Background
Onecom acquired part of a telecommunications business formerly owned by James Palmer, while the “eve” connectivity product remained subject to a separate Master Services Agreement under which KM Telecom supplied it to a Onecom company for resale. After relations deteriorated, the claimants alleged unlawful means conspiracy and inducing breach of contract. The defendants alleged that Onecom had unlawfully accessed an EVE Connect web portal, and KM Telecom purported to terminate the services agreement in November 2024.
The claimants treated that termination as an unlawful repudiation and alleged that the defendants subsequently poached their customers. Their claimed lost profits extended over 22 years and were estimated at approximately £16 million. EVE Connect and Mr Palmer sought summary judgment or strike-out of that part of the claim, arguing that the services agreement could lawfully have been terminated without cause on 28 February 2026, that the enlarged claim was an abuse designed to preserve a set-off against debts owed to Palmer, and that Onecom had failed to comply with an earlier order requiring further information about its calculation.
The Court’s Holding
Mrs Justice Dias dismissed the application as framed. The court held that the 22-year lost-profits claim was not bound to fail. Whether the principle in Lavarack v Woods of Colchester Ltd required proof merely that KM Telecom could have terminated the agreement, or proof that it would have done so, was arguable and required fuller consideration. It was also arguable whether that contractual principle applied in the same way to the tort claims. Those questions, and disputes about contract duration, customer churn, migration, technological change, and the damages methodology, were too fact-sensitive for summary determination.
In addition, the alleged customer-poaching loss was not necessarily dependent on continued supply of the eve product because Onecom claimed that it could have sold alternative products to customers who were not enticed away. The court also found no clear abuse of process and concluded that the claimants had substantially complied with the earlier information order, despite belated explanations and an admitted formula error. Although the judge regarded the pleading of loss as unclear and unsatisfactory, the judgment states only that, subject to hearing counsel, she proposed to direct the claimants to replead their lost-profits case; the supplied opinion does not record that such a direction was ultimately ordered.
Key Takeaways
- A contractual right to terminate did not, on this application, establish conclusively that post-termination losses were legally irrecoverable; whether the defendant would have exercised that right remained at least arguably relevant.
- Claims arising from alleged customer poaching could extend beyond termination of the services agreement because the claimants might have continued supplying those customers with alternative products.
- An ambitious 22-year damages period warranted close scrutiny, but disputed assumptions and methodology were matters for evidence and trial rather than summary disposal.
Why It Matters
The decision illustrates the limits of summary judgment and strike-out where the duration and amount of future lost profits depend on contested counterfactual facts. A court will not necessarily cap damages at the earliest lawful termination date when it is arguable that the defendant would not have terminated then or that the alleged loss arose independently of the terminated contract.
It also underscores the need to plead complex quantum cases transparently. Although the application failed, the court criticized the shifting and opaque presentation of the claim and contemplated requiring a revised pleading identifying the counterfactual assumptions, treatment of churn, corrected calculations, and current mitigation position.