Mennell & Anor v Stock & Ors [2006] EWHC 2514 (QB)

Case No HQ06X01041[2006] EWHC 2514 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday 17 th October 2006
Before
MR. JUSTICE TEARE
Between
MARK MENNELLClaimantsLOFT LOGIC LIMITEDClaimantLAWRENCE STOCKDefendantsEXTENDALOFT LIMITEDDefendantT-MOBILE (UK) LIMITEDDefendant
Rohan Pershad (instructed by Silverman Sherliker LLP) for ClaimantsAntony Sendall (instructed by Lawrence Stephens) for First and Second DefendantsRichard Leiper (instructed by Hammonds) for Third DefendantsHearing Hearing dates: 5-6 October 2006
Judgment

Mr. Justice Teare:

[1]This is the trial of a preliminary issue, namely, whether the Defendants are liable to the Claimants in respect of one or more of three causes of action; breach of contract, interference with trade and procurement of a breach of contract. The preliminary issue was ordered to be tried by Mr. Leighton Williams QC sitting as a Deputy High Court Judge on 12 June 2006. Issues concerning the appropriate remedy are not to be determined on this hearing.[2]The First Claimant is a director of the Second Claimant company which, as its name suggests, is involved in the business of loft conversion. Prior to setting up the company the First Claimant had a business relationship with the Defendants.[3]The First Defendant is a director of the Second Defendant company which, as its name suggests, was also involved in the business of loft conversion.[4]The present dispute between the Claimants and the Defendants concerns the use of two mobile telephone numbers. The issue is of great concern to the Claimants because one of the mobile telephone numbers in question is advertised as the mobile telephone number by which actual or prospective customers can contact the Claimants.[5]The First Clamant gave oral evidence as did the First Defendant. Oral evidence was also given by Carmel Codd on behalf of T-Mobile UK Limited who operate the mobile telephone service in question. T-Mobile is described as a Third Defendant but no cause of action is advanced against it, at any rate in this hearing.[6]It is first necessary to recount the material facts and to resolve the factual issues which arose as a result of the oral evidence.

Mobile telephone number 07956

[7]The First Claimant had for many years a mobile telephone with One2One and latterly T-Mobile. He used it for personal and business purposes and its number was 07956 567739 (“07956”). By August 2003 his involvement in the business of the Second Defendant was such that he received many calls on number 07956 from customers of the Second Defendant. So on 29 August 2003 the First Claimant requested T Mobile to cancel his account and open a new account in the name of the Second Defendant. Mobile number 07956 was transferred to the Second Defendant’s account. The bills were paid by the Second Defendant but the First Claimant continued to use mobile number 07956 for personal and business use.[8]On 30 June 2004 the Second Defendant ceased trading. It is the case of the First Claimant that in the summer of 2004, probably about August, he made an agreement with the Defendants concerning the use of mobile number 07956. His evidence is that he and the First Defendant, acting on his own behalf and on behalf of the Second Defendant, agreed that the First Claimant could thereafter continue to use and pay for mobile number 07956. The Defendants deny that any such agreement was reached.[9]On 16 October 2004 the First Claimant rang T-Mobile to give certain instructions. He said he would be paying the bills, he gave his name, address and his home telephone number and requested that the customer address and billing address be changed to his address. However, he did not formally seek to change the name of the account holder which therefore remained the Second Defendant. Thereafter he paid the bills and continued to use the mobile number.[10]On 12 July 2005 the First Claimant requested an upgrade of his phone. T-Mobile acceded to the request. A 12 month contract was agreed and a delivery charge had to be paid which was to be shown on the next bill. The formal name of the customer in T-Mobile’s records remained the Second Defendant.

Mobile number 07985

[11]In about September 2005 the First Claimant set up the Second Claimant company. The mobile number used for the business of the Second Claimant was 07985 254307 (“07985”). The First Claimant was the account holder. On this account there were three mobile numbers. The other two numbers were used by two of the First Claimant’s daughters.[12]In about March 2006 the First Claimant wished to have a further mobile phone on the account for another of his daughters. He enquired of T-Mobile whether this was possible and was told that it was not possible to have more than 3 telephones on the account having regard to his payment history. Having discussed the matter further he requested that mobile number 07985 be transferred to what he referred to as the business account, namely, the account to which 07956 was attached. He then bought a “pay as you go” mobile phone for his daughter.[13]There was an issue as to whether, when the First Claimant, requested that mobile number 07985 be transferred to the account to which 07956 was attached he stated that the account holder was the Second Defendant. He said that he did not and that he was not asked who was the account holder. He said that he gave the mobile telephone number, his name and his password.[14]The person to whom he spoke at T-Mobile was Elaine Gallacher. She did not give oral evidence but there was in evidence an e-mail from her dated 17 April 2006 in which she said that both his personal and business account were “under his name at the time of transfer”. In a further e-mail on 19 April she said that although the business account was under the name of the Second Defendant the First Claimant was “the main contact which allowed him full authority on this account. I did not need any faxes to complete this call and did it straight away advising customer of billing changes etc.”[15]Oral evidence was given by Carmel Codd as to T-Mobile’s procedures. She said that when the First Claimant rang on 9 March 2006 to transfer number 07985 to the business account he would have been asked for the name of the account holder, the Second Defendant. She accepted that there was no record of this in the T-Mobile computerised record of calls but insisted that he would have been asked for the name of the account holder.[16]I do not doubt that Carmel Codd gave correct evidence as to the procedures T-Mobile expect to be followed when customers call. But she was not party to the call on 9 March 2006 and cannot give evidence as to what was said. The First Claimant said that he was not asked for the name of the account holder and Elaine Gallacher made no mention of such a request in her e-mails concerning the conversation. The first of those e-mails describes both the personal and business accounts as being under the First Claimant’s name. This does not suggest that she required the caller to identify, as the account holder of the business account, a name other than the First Claimant’s name. In the second e-mail she accepts that the business account was in the name of the Second Defendant but describes the First Claimant as the main contact which allowed him full authority on the account. Again, this does not suggest that, before proceeding with the call, she required him to identify the name of the account holder. I therefore accept the First Claimant’s evidence that he was not asked for the name of the account holder on 9 March 2006. The end of the business relationship between the First Claimant and the First Defendant.[17]After the Second Defendant ceased to trade in 2004 the First Defendant continued to be involved in the loft conversion business through another company, Stock Construction (London) Limited. Initially the First Claimant continued to have a business relationship with the First Defendant and Stock Construction but this appears to have come to an end when the First Claimant set up the Second Defendant company and competed for loft conversion business. The First Defendant became concerned at the advertising used by the Claimants. He took photographs of the advertising used at the Claimants’ sites and on their vehicles and in January 2005 took legal advice as to a possible passing off claim against the Claimants. On 11 April 2005 the First Claimant ceased to be a director of the Second Defendant.

The events which gave rise to these proceedings

[18]On 27 March 2006 the First Defendant requested a reprint of the bills concerning mobile number 07956. He wished to obtain information relating to personal usage of number 07956 by the First Claimant when he was a director of the Second Defendant. He was then informed that mobile numbers 07956 and 07985 were in use on the account in the name of the Second Defendant. On 28 March 2006 the First Defendant gave written instructions to T-Mobile using paper headed with the name of the Second Defendant. The instructions included the following:
“We note from our records that mobile telephone numbers 07985 25307 and 07956 567739 are still registered to the Company and we require these numbers to be suspended with immediate effect. Please direct all phone calls for those handsets and Sims provided as these are not in our possession to the following number: 07659 550359. Pleased delete password, user name and M.Mennell from these accounts.”
Pleased delete password, user name and M.Mennell from these accounts.”[19]These instructions were acted upon. On the same day the First Defendant gave T-Mobile a new password: Shark.[20]That action led to these proceedings in which the Claimants seek injunctive relief and damages.

The alleged agreement

[21]It is now necessary to return to the main factual dispute between the parties, namely, whether an oral agreement was reached in about August 2004 concerning the use of mobile number 07956.[22]The First Claimant gave oral evidence in support of his case. His evidence in chief concerning the alleged agreement was set out in two written statements. In his statement dated 4 April 2006 he said that in about June 2004 the First Defendant agreed that the First Claimant should continue to use mobile number 07956 after the Second Defendant ceased trading. In his statement dated 26 August 2006 he said that following a number of conversations as to how the First Claimant and First Defendant might work together after the summer of 2004 the First Defendant said that “moving forward I should use the 07956 number and he would use his own mobile number”. In answer to supplementary questions in chief he said that the conversation took place at the end of August 2004. When cross-examined he said that the further information which had been pleaded about the agreement was correct, namely, that the agreement was made in about August 2004, that it concerned the way in which the First Claimant and the First Defendant could continue in a business relationship, that they would work together in a joint venture from 1 September and that as part of that arrangement the First Claimant would continue to have the benefit and use of the 07956 number and the First Defendant would continue to use his own mobile telephone number. He explained that he was to work on his own but to sub-contract with Stock Construction. It was put to him in cross examination that there was no agreement concerning the use of the 07956 number. He said there was. “I would keep my phone. I would pay my own bills. He would keep his phone and would pay his bills.”[23]The First Defendant also gave oral evidence. He denied that he made any agreement concerning the use of mobile number 07956. In his statement dated 5 June 2006 he said that since the Second Defendant had developed goodwill in association with number 07956 he had no intention of allowing the First Claimant to walk away with it and he did not recall discussing it with him at all. In his statement dated 14 September 2006 he said that he should have raised number 07956 with the First Claimant but that that there were so many other things for him to be focussing on in running his business that he overlooked the point. In his cross-examination he said that he had been seriously ill and simply overlooked the number. It was suggested to him that given that business goodwill was attached to the number it was inconceivable that he would have allowed the First Claimant to use the number for 18 months. He replied that the number had slipped past him; he was rebuilding the company.[24]The burden lies on the First Claimant to establish on the balance of probabilities that he made an oral agreement in about August 2004 with the First Defendant that he should retain the use of mobile number 07956. In my judgment he has discharged that burden, for these reasons:(i) The First Claimant’s evidence is consistent with the fact that in October 2004 he rang T-Mobile to change the customer address and billing address to his own and commenced paying the bills for that phone. It is true that he did not take the further step of formally requesting the name on the account to be changed from the Second Defendant to his own. His explanation was that so far as he was concerned he had done that because he had rung T-Mobile, given his name and address and said that he would be paying the bills. Notwithstanding that in August 2003 he had asked for the account to be transferred into the name of the Second Defendant this explanation had, to me, the ring of truth.(ii) The First Claimant’s oral evidence as to the agreement was that “I would keep my phone. I would pay my own bills. He would keep his phone and would pay his bills.” He repeated this more than once. I was left with the impression that this was very much the gist of what was agreed. They are the sort of words one would expect two laymen to use when deciding how the mobile phone numbers used for the business of the Second Defendant should be used following the demise of the Second Defendant. They are also consistent with paragraph 11 of his written statement dated 26 August 2006.(iii) Cross-examination did not reveal any significant inconsistencies in his evidence. He had put the date of the agreement in his first statement as June 2004 rather than August 2004 but I do not regard this as a significant inconsistency. His first statement was dated 4 April 2006 very shortly after the need to seek injunctive relief had arisen. In circumstances where there was no record of the date of the agreement it is not surprising that he should later, on reconsideration, put the date a little later in the year. It is also the case that his first statement did not contain words similar to “I would keep my phone. I would pay my own bills. He would keep his phone and would pay his bills” but the brief account of the agreement in that statement is consistent with those words. I formed the impression that the First Claimant was an honest witness.(iv) By contrast the First Defendant’s evidence was improbable and he was not an impressive witness.(v) In a letter dated 12 September 2006 from the First Defendant’s solicitors written on the instructions of the First Defendant it was said that use of mobile number 07956 will have diverted “a significant amount of business away from” the First Defendant. In his oral evidence he accepted that the number had goodwill attached to it. In these circumstances it is improbable that the First Defendant would have overlooked the mobile number in the summer of 2004 when winding up the business of the Second Defendant, notwithstanding that there were other matters to deal with in the reconstruction of his companies and that he had been seriously ill.(vi) The First Defendant accepted that he had telephoned the First Claimant many times on number 07956 before January 2005 and that in January 2005 he had given the number to the police so that they could contact the First Claimant. In the Defence, paragraph 21, which the First Defendant certified to be true on 14 June 2006, he accepted that in January 2005 he was aware that number 07956 was being used by the First Claimant. In these circumstances it is improbable, given that the First Defendant accepts that the number had a goodwill value, that he had simply overlooked the number.(vii) The First Defendant was not an impressive witness. He made statements in his oral evidence which were inconsistent with earlier statements. Thus, until he was shown paragraph 21 of the Defence he was unwilling to accept that he was aware that number 07956 was being used by the First Claimant. Similarly, he maintained that he also telephoned the First Claimant on number 07990 694682 (the “project” number) but in his written statement dated 5 June 2006 he said that so far as he was aware the First Claimant did not use that number. Whilst saying that he had overlooked number 07956 he also said that in March 2006 he thought that the account with T-Mobile (to which number 07956 had been attached) “had ceased in 2004 when the Second Defendant ceased trading”.[25]There are two further matters I should mention concerning this factual dispute. Firstly, it was suggested in argument that the First Claimant’s telephoned instructions to T-Mobile in October 2004 are consistent with an allegation that the First Claimant, knowing no agreement had been reached with the First Defendant but being keen to keep use number 07956, took steps to keep it. I am not sure that this allegation was put squarely to the First Claimant but, since I have accepted the First Claimant’s evidence as to the agreement, I am not able to accept it. Secondly, it was suggested that the account of the agreement in the Further Information which the First Claimant accepted to be true was an account of an agreement which would last only so long as the intended joint venture would last. I do not accept this suggestion. Whilst the context in which the agreement was reached was that of an intended ongoing relationship there was no express agreement that in the event that that relationship failed the agreement as to the use of the phones would come to an end. Nor do I consider, having regard to the gist of the words which I consider were used, that any such agreement should be implied. So far as the First Claimant and the First Defendant were concerned the agreement was unlimited in duration. Of course, if T-Mobile or Ofcom removed mobile number 07956 from the cell phone network the First Claimant would no longer be able to use that number but it does not follow that as between the First Claimant and the Second Claimant the agreement was other than unlimited.[26]I therefore find that in about August 2004 an oral agreement was reached between the First Claimant and the First Defendant to the effect that the First Claimant would keep mobile number 07956 (which had originally been registered by T-Mobile in his name) and would pay the bills for that phone and that the First Defendant would keep his phone and would pay the bills for that phone. I also find that that agreement was made by the First Defendant on his own behalf and on behalf of the Second Defendant. It was made on behalf of the Second Defendant because it concerned a phone number registered by T-Mobile in the name of the Second Defendant. The First Defendant was intending to bind himself as well as the Second Defendant because he and the First Claimant were dealing with their own personal business futures and dividing between themselves the mobile phones used by the company of which they were both directors.

Liability

(i) Breach of contract

[27]It must follow that when the First Defendant wrote to T-Mobile on 28 March 2006 on behalf of the Second Defendant requiring that number 07956 be suspended and that calls to that number be diverted to another number such conduct was a breach of the agreement by the First and Second Defendants.[28]That letter was also written in respect of number 07985 which, as from 9 March 2006, had been attached to the same account number with T-Mobile to which number 07956 was attached. There was an issue as to whether this was also a breach. It was submitted on behalf of the Defendants that it was not because the phone number which the First Claimant and First Defendant agreed would be used by the First Claimant was 07956. The submission on behalf of the First Claimant was more complex. The submission was that the legal effect of the agreement made in August 2004 was that the First Defendant ceded control and use of the account number with T-Mobile to which number 07956 was attached. That was because the agreement concerning that number could only take effect through the medium of the account to which that number was attached.[29]The First Claimant and the First Defendant agreed that the First Claimant would keep mobile number 07956 (which had originally been registered by T-Mobile in his name) and would pay the bills for that phone. The First Defendant had no authority to act on behalf of T-Mobile and, pursuant to clause 9 of T-Mobile’s terms and conditions, could not assign such rights as it had with T-Moble. What then was First Defendant agreeing to do ? There is no evidence as to what either the First Claimant or Second Claimant subjectively intended and in any event the effect of their agreement must be assessed objectively. In my judgment the First Defendant agreed that, as between the First Claimant and the Defendants, the First Claimant would have exclusive use of number 07956 in return for paying for that number. Since that number existed as an adjunct to the account in the name of the Second Defendant and debts arose under that account it must follow that the Second Defendant in effect agreed to give up or cede that account to the First Claimant. On an objective basis the First Defendant cannot have intended to have had any further involvement in the account to which number 07956 was attached after August 2004.[30]For these reasons the request in the letter dated 28 March 2006 (which was headed with the number of the account in the name of the Second Defendant) to suspend number 07985 and divert calls to that number was also a breach of that agreement because the effect of that agreement was that the Defendants had agreed to cede control and use of that account to the First Claimant. (ii). Interference with business[31]Since the oral agreement of August 2004 was not made with the Second Claimant the Defendants are not liable to the Second Claimant in contract. It was submitted, however, that the Defendants were liable to the Second Claimant in tort in that they unlawfully interfered with the business of the Second Claimant. The case of the Second Claimant was that in writing the letter dated 28 March 2006 the Defendants intended to injure the business of the Second Claimant by suspending and diverting numbers 07956 and 07985 which they knew to be mobile numbers used by the Second Claimant. Those were unlawful means because they involved a breach of the agreement with the First Claimant.[32]No detailed submissions on the extent of the tort of unlawfully interfering with business, and in particular on the question whether a breach of a contract to which the alleged victim of the tort was not party was capable of amounting to unlawful means, were made. Counsel for the Defendants accepted that the tort existed but submitted that it had not been committed by the Defendants because they had no intention to injure the Second Claimant and because they had acted lawfully throughout. Thus the allegation as to liability in tort raised an issue of fact and an issue of law.

Intention to injure

[33]The First Defendant gave evidence that the reason he wrote the letter dated 28 March 2006 was that he was very concerned that the First Claimant was giving instructions to T-Mobile in relation to the telephone numbers in the name of the Second Defendant. In cross-examination he said that he was concerned that something fraudulent was going on. The case of the Second Claimant was that the Defendants took advantage of the fact that mobile numbers 07956 and 07985 were registered in the name of the Second Defendant to pursue their feud with the First Claimant and to damage the business of the Second Claimant.[34]It was submitted that when the First Defendant was informed on 27 March that number 07985 was on an account in the name of the Second Defendant he was aware that that number was used in the Second Claimant’s business. This submission was based upon the following circumstances; that the First Defendant had taken photographs of the advertising used by the Second Claimant on banners and on vehicles, that he must have studied those photographs because he had taken advice as to whether to commence an action for passing off based upon the colour of the advertising material and that he said that he drove past sites of the Second Claimant once a fortnight. The First Defendant said that the name and colour on the advertising material registered with him but nothing else.[35]It is more probable than not that when told of number 07985 by T Mobile the First Defendant was aware that that was the mobile number used by the Second Claimant. That is because it was clearly displayed on the photographs of the Second Claimant’s advertising material which the First Defendant had taken and in which he was clearly interested. I do not accept his evidence that the mobile number did not register with him. I therefore find that in March 2006 he was aware that mobile number 07985 was used by the Second Defendant.[36]It follows that by instructing T-Mobile to suspend numbers 07956 and 07985 it must have been obvious to the First Defendant that his actions would damage the business of the Second Claimant. He knew that the First Claimant was likely to have been using number 07956 in connection with the business of the Second Claimant and that 07985 was the mobile number advertised by the Second Claimant. I infer that the First Defendant, by his letter dated 28 March 2006 to T-Mobile, must have intended to injure the Second Claimant.[37]I am not able to accept the First Defendant’s evidence that he was very concerned that the First Claimant was giving instructions to T-Mobile in relation to the telephone numbers in the name of the Second Defendant or that there was something fraudulent was going on. In circumstances where the Second Defendant had ceased trading in June 2004, where neither the First nor Second Defendants had used number 07956 since August 2004 and where they had permitted the First Claimant to use that number since August 2004 the First Defendant’s concern as to possible misuse of the number in March 2006 is, at the very least, improbable. Moreover, he was prepared to allow his solicitors to make allegations which he must have appreciated were untrue. Thus on 30 March 2006 his solicitors said in a letter to the Claimants’ solicitors that both numbers were taken unlawfully by the First Claimant when he ceased his association with the Second Defendant.

Unlawful means

[38]The Second Claimant’s case is that the means used to harm the Second Claimant were unlawful because the instructions contained in the letter dated 28 March 2006 were in breach of the agreement made in August 2004 between the First Claimant and the Defendants.[39]Counsel for the Defendants did not submit that the breach of an agreement between the First Claimant and the Defendants (if proved) could not amount to unlawful means for the purposes of this tort. Instead, I was referred to Clerk and Lindsell on Torts 19th.ed at paras.25-111 to 25-114 where there is a discussion of this issue. The editors there conclude, following the decision in Rookes v Barnard [1964] AC 1129, that a breach of contract must be regarded as unlawful means, notwithstanding the effect of such a conclusion on privity of contract (see in particular para.25-112). I agree with that conclusion and therefore hold that a breach of contract can amount to unlawful means for the purposes of the tort of interference with business by unlawful means.[40]It follows that the Defendants are liable to the Second Claimant for the tort of interfering with its business by unlawful means. (iii). Procuring a breach of contract[41]The Claimants also submitted that there was a contract between them and T-Mobile and that the Defendants’ letter dated 28 March procured a breach of that contract. The Defendants (and T-Mobile) submitted that there was no relevant contract between the Claimants and T-Mobile. The account to which, on 28 March 2006, the numbers 07956 and 07985 were attached evidenced a contract between the Second Defendant and T-Mobile. In any event, if there was a contract between the Claimants and T-Mobile the Defendants had no knowledge of such contract and accordingly could not be liable for the tort of procuring a breach of contract.[42]I can deal with this issue very shortly. The account in question with T-Mobile remained at all material times in the name of the Second Defendant. The name of the account holder was not changed to the First Claimant in October 2004 and thereafter the bills which the First Claimant paid must have continued to show the Second Defendant as the account holder. In July 2005 when an upgrade was issued the name of the account holder was not changed to the First or Second Claimants. The account holder remained the Second Defendant and the bills paid by the First or Second Claimants must have continued to show the Second Defendant as the account holder. The First Claimant may subjectively have considered that he had made an agreement with T-Mobile on his own behalf or on behalf of the Second Claimant in July 2005 but his subjective views cannot determine this question. The First Claimant was able to give instructions with regard to the account because, as Elaine Gallacher said in her e-mail dated 19 April 2006, he was regarded as “the main contact which allowed him full authority on this account.” In so far as a new contract came into existence in July 2005 the First Claimant had ostensible authority to act on behalf of the Second Defendant. Although he had ceased to be a director in April 2005 the Second Defendant had not informed T-Mobile of that. The First Claimant was able to use mobile number 07956, not because T-Mobile had agreed that he could do so, but because the Defendants permitted him to do so. Had the Second Defendant been struck off the register by July 2005 and so ceased to exist a different analysis would probably be required but the Second Defendant remained in existence at all material times.[43]But even if, contrary to my finding, a contract was made between the Claimants and T-Mobile in July 2005 there is no evidence that the Defendants had any knowledge of that contract and so they cannot, in my judgment, be liable for the tort of procuring a breach of contract.

Conclusion

[44]The First and Second Defendants are liable to the First Claimant for breach of an oral agreement made in August 2004. The First and Second Defendants are liable to the Second Claimant for the tort of interference with business by unlawful means. I shall ask Counsel to agree the terms of an order giving effect to this judgment.