Quigley v Harris
| Jurisdiction | Ireland |
| Judge | Miss Justice Laffoy |
| Judgment Date | 28 November 2008 |
| Neutral Citation | [2008] IEHC 403 |
| Court | High Court |
| Docket Number | [2006 No. 572 R] |
| Date | 28 November 2008 |
[2008] IEHC 403
THE HIGH COURT
BETWEEN
AND
TAXES CONSOLIDATION ACT 1997 S941
TAXES CONSOLIDATION ACT 1997 S1013
FINANCE ACT 2000
TAXES CONSOLIDATION ACT 1997 S1013(2)
TAXES CONSOLIDATION ACT 1997 S305
TAXES CONSOLIDATION ACT 1997 S1013(1)
FINANCE ACT 1986 S46
FINANCE ACT 2005 S37
CRONIN (INSPECTOR OF TAXES) v CORK & COUNTY PROPERTY CO LTD 1986 IR 559
FINANCE ACT 1998
TAXES CONSOLIDATION ACT 1997 S1013(1)(a)
TAXES CONSOLIDATION ACT 1997 S1013(1)(b)
TAXES CONSOLIDATION ACT 1997 S1013(1)(c)
TAXES CONSOLIDATION ACT 1997 S1013(1)(d)
PARTNERSHIP ACT 1890 (UK)
LIMITED PARTNERSHIPS ACT 1907 S4(1) (UK)
LIMITED PARTNERSHIPS ACT 1907 S4(2) (UK)
LIMITED PARTNERSHIPS ACT 1907 S5 (UK)
LIMITED PARTNERSHIPS ACT 1907 S6 (UK)
LIMITED PARTNERSHIPS ACT 1907 S6(1) (UK)
LIMITED PARTNERSHIPS ACT 1907 S8 (UK)
LIMITED PARTNERSHIPS ACT 1907 S9 (UK)
LIMITED PARTNERSHIPS ACT 1907 S10(1) (UK)
INVESTMENT LIMITED PARTNERSHIPS ACT 1994
MURPHY INVESTMENT LIMITED PARTNERSHIPS 1994 1 (11) CLP 287
INVESTMENT LIMITED PARTNERSHIPS ACT 1994 S4(2)
INVESTMENT LIMITED PARTNERSHIPS ACT 1994 S6(2)
INVESTMENT LIMITED PARTNERSHIPS ACT 1994 S6(3)
INVESTMENT LIMITED PARTNERSHIPS ACT 1994 S3
INVESTMENT LIMITED PARTNERSHIPS ACT 1994 S43
MEMEC PLC v COMMISSIONERS OF INLAND REVENUE 71 TC 77
KUTCHERA v BUCKINGHAM INTERNATIONAL HOLDINGS LTD 1988 IR 61
REVENUE COMMISSIONERS v DOORLEY 1933 IR 750
HARRIS v QUIGLEY & IRWIN 2006 1 IR 165
BENNION STATUTORY INTERPRETATION: A CODE 4ED 2002 1027
INSPECTOR OF TAXES v KIERNAN 1981 IR 117
LINDLEY & BANKS LINDLEY & BANKS ON PARTNERSHIP 18ED 2002 841
LINDLEY & BANKS LINDLEY & BANKS ON PARTNERSHIP 18ED 2002 842
LIMITED PARTNERSHIPS ACT 1907 S10 (UK)
INVESTMENT LIMITED PARTNERSHIPS ACT 1994 S6
DEIGHAN v HEARNE 1986 IR 603
DEIGHAN v HEARNE 1990 1 IR 499
STATE (CALCUL INTERNATIONAL LTD & SOLATREX INTERNATIONAL LTD) v APPEAL COMMISSIONERS 1986 3 ITR 254
BOLIDEN LTD v LIBERTY MUTUAL INSURANCE CO 2007 85 OR (3D) 492
RAE (HM INSPECTOR OF TAXES) v LAZARD INVESTMENT CO 41 TC 1
GARLAND (HM INSPECTOR OF TAXES) v ARCHER-SHEE 15 TC 693
DREYFUS v THE COMMISSIONERS OF INLAND REVENUE 14 TC 560
MAJOR (INSPECTOR OF TAXES) v BRODIE & ANOR 1998 STC 491
Taxation - Income tax - Reliefs - Restrictions - Statutory interpretation - Principles governing interpretation of taxation statutes - Words and phrases - "limited partner" - Taxpayer's status - whether expression "general partner" in statute expressly and in clear and unambiguous terms encompasses person who is partner under partnership established in foreign jurisdiction whose liability is limited and who has no implied authority to bind firm but who is entitled to participate in management of partnership business - Whether taxpayer limited partner - Limited Partnership Act 1907, sections 3, 4, 5, 6 - Investment Limited Partnerships Act 1994, section 43 - Taxes Consolidation Act 1997, section 1013.
Facts: section 1013(2) of the Taxes Consolidation Act 1997 provides that "(a) Where, in the case of an individual who is a limited partner in relation to a trade, an amount may apart from this section be given or allowed under any of the specified provisions - (i) in respect of a loss sustained by the individual in the trade...in a relevant year of assessment, or (ii) as an allowance to be made to the individual for the relevant year of assessment either in taxing the trade or by means of discharge or repayment of tax to which he or she is entitled by reason of his or her participation in the trade, such an amount may be given or allowed...where the individual is a limited partner in relation to a trade by virtue of paragraph (d) of the definition of 'limited partner'... only against income consisting of profits or gains arising from the trade, and only to the extent that the amount given or allowed or, as the case may be, the aggregate amount in relation to that trade does not exceed the amount of his or her contribution to the trade at the relevant time." Section 43 of the Investment Limited Partnerships Act 1994 provides that "in any proceedings involving a limited partnership established under, or by its terms governed by, the law of another state, the liability of the partners, its organisation and internal affairs shall be determined according to the law of that state." The Appeal Commissioner determined that the taxpayer was a general, and not a limited, partner. The inspector of taxes appealed that determination by way of case stated to the High Court asserting that to qualify as a limited partnership, the partnership must not display any of the indicia of a general partnership. The taxpayer argued that his tax status as a limited partner was governed by the law of the foreign jurisdiction where it was based and not Irish law by virtue of section 43 of the Act of 1994 and that he did not come within the ambit of section 1013 of the Act of 1997.
Held by Ms Justice Laffoy in answering the question posed to the effect that the taxpayer did not fall within paragraph (d) of the definition of limited partner in s. 1013(1) of the Act of 1997, as amended, 1, that, the determination of whether the taxpayer was a limited partner by reference to paragraph (d) of the definition in section 1013(1) of the Act of 1997 so as to be subject to the restrictions on the availability of relief imposed by s. 1013 was a two stage process. The first stage was to determine the characteristics, rights and obligations of the taxpayer qua partner under the partnership by reference to the law of the foreign jurisdiction. That approach was mandated by common law and by section 43 of the Act of 1994. The second stage was to determine whether, applying Irish law, the characteristics, rights and obligations of the taxpayer qua partner matched the characteristics, rights and obligations of a general partner within the meaning of paragraph (d) in the context of section 1013 as a whole to the extent that one could conclude that the expression "general partner" in paragraph (d) clearly and unambiguously captured the taxpayer.
That the definition of "limited partner" in section 1013(1) of the Act of 1997 did not incorporate the definitions of general partner and limited partner contained in the Act of 1907 or the corresponding definitions contained in the Act of 1994 by reference, because those definitions were statute-specific.
Reporter: P.C.
Judgment of Miss Justice Laffoy delivered on 28th day of November, 2008.
These proceedings are by way of case stated under s. 941 of the Taxes Consolidation Act 1997 (the Act of 1997) by Ronan Kelly, Appeal Commissioner (the Commissioner), at the request of the appellant inspector of taxes (the appellant) following the Commissioner's finding for the respondent taxpayer (the taxpayer) on his appeal against assessments for income tax for the following periods and in the following amounts:
(a) for the year ended 5 th April, 2001, €3,166,025.87;
(b) for the period ended 31 st December, 2001, €3,408,336.72; and
(c) for the year ended 31 st December, 2002, €2,552,384.00.
In broad terms, the appeal concerned a claim by the Irish resident taxpayer to be entitled to set off against his general liability for income tax in this jurisdiction under Schedule E capital allowances and other reliefs (losses and interest incurred) in respect of expenditure incurred by him in his capacity as a partner in a limited partnership registered under the laws of Cook Islands, which was disallowed by the appellant. That partnership, which is known as the Christina Limited Partnership (the C.L. Partnership), carries on the business of the acquisition and operation of luxury yachts. A single net question is posed in the case stated for the opinion of the Court. Before identifying that question, I propose outlining the relevant taxation legislation which gives rise to the question.
The question posed on the case stated concerns the construction of one provision of s. 1013 of the Act of 1997. The Court is concerned with s. 1013 as amended with effect from 29 th February, 2000 by virtue of the provisions of the Finance Act 2000 but prior to its amendment by the Finance Act 2005.
The substantive provision of s. 1013 for present purposes is subs. (2). The following truncated version of subs. (2), as applicable at the relevant time and material to the issue with which the Court is concerned, illustrates how the issue on the case stated arises:
"(a) Where, in the case of an individual who is a limited partner in relation to a trade, an amount may apart from this section be given or allowed under any of the specified provisions -"
(i) in respect of a loss sustained by the individual in the trade ... in a relevant year of assessment, or
(ii) as an allowance to be made to the individual for the relevant year of assessment either in taxing the trade or by means of discharge or repayment of tax to which he or she is entitled by reason of his or her participation in the trade,
such an amount may be given or allowed -
(I) ...
(II) ...
(III) where the individual is a limited partner in relation to a trade by virtue of paragraph (d) of the definition of 'limited partner' and the relevant year of assessment is -
a (A) ...
b (B) in any other case, the year of assessment 1999 - 2000 or any subsequent year of assessment ...
only against income consisting of profits or gains arising from the trade,
and only to the extent that the amount given or allowed or, as the case may be, the aggregate amount in relation to that trade does not exceed the amount of his or her...
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