Kennedy v Hearne

JurisdictionIreland
JudgeMr. Justice Murphy
Judgment Date06 February 1987
Neutral Citation1987 WJSC-HC 883
CourtHigh Court
Docket Number[1984] No. 6365P],No. 6365P/1984
Date06 February 1987
KENNEDY v. HEARNE
GILES J. KENNEDY
PLAINTIFF

AND

EDWARD G. HEARNE, MICHAEL HAYES AND THE ATTORNEY GENERAL
DEFENDANTS

1987 WJSC-HC 883

No. 6365P/1984

THE HIGH COURT

Synopsis:

NATURAL JUSTICE

Fair procedures

Statutory procedure - Income tax - Collection - Default procedure - PAYE system - Employer's obligations - ~See~ Revenue, income tax - (1984/6365 P - Murphy J.-6/2/87)- [1987] IR 120 [1988] ILRM 52

|Kennedy v. Hearne|

CONSTITUTION

Courts

Administration of justice - Income tax - Collection - Default procedure - PAYE system - Employer's obligations - Held that an application by the revenue commissioners of the default procedure specified in s.7 of the Act of 1968 did not constitute usurpation of the judicial function contrary to Article 34.1 - Finance Act, 1968, s.7 - ~See~ Revenue, income tax - (1984/6365 P - Murphy J. - 6/2/87) - [1987] IR 120 [1988] ILRM 52

|Kennedy v. Hearne|

CONSTITUTION

Personal rights

Property - Income tax - Collection - Fair procedures - Default procedure - Held that the application of the default procedure specified in s.7 of the Act of 1968 does not infringe the guarantee of fair procedures inherent in Article 40.3 - Finance Act, 1968, s.7 - ~See~ Revenue, income tax - (1984/6365 P - Murphy J. - 6/2/87) - [1987] IR 120 [1988] ILRM 52

|Kennedy v. Hearne|

DAMAGES

Assessment

Libel - Income tax - Collection - Enforcement notice issued after payment of sum due - Unwarranted nature of defence - Aggravated damages - ~See~ Revenue, income tax - (1984/6365 P - Murphy J. - 6/2/87) - [1987] IR 120 [1988] ILRM 52

|Kennedy v. Hearne|

DEFAMATION

Libel

Damages - Income tax - Collection - Enforcement notice issued after payment of sum due - Unwarranted nature of defence - Aggravated damages - ~See~ Revenue, income tax - (1984/6365 P - Murphy J. - 6/2/87) - [1987] IR 120 [1988] ILRM 52

|Kennedy v. Hearne|

REVENUE

Income tax

Collection - Default procedure - Validity - Fair procedures - PAYE system - Employer's obligations - Defamation - Damages - Part V of the Regulations of 1960 directed the plaintiff employer to remit to the Collector General before 14/5/84 the income tax payable by the plaintiff's employees in respect of wages paid to them by the plaintiff during the month which ended on 4/5/84 - The plaintiff failed to remit any of that tax before 14/5/84 - The revenue commissioners estimated the sum which should have been remitted by the plaintiff before that date, and served him with notice of the estimate - On 2/7/84 the commissioners demanded payment by the plaintiff of the estimated sum - On 16/7/84 the commissioners initiated the procedure for the issue of an enforcement notice - On 19/7/84 the plaintiff paid to the Collector General, inter alia, the sum which the plaintiff should have remitted as tax payable by his employees in relation to their wages paid during the month ending on 4/5/84 - By an unexplained error the plaintiff's payment was not associated by the commissioners with any of the prior notices or demands, and on 25/7/84 an enforcement notice issued to the city sheriff - On 30/7/84 the commissioner's computer identified the payment as relating to the enforcement notice and the sheriff's warrant was recalled - The plaintiff claimed (inter alia) damages for libel - Held that the occurrence of a mistake in the course of applying the default procedure specified in s.7 of the Act of 1968 did not invalidate that procedure - Held that the application of that procedure did not infringe the guarantee of fair procedures inherent in Article 40, s.3, of the Constitution - Held that the decisions and acts of the commissioners, in applying the provisions of s.7 of the Act of 1968, did not constitute the administration of justice contrary to Article 34, s.1, of the Constitution - Held that the publication of the enforcement notice constituted a libel of the plaintiff - Held that the plaintiff was entitled to an award of #500 general damages for libel and, in view of the nature of the defence to the libel claim, the sum of #2,000 as aggravated damages - Income Tax (Employment) Regulations. 1960, Part V - Income Tax Act, 1967, ss.131, 485 - Finance Act, 1968, s.7 - (1984/6365 P - Murphy J. - 6/2/87) - [1987] IR 120 [1988] ILRM 52

|Kennedy v. Hearne|

WORDS AND PHRASES

"Judicial function"

Income tax - Collection - Default procedure - Application of default procedure specified in s.7 of the Act of 1968 does not constitute usurpation of the judicial function contrary to Article 34.1 of the Constitution - Finance Act, 1968, s.7 - ~See~ Revenue, income tax - (1984/6365 P - Murphy J. - 6/2/87) 1987 IR 120 - [1988] ILRM 52

|Kennedy v. Hearne|

Citations:

INCOME TAX ACT 1967 S485

FINANCE ACT 1968 S7

FINANCE ACT 1968 S8

INCOME TAX ACT 1967 S131

INCOME TAX ACT 1967 S109

INCOME TAX ACT 1967 S127

FINANCE (NO 2) ACT 1959 S6

INCOME TAX ACT SCH E

INCOME TAX ACT 1967 S129

INCOME TAX (EMPLOYMENTS) REGS 1960 SI 28/1960

INCOME TAX (EMPLOYMENTS) REGS 1960 SI 28/1960 PART III

INCOME TAX (EMPLOYMENTS) REGS 1960 SI 28/1960 PART IV

INCOME TAX (EMPLOYMENTS) REGS 1960 SI 28/1960 PART V RULE 31(3)

INCOME TAX (EMPLOYMENTS) REGS 1960 SI 28/1960 PART V RULE 31(4)

INCOME TAX (EMPLOYMENTS) REGS 1960 SI 28/1960 PART V RULE 31(5)

FINANCE ACT 1968 S7

FINANCE ACT 1960 S8

FINANCE ACT 1968 S7(2)(c)

FINANCE ACT 1968 S7(2)(d)

HAUGHEY, IN RE 1971 IR 217

O'BRIEN V BORD NA MONA 1983 IR 255 1983 ILRM 314

EAST DONEGAL CO-OP V AG 1970 IR 317

CONSTITUTION ART 34

R V R 1984 IR 296, 1985 ILRM 631

DEIGHAN V HEARNE & ORS 3 ITR 253

CONSTITUTION ART 40.3

MCDONALD V BORD NA gCON 1965 IR 217, 100 ILTR 89

WEXFORD COUNTY COUNCIL 1902 2 IR 349

1

Judgment of Mr. Justice Murphy delivered the 6th day of February 1987.

2

In this case the Plaintiff claims damages for breach of his constitutional rights and for libel. In addition he seeks a declaration that Section 485 of the Income Tax Act 1967is unconstitutional and indeed it was further argued that the legislative provisions enabling the enforcement of the P.A.Y.E. Regulations as against an employer (in particular Sections 7 and 8 of the Finance Act 1968and Section 131 of the Income Tax Act 1967) are similarly flawed.

3

The Plaintiff, Mr. Kennedy, is a Solicitor who commenced practice on his own account in February/80 at Eccles Street Dublin, under the name or style of Giles J. Kennedy & Co. In the year 1984 he had a branch office in Drumcondra and between the branch and the main office he engaged eight employees. The emoluments of those employees were of course chargeable to tax under Schedule E, that is to say, Section 109, of the Income Tax Act 1967. Section 126 of the 1967 Act provides that income tax shall be deducted by the person paying the emoluments and Section 127 (re-enacting Section 6 of the Finance Act (No. 2) 1959) empowers the Revenue Commissioners to make regulations governing the assessment charge, collection and recovery of income tax on emoluments payable by an employer to an employee.

4

It is material to draw attention too to Section 131 of the 1967 Act which makes available to the Revenue Commissioners the same procedures for the collections of tax as against the employer as they would have had against an individual charged to tax under Schedule E and in particular provides for resort to Section 485 of the same Act. Section 485 as amended provides as follows:-

5

2 "(1) Whenever any person makes default in paying any sum which may be levied upon him in respect of income tax, the Collector may issue a certificate to the county registrar or sheriff of the county in which the defaulter resides or has a place of business or (when the tax in default is charged on lands or tenements) in which the lands and tenements are situate, certifying the amount of the sum so in default and the person upon whom the same is leviable and the lands and tenements (if any) on which the sum is charged.

6

(2) Immediately upon receipt of the certificate the county registrar or sheriff shall proceed to levy the sum therein certified to be in default by seizing all or any of the goods, animals and other chattels within his bailiwick belonging to the defaulter and for such purposes he shall (in addition to the rights, powers and duties conferred on him by this section) have all such rights, powers and duties as are for the time being vested in him by law in relation to the execution of a writ of fieri facias so far as the same are not inconsistent with the additional rights, powers and duties conferred on him by this section."

7

Another section to which reference should be made before passing to the relevant regulations is Section 129 (as amended) which provides for the payment of simple interest at the rate of 1.25 per cent per month by an employer in respect of the tax payable by him under the P.A.Y.E. procedure.

8

The Income Tax (Employment) Regulations 1960 (S. I. No. 28 of 1960), generally known as the P.A.Y.E. Regulations, provide at Regulation 8 for the registration of employers who make payments of emoluments to an employee at a rate exceeding £6 per week and imposes on the employer a duty to maintain a register of his employees.

9

Part III of the Regulations imposes on the Inspector the obligation to determine the tax free allowances appropriate to a particular employee and affords to the employee the opportunity of appealing to the Appeal Commissioners the decision of the Inspector in relation to those allowances. Part IV of the P.A.Y.E. Regulations imposes on the employer the duty to calculate the cumulative emoluments of the employee and the cumulative tax free allowances specified on the tax deduction card and having made such calculation to deduct the appropriate sum for tax on the occasion of every payment of emoluments to the employee. It is Part V of the Regulations which imposes on the employer the obligation to remit to the Collector on or...

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