Gladney v Di Murro

• Jurisdiction: Ireland
• Judge: Mr. Justice Hunt
• Judgment Date: 11 January 2017
• Neutral Citation: [2017] IEHC 100
• Docket Number: [2014 No. 198 R]
• Court: High Court
• Date: 11 January 2017

BETWEEN

MICHAEL GLADNEY

PLAINTIFF

AND

ANTONIO DI MURRO

DEFENDANT

[2017] IEHC 100

Hunt J.

[2014 No. 198 R]

THE HIGH COURT

Revenue – S. 71(2) of the Taxes Consolidation Act 1997 – Practice & Procedures – Order for Summary judgment.

Facts: The plaintiff sought an order for summary judgment for the sum claimed and continuing interest for income tax due for the relevant period. The defendant denied any tax liabilities and stated that the manual assessment made by the plaintiff was incorrect.

Mr. Justice Hunt granted the liberty to the plaintiff to enter the final judgment against the defendant. The Court found that it was the duty of the taxpayer to place appropriate records for the Revenue Department to correctly assess the financial liability of a taxpayer. The Court found that the correctness of an assessment could not be judged in the judicial review. The Court held that appropriate remedy for the defendant was to file an appeal before the Revenue Commissioners, which he had failed to do.

JUDGMENT of Mr. Justice Hunt delivered on the 11th day of January, 2017

Issue

1 By summary summons issued on 15th April, 2014, the plaintiff claims the sum of €2,159,766.86 for income tax due in respect of the period 1st January, 2002 to 31st December, 2002, chargeable by way of ‘manual assessment’, which said sum is comprised of tax in the sum of €1,039,882.28 and interest in the sum of €1,119,884.58. There is also a claim for continuing interest from the 11th February, 2014 until judgment or prior payment.

2 By notice of motion dated 15th August, 2014, the plaintiff applied for liberty to enter final judgment for the sum claimed and continuing interest. The defendant filed a replying affidavit setting out the reasons for his claim that there is no outstanding liability to the plaintiff, and requested that the plaintiff's claim be dismissed. The plaintiff's motion was heard on 6th July, 3rd of October, 7th November and 8th November, 2016, when the defendant argued that he had set out in his affidavits sufficient issues to comfortably pass the threshold required for leave to defend the proceedings. The plaintiff essentially argued that by virtue of the substantive law applicable to Revenue claims of this type, the scope for leave to defend in such proceedings was limited, and that the matters alluded to by the defendant were not such as to displace the entitlement of the plaintiff to liberty to enter final judgment at this stage of the proceedings. For the reasons set out below, I agree with the submissions of the plaintiff, and will order that the plaintiff has liberty to enter final judgment in terms of the particulars pleaded in the special endorsement of claim on the summary summons issued by the plaintiff.

Background

3 From 1973 the defendant operated a take away business from premises on the Malahide Road, Co. Dublin. In addition, from in or about 1988, he carried on a similar business from a unit at the River Valley Shopping Centre, Swords, Co. Dublin. At all material times, it is agreed by the plaintiff that the defendant submitted returns to the Revenue in respect of these businesses. In 2005, the defendant made a tax return indicating that he no longer traded in either of these activities. In his tax returns from 2007 to 2013 inclusive, the defendant indicated that his income was derived solely from the letting of two properties within the State in which he had an interest. At all material times, the defendant resided at various locations in Co. Dublin, and does not appear to dispute the plaintiff's assertion that he was always regarded as ‘resident’ and ‘ordinarily resident’ within the State for taxation purposes from 1973 to 2009 inclusive, and therefore subject to Irish tax on income from Irish earnings.

4 On 1st June, 2003, the Revenue Commissioners (‘the Revenue’) commenced an investigation into undeclared liabilities to tax associated with funds held by various persons subject to Irish tax law in accounts maintained with Bank of Ireland Trust Company (Jersey) Limited. In 2005, the plaintiff states that the Revenue was provided with confidential information suggesting that the defendant was the holder of funds in such an account (‘the offshore account’), and by letter dated 26th January, 2005, the defendant was advised that his taxation affairs and the tax affairs of any company of which he was a director, or any trust in which he was either a settlor or beneficiary were then under investigation by the Revenue. In response to this letter, it appears that the defendant instructed an accountant, who wrote to the Revenue by letter dated 14th February, 2005, indicating that he would be in further touch when his enquiries and information were complete.

5 A Revenue memorandum dated 16th February, 2005 records as follows:-

‘Roddy Comyn of CCMG rang in relation to the above. They have recently taken over the case from the late Hugh Gallagher. At present the only information available is that Mr. Di Murro transferred the funds back to Italy where there was some sort of an amnesty scheme for repatriated funds. Mr. Di Murro paid some €79,000 Italian tax. He alleges that it came from UK savings. (Emphasis added) Mr. Comyn has written on 31st January, 2005 to Bank of Ireland Trust Jersey in the Isle of Man where the records are maintained for copies of the bank statements. I advised that Mr. Di Murro had until 26th February to complete and submit the forms SA1 but in view of the new agents I will consider a short extension of time. Mr. Comyn is to advise me of any progress next week.’

6 In his initial replying affidavit, the defendant indicated that he had returned to live in Italy, and having regularised his tax affairs with the Italian revenue authorities, he considered the matter to be closed. Indeed, there does not appear to have been any further developments in relation to the case until 2010, when the Revenue apparently obtained a High Court disclosure order in relation to the aforesaid financial institution. Thereafter, by letter dated 15th October, 2010, the Revenue wrote again to the defendant seeking urgent clarification of a number of specific matters listed in that letter.

7 By letter dated 20th December, 2010, Seamus Walsh and Co., accountants, replied to the Revenue on behalf of the defendant. They answered the specific queries raised in the letter from the Revenue as follows:-

(i) The defendant held a bank account in Jersey which was closed in September, 2003;

(ii) No monies from this account were remitted to the Republic of Ireland;

(iii) The defendant had no undeclared tax liabilities;

(iv) On the closure of the bank account in September, 2003, the money was remitted to Italy and lodged into a ‘Scudo’. The defendant paid some €79,000 tax on the funds remitted to Italy;

(v) Accordingly, no further remittance was due by the defendant to the Revenue on foot of undeclared liabilities to Irish tax.

8 On the basis of this information, the Revenue wrote in January 2011 indicating that they also considered the matter to be closed. However, the investigation into the affairs of the defendant was re-opened by the Revenue writing to Seamus Walsh and Co. on 1st November, 2011, referring to previous correspondence. The Revenue noted that the defendant had never claimed a non-domicile status on any of his completed tax return forms for previous years up to that point, as stipulated by s.71(2) of the Taxes Consolidation Act 1997 (‘the Act’). This letter requested copies of all relevant statements in respect of the offshore account, or any other offshore financial institution, from the dates of commencement to closure, in order to establish the exact source and origin of funds lodged to the account. It also indicated that the Revenue was entitled to request such information to establish the origin or source of funds in a non-domiciliary case.

9 Thereafter, it appears that the Revenue received further correspondence on behalf of the defendant indicating that there would be no additional assistance to the re-opened Revenue investigation. Consequently, on 30th November, 2012 the Revenue issued the manual assessment which is the basis of the plaintiff's claim in these proceedings. This document sets out particulars of three sums assessed under schedule D, descried therein as ‘fish and chip take away’, ‘gross rental income’ and ‘ miscellaneous income’. It also contains the calculation of the sum subsequently claimed in the summary summons issued by the plaintiff. The issue of this document was followed by a demand notice to the defendant in respect of the sum claimed on 18th February, 2013, and a final letter of demand from the plaintiff on 26th February, 2013.

10 On 12th March, 2013, Seamus Walsh and Co. again wrote to the Revenue, referring to previous discussions and correspondence regarding this case. In essence this letter repeated reliance on the matters previously raised by the defendant in answer to the demands of the Revenue, and repeated the assertion that notwithstanding the failure of the defendant to tick the ‘non-domiciled’ box on previous tax returns, the defendant was not domiciled in this jurisdiction. The letter closed with a suggestion that the Revenue was in possession of sufficient material and details to conclude that the matter should be closed on the basis that...