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Flow Jamaica wins decade-long fight over telephone tax

Published:Wednesday | June 7, 2023 | 12:30 AMBarbara Gayle/Gleaner Writer
Flow Jamaica headquarters in Kingston.
Flow Jamaica headquarters in Kingston.

The United Kingdom Privy Council has upheld a ruling by the Jamaican Court of Appeal that telecommunications provider Cable...

The United Kingdom Privy Council has upheld a ruling by the Jamaican Court of Appeal that telecommunications provider Cable & Wireless Jamaica Limited, CWJ, had acted reasonably to deny Traille Caribbean Limited connection to its network until the telephone call tax was added to Traille’s security deposit.

The ruling settles a near decade-old dispute when Cable & Wireless was operating as LIME. It now operates as Flow Jamaica.

In handing down its decision last Thursday, the Privy Council said it agreed with the Court of Appeal and Supreme Court Judge David Batts that CWJ was contractually entitled to refuse to turn on the switch because of the non-payment of the tax in the security deposit.

Traille will now have to pay CWJ $22.6 million with statutory interest at six per cent per annum, dating from May 22, 2017, until the amount is paid.

Traille had taken the issue to the Privy Council, seeking to overturn the decision of the Court of Appeal, but was unsuccessful.

In March 2014, Traille entered into a written agreement with CWJ to terminate calls from overseas carriers to mobile numbers in Jamaica. The interconnection agreement provided for a guarantee or a three-month security deposit by Traille.

CWJ claimed that the deposit included the call tax imposed by the government, but Traille contended otherwise. It sued CWJ in the Supreme Court in August 2014 and got an injunction compelling CWJ to turn on the connection switch for Traille so it could conduct its business.

IN FAVOUR

Following the injunction, the matter came up for hearing in 2016 before Justice Batts, who ruled in favour of CWJ that the telephone call tax was payable in the deposit.

Traille had given an undertaking as to damages when the injunction was granted. Supreme Court Judge Kissock Laing assessed damages in 2017 and made the award of $22.6 million with interest, based on the interest CWJ lost in having to pay the call tax.

Traille, which was seeking damages for loss of revenue, claimed on appeal that it was paying the call tax separately to the relevant authorities and was current in its payment. The Privy Council ruled that the manner in which damages and interest were computed by Justice Laing was correct.

The ruling affirmed the previous decision of the Court of Appeal panel, comprising the president Justice Patrick Brooks, Justice Almarie Sinclair-Haynes and Justice Paulette Williams, in July 2020.

Dr Lloyd Barnett, who represented Traille, submitted before the Privy Council that CWJ failed in its duty to mitigate its loss by continuing to pay the telephone call tax, and that the telecoms should have known that Traille was also paying the tax to TAJ, or Tax Administration Jamaica.

“But CWJ did press Traille for information and proof that Traille was paying TCT (the telephone call tax) to the TAJ and that was not forthcoming until a late stage. In any event, we agree with the Court of Appeal that CWJ had acted reasonably in paying TCT in a situation where it was legally liable to pay TCT on pain of paying a penalty of 15 per cent for non-payment,” the Privy Council said in response to the submission.

The Privy Council found that Traille was unacceptably blowing hot and cold to rely on a finding that there was no breach of contract, while also saying the loss suffered by CWJ was not caused by the injunction. The Privy Council rejected all arguments advanced on behalf of Traille.

CWJ was represented by King’s Counsel Denise Kitson and attorneys-at-law Kevin Williams and Rachel Kitson, who opposed the legal arguments put forward for Traille before the Privy Council.

Attorneys-at-law Weiden Daley and Shaydia Sirjue appeared with Dr Barnett.

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