Legal updates and commentary
Dennis Meadows et al v Attorney General of Jamaica, Jamaica Public Service and Office of Utilities Regulation (before Sykes J.)
Summary: The Court ruled that whereas the license granted to the Jamaica Public Service Company (JPS) is valid, the term of the license which grants it exclusive rights to transmit electricity is not valid. The Office of Utilities Regulation (OUR) did not act unlawfully in the matter.
Issues: statutory interpretation, Pepper v Hart, exclusive license, “always speaking” statutes
There has been much jubilation over the Supreme Court decision in this case. In my view, such celebration is premature. My conclusion is entirely apart from the fact that this case is almost certainly going to be appealed,
What the court said was that as the statute now stands, the Minister does not have the power to grant an exclusive license which will prevent other applications from being considered.
The court specifically points out two ways in which this problem (if it is seen as such) can be overcome.
Therefore, I would argue, no matter what the higher courts may decide that the law states, the critical issue here is going to be whether the government decides to stick with its current policy or whether it wishes to change tack. If it does wish to maintain its policy of a single licensee, then it simply has to make the changes alluded to in the judgment and proceed.
It may indeed be that the government decides to use this case as an opportunity to change its policy, but we should await that decision before breaking out the champagne.
The claimants sought the following declarations from the Supreme Court:
1. That the 20-year all-island exclusive electricity license granted by the Mining and Energy Minister to JPS under section 3 of the Electric Lighting Act on 30th March 2001 is illegal, null and void and of no effect. The license was extended for an additional seven years.
2. That the JPS is therefore operating without a license as required by law;
3. Alternatively, that section 3 of the Act does not empower the Minister to disenfranchise the prospective right of any person to apply for a license to transmit electricity whether for personal, public or commercial purposes;
4. That the grant of an exclusive right to JPS on the recommendation of the OUR constitutes an unlawful fetter on the discretion of the Minister and subsequent Ministers in granting a license to transmit electricity under section 3 of the Act and/or conduct the business of the transmission of electricity;
5. That the OUR acted unlawfully in recommending the grant of an exclusive license by the Minister;
6. That the all-island license is contrary to the provisions and spirit of the Fair Competition Act.
The Court refused the 1st, 2nd, 4th and 5th declarations, and the 6th was not pursued. The significance of the judgment lies in the Court’s decision to grant the 3rd declaration, that the Minister did not have the power to grant an exclusive license.
The license gave JPS an exclusive right for the first three years of the license to develop new generating capacity, and the exclusive right for the duration of the license to transmit, distribute and supply electricity. The license was granted on 30th March 2001 for a 20-year period and extended for an additional seven years.
The case hinged on the interpretation of the relevant provisions of the Electric Lighting Act, an 1890 statute.
Sykes J. summarised the principles of statutory interpretation, that is the rules which govern how legislation is interpreted, which have been known as the literal rule, golden rule and mischief rule.
He stated that context has become an important aspect of statutory interpretation.
“…as time has gone on it has come to be recognized that the process of interpretation of statutes is more nuanced than previously acknowledged. Language, we now know, only becomes better understood if the context is known.
“It used to be that before the court could look at the context to interpret a statute, there had to be some ambiguity. This has now gone by the way.”
Another principle is that a statute is “always speaking” meaning that courts must interpret and apply a statute to the world as it exists today, and that it must be interpreted in the light of the legal system as it exists today. Sykes J. stated that the court expressly adopted the “always speaking” principle, although admitting to some potential problems.
“Admittedly the always-speaking principle is open to the accusation that it is a surreptitious method of judicial updating of legislation which has not been amended by the legislature. This court will acknowledge that there is always that danger but that should not deter the courts from applying old statutes to new circumstances that were not in the minds of the legislators provided that words can reasonably accommodate the new circumstances. Where this can be done without altering the substance of the legislation then the courts should do this even at the risk of being accused of amending the statute.”
“This court expressly adopts the always-speaking principle. This court sees no reason why in the twenty first century we should be shackled by what the legislators in 1890 thought. Social and economic considerations have changed considerably. Jamaica was a colony at that time but is now an independent country with a growing population which means an increasing demand for the supply of electricity. The priority of a colonial government in the nineteenth century may not be the priority of a democratically elected government under universal adult suffrage in the 21st century. In 1890 the Governor was obliged to govern in the interest of the United Kingdom. In 2012, the government is elected by Jamaicans to govern in the interest of Jamaicans.”
The Electric Lighting Act
The judge said that it is important to say what section 3 of the Electric Lighting Act does not say.
“It does not say that one person cannot be granted an all-island license. Neither does the Act say that the Minister must grant multiple licenses to a multiplicity of persons. Also the Minister is not prevented from granting more than one all-island license. Indeed the Act could hardly have said any of these things because the Minister cannot know how many applicants there will be.
“The section permits the Minister to grant licenses to a person to supply electricity within any area. On the face of it, persons and companies can receive licenses for any area. There is nothing to say that the areas cannot be contiguous to each other.”
The Meaning of “Area”
There were submissions as to whether the Minister had the power to grant an all-island license as the Act speaks to the Minister being able to grant a license “within any area.” The claimants argued that area meant something less than the whole and therefore an island-wide license could not be granted. But Sykes J. did not accept this submission and ruled that:
“…section 3 gives the Minister a discretion to grant to one person an all-island license for generating distributing and supply electricity. The section also permits the Minister to grant more than one all-island license to generate, transmit and supply electricity. The Minister may also grant more than one license for a part of the island. In the 21st century there is no compelling reason to interpret area to mean only something less than the whole.”
Can the Minister grant an exclusive license?
The Act allows the Minister to grant licenses, and to impose regulations on the license. The court said that since the statute allows for multiple providers of electricity, anyone who wishes to do so should be able to apply for a license.
“If this is so, then it means the Minister needs to hear and consider that application even if he has a stated policy on the matter. He is free to declare the application in accordance with the policy but that policy should not be so inflexible that it prevents applicants from having their applications genuinely considered.
“It is one thing to say that a decision will be made in accordance with a policy but it is quite another to grant a license to a previous applicant in terms which effectively guarantee that no other application will be considered regardless of its merits.
“The statute does not give the power to the Minister to grant a license on terms which effectively bar any other applicant from being considered. This, in the opinion of this court, is the problem with the current license to JPS. The Minister has committed himself and his successors to a situation in which there is no possibility of change for the required twenty years (which has been extended) even if technology or a new company has a better and cheaper way of of doing some of what JPS is now doing.”
The judge noted that the sequence of events demonstrates the “dangers of the Minister’s approach” noting that an initial 20-year license was extended for another seven years. If that approach was correct, the court asked, what would prevent the Minister from granting a 100-year or 200-year exclusive license?
The court said that since the Act contemplated that applicants have a legitimate expectation that their applications would be genuinely considered
“The legitimate expectation arises from the words of the statute. They have the right to apply. To have the right to apply without a further right to have it genuinely considered would be meaningless.”
The court said, therefore, that while the Minister may have a policy regarding granting licenses, and then after hearing an applicant, declines to grant a license in light of the policy, this will not be wrong once the Minister has exercised an “honest and bona fide exercise of discretion.”
What is not permissible, is adopting a position which would result in other applicants not being considered at all.
The court noted that JPS stressed the significance of its investment in the provisions of electricity but said that:
“…as important as economic considerations are, the rule of law is even more important. Since we are developing a society based on the rule of law then the law must be followed. The Minister cannot exercise a power that in law he does not have.
The way out of the problem (if it is seen as a problem) is to amend the law to give the Minister the powers he needs to implement the policy of the government.”
The Role of the Office of Utilities Regulation (OUR)
The claimants argued that the OUR had recommended an exclusive license and had therefore acted contrary to section 4 (3) (a) the OUR Act which states that the OUR “shall undertake such measures as it considers necessary or desirable to (a) encourage competition in the provision of prescribed utility services.”
The opening words of the license stated that the Minister was granting the license “having regard to recommendations of the OUR” but did not specify what the recommendations were.
In fact, a letter dated March 15, 2001 the OUR expressed its opposition to the Minister’s proposal to exempt JPS from the Fair Competition Act, but the Minister ignored the recommendation. The Court therefore held that the OUR had done nothing unlawful.
The Use of Parliamentary Records and Pepper v Hart
The claimants attempted to rely on Pepper v Hart, a House of Lords case which dealt with using statements in Parliament to help interpret statute. Sykes J. indicated his discomfort with that case, and with the concept of using a statement made by one Minister in Parliament to try to interpret what the Parliament as a whole intended in passing a statute.
“Pepper v Hart is not a case which should be followed without extreme care and caution…It is well known that ministerial, assignments are often the product of political considerations rather than the person’s actual expertise in a particular area. The Minister may not know much about his portfolio prior to his assignment. His statements to Parliament are often prepared by advisors and senior civil servants, Sometimes the legislation comes after extensive public discussion. All this shows that Pepper v Hart is not without difficulties and should be avoided.”