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All England Official Transcripts (1997-2008)
I-Way Ltd v World Online Telecom UK Ltd (formerly Localtel Ltd)
Practice - Summary judgment - Entitlement to summary judgment - Defendant and claimant
having entered into contract - Contract containing clause stating contract might only be varied in
writing - Defendant relying on clause to make counter-claim - Defendant applying for summary
judgment on counter-claim - Judge refusing to grant summary judgment - hether judge correct
[2002] EWCA Civ !" (Transcript: Sit! "ernal)
COU#T O$ A%%EAL (CI&IL 'I&I(IO))
(C*IE+A)), (E'LE- L.., C*#LE( .
/ +A#C* 2002
/ +A#C* 2002
(C*IE+A)) L.0 1!] I 2ill a34 Lord .53tice (edley to deliver t6e fir3t 75d8ment9
# $asir f%r t!e Appellant
# &reedan f%r t!e 'esp%ndent
(in)laters * Alliance+ E,ers!eds- .anc!ester
(E'LE- L.
12] T!is is an interl%c/t%r0 appeal against t!e ref/sal %f .itting 1- sitting in .anc!ester %n 11 1/l0
2001- t% gi,e s/ar0 2/dgent f%r t!e defendants- 3%rld Online- f%r s%et!ing %,er
41-200-000 %n t!eir c%/nterclai5 6t is als% t!e claiant7s- 6-3a07s- cr%ss-appeal against t!e
2/dge7s stri)ing %/t %f t!eir clais f%r isrepresentati%n and negligent isstateent 8it!%/t at t!e
sae tie c%nsidering t!e aendents 90 8!ic! t!e0 pr%p%sed t% c/re t!e defects5 T!e f/rt!er
appeal iss/e a9%/t t!e 2/dge7s all%cati%n %f c%sts 9ef%re !i is c%ntingent %n t!e %/tc%e %f t!e
appeal and t!e cr%ss-appeal5
1"] 6-3a0 is an 6nternet ser,ice pr%,ider5 6n April 1999 it reac!ed a 8ritten agreeent 8it! (%caltel
t% pr%,ide a !ard8are platf%r t% aff%rd 6nternet access t% (%acaltel7s c/st%ers in ret/rn f%r 20
: %f t!e re9ate fr% t!e telep!%ne %perat%r- t!e 80 : 9alance 9eing passed %n t% t!e present
Appellant- 3%rld Online- 8!% t%%) %,er (%caltel and 9ecae c%ntract/all0 s/9stit/ted f%r it5 6-3a0
c%ntend t!at as earl0 as .a0 1999 it 8as realised t!at additi%nal e;/ipent 8as g%ing t% 9e
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necessar0 at a c%st 8!ic! 8as n%t realistic in t!e a9sence %f reneg%tiati%n %f t!e re9ate split5
T!eir case is t!at an %ral agreeent 8as reac!ed t% gi,e t!e <0 : instead %f 20 :5 T!is is
denied 90 3%rld Online5 T!e0 sa0 t!at t!eir s/9se;/ent parting 8it! a f/rt!er 10 : %f t!eir s!are
8as a tep%rar0 and grat/it%/s gest/re and n% %re5 T!e0 als% den0 6-3a07s allegati%n t!at t!e0
!a,e s/9se;/entl0 /sed t!eir s/peri%r p%8er- and /sed it acti%na9l0- t% sip!%n %ff t!e re,en/es it
8as intended t!at !ad 6-3a0 s!%/ld earn fr% t!e c%ntract5
1] 6-8a07s acti%n as claiants against 3%rld Online incl/ded a clai f%r daages f%r
isrepresentati%n %r negligent isstateent %f t!e n/9er %f li)el0 /sers %f t!e ser,ice and %f
t!e ties %f da0 8!en t!e0 8ere li)el0 t% /se it5 T!e eas/re %f daage- !%8e,er- 8as accepted
as 9eing inappr%priatel0 pleaded5 T!e claiants- rec%gnising t!is- !ad at a late stage 9ef%re t!e
!earing p/t f%r8ard a draft aendent5 On 11 1/l0 .itting 1 f%/nd !iself 8it!%/t s/fficient tie
t% c%nsider it+ s% !e str/c) %/t t!e aterial part %f t!e pleading- gi,ing li9ert0 t% aend s% as t%
rene8 t!e clais 8it! a tena9le pra0er f%r daages5 Ot!er eleents 8!ic! !e str/c) %/t !a,e
n%t 9een cr%ss-appealed5
1:] 6t is n%8 s/9itted %n t!e cr%ss-appeal t!at t!e 2/dge %/g!t t% !a,e ad2%/rned t!e applicati%n
t% stri)e %/t t!e isstateent and isrepresentati%n clais s% t!at !e c%/ld c%nsider it in t!e
c%nte=t %f t!e claiant7s applicati%n t% aend5 $%t!ing c%ncrete- !%8e,er- !as 9een l%st 90 !is
pr%ceeding as !e did5 .r &reedan >#- 8!% !as appeared f%r t!e claiants- fears t!at an iss/e
est%ppel a0 n%8 9e pleaded in 9ar %f !is pr%p%sed aendent - 9/t it sees t% e t!at 90 t!e
ters %f !is decisi%n t!e 2/dge !as precl/ded t!is5 An0 %92ecti%n t% t!e s/staina9ilit0 %f t!e
aendent is n%t f%r /s 9/t- if and %nl0 if it is raised- f%r t!e 2/dge %f t!e >/een7s "enc!5 T!e
%nl0 apprecia9le aterialit0 %f t!e iss/e t!eref%re is as t% c%sts- since it 8as %n t!e 9asis %f !is
decisi%n t% stri)e %/t t!at t!e 2/dge- in effect- declared a dra8 %n c%sts5 6 d% n%t t!in) t!e
'esp%ndents can reas%n 9ac)8ards fr% t!at+ n%r d% 6 t!in) t!e attept t% d% s% is s%/nd5 .%re
8as str/c) %/t t!an 8as capa9le %f 9eing c/red 90 aendent- and in an0 e,ent t!e %rdinar0
practice 8%/ld 9e t!at a part0 8!ic! can %nl0 sa,e its pleading 90 aendent 9ears t!e c%sts %f
d%ing s%5 6 d% n%t t!in) t!e cr%ss-appeal can s/cceed5 $e,ert!eless- it 8ill 9e necessar0 t% ret/rn
t% it and t!e disp%sal %f it in relati%n t% t!e 2/dge7s c%sts %rder5
1;] T!is lea,es t!e real and diffic/lt iss/e %n 8!ic! 'i= (1 ga,e perissi%n t% appeal5 T!e
pleaded %ral agreeent t% alter t!e split faced t!e a2%r %9stacle t!at cl 2151 %f t!e c%ntract
pr%,ided:
?5 5 5 n% additi%n- aendent %r %dificati%n %f t!is Agreeent s!all 9e effecti,e /nless it is in 8riting and
signed 90 and %n 9e!alf %f 9%t! parties5?
1<] T!e %dificati%n relied %n 90 6-3a0 8as p/rel0 %ral and %r 90 c%nd/ct5 .itting 1 ne,ert!eless
!eld t!at t!e iss/e deser,ed t% g% t% a f/ll trial5 3!at !e said 8as t!is:
?6t is plainl0 arg/a9le and- if t!e claiants are rig!t in t!eir asserti%ns a9%/t n%n-receipt %f t!at letter- an
arg/ent t!at !as a real pr%spect %f s/ccess- t!at t!e agreeent 8as t!/s ,aried5 6f it 8as %rall0 ,aried
and acted /p%n- as it sees- at least- arg/a9le as it 8as- t!en 6 a satisfied t!ere is a real pr%spect %f
t!e claiants esta9lis!ing t!at s/c! a ,ariati%n 8as effecti,e- n%t8it!standing t!e sec%nd li9 %f cla/se
21515 5 5
T!e reas%n is straig!t f%r8ard+ t!e parties are free t% c%nd/ct t!esel,es as t!e0 8is!5 6f t!e0 entered
int% an agreeent t!at in,%l,ed t!e redistri9/ti%n %f t!e inc%e fr% Telec% c%panies- t!en t!e0 8ere
free t% d% s%- %rall0 %r 90 c%nd/ct- f%r t!at atter- if t!e0 c!%se5 T!at agreeent can eit!er 9e treated as
an %ral agreeent ,ar0ing t!e %riginal agreeent- %r as a free-standing c%ntract- and 6 )n%8 n%t!ing in
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case la8 t!at pre,ents s/c! an e,ent !a,ing effect5
As regards t!e f/rt!er arg/ent t!at t!ere 8%/ld !a,e 9een n% c%nsiderati%n f%r t!at ,ariati%n- 6 need
%nl0 refer t% !illiams v "rophy "rothers [1991A 1 >/een7s "enc!- 1BC t% 1DA f%r it t% 9e anifest t!at
t!ere is an arg/ent 8it! a real pr%spect %f s/ccess %n t!at iss/e5?
1/] T!e reference t% n%n-receipt %f a letter c%ncerns a letter 8!ic! t!e claiants sent setting %/t
8!at t!e0 n%8 rel0 %n as t!e ,ariati%n- and an iediate resp%nse pr%d/ced in t!e acti%n 90 t!e
defendants den0ing an0 s/c! agreeent 8!ic! 8as- acc%rding t% t!e claiants- ne,er recei,ed
90 t!e5 6t is n%t a ;/esti%n t!at falls t% 9e f/rt!er addressed !ere5 6n passing- !%8e,er- it is
p%ssi9le t% accept .r $asir7s s/9issi%n t!at 8!ate,er else it a0 !a,e 9een t!e agreeent
relied %n 90 t!e 'esp%ndent cann%t !a,e 9een a free-standing %ne %perating 90 rescissi%n5
#%ncept/all0- !%8e,er - and t!is is 8!at t!e 2/dge 6 t!in) 8as dri,ing at - a separate c%ntract t%
8it!!%ld a f/rt!er 10 : %f t!e re9ate is n%t ip%ssi9le- and t!e criti;/e 8!ic! .r $asir ad,ances
%n t!e Appellant7s 9e!alf %f t!e p!rase ?%r as a free-standing c%ntract? is acc%rdingl0- in 0 ,ie8-
isdirected5
1=] 'i= (1- gi,ing 3%rld Online perissi%n t% appeal- 8r%te:
?T!e ;/esti%n is %ne %f la8- a ,er0 s!%rt ;/esti%n %f c%nstr/cti%n 8%rt! %,er 41-000-000- and t!ere is a
reas%na9le pr%spect %f s/ccess5 T!e 2/dge7s c%ncl/si%n is a failiar resp%nse t% t!e pr%9le- 9/t
a/t!%rit0 is scarce- and n%ne 8as cited5?
1!0] .r #%lin $asir- 3%rld Online7s s%licit%rEad,%cate- t% 8!%se s)elet%n arg/ent and %ral
s/9issi%ns 6 8%/ld li)e f%r 0 part t% pa0 tri9/te- !as spelt %/t gr%/nds %f principle f%r gi,ing
literal effect t% a cla/se s/c! as t!e present cl 21515 Ce !as s%/g!t als% t% rel0 %n a/t!%rit0 8!ic!
depends /p%n t!e %perati%n %f t!e Stat/te %f &ra/ds5 6 d%/9t 8!et!er an0 s/c! a/t!%rit0 c%/ld
aff%rd a tr/e anal%g05 6n Stat/te %f &ra/ds cases- t!e c%/rt 8ill 9e c%ncerned 8it! t!e la8 8!ic!
Parliaent !as ade f%r e,er0%ne5 6n a case li)e t!e present t!e parties !a,e ade t!eir %8n
la8 90 c%ntracting- and can in principle /na)e %r rea)e it5 A%ng %t!er t!ings- far fr%
fettering t!eir freed% %f c%ntract- .r $asir can legitiatel0 sa0 t!at a precl/si,e cla/se li)e cl
2151 gi,es effect t% t!at freed%5 "/t as !e als% rec%gnises in !is arg/ent n% fir a/t!%rit0 in
t!is c%/ntr0 cl%ses t!e d%%r /p%n fact-9ased arg/ents t% t!e c%ntrar05 One reas%n a0 9e t!at
t!e principle itself is neit!er siple n%r /nitar05 A c%nsens/al %ral ,ariati%n- after all- is als% an
e=ercise %f freed% %f c%ntract5 6n !is s)elet%n arg/ent .r $asir !as relied %n t!e Fnited States
Fnif%r #%ercial #%de- s 2-209(2)- 8!ic! pr%,ides:
?A signed agreeent 8!ic! e=cl/des %dificati%n %r rescissi%n e=cept 90 signed 8riting cann%t
%t!er8ise 9e %dified %r rescinded5?
1!!] T!e pre,i%/s p%siti%n at c%%n la8 in t!e Fnited States- 8e are t%ld- did all%8 t!e inf%ral
%,erriding %f a 8ritten cla/se e=cl/ding an0 /n8ritten %dificati%n5 Alt!%/g! t!is appears in its
tie t% !a,e 9een an Aerican and n%t an Englis! d%ctrine- it d%es t% 0 ind ill/strate 8ell
en%/g!- in t!e a9sence %f decisi,e Englis! a/t!%rit0- t!at t!ere is r%% f%r de9ate and %,eent
%n t!e ;/esti%n5 6ndeed- .r &reedan ># in !is s)elet%n arg/ent- !as 9een a9le t% depl%0
9%t! te=t9%%) and 2/dicial s/pp%rt f%r a ar)edl0 %re fle=i9le appr%ac! t!an t!at ta)en 90
Fnited States c%de5
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1!2] 6n 0 2/dgent it 8as a s/fficient 2/stificati%n %f t!e ref/sal %f .itting 1 t% gi,e s/ar0
2/dgent %n t!e c%/nterclai t!at t!e la8 %n t!e t%pic is n%t settled5 .r $asir7s in,itati%n t% t!is
c%/rt %n 8!at is an interl%c/t%r0 appeal t% declare t!e la8 %f England and 3ales t% 9e t!e sae
as t!at %f t!e Fnited States is an essa0 in %ptiis 8!ic! is d%%ed- 6 a afraid- t%
disapp%intent5 6t is %f n% assistance t% !i- 9e0%nd t!at p%int- t% s!%8 /s t!e inc%ncl/si,e
c%rresp%ndence a9%/t t!e re,isi%n %f t!e 80E20 split5 T!e Appellant sa0s t!is 8as neit!er
e,idence %f a ,ariati%n- n%r did it a%/nt t% an /ne;/i,%cal c%/rse %f c%nd/ct5 T!e 'esp%ndent
sa0s t!at it 8as part- t!%/g! n%t necessaril0 t!e 8!%le- %f 9%t! t!ings5 T!ese are iss/es 8!ic!
plainl0 !a,e t% 9e tried %/t5 T!e0 cann%t 9e s!%rt-circ/ited 90 .r $asir7s s/9issi%n- p%8erf/l
t!%/g! it is- t!at t% c%/ntenance an0 ,ariati%n 90 par%le %r 90 c%nd/ct is t% render an0 cla/se li)e
cl 2151 a dead letter5
1!"] T!e reas%ns g% f/rt!er t!an t!is5 6-3a0 !a,e pleaded t!at 3%rld Online is est%pped fr%
rel0ing %n t!e pr%!i9it%r0 cla/se5 $% d%/9t 9eca/se !e did n%t need t% d% s% t!e 2/dge did n%t
deal 8it! t!at s/9issi%n5 "/t /nless 3%rld Online can s!%8 it t%% t% 9e an /ntena9le pleading it
aff%rds a separate gr%/nd f%r letting t!eir defence t% t!e c%/nterclai g% t% trial5 6t a0 9e t!at it
s!%/ld n%t !a,e 9een pleaded in t!e clai- since %ne cann%t s/e %n an est%ppel+ 9/t it 8as
certainl0 a,aila9le in ans8er t% 3%rld Online7s c%/nterclai5 Alt!%/g! .r $asir n%8 arg/es t!at
t!e e,idence cann%t s/stain an est%ppel 90 c%nd/ct- t!e fact t!at in t!eir 8ritten arg/ent in
s/pp%rt %f s/ar0 2/dgent 3%rld Online !ad t% rel0 %n a c%nsidera9le 9%d0 %f c%ntested
e,idence again de%nstrates t!e /ns/ita9ilit0 %f t!e iss/e f%r s/ar0 disp%sal5 "%t! iss/es -
c%nstr/cti%n and est%ppel - are capa9le in %ne eas/re %r an%t!er %f 9eing fact-sensiti,e- t!e
f%rer in relati%n at least t% t!e fact/al atri= %f t!e c%ntract- t!e latter in relati%n t% transacti%n
and reliance5 6 d% n%t accept .r $asir7s fall-9ac) s/9issi%n t!at %n t!e e,idence 6-3a0 sipl0
cann%t esta9lis! eit!er a 8ritten ,ariati%n %r an est%ppel 90 c%n,enti%n5 T!e e,idence is
c%ntested+ its ipact is de9atea9le5
1!] One f/rt!er reas%n f%r /p!%lding .itting 17s decisi%n is t!is5 Against t!e c%/nterclai %n
8!ic! 2/dgent is s%/g!t- t!e claiants !a,e pleaded a set%ff %f t!e /nli;/idated daages
claied 90 t!e5 One 8%/ld 8ant t% 9e c%nfident t!at a)ing t!e pa0 8ell %,er 41-000-000 at a
tie 8!en t!eir cr%ss-entitleent t% daages !ad n%t 9een tried %r ascertained 8as n%t g%ing t%
9e financiall0 r/in%/s t% t!e5 &r% t!e (6 stress) relati,el0 little 8e )n%8 a9%/t t!e t8% parties- 6
d% n%t t!in) %ne c%/ld at present 9e c%nfident %f an0 s/c! t!ing5
1!:] 6t f%ll%8s in 0 2/dgent t!at 9%t! t!e appeal and t!e cr%ss-appeal fail5 .itting 1 in t!is
sit/ati%n %rdered t!e c%sts t% lie 8!ere t!e0 fell5 6 8%/ld accept 6-3a07s s/9issi%n t!at t!is 8as
(t% p/t it in 0 8%rds- n%t .r &reedan7s) %re nearl0 a 2/dgent %f S%l%%n t!an a tr/e
e=ercise %f discreti%n5 T!e s/9stantial %/tc%e 8as t!at 3%rld Online !ad failed in t!eir
ann%/nced attepts t% stifle t!e clai and t% carr0 %ff t!e c%/nterclai in a single s/ar0 9l%85
6-3a0 !a,e c%e %/t %f t!e fra0 tattered- it is tr/e- 9/t %t!er8ise intact- and 6 t!in) t!at t!e0
s!%/ld !a,e !ad %ne !alf %f t!eir c%sts 9ef%re t!e 2/dge5 T% t!at e=tent- 9/t t% t!at e=tent %nl0- 6
8%/ld all%8 t!e cr%ss-appeal in relati%n t% c%sts- 9/t disiss 9%t! it and t!e appeal in all %t!er
respects5
C*A#LE( .
1!;] 6 agree
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(C*IE+A)) L.
1!<] 6 als% agree 9%t! 8it! 0 (%rd7s c%ncl/si%n and !is reas%ning5 6 !a,e 9een ipressed 90 .r
$asir7s s/9issi%n t!at t!e p/rp%se %f a cla/se s/c! as cl 21 is n%t t% pre,ent t!e rec%gniti%n %f
%ral ,ariati%ns- 9/t rat!er- cas/al and /nf%/nded allegati%ns %f s/c! ,ariati%ns 9eing ade5 Cis
s/9issi%n t!at if in cases s/c! as t!e present 8e all%8 s%et!ing g%ing t% trial- precisel0 t!at is
all%8ed against 8!ic! t!e parties a0 9e regarded as !a,ing s%/g!t t% safeg/ard t!esel,es5 6
see a g%%d deal %f f%rce in t!at s/9issi%n+ 9/t f%r t!e reas%ns gi,en 90 0 (%rd t!is appeal
/st 9e disissed- sa,e t!at it 8ill 9e %rdered t!at 6-3a0 8ill !a,e %ne !alf %f t!eir c%sts 9el%8
paid 90 3%rld Online tele,isi%n5
#ppeal dismissed$ cross appeal allowed%