Discretion conferred by Oireachtas must be exercised fairly and reasonably

The Zockoll Group Ltd, Dyno-Rod and Phone Names Ltd (plaintiffs) v Telecom Eireann (defendant)Contract - Telecommunications - Franchising - Fairness of procedures - Right to vary existing subscription agreement - Whether a subscriber has a right to keep existing telephone number - Whether Telecom Eireann in abuse of a dominant position - Whether defendant engaged in brokering telephone numbers - Postal and Telecommunications Services Act 1983 - SI 177 of 1994, article 51.The High Court (before Mr Justice Kelly); judgment delivered 28 November 1997.In exercising the discretion it has in relation to the withdrawal of telephone numbers which have been allocated to a customer Telecom Eireann to alter the number of a subscriber may only be exercised if it can be shown that the subscriber is I breach of his contract or circumstances exist in which in the interest of some revision of the telecommunications service it is necessary to change the subscriber's telephone number. The High Court so held in allowing the claim of the plaintiffs saying that the plaintiffs were entitled to have their original numbers restored to them and further saying that their application for a further 270 numbers be accepted.Michael M. Collins SC, Paul Gallagher SC and Denis McDonald BL for the plaintiffs; James O'Reilly SC and Gerard Hogan SC for the defendant.Mr Justice Kelly said that each of the plaintiffs was a limited company with a registered office at Surrey in England and all of the plaintiffs had as their chairman one James Zockoll. The first plaintiff owns the trade marks "Dyno" and "Dyna". The second plaintiff, a wholly owned subsidiary of the Zockoll Group, has a licence in respect of these trade marks. The third plaintiff, another wholly owned subsidiary of the Zockoll group, licences to third parties telephone numbers leased by the Zockoll group from providers of telecommunications services. The defendant is a limited company set up pursuant to the provisions of the Postal and Telecommunications Services Act 1983 in order to provide a national telecommunications service within the state and between the state and places outside the state. The operations of the defendant are further regulated by the Telecommunications Scheme 1994 (SI No 177 of 1994).Mr Justice Kelly outlined the background to the case. He said that the case concerned a refinement to the concept of easily memorised freephone telephone numbers based on alpha-numeric numbering. He said that this innovation, already popular in the United States, enabled a number to be translated into a word on a keypad thereby enabling a telephone user to avail of a commercial service without having to memorise a number. The defendant is a service provider of, inter alia, freephone numbers with a 1800 prefix. These numbers are provided on request to subscribers either on a random basis or alternatively a "choice" number may be supplied for a higher price. This service is provided by the defendant on a first come, first served basis.In May 1995 a representative of the plaintiffs applied for and obtained eight "choice" freephone 1800 numbers to parallel their existing freephone 0800 numbers in the United Kingdom. The service duration of this agreement was indefinite. All eight numbers translated on the alpha-numeric system into particular words including "dyno-rod", "florist", "flowers" and "drains".On 6 November 1995 the first plaintiff received a letter from Ms Dorothy O'Byrne on behalf of the defendant purporting to withdraw and replace with alternatives the numbers already granted to the plaintiffs. Mr Justice Kelly reproduced this letter which was to take effect from 30 November 1995 and subsequent correspondence in full. The basis for the decision of the defendant, as communicated to the plaintiffs in the letter of 6 November, was that article 51 of the Telecommunications Scheme 1994 provided that the subscriber shall have no proprietary interest in any telephone number, freephone number or telephone name. Article 51 further provided that Telecom Eireann reserved the right for itself, as its absolute discretion, to alter the telephone number, freephone number, freephone number or telephone name of the subscriber.Subsequent to that letter telephone contact was established by Mr Zockoll with Ms O'Byrne. Mr Justice Kelly satisfied himself on the evidence that in the course of that conversation four reasons were given by Ms Byrne for the decision of the defendant. These were: firstly, operational reasons; secondly, it was stated that there was little use of the numbers; thirdly, it was stated that the numbers were useful vanity numbers which was an area the defendant itself was looking into; and, finally, the defendant believed that the plaintiffs were brokering the numbers.Legal action was threatened by the plaintiffs and an undertaking was eventually given that the numbers would not be withdrawn before 11 January 1996. The plaintiffs were further informed that any applications for further numbers would be dealt with in the usual manner. On 4 December 1995 the plaintiffs applied for a further 270 numbers and also requested an undertaking, in the event that the numbers were not allocated, that the numbers would be reserved exclusively pending the resolution of the legal dispute. The defendants responded on 5 December refusing to make any undertaking and they indicated that the application for the numbers would be dealt with "as soon as may be".The present proceedings were then commenced on 12 December 1995. Mr Justice Kelly noted that before the action commenced before him two of the original eight numbers were restored to the plaintiffs. This was done on the basis that the defendants accepted that the numbers which translated into the words "dyno-rod" and "drains" were numbers in respect of which the plaintiffs had a bona fide interest.The plaintiffs contended that the had the benefit of a contract in respect of all eight original numbers and that the reasons for the withdrawal of these numbers were not made out in fact or in law. In relation to the other 270 numbers the plaintiffs claimed that the defendant held itself out as operating on a first come, first served basis and therefore the plaintiffs were entitled to the numbers unless they were already allocated. The plaintiffs further contended that the defendant was in a dominant market position in the provision of these numbers and that withholding the numbers without objective justification constituted an abuse of that position. Mr Justice Kelly satisfied himself on the evidence that the decision arrived at by the defendants concerning the withdrawal of the original eight numbers was in fact arrived at for a single reason which might be legally justified. This was the belief that the defendants were engaged in brokering the telephone numbers. However, Mr Justice Kelly concluded that the plaintiff companies were at all times engaged in a bona fide franchising business which said conclusion could also have been reached by the defendant if it had properly and accurately assessed the situation. The inaccurate analysis of the relevant facts led to the defendant misunderstanding the nature of the perfectly legitimate business of the plaintiffs.Mr Justice Kelly further found that the defendant's decision was in part motivated by a desire to facilitate a third party with whom the defendant had a good commercial relationship. This third party, one Jim McCann, was the owner of an American company called 1800 flowers and was desirous of obtaining the telephone number in Ireland equivalent to that name which was already allocated to the plaintiffs. In addition the defendant mistakenly formed the view that Mr Zockoll had tried to sell the 1800 flowers number to Mr McCann.

The position in fact was that the plaintiffs were prepared to enter into a franchise agreement with Mr McCann's company in return for a fee. The actual right of use of the number, i.e., the numeric equivalent of "1800 Flowers" would be transferred from the plaintiffs to Mr McCann provided the service provider so consented. Had this been fully appreciated by the defendant Mr Justice Kelly found that the decision might not have been made and further there could be no legal justification for removing the numbers from the plaintiffs to Mr McCann provided the service provider so consented.Had this been fully appreciated by the defendant Mr Justice Kelly found that the decision might not have been made and further there could be no legal justification for removing the numbers from the plaintiffs simply because the defendant wished to give them to someone with whom it had formed a good commercial relationship.Mr Justice Kelly then considered the manner in which the defendant had exercised its powers. He found that the position of the defendant was not dissimilar to the position of the Voluntary Health Insurance Board and relied on the High Court case of Callinan v VHI (unreported, 22 April 1993), in holding that powers entrusted by the Oireachtas for the common good must be exercised fairly and reasonably. It followed therefore that the "absolute discretion" given to the defendant to alter the telephone numbers of subscribers may only be exercised if it can be shown that the subscriber is in breach of his contract or circumstances exist where in the interest of some revision of the telecommunications service it is necessary to change those numbers.While Mr Justice Kelly was not persuaded that public law principles apply to the commercial relationship between the plaintiffs and defendant he was satisfied that it was neither fair nor reasonable to serve notice of withdrawal on the plaintiffs without affording them an opportunity to explain their position in the light of the information the defendant had in its possession.In these circumstances Mr Justice Kelly held that the plaintiffs without affording them an opportunity to explain their position in the light of the information the defendant had in its possession.In these circumstances Mr Justice Kelly held that the plaintiffs were entitled to have the remaining six of their original eight numbers reinstated to them and he further found that there was not justification for the removal of service on the other two numbers.In respect of the remaining 270 numbers, he held that the defendant was under a statutory duty to allocate these numbers to the plaintiffs save and except where such numbers might already have been allocated to another party or where there are other good and objectively justifiable reasons for refusing allocation, e.g. where the number is an emergency number. As the plaintiffs were entitled to succeed in their action on the foregoing grounds, Mr Justice Kelly was of the view that it was not necessary to express an opinion on any of the arguments made before him on domestic competition law or European law.Solicitors: Beauchamps (Dublin) for the plaintiffs; Dr E. G. Hall (Dublin) for the defendant.