Hospital argues that deals can’t fetter tax collection

| 21/04/2022 | 41 Comments
Cayman News Service
Doctors Hospital in George Town

(CNS): A lawyer representing Doctors Hospital made a comprehensive argument in court on Wednesday that the contracts signed by the UDP government with Health City Cayman Islands in 2010 and by the Unity government with Aster Cayman Medcity weeks before the 2021 election, both of which waived fees, cannot legally bind other administrations’ collection of public taxes.

The deal with Health City has enabled it to reap significant benefits for the last decade and the same benefits are now being offered to another proposed facility. Meanwhile, Doctors Hospital has paid over C$1 million duty on medical equipment over the last three years.

The private hospital, located in George Town, is therefore challenging, through a judicial review, the ongoing duty and other tax waivers being given to HCCI and those that will be given to Aster if that project goes ahead. Chris Buttler QC, a UK-based lawyer, is representing the Doctors Hospital (formerly Chrissie Tomlinson Memorial Hospital), instructed by McGrath Tonner.

As he presented his client’s case, Buttler told the court that there is no provision in the Customs Law to allow the Cabinet to grant these blanket duty waivers to specific institutions for seemingly endless periods of time.

The government’s response to the legal case depends largely on the argument that it is bound by the legal contracts that previous governments signed with these two medical tourism institutions. The deals were struck as part of government policy to attract a new economic pillar, and the government maintains it has a right to carve out the special provisions.

But Buttler argued that the contract signed by the UDP with Health City and the more recent deal with Aster cannot bind future governments. He said that in a democracy the Cabinet cannot be fettered from collecting taxes in the public interest and, more importantly, deciding what is and is not in the public interest at any given time.

“Cabinet should be deciding on a case by cases basis whether duty waivers are in the public interest or not,” he said, adding that giving up these taxes, fees or duties was sacrificing public funding. He pointed out that while one government may decide on a policy to facilitate medical tourism, another may not feel that giving up public revenue meant for public services for such a policy was in the public interest.

Buttler argued that the same thing applied to stamp duty, which according to the law only the finance minister has the power to waive. One finance minister might believe a decision to waive land taxes is in the public interest on one occasion for policy reasons, but that decision cannot bind the next minister to take up that office.

He said that when granting a waiver, a finance minister must decide whether that specific sacrifice of public funds, and in turn public services, is worth it. But there is no provision in the law for a general waiver or any provision that allows the minister to “surrender the power” to grant waivers, which is effectively what has happened with the contracts in this case, he told the court.

Buttler accepted that there is a provision in the law for blanket waivers on work permit fees, as HCCI has also been exempt from paying those. However, he said, each successive government must retain the right to change public policy and put an end to any previous blanket decision to waive the collection of any revenue.

“Failure to collect fees and taxes harms the public interest,” Buttler argued. In a democracy the Cabinet must retain its powers to collect all taxes, he said, noting the huge amounts of money that have been given up in fees under the Health City deal. Over the first fifteen years of operation, HCCI will have received more than CI$167 million worth of waived taxes.

Buttler argued that there were clauses in the HCCI contracts that on their face “compel future administrations to continue with the waivers forever… regardless of the future public interest” and any policy adopted by future administrations. But this had concerning implications in a democracy, he said.

He also noted that the HCCI contract signed by the UDP administration was found to be unlawful in a 2015 report by the auditor general at the time (Alastair Swarbrick). In his role as the guardian of public finances, Swarbrick had also raised questions about the ongoing waivers and the government’s failure to adopt a transparent waiver policy, Buttler said.

He explained that Doctors Hospital has applied for duty waivers on a number of occasions for some of the medical equipment it imports and has received a mixed response. The hospital has been granted a full waiver for some pieces of equipment and a partial waiver or nothing at all for others.

Buttler argued that it was wrong for the government to have no published criteria about what would warrant duty or fee waivers, making it very difficult for his client to know when or how the hospital can secure a waiver whenever it needs to bring in specialist medical equipment.

He said it was obvious that government should be transparent about this type of public policy and that all taxpayers should know on what grounds its government is giving up public money.

The case, which is being heard by Justice Richard Williams, continues this week.


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Category: Government Finance, Policy, Politics

Comments (41)

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  1. Anonymous says:

    I for one am thankful that Health City has raised the quality of health services on the island. Doctor’s Hospital has improved since Health City opened as well. I’m also very glad to hear Health City is building the oncology facility in Camana Bay. This is great news for Cayman. However, I do believe that all health facilities should be on a level competitive playing field. Just give all medical facilities the same waivers. Hopefully that will result in lower costs to them, lower costs to patients, lower costs in insurance. Yes, the government loses some revenue, but if the result is a healthier society, then it’s a win-win situation.

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  2. Anonymous says:

    Customs charged me a native caymanian $ 22.95 usd duties….but i guess they just doing their jobs….good job guys!!!…keep up good work…

  3. Anonymous says:

    How? Do you possibly think it might be the same reason for all their other little concessions and waivers -$167m in duty and still counting, work permit waivers, completely ignoring the requirements not to conpete with the domestic health providers, immunity against liability for malpractice? You naive or what?

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    • Anonymous says:

      Yes, yes we get how HC has benefitted. But on the other side of the equation how did/is Cayman benefit(ting)?

  4. Anon says:

    These waivers/concessions need to have a stipulated end date. It’s just plain wrong these concessions have continued for so long and have now been granted to another medical facility. These are not charitable organisations – I wonder, did / does Jasmine Hospice get the same waivers?

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    • Anonymous says:

      The governance structure at the Hospice would never countenance bribes, sorry “consulting/facilitation” fees.

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    • Anonymous says:

      The waivers/concessions have to STOP.. .period! As far as I am aware, HCCI has been given 50-years of waivers, which means that a private, for-profit company is being buoyed up by a whole generation of tax-paying Caymanians to the tune of $164M every decade. Madness!

  5. Anonymous says:

    I want duty concessions with my busy as well!
    Been dumping money into governments piggy bank for 30+ years and why not get some of it back as well!
    Everyone getting payouts so why not me!!!!
    Seriously this island is going to crap everywhere you look and it’s all about me! me! me!

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  6. Anonymous says:

    There is a professional standard spread as well, where the practitioners at the discount hospitals aren’t required to go through the same professional competency hurdles and educational precursors, as the other hospitals, so they can pay them far less. They’re probably okay most of the time, and genuinely mean well, but let’s just lower professional liability limit to $200k just in case.

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  7. Anonymous says:

    Duty concessions, where they exist, should be across the board. Whether a private hospital, public hospital, tourist, or a private citizen. There should be no favouritism or penalty applied to one party versus another. Neither should the public have to pay any 22% price premiums when they’re procuring goods or services from a distributor who didn’t pay that duty spread (somehow, HSA still manages to loose money)! The main point being that the fairness of duties and expired timeframe of regime-specific waivers is very random, loosely policed, and past time for serious grownup review. Thank you Dr’s Hospital for challenging the BS status quo!

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  8. Anonymous says:

    So, what exactly is Doctors Hospital hoping to achieve. . . a refund of their duties paid since HCCI arrived in Cayman? If this transpires, expect every other medical facility in Cayman to hire a lawyer! Or, do they want HCCI to pay back duties because that’s certainly never going to happen?

    What is a crime is the $164M of taxpayers’ money given away to prop up a private hospital that has failed to produce what McKeeva referred to as the “third pillar of the Cayman economy”, i.e., medical tourism. That project has clearly failed miserably.

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    • Anonymous says:

      You answered your own question.

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    • Anonymous says:

      A Mcbeater deal that screw.d the citizenry. How shocking.

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    • Anonymous says:

      It’s a judicial review – the outcome will bind everyone so there is no need for individuals medical practices to hire a lawyer. If they persuade the court that prior governmy duty concessions cannot bind successive governments, it won’t be a matter of Health City refunding – rather the current government will have a choice; either contours the concession but offer it to every medical facility , since to do otherwise would be discriminatory, or withdraw it, so every one pays on the same basis.

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      • Anonymous says:

        Sure, but what about reparations for the discrimination that has taken place over the last 15-years?

      • Anonymous says:

        It will bind everyone? You jest?

        Not in Cayman. Judicial determinations are routinely ignored by government and the civil service.

  9. Anonymous says:

    Does not surprise me. This is this PPM-Unity government’s modus operandi. They cannot be trusted. NONE of them.

    Keeping issues in private, while omitting to telling the public what the true story really is.

    Only thing is that some of us know certain things thiat government does not think we know.

    Let’s see if they come clean or whether exposing them will be necessary. This court case will expose a lot.

    Trust me, it will be better for them to come clean instead of it being disclosed.

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    • Anonymous says:

      Light them up. Expose them.

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    • Rodney Barnett says:

      You are so correct, 2:14.

      IF the government loses, I think that the Judge, in this case, should order the government to open all of its books and records to the public. These contracts, accounts, and other records should all be available ONLINE to the public at no cost.

      The only way to honest government is via GOVERNMENT IN THE SUNSHINE!

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  10. Anonymous says:

    “Consulting fees”. What needs to come to light is what was paid to/for the benefit of, certain politicians in order for concessions. Concessions granted as part of a corrupt deal should not happen at all let alone be made permanent.

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    • Anonymous says:

      And the Governor grins, and the Commissioner proclaims the crime situation is stable, and Eric raises his glass as Franz proclaims it’s all world class.

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      • RES IPSA LOQUITUR says:

        It’s disgusting the arrogance, double standards, excuses plus lack of accountability and transparency displayed at all levels in the governance model.

        The leadership in this country both elected and at the senior levels of civil service have consistently facilitated incompetence, abuse of public funds, public malfeasance whilst praying before every meeting and making a mockery of God instead of doing what is right. Look at the track record over the past twenty years and what still happens today. It’s shocking no one has been held accountable. Therefore, one must conclude that it is all deliberate to protect the chosen few.

        Those persons responsible and making these decisions need to be investigated, exposed, fired without severance and charged with relevant offenses instead of making excuses and claims of equality, honesty or a world class civil service.

        Leadership at every level has consistently failed the people of the Cayman Islands, business owners and tax payers.

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      • Anonymous says:

        It’s sickening as they are all complicit with no shame

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  11. Anonymous says:

    The PPM slogan should say Better Future For The Rich

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  12. Anonymous says:

    Shady, shifty snakes , all of them. Every politician for years now are all in if for themselves in one way or another. They do nothing for the people that in some way does not benefit themselves, they are the bottom feeders who somehow got you attention, your trust, and your votes. Every dam time. They are are snak oil salesman and should be banished from our shores. But alas, the majority of my fellow Caymanians are weak, Nieve, slow, and blind to it. Wake up my people. There is no reason we have to blindly , stupidly, follow these individuals down the wrong path, whether they are in our political arena or not, it is wrong, they are, wrong, and it should be stopped.

    Stop putting these obtuse , self concerned individuals in a position of power. How the UK has never stepped in is beyond me, they either don’t care or are to stupid themselves to recognize how piss poor this country is managed and run, God save Cayman.

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    • Anonymous says:

      Weak, naive, slow, blind? You seem to be ignore the possibility that a significant enough proportion of the voting public are quite happy to trade their votes for favours, either explicit gifts at elect time or active intervention in their interest by their MLA after election. We have no shortage of downright dishonest or even plain dumb MPs, yet they get elected even though their dishonesty or stupidity is in plain sight. How is that possible? You can’t just blame the MPs – they only thrive because we have an electorate that tolerates or even welcomes that behaviour.

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  13. $$$$ talks says:

    There is zero accountability and transparency in CIG by design. Elected government and top civil servants prefer things that way for the deal flow.

    Follow the money

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  14. Anonymous says:

    Legacy of Alden’s crew. Apparently PPM nor UDP can say no to any requests from uncle GT and Cayman’s self appointed royalty

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  15. The Truth Shall Set Is Free says:

    The legacy of the UDP and PPM led UNITY governments is rife with poor negotiations and bad deals that will costs the Cayman Islands hundreds of millions in current and future revenue. The medical deals are the only the tip of the iceberg.

    When will the Auditor General formally investigate the deals and concessions granted to wealthy developers by the PPM planning ministers from 2013-21 and the lack of transparency when dealing with public funds? The time has come to expose all the deals that PPM cabinet including former planning ministers Tibbetts, Hew and UDP cabinet negotiated that benefited business associates, friends and campaign donors.

    All bad deals signed by CIG may potentially constitute an abuse of public office and should be investigated by the authorities.

    https://caymannewsservice.com/2020/06/development-deals-to-remain-secret/

    https://caymannewsservice.com/2021/03/four-development-deals-still-secret/

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    • N says:

      See all those apartments Tibbetts build near Clifton Hunter High School? And the first set I’m told all leased by HCCI.

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  16. Anonymous says:

    As much as I am not a fan of Doctors Hospital, they should absolutely be fighting this fight. They are competing for business with Health City and will compete with any new medical facilities that open. Why shouldn’t they receive the same concessions?

    I don’t have a problem with government giving duty breaks to medical providers as it is a benefit to the local population to have access to better and more sophisticated medical care.

    This is the kind of stuff we should be giving duty waivers for, not property developers in a scorching real estate market.

    If this PACT government was truly for the people and not absolute BS artists they would waive duties on things like medical equipment, drugs and staple foods and lean on the supermarkets to pass the cost savings down to consumers.

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  17. Anonymous says:

    This will fall by the wayside as our goverment will take care of their buddies!

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  18. Anonymous says:

    Meanwhile, Bernie Bush reaches for popcorn as the public slowly becomes more aware of the scale and illegality of past concessions and duty giveaways by previous governments and sitting MPs – most of whom are comfortably untouched by years of SIPLC, ACC, or prison wardens. Hospital giveaways, land giveaways, developer giveaways, Special Economic Zone giveaways, soft dollar trades…even Roy, the guy entrusted with the numbers, admitted nobody was keeping track. Maybe we should, starting now.

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  19. Anonymous says:

    Fight the good fight! Two tier politics can not continue. Every business should be on equal grounds! I am sure whoever signed the waivers is driving a nice Mercedes right about now

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    • Anonymous says:

      For a $167m in duty waivers, no work permits and malpractice liability limitation I would think they got more than a Mercedes’. You could never be a Caymanian politician – you think too small lol.

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  20. Say it like it is says:

    Unlike Govt. officials, we can rely on the Courts and our Auditor Generals to be independent and free from corruption.

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    • Anonymous says:

      To “Say it like it is” – We hope so! Auditor General, yes! I’m not so sure about some of the justice system though.

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    • Anonymous says:

      Say it like you might wish it were. The Cayman Islands Judiciary is helmed by an Attorney General installed via judicial coup by then LOGB McKeeva Bush in 2003.

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      • Anonymous says:

        Umm – it’s helmed by the Chief Justice, not the AG. Which is why the government frequently loses judicial reviews.

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    • Anonymous says:

      You left the Ombudsman out, or was that intentional?

    • Anonymous says:

      The problem with the Auditor General is not their independence, it’s the fact that even when they identify problems, neither the government nor the governor actually does anything about them. The only way things change around here is when someone has the money and the cohones to go for judicial review.

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