Nationwide Controlled Parking Systems Ltd v Revenue Commisioners

• Jurisdiction: Ireland
• Judge: Mr. Justice Tony O'Connor
• Judgment Date: 16 July 2019
• Neutral Citation: [2019] IEHC 524
• Docket Number: [2018 No. 154 R]
• Court: High Court
• Date: 16 July 2019

BETWEEN

NATIONWIDE CONTROLLED PARKING SYSTEMS LIMITED

APPELLANT

AND

REVENUE COMMISSIONERS

RESPONDENT

[2019] IEHC 524

[2018 No. 154 R]

THE HIGH COURT

Case stated – Clamping release fees – Value added tax – Commissioner of the Tax Appeals Commission seeking to state a case to the High Court – Whether the Commissioner was correct in law to determine that clamping release fees are not subject to value added tax in accordance with s. 3 of the Value-Added Tax Consolidation Act 2010 and Article 2 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax O.J. L347/1 11.12.2006

Facts: The appellant, Nationwide Controlled Parking Systems Ltd (NCPS), appealed the refusal by the respondent, Revenue Commissioners (Revenue), of a repayment claim on the 16th January, 2014, for value added tax (VAT) paid on clamping release fees in respect of the periods November-December, 2009, and September-October, 2013. Revenue refused the repayment claim on the basis that the clamping fees were subject to VAT in accordance with s. 3 of the Value-Added Tax Consolidation Act 2010 and Article 2 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax O.J. L347/1 11.12.2006. The total claim in contest was €1,778,458.00. Commissioner Gallagher of the Tax Appeals Commission, in her determination, concluded in favour of NCPS. The Commissioner, at the request of Revenue, pursuant to s. 949AQ of the Taxes Consolidation Act 1997, stated a case to the High Court on 2nd July, 2018, in relation to her determination dated 16th March, 2018. The specific question was: “Whether, upon the facts proved or admitted, I was correct in law to determine that clamping release fees are not subject to VAT in accordance with [s. 3 of the 2010 Act and Article 2 of the 2006 Directive].”

Held by O’Connor J that the Commissioner was incorrect in law to determine that all clamping release fees which were relevant to this appeal were not subject to VAT in accordance with s. 3 of the 2010 Act and Article 2 of the 2006 Directive. O’Connor J held that the Commissioner did not address the context of all the legal relationships and the reciprocal performance by the relevant parties to the arrangements which lead to the generation of significant income for NCPS.

O’Connor J invited counsel for both parties to reflect and obtain instructions before a final order was made. Counsel were asked to identify a convenient date for the Court to hear the parties before making a “just” order within the meaning of s. 949AR of the 1997 Act.

Case stated.

JUDGMENT of Mr. Justice Tony O'Connor delivered on the 16 ^th day of July, 2019

Table of contents

1. Introduction	2
2. Background	3
3. The Determination	3
4. Jurisdiction of the High Court on an appeal by way of case stated	4
5. Facts and documents	6
6. Relevant Statutory Provisions	7
7. Relevant Articles of the 2006 Directive	8
8. Submissions for Revenue	9
(i) VAT has a wide scope and covers activities of an economic nature	9
(ii) The removal of a clamp is a supply of services effected for consideration within the meaning of s. 3(c) of the 2010 Act and Article 2(l)(c) of the 2006 Directive	11
(iii) No requirement for there to be a contract	13
(iv) Questions to be asked by the Court	14
(v) The Tax Appeal Commissioner erred in her reasoning and in her over-reliance on UK case-law	15
(vi) Application to the facts of this case	16
9. Submissions for NCPS	17
(i) Clamping release fees are generated in the context of enforcement and outside the scope of contract	17
(a) Private car park enforcement	19
(b) Non-payment	19
(c) Breach of parking contract	19
(ii) There is no fundamental difference between the different methods of enforcement	20
10. Decision	21
(i) Common law remedies	21
(ii) Tripartite choices	22
(iii) Whether the rule for de-clamping is binding?	23
(iv) Economic Activity	24
(v) Trespass	25
(vi) Economic and commercial realities	25
(vii) Context	27
(viii) Other points made by NCPS	27
11. Conclusion	28
12. Postscript	28

1. Introduction

1 This judgment considers whether value added tax ( “VAT”) applies to clamping release fees charged by the appellant ( “NCPS”), who manages car parks and controls other privately owned spaces. It arises from a case stated on 2 ^nd July, 2018, by Commissioner Gallagher of the Tax Appeals Commission ( “the Commissioner”), at the request of the respondent ( “Revenue”), pursuant to s. 949AQ of the Taxes Consolidation Act 1997, ( “ TCA”). in relation to her determination dated 16 ^th March, 2018.

2 The specific question is:-

“ Whether, upon the facts proved or admitted, [as described at para. 4, with the documents listed at para. 7 and exhibited in the case stated], I was correct in law to determine that clamping release fees are not subject to VAT in accordance with [s. 3 of the Value-Added Tax Consolidation Act 2010 ( “the 2010 Act”) and Article 2 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax O.J. L347/1 11.12.2006 ( “the 2006 Directive”)].”

2. Background

3 NCPS appealed the refusal by Revenue of a repayment claim on the 16 ^th January, 2014, for VAT paid on clamping release fees in respect of the periods November-December, 2009, and September-October, 2013. Revenue refused the repayment claim on the basis that the clamping fees were subject to VAT in accordance with s. 3 of the 2010 Act and Article 2 of the 2006 Directive. The total claim in contest is €1,778,458.00.

3. The Determination

4 The Commissioner in her determination concluded in favour of NCPS as follows on p. 23:-

“i. In accordance with Manchester Airport, VCS and Inland Fisheries, a Court has power to grant remedies to a licensee which will protect but not exceed his legal rights under the licence and these remedies may include an order for possession.

ii. By parking without ever purchasing a ticket or permit, or by remaining parked after a ticket or permit has expired, the motorists become a trespasser. The Appellant is entitled to pursue the remedy of a Court order for possession and/or damages to vindicate its rights as licensee. The Appellant's preferred enforcing mechanism was to immobilise the vehicles of trespassing motorists by applying a wheel clamp.

iii. At the point of application of the wheel clamp, there is no longer a contract in existence between the Appellant and the motorist because, either the contract has expired or the motorist is parked in breach of its terms. Either way, the motorist has become a trespasser.

iv. In other instances, there was no contract between the Appellant and the motorist to begin with as no ticket or permit was ever purchased and in this situation the motorist was a trespasser from the outset.

v. The monies generated on foot of clamping release fees are generated in the context of enforcement of the Appellant's rights as licensee against trespassing motorists. It follows that these monies are in the nature of damages for trespass or a payment in lieu thereof and fall outside the scope of VAT.

vi. I determine that clamping release fees paid to the Appellant comprise payments in the nature of or in lieu of damages for trespass. Those monies do not comprise a supply of services for consideration and are not subject to VAT in accordance with section 3 [of the 2010 Act and Article 2 of the 2006 Directive].”

4. Jurisdiction of the High Court on an appeal by way of case stated

5 Section 949AQ of the TCA (as inserted by Finance (Tax Appeals) Act 2015, which came into operation on the 21 ^st March 2016) provides for how a case stated is prepared and what it should contain.

6 Section 949AR(1) of the TCA provides that the High Court:-

“(a) shall reverse, affirm or amend the determination of the [Commissioner], (b) shall remit the matter to the [Commissioner] with its opinion on the matter, or (c) may make such other order in relation to the matter as it thinks just, and may make such order as to costs as it thinks fit.”

7 There is little controversy between the parties about how a judge should approach this case stated. Kenny J. in Mara (Inspector of Taxes) v. Hummingbird Ltd [1982] ILRM 421 at p. 426 explained:-

“A case stated consists in part of findings on questions of primary fact, e.g. with what intention did the taxpayers purchase the Baggot Street premises. These findings on primary facts should not be set aside by the courts unless there was no evidence whatever to support them. The commissioner then goes on in the case stated to give his conclusions or inferences on these primary facts. These are mixed questions of fact and law and the court should approach these in a different way. If they are based on interpretation of documents, the court should reverse them if they are incorrect for it is in as good a position to determine the meaning of documents as is the commissioner. If the conclusions from the primary facts are ones which no reasonable commissioner could draw, the court should set aside his findings on the ground that he must be assumed to have misdirected himself as to the law or made a mistake in reasoning. Finally, if his conclusions show that he has adopted a wrong view of the law, they should be set aside. If however they are not based on a mistaken view of the law or a wrong interpretation of documents, they should not be set aside unless the inferences which he made from the primary facts were ones that no reasonable commissioner could draw.” (emphasis added).

8 Blayney J. in Ó Culachain v. McMullan Brothers Ltd [1995] 2 I.R. 217, cited by the Supreme Court in Mac Cárthaigh v. Cablelink Ltd [2003] 4 I.R. 510, further summarised as follows at pp. 222-223:-

“(1) Findings of primary fact by the judge should not be disturbed unless there is no evidence to support them.

(2) Inferences from primary facts are...