A decision by the Mayor and City Councillors (M&CC) of Georgetown to raise the fee for a certificate of compliance has been set aside following a ruling by High Court Judge Gino Persaud, who found that it was unlawful and ultra vires the Municipal and District Councils Act and the Deeds Registry Act.
On June 20, 2019, then Town Clerk Sharon Harry-Munroe on behalf of the M&CC, published a notice which informed the public that the cost for a certificate of compliance will be increased by 0.5 per cent of the current market value of the property. The Guyana Bar Association (GBA) was aggrieved by this decision.
Attorneys-at-Law Pauline Chase and Teni Housty in their capacity as representatives of the GBA, wrote the Council twice requesting reasons for its decision under the Judicial Review Act. Such reasons were not provided and the GBA instituted legal proceedings in which it was contended that the decision was unlawful.
The GBA argued that the documents demanded by the M&CC to apply for a certificate of compliance are not necessary for the Council to ascertain and certify from its records whether rates and taxes have been paid on a particular property up to a specified time. It described the demand for the documents as being burdensome, frustrating to commerce, superfluous, and unnecessarily adds costs and time.
The M&CC was requesting the following documents to process transactions: 2019 general rates receipt, 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 done (if the property is to be transferred as gift/trust) and the fee of 0.5 per cent of the current market valuation of the property.
The Bar Association, in its case, argued that the exorbitant fee demanded by the Council is unreasonable and contrary to the policy of and ultra vires Section 16 (a) 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 and not to act as an additional tax as the Council purports to do.
It also argued that the effect of the M&CC’s decision has proven financially detrimental, stating that the cost to obtain a certificate of compliance has increased from a flat fee of $10,000 to hundreds of thousands of dollars depending on the valuation of the property.
The Council deposed that its decision was a policy-making 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.
It contended that its power/discretion to request the submission of the set of documents is an implied or ancillary power or discretion flowing from Sections 16 (a) of the Deeds Registry Act and courts are not to substitute their views on how such discretion is exercised.
Among other things, the M&CC relied on Section 301 (35) (36) of the Municipal and District Councils Act as the statutory basis which authorises it “to prescribe fees” and in the instant case has allowed it to fix the new percentage basis fee based on a current market valuation of the property.
The M&CC submitted that the separate and conjoint meaning of “establish” and “control” under Section 301 (35) of the Act means that it is authorised to “prescribe fees and charges” in respect of anything which it has to verify, substantiate, prove or control. The Council further contended that there is nothing in the legislation that prohibits it from setting fees and charges on a percentage basis as opposed to a flat fee. It also contended that the new fee is not a tax but a levy by a public body.
Having examined Section 206 of the Municipal and District Councils Act, Justice Persaud found that such a power to levy a charge for a certificate of compliance as a percentage of the value of the property does not exist.
He ruled that the decision was beyond the M&CC’s powers and the figure of 0.5 per cent of the current market valuation of the property to be transferred was not explained in any way at all. In quashing the decision, he reasoned that Parliament could not have intended a double levy on a ratepayer within the same year which is exactly what became the position in 2019.
He said, that year, the Council 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 a ministerial function and cannot cost 0.5 per cent of the value of the property to be transferred; this is a pedestrian exercise, the Judge pointed out.
While he noted that the 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, Justice Persaud held that it is not empowered to raise additional revenue by increasing the cost for the issuance of a certificate of compliance.
The High Court judge said 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. He noted that the M&CC also has a duty in this regard not to overcharge ratepayers while adding that the fees for the provision of administrative services must be reasonable and not exploitative.
He, therefore, held that the Council has undoubtedly breached its fiduciary duty owed to ratepayers with the double levy in a single year when a property is intended to be transferred. Moreover, he found that this policy decision was not a utilitarian calculation of the public good.
“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 added. The M&CC had sought to justify its decision and gave a reason as preventing fraud.
However, Justice Persaud said that the Act does not contemplate this as a function that falls within the remit of the M&CC. In fact, he made it clear that this was none of the Council’s business and it had absolutely no authority in considering fraud in property transfer as a factor that led to the policy decision.
To this end, the Judge said there is no doubt in his mind that the increased fee is a heavy penalty. The High Court judge termed the Council’s decision “a penal blow to ratepayers”.
He added, “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 ended his judgement with this salutary warning: “It cannot be too strongly emphasised that Local Government Councillors are not legislators. Their duty is not to re-structure the law but to exercise honestly and on a proper consideration of all relevant factors the discretions which Parliament has entrusted to them.”
The Council was ordered to pay $150,000 in costs to the GBA, which was represented by Attorney-at-Law Kamal Ramkarran, while Senior Counsel Roysdale Forde and Attorney-at-Law D Sukhdeo appeared on behalf of the M&CC.
The GBA was in high praise of the court’s ruling. In a statement Wednesday, the Bar Association noted that from time to time, in fulfilment of its mandate to uphold the rule of law, it participates in litigation before the courts.
“The Bar Association welcomes the decision of His Honour as it grants much relief to the property owners within the city of Georgetown who have had to suffer staggering costs and an unnecessarily complicated process resulting in hardship and financial loss,” the missive reads.
