Republic Bank (EC) Ltd v Director of Finance and Planning

• Jurisdiction: St Lucia
• Judge: St Rose-Albertini, J.
• Judgment Date: 31 May 2021
• Neutral Citation: LC 2021 HC 11
• Docket Number: CLAIM NO. SLUHCV2020/0030
• Court: High Court (Saint Lucia)

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

[CIVIL]

Before:

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

CLAIM NO. SLUHCV2020/0030

Between:

Republic Bank (EC) Limited

Appellant

and

1. Director of Finance and Planning

2. Accountant General

Respondents

Appearances:

Mr Fyard Hosein SC with Mr Geoffrey DuBoulay, Mrs Sardia Cenac-Prospere and Ms Sasha Bridgemohansingh for the Appellant

Mr David Dorsett with Mrs Brenda Portland-Reynolds, Mr Seryozha Cenac and Mr Kareem Allyene for the Respondents

Time for Filing Appeal — Assessment of Ad Valorem Duty — Date of assessment — Methodology and Criteria for Assessment — Stamp Duty Act — Interpretation Act — Banking Act — Part 60 of Civil Procedure Rules 2000

1 St Rose-Albertini, J. [Ag]: This Appeal is filed by Republic Bank (EC) Limited (“the Bank”), challenging the assessment of stamp duty payable on a Banking Business Vesting Order (“BBVO”) 1 in which the Bank is the transferee. The BBVO transferred and vested in the Bank all assets, rights, liabilities, and obligations of the banking business of the Saint Lucia branch of The Bank of Nova Scotia (“BNS”). The Bank is aggrieved over the methodology applied in calculating the stamp duty payable on the BBVO.

2 The Director of Finance and Planning and the Accountant General are the respondents, as officers charged with responsibility for assessment and receipt of payment of stamp duty in accordance with the Stamp Duty Act 2 (“the Act”). In that regard their responsibilities are performed by the Inland Revenue Department (“IRD”), which falls under the umbrella of the Ministry of Finance. The respondents maintain that the assessment is based on a meticulous application of the relevant statutory provisions and is lawful. They further assert that the appeal is filed out of time and should be dismissed with costs.

The Issues

3 The issues for determination are:-

• 1. Whether the appeal was filed out of time?

• 2. If the appeal is in time, whether in assessing the stamp duty payable on the BBVO, the respondents erred by applying 2% ad valorem stipulated for Instrument Nos. 35 and 36 in the Schedule of Act, to the ostensible value of the assets conveyed under the BBVO, instead of applying same to the amount or value of the consideration paid for the acquisition?

The Grounds of the Appeal

4 The Bank is duly incorporated under the Companies Act 3 and engages in banking business in Saint Lucia. The appeal is filed under section 16 of the Act and Part 60 of the Civil Procedure Rules 2000 (“CPR”). Having initiated same by way of a fixed date claim on 23 ^rd January 2020, the Bank subsequently filed an amended fixed date claim form with amended grounds of appeal on 24 ^th April 2020

5 The Bank asserts that pursuant to a Purchase and Sale Agreement dated 20 ^th September 2019 between BNS and itself (“the PSA”), all of the BNS banking business in Saint Lucia was acquired by the Bank. The BBVO was published in the Official Gazette as a statutory instrument, 4 and was the conveyance by which the BNS banking business vested in the Bank with effect from 31 ^st October 2019.

6 By letter dated 22 ^nd November 2019, the respondents advised the Bank, among other things, that (i) the applicable stamp duty on the BBVO was based on the value of the individual loans and items of security being transferred; and (ii) such stamp duty is to be paid in accordance with Instrument Nos. 35 and 36 of the Schedule of the Act, in keeping with section 177 of the Banking Act 5. At the IRD's request, the Bank furnished a copy of the BNS unaudited balance sheet as of 31 ^st October 2019 to substantiate the value of the banking business transferred under the BBVO.

7 By letter dated 16 ^th January 2020 the respondents conveyed to the Bank that stamp duty on the BBVO was assessed at 2% of the value of the total assets stated in the BNS unaudited balance sheet for the year ended 31 ^st October 2019. The Bank contends that the assessment is unjustified and illegal, and should instead be calculated on the amount of the purchase price paid for the acquisition, as stated in the PSA. Further that the respondents applied the duty to the book value of the assets conveyed, without giving due consideration to the liabilities assumed under the BBVO.

8 In the alternative the Bank asserted that the respondents erred in assessing the stamp duty on the book value of the assets transferred without consideration of the liability to stamping and/ or categorization of the instruments transferred in accordance with section 177 of the Banking Act and the Schedule to the Act, including but not limited to Instrument No. 53(6) of the said Schedule. At the hearing the Bank elected to discontinue this ground of appeal.

The Respondents Answer

9 In rebutting, the respondents assert the following:

• 1. By letter dated 6 ^th June 2019, the Bank requested a provisional assessment of the liability for stamp duty and attached to that letter a draft balance sheet. Subsequently, by letter dated 20 ^th September 2019 6 the Bank wrote to the Prime Minister and Minister of Finance requesting that the calculation of stamp duty be varied to reflect the value of the purchase price actually paid for the acquisition, as opposed to the value of the underlying assets conveyed. This led to the letter of 22 ^nd November 2019 in which the Director of Finance confirmed that stamp duty was payable on the value of the underlying assets and not the purchase price paid.

• 2. Subsequently by a letter dated 20 ^th December 2019, the Bank (i) accepted Cabinet's decision on the calculation of stamp duties as conveyed in the letter of 22 ^nd November 2019, (ii) agreed that the position was final, and (ii) acknowledged that the payment of stamp duty was then overdue.

• 3. By letter dated 13 ^th January 2020, the Bank submitted a revised unaudited balance sheet for the purpose of assessing stamp duty. Based on this the respondents adjusted the chargeable amount, having assessed the stamp duty payable as 2% of the value of the assets transferred to the Bank. This led to a revised sum of $31,720,635.30 as the stamp duty payable and was conveyed to the Bank in a letter dated 16 ^th January 2020.

• 4. That the assessment of stamp duty was communicated to the Bank from 22 ^nd November 2019 or at the latest on 20 ^th December 2019 and the appeal ought to have been lodged within 7 days of the date of that assessment, as required by section 16 of the Act. Therefore, the appeal is filed out of time.

• 5. The BBVO is an instrument of conveyance or transfer on sale, to which section 35 of the Act and Instrument Nos. 35 and 36 of the Schedule are the applicable provisions. These provisions have been applied correctly by calculating stamp duty at 2% of the value of the assets transferred under the BBVO. Further, as the transfer is not by way of assignment, Instrument No. 53(b) does not apply.

• 6. Section 11 of the Act in conjunction with section 177 of the Banking Act allows the respondents to calculate stamp duty on each of the separate and distinct matters referred to in the BBVO. Thus, the assessment is justified, and the computation conveyed in the letter of 16 ^th January 2020 should be affirmed.

The Bank's Reply

10 In reply the Bank contends that the request for a provisional assessment of stamp duty contained in the letter of 6 ^th June 2019 was submitted by its parent company, Republic Financial Holdings Limited (“RFHL”). This request was not pursued by the Bank. Further, the letter referred to by the respondents as being dated 20 ^th September 2019 was written by RFHL and was in fact dated 30 ^th September 2019.

11 The Bank denies having agreed that the respondent's method of computation contained in the letter of 22 ^nd November 2019 was final, and what was accepted as final was Cabinet's decision as referenced in that letter, that no waiver of stamp duty would be granted.

12 The Bank asserts that it also agreed that certain steps be undertaken and thereafter to facilitate agreement on the chargeable value. Thus, an assessment had never been settled or communicated by the respondents and the letters of 22 ^nd November or 20 ^th December 2019 contained nothing which could have constituted an assessment.

13 The Bank further contends that it was in the letter of 16 ^th January 2020 that the respondents finally communicated the assessment and stated the calculation and amount due for payment This letter was received on 17 ^th January 2020 via email and was the only missive in which the respondents informed the Bank of the completed assessment. Thus, the appeal filed on 23 ^rd January 2020 is within the 7-day period required under the Act.

The Bank's Evidence

14 Pursuant to CPR60.8(2) the Court is allowed to receive evidence on matters of fact at the hearing of the appeal.

15 Mr. Ian Du Souza, Chartered Accountant and Consultant employed by RFHL testified on behalf of the Bank. He was the Project Manager charged with responsibility for the acquisition of BNS' portfolio in Saint Lucia, as well as other Caribbean countries. He stated that under an Original Purchase and Sale Agreement dated 28 ^th November 2018 between BNS and RFHL, which was amended and restated on 24 ^th September 2019, RFHL agreed to purchase all BNS' banking business operations in several Caribbean countries, at an agreed total price 7

16 Around 18 ^th June 2019 the Bank was incorporated by RFHL for the purposes of acquiring the banking business in Saint Lucia, amongst other things. Pursuant to the Amended and Restated Purchase Agreement, BNS and the Bank executed the local PSA on 20 ^th September 2019 to purchase the banking business in Saint Lucia 8. The purchase price for that sale was stated in Schedule C of the PSA as $18,630,000.00 9. The parties agreed that the assets and liabilities for the banking business would be transferred at a net value of zero, such...