The Federal Court of Australia recently handed down a decision relating to an application for relief in relation to phone numbers associated with a taxi company. The case provides clarity in relation to the issues around property rights existing in phone numbers, and the power of the Court in exercising the discretion to give directions in relation to the external administration of a company.

Facts

The Plaintiff, Manly Warringah Cabs, and RSL Cabs each own 50% of the shares in the Defendant, Sydney Taxis. On 19 August 2020, Manly Cabs applied for a provisional liquidator to be appointed to Sydney Taxis. Sydney Taxis presently operate a radio room and call centre for both shareholders.

On 3 September 2020, Manly Cabs applied for relief in relation to some phone numbers associated with its business. RSL Cabs opposed the application for relief by Manly Cabs and had previously stated its intention to the liquidator to submit a purchase offer for the phone numbers. RSL Cabs do not dispute that the phone numbers are associated with Manly Cabs but claim that Sydney Taxis owns the numbers.

Manly Cabs wish to retain the phone numbers and prevent the transfer of the numbers to RSL Cabs.

Issues

The Court considered a number of issues:

  1. What rights exist in relation to the disputed telephone numbers?
  2. Is Sydney Taxis’ the agent of Manly Cabs for the purposes of dealing with telephone numbers?
  3. Does Manly Cabs have a “better right” to the disputed numbers?
  4. Can the Court give a direction under s 90-15 of the Insolvency Practice Schedule as to the transfer of the phone numbers?

Judgment

Gleeson J first considered whether there is any property in phone numbers, to which it was held there is not, pursuant to s 454B of the Telecommunications Act 1997. The service provider of the phone numbers is Telstra and under Telstra’s terms, the customer does not have any legal interest or goodwill in the phone numbers but may be permitted to transfer the numbers to another party with the prior consent of Telstra. As Sydney Taxis is the customer, they have obtained the contractual rights under Telstra’s terms to transfer the phone numbers. The Court considered two relevant cases to decide on this issue. In Rahme v Telstra Corporation Ltd (1995) 119 FLR 42, the Court held that the plaintiff had a better right to phone numbers, but that this decision will have no precedent value to phone services connected after 1991. In the later case of Saxby Bridge Mortgages [1999] NSWSC 695, the Court did not agree that a right relating to goodwill existed in phone numbers. Therefore, Manly Cabs does not have a better right to the disputed numbers than Sydney Taxis.

In relation to the argument put forward by the plaintiff that Sydney Cabs is the agent of Manly Cabs and RSL Cabs for the purpose of their dealings with Telstra, the Gleeson J held that on the available evidence, her Honour was not convinced that this was so.

Pursuant to s 90-15(1) of the Insolvency Practice Schedule in relation to the external administration of a company, the Court is permitted to make such orders as it sees fit. Per Kelly, in the matter of Halifax Investment Services Pty Ltd (in liquidation) (No 8) [2020] FCA 533, the powers conferred on the Court to make such directions are broad. Gleeson J decided that whether the liquidator is justified in transferring the numbers to Manly Cabs for no consideration is a commercial decision. Furthermore, the Court held that the evidence does not support the exercise of the s 90-15 power to give directions to the liquidator to transfer the disputed numbers to Manly Cabs.

 

Interested in learning more on Insolvency and Reconstruction?

Click our recent articles below to find out more:

How to Annul your Bankruptcy

What happens to your property when you go bankrupt?

Insolvent Trading Relief Continues!