First Caribbean International Bank (Barbados) Ltd v Director of Finance and Planning et Al

• Jurisdiction: St Lucia
• Judge: St Rose-Albertini, J.
• Judgment Date: 03 October 2023
• Judgment citation (vLex): [2023] ECSC J1003-1
• Docket Number: CLAIM NO. SLUHCM2022/0008
• Court: High Court (Saint Lucia)

Between:

Firstcaribbean International Bank (Barbados) Limited

Appellant

and

(1) Director of Finance and Planning

(2) Accountant General

Respondents

Before:

The Hon. Mde. Justice Cadie St Rose-Albertini High Court Judge

CLAIM NO. SLUHCM2022/0008

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

COMMERCIAL DIVISION

Appearances:

Ms Diana Thomas with Mr Barrie Attzs for the Appellant

Mr Seryozha Cenac with Mrs Antonia Charlemagne for the Respondents

1 St Rose-Albertini, J. [Ag]: This matter concerns an appeal filed by FirstCaribbean International Bank (Barbados) Limited (“the Bank”) challenging a purported assessment done by the Inland Revenue Department (IRD) as agent of the respondents. It is brought pursuant to Part 60 of the Civil Procedure Rules 2023 which deals with appeals to the High Court, and section 16 of the Stamp Duty Act 1 (the Act) which permits an appeal to be made

to the High Court within 7 days of the date of an assessment, where a taxpayer is dissatisfied with such assessment

2 The appeal raises three questions for the Courts consideration:

1. Whether an assessment has been done in relation to payment of stamp duty on a Banking Business Vesting Order dated 19 ^th August 2019 2 (“the BBVO”) wherein the Bank acquired the banking business of FirstCaribbean International Finance Corporation (Windward and Leeward) Ltd?

2. Based on the answer to the first question, was the appeal filed prematurely, or is in time, or is out of time?

3. If the appeal is properly filed, then what is the chargeable value and the applicable Instrument in the Schedule to the Act, to be used for the assessment of stamp duty on the BBVO.

Issue 1: Has an assessment been done, and if so, when?

The Evidence

3 By letter dated 11 ^th January 2018 3 the Bank's attorney informed the IRD of the proposed acquisition of loans and the mortgages owned by FirstCaribbean International Finance Corporation Limited (Leeward & Windward) Ltd and requested that the IRD assess the stamp duty payable in relation to the transaction. A schedule of the value of the loans to be transferred was enclosed with the letter.

4 By Letter dated 22 ^nd January 2018 4 the IRD responded indicating that based on Instrument No. 53(b) of the Act the amount would be $66,810.69. The letter stated that the IRD reserved the right to change its opinion on the amount stated, should there be any change of facts.

5 The BBVO took effect on 19 ^th August 2019 and by letter dated 5 ^th September 2019 5 from its attorneys, the Bank delivered a draft for the said amount, to the IRD.

6 Subsequently, by letter dated 15 ^th October 2019 6 the IRD represented that stamp duty on the BBVO has been estimated to be $668,105.90, and requested verification of the lending business being transferred under the BBVO, as the information was provided over a year ago. The letter further stated that the calculation of stamp duty remained contingent on the provision of an updated accounting of the lending business to be transferred.

7 Some two years later, by letter dated 10 ^th January 2022 7 the Bank's attorneys advised the IRD that based on the decision in RBL v Director of Finance et al 8 the value of the consideration was the proper taxing basis for the BBVO, and not the value of the underlying assets, and enclosed the Net Asset Value Statement as at 19 August 2019. The letter further stated that the tax chargeable on the BBVO should be 2% ad valorem of the consideration of $18,441,000.00, being the net asset value of the banking business transferred at the date of closing.

8 By letter dated 8 ^th February 2022 9 which the Bank says was received on 17 ^th February 2022 the IRD responded stating that the assessment was done some two years ago, and has not changed, and further that non-payment of the stamp duty will attract penalties from the effective date of the BBVO.

The Bank's Submissions

9 The Bank submits that against the background of the statutory provisions and RBL v Director of Finance et al, an assessment requires (i) a definitive statement of liability and (ii) a statement that said liability is payable. The letter of 15 ^th October 2019 does not satisfy these requirements, as it included the words “estimate” and “contingent” and made it clear that the estimate could change following the provision of additional information.

10 The Bank argued that neither the Income Tax Act 10 or the VAT Act 11 in this jurisdiction stipulates the form which a notice of assessment should take, however the assessment form in use by the IRD, for the Income Tax Act contained all the information required for a proper assessment. Further, the VAT Act specified the information to be contained in a notice of assessment for VAT purposes. As the IRD is the administrator of the Act and all the other taxes referenced above, there is a legitimate expectation that similar information should be contained in any assessment done under the Act. Thus the letter of 15 ^th October 2019 is at odds with the standard of assessment that taxpayers have come to expect from the IRD, in the administration of the other pieces of tax legislation.

11 The Bank further says that the letter dated 15 ^th October 2019 on its own does not constitute an assessment but when read together with the letter dated 8 ^th February 2022, the two letters convey that an assessment has been done. Moreover, it was only upon receiving this letter that the Bank understood the IRD to be saying unequivocally and definitively that an assessment of stamp duty had been done in relation to the BBVO. Up until that time what was taking place was open and fluid communication, but from this point on the IRD made it clear that the figure stated in the letter of 15 ^th October 2019 was final, and due immediately.

12 Alternatively the Bank says, given that the letters of 15 ^th October 2019 and 8 ^th February 2022 were based on the same document or information it meant that the first letter of 22 ^nd January 2018 was also an assessment for which Instrument No. 53(b) of the Schedule of the Act was applied for the arriving at the stamp duty payable. This amount was paid to the IRD on 5 ^th September 2019.

The Respondents Submissions

13 The respondents submit that an assessment is simply a determination by the IRD of the amount due and the letter of 15 ^th October 2019 was a record of that determination, which was communicated to the Bank's attorneys. Further the law ought not to be interpreted to prejudice the respondents by requiring precise language for an assessment. Thus, the

respondents contend that they have made an assessment and a record of that assessment was communicated to the Bank. Further, whether the Bank considered it an assessment is irrelevant, and the letter of 15 ^th October 2019 constituted a valid and effective assessment of the stamp duty payable on the BBVO

14 Alternatively, the respondents submit that in keeping with the Bank's own argument, if it is correct that the letter of 15 ^th October 2019 is not an assessment, then there has been no assessment at all and the Bank is pre-mature in filing this appeal. The letter of 8 ^th February 2022 did not state the amount to be paid and is not an assessment by the absence of...