On 4 February 2025, the Court of Appeal handed down its decision in EE Limited v Virgin Mobile Telecoms Limited [2025] EWCA Civ 70, dismissing EE’s appeal against the decision of Mrs Justice Joanna Smith giving summary judgment dismissing EE’s claim on the basis that it fell within an exclusion clause.
Adam Zellick KC and Gillian Hughes appeared for the successful respondent / defendant, Virgin Mobile Telecoms Limited, instructed by Baker & McKenzie LLP.
The case concerned EE’s provision of 2G to 4G (but not 5G) mobile network services to Virgin Mobile. EE’s claim alleged that Virgin Mobile had breached an obligation of exclusivity owed under the contract between the parties (by migrating non-5G customers to services on a different network where only 5G customers could be migrated). EE sought substantial damages in alleged lost charges which it claimed Virgin Mobile would have been obliged to pay under the contract but for any breach. Virgin Mobile denied this claim in full, including on the grounds that there had been no breach of the exclusivity obligation at all and only 5G customers had ever been migrated which was agreed to be entirely permissible; but that, in any event, the claim was precluded by an exclusion clause providing that neither party could claim for “anticipated profits”.
The issue on appeal was whether the Judge had been correct to find that the terms of the exclusion clause applied to EE’s claim. The Court of Appeal held by a majority (Coulson and Zacaroli LJJ, Phillips LJ dissenting) that the Judge’s conclusion was correct and EE’s appeal was dismissed.
Zacaroli LJ gave the leading judgment with which Coulson LJ agreed in a brief judgment developing his further reasons. In the main judgment, Zacaroli LJ identified the core issue as being whether a claim for “loss of anticipated profits” meant, on the true construction of the exclusion clause, something other than the loss that consists in the value to EE of the contractual performance which would have been provided by Virgin Mobile but for the breach of contract (i.e. EE’s “expectation loss”) (at [42]). He rejected EE’s arguments on why this was not the case and considered Virgin Mobile’s construction to be correct, reasoning that: (i) every exclusion of liability for loss of profits fell to be construed on its terms and in context and little assistance could be gained from existing case law ([53]-[67]); (ii) it was wrong to focus too narrowly on the particular breach in issue in this case ([52] and [69]); (iii) the word “anticipated” did not change the meaning of the clause ([72]); (iv) Virgin Mobile’s construction was further supported by other wording in the clause and the separate exclusion clause for indirect losses ([73] and [84]-[87]); and (v) this conclusion was not to be rejected as uncommercial in circumstances where it was part of a carefully drafted agreement allocating risk between the parties and the parties were still left with valuable contractual rights enforceable by specific performance or injunction or damages based on wasted expenditure (at [99]).
The judgment is available here.
For reference to the earlier decision at first instance, in which Philip Ahlquist was also part of the counsel team together with Adam and Gillian, please see here.
