) In this section—
"approved code" means a code for the time being approved under section 121;
"enforcement authority", in relation to such a code, means the person who under the code has the function of enforcing it; and
"intermediary service provider" means a person who—
(a) provides an electronic communications service used for the provision of the relevant service or an electronic communications network so used; and
(b) is a party to an agreement with—
(i) a provider of the relevant service falling within subsection (9)(a) to (d), or
(ii) another intermediary service provider,
which relates to the use of that electronic communications service or network for the provision of premium rate services, or of services that include or may include premium rate services.
121 Approval of code for premium rate services
(1) If it appears to OFCOM—
(a) that a code has been made by any person for regulating the provision and contents of premium rate services, and the facilities made available in the provision of such services;
(b) that the code contains provision for regulating, to such extent (if any) as they think fit, the arrangements made by the providers of premium rate services for promoting and marketing those services; and
(c) that it would be appropriate for them to approve that code for the purposes of section 120,
they may approve that code for those purposes.
(2) OFCOM are not to approve a code for those purposes unless they are satisfied—
(a) that there is a person who, under the code, has the function of administering and enforcing it; and
(b) that that person is sufficiently independent of the providers of premium rate services;
(c) that adequate arrangements are in force for funding the activities of that person in relation to the code;
(d) that the provisions of the code are objectively justifiable in relation to the services to which it relates;
(e) that those provisions are not such as to discriminate unduly against particular persons or against a particular description of persons;
(f) that those provisions are proportionate to what they are intended to achieve; and
(g) that, in relation to what those provisions are intended to achieve, they are transparent.
(3) OFCOM are not for those purposes to approve so much of a code as imposes an obligation as respects a premium rate service on a person who is a provider of the service by virtue only of section 120(12) ("the relevant provider") unless they are satisfied that the obligation—
(a) arises only if there is no one who is a provider of the service otherwise than by virtue of section 120(12) against whom it is practicable to take action;
(b) arises only after a notice identifying the service and setting out respects in which requirements of the code have been contravened in relation to it has been given to the relevant provider by the person responsible for enforcing the code; and
(c) is confined to an obligation to secure that electronic communications networks provided by the relevant provider are not used for making the service available to persons who are in the United Kingdom.
(4) The provision that may be contained in a code and approved under this section includes, in particular, provision about the pricing of premium rate services and provision for the enforcement of the code.
(5) The provision for the enforcement of a code that may be approved under this section includes—
(a) provision for the payment, to a person specified in the code, of a penalty not exceeding the maximum penalty for the time being specified in section 123(2);
(b) provision requiring a provider of a premium rate service to secure that the provision of the service is suspended or otherwise ceases or is restricted in any respect;
(c) provision for the imposition on a person, in respect of a contravention of the code, of a temporary or permanent prohibition or restriction on his working in connection with the provision of premium rate services or, in the case of a body corporate, on its providing such services or on its carrying on other activities in connection with their provision.
(6) OFCOM may, at any time, for the purposes of section 120—
(a) approve modifications that have been made to an approved code; or
(b) withdraw their approval from an approved code.
(7) Where OFCOM give or withdraw an approval for the purposes of section 120, they must give notification of their approval or of its withdrawal.
(8) The notification must be published in such manner as OFCOM consider appropriate for bringing it to the attention of the persons who, in OFCOM's opinion, are likely to be affected by the approval or withdrawal.
122 Orders by OFCOM in the absence of a code under s. 121
(1) OFCOM may make an order under this section if, at any time, they consider that there is no code in force to which they think it would be appropriate to give, or to continue to give, their approval under section 121.
(2) An order under this section may make such of the following provisions as OFCOM think fit—
(a) provision imposing requirements with respect to the provision and contents of premium rate services, and with respect to the facilities made available in the provision of such services (including provision about pricing);
(b) provision imposing requirements with respect to the arrangements made by the providers of premium rate services for the promotion and marketing of those services;
(c) provision for the enforcement of requirements imposed by virtue of paragraph (a) or (b);
(d) provision making other arrangements for the purposes of those requirements.
(3) The power to make provision by an order under this section includes, in particular—
(a) power to establish a body corporate with the capacity to make its own rules and to establish its own procedures;
(b) power to determine the jurisdiction of a body established by such an order or, for the purposes of the order, of any other person;
(c) power to confer jurisdiction with respect to any matter on OFCOM themselves;
(d) power to provide for a person on whom jurisdiction is conferred by the arrangements to make awards of compensation, to direct the reimbursement of costs or expenses, or to do both;
(e) power to provide for such a person to enforce, or to participate in the enforcement of, any awards or directions made under such an order;
(f) power to make provision falling within section 121(5)(c) for the enforcement of the provisions of the order; and
(g) power to make such other provision as OFCOM think fit for the enforcement of such awards and directions.
(4) An order under this section may require such providers of premium rate services as may be determined by or under the order to make payments to OFCOM in respect of expenditure incurred by OFCOM in connection with—
(a) the establishment and maintenance, in accordance with such an order, of any body corporate or procedure; or
(b) the making of other arrangements for the purposes of the requirements of such an order.
(5) An order under this section is not to impose an obligation as respects a premium rate service on a person who is a provider of the service by virtue only of section 120(12) ("the relevant provider") unless the obligation—
(a) arises only if there is no one who is a provider of the service otherwise than by virtue of section 120(12) against whom it is practicable to take action;
(b) arises only after a notice identifying the service and setting out respects in which requirements of the order have been contravened in relation to it has been given to the relevant provider by OFCOM; and
(c) is confined to an obligation to secure that electronic communications networks provided by the relevant provider are not used for making the service available to persons who are in the United Kingdom.
(6) The consent of the Secretary of State is required for the making by OFCOM of an order under this section.
(7) Section 403 applies to the power of OFCOM to make an order under this section.
(8) A statutory instrument containing an order made by OFCOM under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.
123 Enforcement of s. 120 conditions
(1) Sections 94 to 96 apply in relation to a contravention of conditions set under section 120 as they apply in relation to a contravention of a condition set under section 45.
(2) The amount of the penalty imposed under section 96 as applied by this section is to be such amount not exceeding £100,000 as OFCOM determine to be—
(a) appropriate; and
(b) proportionate to the contravention in respect of which it is imposed.
(3) In making that determination OFCOM must have regard to—
(a) any representations made to them by the notified provider;
(b) any steps taken by him towards complying with the conditions contraventions of which have been notified to him under section 94 (as applied); and
(c) any steps taken by him for remedying the consequences of those contraventions.
(4) The Secretary of State may by order amend this section so as to substitute a different maximum penalty for the maximum penalty for the time being specified in subsection (2).
(5) No order is to be made containing provision authorised by subsection (4) unless a draft of the order has been laid before Parliament and approved by a resolution of each House.
124 Suspending service provision for contraventions of s. 120 conditions
(1) OFCOM may give a direction under this section to a person who is a communications provider ("the contravening provider") if they are satisfied—
(a) that he is or has been in serious and repeated contravention of conditions set under section 120;
(b) that an attempt, by the imposition of penalties or the giving of enforcement notifications under section 95 (as applied by section 123) or both, to secure compliance with the contravened conditions has failed;
(c) that the giving of the direction is appropriate and proportionate to the seriousness (when repeated as they have been) of the contraventions; and
(d) that the giving of the direction is required for reasons of public policy.
(2) OFCOM may also give a direction under this section to a person who is a communications provider ("the contravening provider") if they are satisfied—
(a) that he is, or has been, in contravention of conditions set under section 120 in respect of a premium rate service;
(b) that the circumstances of the contravention make it appropriate for OFCOM to suspend or restrict the provision of premium rate services provided by the contravening provider without the conditions set out in subsection (1) being satisfied; and
(c) that in those circumstances the giving of the direction is urgently required for reasons of public policy.
(3) A direction under this section is—
(a) a direction to the contravening provider to secure the suspension of the provision of premium rate services provided by him; or
(b) a direction requiring him to secure compliance with restrictions, set out in the direction, on the provision of such services.
(4) A direction under this section—
(a) must specify the services to which it relates; and
(b) except so far as it otherwise provides, takes effect for an indefinite period beginning with the time at which it is notified to the person to whom it is given.
(5) A direction under this section—
(a) in providing for the effect of a suspension or restriction to be postponed, may provide for it to take effect only at a time determined by or in accordance with the terms of the direction; and
(b) in connection with the suspension or restriction contained in the direction or with the postponement of its effect, may impose such conditions on the contravening provider as appear to OFCOM to be appropriate for the purpose of protecting that provider's customers.
(6) Those conditions may include a condition requiring the making of payments—
(a) by way of compensation for loss or damage suffered by the contravening provider's customers as a result of the direction; or
(b) in respect of annoyance, inconvenience or anxiety to which they have been put in consequence of the direction.
(7) If OFCOM consider it appropriate to do so (whether or not in consequence of representations or proposals made to them), they may revoke a direction under this section or modify its conditions—
(a) with effect from such time as they may direct;
(b) subject to compliance with such requirements as they may specify; and
(c) to such extent and in relation to such services as they may determine.
(8) Sections 102 and 103 apply in the case of a direction under this section as they apply in the case of a direction under section 100, but as if references in section 103(1) to an electronic communications network or electronic communications service were references to a premium rate service.
(9) For the purposes of this section there are repeated contraventions by a person of conditions set under section 120 to the extent that—
(a) in the case of a previous notification given to that person under section 94 (as applied by section 123), OFCOM have determined for the purposes of section 95(2) or 96(2) (as so applied) that such a contravention did occur; and
(b) in the period of twelve months following the day of the making of that determination, one or more further notifications have been given to that person in respect of contraventions of a condition set under section 120.
(10) For the purposes of this section the seriousness of repeated contraventions of conditions set under section 120 has to be determined by reference to the seriousness of the contraventions of the approved code or order by reference to which the conditions have effect."
"1. The Communications Providers shall comply with-
(a) directions given in accordance with an Approved Code by the Enforcement Authority and for the purposes of enforcing the provisions of the Approved Code."
"94(1) Where OFCOM determine that there are reasonable grounds for believing that a person is contravening, or has contravened, a condition set under section 45, they may give that person a notification under this section.
(2) A notification under this section is one which-
(a) sets out the determination made by OFCOM;
(b) specifies the condition and contravention in respect of which that determination has been made; and
(c) specifies the period during which the person notified has an opportunity of doing the things specified in subsection (3)..."
Section 95 of the Act provides as follows:
"95 Enforcement notification for contravention of conditions
(1) This section applies where—
(a) a person ("the notified provider") has been given a notification under section 94;
(b) OFCOM have allowed the notified provider an opportunity of making representations about the matters notified; and
(c) the period allowed for the making of the representations has expired.
(2) OFCOM may give the notified provider an enforcement notification if they are satisfied—
(a) that he has, in one or more of the respects notified, been in contravention of a condition specified in the notification under section 94; and
(b) that he has not, during the period allowed under that section, taken all such steps as they consider appropriate—
(i) for complying with that condition; and
(ii) for remedying the consequences of the notified contravention of that condition.
(3) An enforcement notification is a notification which imposes one or both of the following requirements on the notified provider—
(a) a requirement to take such steps for complying with the notified condition as may be specified in the notification;
(b) a requirement to take such steps for remedying the consequences of the notified contravention as may be so specified.
(4) A decision of OFCOM to give an enforcement notification to a person—
(a) must be notified by them to that person, together with the reasons for the decision, no later than one week after the day on which it is taken; and.
(b) must fix a reasonable period for the taking of the steps required by the notification.
(5) It shall be the duty of a person to whom an enforcement notification has been given to comply with it.
(6) That duty shall be enforceable in civil proceedings by OFCOM—
(a) for an injunction;
(b) for specific performance of a statutory duty under section 45 of the Court of Session Act 1988; or
(c) for any other appropriate remedy or relief."
"Penalties for contravention of conditions
(1) This section applies (in addition to section 95) where-
(a) a person ("the notified provider") has been given a notification under section 94;
(b) OFCOM have allowed the notified provider an opportunity of making representations about the matters notified; and
(c) the period allowed for the making of the representations has expired.
(2) OFCOM may impose a penalty on the notified provider if he-
(a) has, in one or more of the respects notified, been in contravention of a condition specified in the notification under section 94 ...
...
(5) OFCOM may also impose a penalty on the notified provider if he has contravened, or is contravening, a requirement of an enforcement notification given under section 95 in respect of the notified contravention.
(6) Where OFCOM impose a penalty on a person under this section, they shall-
(a) within one week of making their decision to impose the penalty, notify that person of that decision and of their reasons for that decision; and
(b) in that notification, fix a reasonable period after it is given as the period within which the penalty is to be paid.
(7) A penalty imposed under this section-
(a) must be paid to OFCOM; and
(b) if not paid within the period fixed by them, is to be recoverable by them accordingly."
"102 Procedure for directions under ss. 100 and 101
(1) Except in an urgent case, OFCOM are not to give a direction under section 100 or 101 unless they have—
(a) notified the contravening provider or contravening supplier of the proposed direction and of the conditions (if any) which they are proposing to impose by that direction;
(b) provided him with an opportunity of making representations about the proposals and of proposing steps for remedying the situation; and
(c) considered every representation and proposal made to them during the period allowed by them for the contravening provider or the contravening supplier to take advantage of that opportunity.
(2) That period must be one ending not less than one month after the day of the giving of the notification.
(3) As soon as practicable after giving a direction under section 100 or 101 in an urgent case, OFCOM must, provide the contravening provider or contravening supplier with an opportunity of—
(a) making representations about the effect of the direction and of any of its conditions; and
(b) proposing steps for remedying the situation.
(4) A case is an urgent case for the purposes of this section if OFCOM—
(a) consider that it would be inappropriate, because the contraventions in question fall within subsection (5), to allow time, before giving a direction under section 100 or 101, for the making and consideration of representations; and
(b) decide for that reason to act in accordance with subsection (3), instead of subsection (1).
(5) The contraventions fall within this subsection if they have resulted in, or create an immediate risk of—
(a) a serious threat to the safety of the public, to public health or to national security;
(b) serious economic or operational problems for persons (apart from the contravening provider or contravening supplier) who are communications providers or persons who make associated facilities available; or
(c) serious economic or operational problems for persons who make use of electronic communications networks, electronic communications services or associated facilities.
(6) In this section—
"contravening provider" has the same meaning as in section 100; and
"contravening supplier" has the same meaning as in section 101.
103 Enforcement of directions under ss. 98, 100 and 101
(1) A person is guilty of an offence if he provides an electronic communications network or electronic communications service, or makes available any associated facility—
(a) while his entitlement to do so is suspended by a direction under section 98(4) or 100; or
(b) in contravention of a restriction contained in such a direction.
(2) A person is guilty of an offence if he supplies electronic communications apparatus—
(a) while prohibited from doing so by a direction under section 101; or
(b) in contravention of a restriction contained in such a direction.
(3) A person guilty of an offence under this section shall be liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum;
(b) on conviction on indictment, to a fine.
(4) Sections 94 to 99 apply in relation to a contravention of conditions imposed by a direction under section 98, 100 or 101 as they apply in relation to a contravention of conditions set under section 45."
The Code
"2.2.1 Network Operators are responsible for ensuring that ICSTIS' regulation is satisfactorily maintained by carrying out directions given by ICSTIS where necessary to assist in the enforcement of ICSTIS' decisions.
2.2.2 Network Operators are also required to have regard to and comply with the funding provisions which can be found in Annex 3.
...
2.3.1 Network Operators must bring this Code to the attention of those with whom they contract in respect of the provision of premium rate services and, through their commercial arrangements, must in particular-
(a) require, through contracts, that Service Providers comply with this Code ... and any directions that are made by ICSTIS in accordance with it ...
...
2.3.5 Upon receiving a direction from ICSTIS Network Operators must, without delay, do one or more of the following as directed:
...
(d) withhold such an amount of money as ICSTIS may direct out of monies payable by the Network Operator to a specified Service Provider until permitted by ICSTIS to do otherwise ... or withhold all sums payable to a specified Service Provider until informed by ICSTIS that it may do otherwise;
(e) pay over to ICSTIS such an amount of any funds withheld pursuant to sub-paragraph (d) above as ICSTIS may direct in order to satisfy outstanding fines and/or administrative charges."
"7.7 Sanctions
...
7.7.2 ... Having taken all relevant circumstances into account, ICSTIS may:
...
(d) impose an appropriate fine on the service provider to be collected by ICSTIS. ICSTIS may direct any relevant network operator(s) to withhold and pass over to ICSTIS the sum(s) due in terms of the fine from the payments outstanding under the contract between the network operator(s) and the service provider ...
...
7.10 Administrative charge
All Service Providers found to be in breach of the Code may be invoiced for the administrative and legal costs of the work undertaken by ICSTIS. Non-payment within the period laid down by ICSTIS will also be considered a breach of the Code and may result in further sanctions being imposed. ICSTIS may request that the relevant Network Operator withholds and passes over to ICSTIS that sum(s) due from the payments outstanding under the contract between the Network Operator and the Service Provider."
"5 Levy
5.1 ICSTIS will determine the proportion of every outpayment that needs to be retained and paid to ICSTIS ("the Levy") ...
5.2 ICSTIS will advise Network Operators (in writing) ... of the Levy to be applied to outpayments from time to time, and issue directions accordingly ...
...
5.4 Network Operators are responsible for deducting the Levy notified under paragraph 5.2 from every outpayment that they make. Where a Network Operator fails to deduct the Levy, the Network Operator will remain liable to ICSTIS as though it had in fact deducted the Levy ..."
"8.1 If it appears to ICSTIS that any network operator has failed to comply with a direction(s) given by ICSTIS for the purpose of enforcing this Code:
a the network operator will be contacted on an informal basis regarding its apparent non-compliance. ICSTIS or the network operator may, at any time, request a meeting between ICSTIS and the network operator at which the issues can be discussed with a view to clarification and resolution;
b if the matter is not resolved through informal contact, ICSTIS will write to the network operator formally setting out its apparent noncompliance and the network operator will be given a reasonable time within which to respond (this will normally be five working days);
c if the network operator accepts the alleged non-compliance, it shall immediately make good such failure;
d if the network operator does not accept the alleged non-compliance ICSTIS will reconsider the matter and set out its opinion which it shall provide in writing to the network operator, and notify it of the steps it is directing the network operator to take;
e if the network operator does not forthwith take such steps as ICSTIS may direct, ICSTIS shall notify Ofcom in writing that it considers the network operator to have contravened the terms of the condition issued by Ofcom under section 120 of the Act;
f ICSTIS may in any event notify Ofcom that it considers the network operator has contravened the terms of any condition made under section 120 of the Act where ICSTIS considers that the network operator has been in serious and/or repeated breach of its obligations whether or not the network operator subsequently complied with directions given by ICSTIS;
g in making a notification to Ofcom, ICSTIS may provide to Ofcom such details of the network operator's past conduct as ICSTIS considers are relevant."
Questions for the Administrative Court
(1) ICSTIS is entitled under the statutory scheme to sue in debt to recover a monetary sum that it has directed Allied to pay to it, in circumstances where Allied has withheld that sum from a Service Provider pursuant to a prior direction to do so and neither (3) nor (4) below applies.
(2) ICSTIS is entitled under the statutory scheme to sue in debt to recover a monetary sum that it has directed Allied to pay to it, in circumstances where Allied has not withheld that sum from a Service Provider pursuant to a prior direction to do so and neither (3) nor (4) below applies.
(3) ICSTIS is entitled under the statutory scheme to sue in debt to recover a monetary sum that it has directed Allied to pay to it notwithstanding that the Service Provider to which the sum relates does not have legal personality.
(4) ICSTIS is entitled under the statutory scheme to sue in debt to recover a monetary sum that it has directed Allied to pay to it notwithstanding that the Service Provider does have legal personality but has not been accurately identified.
Question 1: Sums withheld
(1). At the very outset of the part of the statute dealing with the regulation of premium rate services, section 120(1) makes it plain that conditions under the section are to "bind" the persons to whom they are applied. Sub-section (3) makes it clear that what any such condition will involve will be a requirement to comply with directions given in accordance with an approved Code by an "enforcement authority", and for the purpose of enforcing its provisions. Mr Lewis, for the purposes of argument, asked: on what basis can any condition be a condition that "binds"? The answer must be that the person is bound by the statute. Thus, as it seems to me, at the very outset, section 120 is contemplating that by virtue of the statute, a condition which requires compliance with directions given by the enforcement authority, which in the event is ICSTIS, in accordance with the approved Code and for the purpose of enforcing that Code will be binding upon the person to whom the direction has been given.
(2). The statutory provisions concerned with regulation of premium rate services focus strongly upon the concept of "enforcement". ICSTIS is described as "the enforcement authority". Section 121 makes certain requirements of any Code before it can properly be approved by OFCOM. These include at (2)(a) that there is a person who, under the Code, has the function of administering and enforcing it. They include under sub-section (4) that the Code envisaged by the statute will make provision for "the enforcement" of the Code. To my mind these provisions point strongly towards the enforcement authority, namely ICSTIS, having the ability which is inherent in its title, namely the ability to enforce.
(3). The ordinary principles of statutory interpretation as set out in Halsbury's Laws of England, Volume 44(1) Reissue (1995), paras 1362 and 1363, are that where an Act imposes an obligation on a person to pay to another a sum of money, the amount due can be recovered by action as a debt. If no other remedy is provided by the Act, then no provision to the contrary is contained in it. Where a statutory remedy is given for a particular breach of duty for which there is already an existing remedy, these remedies may co-exist.
Question 2: Sums not withheld
"... the revenue withheld should be forwarded to ICSTIS in order to cover the outstanding charges."
Question 3 and 4: Identity of service provider
Conclusion
"ICSTIS seeks to recover the amounts that Allied has withheld, pursuant to ICSTIS' direction, from Allied's service providers that committed breaches of the Code. Allied has an obligation to pay those amounts to ICSTIS that is enforceable."