Pigs Marketing Board ging Debtor

• Jurisdiction: Ireland
• Judgment Date: 26 April 1939
• Date: 26 April 1939
• Court: High Court

In re P. C. an Arranging Debtor.

In re P. C., An Arranging Debtor

In re G. C., An Arranging Debtor

In re C. C., An Arranging Debtor

Bankruptcy - Arrangement - Claim for income tax - Claim for unemployment insurance contributions - Claim for telephone services - Crown debts - Priorities - Preferential Payments in Bankruptcy (Ir.) Act, 1889 (52 & 53Vict. c. 60), s. 4 - Unemployment Insurance Act, 1920 (10 & 11 Geo. 5,c. 30), s. 22, sub-s. 6; s. 26, sub-s. 5 - Constitution of the Irish Free State (Saorstát Eireann) Act, 1922 (No. 1 of 1922), Arts. 51, 60 and 61 - Adaptation of Enactments Act, 1922 (No. 2 of 1922), s. 1 - Ministers and Secretaries Act, 1924) (No. 16 of 1924), s. 1 - Finance Act, 1924 (No. 27 of 1924), s. 38 - Constitution of 1937, Art. 49 - Constitution (Consequential Provisions) Act, 1937 (No. 40 of 1937), ss. 6 and 7.

Motion for directions on a memorandum of the Chief Registrar in Bankruptcy, in the cases of three arranging debtors, in regard to the claim by the Revenue Commissioners for income tax, by the Minister for Industry and Commerce for contributions to unemployment insurance, and by the Minister for Posts and Telegraphs for telephone charges.

The Chief Registrar's memorandum in regard to the claim for income tax in his view governed the three claims. This memorandum was as follows:—

"I refer to the claim of the Revenue Commissioners, dated 9th March, which I propose to admit for £2 18s. 6d.; as a preferential debt and £3 7s. 6d. as an ordinary debt. Sect. 4 of the Preferential Payments in Bankruptcy (Ir.) Act, 1889, provides that in the distribution of the property of a bankrupt, the parochial or local rates, wages and salaries therein specified, and all property or income tax assessed on the bankrupt up to the 5th of April next before the date of the order of adjudication, but not exceeding in the whole one year's assessment shall be paid in priority to all other debts. Sub-s. 2 enacts that the foregoing debts shall rank equally between themselves and shall be paid in full, unless the property of the bankrupt is insufficient to meet them, in which case they shall abate in equal proportion.

In In re Galvin(1) Palles C.B. decided that 'neither of these sections purports to deal with priority inter seof debts not specifically mentioned in them. Neither of

them purports to affect the priority of a Crown debt, not being for property or income tax, over a debt due to a subject, other than a debt for rates, wages or salaries.'

It seems clear that later in the judgment of the Chief Baron, he dealt with Crown debts which were not in the nature of income tax only, and that he regarded that when the specified portion of the income tax had been paid, the balance was not to be regarded as a Crown debt, but was to be paid pari passu with all other debts. His judgment was that the Act of 1889 made one year's assessment preferential and that there the rights of the Crown were exhausted, as to the balance, expressio unius est exclusio alterius.

The Revenue Commissioners rely upon the provisions of s. 38, sub-s. 2, of the Finance Act, 1924, that 'moneys due or payable to or for the benefit of the Central Fund shall have and be deemed always to have had attached to them all such rights, privileges, and priorities as have heretofore attached to debts due to the Crown.' This section seemingly was the result of the decision in In re Orr(1) which overlooked the terms of the judgment of the Chief Baron. The latter did not decide that any balance of income tax, not falling within the Preferential Payments in Bankruptcy (Ir.) Act, 1889, retained its original priority as a Crown debt.

Secondly, s. 38 of the Finance Act, 1924, has been affected by the terms of the new Constitution. Article 49 of that Constitution provides that 'all powers, functions, rights and prerogatives whatsoever exercisable before 11th December, 1936, . . . belong to the people. The effect of this Article of the Constitution is to sweep away expressly the continuance of the royal prerogative—even if it existed after 1922—in general matters, apart from statutory provisions.

The privileges and prerogatives attaching to debts due to the Crown mentioned in s. 38 of the Act of 1924, now belong to and are vested in the people, in pursuance of Art. 49 of the Constitution, and are no longer attached to moneys due to the Central Fund.

Art. 49, clause 2, provides that the said rights and prerogatives are to be exercised only by or on the authority of the Government; and the Government have not authorised any Department or Minister to exercise their privilege on behalf of the people, namely:—that the Revenue should recover any balance of income tax not

falling within the Preferential Payments in Bankruptcy (Ir.) Act, 1889.

There is no mention of any 'Central Fund' in the new Constitution, but Art. 11 states that 'all revenue shall form one fund.'"

(Signed) Gerald Horan.

Sect. 38 of the Finance Act, 1924, provides:—

"(1) Every sum due in respect of a tax or duty now under the care and management of the Revenue Commissioners or which is by this Act or shall by any future Act of the Oireachtas be placed under the care and management aforesaid, and also every fine, penalty, or forfeiture incurred in connection with any such tax or duty, shall be deemed to be a debt due to the Minister for Finance for the benefit of the Central Fund and shall be payable to the Revenue Commissioners and may (without prejudice to any other mode of recovery thereof) be sued for and recovered by action, or other appropriate proceeding, at the suit of the Attorney-General in any Court of competent jurisdiction.

(2) Moneys due or payable to or for the benefit of the Central Fund shall have and be deemed always to...