Before : |
Sir Michael Birt, Kt., Esq., Bailiff, and Jurats Morgan and Crill. |
Between |
JT (Jersey) Limited |
Appellant |
And |
Jersey Competition Regulatory Authority |
Respondent |
Advocate D. M. Cadin for the Appellant.
Advocate H. E. Ruelle for the Respondent.
judgment
the bailiff:
1. This is an appeal by the Appellant ("JT") under Article 12 of the Telecommunications (Jersey) Law 2002 ("the Law") against the exercise of a specified regulatory function by the Respondent ("JCRA"), which involved the modification of the conditions of the licence held by JT.
2. The matter came before the Court on an interim basis when, in a judgment dated 6th August, [2013] JRC 159, the Court delayed the implementation of the JCRA's decision pending the hearing of this appeal.
3. Under the Law, the JCRA is the regulator of the telecommunications industry in Jersey. Any person who wishes to run a telecommunications system in the Island must hold a licence from the JCRA.
4. Article 7 of the Law sets out the matters to which the JCRA is to have regard when exercising its functions. The relevant parts of the Article are as follows:-
"7 Duties of Minister and Authority
(1) The Minister and the Authority shall each have a primary duty to perform his, her or its functions under this Law in such manner as each considers is best calculated to ensure that (so far as in his, her or its view is reasonably practicable) such telecommunication services are provided, both within Jersey and between Jersey and the rest of the world, as satisfy all current and prospective demands for them, wherever arising.
(2) In so far as it is consistent with paragraph (1) to do so, the Minister and the Authority shall each -
(a) perform his, her or its functions under this Law in such manner as each considers is best calculated to protect and further the short-term and long-term interests of users within Jersey of telecommunication services and apparatus, and perform them, wherever each considers it appropriate, by promoting competition among persons engaged in commercial activities connected with telecommunications in Jersey;
(b) perform his, her or its functions under this Law in such manner as each considers is best calculated to promote efficiency, economy and effectiveness in commercial activities connected with telecommunications in Jersey;
(c) perform his, her or its functions under this Law in such manner as each considers is best calculated to further the economic interests of Jersey;
(d) perform his, her or its functions under this Law in such manner as each considers is best calculated to impose a minimum of restriction on persons engaged in commercial activities connected with telecommunications in Jersey;
(e) in performing his, her or its functions under this Law, have regard to the need to ensure that persons engaged in commercial activities connected with telecommunications in Jersey have sufficient financial and other resources to conduct those activities; and
(f) in performing his, her or its functions under this Law, have regard to any special needs of persons who are disabled or have limited financial resources or have particular needs."
5. When granting a licence, the JCRA may impose conditions (Article 16). Under Article 18, it is given power to modify any condition of a licence and 'modification' is expressed to include the insertion of a new condition. The modification of a condition contained in a licence is one of the matters which is included by Article 10 (1) in the definition of a "specified regulatory function".
6. Article 11 sets out the procedure that the JCRA must follow when it wishes to exercise a specified regulatory function. Many of the submissions made in the course of the appeal have turned on the exact terms of Article 11 and accordingly it is necessary to set out the relevant parts in full:-
"11 Notice and consultation
(A1) This Article applies to a specified regulatory function other than a specified regulatory function under Article 19 or 19A.
(1) Before exercising a specified regulatory function the Authority shall give initial notice -
(a) specifying the function that it proposes to exercise and the action proposed in that exercise;
(b) stating the reason for the proposed exercise;
(c) stating (whether by specification or by formula) the date when the proposed exercise would take effect, not being a date earlier than the 29th day after the day when the notice is published or served (whichever is later) in accordance with this Article;
(d) specifying the place where the document giving effect to the proposed exercise may be inspected; and
(e) specifying the period within which written representations or objections in respect of the proposed exercise may be made.
(2) A document referred to in paragraph (1)(d) shall, where the proposed exercise of the specified regulatory function -
(a) would be the grant or making of an instrument, being a licence, approval, consent, determination, direction or other instrument - include a copy of that instrument; or
(b) would be the modification of conditions contained in a licence - include a copy of the conditions before modification and a copy in draft form of the conditions as modified.
(3) Any person may make representations or objections to the Authority about the proposed exercise of a specified regulatory function within the period commencing on the earlier of the following dates -
(a) the date when initial notice (if any) of the proposed exercise is served on any person; or
(b) the date when initial notice of the proposed exercise is published in accordance with this Article,
and ending at midnight on the 28th day after the later of those dates.
(4) If any representations or objections are made within that period, the Authority shall consider them and then give final notice in relation to the proposed exercise of the specified regulatory function.
(5) The final notice shall -
(a) refer to the matters contained in the initial notice;
(b) contain a summary of the representations and objections;
(c) contain details of the Authority's response to them sufficient in content to enable it to be understood and the reasons for it to be known;
(d specify the place where a document setting out the full text of the response may be inspected if the full text is not contained in the final notice; and
(e) state -
(i) that the Authority intends to exercise the specified regulatory function, either by taking the action proposed or by taking some other specified action, and the date when the proposed exercise of the function will have effect (expressed by specification or by formula), or
(ii) that the Authority does not intend to exercise the specified regulatory function.
(6) The Authority shall give initial or final notice in relation to a proposed exercise of a specified regulatory function as follows -
(a) in a case where the proposed exercise relates to a licence, or approval, held by a person named in the licence or approval, by notice served on the person;
(b) in a case where the proposed exercise is in response to an application made by a person not referred to in sub-paragraph (a), by notice served on the applicant;
(c) in every case (including the case referred to in sub-paragraph (a) or (b)), by taking reasonable steps to bring the proposed exercise to the attention of the public, coupled with making available for inspection full details of the proposed exercise in such place as is specified in taking those steps.
(7)
(8) The Authority shall, on demand, make a document, full text, or full details, referred to in this Article available for inspection by members of the public at reasonable hours and, on demand, supply copies of it, or them, to members of the public at reasonable cost.
(9) The exercise of a specified regulatory function shall have effect only in accordance with such terms of an initial notice as are referred to in paragraph (1)(a) and -
(a) if a representation or objection has been made in accordance with paragraph (3), on a date specified in the relevant final notice, being a date that is later than the 28th day after the final notice is published or served (whichever is later) in accordance with paragraph (6); or
(b) if no representation or objection has been made in accordance with paragraph (3), on the date stated in the initial notice.
(10) Paragraph (11) applies where -
(a) after considering any representations or objections, the Authority decides not to take the action proposed in the exercise of the specified regulatory function but to take some other action; and
(b) the Authority is satisfied that a person or the public in general should be permitted to make representations or objections in respect of the taking of that action.
(11) The Authority may give fresh initial notice under paragraph (1).
(12)....."
7. The Court has received three affidavits from Mr Daragh McDermott, the Director of corporate affairs for JT and two affidavits from Mr Michael Byrne, Deputy Director of the JCRA which, together with the Guernsey Competition and Regulatory Authority (GCRA) forms the Channel Islands Competition and Regulatory Authorities (CICRA).
8. From the affidavits, the relevant background would appear to be as follows.
9. The telecommunications industry in Jersey provides products and services in the mobile sector and the fixed line sector (i.e. landlines). Although consumers have the benefit of a competitive market in the mobile sector with a number of other licenced operators ("OLOs"), JT runs and has exclusive control of the fixed network infrastructure required to deliver fixed line services. In particular, consumers can only purchase an exchange line rental service from JT.
10. As set out above in Article 7(2)(a), the JCRA has a remit to promote competition and furthermore a number of the OLOs have requested that the fixed line market be opened up in order to increase competition. According to the JCRA, as JT is the only fixed exchange line service provider, it is in a unique position to provide one complete invoice to its customers and is in a position to "bundle" together certain services, so that discounts can be offered to a customer who contracts with JT in respect of all of their telecommunication needs (fixed line rental, calls, mobile and broadband services). OLOs cannot do this because fixed line consumers must maintain a commercial relationship with JT and receive an invoice from JT for the fixed line rental even if the consumer uses an OLO for fixed line calls, mobile and broadband services. In the view of the JCRA, this gives an advantage to JT over the OLOs which contributes to an uneven competitive playing field.
11. The JCRA has been considering the question of "wholesale access products". These are products whereby an incumbent provider, such as JT, can provide other "wholesale products" to OLOs in order to enable those OLOs to offer the same services as JT (as incumbent), thereby potentially improving competition.
12. The particular wholesale access product which is the subject of this appeal is "Wholesale Line Rental" (WLR). In his affidavit Mr Byrne describes WLR as follows:-
"21. Currently, the incumbent operator maintains a direct commercial relationship with the customer for line rental as the only provider of the fixed exchange line service. This is the case even if the customer uses an OLO for calls or broadband services. As a result of WLR, a full relationship with the customer would be able to lie with the OLO and the OLO could produce a single bill for both exchange line rental and calls. The Appellant would remain responsible for maintaining and repairing the network infrastructure required to deliver the telephony services.
22. In the simplest terms, WLR is largely a change to billing arrangements. WLR means that rather than the customer renting the exchange line directly from the Appellant (as the only provider of the service) and the Appellant invoicing the customer in that respect, the Appellant invoices the relevant OLO for the exchange line and wholesale calls, which then charges its customer accordingly. From the incumbent provider's perspective, it is effectively a change from retail sale to telecommunications customers to a wholesale sale to OLOs. WLR also means that anybody with a landline does not have to have a relationship with the Appellant, as is currently the case.
23. WLR is a service which is widely available in other jurisdictions. It has been in place in the United Kingdom since 2002 and has enabled telecommunications service providers to offer substantial benefits to customers through discounts and bundled services. WLR is available in at least 27 European countries as well as in New Zealand, South Africa and Australia."
13. In short therefore, WLR is a service which allows OLOs to rent telephone exchange lines on wholesale terms from the incumbent network owner (in this case JT) and resell the use of those lines to the OLO's own customers.
14. Other wholesale access products which have been the subject of consideration in the various consultation exercises which we shall describe shortly, are Wholesale Bitstream and Naked DSL with Bitstream. However, for the purposes of this judgment, it is not necessary to describe these products further.
15. In December 2008 the JCRA decided to employ consultants to conduct a review of the wholesale business of JT. It appointed Regulaid BV to carry out the review. Regulaid comprises a group of consultants from various European countries with extensive experience of the telecommunications industry.
16. Regulaid reported in June 2009. It was a detailed report. A key finding was contained in the Executive Summary on page 3 which said as follows:-
".......
The 'playing field' in Jersey is more tilted towards the incumbent operator than in other jurisdictions, mainly because providers that compete with JT do not have access to wholesale products that enable effective competition.
Retail prices on Jersey are higher than on Guernsey.
Wholesale prices are much higher than on Guernsey, preventing OLOs on Jersey from having a viable business.
The higher retail and wholesale prices reflect greater operating costs, capital costs and profits in JT's fixed network business, which has not been challenged by strong competition or regulation to become more efficient.
The lack of effective regulation makes Jersey less attractive than its neighbours for telecommunications investment."
17. The report went on to give detailed consideration to wholesale access products. It reminded itself of the need to have regard to the fact that Jersey was a small Island. Thus at paragraph 3.2.1 on page 17 it said this:-
"This comparison demonstrates that a number of regulatory measures used to promote competition are not available in Jersey, particularly wholesale line rental, local loop and bundling, carrier pre-selection and fixed number portability. However, we recognise that not all these measures may be required or be cost-effective in a State as small as Jersey, and that an assessment of the need for additional measures that open the market to greater competition is necessary."
18. On the issue of whether there was a demand for wholesale access products, the report said this at paragraph 5.2.1 on page 32:-
"We are aware of the danger of requiring JT to produce wholesale services as a matter of course when there may not be a demand for them from OLOs, resulting in a waste of its resources. We suggest that the requirement of replicability should be subject to a request for the specific service from a licensed operator, and that JT should be allowed to recover the costs incurred by an efficient operator in providing the wholesale service (bearing in mind that the service is also provided to its retail arm). However JT is not in a good position to judge whether there is a demand for the service as it may be more aware of the costs of provision than the benefits (which will be enjoyed by the OLOs). Hence if there is a disagreement between the OLO and JT over whether the service should be provided, JCRA should become involved in resolving the dispute."
19. However, the Regulaid report went on to recommend the introduction of WLR. Because both parties to this appeal have relied on different passages of the Regulaid report, we think we should set out the relevant section in full, which is to be found on pages 36 - 37 of the report:-
"5.3.2 Wholesale line rental
The Issue
Wholesale line rental (WLR) enables an OLO to rent exchange lines from the incumbent operator, and to resell them to customers. WLR is usually combined with carrier pre-selection and fixed number portability so that an OLO can replicate the line and calls packages offered by the incumbent and provide a full service with a single bill to its customers. However the implementation of WLR poses significant challenges to the incumbent operator in terms of developing an ordering and provisioning process that is quick, that does not leave the customer without service during transfer, and is fully integrated with the parallel process for number portability and carrier pre-selecting. Furthermore, the incumbent operator remains responsible for fault repairs and maintenance, and it is essential that these services are provided on a non-discriminatory basis, so that the OLO's customers receive the same standards of service as the incumbent's customers. The OLOs therefore need equivalent access to the incumbent's fault reporting processes, and the incumbent's staff have to be seen by the customers as acting on behalf of the OLO (for example, by not undertaking opportunities to "win back" the customer to the incumbent). Hence the introduction of WLR raises some significant process challenges for the incumbent operator.
Analysis
JT controls 100% of the fixed narrowband access market in Jersey, and the only way of introducing competition in this market is through WLR. Furthermore, our pricing analysis suggests that the current levels of margins for wholesalers in the calls market are insufficient to make entry profitable, and WLR is one way of making the calls market more attractive by providing another source of revenue. With WLR, the OLOs will be able to offer packages in competition with JT. At present JT is the only operator that can offer calls packages combined with line rental, and until WLR is available, this package is not replicable.
In our discussions with the OLO, both Newtel and C&WJ showed strong interest in WLR, which enables them to provide a complete narrowband service to the customer, strengthens their relationship with the customer (who no longer receives a bill from the incumbent operator for line rental), and to capture termination rates for incoming calls. We believe that WLR is important because it enables the OLOs to replicate JT's bundles, thus improving competition in both the calls and the lines markets.
Implementation issues
Condition 22 of JT's licence permits JCRA to require JT to provide "access" (defined as the ability to obtain a required service, facility or function) to its facilities, provided that it is the only "economically feasible means". This may permit JCRA to mandate WLR, but we think it will be preferable to introduce a specific Licence Condition requiring JT to provide WLR.
As discussed above, experience in other countries has shown that considerable discussions are required between the operators (and with the national regulatory authority) to agree the processes described above. The OLOs and JT will need to commit resources to achieve agreement on these processes, and should operate within a strict timetable, which should be set by the JCRA.
Recommendation
5.9 JCRA should mandate the introduction of wholesale line rental, and introduce a specific Condition into JT's Licence."
20. JT points out (correctly) that this was not the sole recommendation in relation to wholesale access products. Thus the recommendation in paragraph 5.20, states that JT and the OLOs should discuss new forms of Bitstream products (including Naked DSL) and that should they be unable to agree specifications for these new services, they should refer this disagreement to the JCRA. Nevertheless, the Regulaid report contained a clear recommendation that WLR be introduced by way of an additional condition in JT's licence.
21. In terms of implementation, the report accepted that the introduction of wholesale access products would require close working between JT and OLOs in order to agree specifications etc. (see section 8.2 at page 86). It suggested that the operators should form two working groups consisting of the relevant staff from JT and the OLOs, with a representative of the JCRA and an independent chairman. The first group would deal with well-established wholesale products (such as WLR, local loop and bundling and fixed number portability), and the second with next generation products.
22. The report went on to say this at section 8.3 on page 77:-
"8.3 Demand for new wholesale products
In the past, discussions between JT and the OLOs about new wholesale products have made little progress. We think that this is in part due to JT's doubt about the seriousness of the demand for these products. JT has wanted to see a detailed specification from the OLOs before it can respond, and then would assess the likely demand for the product before investing resources in its provision. The OLOs see this lack of response as "stonewalling", and in any case, consider that JT is not in a good position to give an unbiased view on the demand for wholesale products.
We recognise that the provision of new wholesale products will impose some costs on the operators, especially JT, and that until these costs are understood, it is not possible to derive a price for the product. However, without the price, it is difficult for OLOs to indicate their demand for the product. Especially in a small market such as Jersey, it is important to avoid wasted investment in products that no one requires. How can the working groups resolve the issue of demand?
We think that one of the benefits of the working groups proposed above will be that JT and the OLOs can improve their understanding and confidence in each other's plans (provided that the Chinese walls discussed in section 6 work effectively). Once the groups have agreed a specification for a new wholesale product, they should develop an indicative price. This task could be given to a specific commercial sub-group."
23. On 9th October, 2009, JT responded to the report in critical terms contending that, whilst it saw merit in some of Regulaid's observations and recommendations, it did not consider the report to be a sound basis for making policy.
24. In December 2009, in order to progress what it referred to as the Channel Islands Wholesale Access Project (CIWAP), CICRA facilitated a pan-Channel Islands meeting with the incumbent operators and OLOs who had indicated an interest in the development of wholesale access products in either Jersey or Guernsey. It is of note that Cable and Wireless (C&W) is the incumbent operator in Guernsey but is an OLO in Jersey; conversely, JT is an OLO in Guernsey but the incumbent operator in Jersey. CICRA also appointed KPMG to act as independent consultants to liaise with the operators and regulators in order to facilitate discussions on the future requirements for wholesale access products in the Channel Islands. An industry working group ("the WAP group") was set up comprising C&W, Airtel Vodafone, JT, Newtel and the regulators. The aim of the WAP group was, according to the JCRA, to explore the options for wholesale access, to narrow the choice of options down to a manageable shortlist and to bring about the implementation of the necessary wholesale access products on a consensus basis.
25. At a meeting in February 2010, it was agreed that each member of the WAP group should provide a high level cost estimate for a specific wholesale access product. JT was given responsibility for WLR and Naked DSL with Bitstream. For the remainder of that year, the various operators worked on the particular products which had been allocated to them.
26. JT presented its findings at a WAP group meeting on 9th December, 2010, and suggested that JT would incur annual incremental costs of £350,000 in addition to an upfront cost of £2.45 million for providing both WLR and Naked DSL. However there was no breakdown between the two and the provision of WLR was limited to copper networks.
27. On 21st December, 2010, it was agreed that five wholesale access products should be taken forward to the next stage of the process. This included WLR. JT expressed concern about the resource and time requirement for it to lead on two products, namely WLR and Naked DSL and accordingly C&W took over the lead role for Naked DSL.
28. At a WAP group meeting on 11th February, 2011, each operator submitted a presentation on the particular wholesale access product that it had been considering. JT's cost estimate this time was £235,000 with an estimated £1 million required for investment in systems capability to deliver WLR. The estimated timescale for implementation was 12 - 15 months. In view of JT's complaint that the Final Notice includes provision for optional wholesale calls within the definition of WLR, it is to be noted that the definition of WLR presented by JT at this meeting included such calls. The definition is in fact reproduced in Annex B1 of the Final Notice.
29. JT circulated a revised WLR presentation to the WAP Group on 7th March and this repeated the definition of WLR referred to above i.e. it included an option for OLOs to purchase wholesale calls.
30. There was a further WAP Group meeting on 9th June, 2011, at which progress was reviewed. Different views were expressed but JT maintained its objection to WLR, particularly on the grounds that it was upgrading its billing system and working on the Gigabit programme to introduce a fibre network in Jersey. These two programmes drew on its existing resources. Having considered the points made at the meeting, CICRA concluded there was still benefit in including WLR and assessing the need for its implementation with particular reference to the likely timescale and implications of introducing other wholesale access products. CICRA was conscious that, whilst it was not the long-term preference of certain operators, WLR would address some of the access limitations for OLOs.
31. CICRA was concerned about the differences between C&W in Guernsey and JT in Jersey as to the costs and difficulties of implementing WLR (C&W was asserting that the implementation was far simpler and cheaper than was being suggested by JT). Accordingly on 6th July, 2011, CICRA sent an e-mail to JT referring to C&W's assessment of the resources needed to provide WLR and requesting comments. JT replied by e-mail on 8th July and, in terms of timescale said this:-
"In terms of the cross over on the project resources, I agree that the WLR product would be mostly process work and will require some billing input however from our side we have one product manager who is responsible for fixed line product which includes both broadband and line rentals/calls so there would be an overlap there. We also would need to consider other programmes of work running in JT during the development time. The two key programmes that involve a large amount of internal resource and would overlap with both WLR and naked Bitstream/DSL is the change out of our billing and CRM system which is currently due to run until end of quarter 3 2012. The billing and CRM programme requires specialist billing resource from the business and the WLR work does not currently have resource allocated so is likely to have an impact on this programme of work. Our Gigabit Isles programme will require resource from the whole business over the next 18 months and will take up a large amount of technical and product development resource so will have an impact on the naked Bitstream/DSL piece."
32. In an e-mail of the same date to KPMG setting out a cost estimate, JT gave an estimate of six months to implement WLR but emphasised "... these are only ball park figures and don't take into consideration the other programmes of work already in progress in JT".
33. As matters went on, it became clear to CICRA that there was no consensus amongst the operators as to the way forward and that therefore regulatory action would have to be taken if there were to be competition in the provision of wholesale access products.
34. Accordingly, on 24th November, 2011, CICRA published the "Channel Islands Wholesale Access Project Consultation Document" ("the 2011 Consultation"). Section 9 on page 21 stated as follows:-
"Feedback from operators indicates that WLR could be launched in 9 months from the commencement of the project, should it be confined to a PSTN service.
It is apparent from the discussions that there are different views on the priority and importance of the WLR. JT / Wave has stated that it considered WLR had been set aside as not being future proof and not of interest to the parties. Therefore it provided no views on costing or timing of implementation for the WLR product. However, the majority of OLOs and operators were keen to see WLR implemented as quickly as possible in order to compete in the market with single provider solutions. While operators appear to agree that in the long term, Naked DSL with Bitstream, provided FNP is also available, offers the most opportunities to develop retail products for customers, WLR provides the most immediate opportunities for competition and should therefore be the highest priority."
35. On behalf of JT, Advocate Cadin pointed out that the third sentence of the second paragraph in the above extract was completely erroneous. We accept that this is so. Whilst the JCRA may not have agreed with the figures which JT had put forward, JT had undoubtedly provided views both on costings and the timing of implementation of WLR.
36. JT and the OLOs provided responses to the 2011 Consultation in due course. JT's response repeated that it favoured the development of Naked DSL with Bitstream and FNP rather than WLR.
37. Amongst the OLOs, there was, according to CICRA, a general consensus that some form of wholesale access product should be implemented in the Channel Islands. However views varied as to which products were the greatest priority. Nevertheless CICRA concluded that the best first step would be the implementation of WLR. On that aspect there was a disparity between JT in Jersey and C&W in Guernsey, as the incumbent operators, as to the level of resources and cost of implementing WLR. Accordingly CICRA arranged a visit to C&W on 12th March, 2012, and a visit to JT on the 16th May, 2012. Following the latter visit, CICRA sent a letter dated 28th May to JT setting out a number of questions. JT responded on 29th June. We shall refer to that response in more detail shortly but an important aspect for the JCRA was that, whereas previously JT had been indicating that WLR was only appropriate for a copper wire system, it now accepted that it could be applied equally to the fibre optic network which was being rolled out as part of the Gigabit programme.
38. On 1st June, 2012, whilst awaiting the response from JT to CICRA's letter of 28th May, a paper was prepared by the executive for the Board of the JCRA. It recommended that the JCRA should require the introduction of WLR. The paper pointed out that JT continued to express strong resistance to WLR, maintaining that it was old technology. In relation to the fact that it was still awaiting a final response from JT to its letter of 28th May, the paper said this:-
"Given the strength of these views, prior to issuing a draft decision, it seems appropriate to allow JT one further opportunity to explain any remaining concerns with the proposals. To this end, a letter has been sent to JT setting out a series of questions and inviting their response, which we will consider carefully before any decision to issue a draft decision. A response is expected by 20 June. Should JT raise any material concerns, we would intend to return to the Board before issuing a draft decision/initial notice in July.
Given the extensive engagement we have undertaken on WAP over more than two years, and despite careful consideration of JT's objections to date, we have serious concerns that JT's objections are a concerted attempt to delay progress towards a more even playing field for its competitors. We are therefore seeking the Board's approval to issue a draft decision/initial notice in July that the WLR product has passed the high-level cost benefit assessment subject to the above caveat. In that document, we would set out the timescale for the introduction of WLR. The precise details require project management and the operators would need to design and implement the solution in cooperation with each other in a process similar to that used for the mobile number portability project."
The paper proposed that an Initial Notice under the Law should be issued, subject to no convincing contradictory evidence being received from JT in response to the letter of inquiry from the JCRA dated 28th May, 2012. The Board approved that recommendation at its meeting on 13th June.
39. JT responded on 29th June to the JCRA's letter of 28th May with a 4 page document replying to the specific questions posed. As already stated, it accepted for the first time that WLR was in the main a process/administrative solution and had little bearing on the delivery medium, namely copper or fibre. It went on to explain that the Comverse One billing programme (which was the new billing programme referred to in its e-mail of 8th July quoted at para 31 above) did not have provision for WLR written into it. It said that it had requested Comverse for an estimate of the additional time and cost of adding WLR to the programme and that this would be supplied once received (although in fact that never happened). It did make the point in some detail that it was in the course of implementing the Gigabit and Comverse programmes (as well as a programme in Guernsey) and that these programmes were stretching the business in terms of its resource (both normal staff and those brought in on a contract basis). It said that all the programmes had ambitious targets attached to them and the business was pushing to complete all programmes to very tight timescales. It submitted that the introduction of WLR could have an impact on both of the Jersey programmes.
40. Following receipt of JT's response, a further paper was prepared for the Board meeting on 23rd July, 2012. It would appear that JT's response itself was not placed before the Board. All that the paper said about JT's response was as follows:-
"Prior to the June Board meeting, JT was issued with a series of questions seeking to clarify its objections to introducing a wholesale line rental product and JT responded at the end of June. On specific issues, JT has suggested its costs will be double those proposed by C&W. Even if this level of implementation costs were accepted, the high level cost benefit analysis is still passed. JT's objections appear more focussed on avoiding having to develop any service for its legacy copper network. The implication of this stance is that a fibre-only product would effectively delay the introduction of further competition by several years. While JT raises issues with the resources required to develop the WLR service, on the other hand it continues to push for the development of a wholesale Naked DLS Bitstream product, which requires even greater resource to deliver. We find JT's objections uncompelling, and do not believe there is a need to revisit the decision made by the Board in June."
We have to say that this was not a full or fair summary of JT's responses, particularly in relation to the prejudice which JT submitted the introduction of WLR would cause to the Comverse and Gigabit programmes.
41. A draft Initial Notice was put before the Board at its meeting on 23rd July, 2012. Having considered the paper and the draft, the Board approved the issue of an Initial Notice requiring JT to offer WLR. The Initial Notice was in fact not issued until November 2012. It was a seventeen page document which explained the legislative setting, the background, a high level cost benefit analysis, the processes required for the provision of WLR, and invited representations or objections to the Initial Notice. One of the annexes to the Notice set out the considerations under Article 7 of the Law, and Annex C set out the proposed terms of the licence modification by inserting a new condition in the following terms:-
"From the earliest reasonable practicable date after this licence condition takes effect, and in any event no later than 3rd June 2013, the Licensee shall provide Wholesale Line Rental (WLR) for single lines on its fixed / line network to Other Licenced Operators. WLR shall be provided in conformance with the processes set out in Section 7 and Annex B of the Initial Notice published as CICRA 12/52. The Licensee shall be entitled to share the efficient costs of the provision of the WLR service equally with each of the Other Licenced Operators that seek WLR and will ensure that it makes representatives available to attend meetings, upon reasonable notice, with the JCRA and / or its representatives to discuss the implementation or operation of WLR. Where a dispute arises in respect of WLR charges, the JCRA may set the maximum price for the provision of such a service."
42. GCRA resolved to impose a similar condition on the licence of C&W in Guernsey.
43. Representations in response to the Initial Notice were duly received from ACS Telecommunications Consultants, Airtel, C&W, Nitel and JT. We shall in due course have to consider the process followed by the JCRA in more detail but, at a Board meeting on 8th March, 2013, the Board agreed to maintain its decision on WLR and that a Final Notice to that effect should be issued.
44. The Final Notice was issued on 8th May, 2013. As required by Article 11 of the Law, it set out the representations and objections to the Initial Notice in Section 4 and its response to those representations and objections in Section 5, before stating its decision in Section 6. The actual licence modification was expressed in Annex C as the insertion of a new condition 25A in the following terms:-
"25A Wholesale Line Rental
25A.1 From the earliest reasonably practicable date after this Condition takes effect, and in any event no later than 7 November 2013, the Licensee shall make available a Wholesale Line Rental (WLR) service for single lines on its fixed-line Network to Other Licensed Operators. The WLR service shall be provided in conformance with the processes set out in Annex B2 of the Final Notice published as CICRA 13/20.
The Licensee must ensure that, upon reasonable notice from the JCRA, representatives of the Licensee attend meetings with the JCRA and /or its representatives (which meetings may include representatives of Other Licenced Operators), to discuss the implementation or operation of WLR.
The Licensee shall be entitled to share the efficient costs of the provision of the WLR service proportionately with each Other Licensed Operator that seeks a WLR service. Where a dispute arises in respect of WLR charges or other terms and conditions, the JCRA may set the maximum prices and any relevant non-price terms and conditions for the provision of the WLR service by the Licensee.
25A.2 For the purposes of this Condition 25A, Wholesale Line Rental or WLR shall be defined as a service provided by the Licensee to Other Licenced Operators which enables them to offer exchange line rental and calls over the fixed-line Network, such that a User is no longer obliged to hold a contractual relationship with the Licensee and is instead billed by the Other Licensed Operator for exchange line rental and/or calls.
25A.3 Where access to information regarding WLR, whether regarding prices, non-price terms or other matters, is made available by the Licensee to Other Licensed Operators, the Licensee shall also be obliged to provide such information to prospective Licensed Operators upon request."
45. It is against the decision reflected in the Final Notice that JT now appeals.
46. This is the first appeal under Article 12 of the Law which has come before the Court. Accordingly we must, as a first step, identify the correct approach for the Court to adopt when hearing such an appeal.
47. The relevant parts of Article 12 are in the following terms:-
"12 Appeals
(1) An appeal to the Court is available against the exercise of a specified regulatory function, whether or not the exercise has taken effect, as follows:-
a) ...
b) ...
c) ...
d) ...
e) If the exercise concerns a licence, excluding an exercise that concerns an approval, but including:-
1) the giving, or failure to give, a direction under Article 19, or
2) the imposition of a financial penalty under Article 19A, or the amount of any such penalty imposed,
any person may appeal against the exercise.
(3) ...
(4) In determining an appeal under this Article, the Court is not restricted to a consideration of questions of law or to the facts contained in an application, or other information, before the Authority.
(5) When it determines an appeal under this Article, the Court may:
a) confirm the exercise (or proposal) appealed against;
b) refer the matter of the exercise back to the Authority for its determination, or other action, in accordance with the law or
c) exercise a specified regulatory function (and do any incidental thing) in the same way as the Authority could have done.
(6) The Court may make such orders as it thinks appropriate, including ancillary orders and orders as to costs."
48. As can be seen, the relevant words in paragraph (1)(e) are simply "may appeal". There is no qualification or limitation of these words and no indication of any specific grounds for allowing an appeal. This is to be contrasted with, for example, the Island Planning Law 1964 (and its successor the Planning and Building (Jersey) Law 2002) (each "the Planning Law") and the Financial Services (Jersey) Law 1998, which both provide that a person may only appeal on the grounds that the decision to be appealed from is "... unreasonable having regard to all the circumstances of the case."
49. As explained in Interface Management Limited-v-Jersey Financial Services Commission [2003] JLR 524 at paras 33-35, this Court had traditionally applied a very restrictive test in appeals from administrative decisions. Apart from considering the vires of the decision and whether a fair and proper procedure had been followed, the Court would only interfere in relation to the merits of the decision if it was one which no reasonable decision maker could have reached i.e. the Wednesbury unreasonable test applied in judicial review.
50. The error in this approach was exposed in the seminal case of IDC-v-Fairview Farm Limited [1996] JLR 306 where the Court of Appeal, presided over by Le Quesne JA, made it clear that the test on the third aspect was not the judicial review test of being Wednesbury unreasonable; the test was the lesser threshold of whether the Court considered the decision to be unreasonable. Accordingly, in Interface, the Court endeavoured to summarise the position as follows at paragraph 35:-
"It follows that... the Court will look at three aspects on an appeal. First, it will consider whether the decision was one which the decision-maker was empowered to make, i.e. was the decision ultra vires? Secondly, it will look at the correctness and fairness of the procedure in order to decide whether the proceedings of the decision maker were in general sufficient and satisfactory. Thirdly, it will look at the merits of the decision and decide whether it considers that the decision was unreasonable...".
51. In Anchor Trust Company Limited-v-Jersey Financial Services Commission [2005] JLR 428, the Court gave further consideration to the third limb of the test described above, namely whether the decision was unreasonable. Having discussed the matter at paragraphs 6-12, the Court summarised the position as follows at paragraphs 13 and 14:-
"13. In our judgment, these authorities confirmed that there are at least three possible degrees of "wrongness" which the Court may find in respect of a decision under appeal. In ascending order of "wrongness" they are as follows:-
a) The decision was wrong in the sense it is not the decision which the Jurats would themselves have reached.
b) The decision was wrong to such an extent that the Jurats would categorise it as unreasonable.
c) The decision was wrong to such an extent that it goes beyond merely being unreasonable and becomes a decision to which no reasonable decision-maker could have come i.e. "Wednesbury unreasonable" or "irrational".
14. On an appeal under the 1998 Law (and any similarly-worded Law) the Jurats should dismiss the appeal if their conclusion falls within (a) of the preceding paragraph but should allow the appeal if it falls within (b). Contrary to Advocate Kelleher's submissions, the decision does not have to be categorised as falling within (c) before an appeal can be successful."
52. Interface, Fairview Farm and Anchor were all concerned with statutes where the grounds of appeal were specifically stated in the statute as being that the decision was "unreasonable having regard to all the circumstances of the case". That is not the case in relation to Article 12. It simply states that a person "may appeal". In that sense it is similar to the appeal provisions of Article 12(1) of the Housing (Jersey) Law 1949 ("the Housing Law"). Despite the difference in wording, there was a succession of cases over the years where the Court adopted an approach on appeals under the Housing Law which was really indistinguishable from the approach it adopted on appeals under the Planning Law, albeit that the exact wording used in the various judgments was not identical. Thus in Cottignies-v-Housing Committee [1969] JJ 1149 the Court rejected the proposition that the Court should, in effect, consider the application de novo and come to its own conclusion. The Court endorsed its previous decisions that Article 12 did not have the effect of substituting the Court for the Housing Committee and that the opinion of the Court on a particular application could be no more valid than that of the Committee; indeed it was likely to be less so. The Court affirmed that it could not interfere unless it could be shown that the discretion of the Housing Committee was exercised in consequence of an erroneous view of law, or an obvious mistake of fact, or by taking into account irrelevant matters, or by failing to take into account relevant matters, or because it did not accord to common sense and justice. Thus the approach adopted on an appeal under the Housing Law was effectively the same as that applied (at the time) on appeals under the Planning Law and was the test applicable for judicial review.
53. This approach of the Court in relation to appeals under the Housing Law was challenged before the Court of Appeal in Housing Committee-v-Phantesie Investments Limited [1986-86] JLR 96. The Court of Appeal agreed that the test which the Royal Court had adopted when hearing administrative appeals was in effect the judicial review test. However, it upheld the decision of the Royal Court that, on the facts, the decision of the Housing Committee in that case was one to which no reasonable Housing Committee could have come. It therefore did not need to deal with the argument that the Court should adopt a wider approach. However it said this at 116:-
"It would be otiose for us to go in to the very important point raised by Mr Bailhache as to the scope of an appeal under Article 12(1) of the Housing (Jersey) Law 1949. In substance the argument is, as I have earlier stated, that the words "may appeal to the Court against the decision of the Committee" coupled with "the power to give such directions in the matter as it considers proper and the Committee shall comply with any such direction" together with the fact that evidence can be called, or point, says Mr Bailhache, to a re-hearing situation de novo and put the Royal Court in precisely the same position as the Housing Committee. It could therefore take its own view on the merits of this case and would not be restricted to the sort of tests which are applied on an application for judicial review, such as the Wednesbury test, on which I have said it found itself satisfied....".
54. Having then referred to the line of cases in the Royal Court which pointed to a much narrower approach, Neill JA went on to say this at 117:-
"What I think emerges from the cases that we have seen is that in all those decisions which have been given by the Jersey courts, no reference has been made to a line of English authorities where the words "may appeal" have been held many times - I will not say invariably, because unless one has carried out the most exhausting research exercise that would be a dangerous statement - but in all the cases we have seen coming from England rather than in the Privy Council on appeal from Canada, "may appeal" has been held to give an unrestricted right of appeal and to point to a de novo hearing. I think the earliest of the cases we were shown was Fulham Borough Council v Santilli, and there are other cases in the same line: Godfrey v Bournemouth Corp, Greenly v Lawrence and the judgments of Edmund Davies and Phillimore LJJ in Sagnata Investments Limited v Norwich Corp where there was a citation back to Archbold, Quarter Sessions Practice 6th ed. (1908) showing the law as already clearly established to that effect.
On the other side, we were referred in reply, by Mr Whelan, to a couple of cases in the Privy Council on appeal from Canada where an opposite approach appears to have been adopted but as seems to happen continually in this field, none of the cases from England which I have just mentioned had been cited and we have not got the advantage of knowing what was the language of the Canadian statue which was being construed in those cases. The two cases are Minister of Natl. Rev. v Wright's Canadian Ropes Ltd and DR Fraser & Co Ltd v Minister of Natl. Rev..
All that we need to say today and all that we propose to say is that there is a serious question to be considered, and when that question comes to be considered the Privy Council cases will have to be before the court, the text of the Canadian statute will have to be there and it will then be a question for the courts of this Island to consider whether the English cases are of significance and importance or whether a more restricted meaning on the word "appeal" should be attached to it in accordance with the views so far taken here. But beyond saying that that is a serious question which cannot be resolved and does not need to be resolved today, we say no more about the matter."
55. The matter of appeals under the Housing Law next came before the Royal Court in the case of Mesch-v-Housing Committee [1990] JLR 269 at which time, in accordance with the views expressed in Phantesie, the issue of the correct approach was revisited and the English and Canadian cases referred to in Phantesie were placed before the Court. They are discussed in some detail in the judgment of Crill, Bailiff. The final conclusion of the Court was expressed as follows at 287:-
"As we have said above, we would not like the Royal Court to be deprived of the right to hear fresh evidence on an appeal from a decision of an administrative body where the right of appeal, as in the instant case, appears to be unfettered by the words conferring a right of appeal. Accordingly, we find, as a matter of law, that the Royal Court has the power to reverse a discretionary decision of an administrative body where the appellate provisions are as wide as those in the Housing (Jersey) Law 1949, which would allow it to hear fresh evidence or decide on any disputed fact. That power, however, is not unfettered but must be exercised, as Dawson J said in the Peko-Wallsend case ([1987] LRC (Const.) at 837) "...[w]here there can be some identified error or manifest injustice in the exercise of [the administering body's] discretion." Our decision might have meant that but for the subsequent dilution of the restrictive approach of the Royal Court in earlier cases by subsequent decisions we might have felt obliged to rule that earlier decisions were wrong. We would have been reluctant to do this, particularly in the light of the careful analysis of the cases in Habin v Gambling Licencing Auth. to which the Court of Appeal in Phantesie referred. If a decision is such that no Committee properly directed could reasonably have made it and it is contrary to justice and common sense, it must follow that that decision is wrong and should be struck down."
56. With due respect to Crill B, the reasoning is not entirely clear. Although he refers at 281 to some retreat from what he called the extreme and narrow view of the earlier cases, it is not at all clear why he thought that this had occurred. The position which he described (at 281) as having been arrived at was that the Court would only intervene if the decision was one which could not have been reached "by any Committee acting reasonably and properly directing itself". This is of course Wednesbury unreasonableness and was the test that the Royal Court had always applied. Similarly, his use of the phrase "contrary to justice and common sense" seems to us to add nothing. If a decision is contrary to justice and common sense, it will be Wednesbury unreasonable because a decision which is contrary to justice and common sense will be a decision to which no reasonable tribunal should come. In short, doing the best we can, we do not understand Mesch as having altered or widened the test which had hitherto been applied on appeals under the Housing Law, although it did make it clear that the Court was free to hear further evidence.
57. The only other reference to appeals under the Housing Law is to be found in the decision of the Court of Appeal in Glazebrook-v-Housing Committee [2000] JLR 381 where Phantesie and Fairview Farm were cited although, somewhat unfortunately, Mesch appears not to have been. As to the test on appeal, Southwell JA said this at 389:-
"The powers of the Court on any such appeal are substantially wider than those which the court would have if there were an application for judicial review rather than an appeal under art 12. The extent of the Court's powers can be seen by reference to the decision of this Court in Island Dev. Committee v Fairview Farm Limited in the judgment of Le Quesne JA (1996 JLR 317). The wording of the statutory provision for appeals in art. 21 of the Island Planning (Jersey) Law 1964 (the provision being considered in Fairview) is different from the wording of art. 12 of the 1949 Law. Since the point was not fully argued before us, I would not wish to express any finally concluded view as to the ambit of the court's powers under art. 12. It seems to me to be plain that on an art. 12 appeal the court has a duty to consider not only whether the Committee has acted within its powers and in accordance with appropriate procedure (the judicial review function), but also to form its own view, not just as to whether any reasonable body could have reached the decision which the Committee reached, but whether that decision was, in the view of the court, unreasonable (the appeal function). In performing this function, the Court is entitled to allow whatever weight it thinks appropriate to the experience and knowledge of the Committee."
We do not think that Southwell JA was purporting in that case to give a definitive ruling that the Court decision must consider the decision of the Housing Committee to be unreasonable before it can intervene on an appeal; on the contrary, he makes it clear that the point was not fully argued and he is not expressing any finally concluded view. What he was saying is that, on any view, the test on appeal cannot be more restrictive than on an appeal under the Planning Law and that at its highest, the test must be that of being 'unreasonable' (as per Fairview Farm) rather than Wednesbury unreasonable.
58. It is not for us today to determine the correct test on an appeal under the Housing Law as it is not directly before us. But, given the similarity of the wording of the appeal provisions in the Law and in the Housing Law, we think it useful to summarise the present position as we see it in relation to appeals under the Housing Law:-
(i) Unlike the Planning Law, the ground of appeal in the Housing Law is not limited to where the decision is unreasonable. The statute simply states that a person "may appeal" without any qualification or limitation.
(ii) However, the Royal Court has historically laid down a very narrow test on appeals under both the Planning and Housing Laws which has been the same as the test on judicial review i.e., was the decision Wednesbury unreasonable?
(iii) The position was corrected in relation to appeals under the Planning Law in Fairview Farm. The Court made it clear that the appellant only has to show that the decision was unreasonable, not that it crosses the even higher threshold of being Wednesbury unreasonable.
(iv) In Phantesie, the Court of Appeal made it clear that there was a serious issue as to whether the correct test in appeals under the Housing Law was much wider than the judicial review approach which the Court had applied hitherto and amounted to a de novo hearing entitling the Court to substitute its own view for that of the Committee.
(v) In Mesch, the Royal Court purported to reassess the position but appears, as best one can understand, to have retained the judicial review test.
(vi) If that is a correct interpretation of Mesch, the decision seems to be untenable. On any view, given the unqualified wording in the Housing Law as compared with the wording in the Planning Law (which requires the decision to be unreasonable), the grounds for appeal under the Housing Law cannot possibly be narrower than those under the Planning Law.
(vii) Mesch is in any event inconsistent with the subsequent observations of Southwell JA in Glazebrook where it is made clear that, at its very highest, the test for an appeal under the Housing Law is that it was unreasonable; there is no need to go further and prove that it was Wednesbury unreasonable.
(viii) The upshot is that, apart from in Mesch (where an erroneous decision was reached), the review of the test for appeals under the Housing Law envisaged by the Court of Appeal in Phantesie has not yet taken place. The position therefore is that, at worst, an appellant under the Housing Law may have to prove that the decision is unreasonable (as per Glazebrook) but it remains strongly arguable that the test is wider, as described in Phantesie.
59. The only other Jersey case to which we were referred is the recent case of Volaw Trust and Corporate Services Limited-v-Comptroller of Taxes [2013] JRC 095, where an appeal was brought under Article 14 of the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 (where again there is no reference in the Regulations to the need for the decision to be unreasonable).
60. At paragraph 3 of the judgment Page, Commissioner said this:-
"It is common ground between counsel that the appeal involves a hearing de novo; that it is not therefore for the appellants to show that the Comptroller erred on one or more of the more limited grounds that would be required on a judicial review but, rather, that it is for the Court - standing, in effect, in the shoes on the Comptroller - to consider the matter afresh and to "confirm, vary or set aside the requirement to which the appeal relates" as provided by Regulation 14, paragraph (4). Whether this is indeed the right approach may be for further consideration on another occasion but for present purposes we proceed on the assumption that it is correct."
Given the fact that the matter proceeded there by agreement and given the further fact that the Court appears to have had reservations as to whether this was the right approach, we do not think that we can derive any assistance from that case.
61. Both counsel very helpfully referred us to the cases discussed above in their written submissions. JT submitted that, although it was conscious of the differences in language between the appeal provisions in Article 12 of the Law and those in the Planning Law and the Financial Services Law, it submitted that, as the Law relates to a specialised sector of unusual technological complexity which is outside the usual remit of the Royal Court, the Court should apply the test in Anchor and Glazebrook, namely it should only intervene if it considered that the decision of the JCRA was unreasonable. The JCRA agreed that this was the test which the Court should apply.
62. At the hearing, the Court raised the issue as to whether the different wording of the appeal provision in the Law did not mean that the test was wider than in Anchor (where the relevant statute refers specifically to the need for the decision to be unreasonable before the Court can intervene). It requested counsel to file further submissions on the point and also to produce for it the various cases from England and from the Privy Council on appeal from Canada referred to in Phantesie.
63. These submissions were duly provided and the Court is grateful for them. JT appears to be maintaining its position that the Court should apply the test described in Anchor. The JCRA's supplemental submissions included the following at paragraph 17:-
"In the JCRA's first written submissions, it invited the Court to apply the test in Anchor. However, in light of the fact that the appellant appears to be arguing for the Wednesbury test in their submissions, and in light of the wording of the Telecommunications Law being closer to the terms of the Housing Law rather than the Financial Services Law, we respectfully invite the Court to apply the test as put forward by the Appellant, namely whether the decision was Wednesbury unreasonable or irrational".
64. Whilst we agree that there is ambiguity in some of the phraseology used in its supplementary submissions, we do not understand JT to be arguing that Wednesbury unreasonableness has to be reached before an appeal under the Law can be allowed. Furthermore, we simply fail to follow the logic of the argument in the JCRA's submission quoted above that, because of the different wording in the Law as compared with the Financial Services Law, (i.e. the lack of reference to the decision being unreasonable) this somehow raises the bar, so that, before it can be overturned, a decision must be Wednesbury unreasonable rather than simply unreasonable. Such a submission is inconsistent with the observations of Southwell JA in Glazebrook in relation to the fairly similar wording under the Housing Law and is, in our judgment, untenable.
65. It is important to emphasise that counsel's submissions have been directed only to the third aspect of the Court's consideration on an appeal (as described in the extract from Interface quoted at para 50 above), namely the merits of the decision. There is no dispute that, if the decision was unlawful or ultra vires in any way or if a fair procedure has not been followed, or if other grounds which would suffice for judicial review are made out (such as a failure to take a relevant factor into account), the Court may allow the appeal.
66. Notwithstanding that counsel appeared to be agreed that the Court must at the very least find the decision of the JCRA to have been unreasonable before it can allow an appeal, the Court must consider whether that is correct. The approach to be adopted on an appeal is a matter of law and the Court must determine for itself the correct test to be applied on this appeal.
67. The fact that an appeal provision states simply that a person 'may appeal' does not lead inexorably to the conclusion that the appeal body can consider the matter afresh and reach its own decision. It all depends on the context. After all, a civil litigant may appeal from the Royal Court to the Court of Appeal and there is nothing in the Court of Appeal (Jersey) Law 1961 which gives guidance as to the circumstances in which the Court of Appeal will allow an appeal. The right is not qualified and there is no reference, for example, to the Court of Appeal only intervening if the decision of the Court below is unreasonable.
68. Yet there is ample authority in Jersey, based on similar authority in England, that the approach of the Court of Appeal will depend upon the nature of the particular appeal before it. Thus, where the appeal turns on a question of fact where the Court below has seen and heard the witnesses, the threshold for the Court of Appeal allowing an appeal is extremely high. Unless the finding of fact is insupportable on any objective analysis, it will be immune from review (see, for example. Lord Kerr in Re B (a child) (Care Order: Proportionality: Criteria and Full Review) [2013] 3 All ER 929 at para 108. Similarly, where the judgment below constitutes the exercise of a discretion, the Court of Appeal will only allow an appeal if the Royal Court has misdirected itself as to the applicable principles, has considered any improper matters or failed to consider proper matters or has reached a decision which is plainly wrong (United Capital Corporation Limited-v-Bender [2006] JLR 269). Being 'plainly wrong' is the same as another expression which is commonly used, namely that a decision exceeds the generous ambit within which reasonable disagreement is possible (see Re B at [38]) Similarly, where the Royal Court's determination is one of evaluation (in comparing various factors in favour of one or other course) the Court of Appeal will still not interfere unless the Royal Court has taken into account irrelevant factors, has failed to take into account relevant factors, or has reached a conclusion outside the spectrum of reasonableness. It is not for the Court of Appeal simply to substitute its view for that of the Royal Court (Jaiswal-v-Jaiswal [2007] JLR 305 per Beloff JA at para 76). As against that, where an appeal turns on a point of law, the Court of Appeal will interfere if it simply considers that the Court below was wrong. In short, even where there is an unqualified right of appeal, the approach of the appellate tribunal may vary according to the nature of the appeal.
69. The fact that there is no single answer merely by reference to the fact that the appeal is not subject to any qualification in the statute, is shown by a comparison of the English and Canadian cases referred to in Phantesie and to which we have been referred in this case. We do not think it necessary to analyse them because ultimately we consider them to be irreconcilable. In the English cases referred to in Phantesie, the court has allowed the appeal if satisfied that the decision below was wrong. No higher threshold such as 'plainly wrong' has been required. Conversely, in the two Canadian cases, where the statutory right of appeal was not subject to any qualification in the statute, the Privy Council held that the court, to whom an appeal against the decision of the Minister lay, could not intervene simply on the ground that the court would have reached a different decision. An appellant had to go beyond that to show there had been some error of law or other lack of reasonableness. Accordingly we are unable ultimately to derive any assistance from these cases. As Costello J said in the Irish case of Dunne-v-Minister for Fisheries and Food [1984] I.R. 230 at 238, having considered one of the Privy Council cases referred to in Phantesie:-
"Therefore, in my opinion, the Canadian Ropes Case lays down no principle of general application. When the Court is given by statute an appellate jurisdiction to confirm or annul a bye-law or other administrative act, it must construe the words used by the legislature to see whether the Court has power to substitute its own opinion for that of the administrative authority if, on the evidence before it, the Court considers that the impugned act was wrong on the merits and not merely wrong in law."
70. As with appeals from a court, it seems to us that the nature of the administrative decision under appeal must have some relevance to the approach which the Court adopts on hearing an appeal. For example, an appeal against a decision of the Housing Committee (now the Housing Minister) is likely to turn on comparatively simple factual issues where the Court may well be in just as good a position to reach a decision as the Minister. Conversely, in an area of complex and technical regulation (whether of financial institutions or the telecommunications industry) the Court may suffer from a considerable disadvantage as compared with the body to whom the legislature has committed the primary decision making.
71. We have carefully considered the correct approach to be adopted in appeals under the Law and have concluded that the Court should allow an appeal if it is satisfied that the decision of the JCRA was wrong; it does not have to go further and conclude that the decision was plainly wrong or so wrong as to be unreasonable, let alone attaining the higher threshold of being Wednesbury unreasonable. We would summarise our reasons for so concluding as follows:-
(i) There is nothing in Article 12 which qualifies the right of appeal. In particular, there is no reference to any need for the decision of the JCRA to be unreasonable. In a number of statutes, the States has specifically inserted such a requirement (e.g. the Planning Law and the Financial Services Law). Logically, some consequence must attach to this difference. Clearly, in those latter Laws, the States has decided that it does not wish the Court to intervene unless the decision is so wrong as to be unreasonable. Had it wished that to be the approach of the Court in appeals under the Law (or indeed under the Housing Law) one would have expected the States to have said so. The fact that there is no such provision must suggest that there is a lower threshold for an appeal than in those Laws where the requirement of unreasonableness is specified.
(ii) Support is given to this by an analysis of the provisions of Article 12 itself. Paragraph (4) specifically provides that the Court is not restricted to consideration of the facts, law or other information which was considered by the JCRA. The Court is clearly therefore free to receive further evidence, as indeed it has done so in this case. Paragraph (5) goes on to say that the Court may exercise a specified regulatory function in the same way as the JCRA could have done. It follows that Article 12 envisages the possibility of the Court receiving further evidence which was not before the JCRA and, as a result of that further evidence, concluding that it should itself exercise a specified regulatory function in a way different from the way in which the JCRA had exercised it. In those circumstances, it would be hard to categorise the original decision of the JCRA as unreasonable. The Court may conclude that it was entirely correct on the basis of the information then before the JCRA but the new information has lead the Court to conclude that a different decision should now be taken. This all points to a wider test for appeal.
(iii) Although, as described above, different courts have reached different decisions about the test for upholding an appeal against an administrative decision, we think the trend is in favour of allowing wider grounds of appeal, not least to ensure compliance with Article 6 ECHR where this is applicable. As an example we would quote from the observations of Lord Millett, speaking for the Privy Council in Ghosh-v-General Medical Council [2001] 1 WLR 1915, which concerned an appeal by a medical practitioner against a decision of the professional conduct committee of the GMC to strike her off. The Privy Council gave consideration to the nature of its role and Lord Millett said this at paragraphs 33 and 34:-
"33. Practitioners have a statutory right of appeal to the Board under Section 40 of the Medical Act 1983, which does not limit or qualify the right of the appeal or the jurisdiction of the Board in any respect. The Board's jurisdiction is appellate, not supervisory. The appeal is by way of a rehearing in which the Board is fully entitled to substitute its own decision for that of the committee. The fact that the appeal is on paper and that witnesses are not recalled makes it incumbent upon the appellant to demonstrate that some error has occurred in the proceedings before the committee or in its decision, but this is true of most appellate processes.
34. It is true that the Board's power of intervention may be circumscribed by the circumstances in which they are invoked, particularly in the case of appeals against sentence. But their Lordships wish to emphasise that their powers are not as limited as may be suggested by some of the observations which have been made in the past. In Evans v General Medical Council (Unreported) 19 November 1984 the Board said:
"The principles upon which this Board acts in reviewing sentences passed by the Professional Conduct Committee are well settled. It has been said time and again that a disciplinary committee are the best possible people for weighing the seriousness of professional misconduct, and that the Board will be very slow to interfere with the exercise of the discretion of such a committee... The committee are familiar with the whole gradation of seriousness of the cases of various types which come before them, and are peculiarly well qualified to say at what point on that gradation erasure becomes the appropriate sentence. This Board does not have that advantage nor can it have the same capacity for judging what measures are from time to time required for the purpose of maintaining professional standards."
For these reasons the Board will accord an appropriate measure of respect to the judgment of the committee whether the practioner's failings amount to serious professional misconduct and on the measures necessary to maintain professional standards and provide adequate protection to the public. But the Board will not defer to the committee's judgment more than is warranted by the circumstances ...".
72. Although, for the reasons given, we have concluded that the Court should intervene if satisfied that the decision of the JCRA was wrong, as Lord Millett makes clear, the burden lies on an appellant to satisfy the Court that this is so. When considering whether it has been so satisfied, the Court will have due regard to the nature of the decision under appeal. As Ereaut, Bailiff said in Habin-v-Gambling Licensing Authority [1971] JJ 1637 at 1642:-
"The two things which the Gambling Licensing Authority and the other authorities which we have listed have in common are: firstly, that the questions with which they have to deal are not legal rights but a conflict between public and private interests bound up in a greater or lesser degree with government policy as outlined by statute: and secondly, that none of their decisions can be demonstrably right, although some may be demonstrably wrong."
73. These observations are particularly apt in relation to decisions made by the JCRA as regulator of the telecommunications industry. This is a complex and technical area. Decisions as to, for example, the level of competition which should be introduced, and the speed at which this should occur and the nature of measures which should be introduced will bring into play many competing considerations and will call for a considerable level of expertise. It is the JCRA which has been appointed by the States to regulate the industry, not the Court. This is not surprising. The JCRA consists of members who may be expected to have expertise in the area of business or competition which the Court does not have and they will also have easy access to further assistance from industry experts. To adapt the observations of Lord Millett, it seems to us that, on an appeal of the nature which is before us now, the Court will accord a considerable measure of respect to the judgment of the JCRA. Nevertheless, having done so, the Court will intervene if it is persuaded that the decision of the JCRA was wrong.
74. In summary, adapting what was said in Interface to reflect our decision in this case, the Court will look at three aspects on an appeal:-
(i) It will consider whether the decision was one which the JCRA was empowered to make i.e. was the decision ultra vires?
(ii) It will look at the correctness and fairness of the procedure in order to decide whether the proceedings of the JCRA were in general sufficient and satisfactory.
(iii) It will look at the merits of the decision (as well of course as considering matters such as whether the JCRA took into account any irrelevant factors or failed to have regard to relevant factors) and decide whether the appellant has satisfied it that the decision was wrong. In reaching its conclusion, it will give due weight to the decision of the JCRA bearing in mind its expertise and experience.
Where an appeal is allowed because of procedural errors or unfairness of sufficient gravity, the likely remedy will be that the decision is quashed and the matter remitted to the JCRA for reconsideration. Where, on the other hand, the appeal is allowed because the Court considers the decision to be wrong, it will make such order as it thinks fit. This may be to remit the matter to the JCRA for a new decision to be taken or it may be that the Court will, in accordance with Article 12(5)(c) make a decision itself as to the exercise of the specified regulatory function.
75. The Notice of Appeal and JT's written submissions in support set out a substantial number of grounds of appeal. With no disrespect to Advocate Cadin, we prefer to summarise them in a slightly different format but we hope to address all the material points which he has raised. Some of the grounds relate to the procedure followed, some to the lawfulness of the decision and some to its merits. As will appear, we uphold JT's appeal on two grounds, but reject it on all the other grounds. We propose to take first the two grounds upon which JT succeeds and then deal with those upon which it fails.
76. As set out in paragraph 6 above, Article 11 of the Law establishes a very formal procedure whereby, following the issue of an Initial Notice, persons may make representations and objections. Article 11 (4) provides that, if any representations or objections are made in response to an Initial Notice, "...the Authority shall consider them....." [emphasis added]. It is clear therefore that the legislature intended that, before proceeding to issue a Final Notice, the Authority should be aware of and have fairly and properly considered any representations or objections made in response to the Initial Notice.
77. The JCRA accepts that, at no time before the issuing of the Final Notice, did the Board see the representations and objections of JT (or indeed the OLOs) made in response to the Initial Notice. What happened was this. At its meeting on 8th March, 2013, the only information about the responses to the Initial Notice was that contained in the two page Board paper prepared by the executive of the JCRA for that meeting. That had a section summarising the responses to the Initial Notice. We have to say that this is a somewhat surprising approach. This was a decision as to whether to add a condition to the licence of JT. JT was clearly going to be significantly affected by the decision and had put in a response to the Initial Notice. One would have expected that response itself (and indeed the responses of the OLOs) to be made available to the Board. We are not to be taken as saying that the Law automatically requires that every response to an Initial Notice is reproduced in full to the Board, and that a failure to do will automatically render the decision liable to be quashed. Many responses may well be extremely short and uncontentious and can be summarised. But it would be wise for the Board to see any significant responses in full and, if the Board is going to rely on a summary, that summary must be sufficiently complete to give a fair and accurate portrayal of the response.
78. We have concluded that the summary by the executive in the paper prepared for the Board meeting of 8th March failed by quite a substantial margin to meet that requirement.
79. JT's response of 19th December, 2012, to the Initial Notice seems to us to have made the following eight points:-
(i) JT remained in favour of developing wholesale access products that were fit for purpose and future proof. It was not in the interest of Channel Island consumers to develop legacy products. It repeated its view that new products could be forward looking and it therefore favoured the development of Naked DSL with Bitstream and FNP rather than WLR.
(ii) It objected to the six months which had been given in the Initial Notice for complying with the proposed new condition. It pointed out that in the Initial Notice the JCRA had stated that "feedback from operators indicates that WLR could be launched in nine months from the commencement of the project". It pointed out that the JCRA had disregarded this feedback from operators, who were experts in running telecommunication businesses, and had picked an arbitrary date which was setting JT up for failure. It said that if operators told the JCRA that it would take nine months, then the JCRA should give the operators nine months to implement WLR.
(iii) It submitted that the views of the OLOs were somewhat different to that portrayed by JCRA in the Initial Notice. JT submitted that Newtel were no longer interested in WLR and that C&W's desire for WLR was based solely on the cost of introducing the product in Guernsey and had no bearing on their requirements in Jersey. It pointed out that C&W had specifically requested that JT develop a Naked Bitstream service in Jersey for fibre and that JT had started discussions with C&W and Newtel on their requirements.
(iv) The JCRA's decision to develop WLR would have an impact on the resources available within JT to consider other wholesale access products (such as fibre Naked Bitstream) during 2013. If the decision to direct WLR were maintained, JT would have to prioritise the development of WLR over other wholesale products during 2013.
(v) Whilst JT accepted that the JCRA had consulted with OLOs over a period of time, it said that it would strongly argue that the passage of time between the consultation and the Initial Notice had altered the OLO's requirements in Jersey and that there was a greater need for Naked Bitstream than WLR.
(vi) JT pointed out that its number one priority in Jersey was its Gigabit programme which was intended to provide fibre connection to every property in Jersey. This was a political objective of the States and was in the interests of all users of fixed line telecommunication services in the Island. Gigabit was an ambitious and intensive programme. JT was anxious to ensure that nothing distracted it from meeting the targets of the Gigabit programme.
(vii) Furthermore, requiring JT to introduce WLR on copper line and then fibre would lead to duplication. It would have to move OLO services onto a copper line and then arrange for a transfer to fibre. JT believed it would be more efficient for OLO customers wishing to take a WLR service to do this at the same time as they switched to fibre. This would also make matters simpler as it would only require one tariff option to be input into the WLR system. This would not lead to substantial delay as every premise in Jersey would have the ability to connect onto JT's fibre network by April 2013 and JT would be undertaking a process of removing copper from its network on a geographic basis with the intention of removing all copper services by the end of December 2014.
(viii) The statement by the JCRA in the Initial Notice that both C&W (in Guernsey) and JT (in Jersey) use the Comverse billing system was misleading because there was a considerable difference. C&W in Guernsey already had the Comverse system whereas JT was in the process of introducing the Comverse system. That was a huge piece of work and had been planned for some time. It was commonly understood that, when a company was implementing major changes in technology and systems and had a set programme to implement those changes, any additional out of scope elements that are forced into the programme will increase time and cost. The JCRA had disregarded this.
80. The paper submitted by the executive to the Board meeting of 8th March (which was intended to determine whether a Final Notice should be issued maintaining the proposal for WLR) consisted of only two pages. It seems to us that only the following passages dealt with JT's response:-
"JT continued to express its reservations regarding WLR, but has somewhat belatedly (and at least implicitly) recognised that WLR is not simply a legacy product confined to copper or fibre networks - demonstrated by JT's proposal to link the use of WLR with the forced migration of the existing customers of Other Licenced Operators [OLOs] to fibre.
By contrast, CW views WLR as simple and relatively cheap to implement - with an annual cost of around £40k (£1 to £1.50 per customer) in Guernsey. JT is less specific and, in its response to the Initial Notice, restates its concerns about its ability to find resources for the introduction of WLR as well as existing projects, and the timescale for implementation. While we are sensitive to issues of timing and cost, we believe that CW has identified a low cost and practical approach that could be applied across both operators. Moreover, JT has not been able to provide any firm evidence of the need for it to incur additional costs compared to CW. We do not believe that there will be substantial overlap in the resources required for WLR implementation and the Gigabit Jersey project, since one (WLR) is primarily a billing-related product, while the other is an infrastructure project.........
The most likely issues of contention all arise from JT's submissions, and centre on the choice of WLR at all, the timetable (JT believes implementation will take at least nine months), and the implementation costs (JT's estimates are substantially higher than CW's).
Overall, we have not been impressed with the quality of JT's response to the Initial Notice / Draft Decision, and the lack of evidence provided to support its position. Reliance on statements such as "it is commonly understood", rather than identification of specific costs, has considerably weakened the strength of its arguments and we see little justification for accepting its higher cost or resource estimates. Given that operators have been aware for some time of the wholesale access project and the potential for WLR to be introduced, it is disappointing that JT has not already included it in the specification for its updated billing system, which is currently being installed. It could be implied that JT's offer to allow customers to benefit from WLR in switching to fibre in fact means that JT accepts that it can be delivered within a reasonable time and at a reasonable cost."
81. In our judgment, that summary does not fairly and accurately put forward the arguments raised by JT. It touches on some of them but a Board member reading only the summary in the Board paper would not be fully aware of the arguments put forward by JT in its response nor such reasons as it gave in support of those arguments. It might be said that some of the arguments made by JT repeated points made in the response of JT on 29th June, 2012, to the queries raised by the JCRA in its letter of 28th May. However, as stated at paragraph 40 above, that response was also not put before the Board before it decided to finally issue the Initial Notice. The Board was only given a summary (quoted in paragraph 40) of JT's response and, in our judgment, that summary was equally deficient in terms of conveying a fair and accurate portrayal of JT's concerns, particularly in relation to the possible prejudice to the Comverse and Gigabit programmes.
82. A fair process is extremely important in administrative decisions. That is why the courts have regularly quashed such decisions where a fair process has not been followed. The powers conferred upon the JCRA are far reaching and capable of having a considerable effect on those affected by the exercise of such powers. Even without the terms of Article 11 (4), the Court would have implied, from the process laid down in Article 11 of issuing an Initial Notice for consultation followed by the issue of a Final Notice, that the JCRA should properly and fairly consider any responses to the Initial Notice. The fact that that duty is made express by Article 11 (4) simply adds to the strength of the point.
83. The decision to issue the Final Notice was made by the Board at its meeting on 8th March, 2013, and it confirmed that a draft of the Final Notice did not need to be circulated for approval before it was published. Thus the key decision to maintain the requirement for WLR and issue the Final Notice was taken by the members of the Board present at the meeting on 8th March. Whilst those members of the executive present were aware of the exact terms of JT's response to the Initial Notice, none of the other members were, because the Board paper did not contain a fair and proper summary of the points made; nor had such Board members seen the observations of JT in 2012 prior to the issue of the Initial Notice. They therefore made their decision in ignorance of the points made by JT save to the limited extent that they were to be found in the Board paper.
84. In the circumstances, we do not consider that the JCRA complied with fair process or with the requirements of Article 11 (4).
85. The Final Notice was issued on 8th May, 2013. It required implementation of WLR by JT by 7th November (i.e. within six months of the Final Notice). Implementation of the decision was stayed by this Court on 15th July. It follows that, even if JT's appeal is dismissed in every other way, a new date for implementation of WLR will have to be set by this Court. However, in view of the submissions made by JT, it is relevant to consider the timescale originally set by the JCRA in the Final Notice.
86. JT submits that there was no proper evidential basis for the JCRA to conclude that WLR could be implemented in six months. In the Initial Notice the JCRA stated at page 12:-
"Feedback from operators indicates that WLR could be launched in nine months from the commencement of the project, should it be confined to a single line service."
No other information on timescales was given in the Initial Notice; yet the time allowed in the Initial Notice for implementation was approximately six months.
87. In the Final Notice, JCRA expressed itself somewhat differently. On page 3 it said:-
"Feedback from operators at the time of CIWAP indicated that WLR could be launched in six to nine months from the commencement of the project, should it be confined to a single line service."
It expressed its conclusions on page 11 as follows:-
"The JCRA recognises the concerns about timescales and implementation and have (sic) listened carefully to the operators and the OLOs on this issue and have regard to the discussions throughout the CIWAP process. The JCRA believes that a six to nine month lead time from the IN and DD [the Guernsey equivalent of an Initial Notice] to finalise and implement WLR is adequate and reflects the time required by all parties to negotiate and implement the service. However, in recognising the operators' and in particular, JT's concerns, the JCRA has pushed back the implementation date from the 3 June proposed in the IN and DD to 7 November 2013, almost 12 months after the date of the JCRA's IN. Recognising CWG's concerns regarding the importance of introducing WLR to both the Jersey and Guernsey markets at the same time, the GCRA has also moved the implementation date for Guernsey to 7 November 2013."
88. It transpires from the evidence produced at the appeal that the JCRA was in fact in possession of evidence on timescale from only two sources. First, C&W had indicated that WLR could be introduced within nine months from the date of any decision by CICRA.
89. Secondly, although JT had indicated periods of twelve months or more back in 2011, it had, as set out at paragraph 32 above, indicated a period of six months when responding to the JCRA on 6th July, 2012. However, that response had made it clear that this was a "ball park figure" and did not take account of pressure on resources caused by other existing programmes.
90. In this respect, JT has been engaged on the Comverse billing programme which was planned well before the Initial Notice and the Final Notice. It is clear that this is of major importance to JT, which has committed a budget of £9.1 million to the programme which is intended to modernise and update its billing processes. The programme is running well behind schedule. It had been hoped the programme would go live by July 2013 but many aspects of it have fallen behind schedule. It is clear that JT has thrown considerable human resources at the programme and the new launch date is 15th November. In addition, JT is engaged in the Gigabit programme, which it is accepted is of economic importance to Jersey.
91. We find that to require JT to implement WLR within six months by November 2013 would have impacted adversely to a material degree on the Comverse programme. Given the lack of evidence in support of a six month timescale for implementation of WLR, we consider that this was unreasonable.
92. In so holding we are not to be taken as accepting that a regulated entity is able to avoid regulation simply by committing its resources to other projects or because it has chosen to undertake certain commercial projects. The JCRA has determined that a particular course of action is required. It is entitled to require that the regulated entity achieve this within a reasonable timescale. However, the JCRA must take account of resourcing issues which are presented to it by the parties it regulates, so that any timescale strikes a reasonable balance between the requirements of the regulator and the commercial interests of the operator. In our judgment, the JCRA in this case failed to focus fairly and properly on the appropriate balance. The failure of the executive to draw this aspect fully and fairly to the attention of the Board was largely responsible for this, although we accept that JT has presented rather more information on this topic to the Court during the hearing of the appeal than it did to the JCRA prior to the Final Notice. Its response to the Initial Notice was particularly thin on this aspect, although it had emphasised the points rather more in its response of 29th June, 2012, (neither of which were of course seen by the Board).
93. Furthermore, as set out above at paragraph 87, the Final Notice referred to a six to nine month lead time for the implementation of WLR and then went on to point out that the deadline in the Final Notice of 7th November, 2013, was almost twelve months after the date of the Initial Notice. We think that this displays an erroneous approach. An Initial Notice is put out for consultation. Consultees may well believe that they will be able to persuade the JCRA to change course and not to proceed with the regulatory action suggested in the Initial Notice. It is in our judgment unreasonable to expect regulated entities to incur time and expense in beginning to implement the course of action proposed in the Initial Notice at a time when there is no certainty that that course of action will be proceeded with. Accordingly we find that the JCRA should fix any timescale having regard to how long would reasonably be needed for implementation from publication of the Final Notice.
94. For these reasons, we find the deadline of 7th November in the Final Notice to have been too short. We shall revert later to the consequences of that finding.
95. Advocate Cadin points out that, at its meeting on 8th March, 2013, the Board of the JCRA resolved as follows:-
"The Board approved the issue of a Final Decision and Final Notice on Wholesale Line Rental (WLR) and agreed:-
(a) that the decision should remain focussed on WLR for single lines (with other issues such as WLR for ISDN to be reviewed at a later date); and
(b) that the date for implementation of WLR should be set at 31 October 2013.
The Board confirmed that the Final Notice did not need to be circulated for approval before it is published."
96. The final sentence was in response to a query raised in the Board briefing paper inviting the Board to indicate whether a copy of the proposed Final Notice should be circulated to the Board for review and sign off before it was published. It follows - and was accepted by the JCRA - that the Board as a whole did not see the Final Notice before it was published. The only members of the Board to see it were the three executive members, namely Mr Riseley, Mr Byrne, and Miss Read. The four other members did not see it.
97. Advocate Cadin accepts that, although the wording is not identical and the numbering is different, the effect of the new licence conditions specified in the Final Notice is the same as in the Initial Notice save for the following four matters, which he submits are new:-
(i) Unlike in the Initial Notice, the Final Notice contains a definition of WLR in the proposed new condition 25 A.2. He points out that this defines WLR as a service provided by JT to OLOs "which enables them to offer exchange line rental and calls" [emphasis added]. He says that the reference to calls is new and gives rise to a more complex form of WLR than was envisaged in the Initial Notice.
(ii) Whereas the proposed condition in the Initial Notice had provided that JT should share the efficient costs of the provision of WLR equally with the other OLOs who sought it, the proposed condition in the Final Notice refers to such efficient costs being shared proportionately.
(iii) Whereas the proposed condition in the Initial Notice had provided that, were a dispute to arise in respect of WLR charges, the JCRA may set the maximum price, the proposed condition in the Final Notice extends that to disputes over other terms and conditions and enables the JCRA to set any relevant non-price terms and conditions.
(iv) The proposed new condition 25A.3 in the Final Notice requires JT to provide information to prospective licensed operators upon request as well as OLOs. This provision had not existed in the Initial Notice.
98. He submitted that, as the Board as a whole never saw the Final Notice, these four additional points were not decided upon by the Board but only by one or more of the executives who were involved in drafting the Final Notice. The decision was therefore ultra vires. We turn therefore to consider that argument.
99. The JCRA is a body corporate established by the Competition Regulatory Authority (Jersey) Law 2001 ("the 2001 Law"). At the time of the Final Notice, the JCRA Board consisted of four non-executive members and three executive members. Article 9 of the 2001 Law deals with the question of delegation as follows:-
"9. Delegation
(1) The Authority may delegate any of its functions under this or any other enactment wholly or partly to:-
(a) the Chairman;
(b) another member;
(c) an officer or employee of the Authority; or
(d) a committee whose member or members are drawn only from the members, officers and employees of the Authority.
(2) Nothing in this Article shall authorise the Authority to delegate:-
(a) this power of delegation; or
(b) the function of reviewing any of its decisions.
(3) The delegation of any functions under this Article:-
(a) shall not prevent the performance of those functions by the Authority itself; and
(b) may be amended or revoked by the Authority."
Nothing is specified in the 2001 Law as to how any delegation is to be made. In particular, there is no requirement for any specific formality. Article 2 (5) of the 2001 Law provides "the Authority may regulate its own proceedings".
100. It is to be recalled that, at its meeting on 8th March, 2013, the Board approved the issue of a Final Notice on WLR for single lines but confirmed that the terms of the Final Notice did not need to be circulated to the members of the Board before it was published. This decision must imply therefore that the Board had delegated to the executive the drafting of the Final Notice. The Final Notice was a twenty-two page document which, under the Law, had to deal with a number of matters including a summary of the objections and representations to the Initial Notice and the JCRA's response to them. Although the minute of the meeting of the Board did not specifically refer to delegation, it is clear that the Board was delegating the preparation of the Final Notice to the executive. This was something it was entitled to do under Article 9 of the 2001 Law.
101. In our judgment, the four matters referred to above all fell within the discretion delegated to the executive by the Board on 8th March. Thus:-
(i) It was clear from the responses to the Initial Notice that there was some confusion amongst the operators as to whether calls were included in what was proposed. Both Nitel and ACS queried whether calls were included in the WLR envisaged in the Initial Notice. JT also queried in its response to the Initial Notice what the position was in relation to calls and whether its understanding was correct. The JCRA replied to JT by email on 8th March, 2013, making it clear that calls were included and referring to the fact that this had been the position as set out in the original definition of WLR proposed by JT at the CIWAP. JT responded by email dated 13th March saying that the company was now clear as to the expectation in this regard. It is of note that the product description of WLR set out in Annex B1 of the Final Notice is taken word for word from that proposed by JT at the time of the earlier consultation and includes optional calls.
(ii) In the circumstances, we do not think that inclusion of calls can have come as a surprise to JT and it had the opportunity to oppose their inclusion if it so wished following the email clarification referred to. We consider that this was a matter of clarification and was well within the area of delegation by the Board to the executive in connection with the finalisation of the Final Notice.
(iii) As to the points made at (ii), (iii) and (iv) in para 97 above, we consider that these are all points of detail. The Board had simply approved the introduction of WLR in principle and, by delegating the drafting of the Final Notice to the executive, had left such details to be determined by the executive. We find therefore that the inclusion of these matters in the Final Notice was within the authority conferred by the delegation and was therefore a valid decision of the JCRA.
102. The position in relation to the date is slightly different. The Board did not delegate this to the executive at its meeting on 8th March. On the contrary it took its own decision which was to set the date for implementation of WLR as 31st October, 2013. This differed from the implementation date of 30th September, 2013, which had been recommended by the executive in the Board paper. On that basis, we do not think that the Board can be taken to have delegated to the executive the ability to fix the date for implementation. It follows that this aspect of the decision was ultra vires. However, nothing turns on it because the Court has already held earlier in this judgment that the timescale allowed by the JCRA was too short, and a new date is going to have to be fixed in any event because of the passage of time for the appeal.
103. As set out in paragraph 6 above, Article 11 lays down the procedure which the JCRA must follow before it exercises a specified regulatory function. It involves the issue of an Initial Notice specifying the function that it proposes to exercise and the action proposed in that exercise (paragraph 1(a) of Article 11). An opportunity is then given for persons to make representations or objections about what is proposed in the Initial Notice and the JCRA must then consider those representations or objections before issuing a Final Notice. Although we have already set it out in full, we propose for convenience to repeat those parts of Article 11 which are relevant to this particular submission. Paragraph (5) provides as follows:-
"......(5) The Final Notice shall:-
(a).......
(b).......
(c).......
(d).......
(e) state:-
(i) that the Authority intends to exercise the specified regulatory function, either by taking the action proposed or by taking some other specified action, and the date when the proposed exercise of the function will have effect......or
(ii) that the Authority does not intend to exercise the specified regulatory functions." [Emphasis added]
104. The emphasised wording clearly suggests that the JCRA is not tied to the exact action proposed in the Initial Notice. That is supported by the terms of paragraphs (10) and (11) of Article 5 which are as follows:-
"(10) Paragraph (11) applies where:-
(a) after considering any representations or objections, the Authority decides not to take the action proposed in the exercise of the specified regulatory function but to take some other action; and
(b) the Authority is satisfied that a person or the public in general should be permitted to make representations or objections in respect of the taking of that action.
(11) The Authority may give fresh initial notice under paragraph (1)." [emphasis added]
105. Put together, these provisions would seem to confer a clear discretion on the JCRA to proceed with the specified regulatory function stated in an Initial Notice by taking some action other than that specified in the Initial Notice. However, the discretion is limited in that, where it is satisfied that a person or the public should be permitted to make representations or objections in respect of the action now proposed in the Final Notice, the JCRA may give a new Initial Notice so as to start the process all over again.
106. However, Advocate Cadin has pointed to Article 11(9) which provides:-
"The exercise of a specified regulatory function shall have effect only in accordance with such terms of an initial notice as are referred to in paragraph 1(a)....."
107. On the face of it, this would suggest that the Final Notice must be in accordance with the terms of the Initial Notice as to the specified regulatory function which the JCRA proposes to exercise and the action proposed in that exercise, because both of these aspects are covered by paragraph (1)(a) of the Article. That is very hard to reconcile with paragraph (5)(e), supported as it is by paragraph (10), which states specifically that the JCRA can exercise the regulatory function specified in the Initial Notice by taking some specified action other than that proposed in the Initial Notice pursuant to paragraph (1)(a).
108. The explanation for this apparent inconsistency may lie in the legislative history of the provision. Paragraph 5(e) of Article 11 as originally enacted provided that the Final Notice should:-
"state whether or not the Authority now intends to exercise the specified regulatory function......"
and paragraph (10) provided:-
"If, after considering any representations or objections, the Authority wishes to change its proposal as to the exercise (other than the date when it is to take effect), the Authority shall issue a fresh initial notice about the exercise."
Paragraph (9) as originally enacted was in its current form.
109. The effect of these provisions was that any variation whatsoever to the Initial Notice which the JCRA wished to make as a result of the consultation process would result in the need to start again by issuing a fresh Initial Notice.
110. This was clearly thought to be unsatisfactory and the Law was amended by the Telecommunications (Amendment No 2)(Jersey) Law 2012. This replaced the original paragraphs (5)(e), (10) and (11) with the current provisions. The background was described in the report which accompanied the amending Law as follows:-
"Summary
The purpose of this amendment is:-
3. To simplify the current consultation processes to remove the obligation on the JCRA in Article 11 (10) of the Telecommunications (Jersey) Law 2002...... to issue a fresh initial notice in the event of any change to a proposal........
3. Requirement for repeated consultation
The amendment revises the manner in which the JCRA is required to consult upon regulatory decisions.
The JCRA is obliged to undertake public consultations in response to a wide range of proposals and initiatives. Currently, if it consults upon a regulatory decision, and then changes its proposed decision in any way in response to feedback that it has received as a result of the consultation, it is then required to begin the consultation again more or less from scratch. The burden that this imposes may have a number of negative consequences:-
Repeated consultation on the same issue may create "voter apathy" and reduce the overall effectiveness of consultation.
It will divert JCRA resources from other, potentially more significant, matters.
The need to repeat a consultation if changes are made in response to it could create a perverse incentive not to adopt the findings of a consultation. This is particularly likely to be the case where resources are constrained.
The LECG Review recommended that this procedure should be reconsidered so that there was no absolute obligation to issue fresh notifications when changes to consultations are made, but that the JCRA should be able to start a new notification in cases where it feels that the proposals have changed so significantly that there would be benefit from starting a new consultation.
For these reasons, the amendment provides discretion in such circumstances."
111. The fact that the intention behind the amendment is clear from the report is not of course determinative. The Court must interpret the words of the statute as they are. Advocate Cadin argues that the provisions can be reconciled by holding that the meaning of paragraph (5)(e) is that "some other specified action" must fall within the 'envelope' of "the action proposed" in paragraph (1) (a). However that does not appear to be consistent with the actual wording of paragraph (5)(e) which refers to ".....the action proposed or..... some other specified action". That is made crystal clear by paragraph (10) which refers to where the JCRA, after considering any representations or objections, decides not to take the action proposed but to take some other action.
112. We are driven to conclude that paragraph (9) is simply inconsistent with paragraphs (5)(e) and (10) and that the latter, being more recent and being wholly clear and unambiguous in their terms, must prevail. If we are wrong in this, we would adopt Advocate Cadin's construction that the "other specified action" contained in the Final Notice must somehow fall within the envelope of the "action proposed" in the Initial Notice.
113. But even taking our preferred interpretation, the discretion on the JCRA to depart from the action proposed in the Initial Notice is subject to limitation. Where there is to be a substantial departure from the action proposed in the Initial Notice such that persons might reasonably wish to make representations or objection to what is now to be proposed, the JCRA ought to begin again and issue a fresh Initial Notice.
114. Applying the Law to the facts of this case, we are quite satisfied that the minor changes between the Initial Notice and the Final Notice (listed at paragraph 97 above) were not such as to require the JCRA to start again. They were points of detailed implementation and clarification and the JCRA was perfectly entitled to conclude that there was no need to give people the opportunity to make further representations or objections on these points. Even if Advocate Cadin's construction of the Article is correct, we are content to hold that the additional matters covered in the Final Notice fell within the 'envelope' of the action proposed in the Initial Notice and did not therefore breach Article 11(9) as he would have us interpret it.
115. It follows that we reject JT's contention that the Final Notice was ultra vires because it differed too greatly from the terms of the Initial Notice.
116. Advocate Cadin pointed out that, as the Regulaid Report made clear, WLR could not be implemented by JT on its own. It would require the active cooperation of those OLOs who wished to take up WLR. It followed, said Advocate Cadin, that the JCRA should have imposed an appropriate condition in the licence of any OLO wanting to take up WLR. When pressed by the Court as to what such a condition would say, he submitted that it would direct the OLO to cooperate with JT in scoping and implementing WLR. Advocate Ruelle's response was that it would be in the commercial interests of an OLO which wanted WLR to cooperate so that it could offer the service which it considered was in its financial interests. There would be every incentive for an OLO to cooperate with JT in these circumstances and there was no need for a condition. In any event, it was very difficult to think of satisfactory specific wording for such a condition on the licence of an OLO.
117. Advocate Cadin further submitted that there was a risk to JT. An OLO might deliberately cause JT to fail to meet the deadline required by the JCRA in order to cause JT (as a competitor) difficulty. He pointed out that, under Article 19 of the Law, where, in the opinion of the JCRA, a licensee is in contravention of a condition, the JCRA shall give a direction to the licensee to take steps or specified steps to ensure compliance with that condition. Under Article 19A the JCRA may also impose a financial penalty on a licensee for a contravention of a licence condition. JT was concerned that the JCRA might exercise these powers where JT had done all it could but the OLOs had not cooperated, so that the timescale for the implementation of WLR in JT's licence had not been met.
118. We do not accept that this is a realistic possibility. Article 19(2)(g) provides that the Authority shall not give a direction under Article 19 if is it satisfied that "... (b) the licensee is taking reasonable steps to comply with the condition and to remedy the effects of the contravention." Article 19A (13)(b) contains an identical provision in relation to any decision to impose a financial penalty. On the factual situation outlined by Advocate Cadin (where an OLO was failing to cooperate) the JCRA would presumably be satisfied that it was not JT's fault and that JT was taking reasonable steps to comply with the condition. In the event of the JCRA reaching a decision that JT considered wrong or unfair, there is a right of appeal to this Court under Article 12(1)(e). In our judgment these various measures provide adequate protection to JT. Accordingly we reject the contention that the JCRA was wrong to conclude that it did not need to impose a condition on the licence of the OLOs.
119. Throughout the lengthy discussion and consultation process described earlier, JT has remained consistent in its view that WLR should not be introduced but that, instead, other wholesale access products such as Naked Bitstream etc would be preferable. It argues that these are the tools of the future and that it would be preferable to wait to introduce them even though this would entail some delay as compared with WLR.
120. In support of his contention that the decision to require the introduction of WLR at this time was wrong, JT made a number of subsidiary points. Thus:-
(i) The JCRA had not carried out a proper costs benefits analysis (CBA). It was conceded that there was a high level CBA in the Initial Notice but this was not sufficient and did not give adequate weight to the effect on JT's existing programmes such as Gigabit and Comverse One.
(ii) The JCRA had not carried out a proper regulatory impact assessment (RIA). It now purported to rely on the RIA contained in the Regulaid report but that had been carried out many years ago. The position had changed since then (including the attitude of the OLOs) a further RIA should have been carried out and this would have shown up the effect on JT's existing programmes.
(iii) The JCRA had failed to consider adequately the different types of WLR.
121. The JCRA has, however, come to a different view. It has drawn on the recommendations in the Regulaid report and the results of its consultation exercises and has concluded that it is in the interests of the consumer and of competition in the industry to introduce WLR at this stage. It accepts that this is a first step and that other wholesale access products will be required in due course, but it believes that WLR is comparatively simple and cheap to introduce as compared with these other measures. It points out that WLR is a familiar product which has been implemented extensively across the world and is welcomed by the incumbent operator in Guernsey, C&W. It believes that WLR will aid competition in the industry by allowing consumers to deal only with an OLO rather than having to maintain a relationship with JT as well as an OLO. Its reasoning is set out in much greater detail in the papers before us.
122. No one can accuse the JCRA of having rushed into this decision. It started the process as long ago as 2008. It obtained the report from Regulaid; it then embarked on a lengthy discussion process with the assistance of KPMG and involving the establishment of the WAP Group and seeking the views of the various operators. When this failed to produce agreement in favour of any particular wholesale access product, it embarked upon the 2011 Consultation. It was only in 2012 that it issued the Initial Notice. Throughout this lengthy process, WLR featured highly on the list of possible measures.
123. We have held that, on an appeal under the Law, the Court will allow an appeal if it concludes that the decision of the JCRA was wrong; there is no threshold of unreasonableness. However, the Law has not constituted the Court as the regulator of the telecommunications industry; it has appointed the JCRA to that role and the JCRA has access to expert advice in discharging its responsibility of regulating the industry. The Court must in such circumstances give due weight to the views of the regulator in what is a technical and complex field.
124. Ultimately the decision as to whether to require the introduction of WLR at this stage is a judgment call. Is it better, as JT suggests, to delay further with a view then to introducing wholesale access products which may be of more benefit in the long term? Or is it better, as the JCRA has decided, to take some action to improve competition by introducing WLR whilst continuing to work towards additional measures in due course?
125. We have carefully considered the arguments which JT has put forward both during the long discussion and consultation period and in its submissions to us. But we have to say that it has come nowhere near satisfying us that the decision of the JCRA to require the implementation of WLR at this stage was wrong. On the contrary, we can fully understand the JCRA concluding, bearing in mind the terms of Article 7(2)(a) of the Law regarding competition that, for the reasons it has given, it should require the introduction of WLR at this stage as a comparatively simple and well established first step, but without prejudice to any further wholesale access products which it may require to be introduced in due course. We therefore reject this ground of appeal.
126. In summary therefore the Court has found that:-
(i) The JCRA did not comply with fair procedure or with the requirements of Article 11(4) of the Law in that the Board, which took the decision to issue the Final Notice requiring the implementation of WLR, did not 'consider' the objections and representations of JT; and
(ii) The period of six months for implementation was, on the evidence before the JCRA, too short.
What should the Court do as a consequence of these findings?
127. The powers of the Court on an appeal under the Law are set out in paragraphs (4), (5) and (6) of Article 12, which are quoted at para 47 of this judgment.
128. The normal consequence of a failure by a decision maker to follow the statutory procedure is that the decision is quashed, so that the decision maker must consider the matter afresh and follow the correct procedure.
129. Advocate Ruelle submits that the Court does not have power to quash or - as the Notice of Appeal states - 'set aside' a decision of the JCRA. We do not follow that argument. In order for the matter to be referred back to the JCRA for determination as set out in Article 12(5)(b), the original decision ought to be quashed; otherwise there is nothing for the JCRA to determine because it has already made a determination. It follows, in our judgment, that it is implicit in Article 12(5)(b), (supported by Article 12(6)), that the Court has the power to quash a decision of the JCRA and to refer the matter back to the JCRA for determination. This is what one would expect and accords with the procedure for judicial review where a decision maker has not followed the proper procedure. The Court has also regularly followed a similar course in appeals under other Jersey statutes such as the Planning Law and the Housing Law, where there has been no specific reference to 'quashing' or 'setting aside'.
130. Advocate Ruelle further submitted that it would serve no purpose to remit this matter to the JCRA for determination. Whatever may have been the position at the time the Final Notice was decided upon on 8th March, all the members of the Board have now seen everything that JT has to say about the matter because they have seen all the material filed for this appeal. Yet the Board stands by its decision to require the implementation of WLR despite now having seen all that material.
131. In some cases a Court will not quash a decision because it is inevitable that the decision maker would have reached the same conclusion even if the legal flaw had not occurred. However, this is a discretion to be applied very sparingly. As Beloff JA said in Re X Children [2009] JLR 143 at para 36:-
"In our view, Mr Pollard's candid testimony constituted (unusually) an admission of a breach of the primary rule of natural justice, namely that a person potentially affected in his rights or interests by a decision should have a reasonable opportunity to see and comment on matters which might be deployed to his disadvantage. Save in exceptional circumstances, such a breach inevitably flaws the decision. The Court should not, other than in such circumstances, assume that the disadvantaged person would have been unable to influence the decision if he had enjoyed the opportunity denied to him (R v Chief Const. (Thames Valley, ex P Cotton).
132. That observation was of course made in the context of the person affected not being aware of a matter which might influence the decision and therefore not having the opportunity of commenting on it. This is not exactly the same as the present case where the flaw is that the decision maker (i.e. the Board) was not aware of and therefore never considered the representations of the person affected (i.e. JT). However, the principle seems to us to be equally applicable. The Court should not, save in exceptional circumstances, assume that the representations and objections of a person affected by a decision would not have influenced the decision.
133. A further reason for reaching that conclusion is that, in the proceedings before this Court, the Board was of course defending a decision already made. As Beloff JA pointed out in para 42 of the X Children case, that is a different situation from considering representations before a decision is made. It is wrong to assume that an administrative body which has defended a decision on appeal before the Court will invariably reach the same decision again when directed to consider the matter afresh.
134. In our judgment, the flaw in the process followed by the JCRA was a serious one. Article 11(4) specifically envisages that the JCRA will consider the representations and objections of persons affected. Yet in this case the representations and objections of JT - as the entity likely to be most affected by any decision - were simply never put properly or fairly before the decision maker i.e. the Board of JCRA. In the circumstances, the importance of upholding due process in decision making leads us to conclude that the decision should be quashed and referred back to the JCRA for its determination.
135. In those circumstances it is not strictly necessary for us to deal with the timescale point as, in the event of it deciding afresh to require the introduction of WLR, the JCRA will also have to consider in a new timescale. Nevertheless, in case it is of assistance and helps avoid yet further appeals in future, we would offer these brief observations.
136. We invited submissions from both parties as to the timescale required in the event that we should otherwise dismiss the appeal and decide to fix the new timescale ourselves. JT submitted evidence to the effect that one could not simply fix a timescale to run from any decision to require WLR. There had first to be proper scoping of the WLR project which required consultation and agreement between the OLOs and JT and the time required for that was not within the control of JT and would depend upon the OLOs as well. JT submitted that the timescale should be six months from the date of any scoping agreement.
137. The JCRA disagreed. It considered that scoping was all part of the implementation process and that it all should be capable of achievement in six months. It submitted that a fixed deadline was required in order to give certainty to OLOs and also to ensure that all parties were engaged in the process so as to ensure that the deadline was met. It was concerned that setting a deadline which relied upon engagement and agreement by JT would create a significant degree of uncertainty over the implementation date.
138. We agree with the JCRA that a fixed date would be appropriate and we do not accept JT's submission that a date can only be fixed after JT and the OLOs have agreed on the details of the implementation and scoping. Nevertheless, on the basis of the material before the Court, there is no evidence to support a six month timescale. Taking into account the submissions of the parties and that the Comverse billing programme is due to have gone live in early November, we would have ordered a period of nine months from the date of our decision for the implementation of WLR. However, in the event of the JCRA deciding afresh to require WLR, it will be for the JCRA to consider the appropriate timescale for implementation in the light of the evidence then before it as to the time required and any balancing factors such as the availability of resources in the light of other on-going programmes.
139. In summary therefore, the appeal is allowed, the specified regulatory function contained in the Final Notice dated 8th May, 2013, is quashed and the matter is referred back to the JCRA for its determination in accordance with the guidance which we have offered in this judgment.
140. We should add this. Ironically, given the time we have spent in considering the correct approach on an appeal under the Law, we do not think that anything turns on it in this case. As can be seen, the outcome of this appeal has been determined largely by consideration of matters of procedure, which are of course unaffected by whether, in terms of merits, the Court intervenes because the decision is wrong or because it is unreasonable. Conversely, where the Court has considered the merits of the decision, it has concluded (subject to the point on timescale) that JT has not satisfied it that the decision of the JCRA was wrong (let alone unreasonable). On the one ground where JT has succeeded on the merits (timescale), the issue is academic because of the earlier decision of the Court to delay implementation of the JCRA's decision pending appeal and the decision to remit the matter to the JCRA. The consequence is that the result of this case would have been the same even if the Court had concluded that the test on appeal required the decision to be unreasonable rather than simply wrong.
141. We cannot leave this case without commenting on how unfortunate it is that the parties have not been able to resolve matters between them. JT is ultimately wholly owned by the taxpayer. Similarly, the JCRA is a public regulatory body which is funded by the taxpayer as to its competition law functions, although its function as regulator of the telecommunications industry is funded by licensed operators i.e. by JT and the OLOs. One cannot help but think that the money and resources devoted to this case could have been put to much better use.
142. We add that we are grateful to both counsel for their detailed and helpful written (and oral) submissions which have greatly assisted us in our task.
Authorities
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