Patrick W. Keane & Company Ltd -v- The Revenue Commissioners, [2007] IEHC 466 (2007)

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Patrick W. Keane & Company Ltd -v- The Revenue Commissioners, [2007] IEHC 466 (2007)

THE HIGH COURT [2007] No. 329RBETWEENPATRICK W. KEANE AND COMPANY LIMITEDAPPELLANTAND

THE REVENUE COMMISSIONERSRESPONDENTSJUDGMENT of Mr. Justice John Edwards delivered on the 18th December, 2007

Introduction

This is a case stated by His Honour Judge Patrick Moran, a Judge of the Circuit Court, pursuant to s. 941 of The Taxes Consolidation Act, 1997 as extended by s. 943 of the same Act, at the request of the Revenue Commissioners, the respondents named in the title to these proceedings. The relevant provisions provide, in substance, that after the determination of an appeal against an assessment to tax by an Appeal Commissioner, or the Circuit Court, as the case may be, a party dissatisfied with the determination as being erroneous in point of law, may declare his or her dissatisfaction and require the appellate tribunal (the Appeal Commissioner or the Circuit Court, as the case may be) to state and sign a case for the opinion of the High Court on the determination. In the case stated by His Honour Judge Moran dated 27th April, 2007 this court is asked to answer the following question:-"Does the arrangement in the present case constitute a 'reconstruction' within the meaning of s. 80 of the Stamp Duties Consolidation Act, 1999?"

Facts

Prior to November, 2001 the appellant Patrick W. Keane and Company Limited (hereinafter referred to as "the company"), had five shareholders, namely Catherine Neville, Tim Keane, Gerard Keane, Pat Keane and Liligan Limited (a company controlled by Gerard Keane and Pat Keane). The company carried on a jewellery business. It had jewellers shops at Oliver Plunkett Street, Cork, Winthrop Street, Cork, Patrick Street, Cork and High Street, Killarney, County Kerry. In addition, it had a property at 2A Pembroke Street, Cork and it also had an investment property portfolio comprising properties at Cook Street, Cork, North Main Street, Cork and Brentwood, Wilton, Cork. It appears that a dispute arose between the shareholders that was subsequently settled by agreement. This court has been informed by counsel for the company (the appellant), Mr. Shipsey, S.C., that this agreement (for clarity hereinafter called "the initial agreement") was entered into "about a month" before a subsequent agreement of the 23rd November, 2001 and with which this court is centrally concerned. For the purposes of the initial agreement, the ordinary shares in the company where redesignated into "A shares" "B shares" and "C shares". In addition a new class of shares, namely the "E" shares where created. However, Article 4.2. of the company's Articles of Association provided that the holders of the "E" shares were not entitled to receive notice of, attend or vote at general meetings of the company or even to receive copies of the accounts of the company. The company's Articles of Association further provided that the "E" shareholders were not entitled to any distribution save such distribution as might be approved by the company in general meetings (which they had no right to attend, or to vote at). The "A" shares were held by Catherine Neville; the "B" shares were held by Tim Keane and the "C" shares were held by Gerard Keane and Pat Keane and Liligan Limited. "E" shares in the company were issued to each of Catherine Neville, Tim Keane, Patrick Keane, Gerard Keane and Liligan Limited. The Articles of Association were amended to provide that the "A" shares were to benefit only from the "A" assets, the "B" shares were to benefit only from the "B" assets and the "C" shares were entitled to benefit only from the "C" assets. Essentially, each of the assets and businesses hereinbefore described were divided into three classes of assets. The premises and business of the company at Winthrop Street, Cork, known as the "Swiss Gem Business" together with the investment property portfolio became the "A" business; the premises and business of the company carried on at 116 Patrick Street, Cork, known as the "Michel's Business", became the "B" business while the balance of the assets of the company were attributed to the "C" business.

On 23rd November, 2001 a further agreement, (to which I...

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