Traille Caribbean Ltd v Cable & Wireless Jamaica Ltd (Trading as Lime)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hamblen,Lord Burrows |
| Judgment Date | 01 June 2023 |
| Neutral Citation | [2023] UKPC 19 |
| Court | Privy Council |
| Docket Number | Privy Council Appeal No 0028 of 2021 |
[2023] UKPC 19
Lord Briggs
Lord Kitchin
Lord Hamblen
Lord Burrows
Lord Richards
Privy Council Appeal No 0028 of 2021
Privy Council
From the Court of Appeal of Jamaica
Appellant
Dr Lloyd Barnett
Weiden Daley
Shaydia Sirjue
(Instructed by Simons Muirhead Burton LLP (London))
Respondent
Denise E Kitson KC
Kevin A Williams
Rachel Kitson
(Instructed by Axiom DWFM (London))
Heard on 22 March 2023
Lord Hamblen AND
Traille Caribbean Ltd (“Traille”) and Cable & Wireless (Jamaica) Ltd (trading as Lime) (“CWJ”) are companies involved in the telecommunications industry in Jamaica. Traille's business model has been to enter into agreements with overseas telecommunications companies under which Traille is paid to terminate overseas mobile phone calls on various networks in Jamaica: ie Traille's role is to connect the overseas calls to, and in that sense terminate those calls on, those networks. This model was dependent on an interconnection agreement (“the contract”) entered into on 1 November 2013 between Traille and CWJ, which had a network in Jamaica. The overseas calls would terminate on the CWJ network or would be transferred by CWJ to another network (in particular the network of a company called Digicel Jamaica Ltd).
This case is concerned with a dispute as to the interpretation of the contract between Traille and CWJ and, in particular, the impact of the Telephone Calls Tax (“TCT”) which was introduced by the Provisional Collection of Tax (Telephone Calls Tax) Order 2012 (“the 2012 Order”) and came into force on 30 August 2012. The TCT imposed a charge of US$0.075 per minute on international calls terminating on a network in Jamaica.
Under clause 28.2 of the contract, CWJ was entitled to insist on an initial security deposit. CWJ has argued throughout that it was entitled to add the TCT to the amount required to be paid by Traille as the security deposit and that, until the security deposit including the TCT was paid, CWJ was contractually entitled to refuse to turn on the switch enabling Traille to connect international calls to CWJ's network. On 1 May 2014, the Office of Utilities Regulation (“OUR”) determined in favour of CWJ that it was appropriate for CWJ to include the TCT in the security deposit.
A further dispute arose as to the 30% tax exemption from TCT provided for in the 2012 Order. Traille considered that that exemption meant that there should be a 30% deduction from the tax element in calculating the security deposit but CWJ disagreed.
In July 2014, Traille brought an action for breach of contract against CWJ for failure to turn on the switch to allow Traille to terminate international calls on CWJ's network. On 15 August 2014, Brown J granted Traille an interim mandatory injunction requiring CWJ, once the deposit without the inclusion of the TCT was paid, to turn on the switch. In obtaining that interim injunction, Traille gave the usual undertaking in damages (ie it undertook to compensate CWJ for loss caused if it transpired at trial that the interim injunction should not have been granted).
On the trial of the substantive issues, Batts J in a judgment dated 15 April 2016 largely held in favour of CWJ and gave CWJ permission to pursue recovery on Traille's undertaking in damages. On 22 May 2017, Laing J delivered judgment on the undertaking in damages holding that CWJ was entitled to recover as its loss J$22,600,680.19 plus interest at the rate of 6% per annum from the date of judgment plus costs.
Traille appealed against the decisions of both Batts J and Laing J. The appeals were consolidated. The judgment of the Court of Appeal (Brooks JA, with whom Sinclair-Haynes and Williams JJA agreed) was delivered on 31 July 2020. The appeals of Traille were dismissed with costs. Traille now appeals to the Board.
Although several other issues have been canvassed over the course of the dispute, there are four issues which the Board has to decide in order to determine this appeal. They are as follows:
(i) Issue 1: who was liable under the 2012 Order for the payment of TCT to the Tax Administration Jamaica (“TAJ”)?
(ii) Issue 2: was CWJ contractually entitled to include the TCT in calculating the amount of the security deposit?
(iii) Issue 3: was CWJ contractually entitled to refuse to turn on the switch because of the non-payment of the deposit demanded (and taking into account that there was a 30% tax exemption)?
(iv) Issue 4: if the interim mandatory injunction ordering CWJ to turn on the switch should not have been ordered (because CWJ was contractually entitled to refuse to turn on the switch), what loss is CWJ entitled to be compensated for under Traille's undertaking in damages?
The first three of these issues concern the Court of Appeal's decision on the appeal from Batts J and the fourth issue concerns the Court of Appeal's decision on the appeal from Laing J.
The 2012 Order was gazetted, and therefore came into force, on 30 August 2012. The provisions that are relevant to this case are as follows.
“ 2. Interpretation
In this Order—
‘applicable taxpayer’ means a carrier or service provider who is registered pursuant to section 27 of the General Consumption Tax Act and is liable to pay tax under this Order; …
‘carrier’ has the meaning assigned to it by section 2 of the Telecommunications Act; …
‘service provider’ has the meaning assigned to it by section 2 of the Telecommunications Act; …
‘telephone service’ means the provision of telecommunications comprising wholly or partly of real time or near real time audio communications utilizing a telephone; …
3. Tax on telephone call services
Subject to the provisions of this Order, every applicable taxpayer who provides telephone service in Jamaica shall pay to the Commissioner General, a tax on telephone calls (hereinafter referred to as ‘the tax’) as provided—
(a) …
(b) …
(c) from a point originating outside of Jamaica and terminating on a public mobile network in Jamaica.
4. Rate of tax
(1) The tax payable under paragraph 3, is the amount calculated based on the duration of the telephone calls, measured in the total number of minutes, during the taxable period at the rates specified in the First Schedule. …
5. Exemptions
Notwithstanding paragraph 3, no tax shall be payable in respect of telephone calls provided by a carrier or service provider—
(a) …
(b) in respect of thirty per cent of the taxable call minutes in each transaction month for each call category;…
6. Returns required from applicable taxpayer
(1) An applicable taxpayer shall, within the calendar month next following the preceding taxable period, whether or not he provides a telephone call service during that taxable period—
(a) furnish to the Commissioner General a return in the form set out in the Second Schedule; and
(b) pay to the Commissioner General the amount of tax, if any, payable by that applicable taxpayer in respect of the taxable period to which the return relates. …”
Under the First Schedule, the “Rate of Tax Payable” on “Telephone calls provided from a point originating outside of Jamaica and terminating on a public mobile network in Jamaica” was specified as being US$0.075 per minute.
In the contract, CWJ is referred to under its trading name as LIME; and Traille is referred to generically as “Telco” or “a Telco” or “the Telco”.
Clause 9 of the contract is headed “Charges and Payment” and clauses 9.1 and 9.7 read as follows:
“9.1 Each party shall pay to the other the relevant charges applicable to each service as more particularly described in the Service Descriptions and tariffed in the Tariffs Schedule.
9.7 Where appropriate, any value added or other applicable tax shall be added to all or any part of the Charges under this Agreement and shall be paid by the Party responsible for making such payment.”
Clause 28 of the contract was headed “Guarantee and security deposit”. Clauses 28.2 and 28.3 provide as follows:
“28.2 In addition to the guarantee required pursuant to Clause 28.1, LIME may require a Telco without sufficient immovable fixed assets to provide an initial security deposit by the Ready for Service date of the first Joining Service provided pursuant to this Agreement (the ‘Initial Deposit’). The amount of such Initial Deposit shall not exceed the sum of three months Usage charges for all Services forecast to be used by the Telco in the Forecast agreed pursuant to the Joint Working Manual. On the expiration of a period of twelve months after the Ready for Service date of the first Joining Service, the deposit should be revised to a fair amount that covers the average amount payable by the Telco for billing and credit for the collection cycle applicable to the Telco. Any Deposit provided under this Clause shall be returned to the Telco with interest, less outstanding Charges, in the event that the Agreement is terminated. For the purposes of this Clause, ‘sufficient immovable fixed assets’ means fixed assets of the Telco located in Jamaica of a value which would reasonably cover the amount of any security deposit calculated in accordance with this Clause.
28.3 In the event that Telco's Services usage during the first seven days of a Billing Period reasonably indicates to LIME that the Usage Charges which will be payable by Telco to LIME at the end of such Billing Period shall exceed the Deposit, LIME may request that Telco shall, within a minimum period of five (5) Business Days of the request from LIME, increase the Deposit. The increased Deposit shall be a sum which covers the projected Usage Charges for the Billing Period based on the Services usage during the...
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