Tele2 International Card Company SA and Others v Post Office Ltd
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.,HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.: |
| Judgment Date | 25 February 2008 |
| Neutral Citation | [2008] EWHC 158 (QB) |
| Docket Number | Case No: HQ06X00067 |
| Court | Queen's Bench Division |
| Date | 25 February 2008 |
[2008] EWHC 158 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Richard Seymour Q.C.
(Sitting As A Judge Of The High Court)
Case No: HQ06X00067
John McCaughran Q.C. and Matthew Cook (instructed by Fox Williams LLP) for the Claimants and the Part 20 Defendants
Jeffrey Onions Q.C. and Benjamin Strong (instructed by Lovells LLP) for the Defendant/Part 20 Claimant
Hearing dates: 27, 28, 29, 30 November, 3, 4, 5, 6, 7, 10, 11, 14 and 17 December 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
1. The background to this action lay in the desire of the defendant, Post Office Ltd. ( “the Post Office”) to offer to its customers the facility of using what was described as a “phonecard”. Historically there have, at different times, been various types of phonecard. The type with which this action was concerned was one which could be used by a holder to obtain access to telephone services, whether from a land line or from a mobile telephone, at prices below those charged by the provider of the relevant land line or the operator of the network to which the mobile telephone was attached. It is in that sense that I shall use the expression “phonecard” in this judgment.
2. The intention of the Post Office in offering phonecards to customers was that the phonecards in question should be branded as coming from the Post Office by using its name and logo on the front, although the actual services would not be provided by the Post Office itself, but by those with whom the Post Office contracted for the provision of phonecards.
3. As I understood it, the principal circumstance in which it was likely to be advantageous to a holder of a phonecard to use it to make a telephone call was if the holder desired to make an international call, although it was also possible to use one to make calls within the United Kingdom.
4. The way in which a phonecard is used is that each is assigned a Personal Identification Number ( “a PIN”) and the user is provided with a telephone number to dial when he or she wishes to take advantage of the rates afforded by the phonecard. On dialling the relevant telephone number, and communicating the PIN, access is afforded to a telephone line by means of which the holder of the card can make contact with his or her desired interlocutor.
5. Typically phonecards are sold in pre-determined values. In the present case the values were £5, £10 and £20. The provider of the facility of using the relevant brand of phonecard determines what charges to levy for calls made to particular destinations. It is convenient to refer to such charges in this judgment as “Rates”. If the only charge levied is a declared rate per second or per minute for each call made the phonecard is described as “transparent” or “clean”. In practice, it appears, most brands of phonecard are not transparent, because the providers of them levy undisclosed charges in addition to the declared call charges. Examples of such undisclosed charges are connection charges, that is to say, a charge is levied for making a connection to the telephone the user wishes to contact, in addition to the charge related to the length of the call, and service charges, a daily charge for the facility of having the phonecard at all. Obviously the net amount which a user of a phonecard has to pay to make use of it depends upon the incidence of all the charges levied in respect of the phonecard.
6. The principal variable costs to the provider of phonecards to the public are the costs of production of the physical card and the costs of providing the telephone route by means of which the holder of the phonecard could use it to speak to others by telephone. The latter type of cost is called “interconnect costs”. Interconnect costs include what are called “termination costs”. Termination costs are the costs incurred by the telecommunications supplier for connecting calls to their destinations, as opposed to the routing of such calls through the telecommunications system. In addition to incurring interconnect costs, a provider of phonecards might undertake marketing of the benefits of using his phonecards.
7. Phonecards, it seems, have to some extent been overtaken by improvements in technology. In particular, the availability of what is called “Voice Over Internet Protocol”, or “VOIP”, using the internet to make telephone calls at no cost in addition to a broadband connection, has meant that it is no longer necessary to use a telephone to speak to someone, if one has the VOIP facility and the person to whom one wishes to speak has it also. Again, it appears that there are direct dial suppliers through whom cheap international Rates can be obtained without the cumbersome procedure of having to dial a phonecard provider's access telephone number and provide a PIN before being able to make a call.
8. One of the largest telecommunications groups in Europe is that headed by Tele2 AB ( “the Parent Company”), a company incorporated in Sweden. That group is also one of the largest suppliers in Europe of phonecards.
9. All of the claimants in this action are ultimately subsidiary companies of the Parent Company. The immediate parent of each is a company incorporated in the Netherlands called CCC Holding BV. The first claimant, Tele2 International Card Company SA ( “Tele2 International”), is a company incorporated in Luxembourg. The second claimant, Kub 2 Technology Ltd., was formerly called C3 Calling Card Company (Ireland) Ltd. and it is convenient to refer to it in this judgment as “Tele2 Ireland”, although there was in fact another company the name of which was actually Tele2 Ireland Ltd. Unsurprisingly, Tele2 Ireland was incorporated in Ireland. The third claimant, Kub 7 Technology Ltd., was formerly called Calling Card Company (UK) Ltd. It was incorporated in England and Wales, and I shall refer to it in this judgment as “C3 (UK)”. In this judgment I shall refer to Tele2 International, Tele2 Ireland and C3 (UK) collectively as “the Claimants”.
10. For present purposes it is necessary to mention a number of other companies in the group headed by the Parent Company. One of these is a company incorporated in England and Wales called Tele2 UK Communications Ltd., to which I shall refer in this judgment as “Tele2 UK”. A second is Tele2 Nederland BV, a company incorporated in the Netherlands, to which I shall refer in this judgment as “Tele2 Nederland”. A third is a company incorporated in Spain called Calling Card Company Spain SA, to which I shall refer in this judgment as “Tele2 Spain”. In addition there is a company called, simply, The Calling Card Company Ltd., to which I shall refer in this judgment as “C3”.
11. The claims in this action all arose out of an agreement ( “the Agreement”) in writing dated 9 November 2001 and made between (1) the Post Office (2) Tele2 UK (3) Tele2 International and (4) Tele2 Ireland. In this judgment I shall refer to Tele2 UK, Tele2 International and Tele2 Ireland collectively as “the Tele2 parties”. Tele2 UK was not a party to this action. C3 (UK) was a party to this action, but was not named as a party to the Agreement. The claims of the Claimants in this action were not differentiated as between the individual claimants, but put on behalf of the three of them collectively. Where, in this judgment, it is necessary to refer to an undifferentiated member of the Tele2 group of companies I shall adopt the designation “Tele2”. Where I use that expression, therefore, it is because it is not possible, from how the Claimants have put their case, to identify a specific company as that said to be involved.
12. The claims were, first, for damages for alleged wrongful determination of the Agreement and, second, for damages for alleged breach of an obligation on the part of the Post Office in the Agreement not to promote the services to be provided under the Agreement by the Tele2 parties to a lesser extent than it promoted similar products and services. There were two cross-claims on the part of the Post Office. One was in respect of the share to which the Post Office contended it was entitled of what was called “Expiry Revenue” or “breakage”. The other related to an alleged entitlement of the Post Office to what can conveniently be called “Additional Fees”.
13. In order to explain these various claims and cross-claims it is necessary to set out the material terms of the Agreement.
The material terms of the Agreement
14. It is convenient to set out together all of the provisions of the Agreement to which it will be necessary to refer in this judgment, notwithstanding that some of the terms were material not to issues of liability, but to issues of quantum in the event that liability in respect of a particular claim was established.
15. Clause 1 of the Agreement contained definitions for the purposes of the Agreement. In clause 1 the various Tele2 parties to the Agreement were identified individually by the names which I have adopted for the purposes of this judgment, while the Post Office was variously called...
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