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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Business Online Group Plc v MCI Worldcom Ltd [2001] EWCA Civ 1399 (9 August 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1399.html Cite as: [2001] EWCA Civ 1399

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION,
ADMINISTRATIVE COURT
(MR JUSTICE GRIGSON)

		Royal Courts of Justice Strand London WC2 Thursday, 9th August 2001

Thursday, 9th August 2001

1. LORD JUSTICE MUMMERY: This is an appeal from Grigson J. It is brought with the permission of the judge, he having, on 3rd August 2001, dismissed an application by the claimants, Business Online Group, for an interim injunction against the defendants, MCI Worldcom Limited. An order had been sought by Business Online to restrain MCI Worldcom from terminating telephone and other services supplied by MCI Worldcom to Business Online.
2. Business Online, the claimant, is an Internet service provider based in Brentford. In April 2000 it launched a free services operation to subscribers, who pay an annual subscription in return for free Internet use including use of the telephone lines. It derives its income from members' subscriptions, and also from a share of revenue produced by phone calls into the Internet, an operation called "call-splitting". The access to the Internet is by 0800 numbers. The subscribers can, according to the evidence, use the Internet for as long as they like free of charge. There was a previous service on 0845 numbers, which it is not necessary to deal with in detail.
3. MCI Worldcom is a telecommunications company. It connects the telephone calls to business Online's equipment and acts as a carrier for Business Online carrying the calls of Business Online customers connecting them to the Internet. That service is provided by MCI Worldcom under an agreement made on 15th November 1998, which is referred to in the evidence as the Master Services Agreement. There are also two other agreements, one of 28th February 2000 and one of 10th March 2000 made with a subsidiary of MCI Worldcom, Uunet, which provides a connection from Business Online's equipment to the Internet.
4. The background to the dispute can be briefly outlined in view of what has happened in this court. It appears that MCI Worldcom claims that a large sum of money in the region of £9M is due to it from Business Online. There are substantial disputes about the amount. According to the evidence, Business Online has not paid anything for the services provided since October 1999. Business Online complains that the invoicing to them has been excessive, confusing and unsatisfactory generally.
5. Matters have come to a head because on 2nd July this year MCI Worldcom sent a notice to Business Online under Clause 11.2 of the Master Services Agreement purporting to suspend all the services at the expiration of 30 days. The notice expired on 3rd August, hence the application for an urgent injunction. The evidence reveals that Business Online needs some further time in which to transfer to another supplier. Another supplier has been named in the evidence as NTL, formerly Viatel. The evidence states that the agreement has been signed, but time is needed between now and 14th September for the migration from MCI Worldcom to NTL.
6. The position is that MCI Worldcom is only willing to continue to provide telephone lines and other services to Business Online if security is put up for the ongoing use of those services. The main argument before the judge was as to whether Business Online had established a serious question to be tried. It appears from the notes of his judgment that the judge was not satisfied that there was a serious question to be tried on the two arguments which were put before him. One was based on an estoppel arising from two representations alleged to have been made relating to the non-termination of the services while there were ongoing negotiations to resolve the dispute about the billing. Secondly, there was an argument as to the effect of the Unfair Contract Terms Act on the reasonableness of the period of 30 days for termination prescribed in Clause 11.2 of the Master Services Agreement.
7. Before this court the case has taken a rather different turn, and I think it is fair to say that the only substantial dispute between the parties has been as to security for the injunction for the run-off period, which would enable the migration from MCI Worldcom to the new carrier. Mr Gee, for MCI Worldcom, of course reserved his position that there was no serious question to be tried, but realistically recognised that in fact it is in his own client's interests that an injunction is granted, provided that there is satisfactory security on the cross-undertaking in damages. It does not appear from MCI Worldcom's evidence that it contradicts the assertion in the witness statement of Mr Nicolaides on behalf of Online that the effect of terminating the services which have been provided will be catastrophic and would be not only damaging to the business of Business Online, also to the prospects of MCI Worldcom in recovering the money owed to it.
8. The position on the security is this. There has been no substantial dispute about the form it would take. The dispute is as to what amount should be given. We have been bombarded with figures showing a considerable difference of view between the parties. The position taken up by Business Online, which is based on statistics which they have produced for use of the lines for 8th August 2001, is that they should not be required to give security higher than the sum of £5,8026.50 per day for the continuing use of the lines during the period over which any injunction is granted. That figure is disputed by Mr Gee on behalf of MCI Worldcom. He says that at least there should be a sum of £22,650 a day, which has been worked out on the basis of figures which are produced on page 149 of the bundle of documents as an average of billing over a three-month period of May, June and July. It appears, as emerged during the course of argument, that the figures given in that document for July have been incorrectly added up. If they had been correctly added up, they would produce a higher figure than the sum of £22,650 per day.
9. It was made clear to the parties that it was impossible for the court to reach any final decision at this stage of the proceedings as to who is right and who is wrong about the rival figures. It was also pointed out to the parties that it is not appropriate for the court to engage in the process of haggling between the parties as to what should be a figure for security. The role of the court is to consider on the evidence which it has what would be a reasonable and satisfactory sum for security.
10. I approach the matter on the general principle that, as the money is by way of security and not by way of payment, it should be on the basis of the highest arguable figure that can be advanced by the defendants. That must be fixed by taking into account all the evidence which the court has. The conclusion that I have reached on the material we have been provided with is that a sum of £20,000 per day should be provided by the defendants by way of security. The order which I would propose is as follows.
11. I would make an order until 4.00pm on 14th September 2001, or until further order in the meantime restraining MCI Worldcom Limited from terminating without the prior permission of the court, the services provided by it and the services of Uunet to Business Online Group Plc. But that order is to cease to have effect if Business Online fails to provide security to MCI Worldcom Limited in the sum of £20,000 per day. That sum is to be paid as to £20,000 by midday on Monday, Tuesday, Wednesday and Thursday each week, and as to £60,000 by midday on Friday in respect of the sums which would be provided by way of security over the weekend. That sum is to be paid into the defendants' solicitors' designated account, in which it is to be held as security for the cross-undertaking in damages which is given by Business Online in respect of the injunction which is being granted. There should also be included in the order a liberty to apply to both parties at the expiration of two weeks from today; that liberty to apply to be in respect of the sum which has been fixed by the court today as the security. The liberty to apply may be taken up by Business Online if it finds that it has evidence that the sum fixed in £20,000 is too high. The liberty to apply may be taken up by MCI Worldcom Limited if the evidence which is available as to use shows that the figure has been fixed is too low. The liberty to apply is to apply not to this court but to the judge in chambers.
12. Relating to that there will also be an undertaking given by MCI Worldcom to supply to Business Online the CD Roms and CLIs in an appropriate form relating to the services which have been provided by MCI Worldcom Limited to Business Online since 1st July 2001, and which also relate to the services to be provided during the period over which the injunction is granted. Those CD Roms and CLIs are to be provided as soon as reasonably practicable.
13. I would also propose, subject to any further argument from either side, that the costs of the hearing should be reserved to the trial of the action.
14. LORD JUSTICE CLARKE: I agree.
(Application granted; costs to be costs of the hearing).