The Social Security Board v First Caribbean International Bank (Barbados) Ltd et Al

• Jurisdiction: Saint Kitts and Nevis
• Judge: Ventose JA
• Judgment Date: 25 July 2024
• Judgment citation (vLex): [2024] ECSC J0725-1
• Docket Number: SKBHCVAP2022/0007
• Court: Court of Appeal (Saint Kitts and Nevis)

Between:

The Social Security Board

Appellant

and

[1] First Caribbean International Bank (Barbados) Limited

[2] Exclusive Retreats Limited

Respondents

Before:

The Hon. Mde. Margaret Price Findlay Justice of Appeal

The Hon. Mr. Eddy D. Ventose Justice of Appeal

The Hon. Mde. Esco L. Henry Justice of Appeal

SKBHCVAP2022/0007

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Civil Appeal — Appeal against the learned master's decision to dismiss the appellant's application to be added as a party in an effort to assert their statutory interest in property owned by the second respondent and sold by the first respondent — Statutory interest in property — Sale of property without payment of debt — Social Security Act Revised Laws of Saint Christopher and Nevis 2020 — Income Tax Act Cap 20.22 of the Revised Laws of Saint Christopher and Nevis 2020 — Whether the High Court or the Magistrate's Court was the court of competent jurisdiction for any enforcement proceedings in respect of the Debt — Whether the word “property” in section 75 of the Income Tax Act includes real property — Whether the provisions of the TAPA applies to section 75 of the Income Tax Act as relevant to the recovery of social security contributions by virtue of section 44 of the Social Security Act

The first respondent sold a property belonging to the second respondent for US$ 540,000 (“Sale Price”) pursuant to the provisions of the Title by Registration Act (“TRA”). The proceeds of the sale of the property were paid into court. On 26 ^th January 2021, the first respondent applied to the court pursuant to section 81 of the TRA to settle the scheme of division of the Sale Price. Since the amount due to the first respondent exceeded the Sale Price, no other creditor stood to benefit from the proceeds of the sale of the property.

The appellant applied on 30 ^th July 2021 for an order for it to be added to the proceedings arguing that (1) the second respondent has statutory financial obligations to the appellant in the sum of EC$757,697.92 (the “Debt”) for the period February 2005 to August 2011 under the Social Security Act (“SSA”), Protection of Employment Act, the Housing and Social Development Levy Act, (2) pursuant to sections 72 and 75 of the Income Tax Act (“ITA”), the appellant is granted a statutory interest in the property (that was sold by the first respondent and (3) notwithstanding that the appellant informed the first respondent of its interest in the property before it was sold, the first respondent filed an application to settle the scheme of division of the Sale Price without paying the appellant the Debt or including the appellant's statutory priority in the interest in the scheme of division of the Sale Price. The appellant also sought, in the alternative, an order that the sale of the property by the first respondent was unlawful and null and void for failing to comply with sections 72 to 75 of the ITA

The learned master in his written judgment held that (1) there was no evidence before him that either of the two processes outline in section 72 of the ITA were followed in relation to the Debt claimed by the appellant, (2) the word “property” as defined in section 75 of the ITA did not include real property, rather it referred to movable property, good and chattels of the debtor, (3) if it did, by virtue of section 30 of the Tax Administration and Procedures Act, the lien for the unpaid contributions due and owing to the appellant, if any, did not rank in priority to any debt owed to the first respondent which is a secured creditor, (4) there was no evidence of any judgment being entered in the High Court against the first respondent pursuant to section 3 of the Judgments Act, which would have created a charge against the land owned by the first respondent and (5) in the absence of such a charge and considering section 30(3)(b) of the TAPA, the appellant's debt did not rank in priority over the first respondent's interest.

Dissatisfied with the decision of the master, the appellant appealed on nine grounds of appeal which gave rise to the following issues for the Court's determination: (1) Whether the High Court or the Magistrate's Court was the court of competent jurisdiction for any enforcement proceedings in respect of the Debt, (2) whether the word “property” in section 75 of the ITA includes real property and (3) whether the provisions of the TAPA applies to section 75 of the ITA (as relevant to the recovery of social security contributions by virtue of section 44 of the SSA).

Held: allowing the appeal and making the orders set out at paragraphs 24 and 25 of the judgment, that:

• 1. Where an employer fails to make its contribution to the Social Security Fund, the Social Security Board may pay the person the benefit of that contribution and then seek to recover summarily in a Magistrate's Court from the employer as a civil debt a sum equal to the amount of benefit so lost irrespective of the amount. The court in which the board can seek to recover such sum from the employer is the magistrate's court. This is made clear by section 49(1) of the SSA read in tandem with section 72 of the ITA as required by sections 44(1) and 44(2) of the SSA. The learned master therefore erred in his conclusion at paragraph 14 of his judgment that there was no evidence before him that either of the two processes outlined in section [72] of the ITA were followed in relation to the debt claimed by the appellant. This contradicts the uncontroverted evidence of the appellant that was accepted by the learned master at paragraph 11 of his judgment when he stated that the appellant obtained several judgments in the Magistrate's Court, not in the High Court, against the second respondent for the outstanding Debt.

  Social Security Act Cap 22.10 of the Revised Laws of Saint Christopher and Nevis 2020 applied; Income Tax Act Cap 20.22 of the Revised Laws of Saint Christopher and Nevis 2020 applied.

• 2. Section 75(1) of the ITA provides that where a person sells any property, goods or chattels, before any such sale, that person must pay or cause to be paid to the Director all arrears of contributions which are due at the time when the property, goods or chattels are seized. While section 75 originates from the ITA, it is to be read as a stand-alone provision for the purposes of the SSA. The other provisions of the ITA cannot be used to interpret section 75 unless expressly incorporated into the SSA by section 44 of the SSA. The question of how “property” is to be defined needs to be answered since it is not defined in the SSA. Section 2(1) of the Interpretation Act provides the necessary assistance. It states that “property” includes money, goods, things in action, land and every description of property, whether real or personal; also obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incidental to property as herein defined. The definition of “property” for section 75 must be that as defined in section 2(1) of the Interpretation Act and that definition includes real and personal property. Section 75 must be read purposively to allow for the sale in respect of all types of property that is defined in section 2(1) of the Interpretation Act.

  Social Security Act Cap 22.10 of the Revised Laws Saint Christopher and Nevis 2020 applied; Income Tax Act Cap 20.22 of the Revised Laws of Saint Christopher and Nevis 2020 applied; Interpretation Act Cap 1.02 of the Revised Laws of Saint Christopher and Nevis 2020.

• 3. The Tax Administration and Procedure Act (“TAPA”) applies to “taxes” under a tax law, not “contributions under the SSA. Further, the Department of Inland Revenue does not administer “contributions” under the SSA. Section 40 of the SSA expressly states that the contributions to the Social Security fund shall be under the control and management of the Social Security Board. The argument that the TAPA has impliedly repealed section 75 of the ITA is misconceived as it does not differentiate section 75 as applied to the SSA and section 75 as a provision in the ITA. Even if section 30 of the TAPA has that effect, it would still not apply to section 75 when it is used as a part of the enforcement machinery for the recovery of contributions pursuant to section 44 of the SSA. The application of section 30 of the TAPA is unworkable for the following reasons: (1) it would require the court to engage in a complete rewrite of the law, (2) the Board is a body corporate and cannot be equated with the Crown for the purpose of section 30 of the TAPA and (3) if Parliament intended the entire enforcement regime under the TAPA to apply, with any subsequent modifications by future legislation, it could have simply and clearly stated that. The learned master therefore erred in his conclusion that the right of the Director to sell property is subject to the provisions of the TAPA and that section 3 of the TAPA must be read in line with section 44 of the SSA and sections 72 to 77 of the ITA.

  Tax Administration and Procedures Act Cap 20.52 of the Revised Laws of Saint Christopher and Nevis 2020 considered.

Appearances:

Mrs. Angelina Gracy Sookoo-Bobb and Ms. JeNise Carty for the Appellant

Mr. Damian Kelsick KC with him Ms. Hayda Dolphin for the First Respondent

Ventose JA

1 This is an appeal filed by the appellant on 25 ^th May 2022 against the decision of the learned master dated 9 ^th May 2022. The appellant appeals against the master's decision dismissing their application to be added as a party to proceedings between the first and second respondents so that they could assert their statutory priority interest in property owned by the second respondent and subsequently sold by the first respondent.

Background

2 The first respondent sold a property belonging to the second respondent (the “Property”) for US$540,000.00 (the “Sale Price”)...