Madigan v Attorney General

• Jurisdiction: Ireland
• Judge: O'HIGGINS C.J.
• Judgment Date: 01 January 1986
• Neutral Citation: 1984 WJSC-SC 2512
• Court: Supreme Court
• Date: 01 January 1986

MADIGAN v A.G.

PATRICK J. MADIGAN and PATRICIA MADIGAN

v.

THE ATTORNEY GENERAL, THE REVENUE COMMISSIONERS and THE MINISTER FOR FINANCE

and

CATHERINE MARY GALLAGHER and GERARD GALLAGHER

v.

THE ATTORNEY GENERAL, THE REVENUE COMMISSIONERS and THE MINISTER FOR FINANCE

1984 WJSC-SC 2512

O'Higgins C.J.

Henchy J.

Griffin J.

Hederman J.

McCarthy J.

36/1984

THE SUPREME COURT

Subject Headings:

CONSTITUTION: statute

REVENUE: residential property tax

1 JUDGMENT OF THE COURT delivered the 20th day of November 1984 by O'HIGGINS C.J.

2 These appeals arise in two separate proceedings in which the same reliefs involving a declaration of unconstitutionality of Part VI of the Finance Act and consequential orders are claimed. As the claims are identical the actions were tried together in the High Court and, the claims having been refused, the consequent appeals were heard together in this Court. Although the relief claimed in each action is the same the circumstances of the Plaintiffs differ. This judgment which relates to and determines each of the claims made, takes such difference in circumstances into consideration.

3 Part VI of the Finance Act 1983created a new tax known as "residential property tax". This was done by Section 96 which provides as follows:

"96. Subject to the provisions of this Part and any regulations thereunder, with effect on and from the 5th day of 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 one and one half per cent of that net market value."

4 While the tax created by this Section is declared to be chargeable and leviable on all residential property other provisions of Part VI restrict its impact within narrow limits. The first restriction is contained in the definition of "net market value" in Section 95. This confines the operation of the new tax to residential properties which have a market value or an aggregate of market values in excess of £65,000. A second restriction arises from the definition of "relevant residential property" as meaning in relation to any person "any residential property of which he is the owner and which is occupied by him as a dwelling or dwellings". A further restriction arises from the provision made in Section 101 for an income exemption limit. This provision entitles a person assessable for tax to exemption if he claims and proves that the aggregate of his income for the year in question and that of every other person (other than an employee of his) who normally resides with him, does not exceed £20,000. The combined effect of these provisions is to make the new tax one which applies only to an owner who occupies residential property having a market value or an aggregate of market values in excess of £65,000 and who does not establish that the aggregate of his income with the incomes of those who normally reside with him (other than servants) does not exceed £20,000.

5 Other provisions of Part VI also require to be noted. By Section 95(2) the term "owner" in relation to residential property includes any person who, beneficially, whether solely, jointly or in common, holds any freehold interest in property, or who holds under any lease, agreement or licence the duration of which exceeds fifty years, or who is the owner of the equity of redemption where the property is mortgaged or who holds under any arrangement whereby either no rent or a token rent only is payable. Section 98 requires the market value of any property to be estimated on "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." In relation to the income exemption limit, "income" is defined in Section 95 in terms which mean total income from all sources without allowance for losses, retirement annuity premiums, pension contributions, personal interest or capital allowances in excess of basic rates. By Section 102 marginal relief in reduction of tax is provided where the aggregate relevant income does not exceed £25,000 and the assessable person has a dependent child or children resident with him. Part VI contains other provisions in relation to the delivery of returns, the assessment and payment of tax, provision for determination of market values and apportionment, the bringing of appeals and the imposition of penalties. It is not necessary, however, to refer to these provisions in any further detail.

6 The Plaintiffs in the first of these actions (hereinafter called "the Madigan action") are husband and wife. They own jointly a house in Foxrock, Co. Dublin, having an estimated market value of £250,000. The house is subject to a mortgage of £25,000. The husband is also the sole owner of a freehold property in Salthill, Co. Galway, with an estimated market value of £20,000. He has an income in excess of £25,000. His wife has no income. They have six children aged between 15 ½ and 3 years. It is clear that liability to the impugned tax in the case of these Plaintiffs arises both on the aggregate market values of the residential properties involved and on the personal income of the husband without aggregation with any other income. It is also clear that no question of marginal relief can arise in relation to liability although the couple have six dependent children. This is so because the husband's income is in excess of £25,000.

7 The Plaintiffs in the second action (hereinafter called "the Gallagher action") are mother and son. Mrs. Gallagher, the mother, lives with her husband and five of her six children at Hollybank House, Hollybank Avenue, Ranelagh, Co. Dublin. She is the owner of this house, having inherited it from her mother. Its market value is estimated to be £95,000. Mrs. Gallagher has an income of £1,400 per annum. Her husband is a gynaecologist but is semi-retired. Three of the children living in the house are solicitors, one is a barrister and one is a schoolboy. Mrs. Gallagher does not know the income of her husband or of the children but believes the aggregate of what they earn and of her own income would exceed £25,000. Gerard Gallagher, the other Plaintiff, is one of her sons. He is a solicitor and resides with his mother. He would not be willing to disclose his income to his mother and states that he would regard it as an invasion of privacy to be required to do so. Liability to tax on the market value of the property arises in this case because of the aggregation of incomes and the impossibility of proving that the total is less than £20,000.

8 The Finance Act 1983, Part VI of which is impugned in these proceedings, was in its passage through the Oireachtas a Money Bill within the meaning assigned to that term by Article 21 of the Constitution. By Article 22 of the Constitution such a Bill can only be initiated in Dail Eireann. This Article also provides that while a Money Bill must be sent to Seanad Eireann, that house cannot amend it. It may only recommend changes to Dail Eireann and such recommendations must be made within twenty-one days. Further, such a Bill cannot be referred to the Supreme Court on a question of repugnancy under Article 26. This special and particular treatment of a Money Bill, however, does not survive its enactment into law. As an Act of the Oireachtas, such a legislative measure must be subject to the same test, scrutiny and examination as any other Act and, if on the question being raised, unconstitutionality is...