The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Court of Appeal this week overturned permission granted to a niche telecoms provider to amend its claim against the Bahamas Telecommunications Company (BTC), whose “misfeasance in a public office” allegedly caused its collapse.

Island Bell Ltd, which was owned by the late Peter Lorandos, suffered a blow in its near 13-year battle for redress after the appeal court unanimously ruled that it was unfair to change its pleadings midway through the trial.

BTC had already closed its defence when Island Bell and its attorneys sought to amend their ‘statement of claim’, a move that was initially granted by Supreme Court Justice Rhonda Bain.

However, Dame Anita Allen, the Court of Appeal’s president, overturned this on the grounds that no new evidence had been obtained to justify such late changes, which added “entirely new claims of unlawful conduct against BTC”.

Pointing to the lateness of Island Bell’s move, Dame Anita said none of the amendments identified “the real issue” between the two sides - the phrase Justice Bain had used to justify granting permission.

Ruling that the changes “substantially change the case” against BTC, Dame Anita said the consequences were that “after the close of its case, [BTC] is confronted with an entirely new case to defend”.

Island Bell’s dispute with BTC dates back almost to the beginning of this century, and is founded on allegations that the latter’s failure to uniformly enforce the rules - and contractual obligations - among firms providing operator-assisted call services to Bahamian hotel guests resulted in it being forced out of business.

The dispute occurred at a time when the Bahamian communications market was in the initial stages of liberalisation, amid efforts to privatise BTC, and also touches on an age-old issue affecting the private sector, namely that of locals ‘fronting’ for foreigners in industries supposedly reserved for Bahamians only.

Detailing the origins of the legal battle, Dame Anita said Island Bell had a contract with BTC to provide Automated Operator Services (AOS) to guests at Bahamian hotels.

The rules included a prohibition on the use of Voice over Internet Protocol (VoIP) and toll free numbers, while call rates were ‘capped’ and the AOS operator had to be a Bahamian company as defined by the Companies Act.

Island Bell alleged that these contracts made all AOS operators, such as itself, agents of BTC, with the latter effectively responsible for regulating all the players so that they “complied with all the terms and conditions”.

The crux of its case is that BTC breached its duty as regulator, and as contract principal, by allowing a rival, One World Communications, to operate in breach of these terms - something Island Bell alleged ultimately forced it out of business.

Apart from “persistently and habitually charging rates for long distance international calls upwards of 500 per cent above” BTC’s published operator-assisted call rates, Island Bell alleged that One World Communications also “breached the public policy of Bahamianisation” and was engaged in “fronting”.

Media coverage dating from 2003-2004 alleged that One World Communications, headed by former BTC employee Maggie Colebrooke, was a ‘front’ for a large Mexican communications player, BBG Communications.

One World’s office in 2003 was said to be the then-Christie, Davis & Company law firm, while its president and vice-president both had Spanish names, even though Ms Colebrooke and a Bahamian lawyer were listed as the shareholders.

Island Bell, in its initial statement of claim, alleged that BTC had failed to ensure approvals were in place for non-Bahamians to participate in the communications industry, a sector supposedly reserved for Bahamian ownership only under the National Investment Policy.

It also claimed that BTC had failed to check that “an illegal ‘Call-back’ service was not being offered by One World Communications” and that “unsuspecting consumers were not being ‘price-gouged’ by any of its AOS licensees.

Island Bell alleged that despite “the many complaints received from tourists who were the victims of the price gouging by One World Communications”, both BTC and various government departments failed to act - even when evidence was presented to them that One World was not Bahamian owned.

Island Bell claimed it supplied such evidence consistently between 2000 and 2003, and based its case on BTC’s alleged failure to act and ensure a ‘level playing field’ between competitors - something that it claimed constituted a “misfeasance in public office”.

Dame Anita noted of Island Bell: “In the respondent’s particulars of damage, it claimed that its annual net ordinary income fell from more than $400,000 in 1999 to $3,005 in 2003 through loss of market share, and that it was forced out of business.”

BTC, though, denied all of Island Bell’s claims, pointing out that it was URCA’s predecessor, the Public Utilities Commission (PUC), not itself, that became statutorily responsible for regulating the communications sector from September 22, 2002, onwards.

It added that there were no formal contracts with AOS operators, and that it merely gave them authorisation to operate.

The legal battle finally made it to trial in the Supreme Court in October 2011, with Island Bell calling witnesses from Atlantis and SuperClubs Breezes to give evidence about receiving deposits from One World Communications.

Island Bell then sought to amend its case to include new causes of action, including that BTC had breached the Telecommunications Sector Policy, and that it had also failed to properly investigate whether One World Communications had the necessary foreign investor approvals.

Justice Bain granted the amendments, allowing Island Bell to include the allegation that One World Communications was paying “hundreds of thousands of US dollars per annum to hotels as advance deposits, or pre-authorised credits, for AOS provision..... thereby securing to itself an illicit competitive advantage over the plaintiff, which adversely and fatally affected the plaintiff’s AOS business”.

BTC was said to have “vigorously” resisted the amendments, which Dame Anita said were submitted for consideration seven months after Island Bell claimed new witnesses had come forward.

Suggesting that it was “significant” that the only cause of action pleaded in the original claim was “misfeasance in a public office”, Dame Anita added that the Supreme Court “did not identify what was the real controversy between the parties”, and “the amendments went further than simply that which was required to take into account the late discovery of evidence”.

Raynard Rigby was BTC’s attorney, while Carl Bethel QC and Michael Foulkes represented Island Bell.