WORLD ONLINE TELECOM Ltd v I-way Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE SCHIEMANN,Lord Justice Sedley,LORD JUSTICE SEDLEY,MR JUSTICE CHARLES
Judgment Date08 Mar 2002
Neutral Citation[2002] EWCA Civ 413
Docket NumberA2/2001/1668

[2002] EWCA Civ 413

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM MANCHESTER DISTRICT REGISTRY

(MR JUSTICE MITTING)

Royal Courts of Justice

Strand

London WC2

Before

Lord Justice Schiemann

Lord Justice Sedley

-and—

Mr Justice Charles

A2/2001/1668

World Online Telecom Limited (Formerly Known as Localtel Limited)
Claimant/Repondent
and
I-Way Limited
Defendant/Appellant

MR C NASIR (Solicitor/Advocate) (instructed by Linklaters & Alliance, London EC2Y 8HQ) appeared on behalf of the Appellant

MR C FREEDMAN (instructed by Eversheds, Manchester M1 5ES) appeared on behalf of the Respondent

Friday, 8th March 2002

LORD JUSTICE SCHIEMANN
1

I will ask Lord Justice Sedley to deliver the first judgment.

LORD JUSTICE SEDLEY
2

This is an interlocutory appeal against the refusal of Mitting J, sitting in Manchester on 11th July 2001, to give summary judgment for the defendants, World Online, for something over £1,200,000 on their counterclaim. It is also the claimant's, I-Way's, cross-appeal against the judge's striking out of their claims for misrepresentation and negligent misstatement without at the same time considering the amendments by which they proposed to cure the defects. The further appeal issue about the judge's allocation of costs before him is contingent on the outcome of the appeal and the cross-appeal.

3

I-Way is an Internet service provider. In April 1999 it reached a written agreement with Localtel to provide a hardware platform to afford Internet access to Loacaltel's customers in return for 20 per cent of the rebate from the telephone operator, the 80 per cent balance being passed on to the present appellant, World Online, who took over Localtel and became contractually substituted for it. I-Way contend that as early as May 1999 it was realised that additional equipment was going to be necessary at a cost which was not realistic in the absence of renegotiation of the rebate split. Their case is that an oral agreement was reached to give them 30 per cent instead of 20 per cent. This is denied by World Online. They say that their subsequent parting with a further 10 per cent of their share was a temporary and gratuitous gesture and no more. They also deny I-Way's allegation that they have subsequently used their superior power, and used it actionably, to siphon off the revenues it was intended that had I-Way should earn from the contract.

4

I-way's action as claimants against World Online included a claim for damages for misrepresentation or negligent misstatement of the number of likely users of the service and of the times of day when they were likely to use it. The measure of damage, however, was accepted as being inappropriately pleaded. The claimants, recognising this, had at a late stage before the hearing put forward a draft amendment. On 11th July Mitting J found himself without sufficient time to consider it; so he struck out the material part of the pleading, giving liberty to amend so as to renew the claims with a tenable prayer for damages. Other elements which he struck out have not been cross-appealed.

5

It is now submitted on the cross-appeal that the judge ought to have adjourned the application to strike out the misstatement and misrepresentation claims so that he could consider it in the context of the claimant's application to amend. Nothing concrete, however, has been lost by his proceeding as he did. Mr Freedman QC, who has appeared for the claimants, fears that an issue estoppel may now be pleaded in bar of his proposed amendment—but it seems to me that by the terms of his decision the judge has precluded this. Any objection to the sustainability of the amendment is not for us but, if and only if it is raised, for the judge of the Queen's Bench. The only appreciable materiality of the issue therefore is as to costs, since it was on the basis of his decision to strike out that the judge, in effect, declared a draw on costs. I do not think the respondents can reason backwards from that; nor do I think the attempt to do so is sound. More was struck out than was capable of being cured by amendment, and in any event the ordinary practice would be that a party which can only save its pleading by amendment bears the costs of doing so. I do not think the cross-appeal can succeed. Nevertheless, it will be necessary to return to it and the disposal of it in relation to the judge's costs order.

6

This leaves the real and difficult issue on which Rix LJ gave permission to appeal. The pleaded oral agreement to alter the split faced the major obstacle that clause 21.1 of the contract provided:

"… no addition, amendment or modification of this Agreement shall be effective unless it is in writing and signed by and on behalf of both parties."

7

The modification relied on by I-Way was purely oral and or by conduct. Mitting J nevertheless held that the issue deserved to go to a full trial. What he said was this:

"It is plainly arguable and, if the claimants are right in their assertions about non-receipt of that letter, an argument that has a real prospect of success, that the agreement was thus varied. If it was orally varied and acted upon, as it seems, at least, arguable as it was, then I am satisfied there is a real prospect of the claimants...

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    ...between the parties. Footnotes United Bank Ltd v Asif and Anor (11 February 2000, unreported). World Online Telecom v I-Way Ltd [2002] EWCA Civ 413. MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016]. [2016] EWCA Civ 396 Cardozo J, New York Court of Appeals in Alfred C Beatty v......
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