Satellite broadband seller's legal appeal knocked back by court

Satellite broadband seller's legal appeal knocked back by court

Court finds in favour of local internet services provider

An appeal by satellite broadband service provider, Ipstar Australia, to fight a decision by the NSW Supreme Court ruling that it pay internet service provider, APS Satellite (also known as SkyMesh), millions of dollars in damages has been knocked back.

The satellite telecommunications provider, which is a wholly-owned subsidiary of Thai satellite operator, Thaicom, applied mid-last year to appeal the original decision handed down by the court on 22 December 2016.

The original case revolved around an agreement struck between SkyMesh and Ipstar in 2007, in which Ipstar sold bandwidth to SkyMesh at a price per megabytes per second (Mbps) per month.

The agreement was varied on three occasions. The first, in 2008 by a document described as the “First Addendum”, the second, by an agreement reached some time in May 2010 varying the price payable for the services, and the third, by a document executed on 27 April 2011 described as the “Second Addendum”.

The Second Addendum increased the price payable for bandwidth to $2,933 per Mbps per month. SkyMesh paid that amount for bandwidth from 1 March 2011 to 31 July 2016, according to court documents.

SkyMesh claimed, however, that the price increase insisted upon by Ipstar in the Second Addendum involved conduct which was allegedly unconscionable, in contravention of the Australian Consumer Law at the time.

SkyMesh claimed that it suffered loss and damage as a result. It claimed as damages the difference between the price it paid for bandwidth immediately prior to 1 March 2011 and the price it paid thereafter. Alternatively, it sought that the Second Addendum be varied to provide for the payment of the pre-existing price.

Court documents indicate that SkyMesh also claimed that the equipment supplied by Ipstar was allegedly defective and not fit for the purpose for which customers required the equipment.

It was alleged that two defects affecting the proprietary user terminal (UT) needed to be installed to connect premises to the satellite that were supplied to SkyMesh between 2009 and 2011, had what was referred to as “the water ingress problem” and “the firmware problem”.

The case, which was heard by NSW Supreme Court judge, Justice Nigel Rein, saw the broadband wholesaler ordered to pay SkyMesh millions of dollars in damages over a number of claims made against it by the local ISP.

The primary judge hearing the original case found in favour of SkyMesh, giving judgment in favour of SkyMesh in respect of an unconscionability claim in the amount of $3,482,367, together with pre-judgment interest in an amount of $856,074.49.

He also gave judgment in favour of SkyMesh in a defective goods claim in the amount of $1,837,792, together with pre-judgment interest in an amount of $779,602.08 on that claim, according to court documents.

Ipstar Australia appealed against the orders.

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Now, the NSW Supreme Court has dismissed the current appeal by Ipstar Australia, ordering the company to pay for APS Satellite’s costs related to the appeal.

However, Ipstar Australia was given permission by the court to amend its notice of appeal in terms of the draft amended notice of appeal dated 30 August 2017.

“First, in an appeal challenging the evaluative conclusion of the primary judge that Ipstar's conduct was unconscionable contrary to the Australian Consumer Law, there is no escape from a close consideration of the facts,” Supreme Court judge, JA Leeming, said in a decision handed down on 14 February.

“The impression from the documents is that Ipstar appears to have taken quite extreme steps to prolong the claims adjudication process. And at the same time as Ipstar was refusing to pay any claims, which on its case were incorporated into the increased price charged to SkyMesh, Ipstar insisted on SkyMesh paying the increase immediately.

“All this took place in circumstances where SkyMesh was effectively locked in to dealing with Ipstar, because SkyMesh could only change supplier at a cost of tens of millions of dollars in replacing equipment which could only be used for the Ipstar service,” Leeming said.

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