Daughter was not fronting for dad

A young Caymanian woman who held a trade and business licence for a shop operated by her Caymanian stepfather was not breaking the law, Chief Magistrate Margaret Ramsay-Hale ruled recently.

Defence Attorney Irvin Banks argued there was no case for Dawn Charlotte Smith to answer on any of the three charges against her. They related to the business known as Shop Right, a small store on Walkers Road.

Ms Smith was accused of making a false representation on a work permit application, providing false information on a trade and business licence application and failing to provide documents for inspection.

The charges were laid after Ms Smith put in a work permit application in April 2008 for a foreign national to work as cashier in the store.

Mr. Banks said Ms Smith had a bona fide business licence and the business needed the employee, so there was no case to answer on the first charge.

On the charge that she had no interest in the business and was merely fronting, Mr. Banks cited the Trade and Business Licensing Law and said the exceptions to a licence grant did not prohibit Ms Smith from holding the licence.

He agreed with the chief magistrate’s summary of his position: that the mischief the law was designed to prevent was a Caymanian taking out a licence for a foreigner and having nothing to do with the business.

Mr. Banks also pointed to the evidence of her stepfather, Regal Jackson.

Mr. Jackson had told the court he and a friend had the idea for the business and got financing from family members. He asked for Dawn’s help because she is an accountant and has her own business. ‘I asked her to take out the trade and business licence because she understands these things better than I do.’

He said he worked full time and needed someone in the shop during the day. He and his original partner were responsible for balancing the books

He said Dawn told him she would invest in the business if he made her a partner. She was a signer for the bank. When a partition was needed in the shop premises, Dawn’s construction company built it.

Questioned by Crown Counsel Tricia Hutchinson, Mr. Jackson admitted signing a statement in which he said Dawn had not made a financial contribution to the business and was not involved in it. He said he signed because Dawn was being held in custody and he wanted to get her out: ‘If I didn’t give the statement they would put me in jail with her.’

The custody issue arose when Ms Smith was requested to provide payroll records for the shop employee. Ms Hutchinson referred to Ms Smith’s statement that she would not provide the requested documents ‘unless requested by a court of law’.

The officer advised Ms Smith that he had the authority to require her to produce the documents. ‘She does not ask for time. She simply tells him what he can get. She does not offer to get the records to him,’ Ms Hutchinson told the court.

The chief magistrate adjourned the matter for a week to consider the ‘no case’ submission.

In ruling there was no case to answer on two of the charges, she pointed out: ‘The defendant did not represent that she was hiring [the employee] for her own purposes, but for and on behalf of the business. As the trade and business licensee, she was the only person who could make the application and the need for the employee was clear on the facts.’

On the question of whether Ms Smith was fronting for her stepfather and others, the chief magistrate referred to the section of the law cited by Mr. Banks.

It says the Trade and Business Licensing Board shall grant a licence if satisfied that the application is made in the prescribed form and the requisite fee is paid – with five exceptions.

Cases in which a licence will not be granted are when the applicant is a person of non-Caymanian status who does not hold a work permit; where the person is unable to carry on the business because of youth or infirmity; where the person is disqualified by law from holding the licence sought; where the chief medical officer has objected; and where the applicant is a company that requires a licence under the Local Companies (Control) Law and does not have it.

‘My understanding of the term ‘fronting’ is that it describes the situation where a person who is entitled to apply for a trade and business licence does so not with the intention of operating a business but with the intention of assisting a third party to own and operate a business who would otherwise be unable to do so,’ the chief magistrate concluded.

In this case, ‘I can see no provision in the law that would prevent a Caymanian from applying for a licence to operate a business even if that person should choose to operate it at arms length and have the day to day business attended to by her father, who is himself not disqualified from obtaining a trade and business licence.’

As to the charge of failing to produce documents for inspection, the chief magistrate said Ms Smith’s outright refusal was evidence that could support the charge. However, she did not call on her to answer because she would not proceed to a conviction in any event, having regard to all the circumstances of the case.