England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(COMMERCIAL COURT)

		Royal Courts of Justice Strand London WC2A 2LL
		6th February 2015

NB: I regret that I cannot recreate some of what is transcribed or, as I have no papers, correct names and spellings. The parties will have to do that.

1. HIS HONOUR JUDGE MACKIE: This an application for summary judgment brought by the claimant, Amadeus, against Lycamobile. I have documents and witness statements from each side. I have also had assistance from Mr Braithwaite, who appears for the claimant, and Mr Richards for the defendant.
2. It is an application for summary judgment. The burden is firmly upon the claimant to show that the defendant has no real prospects of success. The criteria are set out in the White Book and I bear in mind, as I always do, that in particular the considerations set out by Lewison J in the Federal Republic of Nigeria case and in the cases following that, leading up to a recent one from Simon J in the Commercial Court.
3. Amadeus provides transaction services in the travel industry. Lycamobile is a well-known virtual mobile television service provider which sells SIM cards to the public. On 31 January 2013 the parties entered into an agreement by which the defendant would advertise products to the claimant's business customers through what is called a B2B channel so that those business customers could earn commission by reselling the defendant's products to the travelling public and also what were called B2C channels to potential purchasers directly.
4. I start with the relevant terms of the agreement, which is a standard form. After certain definitions and descriptions of the product Amadeus agreed to offer the following (inaudible) Amadeus (inaudible). By article 2.1 Amadeus offers a very large number of impressions of the media solutions during the term of the agreement. By 2.7 Amadeus agreed not to offer media solutions to a series of competitors who are then identified in an appendix. I do not find within that sub-clause anything which creates other rights and obligations upon Amadeus. Article 3 sets out the rights and obligations of the client. Article 4 deals with media planning. The client is to order impressions according to the media planning as agreed between the parties or according to any other written request from the client as accepted by Amadeus. The media planning and the periodic impressions and corresponding charges for the year 2013 are included in an appendix at points A and B. There are agreements for the number of impressions as total inventory. 4.5 provides this:

"For the term of this agreement the client commits to order and use at least the following minimal number of impressions, which are invoiced and paid in the year 2013: 84, 284, 848 impressions appearing in B2B channels at €60 per 1000 impressions and 78,900,000 impressions appearing on B2C channels and €750 per 1000 impressions." (Quote unchecked)

5. Clause 5 provides this:

"Amadeus will charge the client and the client will pay to Amadeus for the first year of the term in article 7 of this agreement. Any of the charges sent forth on article 4.2 of this agreement can be subject to 4.4 of this agreement, charges mentioned in appendix A for a total inventory for period two and three." (Quote unchecked)

6. Counsel for the claimant submits that the reference to 4.2 in 5.1 is an obvious error and must refer to article 4.5. That is not disputed, and if one follows through the clauses and the annexes and schedules to the agreement it is clear that that is indeed a typo and it should be 4.5. Article 5 then deals with the charges for the remainder of the period.
7. The term of the agreement is five years, but there is a provision that either party may terminate at any time for no cause by giving at least three months' prior written notice. There are termination provisions for breach. Article 11 provides that the dispute to be determined English law and the English courts. At 12.2 there is an entire agreement clause.
8. No fees were paid by the defendant under the agreement. The minimal order value is some €1.9,000,000. The agreement provides for this sum be paid in the first year, so the claimant seeks recovery of that sum.
9. In response to these proceedings the defendants put it in a defence with two main limbs. The first was a claim that there had been fundamental breaches of the agreement which are then set out. The second was a claim that the agreement was never finalised or properly executed by Mr Dott (?) of the claimants. The second point was hopeless and should never have been raised because the documents show that the parties treated the contract as being in full force and effect. The final nail in the coffin on that point came in the form of a witness statement by Mr Dott(?) confirming the obvious, which is that he did sign the document.
10. So the defence is fundamental breach. These defences are put forward in the defence itself. They are put forward in the skeleton argument of Mr Richards and they are supported in witness statement from Mr Val Singham (?), which was unfortunately served far too late. No point is taken by the defendant about that.
11. The defence says that it was an express and fundamental term of the contract that the claimant would advertise and promote the defendant company by offering media solutions to subscribers to the claimant. Media solutions are defined in the schedule to the agreement. The defence goes on:

"The claimant was required under the agreement to provide tracking and/or reporting information in line with the definition of media solutions to the defendant. This information was intended to be a tool for analysing the market and to improve future sales. Included in this provision of information there is a breakdown of where customers were making orders, from which countries along with other return of investment." (Quote unchecked)

12. The document then says that Mr Shetty (?), the defendant, was "told in open email correspondence in or around April 2013 and it is impossible to give you access to our reporting tool in breach of the agreement". The defence goes on to report further inquiries that Mr Shetty made and his concerns which, he says, he raised with Ms Gomez of the claimant.
13. That ground of defence faces the difficulty, whatever may have been the subjective intentions of the defendant, that the alleged breach of the agreement cannot be identified. There is simply no term of the agreement identified as allegedly broken. Neither is there a suggestion of implication of a term, and on the facts that may be because there is simply no room for implication.
14. On the material provided on the application the complaint also seems to be mistaken in fact. It seems that the claimant did provide reporting information and there is nothing to suggest the defendant was unhappy with the information it got. Indeed throughout the time this agreement was in force, before the defendant terminated it, as it was entitled to do, by giving three months' notice, there is no record of complaint or assertion by the defendant that the claimant has in any respects failed to comply with its obligations.
15. There is also a complaint that the claimant did not allow(?) for the same SIM cards via the banners which are the subject of agreement using a click to book facility. (This provides a facility by which users can access a microsite in which a transaction can be made by clicking on a banner and buying a SIM card or something like that.)
16. No contractual obligation in the agreement is identified, which, I repeat, contains an entire agreement clause. Reliance is placed in the defence on a non-contractual document, which precedes the entering into the agreement, for the full scope of information and material. It is referred to in the defence. I am told it exists. There is apparently one copy, but it has not been produced to me. This is odd.
17. It would seem that the relevant obligation was primarily an obligation on the defendant, not on the claimant. An email trail shows that what happened was that the defendant was seeking to develop a microsite and to put it out to a specialist to develop, but nothing happened. There is no 3(4) or (5) ion the Defence, but 3(6) says that there was never any strategy agreed about how implementation would be done for each country, including monitoring arrangements and related return on investment analysis. Maybe that was wrong if it happened, but it does not appear to amount to a coherent breach of contract. No provision is identified and it is not explained how any such provision might have been broken.
18. Before leaving that point there is another unexpected aspect. There is no counterclaim. What is claimed is that there was a fundamental breach in respect of the particular matters which I have sought to deal with. But a mere assertion of fundamental breach is not good enough. There was no acceptance of repudiation or alleged repudiation in this case. The contract was terminated in accordance with its terms. The alleged breaches might give rise to a right to the defendant to claim damages from the claimant, but no such claim has been put forward, so procedurally, as a matter of law as well as a matter of fact, there is no real prospect of this defence succeeding. The defendant appears to contend that an alleged but unaccepted repudiation somehow releases it from its obligations to the parties.
19. When reading through the papers a point did occur to me that was not taken by the defendant. That was the question of whether or not, on a true analysis, this was a claim for damages for breach of contract to be assessed, rather than a claim for debt. That dialogue, brief though it was, was entirely between Mr Braithwaite and myself. The point was not adopted by Mr Richards, possibly because, like me, he was persuaded by the argument of Mr Braithwaite, that on the proper construction of the agreement this is a debt claim. There will accordingly be judgment of the claim.
20. I accept of course what my fellow solicitor says about how he came to sign the statement of truth. It is important for parties to remember that it is a serious document which should not be signed by someone unless they are in a position to know that what it is said in it is true.
21. It seems to me overwhelmingly clear that this is an indemnity costs case. It is out of the norm, as will be apparent from the terms of what I hope is a reasonably courteous judgment in the circumstances.

Costs

22. First of all, it is on the indemnity basis. Secondly, the solicitor's letters I read were of a high standard. Thirdly, the guideline rates do not apply much in this court and it is fair for Mr Braithwaite to point out that the service has been of a City standard but at rates which are, by those standards, low. So I am going to round it down to £60,000.