IT HAD been the contention of the lawyers representing Premium Investments and Town and Country that DHC, a company from Delaware, United States, which had signed a management agreement with Premium Investments in 1993, was the entity liable for the collection and payment of the GCT.
The essence of the Privy Council's ruling is that, even if DHC was the operator of The Enchanted Garden, and so the agent of Town and Country, that would not exclude the liability of its principal, Town and Country, which is the registered taxpayer in respect of the taxable activity carried on at The Enchanted Garden. The Privy Council stated that "Concurrent liability of an agent under Section 23A cannot exclude the principal's liability."
In its ruling the Privy Council stated:
"In 1997 payment of GCT in respect of the resort was falling into arrears. There were discussions between officers of the General Consumption Tax Department and representatives and advisers of Town and Country. For about two years these discussions proceeded and some payments of GCT were made by Town & Country, on the basis that it acknowledged its obligations and was trying to solve its cash-flow problems. There was no suggestion that Town and Country was not liable for the tax.
"In 1999 matters came to a head. On 18 March 1999 Mr. (Frederick) March was appointed, no doubt under pressure from the Collector of Taxes, as 'responsible officer' in respect of Town and Country for the purposes of Section 52 of the Tax Collection Act. On April 16, 1999, the Collector of Taxes laid information against Town & Country in the Resident Magistrate's Court for the parish of St. Ann. The proceedings were adjourned several times. Then on or about August 3, 1999, Town & Country's advisers raised, for the first time, the suggestion that that company was not liable for GCT at all."
The main arguments presented to the Privy Council focused on the purpose and effect of Section 23A of the GCT Act. The Privy Council stated that, although the case had a number of "unusual facts", and although the section was "not without its difficulties", a number of matters were clear. It noted, for instance, that: "Town and Country was the registered taxpayer for the whole of the relevant period (December 1993 until August 1998) in respect of the taxable activity and it (or its holding company the contractual arrangements between the two companies were another matter not explored below) is or was the owner of the resort business and its assets.
"DHC was the owner of the separate business of running the resort as an agent, remunerated partly by a fixed fee and partly by reference to profits. So DHC, although an agent, may well have been the operator for the purposes of Section 23A. But, like the courts below, their Lordships refrain from any definite finding to that effect, since DHC is not a party to the proceedings.
"But assuming (without deciding) that DHC was the operator, their Lordships are of the clear opinion that that does not exclude the liability of Town and Country as registered taxpayer in respect of the taxable activity carried on at The Enchanted Garden. Concurrent liability of an agent under Section 23A cannot exclude the principal's liability any more than it does under Section 58 of the Act or Section 52 of the Tax Collection Act."
Mr. Seaga told a Gleaner Editors' Forum in September 2002 that the sale of his 112-room Enchanted Garden hotel (which was built with some of the proceeds of a US$8 million loan that he assumed in the 1980s, when he was Prime Minister) was all but complete. He said then that "the agreement with the purchaser is that they will assume responsibility for all taxes and debts." He was at the time the principal shareholder in Premium Investments and Town and Country Resorts, the two companies which owned Enchanted Garden.
