Six years after a challenge was mounted by now retired judge William Ramlal, the High Court has found that a law granting tax exemptions to the Chancellor and Chief Justice to be discriminatory and unconstitutional.
It has not been established that the differential tax treatment has a legitimate aim…I find that Section 13 (a) [of the Income Tax Act] contravenes Article 149D of the Constitution in so far
as it confers tax exemptions on the Chancellor and Chief Justice only and excludes other judges of the Supreme Court,” Justice Fidela Corbin-Lincoln said in her ruling, which was handed down yesterday.
“It is therefore declared that section 13(a) of the Act insofar as amended by Act No. 7 is unconstitutional, void and of no effect,” Justice Corbin-Lincoln further declared in her ruling, which also awards $2.5 million to Ramlal for breach of the constitutional protection against discrimination.
Ramlal had challenged the deduction of millions in income tax from his salary, which he described as discriminatory because of exemptions granted to the Chancellor and Chief Justice.
In his constitutional motion, filed on January 23, 2015, he asked for a refund of the approximately $34 million with interest, which deducted in taxes from his salary from 2004 to the end of 2014.
He also sought declarations that he had been denied equality and equal protection and benefit under the law; that Section 13 was discriminatory against him; that the deductions of income tax was an unlawful alteration of the terms and conditions of his service; and that the State was not entitled to take or receive income tax from him.
He asked the Court to declare, also, that in keeping with article 197 (10) of the Constitution he was entitled to a monthly pension and retirement benefits of not less than seven-eighths of his salary at the time of his retirement.
“At the date of my appointment as a judge of the Supreme Court of Judicature all judges including the Chancellor and Chief Justice paid income tax on their judicial incomes and the relief of two judges from liability to the exclusion of others has been severely prejudicial to me,” he argued in the motion, which listed him as the applicant and the Attorney General as the respondent.
Attorneys R. Satram, P. Mohanlal, C.V Satram, Ganesh Hira, Manoj Narayan and Ron Motilall appeared for Justice Ramlal, while Solicitor General Nigel Hawke appeared for the Attorney General.
No valid ground
Section 13 (a) of the Income Tax Act, amended by Act No. 7 of 2004, provided that “There shall be exempt from the tax the official emoluments received by the President both when in and when absent from Guyana and the provisions of this paragraph shall mutatis mutandis apply to the emoluments of the Chancellor and Chief Justice.
That amendment, Justice Ramlal’s action argued, contravened his fundamental rights guaranteed under Article 149D, which states, “The State shall not deny to any person equality before the law or equal protection and benefit of the law.”
Justice Ramlal, who was appointed in July 2000, had said that during a 2003 meeting between the judges and the then Executive President, representations were made concerning the grant of exemption from income tax on incomes as judges. Those representations, Justice Ramlal further said, were not successful except for the passage of an amendment in 2004 to “allow the Chancellor and the Chief Justice exemption from income tax in accordance with Section 13 (a) of the Income Tax Act.”
Justice Ramlal’s contention has always been that what sets the Chancellor and Chief Justice apart from the other judges is that they have some responsibilities of an administrative nature. Nevertheless, his action argued that the “nature and character” of the judicial services rendered by all members of the Supreme Court was the same and added administrative responsibilities were not valid grounds for the difference of treatment in relation to exemption from income tax.
Justice Corbin-Lincoln would so find.
In examining the issue of whether Section 13 as amended by Act No. 7 was unconstitutional and infringed upon Article 149D, Justice Corbin-Lincoln cited Article 149 (a) and (b), which provides: “Subject to the provisions of this article–(a) no law shall make any provision that is discriminatory either of itself or in its effect; and (b) no person shall be treated in a discriminatory manner by any person acting by virtue of any written law or in the performance of the functions of any public office or any public authority.”
Subsection (2) then goes on to define “discriminatory” as meaning “affording different treatment to different persons attributable wholly or mainly to their or their parents’ or guardians’ respective descriptions by race, place of origin, political opinion, colour, creed, age, disability, marital status, sex, gender, language, birth, social class, pregnancy, religion, conscience, belief or culture whereby persons of one such description are subjected to disabilities or restrictions to which other persons of the same or another such description are not made subject or are accorded privileges or advantages which are not afforded to other persons of the same or another such description.”
Noting that “equality” includes the full and equal enjoyment of all rights and freedoms guaranteed by or under the Constitution or any other law, the judge pointed out in her ruling that the Applicant was not asserting that he had been discriminated against based on any of the reasons outlined in Article 149 (1) or (2); rather, he was asserting a breach of his right to equality and equal protection and benefit of the law.
Therefore, in assessing whether his right to equality under Article 149D had been infringed, Justice Corbin-Lincoln found that the Attorney General needed to explain and justify the difference in treatment; while noting that differential treatment “must have a legitimate aim and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realized.”
Broadly similar
The judge would then go on to examine the qualification and appointment, tenure of office, hierarchy and responsibilities and remuneration of all judges, pointing out that while the roles of Chancellor and Chief Justice are not identical to other Supreme Court judges “I find that they are analogous and broadly similar.”
Against this background, the judge then went on to examine whether the roles of Chancellor and Chief Justice were “similarly situated/circumstanced, comparable, analogous or broadly similar to that of the Applicant and other judges of the Supreme Court.” While recognising that the Chancellor and the Chief Justice are appointed by a different process, are at the apex of the hierarchy of the Supreme Court, have administrative responsibilities and are remunerated at a higher rate than other judges of the Supreme Court; Justice Corbin-Lincoln said that they, however, belong to the class “judges of the Supreme Court like other judges as defined by the Constitution. They must meet the same pre-qualification requirements, she said, have the same retirement age as other judges of the Court of Appeal, subscribe to the same oath, have the same judicial responsibilities and be bound by the same judicial code of conduct.
She said the Attorney General sought to justify the differential treatment by contending that the Chancellor and Chief Justice are appointed and removed from office in ways different from the applicant as a Puisne Judge; that they have additional administrative responsibilities and that the Chancellor and Chief Justice—particularly the Chancellor—enjoy precedence over other judges.
The judge said it is clear that the Chancellor and Chief Justice are higher ranking judges based on the administrative authority exercised over other judges and are tasked with additional administrative responsibilities. She said they are both paid higher remuneration than all other judges of the Supreme Court, while judges of the Court of Appeal are paid higher remuneration than judges of the High Court.
This scaled remuneration, she said, is reflective of the fact that the judges of the Supreme Court are remunerated in accordance with their ranking and responsibilities.
Justice Corbin-Lincoln then said that the factors identified by the Attorney General as justifying the differential treatment would have already been taken into consideration when determining the remuneration of the Chancellor and the Chief Justice.
She therefore said, “I am unable to agree that these factors could reasonably explain or justify the difference in tax treatment for the Chancellor and Chief Justice.”
She then went on to note that the Hansard on the amendment of the Income Tax amendment bill shows that the Members of Parliament who made presentations both alluded to the additional administrative responsibilities and symbolic esteem of the offices as reason for the amendment.
She reasoned that “since the remuneration of the Chancellor and Chief Justice already takes into account their hierarchy and additional administrative responsibilities, it has not been established that the differential tax treatment has a legitimate aim.”
She said it was apposite to note that in other CARICOM countries all judges are treated equally in relation to taxes. In Trinidad and Tobago and the Eastern Caribbean, she pointed out, all judges are exempted from taxes. “There is no subset of judges that enjoy the exemption and others excluded,” she said, while adding that in Jamaica, all judges are subject to taxes.
Failed to establish
Citing a plethora of case law authorities on the issue of remedy, Justice Corbin-Lincoln noted that that the breach in the Applicant’s case—which involved the passage of legislation which had a discriminatory effect—was not as egregious.
Taking all the circumstances of this case into account, including the effect of the breach on the Applicant, Justice Corbin-Lincoln said she found that an appropriate award of compensation for the breach of Article 149D (1) was $2,500,000.
On the issue of the averments Ramlal made regarding his pension, however, the judge said he failed to establish a right to a declaration that he is entitled upon retirement to a monthly pension and retirement benefits of not less than seven-eighths of his salary.
Justice Ramlal’s contention had been that the State failed to put the necessary machinery into
operation so that he could benefit “from the increased pension and superannuation benefits which the provision was intended to provide.”
His evidence was that upon retirement members of Parliament enjoy 7/8 of their salary as pension in circumstances where the Constitution makes no provision for same.
He argued that in the case of judges, the Constitution provides by Article 197 (10) for such benefits that will deter retired judges from practicing at the Bar and that the denial therefore by the State was unconstitutional and amounted to a breach of a legitimate expectation, created by the State, in all judges to be retired. “The State is bound to give effect to the promise contained in Article 197 (10) of the Consti-tution,” Justice Ramlal’s action argued.
He further deposed that based on the statutory regime in place, he would receive a pension of 2/3 of his salary upon retirement, which he said is the same level of pension received by other public servants. His evidence was that this level of pension is not enough to maintain the standard of living enjoyed as a judge and keep him from practicing at the Bar on retirement.
Against that background, he argued that the actions of the State are contrary to the spirit and intent of Article 197 (10).
Referencing case law, Justice Corbin-Lincoln noted that “a legitimate expectation arises from an expressed promise given on behalf of a public authority or from the existence of a regular practice which the Applicant can reasonably expect to continue.”
Further to that, she noted that the computation of pension for judges of the Supreme Court is therefore set out in Regulation 7(2) of the Pension Act and is calculated on the same basis used to calculate pension for the Director of Public Prosecutions, the Solicitor General and the Chief Parliamentary Counsel.
She said Article 197 (10) declares it to be “in the interest of the State” to provide such terms and conditions to judges to avoid them having to practice at the Bar upon retirement.
Justice Corbin-Lincoln noted that there are a multitude of reasons why this would be in the interest of the State, including ensuring the independence, impartiality and dignity of the judicial office.
On this point she said that there is an existing statutory regime for the calculation of pension for judges, while noting that the applicant appears to be contending that the current statutory pension
regime for judges enacted by Parliament is unconstitutional and does not adequately provide for judges to avoid them having to return to private practice.
Justice Corbin-Lincoln said that pension rights are inextricably linked to the quantum of remuneration and that Article 197 (10) in her view was “nebulous, perhaps deliberately so.”
On that point she asked, “By what objective standard is it to be determined whether the pension benefits are adequate enough to avoid a Judge having to return to practice at the Bar? How is it to be determined that the current statutory pension regime puts the State in “breach” of this Article?”
She reasoned that Article 197 (10) expresses the notion that judges ought not to be placed in a position of inadequate means both while serving and in retirement. The terms of the Article, she said, are, however, “too unclear, ambiguous and imprecise to give rise to a legitimate expectation of better pension rights that currently exists by statute.”
In all the circumstances Justice Corbin-Lincoln said she found that Justice Ramlal had failed to establish a right to a declaration that he was entitled upon retirement to the monthly pension in the proportion he was seeking.
