National Transport Co-operative Society Limited v The Attorney General of Jamaica (Jamaica)

An exclusive public passenger licence must comply with the statutory conditions governing its territorial scope. A licence for a zone is not a licence operating throughout the Corporate Area. A minister cannot bind the Government by a franchise outside statutory authority, even where it has been acted on. However, a purported franchise may take effect as a lesser road licence under the Road Traffic Act, where the statutory grantor had power to confer that benefit. Here, the ten-year term was reduced to three years and exclusivity could not be assumed. A contractual provision suspending a fare obligation was unenforceable where its necessary improvements and valuation adjustments lacked objective standards or machinery and required further negotiation. An invalid clause may be severed from otherwise binding terms. A refined pure point of law may be entertained on appeal where it causes no unfair prejudice.

The Society entered into two ten-year Franchise Agreements with the Jamaican Government for exclusive bus services in the Northern and Portmore zones. The Government failed to publish a new fare table and later relied on statutory invalidity and a subsequent Heads of Agreement.

Arbitrators awarded damages. Brooks J set aside the award, and the Court of Appeal of Jamaica dismissed the Society’s appeal. The Privy Council considered whether the Franchise Agreements were authorised by the Public Passenger Transport (Corporate Area) Act, whether they could operate as road licences under the Road Traffic Act, and whether paragraph 7(b) of the later agreement varied the fare-table obligation.

1. Disposition. The appeal was allowed. The Franchise Agreements were valid only as road licences for three years, not as ten-year exclusive franchises. Paragraph 7(b) of the second agreement did not suspend or vary the Government’s obligation to provide a new fare table. The matter was remitted to the Court of Appeal of Jamaica to consider the consequences for duration, quantum and mitigation.
2. Statutory authority. Section 3(1) of the Public Passenger Transport (Corporate Area) Act contemplated an exclusive licence operating within and throughout the Corporate Area. The Northern agreement did not cover the whole area, while the Portmore agreement was primarily concerned with an area outside it and was non-exclusive within it. Section 4(b) of the Interpretation Act could not convert licence into licences because the statutory context was inconsistent with multiple exclusive licences operating throughout the same area.
3. Effect of unauthorised contracting. Applying the reasoning in Credit Suisse v Allerdale Borough Council [1997] QB 306 and Cudgen Rutile (No 2) Pty Ltd v Chalk [1975] AC 520, a minister cannot contract outside statutory powers. The resulting agreement is unenforceable, notwithstanding reliance or expenditure. Section 112 of the Road Traffic Act merely preserved any existing prerogative; it did not confer one, and none was established.
4. Saving under the Road Traffic Act. The agreements could operate as road licences under section 63. The Authority was a contracting party and had substantial control over the agreements. The statutory three-year duration in section 61(3) limited the licences to three years. A purported grant exceeding the grantor’s power could take effect to the extent lawfully available, including as a non-exclusive licence. The matters required by section 63 had been investigated, and the departures concerning vehicle certificates and advance fees were insufficient to invalidate the licences between the parties.
5. Contractual certainty. Paragraph 7(b) was too vague to be enforceable. It supplied no objective means for valuing concessions and cost increases, identifying or assessing the necessary improvements, or determining the required success of training. It therefore amounted to an unenforceable agreement to agree or negotiate, applying the principles in Prenn v Simmonds [1971] 1 WLR 1381 and Walford v Miles [1992] 2 AC 128. Paragraph 9 was also unenforceable but severable, leaving other provisions capable of contractual effect.
6. Late arguments. The Board could entertain the Society’s refined uncertainty argument and the statutory road-licence point. Both were principally points of law, sufficiently related to arguments previously advanced, and caused no unfair prejudice.

• Privy Council: In [2009] UKPC 48, the appeal was allowed and the matter remitted for consequential issues concerning duration, quantum and mitigation.
• Court of Appeal of Jamaica: On 9 May 2008, the Society’s appeal from Brooks J was dismissed.
• Supreme Court of Jamaica: On 29 November 2004, Brooks J set aside the arbitrators’ award under section 12(2) of the Arbitration Act.
• Arbitration: The arbitrators awarded damages after rejecting the Government’s statutory-invalidity and variation arguments.