The Privy Council has settled the issue of how Value Added Tax (VAT) is to be added to legal fees in Trinidad and Tobago.
In a ruling on February 20, Lords Hodge, Briggs, Hamblen, Richards and Lady Rose upheld the appeal filed by attorneys for Bhagwantee Singh-Weekes, the mother of a 20-year-old man, Navin Singh, who died in 2014 from complications from a “flesh-eating” disease.
The Privy Council’s decision overturned a ruling by the Court of Appeal and set a precedent for how VAT is to be applied to court-awarded costs.
The case arose from a wrongful death lawsuit filed against the South-West Regional Health Authority (SWRHA) over medical negligence in Singh’s death. The SWRHA was ordered to pay almost $2 million because doctors misdiagnosed Singh.
He was twice diagnosed with sciatica—severe pain radiating from the back into the hip and outer side of the leg caused by compression of the sciatic nerve but doctors eventually said he had necrotising fasciitis—a bacterial infection that results in the death of soft tissue. He died on October 30, 2014, five days after he sought treatment.
His mother was represented by a team of attorneys led by Anand Ramlogan, SC.
On February 14, 2020, Justice Avason Quinlan-Williams ruled in favour of Singh’s estate and awarded $1,650,276.97 in damages and $141,513.85 in prescribed costs. However, the judge refused a request by Ramlogan to add VAT to the prescribed costs, a decision later upheld by the Court of Appeal.
The dispute centred on the interpretation of Rule 67.13 of the Civil Proceedings Rules (CPR), which states that a party who is not VAT-registered may add “the appropriate amount” of VAT to awarded costs. The Court of Appeal took a strict interpretation, ruling that VAT could not be added once costs were already awarded.
Ramlogan argued that the Appeal Court’s interpretation was flawed and that VAT should be recoverable as part of the costs to prevent undue financial burdens on litigants.
The Privy Council unanimously ruled that the lower courts misinterpreted Rule 67.13 and that VAT should be added to prescribed costs.
It noted that the Appeal Court decision in the case has since been applied in several cases by first-instance judges to refuse applications to add VAT to the costs awarded to a successful party who has been represented by a VAT-registered attorney.
“The decision raises a question of law which is important to legal practice in Trinidad and Tobago.”
In arriving at their decision, the Privy Council judges held the Court of Appeal’s interpretation of Rule 67.13 was incorrect. The correct analysis was that the word “awarded” in the rule includes costs that have been or will be awarded.
“There is nothing unprincipled about the addition of the appropriate amount of VAT to the prescribed or other costs awarded or to be awarded when the recipient party’s attorney is VAT-registered and the recipient party has paid or is liable to pay that sum as VAT.”
They noted the purpose of the rule was to ensure successful litigants are not disadv
