THE government was bracing last night for a fight all the way to the Privy Council after its high court victory yesterday in which Justice Patrick Brooks threw out a multi-billion arbitration award in favour of Ezroy Millwood’s bus co-operative for the administration’s premature termination of two franchises for providing transportation in the greater Kingston region.

With lawyers for Millwood’s National Transport Cooperative Society saying that they intend to appeal, the transport minister, Robert Pickersgill, was warning that the matter would not end in the local courts if the NTCS was successful.

“If the NTCS wins the appeal, government will take the matter to the Privy Council,” Pickersgill told the Observer.

Based in London, the Privy Council is Jamaica’s court of last resort.

Ironically, it may have been a misapplication of the transport laws by Pickersgill in granting the franchises to the NTCS that is a major plank saving the government from the $4.5 billion award handed down a year ago by a three-member tribunal to the NTCS for a loss of earnings between 1995 and 2001. With applicable interest at the time of the arbitration ruling, the real payout would have been in the region of $12.5 billion.

Justice Brooks held that the operating franchises issued to the NTCS nine years ago were invalid for the law recognised only exclusive contracts, which was what the Public Passenger Transport Act of the time required for providing bus service in the city – a point argued by government lawyers before arbitrators last year.

“The learned arbitrators ought not to have refused to accept that the granting of the licences by zones was ultra vires and void,” Justice Brooks said in his 45-page ruling delivered yesterday. “This was an error in law evident on the face of the record as such constituted an act of misconduct.”

There were other grounds, too, on which the findings of the arbitrators – retired Appeal Court Justices Boyd Carey and Ira Rowe (now deceased) and lawyer Andrea Hudson-Phillips – were overturned, including a failure of performance by the NTCS.

But the NTCS’ lead counsel, Lord Anthony Gifford, insisted that Justice Brooks had erred.

“My next step is to head for the Court of Appeal,” Lord Gifford told the Observer. “I believe we have good grounds for appeal.”

The government, in the interim, was savouring its victory.

“Obviously we are very delighted,” the information minister, Burchell Whiteman, said after yesterday weekly meeting of the Cabinet.

“We are aware that the NTCS has indicated that it is going to appeal, but we feel vindicated in dealing with the matter in the way that we did and we feel there was no basis for the kind of award which was made.”

Millwood’s NTCS was in 1995 granted two of four franchises to operate the bus system in the capital. The licence was to have been for a decade.

But the co-operative was thrown out by Pickersgill’s successor Peter Phillips in 2001, as part of the government’s attempt to reform a city bus service that had long been ramshackle and undisciplined. Phillips paid the NTCS $337.7 million for the remaining five years of its franchise and agreed to the separate purchase of its buses.

However, the NTCS claimed that Phillips had arbitrarily revoked is contracts.

The routes that were operated by the NTCS were handed over to the government’s Jamaica Urban Transit Company (JUTC), as had been those run by the other franchise holders.

Milwood, however, claimed billions of dollars in lost earnings over the entire span of the contract, arguing that it was the government’s failure to adjust bus fares, as agreed at the time of the contract, was the basis for the poor quality of the bus system.

Under the March, 1995 agreement the government did in fact undertake to raise bus fares to allow the NTCS to enjoy a rate of return of 15 per cent of capital employed, adjusted for inflation.

The new fares should have come into effect by that June and in the interim the government provided the NTCS with a $10-million subsidy. The new fare table was never promulgated.

There was an interim fare hike early 1996, but in April of that year both sides reached a new Heads of Agreement under which there were to be further fare adjustments, but based on an undertaking by the NTCS to implement and maintain schedules, add more buses to its routes and ensure “improvements in the conduct and decorum of bus crews”.

The government argued that these improvements never happened. At arbitration and in the court hearing after the government’s challenge of the award of the tribunal, the NTCS insisted that the 1996 Heads of Agreement did not vary the earlier franchise agreement. The arbitration panel agreed, but Justice Brooks said they had misconstrued the relevant clause in the agreement.

Justice Brooks also rejected the NTCS claim to losses for the period after 1998, having been informed that the JUTC would take over the city’s bus service.

The co-operative said it lost over $600 million in two years because of the activities, but the government argued that even if this was the case Millwood’s group should have taken reasonable steps to mitigate its losses – a point that was not addressed by the arbitrators.

Agreeing that the NTCS could have ceased its operation and leaving the responsibility for providing public transport to the government, Justice Brooks said: “I therefore find that the society failed to mitigate its losses and to the extent that it failed to do so the government would not be liable to it for those losses.”

lawyer Andrea Hudson-Phillips – were overturned, including a failure of performance by the NTCS.

But the NTCS’ lead counsel, Lord Anthony Gifford, insisted that Justice Brooks had erred.

“My next step is to head for the Court of Appeal,” Lord Gifford told the Observer. “I believe we have good grounds for appeal.”

The government, in the interim, was savouring its victory.

“Obviously we are very delighted,” the information minister, Burchell Whiteman, said after yesterday weekly meeting of the Cabinet. “We are aware that the NTCS has indicated that it is going to appeal, but we feel vindicated in dealing with the matter in the way that we did and we feel there was no basis for the kind of award which was made.”

Millwood’s NTCS was in 1995 granted two of four franchises to operate the bus system in the capital. The licence was to have been for a decade.

But the co-operative was thrown out by Pickersgill’s successor Peter Phillips in 2001, as part of the government’s attempt to reform a city bus service that had long been ramshackle and undisciplined. Phillips paid the NTCS $337.7 million for the remaining five years of its franchise and agreed to the separate purchase of its buses.

However, the NTCS claimed that Phillips had arbitrarily revoked is contracts.

The routes that were operated by the NTCS were handed over to the government’s Jamaica Urban Transit Company (JUTC), as had been those run by the other franchise holders.

Milwood, however, claimed billions of dollars in lost earnings over the entire span of the contract, arguing that it was the government’s failure to adjust bus fares, as agreed at the time of the contract, was the basis for the poor quality of the bus system.

Under the March, 1995 agreement the government did in fact undertake to raise bus fares to allow the NTCS to enjoy a rate of return of 15 per cent of capital employed, adjusted for inflation.

The new fares should have come into effect by that June and in the interim the government provided the NTCS with a $10-million subsidy. The new fare table was never promulgated.

There was an interim fare hike early 1996, but in April of that year both sides reached a new Heads of Agreement under which there were to be further fare adjustments, but based on an undertaking by the NTCS to implement and maintain schedules, add more buses to its routes and ensure “improvements in the conduct and decorum of bus crews”.

The government argued that these improvements never happened. At arbitration and in the court hearing after the government’s challenge of the award of the tribunal, the NTCS insisted that the 1996 Heads of Agreement did not vary the earlier franchise agreement. The arbitration panel agreed, but Justice Brooks said they had misconstrued the relevant clause in the agreement.

Justice Brooks also rejected the NTCS claim to losses for the period after 1998, having been informed that the JUTC would take over the city’s bus service.

The co-operative said it lost over $600 million in two years because of the activities, but the government argued that even if this was the case Millwood’s group should have taken reasonable steps to mitigate its losses – a point that was not addressed by the arbitrators.

Agreeing that the NTCS could have ceased its operation and leaving the responsibility for providing public transport to the government, Justice Brooks said: “I therefore find that the society failed to mitigate its losses and to the extent that it failed to do so the government would not be liable to it for those losses.”