THE WENDY CASTILLO CASE

INTRODUCTION AND BACKGROUND

On Monday, July 14, 2008, the Supreme Court of Judicature (Amendment) Bill was
presented to the House of Representatives. The Bill was intended to amend section 112
of the Supreme Court of Judicature Act, Chapter 91 of the Laws of Belize by
inserting a new section 112(2A) “ to provide for expeditious and effective collection of
revenue and to provide for matters connected therewith or incidental thereto”.

The Amendment Bill was introduced to the House of Representatives by Prime Minister,
Dean Barrow who stated:

This Bill has to do, let me say it plainly, with the ongoing struggle of the
Government to collect the Business Tax from Telemedia. On the last occasion,
when the Magistrate ordered Telemedia to pay, Telemedia filed an appeal and
took the view that the filing of the Appeal suspended the Magistrate’s order for
them to pay. Now, Mr. Speaker, we don’t agree with the legal position taken by
Telemedia, and in-fact, there is a challenge to that position right now winding its
way through the Court. But, we want to make assurance doubly sure, and so we
are amending that provision of the Supreme Court of Judicature Act on which
Telemedia relies, as conferring the authority, as conferring the right to a
suspension of the order for the income tax to be paid.

The Bill was introduced in the House without consulting or informing the Bar
Association or any relevant Business NGOs and was passed through THREE
READINGS in that same day. On the 18th of July, the law was moved though the Senate
just as rapidly. The Amendment Act, 2008 came into force on the 24th day of July, 2008.
It took a total of 10 days from introduction to coming into force of the Amendment of
the Supreme Court of Judicature Act.
WHAT DID THE AMENDMENT DO??

The Amendment inserted into the Supreme Court of Judicature Act removes the almost
automatic stay of execution of any decision by an inferior court ( Magistrate’s Court)
pending an appeal of that decision, where the matter involves payment of a sum of
money being a tax, duty, rate or charge arising under the Income and Business Tax
Act, the General Sales Tax Act, the Land Tax Act, the Stamp Duties Act, the Towns
Property Tax Act, the Trade Licensing Act, or any other enactment, rule or regulation
imposing a tax, duty, rate or charge”

Previous to this change to the Supreme Court of Judicature Act, only when four kinds of
cases were before the Magistrate’s court was permission needed for a stay of execution :
for a person to obtain his liberty under certain gun or drugs charges, or in respect of
Customs and Agriculture fines when the amount exceeded $20,000.00

What the new section means is that if you wish to appeal any decision of a Magistrate’s
Court ordering you to pay taxes or duties, or charges under ANY law or rule or regulation
in Belize, you MUST pay the full amount of such a tax, duty or charge (including any
penalty or interest) thereon BEFORE “... any such appeal or review is entertained or
determined by the Court”

LEGAL CHALLENGE – CLAIM NO. 480 OF 2010

A lawsuit was been filed by Wendy Castillo in the Supreme Court of Belize claiming that
the law will offend against article 2 of the Constitution because it is inconsistent with
Article 6(1) and (7) of the Constitution since it will restrict access to the court for an
appeal of any order in respect of any tax, duty, rate or charge to such an extent that very
right will become virtually meaningless. Section 6(1) guarantees the Citizen equal
protection before the law and (7) enshrines the right to a fair hearing.
The Claimant is a businesswoman, taxpayer, and land owner who is bound to pay taxes,
duty, rates or charges arising under the Income and Business Tax Act, General Sales Tax
Act, the Land Tax Act, the Stamp Duties Act, the Towns Property Tax Act, and the Trade
License Act, or indeed, under any enactment, rule or regulation imposing a tax, duty, rate
or charge. She would be subject to an order of an inferior court in Belize ordering the
payment of a sum of money by way of tax, duty, rate or charge arising under the Income
and Business Tax Act, the General Sales Tax Act, the Land Tax Act, the Stamp Duties
Act, the Towns Property Tax Act, the Trade Licensing Act, or any other enactment, rule
or regulation imposing a tax duty, rate or charge,

In claim 480 of 2010, Wendy Castillo claimed that her right to protection of the law is
abrogated by and derogated from by the Supreme Court of Judicature (Amendment) Act,
2008 (hereinafter referred to as the Amendment Act, 2008). Specifically, she sought a
declaration in respect of the disproportionate restriction on her right to access of Court
relating to appeals of tax orders of an inferior court. That is to say, the abrogation of her
constitutional right enshrined under section 6(7) of the Constitution, of the right of access
to court

Prior to the passage of the Amendment Act, 2008 there were no statutory restrictions on a
person’s right of appeal to the Supreme Court from an inferior court in respect of orders
by that inferior court for payment of sums of money by way of a tax, duty, rate or charge
arising under the Income and Business Tax Act, the General Sales Tax Act, the Land Tax
Act, the Stamp Duties Act, the Towns Property Tax Act, the Trade Licensing Act, or any
other enactment, rule or regulation imposing a tax duty, rate or charge.

The Amendment Act 2008 in this way now restricts a person’s access to court in respect
of appeals from an inferior court to the Supreme Court relating to any such tax order.

According to Castillo’s case, the new Amendment Act will mean that no person
individual or corporate will be able to go to Supreme Court to challenge any tax, duty,
rate or charge (however unreasonable) imposed on that person in an appeal from an
inferior court without first paying the FULL amount of that tax, duty, rate or charge. The
case makes the point that the Amendment does not provide for any way in which any
citizen, real or corporate can challenge a tax without having first paid it in full ( even if
the citizen gives security or obtains a bond), even if the amount claimed is completely
unreasonable or baseless and the citizen does not have the funds to pay.

A citizen, real or corporate, with less means would automatically suffer discrimination
under this law and would be afforded neither a fair hearing nor equal protection as one of
greater means.

Even should the citizen find the cash to pay up front, and pays up to appeal, the money is
not returned until ALL APPEALS by either party are at an end – and then- will only, if
the appeal or review results in nil or less tax, duty, rate or charge, get back the excess
money paid with interest ”at such rate of interest as may be determined by the Court to
be fair and reasonable” with no compensation for lost opportunities or lost purchasing
power.

The Amendment Act, 2008 proscribes an absolute bar on the suspension of execution of a
judgment of an inferior court in respect of tax orders under the Income and Business Tax
Act, the General Sales Tax Act, the Land Tax Act or the Towns Property Tax Act, which
is being appealed; or indeed the appeal of any order made where the inferior court orders
the payment of a sum of money by way of duty, rate or charge arising under the Stamp
Duties Act, the Trade Licensing Act, or any other enactment, rule or regulation
imposing a tax, duty, rate or charge

The amendment imposed an absolute operational bar to a suspension of execution of an

inferior court tax order, or any other order of an inferior court for the payment of a sum of money
by way of tax, duty, rate or charge arising under any enactment, rule or regulation imposing a tax,
duty, rate or charge.

The new section 2 (a) scrupulously avoids any mention of such factors such as

(1) the amount of charges, rates duties fees or tax assessed or levied on the taxpayer or
ratepayer or chargee under the relevant tax or other law;

(2) the ability to pay such an assessment or levy; the prospects of success of any appeal; and
(3) what security and in what amount is to be entered in by the Appellant;

which an inferior court or the Supreme Court would consider in determining whether to stay the
execution of a decision under section 112(2) of the SCJR prior to the Amendment Act, 2008. All
such accommodation or consideration is scrupulously avoided, no matter how unreasonable or
baseless the assessment or levy of such a tax, rate, duty or charge may be.

The issue could have been addressed differently. An exemption could have been made for
the appeal of tax matters under $20,000.00 to have an automatic stay. The law could have
been written to kick in only for amounts exceeding one million, or half a million, or any
other reasonable amount and could have left some form discretion in the Supreme Court.

An appellant seeking to appeal a tax levy or assessment could have been granted the
opportunity to proffer or tender into court PRIOR TO APPEAL some form of security or
an undertaking rather than being forced to pay cash on the spot.

It could even have been limited to Income and Business Tax and GST and not extended
to every law in Belize dealing with “rates, charges, taxes or penalties”.

Instead, the law is akin to cutting the foot to fit a shoe, and not the other way around.

The imposition of such a condition precedent on the taxpayer appellant is an unreasonable and
arbitrary disproportionate restriction on his/her right of access to a court. This is especially so
when it is realized that this disproportionate restriction applies only to appellants of tax or other
rate, duty and charge orders from an inferior court. The absolute disproportionate restriction
placed on the Claimant and an appellant tax/rate payer or chargee by the Amendment Act, 2008
cannot be countenanced as striking a balance in the interest of the fair administration of justice or
being in the interest that tax should be paid. The Amendment Act, 2008 so severely impinges on
and impairs the Claimant’s right guaranteed under section 6(71) to the extent that the right
becomes theoretical and illusory

The means employed to achieve the objective or aim is, it is submitted, most unjust, capricious
and wholly disproportionate. There must be a balance between, on the one hand, the interest of
the state in collecting taxes, rates duties and charges; and on the other hand, the citizen’s
constitutionally guaranteed right of access to the courts as well as the interest of the applicant in
vindicating his case through the courts.

There is no such balance in the Amendment Act, 2008. The restriction in the Amendment Act,
2008 is so disproportionate that it operates so arbitrary or unreasonably that it compels the
conclusion that the provisions constitute in substance and effect a different and forbidden power
than that which is permissible under the Constitution. Accordingly, the Amendment Act, 2008
contravenes not only section 6(7) of the Constitution, but section 6(1) thereof which guarantees a
right to equal protection under the law.