Used Car Importers of Ireland Ltd v Minister for Finance

CourtCourt of Appeal (Ireland)
JudgeMr. Justice Gerard Hogan
Judgment Date15 December 2017
Neutral Citation[2017] IECA 327
Date15 December 2017
Docket NumberNeutral Citation Number: [2017] IECA 327 Record No's 2014 1170 2014 1210 [Article 64 transfer]
- AND -



[2017] IECA 327

Neutral Citation Number: [2017] IECA 327

Record No's 2014 1170

2014 1210

[Article 64 transfer]


Practice & procedure – Costs – Security for costs – Claim for review of Revenue’s Vehicle Registration Tax system – Application for security of costs on appeal

Facts: The appellant was an importer of used vehicles from other right-hand drive countries such as Japan and the North. The appellant considered that the rate of Vehicle Registration Tax was too high on first registration, and sought to challenge the entire system operated by the Revenue Commissioners. The High Court had dismissed the appellant’s claim and had made an order for costs. The substantive matter had been transferred on appeal to the Court of Appeal, but this hearing concerned an application for security of costs by the respondents.

Held by the Court that the application would be granted. The Court stated the Rules of the Superior Courts gave the Court of Appeal jurisdiction to grant an order for security of costs, and considered the jurisprudence applicable. The Court was persuaded that the appellant’s impecunious nature and the absence of countervailing circumstances justified granting the application. Midland Bank Ltd v Crossley-Cooke [1969] IR 56 and Farrell v Bank of Ireland [2012] IESC 43 considered.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 15th day of December 2017

In these proceedings the plaintiff company, Used Car Importers of Ireland Ltd., (‘UCII’) has challenged the entire system of vehicle registration tax (‘VRT’) as provided for by the Finance Act, including the manner in which it has been operated by the Revenue Commissioners. As its name implies, UCII specialised in the importation of used cars from other right-hand car markets and where vehicle taxes (however described) tended to be lower. Most of the vehicles were imported directly from Japan, but the evidence also established that 44 vehicles were imported from Northern Ireland.


UCII maintains that the system as operated is ultra vires the parent legislation because it contends that the Revenue Commissioners have adopted an artificial and non-transparent method of valuing imported cars, thereby inflating the true value of these vehicles. The effect of this was that – or so the argument ran – these used vehicles attracted a much higher registration tax when they were first presented for registration upon arrival in the State. The company also contends that insofar as the (allegedly) arbitrary method of the valuation of the vehicles is in fact intra vires the parent Act, the said legislation is unconstitutional, which argument is based on case-law such as Brennan v. Attorney General [1984] I.L.R.M. 355. It further contends that the VRT system violates Article 78 of the Sixth VAT Directive (now Directive 2006/112/EC) by providing for a tax to be calculated on the value of the vehicle (including the VAT element) of that vehicle.


Although these proceedings were commenced as far back as 1995, quite remarkably they have not yet come to a final conclusion. The High Court proceedings were, admittedly, determined in 2012 following a 33 day hearing. Some measure of the complexity of the issues presented on this appeal can be gauged by the fact that the judgment of Murphy J. runs to over 200 pages. The plaintiff company's action was, however, dismissed and an order for costs was made against it.


The plaintiff duly lodged an appeal with the Supreme Court, but that appeal was transferred to this Court following the establishment of this Court on 28th October 2014 pursuant to Article 64 of the Constitution.


The issue which is presented now is whether the State defendants are entitled to security for costs in respect of this appeal. It should be said immediately that it is accepted that UCII faces considerable financial difficulties and it is accepted that the company is not currently in a position to discharge the High Court order for costs.

The jurisdiction to order security for costs on appeal to the Court of Appeal

The first thing to be considered is the basis of this Court's jurisdiction to order security for costs. The State's motion for security was issued on 27th April 2016 and the basis for the security sought was expressed to be either s. 390 of the Companies Act 1963 (‘the 1963 Act’) or s. 52 of the Companies Act 2014 (‘the 2014 Act’) or Ord. 86, r. 9. This jurisdictional issue is of some importance because there are or, at least, may be differences between the various statutory provisions or Rules of the Superior Courts so far as the requirement to order security is concerned.


A further complication is presented by the fact that s. 52 of the 2014 Act came into force on 1st June 2015 and to that extent s. 390 of the 1963 Act is no more. It is true that the motion which was issued post-dated the repeal of s. 390 of the 1963 Act, but it is at least arguable that given that s. 390 of the 1963 Act was in force at the date on which the proceedings were commenced and, indeed, on the date on which the original appeal to the Supreme Court was lodged it nonetheless applies to this motion. What is clear, however, that if an order for security is made under s. 390 of the 1963 Act it applies to the full quantum of the costs: see Lismore Homes Ltd. v. Bank of Ireland (Finance) Ltd. [2001] IESC 79, [2001] 3 I.R. 536. The wording of s. 52 of the 2014 Act is slightly different again from that of s. 390 of the 1963 Act and there is, accordingly, an argument that the full quantum requirements of Lismore Homes no longer apply even where security is directed under the terms of the new s. 52.


Some of these issues were raised by members of the Court with counsel in the course of the hearing of this application. Counsel for the State, Mr. Maurice Collins S.C., acknowledging the existence of some of the legal issues associated with the statutory provisions, elected to ground the application for security on the provisions of Ord. 86, r. 9, albeit that he submitted that some of the existing case-law arising under s. 390 of the 1963 Act was at least applicable by analogy in respect of any such application.

The provisions of Order 86, r. 9

Order 86, r. 9 provides:

‘The Court of Appeal may under special circumstances direct that a deposit or other security in the amount fixed by the Court of Appeal be made or given for the costs to be occasioned by any appeal.’


This language is similar – but not identical to – the wording of the former Ord. 58, r. 17 which applied to appeals to the Supreme Court prior to the establishment of this Court in October 2014.


The reference to ‘special circumstances’ may, however, be taken to imply that the requirement as to security is generally not required and is, to some extent, at least, confined to special or clearly identified categories of cases. While the categories of what may constitute ‘special circumstances’ for the purposes of Ord. 86, r. 9 are never closed, the existing case-law dealing with the analogous provisions of the (old) Ord. 58, r. 17 had identified a number of categories. In one of the leading authorities on the point, Midland Bank Ltd v. Crossley-Cooke [1969] I.R. 56, 61, Walsh J., having reviewed relevant authorities up to that time, said the following:

‘Four points emerge clearly from these cases. They are, first, that the Court was free to order security in any type of case. Secondly, that poverty alone was not sufficient to warrant the making of such an order. Thirdly, that poverty, or insufficiency of assets on the part of the appellant, was an essential prerequisite for the making of an order. Fourthly, if a point of law of public importance was in issue, that the Court would not make such an order, even if all the other circumstances existing in the case would themselves have ordinarily caused the Court to make the order, if the effect of making the order would be to prevent the point of law in question being decided. It would appear that in the circumstances of any particular case the Court could have felt itself justified in making such an order when there was a combination of poverty of the appellant and any one or more of the several factors mentioned in those cases, such as a party being resident out of the jurisdiction, or there being no apparent prima facie grounds for the appeal, or the complexity of the issues, or long delays on the part of the appellant in the conduct of the litigation, or where the appellant is simply a nominal appellant; or, where there are several appellants and poverty is common to each of them, a combination of that and one or more of the other factors even if the other factors affect only one of the appellants.’


It is worth emphasising, however, the application for security at issue in Crossley-Cooke concerned a natural person. As I...

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