2013 Case of Note: Director of Land Valuation v Samuel Andrew Banks [2012] CA

2013 Case of Note: Director of Land Valuation v Samuel Andrew Banks [2012] CA

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Land tax payments scrutinized on newly built properties…

This civil case has been ongoing for several years concerning the owners (“the Banks”) and their property named “Gatewood” in Paget. The Banks disputed the annual rental value (“ARV”) which was allocated to their newly built home by the Land Valuation department. The two contentious point of law in this case were:

  1. By way of The Land Valuation and Tax Act 1967 (“the Act”) the Director of Land Valuation must provide an ARV for each unit in Bermuda for the central valuation list. The usual practice regarding the valuation of new buildings is to wait until the Occupancy Certificate has been issued before the value of the property is officially listed. Once the valuation has been listed the land tax becomes payable. In this way, a homeowner could delay the application of the occupancy certificate in order to stall the tax payments. The Banks argued that they should not be obliged to pay the land tax when they were not capable of beneficial occupation of Gatewood without an Occupancy Certificate.
  2. The Director of Land Valuation wanted to allocate one ARV to the large property as opposed to three individual assessment numbers. The Banks objected to this decision which would increase their annual tax liability as opposed to being allocated three assessment numbers as anticipated.

The Director of Land Valuation appealed the date of beneficial occupation of Gatewood which was dismissed by the Chief Justice. It was determined that Gatewood was not ready for “physical occupation”. The ambiguous wording of “capable of beneficial occupation” within the Act and the dependency upon the issue of the Occupancy Certificate may soon need to be scrutinized in order to predicate incorrect interpretation.

The Banks objected to the combined ARV which was upheld at a tribunal and the property was determined to have three assessments numbers including the main house, the pool house and the staff apartment. This determination significantly reduced the annual tax liability that the Government could levy upon Gatewood. Section 5(2) of the Act prohibits the Director from combining units if the combination results in a higher tax liability for the owner.

This recent appeal has illuminated the grey areas in the Land Valuation legislation that need to be addressed in order to avoid further lengthy and costly litigation.