Court rules SOS must pay Azzurri for faulty phones

Three resellers end up in the Patents Court over AA handset replacement

Azzurri has been awarded £221,052 as recompense following a legal wrangle involving two other resellers over faulty phones supplied to the Automobile Association (AA) back in 2009.

The breach-of-contract battle was played out between Azzurri and Sussex-headquartered SOS Communications, with the latter also counter-suing its New York handset supplier Fonesys, in the Patents County Court in London.

Judge Colin Birss ruled that SOS must pay Azzurri £196,502 for replacing more than 1,000 Avaya 2420 handsets and £25,550 for related staff time – adding "an appropriate amount of interest" plus one per cent.

Many of the handsets after installation had begun blanking out at random, and Azzurri had returned them to the manufacturer, Avaya, on its request. However, Avaya discovered that serial numbers on the outside did not match the internal circuit boards, suggesting the phones were either refurbished or grey market kit.

Avaya then alleged the phones must be counterfeit and thus not Avaya kit at all – sueing Azzurri and SOS, which both settled out of court in late 2010.

SOS has argued that not only were the phones legitimate product, but that Azzurri should have returned the faulty handsets to it directly so SOS could have replaced them at no cost.

Colin Hepher, managing director of SOS, had asked for a sample of at least 10 of the faulty handsets for testing and had also offered repairs under warranty.

"While I have accepted that there were indeed faults, there is some justice in SOS's complaint that the actual extent of the faults has never been made clear," said Judge Birss in his ruling.

Azzurri had sought the return of the £118,470 originally paid to SOS for the handsets, £78,032 for additional costs, and £93,206 for the cost of management and investigation of the issues on top of the £196,502 for replacing the handsets.

However, Birss said Azzurri could not base its costs claim on the rate normally charged out to a customer, as it had done, and that he was not satisfied that some of the other costs, including totals for hotel stays and courier charges, had been proven.

"The engineers working on the fault no doubt worked hard and were frustrated by not being able to find the fault more quickly, but I am not satisfied that this process disrupted Azzurri's business or interfered with its ability to earn revenue from elsewhere," Birss went on to say.

"I accept that the engineers will have spent time on the AA project and as a result not spent time on other projects, but that is not disruptive. It is their normal support function."

The original AA deal, sealed in April 2009, was for 1,100 Avaya 2420 call centre handsets, but the AA had then ordered another 1,077. Azzurri had sourced the second batch, invoiced for £118,470, from SOS, a former authorised Avaya reseller.

According to the court ruling, shortly after the handsets were installed the users started complaining.

"Azzurri would expect less than 0.5 per cent of new Avaya handsets to fail within the first year and the problems were much more frequent than this – intermittently users [were] experiencing phone screens going blank and some calls cut off."

Fonesys was not represented in the Patents Court. CRN contacted the New York telecoms reseller, from which the court says SOS bought the 1,077 Avaya 2420 handsets it supplied to Azzurri, asking about the origin of its kit.

Fonesys said its unused Avaya kit is genuine and all its kit – refurbished or new – is thoroughly tested in its own workshops before shipping.

"It's in original Avaya factory boxes, with the Avaya factory seals intact. Quality standards on these items are out of our control, as the product has never been opened for testing since this would render the product 'used' or 'open box' and reduce the value," a Fonesys customer service staffer, Martin Horne, said.

"Our refurbished equipment is exactly that: refurbished. This process is either performed in our own workshops, or occasionally the product is purchased as refurbished."

"Refurbished equipment is plain brown boxed. We pride ourselves on supplying some of the best-quality refurbished equipment in the business, and in many cases it is hard to distinguish from unused," he said. "We offer a 12-month warranty on all equipment, unused or refurbished, with the usual exclusions against accidental damage, misuse, mis-programming and disassembly."

Azzurri was asked for comment on the court case, and submitted a statement.

"While this case related to an issue from some time ago, we are pleased to have won. Going to court can be a time-consuming business but our reputation is very important to us, so we wanted to ensure justice was done," a spokesperson for Azzurri said.