McLoughlin v Tuite

• Jurisdiction: Ireland
• Judge: Miss Justice Carroll
• Judgment Date: 01 January 1986
• Neutral Citation: 1985 WJSC-HC 2475
• Court: High Court
• Docket Number: [1983 No. 5172P],No. 5172P/1983
• Date: 01 January 1986

1985 WJSC-HC 2475

THE HIGH COURT

No. 5172P/1983

McLOUGHLIN v. TUITE

BETWEEN:

EDWARD McLOUGHLIN

PLAINTIFF

AND

THOMAS MARIE TUITE THE REVENUE COMMISSIONERS IRELAND AND THE ATTORNEY GENERAL

DEFENDANTS

Citations:

AG V CASEY 1930 IR 163

AG V SOUTHERN INDUSTRIAL TRUST 94 ILTR 161

CONSTITUTION ART 38.1

CUSTOMS CONSOLIDATION ACT 1876

CUSTOMS CONSOLIDATION ACT 1876 S186

CUSTOMS CONSOLIDATION ACT 1876 S197

CUSTOMS CONSOLIDATION ACT 1876 S204

CUSTOMS CONSOLIDATION ACT 1876 S205

CUSTOMS CONSOLIDATION ACT 1876 S233

CUSTOMS CONSOLIDATION ACT 1876 S256

ENFORCEMENT OF COURT ORDERS ACT 1926

FINANCE ACT 1982 S60(1)

FINANCE ACT 1982 S60(2)(d)

FINANCE ACT 1983 S94

FINANCE ACT 1983 S94(2)(e)(i)

FIRMSTONES'S CASE 20 EQ 524

INCOME TAX ACT 1918 S30

INCOME TAX ACT 1918 S30(1)

INCOME TAX ACT 1967 S172

INCOME TAX ACT 1967 S500

INCOME TAX ACT 1967 S500(1)

INCOME TAX ACT 1967 S500(2)

INCOME TAX ACT 1967 S504

INCOME TAX ACT 1967 S508

INCOME TAX ACT 1967 S512

INCOME TAX ACT 1967 S515

INCOME TAX ACT 1967 S516

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

MELLING V O MATHGHAMHNA 1962 IR 1, 97 ILTR 60

O'CROININ & QUINN V BRENNAN 1939 IR 274

SHERRY'S CASE 25 CH 692

Synopsis:

CONSTITUTION

Trial of offences

Criminal charge - Meaning - Revenue - Income tax - Income - Annual return - Failure to furnish - Imposition of statutory penalties - Validity of recovery of penalties - Action for recovery of penalties is not a trial of the taxpayer on a criminal charge within Article 38 of Constitution - Section 500 of Income Tax Act, 1967, not unconstitutional - (1983 No. 5172P - Carroll J. - 4/10/85). - [1986] IR 235 - [1986] ILRM 304

|McLoughlin v. Tuite|

REVENUE

Income tax

Income - Annual returns - Failure to furnish - recovery of statutory penalties - validity - Action for recovery of penalties is not a trial of the taxpayer on a criminal charge within Article 38 of Constitution - Section 500 of Income Tax Act, 1967, not unconstitutional - (1983 No.5172P - Carroll J. - 4/10/85). - [1986] IR 235 - [1986] ILRM 304

|McLoughlin v. Tuite|

WORDS AND PHRASES

"Criminal charge"

Revenue - Income tax - Annual returns - Failure to furnish - Action to recover statutory penalties - Action not a trial of taxpayer on a criminal charge - Constitution of Ireland, 1937, Article 38 - (1983 No.5172P - Carroll J. - 4/10/85). - [1986] IR 235 - [1986] ILRM 304

|McLoughlin v. Tuite|

1 Judgment of Miss Justice Carroll delivered the 4th day of October, 1985.

2 In this action the Plaintiff challenges the right of the first named Defendant, an Inspector of Taxes, to claim payment of penalties from the Plaintiff for failing to prepare and deliver returns of income on being required to do so.

3 The first Defendant issued a notice to the Plaintiff pursuant to Section 172 of the Income Tax Act 1967requiring the Plaintiff to prepare and deliver returns for the years 1972/73 to 1982/83, inclusive, within the period of twenty-one days limited by the notice. The Plaintiff failed to deliver the returns. The first Defendant sued the Plaintiff on foot of a Summary Summons claiming that the Plaintiff by virtue of Section 500 of the Income Tax Act 1967had become liable to pay and was indebted to the Minister for Finance for the benefit of the Central Fund in respect of the years 1972/73 to 1982/83, inclusive, for a penalty of £500 for each of these years. The total sum claimed was £5,500 being the aggregate amount of the penalties payable by the Plaintiff in respect of those years. The action proceeded to judgment and a return of null a bona was made on execution by the sheriff.

4 Section 500 of the Income Tax Act 1967provides:-

5 2 "(1) Where any person -

6 (a) has been required, by notice or precept given under or for the purposes of any of the provisions specified in column 1 or 2 of Schedule 15, to deliver any return, statement, declaration, list or other document, to furnish any particulars, to produce any document, or to make anything available for inspection, and he fails to comply with the notice or precept, or

7 (b) fails to do any act, furnish any particulars or deliver any account in accordance with any of the provisions specified in column 2 of that Schedule, he shall, subject to subsection (2) and to section 503 be liable to a penalty of £100 and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £10 for each day on which the failure so continues.

8 (2) Where the said notice was given under or for the purposes of any of the provisions specified in column 1 of the said Schedule and the failure continues after the end of the year of assessment following that during which the notice was given the first of the penalties mentioned in subsection (1) shall be £250.

9 (3) The preceding provisions of this section shall have effect subject to the proviso to section 169 (4) and the proviso to section 178 (1)."

10 By Section 60 (1) of the Finance Act 1982the sum of £100 in Section 500 (1) was increased to £500 and the sum of £250 in subsection (2) was increased to £800. By Section 60 (2) (d) of the same Act the words "and if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced to a further penalty of £10 for each day on which the failure so continues" have been deleted and in subsection (2) the word "penalty" is substituted for "first of the penalties".

11 Both the Plaintiff and the Defendants made written submissions and expanded them in argument. To summarise both cases briefly, the Plaintiff submitted:-

12 (1) The penalties imposed in Section 500 of the Income Tax Act 1967are punitive and proceedings for their recovery are trials of a criminal nature for the purpose of coming within the provisions of Article 38 (1) "No person shall be tried on any criminal charge save in due course of law"

13 (2) "Penalty" in this context is not to be confused with a penalty in a contract which is a provision for securing the due performance of a contract. It is to be equated with a fine, i.e., a pecuniary punishment for an offence. Civil liability for a breach of statutory duty is different to a penalty for such breach. For civil liability to arise there must be damage; penalties apply whether damage is caused or not. Their object is to punish in addition to any civil liability there may be.

14 (3) The reasoning of the courts as to the nature of offences contrary to the Customs Code are relevant to penalties imposed by the Income Tax Acts. Formerly penalties under the Customs Code were recovered in civil proceedings (See O'Cronin and Quinn .v. Brennan 1939 I.R. 274. They are now firmly regarded as criminal offences whether of a minor or non-minor character. See Melling .v. O'Mathghamhna & Aner. 1962 I.R. 1.

15 (4) The case of The Attorney General .v. Casey 1930 I.R. 163, which supports the view that the recovery of penalties under the Income Tax Code are not criminal in character, being a decision of the former Supreme Court, is not binding and has been wrongly decided.

16 The Defendants submitted:-

17 (1) The failure of the Plaintiff to make returns within a given period as required created a non-criminal liability for the payment of a fixed sum to the Exchequer.

18 (2) While the Oireachtas cannot dress up a criminal charge as a civil procedure, they can create a non-criminal liability. There is no reason why, if a fixed sum is exacted, it must be criminal. Payment of a sum of money is not per se punitive; even if there is a punitive element in it, it does not mean that it is inevitable criminal.

19 (3) While the Attorney General .v. Casey is not binding, it gives the correct analysis.

20 (4) The construction of the Act attracts the presumption of constitutionality. If it is possible as a legal concept that there can be created a civil liability to pay a liquidated sum without giving rise to a criminal charge, that is the construction the Court must give. It is only if no such construction is reasonably open to the Court, that a finding of repugnancy can be made. (see McDonald .v. Bord Na gCon 1965 I.R. 217 at 239).

21 (5) The Oireachtas set out to create a form of civil liability as shown by the following:-

22 (a) The precursor of Section 500 was Section 30 of the Income Tax Act 1918. In drafting Section 500 for the consolidation of the Income Tax Code in the 1967 statute, the Oireachtas avoided the language of a criminal charge. The word "guilty" and the words "committing an offence" which appear in Section 30 do not appear in Section 500.

23 (b) Under Section 508 an Inspector of Taxes is given power to sue for the recovery of the penalties in his own name by civil proceedings.

24 (c) A penalty payable for failure to make a return does not cease to be payable on the death of the taxpayer. It is recoverable as a debt against his estate (see Section 504). This is inconsistent with the nature of a crime. A prosecution cannot be commenced after the death of a wrongdoer.

25 (d) If the penalty is not paid, imprisonment does not result.

26 (e) By the same Act the Oireachtas have created criminal offences in Sections 515 and 516 (inter alia). They are clearly meant to be criminal. In Section 515 the penalty is expressed to be a "fine" of £100.

27 (f) Subsequent to the 1967 Act, the Finance Act 1983, Section 94, created a series of statutory offences under which subsection (2) (e) (i) corresponds to a requirement to make a return under Section 172.

28 "(2) a person shall without prejudice to any other penalty to which he may be liable, be guilty of an offence under this section if, after the date of the passing on this Act, he - .....

29 (e) knowingly or wilfully fails to comply with any provision of the Acts requiring -

30 (i) the furnishing of a return...