High Court Judge Gino Persaud has ruled that the June 20th, 2019 decision of the Mayor and City Council (M&CC) to increase the cost for a certificate of compliance to 0.5% of what at that time was the market value of the property was among other things, in excess of jurisdiction, null and void.
The judge said that the increase was not only arbitrarily made by the Council and amounted to a heavy penalty to ratepayers, but was “inordinately” high and not made in good faith; even as he noted that the M&CC seemed not have sought legal advice before making the decision.
The challenge was mounted by the Bar Council of the Guyana Bar Association (GBA) by its then President Teni Housty and Secretary Pauline Chase who had asked the Council for the reasons behind its decision, but were never given any.
The effect of the decision the GBA argued, had proven financially detrimental since the cost to obtain a certificate of compliance from the M&CC would have increased from a flat fee of $10,000; to hundreds of thousands of dollars depending on the valuation of the property.
The GBA was of the view that the Council’s decision was in the first place unlawful, and by way of Judicial Review, subsequently moved to the courts over the respondent’s refusal to supply the reasons sought.
The Court noted that the primary issue for consideration surrounded the legality of the M&CC’s decision—whether it had the power to make the decision—or whether it exceeded its jurisdiction and acted ultra vires.
The GBA (the Applicant), had asked for an Order of Certiorari quashing the respondent’s decision which also required that a 2019 general rates receipt be submitted for a certificate of compliance; in addition to the then current market valuation, valid identification card, letter of administration and death certificate (if owner(s) are deceased), agreement of sale, deed of gift and the affidavit of Donor and Donee (if the property is to be transferred as Gift/Trust) and payment of the increased 0.5% fee.
The GBA contended that the M&CC’s decision was contrary to law and the policy of Section 16A of the Deeds Registry; and sought an order prohibiting it from enforcing the decision; arguing further, that the documents it demanded were not needed by the Council; since it could ascertain and certify from its own records whether rates and taxes had been paid on a particular property up to a specified time.
Additionally, the GBA argued through its attorney Kamal Ramkarran that the demand for the documents was burdensome, frustrated commerce and unnecessarily added to cost and time.
The applicants further contended that the exorbitant fee demanded by the Council for the issuance of the compliance was unreasonable and contrary to the policy of and ultra vires Section 16A of the Deeds Registry Act, which is to ensure that immovable property is not conveyed by way of gift or voluntary sale without the payment of rates of taxes therefor, and not to act as an additional tax as the Council purported to do.
In its affidavit in defence, the M&CC provided the reason for its decision “as a policing one to prevent fraud in applications for declarations of title by ascertaining that the persons to whom certificates of compliance are issued have a legal interest in the property.”
Through its attorney Roysdale Forde SC, the Council further said that its power/discretion to request the submission of the stated documents is an implied or ancillary power or discretion flowing from sections 16A of the Deeds Registry Act and that Courts are not to substitute their views on how such discretion is exercised.
Additionally, the M&CC relied on Section 301 (35) (36) of the Municipal and District Councils Act as the statutory basis by which it said it is authorized “to prescribe fees and charges” and in the instant case allowed it to fix the new percentage-basis-fee based on prevailing market value of the property.
The Council argued that the new fee was not a tax but rather a levy by a public body; while advancing that the GBA had not alleged that the percentage fee was adopted for the sole purpose of raising revenues.
The Council submitted that the separate and conjoint meaning of “establish” and “control” under Section 301 (35) means that it is authorized to “prescribe fees and charges” in respect of anything which it has to verify, substantiate, prove or control.
In examining whether the M&CC had the power to make the decision it did for the increase, Justice Persaud noted that Section 206 of the Municipal and District Councils Act, fixes the quantum to be levied as a percentage on the value of the property.
He said that there is no other corresponding section in the Act which equally fixes the cost of a certificate of compliance to be levied as a percentage on the value of the property.
The judge in his analysis said that this is a clear example of an express statutory power given to the Council. “It is unambiguous,” he said, while adding that it is clear that this statutory power to levy rates is the mechanism or means by which Parliament intended and authorized the City Council to raise revenue to meet its expenditure and do its business.
In rendering his ruling on Tuesday, Justice Persaud said, “the jurisdiction or power of the City Council to levy such general rates—the quantum which is statutorily fixed as a percentage on the value of the property—is without dispute.”
The judge said it is reasonable therefore to conclude that in the absence of a provision as unequivocal as section 206; such a power to levy a charge for a certificate of compliance as a percentage on the value of the property does not exist.
Double levy
Parliament, he said, could not have intended a double levy on a ratepayer within the same year which is exactly what he said became the position in 2019 in what the M&CC sought to do.
The judge said that in 2019, the MCC instituted a double levy on the ratepayer which coincidentally is also a fixed percentage on the value of the property simply to obtain a certificate of compliance which is nothing more than a document verifying that the rates and taxes are paid up in respect of a property to be transferred to a new owner.
Such verification by issuing a piece of paper in writing (certificate of compliance) is purely an administrative function and cannot cost 0.5% of the value of the property to be transferred.
Justice Persaud said that M&CC is expressly empowered to raise revenue to carry out its statutory mandate and its fiscal provisions guide its income, expenditure and financial reporting in the interest of accountability.
He said it is expected to manage its financial affairs so as to break even, but that it is not empowered to raise additional revenue by increasing the cost for the issuance of a certificate of compliance; which is exactly what it did.
He said too that it is an established principle that a local authority owes a fiduciary duty analogous to that of a trustee to ratepayers to have regard to their interests. Its duty in this regard the judge said, is not to overcharge ratepayers.
“Fees for the provision of administrative services must be reasonable and not exploitative,” Justice Persaud said.
Against this background he said that the M&CC undoubtedly breached its fiduciary duty owed to ratepayers with the double levy in a single year when a property is intended to be transferred.
To the M&CC’s argument that its decision was a policy one, the judge in referencing legal authority said decisions involving “policy” are described as “the utilitarian calculation of the public good.”
In determining whether the M&CC’s policy decision was a “utilitarian calculation of the public good” when it raised the fee from a flat rate of $10,000 to a percentage basis of 0.5% of property market value, the judge said, “the answer must surely be an emphatic and resounding `nay’ worthy of parliamentary disapproval.”
The Court said it found that the policy decision was not a utilitarian calculation of the public good; while adding that the object of a policy of any statutory body cannot be whimsically and arbitrarily decided upon for reasons which have nothing to do with its statutory functions contemplated under the Act.
Justice Persaud said that while the M&CC gave a reason as preventing fraud, the Act does not contemplate this as a function that falls within their remit.
“Put frankly, this is none of their business and they had absolutely no business considering fraud in property transfer as a factor which led to their policy decision,” the judge said.
He said, too, that the Council never presented any evidence in its affidavit such as minutes of a meeting or any official record to prove the date when the impugned decision was made, by whom was it made, whether it was made at a statutory meeting, was it voted upon, or whether it was made by one person or a group of persons.
The judge further questioned whether it was a democratic decision or an instruction given to be carried out—whether the M&CC advised itself that it had the power to make such a decision—or whether it receive expert legal advice?
Justice Persaud noted that Town Clerk Sharon Munroe who swore to the affidavit in defence, attached no official record to support her contentions.
These, the judge said are all matters that go to the heart of transparency and accountability which the M&CC and any public body should hold as sacrosanct.
To what the judge described as amounting to a misapplication of Section 302 (35) of the Act, he said that issuing a certificate of compliance by the M&CC does not fall within anything it is required to do to establish, maintain, control or carry on.
“There is no doubt in my mind that the increased fee is a heavy penalty. It is a penal blow to ratepayers. It is a double burden on the ratepayer who has to pay off all outstanding rates and taxes before transferring his property and then pay an increased fee to obtain a certificate of compliance based on a fixed percentage of the current market value of the property. This is undoubtedly a serious financial injury to the ratepayer,” the judge said.
He said that if one looks at the general scheme of the Act it is not possible to conclude that the M&CC is empowered to raise revenue or levy such a financially injurious fee for merely providing a piece of paper certifying that rates and taxes are paid up.
He said it is not expressly provided for by statute nor does it arise by necessary implication. This the judge said, is essentially a clerical exercise which can probably be extracted electronically by a data entry clerk. The overall objects of the Act he said, does not contemplate the M&CC raising money in this arbitrary manner.
“If this were intended, Parliament would surely have made express provision for it in the statute,” Justice Persaud said.
“I find that the impugned decision was without regard to the purpose for which the statutory powers are given and constitutes a breach of the fiduciary duty owed to ratepayers. It does not appear from the affidavit filed by the M&CC that any expert legal advice was obtained by them to legally advise themselves before promulgating the new policy,” the judge said; before adding, “This is significant because it discloses that no serious consideration was given to the Act as a whole to see whether such a power existed. In fact, it was an abuse of power.”
Justice Persaud said that the M&CC has no statutory power to make the decision it did to raise the fee for a certificate of compliance and to request the additional documents.
In fact, he said that it had no power or business in making the purported policy decision to levy such a charge; and also had no implied power to do it; stressing that “the decision was beyond their powers and ultra vires and void.”
The judge said that the figure of 0.5% of the current market valuation of the property to be transferred was not explained in any way at all.
He asked, “How did the M&CC arrive at this figure? Were any calculations done? Was there a financial reason in choosing this figure? Did they receive expert advice?”
The judge said that no councillor has provided evidence by affidavit to explain how they arrived at that figure. In the absence of evidence to justify such a figure, he said it is difficult for the Court not to conclude that it is an entirely arbitrary figure.
In the circumstances, judgment was granted to the applicants nullifying the Council’s decision to impose the increase for certificates of compliance as well as quashing the order requiring the submission of the stated documents.
The GBA was awarded costs in the sum of $150,000.
In December last year, a class action lawsuit saw Justice Navindra Singh ruling that the City was prohibited from imposing a fee or charge for the issuance of a certificate enabling the transfer of a property under the Deeds Registry Act.
Justice Singh issued the ruling on December 6th in relation to the case lodged on behalf of Gerald Bhoodram and others.
At issue was whether the Mayor and City Councillors of the City of Georgetown were permitted to impose a charge or fee on ratepayers when such ratepayers request the city to provide a certificate in accordance with Section 16A (b) of the Deeds Registry Act and the Municipal and District Councils Act on the transfer of properties.
The judge said that those who paid such fees following July 8th, 2015 were entitled to a refund.
