Broadnet Ltd v Director of Telecommunications Regulation

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 13 April 2000
• Neutral Citation: [2000] IEHC 46
• Court: High Court
• Docket Number: [2000 No. 75 J.R.]
• Date: 13 April 2000

BROADNET IRELAND LTD v. DIRECTOR OF TELECOMMUNICATIONS REGULATION & EIRCOM PLC

JUDICIAL REVIEW

BETWEEN

BROADNET IRELAND LIMITED

APPLICANT

AND

OFFICE OF THE DIRECTOR OF TELECOMMUNICATIONS REGULATION

RESPONDENT

AND BY ORDER

EIRCOM PLC

RESPONDENT

AND

ESAT TELECOMMUNICATIONS LIMITED, PRINCES HOLDINGS LIMITED, AND FORMUS COMMUNICATIONS LIMITED

NOTICE PARTIES

[2000] IEHC 46

No. 75 JR /2000

THE HIGH COURT

Synopsis

Administrative Law

Judicial review; security for costs; undertaking as to damages; applicant participated unsuccessfully in tender process for the award of certain licences; respondent decided to refuse to grant applicant a licence; High Court granted leave to applicant to apply for judicial review of respondent's decision; respondents and notice parties seeking security for costs against applicant; applicant not in a position to meet orders for costs; whether any special circumstance in existence that would allow Court to exercise its discretion against awarding security; whether fact that Director defending the proceedings meant other parties should not be granted security for costs; respondents and notice parties seeking undertaking as to damages; whether respondents and notice parties will incur loss and damage caused by delay in the issuing of the licences; applicant did not seek injunction or stay; whether jurisdiction to require undertaking as to damages confined to situation in which interim injunction or stay granted; analogy between conditioning grant or continuance of leave to apply for judicial review and the Court's discretionary power to grant interlocutory injunction in private litigation; test for whether or not to exercise discretion to require undertaking as to damages; whether existence of this judicial review application has, in substance, the same effect as an interlocutory injunction; whether balance of justice in favour of requiring undertaking; whether any factors militate against requiring undertaking; whether fortified undertaking should be required; s.390, Companies Act, 1963; O.29, r.1 and O.84, r.20, Rules of the Superior Courts.

Held: Security for costs awarded against applicant in respect of each respondent and notice party; in deciding whether to require undertaking as to damages test is whether it is necessary in interests of justice or whether necessary to mitigate injustice to parties directly affected by existence of the pending application; continuance of leave conditional on applicant giving fortified undertaking as to damages to each party directly affected by the proceedings.

Broadnet Ireland Ltd v. Office of the Director of Telecommunications Regulation - High Court: Laffoy J. - 13/04/2000 -

- [2000] 3 IR 281 - [2000] 2 ILRM 241

The applicant had entered a tendering process for the award of a broadband licence. The applicant was ultimately unsuccessful in its bid to obtain a licence. The applicant issued proceedings seeking to have the decision of the respondent to refuse it a licence quashed. The applicant claimed that the tendering process had been evaluated in a biased manner so as to give Eircom, who was awarded a licence, a distinct advantage. In this motion both the respondent and notice parties, who were the successful bidders, sought orders for security of costs and undertakings as to damages in respect of the proceedings. Laffoy J held that further prosecution of the proceedings be stayed until such time as the applicant furnish both undertakings as to damages and security for costs to the respondent and the notice parties.

Citations:

COMPANIES ACTS 1963 - 1990

POSTAL & TELECOMMUNICATIONS ACT 1983 S111(10)(c)

EUROPEAN COMMUNITIES (TELECOMMUNICATIONS LICENCES) REGS 1998 SI 96/1998

POSTAL & TELECOMMUNICATIONS ACT 1983 S111(10)(g)

EEC DIR 97/13

EUROPEAN COMMUNITIES (TELECOMMUNICATIONS LICENCES) (AMDT) REGS 2000 SI 70/2000

RSC O.84 r20(6)

COMPANIES ACT 1963 S390

RSC O.29 r1

LISMORE HOMES LTD V BANK OF IRELAND FINANCE LTD UNREP MCCRACKEN 24.3.2000

RSC O.84 r22

PEPPARD & CO LTD V BOGOFF 1962 IR 80

RSC O.84 r20(7)

RSC O.53 r3(9)

RSC O.84 r20(7)(a)

RSC O.84 r20(7)(b)

RSC O.84 r22(2)

CLEARBROOK PROPERTY HOLDINGS LTD V VERRIER 1974 1 WLR 243

TIVERTON ESTATES LTD V WEARWELL LTD 1975 1 CH 146

BLUE TOWN INVESTMENT V HIGGS & HILL PLC 1990 2 AER 897

OXY ELECTRIC LTD V ZAINUDDIN 1990 2 AER 902

WESTMAN HOLDINGS LTD V MCCORMACK 1992 1 IR 151

COMHLUCHT PAIPEAR RIOMHAIREACHTA TEO V UDARAS NA GAELTACHTA 1990 1 IR 320

R V POLLUTION INSPECTORATE EX-PARTE GREENPEACE 1994 4 AER 321

HOGAN & MORGAN ADMINISTRATIVE LAW IN IRELAND 3ED 711

AMERICAN CYANAMID CO V ETHICON LTD 1975 AC 397

R V MONOPOLIES COMMISSION 1986 2 AER 257

BEAN ON INJUNCTIONS 7ED 29

HARMAN PICTURES NV V OSBORNE 1967 1 WLR 723

1 Ms. Justice Laffoy delivered on 13th April, 2000

THE FACTUAL BACKGROUND TO JUDICIAL REVIEW PROCEEDINGS

2 The Applicant (Broadnet) was incorporated under the Companies Acts, 1963–1990 as a company limited by shares on 4th May, 1999. Its authorised share capital is £10m divided into ten million ordinary shares of £1 each, of which two shares have been issued.

3 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.

4 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.

5 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:-

"If it is an auction [Eircom] in greater uncertainty a large bid will be necessary to attempt to guarantee a licence for [Eircom]. Our model leaves [Eircom] in a better position to get a licence by virtue of their infrastructure and credibility".

6 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.

7 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...