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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> McMahon (Inspector of Taxes) v. Murphy [1988] IEHC 5 (25 November 1988)
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Cite as: [1988] IEHC 5
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1988 No. 816R
THE HIGH COURT (REVENUE)
BETWEEN
J. McMAHON (INSPECTOR OF TAXES)
APPELLANT
AND
ALBERT NOEL MURPHY
RESPONDENT
Judgment of Mr. Justice Lynch delivered the 25th day of November, 1988.
This matter comes before the High Court by way of Case Stated by Circuit Judge Fawsitt of the Cork Circuit Court at the request of the Appellant The Inspector of Taxes pursuant to Section 428 and Section 430 of The Income Tax Act 1967 and the Fourth Schedule, paragraph 8 (2) (b) of the Capital Gains Tax Act 1975.
The learned Circuit Court Judge had only one matter to decide-in the appeal before him namely the market value on the 6th of April 1974 of 73 acres of the lands of Inchinashingane situate about two and a half miles south of the town of Macroom in the County of Cork. The facts found in the Case Stated may be summarized as follows.
The Respondent purchased the 73 acres in question for £.4,950 in the year 1961. The land is situate in the valley of the River Lee close to but not visible from the Cork to Macroom Road. The land is good agricultural quality level to gently rolling. The holding was a compact farm with good frontage on two roads. There was a well on the lands and the River Lee was within easy access. Electricity was also available in the vicinity. The land was zoned for agricultural use falling outside the area in the immediate vicinity of the town of Macroom which was zoned for industrial development and the 1972 development plan for the town of Macroom described the area as one of little development.
In 1978 the Respondent was approached by a Mr. Fitzgerald on behalf of a prospective purchaser whose identity was not at first revealed to the Respondent but who in fact was the Ballyclough Co-operative Society Limited. The Society was interested in buying some of the 73 acres of land. The Respondent initially looked for £10,000 per acre but finally agreed on £7,000 per acre for 43 acres. An option was given to the purchaser on that basis subject to the purchaser obtaining planning permission for the erection of a milk processing plant. The Respondent had never previously applied for planning permission and the lands had been farmed up to the date of sale. Planning permission having been duly obtained a contract was entered into on the 9th day of April 1979 whereby the Respondent sold the said 43 acres portion of the said lands to the Ballyclough Co-operative Society Limited for £313,500. The Society first contemplated the purchase of these lands in the year 1978 and was not in the market for such a site in the Macroom area on the 6th of April 1974.
The Respondent's Auctioneer valued the property at £292,000 at the 6th of April 1974 taking into account the development qualities of the land. The Revenue valuer valued the property at £58,400 as agricultural land at the 6th of April 1974. A price of £292,000 for the 73 acres represents £4,000 per acre and a price of £58,400 represents £800 per acre.
SUBMISSIONS
It was submitted on behalf of the Appellant Inspector that the evidence given before the learned Circuit Court Judge could not justify his finding of a value of £3,000 per acre for 73 acres on the 6th of April 1974. In particular it was urged that as there was evidence adduced on behalf of the Respondent and uncontradicted that four and three quarter acres of land in Macroom town which were zoned for industrial development was sold for £14,628 that is to say just over £3,000 per acre in February 1974 it was impossible for as large a unit as 73 acres situate two and a half miles outside Macroom and zoned for agricultural use to have a value of £3,000 per acre.
It was sumbitted on behalf of the Respondent that the appeal before the learned Circuit Court Judge and his decision thereon was one of fact only and that this appeal by way of Case Stated was really misconceived. Counsel submitted that this was the first ever attempt to appeal to the High Court from a decision of a Circuit Court Judge merely on the value of property. Counsel referred to the history of the appeal by way of Case Stated and the limitations of the jurisdiction of the High Court on such an appeal as set out in Section 428 and in particular subsection (6) of The Income Tax Act 1967. Counsel further submitted that the learned Circuit Court Judge had to decide on values ranging on the evidence from £800 to £4,000 per acre and that having found the value to be £3,000 per acre that should be the beginning and end of this Case Stated.
The Law and Conclusions
The case as argued before me has really come down to the question whether or not there was evidence before the learned Circuit Court Judge to support his valuation of £3,000 per acre. This is indeed a very unusual question to arise on a Case Stated especially as there is no requirement that the Circuit Judge should state or include or summarize the evidence given before him in the Case Stated at all. He certainly should state the facts as found by him, his decision thereon and then the question of law arising on his decision in the light of the facts so found. In paragraph 11 of the Case Stated the learned Circuit Court Judge says
"Dissatisfaction was immediately expressed on behalf of the inspector with my decision. I stated that in my view the matter was purely one of fact and did not involve any point of law for the consideration of the High Court."
I think that the learned Circuit Court Judge's statement that the matter was purely one of fact is not without some force having regard to the task which it is suggested should be undertaken by the High Court now on this Case Stated. It seems to be suggested that the High Court should examine the evidence given before the Circuit Judge without the benefit of any transcript thereof just as the Supreme Court does in an appeal from the High Court having the benefit of a transcript of the evidence given before the High Court.
In the case of Irish Agricultural Machinery Limited .v. S.-O'Culachain (Inspector of Taxes) decided on the 6th of
February 1987, Murphy J., was asked to have regard to notes of evidence set out in a Schedule to the Case Stated but in respect of which the Circuit Court Judge had made no particular findings. In response to this request Murphy J. stated in his Judgment:
"I declined to have regard to the notes of evidence aforesaid on the basis that it comprised or included material in respect of which the learned trial judge expressly stated that he had made no particular findings. It seems to me unthinkable that on an appeal by way of Case Stated the appellate tribunal could consider facts and form a view thereon which might be in conflict with the view which the court of first instance would have taken if it had felt it necessary to form a decision thereon. Furthermore I would be reluctant to accept that it is appropriate for a court or tribunal stating a case to incorporate therein a detailed note or transcript of the evidence given viva voce before it. In principle this is unnecessary for resolving a disputed question of law and in practice it would be very difficult if not impossible without far-reaching changes in the facilities available to many courts and tribunals for recording the evidence given before them."
In Hinchcliffe (Inspector of Taxes) v. Crabtree 47 TC 419 Lord Reid in the House of Lords emphasised that the inclusion of evidence as distinct from findings of fact in a Case Stated of this nature is "most regrettable". On the other hand in Mara (Inspector of Taxes) v. Hummingbird Limited (1982) ILRM 421, Kenny J., in giving the Judgment of the Supreme Court stated at page 426 as follows:
"A case stated consists in part of findings on questions of primary fact, e.g. with what intention didthe taxpayers purchase the Baggot Street premises. These findings on primary facts should not be set aside by the courts unless there was no evidence whatever to support them. The commissioner then goes on in the case stated to give his conclusions or inferences from these primary facts. These are mixed questions of fact court should approach these in a different way. If they are based on the interpretation reverse them if they are a position to determine the commissioner. If the conclusions from the primary facts are ones which no reasonable commissioner could draw, the court should set aside his findings on the ground that he must be assumed to have misdirected himself as to the law or made a mistake in reasoning. Finally, if his conclusions show that he has adopted a wrong view of the law, they should be set aside. If however they are not based on a mistaken view of the law or a wrong interpretation of documents, they should not be set aside unless the inferences which he made from the primary facts were ones that no reasonable commissioner could draw."
Having regard to the foregoing views of the Supreme seems to me that I should have regard to the whole of the Case Stated including paragraphs five and six thereof which summarize the evidence for the Respondent and for the appellant respectively and also of course the findings of the learned Circuit Court Judge in paragraph 10 as to what evidence he accepted and what he rejected. The facts specifically found by the learned Circuit Court Judge are set out by him in paragraph four and have been summarized by me above. In paragraph 4(L)he sets out as though they were facts what are really the expert opinion evidence or conclusions of the valuers for the Respondent and for the Appellant respectively and I quote it again:
"The Respondent's auctioneer valued the property at £292,000 at 6th April 1974 taking into account the development qualities of the land. The Revenue valuer valued the property at £58,400 as agricultural land at 6th April 1974."
As I have already said a price of £292,000 represents £4,000 per acre and a price of £58,400 represents £800 per acre. The learned Circuit Court Judge found the value of the lands on the 6th of April 1974 to be £219,000 which represents £3,000 per acre and there was clearly evidence before him to support this finding or indeed any valuation not less than £800 per acre and not more that £4,000 per acre. The value of the 73 acres of land on the 6th of April 1974 was the one pre-eminent fact which the learned Circuit Court Judge had to find and determine in the appeal before him and he has done precisely that on foot of evidence which supports such finding.
The questions in the Case Stated will therefore be answered as follows:
"(a) Whether on the facts found by me and as set forth in this Case Stated there was evidence upon which I could properly decide that the market value of the Respondent's lands as at the 6th April 1974 was £219,000."
Answer: Yes
"(b) Whether Section 49(1) of the Capital Gains Tax Act 1975 requires or allows me to value the land as at the 6th April 1974 taking into account all reasonable potential uses to which the land can be put."
Answer: Yes
"(c) Whether I was erroneous in point of law in finding that the Revenue valuer had applied an incorrect principle and a wrong method in arriving at his valuation."
Answer: No
"(d) Whether the facts found are such that no person acting judicially and properly instructed as to the relevant law could come to the determination under appeal."
Answer: No
Finally, I would like to make it clear that even if I disregarded the portions of the Case Stated reciting evidence as distinct from finding facts I would still be of the same views.