The Belize Bank Ltd v The Commissioner of Income and Business Tax
| Jurisdiction | Belize |
| Judge | Mr. Justice Courtney A. Abel |
| Judgment Date | 22 January 2019 |
| Court | Supreme Court (Belize) |
| Docket Number | CLAIM NO: 327 of 2018 |
| Date | 22 January 2019 |
IN THE SUPREME COURT OF BELIZE, A.D. 2019
the Honorable: Mr. Justice Courtney A. Abel
CLAIM NO: 327 of 2018
Mr. Eamon H. Courtenay SC and Ms. Iliana N. Swift for the Claimant.
Mr. Yohhahnseh Cave for the 1 st Defendant.
Mrs. Samantha Matute-Tucker for the 2 nd Defendant
Sections 114 (2) & (3) of Belize Constitution; Parliamentary Appropriation of Funds; Collection of Government Debt;
Concurrent Debts; Cross-Debts; Foreign Arbitral Award; Enforcement and Implementation of Arbitral Award; Set-Off; Process of Enforcing & Collecting Debt;
Section 58(1) and (2) of the Income and Business Tax Act (IBTA); Business Tax; Exercise by Commissioner of Discretion; Fairness; Categories of Fairness Spirit of Fair Dealing in Public Life; Unfairness; Substantive Unfairness;
Judicial Review; Equitable Set-Off; Whether Decisions of Commissioner Unlawful, Disproportionate and Unreasonable; Abuse of Power of Public Authority;
Section 25 of the Crown Proceedings Act; Enforcement of Debt;
Garnishment in Relation to Judgment Debt.
Orally Delivered on the 22 nd day of January 2019
This is a claim by a bank, the Belize Bank Limited (“the Bank”), against two (2) representatives of the Government of Belize (“GOB”, the Commissioner of Income and Business Tax (“the Commissioner”), and the Attorney General (“AG”), to review, impugn and override the Commissioner's decisions. The decisions being to collect business taxes which the Bank undoubtedly owes GOB under an arbitral award. The basis of the present application for judicial review is that GOB owes a much larger sum to the Bank and that, in this circumstance of the present case, it would be unfair and inequitable to allow the Commissioner to proceed with such collection while GOB is unwilling to proceed to satisfy the debt due to the Bank.
There does not appear to be any dispute by the parties that both the taxes due to GOB and the debt due to the Bank are in fact outstanding.
In essence, the Bank is arguing that because GOB owes the Bank a sum much greater than the business tax due, that the decisions of GOB to insist on payment of taxes flies in the face of legality, proportionality and reasonableness. As a result, such decisions ought to be reviewed by this Court, quashed and in effect replaced with a decision that GOB simply holds its enforcement hands in the sum which is owed to it by reason of the outstanding sums which is owed by GOB to the Bank.
GOB, on the other hand, is arguing that the Bank, by the present claim for judicial review, is attempting to achieve an impermissible “backdoor enforcement” of the debt by bringing the present procedure for judicial review to prevent payment of the taxes which are due. That the Bank is required to seek enforcement of the debt due to it by GOB by other enforcement means than by the present proceedings.
The present dispute appears to be therefore about the appropriate process which ought to be adopted by the Bank for staying enforcement of GOB's debt.
Whether the Claimant is procedurally entitled to make the present application for judicial review?
As at 13 th April, 2018, GOB was undoubtedly indebted to the Bank in the sum of $92,154,628.46 plus costs of $536,817.71 (“the Judgment Debt”) with interest accruing thereon at a rate of 6.0% per annum.
On the same day, 13 th April, 2018, the Bank authorized the Commissioner to set-off its Business Tax in the sum of $8,545,135.02 (“the Taxes”) for the first Quarter 2018 against the Judgment Debt obtained by way of an arbitral award. For as long as the Judgment debt and/or the Taxes remain unpaid the sum which is sought to be set-off by the Bank will not remain static.
The Commissioner is also entitled under section 58 of the Income and Business Tax Act (“the IBTA”) to collect the Taxes by way of garnishment against the Judgment Debt but has refused to do so.
Notwithstanding being duly authorized by the Bank to satisfy the Taxes due by way of set-off or garnishment against the Judgment Debt, the Commissioner refused to set-off the Business Tax or to garnish said taxes until the Commissioner had obtained approval to do so by the Minister of Finance. It appears that no such approval has been obtained to date.
The Commissioner, even though she is entitled to do so, is also refusing to collect the taxes by way of garnishment against the Judgment Debt. Instead, the Commissioner has opted to enforce collection of the Taxes against the Bank.
By the present claim the Bank is seeking to impugn the decisions of the Commissioner by alleging that such decisions are unlawful, disproportionate and unreasonable. The Bank is seeking orders of this Court that the Commissioner promptly stays it enforcement hand by reason of the ‘equitable set-off’ or ‘garnishment’ in relation to the Bank's tax liability against the Judgment Debt owed to the Bank by the GOB. GOB appears unwilling to take steps to satisfy the debt due to the Bank by taking the necessary means to constitutionally appropriate the funds to discharge the debt to the Bank.
The Court has being informed that there is a pending claim, in other proceedings, for Mandamus which has been brought by the Bank against GOB to pay the Judgment Debt which GOB owes. This claim is at present before the Hon. Chief Justice and is immanently due for decision.
On the 15 th June, 2018, the Claimant was granted conditional permission to apply for Judicial Review of three decisions of the Commissioner of Income and Business Tax totaling $8,545,135.02 and $256,354.06 in interest. The Decisions which are sought to be impugned are:
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(a) The decision of the Commissioner dated 16th April, 2018 to issue a Notice of Assessment against the Bank for the sum of $8,545,135.02 in Business Tax and $128,177.03 in interest;
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(b) The decision of the Commissioner dated 16th April, 2018 refusing to set-off the Bank's tax liability against the Judgment debt owed to the Bank by the GOB; and
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(c) The decision of the Commissioner dated 22nd May, 2018 to issue a Demand notice against the Bank for the sum of $8,545,135.02 in Business Tax and $256,354.06 in interest.
Directions were also given in relation to the applicable condition, namely the filing of a Fixed Date Claim Form, and for filing the evidence in the case as well as written submissions and a date fixed for hearing.
The conditions were met by the Claimant by the filing of a Fixed Date Claim Form on the 28th June, 2018 in which the Claimant, inter alia, claimed the following reliefs:
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(a) A declaration that the decisions of the Commissioner refusing to setoff the Bank's tax liability against the judgment debt is unreasonable and disproportionate and therefore unlawful;
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(b) An order restraining the Commissioner whether by herself, her servants and/or agents from seeking to enforce the tax liability against the Bank; and
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(c) A declaration that the decision of the Commissioner not to garnish the Bank's tax debt from the judgment debt is unlawful.
Section 114(2) of the Constitution provides:
”(2) No moneys shall be withdrawn from the Consolidated Revenue Fund except to meet expenditure that is charged upon the Fund by this Constitution or any other law enacted by the National Assembly or where the issue of those moneys has been authorised by an appropriation law or by a law made in pursuance of section 116 of this Constitution.”
Section 115 (3) of the Constitution provides:
“If in respect of any financial year it is found… that a need has arisen for expenditure for a purpose for which no amount has been appropriated a supplementary estimate showing the sums required or spent shall be laid before the House of Representatives and the heads of any such expenditure shall be included in a Supplementary Appropriation Bill.”
In the case of Belize Bank Limited v The Attorney General of Belize 1 the Caribbean Court of Justice (“CCJ) ruled that:
“It is presumed that judicial orders will always be obeyed by those affected, including the Government, but the order for enforcement of a foreign arbitral award does not itself compel payment from the CRF. It is common ground that s 114 of the Constitution requires legislative approval for expenditure which the Government promised to pay by validly entering into the Loan Note. If the Government procures the passage of the relevant legislation there is obviously no illegality in making payment. 2“
The CCJ also authoritatively determined that:
“It is, however, accepted that monies payable under s 25 are not charges on the Consolidated Revenue Fund and so need legislative approval in a General Appropriation Act or, if not so budgeted for, in a Supplementary Appropriation Act 3.”
In the Grenadian case of Gairy v Attorney General 4 it is recognized by the Judicial Committee of the Privy Council that a judgment debt against the Government is one payable out of the Consolidated Fund. This case suggested that the proper procedure in this instance would be to follow the requirements under Section 25 of the Crown Proceedings Act 5 which provides an exclusive procedure for enforcing money orders against the Crown and subject to the terms of that section the Claimant may seek an order of mandamus compelling payment by the relevant minister or public official proper basis to do so) 6.
It appears to be legally questionable whether an order of mandamus could be issued to compel payment in circumstances where there was no appropriation of a scope that would render payment of the judgment debt lawful.
It also appears unquestionable that under Section 25 of the Crown Proceedings Act that by ...
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