Michaelmas Term
[2017] UKPC 29
Privy Council Appeal
No 0036 of 2016
JUDGMENT
Meadows and others (Appellants) v The Attorney
General and another (Respondents) (Jamaica)
From the Court of Appeal
of Jamaica
before
Lord Neuberger
Lord Kerr
Lord Wilson
Lord Sumption
Lord Carnwath
JUDGMENT GIVEN ON
19 October 2017
Heard on 12 July 2017
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Appellants
Nicholas Padfield
QC
(Instructed by
Sheridans)
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Respondent (The
Attorney General and another)
Marlene Malahoo
Forte QC
Althea Jarrett
(Instructed by
Charles Russell Speechlys LLP)
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Respondent
(Jamaica Public Service Company Limited)
B. St Michael
Hylton QC
Sundiata Gibbs
Shanique T Scott
(Instructed by Myers
Fletcher & Gordon)
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LORD CARNWATH:
Introduction
1.
This appeal raises the question whether, under section 3 of the Electric
Lighting Act 1890, the relevant Minister had power in 2001 to grant to the
second respondent (“JPS”) an exclusive licence for the supply of electricity
for 20 years for the whole of the island of Jamaica. The appellants represent
certain local interests concerned to secure cheaper electricity on the island.
Their principal objection is that the grant of such a licence is contrary to
the policy of the 1890 Act, by creating a monopoly rather than promoting
competition.
2.
Section 3 provides:
“The Minister may from time to
time license any Local Authority as defined by this Act, or any company or
person, to supply electricity under this Act for any public or private purposes
within any area, subject to the following provisions -
(a) the licence may make
such regulations as to the limits within which, and the conditions under which,
a supply of electricity is to be provided, and for enforcing the performance by
the licensees of their duties in relation to such supply, and for the
revocation of the licence where the licensees fail to perform such duties, and
generally may contain such regulations and conditions as the Minister may think
expedient; …”
Subsection (b) provides that, in “any area or part of an
area” in which the undertakers are not the local authority, the licence may
provide for the local authority for “such area or part of an area” to exercise
the powers of the undertakers in respect of the breaking up of streets and so
on.
3.
The agreed facts can be shortly stated. Before March 2001 the Government
of Jamaica held the controlling (80%) interest in JPS. In that month it sold
its interest to Mirant Corporation (“Mirant”). It was a condition of the sale
that the Minister would grant to the company an exclusive licence under the
Act. Such a licence was granted on 30 March 2001 for 20 years. The draft
licence had been attached to the share purchase agreement. Exemption from the
Fair Competition Act was granted by an order made by the Minister under section
3(h) of that Act. The licence has since been extended for a further period of
seven years.
4.
Aspects of the 2001 licence were the subject of unrelated proceedings by
JPS itself, which came before the Board recently (Jamaica Public Service Co
Ltd v The All Island Electricity Appeal Tribunal [2017] UKPC 20). As there
explained in that judgment, the operations of JPS are regulated by the Office
of Utilities Regulation (“OUR”), a statutory body established under the Office
of Utilities Regulation Act. The licence (inter alia) provides for the charges
for electricity to be set by OUR in accordance with a complex formula set out
in Schedule 3 to the licence (ibid paras 1-4). No issue arose in that
appeal as to the validity of the licence itself.
5.
The present proceedings were begun in 2011 for a declaration that the
grant of an exclusive licence was not authorised by section 3. In the Supreme
Court on 30 July 2012 Sykes J upheld the challenge in part, holding that, while
the Minister had power under section 3 to grant a licence for the whole of
Jamaica, he had (in the words of his declaration) no power “to grant a licence
on terms which prevent other applicants from having their applications being considered
genuinely”.
6.
On 16 January 2015, the Court of Appeal (in a judgment given by Brooks
JA, with whom Panton P and McIntosh JA agreed) allowed the Minister’s appeal on
the latter issue and set aside the declaration, holding that there was no
evidence to support the judge’s view that the Minister had closed his mind to
other possible applications (paras 88-92). They dismissed a cross-appeal on the
first issue, with the result that the validity of the licence as granted was
confirmed. The appellants appeal to the Board, with final leave granted on 14
December 2015.
Previous history
7.
The grant of the 2001 licence can be seen in the context of the
historical background, including the development of electricity policy for the
island, as described in the evidence (in affidavits by Mr Dan Theoc, JPS Vice
President of Finance, and Mr Fitzroy Vidal on behalf of the Minister). This
shows that the policy for the integration of electricity supply on the island,
and the grant of licences on that basis, did not begin in 2001 but had been
established for many years. This appears to have taken place without legal
objection until the present proceedings.
8.
JPS was originally formed in 1923, when it took over the assets of the
West India Electric Company. Until 1975 it was controlled by Canadian
shareholders. From 1923 until 1966 its licence was limited to certain parts of
the island, others being supplied by individual, parish-based companies. In the
1950s, as Brooks JA noted (para 68), there were other developments:
“Between 1957 and 1958 the
supervision of the use and distribution of electricity in the island underwent
an overhaul. The Electricity (Frequency Conversion) Act passed in 1957 required
the use of a standard frequency for electricity throughout the island. The Electricity
Development Act, passed in 1958, established the Electric Authority. The
Electric Authority was designed to consider ‘the needs for electricity
throughout the island’ (section 4(1)(a)).”
9.
In 1966 (apparently while the company was still under Canadian control)
it was granted for the first time an “All Island Electric Licence” for a period
of 25 years. The preamble to the 1966 Licence referred to the “vital” need for
an adequate supply of electricity available to all parts of the Island at
reasonable rates, and the intention “to integrate under one ownership and
management” all the properties and facilities used for that purpose as “an
all-island integrated electrical system”; and declared that its operations were
to be regulated by an independent Public Utility Commission established by
statute. In June that year there was enacted the Public Utility Commission Act,
which established the Public Utility Commission. (That body was in 1995
superseded by the OUR established under the Office of Utilities Regulation Act
of that year.)
10.
In 1975 the Electricity Authority, a government agency, acquired 93% of
the shares in JPS, to which, in 1978, the Minister granted a new 39 year
All-Island Electricity Licence. According to Mr Vidal, the previous licensing
regime had resulted in a significant differential in frequency of electricity
supplied to consumers as well as in the price paid by the consumers. Consumers
in rural parishes in particular had tended to pay more for their electricity
due to the higher cost to supply those rural areas as against urban areas.
11.
In the 1990s, the need for increased generating capacity to meet growing
demand, combined with the Government’s fiscal and budgetary constraints on
JPS’s ability to meet it, led to pressure for privatisation (encouraged by the
International Monetary Fund). That provided the background to the negotiations
which led ultimately to the sale to Mirant in 2001.
Grounds of challenge
12.
Mr Padfield QC for the appellants seeks to challenge the 2001 licence on
a number of grounds, which he applies with equal or added force to the
“exclusive” condition and to the extension for a further seven years. He
criticises the Court of Appeal for adopting a “purely literal” approach to the
construction of section 3, rather than by reference to the purpose and
intention of the statute as a whole, viewed in the context of its historical
and common law background. He relies generally on what he calls the common law
rule against the grant of monopolies, affirmed as long ago as the time of Queen
Elizabeth I (Darcy v Allen (1603), also known as The Case of
Monopolies 77 ER 1260; 11 Co Rep 84b).
13.
More directly he points out that the Jamaican Act of 1890 follows
closely the form and language of the English Electric Lighting Act 1882,
considered by the House of Lords in London Electric Supply Corpn Ltd v
Westminster Electric Supply Corpn Ltd (1913) Knight’s Local Government
Reports 1046, in which reference was made to the purpose of the legislature “to
maintain competition and avoid monopoly” (p 1052, per Lord Haldane LC). The
underlying policy of the 1882 Act, he submits, was to promote competition
between a number of undertakers in different areas of supply, in the interests
of consumer protection and cheaper prices. The same policy was endorsed by the
Jamaican legislature in the 1890 Act.
14.
He also criticises the Court of Appeal for relying on the “always
speaking” rule of statutory construction (see R v G [2004] 1 AC 1034,
para 29) to justify the grant of an exclusive licence, by reference to technological
changes in electricity generation and supply since 1890. Such changes, so he
says, cannot justify departing from the underlying purpose of the legislation.
Discussion
15.
The Board is unable to support these grounds of appeal. Since its
reasons are in substantial agreement with those of the Court of Appeal, and
without disrespect to Mr Padfield’s careful presentation, they can be stated
relatively shortly.
16.
In the first place the language of the relevant section is clear. The
power is to grant a licence to supply electricity in “any area”. It is not in
dispute (by reference, inter alia, to section 3(b)) that the area may extend
beyond the boundaries of a particular local authority. There is nothing in the
section or its context to require that expression to be used in anything other
than its ordinary sense, which would include the area constituting the whole
island. Nor have any other rational criteria been suggested by which it could
or should be restricted to any lesser area. It is not clear in any event how
such an interpretation would assist the competition policy, so long as the
licence could be limited to a single supplier for that area. An individual
consumer within that area would still be limited to the single supplier, unless
he was willing to move house.
17.
As to the authorities on which Mr Padfield relies, the Case on
Monopolies does not assist. That seminal case confirmed the limits of the
Royal Prerogative but said nothing about the powers of the legislature or the
principles of interpretation of statutes.
18.
The London Electricity case is of more relevance, in that it
concerned the construction of a statute which was the precursor of the 1890
Act, but it was concerned with a different section and very different facts. At
issue was the interpretation of an agreement between two electrical supply
companies operating in Westminster, one offering alternating and the other
continuous (or direct) current. Thus the competition was not simply about
prices or supply, but between competing technologies. The details of the
agreement are complex and not material for present purposes.
19.
The historical background was explained in the speech of Lord Moulton (p
1059ff). As he said, this was in the early days of public electric lighting,
when the legislature was “very jealous of any association or union between
electric lighting enterprises lest a monopoly should grow up to the detriment
of the public”. Further it was still uncertain which of the competing
technologies, “as electrical invention progresses”, would prove more efficient;
and it would be “intolerable to think that the undertakers should have the
power to give to favoured customers the more efficient form and to refuse it to
others” (ibid p 1063, 1068).
20.
The section directly in issue was section 11 of the 1882 Act (equivalent
to section 7 of the Jamaican statute) which prohibited any authority or company
licensed under the Act from, by contract or assignment, divesting itself of its
powers under the licence other than with the consent of the Board of Trade.
This did not stand alone, but was reinforced by Provisional Orders applicable
to the two companies in question, prohibiting them from acquiring the
undertakings of any other company supplying electricity under licence in London
without Parliamentary authority (see p 1060). It was those provisions which
were seen by their lordships as giving effect to the legislative intention of
maintaining competition and avoiding monopoly, against which the agreement had
to be construed. Their comments must be read in that specific context.
21.
In the Board’s view, this authority provides no assistance to Mr
Padfield’s argument. There is nothing in the speeches to support any general
limitation on the scope of the Act, other than as reflected in section 11 and
the Provisional Orders. Furthermore, the restrictions in that section were not
absolute but were subject to release with the consent of the Board of Trade (in
Jamaica, the Minister). There is no reference in the speeches to the scope of
the power to grant licences for supply “within any area” (section 3, equivalent
to section 3 of the Jamaica Act), let alone any suggestion that the words were
to be used in any other than their ordinary meaning.
New grounds
22.
In addition to the grounds relied on in the courts below, Mr Padfield
sought permission to advance certain new points for the first time before the
Board. First he argued that in granting the Licence, the Minister was motivated
by an improper purpose, that is to give effect to the commercial arrangement
made with Mirant for the sale of the government’s majority shareholding in JPS,
and without proper regard to the public interest or the interests of other
potential applicants for licences. He argued further that the Minister failed
to act on, or misrepresented, the recommendations of the OUR. Following
objection from the respondents, the Board refused permission so to extend the
grounds of appeal, for reasons to be given in this judgment.
23.
Allegations of improper purpose, or failure to take account of relevant
considerations, should be made at the earliest possible stage, in order to give
the respondent an opportunity to respond with appropriate evidence, and to
enable that to be examined by the trial judge. Furthermore the grant of the
exclusive all-island licence in 2001 would need to be seen against the
background of the earlier history referred to above, including the all-island
integration policy and the previous all-island licences, going back apparently
without legal objection for some 35 years.
24.
No reason has been put forward by the appellants for not taking these
points at an earlier stage. Indeed, as Mr Gibbs (junior counsel for JPS) points
out, this appears to have been a considered decision. Sykes J (judgment para 8)
noted the submission before him by Mr Wildman (then counsel for the appellants)
that the grant of the licence was “illegal in the sense of not authorized by
law”, adding:
“Mr Wildman was careful to make
the point that this is not a challenge based on administrative law grounds such
as bad faith, irrationality or irrelevant considerations. He is not saying that
the Minister had the power but exercised it incorrectly; he is saying that the
Minister does not have the power at all.”
In the Board’s view it would be contrary to principle,
and unfair to the respondents, to allow such points to be taken for the first
time at this level.
Conclusion
25.
For these reasons, the Board will humbly advise Her Majesty that the
appeal should be dismissed, and that (subject to any submissions from the
appellants, to be filed within 14 days of the delivery of this judgment) the
appellants should pay the costs of both respondents.
