Gerard Harrahill v Owen Swaine

• Jurisdiction: Ireland
• Judge: Mr. Justice Barrett
• Judgment Date: 28 February 2014
• Neutral Citation: [2014] IEHC 94
• Court: High Court
• Date: 28 February 2014

[2014] IEHC 94

THE HIGH COURT

[No. 274 R/2012]

Harrahill v Swaine

Approved Judgment

No Redaction Needed

BETWEEN

GERARD HARRAHILL

PLAINTIFF

AND

OWEN SWAINE

DEFENDANT

COMMODITY BROKING CO LTD v MEEHAN 1985 IR 12 1985/5/1071

FULLERTON & ANOR v PROVINCIAL BANK OF IRELAND 1903 AC 309

MENOLLY HOMES LTD v APPEAL CMRS & REVENUE CMRS UNREP CHARLETON 26.2.2010 2010/33/8385 2010 IEHC 49

NATIONAL ASSET LOAN MANAGEMENT LTD v MCMAHON & ORS UNREP CHARLETON 16.1.2014 2014 IEHC 71

TUNGSTEN ELECTRIC CO LTD v TOOL METAL MANUFACTURING CO LTD (NO 3) 1955 1 WLR 761 1955 2 AER 657

AER RIANTA CPT v RYANAIR LTD 2001 4 IR 607 2002 1 ILRM 381 2001/1/68

HARRISRANGE LTD v DUNCAN 2003 4 IR 1 2002/12/2982

Summary proceedings - Plenary hearing - Tax collection - Repayment agreement - Undertaking - Promissory estoppel - Leave to defend - Whether very clear that defendant had no case

In these proceedings, the Revenue Commissioners sought summary judgment against the defendant, Owen Swaine, for the sum of €1,662,288.01 plus interest and costs. The plaintiff, Gerard Harrahill, was the Collector General and an officer of the Revenue Commissioners. On the 17 ^th of October 2013, the Master of the High Court made an order for the payment of the sum due. Mr Swaine then commenced the present proceedings seeking an order to set aside that of the Master and requesting a fresh hearing of the matter before this court.

Mr Swaine asserted that he had an agreement with the Revenue Commissioners as to how he would settle his tax liabilities whereas the Revenue Commissioners indicated that this was in fact a ‘repayment agreement’. Mr Swaine argued that he believed that he was buying time from the Revenue Commission and that as long as he complied with the repayment agreement, the Revenue Commissioners would stay their hand. On his own evidence however, it seemed as though he did not act in compliance with this agreement. The Court found that it was difficult to see what defence Mr Swaine would make in relation to this breach of the agreement.

The Court then considered an undertaking made to the Revenue Commissioners in June 2011 where Mr Swaine stated that he undertook to discharge the audit liability and outstanding taxes from certain ‘High Court cases’. The Revenue Commissioners replied, stating that they accepted this undertaking. The Court commented that it might be contended that it was unwise for the Revenue Commissioners to accept the undertaking without indicating that it was accepted on the contingent basis of the cases settling within a particular timeframe. The Court also noted that it was arguable that the undertaking involved an implied request to refrain from bringing proceedings and that the Revenue Commissioners, in accepting the undertaking, were agreeing to this request. Mr Swaine also asserted that the revenue Commissioners represented to him that they would not pursue the liabilities against him until the resolution of the aforementioned cases. As such, it was argued that they were estopped from pursuing the liability. The Court was of the opinion that the undertaking and reply were such that they could be reasonably contended as altering the legal obligations that existed between the parties to the extent that it may have been unfair to then enforce them.

The Court then turned to the threshold to be met for obtaining leave to defend. The relevant test, set out in Aer Rianta cpt. v Ryanair Limited was whether it was ‘very clear’ that the defendant had no case. The Court also considered Harrisrange Ltd v Duncan where it was stated that only a fair or reasonable probability of a real or bona fide defence was required to allow leave to defend. The Court determined that it was not very clear that Mr Swaine had no case in all the circumstances. There were issues to be tried which were not simply or easily determined. The Court applied the observation from Harrisrange that the power to grant summary judgment should be exercised with ‘discernible caution’.

The Court ordered that the order of the Master of the High Court be set aside and granted Mr Swaine leave to defend the amounts claimed at a plenary hearing.

1 JUDGMENT of Mr. Justice Barrett delivered on the 28th day of February, 2014

2 1. This case arises from summary proceedings commenced by the Revenue Commissioners against Mr. Swaine for the amount of €1,662,288.01 plus interest and costs. Any views expressed in this judgment are tentative in terms of the strength or weakness of the case that might be made by either side at plenary hearing. The case centres on whether the Revenue Commissioners in an agreement which they concluded, or by virtue of an undertaking that they accepted, or otherwise in their course of dealings with Mr. Swaine can be argued to have bound themselves such that Mr. Swaine, until he receives certain anticipated income, is not liable to pay the claimed taxes that have been sought of him in these proceedings. The plaintiff in this case is the Collector General and an officer of the Revenue Commissioners duly authorised to collect the tax and interest sought.

Order sought

3 2. On 11 ^th April, 2012, the Revenue Commissioners commenced summary proceedings against Mr. Swaine, a solicitor, seeking payment of certain amounts that they claim are owed to them. On 17 ^th October, 2013, the Master of the High Court issued an order for payment of monies by Mr. Swaine. On 23 ^rd October, 2013, Mr. Swaine commenced the present proceedings, seeking, inter alia, an order of the court setting aside the order made by the Master, and resulting in a de novo hearing of the summary proceedings before this Court.

The Agreement

4 3. Mr. Swaine asserts in his affidavit evidence that he had an agreement with the Revenue Commissioners as to how he should structure his affairs and settle his tax liabilities. In their affidavit evidence, the Revenue Commissioners indicate under the heading "The alleged agreement" that in fact " a repayment agreement was entered into". There was some argument before the court as to whether a binding repayment contract had been agreed between the parties. As it is common cause between the parties, having regard to the affidavit evidence, that a repayment 'agreement' has in fact subsisted between them, the court does not propose to embark upon a detailed consideration of the various elements of a valid contract, though it notes that all of the relevant elements appear to have pertained here. It does not seem that the repayment agreement was documented. It might perhaps be contended that it is surprising that the Revenue Commissioners, dealing as they were with unpaid taxes which have yielded the present claim for in excess of €1.6 million, did not execute a document indicating the key details of a repayment agreement that both parties accept to have subsisted between them. It might also perhaps be contended that any contract or, for that matter, any estoppel that may arise between the parties does not amount to a fettering by the Revenue Commissioners of their tax-collecting powers but instead involves or arises from the exercise by the Revenue Commissioners of the extensive powers enjoyed by them in the area of tax-collection.

5 4. It is obviously challenging for any court to determine the terms of a contract that have not been reduced entirely to writing. However, it appears from the evidence before the court that there was a repayment agreement between the parties and that Mr. Swaine acted to his detriment pursuant to that agreement. The general thrust of Mr. Swaine's case is that, in doing so, he believed himself to be 'buying time' from the Revenue Commissioners as regards the commencement of enforcement proceedings against him. In an affidavit of 5 ^th March, 2013, Mr. Swaine states his understanding to have been that:

"In consideration for [the various actions he undertook pursuant to the agreement] … the Revenue Commissioners would not pursue the outstanding tax liabilities (the subject matter of the proceedings herein) until such time as the above mentioned … cases had resolved and legal fees had been paid".

6 In short, Mr. Swaine appears to have understood that so long as he complied with the repayment agreement the Revenue Commissioners would stay their hand. However, on Mr. Swaine's own evidence it seems that he has not acted in compliance with the repayment agreement. He avers in his affidavit evidence that "an agreement was reached with them [the Revenue Commissioners] to the effect that … I would rearrange my tax affairs so that my tax liabilities … would cease to increase". But his tax liabilities have increased. Such a breach of the repayment agreement would mean that, were one to have regard to the repayment agreement alone, the Revenue Commissioners would not need to stay their hand now as regards the collection of taxes. It is difficult to see what defence Mr....