O’Culachain (Inspector of Taxes) v McMullan Brothers Ltd

• Judge: Lardner J.
• Judgment Date: 31 July 1990
• Court: High Court

Corporation tax - principles to be applied in a case stated - whether canopies in forecourts of petrol filling stations constitute plant - whether part of the premises - whether part of setting in which business carried on - whether function is to provide shelter and light - whether function is to attract customers - whether view of law correct - whether correct tests applied - whether “setting” and “plant” mutually exclusive - whether conclusion is one which a reasonable judge could not have arrived at.

The question of law for the opinion of the High Court is whether I was correct upon the evidence before me and the findings which I made in holding that the said forecourt canopies qualified (sic) as “plant” within the meaning of ITA 1967 s 241(1) as amended when properly construed.

In a reserved judgment delivered on 31 July 1990 Lardner J held that Judge Martin on the evidence before him was correct in law in holding that the forecourt canopies qualified as plant. This decision is now appealed to the court.

Held, in the Supreme Court by Blayney J in dismissing the appeal, that the Circuit Court Judge’s conclusion on the facts was not one which a reasonable judge could not have reached and since his conclusion was not based on a mistaken view of the law Lardner J was correct in answering Judge Martin’s question in the case stated in the affirmative.

Legislation

ITA 1967 ss 241(1). FA 1971 s 26. CTA 1976 s 21.

Cases referred to in judgment

Breathnach v McCann 3 ITR 112, [1984] ILRM 679.

Cole Bros v Phillips [1981] STC 671.

Dickson v Fitch’s Garage [1975] STC 480.

Edwards (Inspector of Taxes) v Bairstow [1956] AC 14 at 33.

Jarrold v Good 40 TC 681.

Lyon, J & Co Ltd v Attorney General [1944] Ch 281.

Mara v Hummingbird Ltd 2 ITR 667, [1982] ILRM 421.

St John’s School Mount Ford & Knibbs v Ward 49 TC 523.

Wimpey v Warland [1989] STC 273.

Yarmouth v France [1880] 19 QBD 646.

High Court - 31 July 1990

Lardner J: see 3 ITR 284

Supreme Court - 7 July 1995

Blayney J. This is an appeal against a decision of Lardner J in a Revenue case. The appellant is an inspector of taxes and the respondent (to which I shall refer as “Maxol”) is the well-known Irish oil company. The issue concerns canopies in the forecourt of a petrol filling station. Maxol appealed against an assessment to corporation tax for the accounting period ended 31 December 1988 on the grounds that they were entitled to a deduction under ITA 1967 s 241(1), as amended by FA 1971 s 26, extended to corporation tax by CTA 1976 s 21 Sch 1 by reason of the expenditure of £70,932 in the erection of such canopies. Maxol claimed that the canopies were “plant” and it is common case that, if they were, the expense of their erection was a permissible deduction under the relevant sections. The Appeal Commissioners held that they were not plant. On appeal to the Circuit Court, His Honour Judge Martin held on the evidence before him that they were plant. The appellant, being dissatisfied with that decision, asked Judge Martin to state a case for the opinion of the High Court, which he duly did on 17 November 1989. The question posed in the case stated for the opinion of the High Court was as follows:

The question of law for the opinion of the High Court accordingly is whether I was correct upon the evidence before me and the findings which I made in holding that the said forecourt canopies qualifies (sic) as “plant” within the meaning of ITA 1967 s 241(1), as amended when properly construed.

In a reserved judgment delivered on 31 July 1990 Lardner J held that Judge Martin, on the evidence before him, was correct in law in holding that the forecourt canopies qualify as “plant” within the meaning of ITA 1967 s 241(1) as amended. The appellant now appeals that decision to this court.

The first matter that has to be considered is the manner in which the court should approach this type of appeal and this is very clearly set out by Kenny J in his judgment in Mara v Hummingbird Ltd [1982] ILRM 421 at page 426:

A case stated consists in part of findings on questions of primary fact, eg 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 from 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 the 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 make 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. The ways of conducting business have become very complex and the answer to the question whether a transaction was an adventure in the nature of trade nearly always depends on the importance which the Judge or Commissioner attaches to some facts. He will have evidence some of which...