Bebo Investments Ltd Applicant/ Claimant v The Financial Secretary Respondent/Defendant

• Jurisdiction: British Virgin Islands
• Judge: HARIPRASHAD-CHARLES J
• Judgment Date: 17 January 2008
• Neutral Citation: VG 2008 HC 2
• Judgment citation (vLex): [2008] ECSC J0117-1
• Court: High Court (British Virgin Islands)
• Docket Number: Claim No. BVIHCV2007/0151
• Date: 17 January 2008

[2008] ECSC J0117-1

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

Claim No. BVIHCV2007/0151

In the Matter of the Stamp Act (Cap 212)

And

In the Matter of an Application by Bebo Investments Limited Pursuant to section 23 of the said act for an appeal against the assessment of the Financial Secretary of the Government of the British Virgin Islands

Bebo Investments Limited

Applicant/ Claimant

and

The Financial Secretary

Respondent/Defendant

Appearances:

Ms Keisha Durham of Harney Westwood & Riegels for the Appellant/Claimant

Mr Arden G. Warner, Solicitor-General of the Attorney General's Chambers for the Respondent/Defendant

Introduction

HARIPRASHAD-CHARLES J

1 The Appellant/Claimant, Bebo Investments Limited ("the Appellant") is a company incorporated in the British Virgin Islands ("BVI") as an International Business Company. It is a non-belonger by virtue of section 6 of the Non-Belongers Land Holding Regulation Act ("the NBLHR Act"). This is not in dispute. The Respondent/Defendant is the Financial Secretary of the BVI whose decision is under appeal in these proceedings.

2 On 22 June 2007, the Appellant filed a fixed date claim form in accordance with Part 60 of the Civil Procedure Rules ("the CPR") for an appeal from the decision/assessment of the Financial Secretary pursuant to section 23 of the Stamp Act. On 12 July 2007, the Court ordered the Financial Secretary to provide a case stated pursuant to section 23(2) of the said Stamp Act. This was filed on 27 July 2007. He identified the sole question of law for the decision of the Court as:

"Whether on the true and proper construction of sections 3 and 21 of the Non-Belongers Land Holding Regulation Act (Cap 122), in the context of the purpose of the said Act, the rate of the stamp duty chargeable in respect of an instrument of transfer of land from a Bank to a non-belonger purchaser of the said land from a Bank's power of sale under a mortgage or charge, is the higher rate of 12% contained in Cap 122 or the lower rate of 4% stipulated in the Stamp Act (Cap 212)."

Background facts

3 The background facts are not in dispute. They are well summarized by Ms Keisha Durham, Learned Counsel for the Appellant. For present purposes, I can do no better than to gratefully adopt them. The Appellant purchased Parcel 58 Block 2235B of the West End Registration Section from First Bank Puerto Rico which sold the property in exercise of the bank's power of sale as a mortgagee under a registered charge bearing number No. 181 of 2006. This transaction was evidenced by an executed Instrument of Transfer dated 13 April 2006 ("the Instrument").

4 Previously, on 16 March 2007, the legal practitioners for the Appellant wrote to the Acting Commissioner of Inland Revenue ("the CIR") for guidance as to the stamp duty payable in the circumstances. The CIR responded by letter dated 12 April 2007 in which she stated that "the applicable rate for a non-belonger whether licensed or unlicensed and whether transferred from a bank or otherwise to a non-belonger attracts stamp duty at the rate of 12% under the NBLHR Act". She added that "there is no provision in the Stamp Act or the NBLHR Act which exempts a non-belonger from the non-belonger stamp duty rate of 12%".

5 On assessment, the Instrument attracted a stamp duty of $92,400 which meant that the CIR applied the rate of 12% of the market price as prescribed by the NBLHR Act as opposed to an amount of $30,800 were it assessed pursuant to the Stamp Act. By virtue of the assessment, the legal practitioners for the Appellant's bank wrote to the Financial Secretary on 17 April 2007 requesting his opinion pursuant to section 22 of the Stamp Act as to the duty chargeable on an Instrument of Transfer in these circumstances. In the interim, the Appellant paid the stamp duty under protest contending that the applicable rate in respect of the Instrument should be at the lower rate of 4% pursuant to the Stamp Act.

6 By letter dated 24 May 2007, the Financial Secretary responded and confirmed the position adopted by the CIR. He stated that he had been legally advised by the Attorney General that, upon a true and proper interpretation of sections 3 and 21 of the NBLHR Act, the CIR was correct in her assessment of the stamp duty.

7 The following is a summary of the opinion set out in the CIR's letter which was adopted by the Financial Secretary.

• 1. That the stamp duty on transfers to non-belonger transferees from a bank in exercise of its power of sale under a charge is at the 12% stamp duty rate on the market value or consideration whichever is higher as specified for non-belongers under the NBLHR Act;

• 2. The NBLHR Act [section 3 (c) (ii)] does not exempt a non-belonger from the applicable stamp duty rate which applies to a non-belonger but rather allows and gives permission for the bank to exercise its right as mortgagee under a mortgage;

• 3. There is no provision in the Stamp Act or the NBLHR Act which exempts a non-belonger from the non-belonger stamp duty rate of 12% as set out in the NBLHR Act.

8 The Appellant is dissatisfied with the assessment of the Financial Secretary and has appealed against it. In the grounds of appeal, it contended that: (i) the Financial Secretary simply adopted the position held by the Ministry of Finance without considering the issues arising and thus did not conduct a proper assessment as contemplated by section 22 of the Stamp Act and (ii) the assessment of the Financial Secretary is wrong in law and erroneous as it fails to construe the proviso as set out in section 3 (c) of the NBLHR Act in its clear and proper context.

Jurisdiction of the High Court to hear the appeal

9 Part 61 of the CPR deals with the manner in which the High Court determines a case stated or a question of law referred to it, by a minister, magistrate, judge of a tribunal, a tribunal or other person.

10 Section 22 (2) of the Stamp Act states:

"Subject to such regulations as the Governor may think fit to make, the Financial Secretary may be required by any person to express his opinion with reference to any executed instrument upon the following questions -

(a) whether it is chargeable with any duty;

(b) with what amount of duty it is chargeable.

11 Section 23 of the said Act deals with appeals by a person who is dissatisfied with the assessment of the Financial Secretary. It provides:

"(1) Any person who is dissatisfied with the assessment of the Financial Secretary, made in pursuance of the last preceding section, may within thirty days after the date of such assessment, and on payment of duty in conformity therewith, appeal against such assessment to the High Court, and may, for that purpose, require the Financial Secretary to state and sign a case, setting forth the question upon which his opinion was required, and the assessment made by him.

(2) The Financial Secretary shall thereupon state and sign a case accordingly, and deliver the same to the person by whom it is required, and, on his application, such case may be set down for hearing before the High Court and shall be heard by the Court or before any Judge of the High Court sitting in Chambers."

12 Unquestionably, the Stamp Act and the CPR confer jurisdiction on the High Court to hear this appeal from the decision of the Financial Secretary by the Appellant who is dissatisfied with the assessment of stamp duty that was payable on its instrument. In addition, the Appellant has complied with the law as stated in that section in that it paid the stamp duty in conformity with the Financial Secretary's assessment.

Submissions by Counsel

13 Briefly put, the Appellant's case is that it is only liable to pay 4% stamp duty instead of 12% on the Instrument by virtue of the proviso set out in section 3 (c) of the NBLHR Act in reference to land sold by a bank to a non-belonger in the exercise of the bank's power of sale, i.e. "shall not be subject to the provisions of that Act" and that section 21 of the NBLHR Act does not apply to such land as it falls within the exception created by the former section thus taking it outside the ambit or application of this section. Accordingly, by virtue of this land not falling within the application of the NBLHR Act, the Instrument would not be subject to section 21 of the said Act. Instead, section 53 of the Stamp Act would apply thereto.

14 The Financial Secretary holds a contrary view. The thrust of his argument is that the rationale of section 3 is to establish that land or a mortgage in land held by an unlicensed alien shall be forfeited to the Crown save that the exceptions set out at (a) to (h) shall not be liable to forfeiture. According to the Financial Secretary, section 3 is intended to deal exclusively with the issues of ownership and forfeiture, as distinct from the liability to pay stamp duty. He contended further that the Instrument is subject to the provisions of the NBLHR Act by virtue of the use made in section 3 of the words "Subject to the provisions of this Act" and the supremacy clause contained in section 21 of "Notwithstanding the provisions of the Stamp Act."

15 According to Ms Durham, a good starting point is that of the first or cardinal rule for the construction of legislation: the literal rule which provides that legislation should be construed according to the intention of the Legislature which is expressed in the language of the statute. She submitted further that the Court should be engaged in an objective exercise of determining the meaning to be ascribed to the words in the sections under consideration and if the language of the statute is plain and suggests only one meaning, it is this meaning that is construed to be the intention of the Legislature and be given effect to by the Court notwithstanding the fact that it may result in harshness or absurdities 1. She qualified this submission by recognising the...