Zockoll Group Ltd v Mercury Communications Ltd

For a mandatory interlocutory injunction, the overriding consideration is which course carries the lower risk of injustice if the court is later shown to have been wrong. A high degree of assurance that the claimant will succeed is an important guideline, because positive orders may cause greater prejudice, but it is not an inflexible threshold. Relief may be granted without that assurance where refusal presents the greater risk. A contractual power to withdraw a specified telephone number may arguably engage section 3(2) of the Unfair Contract Terms Act 1977, even where reasonable notice is required. On the facts, however, restoration was refused and an expedited trial ordered.

Zockoll contracted with Mercury for 53 Callink telephone numbers, including 0500 354448, capable of being used as the phonename 0500 FLIGHTS. Clause 8.1 stated that Mercury could withdraw or change any number at its discretion on reasonable written notice and that Zockoll acquired no rights in it.

Mercury withdrew the number on short notice and assigned it to Manchester Flights after the Vice-Chancellor dismissed Zockoll’s application for an interlocutory injunction. Zockoll appealed from the High Court order and sought a mandatory injunction restoring the number pending trial. The issues were whether there was a reasonably arguable breach under section 3(2) of the Unfair Contract Terms Act 1977 and where the lower risk of injustice lay after the transfer.

1. Arguable contractual claim. Phillips LJ held, with Simon Brown LJ agreeing, that Zockoll had a reasonably arguable case. Mercury’s withdrawal of the particular number could arguably render its contractual performance substantially different from what Zockoll reasonably expected, or amount to non-performance of part of the obligation, within section 3(2) of the Unfair Contract Terms Act 1977. The requirement for reasonable notice did not necessarily make clause 8.1 reasonable, particularly where Mercury had allowed investment in the anticipated commercial value of the number. The reasoning in Timeload Limited v British Telecommunications PLC Transcript 30th November 1993 was not confined to its different facts. Phillips LJ also considered it right to take account of the possible common-law response to oppressive contractual terms.
2. Mandatory interlocutory relief. The court adopted the risk-of-injustice approach described in Films Rover Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670 and summarised in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468. The distinction between mandatory and prohibitory relief is substantive, not semantic. A mandatory order normally carries greater risk because it requires positive action, may cause wasted expenditure, may grant much of the final relief, and may be difficult to formulate or reverse. A high degree of assurance is therefore a legitimate consideration, but not a rigid precondition. The court must select the course carrying the lower risk of injustice.
3. Application and disposition. Mercury’s transfer was not ignored, although Manchester Flights knew of Zockoll’s claim and could not be treated like an innocent bona fide contracting party. The court considered the practical consequences for all three parties. There was no persuasive evidence of irreversible damage to Zockoll’s phonename business before trial, while restoration could cause substantial disruption and expose Mercury to consequences arising from Manchester Flights’ established use. Simon Brown LJ regarded Mercury’s conduct as having stolen a march on Zockoll, so the changed circumstances were discounted, but not wholly disregarded. The appeal was dismissed, the mandatory injunction refused, and the trial was ordered to be expedited. Costs were ordered to be the defendant’s costs in the cause.

• Court of Appeal (Civil Division) dismissed the appeal against the interlocutory order and refused mandatory restoration of the telephone number. The trial was ordered to be expedited.
• High Court (Chancery Division), per the Vice-Chancellor, dismissed Zockoll’s application for an interlocutory injunction restraining withdrawal of the number.