MANCHESTER DISTRICT REGISTRY
Strand, London, WC2A 2LL
B e f o r e :
| EASYAIR LIMITED (Trading As OPENAIR)
|- and -
|OPAL TELECOM LIMITED
Mr. Michael J. Booth QC (instructed by Mason Hayes) for the Defendant.
Hearing dates: 4, 5 February 2009
Crown Copyright ©
Mr Justice Lewison:
"The term 'GSM Gateway' is used to describe equipment which enables the routing of voice calls from fixed line equipment to a mobile phone, yet it gives the impression it's a mobile to mobile call.
This type of equipment is being deployed widely across mobile networks without the prior consent of the network operators and is resulting in quality impairments, network congestion and safety/security concerns.
New legislation has been introduced which has allowed us to review our policy on the use of GSM Gateways.
The use of GSM Gateways by private users is permitted providing that the system is operated by or on behalf of the customer for the sole use of that customer
A private GSM Gateway registration process is being introduced in January 2004 which will allow us to strictly control the use of these devices on our network.
Non permitted use
The use of public GSM gateways for the conveyance of third party traffic is not permitted on the O2 UK network and where found we will withdraw the service."
i) A sale and purchase agreement ("the SPA") and
ii) A dealer agreement.
"1. Prohibition on the use of public GSM Gateways
Public GSM Gateways are not permitted to operate using the O2 network. O2 does not agree to provide service to operators of public GSM Gateway operators. Where they are found to operate, O2 will take steps to withdraw service, on the basis that their continued operation effectively puts O2 in breach of its Conditions of Entitlement
2. Private GSM Gateways should be permitted
The operation of private GSM Gateways does not appear to be inconsistent with legal or regulatory requirements. On that basis, there is no general prohibition. However, Gateway operators should ensure to O2's reasonable satisfaction that they adhere to OFCOM's guidance on the provision of correct CLI information."
i) The Vodafone licence did not, on its true construction, permit the use of GSM gateways, let alone COMUGs;
ii) The construction of the licence was not affected by European legislation. As Mummery LJ put it (§ 102):
"It is not, however, correct to construe that directive and then to hold that the licence must be construed to be compatible with that directive. It is wrong because the licence is neither domestic law made to implement the EC directive, nor is it any other kind of "law" in the generally understood sense of general rules laid down either in the form of legislation or of case law."
i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman  1 All ER 91 ;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel  EWCA Civ 472 at 
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at 
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)  EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd  FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd  EWCA Civ 725.
"the contracts between [Openair] and Subscribers for the supply of the Services complete and up-to-date [copies of which] have been supplied to [Opal] at Completion."
"At Completion [Openair] shall sell (which expression shall where appropriate include an assignment or novation) and [Opal] shall buy the following assets free from all Encumbrances
All rights under an in connection with the benefit of the Subscriber Contracts
The Subscriber Database"
"Subject to the following provisions of this clause 7, [Opal] shall perform all obligations required to be performed after [1 May 2004] under those Subscriber Contracts of which complete and up-to-date copies have been provided to [Opal] at Completion."
"O2 has given written approval to all subscriber identity module Gateways (whether public or private) used by or in respect of the Subscribers."
|"Customer"||means a New Customer and/or an Openair Customer|
|"New Customer"||means a person who enters into an Opal Contract after the date of this Agreement|
|"OPAL Contract"||means a written agreement between OPAL and a customer for the provision of Services where the execution of the agreement has been procured by the Dealer|
|"OPAL Terms"||means the terms and conditions on which OPAL offers to provide Services to customers which terms and conditions OPAL shall determine in its absolute discretion|
|"Openair Customers"||means those customers of the Dealer for mobile telecommunications services transferred to Opal pursuant to the SPA|
|"Openair Customer Contracts"||means the contracts entered into by [Openair] with the Openair Customers in relation to the provision of mobile telecommunications services and sold to Opal pursuant to the Opal SPA|
"ensure that the Customer signs the then current OPAL Terms as provided by OPAL to [Openair] under Clause 2.2…."
"in respect of all Openair Customer Contracts that are in force during the Life of this Agreement and all OPAL Contracts entered into during the Life of this Agreement…"
"If [Openair] disputes the amount of any payment (a "Disputed Payment") by OPAL under this Agreement, [Openair] shall as soon as reasonably practicable issue a notice in writing identifying the Disputed Payment and detailing the nature of and reason for the dispute, accompanied by supporting documentation. In the event that [Openair] fails to issue any such notice within 60 days of the receipt of the Disputed Payment, [Openair] agrees that the payment shall be deemed to have been agreed and that, notwithstanding the issue of any subsequent notice, it shall be deemed to have waived any right or remedy which it might otherwise have enjoyed in respect of any underpayment."
"Neither Party shall be liable to the other in contract, tort (including negligence and breach of statutory duty) or otherwise howsoever for:
(a) any loss of profit, business, goodwill, contract revenue, anticipated savings or business; or
(b) … or
(c) any special indirect consequential loss or damage of any nature whatsoever, whatever the cause thereof arising out of or in connection with this Agreement."
i) The SPA was just that. It was a sale and purchase. In other words the assets ceased to belong to Openair and became the property of Opal. Openair had no continuing proprietary interest in the sold assets.
ii) Following the SPA, the only way in which Openair could make money from the assets it had sold was under the dealer agreement.
iii) Commission was payable under the dealer agreement on two kinds of contract:
a) Contracts which had been sold by Openair to Opal and which continued in force and
b) Contracts between subscribers and Opal which Openair had procured.
iv) Since commission was payable at the same rate for both kinds of contract it was a matter of financial indifference to Openair whether customers in its subscriber base signed up on new Opal terms or remained on Openair contracts;
v) Indeed the dealer agreement positively required Openair to sign up "Customers" (a defined expression which includes Openair's subscribers) on Opal terms;
vi) The parties expressly agreed that neither of them would be liable for loss of profit or revenue under the dealer agreement.
"Further or alternatively [Opal] owed [Openair] a fiduciary duty to act (in relation to the Subscriber Base) in the interests of [Openair]. It is the case of [Openair] that such a duty arises because of the circumstances pleaded in paragraphs 4-7 above [which set out certain provisions of the SPA and the dealer agreement] and the fact that [Opal] was in control of the Subscriber Contracts but [Openair] was dependent on the maintenance of the same for the purpose of generating revenues under the [dealer agreement]."
"for each Month (as defined by the Dealer Agreement) falling in a period of six months following [30 April 2004] … (B + D + E) exceeds A where
B, D and E have the meanings set out in Schedule 2 to the Dealer Agreement; and
A means the aggregate sums actually paid by customers in respect of the figure represented by "A" in the formula set out in Schedule 2 to the Dealer Agreement.
Such excess being hereinafter referred to as "the Monthly Excess"."
i) A is Opal's actual monthly receipt from Customers (less tax, discounts etc);
ii) B is what Opal pays the mobile phone network;
iii) D is 3.25 per cent of A; and
iv) E is £3 per connected SIM of each customer included in the calculation of A.
i) It does not accept that Opal cannot recover the debt from Itelso;
ii) The true position is that Itelso has disputed the accuracy of Opal's invoices, and has also claimed a set off;
iii) In any event Opal has not shown that the Itelso debt arose during the period covered by the deposit; and
iv) The formula in the collateral agreement does not entitle Openair simply to deduct a bad debt; but only entitles it to calculate the figure produced by application of the formula, which Opal has not done.