Quigley v Harris

• Jurisdiction: Ireland
• Court: Supreme Court
• Judge: Mr. Justice Geoghegan
• Judgment Date: 01 December 2005
• Neutral Citation: [2005] IESC 79
• Docket Number: [2004 No. 1586 Sp. & S.C. No. 154 of 2005]
• Date: 01 December 2005

[2005] IESC 79

THE SUPREME COURT

Geoghegan J.

McCracken J.

Macken J.

Record No. 154/05

HARRIS v QUIGLEY & IRWIN

BETWEEN/

ROBERT HARRIS

Plaintiff/Respondent

and

J.J. QUIGLEY AND LIAM J. IRWIN

Defendants/Appellants

TAXES CONSOLIDATION ACT 1997 S1013(1)(d)

TAXES CONSOLIDATION ACT 1997 S933(4)

TAXES CONSOLIDATION ACT 1997 S942

TAXES CONSOLIDATION ACT 1997 S934(6)

TAXES CONSOLIDATION ACT 1997 S934

TAXES CONSOLIDATION ACT 19971997 PART 40

TAXES CONSOLIDATION ACT 1997 S933(6)(a)

TAXES CONSOLIDATION ACT 1997 S933(6)

TAXES CONSOLIDATION ACT 1997 S941(9)

TAXES CONSOLIDATION ACT 1997 S941(9)(b)

TAXES CONSOLIDATION ACT 1997 S943(1)

TAXES CONSOLIDATION ACT 1997 S865A

FINANCE ACT 2003

CRIMINAL ASSETS BUREAU (CAB) v MCDONNELL UNREP SUPREME 20.12.2000 2000/5/1609

DOLAN v NELIGAN 1967 IR 247

WOOLWICH BUILDING SOCIETY v IRC (NO 2) 1993 AC 70

KLEINWORT BENSON LTD v LINCOLN CITY COUNCIL 1999 2 AC 349

DEUTSCHE MORGAN GRENFELL GROUP PLC v INLAND REVENUE COMMISSIONERS 2005 EWCA CIV 78

O'ROURKE v REVENUE COMMISSIONERS 1996 2 IR 1

MURPHY v AG 1982 IR 241

TAXATION

income tax

Overpayment - Case stated pending - Refund - Unjust enrichment - Whether taxpayer entitled to refund consequent on Appeal Commissioners' determination - Whether excessive tax retained should be repaid pending final determination - O'Rourke v Revenue Commissioners [1996] 2 IR 1 and Woolwich Building Society v IRC [1993] AC 70 approved - Taxes Consolidation Act 1997 (No 39 ), ss 933(4) and (6), 934(6) and 941(9) - Defendant's appeal dismissed

STATUTORY INTERPRETATION

construction

1 JUDGMENT of Mr. Justice Geoghegan delivered the 1st December 2005

2 There is a net issue of law to be determined in this appeal namely, whether in the event of an appeal by the Revenue Commissioners to the High Court by way of case stated from a determination of the Appeal Commissioners under the Tax Acts, any overpayment of tax, (which in this case meant overretention of tax) resulting from the determination of the Appeal Commissioners, ought to be refunded to the taxpayer or on the other hand whether the Revenue Commissioners are entitled to retain the overpaid tax pending the outcome of the case stated to the High Court and any appeal therefrom to the Supreme Court. If the first of these options represents the correct legal position, the taxpayer fully concedes that if, as a consequence of the decision of the High Court or on appeal, the decision of the Supreme Court, he is found to be liable for more tax than had been payable pursuant to the determination of the Appeal Commissioners, he is obliged to repay that additional tax with interest as though it was arrears of tax. If the second of the two options represents the correct legal position, the appellants representing the Revenue Commissioners concede that in the event of the determination of the Appeal Commissioners being upheld the overpaid tax must, at that stage, be paid back to the taxpayer with interest as provided for in the Tax Acts.

3 As to which position is correct is entirely a matter of construction of the relevant statutory provisions.

4 The background facts are not in dispute. The respondent's claim is for a refund of €9,136,776.59 being a refund of tax for the year ended the 5th April, 2001, the period ended 31st December, 2001 and the year ended 31st December, 2002 and arising out of a determination made on the 29th October, 2004 by the Appeal Commissioner in a tax appeal taken by the respondent. The respondent is a taxpayer subject to Schedule E, who has his tax deducted at source. The respondent had become a partner in a limited partnership arising out of which he claimed to become entitled to the benefit of certain capital allowances. The partnership had been established under the laws of the Cook Islands and was for the purpose of carrying on the trade of operating high class luxury yachts and undertaking hospitality events and similar activities. The claim for capital allowances arose out of major refurbishment work which was carried out on a motor yacht which had been purchased by the partnership. Under Irish tax law there are restrictions placed on the tax relief available to limited partners. These restrictions, however, apply only to "limited partners" within the meaning of section 1,013(1)(d) of the Taxes Consolidation Act, 1997. The Appeal Commissioner determined that the respondent was not a "limited partner" within the meaning of that statutory provision and was not, therefore, subject to the restrictions. The effect of the Appeal Commissioner's determination was that the Revenue Commissioners had retained excessive sums as tax amounting to €9,136,776.59. Immediately following the determination by the Appeal Commissioners the Revenue Commissioners gave notice of an appeal by way of case stated. It is of some interest to note that the terms of the case stated have not even yet received final approval from the Appeal Commissioners. Quite apart from any inevitable delay in the drafting of a case stated and the approval by the Appeal Commissioners there would then follow the inevitable delays in obtaining a hearing in the High Court. If a point of law is considered by the Revenue Commissioners to be of such importance as to warrant an appeal by way of case stated to the High Court, it is highly likely that no matter what the outcome in the High Court there will be a further appeal to the Supreme Court. In each court there would be likely to be a reserved judgment and, therefore, if ultimately, the Appeal Commissioners" determination was upheld, the respondent would have been without the benefit of the monies which ought to have been repaid for a very considerable period. Such hardship would not, necessarily, be remedied by ultimate repayment with interest.

5 It is against this background that it is necessary to interpret the relevant statutory provisions.

6 The first of these is section 933(4) of the Taxes Consolidation Act, 1997. That subsection reads as follows:

"All appeals against assessments to income tax or corporation tax shall be heard and determined by the Appeal Commissioners, and their determination on any such appeal shall be final and conclusive, unless the person assessed requires that that person's appeal shall be reheard under section 942 or unless under the Tax Acts a case is required to be stated for the opinion of the High Court."

7 The reference to section 942 is a reference to appeals to the Circuit Court a matter which does not arise except inferentially in this case. The purpose of the subsection is to make clear that in the absence of either an appeal to the Circuit Court or an appeal by way of case stated to the High Court, the determination by the Appeal Commissioners becomes "final and conclusive". It is clear that in the event of such appeal or case stated the Appeal Commissioners' determination is not "final and conclusive". This is something heavily relied on by the appellants in resisting the claim for the refund. I will return in due course to this aspect of the appellants" argument. It is appropriate, however, to signpost at this stage that because a determination by the Appeal Commissioners has not become "final and conclusive" it does not necessarily follow that the claim for the refund is ill-founded. A High Court judgment is necessarily not final and conclusive if an appeal from it is pending before the Supreme Court but that does not mean that in the meantime the judgment of the High Court is not a lawful judgment capable of being executed upon. It is only if the High Court or the Supreme Court grants a stay of execution on the judgment that the execution process can be prevented notwithstanding the pendency of an appeal. Even then the High Court judgment remains lawful until overruled. I am not suggesting that the High Court analogy to which I have just referred could be directly relevant to the interpretation of a tax statutory provision but it does illustrate the conceptual normality, at least, of a determination by a lower tribunal being valid and enforceable notwithstanding an intended or actual appeal from it.

8 I now turn to the statutory provision which, in my view, is most relevant to the outcome of this appeal. That is section 934(6) of the same Act of 1997. The subsection reads as follows:

"Where an appeal is determined by the Appeal Commissioners, the inspector or other officer shall give effect to the Appeal Commissioners" determination and thereupon, if the determination is that the assessment is to stand or is to be amended, the assessment or the amended assessment, as the case may be, shall have the same force and effect as if it were an assessment in respect of which no notice of appeal had been given."

9 Section 934 is one of a group of sections dealing with appeals and contained in Part 40 of the Act of 1997. It is obvious on a reading of these sections that the wording of each section has been carefully thought out and for the most part each contingency and necessary exception has been expressly provided for. It is the appellants" case, however, that subsection (6) cited above has no application where an appeal is brought to the Circuit Court or on a case stated to the High Court. The learned trial judge in the High Court (Gilligan J.) seems to have taken the same view even though on other grounds he held in favour of the respondent. While, as far as possible, a taxing statute should be interpreted in the same way as any other statute and should not be interpreted, if at all possible, as to create an absurdity, nevertheless there is a countervailing principle that where there is an ambiguity a taxing statute will be interpreted in favour of the taxpayer. I do not consider that this court...