Traille Caribbean Ltd v Cable & Wireless Jamaica Ltd (Trading as Lime) (Jamaica)

For telephone tax imposed on international calls terminating in Jamaica, liability follows the actual provision of telephone service and the identity of the terminating carrier, rather than contractual labels or licences. An interconnection contract requiring payment of applicable taxes may require the customer to reimburse the network operator for the tax. Where connection is subject to an initial security deposit, payment of the properly calculated deposit is a condition precedent. An undertaking in damages is assessed on contractual damages principles. Loss of use of tax payments may be compensated by interest where causation, reasonable mitigation, opportunity to contest, and proof are established. Charges earned for services are not windfall benefits, while collateral, indirect, or speculative benefits do not generally offset the loss.

Traille, a Jamaican telecommunications intermediary, sued Cable & Wireless Jamaica Ltd, trading as Lime, over its refusal to activate interconnection under a 2013 contract. The dispute concerned liability for tax on international calls terminating in Jamaica, inclusion of that tax in the initial security deposit, the effect of a 30% exemption, and damages under an interim mandatory injunction undertaking.

Batts J largely found for CWJ and permitted recovery under Traille’s undertaking. Laing J assessed CWJ’s damages. The Court of Appeal of Jamaica dismissed Traille’s consolidated appeals on 31 July 2020. The Board considered four issues: tax liability, contractual entitlement to include the tax in the deposit, the right to refuse connection, and the loss recoverable under the undertaking.

Appeal dismissed. The Board, in the joint judgment of Lord Hamblen and Lord Burrows, upheld the decisions below on all four issues.

1. Tax liability. Under paragraph 3 of the Provisional Collection of Tax (Telephone Calls Tax) Order 2012, liability depended on who actually provided telephone service in Jamaica. Traille had licences but operated no Jamaican network. CWJ was the terminating carrier and was liable for the tax. Contractual descriptions of Traille’s role and the suggested agency relationship did not alter that conclusion. The Technical Note could assist interpretation provided it did not contradict the Order, and confirmed the result.
2. Security deposit. TCT was an applicable tax under clause 9.7 of the contract and had to be paid by Traille to CWJ. Construing the contract as a whole, the reference in clause 28.2 to three months’ Usage Charges included TCT. That construction was consistent with the commercial purpose of protecting CWJ against default and its exposure to the tax authorities.
3. Refusal to connect. Clause 3.1 made CWJ’s obligation to connect subject to clause 28. The initial deposit was therefore a condition precedent to connection. Traille had not tendered the properly calculated deposit. The emails relied on did not amount to an offer to pay it, and the concurrent factual findings were not open to challenge absent exceptional circumstances. CWJ was entitled to refuse to turn on the switch.
4. Undertaking in damages. The Board applied the principles stated in F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295: damages under an enforced undertaking are assessed on the same basis as contractual damages. The injunction directly caused CWJ to provide the service and pay TCT, resulting in recoverable loss of use. CWJ acted reasonably in continuing to pay tax while legally liable and exposed to a 15% penalty. Service charges were earned consideration, not windfall benefits. The 30% tax benefit was collateral, indirect and speculative, and did not reduce the damages. Interest was recoverable despite the absence of formal pleadings because Traille had a full opportunity to contest the claim and the loss was proved. The award of J$22,600,680.19, with statutory interest and costs, was upheld.

• Privy Council: The Board dismissed Traille’s appeal and advised His Majesty accordingly.
• Court of Appeal of Jamaica: On 31 July 2020, Brooks JA, with whom Sinclair-Haynes and Williams JJA agreed, dismissed Traille’s consolidated appeals with costs.
• First-instance judgments: Batts J’s judgment dated 15 April 2016 largely favoured CWJ and permitted recovery under Traille’s undertaking in damages. Laing J’s judgment dated 22 May 2017 assessed CWJ’s recovery at J$22,600,680.19 plus interest and costs.