Healey v Attorney General
| Jurisdiction | Barbados |
| Judge | Richards, J. |
| Judgment Date | 31 July 2015 |
| Neutral Citation | BB 2015 HC 27 |
| Docket Number | 475 of 2004 |
| Court | High Court (Barbados) |
| Date | 31 July 2015 |
High Court
Richards, J.
475 of 2004
Sir Henry deB. Forde Q.C. and Ms. Wendy Straker, Attorneys-at-Law for the plaintiff.
Mr. Roger Barker and Ms. Sharon Deane Attorneys-at-Law for the defendant.
Statutory Interpretation - Taxing statute — Ejusdem Generis Rule of Construction — Specific words — General words.
Property Law - Whether the conveyance of the properties to the plaintiff was by way of other dispositions inter vivos – Whether the properties were transferred to the plaintiff by operation of law – Whether the plaintiff was a purchaser within the definition of a transfer of property.
Revenue Law - Whether the plaintiff was entitled to be exempted from paying property transfer tax under section 6(1C)(b) of the Property Transfer Tax Act – Whether the dispositions were subject to property transfer tax.
Trusts - Whether the plaintiff as a beneficiary was also the settlor of any trusts.
In this matter, the Court is required to determine whether the plaintiff is exempt from the payment of tax under the Property Transfer Tax Act, (“Cap.84A”), pursuant to the transfer of two properties to him in December 2000.
The plaintiff was said to be the sole shareholder in Bachelor Hall Limited and AEA Holdings Inc. Both companies were registered in Barbados as external companies under the Companies Act, (“Cap. 308”).
Bachelor Hall Limited purchased a property at Porters, St. James on 30 April 1980. And by a special resolution dated 14 December 2000, it was resolved that this company be wound up voluntarily, and that a liquidator be appointed for the purposes of the winding up. Recital (7) of a conveyance dated 15 December 2000 indicates that the liquidator agreed to distribute the property in specie to the plaintiff as the sole shareholder.
An identical exercise was carried out in relation to AEA Holdings Inc., and a property that it owned at Westmoreland, St. James. Both conveyances are dated one day after the special resolutions. Exchange control permission for the two transfers was applied for and granted in January 2001.
The plaintiff paid the sums of $3,946,000.00 and $119,450.00 as property transfer tax on the respective properties. However, these sums were paid under protest, as he did not accept any liability to pay the tax. An Originating Summons was filed on 31 March 2004, in which the plaintiff challenged the decision of the Registrar of Titles to exact and/or collect property transfer tax from him, pursuant to the conveyance of the two properties to him.
The plaintiff sought the Court's ruling with respect to the following:–
- Whether the distribution in specie, by way of the conveyance vesting the properties in him, was or is liable to property transfer tax; 2. A declaration that the Crown erred in exacting and/or wrongly collecting and retaining the aggregate sum of $4,065,450.00 as property transfer tax in respect of the conveyances; 3. An order that the sum of $4,065,450.00 be refunded and paid over to the plaintiff; 4. an order that the Crown do pay to the plaintiff interest on the said sum at such rate and from such date as Court thinks fit, and in accordance with section 35 of the Supreme Court of Judicature Act, Cap.117A; 5. Such other declarations, directions, orders or other relief as the circumstances require; and 6. The award of costs to the plaintiff.
The matter reached this Court for the first time to be heard, in June 2012, some eight years after the filing of the Originating Summons. Therefore, the Court must ensure that the statements of law and the findings of fact, made in this judgment, are relevant to the transfer of the properties to the plaintiff in December 2000.
The factual background is pleaded in the affidavit filed on 31 March 2004 by Joslin Ann Parris, the Manager of the properties. Unfortunately, much of this background was not bolstered by the documentation annexed to the affidavit. There was neither proof of the local or external registration of the companies; nor certified copies of the special resolutions dated 14 December 2000; nor evidence that the companies had no outstanding debts or liabilities at the time of winding up.
The Parris affidavit required the Court to assume that the plaintiff was the sole shareholder in each company, in the absence of proof of the shareholding when the companies were wound up. And this assumption was to be made in the face of a contradiction in the Parris affidavit. Exhibit JAP7, annexed to that affidavit, describes the plaintiff and his wife as purchasers of shares in the companies, and as transferees of the properties. (See para. 3 on page 2 of Exhibit JAP7). However, both conveyances transferred the properties to the plaintiff solely, and described him as the sole shareholder.
The factual matrix, as alleged by the plaintiff, was not challenged by counsel for the defendant. In fact, an Order granted by Crane-Scott J., and filed on 22 December 2009, recites that the parties informed the court that the facts deposed to in the Parris affidavit were not in dispute, and that the sole issues arising were matters of law.
After careful deliberation, this Court postponed delivery of the judgment, and requested counsel for the plaintiff to provide relevant additional documentation. It was thought that these documents could assist the Court with a better understanding and appreciation of the factual and legal matrices existing at the time the two properties were transferred to the plaintiff.
Shortly after this request was made, the Court received a number of documents from counsel for the plaintiff in July 2014. These documents confirmed that the companies were registered as external companies, and that on 10 November 2000, the plaintiff was the sole shareholder in the companies. However, the Court still is required to assume that between 10 November 2000 and 14 December 2000, the date of the special resolutions for the winding up of the companies, the plaintiff remained their sole shareholder.
Counsel for the plaintiff subsequently submitted two other documents in October 2014. These were unsigned partially dated copies of the special resolutions pertaining to the voluntary winding up of the companies. According to these documents, the liquidator was named and his remuneration determined. The companies were also to be wound up pursuant to the Business Corporations Act (Ontario). Neither the citation of nor relevant extracts from this legislation were made available to the Court.
During the trial, counsel for the plaintiff contended that the companies were wound up under sections 367 and 382 of Cap.308. (See paragraph 23 of the Written Submissions filed on 30 May 2012). This was an interesting submission, in so far as the conveyances recite at Clause (1), that the two companies were continued under the laws of the province of Ontario on 20 November 2000. This was less than a month prior to their liquidation. The special resolutions also indicate an intention for these external companies to be wound up pursuant to Ontario legislation. However, there is no similar statement in the conveyances about the statutory framework for winding up.
Another relevant point is that the Parris affidavit does not say whether the companies were wound up according to the law of Ontario or of Barbados. External companies may be liquidated under Division B of Part IV to Cap. 308. (See s.390 (1)). But this Court believes that winding up occurred in Ontario for a number of reasons. The companies were continued under the laws of Ontario. The liquidator's address is also in Canada, as stated in the conveyances. And the special resolutions also confirm liquidations in Ontario. In addition, the Court saw no documentary evidence to support liquidations in Barbados.
What was required, after winding up in Ontario, was the filing of notices with the Barbados Registrar of Companies, because the companies ceased to carry on their undertakings in Barbados. (S.338 (1), Cap.308). When such a notice is filed, the Registrar must cancel the registration of a company. The Registrar also has the power to cancel the registration on receipt of evidence that an external company no longer exists. (S.338 (2); see Andrew Burgess, “Commonwealth Caribbean Company Law”, 2013, at p.30).
The unsigned special resolutions produced to the Court also authorized the liquidator as follows:–
“(a) to sell or otherwise dispose of the real and personal property, effects and things in action of the Corporation by public auction or private sale and for such consideration and on such terms and conditions as he may see fit;
(b) to distribute the property and assets of the Corporation in kind, specie or otherwise, as the liquidator may determine;
(c) to postpone the distribution of any property and assets of the Corporation for such period of time as the liquidator may see fit with a view to selling or otherwise disposing of the same, such period, however, not to exceed one year from the date hereof unless extended by the Corporation by special resolution of the Shareholder.”.
The above quoted authorization brings into question paragraph 10 of Ms. Parris' affidavit, which states that “By Special Resolution it was resolved that the surplus assets then remaining (including the properties) be distributed in specie to the sole shareholder.” Unless there was another special resolution relating to the companies, it seems to the Court that, under the unsigned special resolutions presented to this Court, the liquidator had several choices with respect to the disposal of the assets of the two companies. Distribution in specie was not his only option.
Also of relevance is Clause (7) of each Conveyance. This Clause indicates that:–
“By Special Resolution it...
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