National Transport Co-operative Society Ltd v Attorney General of Jamaica

• Jurisdiction: Jamaica
• Judge: PANTON, P. , HARRISON, J.A: , HARRIS, J.A.
• Judgment Date: 06 June 2008
• Neutral Citation: JM 2008 CA 37
• Judgment citation (vLex): [2008] 6 JJC 0603
• Court: Court of Appeal (Jamaica)
• Date: 06 June 2008

IN THE COURT OF APPEAL

BEFORE:

THE HON. MR. JUSTICE PANTON, J.A THE HON. MR. JUSTICE HARRISON, J.A THE HON. MRS. JUSTICE HARRIS, J.A. (Ag.)

BETWEEN

NATIONAL TRANSPORT CO-OPERATIVE SOCIETY LIMITED

APPELLANT

AND

THE ATTORNEY GENERAL OF JAMAICA

RESPONDENT

Lord Anthony Gifford, Q.C., Patrick Bailey and Ms. Audrey Reynolds, instructed by Patrick Bailey & Company for the appellant

Michael Hylton, Q.C., Solicitor General, Richard Mahfood, Q.C., Ms. Katherine Francis, Ms. Heidi Gordon and Ms. Tasha Manley, instructed by the Director of State Proceedings for the respondent

ARBITRATION - Arbitrator - Application to set aside Arbitrator's award - Effect of franchise agreement

PANTON, P.

• 1. On May 9, 2008, we dismissed this appeal from the judgment of Brooks, J., and promised then to deliver our written reasons today. The learned judge, on a claim arising from arbitration proceedings involving the parties, had on November 29, 2004, entered judgment in favour of the respondent on the claim and counterclaim. He set aside the award of the arbitrators and awarded costs to the respondent.

• 2. I have seen in draft the reasons for judgment that have been written by my learned colleagues. I agree with their reasoning and conclusion. However, I wish to add a few words on one aspect of the matter. My learned colleagues have given a full statement of the relevant facts, and there is no reason to repeat them except so far as necessary for the expression of my views.

• 3. These proceedings between the parties stemmed from agreements made by them in respect of the provision of a public transportation service in the Kingston Metropolitan Transport Region. In March, 1995, the relevant Ministry of the Government of Jamaica granted exclusive licences to the appellant which undertook the responsibility of providing a professional service in return for specified fares to be paid by the travelling public. I say "relevant Ministry" as the Ministry has had several name changes and has been variously described in the many documents that have been put before us. In the "franchise agreement", it is the Ministry of Water and Transport (p.70 of the record of appeal), although the signature page shows the document being signed by the Minister of Public Utilities and Transport. Finally, the Permanent Secretary describes himself as being in the Ministry of Transport and Works (p.23).

• 4. The licences were for a period of ten years and section 32 of the agreement provided for a fare structure and adjustment thereof. At the granting of the licences, there was an acknowledgment of the following:

  • • The existence of a fragmented system of licensing individual buses to specific routes;

  • • A decline in the overall quality of service;

  • • Inconvenience and frustration being experienced by the travelling public; and

  • • The inadequacy of the existing fares.

• 5. The preamble to the agreement stated that the appellant had the "management, operating and technical personnel, expertise and other useful assets of sufficient quantity to provide (the required) transport services". Disputes concerning termination were to be resolved in accordance with the provisions of the Arbitration Act. Things did not go as smoothly as the parties would have hoped, and along the way, there were changes and further agreements, one such agreement being the 1996 Heads of Agreement — a significant agreement. These developments climaxed with the Government terminating the relationship.

• 6. The arbitrators awarded damages against the Government to the tune of four and a half billion dollars with interest which, when calculated, would have by the time of the hearing of the appeal amounted to almost the sum of the award.

• 7. The learned judge found that the arbitrators erred in concluding that the 1995 franchise agreement was not amended by the 1996 Heads of Agreement. This was one of his reasons for setting aside the award. It is on this specifically that I wish to express my own views. The 1995 agreement provided in part as follows:

  "32 FARE STRUCTURE AND FARE ADJUSTMENT

  A a) The first fare table to apply with effect from March 1, 1995 will be table identified herein as Appendix D. The fares in that table are those in existence at February 28, 1995. The parties appreciate the inadequacy of those fares, even after taking into consideration a subsidy of $10 Million which is to be provided for each franchise for the three months ending May 31, 1995. Therefore a new fare table (hereinafter called the Second Fare Table) will be made available not later than April 30, 1995 to apply with effect from June 1, 1995"

• 8. The 1996 Heads of Agreement was signed by the appellant on February 23, 1996. It is headed "Heads of Agreement Between Franchise Holders and the Ministry Of Public Utilities And Transport". It lists several matters on which "agreements were reached" between the parties. These matters included subsidy, buses, depots, school bus service, training programmes and fares. These agreements were set out extensively in clauses 1, 2, 4, 5, 6 and 7 respectively.

• 9. It is important to set out the agreements in respect of fares, as this is the area of greatest contention between the parties. The relevant particulars are at pages 151 and 152 of the record and read thus:

  "FARES

  • (a) Fare Adjustment Based on Cost Increases

  • (i) It is agreed that based on the increases in costs which have taken place since a fare adjustment was made in July 1994, an upward adjustment in fares need to be considered urgently. (Adjustments introduced February 11, 1996)

  • (ii) It is further agreed that the MPUT would endeavour to obtain approval for this cost based fare increase in order for it to be implemented in February 1996 (introduced February 11, 1996).

  • b) New Fare Table

  • (i) It is agreed that the proposed new fare table will be reviewed and that the computations revised to reflect:

  • 1. the concessions and assistance being provided by Government in areas which based on the existing Franchise Agreement are the responsibilities of the Franchise Holders, and

  • 2. increases in costs which have taken place since the recommendations of the Shirley Committee.

  • (iii) It is agreed that the new fare table would be implemented after the necessary improvements have been effected in the transportation system in the KMTR, specifically with respect to:

  • 1. The implementation and maintenance of schedules which would be possible with establishment and operations of new depots.

  • 2. The putting into service of additional buses.

  • 3. Improvements in the conduct and decorum of bus crews which will be achieved through the implementation of training programmes."

• 10. The arbitrators found that the 1996 Heads of Agreement did not refer to the second fare table, and that by signing the 1996 Heads of Agreement, the appellant was confirming its affirmation of the franchise agreements. There were, according to the arbitrators, "never any amendments made to the Franchise Agreements". Before Brooks, J., however, the appellant conceded that the 1996 Heads of Agreement did indeed refer to the second fare table. The judge, as said earlier, found that there had been an amendment of the franchise agreements.

• 11. It will be recalled that section 32 of the franchise agreement provided for a new fare table (referred to in the agreement as the Second Fare Table). This was to be made available no later than April 30, 1995, and to apply from June 1, 1995. It did not come into existence. That is the reason for the reference in clause 7 of the Heads of Agreement to the non-introduction of a fare adjustment since July, 1994, and the need for urgent consideration of such an adjustment. The document indicates that adjustments were introduced on February 11, 1996. The adjustments are to be taken as dealing with the urgency created since the previous adjustment in July, 1994.

• 12. Clause 7 (b) (i) makes it clear that the second fare table "will be reviewed and ... the computations revised to reflect ... the concessions and assistance being provided by Government in areas which based on the existing Franchise Agreement are the responsibilities of the Franchise Holders". This is in effect saying that the franchise agreement had been overtaken by the provision of the subsidies. There is absolutely no basis for it to be construed that the parties understood that the Government had decided to provide subsidies, which were not contemplated in 1995, while at the same time having no intention to amend the franchise agreement. Further, clause 7 (b) (iii) states unequivocally that it was agreed that the new fare table would be implemented after certain necessary improvements had been effected in the transportation system, particularly, the implementation and maintenance of schedules, improvements in the conduct and decorum of bus crews and the addition of buses to the routes. These were matters that required action on the part of the appellant.

• 13. The coup de grace in respect of the submission that the 1996 Heads of Agreement had no bearing or effect on the 1995 franchise agreement was clause 9 of the former. It states quite clearly that the parties agreed that the 1995 agreement required amendments, which were to be discussed and agreed on by June 1, 1996. In the circumstances, it seems to me that the parties had moved on from the 1995 agreement and had settled on a new position by their Heads of Agreement in 1996.

• 14. The parties placed before Brooks, J. a further agreement that if the claimant were to be successful in respect of paragraph 13(a)(i) and or (iv) of the particulars of claim, then the entire award would be set aside.

  Paragraph 13(a)(i) of the particulars of claim reads:

  "That the said Award by the Arbitrators was improperly procured and/or the Arbitrators misconducted...