The High Court recently granted summary judgment in a dispute between EE and Virgin Mobile.  The judge applied established case law, but the ruling shows the courts' approach to interpreting exclusion clauses.

The court was asked to consider an exclusion clause in a supply agreement, and in particular to decide if EE's claim was a claim for "anticipated profits" so that it was excluded by virtue of that clause. EE opposed the application, saying that it raised questions that could only be dealt with at trial.

EE argued that Virgin Mobile had breached an exclusivity clause by migrating or adding non-5G customers onto other networks. EE claimed almost £25 million in damages, saying that it had been deprived of revenue that it would otherwise have earned. Virgin Mobile denied that it had breached the agreement, and in addition, claimed that the exclusion clause meant that neither party could claim for "anticipated profits".  Virgin Mobile brought a claim to strike out the claim. The High Court granted summary judgment for Virgin Mobile.  

It said that EE had suffered the diversion away of customers to whom it would otherwise have been providing a service for a commensurate cost. In fact, no service was provided and so no invoices could be rendered under the agreement and no charges levied. EE had not provided services that had cost it more; on the contrary, it had not provided any services at all. The judge said that the true nature of the claim, and whether it would fall within a potentially relevant exclusion clause, was unsurprisingly a case sensitive issue. It depended on understanding how the claim is advanced, its true nature and whether it is genuinely concerned with a loss of profit (as opposed to, say, wasted expenditure or a diminution in price).  The judge said that there was no doubt that the claim in this case was one for loss of profits, contrary to EE's arguments.

The judge also rejected EE's argument that the term "anticipated profits" should be construed narrowly. The judge said that the exclusion clause applied equally to damages claims for anticipated profits and anticipated savings made by both parties. There was no justification for construing, or re-writing the clause in a manner which limited the basic exclusion in respect of anticipated profits to indirect and consequential loss.

The judge was satisfied that any liability on the part of Virgin Mobile for damages for the unlawful diversion of its customers to alternative networks fell within the terms of the exclusion. The clause was drafted in a clear and unambiguous way. It was a tailor-made, stand alone, clause apparently intended to have a wide reach. It was plainly part of the risk allocation exercise between two sophisticated parties. It was not qualified by its surrounding provisions and there was nothing surprising about its positioning or context.

So, in short, don't underestimate the importance of exclusions and the specificity that you use!

Case: EE Limited v Virgin Mobile Telecoms Limited, 31 July 2023