McClean v the Barbados Telephone Company Ltd

• Jurisdiction: Barbados
• Judge: King, J.
• Judgment Date: 29 May 1996
• Neutral Citation: BB 1996 HC 9
• Docket Number: No. 1038 of 1994
• Court: High Court (Barbados)
• Date: 29 May 1996

High Court

King, J.

No. 1038 of 1994

McClean

and

The Barbados Telephone Company Limited

Mr. A.W.R. McClean in person

Mr. Harold St. John, Q.C. with Mr. Brian Clarke of Clarke and for the respondents

Public Utilities - Appeal against the Public Utilities Board's decision — Public Utilities Board made a decision in respect of telephone rates which the respondent could have charged to its consumers — Under Section 44 of the Public Utilities Act, Cap.282 the appellant requested a review of specific areas — Board delivered its review decision — Appellant appealed the decision of the Public Utilities Board — Ruling that the Board did not commit any error of law in making its choice — Appeal dismissed.

JUDGMENT OF THE COURT:

1 On the 29th June, 1993, The Public Utilities

2 Board, the authority charged under the Public Utilities Act Cap.282, with the fixing of rates which the public utility companies in Barbados may charge its consumers, delivered a decision in respect of the rates which the respondent may charge its consumers far the various services it provides. The rates were to became effective from that date.

3 Both the appellant and the respondent served notice on the Board in accordance with section 44 of the Act requesting a review of the decision. The appellant requested a review of the specific areas and gave his grounds in support. The respondent requested a review in nine broad areas with multiple particulars and annexed documents.

4 The review came up for hearing over 3 days and the board delivered its review decision on l0th June, 1994. The matter before me is an appeal by the appellant against that decision. The appellant's Notice of Motion is in these terms:–

That the decision and order of the Public Utilities Board (hereinafter called “the Board”) dated the l0th day of June 1984 may be set aside and that the court make such Order as it sees fit which will enable the appellant and other consumers of the telephone services provided by the respondent to obtain the said telephone services at rates which are manifestly and undoubtedly just and reasonable. And or alternatively that the court construct rates or direct the Board to construct rates which will reduce estimated revenue of the respondent, on a test year basis by $4.81 million (being the amount indicated in paragraph 1 of the Grounds of Appeal listed hereunder).

AND FURTHER TAKE NOTICE that the following are the Grounds of Appeal:

• (a) The Board erred in law in that, after making material changes to its decision dated 29 ^th June, 1993 which in their fatality reduced the revenue requirements of the respondent on a test period basis by $4.81 million, it failed to reduce the rates for telephone services correspondingly and in the result has faxed rates which are excessive, unreasonable and unfair to the consumer.

  The board reduced the respondent's return on common equity by $4-765 million and increased depreciation expense by $1.879million

  Hence, the board reduced revenue requirements other than corporation tax by $2.886 million and consequential1y reduced corporation tax by $1.924 million.

  Given the prevailing corporation tax rate of 40%, the consequential reduction in corporation tax is two thirds of $2.886 million.

• (b) The Board erred in law in that it made the following interrelated errors which stand on the face of the record:

  • (i) The board incorrectly included in its computations an amount of $3.667 million, for Loss of Disposal of Fixed Assets, instead of the figure of $1.629 million which was requested by the respondent and was granted by the board in its decision dated 29 ^th June, 1993. Neither the respondent nor the appellant requested a review of this item. It was not raised during the Review hearing, nor was it mentioned by the board in the toady of its decision.

  • (ii) The board reduced revenue requirements for purposes other than corporation tax by $2.886 million, but has produced computations showing an increase in corporation tax, even though the corporation tax rate and all other parameters remained unchanged. This is a mathematical impossibility which raises serious questions regarding the reasons why the board has erred.

  • (iii) The board in its computation of corporation tax deviated without explanation or reason from its Decision dated 29th June by including among the “add-backs” an amount of $1.366 million, for “Deferred Exchange.”

These errors led the board to over-estimate the respondent's revenue requirements by $4.489 million and to conclude falsely that:

“When the revenues requirements determined by the board in respect of the original application and that determined by the Board on review are compared there is a difference of approximately 0.57 of one per cent of revenue requirement awarded in the first instance.”

[page 27 of Decision dated 10 ^th June, 1994]

5 The appellant has asked the courts “to make such order as it sees fit which would enable the appellant and other consumers to obtain the said telephone services at rates which are manifestly and undoubtedly just and reasonable.

6 Section 15 of the Act is simple in its requirement that every rate….. shall be fair and reasonable. Fair and reasonable is the only standard known to law. The term has been widely interpreted a previous cases in this jurisdiction and elsewhere.

7 Games C.J. of Barbados, gave much consideration to the terms at pages 3, 4 and 5 of his decision in the rate case re: The Barbados Light and Power Co. Ltd in 1957; he said at the end of his consideration at p.4.

“The question to be determined therefore is — is the proposed increase fair and reasonable?

This question involves a consideration of certain subsidiary questions, the first of which is — is any test or standard prescribed by the Act: by which the fairness and reasonableness of the rate is to be determined? In my view there is, and it is to be found in subsection (2) of section 20 of the Act. [now 21(2)] That subsection provides that whenever the board, upon an examination of the books and retards or of the property of a public utility, considers that the rates of the public utility are producing a return in excess of a fair return upon the fair value of the property of the concern, used and useful in its public

service, it may prescribe such temporary rates for a trial period of six months as will produce a fair return upon such fair value, and those rates are to become permanent at the end of the period unless the public utility complains that they are unfair and unreasonable. Although this subsection deals with the fixing of temporary rates the test or standard prescribed also applies, in my view, to the fixing of non-temporary rates, for no other test is provided in the remainder of the provisions of the Act and, indeed, it would be strange if there was when it is remembered that temporary rates are to become permanent unless there is objection by the, public utility. I consider therefore that, in determining whether the rates are fair and reasonable, the criterion is that which will produce a fair return on the fair value of, the company's property, used and useful in its public services;”

8 And, Douglas C.J. of Barbados, adopted this view in case No.375 of 1980 A.W.A. McClean v. The Barbados Light and Power Co. Ltd and at: p.26 adapted the words of Lord Shaw in Shannon Realties v. St. Michael 1924 A.C. 185 at 192

“Whether words of a statute are clear they must, of course, be followed; but in their Lordship's opinion, where alternative constructions are equally open, that alternative is to be rejected which will introduce uncertainty, friction or confusion into the working of the system.”

9 The words of sec.15 are simple clear and unambiguous and are not open to alternative or substitute or additional words in order to convey their purpose and intent. The appellant cannot therefore use alternative or substitute or additional words to the words in the Act as the relief he seeks,. To allow the use of the words “manifestly and undoubtedly just and reasonable” would

10 introduce standards unknown to the law, and if per chance he would succeed in this appeal this court would grant relief for which the law does not provide. The standard by which these matters are to be determined, “fair and reasonable,” has been too well established and entrenched in this jurisdiction and elsewhere to be tampered with and much uncertainty, friction and confusion would be introduced into this type of proceedings particularly as there is no right of appeal from this court.

11 Both counsel for the respondent and the Board argued that the appellant was seeking relief not provided for by the Act.

12 I had, in the result, given serious consideration to dismissing the appeal, at this point, but I believe the public of Barbados is deserving of a decision based on the arguments presented by both sides, particularly by the appellant whose obligation it is to prove his case.

13 The appellant alleges that the Board had erred in law and thus came to false conclusions.

14 Section 45(1.) of the Act provides.

“An appeal shall lie on a question of law to a judge of the High Court from a decision or order of the Board.”

15 What is a question of law and how is it to be determined?

16 Williams J. now C.J., dealt with this question at page 9 of his decision can the appeal No.416 of 1974, The Barbados Telephone Co. Ltd v. The Attorney General of Barbados et al. He said at page:–

“An error of law can arise from a variety of circumstances. Volume 1 of the Fourth Edition of Halsbury Laws of England contains at paragraph 63 a useful summary illustrating this variety. Its is as follows:–

“Errors of law include misinterpretation of a statute or any other legal document or a rule of common law; asking oneself and answering the wrong question; taking irrelevant considerations into account or failing to take relevant...