Bdo Cayman Ltd and Four Others v Governor in Cabinet

• Jurisdiction: Cayman Islands
• Court: Grand Court (Cayman Islands)
• Judge: (Mangatal, J.)
• Judgment Date: 07 May 2018
• Date: 07 May 2018

BDO CAYMAN LIMITED and FOUR OTHERS

and

GOVERNOR IN CABINET

(Mangatal, J.)

Grand Court (Cayman Islands)

Accountants — licences — fees — under Trade and Business Licensing Law (2007 Revision), accountancy firm (with more than 5 accountants) to pay licence fee under Schedule, Item 2 (i.e. per firm fee) — not also required to pay fee under Item 1 (i.e. per accountant fee) — required to pay both fees under Trade and Business Licensing Law 2014

Held, quashing the respondent’s decision:

(1) The legislature had intended to charge accountancy firms that were not exempt only one fee for their trade or business, namely the per firm fee set out in Item 1 of the Schedule to the Trade and Business Licensing Law (2007 Revision). The court had had regard to the relevant statutory provisions construed in their context, the statutory purpose of the 2007 Law as a whole and Items 1 and 2 of the Schedule in particular, and all internal and external aids including admissible Hansard reports. An interpretation of the 2007 Law as imposing such substantial increases by way of per firm bands yet at the same time, without express language such as appeared in the 2014 Law, requiring the per accountant fee also to be paid, would be illogical and arbitrary. The respondent had erred in its construction of the correct meaning of the 2007 Law and of the fees payable by the applicants. The decision was unlawful and the court was bound to interfere. It would declare that the applicants were not required to pay any additional fees in respect of their trade and business licence renewals between 2002 and 2012 (paras. 205–211).

(2) When an administrative body such as the respondent was tasked with an assessment of law, it must carry out such an assessment correctly. The test was not one of Wednesbury unreasonableness. Correctness, rather than reasonableness, was required. In order to decide whether the respondent’s assessment was correct, the court had to decide itself what the law was. If the respondent arrived at an incorrect view of the law, however reasonable it might be, the court must substitute its own view (paras. 118–122).

(3) The correct approach to statutory interpretation was that, with the exception of reports of proceedings in Parliament, including Hansard, (which were only to be admitted as an aid to construction if the provision was ambiguous and its meaning obscure or uncertain, and the statement itself was clear and unambiguous), both internal and external aids to construction could be considered regardless of whether there was any ambiguity in the grammatical or literal meaning of an enactment. The purposive approach to statutory interpretation had now displaced the literal approach. While the grammatical or literal meaning was the starting point, the court must construe the enactment in its wider context in order to determine the intention of the legislature, which was the paramount criterion. Only then could the court identify the legal meaning of the enactment. It was only if the enactment was grammatically capable of one meaning only, and on an informed interpretation of the enactment the interpretative criteria raised no real doubt as to whether that grammatical meaning was the one intended by the legislature, would the legal meaninghave the same meaning as the grammatical meaning. If, on the other hand, on an informed interpretation, the wider context did raise a doubt as to whether that meaning was the one intended by the legislature, when it might be said that the provision was ambiguous or led to an absurdity, the court would need to weigh the competing considerations, including any relevant statutory presumptions, in determining the legal meaning. However it was not necessary for an ambiguity to be identified before that wider context was considered. On an informed interpretation, the court considered the wider context including internal aids, such as other provisions in the same statute, and external aids, such as the legislative history and other materials in pari materia which might provide guidance as to the underlying legislative intention. It was not necessary, as the applicants contended, for there to be some ambiguity before those aids to construction could be considered. The clearer the meaning, however, the slower the court should be in adopting another meaning on the basis of an external aid. Section 4(b) of the Interpretation Law obliged the court, when construing any other Law, to construe words in the singular as including the plural unless there was something in the subject or context that was inconsistent with such construction, or express provision (paras. 123–130).

(4) In the present case, there was no one, clear grammatical meaning to the relevant provisions of the 2007 Law under consideration. They were ambiguous and their meaning obscure and uncertain. Certain extracts from Hansard were admissible, being part of the legislative background, and supported the applicants’ interpretation of the Law. There were aspects of the post-enactment history of the 2002 Revision, the contemporanea expositio, that should be taken into account. It appeared that, with the exception of the second applicant, all of the parties had taken the view that both the per accountant fee and the per firm fee were payable. Turning to the relevant provisions, the context of the Law suggested that the use of the phrase “the fee” in s.14 was intended to be singular and not plural, as it was being used to identify that for each business mentioned in the Schedule there was a single applicable fee to be paid. It was noted that s.12 did not state “any trade or business mentioned in the Schedule,” or “respective trades or businesses,” or “each type of trade or business”; but rather “a trade or business mentioned in the Schedule.” The scheme of the legislation plainly contemplated that it was necessary to ascertain which business activity in the relevant category of the Schedule one fell under and then pay the fee applicable to that numbered business activity. There was nothing in the body of the Law to suggest that one would be required to pay the fees applicable to more than one business activity unless one was carrying out more than one business. Section 4(b) of the Interpretation Law could not be used to pluralize the word “fee” in s.14 because it would be inconsistent with the 2007 Law. If the intention of the legislature had been to register a change to the scheme of the Law by requiring that one specified business, an “Accountancy firm,” was also required to pay afee for a separately specified business, “Accountant,” then clear wording would have been required (paras. 134–186).

(5) Accountants in accountancy firms of 1–5 accountants would have to pay the Item 1 per accountant fee. It was reasonable to construe the Law as meaning that the per accountant fee would have to be paid in respect of accountants in relation to small firms that were exempted from paying the per firm fee for “Accountancy firms.” Section 12 of the 2007 Law indicated that every person carrying on a trade or business required a licence unless exempted under s.3. Small accountancy firms were exempted from paying the banded fee under Item 2 of the Schedule but they were not exempted from paying a fee under Item 1, under which they had previously paid a fee. In the court’s judgment, since carrying on a trade or business attracted a fee, small accountancy firms were intended by the legislature to continue to pay the per accountant fee. Accountancy firms had, prior to the 2002 Revision, paid a fee under Item 1 of the Schedule. At that time, there had not been a more appropriate Item to match their business. If it were accepted, however, that the scheme of the legislation was one fee per business or trade, once an Item was added which more appropriately matched their trade or business, then accountancy firms in respect of which the per firm fee was payable under Item 2 could no longer be construed as having an obligation to pay a fee under Item 1. This interpretation of the 2007 Law did not defeat the applicants’ arguments because the provisions of the Law were ambiguous and obscure (paras. 188–195).

(6) There was no fundamental right not to be taxed in a particular way and at a particular time. However, without express words to that effect, it would be surprising, arbitrary and illogical to introduce a new system of bands which required accountancy firms to pay much higher fees as a result of the per firm fee regime and to expect that the per accountant fee would remain payable by those firms in respect of accountants already included in the headcount under Item 2 (para. 199).

(7) Grounds 2 and 3 of the application failed. Ground 2 of the application was that the decision was unreasonable, but the real issue was as to correctness and not unreasonableness. Ground 3 concerned breach of natural justice but on the wording of the relevant legislation the respondent was not required to hold an oral hearing. It was entirely within his discretion to determine the matter on written submissions. As the applicants had now had an extensive opportunity to address the court on the essential questions of statutory construction any complaint as to inadequacy of reasons was also academic (paras. 116–117).

Cases cited:

(1)Associated Provncl. Picture Houses Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223; [1947] 2 All E.R. 680; (1947), 177 L.T. 641, referred to.

(2)Barclays Mercantile Bus. Fin. Ltd. v. Mawson (Inspector of Taxes),[2004] UKHL 51; [2005] 1 A.C. 684; [2004] 3 W.L.R. 1383; [2005] 1 All E.R. 97; [2005] STC 1; [2004] BTC 414, considered.

(3)Blue Metal Indus. Ltd. v. Dilley, [1970] A.C. 827; [1969] 3 W.L.R. 357; [1969] 3 All E.R. 437, applied.

(4)Foster v. Action Aviation Ltd., [2013] EWHC 2930 (QB), considered.

(5)Graham v. Police Serv. Commn., [2011] UKPC 46, referred to.

(6)Inco Europe Ltd. v. First Choice Distribution, [2000] 1 W.L.R. 586; [2000] 2 All E.R. 109; [2000]...