Madigan v Attorney General

• Jurisdiction: Ireland
• Judge: O'Hanlon J.
• Judgment Date: 20 December 1983
• Neutral Citation: 1984 WJSC-HC 571
• Court: High Court
• Docket Number: No. 6052 P/1983
• Date: 20 December 1983

1984 WJSC-HC 571

THE HIGH COURT

No. 6052 P/1983

No. 7258 P/1983

MADIGAN v. ATTORNEY GENERAL

BETWEEN/

PATRICK J. MADIGAN and PATRICIA MADIGAN

Plaintiffs

-and-

THE ATTORNEY GENERAL THE REVENUE COMMISSIONERS THE MINISTER FOR FINANCE

Defendants

and

CATHERINE MARY GALLAGHER and GERARD GALLAGHER

Plaintiffs

-and-

THE ATTORNEY GENERAL THE REVENUE COMMISSIONERS THE MINISTER FOR FINANCE

Defendants

Citations:

FINANCE ACT 1983 PART VI

FINANCE ACT 1983 S96

FINANCE ACT 1983 S97

FINANCE ACT 1983 S95

FINANCE ACT 1983 S98

FINANCE ACT 1983 S99

FINANCE ACT 1983 S100

FINANCE ACT 1983 S101

FINANCE ACT 1983 S102

FINANCE ACT 1910 S33

FINANCE ACT 1983 S108

FINANCE ACT 1983 S109

FINANCE ACT 1983 S103(2)

INCOME TAX ACT 1967 S141

CONSTITUTION ART 40.1

CONSTITUTION ART 40.3

CONSTITUTION ART 41

MURPHY V AG UNREP SUPREME 25.1.1980 1980/2/351

FINANCE ACT 1983 S103(1)

CAHILL V SUTTON 1980 IR 269

CAPITAL ACQUISITIONS TAX ACT 1976

CAPITAL GAINS TAX ACT 1975

O'BRIEN V KEOGH 1972 IR 144

O'BRIEN V MANUFACTURING ENGINEERING CO LTD 1973 IR 334

O'BYRNE V MIN FOR FINANCE 1959 IR 1

EAST REALTY CO V ACHNEIDER GRANITE CO 240 US 1

GREEN V LOUISVILLE & INTER-URBAN RAILWAY CO 244 US 5

ROYSTER GUANO CO V VIRGINIA 253 US 17

LOUISVILLE GAS & ELECTRONIC CO V COLEMAN 277 US 22

TAX COMMISSIONERS V JACKSON 283 US 34

CHARLESTON ASSOC V ALDERSON 324 US 48

EAST DONEGAL CO-OP V AG 1970 IR 317

KING V AG 1981 IR 258

RSC O.19 r29

QUINNS SUPERMARKET V AG 1972 IR 1

NICOLAOU, STATE V BORD UCHTALA 1966 IR 567

MURTAGH PROPERTIES V CLEARY 1972 IR 332

BRENNAN V AG & WEXFORD CO COUNCIL 1983 ILRM 449

MULLOY V MIN FOR EDUCATION 1975 IR 88

BLAKE V AG 1982 IR 117 1981 ILRM 34

AG V SOUTHERN INDUSTRIAL TRUST LTD 94 ILTR 161

ART 26 & OFFENCES AGAINST THE STATE (AMDT) BILL 1940, IN RE 1940 IR 470

CITYVIEW V ANCO 1980 IR 381

PIGS MARKETING BOARD V DONNELLY 1939 IR 413

FINANCE ACT 1978 S47

Subject Headings:

CONSTITUTION: statute

REVENUE: residential property tax

1 Judgment delivered by O'Hanlon J., the 20th day of December, 1983.

2 These two actions were tried together and this judgment is common to both sets of proceedings. Both actions are challenges to the constitutionality of the entire of Part VI of the Finance Act, 1983(No. 15 of 1983) dealing with the imposition, assessment and recovery of Residential Property Tax.

3 This is a new form of taxation in this country. The general scheme of Part VI of the Act may be seen by reference to some of the central provisions, which can be paraphrased as follows:-

4 (1) With effect on and from the 5th April, 1983, a tax, to be called residential property tax, shall be charged, levied and paid annually upon the net market value of the relevant residential property on the valuation date in each year of every person and the rate of tax shall be 1½% of that net market value. (Sec. 96).

5 (2) The relevant residential property of a person who is domiciled in the State on the valuation date shall comprise all the property, wheresoever situate, which is relevant residential property of the person on that date. For a person not domiciled in the State on the valuation date, the relevant residential property shall comprise only the property situate in the State, which is relevant residential property of the person on that date. (Sec.97).

6 (3) "Relevant residential property" in relation to any person, means any residential property in relation to which he is the owner and which is occupied by him as a dwelling or dwellings. (Sec. 95(1)).

7 (4) A person is the "owner" in relation to a residential property, if that person beneficially, whether solely or jointly or in common -

8 (i) holds a freehold estate in the property

9 (ii) holds the property under a lease, agreement or licence, the duration of which exceeds 50 years

10 (iii) is the owner under a mortgage of the equity of redemption in a freehold estate or lesser interest of the type previously mentioned

11 (iv) holds the property under a lease, agreement or licence of a kind not previously mentioned, but no rent is payable or a rent substantially below the open market rent is payable

12 (v) holds the property at the will or sufferance of any other person or under any trust, and either no rent or a rent substantially below the open market rent is payable.

13 There are some exceptions to these provisions which it is unnecessary to specify in detail. (Sec. 95).

14 (5) The market value of any property for the purposes of this Part of the Act shall be estimated to be the price which the unencumbered fee simple of such property would fetch if sold for residential use in the open market on the valuation date in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the property. The owner must make his own estimate of the market value and if the Revenue Commissioners are not satisfied with his figure they may have their own estimate made for the purposes of the tax to be imposed. (Sec. 98).

15 (6) If there are joint owners for the purposes of the Act, the market value of the property is to be apportioned between them in proportion to the number of persons having such joint ownership. (Sec. 99).

16 (7) Tax is payable on the "net market value" of relevant residential property which is defined as the excess of the aggregate amount of the market values of all relevant residential properties over the amount of the market value exemption limit. The initial figure for this is £65,000, subject to variation in subsequent years by reference to movements in the new house index number. (Secs. 96, and 100).

17 (8) Exemption from residential property tax can be obtained if an assessable person can establish that the aggregate of his income and the incomes of persons normally residing at any relevant residential property (with certain exceptions which, again, it is unnecessary to specify) does not exceed £20,000. This figure will vary in subsequent years by reference to movements in the consumer price index. There is provision for marginal relief where the aggregate relevant income does not exceed the income exemption limit by more than £5000, (Secs. 101, 102), and the tax which would otherwise be payable may be reduced by one-tenth for each dependent child resident with the person assessable to tax. (Sec. 102).

18 (9) A person aggrieved by the decision of the Commissioners as to the market value of any residential property may appeal to a referee in the manner prescribed by section 33 of the Finance Act, 1910, and an appeal in relation to assessment to tax in respect of any relevant residential property (other than in relation to the market value of residential property) lies to the Appeal Commissioners, in the ordinary way. (Secs. 108 and 109).

The Circumstances of the Plaintiffs

19 Having considered in outline the scheme of Part VI of the Act of 1983, I turn now to consider the circumstances of the Plaintiffs, viewed in the light of those provisions. Patrick Madigan, the first-named Plaintiff in the first action, is a solicitor, practising in Dublin. In common with the other Plaintiffs in both actions, he is an Irish Citizen and is domiciled in Ireland. He lives at "Algoa", Westminster Road, Foxrock, Co. Dublin, a very substantial residential property on two acres. He and his wife, the second-named Plaintiff, purchased the property in fee simple in June 1975, as joint tenants for £56,000 and they continue to hold it as joint owners, subject to a mortgage in favour of a building society. His own estimate of the value of the property at the present time was about £250,000. His wife has recently commenced practice as a barrister, but her current income would be very small. His own income would exceed £25,000 per annum. He is also the sole owner of the freehold interest in No. 3 Devlin Park, Salthill, Galway, of which he has vacant possession, and he estimated the value of this property at about £20,000. He has six children, whose ages range from 15½ down to three years, all of whom are dependent on him. He has made no return under the Act, although he received a form for completion in which the Revenue Commissioners required him "in accordance with Section 103 (2) of the Finance Act, 1983", to make a return on or before the 1st October, 1983.

20 Catherine Mary Gallagher is a married woman, living with her husband and five of her six children at Hollybank House, Hollybank Avenue, Ranelagh in the City of Dublin. She is the owner of the property, which she inherited from her mother in 1943. It was purchased by her mother in 1928 for £2,300 but the present value would be in the region of £95,000.

21 Mrs. Gallagher has a small income of her own, amounting to about £1,400 per annum. Her husband was a consultant gynaecologist, but is now in semi-retirement. Of the children who still live at home, one is a schoolboy, three are solicitors and one is a barrister. She does not know the income of her husband or of the children who are working but she believes the aggregate of their income and her own would exceed £25,000. She received a form under the Act and completed it and returned it, leaving blank the section relating to aggregate income as she did not know what it was.

22 Gerard Gallagher, who is co-Plaintiff with his mother, Catherine Gallagher, said he was a solicitor practising in Dublin, and living with his mother at Hollybank House. He said he would regard it as a gross invasion of his privacy to have to disclose his income to his mother, and he was unwilling to do so.

The Other Evidence

23 The Plaintiffs called an accountant, Gerard McEvoy, who is a partner in the firm of Stokes, Kennedy, Crowley, and a specialist in taxation, in support of their claim. He proposed to demonstrate the impact of the Act, not only on the Plaintiffs, but on other persons differently...