Ryanair dac v Minister for Finance

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 28 June 2019
• Neutral Citation: [2019] IEHC 469
• Docket Number: [2018/10263P]
• Court: High Court
• Date: 28 June 2019

[2019] IEHC 469

THE HIGH COURT

THE COMMERCIAL COURT

Haughton Robert J.

[2018/10263P]

BETWEEN

RYANAIR D.A.C.

PLAINTIFF

AND

MINISTER FOR FINANCE, THE REVENUE COMMISSIONERS, IRELAND

AND

THE ATTORNEY GENERAL

DEFENDANTS

Interlocutory injunction – Preliminary reference – Taxes Consolidation Act 1997 s. 127B – Plaintiff seeking interlocutory orders – Whether damages were an adequate remedy

Facts: The plaintiff, Ryanair dac, in proceedings commenced by Plenary Summons issued on 23rd November, 2018, which were admitted to the Commercial List on 7th December, 2018, sought a series of declarations to the effect that s. 127B of the Taxes Consolidation Act 1997 is in breach of/incompatible with EU law, or alternatively, is unconstitutional. By notice of motion dated 3rd December, 2018 the plaintiff sought essentially two interlocutory orders: (a) an order temporarily restraining the operation/application of s. 127B to the plaintiff (and/or other airlines) pending a reference to the Courts of Justice of the European Union (CJEU) and/or pending the determination of these proceedings; (b) the making of a preliminary reference under Article 267 of the Treaty on the Functioning of the European Union (TFEU) to the CJEU in relation to the compatibility of s. 127B with EU law.

Held by the High Court (Haughton J) that the least risk of injustice would lie with refusing the interlocutory injunction sought by the plaintiff, that damages are an adequate remedy, and that the balance of convenience favours retention of the status quo.

Haughton J held that a reference in this case at this point would be wholly premature. He therefore declined to make any reference under Article 267 at this stage in the proceedings and he held that he would make an order dismissing the plaintiff’s application for the interlocutory orders.

Application dismissed.

JUDGMENT of Mr. Justice Robert Haughton delivered on the 28th day of June, 2019

4 Test for interlocutory injunctive relief

7 Background to the applications

34 Germany

35 Italy – cabin crew

36 Italy – pilots

37 Spain

43 The plaintiffs' claims based on discriminatory treatment of its aircrew and income tax disadvantage

48 Locus standi

55 Evidentially, has the plaintiff established an arguable case in respect the treatment of aircrew under s.127B?

63 Legally, has the plaintiff established an arguable case in respect of the treatment of aircrew under s.127B?

79 The plaintiffs' claim based on freedom of establishment- the case under Article 49

86 Discussion

95 “Where does the greatest risk of injustice lie?” and the adequacy of damages

110 Preliminary reference

1 In these proceedings, which were commenced by Plenary Summons issued on 23rd November, 2018, and which were admitted to the Commercial List on 7th December, 2018, the plaintiff seeks a series of declarations to the effect that s.127B of the Taxes Consolidation Act 1997 (‘ TCA 1997’) is in breach of / incompatible with EU law, or alternatively, is unconstitutional.

2 By notice of motion dated 3rd December, 2018 the plaintiff seeks essentially two interlocutory orders:

(a) An order temporarily restraining the operation/application of s.127B to the plaintiff (and/or other airlines) pending a reference to the Courts of Justice of the European Union (CJEU) and/or pending the determination of these proceedings;

(b) the making of a preliminary reference under Article 267 of the Treaty on the Functioning of the European Union (TFEU) to the CJEU in relation to the compatibility of s.127B with EU law.

While further injunctive reliefs are sought some of these were not pursued in argument and the essence of the injunctive relief sought is as described at (a) above. In particular the plaintiff did not pursue a mandatory interlocutory injunction exempting the plaintiff from the operation of s.127B. No argument that s.127B is unconstitutional was pursued at the interlocutory hearing.

3 The application was heard on affidavit over three days. The primary evidence on behalf of the plaintiff appears from affidavits sworn by the plaintiff's Chief Financial Officer, Neil Sorahan, on 28th November, 2018 (which confirms as correct the content of the Certificate of Anne Bateman, solicitor prepared for the plaintiff's application to enter the Commercial List), 13th December, 2018, 1st February, 2019 and 1st March, 2019, and an affidavit of the plaintiff's Director of HR Strategy Operations. Darrell Hughes sworn on 21st December, 2018 and 6th June, 2019, and the affidavit of Fintan Clancy, Solicitor in Arthur Cox and adviser to the plaintiff in relation to certain tax matters, sworn on 1st February, 2019. Replying affidavits on behalf of the defendants were sworn by Joanna O'Connor (solicitor with the CSSO) on 11th December, 2019 (opposing the application to admit the matter to the Commercial List), Joe Cullen, Head of Income Tax Policy Unit of the first named defendant on 18th January, 2019, and Áine Blackwell, Principal Officer of the Large Corporates Division, Revenue Commissioners, on 24th January, 2019, 6th March, 2019 and 12th June, 2019.

Test for interlocutory injunctive relief

4 Ultimately there was no dispute between the parties as to the test to be applied by the court in determining whether or not to grant an interlocutory injunction. In Okunade v. Minister for Justice [2012] 3 IR 152 Clarke J. modified the test in Campus Oil [1983] IR 88 in its application to judicial review proceedings, and in delivering the unanimous judgment of the Supreme Court he enunciated the following principles: -

‘As to the overall test I am of the view, therefore, that in considering whether to grant a stay or an interlocutory injunction in the context of judicial review proceedings the court should apply the following considerations: -

(a) the court should first determine whether the applicant has established an arguable case; if not the application must be refused, but if so then;

(b) the court should consider where the greatest risk of injustice would lie. But in doing so the court should: -

(i) give all appropriate weight to the orderly implementation of measures which are prima facie valid;

(ii) give such weight as may be appropriate (if any) to any public interest in the orderly operation of the particular scheme in which the measure under challenge was made; and,

(iii) give appropriate weight (if any) to any additional factors arising on the facts of the individual case which would heighten the risk to the public interest of the specific measure under challenge, not being implemented pending resolution of the proceedings;

but also,

(iv) give all due weight to the consequences for the applicant of being required to comply with the measure under challenge in circumstances where that measure may be found to be unlawful.

(c) In addition, the court should, in those limited cases where it may be relevant, have regard to whether damages are available and would be an adequate remedy and also whether damages could be an adequate remedy arising from an undertaking as to damages; and,

(d) In addition, and subject to the issues arising on the judicial review not involving detailed investigation of fact or complex questions of law, the court can place all due weight on the strength or weakness of the applicant's case.

5 In Dowling v. The Minister for Finance [2013] IESC 576, Clarke J., as he then was, indicated that the Okunade test should also be applied by the court when considering whether to grant interlocutory relief to restrain action being taken on foot of national legislation claimed to be contrary to EU law:

‘88. In those circumstances, it seems to the court that, in considering whether, at an interim or interlocutory stage, to restrain action said to be justified by a national measure whose validity is challenged on the basis of European Union law, this Court should apply the test in Okunade v. The Minister for Justice [2012] IESC 49, [2012] 3 IR 152 but should also have regard to the question of whether it can properly be said that a party might be deprived of an effective remedy by the court's decision. In assessing the latter position the court should have regard to [Zuckerfabrik] and allied caselaw’

Clarke J. considered this test compliant with EU law in that it applied national procedural rules to the question, ensuring “equivalence”, and provided an effective remedy.

In Dowling, Clarke J. also compared the first limb of the Campus Oil test, which is to ask whether the plaintiff has shown ‘a fair issue to be tried’, and the higher EU law test for interim measures under which the court must “entertain serious doubts” about the validity of the measure. At para.90 Clarke J. emphasised that the higher threshold test which applies in cases where an injunction is sought disapplying an EU measure on the grounds that it was contrary to EU law did not apply where an injunction was sought disapplying a national measure on the same grounds. I adopt that position. This challenge concerns the validity of domestic legislation under EU law. Further I am satisfied that it does not concern an application for mandatory interlocutory relief such as would require the plaintiff to show a ‘serious question’ or ‘strongly arguable’ grounds. Accordingly, the first question is whether the plaintiff has established an arguable case.

6 The defendant also argues a preliminary point that the plaintiff lacks locus standi in respect of so much of its claim as it asserts that s.127B breaches the relevant aircrews' rights to equality, non-discrimination, and the right to free movement under EU law. The legal principles relevant to this issue will be considered later in this judgment.

Background to the applications

7 Section 127B deals specifically with the income tax treatment of flight crew engaged in international traffic, and it was inserted into the TCA 1997 by s.16 of the Finance Act 2011. It...