O Coindealbhain (Insp. of Taxes) v Mooney

JurisdictionIreland
JudgeMr. Justice Barr.,Justice Blayney
Judgment Date12 March 1992
Neutral Citation1992 WJSC-HC 842,1988 WJSC-HC 1575
CourtHigh Court
Docket NumberRecord No. 1187/1991,[1988 No. 83R],No. 83R./1988
Date12 March 1992

1988 WJSC-HC 1575

No. 83R./1988
O COINDEALBHAIN v. MOONEY
(REVENUE)

BETWEEN

E.P. O'COINDEALBHAIN (INSPECTOR OF TAXES)
APPELLANT

AND

THOMAS B. MOONEY
RESPONDENT

Citations:

INCOME TAX ACT 1967 S428

INCOME TAX ACT 1967 S430

NARICH PROPERTY LTD V COMMRS OF PAYROLL TAX 1984 ICR 286

ROCHE V KELLY 1969 IR 100

MARKET INVESTIGATIONS LTD V MIN SOCIAL SECURITY 1968 3 AER 732

MCDERMOTT V LOY UNREP BARRON 29.07.82 1982/15/3081A

GRAHAM V MIN INDUSTRY & COMMERCE 1933 IR 156

READY MIXED CONCRETE V MIN PENSIONS 1968 1 AER 433

Synopsis:

WORDS AND PHRASES

"Contract for services"

Contract - Construction - Employment - Employment Office - Branch manager - Contract with Minister for Social Welfare - Contract of service - Distinction - Tests applicable - ~See~ Employment, class - (1988/83 R - Blayney J. - 21/4/88) - [1990] 1 I.R. 422

|O'Coindealbhain v. Mooney|

EMPLOYMENT

Class

Contract of service - Contract for services - Tests applicable - Employment Office - Branch manager - Duties consisted of the performance of certain functions of the Department of Social Welfare - Case stated - Question of law - The appellant inspector of taxes assessed the respondent taxpayer to income tax under Schedule E on the basis that the respondent's contract of employment with the Minister for Social Welfare made the respondent a servant of the Minister - The assessments were appealed, pursuant to s. 429 of th Act of 1967, to His Honour Judge O'Malley who took the view that the respondent was self- employed and should be regarded as employed under a contract for services and as taxable under Schedule D, Case 1 - However, the judge stated a Case for the opinion of the High Court on that issue pursuant to s. 430 of the Act of 1967 - The respondent's contract was in writing and it provided that the respondent should perform the duties of branch manager of the Employment Office at Tullamore from 24/4/78 in accordance with the terms of the contract - The contract provided for the payment to the respondent of a fixed annual sum and various other sums which depended upon the size of the live register at the said office from time to time and the amount of business conducted therein; the respondent was also entitled to a premises allowance and to an annual leave allowance - All the respondent's remuneration was subject to review from time to time - The terms of the contract obliged the respondent to provide and furnish suitable office accommodation in which his duties were to be discharged, to provide the services of a competent deputy during normal office hours as occasion might require and the provision of any clerical assistance which might be considered necessary for the efficient performance of certain work of the Department of Social Welfare - The respondent's employment was subject to three months notice of termination given by either party without any need to assign cause - The main duties of the respondent under his contract were to act as agent for the said Department for the purpose of issuing insurance cards and receiving applications under the Employment Assistance Acts and applications for unemployment benefit, redundancy payments, unemployment assistance and pay- related benefit; to receive evidence of unemployment; to pay unemployment benefit, pay-related benefit, redundancy payments and unemployment assistance; to register the requirements of employers and of persons seeking employment; to account for all moneys received by him and paid on behalf of the said Department; and to complete statistical returns, conduct correspondence, and exhibit and distribute forms and notices - The respondent was also employed by an engineering company as a clerk - Held that the first test to be considered was the extent of the right (if any) of the respondent's employer to direct the respondent how to perform his duties under the contract, as distinct from the employer's power to direct the respondent what duties to perform: ~Roche v. P. Kelly & Co. Ltd.~ [1969] I.R. 100 applied - Held that to determine whether or not the respondent was performing the services in dispute as a person in business on his own account was merely to take a step in making the first test: ~Market Investigations Ltd. v. Minister for Social Security~ [1968] 3 All E.R. 732 considered; ~McDermott v. Loy~ (Barron J. - 29/7/82/) applied - Held that another test is to determine whether or not the following three conditions are fulfilled:- (a) that the taxpayer has agreed, in consideration of a wage or other remuneration, that he will provide his own work and skill in the performance of some service for his employer; (b) that the taxpayer has agreed that, in the performance of that service, he will be subject to the employer's control to a degree sufficient to make the employer his master; and (c) that the other provisions of the taxpayer's contract are consistent with the contract being a contract of service: ~Ready Mixed Concrete v. Minister of Pensions~ [1968] 1 All E.R. 433 considered - Held that the following elements in the respondent's contract were inconsistent with its being a contract of service:- (a) the respondent was not obliged to perform any of of the contract work personally; (b) the respondent was required to provide and furnish office premises and to employ a competent deputy and necessary clerical assistance; (c) a substantial part of the respondent's remuneration was dependent upon the amount of work done in the Employment Office; (d) the respondent's remuneration could be varied without his agreement and (e) the respondent's remuneration expressly included allowances for the provision by the respondent of the facilities and services mentioned in the contract - Held that, even before the accepted tests were applied, the terms of the contract suggested that it was a contract for services - Held that the application of the accepted tests confirmed the conclusion that the respondent's contract was a contract for services since, apart from minor exceptions, the Minister for Social Welfare had no right under the contract to order the respondent to perform his duties in a particular manner or to direct when the work was to be done - Held that the power of the Minister to terminate the contract without assigning cause did not detract from that conclusion: ~Graham v. Minister for Industry and Commerce~ [1933] I.R. 156 considered. Held, further, that the respondent was in business on his own account and that he was not obliged to perform personally the work specified in his contract with the Minister - Held that the determination of the issue by the Circuit Court judge was correct - Income Tax Act, 1967, ss. 429, 430 - (1988/83 R - Blayney J. - 21/4/88) - [1990] 1 I.R. 422

|O'Coindealbhain v. Mooney|

1

Judgment of Mr. Justice Blayney delivered the 21st day of April, 1988.

2

This is a Case Stated for the opinion of the High Court by His Honour Judge Peter O'Malley pursuant to Sections 428 and 430 of the Income Tax Act 1967. It raises a net issue which has frequently had to be considered by the Courts, namely, whether a particular contract is a contract of service or a contract for services.

3

The contract in question is one entered into between the Minister for Social Welfare (to whom I shall refer as the Minister) and the Respondent under which the Respondent was appointed Branch Manager of the Employment Office, Tullamore, from the 24th April 1978 upon the terms and conditions set out in a letter from the Department of Social Welfare dated the 20th March 1978.

4

The Appellant treated the contract as making the Respondent a servant of the Minister and assessed him for Income Tax under Schedule E, and the Department deducted tax under P.A.Y.E. from all emoluments paid to the Respondent in the years 1978/79 to 1981/82 inclusive.

5

The Respondent appealed against the assessments contending that his contract with the Minister was a contract for services; that accordingly he was an independent contractor and not an employee and should have been assessed under Schedule D Case I as a self-employed person. The Learned Circuit Court Judge accepted this contention and at the request of the Appellant he has stated this case for the opinion of the High Court. The question of law for the opinion of the Court is whether the Learned Circuit Court Judge was correct in law in holding that "the Respondent is engaged under a contract for services and therefore self-employed and assessable under Schedule D."

6

The contract between the Respondent and the Minister is a written contract. It is contained in the letter of the 20th March 1978 from the Department, to which I have already referred, and the Form of Acceptance dated the 28th March 1978 signed by the Respondent. In view of its being a written contract, it is not necessary to set out the Case Stated in full, as the Court, in arriving at its decision, is confined to considering the terms of the contract. In Narich Property Limited .v. Commissioner of Payroll Tax (a decision of the Privy Council), reported in 1984 ICR 286, where the issue was whether lecturers employed by the Appellant were employed under a contract of service or were independent contractors, Lord Brandon of Oakbrook, delivering the Judgment of the Court said at page 291:-

"The Judgment of the Judicial Committee in the A.M.P. case was delivered by Lord Fraser of Tullybelton and is authority for three principles of law applicable to a case of the present kind. The first principle is that, subject to one exception, where there is a written contract between the parties whose relationship is in issue, a Court is confined, in determining the nature of that relationship, to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it; and is not entitled to consider also the manner in which the parties subsequently acted in...

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