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The Court of Appeal has dismissed Ofcom’s appeal against a judgment of the High Court awarding over £218 million plus interest as restitution of unjust enrichment to four Mobile Network Operators (“MNOs”).

Ofcom sets the annual licence fees for spectrum by secondary legislation. The MNOs had been paying annual licence fees for the 900 MHz and 1800 MHz spectrum bands pursuant to 2011 Regulations. In 2015, pursuant to a direction given to it by the Secretary of State (the “2010 Direction”), Ofcom purported substantially to increase those annual licence fees by 2015 Regulations. The 2015 Regulations were later held to be unlawful, and so void ab initio. 

The MNOs sought restitution of the difference between the fees that had been charged pursuant to the (unlawful) 2015 Regulations and the (lawful) 2011 Regulations. Ofcom argued that the correct measure of restitution was the difference (if any) between the fees actually charged under the 2015 Regulations and the fees which would have been charged had Ofcom acted lawfully, by making regulations in accordance with the 2010 Direction.

At first instance, the High Court found that where a lawful fee could and would have been charged, then a Woolwich restitution claim is likely to be for the net sum. However, it held that in that exercise it was not permissible to hypothesise different secondary legislation, or in any event to hypothesise an amendment to an existing legislative framework.  It therefore rejected Ofcom’s position. 

The Court of Appeal held that in a claim in unjust enrichment it was open to the Court to award the sum that is in excess of what could lawfully have been charged.  However, it held that the question is confined to what could lawfully have been charged under the existing legislative regime, including existing secondary legislation.  It therefore dismissed Ofcom’s appeal.

The full judgment can be read here

Monica Carss-Frisk QC and Emily Neill acted on behalf of Vodafone Limited.

Thomas de la Mare QC and Tom Richards acted on behalf of Telefónica UK Limited.

Daniel Cashman acted on behalf of Hutchison 3G UK Limited.

Tom Weisselberg QC, Ajay Ratan and Andrew Trotter acted on behalf of The Office of Communications.

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