Tele2 International Card Company SA & Ors v Post Office Ltd

A contractual right to terminate for breach is governed by the parties’ agreement. Where the contract expressly treats specified breaches as material and incapable of remedy, the court should give effect to that allocation. A contractual waiver clause may prevent affirmation arising from delay, neglect or forbearance in enforcing a termination right.

In assessing damages, the court identifies the defendant’s legal obligations, implies reasonable performance where appropriate, and selects the least unfavourable reasonable method where several methods exist. Damages should reflect the value of the bargain and may take account of subsequent events.

The claimants, companies in the Tele2 group, claimed damages from the Post Office for allegedly wrongful termination of an agreement governing branded prepaid phonecards and related services. They also alleged that the Post Office failed to promote their products no less extensively than similar products. The Post Office counterclaimed for expiry revenue and Additional Fees.

The court considered material breach, affirmation, waiver, withdrawal of termination notices, contractual construction, proof of loss, and the assessment of damages.

1. The failure to provide certified parent-company letters was a breach of clause 3.10.2. Clause 11.4.1 expressly treated breaches of clauses 3.10.1–3.10.3 as material and incapable of remedy. The Post Office was entitled to terminate.
2. Clause 16 covered delay, neglect or forbearance in enforcing any contractual provision, including a right to terminate. Continued performance therefore did not amount to affirmation. The termination notices remained effective, and the evidence did not establish their withdrawal.
3. Instructions to promote Nomi-Call cards ahead of Tele2 cards breached clause 2.1. The claimants failed to prove identifiable loss and would have recovered only nominal damages.
4. “Remaining value” in paragraph 1 of Part III of Schedule 4 meant the unspent part of the card’s full face value. The Post Office was entitled to half that amount. Paragraph 2 required annual, not cumulative, accounting for Additional Fees.
5. For damages, the court adopted the approach in Paula Lee Ltd. v. Robert Zehil & Co. Ltd.: damages reflect the claimant’s contractual benefit and exclude matters the defendant was not bound to provide. Where several reasonable methods of performance exist, the least unfavourable method to the defendant is assumed. Subsequent events relevant to the value of the lost rights may be considered.
6. The claims were dismissed. Judgment was entered for the Post Office against Tele2 Ireland for £833,152 on expiry revenue and £202,000 on Additional Fees, totalling £1,035,152.