Fashion Gossip Ltd v Esprit Telecoms Uk Ltd and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JUDGE,Mr Justice Bell,Lord Justice Ward |
| Judgment Date | 27 July 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0727-7 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No:QBENI 2000/0229/A2 |
| Date | 27 July 2000 |
[2000] EWCA Civ J0727-7
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Ward
Lord Justice Judge and
Andmr Justice Bell
Case No:QBENI 2000/0229/A2
John Randall QC & Alistair Wyvill (for the Appellant)
Alistair McGregor QC & Julian Wilson (for theRespondents)
This is an appeal by the defendant from the judgment of Goldring J dated 6th March 2000 granting summary judgment under the Civil Procedure Rules (CPR) Pt 24. The consequent damages would be in excess of £1 million.
Leave to appeal was granted by the judge on the basis that
"This one of a series of similar cases involving substantial sums …… raises issues concerning the law of restitution and conspiracy which are not straight forward."
In essence the case for the defendant, argued by Mr John Randall QC, is that the reason rightly given by the judge when granting permission to appeal simultaneously confirms that this was not an appropriate case in which to enter summary judgment.
After reflection, I agree. Liability in this case should not be decided on a summary basis. I shall, as briefly as possible, explain the significant features of the litigation and the reasons for my conclusion. But, having reached it after forming a series of preliminary decisions of my own about the issues raised in argument, I shall endeavour not to say anything which would lead the trial judge to feel constrained or bound to take any particular view either of the facts or of the extent to which, if any, the relevant legal principles have been developed or should develop.
Part 24 of the CPR sets out the procedure by which the court "may decide a claim or a particular issue without a trial". Summary judgment may be granted against a defendant on the whole of a claim if the court
"(a) ….. considers that
(ii) that defendant has no real prospect of successfully defending the claim …… ; and
(b) there is no other reason why the case …… should be disposed of at a trial."
Stripped to essentials the claim against the defendant was that it misused and organised the misuse of the premium rate telephone system, causing the claimants very substantial losses. Liability was established both for "unjust" enrichment and for conspiracy to deceive.
Although many of the facts were not in dispute the case for the defendant was that the claimant's losses, if any, did not result from deceitful, dishonest, or unlawful conduct, but rather from the defendant's lawful exploitation of its full contractual entitlement. If the claimants lost a great deal of money, that was a consequence of the contractual arrangements and, although not foreseen or anticipated by them, the financial advantage gained by the defendant was the result neither of unjust enrichment nor actionable conspiracy.
Mr Randall further suggested that summary judgment on the basis of findings of fraudulent or deceitful misconduct against his client, when words like "sham" and "fraud" and, less familiar in the legal lexicon, "scam", were used regularly throughout both hearings to describe what it did, should not have been entered when the allegations were neither admitted nor capable of being substantiated by inference from the documentary and affidavit evidence, and when the defendant had been given no opportunity to put its witnesses, particularly its managing director, Mr Sander, who was personally responsible for the activities which attract such serious criticism, before the court, to explain his actions and the reasons why he acted as he did, in the belief that everything done was legitimate. Moreover Mr Randall pointed out that this litigation was one of a number of actions where similar undecided points of principle arising from arrangements for the use of premier rate telephone lines were in issue and currently under consideration.
Despite detailed skeleton arguments, the submissions of counsel on each side before us lasted for well in excess of two days. In that time it was not possible for all the issues set out in the skeleton arguments to be canvassed. When the difficulties of continuing the constitution of the court into another week was explained, Mr Randall invited us to use the available time to reflect on each of his major arguments, first in relation to restitution, and second, conspiracy. This was acceptable to Mr McGregor QC on behalf of the claimants. If Mr Randall were successful on both points then the appeal would succeed: if not, his position in relation to the remaining submissions is fully preserved.
During the course of the hearing our attention was necessarily drawn to a substantial number of authorities and academic writings, particularly in relation to the current state of development of the principles of unjust enrichment. If this judgment in relation to unjust enrichment were to stand, it would represent a further extension, entirely logical and perfectly apt, suggested Mr McGregor. To the contrary, contended Mr Randall, it was a quite unsuitable basis on which to enter summary judgment.
Procedural Complaints
Mr Randall made a number of complaints about the procedure adopted by the judge. In his skeleton argument he set out a detailed chronology of the way in which the proceedings against his client developed, together with an analysis of the orders made by Goldring J once he was seized of the case. Mr Randall suggested that the claimants conducted the application in an "oppressive and unfair" way. In view of my clear conclusion I do not propose to recite all the details, but there were late applications to amend, late service of substantial additional evidence, all of which were said to have deprived the defendant of a reasonable opportunity to meet the application under CPR Pt 24. Such conduct required to be discouraged.
This was not Mr Randall's best point. There were indeed late amendments, and late service of important documents, but Goldring J was well able to assess the consequences of allowing the case to proceed without delay, and simultaneously to ensure that there was no risk that summary judgment would be unfairly entered against the defendant because of lack of sufficient time or preparation. In accordance with current principles the litigation was firmly managed by the judge, and although his orders undoubtedly meant that the defendant had to act at considerable speed, when seeking to examine, even with the benefit of hindsight, precisely what, if any, prejudice the defendant suffered, I could detect none. In short, no basis for interfering with the judge's management of the case has been established.
The facts
In his judgment Goldring J wrote a short summary, carefully encapsulating the crucial facts, from which I gratefully propose to quote substantial passages which were not the subject of any criticism.
"The Second Claimant is the parent of a group of telecommunication companies. The First Claimant is a wholly owned subsidiary. Esprit Netherlands BV is another subsidiary in Holland. It also operates in Belgium. It is not a party to the action.
Esprit provides telephone services to users in a number of countries throughout the world. It provides a network of switches and telephone lines through which users may make national or international calls. In order to do that, it has to gain access to the general telephone network within each of the countries to which calls can be made. One of those networks is the United Kingdom. The First Claimant, by agreements (called interconnect agreements) with British Telecom Plc ("BT") and Cable & Wireless Communications Plc ("CW") on 28th April 1995 and 18th October 1995 was given access to the telephone network. The agreements are in standard form. All calls made by Esprit users world-wide terminating in the United Kingdom are routed through the BT or CW networks.
Among other things, Esprit sold pre paid telephone cards to members of the public. This case concerns cards sold in Holland for use in Holland and Belgium. The company which sold those cards was Esprit Telecom Benelux BV. The cards are called "Budget Calling Cards". Each card is for a specific amount in currency (for example, Belgian francs). It permits calls to that amount. It does not specify the rate at which the credit will be used up. Neither does it specify any limitation on the sort of calls which might be made. The attraction to the purchaser of such cards, as I understand it, is that Esprit will route any call as cheaply as possible. The rates should be less than those of the major suppliers.
To make a call, the user dials Esprit's freephone number in Belgium. That connects him to a switch in Amsterdam. Connected to the switch is a computer, known as the "Budget Calling Card Platform". The platform is programmed to hold information on each card sold. The computer recognises the card by the account and card PIN number given by the user to the computerised answering service. It debits from its records the value of each call made on a particular card, until its financial value is exhausted. The card then stops working.
Users may telephone anywhere in the world. Because that involves billions of individual numbers, the computer is programmed to recognise only the country code: the first four digits. Once it has identified that code, it rates the call and routes it through the switch in Amsterdam as cheaply as possible. If the call is to the United...
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