Supreme Court of Ireland Decisions

1. This is an appeal from an Order of the High Court dated 2nd February, 1999 in which O’Higgins, J. gave judgment for the Plaintiff against the Defendant for the sum of

2. £1,831,502.10 and costs. The claim, initiated by Summary Summons, was for a sum of

3. Assets Bureau pursuant to the provisions of section 10 of the Criminal Assets Bureau Act

4. The central issue in the appeal is whether the monies claimed were due and owing at
the date of the issue of proceedings.

5. In its application to the High Court for liberty to enter final judgment for the amount
of the claim the Plaintiff relied, inter alia , on a certificate issued pursuant to section 966 (5) (a) of the Taxes Consolidation Act 1997. That certificate is dated 3rd December 1998 and it certifies that “before the institution of the above entitled proceedings...” a sum set-out in the Summary Summons “... became due and payable by the [Defendant]... under assessments which had become final and conclusive ...”. [*2]

6. The certificate is signed by an Inspector of Taxes, an officer of the Revenue

7. Commissioners, who is also a bureau officer of the Criminal Assets Bureau. Pursuant to

8. Bureau and not in the name of the individual bureau officer.

9. Pursuant to the provisions of the 1997 Act the Certificate is evidence, until the

10. There were a number of assessments all of which are included in the total sum of the

11. In the High Court the learned High Court Judge initially found that the Plaintiff had

12. Much of the argument in the appeal concerned an interpretation of section 933 (1) (a) - (d) and 6 (a) in conjunction with 957 (2) (a) which are set-out hereunder. The interpretation of section 58 vis-à-vis section 992 also arises but I do not think it necessary to

13. The Defendant’s grounds of appeal focused primarily on the learned High Court

14. Judge’s findings that the monies claimed were due and owing at the date of issue of

15. For convenience I will deal with this point first. In order to do so it is sufficient to

16. The Defendant argues that the assessment could not have been made pursuant to that

17. Section 922 makes express provision for assessment in the absence of a return by the

18. Section 58 (1) provides that profits or gains shall be chargeable to tax notwithstanding that at the time of an assessment by an Inspector they were made from an unknown or unlawful source. Subsection (2) of the section provides that any such profits or gains shall be charged under Case IV of Schedule D and are to be described in the assessment as “miscellaneous income”.

19. Counsel for the Defendant, Mr Hunt, submitted that historically profits or gains from

20. This section was therefore, he submitted, the ‘charging’ section and the only one

21. In my view the submissions made on behalf of the Defendant are not well founded. It

22. Self-evidently, the liability of the tax payer arises under Schedule D even if they are profits or gains referred to in section 58. Accordingly, in my view the assessment of such profits or

23. In what I would call the primary submission of the Defendant, and the one which was fully argued before the High Court, it is contended that the sum claimed by the Plaintiff is not a sum which had become due and payable before the institution of proceedings and, therefore not recoverable. Counsel for the Defendant pointed out that the Plaintiff relied on the certificate of the inspector pursuant to 966 (5) (a) of the 1997 Act which certified that the [*8] monies in question had become “due and payable ...” “under assessments which have become final and conclusive”.

24. Counsel argued that the Plaintiff wrongly relied on section 933 (6) (a) for the purpose of establishing that the assessment was final and conclusive and thus due and owing at the time of the institution of proceedings. Subsection (6)(a) only applied where there was

25. As regards section 933 (1), the first thing that strikes one about paragraphs (a) to (c) is a lack of cohesion concerning the terminology used which seems to confuse the notion of an application for leave to appeal with that of an appeal simpliciter.

26. Paragraph (b) and paragraph (c) each refer to an “application” under paragraph (a) whereas paragraph (a) makes no reference to any sort of application but simply accords a right of appeal to the taxpayer against an assessment on giving notice to the inspector.

27. However, the Court must interpret the section in a schematic and contextual manner and what is clear is that the taxpayer is entitled to appeal against an assessment by an inspector provided he gives notice in writing to the inspector or officer concerned within 30 days of the notice of assessment.

28. Paragraph (b) clearly gives authority to the inspector to stop, so to speak, the appeal against assessment proceeding by refusing “the application” which can only be understood as referring to the appeal, if he is of the opinion that the taxpayer is not entitled to make such an appeal.

29. Although it is an obvious point I think it is important to underline that the inspector (or other officer) who has power to “refuse” the appeal is invariably the person who made the challenged assessment in the first place. It would be rather exceptional if an officer or official whose decision was being appealed could be the sole and final arbiter as to whether there was, on the facts of the particular case, a right of appeal. I would add that the grounds upon which an inspector could form the view that a taxpayer had no right of appeal against his assessment include a failure to deliver a return and the fact that the inspector is not satisfied [*12] with a return or its sufficiency. Even if in an ordinary case the former should be objectively ascertainable the second ground is much more susceptible to debate.

30. Not surprisingly, therefore paragraph (c) of the section makes express provision for an appeal to the Appeal Commissioners against the refusal by the inspector. This appeal must be made within 15 days. If there was not a right of appeal from a refusal, the right to appeal an assessment might well be viewed as being of very limited value if not illusory since an inspector, however much acting in good faith, would hardly be viewed as a detached and independent arbitrator as to whether an appeal should go ahead against his own assessment.

31. I now turn to the next step once the appeal against refusal has been lodged. In that event the Appeal Commissioners, having first asked the inspector to furnish them with a copy of the notice of refusal, are required, pursuant to paragraph (d), as soon as possible either to: -

32. In this case, following the appeal against the refusal, the Appeal Commissioners decided to have a hearing of the appeal on September 18, 1998.

33. Turning now to the first argument of the Plaintiff, although much of what I have to say in this regard is relevant also to the second argument.

34. It is clear from the provisions of this part of section 933 that should the Appeal Commissioners on hearing an appeal against a refusal by the inspector allow that appeal that the system of appeals provided for in the Act envisages that the original appeal against assessment would proceed. In that event there is no requirement that the taxpayer/Appellant take an additional further step to initiate a further appeal or indeed to reactivate the original [*13] appeal. Subsection (2) of section 933 imposes on the Appeal Commissioners the duty to appoint times and places for the hearing of appeals against assessments. On reading the section as a whole it appears clear that this is the subsection that comes into play once a taxpayer is successful in appealing against a refusal. On the other hand if the Appeal Commissioners reject the appeal against refusal that terminates the whole appeal process.

35. However, until the appeal against a refusal is determined, I am of the view that the original appeal must be considered in being, pending the determination of the appeal against refusal. Otherwise there would be no appeal to proceed should the taxpayer obtain a favourable ruling on the inspector’s refusal.

36. Moreover, if the Oireachtas intended that the consequence of a refusal by an inspector under paragraph (b) was that the assessment should be considered as one in respect of which no notice of appeal had been given one would have expected it to be expressly stated.

37. This is what the Act does when a notice of appeal has been served under paragraph (a) but subsequently an agreement in respect of the assessment has been made by the Inspector and the taxpayer. In such an event, the assessment, or amended assessment “shall have the same force and effect as if it were an assessment in respect of which no notice of appeal had been given.” [Section 933 (3) (b)]. Exactly the same terminology is used in subsection (6) (b) (failure to attend an appeal), subsection 6 (c) (certain defaults by the appellant) and section 934 subsection (6) (when the Appeal Commissioners have determined an appeal that the assessment should stand or be amended). A different formula but one to the same effect is used in section 957 subsection (5) where a notice of appeal which is invalid as regards an amount or matter in an assessment “shall, in so far as it relates to that amount or matter, be deemed not to have been brought.”

38. The logic of these express savings seems to me clear. The legislator obviously felt that where an appeal had defacto been brought pursuant to paragraph (a) of section 933 (1)

39. For all the foregoing reasons I do not consider that an appeal against an assessment of tax and an appeal against an inspector’s refusal of the former appeal can be considered as separate and distinct process. They are inextricably linked. Whether the appeal against an assessment of tax can proceed is contingent ultimately not on the inspector’s refusal but on the Appeals Commissioners decision, they being given exclusive jurisdiction to finally determine that question. Accordingly, in my view the sole refusal by an inspector of an appeal pursuant to paragraph (b) of section 933 (1) does not mean that there is a default of appeal within the meaning of subsection (6)(a) and therefore the Plaintiff’s first argument must fail.

40. I now turn to the second argument of the Plaintiff referred to above to the effect that the failure of the Defendant’s appeal against the Inspectors refusal had the retrospective effect of determining that as of the date of the issue of the proceedings there had been no valid appeal and therefore a default of appeal within the meaning of subsection (6)(a) - and this was the position at the date of the hearing of the High Court.

41. The argument has certain attractions because it is indeed the case, and not in contention between the parties, that as a result of the failure of the Defendant’s appeal against the inspector’s refusal, that the Defendant does not have a right of appeal against the assessment by virtue of Section 297, and never did.

42. However, I don’t think the matter is as simple as it might first appear. There are other factors which must be taken into account which I have already referred to above and which I think it is appropriate to recall in this context. The basis of the inspector’s refusal of the appeal on foot of section 933 (l)(b) is that he “is of the opinion” that the taxpayer “is not [*15] entitled to make such an appeal”. Once an appeal is taken by the taxpayer against the refusal it is exclusively for the Appeal Commissioners to determine whether the taxpayer is entitled to make such an appeal. Should the Appeals Commissioner decide in favour of the taxpayer they must then proceed, as indicated earlier in this judgment to hear and determine the appeal proper against the assessment to tax which, in principle, may lead to the assessment being revised. For the reasons stated above and in particular because the hearing of the appeal against the assessment of income tax would proceed without the need for any further or additional step by the taxpayer in the event of the appeal against refusal being successful, that appeal must be considered as being still pending unless and until the Appeal Commissioners determine that there is no right of appeal or the appeal is abandoned. In this case the foregoing elements were present at the time when the proceedings in this case were issued on the 14th July, 1998.

43. On the other hand if he does not appeal the refusal within the time prescribed that is the end of the matter and the refusal stands on the basis that the taxpayer had no appeal. This was not the position here where there was an appeal.

44. If the position contended for by the Plaintiff were correct it would mean that in every case in which there was a refusal by an inspector of an appeal against his own assessment the inspector or other officer would be entitled to issue proceedings for the amount of the assessment on foot of a summary summons. In such a case, once an appearance had been entered by the Defendant as required by the rules of the Superior Courts, the Plaintiff is entitled to apply to the High Court for liberty to enter final judgment. One can readily see that this could occur while the appeal against refusal was pending. Since it is the Appeals Commissioners and not the High Court which has competence to finally determine whether the taxpayer is entitled to appeal it is difficult to see how the High Court could enter final judgment against the taxpayer in those circumstances. Should the Revenue Commissioners [*16] (or as in this case, the Criminal Assets Bureau) wait until the appeal against refusal has been determined in favour of the Inspector, I do not consider that this can in principle alter the objective situation as it pertained on the date of the issue of proceedings. Either the assessment was final and conclusive on that date or it was not. The finality and conclusively of the assessment could be at best contingent only, that is to say contingent on a favourable outcome of the appeal against the Inspector’s refusal. Any other view would I think undermine if not negate the very idea of the appeal process envisaged by the Oireachtas particularly when the assessment in question was still subject to at least potential attack in the appeal process created by the statute.

45. Furthermore, a Defendant taxpayer is entitled to enter an appearance to the originating summary summons with a view to defending the claim as made when the proceedings are issued. It seems to me that such a Defendant would be placed in an invidious position and in a state of legal uncertainty if a claim was made in a summary summons for a liquidated sum alleged to be due and payable when in reality liability was contingent on a future event, that is to say, the outcome of his appeal against the Inspector’s refusal pending before the Appeal Commissioners and the ultimate fate of his appeal against the assessment on which the claim is based. This situation is perhaps illustrated by the statement in the indorsement of claim in a summary summons that in the event of the Defendant paying the amount of the claim and appropriate costs the proceedings would be stayed. A Defendant taxpayer who is in the middle of the statutory appeals process is hardly in a position to properly react to this statement in the writ if he is to fully enjoy the benefits of that appeal process as envisaged by the statute. In those circumstances a Defendant/taxpayer might well feel entitled to say -‘there is no need to engage in these High Court proceedings. I will pay the full amount of whatever assessment stands after the appeal process is completed’. [*17]

46. In my view the final adverse determination of the Defendant’s appeal against the Inspector’s refusal on the 18th September, 1998 does not alter the objective circumstances which existed at the time when the proceedings were issued in July of that year. The appeal process envisaged by the statute did not terminate until the determination and rejection of the Defendant’s appeal on the 18th September, 1998. It is as and from that date of final determination that the appeal against assessments maybe considered to be no longer in being. It is only at that point that the taxpayer may be considered to be a person who is in default of appeal within the meaning of subsection (6)(a).

47. For the foregoing reasons I think it would be contrary to the cohesive and schematic interpretation of the appeals process set out in section 933 if a taxpayer who had exercised his right of appeal under paragraph (a) and subsequently appealed against a refusal made under paragraph (b) were to be considered as being “in default of notice of appeal” within the meaning of subsection (6) of section 933 while the appeal against refusal was still pending. It was still pending on the 14th July, 1998 when these proceedings were initiated by summary summons.

48. There being no default of notice of appeal by the Defendant when the proceedings were issued the assessment in question cannot be considered for the purposes of subsection (6)(a) of section 933 as final and conclusive at the time when proceedings were instituted.

49. In the circumstances the Defendant has established, contrary to what was certified in the certificate issued pursuant to section 966 (5) (a), that the assessment had not become final and conclusive and therefore that the sums set-out in the summary summons had not become due and payable by the Defendant before the institution of these proceeding on July 14 ^th 1998.

50. As a subsidiary and alternative argument the Plaintiff sought to contend that it was entitled, in any case, recover the monies in question on foot of the certificates issued pursuant [*18] to section 966 (5) (b) and section 1080 (4) of the 1997 Act which certified, inter alia, that the said monies were due and payable by the Defendant.

51. It is clear from the ex tempore judgment of O’Higgins J. that the Plaintiff relied on the certificate issued pursuant to section 966 (5) (a) to establish before him the fact that the monies were due and owing prior to the institution of proceedings on foot of assessments which were final and conclusive. It was on that basis that the learned High Judge determined the issue. It is not now open to the Plaintiff on appeal to seek to establish these facts by another means assuming, purely for the sake of argument, that the Plaintiff was entitled to recover on foot of the section 966 (5) (b) and section 1080 (4) certificates. However, in the circumstances I don’t think it is necessary to address that issue.

52. Accordingly, I would allow the appeal and dismiss the Plaintiffs claim.

53. This is an appeal from a judgment of the High Court (O’Higgins J.) against the Defendant in the sum of £1,831,502.10 and costs. The claim was for income tax and interest thereon and was brought in the name of the Criminal Assets Bureau under the provisions of the Criminal Assets Bureau Act, 1996. In the High Court the defence of the action turned on one net point of law which was determined by an ex-tempore judgment of O’Higgins, J. Although the notice of appeal contains three grounds they all relate to the same [*2] point of law considered in the High Court. However when the appeal came to be heard before this court the Defendant was effectively permitted to argue a quite different point in defence of the claim and in support of the appeal. If the Defendant is right in his new point, the old point does not arise for consideration at all, and therefore I think it more logical to deal with it first.

54. At the hearing in the High Court the Plaintiff produced a certificate under Section 966 (5) of the Taxes Consolidation Act, 1997 whereby an inspector certified that before the institution of the proceedings the particular sum claimed became due and payable by the Defendant “under an assessment which had become final and conclusive.” The Defendant had disputed his liability for the taxes in a replying affidavit and I am satisfied that the Plaintiff was relying on this certificate as a necessary proof. Counsel for the Plaintiff, Mr. Nesbitt, attempted to argue otherwise at the hearing of this appeal but having regard to the way the case proceeded in the High Court I am satisfied that the evidential validity of that certificate is crucial to the Plaintiff’s claim. It was of course only evidence “until the contrary is proved.” The Defendant argues that the Certificate is inaccurate in that the assessment had not become “final and conclusive.” In support of this proposition he relies on the fact that he served a notice of appeal to the Appeal Commissioners against the [*3] inspector’s assessment within the proper time under Section 933 of the 1997 Act. Sub-section (6) (a) of Section 933 provides as follows:-

55. The sub-section goes on to provide for various situations where a person who has given notice of appeal is deemed not to have done so, such as where an appeal is discontinued or where an appeal is dismissed etc. It follows logically that in those situations the assessment becomes “final and conclusive.” The Defendant argues that as of the date of the commencement of these proceedings a notice of appeal against an assessment had already been served and that therefore the assessment as of that date was not final and conclusive.

56. The Plaintiff disputes that a valid notice of appeal had been served because for allegedly legitimate statutory grounds the appeal had not been accepted by the inspector under Section 933 (1) (b) of the 1997 Act. To understand how this arises it is necessary to cite in the first instance paragraphs (a) and (b) of that sub-section. They read as follows:

57. There is clearly an element of faulty draftsmanship about these two paragraphs in that although paragraph (b) refers to “an application under paragraph (a)” there is no mention of the word “application” or any cognate word in paragraph (a). The provisions have to be interpreted however by this court and any other court as best it can and it is common case between the parties that the inspector is entitled to refuse to accept an appeal in certain circumstances. The first of the two issues before this court is whether those circumstances existed in this case. The circumstances are to be found in Section 957 of the Taxes Consolidation Act, 1997. Sub-section (2) (a) of that section provides as follows:-

58. It is not in dispute that the assessment in this case was not in accordance with Section 919(4) of the 1997 Act. The only issue is whether it was an assessment in accordance with Section 922. That section provides (inter alia) that where a person makes default in delivery of a statement in respect of any income tax under Schedule D, the inspector shall make an assessment on the person concerned in such sum as according to the best of the inspector’s judgment ought to be charged on that person. The first and new point being made on this appeal by counsel for the Defendant, Mr. Hunt, is that the assessment in this case was not “an assessment in accordance with section...922.” He argues that the assessment was made in accordance with a different section namely Section 58 of the 1997 Act. That section provides that profits or gains shall be chargeable to tax notwithstanding that they may have been earned or gained unlawfully. Sub-section (2) of the section provides that any such profits or gains are to be charged under case IV of schedule D and are to be described in the assessment as “miscellaneous income.” I cannot agree with Mr. Hunt’s argument. Any assessment which is made and which includes profits or gains of the kind referred to in Section 58 is still an assessment in accordance with Section 922. All Section 58 has done is to provide that illegal earnings are to be included and that they are to be included under case IV of schedule D. This is indeed the view which was taken by O’Sullivan J. in The Criminal Assets Bureau v. Kelly unreported judgment of [*7] the 13th April, 2000. As that case is under appeal to this court I do not want to go into it in detail. It was produced at a late stage of the hearing before this court and before ever it was produced I had formed on a preliminary basis the same view of the section as indicated in my interjections with counsel. O’Sullivan J. took the view that the assessment in such a similar case was in accordance with Section 922 but the tax was chargeable under Section 58 . I leave open the question of whether the tax is chargeable under Section 58 . It may well be that it is chargeable under Section 12 but that the Case and the Schedule under which it is chargeable is specified in Section 58 . But nothing turns on that for the purposes of this case. In either event the assessment was in accordance with Section 922 of the 1997 Act. I would therefore reject the first point of appeal made on behalf of the Defendant.

59. I now turn to the second point which was the one really argued before O’Higgins J. in the High Court. Under the provisions of Section 933 of the 1997 Act where an inspector refuses to accept an appeal against an assessment on one of the statutory grounds, the tax payer has a right of appeal against such refusal under Section 933 (1) (c) provided the appeal is brought within fifteen days of the date of issue by the inspector of the notice of refusal. As of the date of the institution of the proceedings such an appeal had been brought and had not yet been processed. Mr. Hunt argues in the first instance that he had in fact [*8] served a notice of appeal which of itself prevented the assessment becoming final and conclusive, or alternatively he argues that the appeal against the refusal to accept the appeal would itself have prevented the assessment from becoming final and conclusive. Counsel for the Plaintiff, Mr. Nesbitt, makes a number of arguments in response but one which he particularly relies on and which is the only one requiring serious consideration is that the court is entitled to look at what in fact happened after the institution of the proceedings. It was accepted before O’Higgins J. that the appeal against the refusal to accept the appeal against the assessment was not proceeded with in that on the date fixed for it the Defendant/Appellant did not turn up. As I understand Mr. Nesbitt’s argument he is saying that whatever doubts there may have been before, that must mean that the notice of appeal against the assessment originally served was not a valid notice of appeal or at least cannot be regarded as such having regard to the failure to avail of the procedures under the Acts. That in turn means that there was a “default of notice of appeal” within the meaning of sub-section (6) of Section 933 and therefore as of the date of institution of the proceedings the assessment was in fact “final and conclusive.” That being so, the certificate relied on was accurate. [*9]

60. But whilst on one view there is an impeccable logic in Mr. Nesbitt’s argument, I agree with the reasons given by Murray J. in his judgment for rejecting it.

61. As he points out, all kinds of problems might arise if summary judgment or even judgment in default of appearance was applied for before the Appeal Commissioners had determined an appeal from the refusal of the inspector to receive an appeal from the assessment. I would hold, therefore, that if such first mentioned appeal was still pending at the date of the institution of the proceedings, then whatever might be the final outcome of that appeal, a certificate that prior to the institution of the proceedings the sum claimed was due and payable under an assessment “which had become final and conclusive” cannot be accurate.

62. As it does not arise, I am expressing no views as to whether by other methods of proof in proceedings under the same section or under other statutory provisions, the sums claimed could be recovered in similar circumstances.

63. I would allow the appeal and substitute for the Order of the High Court, an Order dismissing the action.