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Court of Appeal upholds mobile spectrum licence fee restitution claims against Ofcom

Vodfone Limited, EE Limited and other mobile network operators have succeeded before the Court of Appeal in their claims for restitution of £220 million paid to Ofcom as licence fees between 2015 and 2017.  The claims were originally allowed in 2019 by Adrian Beltrami QC sitting in the Commercial Court as a deputy judge.  His judgment is reported at [2020] QB 200.

The case raised fundamental questions about the principle of legality and the use of counterfactual reasoning in unjust enrichment claims against the State.  Legislation required that mobile spectrum licence fees be set by Ofcom by statutory instrument.  In 2015 Ofcom amended the governing 2011 statutory instrument to significantly increase the licence fees to what was thought to be a market rate.  But in fixing that fee Ofcom failed to take into account certain considerations it was required by EU law to take into account, and the amending 2015 regulations were quashed by the Court of Appeal in 2017: [2018] 1 WLR 1868. 

The mobile network operators sued in the Commercial Court for restitution of the difference between the licence fees they had paid under the 2015 regulations and the lower amounts that were properly due under the subsisting 2011 regulations. These claims were made under the principle in Woolwich Building Society v IRC [1993] AC 70.

Ofcom accepted the principle of liability but argued that the measure of restitution should be limited by reference to the fee Ofcom could and would lawfully have imposed if it had properly appreciated its legal obligations as clarified by the Court of Appeal in 2017.  Ofcom contended that if it had complied with those legal obligations it would still have set the licence fees at the same level.  The mobile network operators responded that this approach would undermine the principle of legality established in Woolwich, in that it would permit Ofcom to retain fees it had not been lawfully entitled to charge, and that the approach was inconsistent with basic principles of unjust enrichment.

In a judgment primary given by the Chancellor, Sir Geoffrey Vos, the Court of Appeal has accepted those responsive arguments and confirmed Adrian Beltrami QC’s decision to allow the claims in their entirety.

Steven Elliott QC, instructed by BT Legal, acted for EE Limited.  You can view the full decision here.