Vodafone Ltd & Ors v The Office of Communications (Ofcom)

Where a public authority unlawfully exacts a fee, restitution is assessed by reference to the legal framework that actually governed the parties. The court may hypothesise omitted administrative steps needed to quantify a lawful charge, but it may not hypothesise new or replacement legislation so as to make an unlawful charge notionally lawful. This remains so where the unlawful legislation has been quashed and an earlier lawful charging regime continues in force. The law of unjust enrichment should not undermine existing statutory rights and obligations. A direct payment of money is ordinarily enrichment at the payer’s expense, subject to the ordinary requirements and defences of unjust enrichment.

Four mobile network operators claimed restitution from Ofcom of annual licence fees paid under the Wireless Telegraphy (Licence Charges for the 900 MHz frequency band and the 1800 MHz frequency band) (Amendment and Further Provisions) Regulations 2015. Those Regulations had been quashed in judicial review proceedings. The earlier Wireless Telegraphy (Licence Charges) Regulations 2011 therefore remained in force during the relevant period.

The operators claimed the difference between the sums paid under the unlawful 2015 Regulations and the sums due under the 2011 Regulations. Ofcom contended that restitution should instead reflect fees which it could and would have charged under hypothetical lawful Regulations. The central issue was the proper measure of restitution.

1. Outcome. Judgment was given for the four MNOs in the net sums claimed, representing the difference between the payments made under the unlawful 2015 Regulations and the fees due under the 2011 Regulations. Simple interest was agreed at 2% above the Bank of England base rate from the relevant payment dates.
2. Legality and the applicable legal framework. The principle of legality supports recovery of fees unlawfully exacted by a public authority. The court could not hypothesise new primary or secondary legislation to convert an unlawful receipt into a lawful one. Both forms of legislation constitute the law of the land, and the 2011 Regulations remained in force throughout. The parties’ rights and obligations had therefore to be determined by the actual statutory regime, not by an alternative version of the law. [90]
3. Administrative steps. The court distinguished a change in the law from the omission of an administrative step. Where a lawful regime already exists but requires an assessment or other administrative act, it may be necessary or helpful to hypothesise completion of that step in order to quantify the proper lawful charge. That reasoning did not permit the creation of a different legal entitlement. [69]-[73]
4. Unjust enrichment. The four questions identified in Benedetti v Sawiris and Menelaou v Bank of Cyprus UK Ltd provide a structured framework rather than rigid statutory tests. Ofcom was enriched by the excess money received, the enrichment was at the MNOs’ expense because the transfer was direct, and the receipt of an unlawful overcharge supplied the unjust factor. Ofcom had no counter-restitution claim and identified no separate defence. Its arguments on enrichment, expense, unjustness and net enrichment all depended on the rejected counterfactual analysis. [31]-[35]; [91]-[107]
5. Authorities. Waikato Regional Airport Ltd v Attorney General and R (Hemming) v Westminster City Council concerned, at most, the quantification of lawful charges or omitted administrative steps. They did not require hypothesising replacement legislation and were not binding authority for Ofcom’s proposed approach. The EU-law arguments were left undecided because the domestic claim succeeded. [75]-[90]; [108]-[110]

The judgment records that the Court of Appeal had previously quashed the 2015 Regulations in judicial review proceedings. The present proceedings were first-instance restitution claims and judgment was given for the MNOs.