High Court Judge Nareshwar Harnanan on Monday ruled against the Georgetown Mayor and City Councilors’ (M&CC) application of a 400% rate increase and demand for Plantation Houston Sugar Estates Company Limited to pay in excess of $500 million in rates and taxes on lands it owns at Houston/Rome.
The Court found the purported increase to have been unlawful.
The Estate Company (the Applicant), had deposed that despite assurances that its taxes would be calculated at a rate of 40%, the M&CC suddenly informed that the new rate would be calculated at 440%.
The parties had entered negotiations surrounding this dispute, but after these failed, the M&CC issued demand notices to the Company.
The judge said in his written ruling that it was gleaned from the demand notices that arrears were assessed at the rate of 440%, and compound interest applied.
The demand notices, the court pointed out, did not themselves state the period applicable to the arrears, nor the rate of interest being applied, but that the parties did accept that it was 21% compounded day to day, going back to 2005.
Claiming a debt of over $100 million in taxes, the M&CC in December 2019, moved to freeze the Houston Estate sale of 52 acres of land to Redstart Investments, which owns Unicomer and similar businesses in Trinidad, the British Virgin Islands and Belize.
Just a week ago, acting Chief Justice Roxane George-Wiltshire delivered a judgment similar to Justice Harnanan’s, where she ruled that Giftland Mall did not have to pay rates and taxes on the increased 21% compounded interest either, since the M&CC had contravened the Act.
The Estate Company, through its attorney, Timothy Jonas SC sought orders to quash the decision of the Council by changing the rate of assessment from 440% and also from making that assessment retroactive.
Arguing that the decision was unreasonable and contrary to the Municipal and District Councils Act, the Estate Company had also asked the court to prohibit the Respondent from charging 21% daily compounded interest on the assessed arrears of rates.
The Company wanted the court to declare that the fixing of rates at 40% by the M&CC in October, 2017, binds it, and that their retraction therefrom would be unlawful.
Also, the company wanted the court to declare that it was not indebted to the M&CC for the payment of rates as set out in the demand notices.
Prior to 2005, the M&CC assessed and levied rates against the Estate Company at 40%.
The Company contends that in June of that year, the Council purported to increase the percentage rates by 10 times the previous rates to 400%, since their lands were classified ‘land only;’ but noted that they objected and entered discussions with the Council contending that they (the Council) did not contemplate that the lands were within a ‘Green Belt’ used for agricultural purposes.
According to the ruling, by exchange of letters in November and December 2005, the Council took a decision to permit the applicant to continue paying their rates at 40% until a further decision was taken, and on condition that the applicant would honour whatever is the percentage above the 40% rate.
It was not disputed that for the next 12 years, the applicant acted pursuant to the decision communicated by the respondent in those letters.
The applicant attached receipts it received from the respondent as evidence of payments of rates calculated at 40%, pre-2005, and a certificate of compliance in relation to lands at Plantation Houston/Rome being paid up to December 2019.
According to the judgment, the applicant advanced that it made all payments up to the date of the demand notices.
Justice Harnanan noted that the record reveals that in September 2017, about some 12 years later, throughout which the applicant had been disposing of parts and parcels of these lands to third parties, the Council, through its then Town Clerk, Royston King, wrote to the applicant to indicate that a decision was still outstanding on the general rates to be levied on lands used for agricultural purposes.; but confirmed in that very letter that all lands being used for such purposes would continue to pay 40%, but that the lands being conveyed to third parties would attract a 400% rate.
The judge observed that with some alacrity, the Council the next month wrote another letter to the Estate Company, finally confirming the decision of the Council’s Finance Committee after the 12-year hiatus that all lands used for agricultural purposes within the estate will continue to pay 40%, and lands conveyed to individuals will attract 400%, and further that where there are buildings for residential and/or business purposes, 40% and 250%, respectively, would apply.
The Estate Company deposed that in 2019 it continued offering portions for sale, when the Council in November of that year raised objections before the Registrar of Deeds to the passing of a transport of a parcel of the land from the applicant to a third party.
It was at that point that the respondent claimed the applicant was indebted to the Council, contending that the rates are to be calculated at the rate of 440%.
The M&CC, through attorney Roysdale Forde SC, denied that the receipts which were supplied by the applicant were issued in respect of the lands in question. They contended instead that the properties in issue were included on a ‘draft list’ issued under the Valuation for Rating Purposes Act (VRPA).
The M&CC further denied the existence of any ‘Green Belt for agricultural purposes’, as required to be determined by them under the Municipal and District Councils Act, and further denied that the applicant was ever assessed by them, and paid rates on any property at a rate of 40%, on the basis that the properties were in a Green Belt for agricultural purposes.
The M&CC contended that prior to 2005, there were only two categories of purposes upon which rates were calculated, which were, ‘residential’ and ‘commercial’. The respondent went on to contend that from 2005 they determined that rate was to be calculated with regard to those same categories, whilst adding another as ‘land only.’
‘In excess of jurisdiction’
In his ruling, Justice Harnanan said there is no question that the Council has the statutory authority to make and levy rates and also under the Act, to make and levy a supplementary rate if the general rate is likely to be insufficient to meet the expenditure during the rating period, and before rates are again payable.
The Judge said that the Council must, however, follow the same procedure for assessing the supplementary rate, as they are obliged to comply with for assessing the general rate under the Act.
The judge said the M&CC deposed that they relied on their statutory power to apply rates on the classification of properties being ‘residential’ and ‘commercial’ prior to 2005, and from 2005, on the classification of ‘residential council’ and ‘land only’.
The judge said it is also clear that rates for any rating area must be a percentage of the value of property in a valuation list in force at the time for that area.
He said that while the M&CC contended that the Estate Company’s properties are included in a ‘draft list’ prepared and issued under the VRPA, there was a marked absence from the record of the final ‘valuation list’ and further that even the ‘draft list’ appeared undated and did not provide any information as to whether it informed a current and valid ‘valuation list’ used to assess rates.
Against this background, the judge said that it raises the concern that an assertion that information from that ‘draft list’ was used for the assessment of rates in respect of the disputed lands.
The judge said that the record before the Court is bereft of any evidence from the M&CC that the ‘valuation list’ from the rating area where the disputed properties are located, corroborates the information in the ‘draft list’ placed on the record by the respondent.
Regarding the demand notice, Justice Harnanan said that a perusal of the demand notices brought up on the record before the court reveals that whilst the interest is quantified in the notices themselves, there is no particular rate of interest stated, save that there is a general statement to the applicant that ‘interest on arrears will be recalculated and applied on the date of payment.’
The court observed that there was also a marked absence of the analysis of the expenditure on the principal services of the respondent for the area rated, for which the demand notices have been issued, as required under the Act.
Justice Harnanan said that an examination of the record reveals that the rate of interest applied by the respondent appears to be 21% compounded daily, over the period it demanded payment of arrears. He pointed out, however, that in these proceedings challenging such an imposition, there is no record placed before the court by the Council concerning the process of assessment and imposition of the 21% interest rate, or under what authority they rely upon to calculate this interest as compound interest, chargeable daily.
The judge said it cannot be doubted that the respondent’s letters to the applicant in 2005, taken together with their conduct over a 12- year period in fixing and accepting the payment of rates for the lands in question at 40%, bind the respondent to this course of action.
The applicant, the judge said, clearly acted to its detriment based on that representation, while adding that a fact which is relevant in this instance is the period of amnesty granted by the Council up to December 2017, which was granted to all defaulting ratepayers, which the applicant could have benefited.
The judge said, too, that the respondent failed to demonstrate their claim that the letter by King was unauthorised. “To simply contend, without more, that the letter was unauthorised is disingenuous and reveals a worrying state of affairs within the municipality,” the judge said.
The judge expressed the view that this contention was self-serving, as the respondent, with a new Town Clerk, sought to apply assessments of the applicant’s lands going back over the period, which was purportedly previously settled by the Council in October 2017, and the decision conveyed under the hand of a previous Town Clerk.
The judge said that there has been no attempt by the respondent, at least on the record before the court, to demonstrate compliance with the provisions of the MDCA and the VRPA in their decision to impose increased rates, and then make these rates retroactive going back 14 years, applying 21% interest, compounded daily.
Justice Harnanan said he found the M&CC to have “acted in excess of their statutory jurisdiction, improperly and unreasonably exercised their discretion in their decision to issue the General Rate Demand Notices 2019 and 2020, to charge the applicant rates on their properties at 400% their assessed value, and also to charge interest on purported arrears of rates compounded daily at 21%.”
This judge then quashed the decision of the Council contained in the Demand Notices that the Estate Company pays rates totaling $517,112,222.
Also quashed was the Council’s decision to charge interest on purported arrears of rates and it was declared unreasonable its decision in 2005 to increase rates from 40% to 400% and in contravention of the Act.
The judge said that the Council was bound by its representation to the Applicant of a rate calculation at 40% and not 440% and also quashed the council’s decision to impose the 21% compounded interest, and more so retroactively.
Justice Harnanan further ordered and declared that the applicant is not indebted to the Council for payment of rates set out in the Demand Notices of 2019 and 2020.
