Deane v The Revenue Commissioners

• Jurisdiction: England & Wales
• Judge: Ms. Justice Costello
• Judgment Date: 25 September 2018
• Neutral Citation: [2018] IEHC 519
• Court: High Court
• Docket Number: [2017 No. 279 R.]
• Date: 25 September 2018

BETWEEN

LEANNE DEANE

APPELLANT

AND

THE REVENUE COMMISSIONERS

RESPONDENT

[2018] IEHC 519

Costello J.

[2017 No. 279 R.]

THE HIGH COURT

Case stated – Tax appeal – Dwelling house exemption – Tax Appeals Commission stating a case for the opinion of the High Court – Whether the appellant was entitled to avail of the exemption in accordance with s. 86 of the Capital Acquisitions Tax Act 2003

Facts: The Tax Appeals Commission stated a case for the opinion of the High Court pursuant to s. 949 AQ of the Taxes Consolidation Act 1997 in relation to the determination by Commissioner Gallagher in the tax appeal of Deane v The Revenue Commissioners dated 14th August, 2017. The appeal related to the question of whether the appellant, Ms Deane, was entitled to avail of the exemption in accordance with s. 86 of the Capital Acquisitions Tax Act 2003 (CATCA 2003) commonly referred to as “dwelling house exemption”. The central issue in the case was whether Ms Deane was, at the date of the inheritance of the dwelling house, beneficially entitled to any other dwelling house or to any interest in any other dwelling house within the meaning of s. 86 (3) (b) CATCA 2003.

Held by Costello J that the answers to the questions of law for the opinion of the High Court were as follows: (1) Whether, upon the facts proved or admitted, the Commissioner was correct in law to interpret the words “in the interest” per s. 86 (3) (b) as meaning “beneficially entitled…to any interest in any other dwelling house” as per the statutory wording of the provision, being an interest in land, as opposed to interpreting the expression as simply any interest”. Yes. (2) Whether, upon the facts proved or admitted, the Commissioner was correct in law in my determination that a beneficiary’s interest in the due administration of an estate is not an interest in land and is not an “interest in any other dwelling house” for the purposes of s. 86 (3) (b), and is not an “interest” for the purpose of s. 86 (3) (b). Yes. (3) Whether, upon the facts proved or admitted, the Commissioner was correct in law to determine that the Appellant was not beneficially entitled to residuary legacies on 27th October, 2010 (the date of the inheritance). Yes. (4) Whether, upon the facts proved or admitted, the Commissioner was correct in law to determine that the appellant became beneficially entitled to the residuary legacies on 29th March, 2011 at the earliest, that being date upon which the net estate was ascertained. Yes. (5) Whether, upon the facts proved or admitted, the Commissioner was correct in law to determine that the date of the inheritance of all of the residuary legacies inherited in this case (i.e. the family home plus the interest in four other properties) on 27th October, 2010 preceded the date upon which the appellant became beneficially entitled to all of those properties. Yes. (6) Whether, upon the facts proved or admitted, the Commissioner was correct in law to determine that s. 86 CATCA 2003 contains no requirement that a successor be beneficially entitled to the dwelling house the subject matter of the claim, on the date of the inheritance. Yes. (7) Whether, upon the facts proved or admitted, the Commissioner was correct in law in law to determine that the expression “at the date of the inheritance” in s. 86 (3) (b) means “at any time on the date of the inheritance”. It was not necessary to answer this question.

Case stated.

JUDGMENT of Ms. Justice Costello delivered on the 25th day of September, 2018

Introduction

1 The Tax Appeals Commission stated a case for the opinion of the High Court pursuant to s. 949 AQ of the Taxes Consolidation Act, 1997, as amended, in relation to the determination by Commissioner Gallagher in the tax appeal of Deane v. The Revenue Commissioners dated 14th August, 2017. The appeal relates to the question of whether the appellant (‘Ms. Deane’) is entitled to avail of the exemption in accordance with s. 86 of the Capital Acquisitions Tax Act, 2003 (‘CATCA 2003’) commonly referred to as ‘dwelling house exemption’. The central issue in the case was whether Ms. Deane was, at the date of the inheritance of the dwelling house, beneficially entitled to any other dwelling house or to any interest in any other dwelling house within the meaning of s. 86 (3) (b) CATCA 2003.

The facts found by the Tax Appeals Commission.

2 Ms. Deane had resided in the family home since childhood and in particular throughout the period of three years immediately preceding the date of inheritance and for a continuous period of six years thereafter commencing on the date of inheritance. Ms. Deane's father, the testator, executed his last will and testament on the 24th June, 2002. All property in the estate was bequeathed in accordance with Clause 3 of the will, which provided:

‘I GIVE DEVISE AND BEQUEATH all of my property of every nature, description and kind, wheresoever situate, to my son Gavin and daughter Leanne in equal shares for their own use and benefit absolutely.’

Clause 3 of the testator's will was in the nature of a residuary clause and the properties devised comprised residuary legacies. There were no specific legacies.

3 The testator died on the 27th October, 2010. The net estate was ascertained on the 29th March, 2011. The grant of probate was extracted on the 30th May, 2011. The assets in the estate were distributed to the beneficiaries on the 17th August, 2011.

4 Prior to ascertaining the net estate and the issuing of a grant of probate, a deed of family arrangement was executed by Ms. Deane and her brother, Mr. Gavin Deane, on 21st February, 2011. The effect of the deed of family arrangement was that Ms. Deane would receive 100% (as opposed to 50%) interest in the family home in relation to which she claimed dwelling house exemption and her brother received 100% (as opposed to 50%) interest in a business and a business premises in Cookstown Business Park, Tallaght, County Dublin. Ms. Deane also inherited from the testator a 50% interest in four other residential properties, three in Ireland and one in Spain.

Standard of review applicable to the case stated

5 In Ó”Cualachain (Inspector of Taxes) v. McMullan Brothers Ltd [1995] 2 I.R. 217, the Supreme Court set out principles governing the mode and standard of review the courts adopt when considering an appeal of a decision of the Appeal Commissioners on a point of law. At p. 222 Blayney J. held as follows:

‘In the light of these statements of the law it seems to me that when a court has before it a case stated seeking its opinion as to whether a particular decision was correct in law, the following principles apply (I refer in them to a case stated by a judge, as is the position here, but they apply equally where the case is stated by the Appeal Commissioners or by any other party): —

(1) Findings of primary fact by the judge should not be disturbed unless there is no evidence to support them.

(2) Inferences from primary facts are mixed questions of fact and law.

(3) If the judge's conclusions show that he has adopted a wrong view of the law, they should be set aside.

(4) If his conclusions are not based on a mistaken view of the law, they should not be set aside unless the inferences which he drew were ones which no reasonable judge could draw.

(5) Some evidence will point to one conclusion, other evidence to the opposite: these are essentially matters of degree and the judge's conclusions should not be disturbed (even if the court does not agree with them, for we are not retrying the case) unless they are such that a reasonable judge could not have arrived at them or they are based on a mistaken view of the law.’

6 The Tax Appeals Commission was established by the Finance (Tax Appeals) Act, 2015 and is the successor body to the Appeal Commissioners. This case stated by the Tax Appeal Commission should be approached on the basis of the principles set out in Ó”Cualachain as there is no reason in principle to vary the principles simply because of the establishment of the Commission.

7 In hearing the case stated, the High Court may either reverse, affirm or amend the determination of the TAC and shall remit the matter to TAC with its opinion on the matter (s. 949 AR TCA, 1997).

Principles governing the interpretation of Taxation Acts.

8 In Inspector of Taxes v. Kiernan [1981] I.R. 117 the Supreme Court through Henchy J. established three basic rules of statutory interpretation. At p. 121 and 122 of the report Henchy J. held:

‘First, if the statutory provision is one directed to the public at large, rather than to a particular class who may be expected to use the word or expression in question in either a narrowed or an extended connotation, or as a term of art, then, in the absence of internal evidence suggesting the contrary, the word or expression should be given its ordinary or colloquial meaning…

Secondly, if a word or expression is used in a statute creating a penal or taxation liability, and there is looseness or ambiguity attaching to it, the word should be construed strictly so as to prevent a fresh imposition of liability from being created unfairly by the use of oblique or slack language…

Thirdly, when the word which requires to be given its natural and ordinary meaning is a simple word which has a widespread and unambiguous currency, the judge construing it should draw primarily on his own experience of its use. Dictionaries or other literary sources should be looked at only when alternative meanings, regional usages or other obliquities are shown to cast doubt on the singularity of its ordinary meaning, or when there are grounds for suggesting that the meaning of the word has changed since the statute in question was passed …’

9 In relation to the question of an exemption to tax, it was held in Revenue Commissioners v. Doorley [1933] I.R. 750 that the principles which apply to the...