Broadnet Ireland Ltd. v. Director of Telecommunications Regulation [2000] IEHC 46; [2000] 3 IR 281; [2000] 2 ILRM 241 (13th April, 2000)

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Broadnet Ireland Ltd. v. Director of Telecommunications Regulation [2000] IEHC 46; [2000] 3 IR 281; [2000] 2 ILRM 241 (13th April, 2000) URL: http://www.bailii.org/ie/cases/IEHC/2000/46.html Cite as: [2000] IEHC 46, [2000] 2 ILRM 241, [2000] 3 IR 281

2. Broadnet, the second named Respondent (Eircom) and the Notice Parties (Esat/Princes/Formus) were five of the six applicants who in 1999 participated in a tender process under which the first named Respondent (the Director) invited applications for four broadband FWPMA (Fixed Wireless Point to Multi-Point Access) licences in Ireland. Under the tender terms and conditions each applicant was required to pay to the Director a non-refundable fee of £5,000 to obtain the tender documents and to lodge with its tender a valid bankdraft for £375,000 which was refundable in the event that an applicant was not offered or awarded a licence. The deadline for delivery of completed tenders to the director was 6th May, 1999, two days after the incorporation of Broadnet.

3. On 21st September, 1999, having completed the evaluation of the tenders, the Director notified Broadnet that, while its application met the formal and minimal requirements of the tender, it had not been ranked in the first four. In fact, the four highest ranked applicants for broadband licences were Eircom, Esat, Princes and Formus. On 1st December, 1999 the Director notified Broadnet that the four highest ranking applicants had confirmed that they would accept licences should they be offered to them and that it was her proposal to refuse to grant Broadnet a licence. A statement of reasons for the proposal to refuse was enclosed with that letter. The statement acknowledged that the financial strength of the backers of Broadnet had been deemed sufficient to fund the project and that the strength of the guarantees provided by the backers of Broadnet merited a grade A, the highest grade. The letter dated 1st December, 1999 invited Broadnet to make representations in relation to the Director's proposal in accordance with section 111 (10) (c) of the Postal and Telecommunications Act, 1983 (as amended by the European Communities (Telecommunications Licences) Regulations, 1998 (SI 96 of 1998) (the Act). By letter dated 3rd February, 2000 the Director notified Broadnet that she had decided to refuse its application for a broadband licence and set out the reasons for the decision, which reasons reiterated the finding that the financial strength of the backers of Broadnet was deemed sufficient and that the strength of the guarantees provided by the backers merited a grade A. By a notice of appeal dated 21st February, 2000 under section 111 (10) (g) of the Act, Broadnet appealed to this Court against the refusal.

4. The event which precipitated the initiation of these Judicial Review proceedings was the publication of a report in the "Irish Independent" of 29th January, 2000 that a document which emanated from the Director's office prior to the decision on the nature of the competition to be held for the award of FWPMA licences appeared to indicate a bias in favour of Eircom in the choice of a competition rather than an auction. Subsequently Broadnet obtained a copy of the document referred to in the report. This document has been characterised by its author, Aidan Ryan, a civil servant who at the time of its authorship was seconded to the office of the Director, as a "speaking note" prepared in January 1999 in advance of a meeting with an official of the Department of Finance formulating thoughts and arguments with a view to convincing the Department of Finance to sanction a competitive evaluation process over an auction for the award of FWPMA licences. The text of the document, which was headed: "Arguments in favour for (sic) the competitive evaluation model for the launch of FWPMA services", included the following paragraph:-

5. In the affidavit of Declan Ganley sworn on 3rd March, 2000 in these proceedings on behalf of Broadnet it was averred that Broadnet is a wholly owned subsidiary of BroadNet Holdings B.V. (the Holding Company), which plans to establish a pan European network of wireless broadband technology and services. It was further averred that the Holding Company has already been awarded licences in both Germany and Portugal and has made applications in Norway, Spain, Switzerland, Austria and France.

6. Contemporaneously with the competition for the award of broadband licences, a competition was held by the Director for the award of four narrowband FWPMA licences in Ireland. Formus tendered for both a broadband and a narrowband licence, as did Eircom, Esat and Princes. In the event, while Formus was ranked among the four highest applicants for broadband licences, it was not ranked for the award of a narrowband licence unlike Eircom, Esat and Princes who, in broad terms, were ranked highest for the three narrowband licences which were on offer following completion of the evaluation process on 21st September, 1999.

9. As is usual, the order granting leave was made on foot of an ex parte application on behalf of Broadnet and, when that application was made, one respondent only, namely, the Director, was named in the proceedings. By order of this Court made on 13th March, 2000 by Kelly J. Eircom was joined as a respondent and Esat, Princes and Formus were joined as notice parties in the Judicial Review proceedings.

on Broadnet's appeal. There is a motion pending in the appeal in which Broadnet seeks directions as to the scope of the appeal and as to the mode of pleading. Neither the notice of appeal, which conforms with the form of notice prescribed by the Act, nor the affidavit grounding the pending motion for directions disclose the ground or grounds on which Broadnet is appealing the Director's refusal and the grounds are not disclosed either in the substantive Judicial Review proceedings or on these applications.

13. Section 111 (10) (g) of the Act has been further amended by the European Communities (Telecommunication Licences) (Amendment) Regulations, 2000 (SI 70 of 2000) made on 16th March, 2000. It is common case that the amendment, which provides that a decision of the Director shall take effect notwithstanding an appeal, subject to such interim or interlocutory relief as may be granted by the High Court, but so provides in the context that the power of the Court on the hearing of the appeal is to confirm the decision or annul the decision or give such other direction or make such other order as the Court considers appropriate, does not affect the instant case.

(2) Whether Broadnet should be obliged to give an undertaking as to damages to any of the parties seeking the same and, in this context, my understanding of what is sought to be covered by the undertaking is damage caused to the party seeking the undertaking by the existence of the Judicial Review proceedings if ultimately Broadnet is unsuccessful in the proceedings, that is to say, the damage occasioned by the existence of the proceedings in the interim period between their initiation and their final determination against Broadnet; and

17. The question of damage essentially turns on the Director's intentions in relation to the issue of the four broadband licences and the three narrowband licences which, on the evidence, it is probable would have been issued by now but for the existence of these Judicial Review proceedings and Broadnet's appeal. Another factor which could affect the issuing of the seven licences is the existence of plenary proceedings in this Court (Record No. 2000 No. 2970P), initially between Formus, as plaintiff, and the Director, as defendant, in which, by orders of this Court, Princes, Eircom and Esat have been added as co-defendants. In the plenary proceedings, as currently constituted, Formus seeks to enjoin the issue of any narrowband licence in advance of the issuing of a broadband licence to it and it seeks to enjoin the issue of any FWPMA licence prior to the determination of these Judicial Review proceedings. Formus also seeks, in the event of Broadnet being successful in these Judicial Review proceedings, a declaration that the competition for all FWPMA licences, including narrowband licences, is void. On 9th March, 2000, the date on which the plenary summons was issued, Formus issued a motion seeking interlocutory injunctions in the terms of the injunctive relief sought on the plenary summons. That application was listed for hearing in this Court immediately after the hearing of these applications. When it came on for hearing on 6th April, 2000, the Court was told that Formus did not intend to proceed with it, because it was not in a position to give an undertaking as to damages, but that Formus is not abandoning the plenary proceedings and intends to prosecute them. I am satisfied that the plenary proceedings are a direct consequence of the existence of the Judicial Review proceedings and do not bear on the issues I have to decide on these applications.

19. None of the other parties to these applications has taken issue with that averrment. However, in an affidavit sworn on 4th April, 2000 by Broadnet's Solicitor, Philip Lee, it was averred, in the context of an assertion that these judicial review proceedings were not a device to enable Broadnet to avoid seeking interlocutory relief, that it was the understanding of Broadnet that the licensing process does not conclude until after the statutory appeal, so that judicial review was the appropriate relief and that at the time Broadnet initiated the Judicial Review proceedings it had already determined that it would be appealing the decision to refuse it a licence.

20. In an affidavit sworn on behalf of Eircom on 23rd March, 2000 Joseph Styles averred that Eircom was unaware of the existence of the matters which it is alleged by Broadnet give rise to an implication of apparent bias in favour of Eircom until the document at the heart of the substantive proceedings came to public notice. The significance of this is that, although the orders sought by Broadnet directly affect and seek specific relief against Eircom, Eircom's position is that it is as innocent and unwitting as the other successful tenderers.

(1) Loss arising from costs, expenses and outlay having already been incurred by the successful tenderers in participating in the tender process. While it is true that value has been obtained for this expenditure, which some of the parties put at in excess of £1m, in the sense that it resulted in successful tenders, it is probable that loss will arise by reason of postponement of a return on the investment as a result of delay in issuing the licences.

(2) Loss in connection with costs, expenditure and outlay already incurred or committed to in respect of the "roll-out" of the services planned for by the successful tenderers. These losses, which on the evidence would be very considerable, relate to matters such as employment of personnel, acquisition of equipment and so forth. Under this head there may be an element of nugatory expenditure, for example, in retaining personnel who have been recruited, as well as loss in the form of delayed return on the investment.

(3) Loss of revenue from the commercial activity which the issue of the licences would permit and generate. In the case of the Director, this loss relates to the postponement of the receipt of the licence fees in relation to the seven licences. In the case of the successful tenderers, the loss is related to the postponement of a return on the commercial activity which the successful tenderers have planned for. Moreover, in the case of Eircom, it has been averred that broadband FWPMA is more cost effective to deploy than a fibre based network, so that savings are postponed.

(4) Loss associated with competitive factors in the telecommunications market. The probable losses contended for under this head take various forms. For example, it is part of Esat's case that every day it is without a licence it is losing customers because it cannot connect them to its network via FWPMA and these customers are "likely to revert to Eircom". In the case of Princes, its concern is that its inability to provide an interactive facility for the current customers of its television retransmission service threatens its current customer base. The particular concern of Formus, which is reflected in its plenary proceedings, is that the issuing of narrowband FWPMA licences in advance of the issuing of broadband licences will give its competitors in the provision of services via FWPMA technology a major commercial and competitive advantage, which would not only result in loss of revenue, but could threaten the capability of Formus to enter the market, with consequential capital and proprietary loss.

(5) Loss attributable to technological advancements in telecommunications. The Director has averred that developments in technology may mean that with the passage of time FWPMA licences will cease to be of interest to either the successful tenderers or to anybody else. In an affidavit sworn by him in support of Princes's application on 14th March, 2000, William Fagan has averred that the immediate introduction of licence services is critical to the commercial success of FWPMA technology and, in particular, he has referred to the necessity to establish market share for services using wireless technology "before other technologies such as UMTS (mobile, voice and data) enter the market place".

22. It has also been suggested that there will be substantial damage to the public interest if broadband licences are not issued. On behalf of Eircom, Mr. Styles has averred that Eircom requires a broadband licence to provide services to towns which are not covered by fibre optic cable because of their size and the density of large bandwidth customers and to improve speed of delivery to businesses in these towns and that that delay will have a detrimental effect on the economy of these towns. On behalf of Esat, Janet Li, in her affidavit sworn on 16th March, 2000, has averred that a broadband licence would enable Esat to offer a leased line, voice, and innovative broadband services that would further competition and growth in internet and e-commerce in Ireland. While no doubt the availability of FWPMA technology in the State would be of benefit to the public, it does not follow that the detriment to the public resulting from the postponement of the availability of the technology of itself is a factor which can support a claim by any of the parties in the instant proceedings to an undertaking as to damages. However, I am satisfied that the evidence establishes, as a matter of probability, that each of the parties seeking an undertaking as to damages will incur loss and damage as a result of delay in the issuing of the FWPMA licences.

23. In asserting that it is the intention of the parties seeking undertakings as to damages in the instant case "to stifle the action...so that the merits of same are never considered", Mr. Lee in his affidavit of 4th April, 2000 has averred that "an undertaking as to damages which required to be backed by guarantee would almost certainly mean that these proceedings could not be prosecuted by [Broadnet]." He has also averred to his belief that the proceedings are of "fundamental importance to maintaining the confidence of international parties dealing with regulatory authorities in the State".

24. Finally, there has been allegation and counter-allegation in relation to delay, prevarication and obscurantism in identifying and endeavouring to achieve a speedy resolution of the issues between the parties. While there is no doubt that these proceedings, in conjunction with the statutory appeal and the plenary proceedings brought by Formus, require speedy resolution, in my view, the history of the conduct of the proceedings by any of the parties to date is not a factor which gives rise to such an adverse inference as would be determinative , or indeed a feature of any significant weight, in the resolution of the issues on these applications.

25. It is conceded by Counsel for Broadnet that, in the event of Broadnet being unsuccessful in the judicial review proceedings, it would not be in a position financially to meet orders for costs awarded to the other parties. It is acknowledged that that being the case, the onus is on Broadnet to establish the existence of some special circumstance on the basis of which the Court could exercise its discretion not to order security.

26. It was all but conceded on behalf of Broadnet that the Director is entitled to security. In fact, it was intimated that Broadnet is willing to provide £60,000 as security for the costs of the Director but that offer is made "without prejudice to Broadnet's contention that security for costs should not arise in this type of case." I understand this to mean that there exists some public interest consideration, which was not defined, which militates against a statutory regulator being awarded security for costs in judicial review proceedings. In point of principle I cannot see any basis for precluding a statutory regulator from the protections afforded by section 390 or the Rules and, in particular, from the operation of sub-rule (6), which expressly provides for security for costs in judicial review proceedings. In my view, the Director is entitled to security for costs, in an amount to be fixed by the Master of the High Court on the basis outlined by McCracken J. in his judgment delivered on 24th March, 2000 in Lismore Homes Ltd. (in Receivership) -v- Bank of Ireland Finance Ltd and others .

27. In relation to Eircom, Esat, Princes and Formus, the special circumstance advanced by Broadnet is that, as the core issue on the substantive application is apparent bias on the part of the Director, in which it is not alleged the other parties were implicated, these parties have no role to play in the resolution of the core issue and, if they wish to participate in the substantive application, Broadnet should not be required to give security for the costs of that participation, which it is contended is unnecessary and in respect of which the trial judge may not make an award of costs.

28. Rule 22 of Order 84 provides that the originating notice of motion in judicial review proceedings "must be served on all persons directly affected." It is not disputed that these parties are directly affected and it was on that basis that they were joined in the proceedings as notice parties and, in the case of Eircom, as a respondent. If these parties are directly affected and have a right to be served with the proceedings, they have a right to participate in the proceedings and to be heard in order to protect their respective interests. In general, the types of special circumstance the existence of which may induce a court to exercise its discretion not to give security for costs are matters connected with the alleged wrongdoing, and its contribution to the financial status of the plaintiff or applicant, for example, the type of situation addressed in Peppard & Co. Ltd. -v- Bogoff [1962] I.R. 80, or the conduct of the alleged wrongdoer. The fact that in this case the alleged wrongdoer, the Director, is defending the proceedings, in my view, cannot, as against the acknowledged innocent parties who are directly affected by the proceedings, Eircom and the Notice Parties, constitute a special circumstance for refusing to award security for costs to those parties. It may well be that, at the end of the day, if Broadnet is unsuccessful in the judicial review proceedings, the trial judge, in awarding costs in favour of those parties, will make such award on the basis that as the matter had unfolded only limited participation was required. If that were to happen, Broadnet would not be prejudiced by having been required to give security because it would be entitled to a return of any surplus of the funds lodged in Court by way of security together with accrued interest. However, the important point is that at this interlocutory stage a judgment cannot, and should not, be made as to those parties' entitlement to costs in the event of Broadnet's failure to obtain the reliefs claimed.

32. In 1986, on the introduction of the Rules, a new procedure, an application by way of application for judicial review in accordance with the provisions of Order 84, for obtaining relief by way of certiorari was substituted for the previous state side procedure. Rule 20 mirrored the corresponding provisions of the Rules of the Supreme Court which regulate judicial review applications in England, Wales and Northern Ireland but it is interesting to note that, while a court in the latter jurisdictions has power, if leave is granted, to "impose such terms as to costs and as to giving security as it thinks fit", no power to require an undertaking as to damages is expressed in the relevant rule (Order 53, rule 3 (9)).

34. I am satisfied, as a matter of construction of sub-rule (6) in the over all context of Order 84, that the Court's jurisdiction to require an undertaking as to damages provided for in that sub-rule is not limited to situations in which a stay is granted under sub-rule (7) (a) or an interim injunction is granted under sub-rule (7) (b). Sub-rule (6) by implication recognises that granting leave to impugn the decision of a public body may have the potential to cause damage and, having regard to the provision of rule 22 (2), which requires service of an application for judicial review "on all persons directly affected", recognises that it has the potential not only to cause damage to the public body in question but also to third parties affected by the decision of the public body. In any such situation the Court has a discretion to condition the leave by imposing a term or terms including a requirement that the person seeking the leave give an undertaking as to damages. In my view, sub-rule (6) is open to the construction that the Court may, at leave stage, on its own motion so condition the grant of leave. While it is not disputed in the instant case that, after leave is granted, the Court can entertain an application from a respondent or a notice party that an undertaking as to damages should be required, I have no doubt that this course is open under sub-rule (6), because the application for leave being an ex parte application, a respondent or a notice party has no opportunity to seek an undertaking until after leave is granted. I would suggest, however, that an application by a respondent or a notice party should seek, as some of the parties in the instant case have sought, that it be a term of the continuance of the leave and the proceedings that an undertaking as to damages be given by the applicant. As a matter of substance, that is what all of the parties seeking an undertaking as to damages in the instant case seek.

37. First, I have been referred to a series of cases in which, in effect, the issue was whether, if the court was unable in accordance with the provisions of the Rules of the Supreme Court and its inherent jurisdiction to strike out the plaintiff's claim in a plenary action, it could require the plaintiff to apply for an interlocutory injunction so that the defendant would have the protection of an undertaking as to damages. The first in the series was a decision of Templeman J. in Clearbrook Property Holdings Limited -v- Verrier [1974] 1 W.L.R. 243. While the issue in that case was whether a caution registered in the Land Registry by a plaintiff purchaser who was claiming specific performance of an agreement for sale should be vacated, I believe I have not mis-characterised the essence of the issue before the Court, because, as appears from the judgment of Templeman J. at page 245, the effect of the vacation of the caution was that the plaintiff's claim for specific performance would have been put in a position in which it was bound to fail in limine. To redress the unfairness to the defendant vendor, whose property was unsaleable while the caution remained registered, Templeman J. held that the caution should be vacated on the plaintiffs being given the opportunity to make an immediate application for an interlocutory injunction restraining the defendant from dealing with the land in any way inconsistent with the plaintiff's claim pending the trial, which would not be opposed by the defendant, and the defendant getting a cross undertaking in damages. The approach adopted by Templeman J. was subsequently approved of by the Court of Appeal in Tiverton Estates Limited -v- Wearwell Limited [1975] 1 Ch. 146.

38. The remaining two authorities in the series - Blue Town Investments -v Higgs & Hill plc [1990] 2 All ER 897 and Oxy Electric Limited -v- Zainuddin and another [1990] 2 all ER 902, are at odds with each other. In the first, Sir Nicholas Browne-Wilkinson V.C., in order to ensure that pending the trial the defendants were not exposed to loss which was not compensatable and which flowed from a claim by the plaintiffs which might be unjustified, decided to strike out the claim unless the plaintiffs were prepared to apply for an interim injunction accompanied by a cross undertaking as to damages. In that case, the plaintiffs, who were claiming an infringement of their right to light, sought an injunction ordering the defendants to pull down or refrain from erecting so much of a block of flats as would obstruct their right to light in plenary proceedings which were initiated three months after the construction of the block of flats had commenced, but had not moved for an interlocutory injunction pending the trial of the action. In the second, the plaintiff was seeking an injunction restricting the erection of a mosque and community centre on part of an industrial estate on which the plaintiff owned a site, on the ground that its erection would be contrary to a restrictive covenant attaching to the plaintiff's site limiting building on the estate to factories, warehouses, work shops, or offices, but again had not moved for on interlocutory injunction. Hoffman J. held that, since the Court had no jurisdiction to strike out an action except in accordance with established principles under the Rules of the Supreme Court or the inherent jurisdiction of the Court, it had no jurisdiction to impose conditions on the right to prosecute a claim. He distinguished the Clearbrook case and doubted the correctness of the decision in the Blue Town case without formally dissenting from it. Hoffman J. distinguished the Blue Town case, which Sir Nicholas Browne-Wilkinson V.C. had described as a "thin" case, from the case before him, which he described as being "a seriously arguable case".

39. As a general proposition, I do not find the foregoing series of cases of much assistance in defining the circumstances in which this Court should exercise this jurisdiction under sub-rule (6). They were concerned with situations in which the relevant rules did not provide for jurisdiction to strike out the plaintiff's claim or exact an undertaking as to damages from the plaintiff. The situation in the instant case is different. As I have found, under sub-rule (6), this Court has jurisdiction to condition the grant or continuance of leave on a requirement that an undertaking as to damages be given, whether the applicant seeks a stay or an injunction or not. In any event, having regard to the decision of Hoffman J., whether the right of a plaintiff in an ordinary plenary action, who has not sought an interlocutory injunction, to maintain a claim for a perpetual injunction may be made conditional on him seeking an interlocutory injunction and giving an undertaking as to damages, must be doubtful. In my view, it is questionable whether in ordinary private civil litigation in this jurisdiction, the Courts have any jurisdiction to inhibit or render conditional the prosecution of a claim unless it is frivolous or vexatious or clearly cannot succeed.

40. Moreover, in so far as it is to be deduced from the judgments in the Blue Town case and the Oxy-Electric case that it is open to the Court on an interlocutory application to assess the strength or weakness of the plaintiff's case, the law in this jurisdiction does not conform with the law in England and Wales. It has been reiterated time and again in this jurisdiction by the Supreme Court that, on an interlocutory application, the Court should not attempt to resolve conflicts of fact or determine issues of law or otherwise evaluate or comment on the strength or weakness of the respective positions of the proponents. I need only mention the dicta of Finlay C.J. in Westman Holdings Limited -v- McCormack [1992] 1 I.R. 151 at page 157, in the context of an application for an interlocutory injunction, and the dicta of McCarthy J. in Comhlucht Paipear Riomhaireachta Teo -v- Udaras na Gaeltachta [1990] 1 I.R. 320 at page 331, in the context of an application for security for costs. In the instant case, all that it is appropriate to say at this juncture is that Broadnet has already established that it has reached the threshold which entitles it to bring an application for judicial review and that the Director has an arguable defence to Broadnet's claim and that the notice parties have an arguable basis for protecting the benefits which Broadnet seeks to deprive them of.

"In my opinion, if the real purpose of interlocutory relief in a judicial review case is to prevent executive action by a third party being carried out pursuant to the decision under attack, the more suitable procedure would be to have the third party in question joined and then to seek an interlocutory injunction against that party, rather than to seek a stay of the decision. If, however, the purpose is pursued, as it has been in the present case, by an application for a stay of the decision rather than an application for an interlocutory injunction against the third party, the courts should, in my opinion, look to the substance rather than to the form, and apply the same principles to the application as would have been applicable had the application been for an interlocutory injunction".

42. That statement, of course, concerns a situation in which an English court is considering granting a stay under the provision of the relevant rules which corresponds to sub-rule (7) (a). While I have not been referred to any authority in this jurisdiction directly in point on sub-rule (7) (a), I think it is likely that a court in this jurisdiction would adopt the approach advocated by Scott L. J. where, in substance, a stay would have the same effect as an interlocutory injunction. (cf footnote 109 in Hogan and Morgan's Administrative Law in Ireland, third edition, page 711)

43. The Court's power to condition the grant or continuance of leave to apply for judicial review by exacting an undertaking as to damages is, in my view, most closely analogous to the Court's discretionary power to grant an interlocutory injunction in ordinary private litigation. The authority which I have found most helpful in identifying the circumstances in which it would be appropriate to exercise the discretion given by sub-rule (6) is the seminal decision of the House of Lords in American Cyanamid Company -v- Ethicon Limited [1975] A.C. 397, because it goes back to first principles. Lord Diplock in his speech (at page 406) explained the underlying rationale of the equitable jurisdiction in the following passage:-

"...when an application for an interlocutory injunction to restrain a defendant from doing acts alleged to be in violation of the plaintiff's legal right is made upon contested facts, the decision whether or not to grant an interlocutory injunction has to be taken at a time when ex hypothesi the existence of the right or the violation of it, or both, is uncertain and will remain uncertain until final judgment is given in the action. It was to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved that the practice arose of granting him relief by way of interlocutory injunction; but since the middle of the 19th century this has been subject to his undertaking to pay damages to the defendant for any loss sustained by reason of the injunction if it should be held at the trial that the plaintiff had not been entitled to restrain the defendant from doing what he was threatening to do. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff's need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff's undertaking in damages if the uncertainty were resolved in the defendant's favour at the trial. The court must weigh one need against another and determine 'where the balance of convenience lies'."

44. While the foregoing passage deals with the various components of the entire machinery for determining whether an interlocutory injunction should be granted, not just the undertaking as to damages given by the party seeking the injunction, what it clearly illustrates is that the objective is to weigh in the balance the advantages and disadvantages on each side in acceding to or refusing the relief so as to mitigate, if not entirely eliminate, the risk of injustice to either party.

45. In considering whether to exercise the discretion under sub-rule (6) to require an undertaking as to damages as a condition to the grant or the continuance of leave to apply for judicial review, the essential test is whether such requirement is necessary in the interests of justice or, put another way, whether it is necessary to mitigate injustice to parties directly affected by the existence of the pending application. If, in substance, the existence of the application has an effect similar to the effect of an interlocutory injunction in private litigation - that activity which would otherwise be engaged in is put "on hold" pending final determination of the controversy, with resulting loss and damage - in my view, it is appropriate for the Court to adopt the approach traditionally adopted in private law litigation in determining whether an interlocutory injunction should be granted and to require that the applicant should give an undertaking to make good that loss and damage if it is ultimately found that the applicant's case is unsustainable, provided there is no countervailing factor arising from the public law nature of the jurisdiction it exercises under Order 84 which precludes it from adopting that approach. Some of the considerations which a court should have regard to in exercising its judicial review jurisdiction were outlined by Sir John Donaldson MR in his judgment in R. -v- Monopolies Commission [1986] 2 All ER 257 and it is convenient to illustrate the countervailing factors which may come into play in exercising the Court's discretion under sub-rule (6) by reference to the following passage (truncated in transcription) from his judgment at page 266:-

47. The first is whether the existence of this judicial review application, in substance, has the same effect as an interlocutory injunction would have if it was sought by Broadnet. Various metaphors were used in the course of the hearing to describe the effect of the existing proceedings on the FWPMA licensing process: "institutional gridlock", "chilling effect" and so forth. By including among the reliefs sought by it, a declaration that the competition for broadband FWPMA licenses is void, in my view, Broadnet has undermined and effectively paralysed the whole process. On the evidence, which is not materially disputed by Broadnet, I am satisfied that, as a matter of probability, the licensing regime will not come into operation until the judicial review proceedings are finally determined. Even if the Director were to decide to grant licences, they might not be taken up and, even if any were taken up, it is hard to see how a commercial entity could justify heavy financial investment until the issues in the judicial review proceedings are resolved. Therefore, in substance, the existence of the proceedings has created the same effect as an interlocutory injunction restraining the Director from implementing the outcome of the competitive process would have.

48. It was submitted on behalf of Broadnet that the existence of the statutory appeal, which it has a statutory right to pursue, in any event, prevents the Director from implementing the outcome of the competitive process. It was argued that the effect of Section 111 (10) (g) (as contained in SI 96 of 1998) is that the licensing process is not completed and licences cannot be awarded until the appeal is finally determined. This argument was advanced both on the construction of the relevant provision and, with regard to the practicalities of this particular licensing process. It was strongly contested by the other parties. For the reasons I have outlined earlier, I consider that it is not open to me to determine any issue of law on this application and I express no view as to whether the statutory appeal has the effect contended for by Broadnet. Similarly, I express no view on the submission advanced on behalf of Eircom, but contested by Broadnet, that, if Broadnet were to succeed in quashing the Director's decision to refuse its application, it would have a claim against the Director sounding in damages. All the parties seeking an undertaking on these applications can expect is an undertaking to make good loss and damage caused by the existence of the judicial review proceedings. If an undertaking is given and if Broadnet is unsuccessful in the judicial review proceedings and if the party to whom the undertaking has been given seeks to enforce the undertaking, Broadnet will not be precluded from arguing the causation point at the trial of the enforcement of the undertaking, if that issue has not already been decided in the substantive judicial review proceedings.

49. The second question is whether the balance of justice lies in requiring or not requiring that the undertaking be given. The starting point for this enquiry is the findings I have already made, namely, that all of the parties who seek undertakings are incurring loss and damage by reason of the delay in awarding the FWPMA licenses and that the existence of the judicial review proceedings is inhibiting the coming into operation of the licensing regime. The longer the judicial review proceedings are in existence, the greater the loss. If one analyses the effect of the continuance of the judicial review proceedings with and without the requirement of an undertaking as to damages against the only contingency in which the undertaking becomes operative, that Broadnet is unsuccessful in the proceedings, it is patently obvious where the balance of justice lies. If an undertaking is exacted, Broadnet will have to bear the loss which has resulted from the existence of its proceedings which are found to be unsustainable and which presumably were never sustainable. On the other hand, if no undertaking is exacted, the Respondents and the Notice Parties will have no redress against Broadnet for the loss that they have incurred as a result of the existence of Broadnet's unsustainable proceedings. It would be patently unfair and unjust to allow the proceedings to continue without Broadnet carrying the risk of the loss occasioned thereby, if they are unjustified.

50. The final question is whether there are any countervailing factors in this case. Aside from the fundamental public law nature of the Judicial Review proceedings that Broadnet is challenging the exercise of a statutory power exercised by a public body on the basis that it was not properly exercised and is seeking redress by way of public law reliefs - there is a real sense in which the proceedings, and in particular these applications, are concerned with asserting and protecting the type of rights and benefits which are normally protected by private law. In reality, Eircom, Esat, Princes and Formus are endeavouring to protect the commercial benefits which accrue from their successful participation in the tender process and Broadnet is endeavouring to engineer a situation in which it has another opportunity to participate in the commercial benefits which accrue from the award of a broadnet FWPMA license. Against that reality, the invocation by the parties other than the Director of the public interest has the appearance of being self serving. Broadnet has advanced the argument that the requirement of a fortified undertaking will stifle its proceedings for a two-fold purpose: to impugn the bona fides of the parties seeking the undertakings; and to invoke a public interest. I have already quoted Mr. Lee's averrment as to the likely consequence of such a requirement. My understanding of that, averrment is that if required to give a fortified undertaking, Broadnet's backers will make a commercial decision not to proceed with the judicial review proceedings. It is clear from the evidence that Broadnet's backers were prepared to support Broadnet, at least to the tune of £380,000, to participate in the tender process. It is also clear from the evidence that, in the course of the tender process, Broadnet was able to satisfy the Director as to the financial strength of its backers. In the light of the evidence, one cannot conclude that Broadnet's backers would have reasonable grounds for abandoning the judicial review proceedings if a fortified undertaking as to damages were required as a condition of continuing the proceedings.

51. The other public interest factors raised in the submissions by Broadnet, on the one hand, and the parties seeking the undertakings, on the other hand, in my view, are finely balanced and none carries sufficient weight to determine or to be a significant factor in determining whether an undertaking should be required or not. In particular, I wish to comment on the argument advanced by the parties seeking the undertaking that the existence of the undertaking would bring an element of discipline into the proceedings and ensure that they are conducted in a more time and cost efficient manner. As I have already stated, the issues on the substantive application do require speedy resolution. However, in my view, that objective is to be achieved by case management and it is not a factor to which I have given any weight in determining whether an undertaking as to damages should be required.

"But where there are doubts about the plaintiff's resources, the court has discretion to require either security or the payment of money into court to 'fortify' the undertaking, or (as an alternative) an undertaking, from a more financially secure person or body. This might apply if the plaintiff is legally aided; or a minor or patient...; or resident outside the jurisdiction ( Harman Pictures NV -v- Osborne [1967] 1 W.L.R. 723); or an unquoted company. In cases where the Plaintiff is a subsidiary of a large company and apparently lacking funds it is common for the parent company to be invited to guarantee the undertaking in damages in writing."

54. It is undoubtedly the case that an undertaking from Broadnet would be worthless unless secured. Using the terminology used by the Director, it seems to me that Broadnet's "backers" should guarantee each undertaking required in the instant case. I will hear further submissions on how this can be best achieved. A number of devices occur to me. Assuming the backer is the Holding Company, the Holding Company could be joined as a co-applicant in the judicial review proceedings for the purposes of giving the undertakings. Alternatively, the Holding Company could give a guarantee in writing of the undertaking as to damages.

High Court of Ireland Decisions

Broadnet Ireland Ltd. v. Director of Telecommunications Regulation [2000] IEHC 46; [2000] 3 IR 281; [2000] 2 ILRM 241 (13th April, 2000)