Social Security Board v Stout

• Jurisdiction: British Virgin Islands
• Court: Court of Appeal (British Virgin Islands)
• Judge: Bishop, J.A
• Judgment Date: 01 January 1986
• Neutral Citation: VG 1986 CA 4
• Docket Number: Criminal Appeal No. 1 of 1985
• Date: 01 January 1986

Court of Appeal

Robotham, C.J., Bishop, J. and Byron, J. (Ag.)

Criminal Appeal No. 1 of 1985

Social Security Board

and

Stout

Dr. F. Ramsahoye, and Mr. E. Hewlett for appellant

Mr. P. Webster for respondent.

Industrial law - Social security contributions — Liability for non-payment — Whether respondent was an “employer” under the Social Security Ordinance, 1979 and Social Security (Contributions) Regulations, 1980 — Whether each non-payment constituted a separate offence or whether all could be lumped together as one offence — Director of Social Security had appealed against the court's decision that the respondent was not the person was not the person liable for failure to pay social security but that the proper defendant should be a company which held the business licence.

Bishop, J.A

1 Warren Stout of Carrott Bay in Tortola was summoned before the Magistrate to answer the complaint that between 1st April 1982 and 23rd October 1984, being an employer in the British Virgin Islands duly registered with the Social Security Board, failed to pay social security contributions in respect of wages paid to his employees as prescribed by Regulations 4(1) and 10(1) of the Social Security (Contributions) Regulations 1980 contrary to section 35(1) of Social Security Ordinance 1979.

2 Section 35(1) reads:–

“Any person who fails to pay at or within the time prescribed for the purpose, any contribution which he is liable under this Ordinance to pay, shall for each such failure be liable on summary conviction to a fine not exceeding one hundred dollars and in default of payment of such fine, imprisonment for a team not exceeding one month”.

3 The criminal offence created thereby is the failure to pay a contribution at or within the time that it ought to be paid. In short the offence is an act of omission.

4 On the 21st November 1984 when the information came on for hearing, Warren Stout pleaded not guilty and the learned magistrate heard the evidence from each side. Following the addresses of the respective counsel, the magistrate upheld one of three submissions made by way of defences to the charge. He found –

A…… the proper defendant here should be Caribbean Transport Ltd, and not Warren Stout…this defendant cannot be held liable for the debts of a Company in his personal capacity.@

5 Joshua Smith, the Director of Social Security gave notice of appeal against the decision of the learned magistrate.

6 In the British Virgin Islands certain employers are required, by law, to register with the Social Security Board, a creature of the Social Security Ordinance 1979, hereinafter called The Ordinance. Following upon registration certain obligations are placed on the employers. These include the registration of employees, the issue of registration and contribution cards in respect of each employee, and the responsibility for the custody of the contribution cards of employers who continue in their employment. Obligations are also placed on employees but it is not necessary to refer to any of them for the purposes of this appeal.

7 From the facts and circumstances of the case it is clear that the Director of Social Security held the view that Warren Stout was an employer who came within The Ordinance and so he called on him to register and to pay social security contributions which the law demanded of him for the social benefits that would accrue to the employees. There were a number of requests — or “reminders” as the Director called them. Eventually Warren Stout wrote a cheque for the sum of $4,743.58 and gave it to his daughter to pay. She paid it to the Social Security Board and it is significant that it was only when he gave evidence in November 1984, that Warren Stout sought to say that the money was intended for the Department of Inland Revenue and not the Social Security Board. As was to be expected, the cheque was regarded as payment of contributions under The Ordinance, for the period ending 31st March 1982. Consequently, on the said date, the British Virgin Islands Social Security Board issued its receipt, No. 6750, in the name of Warren Stout. There is unchallenged evidence that thereafter the Director of Social Security registered Warren Stout as an employer under The Ordinance and assigned to him the registration number, 635.

8 After 31st March 1982, the Board made efforts to obtain from Warren Stout, the information that was necessary in order to keep a full record of the contributions from and benefits to the employees; but it is accepted by all that Warren Stout failed to co-operate and that he made no further payments. However, it is noteworthy that he applied to the Director to be exempted from liability to pay contributions; and the reasons which prompted his claim remained unknown, the result was reflected in the following extract from a letter written to Warren Stout by the Director, and dated 23rd August 1982:

“The Board has examined your petition very carefully in relation to the Social Security law and has found that there is no provision for the type of exemption you request. You are therefore advised to bring your obligations to the Board up to date”.

9 Warren Stout was also informed that a Social Security Inspector would be available to render such assistance as he may wish to seek, but it would seem that he neither sought any assistance nor took any lead step to challenge the decision of the Board on his petition. He did nothing towards paying any further social security contributions.

10 It is appropriate to point out here that for successive years from the year 1980 Warren Stout was issued with and renewed a business licence, in relation to the Commercial Freighter M/V Lorine, for operation in the United States Virgin Islands.

11 So then, as at the 23rd August 1982 the Director of Social Security had treated Warren Stout as an employer within the provisions of the Social Security Ordinance 1979 and the Regulations made thereunder, and Warren Stout, by his conduct in paying contributions, in obtaining a business licence in relation to the M.V. Lorine and in seeking exemption from liability for contributions, had held himself out — at least to the Social Security Board — to be such an employer. Certainly too, he never positively asserted that there was no such status on his part.

12 The next step occurred on 13th June 1984. The solicitor for Social Security Board wrote Warren Stout stating, in part, as follows:–

AI am instructed that you have failed to respond to the written demands of the Director of Social Security Board to

• (a) make your regular monthly/annual returns and or

• (b) pay to the Social Security Board all your Social Security contributions note due

……………………..

You have failed to make any returns whatsoever for the years following: 1980 to 1984…..@

13 There was no response to this letter and it is significant that it was disputed that Warren Stout never made returns for those years during which he had been issued with a business licence in relation to the cargo...