Constitutional Challenge

Table of Contents

Cases

Grange Developments Ltd v Dublin County Council (No.4)

[1989] IR 377

Murphy J.
14th March, 1989

This is an application by the plaintiff, for an order under s. 41 of the Arbitration Act, 1954, that the plaintiff may have leave to enforce the interim award dated 20th July, 1988, of Sean McDermott, property arbitrator, appointed by the land values reference committee in the above mentioned arbitration in the same manner as a judgment or order to the same effect.
I accept that the principles to be applied in granting or withholding such an order are correctly set out in a short passage (indeed, a sentence) from the judgment of Lord Denning M.R. in Middlemiss & Gould v. Hartlepool Corporation [1972] 1 W.L.R. 1643 at p. 1646 where the learned Master of the Rolls says as follows:
“Once an award has been made and not challenged in the court it should be entered as a judgment and given effect accordingly. It should not be held up because the losing party says he wants to argue some point or other or wants to set up a counterclaim or anything of that sort.”
Counsel on behalf of the defendant referred me to another authority, Boks & Co. v. Peters, Rushton & Co. Ltd. [1919] 1 K.B. 491, and in particular to a passage of the then Master of the Rolls, Swinfen Eady, which in fact forms the headnote of the case:
“Where there is no objection to an award or where the objection raised is one which can easily be disposed of, the summary procedure provided by s. 12 of the Arbitration Act, 1889, is prompt and convenient; but that where there are matters which may gravely affect the validity of the award or the right to proceed under it, it is proper that they should be dealt with by an action in which the facts can be fully ascertained, and no order under the section should be made giving leave to proceed summarily under the award.”
The observations of Swinfen Eady M.R., were not in fact challenged or criticised in the subsequent decision of Lord Denning M.R., but I think it is important to recognise the actual context in which Bob & Co. v. Peters Rushton & Co. Ltd. was decided. It was a matter of unusual complexity. It involved a shipping transaction shortly following, indeed, towards the conclusion of, the first world war. It appears that one party was induced to enter into the contract in the belief that a necessary licence had been granted and, subsequent to the arbitration, it emerged that no such licence had been granted so that the transaction was illegal or may have been illegal. There are a number of other complexities in relation to the arbitration; indeed, the conclusion of the award appears to have contained a sentence that the payments directed to be made were”without prejudice to the rights of either party which may thereafter arise under any clauses of the said contract in regard to any balance or any adjustments or cancellation or otherwise.” There was an application to the Divisional Court to set aside the award but that application was refused on the grounds that the whole matter was tainted with illegality and, accordingly, the court would not intervene.
So, when one comes to consider the situation of the Court of Appeal on the issue of whether or not to allow the award to proceed as a judgment, one must recognise that it was in the most unusual and disturbing circumstances that the application arose. It seems to me that those are the kind of facts which the Master of the Rolls had in mind when he was referring to matters which may gravely affect the validity of the award.
In my view there are not such facts in the present case when one understands the facts in respect of which the dispute does indeed exist between the parties. Here there is no doubt about Mr. McDermott’s award. It is expressed in the clearest possible terms and is made without any possible ambiguity. In fact, one might be considered churlish or facetious if one were to say that he had had the advantage of drafting and re-drafting his award because it was the third time he had made an award on the plaintiff’s claim for arbitration. However, as I say, that is an accident of history, as it were, in the present case because the earlier awards, awards which I have also seen, were indeed drawn with the same impeccable clarity.
But the awards of the property arbitrator are merely the tip of the iceberg. The dispute between the parties has involved not merely the hearings before Mr. McDermott and his awards arising from those hearings; there have been at least five hearings in the High Court and at least three appeals from those decisions.
In my second decision in this matter ( Grange Developments Ltd. v. Dublin County Council (No. 2) [1989] I.R. 296) I endeavoured to summarise the history of the dispute between the parties and, having done so, I do not propose to set out the facts once more. However, if further information is required, it is available in vast quantity from the numerous affidavits which have been sworn on behalf of each side in connection with the present application as well, of course, as the reported decisions in relation to the earlier litigation. But none of this wealth of detail alters or, to my mind, affects the essential and basic fact as it impinges on this application: that on 8th June, 1981, An Bord PleanÃ¡la made an order refusing planning permission to the plaintiff, for the development of certain lands at Mountgorry and Drinan, Malahide Road, County Dublin, and that as a result of that refusal the plaintiff became entitled to compensation by virtue of s. 55 of the Local Government (Planning and Development) Act, 1963, and they became there and then entitled by statute to be compensated in money for the refusal of the permission which they had sought. In the seven years, or almost seven years, which have elapsed since that entitlement originated the plaintiff has not received a penny piece in compensation notwithstanding the statutory entitlement in that behalf.
That is a serious matter. I am in no sense I have said this before and I will repeat it now seeking to apportion blame or award credit to any person in respect of this situation and I comment not as to how it arose. I am merely saying that it is an undisputed and indisputable fact that the statutory compensation payable since 1981 has not been paid.
In those circumstances the question I ask myself is, why should I not at this stage, at the very least facilitate the plaintiff in enforcing the award which it obtained from the property arbitrator? Why should it not be permitted to enforce it as a judgment as is allowed by s. 41 of the Arbitration Act? The defendant’s answer to the question which I have posed is conveniently summarised by counsel by saying that the County Council are attacking the entire sub-structure of the award, not its detail, not its form, but the entire sub-structure of the award, on the following two grounds:
(1) Because of the absence of proof of the plaintiff’s title to the lands the subject matter of the application for planning permission.
(2) Because the County Council did on 28th July, 1988, institute proceedings for a declaration that the provisions of s. 55 of the Local Government (Planning and Development) Act, 1963, are unconstitutional.
So let me deal, then, with these two bases on which the sub-structure of the award is being challenged. As to the title, two points must be made. First of all, the property arbitrator and the parties have dealt with the matter of title in accordance with the statutory regulations appertaining to those matters. It may be that other procedures would be desirable or more suitable or more appropriate or could certainly be conceived or devised. However, on the evidence before me I am satisfied that the parties, as required by law and, indeed, as required by the property arbitrator have dealt with the title matters as required by the ministerial regulations. Secondly, or perhaps for that reason, no challenge has been made to the award by virtue of the questions raised in relation to title and no challenge has been made resulting in proceedings.
The County Council have not applied to this court to remit the matter to the property arbitrator for any further finding. There is no challenge made in that sense to what he has done or what he may be alleged to have omitted. There is nothing before this court, and there is nothing pending before this court, challenging the actions of the property arbitrator in relation to title matters. In those circumstances it seems to me that there is no substance in this point and so I am left with the attack on the structure of the award by reference to the constitutional proceedings which are pending.
Let me say at once that the plaintiff in the constitutional proceedings, the County Council, are perfectly entitled to institute such proceedings. One can comment, and obviously comment will be made, on the fact that a period of twenty-five years has elapsed since the legislation came into force, and it appears that at least some compensation has been paid under these sections. How much compensation has been paid may be a matter of speculation and misunderstanding. Even that would not, as I understand it, in any way impede the Council or any other local authority in challenging even at this apparently late stage the constitutionality of those provisions. Indeed, it is a feature of our law that the time within which a constitutional issue can be raised knows no bar. It may be said by the plaintiff in this case that the constitutional issue cannot be raised against them by the local authority because the local authority have engaged in these proceedings over a period of seven years and that they are estopped as against Grange Developments Limited from taking such proceedings or pursuing successfully such proceedings. I would have views on that issue myself. However, as it is pending before the court, I will leave that issue for one of my colleagues to decide at an appropriate time and in the appropriate forum.
But in order that such constitutional proceedings may advance and must be defended, if only by the Attorney General, who is the guardian of the Constitution and who has the constitutional responsibility of upholding the constitutional validity of all legislation enacted by the Oireachtas, the proceedings will continue and will be defended.
It is not the existence of these proceedings that is a matter of concern. It is the question of whether, as I am asked to do, some bar should be placed on the right of the plaintiff to pursue, after all these years, their claim to compensation for some further months or some further time until this issue can be disposed of. Should I place some restraint in their way or should I assist them in pursuing their claim? In effect, what I am being asked to do by implication is to impose an injunction on the plaintiff from enforcing or seeking to enforce the award in their favour on the grounds that the award is based upon legislation which is unconstitutional.
Very recently I had to consider how far interlocutory injunctions, where they are sought, may be granted to restrain actions which are on the face of it valid but where the constitutionality of which is about to be questioned. I gave an ex tempore judgment on that issue as recently as 23rd February, 1989. Very helpfully, the official stenographer has kept a note of this judgment and I quote from pages 9, 10 and 11 of the transcript as follows:
“Finally there is the question of the constitutional issue. It can be said with confidence amounting to certainty that in this country an injunction can be granted restraining an action based upon legislation in anticipation of the hearing of proceedings in which the constitutional validity of the legislation is challenged. That statement can be made with confidence having regard to the decision in Pesca Valentia Ltd. v. The Minister for Fisheries and Forestry [1985] I.R. 193, and the matter is very conveniently summarised in the decision of the present Chief Justice at page 201:
‘It is, as has been so frequently stated, the duty of the courts to protect persons against the invasion of their constitutional rights or against unconstitutional action. It would seem wholly inconsistent with that duty if the Court were to be without power in an appropriate case to restrain by injunction an action against a person which found its authority in a statutory provision which might eventually be held to be invalid having regard to the Constitution. In particular, it seems to me that this power must exist in an appropriate case where the form of action is under a penal section and involves conviction of and the imposition of a penalty for the commission of a criminal offence.’
In other words, that such an appropriate case may arise is now beyond debate.
I have also had the opportunity, however, of reading the only reported note of the decision of the Supreme Court in Cooke v. The Minister for Communications which is very helpfully reported in the new ‘Law Report’ series of The Irish Times of 20th February, 1989, where the judgment of the Court is expressed briefly in the following terms:
‘Where an existing statute rendered an activity illegal, the Court would not by injunction restrain the imposition of preventive measures authorised by the statute, even where a challenge to the constitutional validity of the said statute was pending.’
There is some apparent discrepancy between that brief but helpful report in Cooke v. The Minister for Communications and Pesca Valentia Ltd. v. The Minister for Fisheries and Forestry , though I have no doubt that they could be distinguished on their facts.
However, having regard to the apparent discrepancy it may be appropriate to refer to decisions of my own in Nova Media Services Ltd. v. The Minister for Posts and Telegraphs [1984] I.L.R.M. 161 and in Sunshine Radio Productions Ltd. v. The Attorney General [1984] I.L.R.M. 170. Towards the conclusion of my judgment in Nova Media Services Ltd. v. The Minister for Posts and Telegraphs [1984] I.L.R.M. 161 I said at page 169:
‘In principle and in particular having regard to the unreported decision of the Supreme Court in a recent case referred to by counsel under the title of Paperlink Ltd. it may be that in certain circumstances the courts might in the proper exercise of their discretion refuse to grant an injunction on the application of a Government Minister or other State agency to secure compliance with a statutory provision by members of the public pending a decision of the courts as to the constitutionality of the particular statute, but, as I have already said, it would only be in the most extraordinary circumstances that the courts would intervene to prevent the Minister or the Government agencies from exercising a function conferred upon him or them by the express terms of a statute made for the control of a public resource and for the benefit of the public good’.”
It seems to me, and I believe, that that decision accords with the observations of the Chief Justice in Pesca Valentia Ltd. v. The Minister for Fisheries and Forestry [1985] I.R. 193 and may be reconcilable with the facts in Cooke v. The Minister for Communications .
My own decision in the case I have cited, which is Staunton v. V.H.I., (ex tempore judgment delivered on 23rd February, 1989) goes on to deal with the added complexity which arose there of the injunction sought being of its nature a mandatory injunction.
However, returning to the present case, what I would say is this; that having regard to the fact that the local authority’s prospects of success depend upon establishing that the provisions of s. 55 of the Act of 1963 are unconstitutional, that being an essential ingredient in their case, and having regard to the enormous onus which lies on anybody who seeks to establish that an Act of the Oireachtas is invalid having regard to the provisions of the Constitution, I would not lightly grant an injunction on that ground alone. But even on the ordinary grounds of balance of convenience, stateable case and irreparable damage, it seems to me that in the present case one is talking about the payment of money, money which is long overdue and which should be paid. The question is in whose hands it lies. There is no difficulty in assessing the amount which should be paid or which may have to be repaid in certain circumstances, depending, of course, upon the decision of the court both as to the constitutionality of s. 55 of the Act and as to the right to recover monies paid under legislation which was at the time of the payment not held to be unconstitutional. Again, however, I have no intention of forecasting the outcome of such proceedings.
At this stage it seems to me that I am simply asked to permit an award to proceed or to be enforced as a judgment of the court. So, far from taking any action which would postpone the payment that justice requires, I have no doubt that this court should assist the plaintiff by every appropriate means to recover payment of the compensation to which they became entitled in principle in July, 1981, and which has been quantified in detail by the award made by the property arbitrator. In those circumstances it seems to me that the application should be granted.
I propose to make the order in the form suggested by Mr. Fennelly, that is, to enforce the award as a judgment together with interest thereon as from the date of the award at 11 per cent up to 23rd January, 1989, and at 8 per cent thereafter. I will allow the costs of this application.
I have been asked to place a stay on the order which I have made. In the ordinary way such an application would be granted as a matter of course. However, I am concerned by the fact that to a very large extent I see this application as being one by the Council for an injunction to retrain the plaintiff from enforcing the award. It is not done that way but to my mind that is the effect of it.
I would regard the granting of the relief sought almost as a matter of course in the circumstances of this case but for the defendant’s contention that it is challenging the constitutionality of the underlying legislation, or the material parts of it. It is effectively asking that I stay the plaintiff from pursuing its claim. If one puts it that way, there can be no question of a stay. If I refuse an injunction I do not grant an injunction by way of a stay. That would be to effectively reverse my own order. On that logic I would refuse the Council’s application for a stay subject to this: I do not want to create unnecessary difficulties for the parties and, above all, for the appellate court. If the matter is to proceed, I will simply grant a stay of seven days from today’s date so that within that time the matter can be mentioned to the Supreme Court and they can take responsibility for whatever course they adopt. But my order will take effect at the expiration of seven days unless the Supreme Court otherwise directs. I will put a stay on the entire of the order for a period of one week.

The State (D. and D.) v. Groarke

[1988] IR 188

Carroll J.

By order made by District Justice O’Sullivan on the 18th November, 1986, the child, D.D., (born the 1st November, 1979) was ordered to be committed to the care of the Midland Health Board as a fit person, the order to remain in force until the 1st November, 1995, unless sooner varied or revoked. The order was made in the context of alleged sexual abuse by the father which was denied by him. That order was not appealed by the parents. No application was made to vary or revoke the order.
An application by the parents for an inquiry under Article 40 of the Constitution as to the validity of the detention of the child was granted in the High Court on the 16th June, 1987. Both of them denied there was any sexual abuse of the infant by the father. The issues to be determined were set out in writing and agreed between the parties. Some of these issues were expressed in broad terms and it was submitted on behalf of the parents that the Court should itself investigate the matters alleged against the father and determine whether the order should have been made by the District Justice. Other issues contested the constitutionality of s. 24 of the Children Act, 1908 (the Act of 1908), although no notice had been served on the Attorney General under O. 60 of the Superior Court Rules, 1986, O. 60, r. 1 provides:
“If any question as to the validity of any law, having regard to the provisions of the Constitution, shall arise in any action or matter the party having carriage of the proceedings shall forthwith serve notice upon the Attorney General, if he is not already a party.”
Mr. Shatter, for the parents, submitted that it was not necessary to serve notice because the Act was passed prior to the coming into operation of the Constitution. While there is a dictum of Keane J. to that effect in The State (D.C.) v. Midland Health Board (Unreported, High Court, Keane J., 31st July, 1986, at page 14) based on the decision of the Supreme Court in The State (Sheerin) v. Kennedy [1966] I.R. 379, I am not satisfied that the Supreme Court did hold to that effect. The State (Sheerin) v. Kennedy decided that the High Court did not have power to refer the question of the validity of a pre-Constitution statute to the Supreme Court by way of case stated under Article 40, s. 4., sub-section 3. It did not decide that the Attorney General should not be informed if the constitutionality of a pre-constitution statute was challenged.

In my opinion the purpose of O. 60 is to enable the Attorney General to argue for the constitutionality not only of post-constitution statutes but also of pre-Constitution ones as well. A large body of our statute law dates from before the Constitution. I cannot accept that O. 60 should be interpreted so that it would be possible for a pre-Constitution statute to be declared unconstitutional in an action between two private individuals without the knowledge of the Attorney General. Accordingly, I declined to consider any of the issues directed to the constitutionality of the statute and those issues have been adjourned pending the service of notice on the Attorney General under Order 60.
I also refused to enter into a consideration of the merits of the case. The District Court has been entrusted by the Oireachtas to make decisions under s. 24 of the Act of 1908, from which there is a right of appeal to the Circuit Court. The infant has not been brought into wardship and accordingly there is no general discretion to investigate all matters regarding the welfare of the child.
This is an inquiry under Article 40 of the Constitution as to whether the infant is validly detained under the District Court order. I must reach a single decision, namely, whether the detention of the child is or is not in accordance with law. If it is, the application must be refused. If it is not, the child must be discharged from the custody in which she is now held (see In re D. [1987] I.R. 449, at 457). Accordingly I limited the enquiry to questions concerning the statutory interpretation of the section and how the District Court hearing was carried out and whether fair procedures were applied.
Section 24, s. 1 provides:
“(1) If it appears to a justice on information on oath laid by any person who, in the opinion of the justice, is acting in the interests of a child or young person, that there is reasonable cause to suspect:
(a) that the child or young person has been or is being assaulted, ill-treated, or neglected in any place within the jurisdiction of the justice, in a manner likely to cause the child or young person unnecessary suffering, or to be injurious to his health; or
(b) that an offence under this Part of this Act, or any offence mentioned in the First Schedule to this Act, has been or is being committed in respect of the child or young person,
the justice may issue a warrant authorising any constable named therein to search for such child or young person, and, if it is found that he has been or is being assaulted, ill-treated, or neglected in manner aforesaid, or that any such offence as aforesaid has been or is being committed in respect of the child or young person, to take him to and detain him in a place of safety, until he can be brought before a court of summary jurisdiction, or authorising any constable to remove the child or young person with or without search to a place of safety and detain him there until he can be brought before a court of summary jurisdiction; and the court before whom the child or young person is brought may commit him to the care of a relative or other fit person in like manner as if the person in whose care he was had been committed for trial for an offence under this Part of this Act.

(2) A justice issuing a warrant under this section may by the same warrant cause any person accused of any offence in respect of the child or young person to be apprehended and brought before a court of summary jurisdiction, and proceedings to be taken against such person according to law.
(3) Any constable authorised by warrant under this section to search for any child or young person, or to remove any child or young person with or without search, may enter (if need be by force) any house, building, or other place specified in the warrant, and may remove the child or young person therefrom.
(4) Every warrant issued under this section shall be addressed to and executed by a constable, who shall be accompanied by the person laying the information, if such person so desire, unless the justice by whom the warrant is issued otherwise directs, and may also, if the justice by whom the warrant is issued so directs, be accompanied by a duly qualified medical practitioner.
(5) It shall not be necessary in any information or warrant under this section to name the child or young person.”
In relation to the construction of the section, it was submitted on behalf of the parents that the District Justice could not make the order taking the child into care until sixteen years of age because:
(a) Section 24 was intended to meet an emergency situation where the District Justice makes a decision based on there being reasonable cause to suspect a child is being seriously ill-treated. The section contemplates the order taking the child into the care of a fit person being made”on reasonable cause to suspect.” It must of its nature be temporary and short-term;
(b) If the Midland Health Board intended to proceed where there was no prosecution they should have applied under s. 58 of the Act of 1908 (as amended by s. 10, sub-s. 1 of the Children Act, 1941) on the grounds that the parents were not “exercising proper guardianship” in which case the District Justice is required by the section to make a finding and the parents would have an opportunity to oppose, which is not the case with section 24;
(c) A detention order until sixteen years of age can only be made under s. 21 where a parent has been successfully prosecuted, because under s. 24 the order is made “in like manner as if he had been committed for trial.” This implies that if there is no successful prosecution, the order is void. There must be compelling reasons why the child should be given into the custody of a person other than the parents (see In re J.H. an infant [1985] I.R. 375) and no such compelling reasons have been proved;
(d) The power to vary contained in s. 21 does not apply to an order made under s. 24 because it was not properly made;
(e) The automatic voiding of an order under s. 21 where there is an acquittal does not apply to an order under section 24. Therefore it cannot have been intended that an order under s. 24 could be made for the same period as an order under section 21.
(f) The Midland Health Board is not capable of being named as a fit person within the meaning of the Act because;
(i) It is not a society or body corporate established for the reception or protection of poor children or the prevention of cruelty to children and so within the express definition of section 38.
(ii) The context of the Act of 1908 implies that a “fit person” should be a natural person, except for the particular societies and bodies corporate mentioned in section 38. In particular, s. 23, which deals with religious persuasion, can only be read in the context of a fit person being a natural person.
(iii) Generally, the Midland Health Board’s own statutory powers do not include a power to act as a fit person. In particular, s. 6, sub-s. 2 of the Health Act, 1970, confers powers on the Health Board in connection with Part I of the Act of 1908. This excludes any other part of that Act.
(iv) The statutory powers of the Midland Health Board do not extend to the custody and care of children such as the child in this case.
In my opinion under s. 24 a District Justice has power, on being satisfied on information sworn on oath by someone who in his opinion is acting in the child’s interest, that there is reasonable cause to suspect the child is being assaulted, ill-treated or neglected in a place within his jurisdiction, to issue a warrant to a named guard to remove the child with or without search to a place of safety and detain the child there until he can be brought before a court of summary jurisdiction.
It is only at the stage of issuing the warrant that the District Justice acts on the basis of “reasonable cause to suspect.” When the matter comes before the District Court as a court of summary jurisdiction to hear the application to commit the child to the care of a relative or other fit person, the District Justice is not entitled to make the order because he has reasonable cause to suspect. First, the parents must be served with a summons to attend in accordance with rule 42 of the Summary Jurisdiction Rules, 1909 (S.R.O. No. 952). These rules were drawn up, under the Act of 1908, to regulate the procedure of courts of summary jurisdiction under the Act. Then the District Justice must enter on a judicial consideration of the matter, observing the requirements of natural and constitutional justice and reach a decision on the evidence. If this is done, he is entitled to make an order under section 24. I accept that the District Justice must be satisfied that there are compelling reasons why the child should be given into the custody of a person other than its parents (see In re J.H. an infant [1985] I.R. 375) but if he was satisfied on the evidence before him that the child had been sexually abused by the father and that the mother had failed to protect the child that would constitute compelling reasons why the child should be removed.
The order which he is entitled to make after a hearing in the District Court is to commit the child “to the care of a relative or other fit person in like manner as if the person in whose care he was had been committed for trial for an offence under this Part of the Act.” This refers to the power to commit a child to care under section 21. Under that section a District Justice may “if satisfied upon inquiry that it is expedient so to deal with the child order that the child be taken out of the custody charge or care of the person committed for trial and be committed to the care of a relative of the child or some other fit person named by the court (such relative or other person being willing to undertake such care) until he attains the age of sixteen years or for any shorter period and that court or any court of like jurisdiction may of its own motion, or on the application of any person, from time to time by order renew, vary and revoke any such order.”Strictly speaking, the question of whether the power to vary or revoke applies does not arise in this case since the order of the District Justice itself prescribed that the order should remain in force until the 1st November, 1995, unless sooner revoked or varied. But it seems to me that it must of necessity be part of the power given.
Section 21, sub-s. 3 would also apply because it relates to the manner in which an order is made under section 21. Sub-section 3 provides:
“Every order under this section shall be in writing, and any such order may be made by the court in the absence of the child or young person; and the consent of any person to undertake the care of a child or young person in pursuance of any such order shall be proved in such manner as the court may think sufficient to bind him.”
In s. 21 the provision in sub-s. 2 that “no order shall be made under this section unless the parent or legal guardian has been convicted of or committed for trial for the offence, or is under committal for trial for having been, or has been proved to the satisfaction of the court making the order to have been, party or privy to the offence, or has been bound over to keep the peace towards the child or young person, or cannot be found” does not apply to an order under s. 24 because it does not relate to the manner in which an order under s. 21 is made. Even though it does not apply, that does not mean that a District Justice would not have to consider the role of a mother in reaching a decision in relation to section 24. Both father and mother are joint guardians. If an allegation of sexual abuse is made against a father and substantiated to the satisfaction of the District Justice, the mother is not automatically deprived of the custody of the child. The District Justice would also have to consider whether she could safeguard the child or whether it would be preferable to remove the child altogether from both parents.
Sub-section 4 of s. 21, also relates to an order “made under this section” and it does not apply to an order under s. 24 because it does not relate to the manner in which an order under s. 21 is made. It provides:
“Where an order is made under this section in respect of a person who has been committed for trial, then, if that person is acquitted of the charge, or if the charge is dismissed for want of prosecution, the order shall forthwith be void, except with regard to anything that may have been lawfully done under it.”
If an order were made under s. 24 and a criminal charge were subsequently brought against the parent, who was acquitted, there would be nothing to prevent such a parent applying to have the order under s. 24 revoked.
As to whether the Midland Health Board is capable of being a fit person, there are a number of facets to the argument. The Midland Health Board does not fit the description of a body corporate established for the reception or protection of poor children or the prevention of cruelty to children. But s. 38 does not provide an exclusive definition. It does not confine the meaning to such bodies corporate. Section 38, sub-s. 1 provides:
“In this Part of this Act, unless the context otherwise requires, the expression “fit person,” in relation to the care of any child or young person, includes any society or body corporate established for the reception or protection of poor children or the prevention of cruelty to children.”
Under the Interpretation Act, 1937, (s. 11) “person” includes a body corporate unless the contrary intention appears.
Therefore, unless there is something in the context of the Act of 1908 which requires the meaning of “fit person” to be confined to a natural person or the specific societies and bodies mentioned in s. 38, a body corporate is entitled to be considered as eligible to be a fit person. Section 23, which concerns religious persuasion, would not preclude a body corporate from being a fit person. While the Midland Health Board could not be “a person of the same religious persuasion”it could be “a person who gives such undertaking to the court as seems to the court sufficient in relation to the child’s religion.”
Therefore in my opinion there is nothing in the context of the Act which would preclude a body corporate which possesses the necessary powers to act in that capacity, from being appointed a fit person even though it could not be described as a body corporate established for the reception or protection of poor children or the prevention of cruelty to children.
As to whether the Midland Health Board possesses the necessary statutory powers to act as a fit person, s. 6, sub-s. 1 of the Health Act, 1970, provides that a health board shall perform the functions conferred on it under the Act, and any other functions which, immediately before its establishment, were performed by a local authority (other than as a sanitary authority) in the functional area of the health board in relation to the operation of services provided under or in connection with the administration of the enactments specified in sub-section 2. Among the functions which were performed by the local authority were functions in connection with the administration of Part I of the Act of 1908 (concerning infant life protection) and ss. 2 and 3 of the Children (Amendment) Act, 1957. These enactments are specified in s. 6, sub-s. 2 at paragraph (g). This however does not prevent the health board from carrying out other functions conferred on it under the Act of 1970 connected with other parts of the Act of 1908 which were not carried out by the local authority.

Under s. 66, sub-s. 2 of the Act of 1970, a health board shall make available without charge a health examination and treatment service for pupils attending a national school.
It is under this section that the Midland Health Board claims to derive its power to take the child into care under the s. 24 order. In my opinion, if a child has suffered sexual abuse, her health is endangered and she is in need of treatment. The provision of care is therefore within the broad description of a treatment service. (See Attorney General v. Eastern Railway Company (1880) 11 Ch. D. 449 and 5 App. Cas. 473). If the health board is to provide an adequate service it is essential that it be involved either directly as a fit person or indirectly with the fit person nominated. There is no reason why a suitable employee of the health board should not be named as a fit person but if for any reason that person ceased to be employed by the health board or became incapacitated, another application would have to be made to the District Court for another person to be appointed. There are therefore good reasons why the board itself should be appointed. It would not seem wise that one of the actual foster parents should be named as this would identify the whereabouts of the child in a case where secrecy is deemed essential.
For the above reasons I am satisfied that District Justice O’Sullivan had power to make the order which he did make committing the child to the care of the Midland Health Board as a fit person until she is sixteen unless the order is sooner revoked or varied.
In drawing up the order some confusion crept in by referring to matters which more properly related to an application under s. 58, namely, reference to a power to send to a certified industrial school. But this does not affect the essentials of the order which are that the child is committed to the care of the Midland Health Board as a fit person.
I am not concerned with whether the Midland Health Board should have proceeded under s. 58 in the first place. I express no opinion on whether that is appropriate. My concern is whether the order made under s. 24 is valid or not. In my opinion the District Justice had the statutory power to make the order which he did make and I now turn to the actual District Court hearing.
It was submitted on behalf of the parents in relation to the hearing in the District Court that a video of an interview between the child and Dr. Maire Woods should have been made available to the parents and/or their solicitor prior to the hearing, that the District Justice should have viewed the video before reaching his decision, and that medical reports from Dr. Woods, Dr. Hensey and Dr. Alford should have been supplied prior to the hearing to the parents and/or their solicitor. There is no great conflict of evidence on the affidavits as to what happened. The initial hearing on the 4th November, 1986, was adjourned at the request of the parents’ solicitor to the 18th November, 1986. It started at 3 p.m. and ended at 5 p.m. At the hearing, Margaret Groarke and Carmel Dolan, social workers, gave evidence of their involvement and of an interview with the child on the 21st October. Dr. Alford of the Midland Health Board gave evidence as to her failure to carry out a physical examination of the child due to her hysterical reaction. Dr. Maire Woods gave evidence of her interview with the child and of the physical examination under anaesthetic carried out by herself and Dr. Owen Hensey at Temple Street Hospital. All of them were cross-examined by Mr. Barra Flynn, solicitor for the parents. Both parents gave evidence. The written report of Dr. Woods was given to Mr. Flynn prior to the hearing.
Both parents denied they had ever seen Dr. Woods’ report before the hearing.
In view of the fact that there was no affidavit from Mr. Barra Flynn I asked that he would attend to give evidence, which he did.
He said he asked for Dr. Woods’ report at the adjournment on the 4th November. He was furnished with a copy on the morning of the proceedings but he had been in touch by ‘phone with Dr. Woods in between the two dates and she had told him her opinion. He did ask if he could have sight of the video but was told they did not have it with them. There was a report by Dr. Woods and also a photostat of the operation chart of the physical examination carried out in Temple Street. A type-written copy of the information on the operation chart was also prepared by Dr. Woods to which she added her conclusions in a few sentences. This was dated the 18th November, the date of the hearing. Mr. Flynn could not remember exactly the report handed to him but it is probable that he received the report and the copy of the operation chart annexed. He did remember the one inch measurement mentioned.
He said he gave the report to the father and both parents read it. He said that he watched their reaction to it and asked them the course of action to be taken in the light of the report. He said they vehemently denied they were involved. Even though both parents denied on affidavit that they saw the report, which denial was repeated by the father in oral evidence, I am unable to accept their version. Mr. Flynn is an experienced solicitor. He said he watched them read the report and watched their reaction to it. That is a detail which is to me totally convincing.
Mr. Flynn did not ask the District Justice to view the video and he did not ask the court to make the video available to him.
Dr. Woods also gave evidence to clear up one area where there was some confusion, namely, whether it was she or Dr. Hensey who carried out the physical examination of the child. Dr. Woods said she carried out the examination and Dr. Hensey who is a consultant paediatrician in Temple Street, was present. She asked him to come and he observed the examination. Dr. Woods herself filled up the operation book at Temple Street, the nurse having filled in the names. The report describes what was visible on inspection. A photostat was sent to the Director of Community Care of the Midland Health Board. There is also the typed report, dated the 18th November, which has the same information together with a conclusion in the report. Dr. Woods said she gave evidence to that effect. It was put to her in cross-examination that Dr. Hensey’s report did not contain any conclusions and she said that he was not being asked to write a report. Dr. Woods’ evidence cleared up a misapprehension that it was Dr. Hensey who carried out the physical examination. In my opinion there was no evidence to show that the hearing in the District Court was inadequate in any way. The solicitor was in touch with Dr. Woods on several occasions prior to the hearing.
The District Justice heard evidence, including medical evidence of a physical examination, where the conclusion was that sexual abuse had occurred. He was not asked to view the video. He was not obliged to view it though he could have asked for it if he felt it necessary. The witnesses for the Health Board were cross-examined by an experienced solicitor. Both parents gave evidence. There was evidence on which the District Justice was entitled to reach the conclusion which he did. Therefore the order made is valid and the application for habeas Corpus is refused.

K v Ireland

[2008] I.E.H.C. 25
JUDGMENT of Mr. Justice Hanna delivered on the 15th day of January, 2008

This matter involves the determination of certain preliminary issues in a case whose central thrust concerns a challenge to s. 3 of the Proceeds of Crime Act, 1996 as being wanting both in terms of the Constitution and the European Convention on Human Rights. The plaintiffs have previously been engaged in proceedings instituted against them in the High Court pursuant to the said Act and which resulted in the seizure and disposal of certain of their assets.
The relevant parts of the statutory framework appear in the schedule to this judgment.

Background Facts

It is necessary that I set out material milestones in this somewhat protracted dispute.

– 1st July, 1997: the Criminal Assets Bureau (hereinafter “the C.A.B.”) is granted an ex parte freezing order by the High Court in respect of a dwelling house and a motor vehicle apparently jointly owned by the plaintiffs.

– 2nd July, 1997: C.A.B. issue a notice of motion for a freezing order under s. 3 of the Proceeds of Crime Act, 1996 (hereinafter “the Act of 1996”) returnable on the 14th July, 1997.

– 15th July, 1997: the plaintiffs enter an appearance requesting delivery of the statement of claim. The plaintiffs claimed that they had difficulty securing legal representation at that time, stating that they were unable to pay the fee required from their preferred solicitor and were told that the Legal Aid Board had a “backlog of work”. They did, in fact, retain the services of a solicitor some months later and they have been legally represented since then and have instructed counsel.

– 16th July, 1997: the motion is heard and a freezing order granted under s. 3 of the Act of 1996. The plaintiffs issued a notice of motion seeking a statement of claim and an order discharging the s. 2 order of the Act of 1996 that had been made on the 1st July, 1997.

– 30th November, 2001: C.A.B. seek the appointment of a receiver over the property.
– 7th December, 2001: a receiver is appointed by the High Court with a stay. By order made the 25th January, 2002, the stay is extended until 29th January, 2002.

– 22nd February, 2002: C.A.B. delivers a statement of claim seeking the appointment of a receiver under s. 7 of the Act of 1996.

– 4th March, 2002: the plaintiffs issue a notice of motion seeking the discharge of the s. 3 order and the dismissal of the proceedings for failure to deliver a statement of claim. The main basis of the challenge is that the s. 3 order was incorrectly made on the basis that it was an interlocutory order.

– 19th March, 2002: the motion is refused in the High Court.

– 22nd March, 2002: the High Court appoints a receiver over the property and makes a number of consequential orders.

– 4th June, 2002: the plaintiffs issue a notice of appeal to the Supreme Court.

– 5th July, 2002: the plaintiffs seek an extension of time, from the Supreme Court, to appeal the decision of Moriarty J. granting the s. 3 order.

– 10th July, 2002: the plaintiffs issue a notice under Order 60 of the Rules of the Superior Courts, 1986, seeking to join the Attorney General on the basis that the appeal concerned the constitutionality of the legislation.

– 15th July, 2002: the Supreme Court, in an ex tempore judgment, refuses the relief sought by the plaintiffs in both applications.

– 19th July, 2002: the house, the subject of the freezing order, is auctioned on behalf of the C.A.B.

– 21st October, 2002: the High Court approves the sale of the property.

– 22nd November, 2002: the plaintiffs issue a notice of motion asking the High Court for an order under s. 3(3) of the Act of 1996 discharging the s. 3 order on the basis that “the section 3 application was truly interlocutory and not in substance the trial of the action”.

– 25th November, 2002: the High Court refuses the relief sought in the notice of motion.

– 26th November, 2004: following the exchange of particulars between the parties, the plaintiffs issue a plenary summons commencing these proceedings.

– 5th July, 2005: an order is made under s. 4 of the Act of 1996 and the proceeds from the sale of the house are transferred to the Minister for Finance.

Issues to be determined

The plaintiffs in the statement of claim delivered on the 1st December, 2004, seek a declaration that all or all relevant parts of the Proceeds of Crime Act, 1996 are repugnant to the Constitution. They also seek a declaration that all or several parts of the Proceeds of Crime Act, 1996 are incompatible with the European Convention on Human Rights.
A defence to the statement of claim was filed on the 21st February, 2006. That defence was filed without prejudice to certain issues enumerated at paragraphs 1-5 inclusive and these preliminary issues now fall to be determined by this Court pursuant to an order of O’Sullivan J. made on the 13th November, 2006.
The issues may be summarised as follows:
(i) That the pleadings are frivolous or vexatious and/or are bound to fail and represent an abuse of process.
(ii) That the pleadings represent an improper collateral attack upon the validity of the decision of the Supreme Court in Murphy v. G.M. [2001] 4 IR 113, which upheld the constitutionality of the Proceeds of Crime Act, 1996.
(iii) That the statement of claim is an improper collateral attack on the validity of a decision of the Supreme Court made on the 15th July, 2002 (see chronology of events).
(iv) That the plaintiffs are estopped by omission, by reason of their failure to raise this claim in previous proceedings in which they have been engaged with the Criminal Assets Bureau.
(v) That, finally, the plaintiffs lack locus standi to challenge any part of the Proceeds of Crime Act, 1996 that is not currently being applied against them.

The previous proceedings entitled Michael F. Murphy v. T.K. and J.B (1997 No. 7354P)
Although C.A.B. were, obviously, the primary mover in the previous proceedings, if I might so term them, the plaintiffs (then defendants) were far from inactive in taking issue with C.A.B.’s actions and engaged with gusto in the litigation, albeit without professional representation for some months.

The material and significant steps in the proceedings were:
– An application by Mr. K. and Ms. B. to the High Court on the 4th March, 2002, seeking: 1) an order discharging the s. 3 order made by the Court on the 16th July, 1997, appointing a receiver over the property; 2) an order dismissing Mr. Murphy’s claim for failure to deliver a statement of claim; 3) dismissal of the plaintiff’s proceedings for being statute barred; 4) an order staying or vacating the appointment of the receiver in the proceedings.
– An appeal by Mr. K. and Ms. B. against the refusal of that application (by notice of appeal dated the 4th July, 2002) was subsequently dismissed by the Supreme Court.
– An application, made on the 5th July, 2002, for an extension of time to appeal against the decision of Moriarty J. to grant the s. 3 order.
– Service of a notice under Order 60 of the Rules of the Superior Courts joining the Attorney General in the proceedings, on the 10th July, 2002, contending that “under the Constitution and unless the statutory provision is held to be unconstitutional” the courts are obliged to apply the law as set out.
– An application to the High Court, made the 22nd November, 2002, for relief pursuant to s. 3(3) of the Proceeds of Crime Act, 1996. An “inquiry into damages” was also sought at that time.
The case advanced by the plaintiffs in the previous proceedings hinged on the argument that the s. 3 order made in relation to the plaintiffs’ property by Moriarty J. on the 16th July, 1997, was understood to be an interlocutory order at the time of the making of the order but was subsequently held to be a “final order” by the Supreme Court (in Murphy v. G.M.). Further, the said s. 3 order as made was improperly obtained because the plaintiffs did not have legal representation at the time the order was made against them and no trial of the action ever took place and, therefore, no statement of claim was delivered in respect of the s. 3 order made. (A statement of claim was delivered by the C.A.B. but it was claimed that this was insufficient as it was a mere recital of the relevant orders made in the case).
It was contended that the s. 3 order was improperly characterised as a ‘final order’. Counsel argued that the characterisation of s. 3 orders given in F. McK. v. A.F. (Statement of Claim) [2002] 1 IR 242 ignored the previous Supreme Court authority on the nature of interlocutory orders in Minister for Agriculture v. Alte LeipzigerA.G. [2000] 4 IR 32. In the Order 60 notice issued, it was submitted that
“…the Oireachtas has made it abundantly clear that the Section 3 stage in the proceedings under this Act is (sic) interlocutory, a command that the Court has no jurisdiction to disregard without finding the direction unconstitutional. That Section 3 provided an interlocutory procedure was not, of itself, unconstitutional.”

It would be fair to note, in passing, that the plaintiffs disputed the proposition that the property in question constituted the proceeds of crime.
In response, C.A.B. disputed all of the plaintiffs’ case. It argued that the s. 3 order made by the High Court should be upheld on the basis that the order was correctly made and the deciding judge (Finnegan P.) did not have jurisdiction to interfere with a s. 3 order apart from where there were grounds for interference under section 3(3) of the Act of 1996. Further, the lack of a statement of claim did not prejudice Mr. K. and Ms. B.
An issue also arose in relation to an application for leave to extend the time for an appeal, it being argued that the applicants did not satisfy any of the criteria outlined by Lavery J. (Maguire C.J., Murnaghan, O’Byrne and Kingsmill Moore JJ. concurring) in Eire Continental Trading Company Limited v. Clonmel Foods Limited [1955] I.R. 170.

The Current Proceedings – Issues and Findings
At the start of the preliminary hearing, counsel for Mr. K. and Ms. B., Mr. Forde S.C., objected to preliminary matters being raised before the Court where matters of fact, as he contended, were not agreed between the parties. In the absence of such agreed facts the moving party should accept the version of facts enunciated by the respondent. I rejected Mr. Forde’s application. I was of the view that there was no factual dispute of any significance and what was squarely in issue was the purport and effect of what had occurred in the previous proceedings. Further, the order of O’Sullivan J. had been consented to and I felt I could not look behind it in any event. I determined the hearing would continue.

It became readily apparent, in my view, that central arguments relied upon by the plaintiffs in these proceedings had been made in the previous proceedings (Michael F. Murphy v. T.K. & J.B (1997 No. 7534P)). The European Convention on Human Rights did not form part of our domestic law at that time and could, in that sense, be identified as a fresh issue.

I now turn to the various issues raised in this motion.

i. That the proceedings are a collateral attack on decisions already made by the Supreme Court.

A number of decisions of the Supreme Court were identified by Mr. McDermott B.L., on behalf of the defendants as being of determinative force. The law was settled. Not so, contended Mr. Forde. Murphy v. GM, as he saw it, was decided against the backdrop of all parties being of the opinion that s. 3 orders were interlocutory in nature. Thus, an analysis of the attributes of such an order did not ensue and the Court was confronted with virgin territory. The issue of constitutionality could be raised afresh.

I cannot agree. It seems to me that the constitutionality of the Proceeds of Crime Act, 1996 (obviously encompassing s. 3) has already been established by the Supreme Court in Murphy v. G.M. A five judge Supreme Court sitting over four days heard the appeal. This was a fully argued, fought and considered constitutional challenge to the Proceeds of Crime Act, 1996.

What, then, of the plaintiffs’ argument that the parties in that case were either labouring under a misconception as to the purport of a s. 3 order or were, in fact, correct in their view? Again, I do not accept this assertion. In F. McK. v. A.F. (Statement of Claim) it was held that the proceedings under s. 3 of the Proceeds of Crime Act, 1996, were not truly interlocutory but constituted a substantive remedy. Further, the Supreme Court made it clear, in F. McK. v. A.F. [2005] 2 IR 163 that the finding that a s. 3 order was a final order had been “signposted” in earlier judgments such as Murphy v. G.M. (Geoghegan J., at p. 166) and was, therefore, not inconsistent with the finding that the Act of 1996 was constitutional. At p. 166, Geoghegan J. (Murray C.J. and Denham, Hardiman and McCracken J.J. concurring) stated:-
“Unfortunately for quite a period the Act of 1996 was viewed differently in the High Court, partly with the encouragement of the parties and probably because the stage was never reached and, indeed, has not still been reached, for considering all the ramifications and the precise nature of a s. 4 application. However, this need not have happened after the 18th October, 2001, when Keane C.J. delivering the judgment of this court in relation to the constitutionality of the Act of 1996 in Murphy v. G.M. [2001] 4 IR 113 of the report said the following at p. 154:
‘As to the claim that the period of seven years which must elapse before a disposal order is made is unduly oppressive, that rests on the misconception that the application for a disposal order can in some sense be equated to the trial of an action in respect of which the legislation earlier provides for interlocutory orders being made. That is clearly not the nature of the scheme provided for in the Act.’
That passage and another passage from a judgment of Keane C.J. in a different case are cited in my judgment referred to above. In making these references, I am merely pointing out that before ever F. McK v. A.F (Statement of Claim)was decided the scheme of the Act of 1996 and in particular the concept that the s. 4 application was not the trial of an action commenced by a s. 3 application had been already signposted in earlier judgments.”

Thus has the Supreme Court held.

That Court will only depart from its previous decisions in the most exceptional cases: Attorney General v. Ryan’s Car Hire [1965] I.R. 642 and Mogul v. Tipperary [1976] I.R. 260. This principle was upheld by the Supreme Court in O’Brien v. Mirror Group [2001] 1 I.R. 1. In that case, arguments were advanced on the part of the defendants which were “virtually identical” to those which had been advanced in a previous case (at p. 12). Keane C.J. noted that the Court would have to hold that the decision of the previous court was “so ‘clearly wrong’ that there are now ‘compelling reasons’ why it should be overruled and that, indeed, justice requires that it be overruled” (at p. 16). Denham J. (dissenting on the facts) stated that “…..a previous decision of the Supreme Court may not be followed by the Supreme Court if it is determined that it was erroneous, if there is a compelling reason, or there are compelling reasons, not to follow the earlier decision. Precedent is followed save for exceptional cases.” (at p. 27).

I cannot see any reason for inviting the Supreme Court to reconsider this matter. I am persuaded that the defendants must succeed on this issue.

ii. The proceedings constitute a collateral attack on the decision of the Supreme Court in Michael F. Murphy v. T.K. and J.B. (ex tempore judgment delivered the 15th July, 2002).

Mr. Forde S.C. argued that the basis for the Supreme Court’s decision in Michael F. Murphy v. T.K. and J.B. was not clear from its ruling of the 15th July, 2002. He submitted there cannot be a collateral attack on a decision of the Supreme Court where the plaintiffs do not know the reasons for that decision. He added that the presumption, where reasons are not available, is that the issues were not raised before the Court. Although both parties’ legal teams were more than likely present for the Supreme Court hearing and decision, no note appears to have been retained of that decision.

It is clear, in my view, that a variety of issues were brought before the Supreme Court in the previous case, including those canvassed herein, and that the Supreme Court upheld the validity of the s. 3 order having considered those arguments made before it. Damages, the remedy sought here by the plaintiffs, were also sought in the original proceedings. The notice of appeal and the written submissions in the case demonstrate that every material issue (bar “Convention Rights”) sought to be litigated in these proceedings was raised before the High Court and Supreme Court. In addition, the Attorney General was served with a s. 60 notice.

When the matter came on before the Supreme Court, to my mind, it is abundantly clear that the plaintiffs’ case, as then advanced, was rejected in toto. No note of the proceedings of the judgment has been furnished to me, as I have already observed. I find this a most peculiar state of affairs. However, given the fact that detailed evidence in affidavit form and exhaustive legal argument touching on all material issues was clearly engaged in (there is no suggestion that things were otherwise) and notwithstanding the peculiar amnesia as to what occurred in court which seems to have affected the parties and not least the plaintiffs who were most intimately concerned with the outcome, in my view I am entitled to assume that what occurred was such a rejection of the then defendants’ claim, out of hand. Since I feel I am entitled, in all of the circumstances of this case, to draw such an inference, I am therefore driven to the conclusion that these proceedings constitute an improper collateral attack on the decision of the Supreme Court made on the 15th July, 2002.

iii. That the plaintiffs are estopped from raising arguments not raised in the initial proceedings.

It follows from what I have found concerning issues numbered i and ii that this complaint is redundant. The plaintiffs did indeed raise all material arguments with the exception of the European Convention on Human Rights Act, 2003 which issue I will turn to shortly and briefly. For the sake of completeness, I should, in brief, indicate the views I would have expressed on this topic were the plaintiffs to have hitherto secured a positive outcome (from their perspective) on the issues already addressed or lest I am in error in my findings to date.

Given the breadth and variety of issues raised in the previous proceedings, before both High and Supreme Courts, including matters relating to the Supreme Court’s decision as to the nature of s. 3 orders, I see no reason in the world why the plaintiffs could not have pursued the arguments they make now relating to the constitutionality of sections of the Proceeds of Crime Act, 1996 in those earlier proceedings. Long established authority (Henderson v. Henderson (1843) 3 Hare 100) provides as a general rule that parties cannot seek to raise points in subsequent proceedings that they could have raised in the original proceedings. (See also Cox v. Dublin City Distillery (No. 2) [1915] 1 I.R. 345). This line of authority the Supreme Court has followed in Carroll v. Ryan [2003] 1 IR 309 and in A.A. v. Medical Council [2003] 4 IR 302 and in Law Society of Ireland v. Malocco [2005] IESC 5).

i.v. That the plaintiffs’ proceedings are frivolous or vexatious and an abuse of process.

This issue is most properly addressed at the end of my deliberations.

v. That the plaintiffs do not have locus standi to challenge the Proceeds of Crime Act, 1996.

Mr. McDermott argued that the plaintiffs did not have locus standi to challenge the entirety of the Proceeds of Crime Act, 1996, as they can only challenge those parts of the Act which have been invoked against them. (See A. v. Governor of Arbour Hill [2006] 4 IR 88). I don’t think that Mr. Forde demurred from this proposition. Mr. Mc Dermott also contended that a s. 4 order had already been made in relation to the property (on the 5th July, 2005) and so matters relating to the s. 3 order are res judicata. Mr. Forde S.C. submitted that the plaintiffs were not seeking to have the Proceeds of Crime Act, 1996, declared invalid, but were, rather, seeking damages for the property taken away from them on foot of the section of that Act which they claim is unconstitutional. The making of the s. 4 order should not shut them out from this palliative relief. I think this is correct. Had the plaintiffs succeeded thus far in negotiating the disputatious logistical steeplechase presented to them in the issues litigated in this motion, it would have been quite unfair to debar them from seeking a monetary remedy. This, alas, is frugal comfort for them given my decision on other aspects of this application.

The European Convention on Human Rights Act, 2003.
The plaintiffs also seek relief under the European Convention on Human Rights Act, 2003. This legislation came into effect on the 31st December, 2003. All of the matters of which the plaintiffs complain occurred before that date.

Kearns J., giving the judgment of the Supreme Court in Dublin City Council v. Fennell [2005] 1 IR 604, determined, inter alia, that the Act could not be seen as having “… retrospective effect or as affecting past events” (at p. 637). In such circumstances, I must follow the explicit view of the Supreme Court and reject the plaintiffs’ case, that they might now advance a claim under the European Convention on Human Rights. The Convention did not form part of Irish domestic law at the time material to the plaintiffs’ complaints and thus cannot bear upon them.

Conclusion
In summary, the defendants must succeed and succeed clearly on all issues bar that of locus standi which, in the circumstances, avails the plaintiffs naught. In all of the circumstances of this case and taking all matters into account, I must also determine that the proceedings amount to a frivolous and vexatious abuse of process.

Schedule

The Statutory Framework

The Proceeds of Crime Act, 1996

1. —(1) In this Act, save where the context otherwise requires—

“interlocutory order” means an order under section 3;

2. (1) Where it is shown to the satisfaction of the Court on application to it ex parte in that behalf by a member or an authorised officer—

( a ) that a person is in possession or control of—
(i) specified property and that the property constitutes, directly or indirectly, proceeds of crime, or

(ii) specified property that was acquired, in whole or in part, with or in connection with property that, directly or indirectly, constitutes proceeds of crime,
and
( b ) that the value of the property or, as the case may be, the total value of the property referred to in both subparagraphs (i) and (ii), of paragraph (a) is not less than £10,000, the Court may make an order (“an interim order”) prohibiting the person or any other specified person or any other person having notice of the order from disposing of or otherwise dealing with the whole or, if appropriate, a specified part of the property or diminishing its value during the period of 21 days from the date of the making of the order.

(2) An interim order—
( a ) may contain such provisions, conditions and restrictions as the Court considers necessary or expedient, and

( b ) shall provide for notice of it to be given to the respondent and any other person who appears to be or is affected by it unless the Court is satisfied that it is not reasonably possible to ascertain his, her or their whereabouts.
(3) Where an interim order is in force, the Court, on application to it in that behalf by the respondent or any other person claiming ownership of any of the property concerned may, if it is shown to the satisfaction of the Court that—
( a ) the property concerned or a part of it is not property to which subparagraph (i) or (ii) of subsection (1) (a) applies, or

( b ) the value of the property to which those subparagraphs apply is less than £10,000,
discharge or, as may be appropriate, vary the order.

(4) The Court shall, on application to it in that behalf at any time by the applicant, discharge an interim order.

(5) Subject to subsections (3) and (4), an interim order shall continue in force until the expiration of the period of 21 days from the date of its making and shall then lapse unless an application for the making of an interlocutory order in respect of any of the property concerned is brought during that period and, if such in application is brought, the interim order shall lapse upon—

( a ) the determination of the application,
( b ) the expiration of the ordinary time for bringing an appeal from the determination,

( c ) if such an appeal is brought, the determination or abandonment of it or of any further appeal or the expiration of the ordinary time for bringing any further appeal,
whichever is the latest.

(6) Notice of an application under this section shall be given—
( a ) in case the application is under subsection (3) by the respondent or other person, making the application to the applicant,

( b ) in case the application is under subsection (4), by the applicant to the respondent unless the Court is satisfied that it is not reasonably possible to ascertain his or her whereabouts,
and, in either case, to any other person in relation to whom the Court directs that notice of the application be given to him or her.

3.—(1) Where, on application to it in that behalf by the applicant, it appears to the Court, on evidence tendered by the applicant, consisting of or including evidence admissible by virtue of section 8—

( a ) that a person is in possession or control of—
(i) specified property and that the property constitutes, directly or indirectly, proceeds of crime, or
(ii) specified property that was acquired, in whole or in part, with or in connection with property that, directly or indirectly, constitutes proceeds of crime,

and
( b ) that the value of the property or, as the case may be, the total value of the property referred to in both subparagraphs (i) and (ii) of paragraph (a) is not less than £10,000,

the Court shall make an order (“an interlocutory order”) prohibiting the respondent or any other specified person or any other person having notice of the order from disposing of or otherwise dealing with the whole or, if appropriate, a specified part of the property or diminishing its value, unless, it is shown to the satisfaction of the Court, on evidence tendered by the respondent or any other person—

(I) that that particular property does not constitute, directly or indirectly, proceeds of crime and was not acquired, in whole or in part, with or in connection with property that, directly or indirectly, constitutes proceeds of crime, or
(II) that the value of all the property to which the order would relate is less than £10,000:

Provided, however, that the Court shall not make the order if it is satisfied that there would be a serious risk of injustice.

(2) An interlocutory order—
( a ) may contain such provisions, conditions and restrictions as the Court considers necessary or expedient, and

(3) Where an interlocutory order is in force, the Court, on application to it in that behalf at any time by the respondent or any other person claiming ownership of any of the property concerned, may, if it is shown to the satisfaction of the Court that the property or a specified part of it is property to which paragraph (I) of subsection (1) applies, or that the order causes any other injustice, discharge or, as may be appropriate, vary the order.
(4) The Court shall, on application to it in that behalf at any time by the applicant, discharge an interlocutory order.

(5) Subject to subsections (3) and (4), an interlocutory order shall continue in force until—
( a ) the determination of an application for a disposal order in relation to the property concerned,
( b ) the expiration of the ordinary time for bringing an appeal from that determination,
( c ) if such an appeal is brought, it or any further appeal is determined or abandoned or the ordinary time for bringing any further appeal has expired,

whichever is the latest, and shall then lapse.

(6) Notice of an application under this section shall be given—
( a ) in case the application is under subsection (1) or (4), by the applicant to the respondent, unless the Court is satisfied that it is not reasonably possible to ascertain his or her whereabouts,
( b ) in case the application is under subsection (3), by the respondent or other person making the application to the applicant,

and, in either case, to any other person in relation to whom the Court directs that notice of the application be given to him or her.

4. —(1) Subject to subsection (2), where an interlocutory order has been in force for not less than 7 years in relation to specified property, the Court, on application to it in that behalf by the applicant, may make an order (“a disposal order”) directing that the whole or, if appropriate, a specified part of the property be transferred, subject to such terms and conditions as the Court may specify, to the Minister or to such other person as the Court may determine.

(2) Subject to subsections (6) and (8), the Court shall make a disposal order in relation to any property the subject of an application under subsection (1) unless it is shown to its satisfaction that that particular property does not constitute, directly or indirectly, proceeds of crime and was not acquired, in whole or in part, with or in connection with property that, directly or indirectly, constitutes proceeds of crime.

(3) The applicant shall give notice to the respondent (unless the Court is satisfied that it is not reasonably possible to ascertain his or her whereabouts), and to such other (if any) persons as the Court may direct of an application under this section.

(4) A disposal order shall operate to deprive the respondent of his or her rights (if any) in or to the property to which it relates and, upon the making of the order, the property shall stand transferred to the Minister or other person to whom it relates.

(5) The Minister may sell or otherwise dispose of any property transferred to him or her under this section, and any proceeds of such a disposition and any moneys transferred to him or her under this section shall be paid into or disposed of for the benefit of the Exchequer by the Minister.

(6) In proceedings under subsection (1), before deciding whether to make a disposal order, the Court shall give an opportunity to be heard by the Court and to show cause why the order should not be made to any person claiming ownership of any of the property concerned.

(7) The Court, if it considers it appropriate to do so in the interests of justice, on the application of the respondent or, if the whereabouts of the respondent cannot be ascertained, on its own initiative, may adjourn the hearing of an application under subsection (1) for such period not exceeding 2 years as it considers reasonable.

(8) The Court shall not make a disposal order if it is satisfied that there would be a serious risk of injustice.

Damache v DPP

[2012] IESC 11

Judgment of the Court delivered on the 23rd day of February, 2012 by Denham C.J.
1. This is an appeal by Ali Charaf Damache, the applicant/appellant, referred to as “the appellant”, from the decision of the High Court (Kearns P.) given on the 13th May, 2011, refusing the appellant’s application.
Judicial Review
2. The appellant brought an application by way of judicial review seeking, inter alia:-

(a) A declaration that s. 29(1) of the Offences against the State Act, 1939 (as inserted by s. 5 of the Criminal Law Act, 1976), and referred to as s. 29(1) of the Act of 1939, is repugnant to the Constitution;
(b) a stay on any further step being taken in the prosecution presently before Waterford Circuit Criminal Court entitled D.P.P. v. Charafe Damache (Bill No. CT0041/10), pending the determination of these judicial review proceedings.

3. The application for judicial review was grounded on an affidavit of Caroline Egan, Solicitor for the appellant. She deposed that she is in possession of a book of evidence relating to the prosecution of the appellant and that part of her information is taken from the statement of Detective Superintendent Dominic Hayes in the book of evidence.
4. Caroline Egan, basing her affidavit on the statement of Detective Superintendent Hayes, deposed that it would appear that:-

“In September 2009, Detective Superintendent Hayes who is attached to the South Eastern Garda Region based at Waterford Garda Station, commenced an investigation into an alleged conspiracy to murder Mr. Lars Vilks, a Swedish cartoonist who had depicted the Islamic prophet Mohammad with the body of a dog, thereby provoking serious unrest in several Muslim countries.
It was suspected that the Applicant was involved in the said conspiracy along with other individuals resident in Ireland. It was also subsequently suspected that on the 9th January 2010, the Applicant made a threatening phone call to an individual in the United States.

During the course of the investigations, D/Superintendent Hayes personally received from D/Superintendent Peter Kirwan, of the Crime and Security Section of An Garda Síochána, intelligence reports from the FBI and phone recordings made in the United States. D/Superintendent Hayes personally applied to Chief Superintendent Kevin Donahue for telephone billing relating to a mobile phone connected to the investigation.

On the 5th and 8th March 2010, D/Superintendent Hayes conducted briefings at Waterford Garda Station and heard from D/Inspector Michael Leahy in relation to the progress of the investigation.

On the 8th March 2010, D/Superintendent Dominic Hayes granted a search warrant under s. 29(1) of the Offences Against the State Act 1939 (as inserted by s. 5 of the Criminal Law Act 1976) to D/Sergeant David Walsh. The search warrant was granted in relation to 1 John Colwyn House, High Street, Co. Waterford, the Applicant’s dwelling at the time, and was executed on the 9th March 2010.”

5. Ms. Egan deposed that the appellant, his wife and child, were present at the time of the search, that the appellant was arrested for the offence of conspiracy to murder contrary to s. 71 of the Criminal Justice Act, 2006, and that items of property were removed from the appellant’s home as evidence, including a mobile phone.
6. The appellant has been charged with an offence, but not the offence on which he was arrested. Ms Egan deposed that the appellant was subsequently detained at Waterford Garda Station and charged with an offence contrary to s. 13 of the Post Office (Amendment) Act, 1951, as amended, that he did on the 9th January, 2010 send a message by telephone which was of a menacing character to Madjid Moughni. Ms. Egan deposed that it is alleged that the appellant made the said phone call on a Nokia mobile phone which was seized during the search.

7. Ms. Egan further deposed that the appellant was served with a book of evidence in relation to the charge at Waterford District Court on the 24th May, 2010. She deposed that she was unaware of the date he was returned for trial, as she came on record in relation to the appellant’s case on the 17th November, 2010, and that the appellant was previously represented by a different solicitor.

8. In her affidavit Ms. Egan sets out the grounds for the application for judicial review. These include:-

(a) I say and believe that the said search warrant was issued by a member of An Garda Síochána who had directed the investigations relating to the appellant for approximately 6 months prior to the appellant’s arrest.
(b) I say that D/Superintendent Hayes has asserted that the warrant was issued because he was satisfied that he had reasonable grounds for believing that evidence relating to the unlawful possession of firearms within the State would be found at the home of the appellant. I say it is not clear from the Book of Evidence to what this is alleged to relate.

(c) I say that while I am not in possession of all relevant information in relation to the said investigation, it would appear that an impartial decision-maker might have refused to issue a search warrant for the dwelling in relation to the possession of firearms within the State.

(d) I say that in any event, the appellant was entitled as a matter of natural and constitutional justice to have the decision in relation to the said search warrant made by a judicial personage or, at the very least, by someone impartial and unconnected with the investigation.

(e) I say and believe, however, that having regard to the decision of the Court of Criminal Appeal in D.P.P. v. Birney & Others [2007] 1 IR 337, the wording of s. 29(1) cannot be understood to mean that the member of An Garda Síochána who issues the search warrant must be independent of the investigation to which the search warrant relates.

(f) I say that, accordingly, s. 29(1) of the Offences Against the State Act, 1939 (as inserted by s. 5 of the Criminal Law Act 1976) is repugnant to the Constitution as it permits a member of An Garda Síochána who has been actively involved in a criminal investigation to determine whether a search warrant should issue in relation to the said investigation. [ … ].

Delay
9. There was delay by the appellant in seeking judicial review. The background facts include the following:-
(i) On the 8th March 2010 D/Superintendent Dominic Hayes granted a search warrant under section 29(1) of the Offences Against the State Act 1939 (as inserted by section 5 of the Criminal Law Act 1976) to D/Sergeant David Walsh.
(ii) The search warrant was granted in relation to 1 John Colywn House, High Street, Waterford.

(iii) The warrant was executed on the 9th March 2010.

(iv) The appellant was present at the time of the search, along with members of his family.

(v) The appellant was arrested for conspiracy to murder contrary to s. 71 of the Criminal Justice Act 2006. The appellant was later charged with an offence contrary to s. 13 of the Post Office (Amendment) Act 1951, alleged to have been committed on 9 January 2010.

(vi) The appellant was charged on the 15th March 2010 with the offence contrary to s. 13 of the Post Office (Amendment) Act, 1951.

(vii) On the 24th May 2010 the appellant was served with the Book of Evidence.

(viii) The appellant sought and obtained leave to bring the within judicial review proceedings on the 2nd December 2010.

(ix) The High Court (Peart J.) granted leave to apply by way of an application for judicial review for a declaration that s. 29(1) of the Offences Against the State Act, 1939 (as inserted by s. 5 of the Criminal Law Act 1976) is repugnant to the Constitution.

(x) The prosecution was listed for trial on the 25th January 2011 at Waterford Circuit Court.

10. No explanation has been given for the delay in seeking judicial review until the 2nd December, 2010. The consequent effect of this order was that the trial of the appellant was postponed pending the determination of the judicial review. The High Court held:-
“The [appellant] had other legal advisors prior to those presently engaged. In circumstances where no explanation has been given by those former advisors for the delay in moving the leave application, the Court at the outset is compelled to conclude that the application has not been launched with the necessary degree of promptitude which is appropriate to the remedy of judicial review. It is also an application brought well outside the three month time period provided for by the Rules of the Superior Courts. A period in excess of six months was allowed to elapse before any challenge to the propriety of the search warrant got off the ground. Quite apart from the fact that this delay is fatal to the [appellant’s] claim for the declaratory relief sought, it also reinforces an unfortunate impression that the judicial review process in this (as in a number of other criminal cases) is being deployed in such a fashion as to delay the ordinary course of criminal trials in this jurisdiction. In recent years a number of judges, myself included, have commented unfavourably about the bringing of very late applications of this nature and it is a practice which must stop if due respect for our criminal process is to be maintained.”
The Court would affirm and adopt the opinion of the President of the High Court.
11. The learned President proceeded to determine the appeal, as has this Court. The core issue on this appeal is the constitutionality of s. 29(1) of the Act of 1939. If these proceedings were dismissed on the basis of the delay of the appellant, it is clear that new proceedings would be instituted by way of plenary summons, thus involving more delay and cost. In all the circumstances, the Court determined that the core issue be decided on these proceedings, and counsel were not heard on the issue of delay. It is most unfortunate that the proceedings were not brought correctly, by way of plenary proceedings, but to minimise delay and cost the Court decided to determine the issue on this appeal.
Premature
12. This case is brought in advance of a trial. No evidence has yet been given. This is well illustrated by the grounding affidavit in these proceedings, deposed by the appellant’s solicitor, based on a statement in the book of evidence of a member of An Garda Síochána. This is an unsatisfactory basis for analysis. However, the appellant has been affected by the section: his home was searched pursuant to a warrant issued under the section. This is not a case about the validity of the warrant. The sole issue is the constitutionality of s. 29(1) of the Act of 1939. In the circumstances the Court did not require to hear counsel on the issue of prematurity.
Constitutionality of s. 29(1)
13. Thus, the issue in the appeal is the constitutionality of s. 29(1) of the Act of 1939.

14. The unamended provision in s. 29(1) of the Offences Against the State Act, 1939 provided:-

“(1) Where an officer of the Garda Síochána not below the rank of chief superintendent is satisfied that there is reasonable ground for believing that documentary evidence of or relating to the commission or intended commission of an offence under any section or sub-section of this Act or any document relating directly or indirectly, to the commission or intended commission of treason is, to be found in any particular building or other place, the said officer may issue to a member of the Garda Síochána not below the rank of inspector a search warrant in accordance with this section.”
15. By s. 5 of the Criminal Law Act, 1976 the following section was substituted for s. 29(1) of the Act of 1939:-
“Where a member of the Garda Síochána not below the rank of superintendent is satisfied that there is reasonable ground for believing that evidence of or relating to the commission or intended commission of an offence under this Act or the Criminal Law Act, 1976, or an offence which is for the time being a scheduled offence for the purposes of Part V of this Act, or evidence relating to the commission or intended commission of treason, is to be found in any building or part of a building or in any vehicle, vessel, aircraft or hovercraft or in any other place whatsoever, he may issue to a member of the Garda Síochána not below the rank of sergeant a search warrant under this section in relation to such place.”
16. The amendment, inter alia, permits a member of the Garda Síochána, not below the rank of superintendent, instead of a chief superintendent as under the Act of 1939, to issue a warrant to a member of the Garda Síochána not below the rank of sergeant, instead of an inspector as under the Act of 1939.
17. The issuing of a search warrant is an administrative act, but it must be exercised judicially. It was accepted that the full panoply of rights do not apply to the issuing of search warrants. Obviously, the law does not require that suspects be put on notice of applications to apply for a search warrant. But, it was submitted on behalf of the appellant, there should be independent and impartial supervision of the issuing of a warrant.

18. In most cases that impartial supervision is exercised by a District Judge, when issuing a search warrant, or by a Peace Commissioner. Thus, third party scrutiny and supervision is built in.

19. It was accepted, on behalf of the appellant, that under a limited number of statutes, relating to serious investigations, members of An Garda Síochána have been granted statutory power to issue search warrants, but, it was submitted, these examples arise in urgent situations, or if immediate action is needed, and as a last resort. Also, such a warrant is required to be executed within a short time, usually 24 hours, while under s. 29(2) the warrant remains valid for a week.

20. The examples opened to the Court of statutes by which the Garda Síochána have power to issue search warrants were as follows:-

(i) Section 16 Official Secrets Act 1963 (allows a search warrant to be issued by a District Judge or, if immediate action is necessary, by a Chief Superintendent or higher);
(ii) Section 14 Criminal Assets Bureau Act, 1996 (allows a search warrant to be issued by a District Judge or, if immediate action is necessary, by a Superintendent or higher);

(iii) Section 8 Criminal Justice (Drug Trafficking) Act 1996 (allows a search warrant to be issued by a District Judge or, if immediate action is necessary, by a Superintendent or higher);

(iv) Section 5 Prevention of Corruption (Amendment) Act 2001 (allows a search warrant to be issued by a District Judge or, if immediate action is necessary, by a Superintendent or higher).

(v) Section 7 of the Criminal Justice (Surveillance) Act 2009 provides that in cases of urgency a surveillance warrant can be issued by a Garda Superintendent, a Colonel in the Defence Forces, or a Revenue Principal Officer.

21. It was submitted, on behalf of the appellant, that the person making the decision at to whether to issue a search warrant, or not, must be independent, impartial and have no material interest in the decision to be made. It was submitted that the issuing of the warrant should be by somebody who is unconnected with the controversy and who can make a decision in an independent and detached manner of whether it is necessary to issue the search warrant.
22. There are echoes in the submissions before this Court and the submissions and decision in The People [Director of Public Prosecutions] v. Birney [2007 1 IR 337. In that case, at p. 370, it was stated that it had been contended on behalf of the first named applicant that the warrant was invalid because it was not issued by a superintendent independent of the investigation, that the issue of the warrant was in breach of the principle nemo iudex in causa sua. It was submitted that the issuance of the warrant by the superintendent offended against two principles, namely: (a) the guarantee of the inviolability of the dwelling under Article 40.5 of the Constitution, and, (b) the guarantee of fair trial enshrined in Article 38 of the Constitution, in that in issuing the warrant the superintendent was acting as a judge in his own cause, namely as head of the investigation.

23. In The People (D.P.P.) v. Birney the Court considered s. 29(1) of the Act of 1939, as amended, under which authority the search warrant had been issued.

The Court held:-

“The Court was not persuaded that s. 29 of the Offences Against the State Act, 1939 precludes the Superintendent, who is in charge of the investigation from issuing such a warrant in the course of the investigation in which he is involved. The Court went on to conclude that on a literal interpretation of the section there was no such prohibition.”
24. This Court agrees with that analysis of the words of s. 29(1) of the Act of 1939. The literal interpretation of the words do not preclude the superintendent in charge of an investigation issuing the warrant.
25. Reference was made to two previous cases where the issue had been raised that if s. 29 of the Act of 2003 did not require that such a warrant be issued by an independent authority, then the section was unconstitutional. In The People (D.P.P.) v. Birney the Court of Criminal Appeal concluded:-

“This Court is likewise satisfied that the wording of s. 29(1) of the Offences Against the State Act is clear and unambiguous. For the applicant’s contention to be correct it would be necessary to read into the words of the statute a proviso that the Superintendent concerned should not be one involved in the particular investigation. This Court can see no basis for so doing. Accordingly this Court does not accept the submissions on behalf of the first named applicant in this regard.”
26. The issue of constitutional validity, which could not be addressed in the Court of Criminal Appeal or the Special Criminal Court, is before this Court. The Court concurs with the analysis that the literal meaning of the words of s. 29(1) of the Act of 1939 do not contain a requirement that the Superintendent should not be involved in the investigation, nor could such a proviso be inferred.
Independent person
27. The principle that the person issuing a search warrant should be an independent person is well established.

28. In Ryan v. O’Callaghan (Unreported, High Court (Barr J.), 22nd July 1987), Barr J. considered the constitutionality of s. 42(1) of the Larceny Act, 1916, which empowered a Peace Commissioner to issue a search warrant in certain circumstances. He held:-

“In light of Mr. Justice Henchy’s definition of ‘save in accordance with law’ in the context of Article 40, Section 4 sub-section (1), does it follow that the procedure for obtaining a search warrant from a Peace Commissioner which is laid down in Section 42 of the 1916 Act is a method which ignores the fundamental norms of the legal order postulated by the Constitution? In my view it does no such thing. I am satisfied that it is in the interest of the common good that there should be a simple procedure readily available to the police whereby in appropriate cases they may obtain search warrants relating to premises, including the dwellings of citizens, so as to facilitate them in the investigation of larceny and other allied offences. The procedure laid down in Section 42(1) of the 1916 Act contains important elements for the protection of the public, including all those who might be found on the premises to be searched. The investigating police-officer must swear an information that he has reasonable cause for suspecting that stolen property is to be found at the premises to be searched and he must satisfy a Peace Commissioner, who is an independent person unconnected with criminal investigation per se, that it is right and proper to issue the warrant. I am satisfied that such warrants bona fide sought and obtained from a Peace Commissioner pursuant to the procedure laid down in Section 42 of the 1916 Act are not tainted with any constitutional illegality and provide lawful authority for the search of the premises to which they relate.”
29. The above dictum was followed and applied by Hamilton P. in Byrne v. Grey [1988] 1 I.R. 31, who stated, at p. 43, that he agreed with Barr J.
30. It was submitted on behalf of the appellant that s. 29(1) of the Act of 1939 is invalid under the Constitution because it fails to reflect, and provide for, the essential balance between the requirements of the common good and the protection of the appellant’s individual rights.

31. On behalf of the respondents it was submitted that s. 29(1) of the Act of 1939 is not repugnant to the Constitution, but rather is a legitimate part of the State’s armoury to protect itself from offences against the State and against the justice system. In so far as s. 29(1) may provide a person with less protection than a search warrant that is issued by an independent person such as a Judge or a Peace Commissioner, it was submitted that any such diminution in rights is proportionate and lawful.
Presumption of Constitutionality
32. Section 29(1) of the Act of 1939 is entitled to the presumption of constitutionality. As Hanna J. stated in Pigs Marketing Board v. Donnelly [1939] I.R. 413 at 417:-

“When the Court has to consider the constitutionality of a law it must, in the first place, be accepted as an axiom that a law passed by the Oireachtas, the elected representatives of the people, is presumed to be constitutional unless and until the contrary is clearly established.”

Double Construction Rule
33. The double construction rule also applies when construing s. 29(1) of the Act of 1939. Thus, if in respect of s. 29(1) two or more constructions are reasonably open, one of which is constitutional and the other or others are unconstitutional, it would be presumed that the Oireachtas intended only the constitutional construction
Administrative Act
34. The issuing of a search warrant is an administrative act, it is not the administration of justice. Thus a search warrant is not required to be issued by a judge. However, it is an action which must be exercised judicially. As Keane J. (as he then was) stated in Simple Imports v. The Revenue Commissioners 2 I.R. 243 at 251:-

“The District Judge is no doubt performing a purely ministerial act in issuing the warrant. He or she does not purport to adjudicate on any lis in issuing the warrant. He or she would clearly be entitled to rely on material, such as hearsay, which would not be admissible in legal proceedings.”

Strictly construed
35. The legislation permitting the issuance of a search warrant should be constructed strictly. As Keane J. stated in Simple Imports v. The Revenue Commissioners [2000] 2 I.R. 243 at 250:-
“These are powers which the police and other authorities must enjoy in defined circumstances for the protection of society; but since they authorise the forcible invasion of a person’s property, the court must always be concerned to ensure that the conditions imposed by the legislature before such powers can be validly exercised are strictly met.”

Two aspects
36. There are two aspects of the issuance of a search warrant which are important. First, that a search warrant be issued by an independent person. Secondly, that such a person must be satisfied on receiving sworn information, that there are reasonable grounds for a search warrant.
37. In exceptional circumstances, such as urgent situations, provision has been made in statutes for a member of An Garda Síochána to issue a warrant, which usually has a short duration. The requirement of urgency is an important factor in determining the proportionality of legislation which may infringe a constitutionally protected right.
Wide area of search
38. Section 29(1) of the Act of 1939 provides that where a member of An Garda Síochána not below the rank of superintendent is satisfied that there is reasonable ground for believing that evidence of or relating to the commission or intended commission of an offence under the Act of 1939, or the Criminal Law Act, 1976, or a scheduled offence, or evidence relating to the commission or intended commission of treason, is to be found

“in any building or part of a building or in any vehicle, vessel, aircraft or hovercraft or is any place whatsoever,”
he may issue to a member of An Garda Síochána not below the rank of sergeant a search warrant pursuant to this section in relation to such place. Thus, a search warrant issued under this section may be in relation to a number of places, including “any place whatsoever”.
Home
39. The place for which the search warrant was issued in this case, and the place searched, was the home of the appellant. The dwelling is regarded as a place of importance which is protected under the Constitution. Thus, at the core of this case is to be found the principle of the constitutional protection of the home.
The dwelling
40. Article 40.5 of the Constitution of Ireland states:-

“The dwelling of every citizen is inviolable and shall not be forcibly entered save in accordance with law.”
Thus, the Constitution protects the inviolability of the dwelling.
41. There has been a long history of protection of the home under common law. In 1604, Sir Edward Coke in Semayne’s Case 77 ER 194, stated:

“That the house of every one is to him as his (a) castle and fortress, as well for his defence against injury and violence, as for his repose”.
The principle was referred to by Sir William Blackstone, in his Commentaries on the Laws of England (1768), where he stated:-
“For every man’s house is looked upon by the law to be his castle of defence and asylum, wherein he should suffer no violence”.
42. In Ireland the dwelling house is protected under the Constitution. The Constitution vindicates and protects fundamental rights. In The People (Attorney General) v. O’Brien [1965] I.R. 142 Walsh J. pointed out that:-
“The vindication and the protection of constitutional rights is a fundamental matter for all courts established under the Constitution. That duty cannot yield place to any other competing interest. In Article 40 of the Constitution, the State has undertaken to defend and vindicate the inviolability of the dwelling of every citizen.”
43. In The People (Attorney General) v. Michael Hogan, (1972) 1 Frewen 360 at 362 Kenny J. stated:-
“Article 40.5 of the Constitution which is in that part of it which has the heading ‘Fundamental Rights’ and the sub-heading ‘Personal Rights’ reads: The dwelling of every citizen is inviolable and shall not be forcibly entered save in accordance with law. The guarantee is not against forcible entry only. The meaning of the Article is that the dwelling of every citizen is inviolable except to the extent that entry is permitted by law which may permit forcible entry.”
44. In The Director of Public Prosecutions v. Dunne [1994] 2 I.R. 537 at p. 540 Carney J. stated:
“The constitutional protection given in Article 40, s. 5 of the Constitution in relation to the inviolability of the dwelling house is one of the most important, clear and unqualified protections given by the Constitution to the citizen”.
The Court would apply these statements, recognising the importance of the inviolability of the dwelling.
“Save in accordance with law”
45. In Ryan v. O’Callaghan (Unreported, High Court, Barr J., 22nd July, 1987)

a search warrant had been issued by a Peace Commissioner and the issue raised was whether the Peace Commissioner in exercising the power granted to him by s. 42 of the Larceny Act, 1916, authorising a search warrant of the dwelling house of a citizen was exercising a judicial power. Barr J. considered the phrase “save in accordance with law” in Article 40.5. He stated that the contemporary view of the Supreme Court was stated by Henchy J. in King v. Attorney General 1981 I.R. 233 at p. 257, when striking down as unconstitutional an offence created by s. 4 of the Vagrancy Act, 1824, for reasons, including:-

“that it violates the guarantee in Article 40.4.1˚ that no citizen shall be deprived of personal liberty save in accordance with law – which means without stooping to methods which ignore the fundamental norms of the legal order postulated by the Constitution …”
46. To pose the question in this case, as posed by Barr J. in the above case, in light of Henchy J.’s definition of ‘save in accordance with law’, does it follow that the procedure for obtaining a search warrant in this case, under s. 29(1) of the Act of 1939, is a method which ignores the fundamental norms of the legal order postulated by the Constitution?
47. The procedure for obtaining a search warrant should adhere to fundamental principles encapsulating an independent decision maker, in a process which may be reviewed. The process should achieve the proportionate balance between the requirements of the common good and the protection of an individual’s rights. To these fundamental principles as to the process there may be exceptions, for example when there is an urgent matter.

48. Analysis and application of such fundamental principles may be illustrated from cases in other jurisdictions.

49. In Camenzind v. Switzerland [1999] 28 EHRR 458 at 476 paragraph 46 it was stated:-

“In the present case the purpose of the search was to seize an unauthorised cordless telephone that Camenzind was suspected of having used contrary to section 42 of the Federal Act of 1922 regulating telegraph and telephone communications. Admittedly, the authorities already had some evidence of the offence as the radio communications surveillance unit of the Head Office of the PTT had recorded the applicant’s conversation and Camenzind had admitted using the telephone. Nevertheless, the Court accepts that the competent authorities were justified in thinking that the seizure of the corpus delicti – and, consequently, the search – were necessary to provide evidence of the relevant offence.
With regard to the safeguards provided by Swiss law, the Court notes that under the Federal Administrative Criminal Law Act of 22 March 1974, as amended, a search may, subject to exceptions, only be effected under a written warrant issued by a limited number of designated senior public servants and carried out by officials specially trained for the purpose; they each have an obligation to stand down if circumstances exist which could affect their impartiality. Searches can only be carried out in ‘dwellings and other premises … if it is likely that a suspect is in hiding there or if objects or valuables liable to seizure or evidence of the commission of an offence are to be found there’; they cannot be conducted on Sundays, public holidays or at night ‘except in important cases or where there is imminent danger’. At the beginning of a search the investigating official must produce evidence of identity and inform the occupier of the premises of the purpose of the search. That person or, if he is absent, a relative or a member of the household must be asked to attend. In principle, there will also be a public officer present to ensure that ‘[the search] does not deviate from its purpose’. A record of the search is drawn up immediately in the presence of the persons who attended; if they so request, they must be provided with a copy of the search warrant and of the record. Furthermore, searches for documents are subject to special restrictions. In addition, suspects are entitled, whatever the circumstances, to representation; anyone affected by an ‘investigative measure’ who has ‘an interest worthy of protection in having the measure … quashed or varied’ may complain to the Indictment Division of the Federal Court. Lastly, a “suspect” who is found to have no case to answer may seek compensation for the losses he has sustained.

As regards the manner in which the search was conducted, the Court notes that it was at Camenzind’s request that it was carried out by a single official. It took place in the applicant’s presence after he had been allowed to consult the file on his case and telephone a lawyer. Admittedly, it lasted almost two hours and covered the entire house, but the investigating official did no more than check the telephones and television sets; he did not search in any furniture, examine any documents or seize anything.”

The European Court of Human Rights held at paragraph 47:-
“Having regard to the safeguards provided by Swiss legislation and especially to the limited scope of the search, the Court accepts that the interference with the applicant’s right to respect for his home can be considered to have been proportionate to the aim pursued and thus ”necessary in a democratic society” within the meaning of Article 8. Consequently, there has not been a violation of that provision.”
50. In Hunter v. Southam Inc. [1984] 2 S.C.R. 145 at 146 to 147 Dickson J. of the Supreme Court of Canada held:-
“First, for the authorization procedure to be meaningful, it is necessary for the person authorizing the search to be able to assess the conflicting interests of the state and the individual in an entirely neutral and impartial manner. This means that while the person considering the prior authorization need not be a judge, he must nevertheless, at a minimum, be capable of acting judicially. Inter alia, he must not be someone charged with investigative or prosecutorial functions under the relevant statutory scheme. The significant investigatory functions bestowed upon the Restrictive Trade Practices Commission and its members by the Act vitiated a member’s ability to act in a judicial capacity in authorizing a s. 10(3) search and seizure and do not accord with the neutrality and detachment necessary to balance the interests involved.
Second, reasonable and probable grounds, established upon oath, to believe that an offence has been committed and that there is evidence to be found at the place of the search, constitutes the minimum standard consistent with s. 8 of the Charter for authorizing searches and seizures. Subsections 10(1) and 10(3) of the Act do not embody such a requirement. They do not, therefore, measure up to the standard the Charter. The Court will not attempt to save the Act by reading into it the appropriate standards for issuing a warrant. It should not fall to the courts to fill in the details necessary to render legislative lacunae constitutional. In the result, subss. 10(1) and 10(3) of the Combines Investigation Act are inconsistent with the Charter and of no force or effect because they fail to specify an appropriate standard for the issuance of warrants and designate an improper arbiter to issue them.”

This sets an appropriately high standard for a search warrant process.
51. The Court applies the following principles. For the process in obtaining a search warrant to be meaningful, it is necessary for the person authorising the search to be able to assess the conflicting interests of the State and the individual in an impartial manner. Thus, the person should be independent of the issue and act judicially. Also, there should be reasonable grounds established that an offence has been committed and that there may be evidence to be found at the place of the search.
Proportionality
52. The Oireachtas may interfere with the constitutional rights of a person. However, in so doing its actions must be proportionate. The proportionality test, adopted from Canada, was first declared clearly in Ireland by Costello J. in Heaney v. Ireland [1994] 3 I.R. 593 at p. 607:

“The objective of the impugned provision must be of sufficient importance to warrant over-riding a constitutionally protected right. It must relate to concerns pressing and substantial in a free and democratic society. The means chosen must pass a proportionality test. They must:
(i) Be rationally connected to the objective and not be arbitrary, unfair or based on irrational considerations;
(ii) Impair the right as little as possible;

(iii) Be such that their effects on rights are proportionate to the objective …”

53. The Morris Tribunal [Report of the Tribunal of Inquiry set up pursuant to the Tribunal of Inquiry (Evidence) Acts 1921 – 2002 into certain Gardaí in the Donegal Division] (Government Publications 2006) considered the proportionality of s. 29(1). The conclusions and recommendations of chapter 6 ‘The Burnfoot Module’ at paragraphs 623 – 624 stated:-
“The Tribunal is satisfied that it is preferable that the power to issue a warrant should be vested in a judge. With modern technology and rapid communications, there is no reason why a judge cannot be easily contacted by telephone, facsimile or e-mail or personally, for the purpose of making an application to him/her for a search warrant. A record can thereby be created, whether by tape or by the recording of the message received by facsimile or e-mail, or indeed by the prompt furnishing of a grounding information to the judge within a limited period after the application of, say, 24 hours, verifying the basis upon which the application was made, which record can then be filed for future reference. The judge can then make an independent decision.
Such a decision as to whether to grant the warrant would involve a balancing of the interests of An Garda Síochána and the investigation of the criminal offence and the constitutional or legal rights of the person whose premises is to be the subject of the warrant. There are very limited occasions upon which time would be so pressing as to make it impossible to follow such a procedure. In any event, a residual power for such eventuality could, perhaps, still be vested in a senior officer of the Garda Síochána to be used in exceptional circumstances.

The Tribunal, therefore, recommends that urgent consideration be given to vesting the power to issue warrants under section 29 in judges of the District or Circuit court. This, the Tribunal believes to be in keeping with best modern practice in this regard as exemplified in judgments of the European Court of Human Rights and judicial trends in Canada and New Zealand.”

Decision
54. This case is decided on its own circumstances. These circumstances include the fact that the warrant was issued by a member of a Garda Síochána investigating team which was investigating the matters. A member of An Garda Síochána who is part of an investigating team is not independent on matters related to the investigation. In the process of obtaining a search warrant, the person authorising the search is required to be able to assess the conflicting interests of the State and the individual person, such as the appellant. In this case the person authorising the warrant was not independent. In the circumstances of this case a person issuing the search warrant should be independent of the Garda Síochána, to provide effective independence.
55. The circumstances of the appellant’s case also includes the fact that the place for which the search warrant was issued, and which was searched, was the appellant’s dwelling house. The Constitution in Article 40.5 expressly provides that the dwelling is inviolable and shall not be forcibly entered, save in accordance with law, which means without stooping to methods which ignore the fundamental norms of the legal order postulated by the Constitution. Entry into a home is at the core of potential State interference with the inviolability of the dwelling.

56. These two circumstances are at the kernel of the Court’s decision.

57. No issue of urgency arose in this case, and the Court has not considered or addressed situations of urgency.

58. The Court points out that it is best practice to keep a record of the basis upon which a search warrant is granted.

59. This Court would grant a declaration that s. 29(1) of the Offences against the State Act, 1939 (as inserted by s. 5 of the Criminal Law Act, 1976) and referred to as s. 29(1) of the Act of 1939, is repugnant to the Constitution as it permitted a search of the appellant’s home contrary to the Constitution, on foot of a warrant which was not issued by an independent person.

People (DPP) v Kavanagh

[2012] IECCA 65
Judgment of the Court delivered on the 24th day of May, 2012, by Denham C.J.
1. Jason Kavanagh, Mark Farrelly and Christopher Corcoran, the applicants before the Court of Criminal Appeal in these appeals, referred to collectively as “the applicants”, were accused jointly, with David Byrne and Niall Byrne, of:-

(i) Having falsely imprisoned Paul Richardson on the 13th and 14th days of March, 2005 at 28 Ashcroft, Raheny, Dublin 5, in the County of the City of Dublin, contrary to section 15 of the Non Fatal Offences Against the Person Act, 1997.
(ii) Having falsely imprisoned Marie Richardson on the 13th and 14th days of March, 2005 at 28 Ashcroft, Raheny, Dublin 5, in the County of the City of Dublin, contrary to section 15 of the Non Fatal Offences Against the Person Act, 1997.

(iii) Having falsely imprisoned Ian Richardson on the 13th and 14th days of March, 2005 at 28 Ashcroft, Raheny, Dublin 5 in the County of the City of Dublin, contrary to section 15 of the Non Fatal Offences Against the Person Act, 1997.

(iv) Having falsely imprisoned Kevin Richardson on the 13th and 14th days of March, 2005 at 28 Ashcroft, Raheny, Dublin 5, in the County of the City of Dublin, contrary to section 15 of the Non Fatal Offences Against the Person Act, 1997.

(v) Having robbed Paul Richardson and Securicor Security Services Ireland Limited of €2,280,000 on the 14th day of March, 2005, in the County of the City of Dublin contrary to section 14 of the Criminal Justice (Theft and Fraud Offences) Act, 2001.

2. The applicants were convicted on the 30th July, 2009, sentenced on the 12th November, 2009, and have appealed to the Court of Criminal Appeal.
Preliminary Issue
3. There is a preliminary issue before the Court. It is a discrete matter, addressed in advance of full appeals. Two fundamental questions arise at this time:

(i) Does the decision in Damache v. DPP and Ors [2012] IESC 11 apply to these cases?
(ii) If it does apply, what are the consequences?

Events
4. The events giving rise to these proceedings were as follows. On the 13th and 14th March, 2005, a number of men forced entry into the Richardson family home. They falsely imprisoned the Richardson family with the intent of forcing Paul Richardson, under threat of harm to his family, to undertake certain acts in his capacity as an employee of Securicor Security Services Ireland Ltd., so as to facilitate a robbery. Paul Richardson’s wife and two sons were taken to Cloon Wood, County Wicklow, where they were kept for a period overnight while Paul Richardson was kept at the family home. On the morning of the 14th March, 2005, Paul Richardson went to work and, under duress and in accordance with instructions, enabled a drop-off of €2.28 million in cash at the car park of the Angler’s Rest Pub, County Dublin. Marie, Kevin and Ian Richardson were left tied up in Cloon Wood. However they managed to release themselves, and obtained assistance.
5. On the 30th July, 2009, the applicants were convicted on all counts by a jury of eleven (one member having been discharged by reason of a family bereavement). The jury failed to reach a verdict in relation to the other accused; David Byrne and Niall Byrne.

6. On the 12th November, 2009, Jason Kavanagh was sentenced to 25 years imprisonment, concurrently on each count, which was backdated to the 1st November, 2008; Mark Farrelly was sentenced to twenty five years imprisonment, concurrently on each count, from the 30th July, 2009, and Christopher Corcoran was sentenced concurrently on each count, to twelve years imprisonment from the 30th July, 2009.

7. Each of the applicants has appealed his conviction and sentence. Jason Kavanagh’s Notice of Appeal was filed on the 2nd December, 2009; Mark Farrelly’s Notice of Appeal was filed on the 11th December, 2009; and Christopher Corcoran’s appeal was filed on the 8th January, 2010.
Damache Case
8. A preliminary issue has arisen in each of the three appeals, by reference to the decision of the Supreme Court in Damache v. DPP [2012] IESC 11 (unreported, 23rd February, 2010). It was held in Damache, at paragraph 59, that:-

“This Court would grant a declaration that s. 29(1) of the Offences against the State Act, 1939 (as inserted by s. 5 of the Criminal Law Act, 1976) and referred to as s. 29(1) of the Act of 1939, is repugnant to the Constitution as it permitted a search of the appellant’s home contrary to the Constitution, on foot of a warrant which was not issued by an independent person.”
9. The first question before the Court for consideration is whether the decision in Damache applies to the appeals of the applicants. Each of the applicants had appealed to this Court, and grounds of appeal had been filed, but no hearing date had been listed, prior to the decision in Damache v. DPP [2012] IESC 11.
Jason Kavanagh
10. It was submitted that Jason Kavanagh seeks to rely upon ground J, in his Notice of Appeal, which was filed before the Damache decision was given. Ground J states:-

“The learned trial judge erred in law and in fact when he found that the search of the appellant’s home and his subsequent arrest during that search were lawful”.
11. This ground refers, inter alia, to the admission of evidence that was obtained after a search of the applicant’s home which was made on foot of a search warrant issued by Superintendent Conneely, pursuant to s. 29 of the Offences Against the State Act, 1939, as inserted by s. 5 of the Criminal Law Act, 1976, referred to as “s. 29 of the Act of 1939.”
12. On Day 14 of the trial (18th May, 2008), the learned trial judge ruled on the issue as to whether the prosecution had fulfilled the legal requirements and had laid a foundation for the subsequent admission of evidence.

13. The home of each of the appellants was searched pursuant to a warrant issued by Superintendent Conneely. The evidence in relation to the warrants, which had been issued under s. 29 of the Act of 1939, was given by Superintendent Conneely on Day 14 of the trial (18th May, 2008). It is clear from that evidence that:-

(i) Superintendent Conneely was one of the senior garda officers involved in the investigation of the offences in this case;
(ii) Superintendent Conneely issued the warrant pursuant to s. 29 of the Act of 1939 to search Jason Kavanagh’s home at 27, Parlickstown Court, Mulhuddart, Dublin 15; as he did for the home of the other applicants;

(iii) Jason Kavanagh was arrested;

(iv) After Jason Kavanagh’s arrest, Superintendent Conneely authorised the taking of bodily samples from Jason Kavanagh during his period of detention at Santry Garda Station.

Warrants issued under s. 29 of the Act of 1939
14. Superintendent Conneely gave evidence, on the 18th May, 2009, that from his investigations it was his belief that there was evidence in relation to the unlawful possession of firearms and other matters at 27, Parlickstown Court, Mulhuddart, Dublin 15, and that on the 26th April, 2005, he issued a warrant under s. 29 of the Act of 1939 for that address to Declan Smith, Detective Sergeant, An Garda Síochána, to enter within a week the said premises, if necessary by force, to search the premises and any person found there, and to seize anything found on such person which any member had reason for believing to be evidence of or relating to the commission of an offence under the Act of 1939, as amended, for an offence which was a scheduled offence. Superintendent Conneely was aware that Jason Kavanagh resided at that address.
15. Superintendent Conneely gave evidence that on the 27th April, 2005, Jason Kavanagh was arrested at 27, Parlickstown Court, Mulhuddart, Dublin 15, for an offence under s. 30 of the Act of 1939, on suspicion of being in the unlawful possession of firearms at the home of Mr. Richardson on the 13th/14th March, 2005.

16. Superintendent Conneely gave evidence that on the 27th April, 2005, he was on duty at Santry Garda Station. He was informed by Detective Sergeant Smith of Jason Kavanagh’s arrest, and he authorised him to take photographs, fingerprints and bodily samples under the Criminal Justice (Forensic Evidence) Act, 1990, from Jason Kavanagh. He authorised the taking of blood, hair and samples of saliva.

17. Superintendent Conneely gave evidence that he issued in excess of 60 warrants in relation to these crimes over two days.

18. Superintendent Conneely gave evidence that on the 26th April, 2005, he issued a warrant under s. 29 of the Act of 1939 to Seán Hogan, Detective Sergeant, An Garda Síochána, to search 23, Moatview Court, Priorswood, Dublin 17, the home of Mark Farrelly, whom Superintendent Conneely was satisfied was involved in the offences before the Court.

19. Superintendent Conneely gave evidence that on the 27th April, 2005, Mark Farrelly was arrested at 23, Moatview Court, under s. 30 of the Offences Against the State Act, 1939, on suspicion of being in unlawful possession of firearms on the 13th/14th March, 2005, at 28 Ashcroft, Raheny, and was detained at Blanchardstown Garda Station.

20. Superintendent Conneely gave evidence authorising the taking of fingerprints, photographs, and a bodily sample from Mark Farrelly.

21. Superintendent Conneely gave evidence that on the 26th April, 2005, he prepared a number of s. 29 Act of 1939 warrants, included was a warrant given to Sergeant Michael Mulligan, An Garda Síochána, to search 94 Bayside Boulevard North, Bayside, Sutton, Dublin 13, the home of Christopher Corcoran, where he was satisfied there was evidence in relation to the investigation, being in unlawful possession of firearms.

22. Superintendent Conneely gave evidence that on the 27th April, 2005, Sergeant Mulligan arrested Christopher Corcoran under s. 30 of the Act of 1939 on suspicion of being in possession of firearms at 28 Ashcroft, Raheny, on the 13th/14th March, 2005, and he was detained at Store Street Garda Station. Superintendent Conneely authorised Sergeant Mulligan to photograph, fingerprint and take bodily swabs from Christopher Corcoran, under the Criminal Justice (Forensic Evidence) Act, 1990.

23. On the evening of the 28th April, 2005, Christopher Corcoran was brought to the District Court, Chancery Street, where Superintendent Conneely applied for an extension of his detention under s. 30(4) of the Act of 1939, and the District Court ordered that the detention be extended for a further 24 hours.

24. Superintendent Conneely gave evidence that on the 16th December, 2005, he attended at the Dublin Metropolitan District Court and sought and obtained a warrant pursuant to s. 30A(1) of the Act of 1939 for the arrest of Mark Farrelly, who had previously been arrested under s. 30 of the Act of 1939 and released without charge, but that in the meantime new evidence, DNA evidence, had been obtained.
Submissions on behalf of Jason Kavanagh
25. It was submitted by counsel on behalf of Jason Kavanagh that Superintendent Conneely was not independent of the investigation. It was submitted that the facts of his case are foursquare within those of Damache v. D.P.P. and Ors [2012] IESC 11.

26. It was submitted that Jason Kavanagh is entitled to rely on the finding of the unconstitutionality of s. 29 of the Act of 1939 made in the Damache case.

27. It was submitted that Jason Kavanagh’s case had not reached finality, as his appeal is live before this Court and that thus the Damache principle may be applied.

28. It was pointed out that the search warrant under s. 29 of the Act of 1939 was challenged at the trial. This included a submission that the reliance by An Garda Síochána on s. 29 of the Act of 1939 was a colourable device and that a judicially issued warrant, which carried with it the safeguards of a judicial enquiry into the propriety of a warrant, should have been employed, which submission at the trial was specifically adopted by counsel for Jason Kavanagh.
Constitutionality of an Act
29. It was submitted that Jason Kavanagh had not been permitted to challenge the warrant any further in the trial. Naturally, by virtue of Article 34.3.2 of the Constitution, the constitutionality of an Act cannot be challenged in the Circuit Criminal Court. In fact, when counsel for one of the co-accused (Mr. F. Kavanagh S.C., counsel for Niall Byrne) tried to do so on the point now determined by Damache, the learned trial judge stated that he was:-

“[…] not in power to decide that and I would be bound by [DPP v. Birney [2007] 1 IR 337] [ …] in any event”
[Transcript, Day 14, at p. 86]
30. Counsel replied by stating:-

“I simply say that the investigating officer is effectively a Judge in his own cause and that it offends against two principles, guarantee of the inviolability of the dwelling under Article 40.5 of the Constitution and Article 8 of the European Convention on Human Rights and it also offends against the guarantee of a fair trial enshrined in Article 38 of the Constitution and that in issuing the warrant he was acting as Judge in his own cause as head of the investigation. I say it is a breach of fair procedures because there is no impartial or independent assessment of the need for the warrant in the first place and I simply put that on the record.”
31. Also, it was submitted that this ground was listed as a ground of appeal before the judgment in Damache was delivered.
32. Thus, it was submitted, Jason Kavanagh has not acquiesced in the use of s. 29 of the Act of 1939.

33. It was submitted that Jason Kavanagh should be entitled to rely on the decision in Damache so as to assert that his home was searched otherwise than in accordance with law and in breach of his constitutionally protected right to the inviolability of his dwelling, for, where there is a finding that a post 1937 statute is unconstitutional, that section is deemed invalid from the date of its enactment.

34. On that basis, it was submitted, Jason Kavanagh’s home was searched on foot of an unlawful warrant and so amounted to a breach of his constitutional rights, and, thus all evidence flowing from that search should have been excluded from the trial: The People (DPP v. Kenny) [1990] 2 I.R. 110, [1990] ILRM 56; The People (DPP v. Laide) [2005] IECCA 24, [2005] 1 I.R. 209. Also, he was not in lawful detention, it was submitted, when bodily samples were taken from him, and these samples should not have been admitted at the trial.

35. It was submitted that the fact that Jason Kavanagh did not challenge the constitutionality of s. 29 of the Act of 1939 prior to his trial in separate legal proceedings is not a bar to him doing so now.

36. Further, it was submitted that had Jason Kavanagh sought to challenge s. 29 of the Act of 1939 prior to his trial, the DPP would have objected to the proceedings on the basis that they were premature and that the facts of the case had not been established. Counsel submitted that he was not estopped from raising the point at this stage.

37. It was submitted that Jason Kavanagh’s case had not reached finality, and that he is entitled to rely on the third party right that was vindicated in Damache, i.e. the unconstitutionality of s. 29 of the Act of 1939.

38. It was submitted that Jason Kavanagh’s appeal on this preliminary issue should be allowed and a re-trial ordered.
Submissions adopted
39. It was a feature of the joint trial that throughout the trial counsel for one accused adopted the submissions of counsel of a co-accused. This cut down on unnecessary repetition of submissions and delay in the trial. This approach was permitted by the learned trial judge. It was submitted that a decision in favour of one accused in the same trial on the issue of the s. 29 warrant should apply to all.
Submissions on behalf of the DPP
40. It was submitted on behalf of the DPP that the independence of Superintendent Conneely was raised only as an ancillary point, and that the main point argued was that the Superintendent did not have sufficient material upon which to make a fully informed decision. It was submitted that counsel for Mark Farrelly had accepted that the Superintendent could issue such a warrant but that it was a colourable device. It was submitted that the main argument relied upon by the applicants was that the Superintendent did not give any or any sufficient evidence of having the requisite state of mind.

41. It was submitted that the arguments were summarised in the ruling of the learned trial judge on the issue [Transcript Day 16 pages 1 – 9]. The learned trial judge, it was submitted, relied on the fact that no suggestion had been made that the provisions of s. 29(1) of the Act of 1939 had not been available to the investigating gárdaí. Rather that the argument had been that other powers should have been invoked instead. The learned trial judge analysed the Superintendent’s evidence with a view to ascertaining whether evidence had been given of the requisite state of mind and he concluded that the evidence was such that there were reasonable grounds to issue the warrants in question and that the statutory precondition for the issue of the warrants had been met.

42. It was accepted by the DPP that: (a) there was no question of urgency in the issuing of the search warrants; (b) that the issue of the search warrants was not independent of the investigation; and (c) the premises searched were dwellings.

43. It was submitted that the declaration of invalidity of a statute only applies to the party in litigation and prospectively and will only apply retrospectively in wholly exceptional circumstances.

44. It was submitted that the fact of an extant appeal is insufficient ground to enable the applicants to rely on a windfall from the Damache decision; that each applicant had chosen not to challenge the constitutionality of s. 29 of the Act of 1939 prior to the trial.

45. It was submitted that appealing to the Court of Criminal Appeal against the manner in which the trial was conducted is an inappropriate way for the applicants to advance Damache type arguments. That the correct way to challenge the validity of the search warrants was by way of judicial review, seeking certiorari of the convictions, or by way of a plenary hearing seeking a declaration.

46. It was submitted that any appeal to the Court of Criminal Appeal must be in respect of the trial and in relation to arguments and points of law raised therein: The People (DPP) v. Cronin (No. 2) [2006] IESC 9, [2006] 4 IR 329. Further, that the applicants have acquiesced in the use of s. 29 of the Act of 1939.

47. Also, it was submitted, that the lack of appellate jurisdiction to deal with the points now raised meant that on that point the proceedings are concluded and finality reached.

48. It was submitted that the function of the Court of Criminal Appeal is not to facilitate a complete rehearing of the case. Rather, it involves targeted criticism of the conduct of the criminal trial in relation to arguments and points raised. In this case it was submitted that the applicants are seeking to go beyond a submission that the trial judge made an error in law; they are seeking to take advantage of a shift in the law to enable an argument to be raised that was not raised at the trial.

49. It was submitted that the approach by the applicants was a misuse of the function of the Court of Criminal Appeal.

50. It was submitted that the applicants should not be entitled to rely on the decision in Damache v. DPP [2012] IESC 11 during the appeal. The applicants did not choose to challenge the legislation prior to their trial, knowing that the trial would not be a forum to challenge the constitutionality of the legislation.

Decision

Joint trial
51. There was a joint trial of the applicants and two other accused. To assist in the running of the long trial, counsel adopted submissions and legal arguments made by other counsel for the other accused. Thus, the raising of an issue by one counsel was adopted by other counsel. There was more than one specific reference to the constitutional validity of s. 29 of the Act of 1939 by counsel. In all the circumstances the Court is satisfied that a decision in relation to the warrants issued pursuant to s. 29 of the Act of 1939 should apply to all the applicants.
Constitutionality of s. 29 of the Act of 1939
52. The constitutionality of s. 29 of the Act of 1939 (and, by extension, the warrants issued thereunder) was clearly before the court of trial, even if, as already noted, the Circuit Court Judge had no jurisdiction on this issue. Thus, for example, on the 18th May, 2009, Mr. F. Kavanagh S.C., counsel for Niall Byrne, submitted to the trial judge:-

“I wish to say and submit to the Court that it is an unconstitutional provision and that it is also in breach of the European Convention on Human Rights in relation to Article 6 right to a fair trial and the Article 8 provisions concerning privacy. I am just simply putting it on the record.
[…]

I simply say that the investigating officer is effectively a Judge in his own cause and that it offends against two principles, guarantee of the inviolability of the dwelling under Article 40.5 of the Constitution and Article 8 of the European Convention on Human Rights and it also offends against the guarantee of a fair trial enshrined in Article 38 of the Constitution and that in issuing the warrant he was acting as a Judge in his own cause as head of the investigation. I say it is a breach of fair procedures because there is no impartial or independent assessment of the need for the warrant in the first place and I simply put that on the record.”

[Transcript, Day 14, p. 86].
Mr. McGinn SC, counsel for the DPP, submitted that as none of the other co-accused had formally adopted this submission, they are now precluded from relying on it. While it is technically true to say that the submission was not formally adopted by all the other counsel, the Court considers that, certainly in the circumstances of this case, it is somewhat unrealistic to suggest that such an objection was not being raised – and strongly raised – on behalf of all the accused. The applicants had effectively thrown down the gauntlet of a challenge on this ground to validity of the statute (and, by extension, the warrants) and the trial judge ruled that he had no jurisdiction in this matter. In the circumstances the Court is satisfied that it is appropriate to consider that the issue of the s. 29 warrants was raised on behalf of all of the applicants.
Does the decision in Damache apply to these applicants?
53. The first legal issue to be addressed is whether the applicants can rely on the decision in Damache v. DPP & Ors [2012] IESC 11 in their appeal.

54. In A v. Governor of Arbour Hill Prison [2006] IESC 45, [2006] 4 IR 88 at 143, a general principle was described by Murray C.J. as follows:-

“In a criminal prosecution where the State relies in good faith on a statute in force at the time and the accused does not seek to impugn the bringing or conduct of the prosecution, on any grounds that may in law be open to him or her, including the constitutionality of the statute, before the case reaches finality, on appeal or otherwise, then the final decision in the case must be deemed to be and to remain lawful notwithstanding any subsequent ruling that the statute, or a provision of it, is unconstitutional. That is the general principle.”
The Court would adopt and apply that principle.
55. The finality of a trial is at its conclusion. The question then arises as to when the trial is concluded. After a trial an accused has a right of appeal. However, the only issues that may be raised on appeal are those raised and decided upon at the trial. Thus, the issues to be determined on an appeal are dependent on what transpired in the trial court.

56. Kearns J. stated in The People (DPP) v. Cronin (No. 2) [2006] IESC 9, [2006] 4 IR 329 at 346:-

“… the Court of Criminal Appeal is concerned only with a review of the trial and the rulings made therein, and not with other suggested errors or oversights which may pre-date the trial or have been amenable to remedy in some other manner”.
The Court agrees with that statement of law and applies it to this case. Thus, the appeal in this case will be a review of the trial, issues raised, and rulings made therein.
Relevant Factors
57. In determining whether or not an issue may be raised on appeal it is necessary to consider the run of the trial to see if the matter was raised and whether there was a decision by the court of trial on the issue.

58. Some decisions by an accused during a trial have an important consequence for an appeal. For example, if an accused enters a plea of guilty at a trial that is a relevant factor. Such a plea is a choice by an accused. Once the plea is made and the conviction order follows, that is the foundation of fact for any consideration on any appeal.

59. Similarly, once a strategy has been decided upon by an accused at a court of trial, the matter cannot be negated and another approach taken on an appeal. As Geoghegan J. stated in The People (Director of Public Prosecutions) v. Cronin (No. 2) [2006] IESC 9, [2006] 4 IR 329 at p.339:

“I agree with the view of the Court of Criminal Appeal that the applicant was defended with skill and competence at the trial. It would be wrong now to set aside the conviction on foot of matters which were deliberately never raised in requisitions unless this court were of the view that a fundamental injustice had been caused. I do not hold any such view.”
60. Thus, if a person has taken a step, such as waiving a ground, that may not be opened on an appeal: Corrigan v. Irish Land Commission [1977] I.R. 317; State (Byrne) v. Frawley I.R. 326; A. v. Governor of Arbour Hill Prison [2006] 4 IR 88.
61. The issuing of the s. 29 warrants was not a rare occurrence. Superintendent Conneely gave evidence that he issued 64 such warrants over 2 days of investigations into these crimes. However, the only warrants in issue are the three which Superintendent Conneely issued in relation to the homes of the three applicants in this case.

62. Relevant factors in this case include the following:-

(i) The applicants pleaded not guilty to the charges at the trial;
(ii) The matter of the constitutionality of the warrants issued under s. 29 of the Act of 1939 was raised for the record during the trial. In the circumstances the Court determines that the issue was raised on behalf of each of the applicants.

(iii) The issue was raised in the Notices of Appeal.

(iv) The Notice of Appeal of each of the applicants was filed, but awaiting a hearing, when the decision in Damache v. DPP & Ors [2012] IESC 11, was made. Consequently, the Court is satisfied that the applicants’ cases had not reached finality.

(v) In contrast to the position in cases such as Byrne and A., none of the applicants had taken any steps which suggested that they had accepted, or waived objection to, or otherwise acquiesced in the validity of the section or the warrants issued thereunder.

63. Therefore, the issue of the s. 29 warrants, having been raised at the trial, and in the Notices of Appeal, may be considered on an appeal. This is so because finality of the case had not been reached. Further, the applicants have not acted so as to exclude the issue, for example by pleading guilty or by adopting a strategy contrary to maintaining the issue. Consequently, the Court is satisfied that there is no bar to the applicants raising the issue of the validity of the warrants issued under s. 29 of the Act of 1939 on their appeal. Therefore, the applicants are entitled to raise the issue on their appeal.
What are the consequences?
64. The applicants being permitted under law to raise the decision of Damache v. DPP & Ors [2012] IESC 11 in their appeal, the next question is, what are the consequences?

65. In general, a finding of the invalidity of a statute is applied prospectively, and to cases in which the issue was raised but in which finality had not yet been reached. Finality not having been reached in the applicants’ cases, and the issue having been raised at the trial, the consequence is that the circumstances of the case may be considered to determine if the law as stated in Damache is applicable.

66. The facts in these cases are on all fours with those in Damache. In all cases it was the investigating Superintendent of the Garda Síochána who issued the warrants; in all cases the warrants were addressed to search the dwelling of the applicants; and in all cases there was no degree of urgency. Thus, these appeals fall within the boundaries of Damache itself.
The Decision in Cunningham
67. These issues were considered at length by this Court in The People (Director of Public Prosecutions) v. Cunningham [2012] IECCA 64. That was also a case where, like the present one, an appeal was pending to this Court at the time of delivery of the judgment in Damache. In that case, the warrant had been issued in respect of a family home pursuant to s. 29 by a Garda Superintendent who was leading the investigation into the allegations of money laundering against the accused. As in the present case, the accused had always denied the charges and had further raised the validity of the warrant (though admittedly not the validity of the section itself) before the court of trial.

68. This Court accordingly rejected the argument that the Damache point could not be raised on appeal. The critical point which the Court of Criminal Appeal stressed was that as the criminal proceedings against the accused had not proceeded to finality and as the accused had taken no steps which suggested that he had acquiesced in or otherwise accepted the validity of the warrant, he was entitled to rely on Damache.

69. The judgment of the Court of Criminal Appeal in Cunningham was delivered by Hardiman J. who further explained how the judgment in Damache had illustrated the inherent constitutional frailty of s. 29. If, for example, the Oireachtas could validly authorise the search of a private dwelling merely because a Garda Superintendent was “satisfied” that there were “reasonable grounds” for believing that a search of a private dwelling would reveal evidence in relation to the commission or intended commission of a range of scheduled offences under the Offences Against the State Act, 1939, or the Criminal Law Act 1976, where then might the limits of that house searching power reside? After all, if the Superintendent in question was leading the investigation (as he invariably was), he presumably had already directed his subordinates to search the dwelling in question. In those circumstances, adopting the words of the Court of Criminal Appeal in Cunningham, the entire s. 29 procedure was often little more than a “convenient and decorous formality” which struck at the essence of the constitutional guarantee.

70. It is, after all, necessary to stress that Article 40.5 provides that the dwelling is “inviolable” and that any exceptions to this rule must therefore be proportionate, objectively justifiable and, in the words of Henchy J. in King v. Attorney General [1981] I.R. 223 at 257, respect “the fundamental norms of the legal order postulated by the Constitution.” All of this means that, absent genuine urgency, a search of a private dwelling must not only be authorised by an independent person, but the objective necessity for such a search must also be capable of being independently demonstrated. This further means that the basis for the search must be appropriately documented.

71. As the Supreme Court stressed in Damache, and as this Court explained in Cunningham, none of these essential safeguards were present in section 29. Absent such safeguards, the section failed to protect and vindicate the essence of that core constitutional guarantee of the inviolability of the dwelling.

72. The Court in Cunningham further demonstrated how a finding of unconstitutionality has general erga omnes (in relation to all) effects. This means that, in general, such a finding will apply to third parties “certainly so far as current and prospective transactions are concerned”, thus rejecting the argument that a finding of unconstitutionality somehow operates purely in personam, the benefit of which is confined to the litigants in question and their privies. Nor was it necessary that the accused should have challenged the validity of the warrant in separate proceedings.

73. For all of the reasons set out in this judgment and in Cunningham, the Court considers that the applicants are entitled to invoke the principles articulated in Damache. It follows, therefore, that the convictions cannot stand.
Potential catastrophic consequences
74. In arriving at this conclusion, just as the Court in Cunningham, this Court refrains from offering any view on the circumstances in which a court would decline to give full (or even partial) retroactive effect to a finding of unconstitutionality if this were to have catastrophic consequences. In addition to the examples mentioned by the Court of Criminal Appeal in Cunningham, the Court would further observe that it would be a fallacy to treat the issue of the consequences of a finding of unconstitutionality as if it were some form of abstract quasi-mathematical syllogism, with the courts looking on helplessly as the retroactive application of a finding of unconstitutionality worked inexorably to bring about catastrophic consequences for the legal system and ordered political society. While the first duty of the courts is to secure legal redress for those whose rights have been infringed by unconstitutional action, this duty is, as Article 40.3.1 itself recognises, tempered by considerations of feasibility and practicability. Any other conclusion would mean that the “true social order” envisaged by the Preamble to the Constitution could not be attained.

75. Just as in Cunningham, however, arguments along these lines were not advanced. Beyond noting that such arguments could be advanced in an appropriate case, this Court accordingly refrains from offering any view on such questions, whether in relation to the present appeals or, more generally, the aftermath of Damache itself.
Conclusions
76. Applying the law stated in Damache to these appeals, it follows therefore, that the applicants in the present case are entitled to rely on the finding of unconstitutionality. As their proceedings have not proceeded to finality, and as the finding of unconstitutionality had erga omnes (in relation to all) effect, it follows in turn that the warrants, issued under s. 29 of the Act of 1939, are invalid.

77. Thus the applicants are entitled to succeed on the preliminary issue. This judgment addresses no other issue. The consequence is that the appeals will be allowed and the Court will order a retrial of each of the applicants.

Cahill v. Sutton

[1980] IR 269
O’Higgins C.J.

O’Higgins C.J.

The relevant facts which form the background to these proceedings are fully set out in the judgment which Mr. Justice Henchy is about to deliver. Therefore, I do not propose to set out these facts in any detail. It is sufficient to say that the plaintiff’s appeal first came before this Court as an appeal against a ruling by Mr. Justice Hamilton on a preliminary issue which was raised on the pleadings in the plaintiff’s action against the defendant. That ruling was to the effect that the provisions3 of s. 11, sub-s. 2 (b), of the Statute of Limitations, 1957, barred the plaintiff’s action. Subsequently, the plaintiff contended that the sub-section was invalid having regard to the provisions of the Constitution, and so that issue was tried as a preliminary question before the President of the High Court.
Both in the High Court and in this Court the case made for the alleged invalidity of the sub-section rested on the absence of any saver to the time bar which would be applicable to a situation where the would-be plaintiff did not know, and could not possibly have known, of the accrual of the right of action within the permitted period. However, on an examination of the facts it transpired that at all material times the plaintiff was aware of her rights and of the alleged wrong of the defendant. Had she chosen to do so, the plaintiff could have initiated this action within the time permitted by the sub-section. Therefore, even if the sub-section had been so framed as to incorporate the suggested saver, this would have availed the plaintiff nothing. In the result, the alleged invalidity of the sub-section infringed no right of the plaintiff nor caused her any prejudice. For this reason the Court felt bound to consider whether the plaintiff had a sufficient standing to raise this question of the validity of the sub-section. I am satisfied that she has not that standing and, in this respect, I fully agree and endorse the judgment which is about to be delivered by Mr. Justice Henchy.
This Court’s jurisdiction, and that of the High Court, to decide questions concerning the validity of laws passed by the Oireachtas is essential to the preservation and proper functioning of the Constitution itself. Without the exercise of such a jurisdiction, the checks and balances of the Constitution would cease to operate and those rights and liberties which are both the heritage and the mark of free men would be endangered. However, the jurisdiction should be exercised for the purpose for which it was conferredin protection of the Constitution and of the rights and liberties thereby conferred. Where the person who questions the validity of a law can point to no right of his which has been broken, endangered or threatened by reason of the alleged invalidity, then, if nothing more can be advanced, the Courts should not entertain a question so raised. To do so would be to make of the Courts the happy hunting ground of the busybody and the crank. Worse still, it would result in a jurisdiction which ought to be prized as the citizen’s shield and protection becoming debased and devalued.
This is not to say, however, that, if those whose rights are affected cannot act or speak for themselves, the Courts should refuse to hear one who seeks to speak or act for them, even if his own rights are not affected. Such exceptional cases, hopefully rare, must be entertained.
I agree that this Court should make the order suggested by Mr. Justice Henchy.

Henchy J.
Dr. Reginald C. Sutton was a consultant gynaecologist who practised in Cork. In March, 1968, the plaintiff consulted him for diagnosis and treatment of a gynaecological complaint. Having given her a medical examination, he prescribed certain tablets. She says that she was told to take eight of those tablets each day. Her complaint is that she began to suffer illness and disability immediately4 after commencing that course of treatment. She still complains of illness and disability. In her view it is all due to the course of tablets prescribed by Dr. Sutton.
On the 11th April, 1972, being four years after she first began to suffer the ill-effects complained of, the plaintiff instituted the present proceedings in the High Court against Dr. Sutton. In those proceedings she claimed damages for negligence and breach of contract. The gist of the claim, as pleaded, was that Dr. Sutton prescribed, inexpertly and negligently, an incorrect and harmful medication in breach of his obligation (both under contract and in tort) to use due professional knowledge, skill and care. It is alleged that he prescribed the wrong tablets, that the dosage of eight tablets each day was excessive and harmful, and that he failed to take the necessary corrective or curative action to counteract the damage caused by those drugs.
In his defence, which was delivered in January, 1973, Dr. Sutton denied that there had been any lack of professional skill or care on his part and denied that the alleged ill-health or incapacity resulted from the prescribed medication; he also pleaded that the plaintiff’s claim was barred by s. 11, sub-s. 2 (b), of the Statute of Limitations, 1957. Pursuant to a notice of motion served by Dr. Sutton, the matter came before Mr. Justice Gannon in the High Court in October, 1974, when he ordered that certain issues preliminary to the trial of the action should be determined by a judge sitting without a jury.
They raised questions as to whether the claim lay in contract or in tort and whether it was barred by s. 11, sub-s. 2 (b), of the Act of 1957. The trial of those issues came before Mr. Justice Hamilton in February, 1975, when the plaintiff waived her claim in tort and it was ruled that the action, being now one in contract, was barred by s. 11, sub-s. 2 (b), of the Act of 1957.
The plaintiff appealed to this Court against the ruling that the action was statute barred. When that appeal came before this Court in January, 1976, counsel for the plaintiff applied for liberty to raise the question of the constitutionality of s. 11, sub-s. 2 (b), and the Court gave the plaintiff liberty to amend her reply (by pleading the constitutional issue) and to serve notice on the Attorney General in accordance with order 60, r. 1, of the Rules of the Superior Courts, 1962. The order of Mr. Justice Gannon was amended by adding the constitutional issue to the preliminary issues to be tried, and the trial of that issue was remitted to the High Court. The hearing of the appeal was adjourned pending the determination of that issue.
II
The issue as to whether s. 11, sub-s. 2 (b), of the Act of 1957 is unconstitutional came before the President of the High Court in July, 1977. Sub-section 2 (b), provides:
“An action claiming damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of a provision made by or under a statute or independently of any contract or any such provision), where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to any person, shall not be brought after the expiration of three years from the date on which the cause of action accrued.”
Since the plaintiff has abandoned the claim in tort, it is agreed that her claim is now one for damages for personal injuries arising from an alleged breach of a contractual duty. Section 11, sub-s. 2 (b), imposes an absolute bar on the bringing of such an action after the expiration of three years from the date when the cause of action accrued. The plaintiff’s cause of action accrued in 1968. Although she became aware in 1968 of the breach of contract which is now the basis of her claim, the action was not brought until 1972, which was some four years after the cause of action accrued. Therefore, the provisions of s. 11, sub-s. 2 (b), clearly bar the plaintiff’s claim; so much is common ground.
The case made before the President that s. 11, sub-s. 2 (b), is unconstitutional was based on two submissions. First, it was submitted that the imposition of this time limit was a failure by the State to carry into effect the guarantee given in Article 40, s. 3, sub-s. 1, of the Constitution of Ireland, 1937, in its laws to respect and, as far as practicable, by its laws to defend and vindicate the personal rights of the citizen. Secondly, it was submitted that this time limit amounted to a failure by the State to observe the duty cast on it by Article 40, s. 3, sub-s. 2, by its laws to protect as best it may from unjust attack and, in the case of injustice done, to vindicate the life, person, good name, and property rights of every citizen. The President rejected both submissions and ruled that the challenge to the constitutionality of s. 11, sub-s. 2 (b), failed.
The appeal now before this Court is limited to a submission on behalf of the plaintiff that the President’s ruling on the issue of constitutionality was incorrect. In the course of the hearing of the appeal the question arose as to whether the plaintiff had locus standi such as would make it competent for her to seek a ruling that s. 11, sub-s. 2 (b), is unconstitutional. To show how that question becomes pertinent, it is necessary to state with more particularity the complaint that is made on behalf of the plaintiff against the constitutionality of that sub-section.
III
Section 11, sub-s. 2 (b), is in terms an absolute bar on the bringing of an action such as this save within three years after the accrual of the cause of action. Whereas Part III of the Statute of Limitations, 1957, provides for an extension of the periods of limitation where there is evidence of disability, acknowledgment, part payment, fraud and mistake, no such extension is allowed for a case such as this. The absolute and unqualified terms of s. 11, sub-s. 2 (b), preclude any extension of the three-year period of limitation where the would-be plaintiff did not know, and could not have learned within that period, of the accrual of the cause of action. Therefore, it is said that the sub-section is capable of shutting out a person from a right of action before it was possible for him to learn that he was entitled to it. For that reason, it is submitted that the sub-section could be compatible with the invoked constitutional provisions only if there were attached to it a saver such as was introduced for England and Wales by the Westminster Parliament in s. 1, sub-s. 1, of the Limitation Act, 1963, whereby a plaintiff may escape the rigour of the period of limitation if, inter alia, he shows that the material facts relating to the cause of action “were or included facts of a decisive character which were at all times outside the knowledge (actual or constructive) of the plaintiff until a date which (a) either was after the end of the three-year period relating to that cause of action or was not earlier than twelve months before the end of that period, and (b) in either case, was a date not earlier than twelve months before the date on which the action was brought.”
The first thing to be noted about this submission is that even if s. 11, sub-s. 2 (b), were qualified by such a saver, it would avail the plaintiff nothing. At all material times she was aware of all the facts necessary for the making of a claim against Dr. Sutton. Her present claim is founded on breach of contract. Within weeks of the commencement of her treatment in 1968 she knew of the facts which, according to her, constituted a breach of contract, and of their prejudicial effects on her. Yet she did not bring her action within the three-year period. It is clearindeed, it is admittedthat the plaintiff would still be shut out from suing after the three-year period of limitation even if the suggested saving provision had been included in the Act of 1957.
That being the legal predicament in which the plaintiff finds herself, the argument formulated on her behalf is not that she is unjustly debarred from suing because of the alleged statutory defect but that a person to whom the suggested saving provision would apply if it had been enacted could claim successfully in the High Court a declaration that s. 11, sub-s. 2 (b), is unconstitutional because the suggested saving provision is not attached to it. Therefore, the plaintiff is seeking to be allowed to conjure up, invoke and champion the putative constitutional rights of a hypothetical third party, so that the provisions of s. 11, sub-s. 2 (b), may be declared unconstitutional on the basis of that constitutional jus tertiithus allowing the plaintiff to march through the resulting gap in the statute. The question which the Court has to consider is whether such an indirect and hypothetical assertion of constitutional rights gives the plaintiff the standing necessary for the successful invocation of the judicial power to strike down a statutory provision on the ground of unconstitutionality.
IV
Little or no help on this question is to be found in the decisions of the Courts in the early years following on the enactment of the Constitution in 1937, for it does not appear that the issue of standing was dealt with as an issue in any constitutional case before 1969. In that year the High Court had to decide in East Donegal Co-Operative v. The Attorney General 8 whether the plaintiffs (who were three co-operative societies and four individuals) had the necessary standing to question the constitutionality of certain provisions of the Livestock Marts Act, 1967. The plaintiffs contended that the Act of 1967 gave excessive and arbitrary powers to the Minister for Agriculture and Fisheries in regard to the granting and the revocation of licences to operate livestock marts. In the High Court O’Keeffe P. held that the three plaintiffs who were co-operative societies operating livestock marts, and the four individual plaintiffs (each of whom was a shareholder in a livestock mart), had the necessary standing to question the constitutionality of the statutory provisions in issue because, although none of the plaintiffs had yet been actually affected adversely by the challenged sections, those sections (assuming that they gave to the Minister the powers suggested) constituted a threat to the existence of the marts in which the plaintiffs had an interest. Understandably, that ruling was affirmed when the case came on appeal to this Court. The nub of the ruling in both courts derives from the direct threat posed by the questioned sections to the property rights of each of the plaintiffs. As the judgment of this Court put it at p. 339 of the report:
“In the present case all the plaintiffs are engaged in the type of business which is directly affected, and subject to control, by the provisions of the Act and it is the opinion of this Court that they have, therefore, a right to maintain these proceedings.”
Therefore, that decision does not provide any direct authority on the point in question in this case, for the plaintiffs in that case were deemed to have the necessary standing because they were asserting their own rights as the basis of their constitutional challenge, whereas in this case the plaintiff’s challenge requires her to rely not on a violation of her own constitutional rights but on the notional complaint of a hypothetical third party that his constitutional rights have not been upheld. In so far as the judgment of this Court in the East Donegal Co-Operative Case 8 contains observations on the law applicable to a situation such as that, they must be deemed to be obiter dicta.
The general approach to the question of standing that has been adopted in other jurisdictions was described as follows in the judgment of this Court in the East Donegal Co-Operative Case 8 at p. 338 of the report

“With regard to the locus standi of the plaintiffs the question raised has been determined in different ways in countries which have constitutional provisions similar to our own. It is unnecessary here to go into this matter in detail beyond stating that at one end of the spectrum of opinions on this topic one finds the contention that there exists a right of action akin to an actio popularis which will entitle any person, whether he is directly affected by the Act or not, to maintain proceedings and challenge the validity of any Act passed by the parliament of the country of which he is a citizen or to whose laws he is subject by residing in that country. At the other end of the spectrum is the contention that no one can maintain such an action unless he can show that not merely do the provisions of the Act in question apply to activities in which he is currently engaged but that their application has actually affected his activities adversely. The Court rejects the latter contention and does not find it necessary in the circumstances of this case to express any view upon the former.”
It should be observed that the contrast drawn in that passage is between two widely divergent opinions or contentions and not between two opposing judicial attitudes taken up in other countries. In point of fact, in no comparable jurisdiction to which the Court’s attention has been directed does either of those two polarised opinions or contentions seem to have received authoritative judicial acceptance. On the contrary, in other jurisdictions the widely accepted practice of courts which are invested with comparable powers of reviewing legislation in the light of constitutional provisions is to require the person who challenges a particular legislative provision to show either that he has been personally affected injuriously by it or that he is in imminent danger of becoming the victim of it. This general rule means that the challenger must adduce circumstances showing that the impugned provision is operating, or is poised to operate, in such a way as to deprive him personally of the benefit of a particular constitutional right. In that way each challenge is assessed judicially in the light of the application of the impugned provision to the challenger’s own circumstances.
This general, but not absolute, rule of judicial self-restraint has much to commend it. It ensures that normally the controversy will rest on facts which are referable primarily and specifically to the challenger, thus giving concreteness and first-hand reality to what might otherwise be an abstract or hypothetical legal argument. The resulting decision of the court will be either the allowance or the rejection of the challenge in so far as it is based on the facts adduced. If the challenge succeeds, the impugned provision will be struck down. If it fails, it does not follow that a similar challenge raised later on a different set of facts will fail: see Ryan v. The Attorney General 5 at p. 353 of the report. In that way the flexibility and reach of the particular constitutional provision invoked are fully preserved and given necessary application.
V
While a cogent theoretical argument might be made for allowing any citizen, regardless of personal interest or injury, to bring proceedings to have a particular statutory provision declared unconstitutional, there are countervailing considerations which make such an approach generally undesirable and not in the public interest. To allow one litigant to present and argue what is essentially another person’s case would not be conducive to the administration of justice as a general rule.5 Without concrete personal circumstances pointing to a wrong suffered or threatened, a case tends to lack the force and urgency of reality. There is also the risk that the person whose case has been put forward unsuccessfully by another may be left with the grievance that his claim was wrongly or inadequately presented.
It is true that a Bill that has passed through Parliament but has not been signed by the President of Ireland may be referred by him to this Court under Article 26 of the Constitution for a decision as to the constitutionality of one or more of its provisions. It is also true that in those circumstances the Court has not the benefit of a case presented by an aggrieved litigant on the basis of his personal situation, so the Court may have to decide the issue in vacuo by reference to abstract or projected considerations. However, that is a special and limited jurisdiction which has been specially vested in this Court by Article 26, and its existence or nature cannot be taken as inhibiting the High Court or the Supreme Court from exercising the general jurisdiction to review legislation in the manner that will most effectively give force to constitutionally guaranteed rights within the general constitutional framework. Indeed, the existence of that jurisdiction may indicate an intention on the part of the framers of the Constitution that the power of the President of Ireland to obtain such a binding advisory opinion from the Supreme Court as to the constitutionality of newly made and questionable legislation should fill the vacuum that might exist until a duly qualified litigant comes forward to challenge the constitutionality of the statutory provision in question.
There is also the hazard that, if the Courts were to accord citizens unrestricted access, regardless of qualification, for the purpose of getting legislative provisions invalidated on constitutional grounds, this important jurisdiction would be subject to abuse. For the litigious person, the crank, the obstructionist, the meddlesome, the perverse, the officious man of straw and many others, the temptation to litigate the constitutionality of a law, rather than to observe it, would prove irresistible on occasion.
In particular, the working interrelation that must be presumed to exist between Parliament and the Judiciary in the democratic scheme of things postulated by the Constitution would not be served if no threshold qualification were ever required for an attack in the Courts on the manner in which the Legislature has exercised its law-making powers. Without such a qualification, the Courts might be thought to encourage those who have opposed a particular Bill on its way through Parliament to ignore or devalue its elevation into an Act of Parliament by continuing their opposition to it by means of an action to have it invalidated on constitutional grounds. It would be contrary to the spirit of the Constitution if the Courts were to allow those who were opposed to a proposed legislative measure, inside or outside Parliament, to have an unrestricted and unqualified right to move from the political arena to the High Court once a Bill had become an Act. It would not accord with the smooth working of the organs of State established by the Constitution if the enactments of the National Parliament were liable to be thwarted or delayed in their operation by litigation which could be brought at the whim of every or any citizen, whether or not he had a personal interest in the outcome.
VI
The Constitution has given Parliament the sole and exclusive power of making laws. The Courts normally accord those laws the presumption of having been made with due observance of constitutional requirements. If a citizen comes forward in court with a claim that a particular law has been enacted in disregard of a constitutional requirement, he has little reason to complain if in the normal course of things he is required, as a condition of invoking the court’s jurisdiction to strike down the law for having been unconstitutionally made (with all the dire consequences that may on occasion result from the vacuum created by such a decision), to show that the impact of the impugned law on his personal situation discloses an injury or prejudice which he has either suffered or is in imminent danger of suffering.

This rule, however, being but a rule of practice must, like all such rules, be subject to expansion, exception or qualification when the justice of the case so requires. Since the paramount consideration in the exercise of the jurisdiction of the Courts to review legislation in the light of the Constitution is to ensure that persons entitled to the benefit of a constitutional right will not be prejudiced through being wrongfully deprived of it, there will be cases where the want of the normal locus standi on the part of the person questioning the constitutionality of the statute may be overlooked if, in the circumstances of the case, there is a transcendent need to assert against the statute the constitutional provision that has been invoked. For example, while the challenger may lack the personal standing normally required, those prejudicially affected by the impugned statute may not be in a position to assert adequately, or in time, their constitutional rights. In such a case the court might decide to ignore the want of normal personal standing on the part of the litigant before it. Likewise, the absence of a prejudice or injury peculiar to the challenger might be overlooked, in the discretion of the court, if the impugned provision is directed at or operable against a grouping which includes the challenger, or with whom the challenger may be said to have a common interestparticularly in cases where, because of the nature of the subject matter, it is difficult to segregate those affected from those not affected by the challenged provision.
However, those examples of possible exceptions to the rule should not be taken as indicating where the limits of the rule are to be drawn. It is undesirable to go further than to say that the stated rule of personal standing may be waived or relaxed if, in the particular circumstances of a case, the court finds that there are weighty countervailing considerations justifying a departure from the rule.
As to the instant case, it is reduced to a question whether there are such countervailing considerations. The plaintiff’s complaint that s. 11, sub-s. 2 (b), of the Statute of Limitations, 1957, is invalid on constitutional grounds is based on the fact that there is not attached to it a saver for those whose claims might become statute barred despite non-culpable ignorance of crucial facts: but the plaintiff’s predicament is that her action would be statute barred even if s. 11, sub-s. 2 (b), of the Act of 1957 had been so qualified. So she cannot be heard to say that the alleged unconstitutionality has wrought her personally any actual or threatened prejudice. Therefore, she is wanting in personallocus standi. Her counsel is driven to grounding her allegation of unconstitutionality on the actual prejudice that would be suffered by a hypothetical person whose action would be statute barred under s. 11, sub-s. 2 (b), despite his non-culpable ignorance of crucial facts.
VII
The primary rule as to standing in constitutional matters is that the person challenging the constitutionality of the statute, or some other person for whom he is deemed by the court to be entitled to speak, must be able to assert that, because of the alleged unconstitutionality, his or that other person’s interests have been adversely affected, or stand in real or imminent danger of being adversely affected, by the operation of the statute.
On that test the plaintiff must be held to be disentitled to raise the allegation of unconstitutionality on which she relies. Even if the Act of 1957 contained the saving clause whose absence is said to amount to an unconstitutionality, she would still be barred by the statute from suing. So the alleged unconstitutionality cannot affect her adversely, nor can it affect anybody whose alter ego or surrogate she could be said to be. As to such other persons, although the statute was passed in 1957, the plaintiff is unable to instance any person who has been precluded from suing for damages because of the absence from the statute of the saving clause for which she contends. Therefore, her case has the insubstantiality of a pure hypothesis. While it is true that she herself would benefit, in a tangential or oblique way, from a declaration of unconstitutionality, in that the consequential statutory vacuum would enable her to sue, that is an immaterial consideration in view of her failure to meet the threshold qualification of being in a position to argue, personally or vicariously, a live issue of prejudice in the sense indicated.
Were the Courts to accede to the plaintiff’s plea that she should be accorded standing merely because she would indirectly and consequentially benefit from a declaration of unconstitutionality, countless statutory provisions would become open to challenge at the instance of litigants who, in order to acquire standing to sue, would only have to show that some such consequential benefit would accrue to them from a declaration of unconstitutionalitynotwithstanding that the statutory provision may never have affected adversely any particular person’s interests, or be in any real or imminent danger of doing so. It would be contrary to precedent, constitutional propriety and the common good for the High Court, or this Court, to proclaim itself an open house for the reception of such claims.

The plaintiff’s lack of standing to raise the constitutional point is aggravated and compounded by her inordinate and inexcusable delay in initiating and prosecuting her claim. Dr. Sutton died in 1980 and his personal representatives have now become defendants in this action. At this remove it would be virtually impossible for the personal representatives to defend this claim on the merits, now that Dr. Sutton has died almost 12 years after the alleged acts of negligence took place.
Apart from the fact that no case has been made out for overlooking the plaintiff’s unexplained delay both in instituting and in prosecuting her claim in due time, there is no pressing constitutional need to entertain the claim that s. 11, sub-s. 2 (b), of the Act of 1957 is invalid for the reason alleged. In the 23 years since that Act was passed, it does not appear that any would-be plaintiff has come forward claiming that s. 11, sub-s. 2 (b), has unconstitutionally precluded him from suing. If the Court were now, on hypothetical grounds, to declare s. 11, sub-s. 2 (b), to be invalid, it would not only allow the plaintiff to proceed with her belated claim at a time when the possibility of a fair trial has passed but it would also allow all other claims of a like nature to be revived and instituted pending a statutory replacement for s. 11, sub-s. 2 (b), save to the extent that such claims might be barred by provisions other than those contained in that sub-section. Of course, the Courts will not be deterred by arguments of inconvenience from declaring a statutory provision invalid on constitutional grounds, provided the proceedings are properly constituted and the circumstances warrant the making of such an order.
However, the plaintiffs inability to overcome the fact that she would still be statute barred even if Parliament had not left what is claimed to be an unfair lacuna in the statute, being compounded by inordinate, unexplained and inexcusable delay and by her failure to identify any real need (either in the public interest generally or in the live interest of any specific person) to strike down s. 11, sub-s. 2 (b), of the Act of 1957, must be held to leave her disqualified from proceeding with her claim.
VIII
In the result, it is not possible to uphold the conclusion of the President of the High Court in regard to the failure of the plaintiff’s claim that s. 11, sub-s. 2 (b), of the Act of 1957 is unconstitutional: but that is due solely to the fact that the plaintiff lacks the necessary competence to make that claim. This particular defence was not raised before the President; it emerged for the first time in this Court and, because it is of the essence of this judgment, it is not possible to express either approval or disapproval of the President’s reasons for his conclusion that s. 11, sub-s. 2 (b), is not unconstitutional.
While in the circumstances of this case the Court is unable to rule on the validity of the claim made against the constitutionality of s. 11, sub-s. 2 (b), of the Act of 1957, it is proper to point out that the justice and fairness of attaching to that sub-section a saver such as was inserted by the British Parliament in s. 1 of the Limitation Act, 1963, are so obvious that the enactment by our Parliament of a similar provision would merit urgent consideration.
For the reasons adduced in this judgment, I would allow this appeal against the order of the President of the High Court to the extent that it declared that s. 11, sub-s. 2 (b), of the Act of 1957 is not unconstitutional. The issue of unconstitutionality must be left undetermined. Strictly speaking, that is the only point raised in this appeal, but in my view it would follow that when this case returns to the High Court the plaintiff’s claim for damages should be dismissed.

Griffin J.
I agree.

Kenny J.
I agree.

Parke J.
I agree.

McDaid v Sheehy

[1991] ILRM 250
Finlay CJ
This is an appeal brought by the applicant against an order made in the High Court by Blayney J on 23 January 1989.

The proceedings brought by the applicant were proceedings for judicial review in which there was sought:

(a) an order of certiorari of the order of the first-named respondent made on 29 February 1988 dismissing the applicant’s appeal and affirming a conviction in the District Court made on 12 June 1986 for an offence contrary to s. 21(8) (a) of the Finance Act 1935 as amended;

(b) a declaration by way of judicial review that the provisions of s. 1 of the Imposition of Duties Act 1957 as amended are invalid having regard to the provisions of the Constitution;

(c) a declaration that the provisions of the Imposition of Duties (No. 221) (Excise Duties) Order 1975 are invalid having regard to the provisions of the Constitution.

The learned trial judge held that part of s. 1 of the Act of 1957 was invalid having regard to the provisions of the Constitution in that it provided for an impermissibly wide delegation of power in breach of Article 15.2.1° of the Constitution, but held that the applicant was not entitled to the order of certiorari sought by reason of the fact that the provisions of the Imposition of Duties Order 1975 relevant to the offence with which the applicant was charged had been confirmed and re-enacted by subsequent legislation, vizs. 46 of the Finance Act 1976 which provided:

The orders mentioned in the table to this section are hereby confirmed.

One of the orders mentioned was the 1975 Order.

The learned trial judge reached the conclusion that it was the intention of the Oireachtas that the order should be part of the law of the State. The confirmation of the order was a clear expression of that intention. At the time it was believed that the order was valid but that confirmation was necessary so that it would continue to have statutory force after the end of 1976. It would have ceased to have effect at the end of that year if it were not confirmed. So, the learned judge held, the intention in confirming it was to give it the status of a permanent statutory provision deriving its validity as from the end of 1976 from s. 46 of the Finance Act 1976.

He, accordingly, dismissed the applicant’s claim for judicial review.

The applicant appealed against that dismiss in so far as it consisted of a decision that he was not entitled to an order of certiorari. The respondents appealed against the finding in the High Court that s. 1 of the Act of 1957 was invalid having regard to the Constitution and against the finding that consequently the Imposition of Duties Order 1975 was also invalid.

Upon the hearing of the appeal the court first heard arguments on behalf of the Attorney General on the challenge to the constitutional validity of s. 1 of the Imposition of Duties Act 1957, having regard to the fact that it had been held in the High Court that the said section of the Act was invalid.

I am satisfied that the learned High Court judge was correct in holding that the 1976 Act gave validity to the order as from the end of 1976 and, therefore, at all material times to this litigation the order was of full force and effect.

Having regard to this view, the issue is as to whether it was necessary for the learned trial judge to pronounce on the constitutional validity of s. 1 of the Imposition of Duties Act 1957 and, if it was not, whether it would be appropriate for this Court to pronounce on it either.

The impugned statutory provisions
Ss. 1 and 2 of the Imposition of Duties Act 1957 as amended by s. 46 of the Finance Act 1975 read as follows:

1. — The government may by order:

(a) impose, whether with or without qualifications, limitations, drawbacks, allowances, exemptions, or preferential rates, and as from any specified day, a customs duty of such amount as they think proper on any particular description of goods imported into the State and, where the goods are chargeable with any other customs duty, so impose the first-mentioned duty either in addition to or in substitution for the other duty;

(b) terminate or vary in any manner or respect whatsoever, and as from any specified day, in regard to goods imported into the State any customs duty in force at the passing of this Act or imposed by any Act passed or order made after the passing of this Act or any qualification, limitation, drawback, allowance, exemption, or preferential rate in force at the date of the order in relation to any such duty;

(c) limit any such imposition, termination or variation to goods consigned from or grown, produced, or made in particular countries;

(d) impose, whether with or without qualifications, limitations, allowances, exemptions, or preferential rates, an excise duty on any particular matter or thing as from any specified day and, for the purpose of the duty, require the taking out of a licence for the doing of any particular thing;

(e) terminate or vary in any manner or respect whatsoever and as from any specified day any excise duty in force at the passing of this Act or imposed by any Act passed or order made after the passing of this Act, or any qualification, limitation, allowance, exemption, or preferential rate in force at the date of the order in relation to any such duty;

(ee) where a customs duty on goods of any particular description —

(i) is terminated by the order and, in the opinion of the government, the whole of the duty was of a fiscal nature or there was a fiscal element in the duty, or

(ii) is varied by the substitution for the rate at which the duty was chargeable of another such rate and there was, in the opinion of the government, a fiscal element in the duty before such variation and the substituted rate is equal to the rate for which it was substituted less so much thereof as, in the opinion of the government was the fiscal element in the duty, impose, whether with or without qualifications, limitations, drawbacks, allowances, exemptions or preferential rates, and as from any specified day, on goods of that particular description imported into the State an excise duty at a rate equal —

(I) if, in the opinion of the government, the whole of the customs duty was of a fiscal nature, to the rate of such duty, and

(II) if, in the opinion of the government, there was a fiscal element in the customs duty, to the part of the rate of such duty that, in the opinion of the government, was the fiscal element therein,

and the references in paragraph (e) of this section to any excise duty and in paragraphs (h) and (i) of this section to any duty shall be construed as including references to any duty imposed under this paragraph and a duty imposed under this paragraph shall be deemed, for the purposes of the said paragraph (h), to be a customs duty and an excise duty;

(f) impose, whether with or without qualifications, limitations, allowances, exemptions, or preferential rates, a stamp duty on any particular description of document or transaction as from any specified day and, for the purpose of the duty, require a document or a particular form of document to be used in or in connection with any particular description of transaction;

(g) terminate or vary in any manner or respect whatsoever and as from any specified day any stamp duty in force at the passing of this Act or imposed by any Act passed or order made after the passing of this Act, or any qualification, limitation, allowance, exemption, or preferential rate in force at the date of the order in relation to any such duty;

(h) apply (with or without modification) to or in respect of any duty imposed or varied under this section any statutory provision regulating the collection of or imposing penalties in relation to duties of the class to which the duty belongs;

(i) place any duty imposed or varied under this section under the care and management of the Revenue Commissioners;

(j) revoke or amend an order under this section.

2. —
(1) Every order under s. 1 shall have statutory effect upon the making thereof and, unless the order either is confirmed by Act of the Oireachtas passed not later than the end of the year following that in which the order is made or is an order merely revoking wholly an order previously made under that section, the order shall cease to have statutory effect at the expiration of that period but without prejudice to the validity of anything previously done thereunder.

(2) No order under s. 1 which ceases to have statutory effect by reason of the expiration of the period mentioned in subs. (1) of this section or which is revoked by order under s. 1 shall be capable of being continued or renewed by any other order made (whether before or after such cesser or revocation) under that section.

(3) If when an order under s. 1 is made or at any time thereafter and before the order is confirmed by Act of the Oireachtas or is revoked or ceases to have statutory effect Dáil Éireann stands adjourned for a period of more than ten days and if during the adjournment a majority of the members of Dáil Éireann by notice in writing given to the Ceann Comhairle require Dáil Éireann to be summoned, the Ceann Comhairle shall summon Dáil Éireann to meet on a day named by him not being more than 21 days after the receipt by him of the notice nor less than ten days after the issue of the summons.

The challenge to the constitutional validity of the section
The challenge to the constitutional validity of these provisions and the basis on which that challenge was upheld by the learned trial judge was that they were in breach of Article 15.2.1° of the Constitution, being, in effect, an impermissibly wide delegation of legislative power.

Constitutional provision
Article 15.2.1° of the Constitution reads as follows:

The sole and exclusive power of making laws for the State is hereby vested in the Oireachtas; no other legislative authority has power to make laws for the State.

The question for resolution in this case now is whether it is appropriate on appeal for this Court to pronounce on the constitutional validity of this legislation when such pronouncement can be of no benefit to the applicant, having regard to the finding that the actual order under which he was prosecuted is constitutionally valid by virtue of the intervening statutory provision of the Finance Act 1976, s. 46.

Just as the presumption of constitutionality enjoyed by post-constitutional Acts of the Oireachtas ‘springs from, and is necessitated by, that respect which one great organ of State owes to another’ (Buckley v Attorney General [1950] IR 67, at 80) so it is clear from our jurisprudence that the courts should not engage in the question of the possible invalidity of an Act of the Oireachtas unless it is necessary for its decision to do so. In Roche v Minister for Industry and Commerce [1978] IR 149 the court was concerned with an order made by the minister under the Minerals Development Act 1940. In the result it was decided that the minister’s orders were invalid and, in those circumstances, it was the unanimous view of the members of the court that it was not necessary to pronounce any opinion upon the question raised as to the constitutional validity of s. 14 of the Minerals Development Act 1940. (See judgment of FitzGerald CJ, at p. 152). In M. v An Bord Uchtála [1977] IR 287, the claim made by the plaintiffs was that certain provisions of the Adoption Act 1952 were unconstitutional and there was also a claim that the requirements laid down by the Act were not complied with and that the order made on foot thereof was null and void on that account.

At p. 293 of the report O’Higgins CJ said:

Where the relief which a plaintiff seeks rests on two such distinct grounds, as a general rule the court should consider first whether the relief sought can be granted on the ground which does not raise a question of constitutional validity. If it can, then the court ought not to rule on the larger question of the constitutional validity of the law in question. Normally, such a law as a statute of the Oireachtas will enjoy a presumption of constitutionality which ought not to be put to the test unnecessarily. However, there may be circumstances of an exceptional nature where the requirements of justice and the protection of constitutional rights make the larger enquiry necessary. Such, in my view, do not exist in this case.

In Cooke v Walsh [1984] IR 710, at p. 728, O’Higgins CJ said:

It is well settled that the consideration of any question involving the validity of a statute or a section thereof should, in appropriate circumstances, be postponed to the consideration of any other question, the resolution of which will determine the issue between the parties.

In Murphy v Roche [1987] IR 106, at p. 110, I (with Henchy and Griffin JJ concurring) said:

There can be no doubt that this Court has decided on a number of occasions that it must decline, either in constitutional issues or in other issues of law, to decide any question which is in the form of a moot and the decision of which is not necessary for the determination of the rights of the parties before it. Secondly, it has also clearly been established that where the issues between parties can be determined and finally disposed of by the resolution of an issue of law other than constitutional law, the court should proceed to consider that issue first and, if it determines the case, should refrain from expressing any view on the constitutional issue that may have been raised.

These principles, however, must, of course, be subject in any individual case to the overriding consideration of doing justice between the parties.

In none of these cases was this Court referred to its decision in McDonald v Bord na gCon reported in [1964] IR 350, though in some of them the court was referred to the decision of McDonald v Bord na gCon (No. 2), reported in [1965] IR 217 as to the questions as to the constitutional validity of the statute.

The decision reported in 1964, however, was a decision on appeal from a ruling by Kenny J in the High Court that the issue of the constitutional validity of the Greyhound Act which was raised in the pleadings should be tried as a preliminary issue without evidence, leaving subsequently to be determined, if necessary, an allegation by the plaintiff that even if the provisions of the Act were constitutionally valid the procedures adopted had been unlawful. That decision was a majority decision from which O’Dalaigh CJ dissented holding that it was inappropriate to try the constitutional issue first. He did not directly advert to the question of the inappropriateness of trying the constitutional validity of a statute as a moot, though he did deal with the question of the balance of convenience, but he did state at p. 356 as follows:

Moreover, while the constitutional validity of a statute has to be determined by reference to the statute’s general application, I must doubt whether it would be proper to pronounce a statute repugnant to the Constitution except in a case where the specific facts of that case themselves exemplified the repugnancy complained of.

The judgment of the majority of the court was delivered by Lavery and Kingsmill-Moore JJ, Haugh and Walsh JJ concurred with it. That judgment would appear to be entirely directed towards questions of convenience in the procedures and no question of the inappropriateness of trying the constitutional validity of the statute as a moot arose.

The facts in McDonald v Bord na gCon undoubtedly are different from the facts in the present case, for if the plaintiff in that case were to succeed on the constitutional invalidity claim (in fact he succeeded on that claim subsequently in the High Court and lost on appeal in the Supreme Court) he would have succeeded in the entire of his action and it would have been unnecessary for any trial of the issue as to the improper procedures under the Act.

In so far, however, as the case constitutes a break in what otherwise appears to be a relatively consistent attitude by this Court to the question which I am here considering, I would feel obliged, after careful consideration, to refuse to follow it.

In the United States of America the Supreme Court has frequently called attention to the ‘great gravity and delicacy’ of its function in passing judgment upon the validity of an Act of Congress: see, for example, Ashwander v. Tennessee Valley Authority 297 US 288 at p. 345, per Brandeis J.

In these circumstances I am satisfied that this Court should not pronounce upon the constitutional validity of the impugned section of the Imposition of Duties Act 1957.

Having regard to my view of the legal effect of the provisions of s. 46 of the Finance Act 1946, the appellant has not been prejudiced nor damaged by the operation of any provision of the Act of 1957 nor of any statutory order made pursuant to it.

The settled jurisprudence of this Court, to which I have referred, is against deciding the issue of constitutional validity in these circumstances. On the issues potentially arising in the instant case, there are practical considerations strongly supporting that jurisprudence.

Amongst the many issues which can arise in the course of a challenge to the constitutional validity of this section would be questions as to whether in any particular instance, if the delegated legislation were impermissibly wide, that resulted in the annulment of both the statute and the order made pursuant to it, or whether it annulled the order only (cf Harvey v Minister for Social Welfare [1990] ILRM 185).

To ascertain whether any statutory order purporting to have been made pursuant to s. 1 of the Act of 1957 was an impermissibly wide piece of delegated legislation, consideration would have to be given to its precise terms, to its intended duration and to the actual effect it had on the interests of the citizen who has challenged it.

These and cognate questions which would be raised in a constitutional challenge properly made by an aggrieved individual against this statutory provision underline the necessity for this Court to abstain from deciding that issue in this case where the validity of the section is no longer of importance to and where it has no effect in law on the interests of the applicant.

I fully understand the problem of the learned trial judge in this case, who was faced with these two particular issues. He had before him a dilemma.

Had he rested his decision solely on the validity of s. 46 of the Finance Act 1946 and its effect confirming the order concerned, and had this Court overturned that decision, there would be before this Court no decision of the High Court concerning the constitutional validity of s. 1 of the Act of 1957 which had also been challenged by the applicant, and it would have been necessary in those circumstances for that precise matter to be remitted for determination before the High Court before it came, if it were appealed, back to this Court.

Such a procedure would clearly be delaying and, in a sense, cumbrous. It would, however, in my view, be justified where the necessity for it arises, as I believe it does, by reason of the fundamental importance of the principle which I have outlined in this judgment.

In reaching this conclusion I am aware that the Attorney General was added as a party in the High Court for the purpose of dealing with the claim of constitutional invalidity and on the hearing of the appeal in this Court, counsel appearing on his behalf was requested, firstly, to deal with the challenge to the constitutional validity of the Act of 1957.

Having regard to the decision which I have reached concerning the validity of the Act of 1976 and the consequent validity of the conviction of the applicant, he can have no conceivable interest in further pursuing his challenge to the constitutional validity of the Act of 1957.

Whilst the question was not specifically put to counsel for the Attorney General as to whether in the event of this Court upholding the decision of the learned trial judge concerning the validity of the conviction, it should proceed to review his decision concerning the constitutional validity of the Act of 1957, I am satisfied that even if the Attorney General were desirous of having that issue finally disposed of by this Court in this case, it would be quite inappropriate for the court to do so.

A refusal to deal with this important question of constitutional law on what has become a moot would, it seems to me, be consistent with the submissions made to this Court on behalf of the Attorney General, although concerning general constitutional principles rather than the constitutional validity of a statute in the case of Murphy v Roche.

In these circumstances, I am satisfied that this Court should treat the decision of the learned trial judge on the question of the constitutional validity of s. 1 of the Act of 1957 as being technically obiter dictum, and as such, not justifying the declaration of constitutional invalidity contained in his order. That portion of the order should accordingly be set aside, but in all other respects the order of the High Court should be confirmed, and I would dismiss the applicant’s appeal.

McCARTHY J:

I agree with the view of the Chief Justice that the learned High Court judge was correct in holding that the 1976 Act gave validity to the order as from the end of 1976 and, therefore, at all times material to this litigation the order was of full force and effect; I further agree that it was not necessary for the learned trial judge to pronounce on the constitutional validity of s. 1 of the Imposition of Duties Act 1957. The question remains as to whether it would be appropriate for this Court to pronounce on it in this appeal. In my view, the over-riding consideration is that since 23 January 1989 there has been a judgment of the High Court holding that the relevant section is invalid having regard to the provisions of the Constitution, based upon the reasons set out in the reserved judgment given by Blayney J. The executive which is charged with the implementation of statute law, here in the imposition of duties, cannot avail of s. 1 of the Act since January 1989, without a decision of this Court, not merely vacating the order of Blayney J but also condemning the reasoning that underlay that order. The executive, as any citizen, is entitled to clarification of the law when not merely has the issue been raised but it has been determined adversely to the executive at a level below that of the final court of appeal. Notwithstanding the impressive reasoning in the judgment of the Chief Justice, in my view the resolution by this Court of the constitutional challenge to the section cannot be avoided.

Some empirical support for this view can be drawn from the circumstance of the case itself. No plea challenging the plaintiff’s locus standi was made in the defence; the issue was not raised before Blayney J; it is not to be found by way of preliminary point or otherwise in the notice of appeal nor, in particular, in the grounds of appeal set out in that notice. Further, at the commencement of the hearing of this appeal counsel for the Attorney General was invited to argue the constitutional point which arose on the cross appeal of the respondents.

In my opinion, this Court should pronounce its judgment upon the substance of the constitutional challenge; I have not been informed of any case in which, after the constitutional challenge was upheld in the High Court this Court, for reasons like unto the present, declined to pronounce upon the substance of the case. In the case of McDonald v Bord na gCon [1964] IR 350 to which the Chief Justice refers, this Court expressly decided to direct the issue of constitutional validity to be determined as a preliminary issue. That appeal was determined on questions of convenience. In Garvey v Ireland [1981] IR 75 the High Court made an order by consent directing the trial as preliminary issues questions on the construction of the Police Forces Amalgamation Act 1925, and a question as to whether or not the provisions of s. 6(2) of the Act were inconsistent with the Constitution. Inter alia, McWilliam J declared that the provisions of the subsection were not inconsistent with the Constitution. The defendants appealed to this Court and the plaintiff served a notice to vary seeking, in certain events, an order declaring that the subsection was inconsistent with the Constitution. As pointed out by O’Higgins CJ, because of the construction placed by McWilliam J on the subsection, ‘it followed that the question of the possible inconsistencies of s. 6(2) of the Act with the Constitution if the defendants’ contrary construction prevailed was neither considered nor decided by him.’ He concluded that if the defendants’ construction were correct, then the constitutional question would have to go back for consideration and determination in the High Court. Of the other members of the court, only Kenny J referred to this point (p. 116) and, on his conclusion on the first issue, thought the second issue should be remitted to the High Court to consider it to the full. I draw attention to the case since it is an instance where this Court was apparently prepared to consider the constitutional issue which, theoretically, might not have arisen. Neither Garvey’s case nor any other case on this issue were cited to the court on the hearing of this appeal, in which, if the point were taken at all, it did not form any significant part of the submission on behalf of the Attorney General.

One can envisage cases in which a lengthy trial with enormous cost might well be saved by the resolution of a simple constitutional issue; is it to be said that such cannot be done? That is not for resolution here.

Jonathan v. Ireland

[2002] IEHC 59 (31 May 2002)
THE HIGH COURT
RECORD NUMBER 2000 14696P
BETWEEN
MARGARET MONI JONATHAN
PLAINTIFF
AND
IRELAND AND THE ATTORNEY GENERAL
DEFENDANT
Judgment of Mr. Justice Murphy delivered the 31 day of May 2002.
1. ISSUE:
The Plaintiff is an Applicant under the Refugee Act, 1996. Judicial Review proceedings in respect of a refusal under the said Act is pending the determination of these proceedings in which she seeks a Declaration that Section 19 of the Refugee Act, 1996 is invalid having regard to the provisions of Articles 40.3, 40.6.1 and Article 34.1 of the Constitution. She also seeks an Order directing that her Judicial Review proceedings may be publicised freely and that she may be identified as an Applicant under the Refugee Act, 1996. Section 19 came into force on the 28th of November, 2000 and is appended hereto.
2. PLAINTIFF’S CLAIM
The Plaintiff arrived in Ireland from Nigeria in June, 1998. She applied for refugee status on the ground of a fear of persecution by reason of her political opinion and her involuntary association with the Ogboni Fraternity and/or her religious beliefs.
2.2 The Plaintiff’s application for refugee status was refused by the Minister for Justice, Equality and Law Reform (“the Minister”) on the 6th of October, 1999. The Refugee Appeals Authority rejected her appeal and made a recommendation to the Minister that her Application be refused. Her appeal was heard on the 25th of May, 2000 and the decision to deport her was communicated to her by letter dated the 16th November, 2000.
2.3 On the 30th November, 2000 the Plaintiff instituted Judicial Review proceedings pursuant to the provisions of Section 5 of the Illegal Immigrants (Trafficking) Act, 2000 challenging both decisions of the Minister and of the Refugee Appeals Authority (Judicial Review 708 of 2001).
2.4 In the present proceedings, commenced 15th of December, 2000 the Plaintiff pleads that Section 19 of the Refugee Act, 1996 prohibits the reporting or publishing of the aforesaid Judicial Review proceedings. The Plaintiff pleads that she wishes to attract the maximum publicity for her case and the manner in which it was dealt with by the Minister, his servants or agents and the Refugee Appeals Authority. She objects to the requirement in Section 19 that she obtain the consent of the Minister before any matter which is likely to lead members of the public to identify her as an Applicant under the Act may be published.
2.5 The Plaintiff seeks declarations that Section 19 is invalid having regard to Articles 40.3 and 40.6.1 of the Constitution and having regard to Article 34.1 of the Constitution.
Her claim for an order directing that her judicial review proceedings may be published freely and that she may be identified as an applicant under the Refugee Act, 1996 is now moot given the consent of the Minister for Justice on 2nd of July, 2001 some six months after the commencement of her action.
3. DEFENCE
The State says that the Plaintiff is not a refugee within the meaning of Section 2 and that that issue has been determined by the Minister.
Moreover the State denies that the Plaintiff has locus standi to challenge Section 19 on the grounds that they are invalid as Section 19(2) is addressed solely to persons publishing or broadcasting material likely to lead members of the public to identify the Plaintiff. Moreover she has no standing to challenge the provisions of the Section in circumstances where she has not sought the consent of the Minister. Indeed by letter of the 2nd of July, 2001 (the same day as the filing of the Defence) the Minister consented to the publication of any matter likely to lead members of the public to identify the Plaintiff as an Applicant for refugee status. In such circumstances the proceedings are now moot. Without prejudice it is denied that Section 19 is invalid. It is specifically denied that it infringes the Plaintiff’s right to express her convictions and opinions fully. It does not interfere with her personal right of freedom of expression or of communication.
3.2 If the Section requires proceedings such as those instituted by the Plaintiff by way of Judicial Review to be heard otherwise then in public, then such a restriction on Article 34.1 of the Constitution is prescribed by law and is justified.
3.3 The State denies that the Section infringes Article 40.3 or Article 40.6.1 (i) or Article 34.1 of the Constitution in that it disportionately or without lawful justification interferes with the Plaintiff’s rights to freedom of expression or the personal rights of the Plaintiff or the rights of the public administration of justice. In so far as it does so such restriction is proportionate and lawful.
3.4 The Plaintiff denies that the mere fact that the Minister consented to publicity renders the case moot. The Plaintiff, it is submitted, is entitled to have her case heard in public as a matter of right and not by reason of special grace or favour or concession or permission.
4. THE PLAINTIFF’S EVIDENCE
Ms. Jonathan gave evidence in relation to the grounds for seeking asylum and the determination of her application and appeal.
She said that in 1998 she demonstrated with a placard for a right to work. In December of 1999 she got a work permit and worked in Bloomfield Hospital, worked as a security officer and went to a nursing school where she is in her second year. A photograph of her placard was published in the Irish Independent in 1999. Previously she had been photographed by the Irish Times on the 17th of October, 1998 in relation to the opening of a centre for asylum seekers by Commissioner Padraic Flynn.
4.2 The Plaintiff said she objected to Section 19 because it was not legal and prevented the right of freedom of speech and of people to hear “our story”. The effect of this, she said, is to frustrate asylum seekers which frustration leads to crime. In her evidence she said that: “the law says you are not allowed to tell your story” . She said she wanted her story to be known to the media as she had been treated unjustly. If she is deported she will be treated unjustly.
4.3 On cross-examination she said that since the 28th November, 2000 no journalist has interviewed her. She has not approached any journalist “because its against the law – the law says that we can’t, prior to the Minister allowing it”. She said that she read about the law in the paper but could not remember when. She had been allowed to picket for work when the law did not prevent it. She said that she cannot approach a journalist as it is against the law unless the Minister agrees. She did not seek the Minister’s consent. She said would prefer to come to Court.
4.4 In relation to the listing in the Judicial Review proceedings she was asked whether she instructed her lawyers to mention her full name in Court. She said: “if it was lawful, I said yes”. She agreed that there was now nothing to prevent her from going to the press.
5. EVIDENCE OF JOURNALISTS
5.1 Mr. Paul Cullen, an Irish Times Journalist, gave evidence of his work in relation to refugee and asylum seekers in Ireland. He was the author of a book of that title published by the Cork University Press in 2000. This dealt with his work as development correspondent from 1996 onwards. Applicants for refugee status are, in his experience, reluctant to come forward. They are living in a twilight world of secrecy and fear. They have cultural and linguistic difficulties.
There is a grey area of humanitarian considerations which the Minister may consider. The Minister’s flexibility, Mr. Cullen added, is influenced by the media. He referred to certain refugee cases where questions were raised in the Dail. There is a difference between nameless and faceless asylum seekers whom the public regard with hostility and those with a name, face and family who have public support. It may be that it is a case of them being known that allows them to get the ear of politicians. Their case thrives on the oxygen of publicity.
Journalists have to meet tight deadlines and need information today for tomorrow’s story. There are mixed reactions to resourcing information, refugee information is difficult to get.
Mr. Cullen said that he never attempted to get information from the Minister as, by November, 2000 when the Act came into force, he was not involved in such work. He understood that the process to gain such information was by way of letter to the Secretary of the Department together with a letter from the asylum seeker. Practically it would take some time. There was a difficulty in getting the letter from asylum seekers particularly where English was not their language and where they were in detention. He did not know the Plaintiff nor her individual circumstances.
He said that he would not go to Court nor use official channels to get information. He would go directly to the community of asylum seekers. In the case of Court proceedings he became aware of the identity of the refugees through legal papers and could interview them but would not name them or publish their photograph.
Under cross-examination he said that he realised that Section 19 did not apply to those who were granted a refugee status but was unclear whether it applied to those who had been refused.
He said that neither he, nor, to his knowledge, his newspaper had reported on the Plaintiff. He did not know her, nor her individual circumstances. He had no example of being refused. He believed the Department did fetter his right to report because of the delay. Now, he understands, the Department has greater resources which were given after negative press coverage – “a barrage of critical coverage and political opposition” in his words.
In his view asylum seekers are relatively voiceless.
Mr. Cullen agreed that the operation of the section had not inhibited him in any respect as he was not “at the coal face”.
5.2 Ms. Nuala Haughey, also a journalist with the Irish Times, had made one application in Spring 2001 to the press office of the Department of Justice who informed her of requisite procedure. Consent was given within two days and was delivered verbally through the press office. She had given herself some time.
She was conscious of the rigmarole when talking to asylum seekers. She tried to find an individual to get the individual persons’ consent.
She did not know the Plaintiff until she had read about her in the report of the first day of the hearing in this case. She was unaware of the Minister’s consent.
There was a memo circulated in her newspaper advising journalists of the effect of Section 19. She was aware of some Nigerian asylum seekers going on hunger strike who were identified by name.
Under cross-examination she said she was aware that Section 19 did not apply to refugees. She had gone to a centre for asylum seekers to interview but not name persons. Those who alleged they were tortured would not give their names.
6. DEPARTMENT’S EVIDENCE
6.1 Mr. George Trimble is an Assistant Principal with the Department of Justice. For the last two and half years he has been in the asylum policy division.
He said that in no case has an application to the Minister been refused. Ten applications were made, the last in August, 2001. The procedures were a request in writing and depended on the consent which would normally come in with the application. The Minister’s consent would then be forthcoming. Applications were made to the press office and may be made by fax. No complaints about delay were made by the media.
The role of the Minister was to ensure that the Applicant had given consent as all information regarding asylum seekers was confidential.
On cross-examination, Mr. Trimble said he did not know why the Minister had given consent in the present case on the 2nd of July, 2001. He did not know whether there was an application from the Applicant. He agreed it was a cumbersome procedure and that is why, he believed, that it was due to be amended.
6.2 Mr. John Lohan was Principal Officer in the Repatriation Unit from May, 2001 and dealt with humanitarian grounds. The Minister must give advanced notice of fifteen days of deportation where an asylum seeker has been refused refugee status. Written representations can then be made.
The criteria by which the Minister deals with applications are dealt with in Section 3(6) of the 1999 Refugee Act. These criteria include age, family, work, security and representations made.
Under Section 3(6)(h) the Minister may consider, among other matters, humanitarian aspects.
In the present case no such application had been made.
He did not agree when cross-examined, that publicity affected humanitarian grounds. He was unaware of the position of the cases referred to by Mr. Cullen. It was put to him that it was the publicity in one of those cases that had contributed to the fifteen day notice of deportation. He said that he was not aware of publicity before May, 2001.
7. PLAINTIFF’S SUBMISSIONS
7.1 The Plaintiff submitted that there were three broad questions for determination by this Court:
1. Whether Section 19 of the Refugee Act, 1996 is invalid having regard to the provisions of Articles 40.3 and 40.6.1.(i) of the Constitution;
2. Whether Section 19 of the Refugee Act, 1996 is invalid having regard to the provisions of Article 34.1 of the Constitution;
3. Whether the Plaintiff has locus standi to challenge the constitutionality of the said section in circumstances where the Defendants have purported to consent to the publication of the details of her case, including her identity at a date subsequent to he issue of these proceedings.
7.2 The Courts have held that the right to communicate exists as an unspecified personal right protected by Article 40.3 of the Constitution. Reference was made to A.G. -v- Paperlink (1984) ILRM 343, Murphy -v- IRC (1997) 2 ILRM 467, 475-5 and Handyside -v- UK ECHR.
It was submitted that Section 19 restricts the right of the media to report on or discuss individual asylum cases by preventing the identification of individual asylum seekers. There was no issue of public order or morality which could rationally justify the enactment of such law.
7.3 Moreover, the administration of justice requires administration of justice to be in public. The listing of the Plaintiff’s proceedings by way of initials and the calling of the case by the Registrar was otherwise than in public. Reference was made to A.G. -v- Leveller Magazine Limited (1979) AC 440 cited by Morris J. in Irish Times -v- Ireland (1997) 2 ILRM; to Roe -v- Blood Transfusion Service Board (1996) 3 IR 67, 71 and to matter of Ansbacher (Cayman) unreported decision of McCracken J. of 24th of April, 2002.
7.4 While the right to communicate and express opinions and views may not be absolute, restrictions must be proportionate and for a legitimate purpose in the common good.
7.5 The Plaintiff has locus standi to challenge the restriction despite the consent of the Minister. Reference was made to Condon -v- Minister for Labour (1981) IR 62 , 70.
8. DEFENDANT’S SUBMISSIONS
Counsel for the State submitted that the Plaintiff has no locus standi to bring these proceedings for the following reasons:-
(a) Section 19.2 is addressed to organs of the media – it is they who are required to obtain the consent of the Minister to the publication of information likely to lead to the identification of an applicant for refugee status;
(b) The Plaintiff cannot point to any manner in which her interests have been adversely affected;
(c) She has failed to exhaust her remedies;
(d) The Minister has consented already to the publication of information likely to lead to the identification of the Plaintiff;
(e) The Plaintiff is not prevented by Section 19.2 from communicating or expressing her opinions;
(f) The Plaintiff’s Judicial Review proceedings will be heard in public;
(g) Insofar as any rights of the Plaintiff are infringed, any such infringement is proportionate to the legitimate aim of the legislation i.e., the protection of asylum seekers.
9. DECISION
9.1 The first issue that the Court must consider is that of mootness. It does seem that on the day the defence was delivered, a letter of consent issued to the Plaintiff’s Solicitor. The only aspect of the possible prejudice that could be suffered after that date is the so called “chilling effect” of the legislation which could have had the effect of restricting the media from dealing with the Plaintiff’s case because of a perceived delay in getting the Minister’s consent. However no journalist attempted to get the Plaintiff’s consent to which, it seems to this Court, to be an essential prerequisite for the Minister’s consent. Neither journalist attempted to contact the Plaintiff and indeed, where unaware of her position. Significantly, the Plaintiff did not seek to contact any journalist: she was clearly under misapprehension, despite being legally advised, that she could not do so up until the 2nd of July, 2001 when the Minister’s consent issued. She did not apply to the Minister for consent.
It seems clear to me that after that date there was no evidence of any “chilling effect” on the journalists who gave evidence or on any other journalists. It seems to me to be too remote to say that there might have been some journalist who could have contacted the Plaintiff. There was, in reality, no issue since the determination of her involvement in the right to work which, as she said in evidence, was granted to her in November, 1999. No evidence was given of any participation in any campaign since that date. Her evidence in relation to the present application, for which she says she wanted publicity, is not an issue. It has been reported with her name. She has not applied to have the judicial review proceedings challenging the decision to deport listed in her full name.
Is Ms. Jonathan’s claim entirely moot?
There is now – since July, 2001 – no restriction whatsoever on the reporting in the Judicial Review proceedings which have been adjourned pending the outcome of these proceedings.
Those proceedings had been listed in the High Court on the return date of the 11th of December, 2000 and adjourned on three occasions (February, 2001; 15th of December and 19th of December, 2001) and adjourned generally. Her Counsel says that on the return date he informed the Judge dealing with the list that he had instructions to apply for declarations that Section 19 was invalid. This does not seem to me to be evidence at a hearing but rather a procedural reason given why the hearing should be adjourned. It does not seem that the exchange in relation to the adjournment was a matter that, had the media been interested in covering the hearing, would have prejudiced the Plaintiff in any way. There was no evidence the listing of that case by the Plaintiff’s initials prejudiced any organ of the media. There is no evidence that the operation of Section 19(2), which had come into effect on the 28th of November – two weeks previously, had any effect, chilling or otherwise, on the media. The Plaintiff suffered no prejudice nor injury.
The Plaintiff has not established in evidence that her interests have been affected adversely or otherwise.
Accordingly the matter would seem to be moot.
If so, it is not appropriate for the Court to consider a claim for declarations in the absence of primary relief.
The Court must assume that Acts of the Oireachtas are constitutional. It does not need to determine constitutional issues when it is possible to dispose of a case otherwise.
Moreover, the Court cannot determine the declaratory issue where its decision would be only an academic issue.
If I am not correct on the issue of mootness I should then consider whether the Plaintiff can otherwise pursue the reliefs sought.
9.2 The second issue, is accordingly that of the Plaintiff’s locus standi. Section 19 is addressed to and concerns the media. It does not affect the Plaintiff’s right to freely express herself in her own name in private or in public. She can do so to the media. It is the media who must obtain her consent and that of the Minister before publishing.
No such application was made by any organ of the media nor requested by the Plaintiff prior to the Minister’s consent. After that consent was given no issue arises which affects her interests.
9.3 Counsel has urged that the challenge to the section should not fail notwithstanding. The decision of the Supreme Court in Condon -v- Minister for Labour (1981) IR 62, it is submitted, enables the Court to deal with the issue.
That case dealt with the validity of an Order prohibiting increases in remuneration of bank employees which was temporary legislation which had expired before the question of its validity could be examined by way of judicial review proceedings.
The High Court had allowed an amendment to the Defence that the claim disclosed no cause of action in view of the expiry of the order. This was then argued as a preliminary issue. The Court held that the claim still disclosed a cause of action. Despite the objections of the Plaintiff the Court adjourned the hearing to enable the Defendants to appeal.
The Supreme Court disallowed the appeal holding that, where at the commencement of an action a Plaintiff has a cause of action based upon the invalidity of a statute, the expiry of the statute before the hearing of the action does not affect the exercise by the High Court of its constitutional power to examine the statute. (See judgment of O’Higgins C.J. at 70).
The Plaintiffs in Condon had locus standi: increases in their remuneration had been prohibited. In the present case there is no loss. There is no evidence of prejudice nor limitation of freedom of speech personalised by the use of one’s name. No evidence of the media being prejudiced was shown. The “chilling effect” contended for was not shown in either the Plaintiff’s evidence nor in the evidence of the journalists.
10. In view of the above it is not necessary to proceed further or to determine whether the section applies to the Plaintiff once her application for refugee status has been determined.
In the circumstances the Court declines to make the Orders sought.

Refugee Act, 1996
19 –
(1) The Commissioner, the Appeal Board, the Minister, the Minister for Foreign Affairs and their respective officers shall take all practicable steps to ensure that the identity of applicants is kept confidential.
(2) Subject to Sections 9 (15) and 26, no matter likely to lead members of the public to identify a person as an applicant under this Act shall be published in a written publication available to the public or be broadcast without the consent of that person and the consent of the Minister (which shall not be unreasonably withheld).
(3) If any matter is published or broadcast in contravention of S. 19 subsection (2), the following persons, namely –
(a) in the case of a publication in a newspaper or periodical, any proprietor, an editor and any publisher of the newspaper or periodical,
(b) in the case of any other publication, the person who publishes it, and
(c) in the case of matter broadcast, any person who transmits or provides the programme in which the broadcast is made and any person having functions in relation to the programme corresponding to those of the editor of a newspaper, shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,500 or to imprisonment for a term not exceeding 12 months or to both.
(4) Where a person is charged with an offence under subsection (3) it shall be a defence to prove that at the time of the alleged offence he or she was not aware, and neither suspected nor had reason to suspect, that the publication or broadcast in question was of such matter as is mentioned in subsection (2).
(5) In this section –
“a broadcast” means the transmission, relaying or distribution by wireless telegraphy of communications, sounds, signs, visual images or signals intended for direct reception by the general public whether such communications, sounds, signs, visual images or signals are actually received or not; “written publication” includes a film, a sound track and any other record in permanent form (including a record that is not in a legible form but which is capable of being reproduced in a legible form) but does not include an indictment or other document prepared for use in particular legal proceedings.

Leonard v Dublin City Council

[2007] I.E.H.C. 404

Judgment of Mr Michael Peart delivered on the 3rd day of December 2007:

Following the granting of leave to the applicant by order dated 23rd July 2007 to seek certain reliefs by way of judicial review, the respondents issued a Notice of Motion dated 27th July 2007 in which they sought to have that order set aside in its entirety, and/or in the alternative an order lifting the stay which the Court granted in respect of the District Court decision of the 15th February 2007 to issue a warrant for possession against the applicant in respect of the dwelling occupied by her at 17, Robert Emmet Walk, Bridgefoot Street, Dublin 8, and the stay granted in respect of the hearing by the Circuit Court of the applicant’s appeal against that decision. Having heard the application, the Court gave its decision on an ex tempore basis, and stated that it would deliver a written judgment as to its reasons at a later stage, and now does so.

At the outset I should state that I am satisfied that this application comes within the jurisdiction of the Court to set aside leave which has been granted on an ex parte basis, as discussed in Adam and Iordache v. The Minister for Justice, Equality and Law Reform [2001] 3 IR 53. The Court’s inherent jurisdiction to set aside such orders was clearly recognised in an appropriate case, even a case such as the present one where there is no question of mala fides in the manner in which the ex parte order was applied for. The jurisdiction should be used sparingly but exists where, having heard the party affected by the ex parte order, the Court is satisfied that the applicant’s proceedings have disclosed, inter alia, no reasonable cause of action and is doomed to fail. In the present case on the present application, the respondents during argument have brought to the attention of the Court a number of decisions of both the High Court and Supreme Court which speak to the question as to whether the applicant’s case is stateable or reasonably arguable. That is sufficient in my view to bring the application to set aside within the principles emerging from the Adam and Iordache case referred to. This jurisdiction ought not to be confined to cases where facts not made known by the applicant on the ex parte application are made known on the application to set aside. It is equally applicable where the Court was not referred on the ex parte application to relevant case law touching upon the points being put forward as arguable at leave stage.

The order of the District Court which has given rise to the present proceedings was made pursuant to the provisions of s. 62 of the Housing Act, 1966 (as amended), in circumstances where the respondent Council had made a decision to serve Notice to Quit on the applicant because of what they contend is a breach by her of the terms of her tenancy agreement with the Council dated 30th November 2005 which provided at Clause 13(a):

“Neither the tenant nor any member of his household or any sub-tenant or visitor shall cause any nuisance, annoyance or disturbance to any neighbours, their children or visitors or to council staff “,

and at Clause 13(vii):
“The tenant must not, at any time, invite or allow to remain on any part of the dwelling or garden, any persons in respect of whom the Council has notified the tenant that they should not enter or remain on the property.”

By letter dated 29th November 2005 the Council had notified the applicant that it was invoking Clause 13(vii) of the Agreement in respect of a person named as Mark Keating, the applicant’s partner, and warned her that if that person was found to be in her premises or to have been in her premises, the Council would be entitled to recover possession under the provisions of s. 62 of the said Act. He, according to her grounding affidavit, is a person with whom she has been in a relationship for a number of years, and who she states is a heroin addict, and she has exhibited some medical information which suggests that she also has an addiction problem of the same nature and that each of them is seeking help in that regard.

It appears also that when the applicant had been a tenant of the Council in a different dwelling prior to the 30th November 2005, there had been a complaint about this person being in her premises or of illegal substances being found there following a search carried out by members of An Garda Siochana on the 23rd/24th December 2004.

Following the service of the Notice to Quit the applicant failed to give up possession, hence the application by the Council to the District Court under s. 62 of the Act for a warrant of possession.

I should add perhaps at this stage that there had been several meetings arranged between the applicant and the Council prior to the decision to serve Notice to Quit being made.

There is no challenge made by the applicant to the validity of the decision by the Council to issue a Notice to Quit against her, which is a pre-requisite to the service of the Notice to Quit, and nor is there a challenge to the Notice to Quit itself as served. Those are important factors in this case. The challenge is in the first place to the constitutionality of s. 62 of the Act, as well as to its conformity with certain provisions of the European Convention on Human Rights. Secondly, a declaration is sought that the determination by the District Court which led to the issuing of the warrant for possession to the Council is invalid by virtue of non-compliance with the principles of constitutional and natural justice or by reason of the unconstitutionality of s. 62 of the Act.

In her grounding affidavit the applicant averred that while for some time prior to her appearance in the District Court when that order was made she had the services of a solicitor, she was unable to engage a solicitor on the 15th February 2007. She states that when the case was called in the District Court on that occasion she applied for an adjournment to enable her to seek alternative legal representation but that this was refused by the District Judge upon objection by the Council being made. She states that thereafter the Council gave its evidence of the various matters upon which the Court had to be satisfied before making the order of possession. She complains that this all happened very quickly and that she did not follow or understand what was happening. In any event, she found out that the order had been made and on the 28th February 2007 she filed a Notice of Appeal to the Circuit Court. She has subsequently obtained legal advice and assistance from a Law Centre and is apparently in receipt of a certificate from the Legal Aid Board for the purpose of mounting her challenge on the basis that s. 62 contravenes this State’s obligations under the European Convention on Human Rights.

As I have stated, this Court granted leave to the applicant to seek the reliefs set forth in her Statement of Grounds, and granted a stay on the warrant of possession and on the hearing of the applicant’s appeal to the Circuit Court. Upon being served with the application papers, the respondent has sought to have those stays lifted and to have leave set aside, principally on the ground that the constitutionality of s. 62 of the Act has already been upheld, and that it is no longer arguable that the section is unconstitutional. In addition, in so far as the European Convention on Human Rights is called in aid, the respondent submits that even if the Court was to grant leave to seek the declarations sought in that regard, this would not itself justify the granting of any stay on the warrant of possession, since any remedy achieved by the applicant, if ultimately successful at the substantive hearing could result only in an award of damages.

The Grounds upon which the applicant seeks the reliefs set forth in her Statement of Grounds include the fact that the Council served her with a summons returnable for the 15th February 2007 and that this summons commanded her to appear at the District Court on that date and “show cause why a warrant under s. 62 of the said Act should not issue for delivery of possession…”. She makes the point that without legal representation she was unable to do what she was commanded to do. In their covering letter dated 18th December 2006 serving that summons upon the applicant, the Council made it clear that they would not consent to any adjournment sought for the purpose of seeking legal representation.

Mr Michael Clarke of the respondent Council has sworn an affidavit to ground the present application to set aside the order granting leave. In that affidavit he clearly sets out the history of events which led the Council to seek the warrant of possession under s. 62 of the Act. There is no factual dispute between the applicant and the respondent as to the history of events which have led to the Council’s decision to serve the Notice to Quit. The applicant has accepted that she committed a breach of Clause 13(vii) of her Tenancy Agreement. Mr Clarke states that on the 30th November 2005, the date on which the agreement was entered into, both the applicant and her partner met with the Council, and that at that meeting she was told about the previous complaint to which I have referred, and that she was told at that meeting that the Council had decided to exclude her partner and that if she permitted him onto her dwelling she would be in breach of her agreement. Mr Clarke goes on to state that on the 8th February 2006 a member of the Council, accompanied by two members of the Garda Siochana, called to the applicant’s dwelling and found Mark Keating in the sitting room smoking heroine, and that he admitted that he stayed on occasions in the premises. Following that visit the Council wrote a letter to the applicant drawing attention to the provisions of Clause 13 (vii) of her Agreement and stating that she was in breach thereof. The letter went on to request that she attend a meeting with the Council. That meeting took place a couple of weeks later and she was given a final warning by letter dated 27th April 2006. However, on the 9th May 2006 the Council received a further complaint that Mark Keating was residing there, and on the 12th May 2006 the Council wrote again to the applicant requesting that she attend a further meeting and stating that a recommendation would be made that her tenancy be terminated. It appears that on the 29th May 2006 both the applicant and her partner attended a meeting with the Council at which they admitted that he had been on the premises, and she was informed that a Notice to Quit would be served. A further letter to her dated 26th July 2006 informed her that she could request a review of the decision to serve the Notice to Quit, following which her then solicitor wrote to the Council and sought such a review of that decision. Further representations were made by her solicitors, but following that review the decision was affirmed. The final decision to serve the Notice to Quit was made on the 23rd October 2006, and this Notice was duly served upon her on the 11th December 2006. She failed to comply with same, and the Council proceeded to serve the summons referred to already wherein the applicant was notified of the Council’s intention to apply to the District Court for a warrant for possession pursuant to the provisions of s. 62 of the Housing Act, 1966.

It is against this factual background that James Connolly SC of the Council has submitted that the case which the applicant seeks to make in seeking the reliefs sought is not arguable given the Court’s previous relevant decisions concerning the constitutionality of s. 62 of the Housing Act, 1966.

He includes in his submissions one that the applicant has not moved promptly in moving her application for leave to seek the reliefs, as she is required to do under the provisions of O.84 of the Rules of the Superior Courts, and in this regard points to the fact that the Order for possession was obtained on the 15th February 2007 and yet the application for leave was not moved until the 23rd July 2007. Just to deal with this delay point first, I would not be satisfied that in circumstances where it was necessary for the applicant to seek a certificate for representation through the Legal Aid Board that she should be refused leave on that ground alone. That process inevitably takes some time to complete. It is true that she was represented by solicitors for some period prior to the making of the order of the District Court, but that relationship ended prior to that date, and it was reasonable that the applicant should pursue alternative representation for the purpose of seeking to impugn that order. In these circumstances I am satisfied that she proceeded as promptly as she could be expected to do.

In relation to her challenge to the constitutionality of s. 62 of the Housing Act, 1966 Mr Connolly has referred the Court to a number of decisions of the courts which have found that section to be constitutional. These are cases to which the Court was not referred when the application for leave was moved on the 23rd July 2007. In The State (Litzouw) v. District Justice Johnson [1981] ILRM 273, the prosecutrix claimed, inter alia, that while the Dublin Corporation had given evidence to the District Court that complaints had been made about the prosecutrix she had never been given information as to the nature of those complaints and accordingly she was unable to mount any defence to the application for an order of possession. It was contended that in such circumstances that the principles of natural justice had been infringed since she had no opportunity to make representations or take any steps which may have been advised as open to her in relation to her defence of her personal and property rights. Gannon J. in his judgment stated that her sense of injustice seemed to him to derive from the failure by the Corporation to give any justification to the District Court for her eviction, rather than the way in which the District Court hearing actually proceeded. The learned judge concluded that in such cases the tenant did not have the protections involving the investigation of the ‘merits’, afforded to other tenants under the Landlord and Tenant Acts or the Rent Restrictions, and concluded that the prosecutrix was not entitled to an order of certiorari on that ground.

That case is of course different to the present case in which the applicant’s case does not involve any complaint based upon her lack of knowledge as to why exactly the Council had made its decision to serve the Notice to Quit. She was told what the reason was, and when given an opportunity to respond to the complaints she admitted the facts giving rise to the complaints and the decision. But she complains that the absence of legal representation in the District Court meant that she was unable to show cause as to why the order should not be made by the District Judge. However, it is important to note that on the present application she has not given any details of what case she would have been able to put had she had legal representation available to her.

Mr Connolly has also referred the Court to the decision in The State (O’Rourke) v. Kelly [1983] IR 58. In that case the prosecutor obtained a conditional order of certiorari on the ground that the order for possession made pursuant to s. 62 of the Housing Act, 1966 was made contrary to the principles of natural justice on the basis that the provisions of s. 62(3) of the Act were invalid having regard to the provisions of the Constitution because they constituted an interference with the function of the District Court in the administration of justice by depriving the District Justice of any real discretion in determining the application. The Supreme Court determined that the mandatory issue of the warrant of possession by the District Judge is dependent only on the proof of the circumstances specified in the section, and that accordingly the section was not invalid. Chief Justice O’Higgins in his judgment held that there was no substance in the ground put forward by the prosecutor and that the legislative provisions in question were within the competence of the Oireachtas. This case is certainly relevant to the point put forward in the present application that the decision to serve the Notice to Quit and demand for possession arises from a policy on the part of the Council to terminate tenancies of all persons suspected of involvement with the use or sale of illegal drugs irrespective of the level of involvement by the tenant in such activity, and that by the adoption of such a policy the Council has fettered its discretion and taken irrelevant considerations into account.

Mr Connolly referred also to the judgment of Geoghegan J. in Lord Mayor, Aldermen and Burgesses of the City of Dublin v. Hamilton [1999] 2 IR 486. In that case, a consultative Case Stated from the District Court, the opinion of the High Court was sought, firstly, as to whether the District Judge has a discretion to consider any other factors when deciding whether to make an order under s. 62 of the Housing Act, 1966 once he/she was satisfied that the necessary proofs required by the section had been complied with, and secondly, whether the District Judge, having been satisfied that these proofs had been complied with, should consider rights under Article 40.1 of the Constitution, the right to fairness of procedures in the decision-making, and the right to bodily integrity. In each of these matters the learned judge answered the questions in the negative, placing considerable emphasis on the need for a local authority to have available to it a rapid method of recovering possession of a dwelling without having to give reasons for so doing, and that such a power was both reasonable and constitutional. He held at page 494 that “it would be inconsistent with the intent of the legislation to interpret the section in any other way than that formal proofs that the matters set out in this section alone are required and that the District Judge is not entitled to inquire into anything else.”

Mr Connolly submits that the arguments put forward by the applicant to impugn the hearing of the application for the warrant for possession in the District Court on the ground that she was not legally represented at that hearing and on the ground that the Council has fettered its discretion in the matter of deciding to serve a Notice to Quit in a case such as this by having a fixed policy in that regard are no longer points that pass the threshold of arguability for the purpose of obtaining leave to seek judicial review, and that in these circumstances the Court should exercise its inherent jurisdiction to set aside the leave order already granted, and the stays granted.

Frank Callanan SC for the applicant has submitted that the case being made by the present applicant is one that has not been the subject of the decisions to which Mr Connolly has referred, and that those cases must be viewed on their own facts and that the case made by the applicant is different. He also submits that in none of those cases was the case argued on the basis that the section in question infringes the provisions of the European Convention on Human Rights, and that this is now something which falls to be considered in the present case following the passing of the European Convention on Human Rights Act, 2003 which came into effect here on the 31st December 2003. He has referred to an obiter comment by Smyth J. in his judgment in McConnell v. Dublin City Council, unreported, High Court, 18th January 2005 to the effect that this Act imposes new obligations on housing authorities and that it may operate to change the interpretation and effect of section 62 of the Housing Act, 1966. Mr Connolly in response has submitted that even if the applicant can argue her case for a declaration of incompatibility with the Convention, which he does not accept, such an argument, even if it was to be ultimately successful could not result in a stay on the order made by the District Court, since the applicant’s remedy would be confined to an award of damages.

While not confining himself to the Convention argument, Mr Callanan has called in aid the judgment of the European Court of Human Rights in Connors v. The United Kingdom, 27th May 2004 where that Court concluded that in the circumstances of that case, which were very different to the facts and circumstances of the present case, the eviction of the applicant under powers similar to those contained in s. 62 of the Housing Act, 1966 constituted a violation of rights protected by Article 8 of the Convention, since the necessity for a statutory scheme which permitted the summary eviction of the applicant and his family for anti-social behaviour reasons had not been sufficiently demonstrated. Of considerable importance in the facts of that case was the fact that the applicant and his family disputed the complaints being made, and the Council relied upon its powers to give 28 days notice to obtain summary possession without proving any breach of the licence under which the applicant had lived on the caravan site in question for between fourteen and fifteen years.

In my view that case is very different on its facts to the present case where the breach of clause 13 (vii) of the applicant’s tenancy agreement was admitted by the applicant and she was afforded several opportunities to make representations in relation thereto.

I am satisfied that the complaint by the applicant that fair procedures were breached by the District Court proceeding to make the order in circumstances where the applicant sought an adjournment so that she could be legally represented is one that does not surpass the threshold of arguability given the decisions to which I have referred. It has been clearly stated on a number of occasions that the District Judge is required by the legislation to make the order sought as soon as the Court is satisfied that the required proofs are in order. In the present case the applicant has not sought to dispute those necessary proofs. She has admitted the breach of her tenancy agreement which gave the Council the power to decide to serve Notice to Quit. She makes no challenge to that decision or to the service of the Notice to Quit itself. It is true that the summons served upon her commanded her to appear in order to show cause why such an order should not be made, but even now on the present application she has not sought to show that there was any ground she may have put forward if she had had the benefit of being legally represented. That would, in my view, be a pre-requisite to argue before this Court that her rights under the Constitution or the Convention to a fair hearing have been infringed. The right to be legally represented is not an absolute right, and the fact that on this occasion she had no solicitor or Counsel to represent her was not a bar to the District Court receiving proof of the matters required to be proved before this order for possession was made.

Similarly I am satisfied that in the face of the decisions to which the Court has now been referred on this application to set aside the leave granted and for the stays placed on the order for possession and the Circuit Court appeal to be lifted, it is no longer open to the applicant to argue or make a reasonable case that the policy of the Council to make a decision to serve Notice to Quit on tenants who are in breach of this clause 13(vii) of the Tenancy Agreement constitutes an unconstitutional fettering of the Council’s discretion in such cases.

I am satisfied that had the cases to which the Court has now been referred been opened to the Court and considered on the ex parte application for leave, leave would not have been granted in respect of the reliefs relating to the challenge to the constitutionality of s. 62. I have referred at the outset to the judgment in the Supreme Court in Adam and Iordache v. The Minister for Justice, Equality and Law Reform I am satisfied that the present application to set aside leave is one covered by the principles to be derived therefrom.

I will therefore order that the leave to seek the declarations of unconstitutionality of s. 62 of the Act be set aside, and that the stays granted by my earlier order be lifted, and the remainder of the said order to stand.

Grace v Ireland

[2007] I.E.H.C. 90

Judgment of Miss Justice Laffoy delivered on 7th March, 2007.

Claim

The primary relief claimed, and in the event the only relief pursued, by the plaintiff in these proceedings are declarations that “all or part” of s. 85 of the Bankruptcy Act, 1988 (the Act of 1988) is repugnant to the Constitution and/or incompatible with the European Convention on Human Rights (the Convention). In response to a notice for particulars from the defendants, the plaintiff particularised the nature of his claim as follows:
(a) the part of s. 85 which he alleges is repugnant to the Constitution and incompatible with the Convention is the requirement in sub-s. (4) that all expenses, fees and costs due and also all preferential claims existing must be paid in full as a prerequisite for availing of the twelve years exit from bankruptcy, regardless of the circumstances that gave rise to the bankruptcy, the amount of those sums and how they were incurred, and supervening events;
(b) that Article 40.3.1 and 2 are the constitutional provisions against which it is alleged that s. 85 is repugnant on the basis of the requirement implied in those Articles that legal proceedings be prosecuted and brought to conclusion in a reasonably expeditious manner, bankruptcy being no more than a convenient mode of collective debt recovery; and
(c) that articles 6.1 and 13 of the Convention are the provisions of the Convention against which it is alleged that s. 85 is incompatible, for the same reasons as are stated at (b).
The plaintiff also sought the release, discharge or other termination of his present status as a bankrupt. However, counsel for the plaintiff informed the court that he accepted that that relief could not be an “automatic outcome”. On that basis, my understanding is that that relief was not pursued. In fact, counsel for the plaintiff indicated that he accepted the position as pleaded in paragraph 11 of the defendant’s defence (that this Court does not have jurisdiction to order the release or discharge from, or the termination of the plaintiff’s status as a bankrupt other than in accordance with the appropriate procedure set out in the Act of 1988) is correct.
The foundation of the plaintiff’s claim, as set out in the written submission made on his behalf, is the assertion that s. 85 permits a state of affairs where certain bankrupts, including the plaintiff, can be kept in a state of permanent bankruptcy – those whose liabilities involve substantial preferential debts, being mainly tax liabilities. Such a state of affairs, it was asserted, contravenes the right to a reasonably speedy resolution of legal disputes, to private property, to engage in various political and economic activities and to equality under the Constitution and under the Convention. The plaintiff has not pleaded any infringement of any constitutional or Convention right other than the right to a reasonably speedy resolution of legal disputes.
In broad terms, the defendants defended the proceedings on the basis that the plaintiff has not established any locus standi to present the claim. In any event, s. 85 is neither repugnant to the Constitution nor incompatible with the Convention. Further, it was asserted that the court does not have jurisdiction under the European Convention on Human Rights Act, 2003 (the Act of 2003) to award a declaration of incompatibility on the ground that the alleged cause of action occurred on a date prior to the coming into force of that Act.

The impugned provision
Section 85 of the Act of 1988 deals with discharge from bankruptcy and annulment of adjudication. Sub-section (4) provides as follows:
“A bankrupt whose estate has, in the opinion of the court, been fully realised shall be entitled to a discharge from bankruptcy when provision has been made for payment of the expenses, fees and costs due in the bankruptcy, as well as the preferential payments, and –
(a) his creditors have received fifty pence or more in the pound, or
(b) he and his friends have paid to his creditors such additional sums as would together with the dividend paid make up fifty pence in the pound, or
(c) the bankruptcy has subsisted for twelve years:
provided that in any application under paragraph (c) the court shall be satisfied that all after acquired property has been disclosed and that it is reasonable and proper to grant the application.”
The plaintiff’s challenge to that provision is grounded on the circumstance provided for in paragraph (c), that the bankruptcy has subsisted for twelve years. In that circumstance, the bankrupt is entitled to a discharge where –
(i) the court is of opinion that the bankrupt’s estate has been fully realised, which is a pre-condition to an entitlement to discharge arising,
(ii) provision has been made for payment of the expenses, fees and costs due in the bankruptcy, as well as the preferential payments,
(iii) the court is satisfied that all after acquired property has been disclosed, and
(iv) it is reasonable and proper to do so.
In summary, the plaintiff’s case is that, as regards circumstance (c), the requirement at (ii) should not apply.
As regards bankruptcies where the order of adjudication was made after 1st January, 1960, the scheme of s. 85 is to give the bankrupt an entitlement to be discharged in the circumstances and subject to satisfaction of the conditions set out in sub-s. (3) and in sub-s. (4), which I have just quoted. Sub-section (3) outlines two situations in which a bankrupt is entitled to be discharged. The first is where provision has been made for the payment of the expenses, fees and costs due in the bankruptcy, as well as the preferential payments, and the bankrupt has either paid his creditors in full with such interest as the court may allow or has obtained the consent of all of his creditors. The second situation is where the court discharges the adjudication order under s. 41 so as to give effect to a composition with his creditors which has been approved under the provisions of ss. 38 to 41 inclusive. It is the bankrupt who must initiate and follow through on the composition procedure provided for. It is the bankrupt who must initiate the process to obtain a discharge where either sub-s. (3) or sub-s. (4) of s. 85 apply (sub-s. (7) of s. 85).
The facts
The plaintiff, who was apparently a sole trader, was adjudicated a bankrupt by order of this Court made on 11th March, 1991 on foot of a petition presented by Thomas F. Mulherin, Collector General, on 22nd November, 1990 in which it was asserted that the plaintiff was indebted in the sum of IR580,759.69 in respect of arrears of income tax (Pay As You Earn), pay-related social insurance contributions, Value Added Tax and interest thereon and also a High Court judgment dated 4th October, 1989 and interest thereon. These proceedings were initiated on 3rd December, 2004, more than twelve years after the date of adjudication.
The Official Assignee is not a party to these proceedings. The only evidence tendered to the court on behalf of the plaintiff was the evidence of his wife, Ann Grace. The only evidence tendered on behalf of the State was the evidence of Bill Holohan, solicitor, who had acted for the Official Assignee in the bankruptcy proceedings.
A feature of this case which is a cause for concern is that, with their replies to a notice for particulars dated 12th April, 2005, the plaintiff’s solicitors furnished to the Chief State Solicitor a medical certificate dated 30th March, 2005 issued by the plaintiff’s general practitioner, Dr. Brendan Thornton. In the certificate, Dr. Thornton gave the plaintiff’s date of birth as 20th January, 1933. He certified that the plaintiff was suffering “from a progressive dementia whose onset was several years ago”. He stated that the plaintiff was then currently on medication specifically for the management of dementia. He had had a significant level of deteriorating mental function dating back from the previous four or five years. He was then currently incapable of caring for himself and he was certainly not capable of earning an independent living. All activities of daily living required either help or supervision. He was then attending a Dementia Centre in Limerick City. In a further certificate put before the court, which was dated 13th November, 2006, Dr. Thornton certified that the plaintiff had severe dementia and was functionally dependent for all activities of daily living. He further certified that he was in no fit state to attend court or be a witness.
Mrs. Grace’s evidence was that the plaintiff was diagnosed with dementia in June, 2003. This was not disputed at the hearing. Mr. Holohan interviewed the plaintiff on behalf of the Official Assignee in June, 2003. The interview was not productive. A view was formed that an examination by the court would not elicit any further information. Mr. Holohan’s evidence was that the view at the time was that either the plaintiff was genuinely forgetful or had consigned the events to the past, but there was nothing to indicate mental deficiency.
The aspect of all of this which causes concern is that a question mark must hang over the competence of the plaintiff to give instructions for the prosecution of these proceedings, probably at the time they were initiated and certainly from March, 2005. Notwithstanding that, the claim was prosecuted in his name and defended. It would appear that the proceedings are not properly constituted having regard to Order 15 of the Rules of the Superior Courts, 1986.
I found Mrs. Grace to be an impressive, and despite the conflict of interest referred to below, a reliable witness. However, she had only second hand knowledge of some of the factual matters which arose and she had no knowledge at all of other factual matters. Apart from that, the evidence disclosed a fundamental conflict of interest between Mrs. Grace, on the one hand, and the plaintiff and the Official Assignee, on the other hand, and it is a conflict which would preclude Mrs. Grace from acting as the plaintiff’s next friend. While counsel for the plaintiff conceded at the hearing that the facts surrounding that conflict are irrelevant to the plaintiff’s case, in my view, it is not something the court can ignore against the background of the admitted evidence of the plaintiff’s medical condition. Prior to his bankruptcy, in 1988, the plaintiff had transferred his dwelling house and 80-acre farm to Mrs. Grace and his daughter. In 1992 the Official Assignee instituted proceedings against Mrs. Grace and the plaintiff’s daughter, as I understand it, to set aside that transfer. Those proceedings have not been prosecuted to completion. Counsel for the plaintiff made the concession that those facts were not relevant in the context of an objection on behalf of the defendants that the conduct of the Official Assignee was not in issue and had not been pleaded. Obviously, that being the position and the Official Assignee not being a party to these proceedings, it would be improper to draw any inference from those facts as to why the proceedings were not prosecuted to completion and none is drawn. However, the precondition to entitlement to a discharge under s. 85(4) that the estate of the bankrupt has been fully realised, allied to the absence of the Official Assignee from the proceedings and to the conflicted position of the only witness in support of the plaintiff’s case, raises the question whether there is any evidence on which the court can conclude that the precondition is complied with, the onus being on the plaintiff to adduce such evidence. I will return to this question when dealing with the issue of locus standi and mootness because I consider it to be relevant to those issues.
The evidence which was regarded as relevant was evidence in relation to four actions in this Court which the plaintiff had initiated before he was adjudicated a bankrupt. The actions in question and the evidence adduced in relation to them were as follows:
(1) Proceedings by the plaintiff against Independent Star Limited and Others (Record No. 1990 No. 3720 P), being proceedings for libel arising out of articles published in the Star newspaper about the plaintiff in 1988. It is common case that this cause of action did not vest in the Official Assignee and that the plaintiff was entitled to prosecute it outside the bankruptcy proceedings. Mrs. Grace’s evidence was that the case was settled in 1993 for IR£20,000, but that it was settled without the plaintiff’s permission, which had ramifications to which I will return later. The evidence of Mr. Holohan was that he was informed by the solicitors on record for the defendants, Dillon Eustace, Solicitors, that the matter had been settled in 1993 for IR£30,000 together with legal costs.
(2) Proceedings by the plaintiff against Radio Telefis Éireann (Record No. 1990 No. 467 P), being proceedings for libel arising out of the broadcast by the defendant of material in relation to a newspaper article which was the subject of the proceedings at (1). It is common case that these proceedings have not been prosecuted to completion. Mrs. Grace’s evidence was that a decision was made in December, 2004, I am not clear by whom, that there was no point in proceeding. Mr. Holohan’s evidence, as a result of a contact he had with the solicitor who acted for the plaintiff in the proceedings, was that they “withered on the vine”.
(3) Proceedings by the plaintiff against Comhlucht na hÉireann um Arachas Cpt (Record No. 1990 No. 5910 P). In these proceedings the plaintiff was claiming damages for breach of contract and negligence arising out of alleged mismanagement by the defendant of the Town Hall Shopping Centre in Rathmines where the plaintiff ran a restaurant business between 1978 to 1989. Prima facie this cause of action would have vested in the Official Assignee. There is no evidence of any formal arrangement between the Official Assignee and the plaintiff in relation to it. However, like the proceedings referred to at (2) above, Mr. Holohan’s understanding from the solicitor who acted for the plaintiff in the proceedings was that they “withered on the vine”. Mr. Holohan further testified that these proceedings were investigated and the conclusion was that they were not viable.
(4) Proceedings by the plaintiff against Michael Cronin, practising under the style of Cronin & Company, Accountants, (1990 No. 17385 P). In these proceedings the plaintiff claimed damages for breach of contract and negligence against the accountant who handled his revenue affairs in the years between 1986 and 1989 in which he alleged that his indebtedness to the Revenue Commissioners was due to mishandling of his tax affairs by the defendant. By an assignment dated 10th March, 1992 the Official Assignee assigned the right of action to the plaintiff on the conditions set out in the agreement. Mrs. Grace disavowed any knowledge of the conduct or outcome of these proceedings. However, the evidence of Mr. Holohan was that the proceedings were dismissed in late 2004 for want of prosecution. I understand from Mr. Holohan’s evidence that the viability of these proceedings was assessed and that, while the conclusion was that there was some substance in the action, it was dependent on the evidence of the plaintiff which would not be forthcoming because of his medical condition.
Mrs. Grace testified that, as a result of the settlement of the libel action against Independent Star Limited and Others referred to at (1) above, the plaintiff initiated proceedings against the solicitor who acted for him in those proceedings some time in 1994 or 1995. The proceedings were settled in June, 2000 for IR£100,000 and the plaintiff did not have to pay any costs out of the settlement. Mr. Holohan testified that the Official Assignee was unaware of these proceedings or their outcome until Mrs. Grace testified in court in these proceedings. Mrs. Grace gave evidence of the disbursement of the sum of IR£100,000 by her on the plaintiff’s instructions. Apart from paying for a medical procedure, a cataract operation, which the plaintiff underwent, all of the monies were distributed to family members, Mrs. Grace, a daughter and two sons, in varying amounts.
The only preferential claims of which the court has evidence are claims aggregating €75,632.51 in respect of PAYE/PRSI, VAT and income tax, as claimed in a letter of 2nd June, 2005 from the office of the Collector General to the Official Assignee. No evidence was adduced as to the expenses, fees and costs due in the bankruptcy.
There was correspondence between the plaintiff’s solicitors and the Official Assignee in 1998 which indicates that, in the context of the proceedings against Michael Cronin referred to at (4) above, the plaintiff was then contemplating a composition with his creditors and again in 2001 and 2002, but nothing came of the correspondence or the proposal which was in contemplation.
Mrs. Grace accepted that after his adjudication, the plaintiff did not seek gainful employment for his own personal reasons, rather than because of any legal constraint. She was unable to say whether after to 1998 he was seeking a discharge, as opposed to a composition, because the subject of his bankruptcy and his dealings with the Official Assignee was a very fraught one, which, she implied, she was not eager to confront. In response to a question put to her in cross-examination, Mrs. Grace stated that the reason the plaintiff did not go through with the composition which was mooted in 1998 was probably due to the state of his mind.
What emerges from the evidence is that, on the basis of the information furnished in the letter of 2nd June, 2005 from the Collector General to the Official Assignee, is that the plaintiff’s preferential revenue debts amount to €75,632.51, whereas his non-preferential debts in respect of PAYE/PRSI, VAT and income tax amount to €1,001,169.50. While no finding can be made as to his ability prior to the institution of these proceedings to pay the preferential debts and the expenses, fees and costs of the bankruptcy, the latter not having been quantified, the fact is that following his adjudication the plaintiff he received either IR£120,000 (€152,368.57) or IR£130,000 (€165,065.95) from the settlement of two legal actions which he prosecuted. I will consider the relevance of this evidence in the context of the defence of locus standi raised by the defendants.
Before doing so or considering the substantive issues, however, I propose considering the authorities relied on by counsel for the plaintiff. While that may seem like “putting the cart before the horse”, I believe it is an approach which gives a useful perspective on the gravamen of the plaintiff’s case.

The authorities
In the context of his invocation of article 6 of the Convention, counsel for the plaintiff referred to four authorities of the European Court of Human Rights (ECHR). Article 6.1 of the Convention, insofar as it is relevant for present purposes, provides:
“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitle to a fair and public hearing within a reasonable time by an independent and partial tribunal established by law …”
The first of the authorities referred to by counsel for the plaintiff was Luordo v. Italy [2003] ECHR 372. Counsel stated that he was relying on this decision only for the purpose of illustrating that bankruptcy proceedings are civil proceedings for the purposes of the Convention. The basis on which article 6.1 was invoked in that case was that during the bankruptcy, which lasted for fourteen years and eight months, under the Italian Bankruptcy Code the bankrupt’s legal proceedings concerning disputes over property issues arising in respect of assets forming part of the bankrupt estate were to be taken or defended by the trustee in bankruptcy and the bankrupt was precluded from intervening in such proceedings save insofar as they concerned an allegation of criminal bankruptcy or if permitted by law. The ECHR held that there had been an infringement of Article 1 of Protocol No. 1, which secures the right to peaceful enjoyment of possessions (para. 71). In relation to the article 6.1 argument it found that the restrictions on the applicant’s ability to take legal proceedings concerned disputes or issues of a pecuniary nature, so that the civil limb of article 6 was applicable (para. 84). Having stated that the “right to a court” is not absolute, the ECHR stated as follows at paras. 86 and 87:
“86. The Court considers that the purpose of the restriction on the applicant’s capacity to take legal proceedings is to assign the role of representing the bankrupt in Court in respect of issues arising over the bankrupt’s pecuniary rights to the trustee in bankruptcy as, once the bankruptcy order has been lodged, he is responsible for the administration of the bankrupt’s assets. Indeed, it is self-evident in the Court’s view that disputes over such matters may have major repercussions on the assets and liabilities of the bankrupt estate. The Court consequently finds that the restriction is intended to protect the rights and interests of others, namely those of the bankrupt’s creditors. The court must go on to examine whether the consequences suffered by the applicant were proportionate to the legitimate aim pursued.

87. The restriction on the applicant’s right of access to a court is not in itself open to criticism. However, the risk with such a system is that it may unreasonably limit the right of access to a court, particularly if the proceedings are protracted as they were in the instant case in which they lasted fourteen years and eight months. In that connection, referring to its findings with respect to Article 1 of Protocol No. 1, the Court considers that, contrary to what the Government have affirmed, the delays in the proceedings were not attributable to the failure of the attempts to sell the applicant’s house at auction or to the applicant’s conduct.

Consequently, it finds that there was no justification for restricting the applicant’s right of access to a court for the full duration of the proceedings, since while in principle a restriction on the right to take legal proceedings is necessary to achieve the aim pursued, the necessity will diminish with the passage of time. In the court’s view, the length of the proceedings thus upset the balance that had to be struck between the general interest in securing the payment of the bankrupt’s creditors and the applicant’s personal interest in having access to a court. The interference with the applicant’s right was accordingly disproportionate to the aim pursued.”
Accordingly, the court held that there had been an infringement of the right of access to a court as guaranteed by article 6.1.
By contrast to the bankrupt in the Luordo case, after his adjudication the plaintiff was entitled to prosecute proceedings against Michael Cronin on foot of the assignment of the cause of action by the Official Assignee to him. He had the right under ss. 38 to 41 of the Act of 1988 to enter into a composition with his creditors and it is clear on the evidence that he contemplated that initiative, and he also had the right to invoke the discharge provisions contained in s. 85. Under the Act of 1988 he was the driver of all those initiatives, not the Official Assignee or any other organ or agent of the State.
The second authority relied on by counsel for the plaintiff was Tierce v. San Marino [2003] ECHR 304. The article 6.1 issue in that case was the applicant’s contention that the length of the proceedings seeking termination of her lease and an eviction order against her for non-payment of rent (from commencement in March, 1993 to the decision on her appeal in October, 2001) had infringed the reasonable time principle enshrined in article 6.1. The ECHR reiterated the jurisprudence on the reasonable time principle (at para. 30) as follows:
“The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and having regard to the criteria laid down in its case law, in particular the complexity of the case, the conduct of the applicant and of the relevant authorities and what is at stake for the applicant in the litigation …”
The court concluded that the length of the proceedings, which lasted for approximately eight years and nine months, was mainly due to the complexity of San Marino litigation procedure. It found that there had been a violation of article 6.1.
The next decision relied on, Davies v. United Kingdom [2006] 2 B.C.L.C. 351, concerned disqualification proceedings brought by the Secretary of State for Trade and Industry against the director of a group of companies (the Blackspur Group), which had gone into liquidation owing an estimated £34 million. The proceedings were commenced in July, 1992 and terminated in January, 1998 on the basis of a settlement under which the applicant agreed to pay the Secretary of State’s costs. Having stated that the reasonableness of the length of proceedings is to be assessed in the light of the circumstances of the case, having regard in particular to its complexity and the conduct of the parties to the dispute and of the relevant authorities, the ECHR continued (at para. 26) as follows:
“In the present case the court must also bear in mind that, given that the applicant was a company director and that disqualification proceedings would have had considerable impact on his reputation and his ability to practise his profession, special diligence was called for in bringing the proceedings to an end expeditiously …”
On the facts, the court found that the United Kingdom was responsible for the greater part of the delay. It considered that the proceedings against the applicant were not pursued with the diligence required by article 6.1 and that there had been a violation of that provision, in that his civil rights and obligations were not determined within a reasonable time.
The fourth authority relied on by counsel for the plaintiff, Eastway v. United Kingdom [2006] 2 B.C.L.C. 361, concerned an application for disqualification of another director of the Blackspur Group. The ECHR applied its decision in the Davies case.
Counsel for the plaintiff did not cite any authority to support the plea that there has been an infringement of article 13 of the Convention, nor did he cite any authority in support of his contention that the section 85(4) is repugnant to the Constitution. However, the basis on which Article 40.3 was invoked was that it guarantees a right to a speedy trial in the same way as the Convention guarantees such right. In other words, the plaintiff did not develop that constitutional argument independently of the argument based on article 6.1 beyond the position taken in the reply to the notice for particular referred to earlier.
As the main focus of the plaintiff’s submissions was on the Convention and the jurisprudence of the ECHR, rather than on the Constitution, I propose considering the case made on incompatibility with the Convention first. There was no debate before the court as to whether it is appropriate for the court to consider Convention issues or constitutional issues first.

Non-retrospectivity of the Act of 2003
It was submitted on behalf of the defendants that the decision of the Supreme Court in Dublin Corporation v. Fennell [2005] 2 I.L.R.M. 288 makes it clear that the Act of 2003 is not retrospective and that no declaration of incompatibility may be granted in proceedings in respect of an act which took place prior to the coming into operation of that Act. The defendants’ contention that the court has been asked to apply the Act retrospectively is based on an analysis which points to the commencement of the bankruptcy process in 1990 and the plaintiff’s adjudication in 1991, from which the legal disabilities of which the plaintiff now complains flowed, as being the events by reference to which the court should assess whether the invocation by the plaintiff of the Act of 2003 has a retrospective or a prospective effect.
I have no doubt that, if the plaintiff in these proceedings was seeking to challenge the validity of his adjudication as a bankrupt in reliance on the provisions of the Convention and the Act of 2003, he would not be entitled to do so. That situation would be entirely analogous to the situation which arose in the Fennell case where, on an appeal to the Circuit Court against an order of the District Court granting Dublin City Council possession of premises on foot of a notice to quit served pursuant to s. 62 of the Housing Act, 1966, both the notice to quit and the order of the District Court having preceded the coming into operation of the Act of 2003, Mrs. Fennell sought to invoke the provisions of the Act of 2003 and, in particular, ss. 2 and 3 thereof. Kearns J., with whom the other judges of the Supreme Court agreed, having examined the texts and authorities on the issue of retrospectivity of statutes, concluded (at p. 318) that the Act of 2003 cannot be seen as having retrospective effect or as affecting past events. He also concluded that, although the appeal to the Circuit Court was prospective in the sense that it still had to be heard, the provisions of the Act of 2003 could not be invoked on the hearing of the appeal, stating as follows at p. 319:
“The parties’ legal rights and obligations were, in my view, fixed and determined once the wheel was set in motion by the service of a notice to quit, an act which triggered the provisions, requirements and consequences of s. 62 of the Housing Act, 1966. That is the moment when the invocation of legal rights determined the applicable law and the position of the parties. The requirement to protect the respective positions of the parties thereafter is all the greater in a situation where vested rights are involved and where changes proposed by the 2003 Act are agreed to be substantive rather than procedural.”
The position here, however, is that the plaintiff is not challenging his adjudication. What he is challenging is the requirement in s. 85(4) of the Act of 1988 that his discharge from bankruptcy is dependent on provision having been made for the payment of the expenses, fees and costs during the bankruptcy, as well as the preferential payments as it currently applies to him. It is in respect of that requirement, as it impacts on him at this point in time, that he seeks a declaration of incompatibility with the State’s obligations under the Convention pursuant to s. 5 of the Act of 2003.
Section 5 was not in issue in the Fennell case. In determining whether, if the plaintiff was entitled to a declaration of incompatibility, the declaration would have retroactive effect, it is necessary to consider the effect of such a declaration. Sub-section (2) of s. 5 provides that a declaration of incompatibility shall not affect the validity, continuing operation or enforcement of the relevant statutory provision, nor does it preclude the making of representations in proceedings before the ECHR. Sub-section (3) provides that the Taoiseach shall cause a copy of any order containing a declaration of incompatibility to be laid before each House of the Oireachtas within the time span stipulated. Sub-sections (4) and (5) provide for the payment of ex gratia compensation to a party to the proceedings in which the declaration is made in respect of injury or loss or damage suffered by him or her as a result of the incompatibility.
If the plaintiff could establish that the impugned requirement in s. 85(4) is incompatible with the State’s obligation under the Convention, the declaration would only operate prospectively to require the Taoiseach to comply with sub-s. (3) of s. 5 and to entitle the plaintiff to pursue a claim for an ex gratia payment of compensation under sub-ss. (4) and (5). The declaration would not affect any legal rights and obligations of the plaintiff or any other party. For instance, the declaration would not disentitle the Official Assignee to the payment of the expenses, fees and costs due in the bankruptcy, nor would it disentitle the Revenue Commissioners to the preferential payments due. Accordingly, in my view, the making of a declaration of incompatibility would not have a retroactive effect and the plaintiff is not barred from pursuing it.

The claim for a declaration of incompatibility
The plaintiff’s claim for a declaration of incompatibility in reliance on article 6.1 of the Convention is utterly misconceived.
The plaintiff’s case is not that his “right to a court”, in the sense in which that expression was used by the ECHR in the Luordo case, has been infringed. His case is that the continuance of the bankruptcy proceedings, and his status as a bankrupt, infringes the reasonable time principle enshrined in article 6.1, to use the terminology which the ECHR used in the Tierce case. The State’s obligation in relation to the reasonable time principle is to ensure that the civil process is brought to a conclusion by a judgment within a reasonable time. The State’s obligation is explained in the following passage from Jacobs and White on The European Convention on Human Rights (Oxford University Press), 4th Edition, commencing at p. 187:
“The object of the provision in article 6(1) is to protect the individual concerned from living too long under the stress of uncertainty and, more generally, to ensure that justice is administered without delays which might jeopardise its effectiveness and credibility.

In civil cases there is usually no problem in deciding when the period to be taken into consideration commenced: this is usually the date on which proceedings were initiated, for example by the issuing of a summons or writ. … The period to be taken into consideration lasts until the final determination of the case, and therefore includes appeal or cassation proceedings, proceedings to assess damages or sentence, and enforcement proceedings. The State can be held responsible only for delays which are attributable to it; if the parties to the litigation or the defendant in a criminal case have caused or contributed to the delay, those periods are not taken into account.

The reasonableness of the length of proceedings is assessed in the light of all the circumstances of the case, having regard in particular to the complexity of the issues before the national courts, the conduct of the parties to the dispute and of the relevant authorities, and what was at stake for the applicant.”
The plaintiff’s case is not that the bankruptcy process has been unduly protracted because of dilatoriness on the part of organs or agents of the State, for example, this Court, the Official Assignee, the Revenue Commissioners in proving their claim and so forth. The plaintiff’s case is that on the expiration of twelve years from adjudication a bankrupt should be discharged from bankruptcy without being required to pay the expenses, fees and costs of the bankruptcy and the preferential payments. Such a case, which involves substantial interference with the rights of third parties, is not a case which can be advanced on the basis of the reasonable time principle enshrined in article 6.1.
It may be that, because of the requirement to discharge expenses and preferential payments as a precondition to being discharged from bankruptcy, the plaintiff has no prospect of being discharged and will remain a bankrupt for the remainder of his life unless, as counsel for the plaintiff put it, he wins the lottery. However, that circumstance does not render the requirement contained in s. 85(4) incompatible with article 6.1 of the Convention.
Although the plaintiff invoked article 13 of the Convention, no case was advanced on the basis of article 13.

Locus Standi
The rule in relation to locus standi in challenging the constitutionality of a statutory provision was summarised by Henchy J. in his judgment in Cahill v. Sutton [1980] I.R. 269 (at p. 286) as follows:
“The primary rule as to standing in constitutional matters is that the person challenging the constitutionality of the statute, or some other person for whom he is deemed by the court to be entitled to speak, must be able to assert that, because of the alleged unconstitutionality, his or that other person’s interests have been adversely affected, or stand in real or imminent danger of being adversely affected, by the operation of the statute.”
Applying that test, the Supreme Court held that the plaintiff, Ms. Cahill, was disentitled to raise the allegation of unconstitutionality of s. 11(2)(b) of the Statute of Limitations, 1957, which provides that an action claiming damages for breach of contractual duty, in which the damages claimed consist of or include damages for personal injuries, shall not be brought after the expiration of three years from the date of accrual of the cause of the action. The breach of contract alleged by Ms. Cahill occurred in March, 1968. Her proceedings commenced on 11th April, 1972, outside the limitation period. The basis of her contention that s. 11(2)(b) was invalid having regard to the provisions of the Constitution was the absence of any saver to the time bar which would be applicable to a situation where the would-be plaintiff did not know, and could not possibly have known, of the accrual of the right of action within the permitted period (cf. judgment of O’Higgins C.J. at p. 276). However, the factual position was that Ms. Cahill became aware of the breach of contract in 1968. On the basis of those facts Henchy J. stated (at p. 286):
“Even if the Act of 1957 contained the saving clause whose absence is said to amount to an unconstitutionality, she would still be barred by the statute from suing. So the alleged unconstitutionality cannot affect her adversely, nor can it affect anybody whose alter ego or surrogate she could be said to be. As to such other persons, although the statute was passed in 1957, the plaintiff is unable to instance any person who has been precluded from suing for damages because of the absence from the statute of the saving clause for which she contends. Therefore, her case has the insubstantiality of a pure hypothesis. While it is true that she herself would benefit, in a tangential or oblique way, from a declaration of unconstitutionality, in that the consequential statutory vacuum would enable her to sue, that is an immaterial consideration in view of her failure to meet the threshold qualification of being in a position to argue, personally or vicariously, a live issue of prejudice in the sense indicated.”
In applying the primary rule as to locus standi, as enunciated by Henchy J. in Cahill v. Sutton, to this case the question which arises is whether the plaintiff can assert that his interest has been adversely affected by the requirement in s. 85(4) that provision be made for the expenses, fees and costs during the bankruptcy, as well as preferential payments, before his entitlement to a discharge arises on the basis that the bankruptcy has subsisted for twelve years. It seems to me that the answer to that question depends upon whether he has established that, if that requirement were excised, he would be entitled to a discharge. While the plaintiff’s bankruptcy has subsisted for in excess of twelve years, there are other conditions to be complied with before an entitlement to a discharge would arise. I have already adverted to the fact that one condition, the precondition that the plaintiff’s estate has been fully realised, is of relevance in the context of mootness. I consider that, irrespective of the views of the parties that the conduct of the Official Assignee in prosecuting the proceedings to set aside the transfer by the plaintiff of his house and farm to Mrs. Grace and his daughter is irrelevant, the pendency of those proceedings is of relevance to the issue of the plaintiff’s locus standi, because their mere existence, prima facie, excludes the conclusion that the plaintiff’s estate has been fully realised. The plaintiff, on whom the burden of showing that he has standing rests, has not discharged the onus of establishing that a precondition to his entitlement to a discharge has arisen. Therefore, to adopt the words of Henchy J. in Cahill v. Sutton, his case “has the insubstantiality of a pure hypothesis”.
As well as relying on the rule as to locus standi as enunciated in Cahill v. Sutton, the defendants also submitted that the plaintiff lacks standing to challenge the constitutionality of s. 85(4) because he has not pursued all avenues open to him to secure his discharge from bankruptcy, by analogy to the position adopted by O’Hanlon J. in E. v. E. [1982] I.L.R.M. 497 and the implicit acceptance of the principle of exhaustion of other remedies by Barrington J. in Brennan v. Attorney General [1983] I.L.R.M. 449. In my view, there is substance in that submission. The proceeds of the two actions which the plaintiff settled could have been utilised in an attempt to procure a composition with his creditors. The Official Assignee’s proceedings to set aside the transfer of the house and farm could have been pressed with a view to procuring a discharge under s. 85(4) and to this end he could have sought the assistance of the court pursuant to s. 61(7) of the Act of 1988. Against that background, the plaintiff’s constitutional challenge, viewed objectively, seems to be particularly unmeritorious. If this Court were to entertain the plaintiff’s challenge, thereby allowing the plaintiff to by-pass remedies available under the Act of 1988 to enable a bankrupt to procure his discharge, I have no doubt that, to adopt the words of O’Higgins C.J. in Cahill v. Sutton (at p. 277) “it would result in a jurisdiction which ought to be prized as the citizen’s shield and protection becoming debased and devalued”.
It was also submitted on behalf of the defendants that, insofar as the plaintiff seeks to rely on particular legal consequences flowing from bankruptcy, such as his inability to set up a building society or stand for election to the European Parliament, the plaintiff has not established any evidential basis that these restrictions have a detrimental impact on his personal situation. That is so, as far as it goes. However, it is peripheral to the core issue on standing, which is whether the requirement in s. 85(4) of payment of the expenses and preferential debts constitutes a live issue of prejudice to the plaintiff’s interest. As I have found, it does not because, absent such requirement, as things stand the plaintiff could not procure his discharge.
For the foregoing reasons, I have come to the conclusion that the plaintiff does not have locus standi to challenge the constitutionality of s. 85(4).
Even if he had locus standi, I consider that the plaintiff’s invocation of Article 40.3 and his contention that the impugned statutory provision is an infringement of an implied requirement that legal proceedings be prosecuted and brought to a conclusion in a reasonably expeditious manner is as misconceived as his case founded on article 6.1 of the Convention.

Inequality
As I understand it, the inequality contended for on behalf of the plaintiff was inequality between the position of an undischarged bankrupt, who may be consigned to a perpetual state of bankruptcy because of inability to pay a preferential claim of the Revenue Commissioners, and the position of the Revenue Commissioners the payment of whose preferential debt is necessary to procure a discharge from bankruptcy, which was characterised as exceptional discrimination in their favour. The comment made on behalf of the defendants on that argument was that it appears to involve no more than an assertion of disequilibrium as between the individual citizen and the revenue authorities, which is not in any way constructed into or related to any legal claim of infringement of the equality guarantee contained in the Constitution. In my view, that comment is justified. The plaintiff’s argument, which I must emphasise is wholly unconnected to the plaintiff’s case as pleaded, does not advance the plaintiff’s constitutional challenge or his assertion of incompatibility with the Convention.
In the circumstances it is neither necessary nor appropriate to express any view on the submission made on behalf of the defendants that the question whether a bankrupt who has failed to discharge certain debts and expenses should be released from the status of bankrupt after a particular period is a matter of policy for the Oireachtas and the policy should not be second-guessed by the courts.

Order
There will be an order dismissing the plaintiff’s claim.

AHP Manufacturing BV (trading as Wyeth Medicare Ireland) v Director of Public Prosecutions

[2008] I.E.H.C. 144

Judgment of Mr. Justice Kevin O’Higgins delivered the 8th day of May, 2008.

The applicant has operated a pharmaceutical production facility in County Kildare pursuant to Integrated Pollution Control licences (“IPC licences”) granted by the Environment Protection Agency (“E.P.A.”) since January, 1997. The Agency first granted a licence to the applicant on the 14th January, 1997 and issued a revised licence registered number 309 on 27th March, 1998. The Agency then issued further revised licence registered number 581 on the 15th February, 2002. Conditions 7.1 and 7.2 of the IPC licences registered numbers 309 and 581 (the impugned conditions) essentially provided that waste sent off the site for recovery could only be conveyed by a waste contractor approved by the E.P.A.
On the 28th November, 2006, the applicant was served with eighteen summonses charging a series of alleged offences in relation to the disposal of waste on various dates between the 18th September, 2000 and 31st May, 2001. Five of the eighteen summonses alleged offences breaching the terms of the impugned conditions. In the case of each of the five summonses the same breach is alleged to have occurred on different dates.
On the 22nd January, 2007, the applicant was granted leave to apply for judicial review seeking a number of reliefs against the respondents:-
(a) In respect of the Director of Public Prosecutions (“D.P.P.”), the applicant was granted leave to seek an order of prohibition or an injunction to restrain the prosecution of the five charges in the summonses alleging breach of the conditions in the licences granted to the applicant.
(b) In respect of the Environmental Protection Agency (“E.P.A.”), the applicant was granted leave to challenge the validity of the certain conditions in the licences granted to the applicant by the E.P.A.
(c) In respect of the third named respondent, the State, the applicant was given leave to seek a declaration to the effect that the statutory provisions under which the licences were granted and the impugned conditions attached thereto were unconstitutional.
On the 13th April, 2007, the E.P.A. issued a motion to have the grant of leave set aside. On the 19th April, 2007, the Attorney General issued a motion to have the grant of leave set aside and on the 15th May, 2007, the Director of Public Prosecutions brought a motion inter alia to have the leave set aside as being out of time. There was a discrete issue between the Director of Public Prosecutions and the application but that issue is now resolved and does not require adjudication by the Court. On the 18th May, 2007, the applicant brought a motion to amend the grounds to include an argument that the statutory time limit provided for in s. 87(10) of the Environmental Protection Agency Act, 1992 (as inserted by s. 15 of the Protection of the Environment Act, 2003) is unconstitutional. The Court is concerned with these four motions.
The reliefs sought.
The relief sought against the E.P.A. is a declaration that the conditions in respect of the alleged breach to which the summonses relate are ultra vires the (E.P.A.) and unlawful, void and of no effect. The applicant seeks an order of certiorari quashing such conditions.
The applicant seeks a declaration that sections of the Environmental Protection Agency Act, 1992 are repugnant to Article 15.2.1 of the Constitution in that the said provisions allow an impermissible delegation of the sole and exclusive law making power of the Oireachtas to the authority of the E.P.A. This argument is primarily a matter to be dealt with by the State.
As has been already noted, the applicant also brings a motion seeking to amend its statement of ground so as to challenge the constitutionality of the time limits contained in the Environmental Protection Agency Act, 1992 (as amended).
The applicant seeks an order of prohibition or an injunction restraining the Director of Public Prosecutions from further proceeding with his prosecution on five of the summonses, the subject matter of these proceedings. No specific argument is directed specifically at the Director of Public Prosecutions separately. However a successful application for relief against the other respondents would have the consequence that the applicant would also succeed in his application against the Director of Public Prosecutions.
This hearing is not concerned with the substantive issues but only with the motions brought by the various parties. The Environmental Protection Agency, Ireland and the Attorney General, and the Director of Public Prosecutions all maintain that the applicant’s application should be dismissed at this stage without going to a full hearing for the reasons argued in Court, and the applicant seeks to amend his grounds to include a new constitutional claim.
The issues.
The issues for the decision of the Court are as follows:
(1) Is the applicant precluded from obtaining relief because of the provisions of s. 87(10) of the Act of 1992 (as amended)?
(2) Is the applicant precluded from obtaining the relief sought by virtue of the delay, either pursuant to the inherent jurisdiction of the Court or the provisions of Order 84 of the Rules of the Superior Courts, 1986?
(3) Has the applicant the requisite locus standi to pursue the constitutional claim in respect of the contention that the conditions imposed on the applicant by the Environmental Protection Agency were ultra vires the Agency?
(4) Is the applicant precluded, by reason of lack of locus standi, from seeking to pursue a new constitutional argument that the time limits imposed in the Act of 1992 (as amended) are unconstitutional?
1. The provisons of the Environmental Protection Agency Act (as amended)
Section 87(10) of the Environmental Protection Agency Act, 1992 (as amended) is clear. It provides as follows:-
“A person shall not by any application for judicial review or in any other legal proceedings whatsoever question the validity of a decision of the Agency to grant or refuse a licence or revised licence (including a decision of it to grant or not to grant such a licence on foot of a review conducted by it of its own volition) unless the proceedings are instituted within the period of 8 weeks beginning on the date on which the licence or revised licence is granted or the date on which the decision to refuse or not to grant the licence or revised licence is made.”
The applicant contends that the above provisions do not apply in the present case and asserts that it is not challenging the grant of a licence but only the conditions attached to such a licence. The applicant argues that, because it faces the possibility of a penal sanction in the present case, s. 87(10) of the Act must be strictly construed in its favour. It contends that because s 87(10) refers to a licence and not to the conditions attached thereto, the provisions of s. 87(10) are not applicable to it.
I was referred to the fourth edition of Bennion, Statutory Interpretation A Code, 4th Ed., (Butterworths, 2002) at p. 729 under section 281, where the following passage appears:-
“One aspect of the principle against doubtful penalisation is that by the exercise of state power the rights of a person in relation to the law and legal proceedings should not be removed or impaired, except under clear authority of law.”
I was also referred to a decision of my own in the case of Mullins v. Hartnett [1998] 4 I.R. 424 and where under the heading “The Principle Against Doubtful Penalisation”, the Court said (at p. 434):-
“According to this principle nobody suffers a detriment by application of a doubtful law”
The Court went on to quote a passage from Bennion, Statutory Interpretation, 2nd Ed., (Butterworths, 1992) at p. 572 as follows (on p. 434):-
“Whenever it can be argued that an enactment has a meaning requiring infliction of a detriment of any kind, the principle against doubtful penalisation comes into play. If the detriment is minor, the principle will carry little weight. If the detriment is severe, the principle will be correspondingly powerful. As Staughton L.J. said in relation to penalisation through retro-respectivity it is a matter of degree – the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended. However it operates, the principle requires that persons should not be subjected by law to any sort of detriment unless this is imposed by clear words”.
In relying on the above passages the applicant contends that its situation is not covered by time limits imposed by s. 87(10), as they apply to a challenge to “a decision to grant a licence” of a licence but not to a challenge to the conditions thereof. Ms. Butler S.C. for the E.P.A., however, argues that the licence and its conditions are not separable and that the decision in relation to the licence is also the decision concerning the conditions. She argues that the conditions do not have free standing existence outside the grant of licence. Moreover, it is submitted on behalf of the E.P.A. that the disjunctive interpretation of the licence from the conditions contended for by the applicant is highly artificial and clearly contrary to the purposes of the statute. While accepting the principle of doubtful penalisation, Counsel for the E.P.A., pointed out that the power of the E.P.A. to grant a licence and attach conditions to it in s. 83 of the Act of 1992 (as amended) is a decision without any criminal consequences. The section makes no reference at all to criminal proceedings other than in the context of giving false information to the E.P.A. The provisions authorising the E.P.A. to grant a licence and attach conditions to it are not penal provisions. Moreover, it is submitted that insofar as the principle applies to statutory interpretation, it is an aid to interpreting a statute along with other principles of statutory interpretation, and counsel for the E.P.A. contends that the principle does not operate so as to disapply statutory provisions in ease of a person that is facing criminal sanctions under provisions of an Act.
It is clear that the intention of the legislature as expressed in s. 87(10) is to establish a strict time limit for challenging decisions. It states as follows:-
“a person shall not by any application for judicial review or in any other legal proceedings whatsoever question the validity of a decision of the Agency.”
The purpose of the Environment Protection Agency Act 1992, as stated by Herbert J. in O’Connell v. Environmental Protection Agency [2001] 4 IR 494 at p. 500 is pertinent and applicable also to the amended legislation. He described the purpose of the time limit provisions as being (at p. 500):-
“…the proper protection of the environment and the right of individuals and organisations to be involved in that process but with a limitation placed upon the time in which the validity of a licence or revised licence might be challenged, so as to give some measure of certainty to developers without excluding objectors with a genuinely perceived and formulated grievance…”.
The policy consideration behind comparable time restrictions in the planning code were expressed by Finlay C.J. in K.S.K. Enterprises Ltd. v. An Bord Pleanála [1991] 2 I.R. 129 where he observed that the holder of a planning permission would (p. 135):-
“…at a very short interval of time after the date of such decision, in the absence of a judicial review, be entirely legally protected against subsequent challenges to the decision that was made and therefore presumably left in the position to act with safety on the basis of that decision.”
If the licence and conditions were taken disjunctively as contended for by the applicant, the clear intention of the legislature as expressed in s. 87(10) would be entirely thwarted. The certainty and security of benefit both to the developer and to the objectors would simply not exist if the conditions to a licence were open to challenge many years later. A person who had the benefit of a licence and knowledge of the conditions attached to that licence could be open to risk of a condition being struck down many years after the grant of a licence. A licensee who on the basis of the conditions in the licence decided to incur to heavy financial investiture to comply with the conditions of the licence would have no certainty that the conditions, on the basis of which he made his investment, might not be the subject of a successful challenge many years later. As noted earlier, there is a high degree of artificiality in the applicant’s submissions. Moreover, it is almost inconceivable that a grantee of a licence would challenge the grant of a licence as opposed to the conditions thereto. The decision to grant a licence is one and the same decision as that to impose new conditions under which the activity may be carried. The conditions do not have any independent existence from the activity which is permitted. The contention by the applicant that a licence would still subsist, even if the conditions were breached, does not aid the applicant in this case. The licence and the conditions have an independent continued existence even in the event of a breach of condition (hence it is permissible to allege breaches of a condition of a licence on separate dates).
I am not convinced that there is any ambiguity or uncertainty posed by the wording of the Act of 1992 (as amended) even taking into account the principle of statutory interpretation contended for by the applicant.
It follows from that finding of the Court that the applicant is precluded from bringing these proceedings as he is clearly many years outside the time limits set out in s. 87(10) of the Environmental Protection Agency Act, 1992 (as amended)
2. The effect of Order 84 rule 21 of the Rules of the Superior Courts
If, however, I am wrong in my conclusion that the provisions of s. 87(10) of the Act of 1992 (as amended) are applicable in this case and preclude the applicant from pursuing these proceedings, and if, contrary to what I have concluded, s. 87(10) does not apply to conditions as opposed to the decision to grant the licence, the applicant is still faced with a difficulty by virtue of the Order 84 of the Rules of the Superior Courts, 1986.
Order 84, rule 21 reads as follows:-
“(1) An application for leave to apply for judicial review should be made promptly and in any case within three months from the date when grounds for the application first arose, or six months where the reliefs sought is certiorari unless the Court considers that there is good reason for extending the period within which the application shall be made.
(2) Where the relief sought is an order of certiorari in respect of any judgment order, conviction or other proceeding, the date when grounds for the application first arose shall be taken to be the date of that judgement order, conviction or other proceeding.
(3) The preceding paragraphs are without prejudice to any statutory provision which has the effect of limiting time within which an application for judicial review may be made.”
The respondents submit that the application was not made either promptly or within the time limits prescribed by Order 84, rule 21 nor has there been any reason advanced for the extension of the period in which the application should be made and in those circumstances the application for leave should be set aside.
The applicant however, contends that it is within time for the bringing of this application. The relevant summonses dated the 16th November, 2006, were served on the applicant on the 28th November, 2006, and were returnable for the District Court at Naas, Co. Kildare on the 10th January, 2007, at which date the applicant was sent forward for trial to the Circuit Criminal Court. Leave to seek for a judicial review was sought and granted by the High Court (Peart J.) on the 22nd January, 2007. The applicant argues that the time began to run when it was placed in potential jeopardy by virtue of the return for trial, and that there was no delay on its part. The respondents, however, contend that the time to challenge the conditions has to be reckoned from the time when those conditions were imposed.
I agree with the arguments of the respondents in this regard. The applicant applied for, obtained and used a licence subject to conditions for many years. It was given an opportunity to be heard on the matter prior to the granting of the licence. It was free not to accept the licence if any of the conditions were unacceptable. The licence was renewed. The argument is not and cannot be made that the applicant was unaware of any of the relevant matters in the licence. The applicant was aware for many years of the possibility of serious penal sanctions in the event that conditions of the licence were breached. I cannot accept the contention of the applicant that the requisite time to be reckoned to challenge the validity of the licence was only when the summons were served and he was returned for trial. Moreover Order 84 specifically provides that the application be made within the time stipulated in the order to be reckoned from when the “grounds for the application first arose”. I cannot construe that as being from the time of the institution of the current criminal proceedings. The fact that the circumstances have changed and that the applicant is now facing criminal charges does not serve either to alter the statutory provisions of s. 87(10) of the Act of 1992 (as amended) nor does it relieve the applicant of its obligations to comply with the requirements of Order 84 rule 21 of the Rules of the Superior Courts, 1986. The applicant has clearly failed to do that.
Collateral Challenge
The applicant argues that there is nothing to suggest that s. 87(10) of the Act of 1992 (as amended) is intended to preclude collateral, as opposed to direct challenges to the licence whether by means of judicial review proceedings or in other proceedings. It argues that the challenge to the conditions of the licence is collateral to the subject matter in this case which is the seeking of an order prohibiting the trial of the applicant. I was referred to the case of Blanchfield v. Hartnett [2002] 3 IR 207. In that case the applicant argued that in order to seek the quashing of an order made by the District Judge he must seek certiorari by way of judicial review in the High Court and contended the Circuit Court did not have requisite jurisdiction to rule that the orders were invalid before deciding on the question of how its discretion would be exercised. The Supreme Court disagreed with that proposition and decided that it was not necessary for a party to apply by way of judicial review in advance of a trial to have orders quashed. It was held that the overwhelming responsibility imposed by law and the Constitution on the trial judge was to ensure fairness of the trial and an exceptionally important part of this function was to adjudicate on the evidence to be placed before the jury. The need for the Court of trial to have any jurisdiction appropriate for the disposal of such problems is underlined by the undesirability of interrupting criminal trials to enable judicial review applications to be made.
It is clear from the judgment in that case that there is no general rule against collateral challenges such as would deprive a trial court of such powers are inherent in the process of deciding on the legality of steps taken to enable the prosecuting authorities or the State to gather evidence for the case. The Court was looking at issues integral to the investigation and the bringing of charges in the context of the criminal procedure adopted in that case. In the present proceedings, the licence in question and its conditions have an existence entirely independent of the criminal proceedings. Apart from the factual differences between Blanchfield v. Hartnett and the present case, however, there is a specific statutory provision providing a time limit for the institution of challenge to the licence, not only in cases of judicial review but in “any other legal proceedings whatsoever”. Even if the Court were to hold that the challenges to the licence and its conditions is a collateral challenge in the present case it would not aid the applicant.
I was also referred to certain passages in Wandsworth London Borough Council v. Winder [1985] AC 461, where the question of collateral charges in the context of the English equivalent of Order 84 was discussed. In his speech Lord Fraser said at p. 509 of the report:-
“I find it impossible to accept that the right to challenge the decision of a local authority in the course of defending an action for non-payment can be swept away by Order 53, which was directed to introducing a procedural form.”
He went on at p. 510:-
“I would adopt the words of Viscount Simonds in Pyx Granite Co. Ltd. v. Ministry of Housing and Local Government [1960] A.C. 260, 286 as follows:
‘It is a principle not by any means to be whittled down that the subject’s recourse to her Majesty’s courts for the determination of his rights is not to be excluded except by clear words’……If the public interest requires that persons should not be entitled to defend actions brought against them by public authorities where the defence rests on a challenge to a decision by the public authority, then it is for the parliament to change the law.”
The applicant argues that the foregoing passages offers support for his contention. That case decided that the existence of a judicial review procedure did not per se preclude persons from validly raising issues collaterally in other proceedings. This is not an issue in the present case. It does not address the argument advanced by the applicant that s. 87(10) of the Act of 1992 (as amended) does not apply to collateral challenges. In my view the words of the statute are clear and unambiguous and specifically preclude the applicant from challenging the decision in judicial review proceedings such as the proceedings before this Court.
The second named respondent further argues that the question of the impugned licence conditions is not collateral in the present case. Although the relief is sought against by way of prohibition against the Director of Public Prosecutions, if the challenge in these proceedings to the validity of the licence conditions is successful, the prohibition would follow. There is no argument addressed specifically to the Director of Public Prosecutions. The challenge has nothing to do with any steps taken by or on behalf or invoked by the Director of Public Prosecutions or any body or agency acting on its behalf with a view to criminal prosecution. This contrasts with the case of Blanchfield v. Hartnett which considered the Bankers’ Books Evidence Act, 1879. The licence and its conditions existed for many years prior to the institution of criminal proceedings. It was granted by the E.P.A. on foot of an application for a licence to carry on a particular application. The substance of these proceedings is to attack a decision of the E.P.A. to impose conditions of a particular nature to the licence, together with a follow on challenge to the constitutionality of the provisions under which those conditions were imposed. The substance of the applicant’s argument is that the decision to attach conditions was invalid. I agree with the E.P.A.’s contention that it is mischaracterisation of the proceedings to describe the challenge to the conditions of the licence as a collateral issue in these proceedings. In my view, the central issue is this case is the challenge to the licence and its conditions and to s. 87(10) of the Act. The fact that the challenge is taken in the context against the background of criminal proceedings does not change the central issue.
3. and 4. Locus standi to argue constitutionality of Act, and to argue other constitutional grounds

The respondent was given leave to challenge s. 80(1), 83(1), 84(1) or s. 84(2) of the Act of 1992 (as amended)as being contrary or repugnant to the Constitution and, in particular, Article 15.2.1 thereof:-
“in that the said provisions or either of them allow impermissible delegation of the sole and exclusive law making power of the Oireachtas to another purported legislative authority namely the Environmental Protection Agency”.
The respondent also seeks leave to amend the grounds of the application in order to argue that the time limits provided by “time limits provided for in s. 87(10) of the Act of 1992 (as amended) (formerly in s. 85(8) of the Act of Act of 1992)” or both, amounts to an unconstitutional infringement on the applicant’s rights of access to the courts or its entitlement to a trial in due course of law, or both.
It is submitted by the respondent that the applicant has not got the requisite locus standi to make either constitutional challenge and, furthermore, that there is no good reason to allow the amendments sought in respect of the motion of the 18th May, 2007.
The resistance to allowing both constitutional challenges to be heard by the Court (as opposed to the reasons for not permitting the amendment on the issue in relation to the time limits) is on the basis that the courts will not decide cases on the basis of a constitutional challenge if the matter can be otherwise disposed of. As Fennelly J. observed at p. 556 in the case of White v. Dublin County Council [2004] 1 IR 545:-
“It is well established in the case law of this court that a challenge to the constitutionality of a statute will not normally be addressed until the person mounting the challenge shows that he is affected by the provisions”.
It is submitted that even if the constitutional issues were determined in favour of the applicant, they would not be of any assistance to its case and that therefore, their determination would be a moot point. It is submitted that the applicant has, therefore, no interest in the constitutional issues such as would give it the requisite locus standi to argue the constitutional case. The basis for such submissions is the contention that the time limits provided in Order 84, rule 21 of the Rules of the Superior Courts, 1986 are an insurmountable barrier to the applicant, preventing him from “arguing” the constitutional point. The third named respondent relies on the well established principles laid down in Cahill v. Sutton [1980] I.R. 269.
In that case the constitutionality of s. (2)(b) of the Statute of Limitations Act 1957, was challenged on the basis that it did not contain an exception in favour of an injured person who did not become aware of the relevant facts on which his claim was based until after the expiration of the period of limitations or until a short time before its expiration. The Supreme Court declined to entertain this constitutional point on the basis that the constitutional claim was based solely on the absence of statutory provisions which, if present, would not be applicable to the facts of the applicant’s claim, that she could not establish that any right of hers had been infringed or threatened by the absence of such a provision and that, accordingly, she lacked locus standi to invoke the jurisdiction of the courts to determine the validity of s. (2)(b) of the Statute of Limitations Act 1957.
Mr. Connolly, for Ireland and the Attorney General, submits that the Court should not allow the applicant to argue that the provisions of the legislation giving the Environmental Protection Agency the right to impose conditions are unconstitutional. He submits that because of the time limits imposed by the Rules of the Superior Courts, 1986, it is not possible for the applicant to show that he is prejudiced by the existence of the conditions alleged to be unconstitutional. In circumstances where even a finding that conditions were unconstitutional would not avail the applicant, it is submitted that he should be precluded from seeking such a finding by the Court. The applicant also relies on certain passages in the case of White v. Dublin County Council, [2004] 1 IR 545 where an unqualified period of two months provided for under the planning code was struck down as being impermissible because the rigidity of the period could lead to an injustice for the plaintiffs. It was submitted by Mr. Connolly for the State that the salient factor in that case was that the plaintiffs, through no fault of their own, were prejudiced by the existence of a rigid two month period and this could lead to an injustice. The following passage appears at p. 575 of the report:-
“The applicants through no fault of their own but through the unlawful act of the decision maker, were deprived of any genuine opportunity to challenge the legality of the decision within the permitted time”.
Mr. Connolly points out that the position in the White case contrasts with the position of the applicant in these proceedings who was at all relevant times aware of the conditions and time limits which he now seeks to challenge.
Counsel for Ireland and the Attorney General submits that the applicant has no locus standi to argue the constitutional position and relies strongly on the decision of the Supreme Court in Cahill v. Sutton and in particular the passages contained at p. 282 of the judgment where Henchy J. stated:-
“… in other jurisdictions the widely accepted practice of courts which are invested with comparable powers of reviewing legislation in the light of constitutional provisions is to require the person who challenges a particular legislative provision to show either that he has been personally affected injuriously by it or that he is in imminent danger of becoming a victim of it”.
At page 286 of the judgment, Henchy J. further stated:-
“The primary rule as to standing in constitutional matters is that the person challenging the constitutionality of the statute, or some other person for whom he is deemed by the court to be entitled to speak, must be able to assert that, because of the alleged unconstitutionality, his or that other person’s interests have been adversely affected or stand in real or imminent danger of being adversely affected, by the operation of the statute”.
The State argues that the effect of the decision is that the applicant is precluded from arguing the constitutional issues because they would only arise to be decided if the applicant’s interest were in real and imminent danger of being adversely affected by them. It submits that, because of the existence of the time limits in the Environmental Protection Agency Act, 1992 (as amended) which would in any event prevent the applicant from succeeding, it should not be allowed to argue the constitutional issues which are quoted in the circumstances.
The applicant, however, points out that there are substantial factual differences between its position and that of the plaintiff in Cahill v. Sutton (notwithstanding that both cases are concerned with the validity of time limits). It submits that in contrast to the plaintiff in Cahill v. Sutton, it has a vital interest in the constitutional argument which it wishes to make. It points out that if successful in the constitutional claim the serious criminal charges which it now faces would fall. The applicant also relies on Cahill v. Sutton and in particular the passage at p. 285 of the report where Henchy J. stated as follows:
“Since the paramount consideration in the exercise of the jurisdiction of the Courts to review legislation in the light of the Constitution is to ensure that persons entitled to the benefit of a constitutional right will not be prejudiced through being wrongly deprived of it, there will be cases where the want of the normal locus standi on the part of the person questioning the constitutionality of the statute may be overlooked if, in the circumstances of the case, there is a transcendent need to assert against the statute the constitutional provision that has been invoked”.
In applying the principles set out in the authorities open to me, it is clear that it is necessary for the applicant to show that he is prejudiced by the existence of the sections of the legislation which he wishes to challenge or is in imminent danger of becoming a victim of them. In my view the applicant cannot show that he has been so prejudiced. In view of the finding of the Court that the time for taking these proceedings commenced at the time of the grant of the licences, the applicant is out of time by a period of many years either under the statutory provisions of the Act of 1992 (as amended) or under the Rules of the Superior Courts, 1986. No reason is proffered to explain or justify this delay. The applicant argued that the time limits under the rules only began to run at the time when the criminal proceedings were commenced. This argument has been rejected by the Court. In view of those findings, it follows that the applicant has no locus standi to argue the constitutional point concerning the conditions of the licence. He runs foul of both the statute and the Rules of the Superior Courts.
In relation to the applicant’s motion to amend grounds to include a challenge to the constitutionality of the time statutory limits, I was referred to the case of Ni Eílí v. Environmental Protection Agency [1997] 2 ILRM 458, where Kelly J. with customary clarity set out some of the factors which were relevant to the exercise of his discretion to refuse an amendment of procedures. In that case he took into account the following at page 466:-
“(1) The applicant has been fully au fait with the circumstances surrounding the grant of this licence. She participated in the oral hearing which took place prior to the decision which it is now sought to impugn.
(2) Although her legal representation has changed since the order of Morris J., that in itself is not a good reason to allow the alteration.
(3) The expansion sought is a major one and really involves an entirely new and different relief to that already contended for. It is in effect a new cause of action.
(4) If granted, the new reliefs would inevitably involve the joinder f the additional party, namely the Attorney General [that is different from the position in this case where the Attorney General is already a party to the action].
(5) Even if a rigid time limit of two months is not imposed by the Act, nonetheless the view of the legislature as to the desirability of such a period being adhered to is of significance. Here four and a half months went by without these new claims being advanced. [In the present case a number of years went by before the claims being advanced].
(6) No satisfactory explanation has been given for the failure to apply for the leave stage for the reliefs now sought to be introduced. I do not consider any disputes which the applicant may have had with the Legal Aid Board subsequent to the order of Morris J. to be of any relevance in this regard. [No explanation at all has been given for the failure to apply that the leave stay should now sought to be introduced].
(7) The new reliefs, by their very nature, can only fall for consideration when all the other existing grounds have been adjudicated on and decided against the applicants. They are therefore discrete reliefs and their joinder now can only give rise to additional cost and expense.
Having regard to the considerations set out by Kelly J. which are applicable to this case, I should exercise my discretion by not allowing the applicant to amend his grounds.

In view of the findings I have made above the following orders should be made:-
The motion to set aside by the EPA, the motion to set aside by Ireland and the Attorney General and the motion of the Director of Public Prosecutions to set aside the leave granted on 22nd January, 2007, must succeed and the application dated the 18th May, 2007, to amend the grounds, must be refused.

Hall v Minister for Finance

[2013] IEHC 39

JUDGMENT of Kearns P. delivered on the 31st day of January, 2013
The plaintiff in these proceedings is an Irish citizen who operates a private ambulance company employing some 70 staff in the State. He has brought these proceedings to challenge the validity of the mechanism or procedures adopted by the Minister for Finance whereby financial support by means of promissory notes was provided to three financial institutions in 2010. He is not a member of the Oireachtas but brings these proceedings as a taxpayer and concerned citizen.

In the aftermath of the banking crisis which led to the bank guarantee provided by the Government in September 2008, the Oireachtas thereafter passed the Credit Institutions (Financial Support) Act 2008 (hereinafter “the Act”) on 2nd October, 2008. It quickly became apparent that, over and above the Government guarantee, various credit institutions, including the notice parties herein, required capital support. During the course of 2009 and 2010, a total of €4.1 billion was provided to Anglo Irish Bank (to which the assets of Irish Nationwide Building Society were transferred in July, 2011) in the form of ordinary equity and special investment shares (the consideration for which was cash) and a total of €30.6 billion in the form of capital contributions (the consideration for which was promissory notes provided by the State). Anglo Irish Bank changed its name to Irish Bank Resolution Corporation (IBRC) on 14 October, 2011. As the promissory notes could be written up for full value in the accounts of the recipient financial institution, the institution in question thereby remained solvent and, in the case of IBRC, the promissory notes are pledged as collateral for Exceptional Liquidity Assistance funding provided to IBRC under a special master repurchase agreement with the Central Bank of Ireland. The total capital thus provided to IBRC was €34.7 billion. Capital was also provided to the Educational Building Society (EBS) by way of €625 million in the form of special investment shares and €250 million by way of a promissory note.

In making this provision, the Minister for Finance relied upon the provisions of the Credit Institutions (Financial Support) Act 2008 which, in its long title, is described as:-

“An Act to provide, in the public interest, for maintaining the stability of the financial system in the State and for that purpose to provide for financial support by the Minister for Finance in respect of certain credit institutions, to amend the Competition Act 2002 and other enactments, and to provide for connected matters.”
“Financial support” was defined in s. 1 of the Act as including a loan, a guarantee, an exchange of assets and any other kind of financial accommodation or support.
Section 2 of the Act (in unamended form) provided as follows:-

“(1) The Minister has, in the public interest, the functions provided for under this Act because, after consulting the Governor and the regulatory authority, the Minister is of the opinion that-

(a) there is a serious threat to the stability of credit institutions in the State generally, or would be such a threat if those functions were not performed,
(b) the performance of those functions is necessary, in the public interest, for maintaining the stability of the financial system in the State, and

Section 6 of the Act authorises the Minister to provide financial support for credit institutions as and from the relevant date (being 30th September, 2008) as follows:-
“(1) As and from the relevant date, the Minister may provide financial support in respect of the borrowings, liabilities and obligations of any credit institution or subsidiary which the Minister may specify by order having regard to the matters set out in s. 2, the extent and nature of the obligations (including the degree of control over possible abuse of the financial support) undertaken and which might be undertaken in the future and the resources available to him or her in that behalf.
(2) In subsection (1) a reference to borrowings, liabilities and obligations includes borrowings, liabilities and obligations to the Central Bank or any person.

(3) Financial support shall not be provided under this section for any period beyond 29th September 2010, and any financial support provided under this section shall not continue beyond that date.

(4) Financial support may be provided under this section in a form and manner determined by the Minister and on such commercial or other terms and conditions as the Minister thinks fit. Such provision of financial support may be effected by individual agreement, a scheme made by the Minister or otherwise. Without prejudice to the Minister’s discretion as to such conditions, all financial support provided shall so far as possible ultimately be recouped from the credit institution or subsidiary to which the support was provided.

(5) Where the Minister proposes to make a scheme under subsection (4) —

(a) he or she shall cause a draft of the proposed scheme to be laid before each House of the Oireachtas, and
(b) he or she shall not make the scheme unless and until a resolution approving of the draft has been passed by each such House.”

Section 6 (12) provides:-
“All money to be paid out or non-cash assets to be given by the Minister under this section may be paid out of the Central Fund or the growing produce thereof.”
The plaintiff contends that the provision of financial support pursuant to s. 6 (1) of the Act, as amended, constitutes an appropriation of revenue or other public moneys within the meaning of Article 17 of the Constitution. That Article provides as follows:-
“(1) 1° As soon as possible after the presentation to Dáil Éireann under Article 28 of this Constitution of the estimates of receipts and the estimates of expenditure of the State for any financial year, Dáil Éireann shall consider such estimates. 2° Save insofar as may be provided by specific enactment in each case, the legislation required to give effect to the financial resolutions of each year shall be enacted within that year.
(2) Dáil Éireann shall not pass any vote or resolution, and no law shall be enacted, for the appropriation of revenue or other public moneys unless the purpose of the appropriation shall have been recommended to Dáil Éireann by a message from the Government signed by the Taoiseach.”

The plaintiff in these proceedings seeks a declaration that the appropriation of revenue or public moneys by the Minister for Finance authorised otherwise than by vote of Dáil Éireann is unlawful, in that the payment out of public moneys on foot of the promissory notes issued by the first defendant to the notice parties herein is an appropriation of public moneys within the meaning of Article 17 of the Constitution and, absent authorisation by Dáil Éireann, is unlawful.
It is common case that no such vote or resolution was passed by Dáil Éireann.

The plaintiff thus seeks a declaration that the provision or making in 2010 by the first defendant of promissory notes to the notice parties herein was made ultra vires the terms of s. 6 (1) and s. 6 (3) of the Act as amended. Section 6, if construed constitutionally, must be taken as meaning that the Minister must first get Oireachtas approval by way of an appropriation for a specific sum subject to a temporal limitation. In that latter context, the plaintiff notes that repayments on foot of the promissory notes will continue up to 2031.

In the alternative, the plaintiff claims that s. 6 of the Act is unconstitutional as an impermissible assumption of power by, or delegation of power to, the Minister.

In short summary, therefore, the plaintiff’s claim may be seen as one premised on the proposition that inappropriate and impermissible mechanisms or procedures were adopted and implemented by the Minister for Finance whereby Dáil Éireann was bypassed and deprived of an opportunity of voting either in favour or against the appropriation of moneys, a safeguard and right vested in Dáil Éireann by Article 17. In the defence delivered on behalf of the various defendants the first line of defence is to deny that the plaintiff has locus standi to institute or maintain these proceedings or to seek the declarations and reliefs sought. It is further contended that the plaintiff failed to bring the proceedings promptly or “within the time provided for by the Rules of the Superior Courts in relation to public law issues” and is thus out of time for seeking the public law declarations and injunctions now sought.

Otherwise the defence admits that certain credit institutions sought to access Emergency Liquidity Assistance (ELA) from the fourth named defendant which required to be guaranteed by the first named defendant to the extent that the ELA requirement exceeded the collateral available from the credit institutions. Such a guarantee was given pursuant to the Act. It is admitted that the capital provided was shown on the general Government deficit in 2010, with the result that the deficit for 2010 was estimated to be in the region of 32% of GDP. Eurostat rules required the full amount of the capital provided to be recorded in 2010 although no payment in respect of the promissory notes was made until March 2011. The IBRC promissory notes are to be paid over a period to 2031, with equal instalments of €3.06 billion being paid from 31st March, 2011 and with the amounts to be paid decreasing from 31st March, 2024.

The defence denies that the specific mandate of Dáil Éireann was required for the making of the promissory notes and/or the granting of the guarantee to the Central Bank concerning the Emergency Liquidity Assistance or that the measures undertaken by the first named defendant were ultra vires as alleged. On the contrary, the first named defendant contends that he acted lawfully under the powers conferred on him by the Act. Specifically, it is denied that the provisions of the Act, as amended, do not authorise the making of the promissory notes without a resolution of Dáil Éireann prior to the provision of same. Further, it is contended that, pursuant to s. 6 (3A) of the Act as amended, the first named defendant may specify a later end date for the provision of financial support in accordance with the requirements of the section.

It is further denied that the provision of financial support pursuant to the Act as amended constitutes an appropriation of revenue or other public monies within the meaning of Article 17 of the Constitution or that in providing such promissory notes the Minister was acting unlawfully in the absence of a resolution providing for same voted upon by Dáil Éireann in accordance with Article 17. It is further denied that s. 6, or any part thereof, is unconstitutional as alleged.

AGREED FACTS

The parties have agreed certain facts as follows:-

1) The Credit Institutions (Financial Support) Act 2008 (the Act) was enacted on the 2nd day of October, 2008.
2) Five Schemes were made pursuant to section 6(4) of the Act. The said schemes were approved by the Oireachtas and are contained in the following statutory instruments:

• S.I. 411 of 2008
• S.I. 490 of 2009

• S.I. 470 of 2010

• S.I. 546 of 2010

• S.I. 634 of 2011

• S.I. 519 of 2012

3) The period in which financial support provided under s. 6 of the Act shall not continue beyond was extended pursuant to the following Orders made by the Minister:

• S.I. 488 of 2009 – to 29th September 2015
• S.I. 471 of 2010 – to 31st December 2015

• S.I. 548 of 2010 – to 30th June 2016

• S.I. 256 of 2011 – to 31st December 2016

• S.I. 636 of 2011 – to 30th June 2017

• S.I. 225 of 2012 – to 31st December 2017

• S.I. 520 of 2012 – to 30th June 2018

4) On 15th January, 2009 the Government announced that it would take steps that would enable Anglo Irish Bank to be taken into State ownership. The Anglo Irish Bank Corporation Act, 2009 provided for the transfer of all the shares of the Bank to the Minister for Finance and was enacted under Irish law on 21st January, 2009. On the same date, the Bank was re-registered as a private limited company.
5) During the course of 2009 and 2010 a total of €4.1 billion was provided to the Irish Bank Resolution Corporation (IBRC) in the form of ordinary equity and special investment shares (the consideration for which was cash) and a total of €30.6 billion in the form of capital contributions (the consideration for which was promissory notes provided by the State). The Promissory Notes are pledged by IBRC as collateral for Exceptional Liquidity Assistance funding provided to IBRC under a Special Master Repurchase Agreement with the Central Bank of Ireland.

6) The total capital provided to IBRC was €34.7 billion.

7) This capital was provided by the Minister for Finance to IBRC in 2009/ 2010.

8) The instalments due to IBRC under the promissory notes are to be paid over a period from March 2011 to March 2031.

9) Capital was provided to the Educational Building Society Limited (EBS) by way of €625 million in the form of special investment shares and €250 million by way of a promissory note.

10) IBRC and EBS sought to access Emergency Liquidity Assistance (ELA) from the Central Bank of Ireland which was guaranteed by the Minister for Finance to the extent that the ELA requirement exceeded the collateral available from the credit institutions. Such a guarantee was given pursuant to the Credit Institutions (Financial Support) Act 2008, and was extended.

11) The Capital provided was shown in the General Government Balance in 2010, with the result that the deficit for 2010 was estimated to be in the region of 32% of GDP. Eurostat rules required the full amount of the capital provided to be recorded in 2010 although no payment in respect of the promissory notes was made until March 2011.

12) The full amount of the capital provided was added to the level of General Government Debt in 2010.

13) The interest rate charged on the promissory notes was referenced to Irish Government bond yields at the date that each tranche of promissory notes was issued. An interest holiday was included in the terms of each of the IBRC promissory notes which meant that between 1st January 2011, and 31st December 2012, no interest was payable.

14) The IBRC Promissory Notes are to be paid over a period to 2031, with equal instalments of €3.06 billion being paid from 31st March, 2011 and with the amounts to be paid decreasing from 31st March, 2024.

15) The 31st March, 2011 IBRC promissory note payment was by way of cash payment, the IBRC promissory note payment due on the 31st March, 2012, was settled by the delivery of a long term Irish Government Bond to the IBRC.

16) The 31st March, 2011 IBRC promissory note payment was made from the Central Fund and was subject to the grant of a credit by the Comptroller & Auditor General for it.

17) A higher interest rate will be chargeable on the IBRC promissory notes from 1st January, 2013 to reflect the fact that an interest holiday was taken for the full calendar years 2011 and 2012.

18) A number of Statutory Instruments have been made pursuant to section 6(3) of the Credit Institutions (Financial Support) Act 2008, which allows for the extension of the period of financial support beyond 29th September, 2010, by Ministerial Order. Statutory Instrument S.l. 520 of 2012 extends the date for the provision of financial support to 30th June, 2018. Furthermore, pursuant to s. 6(3A) of the Act as amended, the first named Defendant may specify a later end date for the provision of financial support in accordance with the requirements of that section.

19) In the Estimates of the Receipts and Expenditure of the State for the financial years 2011 and 2012 the payment of the Promissory Notes is set out under Non-Voted Capital Expenditure.

20) In relation to the Financial Support given to Anglo Irish Bank, the Minister, having consulted with the Governor of the Central Bank and the Financial Regulator, was of the opinion that:

(a) There was a serious threat to the stability of credit institutions generally in the State or would be if financial assistance was not provided;
(b) The provision of financial assistance was necessary in the public interest for maintaining the stability of the financial system in the State and was necessary to remedy a serious disturbance in the economy of the State.

21) The Minister having regard to those matters and the extent and nature of the obligations undertaken and which might be undertaken in the future and the resources available to him for that purpose the Minister provided financial support to Anglo Irish Bank in the form of ordinary shares and Promissory Notes.
22) In relation to the Financial Support given to INBS. The Minister having consulted with the Governor of the Central Bank and the Financial Regulator was of the opinion that:

23) The Minister having regard to those matters and the extent and nature of the obligations undertaken and which might be undertaken in the future and the resources available to him for that purpose the Minister provided financial support to INBS in the form of special investment shares and Promissory Notes.
24) In relation to the Financial Support given to the EBS, the Minister, having consulted with the Governor of the Central Bank and the Financial Regulator, was of the opinion that:

25) The Minister having regard to those matters and the extent and nature of the obligations undertaken and which might be undertaken in the future and the resources available to him for that purpose, provided financial support to EBS in the form of special investment shares and Promissory Notes.
26) Before the beginning of the year (usually in December of the previous year), the Government presents to the Dáil, on or before Budget Day, in accordance with Article 28.4.3 of the Constitution, a White Paper on Receipts and Expenditure setting out its forecasts of the State’s receipts and expenditure for the coming year.

27) This is followed a few days later by the Budget, a central element of which is the Financial Statement of the Minister for Finance, in which the Minister sets out on behalf of the Government its overall budgetary policy for the year ahead and proposed changes in taxation. Since 2011, the Estimates for Voted Expenditure, which form part of the overall Budget, have been presented to the Dáil separately by the Minister for Public Expenditure & Reform.

28) The Budget covers Non-Voted Expenditure – which is set out in the White Paper on Receipts and Expenditure with a break down of Non-Voted current expenditure and Non-Voted Capital expenditure. When total expenditure is expected to exceed total receipts the Budget sets out how much the Government proposes to borrow.

29) Proposed taxation measures which are intended to have immediate effect are contained in Financial Resolutions. These Resolutions are debated and voted on in the Dáil on Budget day. The Budget is also debated in the Seanad on Budget Day although, in keeping with the primacy of the Dáil in financial matters, the imposition of taxation measures by Financial Resolution does not involve a vote in the Seanad.

30) Following the end of the year, the Department of Finance prepares detailed accounts (the Finance Accounts) showing all receipts into and issues from the Exchequer for the year in question together with details of the national debt, which are based on data supplied by the NTMA. The Revenue Commissioners prepare Revenue Accounts and the Departments to which money is voted directly by the Dáil prepare Appropriation Accounts which account for their spending of the amounts appropriated to them during the year. These Accounts are signed by their Accounting Officer (usually the Secretary General).

31) All these accounts are then examined by the Comptroller & Auditor General who audits and certifies them and reports on them to the Dáil. The Comptroller & Auditor General’s Report is then examined by the Public Accounts Committee which then makes a Report on them to the Dáil. The Minister for Public Expenditure and Reform responds to the Committee’s Report by way of a Minute of the Minister for Public Expenditure and Reform and this Minute is then considered by the Committee on Public Accounts.

32) Government spending is divided into two broad categories according to the authority for making it – Voted Expenditure and Non-Voted Expenditure. Voted Expenditure is the money used to fund the ordinary services, both capital and non-capital, provided by Government Departments and certain Offices (e.g. the Office of the Attorney General) and Agencies (such as the Courts Service or the HSE). The funds are provided for under “Votes”, one or more covering the functions of each Department or Office. A “Vote” is an amount of money allocated directly by the Dáil to a Government Department or Office to carry out its services for the year. The annual Budget also includes expenditure which is not voted annually by the Dáil. This is called Non-Voted Expenditure and it is paid out of the Central Fund on the authority of various Statues enacted by the Oireachtas rather than through the annual Estimates procedure.

33) Non-Voted expenditure has a long provenance and has been part of the system since before the foundation of the State.

34) Non-Voted Expenditure is reported on and accounted for in the annual Finance Accounts as are issues for voted spending. The Finance Accounts are an account of payments into and out of the Central Fund. This includes the issues or payments for non-voted spending including the sinking fund, servicing the National Debt, the Capital Services Redemption Account, payments to the holders and former holders of political and constitutional offices, payments to the EU budget together with various payments relating to the State’s international obligations and payments in relation to elections and referendums. It also covers non-voted capital expenditure.

35) Non-Voted expenditure divides into two broad categories – Central Fund Charges and Other Central Fund Issues. Central Fund charges are permanent charges on the State Revenues paid under the continuing authority of specific statutes. They include the servicing of the national debt and the salaries, pensions and allowances of the constitutional officer holders such as the President, the Judiciary and the Comptroller & Auditor General. Other Central Fund Issues are not constant regular payments. Such Issues are repayable advances to State bodies in respect of investment in projects making up part of the Public Capital Programme. Payments made to the banks in recent years are included in this category of expenditure.

36) Authority for Non-Voted Expenditure (whether they are Central Fund charges or issues) may provide for the payment of a fixed amount annually or it may enable payment up to a certain limit or it may not specify any limit at all (as in the case of national debt service costs). The statutory authority for Central Fund Issues usually provides that public money may be made available by the Minister for Finance from the Central Fund or the growing produce thereof.

37) Even when public expenditure has been approved by the Oireachtas, whether through the annual Estimates “Voted Expenditure” or through specific legislation, “non-voted Expenditure” the authorisation for the disbursement of this money is subject to controls. The spending is subject to the sanction of the Minister for Finance (and since 2011 the Minister for Public Expenditure and Reform) under the Exchequer and Audit Department Act 1921 and the Ministers and Secretaries Act 1924 (as amended). It is also subject to the approval of the Comptroller & Auditor General pursuant to Article 33 of the Constitution and the Comptroller & Auditor General Acts 1923-1993.

38) It is the Comptroller & Auditor General’s functions (as Comptroller) to control on behalf of the State all disbursements of moneys and to audit all accounts of moneys administered by or under the authority of the State. He must ensure that no money is issued from the Exchequer by the Minister for Finance except for purposes approved by the Oireachtas.

39) Before any money can issue from the Exchequer, the Minister for Finance (or a senior official duly authorised by the Minister) must first make a written Requisition to the Comptroller & Auditor General for an issue of a credit on the Exchequer Account for a stated sum. If the Comptroller & Auditor General is satisfied that the Requisition is correct and that the amount is properly issuable, he then informs the Central Bank that the credit in question is granted. Only then can the issue from the Exchequer be made.

40) The Comptroller & Auditor General will not issue a credit in respect of non-voted expenditure unless satisfied that the Oireachtas has given statutory authorisation for the relevant charge on the Central Fund. A payment from the Central Fund can only be made if there is a legislative provision authorising the payment and the Comptroller & Auditor General gives the necessary credit.

41) Bills providing for Central Fund services are accompanied by a “Money Message” i.e. a prior recommendation from the Government signed by the Taoiseach as required by Article 17.2 of the Constitution.

42) The Department of Public Expenditure and Reform, Central Expenditure section / Estimates Office arranges for Money Messages, pursuant to requests from the Bills Office of the Houses of the Oireachtas, in respect of any Bills which involve appropriation, irrespective of which Department is sponsoring the Bill. The wordings of the Money Message differ depending on the type of Message in question.

43) On the 30th September, 2008 the Money message for the Credit Institutions (Financial Support) Bill 2008 was signed by the Taoiseach Brian Cowen and submitted to Dáil Éireann and the Bill was passed through the Dáil and Seanad and signed into law by the President on the 2nd October, 2008.

44) The legislation was legislation passed by the Oireachtas to deal with an unprecedented banking crisis which threatened the collapse of the Irish banking sector and the economy. The Minister for Finance has in accordance with the provisions of s. 6 (15) of the Act provided the Houses of the Oireachtas with Annual Reports informing the members of each House on the situation with regard to the financial support provided under section 6.

45) Since any moneys to be paid out under s. 6 are to be paid out of the Central Fund, they require the sanction and approval of the Comptroller & Auditor General.

46) For the purposes of paying the sums due on the promissory notes on the 31st March 2011, in the sum of €3.06 billion the Minister for Finance was required to and did raise a Requisition for Credit on the Account of the Exchequer requesting that the Comptroller & Auditor General grant to the Minister a credit to provide for those payments.

47) The necessary credit was then granted to the Minister by the Comptroller & Auditor General.

In addition to these agreed facts, evidence was given to the Court by both the plaintiff and by two witnesses called by the defendant from the Department of Finance, namely, Mr. Jimmy McMeel, Principal in charge of the Accountant’s Branch/Paymaster General’s Office and Ms. Ann Nolan, Second Secretary General of the Department of Finance both of whom furnished witness statements, on which they were cross examined, providing helpful background to explain how payments into and out of the Central Fund are made and effected. Specifically, they sought to explain the distinction to be drawn between voted expenditure and non-voted expenditure.
In short, voted expenditure is the money used to fund the ordinary services, both capital and non-capital, provided by Government departments and certain offices and agencies, such as the Courts Service or the HSE. These funds are provided for under “Votes”, one or more covering the functions of each department or office. A “vote” is an amount of money allocated directly by the Dáil to a Government department of office to carry out its services for the year.

Authorised voted public expenditure demands that three key steps be taken:-

(a) The presentation of spending estimates to the Dáil;
(b) Dáil approval of the estimates (the vote of supply) which sets the ceiling on the maximum amount that can be spent;

(c) The Appropriation Act at the end of each year which provides the statutory authority for the appropriation of the money issued to specific public services and purposes.

In addition public financial procedures require to be followed. A sanction of the Department of Public Expenditure and Reform is required. Further, a credit from the Comptroller & Auditor General is also required in respect of disbursements from the Central Fund for voted moneys.
Non-voted expenditure was stated by Mr. McMeel to have a long provenance, going back to s. 14 of the Exchequer and Audit Departments Act, 1866 which provided that monies could be made available either by a resolution of the House or by an Act of Parliament to defray expenses for any specified public services. This Act was carried over by the adoption of Enactments Act 1922 and Article 37 of the 1922 Constitution provided that “money shall not be appropriated by vote, resolution or law unless the purpose of the appropriation has in the same session been recommended by a message from the representative of the Crown ….” Thus Mr. McMeel stated that non-voted expenditure – and the Minister contends that the provision of financial support by means of promissory notes may be so described – has been part of our financial system since the foundation of the State. It, in turn, divides into two broad categories. The first category is called Central Fund Charges which are permanent charges on the State revenues. They are paid under the continuing authority of specific statutes which have already been enacted by the Oireachtas. These charges include the service of the national debt by the National Treasury Management Agency and also include the salaries, pensions and allowances of the President, the Judiciary and the Comptroller & Auditor General. The policy basis for treating such charges as non-voted expenditure is that they are regarded as being such permanent or fundamental obligations on the State as to be required to be put beyond the usual annual review. They are thus given priority over all other spending obligations and are in the nature of a first charge on the State.

The second category of non-voted expenditure is referred to as “Other Central Fund Issues”. Unlike Central Fund Charges these issues are not constant regular payments. Generally such issues are repayable advances to State bodies in respect of investment and projects making a part of the public capital programme. Payments made to the banks in recent years are included in this category of expenditure. Payments of this nature are provided for by specific legislation in each case which usually authorises (rather than requires) the expenditure by the Minister. Authority for non-voted expenditure may provide for the payment of a fixed amount annually or it may enable payment up to a certain limit or it may not specify any limit at all. The statutory authority for Central Fund issues usually provides that public money may be made available by the Minister for Finance from the Central Fund or the growing produce thereof. Similar to legislation which involves spending from annually voted supply services, Bills providing for Central Fund services, i.e., that concern non-voted expenditure are accompanied by a “money message”, i.e., a prior recommendation from the Government signed by the Taoiseach as required by Article 17.2 of the Constitution.

Even when public expenditure has been approved by the Oireachtas, whether through the annual estimates “Voted Expenditure” or through specific legislation, “Non-Voted Expenditure”, the authorisation of the disbursement of this money is subject to strict controls. The voted spending is subject to the sanction of the Minister for Finance and (since 2011) the Minister for Public Expenditure and Reform. It is also subject to the approval of the Comptroller & Auditor General pursuant to Article 33 of the Constitution and the Comptroller & Auditor General Acts 1923 – 1993. It is the Comptroller & Auditor General’s function “to control on behalf of the State all disbursements of moneys and to audit all accounts of moneys administered by or under the authority of the State” (Article 33.1 of the Constitution). Thus he must ensure that no money is issued from the Exchequer by the Minister for Finance except for purposes approved by the Oireachtas. Accordingly, before any money can issue from the Exchequer, the Minister for Finance must first make a written requisition to the Comptroller & Auditor General for an issue of a credit on the Exchequer account for a stated sum. If he is satisfied that the requisition is correct, and the amount properly issuable, the Comptroller & Auditor General then informs the Central Bank that the credit in question is granted. Only then can the issue from the Exchequer be made. The Comptroller & Auditor General will not issue a credit in respect of Non-Voted Expenditure unless satisfied that the Oireachtas has given statutory authorisation for the relevant charge in the Central Fund. Thus a payment from the Central Fund can only be made if there is a legislative provision authorising the payment and the Comptroller & Auditor General gives the necessary credit. The payment made on foot of the promissory notes in March 2011 had a credit from the Comptroller & Auditor General.

The money is then transferred from the Central Fund to the Paymaster General’s supply account to make good deficits on that account arising from the spending of departments. Most Non-Voted spending is transferred directly from the Central Fund to the bank account of the recipient.

Similar to legislation which involves spending from annually voted supply services, Bills providing for Central Fund services, i.e., that concern Non-Voted Expenditure, are accompanied by a “money message” i.e. a prior recommendation from the Government signed by the Taoiseach as required by Article 17.2 of the Constitution. This practice reflects the broad meaning of the term “appropriation” in this context that includes not only a “grant” by way of a vote or resolution of the Dáil and confirmed in the Appropriation Act but also any proposal in a resolution or bill which involves a charge upon public funds and a consequent appropriation of money. Article 17.2 requires express legislation to be passed for the provision of Central Fund charges, i.e., Non-Voted Expenditure, thus such legislative basis may be provided either through primary or secondary legislation. For example, statutory instruments enacted under the European Communities Act 1972 serve as the basis for EU contributions from the Central Fund. With respect to Central Fund Services, Article 11 of the Constitution requires that any such “charges of liabilities” on the Fund must be grounded in law.

The National Treasury Management Agency (NTMA) raises funds for the State under the authority of s. 54 of the Finance Act 1970 which grants the Minister the authority to raise funds on terms, including terms as to repayment, he deems fit and provides that such funds are to constitute a charge in the Central Fund. Section 18 (1) of the Finance (No. 2) Act 1981 clarifies that s. 54 (1) of the Finance Act 1970 was intended to cover loans and not merely securities. Thus the servicing of the national debt is a significant appropriation of funds by way of Non-Voted Expenditure. The deficit is not solely related to Voted Expenditure – it is made up of both Voted and Non-Voted Expenditure. Were it not possible for the Oireachtas to authorise payments out of the Central Fund by way of statutory authority, and in the manner achieved by the Finance Act 1970 (or indeed the Credit Institutions (Financial Support) Act 2008) the Minister would be unable to raise funds to finance the State in the bond markets. If the obligation or ability to repay bonds were contingent on the Oireachtas choosing to vote in favour of the repayment the uncertainty thereby introduced would render Irish bonds unmarketable at realistic yields. Market participants would not choose to purchase Irish bonds which carried such a risk when other states do not have such a requirement in respect of their bond issuances. An additional constitutional and legislative check is the role of the Comptroller & Auditor General. Any moneys to be paid out under s. 6 of the Act are to be paid out of the Central Fund and require the sanction and approval of the Comptroller & Auditor General.

He concluded by stating that the ability of the State to be able to make payments by way of Non-Voted Expenditure is an important part of the proper functioning of the State. If all the expenditure had to be Voted Expenditure going through the annual estimates, not only would this create an enormous administrative inconvenience, but it would mean that the State would be unable to raise funds with a tenor in excess of one year or whatever time remained until the next Budget. Thus all debt would have to be short term. His view was that such a change would also be a breach of multiple existing debt obligations since the promise to repay debt in both loan and bond obligations with a maturity greater than one year would be compromised.

Evidence was also given by Ms. Ann Nolan, Second Secretary General of the Department of Finance who has been responsible for the Financial Services Division of the Department since July 2010.

She stated that the Act of 2008 did require a message from the Government signed by the Taoiseach recommending it to Dáil Éireann. On 30th September, 2008 such a message for the Act of 2008 was signed by the Taoiseach and submitted to Dáil Éireann. The Bill was passed through the Dáil and Seanad and signed into law by the President on 2nd October, 2008.

She stated that the legislation was passed by the Oireachtas to deal with an unprecedented banking crisis which threatened the collapse of the Irish banking sector and the economy. It was important, and remains important, that the Minister could take swift, decisive and certain action which would be seen to adequately deal with the serious threat to the stability and systemic risk to the financial system and the economy which had arisen.

Ms. Nolan informed the Court that the Act as amended specifically provides the authority for non-voted expenditure by the payment of moneys out of the Central Fund. She underlined that there were constitutional checks and balances built into the legislation. Before the Minister can provide financial support pursuant to s. 6 of the Act he must have regard to and form an opinion in relation to the matters set out in s. 2 of the Act and must further have regard to the matters referred to in section 6 (1) (b) and (c). Furthermore, he is obliged under s. 6 of the Act to provide the Houses of the Oireachtas with annual reports informing the members of each House of the situation with regard to financial support provided under section 6. An additional constitutional/legislative safeguard is the control of the Comptroller & Auditor General. Since any moneys to be paid out under s. 6 are to be paid out of the Central Fund, they require the sanction and approval of the Auditor General. In fact, for the purposes of paying the sums due on the promissory notes on the 31st March, 2011, in the sum of €3.085 billion, the Minister for Finance was required to and did raise a requisition for credit on the account of the Exchequer requesting that the Comptroller & Auditor General grant to the Minister a credit to provide for those payments. Once satisfied as to the correctness of the requisition, the necessary credit was then granted to the Minister by the Comptroller & Auditor General, indicating that he was satisfied that the Oireachtas has authorised the making of the payment by means of the Act. The financial support by way of the promissory notes was thus effected individually or otherwise than by way of a scheme. The primary distinction between financial assistance by way of a scheme and financial support effected individually or otherwise is that the former is more appropriate when the financial support is to be given to the sector or a large portion of the sector whereas the latter is provided on an individual basis. In the case of the promissory notes and indeed in the case of previous payments of large sums of cash to financial institutions a scheme was not used since these were individual financial supports. The Oireachtas chose to differentiate between the provision of a scheme and the provision of individual financial assistance. The former required to be laid before the Oireachtas whereas the latter did not. A scheme was not suitable in the recent banking crisis, given that the banks were free autonomous institutions and were free to say they did not wish to participate in the Credit Institutions Financial Support Scheme (CIFS scheme) and were free to stay in or out of it as they decided.

On the issue of the date up to which financial support may be provided, Ms. Nolan was careful to point out that the financial support was provided at the time the promissory notes were provided, regardless of the payment schedule under the promissory notes. This is a structured form of financial support where the cash flows are scheduled over a number of years. However, the actual financial support is given at the time the asset was provided (i.e., the time of the promissory note was issued) and subsequent payments do not amount to additional financial support but rather payments required under financial support previously provided.
THE ISSUE OF LOCUS STANDI
The Court has set out the background facts in considerable detail so as to make clear the matters upon which the plaintiff seeks adjudication in these proceedings.

However, the critical issue of the plaintiff’s locus standi, that is to say his standing or entitlement to bring and maintain this challenge must first be considered. This issue was clearly flagged in the defence delivered on behalf of the various defendants on 15th June, 2012. The requirement to show locus standi is not a mere pro forma or token requirement. There are important considerations with regard to litigation challenging the constitutionality of legislation which the court must consider.

Accepting the plaintiff in this case to be a person acting in good faith, counsel for the defendants, Michael McDowell S.C., nonetheless argued that he lacked the requisite locus standi to mount this particular challenge. He drew attention to the fact that the plaintiff is a business man who owns and runs a private ambulance service. He is not now nor has he at any previous time been a member of the Dáil or Seanad. In these proceedings he does not contend for any loss, damage or prejudice unique to him or separate and distinct from that which affects every citizen in this country by the commitments entered into in 2010. Mr. McDowell argued that, in reality, the plaintiff’s proceedings involve an attempt to police Oireachtas procedures by alleging that the rights of Dáil Éireann and its members have been by-passed by the failure of the Minister to seek and obtain a Dáil resolution before making the promissory notes. This was a right which fell to be asserted by a member of that body, specifically elected as its members were to represent the interests of persons such as the plaintiff.

Following the closure of the defendant’s case in which the locus standi issue was argued, an application was made to the Court by Mr. Anthony Williams, a solicitor acting on behalf of three Dáil deputies, namely, Shane Ross, Stephen Donnelly and Joan Collins. None of these deputies were either parties or witnesses in the case but it was intimated to the Court that all three deputies were supportive of the plaintiff’s challenge to the legality of the notes. Mr. William’s intervention was limited to a request to the Court to consider certain correspondence passing between Deputies Ross and Donnelly and the Minister for Finance between 3rd January, 2013 and 16th January, 2013. This correspondence was, without objection from counsel for the defendants, received and considered by the Court. No application was made either by Mr. Williams or by counsel for the plaintiff to join one or more of the deputies to the proceedings as notice parties or co-plaintiffs in the proceedings nor was any application made by the plaintiff to call any of the deputies to give formal evidence in support of the plaintiff’s claim.

As is apparent from the letter dated 3rd inst., deputies Ross and Donnelly, having adverted to the present proceedings, focused their attention on any “deal” which might be made by the Minister in relation to the promissory notes which might involve a sovereign commitment to appropriate public funds. The deputies called upon the Minister to confirm that no binding agreement would be entered into by him on behalf of the State, absent approval of the members of Dáil Éireann. The letter proceeds to state:-

“Clearly a right to negotiate is unaffected. The sole requirement is that the members of Dáil Éireann will be asked to authorise the agreement and subsequent payments on foot of any agreement. In the event that you do not provide such commitment to us on or before 15th January 2013, we intend to seek relief in the courts including by way of application for injunctive order restraining you from entering into any agreement on behalf of the State.”
By letter of reply dated 10th inst., the Minister stated:-

“It would not be appropriate for me to restrict the negotiating position of the Government with regard to any discussions relating to the promissory note, but I can assure you that the Government will be fully cognisant of, and in conformity with, all legal and constitutional requirements in the conduct of such discussions and in any agreement reached.

Should the approval of Dáil Éireann or the Oireachtas be required to give effect to any agreement reached or proposed it will be sought at the appropriate time. An assessment of that issue can best be made when the shape of a final agreement is fully apparent and finalised.”

By further letter dated 15th inst., the Dáil deputies again sought confirmation that the Minister would seek the approval of Dáil Éireann before finalising any agreement on the promissory notes. The letter continued:-
“In deference to your position regarding an assessment being made, and strictly without prejudice to our clearly articulated view, we are willing to accept an undertaking from you that pending any finalisation of agreement you will make the terms of such agreement available to the members of Dáil Éireann, so that the members (including us) can consider whether the approval of Dáil Éireann is required. This would afford us an opportunity to bring the matter before the courts should we differ in our assessment as to whether the approval of Dáil Éireann is required.”
In his reply dated 16th inst., the Minister reiterated what he had said in his previous letter and stated:-
“In your letter you make a number of incorrect statements which appear to derive from your understanding of the litigation which is listed for hearing in the High Court on 22nd January. I confirm that the Government accepts the general principle that approval of Dáil Éireann or the Oireachtas is required for the appropriation of public revenues from the Central Fund. Contrary to the matters pleaded and asserted by or on behalf of the plaintiff in the litigation to which you refer, I have not appropriated public funds without adequate authorisation.”
While this correspondence may be seen as supportive of the contentions advanced by the plaintiff in these proceedings, it is more particularly directed at this juncture to any renegotiation of commitments already entered into with regard to the payments reserved under the promissory notes, the next of which falls due on 31st March, 2013.
Counsel on behalf of the Minister took the position that the correspondence simply underlined that it was open, and always had been open, to any member of Dáil Éireann who believed that a resolution or vote of Dáil Éireann was a prerequisite to the execution of the promissory notes to have brought the very proceedings threatened in this correspondence.

However, notwithstanding that these legal proceedings had been commenced as far back as 28th March, 2012, with a defence being delivered on 15th June, 2012 in which the issue of the plaintiff’s locus standi was specifically pleaded, no member of Dáil Éireann had been joined in the proceedings, either as co-plaintiff or notice party. Given that the case was entirely focused on the Minister failure to seek Dáil approval for a vote or resolution to authorise the making of the promissory notes, Mr. McDowell argued that the entitlement to mount the constitutional claim in this case was one which lay with members of Dáil Éireann and not a non-member. It was submitted on behalf of the defendants that legal authority was firmly in favour of the proposition that one litigant (in this case a member of the public, Mr. David Hall) should not be permitted to argue a ius tertii, that is to say, a claim which properly belonged to a third party, in this case the ‘third party’ being the members of Dáil Éireann.

In reply, counsel on behalf of the plaintiff relied on the seminal authority of Cahill v. Sutton [1980] I.R. 269 to argue that there can be cases, such as the present one, where the want of the normal locus standi on the part of the person questioning the constitutionality of the statute may be overlooked if, in the circumstances of the case, there is a “transcendent need” to assert against the statute the constitutional provision that has been invoked. No other authority on this issue was opened to the Court or relied upon by the plaintiff in either written or oral submissions.
DECISION
The plaintiff undoubtedly brings these proceedings in his capacity as a citizen and taxpayer only. He does not claim any actual breach or threatened breach of his rights specifically, nor does he claim to have been affected by the obligations arising under the promissory notes to a greater degree than any other citizen or taxpayer.

The general principle regarding standing under the Constitution is that the courts will only entertain a constitutional challenge “where it is demonstrated that the litigant’s rights have either been infringed or are threatened”. (See Hogan & Whyte (eds.), J.M. Kelly: The Irish Constitution (4th Ed. at 6.2.117)). In Cahill v. Sutton [1980] I.R. 269 the plaintiff had issued proceedings against a medical practitioner claiming damages for an injury that he had suffered by reason of the defendant’s breach of contract. The defendant pleaded that the plaintiff’s action was barred by s. 11 (2) of the Statute of Limitations 1957. Her claim having failed in the High Court, the plaintiff in the Supreme Court sought a declaration that the relevant statutory provision was invalid having regard to the provisions of the Constitution. She based her challenge to the validity of the subsection on the fact that the Act of 1957 did not contain any exception in favour of an injured person who did not become aware of the relevant facts on which a claim might be based until after the expiration of the period of limitation or until a short time before its expiration. However, it was an agreed fact in the case that the plaintiff had known shortly after her accident all the facts necessary to enable her to institute an action. Accordingly, as her challenge to the constitutional validity of the section was based solely on the absence of statutory provisions which, if present, would not be applicable to the facts of her claim, she could not establish that any right of hers had been infringed or was threatened by the absence of such provisions. In those circumstances she had failed to establish the requisite locus standi. Henchy J. made a number of observations in the course of his judgment which are of particular relevance in the instant case. At p. 283 he stated:-

“While a cogent theoretical argument might be made for allowing any citizen, regardless of personal interest or injury, to bring proceedings to have a particular statutory provision declared unconstitutional, there are countervailing considerations which make such an approach generally undesirable and not in the public interest. To allow one litigant to present and argue what is essentially another person’s case would not be conducive to the administration of justice as a general rule. Without concrete personal circumstances pointing to a wrong suffered or threatened, a case tends to lack the force and urgency of reality. There is also the risk that the person whose case is being put forward unsuccessfully by another may be left with a grievance that his claim is wrongly or inadequately presented.”
At a slightly earlier point in his judgment (at p. 282) Henchy J. had expressed the general rule in the following terms:-
“This general rule means that the challenger must adduce circumstances showing that the impugned provision is operating, or is poised to operate, in such a way as to deprive him personally of the benefit of a particular constitutional right. In that way each challenge is assessed judicially in the light of the application of the impugned provision to the challenger’s own circumstances.”
Henchy J gave as an example the ruling of court in East Donegal Co-Operative v. The Attorney General [1970] I.R. 317 where at p. 339 the Supreme Court stated:-
“In the present case all the plaintiffs are engaged in the type of business which is directly affected, and subject to control, by the provisions of the Act and it is the opinion of this Court that they have, therefore, a right to maintain these proceedings”
Then at p. 284 of the judgment in Cahill v. Sutton, an important passage of particular relevance to the instant case appears:-
“…if the Courts were to accord citizens unrestricted access, regardless of qualification, for the purpose of getting legislative provisions invalidated on constitutional grounds, this important jurisdiction would be subject to abuse….. In particular, the working interrelation that must be presumed to exist between Parliament and the Judiciary in the democratic scheme of things postulated by the Constitution would not be served if no threshold qualification was ever required for an attack in the courts on the manner in which the legislature has exercised its law-making powers. Without such a qualification, the courts might be thought to encourage those who have opposed a particular bill on its way through Parliament to ignore or devalue its elevation into an Act of Parliament by continuing their opposition to it by means of an action to have it invalidated on constitutional grounds. It would be contrary to the spirit of the Constitution if the courts were to allow those who are opposed to a proposed legislative measure, inside or outside Parliament, to have an unrestricted and unqualified right to move from the political arena to the High Court once a Bill had become an Act. It would not accord with the smooth working of the organs of State established by the Constitution if the enactments of the national parliament were liable to be thwarted or delayed in their operation by litigation which could be brought at the whim of every or any citizen, whether or not he had a personal interest in the outcome.”
In the next paragraph (also at p 284) he stated:-
“The Constitution has given Parliament the sole and exclusive power of making laws. The Courts normally accord those laws the presumption of having been made with due observance of constitutional requirements”
It is only fair to acknowledge, as has been pointed out by counsel for the plaintiff in this case, that Henchy J. had stressed that such a rule of practice must, like all such rules, be subject to exception or qualification where the justice of the case so requires. Thus the normal locus standi rule may be overlooked if, in the circumstances of the case, there is a “transcendent need to assert against the Statue the constitutional provision that has been invoked” (at p. 285). That said however, Henchy J. in the following lines went on to give illustrations which indicate clearly what he had in mind in adverting to such an exception.:-
“For example, while the challenger may lack the personal standing normally required, those prejudicially affected by the impugned Statute may not be in a position to assert adequately, or in time, their constitutional rights. In such a case the court might decide to ignore the want of normal personal standing on the part of the litigant before it. Likewise, the absence of a prejudice or injury peculiar to the challenger might be overlooked, in the discretion of the court, if the impugned provision is directed at or operable against a grouping which includes the challenger, or with whom the challenger may be said to have a common interest – particularly in cases where, because of the nature of the subject matter, it is difficult to segregate those affected from those not affected by the challenged provision.
However, those examples of possible exceptions to the rule should not be taken as indicating where the limits of the rule are to be drawn. It is undesirable to go further than to say that the stated rule of personal standing may be waived or relaxed if, in the particular circumstances of the case, the court finds that there are weighty countervailing considerations justifying a departure from the rule” (Emphasis added)

Apart from the obvious importance of the issue itself (which, without more, cannot create locus standi), it seems to me that no such countervailing considerations arise in the present case, because, as is clearly evident from the correspondence made available to the Court from two members of Dáil Éireann, there is no want of an entire body of persons who were in a position to assert the supposed failure of the Minister to seek Dáil approval for the making of the promissory notes. Two of them are now threatening to vindicate their rights through the courts. The members of Dáil Éireann represent the citizens of this country and must be taken as knowing both how Government expenditure works and their rights in relation to it. Indeed the correspondence set out above so confirms as it indicates that the deputies in question have in mind a challenge through the courts to any renegotiated deal which the first defendant might make without Dáil approval. But on the issue before me now, nothing was done in terms of any court challenge by any member of Dáil Éireann to assert that rights vested in Dáil Éireann under Article 17 of the Constitution were usurped or bypassed in the creation of the promissory notes. The plaintiff himself is represented by Dáil deputies who could have brought such a challenge, but he cannot even go as far as to show that he wrote with negative results to his local representative(s), or indeed all or any member of the House, requesting that they assert and vindicate the rights contended for in these proceedings, a step which conceivably might have given him some sort of case to argue that locus standi must be taken as devolving on an ordinary citizen in such circumstances. In the present situation the court can not itself become an alternative version of the legislature, ignoring the particular allocations of responsibility provided for in the Constitution.
As pointed out by Henchy J. at p. 286 of Cahill v. Sutton:-

“Were the Courts to accede to the plaintiff’s plea that she should be accorded standing merely because she would indirectly and consequentially benefit from a declaration of unconstitutionality, countless statutory provisions would become open to challenge at the instance of litigants who, in order to acquire standing to sue, would only have to show that some such consequential benefit would accrue to them from a declaration of unconstitutionality – notwithstanding that the statutory provision may never have affected adversely any particular persons interests, or be in any real or imminent danger of doing so. It would be contrary to precedent, constitutional propriety and the common good for the High Court, or this Court, to proclaim itself an open house for the reception of such claims”
To this I would only add that no evidence was placed before the court to suggest that a declaration of invalidity could lead only to benefits for the plaintiff. There might be every reason to suppose that such a declaration of invalidity would have very serious adverse implications both for him and all other citizens in terms of both the immediate implications for the State’s finances, the country’s financial reputation and the Government’s ability to continue its programme for the financial recovery to which it is committed.
There is then the further issue of delay and the implications of such delay for this issue. In the instant case, the promissory notes were issued by the Minister under the Act to Anglo and INBS on 31st March, 2010 and 22nd December, 2010 respectively. Adjustments to the promissory note in respect of Anglo dated 31st March, 2010 were made in May and August 2010 pursuant to the adjustment instruments provided for in the March notes. Two years then elapsed before the present challenge by the plaintiff was brought to the making of the promissory note. In reality, therefore, the plaintiff in these proceedings is not only endeavouring to assert a ius tertii (because he is in effect arguing a point of constitutional order more properly to be advanced by a member of Dáil Éireann) but he has also been in significant delay. That delay was also a factor to be considered in the context of a locus standi argument was recognised by Henchy J. in Cahill v. Sutton (at p. 287):-

“The plaintiff’s lack of standing to raise the constitutional point is aggravated and compounded by her inordinate and inexcusable delay in initiating and prosecuting her claim.”
This delay in the instant case has meant that payments on foot of the promissory note have already been made. The 31st March, 2011 IBRC promissory note payment was by way of cash payment and that of 31st March, 2012 was settled by the delivery of a long term Irish Government Bond to the IBRC. The arrangements solemnly put into place are now entering their third year of operation. It can only be the case that all manner of financial institutions, both at home and elsewhere, have proceeded with matters during this time on the basis of the validity of steps taken by the first defendant. This is a consideration of great importance when considering if this particular plaintiff should be regarded as having locus standi to try and unravel as invalid the making of the promissory notes in circumstances where no member of Dáil Éireann has seen fit to do so.
It is of course true that there have been important decisions, such as Crotty v. An Taoiseach [1987] 1 I.R. 713 where the requirements of Cahill v. Sutton have to some extent been relaxed and it is apparent that appropriate justification did exist for some relaxation of the rule in that and some other cases also.

In Crotty, the plaintiff challenged the ratification by the Government of the Single European Act in circumstances where the Government had not first sought the approval of the people by way of referendum. While the plaintiff could not point to any specific injury or prejudice to himself more so than any other citizen, both the High Court and Supreme Court considered he had standing to make the challenge. In adjudicating on this point on the interlocutory hearing in the High Court, Barrington J. accepted the plaintiff’s argument that the Single European Act should be put to the people in a referendum, that he had a right to be consulted in any such referendum and that, accordingly, if his contention was correct but no relief was granted, his right would be infringed.

While a divisional hearing of the High Court later took a different view, holding the plaintiff did not have locus standi, the view expressed by Barrington J. was upheld in the Supreme Court where Finlay C.J. stated (at p.766):-

“The Court is satisfied, in accordance with the principles laid down in Cahill v. Sutton [1980] I.R. 269, that in the particular circumstances of this case where the impugned legislation, namely the Act of 1986, will if made operative affect every citizen, the plaintiff has a locus standi to challenge the Act notwithstanding his failure to prove the threat of any special injury or prejudice to him, as distinct from any other citizen, arising from the Act”
However, an important feature of the Crotty case which distinguishes it from the present case is that the Act in that case had not yet come into force, whereas in this case the relevant law was put in place in 2008 and the programme for payments on the promissory notes is now coming up to its third year of operation.
In McKenna v. An Taoiseach (No. 2) [1995] 2 IR 10, the plaintiff successfully argued that expenditure by the Government to favour a particular outcome in a referendum gave rise to countervailing circumstances justifying a relaxation of the locus standi rules. Keane J. stated in the High Court:-

“At the outset I must deal with the standing of the plaintiff to initiate and maintain these proceedings. It is clear that the present proceedings belong to a category of cases in which a challenge to the constitutionality of the legislation or other acts is unlikely to emerge if the specific criteria enunciated by the Supreme Court in Cahill v. Sutton [1980] I.R. 289 are applied. It is clear from the observations of Finlay C.J. in Crotty v. An Taoiseach [187] I.R. 713 that a broader approach should be adopted in cases of this nature and I have no hesitation in concluding that the plaintiff was entitled to institute and maintain the present proceedings.” (Emphasis added)
I am also mindful that in T.D. v. Minister for Education [2001] 4I.R. 259 at 282, Keane C.J. stressed that the Cahill v. Sutton rules:-
“… must on occasions yield the overriding necessity that law is passed by the Oireachtas or acts or omissions of the Executive should not go unchallenged, simply because it is difficult, if not impossible, for individual citizens or groups to establish that their individual rights are affected.” (Emphasis added)
These difficulties, underlined in the above citations, simply do not arise in the instant case where each and every member of Dáil Éireann had ample opportunity to bring a timely constitutional challenge had he or she been minded to do so.
In Riordan v. Government of Ireland [2009] 3 IR 745, the plaintiff challenged the constitutionality of certain provisions of the courts legislation relating to the composition of the Irish Superior Courts. He argued that he had standing on the basis that he had appeared before the courts in their various compositions being challenged. The Supreme Court in that recent case reaffirmed the principles in Cahill v. Sutton in the following terms:-

“The rules relating to locus standi are of ancient origin and require that a person who wishes to initiate or participate in court proceedings should himself have a cognisable interest in the subject matter of the proceedings. The leading modern statement of the rule is that to be found in Cahill v. Sutton [1980] I.R. 269. There, this court refused the plaintiff a right to maintain the proceedings in order to ‘champion the putative constitutional rights of a hypothetical third party’. A plaintiff must have a personal standing in the sense of being able to show (in this case) that the impugned statutory provisions adversely affected or threatened his own personal interest … all citizens have a right of access to the courts, which, in other cases, the courts have been sedulous in protecting. This right of access is for the purpose of resolving justiciable issues and not for the purpose of constituting the courts as a sort of debating society or deliberative assembly for the discussion of abstract issues.”
Finally, the court must be cognisant, particularly in the country’s present financial circumstances, that applications of the sort brought here, particularly when they run their full course through the High Court and Supreme Court, tend to involve significant costs which often fall as a burden on the taxpayer. As pointed out by Murray C.J. in Riordan v. Government of Ireland [2009] 3 IR 745 (at p.765):-
“It must also be borne in mind that all litigation, even groundless litigation, causes expense to the individuals or entities impleaded in it and that this expense will often fall on the taxpayer.”
Ultimately I have come to the conclusion in the instant case that the plaintiff is endeavouring to assert a ius tertii, that is to say, to advance a case or argument which more properly should have been brought, and may yet still be brought, by an individual member or members of Dáil Éireann. This is not a case where there is no other suitable plaintiff can be found as the developments towards the end of the hearing amply demonstrate. No member of Dáil Éireann is precluded from mounting the very challenge brought by the plaintiff in these proceedings and nothing in this judgment should be taken or construed as indicating what view the Court might take of the merits of such a claim if and when so brought. Secondly, the plaintiff has not shown that he himself has suffered any prejudice which puts him in a different position from any other taxpayer in this country. Thirdly, the delay in bringing the application must be afforded particular weight in this case having regard to the solemn undertakings entered into by the Executive which at this point have been operational for almost three years.
Thus, for all the reasons outlined above, the Court must dismiss the plaintiff’s claim on the basis that he lacks locus standi to bring this particular challenge.

O’Connell v. Minister for Justice

, High Court, July 31, 1997, Geoghegan J.

1. By Order of the High Court made by Mr. Justice Carney on the 23rd July, 1996, the Applicant was given leave to apply for Declaration by way of application for Judicial Review in respect of Section 65 of the Courts of Justice Act, 1936 and the Regulations made thereunder on the grounds set forth in paragraph 5 of the Applicant’s Statement of Grounds. Paragraph 5 reads as follows:-

“The grounds upon which the relief sought in paragraph 4 is that the provisions of Section 65 of the Courts of Justice Act, 1936 and the Regulations made thereunder bar an impecunious plaintiff from access to the Courts and the administration of justice. The said provision discriminates against the applicant and breaches his constitutional rights under Article 40.1 and 3 of the Constitution.”

2. The application now before me is brought pursuant to that leave. A Statement of Opposition has been delivered and filed which in addition to opposing the substantive grounds of application, challenges the right of the Applicant to bring the application both on grounds of locus standi and on the grounds that the application is now in the events which have happened, merely a moot. I think that I must first address these preliminary objections.

3. The background to the application is as follows. In 1991 the Applicant instituted proceedings in the High Court against Ireland, the Attorney General and the Ministers for Health, Finance and Social Welfare and the Southern Health Board arising out of matters relating to the Disabled Persons (Maintenance) Allowance Regulations. The proceedings had taken the form of an application for leave to bring a Judicial Review application but Mr. Justice Lavan, in granting leave, had directed that the proceedings be commenced by Plenary Summons. Accordingly, the proceedings then followed the normal course of an action commenced by Plenary Summons. In August 1994, the Applicant, who was litigating in person, made the appropriate application to the Central Office to file the Notice of Trial and set down the action for hearing. The Applicant was informed by the office that he would have to pay £53 stamp duty. Not having sufficient funds to pay the stamp duty, he made an ex-parte application to Mr. Justice Carney for an Order directing the State authorities to waive the requirement for the payment of stamp duty on the grounds that it was blocking his right of access to the Courts. The Judge adjourned the matter overnight to enable him to consider whether he had any such power to make the Order requested and on the following day he ruled that he did not believe that he had such a power but that as the point raised was one of such considerable public importance, he made an Order assigning the Applicant a Solicitor and Senior and Junior Counsel to be certified under the Attorney General’s Scheme for the purposes of making a formal application for waiver of the payment of the stamp duty. That Order was made on the 12th August, 1994. No legal proceedings were taken pursuant to or in the context of that Order until the matter appears to have been personally mentioned by the Applicant to Mr. Justice Carney when he was sitting in connection with Circuit Appeals in Cork in March 1996. Paragraph 11 of the Applicant’s Affidavit purports to set out the reasons for the delay. The paragraph reads as follows:-

“The processing of this present application for Judicial Review was assigned to my Solicitors herein who retained Counsel on my behalf. Initially the application was postponed because a case in which a claim somewhat akin to that made in this application was being canvassed before Mr. Justice McCracken. That case was decided in the summer of 1995 and is the case of Coughlan -v- Ireland and the Attorney General . I beg to refer to the judgment therein when produced. Thereafter, my Solicitor was absent on maternity leave and I was unable to access my then Junior Counsel. After many months I wrote to my Solicitor and requested that alternative Counsel be retained so that this matter could be expedited. I made an appearance before Mr. Justice Carney when he sat in Cork on assizes in March 1996 to indicate and explain the delay in processing this matter and to express my apology to him and to permit me to continue. Mr. Justice Carney gave me such permission having graciously heard me.”

4. As far as I am aware no formal Order of Mr. Justice Carney’s in respect of the airing of the matter on that day was ever drawn up and I am under the impression that he may not have made any kind of formal Order but was regarding the matter as being mentioned to him out of courtesy. It is difficult to see what precise Order he would have made at that stage at any rate given that up to then the only Order which he made was an Order assigning Solicitor and Counsel under the Attorney General’s Scheme. Furthermore, the paragraph is somewhat misleading, though I think unintentionally so. It speaks of “the processing of this present application for Judicial Review” but from the earlier part of the Applicant’s own Affidavit it would seem that Mr. Justice Carney may have contemplated that a formal application would have been made for waiver of the fees and that he had not made a final ruling on the matter. But that is not entirely clear and it is possible that the type of proceedings he envisaged were Judicial Review. I think that what he really had in mind was that the Applicant was to be free to bring any kind of proceedings he liked as might be advised by the Counsel and Solicitor assigned to him. Nothing very much turns on any of that, however, because an application for leave to bring Judicial Review proceedings was in fact granted as I have already mentioned by Mr. Justice Carney on the 23rd July, 1996.

5. In the meantime, the whole problem of the stamp duty and the inability to pay it had become wholly irrelevant as far as the Applicant was concerned. He borrowed the money to pay the stamp duty and any further duty that became payable without any liability for interest from some member of his family and he was successful in his original High Court proceedings which were determined by a judgment of Mr. Justice Barron delivered on the 31st July, 1995. He was awarded his expenses against the State. Although the Order of the High Court was appealed to the Supreme Court, the appeal was not pursued and by consent it was struck out by the Supreme Court and the High Court Order affirmed on the 25th April, 1996. By the same Order, the Supreme Court directed the Defendants to pay to the Plaintiff the costs of the appeal to the Supreme Court in an agreed sum of £726.27. The costs in the High Court were taxed at £1,018.00. It is not in dispute that the High Court costs were paid over to the Applicant, enclosed in a registered letter of the 25th March, 1996 and that the Supreme Court costs were paid over, enclosed with another registered letter of the 8th May, 1996. Before ever leave was granted therefore to bring these Judicial Review proceedings, the original proceedings were entirely disposed of and all costs awarded already paid. However, I have little doubt that quite apart from any consideration of whether the Applicant might at least have an arguable case on locus standi, Mr. Justice Carney would have regarded the granting of leave as in practice, a kind of extension of time for bringing appropriate proceedings in the light of what he had been told in Cork in March 1996 by the Applicant himself of the problems which had occurred in the meantime.

6. But now that this Judicial Review application has come on for hearing, the State is perfectly entitled to argue the locus standi point and linked with it the submission that this application is now a moot and that that being so, the Court should not grant the relief, particularly when part of the relief might involve a Declaration as to the unconstitutionality of the statutory provisions. I am quite satisfied that the Respondents’ objections on these grounds are well founded and that I should refuse the application without considering the substantive argument, however important and interesting that argument may be. A number of authorities were cited to me but there are two which are particularly relevant. In the well-known case of Cahill -v- Sutton , 1980 I.R. 269, in the judgment of Henchy J. at p.282, the following passage appears:-

“…… In other jurisdictions the widely accepted practice of Courts which are invested with comparable powers of reviewing legislation in the light of constitutional provisions is to require the person who challenges a particular legislative provision to show either that he has been personally affected injuriously by it or that he is in imminent danger of becoming a victim of it. This general rule means that the challenger must adduce circumstances showing that the impugned provision is operating, or is poised to operate, in such a way as to deprive him personally of the benefit of a particular constitutional right. In that way each challenge is assessed judicially in the light of the application of the impugned provision to the challenger’s own circumstances.”

7. While that passage, strictly speaking, refers to attacks on the constitutionality of a statutory provision, I think that it would be equally relevant to an attack on provisions of a statutory instrument if the suggestion was that the statutory instrument was, ultra vires, the maker of it by reason of its infringing the Constitution. Therefore in this case whether the attack is ultimately on the statute or the statutory instrument, the Applicant has no locus standi because he was not in fact damaged by the operation of either the Act or the Regulations made under it. His access to the Court was not prevented because he actually did borrow the stamp duty without any liability for interest and not only that, but he went on to win his action in the High Court and on appeal, in the Supreme Court and recovered all his out of pocket expenses from the State. Of course, even if none of that were so, the State might well have a good answer to the application on the grounds that he could have applied for legal aid but that is not something which I need to consider.

8. The obligation imposed on the Applicant to pay stamp duty did not in the events that happened in any way impede his right of access to the Courts or lead to his incurring any loss or damage whatsoever. In these circumstances he has, in my opinion, no locus standi to bring this application.

9. In addition to the principle of locus standi, there is the related principle that a Court ought not to pronounce on the constitutionality of legislation if to do so would effectively be a moot (see McDaid -v- Judge Sheehy , 1991 1 I.R. 1).

10. Having regard to the views which I have expressed, it is not necessary for me to consider the further question of whether if, as in this case, legal aid would probably have been available that would preclude the Applicant from complaining that Court fees denied him access to the Courts, though on the face of it I would see no reason not to follow the unreported judgment of McCracken J. delivered the 12th July, 1995 in Coughlan -v- Ireland , which was to the effect that in such a case a person would be so precluded.

11. The interesting question of whether a person who is genuinely deprived of access to the Courts by reason of an inability to pay the stamp duty and Court fees, cannot be considered in this case but must await an appropriate case where the point does genuinely arise.

12. For the record, there is one other matter which I should mention. It was argued on behalf of the Applicant that he might want to institute some proceedings in the future but it was not suggested that any particular form of proceedings were either contemplated or planned.

Society for the Protection of Unborn Children (Irl) Ltd v Coogan and Ors

[1990] ILRM 70

Finlay CJ

This is an appeal by the plaintiff from the order of the High Court dated 7 September 1988 refusing its application for an interlocutory injunction restraining the defendants from printing, publishing or distributing a publication entitled ‘Welfare Guide UCD 88/89’.

The plaintiff is an incorporated body limited by guarantee which was formed with the object of protecting human life , particularly that of the unborn. It is the body at the relation of which the Attorney General instituted proceedings against Open Door Counselling Ltd and the Dublin Well-Woman Centre Ltd and obtained a declaration and injunction in the High Court affirmed with minor variations on appeal to this Court the purpose of which was to protect the right to life of the unborn.

The defendants respectively are: eight elected officers of the UCD Students’ Union, a printer and UCD itself.

In the High Court the plaintiffs’ motion was refused by Carroll J on the grounds that the plaintiff had not got a locus standi which would entitle it to *72 obtain the injunction. No other issue was determined in the High Court and the learned trial judge expressed no view on the facts proved before her as to whether the plaintiff had established the probability of an infringement by the defendants or any of them of the provisions of Article 40.3.3° of the Constitution to the extent that would justify the granting of a quia timet injunction.

The only issue to be decided on this appeal, accordingly, is the issue of the plaintiff’s locus standi.

When the appeal was first listed before this Court and submissions were heard on behalf of the appellant and of the respondents, it became clear that a question arose as to whether, as was contended on behalf of the defendant, the exclusive right to seek an injunction in the circumstances of this case was vested in the Attorney General.

The court was satisfied that it would be inappropriate to reach any decision on that issue without having given to the Attorney General an opportunity to be heard and to present his views before the court.

Accordingly, the Attorney General was added as a notice party and the hearing was resumed when counsel on his behalf assisted the court.

On behalf of the Attorney General it was submitted that he did not claim to have any exclusive right with regard to the prosecution of proceedings of the kind concerned in this case, seeking to enforce compliance with the Constitution.

It was further submitted to the court on his behalf that the appropriate formula for ascertaining as to whether a person seeking to enforce the provisions of the Constitution has a valid locus standi was the test as to whether the proceedings were instituted by reason of a bona fide concern and interest in the actual or threatened constitutional infringement by a person who could establish a proximity to that infringement, proximity being understood as an interest when considered in an objective sense.

The Attorney General did not seek to make any submission to the court or to enter into the area as to whether on the facts of this case the plaintiff had established such a bona fide concern and therefore such a locus standi.

It was submitted on behalf of the Attorney General that a litigant who had not already got a locus standi in an action of this description could not acquire one merely by reason of being an incorporated body whose articles and memorandum appeared to give it a particular interest in the matter concerned.

In the course of my judgment in Attorney General (SPUC) v Open Door Counselling Ltd and the Dublin Well-Woman Centre Ltd [1989] ILRM 19, 25 I stated as follows:

If therefore the jurisdiction of the courts is invoked by a party who has a bona fide concern and interest for the protection of the constitutionally guaranteed right to life of the unborn, the courts, as the judicial organ of government of the State, would be *73 failing in their duty as far as practicable to vindicate and defend that right if they were to refuse relief upon the grounds that no particular pregnant woman who might be affected by the making of an order was represented before the courts.

I am satisfied that the Attorney General who is the holder of a high constitutional office is an especially appropriate person to invoke the jurisdiction of the court in order to vindicate and defend the right to which I have referred. The defendant’s appeal on the issue of locus standi must, therefore, fail.

I see no reason to alter the view expressed by me in that case. Counsel on behalf of the defendant in this appeal submitted that the paragraphs which I have quoted from that judgment must be construed as being qualified by the reference in the second paragraph to the particular position of the Attorney General and that the view there expressed did not constitute an expression of view that a person with a bona fide concern and interest for the protection of the right to life of the unborn could invoke the jurisdiction of the courts.

I am satisfied that this is not the correct interpretation of the view expressed by me in that case. The issue of locus standi, as the case came before the Supreme Court was one in which the right of the Attorney General to sue was being challenged, and it is for that reason that a particular reference is made to his position but the broad statement of principle contained in the first paragraph remains unqualified.

This Court in East Donegal Co-Operative Society Ltd v Attorney General [1970] IR 317 and Cahill v Sutton [1980] IR 269 considered the extent of interest and concern which was necessary to give to a person challenging a statute locus standi to invoke the jurisdiction of the courts.

In the instant case there is no question of challenge to any statutory provision, the remedy being sought by the plaintiff being the prevention or prohibition of what it alleges is a threatened breach of the Constitution by the defendants.

In such a case I am satisfied that the test is that of a bona fide concern and interest, interest being used in the sense of proximity or an objective interest. To ascertain whether such bona fide concern and interest exists in a particular case it is of special importance to consider the nature of the constitutional right sought to be protected. In this case that right is the right to life of an unborn child in its mother’s womb. The threat to that constitutional right which it is sought to avoid is the death of the child. In respect of such a threat there can never be a victim or potential victim who can sue.

If it were to be accepted as is contended on behalf of the defendants that only the Attorney General could sue to protect such a constitutional right as that involved in this case, that would, I am satisfied, be a major curtailment of the duty and the power of the courts to defend and uphold the Constitution.

On the evidence adduced in the High Court, there can be no question of the plaintiff being an officious or meddlesome intervenient in this matter. I would accept the contention that it could not acquire a locus standi to seek this *74 injunction merely by reason of the terms of its articles and memorandum of association. The part, however, that the plaintiff has taken in the proceedings to which I have referred, which were successfully brought to conclusion by the Attorney General at its relation, and the particular right which it seeks to protect with its importance to the whole nature of our society constitute sufficient grounds for holding that it is a person with a bona fide concern and interest and accordingly has the necessary legal standing to bring the action.

I would, therefore, allow this appeal and remit the application out of which it arose to the High Court for further hearing.

It was suggested at the hearing of this appeal that the matter could only be remitted by this Court to the High Court to be tried in the High Court on the facts already established there as they were in September of 1988. I am satisfied that this is incorrect. This is an interlocutory application, the decision on which was based on a preliminary point of locus standi or jurisdiction, and upon that decision having been reversed, the appropriate order for this Court to make, in my view, is that the matter should be remitted to be tried by the High Court on such evidence as it (the High Court) sees fit to hear.

WALSH J

(Hederman J concurring): I agree with the judgment which has just been delivered by the Chief Justice. However there are some views I wish to add concerning the question of the status of the plaintiffs in these proceedings.

The activities sought to be restrained in the present case are ones which, if proved to exist as alleged, are designed and intended to evade the provisions of Article 40.3.3° of the Constitution. The attitude of the respondents to this case has been unconcealed. They boldly assert that no one but the Attorney General could seek to prevent them from engaging in the impugned activities and, in the absence of such intervention, the courts and the citizens in general must remain powerless to prevent activities designed not merely to evade the constitutional rights but totally to destroy them. Their expressions of indignation at being asked by the plaintiffs before being sued to give an undertaking to cease the activities complained of cannot be seriously accepted. They would have more justification for indignation if they were sued before being asked to desist. Every person against whom it is proposed to seek a restraining injunction should where possible first be asked to, or given an opportunity to, desist from the conduct complained of.

It has been argued on behalf of the respondents in this case that the order sought by the appellants was one which they, the respondents, claim is in respect of a public right and that only the Attorney General can sue in support of or in defence of a public right. It is to be noted that in the present case the Attorney General has disclaimed any such exclusive right.

The question in issue in the present case is not one of a public right in the *75 classical sense (and I do not subscribe to the view that only the Attorney General can sue in respect of such public rights) but is a very unique private right and a human right which there is a public interest in preserving. The right to life of each of the unborn is the private and human right of that life. The parents or relatives of the unborn life have a private family right to seek to vindicate that right to life. They have no right to seek to extinguish it. What is in issue in this case is the defence of the public interest in the preservation of that private right which has been guaranteed by the Constitution. It is a right guaranteed protection by public law as it is part of the fundamental law of the State by reason of being incorporated in the Constitution.

In my view every member of the public has an interest in seeing that the fundamental law of the State is not defeated. The Constitution commits to the judicial organ of government the ultimate guardianship of the Constitution itself and of the vindication of the rights which are either guaranteed by it or conferred by it. But the courts cannot move until their powers are invoked. It is also clear that the Attorney General by virtue of his constitutional office also has cast upon him in the appropriate case the duty of defending the Constitution and vindicating the rights conferred or guaranteed by it. He has therefore a sufficient interest at all times to represent the public interest in the protection of the right in question in this case but not the exclusive right to move in the matter. Indeed there could well be occasions when he could legitimately be cited as a defendant in proceedings brought to defend or vindicate constitutional rights. He might well be called upon to defend the actions of the executive power of government or even the legislative power of government if protection was sought against the actions of the executive or legislative powers of government. If some department of state or some public health authority with the approval if not the encouragement of the executive power were to engage in activities which this Court in the Open Door Counselling case restrained as being a violation of the Constitution it would be an intolerable situation if the defence or vindication of constitutional rights was to be confined to the very officer of State who had been entrusted with the task of defending such impugned activities. In cases which call for the vindication of Article 40.3.3° it could often be that the parent or parents and indeed the relatives or other members of the family of the unborn life, who should normally be expected to vindicate the right, are the ones who are pursuing the goal of the destruction of the right. One of the fundamental political rights of the citizen under the Constitution, indeed one of the most valued of his rights, is that of access to the courts. The life most directly affected in these cases is the unborn life and that is the very one which cannot directly assert this right in court. If speedy access to the courts was not available the life itself could already have been extinguished. The citizen’s right of access to the courts in the appropriate case will include not only access in defence of his own personal and direct rights which are being threatened by the executive or by his *76 fellow citizens, but also the right to seek to restrain the acts of the executive or other persons from breaching the constraints imposed by the Constitution if the public interest requires that such breaches or attempted breaches should be restrained.

In a case such as this the essential question is have the plaintiffs a bona fide interest to invoke the protection of the courts to vindicate the constitutional right in question. It would be an ironic situation if our law, which permits a citizen to bring a petty thief before the courts even though the citizen is not himself the victim of the theft, could yet deem the citizen to be unqualified to invoke the courts’ protection to prevent the destruction of the constitutional right to life. Such cases could often present an element of extreme urgency and if, as in the present case, the Attorney General sees no necessity for intervention on his part and not only shows no disapproval of the action taken by the plaintiffs but indeed is now willing to lend his name to the proceedings if the plaintiff so wishes, is indicative of the legitimacy of the plaintiff’s position.

In the unanimous decision of this Court in State (Ennis) v Farrell [1966] IR 107 O’Dalaigh CJ in rejecting the claim that the role of the private prosecutor no longer existed stated at 121:

[that role] was not only well established but … was (and is) rightly regarded as a salutary check in the rare case of failure and wisdom on the part of such a high constitutional officer as the Attorney General. Indeed, as those who have held that office can affirm, the existence of this power of private prosecution, far from being an embarrassment to the Attorney General, has not infrequently been of value where an Attorney General was being left in doubt as to the reliability of a complainant.

That view was shared by all five members of the court, four of those had previously held the office of Attorney General. I think the relevance and the applicability of that statement to the present case is obvious.

Article 30 of the Constitution provided for the creation of the office of Attorney General. That was the first time such a constitutional office had been established. S. 6 of the Ministers and Secretaries Act 1924 invested in the Attorney General among other matters ‘the assertion or protection of public rights’. The statute did not claim that these rights were exclusive to the office of Attorney General. The Constitution of Saorstat Eireann made no provision for the setting up of the office of Attorney General and s. 6 of the Ministers and Secretaries Act 1924 must be deemed to have been the basis of the existence of the office of Attorney General in Saorstat Eireann. Article 59 of the Constitution provided that the person who was Attorney General of Saorstat Eireann immediately before the Constitution came into operation should become the Attorney General as if appointed under Article 30. The fact that the functions of the Attorney General may be similar or in many cases even identical does not mean that the Constitution did not create a new office. Just as the Supreme Court *77 and the High Court set up under the Constitution are quite distinct and new courts different from those set up under the Constitution of Saorstat Eireann, so also is the office of Attorney General. To the extent that Kenny J in the High Court in Macauley v Minister for Posts and Telegraphs [1966] IR 345 seems to suggest a different view that view ought not to be followed. S. 4 of the Constitution (Constitutional Provisions) Act 1937 conferred upon the new constitutional officer, subject to the express provisions of Article 30 of the Constitution, all the powers and functions set out in s. 6(1) of the Ministers and Secretaries Act 1924. Article 30 of the Constitution conferred directly upon the Attorney General certain powers and functions which no statute may restrict or modify, although provision may be made by law to extend some of these functions to other bodies or persons. At the time of the inauguration of the office of Attorney General by Article 30 of the Constitution there were already other bodies and persons entrusted by law with the prosecution of offences in addition to the continued right of the private prosecutor. As was pointed out by this Court in State (Ennis) v Farrell the phrase ‘or some other person authorised in accordance with law to act for that purpose’ in Article 30 in either the Irish language or the English language texts cannot be construed as only future authorisation, that is to say a law enacted after the coming into force of the Constitution. The court expressly stated that unlike for example, the language of Article 34.4.3°, the language of Article 30 was quite express as a present autonomous form in negativing the idea of the authorisation required being such only as might be made in the future.

Save when the Constitution vests exclusively in the Attorney General certain powers and rights the powers and rights conferred upon him can by law be shared or extended to other persons or bodies although they cannot be removed from the Attorney General. Although the Attorney General by virtue of his constitutional office also has cast upon him the duty of defending the Constitution and vindicating the rights guaranteed by the Constitution that function is not exclusively vested in him either by the Constitution or by statute. Indeed there must be some doubt on the question of whether any statute could validly seek to exclude members of the public from calling in aid the judicial power in defence of the public interest in the vindication of constitutional rights.

In the course of this case reference was made to various decisions of this Court dealing with the interest which a person must show before calling upon the judicial power to declare invalid some legislative provision enacted by the Oireachtas. While a challenge to the validity of a legislative provision is not the same as a claim for the direct applicability of a constitutional provision without the intervention of legislation, which is the present case, nevertheless the position is not as restricted as what is claimed by the respondents in the present case. In East Donegal Co-Operative Society Ltd v Attorney General [1970] IR 317 this Court at p. 338 held that persons seeking invalidation must be prompted *78 by the desire to redress a wrong resulting or a threatened result. The court did envisage that there might be ‘circumstances in particular contests in which, in effect, such an action (actio popularis) may be allowed’. The case of O’Brien v Keogh [1972] IR 144 had one characteristic which could arise frequently in cases brought in defence of the constitutional provision under consideration in this case. In O’Brien v Keogh the parent whose duty it was to look after the interests of the infant plaintiff was one of the parties who raised his own neglect of his duties to his child as a defence to defeat the claims of that child. That child unlike the unborn had the ability to have his interests represented in court for the purpose of challenging the validity of the legislation in question, and in which he succeeded. The basis of that decision striking down the period of limitations in the statute was the fact that the differentiation made between children in the custody of their parents and those not in the custody of their parents had the effect of putting a premium on the neglect of a parent to the detriment of the child. The decision of this Court in Cahill v Sutton [1980] IR 269 is not of such sweeping application as it is sometimes thought. It can be understood only in the light of the narrow ground upon which the case is presented and argued and on the possible injustice of the defendant. At p. 276 of that case O’Higgins CJ states:

Where the person who questions the validity of a law can point to no right of his which has been broken, endangered or threatened by reason of the alleged invalidity, then, if nothing more can be advanced , (emphasis supplied) the courts should not entertain a question so raised.

Henchy J at p. 285 of the same judgment states:

Since the paramount consideration in the exercise of the jurisdiction of the courts to review legislation in the light of the Constitution is to ensure that persons entitled to the benefit of a constitutional right will not be prejudiced through being wrongfully deprived of it, there will be cases where the want of the normal locus standi on the part of the person questioning the constitutionality of the statute may be overlooked if, in the circumstances of the case, there is a transcendent need to assert against the statute the constitutional provision that has been invoked . (emphasis supplied)

It is quite clear from these and other decisions that even in cases where it is sought to invalidate a legislative provision the court will, where the circumstances warrant it, permit a person whose personal interest is not directly or indirectly presently or in the future threatened, to maintain proceedings if the circumstances are such that the public interest warrants it. In this context the public interest must be taken in the widest sense.

A fortiori in a case such as the present where it is sought to restrain, on the basis of a well founded belief, a threatened breach of the Constitution there can be circumstances where the court will be justified in permitting such an action *79 to proceed. Examples of this are to be found in the decisions of this Court in Crotty v An Taoiseach [1987] ILRM 400 and in Boland v An Taoiseach [1974] IR 338. In the last analysis it is a question reserved exclusively to the courts to decide whether or not in a given case a plaintiff who is not personally affected either individually or as a member of a group directly by the activities complained of may be permitted to maintain an action and to obtain an order restraining or restricting those activities complained of.

In the present case the plaintiffs have in my opinion shown a bona fide interest in seeking to curb the activities complained of and in calling upon the judicial power to vindicate the threatened constitutional right. Existing legislation, namely the Civil Liability Act 1961, and the Succession Act 1965, expressly recognises that an unborn life can in law acquire an interest which becomes vested upon its being born alive. Obviously in many such cases the failure of a live birth can be of material benefit to third parties. When the unborn life is threatened by the parent or parents with the encouragement or assistance of other persons there is an obvious need for somebody to assert the interest of the unborn. In the present case the plaintiffs have, in my opinion, shown a genuine interest in the protection of unborn life and it was reasonable on their part to raise the issue as representing the interest of unborn lives. To seek the vindication of the right to life of the unborn is a right which does not rest exclusively with any public authority or officer of State and may on occasion even depend solely upon the vigilance of the citizen.

GRIFFIN J:

I agree with the judgment delivered by the Chief Justice. I would like however to add a few comments.

The only issue necessary for decision on this appeal is whether the plaintiff has, in the circumstances of this case, standing to bring these proceedings. The plaintiff claims that the unique nature of the right given to the unborn in the Eighth Amendment of the Constitution must mean that this right must be protected by the courts, and that as the beneficiaries of this right (the unborn) cannot speak for themselves someone with a bona fide interest and concern for this right must be capable of bringing proceedings, and that the plaintiff has such interest and concern. The only case to which counsel referred the court was that of Attorney General (SPUC) v Open Door Counselling Ltd and The Dublin Well-Woman Centre Ltd [1989] ILRM 19.

On this issue, counsel for the defendants submitted that only the Attorney General could bring these proceedings and that the plaintiff society was acting as an ‘officious bystander’ and ‘a total stranger’. The only authority cited in support of that submission was two short passages from the speech of Lord Wilberforce in Gouriet v HM Attorney General [1978] AC 435, in which he said: (1) that it is the exclusive right of the Attorney General to represent the public interest — even where individuals might be interested in a larger view of *80 the matter — and that this right was constitutional, not technical nor procedural nor fictional; and, (2) that the Attorney General’s right to seek, in the civil courts, anticipatory prevention of a breach of the law is a part of the aspect of his general power to enforce, in the public interest, public rights, and that the distinction between public rights, which the Attorney General can and the individual (absent special interest) cannot seek to enforce, and private rights, is fundamental in English law.

When the Attorney General was added as a notice party and was represented on the resumed hearing, his counsel informed this Court that the Attorney General does not claim an exclusive right to bring proceedings in a case of this kind, and that he was instructed not to make any submissions on the standing of the plaintiff to bring these proceedings. The nature and extent of the rights of the Attorney General and of individuals to bring proceedings for the protection of rights, constitutional or otherwise, was not therefore, fully argued and I would prefer to defer expressing any opinion on this question until it is fully argued in a future case. Likewise, no argument was addressed to the court on the decision of this Court in Cahill v Sutton [1980] IR 269, or on the extent or limits of that decision, or as to how, if at all, it should be qualified. I would accordingly refrain from expressing any view on the application of that decision until it arises for consideration in concrete cases.

For the purposes of this appeal, it is sufficient to show, as the plaintiff society has shown, that it has a bona fide interest and concern for the unborn, and therefore has the necessary standing to bring this action.

McCARTHY J:

The issue raised in this appeal is one of locus standi, the right of the society to seek an undertaking from a citizen that he will obey the law, and, failing such undertaking being given, to obtain an injunction restraining him. It is a grave constitutional issue.

In the first action the society, on 28 July 1985, issued proceedings against Open Door Counselling Ltd and Dublin Well-Woman Centre Ltd alleging a breach of the Constitution and, in particular, Article 40.3.3°. Being met with a plea in defence that it did not have sufficient standing or interest in law to institute the proceedings, the existing action was converted into an action by the Attorney General with a relator. In his judgment in the action now entitled Attorney General (SPUC) v Open Door Counselling Ltd and the Dublin Well-Woman Centre Ltd [1989] ILRM 19, Hamilton P, said at 485:

It is not necessary for me, in the events which have happened, to decide whether the then plaintiff, … had locus standi to maintain these proceedings because an existing action may, by amendment of the writ and statement of claim and by authority of the Attorney General, be converted into an action by the Attorney General with a relator, without prejudice to the proceedings pending in the action.

*81

Subsequently, after debate on the issue of costs, Hamilton P dealt expressly with the issue and, having quoted from the objects set out in the memorandum of association of the society, said:

The court cannot fulfil its constitutional obligations unless its support is sought in proceedings where there is a real and substantial controversy between the parties admitting of specific relief wlthln the sphere of the remedial action. In the course of my judgment I refer to the statement of McCarthy J, in Norris v Attorney General [1984] IR 64 at 103 that:

The right to life of the unborn child is a sacred trust to which all the organs of government must lend their support.

In my view, having regard to the obvious fact that the unborn themselves cannot seek the protection of the court, the obligation which rests on all the organs of government to support the right to life of the unborn must and should be extended to all persons, artificial and real. In bringing these proceedings the society was fulfilling this obligation and I have no doubt but they had the locus standi to maintain these proceedings.

There was no order as to the costs of that action.

In his judgment in the appeal in the first action, Finlay CJ, on the issue of locus standi said:

If, therefore, the jurisdiction of the courts is invoked by a party who has a bona fide concern and interest for the protection of the constitutionally guaranteed right to life of the unborn the courts, as the judicial organ of government of the State, would be failing in their duty as far as practicable to vindicate and defend that right if they were to refuse relief upon the grounds that no particular pregnant woman who might be affected by the making of an order was represented before the court.

I am satisfied that the Attorney General who is the holder of a high constitutional office is an especially appropriate person to invoke the jurisdiction of the court in order to vindicate and defend the right to which I have referred. The defendants’ appeal on the issue of locus standi must, therefore, fail.

The sweep of the judgment of the Chief Justice, with which the other members of the court agreed, was not as wide as that of Hamilton P, in the High Court.

Article 40.3.3° of the Constitution provides:

The State acknowledges the right to life of the unborn and, with due regard to the equal right to life of the mother, guarantees in its laws to respect, and as far as practicable by its laws to defend and vindicate that right.

The direct threat to that right to life is an abortion, a procedure which in the nature of things is likely to be procured by the expectant mother. The two whose *82 rights are protected cannot or will not invoke the constitutional guarantee. Who will? On 20 July 1988 the solicitors for the society, which had sought undertakings from the defendants in respect of the intended publication of a welfare guide, sent relevant documents to the Attorney General writing ‘to enquire whether you are to take action in the courts to prevent the dissemination of this information.’ By letter dated 6 September 1988 from the Office of the Attorney General following, this Court was informed in the course of the hearing, a telephone conversation between the Office of the Attorney General and the society’s solicitors, it was stated:

The Attorney General has considered your enquiry and notes that proceedings have been commenced by your clients in the High Court. In the circumstances he has asked me to inform you that he does not propose taking legal proceedings.

It is clear that at this stage, whilst the society was ‘relating’ the events to the Attorney General, it has not sought his consent to the bringing of a relator action. After the initial debate on this appeal, the views of the Attorney General were invited.

He did not claim an exclusive right to enforce compliance with Article 40.3.3° but propounded the test that a litigant in such circumstances must show a bona fide concern and interest and a reasonable proximity to the anticipated infringement, proximity, as the Chief Justice says, being understood as an interest and considered in an objective sense. Pace the observations of Hamilton P, to which I have referred, the Attorney General expressly submitted that a corporate litigant who had not already got locus standi could not acquire it merely by reason of the contents of the memorandum of association. It was further stated that the Attorney General was now prepared to deal favourably with a request for his consent to a relator action; this invitation was expressly declined by the society.

The office of Attorney General is created by Article 30 of the Constitution; he is charged with the exercise and performance of ‘all such powers, functions and duties as are conferred or imposed on him by this Constitution or by law.’ The Attorney General of Saorstat Eireann was described by a former Attorney General (Kennedy CJ in Moore v Attorney General (No. 2) [1930] IR 471 at 497) as being ‘… the only legal representative of the public in the courts, and … exclusively entitled to assert or defend public interests.’

Private rights are, ordinarily, asserted by private persons. The Constitution does make express provision (Article 40.4.2°) for assertion by a third party of a constitutional right in respect of unlawful detention resulting in a judicial enquiry under the Article. The court has not been referred to any jurisprudence concerning what appears to be the unique form of right guaranteed by Article 40.3.3°. I repeat the question — who will invoke the guarantee? It might be that *83 the right was being infringed by the government whose legal adviser is the Attorney General. Neither the government nor the Attorney General enjoy a monopoly of proclaiming constitutional rights. If the Constitution ‘belongs’ to anyone, it belongs to the people. That is not to say, however, that any given individual or body of individuals may maintain proceedings vindicating that right. The fact that, because of the unique nature of the guarantee, there is apparently no jurisprudence directly in point, save what may be derived from the first action leaves the answer open. If, as submitted on behalf of the society, the whole nature and quality of Irish society is affected by the right, it would appear to be a public right, ordinarily in the province of the Attorney General.

Carroll J, in the High Court said that the society ‘has assumed the self-appointed role of policing the Supreme Court judgment. In my opinion, it has no right to seek undertakings from citizens and it is the Attorney General who is the proper party to move in such a case.’ It is not the Supreme Court judgment, with respect, that the society is seeking to police but, rather, Article 40.3.3° of the Constitution, If the government through the legislature or otherwise were to act so as to breach that sub-section, it must a priori, be open to any citizen to call the judicial organ of government in aid. If the feared breach is through the act of some other person or body, immediacy may require personal initiation of the suit. The only requirement in either case would be a bona fide intent; such is not in issue here. Where I differ from the judgment of the Chief Justice is in what may be properly permitted thereafter. In my view, it is the Attorney General, and he alone, who can in such a case validly pursue that claim to protect the right of the unborn to judgment. The Chief Justice is of opinion that the part which the society took in the first action and the particular right which it seeks to protect with its importance to the whole nature of our society constitutes sufficient grounds for holding that the society has a bona fide concern and interest and accordingly the necessary legal standing to bring the action. The only consideration that sets the society apart from the general run is its Involvement in the first action; the other considerations are common to all citizens with a bona fide concern.

I cannot agree that success in a relator action against other defendants adds, in any way, to the standing of the society to maintain this action. In my view, the society is in no better or worse a position than any other prospective litigant. I confess to a feeling of great unease at the prospect of any person or group of persons, however well intentioned, being held at law competent to maintain an action of this kind without the intervention of the Attorney General, despite his offer of assistance. Of far greater import is the claim by the society, as a preliminary to such action, to demand and receive an undertaking from a citizen or a group of citizens as to their future conduct. The implications to a free society of such a claim are alarming. Success in earlier proceedings against other defendants gives no licence for such a practice and the refusal of the Attorney *84 General’s offer, in my judgment, disqualifies the society from having the necessary standing to maintain these proceedings.

I would dismiss this appeal.

The defendants respectively are: eight elected officers of the UCD Students’ Union, a printer and UCD itself.

The only issue to be decided on this appeal, accordingly, is the issue of the plaintiff’s locus standi.

Accordingly, the Attorney General was added as a notice party and the hearing was resumed when counsel on his behalf assisted the court.

In the course of my judgment in Attorney General (SPUC) v Open Door Counselling Ltd and the Dublin Well-Woman Centre Ltd [1989] ILRM 19, 25 I stated as follows:

I would, therefore, allow this appeal and remit the application out of which it arose to the High Court for further hearing.

WALSH J

In the unanimous decision of this Court in State (Ennis) v Farrell [1966] IR 107 O’Dalaigh CJ in rejecting the claim that the role of the private prosecutor no longer existed stated at 121:

Henchy J at p. 285 of the same judgment states:

GRIFFIN J:

I agree with the judgment delivered by the Chief Justice. I would like however to add a few comments.

McCARTHY J:

*81

Subsequently, after debate on the issue of costs, Hamilton P dealt expressly with the issue and, having quoted from the objects set out in the memorandum of association of the society, said:

The right to life of the unborn child is a sacred trust to which all the organs of government must lend their support.

There was no order as to the costs of that action.

In his judgment in the appeal in the first action, Finlay CJ, on the issue of locus standi said:

I am satisfied that the Attorney General who is the holder of a high constitutional office is an especially appropriate person to invoke the jurisdiction of the court in order to vindicate and defend the right to which I have referred. The defendants’ appeal on the issue of locus standi must, therefore, fail.

The sweep of the judgment of the Chief Justice, with which the other members of the court agreed, was not as wide as that of Hamilton P, in the High Court.

Article 40.3.3° of the Constitution provides:

I would dismiss this appeal.

Society for the Protection of Unborn Children (Irl) Ltd v Grogan and Ors

Finlay CJ
This is an appeal brought by the plaintiff against an order made in the High Court on 11 October 1989 by Carroll J on an application made by it for an interlocutory injunction against the defendants.

By plenary summons issued on 25 September 1989 the plaintiff claimed against the defendants:

1. A declaration that any publication published or distributed under the aegis of the defendants which contains information calculated to inform persons (including pregnant women) of the identity and location of and the method of communication with a specified clinic or clinics where abortions are performed is contrary to the provisions of the Constitution of Ireland and in particular Article 40.3.3° thereof.

2. An injunction restraining the publication or distribution of such information.

By notice of motion dated 25 September 1989 and made returnable for 9 October 1989, the plaintiff sought an injunction by way of interlocutory injunction restraining the defendants from publishing or distributing or assisting in the printing, publishing or distribution of any publication produced under their aegis providing information to persons (including pregnant women) of the identity and location of and the method of communication with a specified clinic or clinics where abortions are performed.

The defendants are persons who are members of three separate groups, namely, the Union of Students of Ireland, the Students’ Union of University College Dublin, and the Students’ Union of Trinity College Dublin.

Affidavits filed in support of the motion for an interlocutory injunction *353 established that each of these three groups had published and asserted that the defendants, amongst others, were intending to distribute the information mentioned in the injunction claimed.

The affidavits filed on behalf of the defendants did not dispute that they were publishing and intending to distribute information of the identity and location of and the method of communication with specified abortion clinics in the United Kingdom. In these affidavits and through counsel at the hearing in the High Court, the defendants claimed to be entitled to publish and distribute this information by virtue of European Community law. The submission made on their behalf was and is before this Court that pregnant women in Ireland had a right under European Community law to travel to any other member state where abortion was legal in order to have the service of an abortion performed on them; that a corollary to that legal right was a right to information about the identity, location and method of communication with abortion clinics in the United Kingdom. Having regard to that right vested in a pregnant woman in Ireland, it was urged that the defendants had a corresponding right vested in them by European Community law to publish and distribute that information.

Having heard submissions on the application for an injunction, Carroll J decided to refer certain questions to the Court of Justice of the European Communities for a preliminary ruling in accordance with Article 177 of the Treaty establishing the European Economic Community.

The relevant curial part of the High Court order of 11 October 1989 reads as follows:

And it appearing to the court that a decision of the Court of Justice of the European Communities on questions to be formulated and submitted to the court is necessary to enable this Court to give judgment on the plaintiffs’ said motion for an interlocutory injunction herein it is ordered that the said questions be referred to the said Court of Justice of the European Communities for a preliminary ruling in accordance with Article 177 of the Treaty Establishing the European Economic Community and the court doth request the said Court of Justice to give a ruling thereon.

There is no express order refusing or adjourning the application for an interlocutory injunction, and when counsel for the plaintiff after Carroll J had delivered judgment, inquired what ruling she was making concerning the application for an interlocutory injunction the learned trial judge stated:

In order to reach a decision as to whether it should be granted I need an opinion from the European Court.

Counsel for both parties agree that the probable time required for the delivery of an opinion from the European Court is a minimum of eighteen months, and more probably longer.

*354

Jurisdiction of this Court to entertain this appeal
Counsel for the defendants has challenged the jurisdiction of this Court to entertain this appeal on the grounds that the only ‘decision’ made by Carroll J in the High Court was a decision to refer questions pursuant to Article 177 of the Treaty to the European Court of Justice and that having regard to the judgment of this Court in Campus Oil Ltd v Minister for Industry and Energy (No. 1) [1983] IR 82, such a decision to refer was not appealable.

Counsel for the plaintiff submits that irrespective of the form of the order made by Carroll J, she in fact made two decisions, one being to refer the questions pursuant to Article 177 and the other being to decline or refuse an interlocutory injunction.

I have come to the conclusion that the submission made on behalf of the plaintiff is correct.

The application before the High Court was for an interlocutory injunction, that is, for an injunction lasting only until the trial and determination of the action. The purpose of an interlocutory injunction is, of course, to maintain a particular situation, without alteration, from the time when the order is made until the court can adjudicate on all the issues involved between the parties. To defer or postpone reaching a decision on such an application for a period which certainly equals and probably exceeds the time necessary to bring the action to hearing is, in my view, to decline or refuse to make an interlocutory injunction.

The appellate jurisdiction of this Court in respect of matters arising in the High Court is provided for in Article 34.4.3° of the Constitution, which reads as follows:

The Supreme Court shall, with such exceptions and subject to such regulations as may be prescribed by law, have appellate jurisdiction from all decisions of the High Court, and shall also have appellate jurisdiction from such decisions of other courts as may be prescribed by law.

The interests of the plaintiff are very clearly affected by the ruling of Carroll J on its application for an interlocutory injunction. In seeking to reverse that ruling by appeal in this Court the plaintiff is asserting an important constitutional right.

The judgments of O’Higgins CJ and Walsh J in People v Conmey [1975] IR 341 which formed the majority decision of the court in that case, both emphasised that for any Act of the Oireachtas to provide an exception or regulation to the constitutional right of appeal from the High Court to the Supreme Court, clear and unambiguous terms would be necessary because of the fundamental nature of that right.

For the same reasons I am satisfied that no mere absence of formal words from a High Court order could be permitted to remove from the appellate *355 jurisdiction of this Court a determination of a High Court judge which affects one of the parties involved and has all the characteristics of a decision.

It is clear from the decision of this Court in Campus Oil Ltd v Minister for Industry and Energy (No. 2) [1983] IR 88, that it was open to the learned High Court judge in this case to grant an interlocutory injunction at the same time as she decided to refer questions of law for the determination of the European Court of Justice.

There is, therefore, in my view, no question of her decision to make a reference under Article 177 having automatically the effect of postponing a decision on the application for an interlocutory injunction. Her declining to grant an injunction, therefore, when applied for, clearly, constitutes a decision of the High Court appealable, by virtue of the Constitution, to this Court.

I reject the contention that for this Court to consider an appeal involving the question as to whether or not an interlocutory injunction should be granted at this stage is, in effect, reviewing on appeal a decision to refer under Article 177 in a manner inconsistent with the decision of this Court in Campus Oil Ltd v Minister for Industry and Energy (No. 1). The making of the reference remains unaltered, the only matter being reviewed is the question of the granting of an interlocutory injunction. I am, therefore, satisfied that this preliminary objection to the jurisdiction of the court fails and that the court must then consider the merits of the plaintiff’s appeal against the decision of the High Court declining to make an interlocutory injunction.

The nature of the injunction sought
The nature of the plaintiff’s asserted cause of action in aid of which the injunction is sought and the defendants’ main defence to it is of fundamental importance for the determination of this appeal.

The plaintiff seeks to protect by injunction the right to life of the unborn which is acknowledged and guaranteed protection by Article 40.3.3° of the Constitution.

The defendants assert that the acknowledgment and guarantee of protection to the life of the unborn contained in Article 40.3.3° of the Constitution must, by virtue of the provisions of Article 29.4.3° of the Constitution, be interpreted as being subject to and qualified by a right in the defendants, arising from European Community law, by the publication and distribution of material in Ireland, to inform the mother of an unborn child of the location, identity and method of communication with abortion clinics in the United Kingdom in which she may, if she so wishes, obtain a service consisting of the intentional termination of the life of her unborn child.

It is submitted on behalf of the defendants that since it appears from the affidavits that the information, publication and distribution of which was sought to be restrained, had already been published and distributed in various ways *356 prior to the application that the status quo ante was the availability of such information and that accordingly no injunction could or should be granted.

This submission, in my view, completely ignores the nature of this action and the principles applicable to it. It was decided by this Court in Attorney General (Society for the Protection of Unborn Children Ireland Ltd) v Open Door Counselling Ltd [1989] ILRM 19‘that the activities of the defendants, their servants or agents in assisting pregnant women within the jurisdiction to travel abroad to obtain abortions by referral to a clinic, by the making of their travel arrangements, or by informing them of the identity and location and method of communication with a specified clinic or clinics are unlawful, having regard to the provisions of Article 40.3.3° of the Constitution.’ This Court by the same order restrained the defendants in that action by permanent injunction from carrying on these activities.

That decision clearly establishes that the actual activity which the defendants in this case are claiming and intending to pursue as of right is unlawful, having regard to the provisions of Article 40.3.3° of the Constitution.

I reject as unsound the contention that the activity involved in this case of publishing in the students’ manuals the name, address and telephone number, when telephoned from this State, of abortion clinics in the United Kingdom, and distributing such manuals in Ireland, can be distinguished from the activity condemned by this Court in the Open Door Counselling case on the grounds that the facts of that case were that the information was conveyed during periods of one-to-one non-directive counselling.

It is clearly the fact that such information is conveyed to pregnant women, and not the method of communication which creates the unconstitutional illegality, and the judgment of this Court in the Open Door Counselling case is not open to any other interpretation.

This application for an interlocutory injunction, therefore, consists of an application to restrain an activity which has been clearly declared by this Court to be unconstitutional and therefore unlawful and which could assist, and is intended to assist in the destruction of the right to life of an unborn child, a right acknowledged and protected under the Constitution.

That constitutionally guaranteed right must be fully and effectively protected by the courts.

If and when a decision of the European Court of Justice rules that some aspect of European Community law affects the activities of the defendants impugned in this case,the consequence of that decision on these constitutionally guaranteed rights and their protection by the courts will then fall to be considered by these courts.

Having regard to that duty of the court, it is clearly quite inappropriate to approach the exercise of the discretion to grant or refuse an interlocutory injunction, upon the basis of a supposed status quo ante consisting of activities *357 which are constitutionally forbidden acts.

The true principle which falls to be considered in this case in relation to the exercise of that discretion is the unqualified existence of the relevant provisions of the Constitution at the time of the application for an injunction which, in my view, having regard to the constitutional law applicable, replaces the ordinary concept of status quo ante arising in interlocutory injunction cases.

With regard to the issue of the balance of convenience, I am satisfied that where an injunction is sought to protect a constitutional right that the only matter which could properly be capable of being weighed in a balance against the granting of such protection would be another competing constitutional right.

I am quite satisfied that in the instant case where the right sought to be protected is that of a life, there can be no question of a possible or putative right which might exist in European law as a corollary to a right to travel so as to avail of services, counterbalancing as a matter of convenience the necessity for an interlocutory injunction.

One further submission remains to be considered. On behalf of the defendants it was submitted as a final alternative that if all the other contentions made on their behalf were to fail that this Court was obliged by the terms of Article 177 of the Treaty to refer to the European Court of Justice for preliminary determination the question as to whether the granting of an interlocutory injunction was possible or appropriate according to European law. This submission was almost entirely based on the decisions of the House of Lords in Factortame Ltd v Secretary of State for Transport [1989] 2 All ER 692.

In that case what was being sought pending the determination by the European Court of Justice of certain questions of community law rights pursuant to Article 177, was an injunction restraining the implementation of an Act of the United Kingdom parliament.

Having regard to the supremacy of parliament in the constitutional law of the United Kingdom, such a relief was absolutely prohibited by national law.

The question, therefore, which was by the decision of the House of Lords referred under Article 177, was as to whether such an interim or interlocutory injunction was either obligatory or permissible under European Community law and if it were permissible only, by what standards the discretion as to whether to grant or refuse it should be exercised.

No such question arises in our national law where an injunction such as is here sought is not only consistent with but is in full accord with our constitutional law.

It is quite clear that where the courts of a member state decide to refer a question pursuant to Article 177 of the Treaty, for a preliminary ruling by the European Court of Justice, that both the question as to the stage of the action in the member state at which that reference is made and what steps, if any, other than a final determination of the action the courts of the member state may take *358 pending that determination, is peculiarly a matter for the national courts to be considered and decided in accordance with national law.

I would, therefore, allow this appeal, and I would grant to the plaintiff an injunction in terms of the notice of motion of 25 September 1989. Such injunction should last until the trial and final determination of this action, with liberty to either party to apply to the High Court for a variation of this order in the light of the preliminary ruling by the European Court of Justice, prior to that time, of the questions referred to it by the High Court under Article 177 of the Treaty.

Any application in respect of the enforcement of this injunction would, of course, be made in the High Court.

WALSH J

(Hederman J concurring): I fully agree with the judgment which has just been delivered by the Chief Justice and I have little to add to it.

The very wording of the Eighth Amendment of the Constitution forecloses any attempt to argue that life does not exist before birth. The decision of this Court in the action between the present plaintiffs and Open Door Counselling and others has given an interpretation to the Eighth Amendment which is not open to question in any court in this State or in any other State or in any international court. The interpretation of the Constitution of Ireland is within the exclusive competence of the courts of Ireland.

The procedural issue raised in this case is subordinate to the overriding issue in the case which is the issue of life and death. The unquestionable purpose of the eighth Amendment is the preservation of life. The most basic of all human rights is life itself. All procedural questions must be subordinated to the defence of that fundamental right.

In the present case it has been sought to argue that the activities of the defendants in relation to the question of abortion can be distinguished from those of the defendants in the Open Door Counselling case. In the latter case what was involved was described as ‘one to one’ counselling. The present case involves the same type of assistance being offered in a broadcast manner to all pregnant women whether married or unmarried. This is not a lesser infringement of the Constitution than was impugned in the ‘one to one’ form of assistance and by its very nature is greater and more indiscriminate.

The defendants and the student body they represent are right to be concerned with the problems which arise from pregnancy among their fellow female students although their booklet is not in any sense strictly confined to those. The defendants are to be commended for their efforts to explain the options which are available and which necessarily involve the preservation of life namely, that the mother should retain her child or put it into fosterage or have the child adopted. As the courts know only too well the last course is one frequently fraught with great emotional distress to the mother of the child and the *359 prospective adopting parents who frequently are themselves childless. It is a drastic step which cannot be recalled but it does ensure the preservation of life. The fourth option put forward by the defendants though admittedly in a ‘non-directive and non-judgemental manner’ is the option of the death of the unborn life. This is beyond question in open conflict with the Eighth Amendment and no effort has been made to disguise that fact. The intentional destruction of unborn life is not a permissible option. This Court has already held that when a pregnant woman is intent upon the destruction of the life of her unborn child that all of those who assist her or facilitate her in the accomplishment of that intention are acting in violation of the Constitution. The information provided by the defendants in the present case is indisputably the offer of such assistance and facilities. The booklet is notable for the fact that there is a total omission of any reference to the right to life of the unborn child.

When a woman becomes pregnant she acquires rights which cannot be taken from her namely, the right to protect the life of her unborn child and the right to protect her own bodily integrity against any effort to compel her by law or by persuasion to submit herself to an abortion. Such rights also carry obligations the foremost of which is not to endanger, or to submit to, or bring about the destruction of, that unborn life. There is no doubt that particularly in the case of an unmarried pregnant woman intense pressures of a social kind may be brought to bear upon her to submit to an abortion, even from her peers or her parents. There may even be specious arguments of an economic nature ranging from those of the neo-Malthusian type to those which would seek to determine for economic reasons that the population should be structured in a particular way even to the point of deciding that the birth of too many persons of one sex should be prevented. The destruction of life is not an acceptable method of birth control. The qualification of certain pregnancies as being ‘unwanted’ is likewise a totally unacceptable criterion. The total abandonment of young children or old persons or of those who by reason of infirmity, mental or physical, or those who are unable to look after themselves too often occurs throughout the world. There is clear evidence that they are unwanted by those who abandon them. That would however provide no justification whatever for their elimination. On the economic plane there are, no doubt, some distorted minds which could make a case for the elimination of what they would regard as all useless and unproductive human units. To be unwanted is not justification for the destruction of one’s life.

When the present matter came before the High Court it was clear beyond all doubt that the activities complained of were contrary to the Constitution. The decision of the High Court judge to adopt the course which she did namely, to leave the matter undecided was in effect to suspend the provisions of the Eighth Amendment of the Constitution for an indefinite period. It is not open to any judge to do anything which in effect suspends any provisions of the Constitution *360 for any period whatsoever. Article 177 of the Treaty of Rome does not oblige any judge of first instance to refer a case for preliminary opinion to the Court of Justice of the European Communities and any such national judge is quite free to determine any matter of Community law arising in a case without any such reference. Therefore any judge of first instance who decides to refer a case for preliminary opinion must bear in mind that such power does not give a completely free and untrammelled power in respect of all other issues in the case. The power of a judge of first instance to make such a reference for a preliminary opinion has been upheld in this Court in its decision in the Campus Oil (No. 1) case and such power, per se, is protected against interference. The exercise of this power to refer does not by its nature affect the parties concerned in the sense that it does not determine any of the issues in the case. But neither does it permit the judge concerned to avoid deciding issues in a case which must be decided and the failure to decide which may be the subject of an appeal procedure or review procedure in a higher national court. The stage at which the High Court judge decided to refer the question in the present case was during the application for an interlocutory order.

The Campus Oil (No. 1) case was not an interlocutory matter. If the learned trial judge had decided to treat the hearing of the interlocutory application as the hearing of the action similar issues would arise and similar consideration would apply as are applicable in the present case. So far as the interlocutory application is concerned the failure to grant it amounted to a withdrawal, for a period at least, of the protection of unborn lives in being from the effects of the activities of the defendants. Apart from the question of the maintenance of the juridical status quo, already referred to by the Chief Justice, this in truth was in fact a failure to maintain the status quo of those unborn lives namely, their continued existence. The destruction of any such life could never be remedied. By its nature the case could not give rise to any question of the balance of convenience being tilted against the unborn lives. It is the undoubted duty of this Court to ensure that the protection guaranteed by the Eighth Amendment is not put in abeyance. It is a matter to be worked out between the High Court judge and the Court of Justice of the European Communities to decide what, if any, steps should be taken on foot of the decision to refer, but it does not appear to me to preclude the consideration of the matter in the terms of the reference which may be of assistance in the final determination of this case.

It has been sought to be argued in the present case that the effect of the amendment of Article 29 of the Constitution, which was necessary to permit our adhesion to the treaties of the European Communities, is to qualify all rights including fundamental rights guaranteed by the Constitution. The Eighth Amendment of the Constitution is subsequent in time, by several years, to the amendment of Article 29. That fact may give rise to the consideration of the question of whether or not the Eighth Amendment itself qualifies the amendment *361 to Article 29. Be that as it may, any answer to the reference received from the European Court of Justice will have to be considered in the light of our own constitutional provisions. In the last analysis only this Court can decide finally what are the effects of the interaction of the Eighth Amendment of the Constitution and the Third Amendment of the Constitution.

What has been sought by the High Court in the present case is an opinion on the question of the right to receive information on certain services which are available in other member States of the European Community although available under differing conditions. The availability of abortion is subject to differing regulations and restrictions. The fact that abortion is virtually available on demand in some of the member states can scarcely be regarded as a criterion. Although the provision of abortions within the law in particular member states provides profit for those engaged in it that could scarcely qualify it to be described as a service of economic significance of a type which must be available in all the member states of the Communities especially when it is manifestly contrary not only to the public morality of the member state in question and to the ordre public but also destructive of the most fundamental of all human rights namely, the right to life itself. The fact that particular activities even grossly immoral ones, may be permitted to a greater or lesser extent in some member states does not mean that they are considered to be within the objectives of the treaties of the European Communities, particularly the Treaty of Rome, which is the treaty of the European Economic Community. A fortiori it cannot be one of the objectives of the European Communities that a member state should be obliged to permit activities which are clearly designed to set at nought the constitutional guarantees for the protection within the State of a fundamental human right.

It appears to me that the High Court judge in the present case made a fundamental error in her initial premise by assuming that there was a right vested in a pregnant woman to receive in this State information calculated to assist her in the accomplishment of her intent to terminate, either within or without this State, the protected unborn life. Such a right does not exist.

In my opinion the interlocutory injunction sought by the plaintiffs must be granted.

McCARTHY J:

The status of the appellants to maintain proceedings to call the judicial power in aid of the guarantee contained in Article 40.3.3° of the Constitution has been clearly established in Society for the Protection of Unborn Children Ireland Ltd v Coogan [1990] ILRM 70.

In Attorney General (Society for the Protection of Unborn Children (Ireland) Ltd) v Open Door Counselling [1989] ILRM 19, this Court held that the activities of the defendants in that case constituted a clear breach of the subsection. Those activities included, admittedly in a one to one situation, giving information as *362 to the names, addresses and telephone numbers of abortion clinics in England. The defendants here do not deny that they are giving similar information to the public but claim that it is not ‘assisting’ in the same manner as in the Open Door Counselling case. I am bound by the decision of this Court in the latter case; I cannot identify any real difference between the conduct of the defendants here and that of Open Door Counselling save that these defendants are more flamboyant in the manner of giving the information. It follows, there being a continuing breach of the constitutional guarantee and a status to sue in the plaintiffs that the courts must enforce the guarantee and must do so forthwith.

In the High Court, as here, the defendants submitted that there was a question of European Community law to be resolved and this required a reference under Article 177 of the Treaty of Rome. The question was whether or not Article 59 of the Treaty is to be interpreted as meaning that a member state may forbid the giving of information within its territory about the provision of a service in another member state where the provision of that service is illegal in the first but lawful in the second member state (affidavit of Ivana Bacik).

Assuming that the students union guide books, insofar as they deal with abortion, are confined to providing information about the availability of the service of abortion in Great Britain and related information, the respondents contend that they have such a right under community law and under Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.

Article 40.3.3° is self executing. In the order made in the Open Door Counselling case this Court declared that the activities of the defendants, their servants or agents, in assisting pregnant women within the jurisdiction to travel abroad to obtain abortions by referral to a clinic, by the making of their travel arrangements or by informing them of the identity and location of and method of communication with a specified clinic or clincs (emphasis added) are unlawful having regard to the provision of Article 40.3.3° of the Constitution. The sole authority for the construction of the Constitution lies in the Irish courts, the final authority being this Court. Article 29.4.3° may exclude from constitutional invalidation some provision of the Treaty of Rome the enforcement of which is necessitated by the obligations of membership of the European Communities; it may be that in enacting the Eighth Amendment to the Constitution as explained by this Court in the Open Door Counselling case, the People of Ireland did so in breach of the Treaty to which Ireland had acceded in 1973. In the course of argument, counsel for the respondents submitted that the wording of the Eighth Amendment itself recognised that there could, in certain circumstances, be a lawful abortion in this State. The constitutional guarantee by the State is ‘in its laws to respect and, as far as practicable, by its laws to defend and vindicate’ the right to life of the unborn. No relevant law has been enacted by the Oireachtas since the Eighth Amendment came into force, the direct criminal law ban on *363 abortion still deriving from the Offences against the Person Act 1861. As was pointed out by the Chief Justice in the Open Door Counselling case:

If the Oireachtas enacts legislation to defend and vindicate the constitutionally guaranteed right it may well do so in wider terms than are necessary for the resolution of any individual case (at 26).

It is unfortunate that the Oireachtas has not enacted any legislation at all in respect of this constitutionally guaranteed right.

In the High Court Carroll J, requiring as she said the view of the Court of Justice as to the validity of the defendants’ argument, in referring the matter under Article 177 made no other order, even an order of adjournment of the motion for the interlocutory injunction. In the course of argument, counsel for SPUC was invited to make a submission on whether or not it was suggested that the learned High Court judge was avoiding the issue. He declined to do so stating he did not wish to personalize the matter. Whatever the intent in making the reference, the clear effect was to postpone the issue — the real issue as to whether or not the constitutional guarantee would be immediately enforced. It is common case that the reference would, in effect, postpone the determination of the interlocutory motion for at least 18 months. Such a result, in my view, is a breach of the constitutional guarantee and a refusal of the duty of the courts to enforce that guarantee.

The fact that Carroll J made no order of adjournment is, in my view, of no importance. The effect of the order of the High Court was to deny the undoubted right to have the guarantee enforced. No argument was advanced calling in aid the constitutional guarantee of freedom of expression or its effect, if any, on that contained in Article 40.3.3°.

In the light of the availability of such information from a variety of sources such as imported magazines etc., I am far from satisfied that the granting of an injunction to restrain these defendants from publishing the material impugned will save the life of a single unborn child, but I am more than satisfied that if the courts fail to enforce, and enforce forthwith, that guarantee as construed in the Open Door Counselling case, then the rule of law will be set at naught.

I would allow this appeal.

Used Car Importers of Ireland v Minister for Finance

[2013] IEHC 128
JUDGMENT of Mr. Justice Roderick Murphy dated the 15th day of March 2013
1. The Proceedings

1.1 Plenary Summons of the 15th March, 1995
These proceedings were brought by way of plenary summons issued on the 15th March 1995. Some interlocutory applications followed. Notice of intention to proceed was served on three occasions between October 1999 and October 2010. Notice of trial was served on the 7thApril 2011. The matter was heard over 33 days from March to June 2012. The plaintiff company claimed a mandatory injunction requiring the second named defendant the Revenue Commissioners (“Revenue”) to “publish to the plaintiffs the values for Vehicle Registration Tax (“VRT”) purposes of the full range of new and used motor vehicles and to publish revised values from time to time as they occur”. The plaintiff also sought declarations of unconstitutionality of the VRT enabling legislation, its being contrary to European Community law and that the manner of its implementation was unlawful.

The general endorsement seeks:-

• A declaration that the manner in which and extent to which the Revenue have assessed and continued to assess VRT on motor vehicles imported by the plaintiff is unlawful and contrary to the provisions of s. 133 of the Finance Act 1992, as amended by s. 9 of the Finance (No. 2) Act 1992.
• A declaration that the provision as so amended is unconstitutional in that it fails to vindicate the property rights of the plaintiff and it infringes its right to equality.

• A declaration that provisions as so amended is contrary to the provisions of European Community law and in particular Article 3(a), 3(c) and 3 (g), Articles 7(a), Article 9, Article 12, Article 30 and Article 95 of the Treaty of Rome and the Sixth VAT Directive 388/77.

• A declaration that the manner in which and extent to which Revenue has assessed and continues to assess VRT on motor vehicles imported by the plaintiff is contrary to the Constitution and fails to vindicate the property rights of the plaintiff and infringes its right to equality.

• A declaration that the manner in which and extent to which Revenue has assessed and continues to assess VRT on motor vehicles imported by the plaintiff is contrary to the provisions of European Community law and in Articles 3(a), 3(c) and 3 (g), Article 7(a), Article 9, Article 12, Article 30 and Article 95 of the Treaty of Rome and the Sixth VAT Directive 388/77.

There are further claims based on legitimate expectation, proportionality, equality and legal certainty:
• A declaration that the manner in which and extent to which the Revenue has assessed and continues to assess VRT on motor vehicles imported by the plaintiff is contrary to the principles of legitimate expectations, proportionality, legality, equality and legal certainty.
The plaintiff also sought damages:
• A mandatory injunction directing the return of all excess VRT paid by the plaintiffs and if necessary, an order for the taking of an account and inquiry.
• Damages for conversion, detinue, negligence, wrongful interference with constitutional rights in European law, misfeasance in public office.

• Such further and other relief as the court shall seem fit.

• Costs.

The Chief State Solicitor (CSSO) entered an appearance on behalf of the first, third and fourth named defendants on the 22nd March 1995. The Revenue Solicitor entered an appearance on behalf of the Revenue on the 19th April, 1995.
1.2 Summary of Statement of Claim 28th July 1995
The statement of claim describes the plaintiff as a limited liability company having its registered office at Marina Commercial Park Centre, Park Road, Cork. The business of the plaintiff is the importation and sale of used motor vehicles, particularly from Japan but also from other member states of the European Union.

On the importation and sale of motor vehicles there are two taxes levied, VAT and VRT. VRT was introduced with effect on and from the 1st January 1993, in accordance with the provisions of s. 132 of the Finance Act 1992, as amended by s. 8 of the Finance (No. 2) Act 1992.

Section 133 of the Finance Act 1992, as amended by s. 9 of the Finance (No. 2) Act 1992 provides that chargeable value of vehicles for VRT shall be the open market selling price (“OMSP”). In the case of new vehicles VRT is further defined as the price, inclusive of all taxes and duties, which in the opinion of the sole wholesale distributor, a model of that make and specification might reasonably be expected to fetch on a first arms length sale thereof in the open market in the State by retail.

In the case of second hand vehicles the OMSP is further defined as the price, inclusive of all taxes and duties, which, in the opinion of the Revenue, the vehicle might reasonably be expected to fetch on a first arms length sale thereof in the State by retail.

The plaintiff complains that the computer system Revenue established for the purposes of calculating the OMSP does not take any account of the actual sale price of a particular vehicle but, instead, applies a chargeable value for VRT purposes obtained by the system. The plaintiff also complains that the declared value of new vehicles and the tables of value of second hand vehicles are not published and that the Revenue refused to supply values to the plaintiff. Further, the plaintiff complains that the Revenue operated a system whereby an estimated amount of VRT in relation to a particular vehicle might be obtained in advance, but Revenue could increase this estimate if it feels that it has been underestimated.

The plaintiff complains that the manner in which the Revenue has operated this valuation system is secretive, arbitrary and lacking in transparency and legal certainty. As a result the plaintiff faces uncertainty when purchasing and selling stock as it is impossible to calculate its eventual VRT liability. Consequently the overall trade of the plaintiff has been in progressive decline. This, the plaintiff claims, has caused it to suffer loss and damage.

The plaintiff states that the values used by Revenue to calculate VRT have been on many occasions well in excess of actual prices capable of being obtained by the plaintiff which results, in those cases, in the VRT being a much higher proportion of the actual sale price than the current rate for the tax. Further, since the introduction of VRT the plaintiff claims that the value of used imported motor vehicles imposed by the Revenue for the purpose of levying the tax have been subject to arbitrary increases, out of line with the actual market price.

The plaintiff claims that the system of valuation, as established by law and as operated by Revenue, discriminates in favour of the domestic car trade and against the trade in imported used cars. This is done, it is claimed, by:-

• Permitting domestic new car trade to determine its values.
• Imposing artificially high values on imported used cars.

• Discriminating against undertakings, such as the plaintiff, trading in imported used cars in that the added value and the dealer’s margin in a domestic used car transaction is not subject to VRT, whereas in imported used car transactions importers such as the plaintiff pay VRT on a value which purports to correspond with the retail price.

• Charging VRT on imported used cars in excess of the residual VRT incorporated in the value of domestic used vehicles of the same characteristics; alternatively it is impossible to establish whether the VRT charged on imported used vehicles exceeds the said residual tax or not.

1.3 Defence of the first, third and fourth defendants and defence of the second defendants 26th September, 1995
In identical defences both the State parties and the Revenue say that they have not established a computer system of valuing imported second hand vehicles as alleged. Revenue state that it takes into account all relevant factors and characteristics which affect or influence the price of imported second hand vehicles in forming the opinion required under the legislation. The fact that a computer programme is availed of in the course of such exercise does not take from the fact that the value attributed to a specific vehicle is determined by the price fixed. The defendants are under no obligation to declare the price of new vehicles and the declared price of new vehicles is openly available to the public at large by recourse to the main dealers for each make of vehicle.
The defendants deny that there are tables of value of second hand cars as alleged, and state that the publication of a table of such values would be impractical and pointless. The defendants operate a system of estimates and submit that the administration of the provisions of the said legislation has been conducted on the part of Revenue openly, objectively and impartially on the basis of facilitating importers of vehicles with approximate preliminary estimates for each vehicle followed by the opportunity of individual examination of each vehicle coupled with a further right of appeal against the value attributed upon such individual examination. Revenue denies that any progressive decline or any loss or damage sustained by the plaintiff in its overall commercial trade in which risk is inherent to that such has been caused or contributed to by any facet of the administration of the provisions of the legislation governing VRT.

Revenue notes that the plaintiff’s business has been affected by material alterations in market conditions generally in the motor vehicle trade, resulting in a lack of competitiveness in imported Japanese vehicles upon which the plaintiff was particularly dependent. Revenue cites particular factors such as the fact that the single age depreciation table, used by the prior tax system, resulted in lower values for the purpose of excise duty, the depreciation of the value of the then Irish currency as against the Japanese currency, which made it more expensive to buy used vehicles in Japan, the fact that within the single market of the E.C. private individuals find it more attractive to import used vehicles from other Member States without import formalities and without paying VAT, as reasons for the decline in the market competitiveness for imported Japanese vehicles.

The defendants deny that the values applied by the second named defendants for tax purposes are on many, or on any, occasions in excess of the actual prices obtained by the plaintiff for the said vehicles. If such excess occurs, it is attributable to the vagaries of the market in which the plaintiff operates. Revenue does not “impose” values on used imported motor vehicles, but rather they value each such vehicle presented for registration on the basis of its “open market selling price” as defined therein, being the price at which, in its opinion, the vehicle might reasonably be expected to fetch on a first arm’s length sale thereof in the open market in the State by retail.

Revenue denies that they have applied or apply arbitrary increases as alleged, or at all, and that the values applied by the second named defendants are set out of line with actual market prices as alleged. Revenue deny that there is discrimination in favour of the domestic car trade as alleged or at all and deny that Revenue permits domestic trade to determine its values for VRT as alleged. Revenue denies that VRT, and the manner in which it has been administered, is unlawful or contrary to the provisions of the said Acts as alleged or at all and denies that it is contrary to E.C. law, including the Sixth VAT Directive, as alleged.

Revenue denies that the tax and its manner of administration contravenes the principles of legitimate expectation, proportionality, legality, equality or legal certainty, and denies that it is unconstitutional or that it fails to adequately vindicate the alleged property or other rights of the plaintiff. They submit it is not an impermissible delegation of law making power as alleged, or at all. It is further denied that the plaintiff, as an artificial corporate personality, is entitled to assert the alleged, or any rights, by reference to the constitution.
1.4 Particulars of Accounts
The first reply dated the 20th November 1995, gave the plaintiff unaudited turnover and profit before tax for 1990 to 1994, the last year of which it made a loss advised as £200,000 or more. (Accounts were audited by O’Callaghan and Company for 1991 to 1993. The 1993 accounts showed a gross profit of £254,038 (€261,652)). Increased staff costs resulted in a loss before taxation of £42,773.

Mr. O’Dowling ceased to be a director of and shareholder in the plaintiff in September 1995. Angela Riordan was appointed director. There were no separate accounts for 1994.

Accounts for two years to 31st October 1995, were produced by Crowley and Company. Gross profit for the two years was £915,237. A different and unexplained comparable figure for 1993 of £586,879 was double that audited by O’Callaghan and Company (£254,038). The accounts for 1995 were signed by neither of the directors, Fintan Riordan and Angela Riordan. The first accounts signed by the directors, though not by Crowley and Company, were the 1999 accounts. The 2009 accounts were signed by the directors and audited by Crowley and Company showing a deficit of £1,213,917 (€1,192,393) and indicated that the net assets were less than half of the amount of its’ called up share capital.

The director’s reports for 1995/1996 and 1997 refers to a major restructuring in 1995 and that “the directors are pleased with the development of the company to date”. The directors’ report for those years repeated that “the directors did not envisage any developments in the business and are enthusiastic about the future”. There is no reference in any of the accounts from 1995 to 2008 of any trading difficulties nor, indeed, to the present litigation.

The abridged accounts for 2009 do not contain a directors report.

The replies indicated that 75 cars were imported from the UK from 1990 to 1994 out of a total imported of about 3,800, of which about 3,500 were sold.

It was stated that “because a substantial part of the plaintiffs trade was wholesale rather than retail it is difficult to show, in relation to each vehicle it imported, the retail price as compared with the Revenue VRT valuation”.

By not taking the invoice price the competitive advantage of a dealer supplying vehicles at a lower cost is reduced.

The further reply to particulars dated the 3rd June, 2011, for gross loss of earnings for the period January 1993 to December 2010, was for €131,605.84. This was based on projected incremental loss of earning margins of between £5.1 million in 1993 to £13 million in 2000 and from €5 million in 2001 peaking at €10-11 million in each of the years 2008 to 2010. These losses were based on projected incremental sales of 103,199 units over the seventeen years.
1.5 Discovery Procedure
Laffoy J’s decision of the 1st March 2006, on an appeal by the plaintiff of a further and better discovery order of the Master of the High Court, stated:-

“In May, 1995 the plaintiff issued a motion seeking an interlocutory mandatory injunction directing the second defendant to publish to the plaintiff the values for VRT purposes of the full range of new and used motor vehicles and to publish revised values from time to time as they should occur. An order was made on foot of the motion by Costello P. on 17th July, 1995, wherein, as the order indicates, by consent of the parties a timeframe was fixed for delivery of pleadings. It was further ordered that each side should make discovery within six weeks from the delivery of the defence “of the documents which are or have been in their respective possession or power relating to the matters in question” in the action. Unfortunately, the enthusiasm for a speedy resolution of the matter which obviously inspired that order appears to have dissipated. Three years later, by order of this Court (Geoghegan J.) dated 22nd June, 1998, the first and second defendants were ordered to make further discovery of specific documentation.”

1.6 Delay
This case was heard over 33 days between 6th March and 21st June 2012, some 17 years after the proceedings were issued. Counsel for the plaintiff told the court on the first day of the hearing that the reason it had taken so long to get to trial was that the plaintiff had to make repeated applications in relation to discovery and inspection. Counsel told the court that the plaintiff was not satisfied with the extent of discovery but had decided to proceed.
2. Plaintiffs Opening Submissions
The plaintiff was established in 1988 and its business involves sourcing quality used cars from other EU Member States as well as countries outside the EU and, in particular, Japan. The court was told that there was good commercial opportunity involved in importing quality used motor vehicles from Japan. People tended to trade in or dispose of their cars after a relatively short period of time and they tended to be in good condition. The plaintiff saw a market opportunity in Ireland involving the importation of used cars from Japan into the European Community, causing them to enter into free circulation so that imported cars competed with domestic used cars on the Irish market.

Counsel for the plaintiff in his opening submission told the court that issues arose as to whether or not the administration of the tax by the Revenue is intra or ultra vires.

Vehicle Registration Tax (VRT) has been in operation since the 1st January 1993. It replaced Motor Vehicle Excise Duty (MVED). VRT is a tax on registration rather than importation. This was brought about as a result of Ireland’s membership of the European Community and the creation of the Single European Market (SEM), which would have made importation taxes unlawful. The plaintiff claims that the system, either as legislated for or as operated, must be either unlawful according to both domestic law and European law, but also unlawful in the manner in which the system is operated by Revenue as a matter of domestic law and European law. The plaintiff submits that there is unlawful discrimination between imported vehicles compared with domestic used vehicles.

Counsel submitted that if the administration of the tax was ultra vires, then the system as operated by Revenue was unlawful.
3. Relevant Legislation

Section 132(1) of the Finance Act, 1992 states: “In addition to any other duty which may be chargeable, subject to the provisions of this Chapter and any regulations thereunder, with effect on and from the 1st day of January, 1993, a duty of excise, to be called vehicle registration tax, shall be charged, levied and paid at whichever of such rates as may stand specified for the time being by an Act of the Oireachtas is appropriate on –

(a) the registration of a vehicle, and
(b) a declaration under section 131(3).”

The amendment of s. 132 by s. 8 of the Finance (No. 2) Act 1992, in respect of non converted and exempt motor vehicles is as follows:-
“8. Section 132 of the Act of 1992 is hereby amended –

(a) in subsection (1), by the substitution of “at whichever of the rates specified in subsection (3) is appropriate” for “at whichever of such rates as may stand specified for the time being by an Act of the Oireachtas is appropriate”,
and

(b) by the insertion of the following subsections after subsection (2):

“(3) The duty of excise imposed by subsection (1) shall be charged, levied and paid –

(a) in case the vehicle the subject of the registration or declaration concerned is a category A vehicle which has an engine of a cylinder capacity exceeding 2,012 cubic centimetres, at the rate of an amount equal to 31.8 percent of the value of the vehicle or £100, whichever is the greater,

(b) in case it is any other category A vehicle, at the rate of an amount equal to 25.75 percent of the value of the vehicle or £100, whichever is the greater,

(c) in case it is a category B vehicle, at the rate of an amount equal to 13.3 percent of the value of the vehicle or £100, whichever is the greater,

(d) in case it is a category C vehicle, at the rate of £40,

(e) in case it is a category D vehicle, at the rate of nil percent of the value of the vehicle.”

“133(1) Where the rate of vehicle registration tax charged in relation to a category A vehicle or a category B vehicle is calculated by reference to the value of the vehicle, that value shall be taken to be the open market selling price of the vehicle at the time of the charging of the tax thereon.
(2)(a) For a new vehicle on sale in the State which is supplied by a manufacturer or sole wholesale distributor, such manufacturer or distributor shall declare to the Commissioners in the prescribed manner the price, inclusive of vehicle registration tax, which, in his opinion, a vehicle of that model and specification, including any enhancements or accessories fitted or attached thereto or supplied therewith by such manufacturer or distributor, might reasonably be expected to fetch on a first arm’s length sale thereof in the open market in the State by retail.

(b) A price standing declared for the time being to the Commissioners in accordance with this subsection in relation to a new vehicle shall be deemed to be the open market selling price of each new vehicle of that model and specification:

Provided that where, at the time of its registration, a new vehicle has fitted or attached to it enhancements or accessories which have not been taken into account in the price declared under this subsection, an amount equal to the declared price, increased by the addition thereto of such amount as, in the opinion of the Commissioners, is the retail value of such enhancements or accessories, shall be deemed to be the open market selling price of the vehicle.

(c) Notwithstanding the provisions of paragraph (b), where a price is declared for a vehicle in accordance with this subsection which, in the opinion of the Commissioners, is higher or lower than the open market selling price at which a vehicle of a similar type and character is being offered for sale in the State at the time of such declaration, the open market selling price may be determined by the Commissioners for the purposes of this section.
(3) In this section –

“new vehicle” means a vehicle which is less than 3 months old when reckoned from its first entry into service or which has travelled less than 3,000 kilometres;
“open market selling price” means the price, inclusive of vehicle registration tax, which, in the opinion of the Commissioners, a vehicle, including any enhancements or accessories fitted or attached thereto or sold therewith, might reasonably be expected to fetch on a first arm’s length sale thereof in the open market in the State by retail, subject to the provisions of subsection (2).”

The amendment of s. 133 by s. 9 of the Finance (No. 2) Act 1992, in respect of non converted and exempt motor vehicles is as follows:-
“9. Section 133 of the Act of 1992 is hereby amended –
(a) in subsection (2) –

(i) in paragraph (a), by the substitution of “the price, inclusive of all taxes and duties,” for “the price, inclusive of vehicle registration tax,”, (ii) in paragraph (b), by the deletion of the proviso,
(iii) by the insertion of the following paragraph after paragraph (c):

“(d) Where a manufacturer or sole wholesale distributor fails to make a declaration under paragraph (a) or to make it in the prescribed manner, the open market selling price of the vehicle concerned may be determined by the Commissioners for the purposes of this section.”,
and
(b) in subsection (3), by the substitution of the following definition for the definition of “open market selling price” –

“‘open market selling price’ means –
(a) in the case of a new vehicle referred to in subsection (2), the price as determined by that subsection,

(b) in the case of any other new vehicle, the price, inclusive of all taxes and duties, which, in the opinion of the Commissioners, would be determined under subsection (2) in relation to that vehicle if it were on sale in the State following supply by a manufacturer or sole wholesale distributor in the State,

(c) in the case of a vehicle other than a new vehicle, the price, inclusive of all taxes and duties, which, in the opinion of the Commissioners, the vehicle might reasonably be expected to fetch on a first arm’s length sale thereof in the State by retail and, in arriving at such price –

(i) there shall be included in the price, having regard to the model and specification of the vehicle concerned, the value of any enhancements or accessories which at the time of registration are not fitted or attached to the vehicle or sold therewith but which would normally be expected to be fitted or attached thereto or sold therewith unless it is shown to the satisfaction of the Commissioners that, at that time, such enhancements or accessories have not been removed from the vehicle or not sold therewith for the purposes of reducing its open market selling price, and
(ii) the value of those enhancements or accessories which would not be taken into account in determining the open market selling price of the vehicle under the provisions of subsection (2) of the vehicle where a new vehicle to which that subsection applied shall be excluded from the price.”

4. Correspondence with Revenue in 1994
4.1 Following a meeting of traders, including the plaintiff, with the Revenue in Dublin Castle in September 1993, a letter was sent to the plaintiff on the 18th January 1994, stating that after a review of the open market selling price of used cars imported directly from Japan, the values had been upwardly adjusted on Revenue’s computer system and the new values would come into effect on the 7th February 1994.
4.2 The plaintiff’s solicitor wrote to Revenue on the 2nd February 1994 in response stating that an arbitrary change such as the one proposed in the chargeable value of imported vehicles for the purposes of levying VRT would have near disastrous consequences for the financial viability of the plaintiffs business and that it was not open to Revenue to make arbitrary block adjustments of values of the kind proposed. The letter finished with a request for an undertaking from Revenue that it would abandon the proposal, and warning that the plaintiff had instructions to take whatever legal steps were necessary to safeguard its business. There was no response to that letter.

4.3 On the 2nd March 1994, the solicitors for the plaintiffs wrote again to the Revenue noting that the increases had taken effect. The letter notes surprise at the fact that “at a time when the Minister for Finance announces a decrease in VRT rates in the budget, against a background of very strong lobbying by the Society of the Irish Motor Industry (SIMI) against used car imports from Japan, that the [Revenue] should introduce an increase in the open market selling price of such vehicles thereby resulting in the increase in the amount of duty paid on such vehicles while the amount paid on new vehicles has presumably decreased”. The full details of the system by which the open market selling price of imported vehicles is arrived at was sought, as were details of the values determined for all types of imported vehicles since the introduction of VRT and finally full details and actual values before the increases took effect were sought. The plaintiff’s solicitor stated that while awaiting a response from Revenue, his client was forced to “pay the tax under protest”.

By letter dated the 11th March 1994, the plaintiff threatened proceedings if the information was not provided.

4.4 On the 21st March 1994, the Revenue responded, referring to the letters and regretting the delay in response. The letter quotes the definition of the open market selling price. It states that “the basis of the valuation treats all similar vehicles in the same way. In particular it is designed to ensure that an imported second hand vehicle of whatever origin will not be discriminated against”. An examination of each imported second hand vehicle was made and the value determined by reference to an established norm of values of similar vehicles sold in the State, whether imported or not. The letter denies that any arbitrary block adjustments were being made, stating the system is subject to continuous adjustments based on the prices achieved for all used car vehicles sold in the State and any adjustment is part of that process.

4.5 The plaintiff’s solicitor responded on the 25th March 1994, seeking certain information as to the “established norm of values” referred to by Revenue in its letter. The plaintiff would continue to pay the tax under protest. This letter and a reminder of the 11th April 1994, was not responded to.

4.6 The plaintiffs appealed a decision in mid 1994 in relation to two cars. This appeal was allowed, with the details communicated to the plaintiff in a letter dated the 29th June 1994. By letter dated the 19th July 1994, the plaintiff’s solicitor informed Revenue that his client would not be accepting the refund because his client was “not prepared to accept any valuation and VRT levied thereof over invoice value” and returned the cheque being monies due on foot of the successful appeal.

4.7 On the 31st August 1994, the plaintiff’s solicitor wrote to Revenue noting a lack of response to the letter of the 25th March 1994 and reiterating his client’s position.

4.8 On the 24th October 1994, Revenue responded in relation to the car which was the subject matter of the successful appeal in mid 1994, referred to above, stating that they had had difficulty in valuing the car to establish a precise open market selling price as it was rarely traded and there was divergence of opinions among the experts they had consulted. Because the transaction price quoted by the plaintiff was not markedly out of line with some of the lower valuations suggested to the Revenue and, in absence of evidence to the contrary, it informed the plaintiff that it was prepared to accept that the transaction price was bona fide and it proposed to use it as the open market selling price for the purposes of charging VRT in that case.

Having consulted with the Revenue solicitor, (Revenue) was satisfied that:

“(i) The manner in which we determine OMSPs is correct and in accordance with the law.
(ii) We are not obliged to have a formal appeals procedure in which the appellant and his/her solicitor could make oral submissions to a deciding officer.”

Revenue further stated that the submissions in the plaintiff’s letter of the 31st August 1994 were being dealt with by the Principal Officer in the Indirect Taxes Division at Dublin Castle.
5. Revenue Correspondence with SIMI
5.1 A letter dated the 8th August 1992, from the Revenue to the Chief Executive of the Society of the Irish Motor Industry (SIMI) referred to the new system which would be taking effect as of the 1st January 1993. It stated that

“In the case of second hand vehicles this price – again the open market value for the market as a whole and not a transaction value – will be determined by the Revenue Commissioners using a procedure which has already been described to you in some detail . . .”
5.2 A letter of the 11th September 1992, from the Chief Executive of SIMI to the Revenue, expressed disappointment that the concerns and proposals of SIMI on the introduction of VRT were not included in the procedures proposed. It sought transparency in the valuations placed on second hand and new cars. The letter went on to state that the proper valuation of second hand cars was of vital importance to its members’ survival as most imports came from countries where taxation levels were substantially lower. The letter contained other complaints and submissions, many of which amount to concerns that local industry would be adversely affected by imported second hand cars.
The Chief Executive also sent a letter to the then Minister for Finance, dated 15th September 1992, referring to a concession made by the Revenue in favour of SIMI. This was that:

“Data on values of used imports will be provided for SIMI periodically. The Society will be given the opportunity to discuss valuations of used vehicles and Revenue will investigate specific complaints about undervaluation.”
“. . . given the E.C. court requirements for fair and indeed transparently fair tax systems the declared OMSP values will be available to the public.”

6. Evidence of Niall O’Dowling
The principal evidence of fact was that of Mr. O’Dowling a director of the plaintiff which formed the basis for the expert evidence.
Niall O’Dowling and Fintan Riordan incorporated the plaintiff company in 1988, having both previously been involved in car repairs. Both were directors and equal shareholders. Both identified an opportunity to import used cars for the Irish motor market because of a chronic shortage of good quality second hand cars available for sale, despite the fact that such cars were in high demand. The plaintiff operated from the old Ford factory in Cork city which, being proximate to Cork port, was accessible for car imports. The plaintiff sold mainly to dealers and also to the public.

Finance was organised by way of a credit facility with Allied Irish Finance which was secured with personal guarantees from both directors, as well as a facility from Anglo Irish Bank for deferred VAT payments. Factory finance was organised with the Sanwa Bank in Japan, which was the principal source of imports. From an early stage the plaintiff formed a business relationship with Mr. Kazumasa Murakami, the president of Yuwa Shipping and first secretary of the Nagoya Used Car Exporters Association. Recommendation from reliable Japanese sources was key for foreigners doing business in Japan. Mr. Murakami introduced the directors of the plaintiff company and Mr. O’Dowling in particular to the car exporters in Japan through Nagoya Used Car Exporters Association.

The plaintiff, unlike the franchised Irish distributors, was not tied to buying specific models of cars. All imported cars were inspected before shipment from Japan both by the plaintiff’s staff and by the Japanese Auto Appraisal Institute. Inspections were carried out by way of mutual agreement between the Department of the Environment in Ireland and the Japanese authorities in a test equivalent to the subsequent Irish National Car Test (NCT).

The largest auction house in Japan sold approximately 80,000 units per week through a system of daily auctions. On purchasing stock the plaintiff had an extended credit arrangement from the Japanese agents of 45 to 120 days from the date of landing in Ireland.

By August 1992, the plaintiff had £208,000 on deposit and £900,000 in working capital.

The taxes payable by all car importers before 1993 were the European Common Custom Tariff (“CCT”), Motor Vehicle Excise Duty (“MVED”) and Value Added Tax (“VAT”). No taxes or duties had to be paid until cars were removed from the bond.

Excise duty (MVED) was imposed on motor vehicles up to 1992 at the point of importation into the State and was calculated on the basis of the recommended retail price of the car as indicated by the manufacturer. The duty for used cars was calculated by depreciating the recommended retail price in accordance with a single statutory depreciation schedule.

The depreciation table or sliding scale had been published for imported used cars from January 1985 to December 1992. This scale enabled the plaintiff and any other importer to calculate tax liability for excise duty. There was one scale, which did not change. That significant aspect of the MVED system was crucial to their business as it allowed an importer to know, both prior and post purchase, what the eventual tax liability would be.

The MVED system was restrictive and he imported older cars generally.

To calculate the MVED the plaintiff had used the single age depreciation scale which did not reflect the true depreciation in the earlier years of the car. In addition, air conditioning and catalytic converters were added to the recommended retail selling price which added an additional £2000 per car. He instanced a new Nissan Micra with the recommended retail selling price of £7,000 having an addition of £2,000 for such extras. The plaintiff considered such extras as a cost rather than a value as the purchaser would not pay more just because the car was more environmental. However, under the MVED system he knew his tax liability and was able to calculate backwards and had a ceiling of what he should pay for each vehicle when they came up at auction.

The MVED system was replaced from the 1st January 1993, by the Vehicle Registration Tax (“VRT”) in the context of the introduction of the single European Market.

The plaintiff hired the late Colm O’Herlihy, a former custom and excise Principal Officer in the motor vehicle duty area, to advise them on the new system in July 1992. Mr. O’Herlihy had been a director of Irish Vehicle Importers, the first Irish company to import used Japanese cars, and acted as a consultant to the main Japanese car importers including the plaintiff.

Mr. O’Dowling said that UCII were selling 700 to 800 units per annum before the introduction of VRT in 1993.

In 1992, there was very little information on the proposed VRT and it was very difficult to get any reasonable sense of how the system was going to operate. They had severe difficulty in actually defining how the open market selling price would be calculated and what it would be based on. He said they could get no clear definition of what the open market selling price would be or what the basis of the calculation was.

Mr. O’Dowling said that in the build up to the introduction of VRT they felt that there was going to be huge opportunities for the car market and they were willing to expand into newer type vehicles. In order to be prepared for the huge increase and influx of relatively new cars, the plaintiff acquired a seven acre site in Ford’s which had the capacity to hold up to 2,100 cars in bond. They had built up a network of 82 dealers throughout the country. They were making preparations at that stage for a huge influx in 1993. They had arranged finance and had already negotiated a contract with the Nazak Line in Japan, which had the carrying capacity for between 5000 and 8000 units, and they were looking forward to a fair taxation system and an opportunity for huge business growth.

Unlike under MVED, where they could calculate and have a higher or upper level of what they would pay for any one type of vehicle, with the new system they could not do so. He said they were effectively purchasing blind, because they did not know the eventual tax liability, they had to base the liability on the estimates or the payments of registration.

After the purchase of the vehicles, he was in a position to get an estimate for VRT in respect of the vehicle from the details of the logbook which he would fax to the Central Vehicle Office in Rosslare.

The Revenue official would take the logbook and the VRT4 form and look up the computer to register the vehicle. He said the only inspection the Revenue official could carry out would be to check the chassis number, the mileage and condition of the vehicle. In the early stages Mr. O’Herlihy had filled out the VRT4 forms which Mr. O’Dowling described as containing a unique code in relation to the car. Tax had to be paid to enable the registration number to be given to the purchaser. He agreed that the Revenue could have worked out what the selling price of the vehicle was in relation to the VAT payable.

From June 1995, the statistical codes were made available to the plaintiff.

Mr. O’Dowling said that the Revenue did not seem to have a clear and precise system in place in 1993. It seemed as if they were trying to build a system. There was very little information available. The plaintiff did not even have the basic information to fill out a simple form with the vehicle registration and depended on information that they had received from a third party, Mr. O’Herlihy. In January, 1993, they noticed an increase of upwards of 23% on their best selling models. It was only in late 1993, nearly a year later that they got some sort of understanding as to the system that was in place, how it operated and the effect it had on their business.

At a meeting between the car dealers and Revenue on 22nd September 1993, Dr. Lennox informed the dealers present that should they continue to be unhappy about the system of taxation, then the Revenue Commissioners would be quite prepared to carry out an audit on their company records. Mr. O’Dowling said that Dr. Lennox had asked if any of them had ever experienced a Revenue audit, adding that the Revenue Commissioners would “live in their offices”. Mr. O’Dowling perceived the reference by the Revenue to an audit as being a threat. The Revenue Commissioners had come to the plaintiff’s office and had taken the invoice prices of certain cars that were sold.

At the meeting in September 1993, he first learned of the depreciation scales under the VRT system. Paddy Dunne of the Revenue had told him that the Revenue were using a sliding scale. They were not allowed to discuss the sliding scale or what it was attached to. There was very little information available. He made complaints to John Kerrigan in the Central Vehicle office in Sullivan’s Quay, Cork and made complaints to Liam O’Mahony who was their control officer in Parnell Place and they also made complaints to Rosslare.

It was correct that in January 1994, the Revenue wrote a letter to the plaintiff saying that the open market selling price of used cars imported directly from Japan had been adjusted on the computer system. That was a reference back to the meeting of September 1993, but that the Revenue had agreed to postpone that adjustment.

There was no clear explanation, nor indeed any explanation as to how in fact the open market selling price on used imported vehicles was arrived at. He said it was untrue that the plaintiff knew precisely or with sufficient detail how the system operated to allow them to conduct their business. He said he still did not understand how it was calculated as the principal key elements were kept secret i.e., the allocation of the cars to each depreciation table.

He had since been provided, as a result of a Freedom of Information application, with 25 tables and agreed that there were another 1,043 of which he became aware of in the previous few weeks before the hearing.

The two factors for working out VRT was the declared open market selling price and the application of appropriate depreciation table. He had never been supplied with the open market selling price (of the equivalent new vehicle) and he recalled that under the old MVED system they were supplied with those details as SIMI published recommended retail prices.

He was not in a position to apply depreciation tables to a particular vehicle. If the plaintiff wanted to bring in a new or a different model he would have to bring in a test model to find out what VRT was. That did not prove to be reliable. If the estimate was favourable, then they increased numbers and imported more of that type of unit.

Mr. O’Dowling was referred to conflicting estimates that he received from the Revenue Commissioners in respect of a large number of vehicles between the 31st January, 1994, and the 22nd February, 1994. The first page of the document listed the make, model, chassis number and statistical code of a range of vehicles being 80 units which were due on the 2nd February, 1994. He had obtained a copy of the VRT estimates from the Revenue’s office at Sullivan’s Quay in Cork, on the 31st January 1994, and got a separate set of estimates for the same vehicles on the 22nd February, 1994. There were increases in the amount of tax that they had to pay.

There was a change in the VRT rate which occurred on the 27th January, 1994, and agreed that those changes had nothing to do with the VRT which had dropped from 25.7% to 23.2%. He was so informed on the 18th January 1994 that the value of cars had been adjusted in the Revenue computer system.

The length of time it would take to obtain an estimate of VRT depended on whether the Revenue had statistical codes for the units. It would vary from a week to weeks. When he was in Japan, at an auction or at wholesale dealer’s premises, it was impossible to get a quick estimate. The only way to get an estimate was after the purchase of the vehicle. That meant they were purchasing blind as they did not know their eventual tax liability which was a key component to their overall price. When he sold a vehicle it had to be a fixed price and not a price plus VRT.

He could build up a database of statistical codes, but could not build up a database of estimates because they were continually changing on a monthly basis. One could not appeal an estimate. An appeal would only be considered once the tax had been paid and therefore only a retail sale could be appealed.

It was correct to say that the higher the VRT the bigger the impact on their margin. In many cases UCII sold cars to the trade at £6000, but the VRT would then be based on £8000 by the Revenue Commissioners.

There were no published rules or procedures in respect of appeals. He had appealed a number of valuations in early years, but the system, his written statement had said, was unworkable and unfair because of the lack of published guidelines.

The appeals first of all went to the Vehicle Registration Office in Cork who passed it on to Rosslare. An official in Rosslare would ring three dealers in Dublin to see what they would expect the particular car to fetch. No inspection of a vehicle took place.

He was referred to an appeal on the 13th May, 1994. Mr. O’Dowling was dissatisfied with the appeal process and the outcome of the appeal. His solicitor wrote to the Revenue on the same date complaining that the process was a “sham”. He agreed that the VRT was reduced in both instances, but as far as he was concerned it was not reduced sufficiently in respect of a Toyota Aristo.

On the 24th October, 1994, the Revenue wrote as follows:-

“Subsequent correspondence regarding the above on behalf of your client. It has proved to be somewhat difficult to establish a precise OMSP for this model as it is rarely traded in and, allied to this, there was some divergence of opinion amongst those experts whom we consulted. However, as the transaction price quoted by you is not markedly out of line with some of the lower valuations suggested to us and in the absence of any evidence to the contrary, we are prepared to accept that the transaction price is bona fide and propose to use as the opening market selling price for the purpose of charging VRT in this particular case.”
Mr. O’Dowling agreed that there was never any instance where it was suggested that the selling price to a third party was other than bona fide. The Revenue did not accept the invoice price as a basis for calculating VRT.
He said the appeal process was too time consuming and that a commercial enterprise could not constantly be appealing valuations. UCII never got a favourable answer and their invoices were never accepted. He was asked whether he could put in a meaningful appeal and replied “No”. In the early days the Revenue Commissioners were “judge, jury and executioner”, and that their decision was final.

On the 21st October, 1993, the plaintiff complained (1993/4521) to the (European) Commission. On the 14th February, 2012, the Commission wrote:-

“Acknowledge and receipt of a letter of request from the 9th February, 2012, when you applied to receive a copy of the reasoned opinion of the Commission in respect of Irish VAT proceedings issued on the 26th January, 2012.
At this delicate stage of the infringement procedure, publicity of the document you have requested would be premature and would have the effect of jeopardising the friendly settlement of the dispute.”

The letter continued:-

“Please note that there is no overriding public interest disclosure in the document which would outweigh the need to protect the purpose of inspections and investigations. You are entitled to have a revision of this decision.”

Shortly beforehand on the 27th January, 2012, Ireland’s permanent representative wrote to the Commission, Duties Taxation and Custom Union referred to the present proceedings. The letter stated:-
“I refer to the above infringement concerning issues relating to Ireland’s VRT. Ireland’s Revenue Commissioners, and the Department of Finance and the Attorney General are currently involved in a long running legal case brought by Used Car Importers of Ireland in relation to the introduction of VRT and its method of application. This case started in 1995 and has now been listed for the High Court starting on the 6th March.

In a witness statement provided by an officer of the Revenue Commissioners mention was made of two documents in relation to the valuation aspects of the above infringement, namely (i) the original letter of formal a notice of 14th May, 2009 and (ii) additional letter of formal notice of the 20th May, 2011. UCII’s legal team have now requested access to those documents. Ireland understands permission should be sought from the Commission before releasing these. I would be grateful therefore if you could grant the appropriate permission for their release to UCII’s legal advisors.”

A response was received on the 3rd February, 2011, in relation to the request. The reply stated:-

“The requested documents indeed form part of the file on infringement procedure which is still ongoing. As a general rule the Commission does not disclose to the public documents relating to the ongoing infringement procedures. The reason for this is to safeguard a climate mutual trust between the Commission and the Member State concerned and to preserve the possibilities for an amicable settlement in this matter. This approach has been consistently confirmed by the Court of Justice. Therefore, at the present stage access to the requested document would be refused if the request for disclosure was directly filed with the Commission. In line with the consistent law of the European Courts, refusal would be motivated by the exception laid down in Article 4.2 Third Indent of the 2001 Regulation according to which the institutions have refused access to a document where disclosure would undermine the protection of the purpose of inspections, investigations unless there was an overriding public interest disclosure.”

Mr. O’Dowling said that he had not been able to identify or discover the terms of the Commission opinion.

He said that since 2010 it was correct that the Revenue could appoint approved persons to carry out inspections and this is now undertaken by the National Car Testing agency.

He had witnessed such an inspection with an imported car from England, and observed the process. He asked the inspector whether he valued the car. The inspector said he did not – the valuation came from Rosslare and had nothing to do with the inspections. He did not ask for the invoice price of the vehicle. He was given the price but he did not use as a basis for taxation or VRT assessment.

Mr. O’Dowling said that it was correct to say that under the old excise duty scheme the new cars seemed to more heavily taxed than the older cars. The newer cars were available in Japan and, given their own estimations, they would have been very competitive in the Irish market. Their new premises had facility for 2100 cars and they had increased credit from the Sanwa Bank which would give them a total amount of funding in the region of £4 million. They were ready in 1992 to “flick the switch” and had everything in place.

When VRT increased there was continual interference in the market through introductions of scrappage schemes, reductions of the rate of tax with increases in OMSP which led to higher payments of VRT. He referred to an internal memo from Mr. Butler on the 21st February, 1994, to the VRO/VRT officials which stated:-

“As of Thursday, the 24th February, 1994, revised depreciation tables will be released ‘live’ in the VRT system.
Also, in conjunction with these revised tables, over the next number of weeks the OMSP’s of certain models of vehicles will be revised to more accurately reflect market prices. One of the effects of this revision will be to increase the open market selling price of smaller type motor vehicles (1000cc or less).

Officials should therefore when giving VRT quotations to the public, emphasise particularly strongly over the next few weeks that the quotations given are likely change without any further notice.”

No notification was given to them of the proposed level or scope of increases, other than the letter in February which affected the viability of purchasing vehicles in Japan.
They continually asked for details in relation to how the system operated but that, even to this day, they still did not know which vehicles applied to each depreciation table. He said that they had to guesstimate and that nearly all the time they got it wrong. The tax was continuously on an upward trend, which exposed their company to severe financial risk. It turned their assets into liabilities. They were left with cars on their hands which they could not sell.

He said he ceased to be a shareholder and director in late summer or autumn of 1995 and the break up was amicable.

He was asked why he ceased to be a director and shareholder and he said:-

“It came about due to the introduction of Vehicle Registration Tax, the financial strain that put on our business and the pressure that it put on our business. It was totally leaning towards the new domestic car trade and it was totally discriminatory as against our company.”
He said there was no other reason. He had, and still has, other business interests.
He was giving evidence on behalf of the plaintiff with the authority of Mr. Riordan with whom he met every week or every couple of weeks. They worked together in compiling the information (for these proceedings).

Had VRT been applied to either the landed price of the vehicles or the retail selling price they would have been able to quantify the likely level of tax they would have to pay in relation to newer cars. He agreed that they effectively imported cars of approximately five years old, but would have purchased younger vehicles if VRT had been applied differently. They were only touching the tip of the iceberg in the five year old cars and that they could have achieved additional sales through all of the years given that they had 82 dealers and if an additional ten units per month were sold by each of 80 dealers this would generate an additional 9,600 units per annum.

He was referred to the suggestion by the Revenue that he knew how the system worked and said he did not know how vehicles were allocated to the depreciation codes and still did not know that to the present day.

The 2002 VRT 1 document, under the heading “How is the Tax Calculated” says:-

“In the case of cars and small vans, the tax is a percentage of the expected retail price, including all taxes in the State. The price is known as the Open Market Selling Price or OMSP. The VRO will calculate this tax for you.”
He agreed that from 1999 to 2001 a CD had been issued by the Revenue Commissioners enabling the calculation of estimated values of VRT. Subsequently an online VRT calculator came into existence in December 2004. Prior to that there was no depreciation code on any document given by the Revenue Commissioners to the public or made available publicly. That affected the operation of a commercial business such as the plaintiffs.
They continually had problems. They could not estimate or calculate the tax. They were coming up against stone walls and they could not operate their business.

He was referred to a document prepared and dated 12th March 2012, entitled “UCII Sales and VRT Statistics for Passenger Vehicles”. He, DKM Consultants, the plaintiffs expert and Mr. Donal O’Boyle had extracted the figures from all the sales of vehicles on which VRT had been paid bu the plaintiff to the Revenue from 1993 to 2009, detailing the Euro cost equivalent of the pound cost in the earlier years and the landed cost plus the custom tariff and VAT together with CIF.

The document total the costs, VRT, sales price and margins to deduce an implied additional or excess VRT of €2,125,313 paid from 1993 to 2009.

Mr. O’Dowling said that DKM and Mr O’Boyle would seal with the analysis of those figures and the consequential effects on demand resulting in a loss of opportunity.

The loss of profit after tax was some €85 million,, if investment income of some €35 million making a total of approximately €120 million (See tabele 3.8 p. 230 below).

In cross examination by counsel for the defendants, Mr. O’Dowling said he was not a director of, or shareholder in, UCII at present.

He was asked to look in the book of pleadings at his affidavit of the 21st July, 2011, wherein it was stated at para. 1, that he was a director of the plaintiff company. He said that proceedings were originally initiated back in 1995 when he was a director of UCII.

It was put to him that in every other affidavit sworn in the proceedings, he carefully avoided saying that he was a director of the company. Mr. O’Dowling said that he had full authorisation from his partner, Mr. Fintan Riordan, to act on their behalf. He said he was not a director of the company at the time of swearing those subsequent affidavits.

Prior to establishing UCII he had fifteen years experience in the car body repair business. He was involved in valuations for insurance companies, loss adjusters and assessors.

He had visited United Kingdom before he went to Japan just prior to August 1989. There were very few vehicles available in the UK. They were predominantly Ford and Vauxhall and, at that time, VAT was charged on their importation. He said they imported about 40 units from Northern Ireland in 1993/1994. Apart from those units from Northern Ireland throughout the period they were talking about, all the other vehicles were imported from Japan. The Japanese cars were more viable because of the VAT situation at that time.

He agreed that it was correct to say that all the estimates and projections of loss were based on imports from Japan. All the instructions given to the experts and the material before the court in the case concerned, direct imports from Japan to Ireland.

From 1989 to 2000, he was in Japan two weeks out of every five, but not in the later stages. At first he dealt with wholesalers and agents. About six months later, he started attending auctions.

From 1990 onwards, the majority of vehicles were purchased at auctions. He was the first foreigner to be allowed in. The variety was bigger at auctions on different days with different volumes. It was a very sophisticated system which was computerised and it was correct to say that one had ten seconds to make up one’s mind. He had inspected the vehicles, which were on the list prior to the auction, and worked back his sums as to the purchase ceiling. He agreed that he had time to prepare and time to check to see the cars he was interested in, but he did not necessarily purchase. Some vehicles might go over his budget but he was paying on average 100,000 to 250,000 Yen at time or IR£700 pounds. He was looking at manual vehicles with low cc and middle of the range cars as well. He agreed that he had stated in his written statement that the purchase price of the cars and the agent’s fees were the only real currency risk as both were paid in Japanese yen but he said the purchase price and the car exporters were low and formed only a small fraction of the final retail price.

Mr. O’Dowling agreed that the gross margin on the sale was roughly £3,000 before VAT and VRT for a car which had been bought for £700 and the cost of the vehicle and transport was less than 25% of the retail price.

It was put to him that the margins were so great on the vehicles that whatever way he looked at it, there was significant room for manoeuvre regarding increases or decreases in VRT. Mr. O’Dowling said that under the VRT system, they did not have scope because in some instances he said “we have increases of between 50% to 80%”.

Mr. O’Dowling agreed that if the car was sold for £800 rather than £700 in Japan, that that would have had a knock on effect but that there was still room for manoeuvre.

It was put to him that he had consistently looked for estimates from 1993 up until late September 1995 when his dealings with UCII came to an end. He was referred to the affidavit of discovery of John Leonard and agreed that he regularly sought estimates in respect of vehicles that he had already purchased in Japan and were in transit. He was referred to the Nissan March cars listed in the detailed schedule which were assessed for similar amounts of VRT of £1,033. He had a reasonable idea as to what the VRT would be in relation to each of them, but said that the estimates were not binding, they were subject to change. It was put to him that the Revenue’s evidence would be that they would stay open for 14 days. He was asked whether the Revenue would ever have withdrawn the estimates before 14 days and he said they had done so when there was an increase in the VAT or in the VRT rates.

It was put to him that there was no evidence to show that there was any withdrawal within 14 days. He replied that in his experience the estimate would not stand and he referred to the increases in 1994 where the Vehicle Registration Office in Sullivan’s Quay in Cork would not accept the estimates.

He agreed that the rates of VRT were set by the Oireachtas.

It was put to him that in relation to the cars he actually did purchase it was fair to say that he had a fairly good knowledge of how the market operated. He had very wide margin and took account of possible variations of VRT but he said he still could not calculate the tax which was always a financial risk for any business. He said he could not guess what the VRT would be on other type of vehicles and that is why he stuck to the five year old vehicles.

The vehicle stayed in bond until such time as he identified a purchaser and that that would be more than 45 days – it could be a period of up to 90 days and even longer.

He was asked why he did not import three year old cars. He said that they would have imported some of them at a later stage but said that even if they had imported three year old vehicles, they would be more expensive and the VRT would be greater. He said that they did import different models to test the water. The earlier models, the Nissan Micras, they were more or less carried over from the old system into the new system. He did not import more three year old vehicles because he could not calculate the VRT assessment. He claimed that was discriminatory.

Mr. O’Dowling said there was more financial risk in the import of newer cars because VRT was only an estimate and he could not run a business on an estimate. He could never be guaranteed on his eventual tax liability.

He said that in 1989 there were three companies involved in importing used cars from Japan: Irish Vehicle Importers, UCII and High Grade. By 1992/1993 there were roughly 15 to 20 companies and he said that he supposed they felt that the Japanese (cars) was good business. They were competitors but the plaintiff was importing larger numbers. It was put to him that none of them ever sued the Revenue and he replied that nobody would be willing to take on the 20 years to do it.

He was referred to a chart in Kieran Coyle’s witness statement which was the Revenue’s record of registration figures for the year 1984 to 2010. In 1989 over 10,000 used cars were registered as imports into Ireland, 22,000 in 1990, 21,000 in 1992 and 17,637 in 1992, just before the introduction of VRT.

In 1993, there was an increase to almost 34,000; over 40,000 in 1994, and 48,000 in 1996 which was the peak. In the year 2000 there was reduction and a significant increase in the number of new vehicles registered.

The percentage of the total number of used cars was 35% in the year VRT was introduced and 34% in the two years afterwards. In 2000 it was 10% and decreasing. It was put to him that in 1990, 22,000 vehicles were imported and that UCII imported 858. In 1991 out of over 21,000, UCII imported 818. He agreed that in the years after the introduction of VRT, the number of cars imported increased and he agreed that other people in the business who were importing cars were able to make a profit, enjoying the highest share of the market in the years 1993 to 1995. He said that there had been an increase in English cars at that time as will with the introduction of the internal market.

He was referred to Dr. Bacon’s statement for used Japanese market share from 1996 to 2010. In 1996, over 48,000 used vehicles were imported, being 35% of the Irish market, and the Japanese share was 23% increasing in the following two years to 36% and 53% and in 1999 to 52% and 46% in 2000. Mr. O’Dowling agreed the year 2000 had a major impact on the car industry in Ireland as people wanted do buy new rather than used vehicles with the 2000 registration.

Mr. O’Dowling said that the cars could be re-exported out of Ireland without being registered. It was put to him that they were figures taken from the Revenue Commissioners. He said that that was not say that they were registered in Ireland.

He said that Dr. Bacon was wrong in reference to the data on imports of used Japanese cars.

It was put to him that in 1996, UCII imported 396 cars in 1997, 597 cars, in 1998, 614 cars in 1999, 353 cars and in 2000, 228 cars as compared to a total import figure from Japan of 11,423, 16,311, 23,904, 19,506 and 11,683 in the same years. He was asked whether he accepted that UCII was a very small player on the market for importing used Japanese cars into Ireland. He replied that they were a small player as a result of the introduction of VRT. He was asked how his competitors were not similarly injured and he answered that it was because they could come in and take it at a different direction. The problem with UCII was that they:

“Were affected with severe restrictions back in 1994 and 1995 and 1996 with rate reductions, rate increases, introduction of scrappage schemes, all of these had a severe effect on VRT and the amount of tax that we, as a company, had to pay. The increases were so severe it stunted the growth, it left us with stock that we could not sell which took years to sell. We could not appeal estimates, we had to sell the vehicles. As a result of the increases, we had to retail most of the vehicles”.
He was asked whether there was not an opportunity at that stage for UCII to continue in the market and he responded by asking how he was going to finance it. He agreed that at that time he was not a director or shareholder and was not in a position to give evidence as to what UCII’s position was in those years.
The possibility of the company coming back into the market was put to him. He replied by saying that it was carrying residual stock. If the plaintiff was starting anew and had not been affected by VRT increases, it could have done so.

A letter of the 21st October, 1993, sent to Mr. Limo Facco, Director General Secretariat of the EC, by UCII made certain complaints to the Commission some ten months after the introduction of VRT. The letter referred to a number of complaints and to correspondence and meetings with Commission officials.

The plaintiff’s letter stated: “we have been trading successfully and our success has in itself meant our expansion”. Mr. O’Dowling said that that was the overall story to date.

The letter continued:-

“The used Japanese car industry in Ireland has generated revenue for the Irish Government in the region of £50 million. Our company’s contribution of that same amount is a sizeable proportion of that figure that is approximately £10 million.”
He was asked whether he would agree that that figure was probably slightly on the generous side. Mr. O’Dowling said that they were probably looking at the overall market with everyone else included.
The letter continued:-

“In January this year our Government introduced a Vehicle Registration Tax, replacing the customs and excise duty, which was abolished throughout the EEC with the removal of borders/frontier barriers. Whilst we fully understand and appreciate that an alternative form of taxation had to found, we are now facing a disastrous situation if our Government are to proceed with their new legislation to increase the Vehicle Registration Tax.”
Mr. O’Dowling agreed that the legislation was already in place at that stage.
The letter referred to the previous rate of excise duty of 20% compared to the VRT rate of 25.75%, which required UCII to restructure their pricing and their buying. Reference was made to the meeting of September 1993 where the Revenue informed UCII that they were receiving directives from the Department of Finance increasing the OMSP by a further 20% effective from the 1st November, 1993 which was to be postponed until the 1st December. Mr. O’Dowling said that there was also an increase in January 1994 with the change in the rate of tax.

The letter also referred to a number of examples and said that UCII could not see how it could be viable to import any cars, new or used. It said that it was necessary for UCII to project market trends and demands and thereby the buying programme had to reflect the additional time span for the actual shipping from Japan. They found themselves committed to 600 units over the next four to five months.

It was put to Mr. O’Dowling that in 1993 UCII imported 608 cars and 613 the following year but that the letter appeared to say that 600 units were being shipped in a half year period. Mr. O’Dowling said that they were carrying stock from the old MVED system, they would have had stock as dealers, they would have stock purchased in Japan and they would have stock in transit at that stage.

Counsel said that his understanding from Mr. O’Dowling’s evidence was that VRT was paid only when a buyer was identified and therefore there would not be any stock with dealers. Mr. O’Dowling said that there was stock in the compound and in transit and that they had already committed to purchasing cars.

When pressed, Mr. O’Dowling agreed that there was no complaint made about secrecy or lack of transparency at that stage.

The letter drew attention to examples of VRT charges. Mr. O’Dowling said that these were based on VRT that they had paid at that time. He said that in 1993, there was an overlapping system from the old MVED system and that the real system as far as he was concerned kicked in after the increases in February 1994. It was put to him that that his own letter, and the plaintiffs claims, that VRT brought in on the 1st January, 1993, in compliance with the creation of the internal market was discriminating.

Mr. O’Dowling agreed that he knew what VRT was on a particular model, but would not have known for a complete range of cars. He agreed that at that stage the secrecy and transparency did not show itself as they were dealing with the Revenue Commissioners through Mr. O’Herlihy. He said that it was correct to say that Mr. O’Herlihy may have been in complete knowledge of what was going on. Mr. O’Dowling said that Mr. O’Herlihy was their agent, but, as he was deceased, would not be giving evidence in the case.

Mr. O’Dowling was asked to consider the reply from the European Commission of the 6th December, 1993, following the plaintiff’s letter to the Secretary General. That letter stated:-

“It may be that you have already taken professional advice, but for clarity perhaps I should explain that there is no harmonisation of law on car taxes and therefore, Member States are, in principal, free to tax as they chose.
There is, however, one major proviso to this: there must be no discrimination against the products of other Member States and no tax advantage given to the national product.

Thus, second hand cars which you “import” from the other Member States (including Japanese cars which have been produced or entered free circulation in other Member States) must not be taxed more heavily than the equivalent cars in Ireland. For this purpose it is, of course, necessary to value the second hand car already in the Irish market and calculate the residual tax element contained in its price.”

Mr. O’Dowling was asked what he understood from that sentence.
Mr. O’Dowling said that that obviously referred to Japanese cars from Member States which had been made or imported into the Member States. He agreed that you could look at it as there being no issue about Japanese cars imported directly into Ireland.

Mr. O’Dowling was asked to consider the memorandum from Dr. Lennox dated the 14th December, 1993, one week after the letter from the European Commission. The memorandum referred to a letter received the previous day, the 13th December and stated:-
“At the outset of the VRT project this office was given to understand that VRT was chargeable on the OMSP of a vehicle. It was my clear understanding that the Revenue Secretariat had obtained this information from Brussels. The attached letter from Mr. Venturi (Brussels) to Mr. O’Dowling would appear to be suggesting somewhat something quite different.

In my dealings with SIJI and Used Car Importers of Ireland Limited they accept fully that customs and excise are implementing the law correctly. However, they hold the view that the law discriminates against their operations.

Perhaps it is time that a definitive clarification of the law could be obtained.”

Mr. O’Dowling did not agree that it was a fair statement of Dr. Lennox in saying that the Revenue was implementing the law correctly. He said that at the meeting in September 1993, the dealers had expressed their views regarding their dissatisfaction of the VRT system. He felt it was discriminatory of the Revenue increasing the OMSP of Japanese vehicles because they felt they had been undervalued in the past. He said that the dealers had requested the meeting because they had severe problems with the way VRT was implemented. They had difficulties with secrecy, transparency, paperwork and it was total chaos when the system was introduced.
He said it was correct to say that the implementation of the law that was not the focus of his complaints to the Commission or to the State at that time, but rather the complaints were of discrimination.

He was referred to a letter from the Commission to the Irish Government on the 28th September, 1993, from Mr. Venturi which said:-

“The Commission have received a number of requests for information concerning the new arrangement for collecting and calculating the Irish Vehicle Registration Tax. It would seem it is difficult to obtain such information directly from the Irish tax authorities.
Mr. McCartan MEP has also asked a number of parliamentary questions relating to this tax and the Commission would like to be able to respond fully and accurately to any further questions put to it by members of the European Parliament or by private individuals.

I would therefore ask you to request the competent authorities in your country to transmit to me the legislation currently governing this tax.”

A draft reply was referred to for onward transmission to Mr. Venturi that all imported used vehicles were examined by a customs officer in order to determine the OMSP, taking into account the exact model specification and comparison with a similar vehicle for sale in this State. On that basis the value and exact amount of tax payable is determined and detailed instructions have been given to assist staff to determine valuations. If the taxpayer was dissatisfied a re-examination could be requested. While the number of used car vehicles being imported into Ireland rose sharply during 1993, less than 1% was subject to appeals about the amount the VRT payable. Mr. O’Dowling said that the criteria for an appeal was that it had to be a retail sale and an estimate could not be appealed.
Mr. Venturi replied in February 1994, saying that, as indicated in his letter of the 16th December, 1993, that some of the complaints centred on the question of how second hand cars produced in other Member States were valued for the purposes of VRT and how that valuation compared to a residual VAT or earlier tax in existing Irish second hand cars in terms of recommended or current sale prices. He asked for extracts of relevant national legislation in relation to how OMSP was calculated on second hand cars from other Member States.

Mr O’Dowling said that the plaintiff also had this problem when they tried to import cars from other Member States. It was put to Mr. O’Dowling that no complaint was submitted by UCII with regard to cars from Member States. Rather, their claim for damages was based on direct imports from Japan as was stated in cross examination.

Mr. O’Dowling said that he also made those claims on the basis that they were bringing cars in from Member States and did find problems.

He was referred to Mr. Reid’s memo of the 23rd May, 1994, which referred to a letter from the Commission dealing with the calculation of OMSP. He agreed that it was an established published list of guide prices for dealers and importers on which the open market selling price was based. Mr. O’Dowling said that that was not published to this day.

He was referred to what was received from Mr. Venturi in May 1994, after the Commission came to Ireland, in which Mr. Venturi said that he was satisfied with the method used to calculate the OMSP.

Mr. O’Dowling said that was not exactly true that the Commission was satisfied. He had discussions with Mr. Malcolm Bevan, who informed him that when he went back to Brussels, he handed the Irish file to the internal investigation branch as he was not happy with system. Mr. Bevan said that “the way the Irish are calculating taxes is illegal”. He said that under the EC regulations, “they are in breach of Article 12” and that “they should base it on the Belgian system, on an invoice value but then they would be in breach of Article 95. They are caught between two stools”. Mr. O’Dowling said that Mr. Bevan had said that the use of depreciation scales was illegal. He said he had got that in writing. He had a copy of his telephone conversation.

He was asked whether the Commission ever took Ireland to court in relation to any of those matters. He replied that he went to visit Brussels in 1995 with UCII’s solicitor, Mr. Whelan, and he spoke to Mr. Venturi and Mr. Bevan who told him that the matter should be dealt with in the national courts. He said that Mr. Bevan was not giving evidence in the case.

Mr. O’Dowling agreed that the letter to him from Mr. Venturi of the 3rd May, 1994, was discovered and said:-

“Following your telephone conversation today with Mr. Bevan, I am writing to confirm that as you already apparently knew, we are indeed visiting Dublin to meet with the national authorities early next month.”
Mr. O’Dowling said that he had sent copies of the depreciation scales to the European Commission and that they had decided to come to Ireland to speak to the Irish authorities regarding the VRT system. He agreed that they were going to review the mechanism and conformity with the EC rules. He said that they were not happy with the Irish System and agreed that it was correct to say that no action was taken against Ireland up until 1994.
He agreed that the references made were to vehicles imported from another EC Member State.

The statement given by Ms. Scriviner on the 11th November, 1994, appearing in the Official Journal of the European Communities, was referred to in the letter to Mr. O’Dowling:-

“According to the information currently at the Commissioners’ disposal concerning Irish registration tax on motor vehicles, it would appear that the imposition of this tax on new vehicles cannot be deemed to infringe Article 95 of the EC Treaty.”
The letter continued:-
“As regards used vehicles, community law does not require the Member States to apply the real value of the vehicle as the taxable amount for this type of tax is not harmonised to European level.”
Mr. O’Dowling said that that was correct, that it was the Commissioner’s view.
The letter of Mrs. Scriviner continued:-

“The use of scales for assessing the value of vehicles will always be somewhat arbitrary, but this is often simple method of determining the taxable amount given to the wide variety of taxable goods. An assessment of this nature is based on an average value for vehicles. Only by examining taxable values in relation to selling price on a model by model, indeed vehicle by vehicle basis, can it be determined whether, overall, the assessment criteria are in line with this average rule.”
Mr. O’Dowling agreed that a sliding scale was being used.
He believed that it was correct that if there was discrimination in relation to the importing of vehicles from another Member State it would be in breach of the rules.

Mr. O’Dowling referred to the depreciation tables he had received from the Revenue Commissioners which he got on request from the Revenue Office in Sullivan’s Quay, Cork and which he sent on to the Commission. He agreed that the Commission did not take any action against Ireland as a consequence of that.

He was referred to a letter of the 24th January, 2000, from the European Commission acknowledging receipt of a complaint made by Mr. O’Dowling following extensive correspondence between his solicitors and the Commission regarding “this infringement notice”. He agreed that the response was from Niall O’Dowling’s Sports Car Centre Limited, but added that he would have been acting on behalf of UCII as well. He agreed that the Commission had addressed the correspondence to Sports Car Centre and that the correspondence came to an end in 1994 and began again in November 1999, with Niall O’Dowling on behalf of Used Car Importers and Sports Cars Centre Limited.

Counsel for the defendants pointed out that papers from Sports Car Centre Limited would have been undiscoverable in the present proceedings.

Mr. O’Dowling said that his solicitors did not send any complaint to the Commission on his behalf. It was put to him that his witness statement referred to a number of complaints pursued down through the years by correspondence and meetings with Commission officials and in May 2009, “our solicitor received a letter from the Commission stating that the Commission had instituted infringement proceedings under Article 226 of the EC Treaty against Ireland in relation to the VRT system”.

Mr. O’Dowling said that he initiated the original complaint and, after a couple of years, his solicitor communicated with the European Commission to explain the secrecy, non transparency and everything that was wrong with the system in Ireland. He said there would have been extensive correspondence between the Commission and the solicitors. He did not have the file in front of him. He did not know what documents were sent with the correspondence.

Counsel for the defendants submitted that this constituted a difficulty in cross examination and in relation to the basis on which the defendant’s expert witnesses would give evidence. Mr. O’Dowling had placed great weight upon the Commission’s intolerance of a breach. It was something that would require intervention as could be seen from the many repeated infringement proceedings brought against France, Greece and Denmark. The defendant was entitled to see what correspondence the Commission had in relation to complaint D200/152.

Mr. O’Dowling said that VRT was a very restrictive regime and the manipulation of the depreciation codes and administration of the system could put a person out of business overnight. If the correct scale were not assigned, Revenue officials, with no trade experience, who were valuing cars for the whole of Ireland, could put a particular, or a particular group, of cars on the wrong scale, therefore overvaluing those cars. The cars would not be viable to import into Ireland. He said that back in 1994, UCII’s growth was stunted and its assets were turned into liabilities overnight (because of VRT).

The plaintiff was put under considerable financial strain. Mr. O’Dowling asked how could they then just turn around and start re-importing cars and go into a newer market or go into a different range of cars when it would have been financial suicide given the non transparency and the secrecy and the overvaluation of the Revenue Commissioners on all cars. He stated that UCII could have been as big as any distributor of imported cars in Ireland – as big as all of them put together, because there was the opportunity there at the time.

Those opportunities could not have been taken by UCII because they did not have the advantage of the new car distributions to declare their own values. If UCII had been able to declare their own values, they would have had a much better system. They would have opened up, going into the new car market and they would have been able to tell their dealers what the car sold for. They would have been able to determine their own taxable value.

Mr. O’Dowling said that the market had changed and by 2003 more opportunities had opened up.

It was put to him that he had completely abandoned UCII which could have taken advantage of the opportunity if he had chosen to continue with them. He said he was not competing against UCII and that he did not abandon them. The reason he left was because obviously they were put under severe financial pressure. They could not sell the cars and they could not wholesale the cars. They actually had to retail all of the cars to get rid of them. They could not put the cars into auction because they would lose too much money.

In May 2009, the Commission had instituted infringement proceedings under Article 226 of the EC Treaty against Ireland in relation to the VRT system. He was asked what the background to that letter was. Mr. O’Dowling said it was a series of letters sent to the Commission and to DG21 in 1993 regarding VRT in Ireland where UCII had complained about the level of taxation, the non transparency and the secrecy of the system. He had those other letters (which were not discovered) had told the Commission the objective of UCII to provide good quality used cars for a market in recession.

He said it was correct to say that the proceedings had been commenced by Sports Car Centre Limited on his instructions to Mr. Whelan, who was also the instructing solicitor in the UCII proceedings.

He agreed that the Revenue Commissioners served a notice for particulars on the 20th October 2000. It was put to him that there was no reply. He thought that his solicitor could confirm whether there was a reply or not.

He agreed that nothing had happened in relation to Sports Car proceedings since then.

He was referred to the plaintiffs’ solicitors’ letter (dated 19th July, 1994) to the Revenue which stated:-

“In this age range the distortion in the depreciation scales is not so obvious but is substantial nevertheless. There are many incidents where the administrative price is higher than the actual sale price. For instance to take one vehicle which the client imported from the U.K., a BMW 318i. The administrative value in that case was £4,283 and the actual sales price was £3,320. There are many such incidents and we can furnish an excel file containing 2,469 cases of over valuation (80% of all appeals from 1993 to 2003) from the Revenue’s own records.”
Mr. O’Dowling agreed that the example given to the Commission of a BMW 318i which a client imported from the UK was of an inter-community import. He also agreed that the overall valuation was from the Revenue records.
It was put to him that there were appeals in 1% to 2% of cases with a high percentage rate of success. He agreed but said that there were severe delays with appeals. He said that that was a problem with cash flow in so far as VRT had to be paid before an appeal was taken. He asked why new car dealers were not appealing.

He was referred to an email from Antonio Blanco Dalamu of the 21st December 2005, relating to complaints which stated that the Commission continued to monitor registration taxes across the community and exercised its prerogatives under Article 226 of the EC Treaty (infringement proceedings), when it considers such taxes infringed community legislation.

Mr. O’Dowling said it was correct to say that the Commission would bring member states to court if it considered that the taxes infringed community legislation. He also agreed that it was correct to say that the Commission was monitoring the situation on an on-going basis. He was referred to a letter of the 21st December 2005, referring to Antonia Victoria’s telephone call of the 23rd September 2005. The plaintiff’s letter referred thereto the Commission having been seriously misled about the true nature of VRT system as operated by the Irish Authorities and asked that the Commission continue its investigations and pursue the complaint of the plaintiffs.

Mr. O’Dowling agreed that the reply of the 7th February 2006 to their solicitors stated that the scope of the Commission’s enquiry was to determine whether Ireland, in levying registration taxes on second hand cars originating in other member states, was infringing Article 90 of the EC Treaty.

Mr. O’Dowling was asked were it not clear that he had led the Commission to believe that his complaint was in respect of the internal market. He replied that he was also talking about EU member state cars. He agreed that the Commission was investigating his complaint on a certain basis and that he had given an example of a member state car, the BMW referred to previously. It was put to him that he misled the Commission and made them believe that that was a matter of internal market trade. He replied that the example was of an internal market purchase.

He agreed that the complaint of Sport Cars Centre Limited had a specific private nature interest that there was no public interest there. Such interest was what was claimed in relation to the request to have access to the correspondence between the Commission and the Irish Authorities in the plaintiff’s letter of March 13th 2006.

Mr. O’Dowling took counsel’s word that the decision of the Commission had not been appealed.

He also agreed that the scope of the Commission’s inquiry was to determine whether any VRT was applied to second hand cars originating in other member states was consistent with Article 90 EC.

Reference was made to complaints received by the Commission that Irish OMSP was higher than that paid for the car abroad. The Commission wrote to the plaintiffs’ solicitor dated 16th October 2006 with reference to Sports Car Centre Limited’s complaint.

“This in itself does not constitute an infringement of Article 90 EC. Prices of new and second cars in Ireland are consistently more expensive than in other member states (in particular those with lower VRT or no VRT such as the United Kingdom). However, the case law of the Courts requires that comparison be made to the residual registration tax included in the price of cars present and in the target market (Ireland) and the amount of registration tax levied upon registration of similar second hand cars coming from other member states.”
The letter continued:-
“OMSP of used cars are not determined by applying a standard depreciation rate to the price of a car when new.”
Mr. O’Dowling agreed that that complaint related to Sports Car Centre Limited’s complaint of 2006, whereas in 1993 to 1997 there wasn’t any internet available and the fastest means of communication was by fax. He agreed that the system changed over the years with different CD ROMs but he said he still couldn’t determine the OMSP in 2004, and the Revenue hadn’t distributed the depreciation tables at that stage.
The reply of the Commission of the 7th February 2006 continued:-

“As I have stated above the services of the Commission will need a great of factual evidence in order in a position to demonstrate that Community law has been breached. I would be grateful if you could provide your views within a two month deadline.
If you are unable to supply that information or if you do not deem it useful to respond to this letter, I would have to propose that the Commission close the file.”

Mr. O’Dowling agreed that that was correct and that they responded in a letter of 12th December 2006, asking the Commission not to close the file saying that they would make contact shortly with a view to setting up a conference call.
Mr. O’Dowling agreed that the Sports Car Centre Limited case, at that stage, had not gone beyond a notice for particulars. He was asked to which case his solicitor was referring to in the letter and he replied that “they would be referring to the UCII case”. It was put to him that the letter didn’t say anything about the UCII case but rather, it just referred to him as principal in the complainant company. He agreed that the complainant company was Sports Cars Centre.

Indeed it appears to the court that there is confusion between the plaintiffs and the Sports Car Centre claim. The booklet of correspondence in these proceedings between the plaintiff and the Commission from 2003 to 2012 all refer to complaint in 1999/5321, which is that of the Sports Car Centre Limited and not the plaintiff.

Mr. O’Dowling agreed that it was correct to say that he had persuaded the Commission to take up infringement proceedings against the State as evidenced by a letter dated the 18th May 2009, addressed to the plaintiff’s solicitors and to complaint 199, being infringement proceedings under Article 226 of the EC Treaty.

Counsel referred to a number of letters that followed, in which Mr. O’Dowling confirmed sending to the Commission the Cars Salesman’s Guide, the plaintiff’s data base of cars and the reports of Brendan Dowling of DKM, economics expert, Sean O’Callaghan, computer expert, and of Rick Yarrow, motor trade expert.

It was put to Mr. O’Dowling that the complaint was from Sports Car Centre Limited and that the solicitor’s letter referred to a complaint “prepared by our client” for their case against the Irish Revenue Commissioners and having taken instructions from our client. Mr. O’Dowling said that the European Commission had no problem with the Japanese cars and that they knew that “we were bringing in Japanese cars”. They provided a data base of the plaintiff’s cars which was accepted. He agreed that the client referred to in that letter was Sports Car Centre Limited.

He was asked to show evidence that he had of any imports from member states of the European Union. He replied that he had imported about 40 units from Northern Ireland in 1993/1994 and did not import any prior to 1993.

In relation to the appeals process, Mr. O’Dowling said the problem was that OMSP’s were not determined by an examination even of “observed” prices –they were determined by applying a standard depreciation rate to the price of a car when used. He said that new car dealers never appealed because new cars are valued by the main importer and that, perhaps, somewhere in the region of 75% may have been overvalued.

He agreed that it was open to the plaintiff and the other importers to appeal the OMSP of second hand imports.

Much later on the 9th November, 2009, the Department of Finance gave the times for the success of appeals measured by refunds being made from the 1st January, 1993, to the 15th October, 2009, (203 to 1497 appeals) which slowed in all years a majority of cases being successful.

Mr. O’Dowling agreed that he was set up in business in terms of his financial arrangements, his shipping arrangements and his involvement in Japan. He was asked if he was set up in such a manner so as to import cars directly from Japan and he replied that that the opportunity arose to import from Japan. From their research in the United Kingdom and Japan, the Japanese cars were more viable because of the VAT situation at that time.

He agreed that it was correct that when he made complaints and claimed damages in these proceeding that all of the plaintiffs’ estimates had been based upon imports from Japan. All the instructions he had given to his experts and all of the material before the court in the case concerning imports were direct imports from Japan into Ireland.
7. Evidence of Mr. Fintan Riordan
Mr. Riordan confirmed he is a director of the plaintiff and that Mr. O’Dowling was a fellow director and shareholder until September 1995. He said that he started in the motor trade in the early 1970s, operating a general garage on the Mallow Road as a sole trader which carried out mechanical work and he got to know Mr. O’Dowling during that time. They built up a mutual trust and towards the end of 1988 decided to look into the availability of sourcing good quality used cars on the Irish market for resale. He stated that the quality available of such cars was pretty bad and “shocking” and because the barrier for importing cars from outside Ireland was lifted, the directors explored the idea of importing Japanese cars.

Mr. Riordan confirmed that the plaintiff had a bonded compound which could hold 300 cars. The business plan was originally to sell to traders. They then opened a retail yard some three to six months later but continued to sell to wholesalers. Some dealers purchased the cars outright and with others they would give them a number of cars for a deposit as security. He said they began to expand their dealer network in 1990. He gave evidence that the Japanese cars had low mileage, had been driven on superior roads and had no rust problems and he said there was no comparison between the used Japanese cars and the used Irish cars.

Mr. Riordan said that the best selling car for the Irish market would have been a two to three year old car as it would have depreciated 40 – 50% after three years and most people would buy a second hand car rather than a new one. The plaintiff had initially imported cars under MVED system to which he pointed out there were both advantages and disadvantages. The main advantage was ability to calculate the actual end tax because of a sliding scale issued by the Revenue. They applied the sliding scale to the recommended retail price of the car and then applied the depreciation scale to it. Evidence was submitted that being able to calculate the MVED was important as it was pointless to buy a car, bring it over from Japan and make no profit. The disadvantage of the MVED system was the scale given tended to value newer cars higher than they were and it meant that the plaintiff had to go for an older profile car.

In cross examination Mr. Riordan stated that UCII dealt with some newer cars and were building up a network of dealers who were requesting them all the time. He said it was possible to import newer cars under MVED system but it was expensive. The dealers bought their existing stock and requested newer models. He said that the margin was so small it wasn’t worth it for UCII or the dealer. He said they were non-profitable cars as they duty was too high. He stated that the dealers were threatened by the main distributor that they would lose their agency.

He said that they had stock sheets for the dealer network, some dealers would get cars on credit because they knew them. He said they didn’t write up contracts like new car distributors but they would interview a dealer, visit his garage and make sure he had a TAN number and was regulated. He said they retained the certificate of assembly which they wouldn’t release without a cheque. UCII maintained control of the vehicles at all times.

Mr. Riordan stated that they did not receive any tables from the Revenue before January 1st, 1993 with regard to the new VRT system. Revenue issued TAN numbers to all the registered dealers and this enabled garages to retain a car unregistered as long as they were registered with the Revenue. When dealers came to purchase cars, the dealer would have to pay the Registration Tax and put number plates on the cars. If a car was sold to a private individual then the plaintiff would pay the registration tax.

In relation to estimates, Mr. Riordan said they received estimates from the Revenue which were binding for “12 days or something”. He said it was not a satisfactory system as the prices could move up and down and VRT affected the retail trade because of “guess calculating” the tax. After the estimate expired he said that many deals were on a ‘knife edge’ and they could lose deals because of an argument on price. In relation to wholesale trade, he said that when they gave cars to dealers they wanted to know the VRT amount. When the dealer sold the car and paid the VRT, if it was above what the plaintiff had said, the dealer would cont look for a cheque or credit note for the difference. The plaintiff would compensate them and he said this strained relationships with dealers.

Mr. Riordan confirmed that in 1994 the VRT rate in the budget went down but the amount of VRT that the plaintiff paid on each car increased because Revenue revised their calculations. He said that the plaintiff took a hit in the retail yard and the dealers sought a claw back. He said he thought the actual valuations were totally out of line with the valuation of cars at that stage and that they didn’t know how they were making the valuations as there was no information how the Revenue worked out VRT.

He gave evidence that if the plaintiff wanted to try a new model on the market they had to test it one at a time which was a three month cycle by the time it arrived from Japan. Even then he had no assurance that the OMSP would be the same if you imported more models further down the track. He said OMSP’s for the same models varied even though the models were the same year and that cars were overvalued in certain age brackets, particularly newer cars. He submitted that the plaintiff would not import three year old cars as VRT was too high and the OMSP did not reflect the real OMSP in the market and that the difference could be between 20 to 30%. He said that if VRT had been charged by the Revenue on the basis of actual OMSP on the Irish market then UCII would have liked to have traded in the market for newer used cars.

Mr. Riordan said that new car dealers never had to appeal valuations. His experience of the appeals system was that it would be a huge administrative burden on the company to appeal all the valuations. He said that the process was too long and that their first one had taken three months. In cross examination it was put to him that UCII’s first appeal had, in fact, been lodged on 16th February 1993 and was responded to on 18th March 1993, which was only a period of a month. Mr. Riordan’s response was that UCII’s business was to sell cars and not be weighted down by administration with the tax system.

He said that the overestimation of value put them at an uncompetitive advantage over the domestic cars because the final price would be higher and if they were quoting high prices all the time the sales would decline and that is what happened.

He said UCII had not achieved its original ambition to become a major car importer because they could not calculate the VRT and because the VRT valuation system was overvalued.

In relation to imports from member states, he gave evidence that between 23rd September 1993 and 7th February 1996, UCII imported 44 cars from Northern Ireland. He said that valuations assigned to cars coming from Northern Ireland were high as well but not as high as those placed on Japanese cars. He said if they had not been as high, UCII would have increased the numbers of imports from the UK.

Mr. Riordan said that Mr. O’Dowling left UCII in 1995 as the company could not afford to pay two salaries of that calibre. He said that the assessment of the damages suffered to UCII was reasonable because of the huge potential for business UCII could have had if the tax system had been fairer.

Mr. Riordan also agreed that he had invested his own money in UCII, as evidenced in the 1996 accounts, to keep the company afloat. He said they had diversified into container hire and sales in 2003 which was not part of the original plan but was necessary to keep the business going. He agreed that the profit in 1992 was £165,245 but that in 2009 the equity was negative (1,230,917). Mr Riordan attributed the financial failure of the company was a result of the VRT system on the used car market.

In cross examination Mr. Riordan agreed that he and Mr. O’Dowling had travelled to England to source cars initially when they set up in business but they were unhappy with the quality and choice of cars available. He said the cars in England would be “harder to get probably”. He agreed to accept Mr. O’Dowling evidence in relation to the UK market.

Mr. Riordan said that he had dealings with Mr. Murakami after Mr. O’Dowling’s departure from UCII in 1995 but not in regards to purchasing cars, merely in terms of shipping and golfing with him when he visited Ireland. Counsel directed Mr. Riordan to Mr. Murakami’s transcript on day 8, page 25, where he stated he did not have dealings with Mr. Riordan after 1995. Mr. Riordan maintained he had dealings with Mr. Murakami’s company post 1995 but agreed he stopped dealing with him directly at that time.

He said that Mr. O’Dowling continued doing business with Mr. Murakami after leaving UCII in 1995 and he had gone his own way. He relied on Mr. Peter Butterly of Quality Cars to go to Japan as he himself did not want to travel all the time. He said that he later established Munster Car Importers Limited as he needed money for UCII and that that company never sold cars retail, just imported them and sold them on to UCII.

Mr. Riordan gave evidence that UCII had been in receipt of the statistical codes from April 1993 but they had no manual as to how to apply them. They received the required manual in July 1995, two and a half years after VRT was introduced. He said they relied on Colm O’Herlihy to do the stat codes up until that point and agreed that, while the point of the code was to make it easier to obtain an estimate, there was “nothing in stone to tell them that”. He said that in all of the time he had not been privy to how the OMSP was reached.

He said that in 1991 and 1992, 80% of UCII’s sales were to the trade as their original intention was wholesale. He said by 1993 the percentage of sales to trade was down to 50%. They had to change their model and so in 1993 they hired an extra salesman and went more into retail which wasn’t their original plan.

He referred to a meeting which took place with Dr. Lennox from Revenue and the car dealers. He said the suggested proposal to issue double invoices was a problem as it would not work commercially. It wouldn’t work for a leasing agreement as all the documents had to be right for VAT and it would be at a different rate, i.e., VAT would be 10% for the service and 21% for the price of the car. He approached a bank to clarify the position and the bank said that they would only give finance for the car price so the service would have to be paid for by the plaintiff. He said such a system would have been impractical and they would have lost a lot of sales. He said UCII left the meeting dissatisfied.

He refuted suggestion by counsel for the defendant that he could have exercised ‘commercial muscle’ over the dealers saying that they had to operate as well at a fixed price and it meant UCII had to underwrite that fixed price. He disagreed that he was in a strong position to bargain with the dealers. He said that he didn’t have figures for the return made to dealers in relation to overpaying VRT and said the liability would be offset against the next lot of cars.

He was asked why the 1996 UCII accounts and report state that the directors were pleased with the development of the company to date, given that VRT had been in operation for three and a quarter years at that point. He said that UCII were not put out of business (by VRT) but that their expansion plans were put out. By 1994 he realised that UCII was not going to expand in the way he had thought and so he resorted to “making do” and continue on with the VRT system. He said they were only running a small company compared to what they should have ran if the actual VRT system was not overpriced.

He accepted the contents of the directors’ report stating that overhead costs were lower in 1996. It was put to him that the stock position improved in 1994 / 1995 insofar as the closing stock figures for the year had decreased. He agreed that on 31 October 1993 UCII held £1.9 million worth of stock and on 31 October 1995 it was reduced to £777,000. He said that it was because they didn’t import many cars in the 1993/1994/1995 period. He agreed that the directors’ report for 1997 stated that “the directors are pleased with the development of the business”.

Mr. Riordan was asked to refer to a document indicating years and figures. He confirmed that the document was a record of sales rather than of imports as had been stated by Mr. O’Dowling. He was directed to a second document which he confirmed to be a sales chart prepared by Mr. O’Dowling. He agreed that the figures when compared between both charts were different but said it depended on which month they were tallied at. He did not accept that the documentary evidence gave the court no reliable figures upon which to make an assessment as to precisely how many cars were sold by UCII between 1990 and 1994. He said the document gave an insight to the sales and the imports.

It was put to him that there was a discrepancy of roughly 10% between the documents for the year 1993 and that this document was also contradicted by other materials in UCII’s discovery. Mr. Riordan said it was an internal thing and not an accounting process because some cars would be “half sold” from the year before. He accepted that the discrepancies in the documents meant it would be more difficult for the court to assess losses that might have been suffered.

Mr. Riordan confirmed that he told Mr. O’Boyle, who was estimating the overcharge of VRT for the plaintiffs, to apply the same rate as the Japanese overcharged VRT to the Northern Ireland imports.

In relation to the allegation of overstocking, he said that the company accounts for 1993 showed purchases of £1.76 million and the accounts for 1995 the figure was £2.12 million. As the 1995 figure applied to two years, the actual gross figure per year was £1.06 million which represented a reduction in the level of stock. He said the reason they were reducing their stock was to reduce overheads, cut their margins and “put up with the VRT”. He said the VRT was probably 30% above the domestic car in Ireland in terms of the OMSP and it was still the situation at that stage that they were guessing the VRT so they didn’t know the price of the car until it was actually sold. He said they didn’t know when the Revenue would change the calculation of the OMSP as they were never kept informed.

He confirmed the plaintiff paid the legal costs in 1994. In 2010 / 2011 legal costs were funded from Mr. O’Dowling’s Sports Car Centre by way of a loan from the Sports Car Centre Limited to UCII.
8. Evidence of Mr. Mitsuo Murakami
Mr. Murakami, in evidence via video –link, referred to his witness statement which he confirmed represented his evidence in the case. Mr. Murakami agreed that he had formed a shipping company for used car exports from Japan in 1981, having spent 20 years working in the shipping business.

His company was involved in exporting used cars to Bangladesh, Sri Lanka, Singapore, Malaysia and Hong Kong. Between 1985 and 2007 he was First Secretary of the Nagoya Used Car Export Association, which was formed with 33 different companies, with the aim of regulating the quality of used cars for exportation. He said that when the market in New Zealand opened in 1987 he began to export cars there. He originally shipped between 4,000 to 5,000 cars per month and finally as many as 89,000 per year to New Zealand.

Japanese cars were assessed and inspected by a governmental authority before they were quality assured. Used cars were sold through auctions but, back in the 1990’s and 2000’s there weren’t many big auction houses so cars were sold through small retailers, wholesalers and car dealers. Mr. Murakami agreed that there were three-year old used cars available on the Japanese market in 1993 onwards.

Mr. Murakami visited Ireland in 1988 to assess the market situation and look for parties who might be interested in his shipping services. He advertised in the newspaper. His assessment of the Irish market was that there was movement and something new was going on. He received a fax at his hotel to say that the plaintiff was interested in importing Japanese cars. Mr. Murakami could not recollect whether he had met Mr. O’Dowling or Mr. Riordan on that occasion. He said they first communicated through fax and then they visited Japan.

Mr. Murakami agreed that it was easy for anyone to come into Japan and start buying second-hand vehicles without local assistance. He said anybody could buy used cars. The service he provided, as President of a shipping company, was to fill the vessels with cars for exportation. He introduced the plaintiffs to many used car companies. Mr. O’Dowling came to Japan once a month and he shipped his vehicles to Ireland. He said that the plaintiffs business grew in terms of them exporting more cars to Ireland.

He trusted Mr. O’Dowling and could not think of anyone more reliable. When Mr. O’Dowling first came to Japan, the Japanese traders did not trust foreign companies so a letter of credit was issued and, at the time the cars were loaded, the bank would automatically make the payment. There was a custom in Japan that where someone buys a car it has to be paid for within a week, so when Mr. O’Dowling purchased cars, Mr. Murakami’s company made a payment to the car dealers or retailers on Mr. O’Dowling’s behalf. He said that because the plaintiff was a foreign company, it would not have been eligible for financial help from institutions and therefore Mr. Murakami used his own company, YUWA Shipping, to get finance from the banks in Japan. He found his relationship with the plaintiff very satisfactory and one which lasted “for years and years”.

Mr. O’Dowling had told him in 1992 that there would be a new tax system introduced and they should be able to ship more cars. Mr. Murakami said regardless of the new tax, he was expecting a lot of business in Ireland because of the similarities to New Zealand. He started arranging further finance for the plaintiff so that it would be able to purchase more cars once the new tax was in place. He was expecting the number of cars shipped to double. There would have been sufficient supply of cars in Japan.

In cross examination Mr. Murakami agreed that his company was involved in shipping goods, rather than cars specifically. He did ship cars to Ireland for other companies as well as for the plaintiff but he could not recall the percentage of cars that were shipped for UCII because the ship stopped in the UK and Holland on the way. He could not remember but he thought he was still shipping cars to Ireland up to 2008. He could not remember when he stopped shipping cars for the plaintiff. He could not recall if he had ever shipped cars to Ireland for Munster Car Importers Limited. He did recall shipping cars to Ireland for Sports Car Centre Limited.

He said as far as he could remember the letter of credit was not issued for Sports Car Centre Ltd. He said because his company was a big company, it was quite easy to get financial backing from banks and, for Sports Car Centre Limited, he borrowed money from the bank to pay the dealers. When the cars were loaded and left Japan, it would take 45 days for them to reach Ireland at which point, Sports Car Centre Limited would make a transfer, so effectively they had credit from Mr. Murakami for between 50 and 60 days.

Mr. Murakami said in terms of shipping fees they had a credit arrangement with a lot of other companies but, for the purchase price of the goods shipped, the arrangement he had with Sports Car Centre Ltd was not typical. He said this was because he trusted Niall O’Dowling and felt he was a very reliable, remarkable person. He respected him and wanted his business to grow. He said he felt a letter of credit was unnecessary for Niall O’Dowling when he established Sports Car Centre Limited because there was already a mutual trust between them.

Mr. Murakami said he was not aware that Mr. O’Dowling ceased to be a director and shareholder with the plaintiff in 1995. He did not have any dealing with Mr. Riordan after 1995. He wanted to be clear that what he did for the plaintiff and Sports Car Centre Limited was just ship used cars. He did not sell cars to them – he allowed Mr. O’Dowling to meet dealers, auction houses and retailers in Japan and then make a payment to those dealers. It wasn’t possible for foreign companies to get credit from the banks in Japan in the early 1990’s.

Mr. Murakami agreed that he had stated in his report that there was the potential to ship between 6,000 to 8,000 cars per month into Ireland. His judgment was based on potential demand and from his experience in New Zealand. It was put to him that his figure meant that used cars would be selling at a rate of 72,000 to 96,000 vehicles per year. Counsel pointed out that the numbers of new registrations in Ireland between 1991 and 1993 were 89,586, 85,492 and 98,215 and therefore, according to Mr. Murakami’s estimation, the entire car market would consist of only used cars. Mr. Murakami said the estimation was based on the New Zealand experience in either 1987 – 1988 or in the early 1990s. He could not be sure of the statistics.

Mr. Murakami said he did not know that VRT was being introduced because of the creation of the single market in the EU. He assumed the new tax would make prices lower. He said that after the early 1990’s they shipped a lot of cars to the UK. Mr. Murakami agreed that his estimation of shipping between 72,000 and 96,000 used cars a year to Ireland might have been a “miscalculation” but said his business is shipping so therefore it doesn’t matter if it is new or used vehicles.
9. DKM Economic Consultants Report & Evidence of Brendan Dowling
The court has considered the two reports prepared by Brendan Dowling, economist and chairman of DKM Economic Consultants Limited, of the 20th February, 2009 and of the 7th September, 2011, and the response to Dr. Bacon’s report. The court has also considered the examination and cross examination of Mr. Dowling.

The first report, which examined the alleged breach of law, was delivered on the 20th February 2009 and dealt with the economic assessment of Irish Vehicle Registration Tax.

Mr. Dowling was of the view that SIMI had expressed a concern regarding the level of used car imports, which had risen from virtually zero in 1984, to 23% of new registrations by 1991. SIMI believed that used cars were undervalued in the MVED system and wanted to ensure that this “under valuation” would not condone in any resistance. They were also concerned that a VRT system based on actual transaction prices would lead to a different tax for each vehicle sold. They sought an amended version of the MVED system, which was based on recommended retail price, as the basis for VRT on new cars.

Mr. Dowling regarded the VRT system, described by the Revenue as a market based system, to be simply a tweaked version of the MVED regime, with collection being at the point of first registration. A major change was that the single statutory depreciation schedule used under MVED was replaced by 14 schedules in 1993 and, a year later, by 23 depreciation schedules, of which only 1 represented a special case of zero depreciation. He believed that the price was neither an open market price nor selling price but a discount from the recommended retail price. The vehicle was allocated by the Revenue to one of the depreciation schedules, which had been devised by the Revenue, but not publicly disclosed.

By way of summary Mr. Dowling said that VRT on the retail price of used cars in the Irish market discriminated against imports and, effectively, applied the VRT tax rate to the used car dealers’ margin when an imported car was involved. He believed that that this discrimination was “clearly in breach of a number of European Court decisions relating to the taxation of imported vehicles”.

He argued that if, as claimed by the Revenue, the price was generated by the combination of the original OMSP and then allocated to the appropriate depreciation schedule, which was continuously compared with actual market prices, then there would have been no need for the model because the continuously updated price data would form the basis for valuing the used car retail price. It was precisely because continuously updated prices were not available that the Revenue relied on a model to generate notional retail value. The random allocation of a particular model to a depreciation schedule combined with the capricious nature of the schedule, made the determination of used car values for VRT purposes entirely arbitrary.

Mr. Dowling said that he had examined the deprecation schedules used by the Revenue, which were discovered to the plaintiff as part of the action taken against the Revenue, and a number of points became clear.

First, although there were 14, later 25 schedules, most of the cars imported by the plaintiff were allocated to just 4 schedules. All of those assumed higher retail residual values for used cars than the original single statutory depreciation table under MVED would have generated for the declared OMSP. His research could find no international support for the depreciation curves created by the Revenue. Almost without exception, the Revenue understated depreciation on cars in the early years. There was an element of catch up in the later years, which was inevitable as used cars must depreciate to zero or near zero. He said that every single example of depreciation curves he had found showed, both from international experience and from an analysis of the actual market in Ireland, a much higher deprecation of values in the early years.

His research tested the depreciation schedules most used by the Revenue and found them to be linear. In Commission v. Greece, C-74/2006, the European Court of Justice ruling on the use of depreciation schedules for valuing cars for registration tax purposes condemned linear schedules for not reflecting the higher deprecation of values in the early years.

Although the Revenue deprecation schedules were wildly at variance with international experience, they could, conceivably, generate accurate retail prices for Irish used cars if Irish consumer behaviour was wildly different to international consumer behaviour. However, when they tested the prices that the plaintiff achieved on the market for their cars, which they assumed would be the highest prices attributable, they found them to be consistently below the retail value assigned to cars by the Revenue under five years of age. Thus, the model test confirmed the international comparison test which showed that the VRT model consistently understated the depreciation of newer used cars and overstated the value for VRT purposes.

This pattern was confirmed by DKM’s own market research based on collecting data for used cars in Ireland. Prices achieved at auction, which were probably closer to wholesale than retail prices, were less than 60% of the Revenues estimation of value. Prices available from both dealers and individual sellers on websites were around 86% of the Revenue value and even prices in the Car Sales Guide, which appeared to be the main source of market data available to the Revenue, were almost 2% below the values generated by the Revenue model.

Mr. Dowling’s report found that even if the Revenue model generated accurate retail prices, there would still be problems with regard to the determination of the correct level of VRT. European law required the VRT on used cars imports to be no greater than the VRT embedded in a domestic used car by the residual VRT remaining in the price of the domestic car. The report showed that this residual is properly measured by looking at the ratio of the used car price to the dealer relative to the original purchase price. A correct measure of VRT has to apply the original VRT rate and original transaction price to generate the correct embedded VRT. A rise in the VRT rate had no effect on the embedded VRT rate in a car taxed at the lower rate. Similarly a rise in prices of a model had no impact on the embedded VRT of a car sold at a lower price. However the DKM Report contends that the Revenue applied the current VRT rate to used cars to derive a tax liability and not the rate that applied when the car was new. Similarly the model permitted the OMSP to rise (and the VRT accordingly) if the new price of the model rises.

The DKM report found that the VRT system, as applied to used car imports, discriminated against those imports, was in breach of the neutrality requirements of EU law and substituted an administered system for a market system. This had the effect of reducing price competition for both new and used cars and provided protection for domestic car dealer margins. DKM looked at the experience from New Zealand and found that a neutral market based system would lead to a much higher penetration of used car imports in the Irish market.

Mr. Dowling placed considerable emphasis on the European Commission’s creation of the Single European Market on the 1st January, 1993, which set out to create “an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured” in accordance with article 14 of the E.C. Treaty. The MVED system, although nominally an excise duty, was levied at the point of importation and was therefore not consistent with the full implementation of the Single European Market.

The Report referred to the Revenue Commissioners working papers and to the Department of Finance and suggested that they wished to maintain the Revenue yield from the pre 1993 MVED system.

The European Commission indicated that it would be opposed to a system of tax which was added to the VAT system because the base of VAT was harmonised across the European Union within permitted bands. They accepted that a registration charge could meet the requirements of the Single European Market even if that meant enforcement problems for the Irish Revenue. Reference was made to the letter from Mr. Venturi, the head of division of the indirect tax section of the E.C. to the plaintiff on the 6th December 1993, where it was stated:-

“There must be no discrimination against the products of other Member States and no tax advantage given to the national product.
Thus, second hand cars which you “import” from the other Member States (including Japanese cars which have been produced or entered free circulation in other Member States) must not be taxed more heavily than the equivalent cars in Ireland. For this purpose it is, of course, necessary to value the second hand car already on the Irish market and calculate the residual tax element contained in it.”

The report referred to concern within the Revenue. Reference was made to a memorandum from Dr. Lennox to Mr. John Reid, both of the Revenue Commissioners, who noted that applying VRT to the OMSP, presumably as adjusted by the depreciation schedule, was not the same thing as valuing “the second hand car already on the Irish market” and calculating “a residual tax element contained in it”. Reference was also made to the letter of the 11th November, 1993, where the European Commission, in reply to a question in the European Parliament, indicated that:-
“Only by examining the taxable values in relation to selling prices on a model-by-model, indeed vehicle-by-vehicle basis can it be determined whether the assessment criteria are in line.”
The report is based on the assumption that the European Commission were insisting that any registration must be neutral between used car imports and used car values in Ireland and referred to the European Court judgments regarding registration taxes in other Member States.
Reference was made to an affidavit sworn by John Leonard, Surveyor of Customs and Excise in July 1995, referring to the Edge Anderson Report. None of the schedules contained in the Butler report were actually used by the Revenue Commissioners in determining VRT calculations from 1st January, 1993. In other words the Edge Anderson Report provided a “fairness” opinion on a system which was not adopted by the Revenue Commissioners. The Edge Anderson report also acknowledged that the value of used cars, under the system proposed in the Butler report, was greatly influenced by new car distributors. At the beginning of the report, Edge Anderson made the following admission:-

“In relation to the report (Butler) our comments on the open market selling price only reflects values in the twenty six counties and does not reflect the much lower selling price in other member countries as obviously this is due to the control of the price by the distributors and the subsequent excise duty”.
That report stated that, given the complexity in the value of cars in the market place, it was a “tall order to obtain a best fit” as had been claimed in relation to the 25 depreciation schedules. There was no evidence as to when that complex task was undertaken.
The DKM report at table 4.6 calculated the revenue collected from VRT.

VRT clearly raised considerable amounts of revenue for the Irish Government. The report said that in 2006, €1.287 billion was raised in VRT, which was 23% of the total funds raised through excise duties and equivalent to 2.4% of the total revenue collected. The report is critical of the use of a series of depreciation curves and noted that in July 1997, Mr. O’Leary had indicated that 37% of statistical codes had not been reviewed for at least twelve months and a further 20% of codes had not been reviewed in the previous six months. In his view this would indicate that 57% of codes had been inaccurate (Report entitled “Enhancements required to improve the VRT Valuation System” by John O’Leary of the 7th July, 1997). The DKM report suspected that Mr. Leonard was describing the system as it ought to have been, but that Mr. O’Leary was describing the actual situation in the CVO.

Reference was made to Revenue’s method of depreciation, to the Yarrow depreciation curve and to the discrepancy between the maximum and minimum deprecation schedules over time, which was referred to as the “zone of arbitrariness”.

The DKM report compared Revenue’s depreciation on the A1 depreciation scale from 1993 to 2003, with the Yarrow depreciation curve. Mr. Dowling found that one main feature stands out – the Revenue schedule is virtually linear. Later adjustments in 2002 marginally reduced its linearity. The European Court of Justice in the Finnish case C-365/02, made it clear that a linear depreciation schedule was not acceptable as a proxy for actual depreciation. It noted that new cars depreciate more rapidly in the early years. This had not been reflected in the main schedule adopted by the Revenue for the calculation of VRT.

In the September 2011 report, DKM presented their analysis of the loss of opportunity of the plaintiff arising from the application of VRT in Ireland from 1993 to 2009.

The court notes that the introduction at para. 1.1.1, refers to DKM being asked to examine the extent to which (the plaintiff) “were negatively affected by those aspects of the VRT system applied in Ireland which were not consistent with the requirements of the legislation, both Irish and European”.

However, while referring to the discrimination being clearly in breach of a number of European Court decisions related to the taxation of imported vehicles, Mr. Dowling did not subsequently refer to any Irish legislation in the reports.

DKM referred to problems with the lack of information for all imports of used cars in that it “reflects the consequences of the excess tax burden imposed by VRT (especially on Japanese imports of cars) in the zero to five year range”. While Mr. Dowling refers to Japanese cars especially, there appears to be no analysis on cars imported from Member States (which would appear from the evidence of Mr. Riordan to have been limited to the 44 cars imported from Northern Ireland). Indeed at p. 15 of his report, Mr. Dowling refers only to direct imports of used Japanese cars and refers to the assumption that the rise in the value of the yen against the Irish pound would have had a major impact on the price of the car that could be sold in Ireland.

Later in the report, at p. 20 at para. 3.1.21, Mr. Dowling deals with the Japanese import share and says:-

“The main focus of our concern in this analysis is the impact of the VRT regime on imports of cars from Japan. Clearly the uncertainty created by the VRT regime differentially affected imports from Japan as contracts had to be entered into many months in advance and shipping and other services committed. In contrast, an Irish resident could import a car from Northern Ireland at very short notice and have relative certainty of the rate of VRT likely to be levied.
Thus, the introduction of VRT increased uncertainty for all importers, but particularly for importers in Japan.”

11. Evaluation of DKM/Mr. O’Dowling’s Evidence
Having regard to the non exclusive language of Mr. Dowling in relation to the Japanese direct imports (his qualification of “especially” of such imports and “particularly” for importers from Japan), the court has considered whether Mr. Dowling has referred to or, more importantly, quantified the loss arising from intra-community imports. However, the court has not been able to find any express reference to grounds by the plaintiff other than discrimination under European Union law, which is contrary to Article 95 EC.
The court also considered the evidence of Mr. Fintan Riordan in relation to the analysis of vehicles imported by the plaintiff from Northern Ireland over the period of sixteen years from 1993 to 2009.

Fintan Riordan agreed that he had analysed the vehicles imported by UCII from Northern Ireland and that his estimated VRT overcharge was given to Mr. O’Boyle for analysis. He said that he had instructed Mr. O’Boyle to apply the same rate as the Japanese overcharge.

In direct examination, Donal O’Boyle said that he had applied the same rate of 37%, which was a purely arithmetic calculation on the basis of the schedule on the computer.

This, of course, does not provide the court with any reliable evidence of the actual overcharge, which was agreed by Mr. Riordan to be less than that on Japanese cars. It also demonstrates the lack of seriousness and precision in relation to a claim that might otherwise have formed the basis for discrimination within the Member States.

There was no evidence of any complaints being made or any appeal process being availed of in relation to the 44 cars imported over the four years. Mr. O’Dowling’s evidence was that the appeal system was too long, they never got a favourable answer and that their invoices were never accepted. However, the evidence of Mr. Campion was that the plaintiff made an appeal in February 1993, within a month and a half of VRT being introduced, and that appeal was dealt with in favour of the plaintiff within a month.

The DKM Report is purely based on the assumption of discrimination against vehicles imported directly from Japan. Mr. Riordan referred to an overvaluation of Northern Ireland imports. Mr. O’Boyle calculated this as 20%. However, Mr. Riordan’s evidence of a £14,997 overcharge on a VRT total of £37,289 in respect of the Northern Ireland imports represented a 40% overcharge.

The court is not satisfied as to the quantification of this estimated overvaluation of Northern Ireland imports. It is not appropriate to extrapolate figures on the basis of overvaluation of Japanese imports whether this is invoice or landed cost, wholesale price or retail price.

Moreover, the legislation provides for open market selling price in the opinion of the Revenue.

Further, there is no EU provision that even in intra-community trade the amount of duty be linked to the price of the vehicle.

The registration tax imposed by the State is something which falls outside the scope of EC law in principle as Member States are sovereign when it comes to imposing taxes (other than VAT which is a community tax).

The Advocate General’s opinion Nádasdi and Németh, C–290/05 and C-333/05, states as follows:-

“52. In the context of a system of registration duty, criteria such as engine type, engine capacity and a classification based on environmental considerations constitute objective criteria. They may thus be used in such a system. On the other hand, there is no requirement that the amount of the duty be linked to the price of the vehicle.
53. However, a registration duty must not burden products originating from other Member States more heavily than similar national products.

54. A new vehicle in respect of which registration duty has been paid in Hungary loses, with time, part of its market value. With the depreciation in value, the amount of registration duty included in the residual value of the vehicle also diminishes. Since it is a used vehicle, it can be sold only for a percentage of its initial value, which contains the residual amount of the registration duty.”

It is clear that this judgment establishes residual value as a proportion of the value of the vehicle. The registration tax should not burden products originating from other Member States more heavily than similar national products.
Tatu C-402/09 dealt with the neutrality of tax as regards imported second hand vehicles and similar second hand vehicles previously registered in national territory and subjected to registration on that tax.

Paragraph 39 of the judgment stated:-

“39. According to settled case law, there is a breach of Article 110 TFEU where the amount of tax levied on an imported second-hand vehicle exceeds the residual tax incorporated in the value of similar second-hand vehicles already registered on national territory.
40. The Court has stated that, when a tax on registration is paid in a Member State, the amount of that tax is incorporated in the value of the vehicle. Thus, if a vehicle registered in the Member State in question is subsequently sold as a second-hand vehicle in that Member State, its market value, including the residual registration tax, will be equal to a percentage of its original value, determined by depreciation. (Nádasdi and Németh, para. 54) Therefore, to ensure the neutrality of the tax, the value of the imported second-hand vehicle taken as the basis of taxation must reflect the value of a similar vehicle already registered on national territory.”

It is clear from that judgment that the market value is a percentage of the original value determined by depreciation. It is not a fixed sum. This was the approach of Dr. Bacon in his evidence
The position of the Commission is based on the decision of the court. The residual value of the tax diminishes proportionally with the depreciation of the vehicle.

It was alleged by the plaintiffs that discrimination resulted in an overvaluation of imports. In Commission v. Greece, C-74/2006 at 6 of 12 it was stated that:-

“24. The court has held that Article 90/EC seeks to ensure the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products. (From other EU Member States).
25. It is settled case law that the first paragraph of Article 90/EC is infringed where the taxation on the imported product and that on the similar domestic product are calculated in a different manner on the basis of different criteria which lead, even if only in certain cases, to higher taxation being imposed on the imported product.

26. The court has thus held that the first paragraph of Article 90/EC is infringed when a Member State charges on second hand vehicles from another Member State a tax, the amount of which, calculated without taking the vehicles actual depreciation into account, exceeds the amount of the residual tax incorporated in the value of similar second hand vehicles already registered in the national territory.

27. In applying Article 90/EC, and in particular where comparing the taxes applicable to imported second hand cars with those applicable to second hand cars purchased at home, which are similar or competing products, it is necessary to have regard not only to the rate of direct or indirect internal taxation on domestic or imported products but also to the basis of assessment and the detailed rules for levying the tax in question.

28. More specifically, a Member State may not charge tax on imported second hand vehicles based on a value which is higher than the real value of the vehicle with the result that they are taxed more heavily than similar second hand cars on the domestic market… The taxable value imputed to the imported second hand vehicle by the revenue authorities should faithfully reflect the value of similar second hand vehicle already registered on the domestic market.

29. In that regard, the court has held that the taking into account of the actual depreciation of the vehicles need not necessarily involve an assessment or export examination of each of them. To avoid the administrative burden inherent in such a system, a Member State may establish, by means of fixed scales determined by statute, regulation or administrative provision and calculated on the basis of criteria such as the vehicle’s age, mileage, general condition, propulsion method, make or model, a value for second hand vehicles, which, as a general rule, would be very close to their actual value.”

It follows that a Member State can establish a fixed scale in relation to models and makes of cars and that there is no requirement for an assessment or expert examination for each car.
In this regard the evidence in relation to the 44 cars imported from Northern Ireland cars does not establish that the values as a general rule were not very close to their actual value. The mere assertion of a 20% differential as stated by Mr. Riordan and Mr. O’Boyle was not substantiated. Mr. Dowling was simply asked to apply the same figures as in the Japanese direct imports.

The Commission v. Greece Case C-74/06 further says at para. 30:-

“30. Such scales must, in any case, take account of the fact that the annual depreciation in the value of cars is in general considerably more than 5% that that depreciation is not linear, especially in the first years, when it is much more marked than subsequently, and that vehicles continue to depreciate more than four years after being put into circulation. Moreover, a vehicle starts to depreciate as soon as it is purchased or brought into use.
31. According to settled case law, in order for a system of taxation of imported second hand cars which takes into account the actual depreciation of the vehicles on the basis of general criteria to be compatible with Article 90 EC, it must be structured in such a way, making allowance for the reasonable approximations inherent in any system of that type, as to exclude any discriminatory effect.”

That is of course, the argument of the plaintiff but it is based, in my view, on direct imports from a non member State.
Further, the judgment at para. 33 allows for the basis for calculation of the taxable value by reference to a guide indicating the average process of second hand vehicles in the national market or to a list of average current prices used as reference in the sector.

The defendant relied on the Car Sales Guide. The evidence given also related to reliance on newspaper advertisements and conferring with dealers in the trade.

The court is satisfied that the Car Sales Guide is the reference guide used in the sector for average current prices of new vehicles.

It would appear from Mr. Yarrow’s Report that in the Hellinic Republic, as in Ireland, the prices of new vehicles are determined by the manufacturers and distributors. That was also acknowledged in the Commission v Greece judgment which did not find that such determination discriminated against used car dealers.

The court also takes into account that an appeal procedure was available and, indeed, was used by the plaintiff to its advantage at times.

The court is not satisfied that the Irish system did systematically overvalue the OMSP of second hand vehicles. Whether, on occasions, it was not “very close to their actual value” is a matter which could have been attested by way of appeal, which, in turn, would have formed part of the basis of the valuation system. It is significant that the decision in Commission v. Greece did not, nor had the Commission sought to, quantify the phrase “very close to their actual value” in percentage terms.

It was further argued by the plaintiffs that VRT did not take into account subsequent changes in tax rates.

Article 110 of the Treaty of the Functioning of the European Union was not intended to prevent a Member State from introducing new taxes or from changing the rate or basis of assessment of existing taxes as the court had stated in para. 49 of Nádasdi and Németh. The court further held in para. 51 of that case, that while the tax applied after the entry into force, it may differ from the rate of tax previously enforced and that circumstances cannot in themselves be regarded as discriminating between earlier situations to those subsequent to the entry into force of the new legislation. This court is of the view that there this no discrimination arising out of the fact that tax rates may change from year to year.

DKM believed that by examining international evidence of the relationship between overall demand for cars and price levels and the extent to which relative price moves affect the market share, there was strong indicative evidence of the impact of the tax discrimination on the plaintiffs’ profitability.

It stated that as income rises, car ownership will increase, though the relationship is complex. Price is a factor in determining the overall stock of cars for any given income level and a fall in the relative price of new cars of 10% is likely to lead to a smaller, less than 10%, increase in the overall demand for cars.

Price elasticity, the impact of demand of one brand caused by a change in the price of a competing brand, is in the range of minus 4 to minus 6. That suggests that if the price of a compact car rose by 10% relative to all other compact cars, then demand for that model could, holding all other factors constant, fall by 40% to 50% to 60%.

An examination of the VRT depreciation schedules of the more popular Japanese models showed a near constant overvaluation of 25 percentage points over the first few years of life. This led to an increasing relative overvaluation of the market price. For example, a three year old import of a Japanese model could be overvalued by the Revenue by a much as 52% compared to an expert view of the depreciated market price. The MVED depreciation schedule, which VRT replaced, involved a lower level of devaluation of market prices, so the price overvaluation of a similar car was around 37.5%.

The proper calculation of VRT for the restricted range of cars the plaintiff actually imported would have led to a reduction of VRT paid of 23%. Over the entire range of ages, VRT imposed by the Irish Revenue was nominally 30% to 40% higher and could be justified by landed prices of imports from Japan. This would have allowed price reductions of 7.5% to 10% in used cars imported from Japan. From DKM’s analysis they assumed a potential price reduction of 7.5%, the lowest end of the possible range. Such a fall would have had two effects: it would have pushed up overall demand for cars as the decline in the price of imported used cars would have led to a decline in all used car prices. Based on international evidence from the price elasticity of overall car demand, the potential increase in total car demand would have been in the order of 5%.

More importantly, DKM believe that the decline in the price of used cars would have taken significant market share from new car imports. The international studies show a high cross price elasticity base and suggest that a 7.5 % fall in used car prices could lead to a 30% to 37.5% fall in the market share of new cars, as nearly new cars were imported as an alternative. DKM assumed a 30% fall for their analysis.

They assumed that half of the new car market was relatively insensitive to competing offerings of nearly new cars. Thus, that market share would not be affected by the decline in used car prices. For the purposes of their simulations they assumed that 60% of the incremental demand for used imports caused by the lower prices, would have been supplied by Japanese imports, with the balance coming mainly from the UK. The plaintiff was a major importer of used Japanese cars. Accordingly, any taxation policy designed to discriminate against Japanese imports affected the main business of the plaintiff. DKM adopted a conservative approach and assumed that the plaintiff could broadly maintain its average 1992 market share of Japanese imports in the face of more favourable conditions for importing used cars.

They estimated that if the VRT scheme had applied to actual car prices of imports, then the plaintiff could have been expected to sell an additional 93,633 cars from 1993 to 2009, or 5,508 per annum. These incremental sales would have achieved a gross margin equal to the actual average margin achieved, on a portfolio of relative old cars, adjusted by the improved ability to sell new cars. Around 81% of the additional margin earned by the increased volume would be retained as profit. These sales would have yielded an aggregate incremental gross margin of €134.2 million before indirect costs and €108.7 million after, allowing for incremental overheads and selling expenses.

The calculation, based on relatively conservative assumptions drawn from international research into the car market, is that the proper application of VRT to the market value of used cars would have resulted in a 7.5% reduction in used car sales, a 5% increase in the total stock of cars registered in Ireland and a 30% increase in the market share of used car imports in terms of the total annual demand for new cars and used cars. Some 60% of this incremental demand for used cars would have been met by direct Japanese imports, as Japan was the main international source of used cars with right hand drive. The plaintiff could have anticipated broadly maintaining its pre VRT share of the market in directly imported used Japanese cars which would have substantially increased its scale and profitability. The loss of opportunity to the plaintiff was, in present value terms, €119.5 million.

The court accepts the contention of the defendants that both DKM reports appear to be based exclusively on tax discrimination under EU law.

The court also notes that Mr. O’Dowling made infringement complaints to the Commission in over 20 years. The first was closed by the Commission. The second, which commenced on the 26th January, 2012, was investigated and, given that there were proceedings before this Court, were left on hold. No evidence was given to the court regarding the first complaint.

In relation to that second complaint the Commission was supplied with the first DKM Report, the Yarrow Report and the O’Callaghan Report as evidence of Irish VRT system being inconsistent with EU law.

Notably, the Commission has commenced proceedings against a number of Member States, including Denmark, France and Greece.
11. Evidence of Mr. Sean O’Callaghan
Mr. O’Callaghan, an IT expert with 17 years experience, prepared a report on behalf of the plaintiff and had attended an inspection, in June 2007, at the Central Vehicle Office (CVO) in Rosslare.

He analysed the database of vehicles imported by the plaintiff between 1993 and 2003. For those ten years, his report suggests that over 3,600 cars were imported by the plaintiff. He found there was a bias to using the highest category of depreciation scales by the Revenue which he called the “A category scales”. The table used most often was the A category table. Tables A1 to A6 carried the lowest levels of depreciation. Therefore the tax return to the Revenue would have been at the highest level.

In relation to the inspection of the CVO, they were told that the OMSP’s and depreciation codes were determined by the CVO staff in Rosslare. When they raised questions relating to this, answers were refused and “terminated consistently” by the Revenue representatives.

He agreed with Ciara Quinlan’s evidence of the inspection in Rosslare. They were given as little information as possible and were told a number of times that certain questions asked were outside the scope of the meeting.

He looked at the application of the depreciation scales to the cars depending on their age and found that the depreciation scales applied the most to cars in the five to eight years category. He referred to the consistency of the scales applied. He used a Toyota Corolla as an example because there were 75 units in the database which would give an accurate answer. He found that five different scales were applied to the same model. For 25 units that were three years old, 3 different scales were applied, and for 24 units that were four years old, 4 different codes were applied.

In the database it was possible for vehicles to have different depreciation codes but the same statistical code.

He did not have the opportunity to find out why vehicles with different descriptions were given the same statistical code. Where a new vehicle was introduced, Revenue allocated it a separate statistical code number.

Revenue’s failure to keep accurate records was a serious flaw in the archival policy of a nationally important system. He was missing data and codes, not just on depreciation but on the condition of the cars as well.

Since writing his report he had been to inspect the Revenue premises in Dublin in January 2012 with Dr. Tony Murphy and Ms. Ciara Quinlan, along with five Revenue officials, including Mr. Pat Mullins.

The original equipment used for the mainframe pre 2007 was available but was not in use. There were backups available but, as they were stored offsite, Revenue would have to revert with further information. Pat Mullins said the customised codes were statistical codes that had separate depreciation values put against them. He was told by Mr. Mullins that 50 or 60 were associated with Japanese cars. He asked for a copy of the codes and was sent an Excel spreadsheet with 1043 statistical codes, which contained 213 Japanese customised codes.

He analysed the spreadsheet and found that it had a statistical code for every vehicle, which was unusual when the database was missing other data. He found a unique set of 838 statistical codes used across all cars. This averaged about five to a car. If a car was imported that didn’t fit into the statistical code, he understood it was put into a customised code where percentages would be placed against it. These customised codes had been applied in 116 instances.

It was his opinion that there should have been one database which would pick up all of the information without having to specify certain cars. He could not understand why Revenue would not explain openly the methods of calculating the OMSP.

He questioned the fairness of the system because the information was entered into the database by an officer in Rosslare who had not seen the car being presented. Their job was essentially to maintain and update the system over time to ensure the information was accurate. During the inspections the officer did not have access to any data that listed actual sales prices or landed prices of vehicles.

Following his analysis of the data supplied to him by the Revenue and his two inspections of their premises, he still does not know how the VRT system works.

In cross examination Mr. O’Callaghan accepted that an OMSP and depreciation code applied to a statistical code, which was put in place by Revenue in Rosslare. He agreed that OMSP is the dealer’s price for the new equivalent car but said he did not know how that was determined.

His report was based on a database which contained, he was told, all the cars the plaintiff had been involved with. He found statistical codes did not vary because of the year of the car but rather because of the attributes of the car. Counsel suggested that, based on his analysis, maybe half or more of the cars imported by the plaintiff were similar types of models. He could not answer that question other than to say that the multiple statistical codes on the system suggested that the VRT of the cars was different.

Mr. O’Callaghan could not answer whether similar cars imported would be on the same depreciation scale. It was hard for him to answer because the clusters of cars were by make, not by model. He disagreed that his conclusions about Revenue’s overuse of certain depreciation tables was unfounded because he had not gone into enough depth when analysing the clustering of imports. He could not answer the question based on the data he had.

It was put to him that the excel sheet used in compiling his report was incomplete as one column was capable of being expanded which contained further information in relation to the statistical codes. He said the database was as he received it and that he didn’t add any extras into it.

He did not know why the codes were different. It was down to the experts who created the codes to explain why they were different. He looked at the information given to him and, without having a detailed understanding of the codes, he could not have pieced the conclusion together. He agreed that had he used the additional column of information relating to the body type then, possibly, he could have differentiated between the vehicles.

In relation to the appeals system, he was told by Frank Burns the relevant period was 21 days. This corresponded with the evidence of Mr. Fogarty. That information was subsequently corrected by Dr. Bannister. The period was actually 30 days. The relevance of the extra nine days to appeal showed there was a flaw in the system. Data inside a system should, over time, modify actions relating to it. He compared it to being overcharged by banks and being compensated some years later. The whole point of using mainframes was their resilience and redundancy.

Counsel said the reason for the contradictory evidence on the length of the appeal process was because both were, technically, correct. Between 1993 and 2000 the appeal window was 21 days but this changed, with the introduction of the Finance Act 2001, to 30 days. Dr. Bannister had stated that if an applicant did not make an appeal within the period outlined, no further right of appeal could be taken. Therefore Revenue would have had no reason to retain the depreciation rate information used to compute the valuation.

Mr. O’Callaghan said that statement contradicted that of Mr. Frank Burns. From the point of view of profiling and understanding if the right depreciation codes had been applied Revenue should have retained the information so they could review the practice and answer any questions raised.

Counsel directed him to Dr. Bannister’s report where he had stated it was his understanding that financial transaction records were kept on-line by Revenue for five years and then archived. Mr. O’Callaghan made no comment.

Following on from the 2007 inspection he did not contact anyone in the Revenue with queries about the materials he had received. The only other thing that would have been of interest to him was accessing the Revenue PC in Rosslare. They had been told that what they had been given in discovery was everything that Revenue had in relation to the matter.

When asked why he had posed the question as to why there was a distinction between high and standard specification for Japanese cars and not, for example, on UK cars, he said he had been told by the Revenue that was the case. He agreed there was no evidence in his report to back up that comment.

The only criticism he had, following the meeting with the Revenue in 2012, was having to read Frank Burns affidavit to clear up a point about the data on the PC. He understood the reason for the initial inspection in 2007 was to allow the plaintiff representatives to see what was available in the office. His impression was that they were being brought to Rosslare to see something more than they should have been able to see from Cork.

He was directed to letters written by the plaintiff and defendants solicitors. The first, of 4th October 2004, related to the plaintiffs taking up the offer to inspect the Revenue office in Rosslare. Mr. O’Callaghan disagreed with counsel’s interpretation of the scope of the inspection saying that the Revenue solicitor’s reply letter, dated 27th August 2004, referred to “a database” whereas the plaintiff’s solicitor’s had referred to the “mainframe database”. He agreed there was a considerable lapse of time between August 2004 and February 2007 just to organise an inspection of the mainframe database.

He reiterated that there was no good reason to go to Rosslare other than to meet people and view equipment. He said they had been told in the affidavit of Frank Burns that there was a PC in Rosslare involved in the whole procedure.

Counsel referred to a letter written by the plaintiff’s solicitor on 20th April 2007 stating that they were reserving their position in relation to the PC. He agreed that, according to the documentation and correspondence, it seemed that his understanding of the inspection in Rosslare was wrong. He agreed that the OMSP and depreciation data were entered into the system by humans. Therefore it was irrelevant to the operation of any inspection of the mainframe computer system as to how the human inputs data into that system.
13. Evidence of Dr. Tony Murphy
Dr. Murphy, computer specialist, said his services were retained to look at the overall operation of the VRT system, not just the computer system, but also the human interaction with the system. There was a requirement to look at whether the information sought by the plaintiffs was reasonable, if the response from the Revenue was reasonable, to look at Mr. O’Callaghan’s work and methodologies, the processes he used and to do some validation on that. His role was not to do statistical analysis. The final issue he was asked to look at was the extent to which the inspector on scene inspecting the car was the key determinant in working out the VRT.

Revenue provided a CD in August 2004, which was updated in 2006, with additional data. He conducted a short analysis of the 2006 CD on a small basis to test some of the results that Mr. O’Callaghan had reached. He found there was a heavy bias towards the depreciation codes for cars with a low value. He would have assumed it would have been more evenly distributed.

He had prepared his report in September 2011 prior to attending the inspection of the Revenue offices in January 2012. The 2012 inspection had taken place because of changes made to the system. He had hoped to establish the basis upon which depreciation codes were changed, who made the decisions and how they were made. He got some answers but did not really find what he was looking for. He wanted to know if there were written procedures governing who could change a depreciation code. He also wanted to know why there was a separate segment for Japanese cars in terms of the kiosk system accessible to the public.

At the inspection in 2012 he asked a lot of questions that were, for the most part, answered. There were a number of specific issues raised and while he got some updates, there didn’t seem to be a formal procedure for managing and changing the codes. There was a master file of statistical codes which represented all the common models for sale in the country. On that master file were also depreciation codes which related to the statistical code in question. The other component of the system was a constant computational element which took into account not only the depreciation code but made adjustments for mileage, condition, age and the plus or minus 5%, depending on the month of the year.

Following the 2012 meeting he learned that there wasn’t a written formal set of protocols and that the depreciation codes had not been copied onto the archives. The explanation for having a separate calculation mechanism for Japanese cars on the kiosk screen, accessible by the public, was that it was for user convenience. He found this surprising and wondered why then there wasn’t one for German or British cars.

He said that financial transaction information should have been retained for review. There was a blank field in the record section that could have held this information. The plaintiffs were looking for data that would enable them to calculate or check how the VRT they were charged was calculated. He could not understand why the Revenue was taking an obstructive approach instead of providing what was basic elementary data to enable a company to calculate its VRT exposure.

It would have been possible for Revenue to redact any confidential information contained on the system in order to allow the plaintiff access information. He emphasised that this would not have been difficult to do. The claims by Revenue that providing the data sought would require substantial complex systems and programming, rendering it inaccessible, were not accurate. They were not dealing with hugely complicated data resources. The Revenue had a data extraction programme (“Clipper”) which would provide the data required in a couple of hours. He could not recall any discussions at the January 2012 meeting as to difficulties in copying data or providing data to the plaintiff.

Dr. Murphy said that the Revenue IT section would know exactly what was required. When they said it would not be possible to provide a working copy of the mainframe system on a PC that was correct but it was also misleading because, for what the plaintiff wanted to do, the information was easily available and could have been provided. It was almost impossible for the plaintiff to calculate what his liability should have been.

Dr. Murphy said that a distinction had to be made between archiving and back-up. A back-up is a short-term record of the data which is kept available in case there of an emergency, such as a fire. The archive is a completely different requirement as it is historical data that is generally kept for audit and analysis purposes. In this case, given the large amounts of money involved, there was potential for collusion and, for that reason, a good internal or external auditor should have wanted to validate that the transactions were all correct and above board.

The information which was not archived was the depreciation codes for individual transactions. The transaction file contained the specific details relating to individual cars. What struck him very clearly was that the depreciation code, which is a fundamental requirement for calculating the VRT, had not been copied over – it was just a set of zeros. It struck him that Revenue had copied practically everything else including, as he saw them, irrelevant details, such as colour. That the depreciation code was missing from the file was inexplicable.

He stated that Revenue had told them that depreciation code changes were maintained in hard copy. It would have been helpful if Revenue had given that data to the plaintiff when they had originally looked for it. He said that it would have been possible for the Revenue to regenerate depreciation codes from the hard copies. This was actually what they had done for 1994 onwards. Revenue had said they could not regenerate the codes for 1993 but their reasons were never fully explained.

Dr. Bannister said storing financial transactions for six years was normal but, in this case, the process was not a financial transaction but a price computation. Dr. Murphy that was semantics. There was no information given at the inspection he attended in January 2012 which addressed the concerns he had in relation to the non-archival of the depreciation codes.

In cross examination, counsel said Revenue had no need to retain the information after the expiry of the appeal period. Dr. Murphy said this was correct from an operational perspective. However, from an audit perspective, Revenue would need to retain the information. It was his understanding that Revenue kept financial transactions online for five years.

Counsel submitted that there was never any demand made by the Comptroller and Auditor General that Revenue should retain back-up materials of the records referred to by the plaintiff. Dr. Murphy said he could not speak for the internal auditors but if he were an auditor, he would be looking for the information.

It was his evidence that the only discretionary element open to the Revenue inspector, in deciding whether or not to apply the depreciation code, was the quality of the vehicle. The analysis in Sean O’Callaghan’s report showed that the quality was found to be ‘good’ in 90 – 95% of cases. This shows that there was literally no discretion open to the inspector. He agreed that Mr. O’Dowling and Mr. Riordan had given evidence that they imported good quality vehicles into Ireland and that therefore it was not surprising that such a high proportion of vehicles were classified as ‘good’.

Counsel said that the Clipper programme could not be used on the Revenue’s mainframe database because it was on a server based utility in Monaghan and that Revenue had made it clear, at the January 2012 meeting, that Clipper was used in this way. That was not the recollection of Dr. Murphy. He said Clipper was capable of going into mainframe files as it has adapters to do that. Regardless, all the back-up data or the archived data had been downloaded onto the PC in Rosslare. Certain information was taken off and given to the plaintiff but they were not given the depreciation codes.

He did not accept the possibility that the programme gave data which was current but not on the mainframe at the time the programme was run which meant three further processes were necessary. It was his contention that at the time the transaction was created, it would have taken from the master file of statistical codes the relevant data it needed, it would have recorded the details of the transaction and it would have posted the transaction into archives. Even if the data on the mainframe subsequently changed, which he agreed could happen, it would be of no relevance to the transaction file because things like the price and depreciation code would have been saved on the transaction file.

He agreed that decollated data had to be extracted from the access database but said that the programme that could be used to get the data for the plaintiff would have been the same database and there would be no need for a third database to do the calculations. The data the plaintiffs were looking for was lying on a database in Rosslare. All Revenue needed to have done was to select UCII data, press a button and they would have the relevant material. The protracted discussion about the mainframe was irrelevant. The data was accessible from the very beginning in exactly the form the plaintiff needed.

Dr. Murphy accepted that there was a separate database for each of the decollated data but said that it wouldn’t have had to be interrogated had the depreciation code been maintained as it should have been. From an operational perspective Revenue may not have needed to retain the information but that it should have been the practice from an archiving and audit perspective. He could not comment on the assertion that no one, apart from the plaintiff, had ever requested the information from Revenue. Technology had changed a lot from 1993 but it would have been very easy, even back in 1993, 1994 or 1995, to provide the data sought to the plaintiff.
14. Evidence of Ms. Ciara Quinlan
Ms. Quinlan, solicitor, with the plaintiff’s firm of solicitors in Cork, made a witness statement dealing with the inspection of the Revenue on 21 June 2007. She also attended a further inspection in January 2012 and took notes. She said Mr. Burns and Mr. Sherlock refused to furnish the plaintiff’s representatives with a response to any of their questions relating to OMSP’s or depreciation scales on the basis it was outside the scope of the inspection.

When they asked to inspect the paper record of valuations inputted into the system, they were told it was outside the scope of the inspection. They had been told beforehand that they would not be able to access the PC but, as they were there, they thought it would be remiss not to ask. They were refused access.

Ms. Quinlan referred to conflicting information they had been given by two of the Revenue officials. They had been told by Frank Burns that the decision to archive depreciation codes was made on a year on year basis. Kieran Coyle then told them that the reason some of the depreciation codes were not archived could have been the result of a programme default. Pat Mullins confirmed that Revenue had a paper record for the depreciation code which applied to particular vehicles. They asked if he might have the records for 1993 and he said he would check in due course, however Kieran Coyle said he doubted the records existed.

She had written to Mr. Sherlock outlining her dissatisfaction with the narrow and restrictive manner in which the inspection had been conducted. The reason for the 2012 meeting was Revenue had advised they were operating a new system and the plaintiffs wanted the opportunity to see it. From a technological, administrative and legal perspective the system looked different but it was still calculating VRT in the same manner.

In cross counsel referred to a letter of 16th February 2007, from the plaintiff’s solicitors to Revenue requesting access to the Revenue database for their expert witness. She said the matter had been raised in 1997 when the plaintiffs had first heard about the OMSP database and they had indicated to the Revenue that it would be helpful if they were allowed to examine it.

She said there were three letters concerning the matter in 1997, the last of which the Defendants did not respond to. The matter was again raised in 2004. The letter to which counsel was referring was the result of ten years of correspondence. The mainframe system was all that Revenue was prepared to show them. She said the scope of the meeting and inspection was not agreed but the Revenue’s position was accepted as they had no alternative.

Michael Loftus, representative for the plaintiff, had asked at the inspection if he could obtain reports from the mainframe system and Revenue said that the system would not allow for that.

She did not agree that the reason Revenue had not granted them access was because they deemed it unnecessary. Her understanding was that a year later Revenue was willing to show them the PC. It was her evidence that both her witness statement and evidence amounted to an allegation that Revenue was deliberately obstructing the plaintiff from obtaining information.

Counsel said that Revenue only brought IT people to the inspection. Ms. Quinlan pointed out that Kieran Coyle was not an IT expert but Head of Policy and Legislation. If Revenue had nothing to hide then why didn’t they allow the plaintiff access the full system.

Revenue wrote to the plaintiff’s solicitors on 10th October 2007, responding to criticism of the inspection. She said that not being given access to inspect the PC in Rosslare was not their chief criticism. Revenue had said an explanation was given by an officer regarding how the OMSP and depreciation characteristics of high versus standard specification were determined and that if the plaintiffs had failed to take a note, the explanation could be given again. She had taken a note of the inspection and Frank Burns had specifically refused to give information relating to OMSP.

What had been agreed was that Revenue would give the plaintiffs a ‘record dump’ with statistical codes and the associated OMSPs and depreciation codes. They had been given a sample file in 2003 / 2004 but, when they asked at the meeting if they could have the statistical codes with all the OMSPs and the depreciation codes, they were refused. She did not know why Revenue had initially agreed to give them the information and then refused at the meeting.

Counsel referred to requests for details as to how monthly adjustment regime for calculating depreciation was maintained and updated. She said it was incorrect to say that this position was clarified because they were told at the meeting that the monthly adjustment figures were only changed twice, not every nine months. It was put in place when the legislation was introduced in 1993 / 1994 and was then changed once to the plus or minus 5% monthly system sometime in 2000. When they asked why it changed to the plus or minus 5% system and when it happened they were refused the information. They subsequently received a response but it did not correspond with what they had been told at the meeting, i.e., that it changed every nine months.

On the day of the inspection Revenue said that they had never heard of an initialisation file. That claim was refuted in a letter dated 27 July 2007. They were told at the meeting that monthly backup’s of the system were carried out without a specific date. The plaintiffs subsequently received a letter saying that the systems were backed up every night.

In relation to accessing the PC in Rosslare, Ms. Quinlan confirmed that no arrangement was made on foot of the offer to inspect the PC, outlined in the letter of 16 October 2007, prior to January 2012. That letter stated that the experts for the plaintiff could inspect the VRT mainframe further as Revenue was willing to allow them access to the PC. She did not know whether an offer to meet with Revenue to discuss exactly what was needed to be inspected in order to progress matters was ever taken up as she stopped dealing with the matter. She did not know if a response had been furnished from her firm to Revenue on foot of a letter of 14th February 2008, outlining the panel of Revenue experts who would be prepared to meet the plaintiff’s experts without legal representatives present.

Ms. Quinlan agreed that the issue of discovery had been determined by Laffoy J. in 2006. In relation to inspection, no order was made because Laffoy J. noted that it had been agreed among the parties. Prior to the letter received from the Revenue on 27 March 2007, there had been no reference to the access to data held by them being confined only to the plaintiff’s data.
15. Evidence of Mr. Rick Yarrow
Counsel submitted that Mr. Yarrow had been retained by the plaintiffs to examine and advise in relation to the system of valuation adopted by the Revenue for the purposes of assigning VRT to vehicles.

Mr. Yarrow is an expert in the analysis of European vehicle pricing issues. In 2002 he founded Experteye AG which provides benchmarking services for the European automotive leasing industry, collecting data from major leasing companies in six European countries and compiling reports comparing their position relative to market averages.

Mr. Yarrow stated that the information available in relation to how the VRT system works in Ireland is unclear. He said he had seen depreciation tables but the exact basis upon which VRT is calculated is not clear. He conceded the system was a bit more transparent because of the on-line calculator but that had only been available recently. Prior to that the system was very opaque.

With regard to the current system he said that it works on a vehicle by vehicle basis, one single vehicle in isolation which makes it difficult to get a full picture of the whole pattern as to how the workings of the on-line system work. He did not recall any reference to what scale a particular vehicle was applied to.

Figure 1, para. 13 of his report showed a typical depreciation curve for Europe. New cars always lose significant percentages. He said that standard practice in the industry is to quote residual value as a percentage of the original new price.

He concluded from the analysis of used car values that there was no reason why depreciation trends should be any different in Ireland compared to any other market-place, because the factors that drive depreciation remain the same. Based on the new car guide values were slightly higher than the European average but not significantly. Throughout Europe, as far as he was aware, the taxation of vehicles is based on the actual price paid for the vehicle. He found the principle of levying taxation based on the price of an equivalent new vehicle to be illogical because the older the car is, the more difficult it will be to find an equivalent new vehicle available in the market place.

Referring to his graphs, Mr. Yarrow said that the most commonly used depreciation curves were not what he would normally expect to see for depreciation. He found it strange that the most commonly used scale should change over time when, as was his understanding, the mix of cars has been similar over time. He said that from 1994 to 1997/1999 the A1 scale was near a straight line or linear in terms of depreciation. He said he did not know of any cars which depreciated in line with that sort of trend.

Mr. Yarrow said he had made estimations based on what he thought to be the most commonly used scales but he accepted, following Mr. O’Callaghan’s evidence, that there were other more commonly used ones. He compared the excise tables with actual depreciation trends in Ireland. The excise tables were based on a percentage of the equivalent new vehicle price and, therefore, to compare them accurately with his analysis of the Car Sales Guide values, he had to adjust them to allow for inflation in new car prices. He allowed for inflation at 2% per annum. A 2% rate of inflation per annum was a reasonable assumption for increase for new car prices because, over the period of his index, increases ranged from 0.7% to 4%.

In relation to the 2006 A1 scale, he said it appeared the scale was inaccurate because there were differences of 30% in some cases. The Car Sales Guide median value for a three year old car was 60% but the A1 scales had a residual value of 84%, a difference of 24%, making it highly inaccurate. He said he had read a lot of documents which indicated that the Car Sales Guide values are high and, looking at the depreciation curve even without that information, he tended to agree with that. He agreed that the Car Sales Guide was tracking retail rather than trade-in prices as it tracked main dealers rather than all sales of second-hand cars.

Mr. Yarrow agreed he had the opportunity to witness the process of paying VRT for two vehicles in Cork in 2007. He said one was purely a paper driven process in an office where the vehicle was not presented for inspection and for the second one the official did not actually examine the vehicle being valued. There was no badge on the vehicle and he wasn’t sure what the vehicle was. He said the documentation showed the official identified it as a five door model when it was apparent that it was a four door saloon. There was no evidence that the official had any real experience or understanding of the motor industry or any ability to identify what the vehicle was. The vehicle was not driven or mechanically examined for the purposes of the test. Its condition was not inspected.

Mr. Yarrow carried out an exercise using the online VRT calculator. On the 1st of May 2012, he entered similar vehicle details into the VRT calculator with different mileages. In the first case he entered 40,000km and in the second, 1,500km per month since registration which, from January 2008 to May 2012, equalled 78,000km. He found that VRT in May 2012, for a car registered in January 2008 which had 40,000km on the clock, was €1,525.00 with an OMSP of €9,535.00. He entered the same vehicle details, but changed the mileage to 78,000km, and got exactly the same OMSP and VRT. He found that putting the registration date as December 2008 but with mileage of 40,000km yielded the same VRT of €1,525.00 and it remained €1,525.00 even if you upped the mileage to 61,000km.

He submitted that this experiment confirmed that the Irish system does not use true market valuation. It is totally illogical that two vehicles can have the same value and same rate of VRT when there is an 11 month difference between them.

The tables used by the Revenue to calculate excise duty did not reflect the actual level of depreciation of a used vehicle and this had the effect of overestimating the value of a used vehicle by as much as 40%, more typically 30% with a resultant increase in excise duty. In summary, he said that the depreciation tables used by Revenue for the purposes of calculating VRT since 1993 did not in any way reflect the real depreciation of vehicles and they were a long way away from the reality of true depreciation.

In cross examination Mr. Yarrow said he was aware it his report had been sent to the European Commission. Counsel asked if he knew what the outcome of the infringement proceedings against Ireland was and he said he did not and that he could not comment on the fact that the Commission decided to take an infringement proceeding against Ireland to require it to change the way it taxes vehicles of less than three months or which have less than 3,000km on the clock.

Mr. Yarrow said he only relied on one part of Mr. O’Callaghan’s report when preparing his own – the section in relation to the most commonly used scales. He assumed Mr. O’Callaghan’s sample related purely to imports by the plaintiff.

Mr. Yarrow agreed he had said the Car Sales Guide was a meaningful benchmark for the market. Mr. Yarrow said he had no comment to make on Mr. Dowling’s findings that Revenue OMSP’s and the guide prices were very close. He carried out a rigorous analysis of 40 vehicles which is statistically relevant of typical vehicles.

The document “Vehicle Registration Tax Section 8 Manual Valuation System for New and Used Vehicles” was referred to. Counsel submitted that had Mr. Yarrow read it while completing the online VRT calculator exercise, he would have discovered that the scales change from time to time because Revenue are trying to reflect market prices. Mr. Yarrow said it was outside the scope of his report and, accordingly, he could not comment on whether or not Revenue changed the depreciation scales occasionally. He looked at depreciation trends only and questioned the accuracy of Revenue’s interpretation of market conditions.
16. Evidence of Mr. Moore McDowell
Mr. McDowell, consultant economist with ECU Limited, prepared a report on the issues raised by the plaintiff. He also prepared a second report responding to issues raised in Dr. Bacon’s report.

In relation to his initial report, his understanding was that intra-community trade was affected by the imposition of VRT. VRT was introduced because the Government of the time wanted imported cars that were of a similar value to pay similar rates. Instead of relying on the price at which the car is sold, the method became to base VRT on the OMSP, a figure provided by the importer and one which Revenue is comfortable with.

He gave an example of the difference between VRT on an Irish bought car and the same model as a UK import. A car of equal value to the Irish car minus the VRT in the UK would pay a higher VRT entering Ireland than the same domestic car. By charging VRT on an OMSP, imported used cars are effectively taxed more expensively than domestic used cars. This distorts trade and is a tariff.

If Revenue relies on a depreciation schedule, which is supposed to capture any fall in value in Ireland relative to the new price of a vehicle, it is simple logic that if the depreciation rate isn’t correct, the basis for charging VRT will be incorrect. In his experience, rates brought in under VRT to calculate the VAT base were much too high when you compared them to the prices in the Car Sales Guide. The system relies on a depreciation rate which could be correct but you have no guarantee that it is correct.

He produced graphs to the court on identical models of Japanese cars imported into Ireland at six-monthly intervals which had three or four year sales prices from the Car Sales Guide. The graph showed that in the first year, the quantity of depreciation was much higher than in the second year. The data in the Car Sales Guide was only produced every six months and the implicit depreciation in the Vehicle Excise Tax, which was carried over into the VRT, was a fairly linear one.

It was his view that Revenue had failed to provide a rationalisation for the numerous schedules, the method of allocating a car to a schedule and the underlying depreciation function being used. The new car equivalent price was not an ideal system because it could be perceived as an example of information source bias or regulatory capture. If Revenue had an independent source of information, they would be likely to do a tougher job than if they are depending on people upon whom they will be imposing a price cap to tell them what the price should be.

In relation to extras, if air conditioning was installed at a cost of €1,500 to €2,000, four years later when they sold the car, it was as if there was no air conditioning at all as it had no effect on the price. Effectively the car is worth something but the extra is not. The VRT base price of the car is increased by virtue of the existence of an extra which has no commercial value.

He did not see the point of depreciation tables or their function if the Car Sales Guide is the source of information for the valuation of OMSPs. Assuming one trusted the Car Sales Guide he could not understand why it was not the only scale used.

Counsel referred to his second report.

Mr. McDowell said that the analysis upon which Dr. Bacon relied in his 2011 report did not justify the conclusions drawn. Dr. Bacon’s criticisms of the basis for the DKM projections were based on a serious misspecification of what the underlying market is. He believed Dr. Bacon’s defence of the structure of estimating depreciation was flawed and does not stand up.

In both Bacon reports the approach taken to define the market was to look at imports of new and used cars over long periods and treat them as being, in principle, dependent on income levels. What Dr. Bacon was looking at as the demand for new cars was actually the number of cars joining the existing stock. The key thing to look at is what determines the equilibrium stock of cars. If one just looked at cars coming into the country they miss the point. That was his most fundamental quarrel with Dr. Bacon’s approach. It was not difficult to find literature on the market. Dr. Bacon’s approach was a misspecification that vitiated the whole model.

Mr. McDowell said that when specifying the relationship between income and car ownership you have to allow for the possibility of saturation effects. The test to see whether the linkage between income and quantity being demanded was stable is the ‘Chow Test’. Dr. Bacon did not appear to have carried out this test.

He also criticised Dr. Bacon’s econometrics presentation. In some cases in the 2009 report he used instrumental variables but did not explain what effect they had. He was using a proxy for prices and did not give coefficients. There was no reported value for a constant term, which is very unusual. The only diagnostic test offered by Dr. Bacon was ‘R Squared’ and the problem with that is that with time series analysis you always get an abnormally high R Squared so it is not very persuasive.

There was no ‘Durbin-Watson’ statistic. One way to test whether error terms are random, serial or auto correlated is to use the Durbin-Watson test. The lack of this test amazed him.

His conclusion was that the specification was wrong, or there were missing variables which hadn’t been tested, or both. The results of a Durbin-Watson for this sample would have said something was badly wrong with the model and if a Durbin-Watson test was carried out it would show a positive over-correlation.

Dr. Bacon had used income as the main variable and as income falls, as so happened in 2008 and 2009, he should have allowed for that if he wanted the trend line to be correct. The cost of credit should also have been considered because when it rose, it was a reason why sales fell. He also referred to Dr. Bacon’s use of the exchange rate as an alternative to price. While he could understand his rationale for doing so, he had not gone about it the right way. He should have corrected the price variable rather than putting in the exchange rate. He had doubts about the actual exchange rate used. In his opinion the British Retail Price Index would have been preferable as it covers imports from all over the world. That would have given an idea of the average price of cars supplied to Ireland.

One other issue which had to be addressed what that of change of ownership. While it was connected to used car sales it was not a used car sale. It was a factor that needed to be taken into account and quantified. A further criticism was Dr. Bacon’s consideration of elasticities of demand. If you are going to have an elasticities of demand you have to define what ‘the demand’ is for. The numbers used by Dr. Bacon can only be used to predict long-term behaviour over time, subject to a whole series of assumptions which one might find were implausible.

Mr. McDowell discussed Dr. Bacon’s analysis and treatment of the market in terms of dividing it into new and used cars. He had essentially posited the existence of two separate markets. Dr. Bacon should have started with the stock and allowed for the fact that new and used imports are the mechanism for increasing stock. What drives them is the growth in stock. Dr. Bacon approached it by saying there were two distinct markets – one for new and one for used cars – which were not connected with the stock. Dr. Bacon’s report does not provide any basis for questioning the price elasticity of demand 0.67 as relied upon by Mr. Dowling. He had not given any evidence in terms of demonstrating that the 0.67 figure was wrong.

Mr. McDowell was not party to the discussions between DKM and the plaintiff in relation to how much money was lost and he was not taking any view on that matter. His only concern was whether the views presented by Dr. Bacon stood up to analysis. It was his opinion that they did not.

He said the present system of determining how much VRT is to be paid is a sort of OMSP approach yet no OMSP is proffered by the importer. Instead the OMSP is a Revenue estimate of what the car would sell for were it to be sold through a dealer and, given this is related to the Car Sales Guide, that means a sale through a main dealer. Obviously, because the car is sold at a price that includes a profit for the dealer, it is not based on the price which the dealer has paid for a domestic used car.

The price that the dealer has paid for the domestic used car contains the embedded VRT and, given that the margin for the dealer is positive, this means that the quantum of VRT chargeable on an imported used car exceeds the embedded VRT in a domestic equivalent car. Mr. McDowell said, from his understanding of EU sources, when used cars are imported they should not be subject to VRT in excess of the VRT embedded in the equivalent domestic used car. This suggested that the present system is in breach of the EU rules.

This was his position and also that of Brendan Dowling. All of the ‘arithmetic gymnastics’ presented to suggest otherwise was basically wrong or based on bizarre assumptions.

In relation to the DKM report Mr. McDowell said that the figures showed that the actual stock of vehicles in 1993 was 891,000 and this was projected to increase to 1.191 million is 1997. That projected increase was to come from imports. Dr. Bacon did not seem to understand that the DKM approach was based on an assumption that new car prices are downward sticky. This implies a permanent shift in the relative price of new cars, they become more expensive because used car prices fall, which increases the price of new cars on any given list price. The cost of changing a car will also increase. Dr. Bacon was not allowing for that adjustment and his estimation of 93% was missing the point. He had fallen into the trap of treating adjustments to the stock of vehicles as being adjustments to the market.

In cross examination Mr. McDowell said that if VRT worked properly in Ireland then the price of cars in Ireland, net of VRT, should be the same as the price of cars in the UK. The embedded VRT of the two should be the same. Dr. Bacon was contending that somehow VRT got re-embedded and that was an extraordinary concept. He disagreed that the value of the VRT remained constant throughout the life of the vehicle. The total VRT is given by the amount which was paid at the original registration and it doesn’t change. However the burden of that money is spread over the people who drive the car during its life.

Mr. McDowell said his analysis had dealt mainly with Ireland and the UK as examples of cars going backwards and forwards between EU States. He was aware that Mr. Dowling had made a complaint in 2003 to the European Commission. The fact that the Commission had not taken action on infringement proceedings in relation to VRT did not necessarily mean that it approved of the current situation.

Counsel directed him to the Commission Press Release of 26 January 2012 and the sentence “the residual value of the tax diminishes proportionately with the depreciation of the vehicle.” He did not agree that it could be garnered from that statement that the Commission was in agreement with Dr. Bacon’s approach to embedded VRT. He thought they were saying quite the opposite. The residual value of the tax diminishes proportionately with depreciation and therefore, if you sell it on, the embedded VRT is the same proportion of what you get for the car as a proportion of the original VRT paid on the car.

Counsel said that the EC’s position in relation to embedded VRT was clarified in the ‘FAQ’s section’ in the Commission’s document. Mr. McDowell said the only disagreement between him and the EC was what constituted the value of the vehicle. It was basic arithmetic and logical to conclude that the sum of the residual values could not exceed the original total. Mr. McDowell said that the wholesale price was not necessarily one which meant selling from an individual to a dealer. He rejected the statutory definition.

In relation to Dr. Bacon’s first report he said the analysis was defective because the price effect of -0.4 calculated was so weak in terms of its statistical reliability that, under conventional economic interpretation, an economist would say it was not significantly different from zero. Counsel said that Dr. Bacon had made his calculations by accepting the price elasticity of 0.67 as put forward by DKM. He would have to check that assertion because, if it was the case, then it was not the impression he had been given from reading Dr. Bacon’s reports.

He said counsel had failed to understand one of the principal points he was making in his critique of the Bacon report – Dr. Bacon’s approach was completely wrong because he treated the market as effectively being the imports of new and used cars.

Mr. McDowell was given the opportunity to read a further short report submitted by Dr. Bacon. He said that Dr. Bacon was suggesting that the relevant demand he was using was the demand for a flow. Mr. McDowell said that if you want to know what drives the additions to the stock you have to ask what the demand for the stock is. He fundamentally disagreed with Dr. Bacon’s analysis.

He reiterated that Dr. Bacon had described the total demand for cars as a demand for new cars. He said it didn’t apply because, in order to establish what his analysis is saying about the demand for new cars, you have to know what the stock is. The price elasticity of demand is not the price elasticity of demand for new cars but the price elasticity of cars generally. He had tried to show that you can get extraordinary increases, apparent increases and implied values for elasticities if all you look at is the swing item.

He disagreed with the statement that the results produced by DKM’s application of the elasticity of demand were incorrect. He wasn’t sure what Dr. Bacon was saying but that it seemed to be that over a three year period there would have been a further increase in the stock of approximately 9% of the opening stock.

The court asked, referring to Dr. Bacon’s elasticity application, could the stock referred to not be interpreted as meaning stock in trade as distinct from the total stock. Mr. McDowell did not believe so because stock in trade is an asset and, if the cost of holding the stock rises, it will reduce inventories. He said that both he, Dr. Bacon and DKM had ignored the issue of traders holding stocks.
17. Evidence of Mr. Martin Kenneally
Mr. Kenneally, an economist, Director of the Centre for Policy Studies and Senior Lecturer in Economics in University College Cork, was retained by the plaintiff to assess VRT.

In his report Mr. Kenneally included a table, drawn from an internal Revenue staff guide issued in 1992, illustrating how VRT worked. His evidence was that the only time there was a personalised touch in the valuation of a car was when Revenue categorised it as good or fair. Apart from that, the officer dealing with the valuation simply fed various characteristics of the car into a computer and it generated the OMSP according to a formula. As OMSP’s fluctuate, depending on market conditions, they represent a constructed artificial average for cars.

His analysis showed that the differential in 1996 between VAT and VRT was 228%. The discrepancy between the implied VAT-based estimates and VRT estimates for new cars were relatively minor. There was a big and unexplained discrepancy for used cars.

Dr. Bacon’s report raised doubts in his mind because the model did not predict the data as well as it should have done. It under-predicted the rise in new car registrations and missed the turning point in the market in the late 1990s.

In relation to assessing residual VRT, Mr. Kenneally gave a simple example of what the VRT would be on a new car costing €10,000 which he calculated at 20% or €2,000. He said if the car was later sold for €5,000 then the VRT would be €1,000. If a dealer added value to the car and sold it on for €6,000 the VRT would remain €1,000. He compared this to the situation of the plaintiff using the same car as an example. Revenue OMSP was €6,000 and VRT would be €1,200, even though the true value of the embedded VRT was €1,000. He said that was an example of an overestimation of €200. Revenue takes the price from the Car Sales Guide and, if the plaintiff imported an identical used car, it will be assessed as if at the point of purchase that VRT had been paid on the domestic resale, when in fact it is not paid.

The sampling base of the Car Sales Guide was insufficient because it just sampled a subset of the market. He counted 29 makes of cars with over 900 different models. To obtain one price quotation would require a search of almost a thousand observations. Such lengths were not gone to by the authors of the Car Sales Guide, who relied on the main distributor values. Even if the Car Sales Guide got the average right, the cars may be under-assessed and some would sell below average. Car sales over the internet were not sampled.

Mr. Kenneally made comments on the month of registration of cars. It was peculiar and that when a car was older than one year and presented to the Revenue before being sold, it was adjusted upwards 3%. If the same car was presented later on in the year it was adjusted downwards by 3%. Therefore if a car was registered in January and presented the following January, its depreciation value increased by 3%. He compared it with a car registered in December and presented in August where there was no adjustment. This showed a car could be younger and have its value unchanged whereas an older car gets a higher value.

In relation to mileage he said the Car Sales Guide recommends changes to the value of the car in respect of mileage. It differentiates between petrol and diesel models and between cars that have different size engines. The Car Sales Guide outlines 18 separate values, 15 of which exceed €50. There is no upper limit whereas, in comparison, Revenue put a limit in place with the maximum mileage that can be accounted for 10% of OMSP or €500.

Mr. Kenneally outlined the comparisons he had made between MVED and VRT. He compared the MVED scale with the A1 table used by Revenue over a short period of time, from 1992 to 1994. He found the age depreciation value systematically increased. He gave an example which showed that on a €10,000 car the value under MVED, two to three years later, would have been 6,000 whereas under VRT it would have been 7,300 rising to 7,900. Dr. Bacon’s report showed that in 2008 used car prices fell by 23% and new car prices by 3 or 4% but there was no downward adjustment in the age depreciation values and was not reflected in the Revenue’s depreciation tables.

In cross examination Mr. Kenneally denied that the scope of his analysis was limited to the impact of VRT on intra-community trade.

He believed that the model and structure of the age depreciation method in the computer valuation system was wrong. To determine the market value of cars it was necessary to go to the market. The system used by Revenue was a mathematical formula and therefore, not actual prices. The computer only gave, at best, an estimate of the average price. In his view the average price was biased upwards and could not be relied upon.

He agreed that VRT had similar characteristics to a turnover tax. It was his view that VRT resided in the vehicle and declined with it pro-rata.

He referred to fiscal and commercial risk because of the unnecessary degree of uncertainty as to the amount of VRT assessed. When Revenue assigns a car to a different schedule, this poses an additional fiscal risk which is not faced by the trader in domestic used cars. There is no third or fourth levying of VRT on domestic used cars.

The issue for him was not whether dealers who imported Japanese cars could trade profitably but rather, whether the imposition of the system impacts adversely on them as compared to a trader in domestic used cars. In his opinion the system did adversely affect them. In relation to the distinction between retail and wholesale sales, he described a sale to a dealer as a retail sale because it was a sale to the end user. The reason he did so was that such a sale was closer to a retail sale than to a wholesale one.
18. Evidence of Mr. Patrick Massey
Mr. Massey, an economist with thirty years experience, was asked to identify the appropriate way to apply VRT to imported used cars. Mr. Massey found that the Revenue estimate the amount of VRT on an imported used car on the basis of the retail price of an equivalent used domestic car. Contrary to Dr. Bacon’s report, he found there is no distortion due to charging VRT at the landed import price. He gave an example using two identical cars where the pre-VRT price and depreciation rates were the same in two separate countries. He found there was a differential in the price at which the importer sells the vehicle because more VRT is charged on the imported vehicle than the residual VRT.

The effect was that the imported car costs the dealer more. The dealer is then at a disadvantage relative to the domestic car. He has to either pass on the higher price and charge more, which puts him at a disadvantage, or accept a lower margin and match the lower price which means he suffers a loss. He found the current method used by the Revenue to calculate VRT places imported cars at a competitive disadvantage.

In cross examination Mr. Massey did not agree with the argument being put forward by the defendants regarding the calculation of VRT. In his view, the price the imported car should be subject to, in terms of calculating VRT, was the landed price. If a car appreciated in value because of some rarity that would be reflected in the price of the imported car. VRT would still be paid on the landed price. By using this model there would be no discrimination or distortion.

He said Dr. Bacon had failed to distinguish between the wholesale and retail price of a used car. He agreed that the retail price is the price the dealer sells the car to the end user for and that VRT is levied on the retail price. Ultimately he contended that VRT should be based on the price the dealer buys the imported car for.
19. Evidence of Mr. Kevin Kenny
Mr. Kenny, a chartered accountant and former tax partner at Ernst & Young in Cork, gave evidence that, at the time his statement was written, the VRT calculator was not available on the internet. Further, a link to a twenty page memorandum in Section 8 of the Employee Revenue Manual on VRT was a very recent addition to the VRT calculator webpage.

Mr. Kenny’s evidence was that what was unique about VRT, from a tax practitioner’s standpoint, is that there is some type of theoretical calculation of an OMSP. The concept of market value existed across a range of taxes but he had never seen a situation where the market value of an asset, in any tax, was calculated on a basis other than the actual market value of that asset at that point in time. It was an extremely unusual feature of VRT in the sense that Revenue operate it and that could have a “jarring effect with any tax advisor”.

Mr. Kenny said that two concepts were central – transparency and the ability to calculate tax. Transparency and certainty are important in a tax system and, for two taxes in particular, VAT and VRT, absolute certainty is needed because the trader, when disposing of an asset, needs to know precisely the tax impact of that transaction at that point in time because it impacts on his pricing. In his view it would be relatively easy to administer VRT on either the landed price or at the point of the third party sale.

Mr. Kenny referred to two publications from the Revenue, a “Traders Guide” issued in March 1993 and a “Revenue Notice VRT 1” from January 2003. In relation to the “Traders Guide”, while the chargeable value was outlined, there was no indication of background methodology as to how the Revenue had arrived at the OMSP. Having read it you were no further advanced in your knowledge. The document “Revenue Notice VRT 1” was effectively one page long and did nothing to outline the methodology used to arrive at a particular result.

Mr. Kenny said that even with the addition of the 20 page document detailing the various depreciation schedules to the online VRT calculator, any tax advisor would be “completely bewildered” as to why they current system existed. Another problematic issue is that the web calculator gives the initial OMSP. From his own experience, he was surprised to find that his car was valued at the current price and not the price he had paid for it eight years previously. Considering depreciation schedules were being applied he automatically assumed they would apply to the original price. He had never seen such a system anywhere and said it was completely illogical. From his research and the information available he found it was quite impossible to determine what the VRT was on any vehicle.

In relation to the distributor’s declared value he said that, based on general tax principles, it is surprising that a competitor, the manufacturer of the vehicle, could influence VRT.

He agreed that to make an appeal a person first had to pay the VRT required. This was not the case across all taxes. Appeals could be lodged against the Revenue for income, corporation and capital gains tax and an individual would not have to pay the disputed tax before lodging the appeal. VRT and Stamp Duty were the exceptions to this rule.

In cross examination Mr. Kenny said the difficulty was not in computing the applicable rate but, rather, it concerned the valuation of the vehicle for the purpose of applying the rate. He agreed the purpose of VRT was to tax cars at registration and there was nothing unusual about that. Mr. Kenny agreed that a trader could technically control when the taxable event occurs by postponing registration by keeping an imported vehicle in bond until he disposed of it to a third party but, with one amendment – a trader would wish to dispose of his stock at the earliest possible date, otherwise his working capital requirement would increase significantly.

Mr. Kenny said there was nothing in the legislation, memoranda or public information that referred to Revenue making material available to members of the public to assist in calculating VRT from 1998 on, but he had read that some CDs were made available to traders at various intervals.
20. Evidence of Mr. Donal O’Boyle
Mr. O’Boyle F.C.A., referred to the unique credit arrangement where the plaintiff was allowed 45 to 125 days credit from the date of a shipment landing in Ireland to pay for the vehicles. It was assumed that this credit would continue.

He said profit before taxation was £134,612 in 1990 and £161,825 in 1991.

The assumptions he made relating to the market were taken as those set out in the DKM report, which assumed a reduction in the VRT over valuation of 30% and, on that basis, gave a projected average gross margin for 1993 to 2008.

Mr. O’Boyle assumed that the plaintiff would invest its surplus in ten year Irish Government Bonds.

His calculation of loss was on the basis of the DKM report of the 31st December, 2010, but as the plaintiff could not have been in a position to accommodate the projected market share immediately, there would be a delay in projected profits, which he calculated as €3,224,914 on the basis of an increase of 1,800 units.

On the basis of the assumptions of interest, overheads and taxation, he concluded that the plaintiff suffered a loss of earnings over the period of the claim in the sum of €128,381,623.

Having examined the books of account of the plaintiffs, he concluded that they had been well kept. He noted that the audited accounts for the year ending the 31st October, 1993, was qualified in relation to the plaintiffs company’s recorded turnover comprising cash sales, over which there was no system of control on which the auditors could rely for the purpose of their audit. In relation to cash sales, the auditors had not obtained all of the information and explanations that he considered necessary and were unable to determine whether the proper accounting records had been maintained.

Mr. O’Boyle noted that the evidence of Fintan Riordan and Niall O’Dowling in relation to the number of vehicles sold by the plaintiff differed in each of the years 1990 to 1994. The focus was not on the books and records but on the bookkeepers employed who, Mr. O’Boyle said, were most diligent and competent and his review of the books supported that view.

He was of the view that the projected margins in the DKM report appeared to him to be reasonable and not inconsistent with the historic actual margin.
21. Evidence of Mr. Niall Butler
Mr. Butler joined the Revenue in 1975 and worked in various aspects of customs and excise until he was assigned to Rosslare. In 1992 he was appointed as a manager, assigned to the Central Vehicle Office, to set up and carry out administrative and operational duties in relation to the introduction of VRT. The deadline was 1st January 1993 when the single market came into being. The main job was to approve a network of dealers, or any other commercial entity, that wanted to deal in unregistered cars after 1st January 1993.

The chargeable event was the point of registration, filling out the form and handing it to the officer. The next step was for the Revenue officer to form an opinion as to the value of the vehicle but essentially, based on the legislation, it was on the first sale in the State in an open market.

There was about 60 to 65 staff working in the office in Rosslare initially but from June 1993 onwards it started to wind down, eventually leaving about 30, 25 of whom would have been researching the Irish market to ensure that the OMSP reflected market value in the country. The work on valuations consisted of setting up specific spreadsheets for every make and model and establishing values for those based on whatever publication was available.

The process wasn’t “absolutely exact” but that they took every piece of information available. The main variable was age but others were mileage, condition, the model itself and extras. They excluded variables like the negotiation skills of the buyer / seller and the pricing policy of the dealer, in order to ensure consistency. They researched every newspaper and magazine where cars were advertised and relied on dealers to provide them with information.

A huge amount of research went into valuing vehicles. They calculated VRT as a percentage of the OMSP, which itself was calculated by reducing the OMSP of the new vehicle in accordance with the depreciation table. The information in the depreciation tables came from researching actual market values. They then translated the actual market values into how that would be reflected as a percentage of the value as new and those values effectively became the depreciation values.

Depreciation tables were analysed to see whether they could build in a logarithm so that when a particular vehicle was assigned to a particular depreciation table, that table reflected the values of that particular model right along through its different ages.

By November 1992, before the system went live, they had fourteen depreciation tables.

By producing bands of depreciation they finally arrived at six depreciation tables (A1 to C2) but that they then discarded A2 because the research showed that no vehicle fell into that depreciation pattern.

One of three conditions could be applied to an imported car; good, fair or poor. The system itself provided a whole range of options but it was the examining officer at a VRO who would ultimately examine the car, identify its particulars and would then input those variables into the computer system. The system then provided a valuation.

He developed guidelines in partnership with Dr. Lennox’s office and these were given to all VRO’s. They set out a number of checks and balances that would have been carried out by management in those offices. There was an element of discretion available to the examining officer in terms of determining the condition of the cars. The OMSP had to reflect the value of any extras that were fitted prior to registration so they gathered as much information as they could in relation to the actual value of extras. When distributors brought in new cars they would supply information to the Revenue on disc with the details of the vehicle. Once the five digit statistical codes had been registered, they added on three further digits which distinguished the particular make and model of the imported version.

When he concluded his report, it was sent for comment and observation to Edge Anderson.

It remained a significant feature of the work of the CVO to continue to monitor and analyse car values in the actual market and then go in and refine and adjust the system. Minor adjustments were made to the depreciation tables where the car had not been registered until May or June. They used June as a benchmark and made adjustments accordingly.

When doing the research for the tables, the benchmark and only available value for a new vehicle at the time was the Recommended Retail Price (“RRP”). The RRP was published in the Car Sales Guide. There was negotiation between the distributors and the government and it was the end of November / early December 1992 when the main distributors agreed that their OMSP’s would come in at 94% of the RRSP.

Revenue built a compensating factor of 1.06 into the IT system to allow for the 6% adjustment. They continued to look at the market and refine and develop the depreciation tables. They moved up to 22 tables plus one, which was a stopper table. It became table number 23. They removed the supplementary adjustments for the first year because they didn’t reflect the market. The court asked if they removed them or adjusted them, as the figure suggested they went up from ½ % to 3%. He said they reduced it based on research and experience.

There was a concern that the values being produced by the system, mainly based on the depreciation tables, was actually undervaluing OMSP. Customs and Excise officials and Revenue officials did some surveys in relation to actual selling prices of a range of models. This consisted of looking at the sales prices of quite a number of second-hand Japanese sales and sending that data back to the VRO.

Mr. Butler said that the appeals process usually took about one week, there was no charge and the number made was quite low – 200 to 300 a year. Mr. O’Dowling had made a complaint that statistical codes were kept confidential from dealers. Mr. Butler said Revenue had a very open policy of providing information to dealers. They provided statistical codes on request to anybody who required them. At the beginning of 1993, people were looking for codes which were not on the system and that meant that research had to be done to find the information. Once they had the code and, where someone made an enquiry or asked for an estimate, they would print out the information which specified the make, model, statistical code and amount of VRT payable and the estimate would be maintained for 14 days.

They achieved a two day turn around for providing estimates in January 1993. Within six to eights weeks they had a one day turn around. From April 1993 they could have an answer within a few hours. It was the policy of the CVO that if they received any legitimate information that their values were out of sync with the market, they would do their research and adjust accordingly.

In cross examination Mr. Butler said he had taken up his position in the CVO in mid May 1992 and Dr. Leonard started two or three weeks later. The two main functions, as per the legislation, were that they had to develop a frame work for developing the OMSP and a framework for the registration tax by dealers. He agreed that the 1992 staff guide was released on the eve of the introduction of VRT. A flaw had been not producing a staff manual so that all staff were working off the same information however they had clear guidelines on what was required.

He was given a copy of the 1992 Act when he was assigned to the CVO. He was not given written instructions but the verbal instructions were very clear. Counsel asked if Mr. Butler could give an explanation for why the spreadsheets had disappeared and electronic or hard copies were not maintained. He said the spreadsheets would have changed and expanded over the preparatory months. They were done on ‘standalone computers’ using a software system that has since become obsolete. The files would have been contained on discs on standalone computers. The data that is currently on the Revenue mainframe came from that original research and accurately reflects the OMSP.

Mr. Butler said that a significant amount of general files would have been kept in relation to the ongoing functionality of the unit. He did not know why they were not discovered. He took no steps to safeguard documents for discovery as he was not involved and was being reassigned at that time.

Mr. Butler agreed he was involved in market research while down in Rosslare. Mr. Butler said he had no knowledge of how many people were employed at the Car Sales Guide, how often they collected data or their knowledge of the industry. He did not have discussions with the people in Car Sales Guide nor did he make enquiries as to how reliable their data was, how up to date they were or whether they were audited.

Counsel asked Mr. Butler what authority he had to re-introduce depreciation tables as a system of valuation. He replied that he had not introduced depreciation tables. What he and his team did was develop a system that produced OMSP’s in relation to particular used cars. His understanding was that the administrative practices he put in place did not require regulation.

He agreed that the statutory definition of OMSP was critical to his work. It had changed after he had written his report and 12 days before VRT was due to come into force. He did not alter his approach to his work because the OMSP of a used vehicle in the State was, to him, an easy concept to grasp. He could not recall paying any attention to the amended definition of OMSP in the Finance (No. 2) Act.

Mr. Butler said he did not get instructions in relation to maintaining the tax yield – his only instructions were to implement a law and design an OMSP that reflected actual market prices.

In relation to mileage counsel said the calculations were not logical – £50 per thousand miles up to a maximum of £500. Technically the same model and five year old car, one with 75,000 miles and the other with 200,000, would only have a difference in value of £500. The Car Sales Guide suggested an allowance but didn’t have a limit. Mr. Butler said that the market reality is that there is a limit.

In relation to extras, counsel said that Revenue depreciated extras at the cost they were based on a new car, when they may in fact have cost far less when initially bought. That was not consistent with trade practice. Counsel suggested it was done to maintain revenue yield. Mr. Butler’s understanding was that extras did retain their value as the car depreciated and that is why the new price was applied. In the guide, extras were depreciated by 50% in the first year, 25% in the second and third and in their fourth they are considered to have no residual value in the car.

Counsel asked why cars less than three months old were not subject to depreciation. Mr. Butler said the legislation required cars less than three months old to be treated as new. He would have discussed that with Dr. Lennox at the time as he would not have made a solo decision on something like that.

Mr. Butler had a very clear recollection of collecting every possible newspaper and publication they could get their hands on in relation to the car markets. Counsel asked why there was no inclusion of a common car, such as Ford, in the table contained in his report. Mr. Butler said it was possible that they had not done sufficient research on Ford at the time to include it. He was trying to think of a viable explanation and said that the cars listed were only examples. Other leading makes (such as Toyota) were missing from the tables. Mr. Butler insisted that his office had carried out in-depth research.

His report was written at a particular point during the research and they were ‘very very conscious’ that the research had to continue.

Dr. Lennox had set up the meeting with Edge Anderson. No documents were provided to Edge Anderson other than a copy of Mr. Butlers report.

Edge Anderson had only been supplied with the report and not the spreadsheets because they were only engaged to comment on the report. They did not ask for the spreadsheets.

Mr. Butler agreed the legislation did not require the use of depreciation tables.

Mr. Butler said that the purpose of his report in August 1992 was to provide a framework and give certain assurances that there was a system in place that would work. He agreed the main depreciation tables had never been published. He agreed that there was no information in Appendix C in relation to which vehicles were to be assigned to which tables.

Mr. Butler said that the system was based on continuous review and research. The plus and minus 5% was a supplementary adjustment depending on the month of registration of the used vehicle. Counsel said the market did not treat cars in the manner outlined where two cars, one bought in January 1990 and the other in December 1990, would effectively be depreciated at the same rate. They adjusted the car on the basis of the month that it was registered and did not take account of the variation in the months and year of first registration.

Mr. Butler said it was very easy system to understand. The OMSP of a new vehicle was declared by the main distributor. This did reflect actual market price because, while the distributors declared the OMSP as, on average 94% of the RRSP, they still retained the RRSP’s as a marketing tool in relation to their sales. There was a two-tier system in place. The court asked for clarification in relation to the VRT on new cars from 1st January 1993 being RRP less 6%. Mr. Butler said the declarations were quite formal and the legislation required them to be made three weeks in advance of the price coming into force.

Counsel said there was a ‘stratagem’ between SIMI and Revenue whereby part of the purchase price could be taken as delivery charges and not subjected to VRT by the seller. Mr. Butler would not have been aware of that but he was aware that the delivery charge was considered to be a service and not part of the OMSP. The law required registration tax to be paid at the time of registration when an invoice is provided, which is the normal course of business, but that the service and delivery charge could be construed as a service separate to the OMSP of the car.

Mr. Butler said that 35,000 vehicles were imported from the UK in 1993 where ‘no sale took place’. The court asked for clarification. He said the vast majority of those imports would have been private and that those sales would not have been picked up by the Car Sales Guide as they were not sales by dealers.

Mr. Butler said various people in the CVO decided which cars attached to the tables. Mr. Butler said the officers would have been working in the car market for two, three and six months, depending on when they started. Mr. Butler refuted the claim they had ‘abandoned the spreadsheets’ because it was too much trouble to update them. They recognised they could develop a system which brought in a range of tables, so having a separate depreciation for every single model on the market was unnecessary.

Counsel submitted the difficulty with the system was that no one had ever explained why particular cars were assigned to particular tables. That information was no longer available. Mr. Butler said there was nothing unusual about not keeping data but he accepted they had not retained it for posterity.

The court asked if an economic analysis of the depression caused by the extra imports had been carried out and counsel said it had not.

Counsel referred to a letter written by the plaintiff’s solicitors in 1994, complaining about the fact that the proposed valuation changes in relation to Japanese cars would amount to an increase of between 5 and 30 per cent over the existing values. Mr. Butler said it was likely the letter was drawn to Mr. Leonard’s attention. He did not know why the plaintiff received no reply. He and Mr. Leonard had carried out some research in relation to Japanese cars at that time and it was clear they were being undervalued. None of that research was available.

The report prepared by Niall Butler was drafted before the amendments in the Finance (No. 2) Act of 1992, were enacted. The report explains that the VRT on second hand vehicles would be calculated as a percentage of the OMSP. The OMSP would be calculated by reducing the OMSP of the new vehicle in accordance with a depreciation table, and incorporating further reductions for the condition and mileage.

The report continues:

“An importer will call to the local Vehicle Office with a second hand vehicle on which he intends to pay the Registration Tax.
The officer examines the vehicle. He notes the exact model, any extras, the mileage on the clock and then makes an informed judgment on the condition.

He returns to his office and, assuming that the model is currently available, he extracts the search code from a list supplied by the Central Motor Vehicle Office (CMVO) and keys this into the system. The system will then generate a list of models and statistical codes and the officer will identify the exact model.

He also assesses the total cost of extras from lists supplied. He then keys onto his screen the statistical code and total value of the extras, the date of first registration of the vehicle (or year and month of manufacture for unregistered second hand vehicles) the condition and the mileage. He then rechecks the data that he has keyed and inputs it into the system by pressing the transmit key.

The system will then prompt the value on which the registration tax is calculated. No further adjustments to this value should be required. Therefore, if a further adjustment was made by the examining officer by keying directly this would have to be flagged immediately to the system for subsequent investigation.

In cases where the statistical code for the model in question is not readily identifiable the officer will note all relevant details, complete an inquiry form and fax this to the CMVO. The statistical code and value will then be conveyed to the officer by the CMVO. A copy of an inquiry form currently used . . . is attached at Appendix B.

All inquiry cases would be dealt with in this manner.”

The calculation sequence is provided on the following page:-

A. The Stats Code generates a value on Age Depreciation Table.

B. The total amount for EXTRAS is added to the value at A.

C. DATE of first registration depreciates the values at B as specified in the Age Depreciation Table.

D. The CONDITION calculates an amount which will be a percentage of C.

E. The MILEAGE calculates a second amount of applicable.

F. The amount at D and E are added and the total is subtracted from the value at C.

G. The value thus generated at F is the value prompted to the officer.

The Butler Report concludes:

“It is impossible to emulate the complex and inconsistent system of second hand car valuation operated by the motor trade.

The proposed system does however go a long way to producing realistic market values which may not exactly mirror prices offered by individual traders. The motor trade itself accepts that the main criteria for the price paid for a car is that of supply and demand. The system obviously cannot cater for this but it can establish a reasonable OMSP for a vehicle using criteria that are acceptable, consistent and fair.”

The Butler Report states that “where possible a cross check was made with advertised selling prices in the newspapers to ensure there were no major disparities in the prices”.
20. Evidence of Mr. E. Campion
Mr. Campion, Assistant Principal in the CVO since 1995 described the developments in the VRT system. In 1995 the monthly adjustment, which had been in the range +3% to -3%, was changed to +5% to -5% as there was research conducted by Mr. Butler to support the restoration to that figure. It was evidence of how Revenue sought to improve the system to ensure it reflected market data.

Counsel referred him to a representative valuation review undertaken by Mr. O’Connor, Executive Officer in the Central Vehicle Office, conducted on 4th July 2011, which illustrated the treatment of direct Japanese imports. Mr. O’Connor used a Honda Edix, which did not exist in the Irish or UK markets. A Honda FRV was selected as it was considered a similar model. Based on his research Mr. O’Connor concluded that there was poor model recognition in the market and slow market interest. He reviewed the valuation downwards from the E1 to F1 scale.

Revenue had assimilated VRT into the taxes division with effect from 2003 and were required to produce monthly output statistics from that time on. There were no figures for codes under review before 2003. Reviews were carried out within the CVO and codes were amended or reviewed. Depreciation tables were not subject to the reviews but two further tables were added in 2002.

Mr. Campion explained the appeals process to the court and said Revenue endeavoured to respond within 30 days but, if it went over that time, the applicant was entitled to go to the Appeal Commissioner. If the amount of VRT should have been higher, s.145 of the Finance Act 2001 provided that the Revenue could insist on the applicant paying the excess. In reality that rarely happened. He could only think of one time in seventeen years where an applicant was asked to pay an excess.

He referred to his report and the table which showed all appeals lodged with the CVO from 1992 to 2010. The figure for 1993 showed 219 appeals lodged, being 0.64% of all used car registrations for that year (33,940). Of the appeals, 133 were successful. The small number of appeals suggested a customer satisfaction rating of 99.36%. An appeal lodged by Mr. Niall O’Dowling was answered within two days.

He understood that CDs were also made available to the trade from 1999 and said that the administration records in the VRT branch in Dublin showed that CDs were posted to the plaintiff on fairly regular dates throughout 1999 to 2001.

When asked how many estimates would be given in a year he said the figure of 75,000 would not surprise him. He said a difficulty might have arisen where a person sought to rely on an estimate received by telephone. It was simpler to honour an estimate received in writing.

In cross examination Mr. Campion said he had no evidence to give in relation to why the monthly adjustment range was ever at plus and minus 3% if the correct range was 5%. He did not have any direct evidence to state in relation to why, from 1993 to 1999, the incorrect percentages of plus and minus 3% were used in the administration of the system. He said the hybrid depreciation table began in November 1999. He could not tell how many hybrid codes existed. If the code was displayed on the Revenue system it would show the customisation.

He did not have an estimate for how many codes there were in total. He was only concerned with the codes that were subject to review. His responsibility included all active codes officially but, in terms of knowing the population of codes, he focussed on the ad valorem ones which he estimated at 18,000. He did not know how many codes were customised and he could not say how many had originated in any particular year.

Mr. Campion confirmed that Executive Officers in the CVO have responsibility for moving vehicles from one code to another. Their decisions do not have to be signed off. The Car Sales Guide was published once a month and records were not constantly updated to reflect that. The system was entirely manual and there was no systematic way of checking values.

Mr. Campion said that the test in the legislation is that Revenue should form a reasonable opinion when reviewing codes. Reviews took place possibly twice a year.

In 1993, 60.73% and in 1994, 82.5% of appeals resulted in refunds which, counsel said, suggested a very high rate of error. Mr. Campion disagreed. He said that the particular cars had features such as unrepaired crash damage and being in poor condition. Valuation was a subjective matter and different methods of research could yield different results.

He outlined the process of inputting information into the system. He said the value was reached by reference to market research, namely the Car Sales Guide. In the event of an appeal, the CVO officer researched the market and came to a conclusion. This research consisted of primarily contacting dealers.

Counsel suggested the steady increase to 2,041 refunds in 2009 showed the Revenue system was in error frequently. Mr. Campion said that he would be surprised if refunds were around 25%. It was an easy system where officials encouraged appeals. It was submitted that this was proof that the system was not working properly when Revenues’ own staff was encouraging people to appeal decisions.

Counsel referred to a letter from Mr. O’Leary, Assistant Principal, to Mr. Goodwin, Principal Officer, VRT Administration branch, dated 4 June 1997. It referred to the Mr. O’Leary’s reservations to publish the valuation database. The letter also stated, in relation to the Car Sales Guide, that,

“the influx of secondhand imports, mostly UK and Japanese, in recent years has created a situation where the guide no longer covers the entire range of vehicles available in the market”
and
“the problem for the CVO is the total dependence on the guide as a source of information”.
The letter also said,
“the existence of the guide allows us to adopt a minimalist research and analysis of the secondhand market”.
Mr. Campion’s position was that the Car Sales Guide greatly facilitated the research of the market.
Counsel referred to Mr. O’Connor’s Edix Report of 2011 where it was suggested the Revenue might replicate the research techniques used by the publishers of the Car Sales Guide. Mr. Campion was of the opinion that this was a reasonable conclusion.

Mr. Campion said he did not agree with the statement that “no code can be assumed to be completely correct”.

Counsel referred to where Mr. O’Leary’s letter said “codes are subjected to cursory ‘review’” and asked what the presence of the quotation marks implied. Mr. Campion said it seemed to be a form of posturing to exert pressure on the manager to allocate more staff to the CVO.

Counsel referred to the “CVO Submission”, of 14th July 1997 which said the choices were either to publish the entire system complete with new OMSP’s and depreciation tables or to issue a set of tables covering all 10,500 codes but only providing values for years of availability. Mr. Campion did not think either of those things were done. Instead, a kiosk system was set up where the user made selections and the system generated a VRT estimate.

Counsel then referred to the quotes from the CVO Submission

“whether this limited publication would satisfy our obligations under Freedom of Information in the context of the UCII court case is a matter for legal advice”
and
“the extent to which our full system is exposed to public scrutiny will determine the amount of corrective action required within the CVO”.
Mr. Campion said this was a reference to earlier reports where Mr. O’Leary was looking for additional information and said it was indicative of his wish to perfect the database.
Counsel said what was being suggested was that the more public scrutiny there was of the system, the more corrective action would be necessary. Mr. Campion said that the system was fit for use and that he interpreted the quotes as a desire to have a system which, when the public accessed it, could be relied upon. Counsel asked if OMSP’s had been audited by the Revenue and Mr. Campion said they would go into new vehicle vendors and conduct surveys. The Assistant Principal was responsible for checking the accuracy of the OMSP’s

A further quote from the Submission “…nondisclosure removes the possibility of such challenges…the key element will be the frequency of reviews and resources to date within the CVO have not permitted a satisfactory performance in this regard”. Counsel referred to the fact that the report stated that 3,000 codes had not been reviewed for at least 12 months which represented 37% of the total database and 23% of all registrations in the previous year. Mr. Campion said that was not a satisfactory situation and he would wish that the codes would be reviewed at least once a year.

Counsel then referred to the “Report of the Working Group” dated September 1997: “Since its introduction policy in relation to the valuation system has been not to reveal how it works to the motor trade or the general public”. Mr. Campion was not aware of any such policy but he was aware of certain factors, for example, complaints from the Irish Motor Dealers Association that the system discriminated against used Japanese cars and criticism from members of the public that the system of valuation was arbitrary and secretive. The purpose of the working group was an attempt to achieve greater transparency. He was not aware of Mr. O’Leary’s concerns and would not have characterised aspects as ‘flaws’. He would have said they were necessary enhancements.

Counsel asked why Mr. Butler constructed an entire system of allocating existing vehicles to Revenue codes back in 1992 and Mr. Campion said it was preparatory work and there was great benefit in having codes set up and ready.
23. Evidence of Dr. Les Lennox
Dr. Lennox, former Principal Officer of the Revenue Commissioners, said that around the time the VRT system was being developed, many representations were received. There were concerns across the car industry that the system would cause problems. He referred to a document dated 5th October 1992 which was written by Colm O’Herlihy, the former Revenue official who acted as a consultant for the plaintiff and a number of the traders in 1992. He said that in many ways Mr. O’Herlihy was the architect of the current VRT system as, in his document, he had recommended using OMSP’s and depreciation tables. Dr. Lennox said that the ideas were tweaked and refined but the underlying idea was Mr. O’Herlihys.

Counsel referred to Mr. Butler’s report and his reference to ‘maintenance of the revenue yield’. He said he never had an instruction from anybody telling him that he had to protect revenue in developing the VRT system. Dr. Lennox said leading up to the meeting of 22nd September 1993, the trade in general had concerns about the VRT system and some of the second hand car importers were unhappy.

He explained to the trade at that meeting that the prices would be adjusted to reflect the research Revenue had gone through. He felt at the time that there were efforts made by the trade to explain this ‘kind of situation away’. The trade wanted to discuss the imminent increase in the OMSP for Japanese imports and what they perceived to be the lack of equity in that new and second-hand cars were effectively dealt with in a different manner.

Dr. Lennox had a note of the September 1993 meeting. Mr. O’Dowling and Mr. Riordan stated that Revenue was acting in an illegal way and both quoted EU laws to support their position. Dr. Lennox said he felt the meeting was being dominated by a small number of traders and he tried to open it to everyone. Mr. O’Dowling presented a folder at the meeting which contained cars he contended would not attract the OMSP as valued by Revenue if they were sold. It was Mr. O’Dowling’s view that VRT should be paid on the invoice price of the cars imported.

Dr. Lennox said there was no mention of invoices or problems concerning invoices at the meeting. The trade was aware that Revenue had the right and remit to do audits. The trade was asked if they would prefer to do business with Revenue on that basis and there was a strong negative response to that proposition. Counsel said that it had been claimed in evidence that this was a threat. Dr. Lennox refuted this because Revenue reserved the right to audit as they saw fit. Revenue had already carried out extensive research into the prices achieved for cars for the purpose of the meeting.

In cross examination Dr. Lennox disagreed that nothing other than the Car Sales Guide was used to determine values. He had not contacted the publishers and he did not know how they collected their data. He could not say if the prices listed in the Guide were actual RRSP or asking prices.

He was not aware of discussions with SIMI with a view to giving them concessions in order that they would not object to the new system. He was not aware of the Revenue Commissioners giving concessions to new car importers.

Dr. Lennox agreed that the reason SIMI would want information on the value of second hand imports was so that they could see how those vehicles were being valued by Revenue to ensure they weren’t posing a competitive threat to domestic used cars. However, he said he could not comment on and knew nothing about, a letter from the Minister for Finance to SIMI, where it stated that SIMI would be given the opportunity to meet with the Revenue periodically to investigate specific complaints about undervaluation.

SIMI were also offered another concession in relation to delivery charges for new cars where the letter stated that “provided they are shown separately on the invoice, the charges will be excluded from the OMSP”. Dr. Lennox said his understanding was that the delivery charges were always outside of the system. Dr. Lennox said he could not remember concessions being made to SIMI that involved him.

Counsel asked why Edge Anderson was not asked to review Appendix C of the Butler Report on the eve of the introduction of VRT (which moved the number of scales from 5 to 14). Dr. Lennox did not think they would have been in a position to add any value at that stage. Dr. Lennox did not know why Edge Anderson had only been provided with the Butler Report and no other documentation or spreadsheets. He could not say why their involvement with the Revenue was so sparsely documented.
24. Report and Evidence of Dr. Peter Bacon
Dr. Bacon, economist, was asked to review the submissions and reports submitted by the experts on the plaintiffs’ side. He prepared a report in December 2011 which was before the court. He summarised his finding by saying there is no discrimination in the treatment of domestic and imported used cars with respect to VRT.

In his report of December 2011, Dr. Bacon referred to the plaintiff’s target market segment of Japanese used cars of less than five years old. The stock of cars rose quite rapidly over the period in contention. Sales of new cars peaked in the late 1990s and again in 2006 – 2007, followed by with a sharp fall attributed to the economic downturn.

Car ownership remained quite low compared to other high tax Member States in the EU. There was no simple relationship between new and used car sales. Income was the key driver in demand with a one to one relationship for new cars. Price elasticity for new cars was minus 0.4 and cross-elasticity between competing models was much higher in the range three to five.

The alleged bias of 30% excess VRT charged on imports, contained in the reports of the plaintiffs’ expert witnesses, rests on an argument that Revenue calculated VRT liability on the basis of schedules which underestimated the rate of depreciation. Dr. Bacon found no foundation to support that allegation. He submitted that the schedules were used only as an administrative tool to ensure consistency and efficiency. Cars were valued against prevailing used car prices in Ireland as published in the Car Sales Guide.

Dr. Bacon said that the three people from the Revenue who had given him instruction were Mr. Kieran Coyle, Principal Officer, Mr. Sean Kennedy, economist and Mr. Eamon Campion, based in Rosslare. His office had spoken with Sean Kennedy and asked him his understanding of how the depreciation tables were used. It was based on that information that he submitted his evidence. He said that on the afternoon of 16th November 2011 his office spoke with Mr. Campion, who provided a similar account to the evidence he himself had submitted to the court. Mr. Campion had said that the purpose of the depreciation tables was to ensure a consistency across the various regional offices and were a means of alerting Revenue to possible fraud.

Dr. Bacon referred to a second element in the claim of DKM 2011 being based on a calculation that provided an estimate of the impact of the alleged bias on the business of the plaintiff. He regarded the calculation as complex and involving the creation of a hypothetical car market in Ireland for the years 1993 – 2009, that differed substantially from the car sector that actually existed. It was based on the assumption that a lower VRT rate on imported used cars would have provided a boost to car ownership in Ireland, a major boost to imported used cars – particularly those sourced in Japan – and would have facilitated the plaintiff in greatly expanding its business. Ultimately, it was calculated that the plaintiff would have imported 26 times more cars that it actually did register in that period.

Dr. Bacon found it hard to see how a 7.5% reduction in price, as estimated by DKM, could give an increase of 2,500% in sales. Inelasticity is a characteristic feature of the demand for cars. Where elasticity is less than one, it is a fact that a reduction in price will not lead to an increase in revenue. Where inelasticity is at unity, a reduction in price will lead to the same revenue.

The calculation involved supplying elasticity to various levels of demand and assumptions in relation to the car market. The elasticities used are in line with reasonable estimates but the way in which they are used is unusual. The basis for the calculation is the allegation that the VRT that was charged on used imported cars in this period was 30% higher than it should have. The basis for this estimate, apart altogether from arguments in relation to the underlying concepts, is unclear.

He said the argument that VRT should be levied on wholesale prices leads to a conclusion that 23% of the VRT charged was excessive, i.e. the wholesale or landed price at which Japanese cars arrive into Ireland was 23% less than the price that was used by the Revenue to calculate VRT. The argument that the depreciation rates used were too small leads to the conclusion that the actual market price of such cars was 30 to 40% less than the estimated market price.

The assumption of 30% overpayment of VRT would appear to be a middle point, but there is no logic to this. Furthermore, if these assertions are correct, it follows that the price at which a used car imported by the plaintiff could have been sold on the open market was substantially less than the landed cost price of that car. Obviously, Dr. Bacon concludes, such a business would not be sustainable.

He believed that there were major problems with the calculation arising from a number of unreasonable assumptions and from a number of fundamental mathematical and other technical errors.

Those could be summarised in a series of six errors that have accumulative effect on the calculation.

1. The first is a mis-definition of demand so that the elasticity of demand is applied to the stock of cars rather than to annual demand.
2. The share in new cars is assumed to fall following a reduction in the price of used cars. However, the new market share of new cars is then applied to the original market size to estimate demand for new cars, rather than to the larger market size that would exist following the fallen price.

3. The market share of used cars is artificially inflated relative to the underlying assumptions being increased by thirty percentage points rather than by 30%. Dr. Bacon regards these as basic errors which are not a matter of opinion. Together they account for 75% of the total loss of sales that are estimated.

4. An assumption that new car manufacturers would not respond to a large loss of their market share and that the domestic used car market would not fall in response to a big rise in the supply of used cars onto the market. The argument in relation to this issue is fairly conclusive as it is inconceivable that the market would not react to a big increase in the supply of used cars and, as a result, the cross-elasticity is wrongly applied. The price of domestic used cars would definitely fall if this happened.

5. An assumption that the share of used Japanese cars would have risen to 60% although there is no evidence to suggest it could have achieved or sustained a market share at anything close to this level.

6. Finally, a claim that the plaintiff would have maintained a market share of 20% in a rapidly growing and profitable market.

Dr. Bacon tabulates the impact of correcting those errors which he calculates as accounting for 98.7% of the incremental sales identified in the claim as follows:

Table 4.4 – Impact of removing errors from calculation
Incremental Imports after Correction Impact after correlation % of total remaining after correction
Original
43,659

Error 1
70,399
-23,260
75.2%
Error 2
66,224
-3,775
71.1%
Error 3
23,835
-42,769
25.4%
Error 4
5,491
-18,344
5.9%
Error 5
2,363
-3,128
2.5%
Error 6
1,193
1,170
1.3%
He concluded that, when the errors were removed, there was a 7.5% reduction in the price and this resulted in an increase of 33% in sales, not 2,500% as maintained by DKM.

He said the idea of embedded VRT is that the value of the VRT continues to exist through the life of the vehicle and exists proportionally to the value of the vehicle. If VRT was 25% on day one then it will be 25% of the retail value at a point in time in the future when the price of the vehicle has depreciated.

Dr. Bacon said the plaintiffs’ were proposing that the VRT base for imported vehicles should be different than for domestic vehicles. The law states that the base is the retail price, therefore the claimant’s position is inferring that the law should be something different from what it is. He could not see any discrimination in how Revenue practiced the application of VRT. There were no barriers to entry in the motor trade so the market would reach equilibrium in terms of price and margin.

He referred to the appeals process and said about 2% of VRT decisions had been appealed. If there was the alleged injustice, unfairness and bias being imposed on participants in a segment of the market, you would expect that number to be higher than 2%.

In cross examination he said the plaintiffs’ argument was focussed on depreciation tables. Brendan Dowling had contended that imported cars were overvalued because of depreciation. Dr. Bacon said that that was not how Revenue valued cars. An officer of the Revenue had told him that depreciation schedules were not used to calculate the OMSP’s for used imports, but were merely used for administrative purposes.

Counsel said that Revenue stating they did not use depreciation schedules was clearly fundamental to Dr. Bacon’s entire report, and was at variance with everything in the reports of Mr. Dowling, Mr. McDowell and Mr. Kenneally. Dr. Bacon said the information he was given by Revenue led him to believe that the experts for the plaintiffs had misinterpreted how the Revenue value cars.

Dr. Bacon said that the basis of his analysis was his belief that the practice of using the Car Sales Guide was widespread within the trade. Revenue had not said anything to him about statistical codes but he did not see why they would. He had never questioned the information he had been given by Revenue as he presumed he was being told the truth. He did not look at the depreciation tables nor did he ask for information explaining the system. In cross-examination he agreed that he did not carry out any analysis of the accuracy of the depreciation tables or whether or not the guide prices actually reflected prices throughout the market for second hand vehicles. He took the statistics and summarised what had happened.

He agreed that when a domestic main dealer buys a used car, adds a margin to it and sells it for a higher price, no VRT is charged on the margin. The margin can be as high as 30%. If a dealer buys a Japanese import instead of a domestic vehicle and adds a margin, VRT is charged on the margin. Dr. Bacon said in that scenario VRT is included in the margin by virtue of the fact that it is levied on the retail price.

While he did not disagree with the process used by DKM to estimate the percentage of incremental demand which they believed would be met by imports, he did not agree with DKM defining demand as the stock of cars rather than the annual demand and with the adjustment period of three years.

Counsel maintained that applying price elasticities to stock was standard in the literature. Dr. Bacon disagreed saying they were trying to measure how demand changes in response to a price change, not the ultimate effect on the stock of cars as a result of a price change.

Counsel put it to Dr. Bacon that his approach was ‘eccentric’ and ‘unorthodox’ and that nobody in the economic community, including the EC and ESRI, adopted such an approach. It was not approved by Mr. Kenneally, Mr. Dowling, Mr. Massey or Mr. McDowell.

Patrick Massey believed that Dr. Bacon had failed to distinguish between the wholesale and retail price of a used car and the difference between them. Mr. Massey, contrary to Dr. Bacon’s report, said that there was no distortion due to charging VRT at the landed import price.

Brendan Dowling of DKM was of the view that Dr. Bacon’s model was for the annual demand of cars as distinct from stock. He felt this was a mistake on Dr. Bacon’s part because the DKM report found that Dr. Bacon’s model was essentially an income elasticity model.

Dr. Bacon’s model examined the figures for 1993, showing that new car sales amounted to 60,800, with the registered stock at the time being 891,000. The ratio of new cars to stock was 6.8%. The Bacon model suggested that a 10% rise in income would lead to a 10% rise in new car sales but, in reality, when applied only increased car ownership by 0.68%. Mr. Dowling believed that the Bacon model performed poorly in 2009 which illustrated that it had little explanatory power.

Moore McDowell believed that Dr. Bacon’s criticisms were based on a misspecification of what the underlying market was. What he was looking at as the demand for new cars was actually the number of cars joining the existing stock.

He had used income as the main variable but had not considered the cost of credit. He did not calculate price effect.

He did not define what “the demand” was for. He appeared to have considered the car market as comprising of a separate market, but nonetheless, applied the concept of ‘one price’ in order to conclude that used and new cars are not the same market.

He did not seem to understand that the DKM approach was based on the assumption that new car prices are downwards sticky. This implies a permanent shift in the relative price of new cars as they become more expensive and cost more to change because used car prices fall.

Counsel referred to figure 2.9 at page 14 of Dr. Bacon’s report at the graph which was supposed to show ‘predicted demand’. The difference between the predicted and actual demand was 80,000 units, which suggested that the model failed and did not do what it was supposed to – predict registrations.

Dr. Bacon said his estimation, if the plaintiffs’ claims were correct, was that the plaintiff would have sold an additional 1,193 cars.
25. Evidence of Mr. Michael Fogarty
Mr. Fogarty, Revenue Official, outlined the development of the computer system which was released on the 1st January, 1993, in order to calculate VRT. Its second function was to register a vehicle by “birth certificate”. He referred to kiosks introduced in the VROs in 1998, which gave a snapshot of data was taken from the Revenue system and updated five nights a week. Revenue officials were given a desktop version of the kiosk to answer questions from individuals calling with queries in relation to estimates for VRT.

Revenue then issued CDs, which allowed the trade to input information and come up with an estimate of VRT.

From 2002 a new online service was available for dealers which allowed them to interact with Revenue and register vehicles from their premises. In 2004 the VRT calculator was introduced online. A new system was also introduced that year whereby distributors could upload statistical codes to the Revenue via Revenue Online Services (ROS). This allowed officials to inspect information submitted and approve it. It could then be stored on the system and matched against other vehicles. Also in 2004 a Vehicle Technical System (VTS) as part of an Integrated Taxation Processing (ITP) was developed.

Mr. Fogarty said it was customary in Revenue to design systems that didn’t waste storage and could store more data than was needed for operational purposes. The systems would cease at six or seven o’clock in the evening, after which, nightly batch runs were done. Payments and returns for various taxes were put into the system and they would then be ready to use the next day.

In cross examination Mr. Fogarty said he had been responsible for the management and development of the VRT system since 2007 and had peripheral involvement prior to that. His involvement in VRT prior to 2007 would have been ad hoc and infrequent. He and his team made some amendments to the mainframe system and occasionally hired experts.

The function to amend statistical codes rested with the officers in Rosslare. The Revenue Inspector had no discretion to change the OMSP, the underlying statistical code or the values associated with that code. His understanding was that the VRO officer inputs the statistical code, the condition, mileage and extras. He referred to the public touch kiosks being available in three locations.

Mr. Fogarty could not definitively answer if CDs given to the trade containing the statistical codes were available prior to 1999. In his opinion it was time consuming to prepare the CDs.

A letter dated 17th May 2001, was sent by Revenue to CD-Rom subscribers, updating the January 2001 CD-ROM. It stated that the CD-ROMs containing the statistical codes could not be accessed.

His role as a manager was to oversee and he was not aware of any deliberate policy within the Revenue to suppress information from the public. However Revenue business managers would occasionally decide, for reasons of confidentiality, that certain information should not be made available to the public.

Dr. Murphy had stated accessing the Revenue mainframe was possible using a ‘COBOL Programme’. Mr. Fogarty said, even at its simplest, the massive mainframe could not have been ported and made available on a PC with all of the system components it would need to allow it to interact. The amount of data held and stored by the mainframe was vast.

The Vehicle Technical System was introduced in 2004 and had the full history of amendments made to the codes since 2004. However the mainframe system was not capable of storing the full history of amendments made to OMSPs and depreciation codes. The maximum number it could store was three. Mr. Fogarty was not aware why the system was designed in that way. He said it was probably the case that details of three amendments was sufficient for Revenue’s needs. In 2009 a Bull NovaScale system (Helios) was introduced. Since November 2011 Revenue no longer use the mainframe system.

The system was designed to be able to store the Depreciation Group Code but it seemed to him, because of a programming error, that wasn’t picked up when the programme was developed and it didn’t go ahead. It was remedied by November / December 2011 but he could not say if it was fixed before then.

Counsel asked if it was appropriate in a system, which was controlling significant amounts of revenue for the State, for individuals to have to go and talk to others and ask for their recollection on a transaction. He said it was probably a rare enough occurrence because the vast majority of VRT cases are just registered normally. He did not perceive any operational difficulties for Revenue.

Mr. Fogarty maintained it was incorrect to suggest it would be a simple job to provide a working version of the Revenue system on a PC. Mainframes were not portable. The Bull NovaScale had taken 320 days to develop with the Revenue team of nine along with six external Bull experts over nine months.
26. Evidence of Declan Sherlock, Deputy Revenue Solicitor
Mr. Sherlock attended with Revenue Officials in the Central Vehicle Office in Rosslare on the 21st June, 2007, to allow the plaintiffs to inspect the operation of the mainframe VRT system.

He referred to a letter of the 27th March, 2007, from the Revenue Solicitor to the plaintiff indicating that “historical data in general is not stored on the system”. The plaintiffs’ solicitor, by letter of the 20th April, 2007, noted the letter of the 27th March.

The inspection with the plaintiffs experts took place over three hours and allowed those experts to take print outs. There were 38 queries which were responded to. Where it was not possible to answer these immediately, the Revenue Officials agreed to write to the plaintiffs’ experts with their answers after the meeting. Had the plaintiffs experts required a further meeting it could have been arranged.

In relation to depreciation codes, Mr. Burns of the Revenue had answered Mr. Loftus’s questions that the statistical codes and depreciation codes were not available on the mainframe.

Manual code records were refused as the request to the court via discovery had not been granted.

The PC was not part of the mainframe and the plaintiff was told that it would not be available for inspection. However, the information on the PC had already been furnished in Mr. Burns’s affidavit of discovery of the 28th June, 2006.

Moreover, the computer disc was furnished to the plaintiff on the 27th July, 2006.

Mr. Sherlock said he was happy to stand over the version of events that occurred at the inspection. He declined the request for manual records because the plaintiff representatives were looking for market research and that order was refused by the court when applied for. When Mr. Loftus asked, he intervened and said it was outside the scope of the investigation in light of the High Court order which was not appealed. Mr. Loftus also referred to the PC and asked if he could see it and again he indicated this was outside the scope of the investigation.

A further offer was made to allow the plaintiffs to inspect the VRT mainframe and that was done in January 2012. There was no further correspondence from the plaintiffs following his letter of 14 February 2008 until 15 October 2010 stating they were intending to proceed with their claim.

In cross examination counsel referred Mr. Sherlock to the Revenue Customer Charter. Mr. Sherlock said it existed from 1998 but its ethos would have existed long before then within the Revenue. Counsel referred to the section marked “Information and Assistance” where it stated:-

“you can expect to be given the necessary information and all reasonable assistance to enable you to clearly understand and meet your tax and custom obligations and to claim your entitlements and credits”.
Reference was then made to a letter of 25 March 1994. Here the plaintiffs’ solicitor asked Revenue to explain “what is the established normal values of similar vehicles sold in the State”. No response was received by the plaintiffs.
Counsel asked how the lack of response to correspondence sent by the plaintiff’s solicitor to the Revenue tied in with the aims of the Revenue Customer Charter. Mr. Sherlock said he would have expected that there would have been a response

Counsel then referred to the 1997 memorandum prepared by Revenue official John O’Leary. Suppressing information and masking statistical codes was hardly consistent with the ethos in the Revenue Charter. Mr. Sherlock said he had no particular comment to make but that he was not prepared to concede that point.

Counsel said Laffoy J. had made no order in respect of the scope of the inspection, saying it was the subject of discussions between the parties. Mr. Sherlock maintained that what the plaintiffs were seeking was outside the scope of the order.
27. Evidence of Mr. Paul Jacobs
Mr. Jacobs, partner at Grant Thornton, was asked by the defendants to review the report of Mr. O’Boyle, to test the assumptions he had adopted, to review the financial performance of the plaintiff and to review the economists’ reports. He relied upon the financial statements for the plaintiff provided in discovery and reviewed them from September 1989 to 31 October 2008.

He was not provided with enough information to determine the calculation of projected gross margin per unit as estimated by DKM, nor did DKM provide a calculation in relation to costs. Mr. Jacobs did not feel Mr. O’Boyle had tested his theory adequately. He felt that he had undertaken a more rigorous exercise.

He was not provided with financial statements from 2009 and 2010.

The court notes that the 2009 financial statements consist of an abridged balance sheet only. There was no directors’ report or any reference in the auditors report to litigation. Stock had been reduced to €23,793; net current assets reduced from €581,000 to €390,000 and there was an increase in creditors from €734,000 to €932,000. The auditors reported that the financial situation warranted a s. 40 statement.

Mr. Jacobs stated that Fintan Riordan incorporated Munster Car Importers Limited in 1995 and started trading in 2000. The accounts showed it had the same registered offices as the plaintiff. Mr. Riordan and his wife were also directors of Sluggera Cross Garage Limited which was struck off the register in 1995 for non-submission of annual returns.

Mr. O’Dowling’s company, Sports Car Centre Limited was incorporated on the 14th June, 1995, and had abridged accounts from 1996 to 2010.

That company had gross profits of £394,600 and operating profits of £113,300 in 1997. In 1998 the gross profits were £884,000 while the operating profits were £453,000.

Mr. Jacobs did a detailed analysis of the trading profit and loss account of the plaintiff and calculated that the actual annual gross profit percentage had increased from 12% to 20% and back to 16% over the period 1990 to 1996.

The plaintiff had relied in directors loans of €612,000 in 208 and loans from connected companies of it being Munster Car Importers Limited of €535,000 in the same year.

In relation to the plaintiff he said that for the period ended 31st August 1990, the company achieved sales of IR£2.7 million and increased a further 6% by 31st October 1992. Mr. Jacobs went through the figures and said that by 1992 the company had net assets of £165,345.00. The amount of stock they had by 1993 suggested an almost doubling in the size of stock compared with the levels of sales. There was an increase of over 40% and yet sales remained static, only up by 10%.

In 1990 the plaintiff achieved a gross profit of £320,000, which was 12% of total sales. This increased to 12% and 17% but fell to 14.3% for year ended 1992. The plaintiff made 21% in the first period, 24% in the second and back to 21% which was good money but did not represent the scale of business contemplated by the multimillion euro claim. The auditors’ reports were unqualified for these periods.

Turning to the period 1992 to 1996 Mr. Jacobs said that total sales fell by 24% down to £2.2 million but nearly offsetting that was a decrease in the purchase price of cars. The sales value went down but it cost less to buy the cars and so the gross margin was about the same. In relation to the direct cost of sales, this had reduced substantially from £187,000 to £138,000. When everything was taken into account there was an increase in the gross margin from 14.3% to 20.4%. The plaintiff made a loss in 1993 of £27,403. In that year there was a considerable increase in directors’ remuneration and the cost of rent.

To the end of 1996, the two year figure in the accounts showed that the plaintiff achieved sales of £3.463 million, which is £1.7 million per year. If that were the case, that represented a 21% decrease from the 1993 position. The gross profit for the two years was £681,000 which represented 16.6% for the year 1996. This was a profit of £4,541.00. Directors’ remuneration was down to £31,000 and rent changed from £128,000 to £64,000.

Mr. Jacobs said his analysis showed that the plaintiff recorded a decrease in sales of 24% from IR£2.9 million to £2.2 million year ended 31 October 1993. 1992 showed a decrease in profit compared with 1991 and 1993 showed an increase in percentage. That was the year VRT was introduced. For 1994 and 1995 he only had one set of accounts but for the two year period the gross profit percentage was less than 20%. 1996 showed a drop in gross profit percentage. Overall he found gross profit percentage increased in 1993 and that is not consistent with the allegations made by the plaintiff about the effect of the introduction of VRT.

The court said that there was the issue of the arbitrary increase of some 30% in 1994. Mr. Jacobs said that in relation to gross profit percentage there was no noticeable adverse impact in 1994 and 1995 which was evident from the financial statements of the plaintiff. One of the most striking things was that sales for 1997 and 1998 were high and then there was quite a substantial fall off in the years 1999 and 2000. Sales declined from 16.6% in 1996 to 6.6% in 1999. This period coincided with the establishment of Sports Car Imports Limited by Mr. O’Dowling.

Mr. Jacobs said shipping and stevedoring was £56,296 in 1997 with increases to £246,000 in 1998 and £188,000 in 1999. By year end 31 October 2001, sales had dropped 41% to £665,642. That marked the first time the plaintiff became loss making. Directors’ remuneration was £50,000 in 2001, up from £33,000 in 2000. Sales increased in 2005, up 21% on the previous year. This fell dramatically in subsequent years and by 2007 it was down to £335,000. There was a gross profit margin of 30% in 2005 but this was contributed to the down sizing of the business which meant the sales base was lower.

In relation to overheads, in 1990 the figure was 8.5% of sales. This increased to 22% in 1999. 1993 was a significant year with regards to directors’ remuneration, rent and rates. Mr. Jacob’s believed those payments caused the plaintiff to make a loss that year. The cost of interest was significant. In 1990 it was £34,428. This increased to £58,000 in 1991, £36,000 in 1992, £39,000 in 1993 and £52,000 in 1994 and 1995. In his opinion there was an inconsistency between the evidence of Mr. Murakami and Mr. O’Boyle in relation to interest. Mr. Murakami’s evidence was that 120 days credit was given from the date of the letter of credit issued in Japan whereas Mr. O’Boyle was of the impression that the plaintiff received 45 to 100 days credit from the date the cars landed in Ireland. He said the O’Boyle report purported to say that there was no interest cost at all involved in the importation of used cars into Ireland. He did not think that was an accurate assessment of the position.

The financial statements were qualified in 1993 and, after a change in auditors, from 1995 to 1998.

He said the qualification from the auditor was suggestive that the auditor had a difficulty in relation to the control systems which were in place within the plaintiff company. In his experience the qualification would not have been widespread. He was surprised that the qualification related to the plaintiff’s cash sales.

The reasonableness check by Mr. O’Boyle was referable to Johnson and Perrott Limited accounts for 2004 which Mr. O’Boyle said were comparable. Johnson and Perrott was the only company reviewed as part of what Mr. O’Boyle referred to as the sample. Mr. Jacobs questioned the validity of that being a reasonable comparator given that its turnover in 1993 was £27 million (£2.2 million for the plaintiff) while net assets were £5.6 million as compared to £0.1 million for the plaintiff.

Moreover, Johnson and Perrott had a rental car subsidiary and was an agent for Volvo and Opel while the plaintiff only dealt with used cars.

The claim for lost incremental margin in 1993 was not consistent under any assessment with the actual gross profits received by the plaintiff in the preceding years. Mr. O’Boyle had asserted that, had there been no change to the tax system, the plaintiff would have achieved incremental gross profit in 1993 amounting to €5.7 million in addition to those actually achieved. This would have represented ten times the gross profit actually achieved in the previous year (1992) which would have been highly unlikely. No explanation was given by Mr. O’Boyle to substantiate such an increase. Figure 4.1 in the Grant Thornton Report provided a comparison of claimed loss incremental margin as compared to the actual gross margin achieved (1993-2008) which showed graphically the scale of the lost incremental profit margin claimed from 1993 to 2008 compared to the actual gross margin from 1990 to 2008.

He said it was a relevant consideration that:

1. Other companies associated with the directors were competitors and may have had an adverse effect on the plaintiff profits;
2. Mr. O’Dowling’s departure in 1995 may have had an adverse affect on the plaintiffs profits;

3. Mr. O’Riordan became a shareholder in Munster Car Importers Limited in 1995, even though it did not trade until 2000.

The assumptions of the saved overheads of 19% of incremental margin was too simplistic to apply over the period.
Mr. Jacobs concluded that in addition to the errors identified in the Bacon report, he identified a number of important factors which from his point of view showed that the assessment of the claim had not adequately taken into account a number of important considerations including, but not limited to:

(a) The inconsistency of the claim for incremental gross profits when compared with historic profits and cash flows. The O’Boyle report did not explain why the plaintiff would have achieved such a significant increase in its business volumes and gross profits in 1993 compared with earlier years. Given his experience it would have been particularly challenging, if not highly unlikely, for a company such as the plaintiff to increase its gross profits by such a magnitude within one year as contemplated by the claim. Moreover, the challenge/ability of a company to increase its gross margin by in excess of ten times its previous years gross margin in one year (ie. from the actual 1992 gross margin to estimated incremental gross margin in 1993), noting that this could have a cumulative effect on latter years.
(b) The lack of a track record of the plaintiff in generating the levels of profits and cash flows which are contemplated by the claim;

(c) The fact that gross profit margin actually increased in 1993 to 1996, compared with 1990 to 1992 – the relevance of 1993 being the year in which the VRT regime was introduced. That issue was not addressed in the O’Boyle Report.

(d) The qualification to the audit report from year ending the 31st October, 1993, to 31st October, 1996 in relation to a lack of adequate system of control governing car sales;

(e) The impact of the loss of one of the company’s shareholders/directors (a potential loss of management to the plaintiff) and the establishment by him of another company which appears to have operated with a similar business to the plaintiff and a concern that the expert analysis submitted on behalf of the plaintiff did not make reference to Munster Car Importers Limited.

Based on his review of the information provided to him, taking all of the evidence together, in Mr. Jacobs’ opinion the claim for lost earnings of €128.4 million is unsubstantiated.
28. Evidence of Prof. Frank Bannister
Frank Bannister, Chartered Engineer, is the Associate Professor at Information Systems in the School of Computer Science and Statistics in Trinity College, Dublin since September 1994, having been previously employed by PwC as an information technology management consultant for sixteen years.

He has had a number of engagements with the Revenues’ Information Communications Technology and Logistics Division and has undertaken extensive study in Consumer Trust in Service Quality in the Revenue Online Services (ROS) with other colleagues.

In his opinion the ICT and L. Division in Revenue is highly competent and operating to professional standards. It was the first organisation in the Central Public Service to invest in computer technology.

He referred to the witness statements of Mr. Sean O’Callaghan, Ms. Ciara Quinlan and Dr. Tony Murphy. Both Mr. O’Callaghan’s and Dr. Murphy’s statements contained a number of misunderstandings and ambiguities, which in the case of the former, had no relevance to the question of the data available to the plaintiffs. He referred to Mr. O’Callaghan references to OMSP and depreciation rates but did not include other factors such a mileage and condition. It was not clear whether Mr. O’Callaghan’s reference to data being removed from the system on a yearly basis was dated from five years earlier or the date of proceeding. Backups were not made on a monthly basis but on a daily basis. Mr. O’Callaghan says that “Revenue were unable to supply all the data relating to this case”, his understanding was that most of the data was available and, where it was not possible to provide the data on the spot, all of the relevant and available data could either be provided or regenerated, although this would take time and require manual intervention. He referred to the daily backups and storing of data off site.

Revenue faced a particular constraint with the size of disc storage packs on the Bull framework which would fill up and would prevent further data being written to them. This data was and is available for retrieval but can no longer be updated.

Mr. O’Callaghan stated that not keeping full historical records and transactions recorded would seem to be serious flaw in the archive of the RCHI VIL and backup policy of such a national important collection system. This was not necessarily a serious flaw in systems designed which was to register vehicles and collect VRT. The person paying VRT had 30 days (not 21 days, as stated by Mr. Fogarty) to appeal the VRT assessment, following which there was no subsequent right of appeal. From the view point of the Revenue Operations, therefore the depreciation rate information used to compute this value is no longer of importance.

Dr. Murphy was of the view that depreciation rates were not saved to, save in the cost of storage. His enquiries were that nobody was aware of that being said and that historic codes were not of operational relevance after the 30 day appeal period expired.

Dr. Murphy had stated that “on information in relation to how OMSP and depreciation data is determined was consistently withheld by Revenue. This information was easily available and could have been supplied by the Revenue”. Professor Bannister said that the second of those statements was not valid as the relevant data was not always available. The depreciation code, hence the OMSP, of a particular model of vehicle could change a number of times during the models life time.

Professor Bannister agreed that storage of financial transactions for six years was normal. However, the process referred to was not a financial transaction but a price computation.

It is only when the VRT charge is paid that a financial transaction occurs. Based on discussion with Revenue officials it was his understanding that such transaction records are, and always have been, kept on line by the Revenue for five years and then archived.

He agreed with the evidence of Mr. Fogarty as to the difficulties in making a version of the main frame system available to him on a PC that the plaintiffs could use for their own analysis.

The court accepts the evidence of Prof. Bannister as to the purpose for which the computer records existed: to collect VRT and to register vehicles. The calculation of OMSP was not the financial transaction. That came with the payment of VRT by the person registering the vehicle.

While there are differences of opinion as to the 2007 meeting in Rosslare, the court accepts the evidence of Mr. Sherlock that the Revenue officials would deal with many of the 38 questions that had been put and sent those in writing to the plaintiffs experts. There is, however, no evidence as to whether this was done or not.

The court also notes that Mr. Sherlock had told the plaintiff’s solicitor that depreciation tables were not available and no issue was taken in the plaintiff’s solicitors reply.

Professor Bannister has dealt with this from a technical point of view in relation to the purpose of depreciation and the changes in the depreciation schedule which render them not necessary to be kept on the main frame.

While there had been reluctance by the Revenue to give the plaintiff the data requested, the court is satisfied that the process undertaken by the Revenue officials did consider the factors such as mileage and condition in addition to depreciation.

The court is of the view that the straight line depreciation commented on by Mr. Yarrow did not accord with international market data which shows the high depreciation in earlier years of most models. However the statutory definition of new cars which extends to cars of up to three months sold and with mileage of 3,000 km is a plausible explanation of cars being held in bond and not taxed until they are older.

However there was no evidence one way or the other in this regard.
29. Evaluation of Directors’ Evidence
The court considers that the evidence of both directors, but in particular that of Mr. O’Dowling, form the evidential basis for the expert reports. All the instructions M. O’Dowling gave to the experts related to direct imports of used cars from Japan.

Mr. Riordan referred to 44 cars imported from Northern Ireland but these imports were not the subject of analysis by DKM. Mr. Boyle’s instructions were to apply the same excess VRT rates to them as applied to Japanese imports.

The court is aware of the limited time Mr. O’Dowling was with the plaintiff from the time of the introduction of VRT on the 1st January, 1993 to his departure in September 1995, less than three years later. This was, he said, as a result of his dissatisfaction with the way VRT operated. When pressed, he said that that was the only reason for the break up between himself and Mr. Riordan. Both agreed that the parting was amicable. Both developed their own independent businesses of importing cars and, as appears clear, even from the incomplete records of the plaintiff, they imported less Japanese cars than before and much less than the overall increase in the importation of used Japanese cars into the Irish market. There was no convincing evidence why the plaintiffs’ competitors, under the same VRT system, increased their imports during that period.

Mr. O’Dowling had said that he was not satisfied with the extent of discovery. While the Revenue did show a reluctance in complying with information regarding tables of depreciation, it is acknowledged that some progress was eventually made by providing more information to the public. Moreover, the complaint in relation to discovery was a matter for interlocutory applications which, as is clear from the decision of Laffoy J. on the 1st March, 2006, was somewhat dilatory. It appears that from that time it was Sports Car Sales Limited rather than the plaintiff who sought information.

The plaintiff had a copy of Niall Butler’s report of the 28th August, 1992, which outlined the steps taken by the Revenue in ascertaining the OMSP. The statement therein that “it is impossible to emulate the complex and inconsistent system of second hand car valuation operated by the motor trade” and that “the proposed system does however, go a long way to producing realistic market values which may not exactly mirror prices offered by individual traders” explained the position of the Revenue. The motor trade itself accepts that the main criteria for the price paid for a car is that of supply and demand. The system obviously cannot cater for this but it can establish a reasonable OMSP for a vehicle using criteria that are acceptable, consistent and fair.

The evidence was that Mr. Colm O’Herlihy, who had been a Principal Officer with the excise division of the Revenue and a person experienced with MVED, was an expert in the area whose expertise was relied on by the plaintiff. It is unclear when Mr. O’Herlihy ceased to act for the plaintiff. A letter from Mr. O’Herlihy to the Revenue dated the 5th October, 1992, on behalf of the plaintiff and another trader asked the Revenue to monitor non registration, but did not complain of VRT.

Mr. O’Dowling repeated under cross examination that the plaintiff was practicing blindly under the VRT system which was “constantly changing”, that estimates were “continually changing on a month by month basis” and that there was “continuous interference when VRT was introduced”. Referring to the scrappage scheme, he said the reduction of the rate of tax and an increase in the open market selling price “led to higher payments of VRT” and that the “tax was continually on an upward trend” which “turned out as a simple liability”.

While the court might expect some element of exaggeration in relation to the evidence, there is no evidence to prove the allegations made. There was no claim that when Mr. O’Herlihy was acting for the plaintiff, that the plaintiff was “purchasing blind”. As a matter of fact, the tax was not “continually” on an upward trend. More importantly those complaints related to the rate of tax and not the determination of OMSP.

In relation to the appeal process, Mr. O’Dowling said that the plaintiff never got a favourable answer, its invoices were never accepted and that the Revenue was judge, jury and executioner. The plaintiff did not agree with the appeal process on the basis it was too long and time consuming. No evidence was given of the time taken. The first appeal took one, not three, months. No evidence was given as to the number of appeals, the success rate or the length of time taken. His own evidence was indeed, that appeals were successful but that OMSP’s were still too high.

Mr. O’Dowling said that new car dealers never appealed because the new cars were valued by them and that “perhaps somewhere in the region of 75% may have been overvalued”. The court assumes that he was referring to the recommended retail price. In any even, no evidence was given as to the 75%. His assertion was unsubstantiated.

Moreover, while there was an assertion Mr. O’Dowling had negotiated a contract with the Japanese Nazak shipping line, with a carrying capacity of 5,000 to 8,000 cars, there was no evidence for an expectation that the plaintiff would ever reach that capacity, given that the figures of cars imported by the plaintiff had decreased from a high of 850 in 1990 under MVED to 600 in 1993 and 1994 and further, gradually declined from September 1995, when Mr. O’Dowling left the plaintiff.

Mr. Murakami’s evidence was that he thought he had shipped new and used cars. He shipped cars to many dealers in Ireland up to 2008, but could not remember when he had stopped shipping to the plaintiff. He did not remember shipping cars to Munster Car Imports Limited (Mr. Riordan’s company). He did ship to Sports Cars Centre Limited (Mr. O’Dowling’s company after September 1995). The court accepts the evidence in this regard.

Mr. Riordan’s evidence was that the plaintiff had been given a loan in 2010 – 2011 by Sports Car Centre Limited. No accounts were in evidence for those years.

Mr. Murakami said that he was shipping 150 to 300 cars to Ireland in the early 1990s and the potential demand for used cars in Ireland was 6000 to 8000 used cars per month (equating to 7,200 to 9,600). This does not accord with the capacity of the market, given that the total number of new registrations was between 90,000 to 98,000 for 1991 – 1993. He agreed that that could have been a miscalculation, but was based on the New Zealand experience, where he was shipping 8,900 used cars per month in the mid 1990s. Later he referred to such exports to New Zealand in the period 1987 – 1988, but could not be sure of the statistics. No comparison was given between the two markets.

The court is of the view that there is no basis for such projection as there is no evidence of what proportion of potential imports would have been taken up by the plaintiff.

It is unclear what was the cause and effect of the declining proportion of the plaintiff imports.

Mr. O’Dowling referred to “an increase of upwards of 23% on their best selling models” in January 1993, notwithstanding the notified increase in Japanese OMSPs.

Mr. Niall Butler’s evidence was that in 1993, some 35,000 used cars were imported from the UK privately and were not picked up by the Car Sales Guide. No evidence was given in relation to the degree to which this affected the overall price of used cars in Ireland in that year. It is clear that an increase in supply of that magnitude must have depressed prices of used cars significantly given that a total of used vehicles, as calculated in the Bacon report, for 1996 – 1998 was on average 46,000 (of which, on average 17,000 were from Japan).

Mr. O’Dowling’s evidence was that he noticed in January 1994, that the estimates had increased in amount while, at the same time, VRT had dropped from 25.7% to 23.2%.

The court has noted his evidence that the cost and transport of the Japanese imports were less than 25% of the retail price when sold in Ireland. His evidence was that on the retail price of £4,500 the gross margin was £3,000 before VAT and VRT. It was uncertain whether this was for 1993/1994 or for the total period. It is also clear that any increase in VRT or on the underlying OMSP could, on his evidence, amount to any more than the 23% of the VRT tax rate of 23.2% which was 5.29% of the OMSP.

Given the margins indicated this does not explain the downward trend in imports.

It seems to the court that an important intervening variable was the resignation or retirement of Mr. O’Dowling from the plaintiff. It was he who had the presence and contacts in Japan. It is somewhat inconsistent to then say that he had everything in place from finance, shipping, dealers and product and to say that it was the new regime of VRT that caused him to abandon the plaintiff. Mr. Murakami’s evidence was that he did not know Mr. O’Dowling had ceased to be a director and shareholder. He did not have any dealings with Mr. Riordan after 1995. He continued to ship to Sports Car Centre Limited, Mr. O’Dowling’s company. The court concludes that it is likely that that company director benefited from the decline of the plaintiff. It follows that this factor, rather than the incidence of VRT together with the fall of market prices of used cars generally due to increased competition, was decisive.

It is even more extraordinary to claim that the plaintiff was a small player as a result of the introduction of VRT. The reference to the scrappage scheme is an example of “continuous interference when VRT was introduced” applied, of course, to other dealers of Japanese cars.

The court notes the complaints made to the European Commission in 1993 stating that “we are now facing a disastrous situation if our Government are to proceed with their new legislation to increase VRT”.

It would appear to be a misstatement that the plaintiff was importing 600 cars per half year when they had imported only 608 cars in 1993 and 613 in 1994. It was not an answer to say that the plaintiff was carrying stock from the old MVED system. Indeed the complaint was made that it was this old stock that caused the plaintiff to do badly compared with its competitors. No complaint is made in these proceedings of MVED.

The court notes that VRT was paid on registration in the name of a buyer and not on stock held by the plaintiff.

Indeed, it was agreed by Mr. O’Dowling that there was no complaint of secrecy and that the complaint was about the increases in VRT in February 1994.

The letter from the European Union of the 6th December, 1993 is critical. There was no discrimination against products of other Member States. This was followed by an equally clear letter from Dr. Lennox of the 14th December, 1993.

The reference by Mr. O’Dowling to an official in the Commission saying that “the way the Irish are calculating tax is illegal” is, of course, hearsay. That official did not give evidence, nor did Mr. O’Dowling have any contemporaneous note to that effect despite saying that he had a copy of a telephone conversation with him.

The decision of the 11th November, 1994 by Mr. Scriviner in the official journal is also critical. That decision stated that the imposition of VRT on new vehicles could not be deemed to infringe Article 95 of the E.C. Treaty. Community law did not require Member States to apply the real value of the vehicle as the taxable amount for this type of tax is not harmonised at European level. The scale will always be somewhat arbitrary.

The court was concerned that Mr. O’Dowling did not have the file on complaints to the European Union with him and could not tell the court what documents were sent to the Commission by the plaintiff.

There was no evidence that the plaintiff could have been as “big as any distributor of imported cars in Ireland or as big as all of them of put together”, which the court notes was an exaggeration and out of touch with the reality of the plaintiffs position.

Moreover, the assertion that the plaintiff “could not put stock into auction as they would lose too much money” was not substantiated.

In relation to imports from the Member States, reference was made to 44 cars imported from Northern Ireland between 1993 and 1994.

The example given by Mr. O’Dowling of a BMW 318i with an administrative value (OMSP) of £4,287 and an actual sales price of £3,320 does not appear to be on the list of car imports from Northern Ireland.

His evidence was unclear as to whether this was the car imported by the plaintiff or by Sports Car Centre Limited.

Indeed, the correspondence with the Commission in the late 1990s, when Mr. O’Dowling was no longer a director, shareholder or, it appears, involved in the plaintiff, would appear to refer to Sports Car Centre Limited.

The court is of the view that this was not reported by the plaintiff.

The complaints, indeed, are similar in that he still could not determine the OMSP in 2004, which would appear to be in relation to Sports Car Centre Limited. He acknowledged that the Revenue had distributed the depreciation tables at that stage.

His complaint that the Revenue was “judge, jury and executioner” in relation to the OMSP was mentioned in that context. The court was aware of the provisions of the section which deal with the Revenues role in calculating the OMSP, subject to appeal.

His claim that the plaintiff could have a bigger mix of used vehicles, including such vehicles from Member States if VRT had been more fairly charged on imports from Northern Ireland, was not substantiated either by examples or by analysis. Indeed his evidence was that the cost of three to five year old Japanese imports was cheaper when shipping and taxes were added than imports from the United Kingdom, which made them more profitable.

It is unclear what the terms of Mr. O’Dowling’s departure from the plaintiff were. Mr. Riordan’s evidence was that it was an amicable parting but does not add much more.

What is clear is that, in anticipation of the introduction of VRT on the 1st January 1993, the plaintiff had high expectations of a growth in the importation of used cars from Japan. What is surprising, however, is that there were no written contemporaneous plans or forecast. Indeed there appears to be some difficulty in reconciling the trends in the sales chart which appears to have been calculated by office staff in respect of sales from 1990 to 1994. The 1989/1990 figures are combines sales over a fourteen month period in respect of the sales of 871 vehicles (745 on an annualised basis) to 751 and 755 in 1991/1992 under the MVED system of duty, to 572 in 1993 and 515 in 1994. The sales chart indicate that there was a drop in sales from 1992 to 1994 of some 24% or 183 units and that sales had further dropped by nearly 32% in 1993/1994 over the 1992 figures.

Mr. O’Dowling attributes that fall to the introduction of the new system and, in particular to the increases in 1994 in the rate of VRT. It is, however, clear that in his complaints to the European Commission he did not ascribe that decline to secrecy or lack of transparency at that time.

The court is satisfied that the plaintiff relied on Colm O’Herlihy, a former excise inspector with the Revenue, who had been employed as consultant to the plaintiff and who, in Mr. O’Dowling’s evidence was conversant with the system.

Mr. O’Dowling, in his evidence in chief, had referred to cars sold to the trade for £6,000 where VRT was based on an open market selling price of £8,000. There was no evidence, however, to back this assertion.

The court is of the view that the complaint, with regard to the changes and estimates for similar cars between the 31st January 1994 and the 22nd February 1994, was explained by the change in VRT rates, which had been notified and that this was not, accordingly, an arbitrary increase. No complaint was made in the pleadings or in the evidence of the rates of VRT.

There is some confusion in relation to the evidence of an increase in 23% in 1993 and a further increase of 20% in 1994. There was no evidence to back up this assertion.

The court is not satisfied that the plaintiff was “purchasing blind” or that the estimates could not be relied upon.

The perceived threat of an audit was explained by Dr. Lennox in his evidence and does not appear to be a threat as alleged.

There was no evidence that appeals were unworkable. The evidence was that many of the appeals made by the plaintiff were, indeed, held in their favour. It was agreed that officials contacted dealers when there was an appeal. The court is satisfied that the determination of the open market selling price by the Revenue, under the provisions of s. 133(3) of the Finance Act 1992, required the establishment of a database such that the opinion of the Commissioners, as to the price which might reasonably be expected to be fetched on a first arms length sale in the open market in the State by retail, could be ascertained.

The court finds that there was no evidence that the Revenue were “judge, jury and executioner” in relation to appeals and/or estimates or that the plaintiff was “working blind”, that “goalposts were moving all the time” or that the plaintiff was “operating on shifting sands”. As in many aspects of the evidence given by Mr. O’Dowling, these remarks appeared to be unsubstantiated exaggerations without any evidential basis. For example is difficult to understand from the financial data how “assets were turned into liabilities”.

The court is not satisfied that the reason why Mr. O’Dowling ceased to be a director was because of the introduction of a totally discriminatory VRT and for no other reason.

The court finds that the basis of calculation of 10 extra units per month by each of the 82 dealers seemed to have been an arbitrary projection in establishing a basis for 9,600 extra vehicles being sold per year. Given that the highest annual figure for sales pre 1993 was 745 vehicles, or a little over 10 vehicles per year per dealer, on the assumption that there were 82 dealers in 1990, this projection is speculative with no basis in reality. In any event even if these 10 extra units were over a longer period – though the evidence does not seem to so suggest – there is no objective basis for such projection. No evidence was given by any of the dealers as to what the market would bear. The calculations with regard to price elasticity of demand given in the expert evidence was not referred to.

The evidence in chief of Mr. O’Dowling referred to the increase of the bonded yard from 1 acre with a capacity of 300 cars to that of 7 acres until 2002, seven years after the resignation of Mr. O’Dowling.

The court is not satisfied that the evidence of Mr. Dowling, the plaintiffs’ main witness, had established a basis for the DKM analysis or Mr. O’Boyle’s calculations of €2.125 million excess VRT paid to the Revenue.

The court has some concern with regard to the extent of importation of used cars from member states of the European Union. Mr. O’Dowlings’s evidence was that between 1993 and 1994 there were “about 40 such cars imported” but he also referred to 30 to 40 units. Mr. O’Boyle dealt with a list of 44 vehicles imported by the plaintiff from Northern Ireland which shows dates of registration from the 23rd September 1993, to the 7th February 1996. The bulk, 39 of the 44, were imported between 1993 and 1994.

Mr. O’Dowling agreed that all instructions given to experts and all material before the court in the case concerned direct imports from Japan to Ireland. The projected losses related to imports from Japan to Ireland.

The court is satisfied from the evidence in cross examination as to average purchase price and landed costs in Ireland, that there was a substantial profit achieved on the average sale price, even allowing for VRT. Moreover, it is clear from the evidence that the most popular five year old cars, such as the Nisan Micra, were in greater demand. Mr. O’Dowling agreed that he could calculate VRT on such models but complained that in attempting to move to newer and more expensive models, he was not in a position to calculate the VRT. His complaint appeared to be that there was discrimination, or more discrimination, in the latter category. His evidence was that he could not calculate VRT on those cars. This would appear to be somewhat of a generalisation given that he had the facility for getting an estimate and, of course, for appealing.

He was asked why nobody sued the Revenue and he replied that nobody would be willing to take on a 20 year commitment to do so. The court is not satisfied that the delays in the prosecution of the claim were the fault of the Revenue. The pleadings indicate that notice of Intention to Proceed was served on three occasions from October 1999 to October 2010. The court had regard to the statement of Mr. Kieran Coyle with regard to the increase in imports generally from 1993 to 2000 which ranged from 34,000 to 48,000 per annum from 1993 to 1996, with a reduction in 2000, along with Dr. Bacon’s analysis of Japanese imports, from 23% of total imports in 1996 to over 50% in 1998 and 1999.

Given that background, the court has difficulty in understanding the evidence of Mr. O’Dowling that the plaintiffs’ performance had suffered because of the VRT system. There would appear to have been other variables that account for the difference of performance of the plaintiff compared to competitors.

Moreover, there was no evidence or suggested basis for the assertion that increases were so severe that growth was stunted.

There was no satisfactory evidence from the accounts of the plaintiff that there was stock which “took years to sell”. No analysis of the age of stock was presented to the court. Moreover, it is common case that VRT was not due until the cars were sold. No evidence was given as to whether the plaintiff, the dealer or the purchaser registered the car when sold.

It was put to Mr. O’Dowling that the plaintiff had an opportunity to continue in the market. He replied that this would have required financing. This, indeed, may have been the problem for the plaintiff when Mr. O’Dowling left as director and shareholder in September 1996, less than three years after the introduction of VRT.

The court notes the plaintiffs’ role in the institution of infringement proceedings by the European Union under Article 226, relating to the VRT system and to the correspondence in 1993. Mr. O’Dowling agreed that there was no complaint of secrecy or lack of transparency in 1993. He said that the “real system as far as he was concerned kicked in after the increases in February 1994” which appears to suggest that, contrary to the pleadings that the introduction of VRT on the 1st January 1993 had caused the difficulties complained of, that it was the later increases in the rate that was of concern.

The court has considered the Commission letter of the 6th December 1993 to the plaintiffs solicitors that there was no harmonisation of law regarding car tax and that there was no discrimination against the products of other Member States. This was followed by the memo from Dr. Lennox of the 14th December 1993, one week later. The court accepts that this position of the Commission is a critical notification to the plaintiff some fifteen months before proceedings issued.

Mr. O’Dowling, notwithstanding his reference to the increases in February 1994, said that there was total chaos when the system of VRT was introduced. There was no reference to the advices or dealings with Mr. Colm O’Herlihy. The court has no doubt that there were teething problems. However, estimates were given and an appeals procedure was in place.

Nr. Niall Butler’s report of 28th August, 1992, (see p. 72 above) had referred to the impossibility of emulating the complex ad inconsistent system of second hand car valuations operated by the motor trade. Mr. Butler was of the view that the Revenue system went a long way to producing realistic market values, even if they did not exactly mirror prices offered in the trade.
29. Decision of the Court

29.1 Scope of Claim:
The pleadings in the case before the court and the evidence of the plaintiff directors are extensive and embrace both EU and Irish law in seeking historic losses and loss of opportunity. The claim involves a wide range of grounds alleging breaches by the Revenue of rights, not only of the plaintiff, but of the public.

The Supreme Court in James Kennedy v. DPP [2012] IESC 34 at p. 19, Clarke J. held for the majority as follows:-

“In addition it is in my view, important to keep clear that the distinction between different rights asserted as being applicable in this case and also to keep clear the implications and consequences which arise from possible breaches of, on the one hand, the Constitution and, on the other hand, rights guaranteed under the European Convention on Human Rights (“ECHR”). I also include, therefore, some observation and the relevance of those distinctions to this case.
Those distinctions are of particular importance when a challenge is brought on a wide range of grounds invoking different rights or different aspects of rights derived from the Constitution and the ECHR. I do not think it would be unfair to characterise the challenge initiated on behalf of the applicant/appellant (“Mr. Kennedy”) as involving something of a scattergun approach. While it is, of course, the right of any litigant to place before the Court argument based on any proposition where the raising of the issue concerned does not amount to an abuse of process, it nonetheless remains the case that a court, when faced with a scattergun approach, has to exercise significant care in identifying with some precision the issues that fall for determination and the precise rights invoked which are relevant to each specific issue.”

In Madigan v. Attorney General [1986] I.L.R.M. 136 at 159, O’Higgins C.J. stated:-
“. . . counsel for the defendants have submitted that the plaintiffs in these actions should not be permitted to advance arguments based on assumptions or hypotheses outside the facts and circumstances of the two actions before the court. They submitted that it was in accordance with the facts approved by the court in Cahill v. Sutton [1980] I.R. 269. The learned trial judge in his judgment accepted this submission.
In the view of the court he was correct in so doing. Accordingly, this Court will only consider such submissions of unconstitutionality made on behalf of the plaintiffs as are relevant to the circumstances of one or other of the plaintiffs before the court.”

The same observations were made in relation to Norris v. Attorney General [1984] 1 I.R. 36.
In A. v. Governor of Arbour Hill Prison [2006] 4 IR 88 Hardiman J. held:-
“The jus tertii rule is a very necessary regulation of locus standi – standing to sue. It prevents the proliferation of litigation and the expense and uncertainty it causes by requiring that each litigant must show that on the facts of his situation he is personally affected by the law he challenges. It prevents necessary and important laws from being struck down on a purely hypothetical supposition which may never arise in real life and avoids the tax payer having to fund the holding of pointless moots. Once a declaration of inconsistency or invalidity is made, however, its effect appears to me to be, necessarily, universal.”

The plaintiff claims breach of community and domestic law in relation to the import market generally as well as to the plaintiff and to Sports Car Centre Limited (2000, 3266P) where similar proceedings issued on the 14th March, 2000.
The court is satisfied that the plaintiff is confined to arguments based upon circumstances that affect it directly. Arguments on a jus tertii cannot be made. The plaintiffs claim is based on importing cars from Japan.

Mr. O’Dowling’s visit to Japan in August 1989 was prompted on the availability of good quality right hand drive cars, obtainable for a good price.

In cross examination he said that the plaintiff had been to auctions in the United Kingdom, but “there were very few vehicles available and VAT was charged again on importation into Ireland”.

It was put to Mr. O’Dowling that the business of the plaintiff was to import cars purchased directly from Japan and that was the basis of his complaint. Mr. O’Dowling replied: “My complaint is the overall system and that even applies to Irish citizens who want to purchase cars in Member States and bring them in, so on that basis I am complaining, not only for myself, Sports Cars Centre, UCII, but I am also complaining on behalf of the citizens of Ireland”.

Only matters that are directly relevant to the plaintiff’s circumstances can be litigated in these proceedings. To argue that the plaintiffs’ growth was adversely affected by the uncertainty of and inability to ascertain the amount of VRT requires more than an assertion that there were overall systematic overcharges.

There is no evidence from the plaintiff directors that when Colm O’Herlihy was acting for the plaintiff any complaint was made of uncertainty or of an inability to ascertain the VRT due. Subsequently, when the plaintiffs’ volume of sales increased, it had records itself for assessing the OMSP and the tax and for appealing if dissatisfied. It was common case that, as the Revenue developed the database, more information was provided to the public by way of estimates, calculators and CD ROMs.

The pleadings, the evidence of the plaintiffs’ directors and the plaintiffs’ experts related largely to discrimination under EU law. While the claim as pleaded also refers to Constitutional rights and breach of principles of Irish law, the quantification of loss is based on discrimination under EU law.

Domestic taxes are not regulated by the Communities. Fazenda Publica v. Nunes (C-345/93) at p. 3 of 6 at para. 11 states:-

“There is at present no rule of Community law which prevents Member States from introducing a general system of internal taxes charged in accordance with objective criteria on a particular category of goods, such as the category concerned here.
However, in applying Article 95, and in particular when comparing the taxes applicable to imported second hand cars with those applicable to second hand cars purchased at home, which are similar or competing products, it is necessary to have regard, as the Court held in (inter alia) case C-47/88 Commission v Denmark ([1990] . . . not only to the rate of direct or indirect internal taxation on domestic or imported products but also to the basis of assessment and the detailed rules for levying the tax.”

It is common case and, indeed, is so recognised by Fazenda Publica v. Nunes, that all taxes are capable of interfering with competition. It is accepted that the plaintiffs’ case is not a claim for uncompetitive practices.
Kawala v. Gmina Miasta Jaworzna case C-134/07 was a reference from Poland where the referring court asked whether the first paragraph of Article 90 EC should be interpreted as precluding the imposition of the charge in question, which is levied, in practice, on the first registration of the second hand motor vehicle imported from another Member State, and not on the purchase of a second hand vehicle in Poland insofar as the latter vehicle is already registered there.

Paragraph 22 of the order is as follows:-

“22. Given that, on the one hand, the Polish Government considers that the requirement to obtain a registration certificate for a second-hand motor vehicle imported from another Member State does not come within the scope of Article 90 EC, but within that of Articles 28 EC and 30 EC, as a measure having equivalent effect to a quantitative restriction on imports and exports which is nevertheless necessary, proportionate and justified on grounds of public policy and, on the other hand, the referring court raises the possibility that the charge in question falls within the scope of Articles 23 EC and 25 EC, that is, the prohibition on customs duties and charges having equivalent effect, it is necessary to determine, first, under which provision of the EC Treaty the charge in question should be assessed.
23. It is settled case-law that the scope of Article 28 EC does not extend to barriers to trade covered by other specific provisions and that barriers of a fiscal nature or having an effect equivalent to customs duties, which are covered by Articles 23 EC, 25 EC and 90 EC, do not fall within the prohibition laid down in Article 28 EC. Furthermore, as regards the respective scopes of application of Articles 25 EC and 90 EC, it is settled case-law that provisions relating to charges having equivalent effect and those relating to discriminatory internal taxation cannot be applied together, with the result that, under the system established by the Treaty, the same charge cannot belong to both categories at the same time (see, inter alia, Case C-383/01 De Danske Bilimportører [2003] ECR I-6065, paragraphs 32 and 33 and case-law cited).”

Indeed, this Court notes that a decision is by way of an order rather than a judgment as it was satisfied that the answer to the question could be clearly deducted from existing case law.
The court continued at para. 25 to say that a charge such as that in issue in the main proceedings was not levied on an amount of the crossing of the border of the member state which had imposed it.

It is clear from the information provided both by the referring court and by the Polish government that the charge in question was levied on second hand motor vehicles only for the first registration in Poland, with the exception of vehicles, which, for whatever reason, were not intended to be registered. In addition, according to the information provided by the Polish government, the charge could also affect the first registration of certain limited categories of vehicles already in Poland but which have not yet been registered there. The court concluded:-

“26. Therefore, to the extent that a charge on the first registration of motor vehicles, such as the charge in question, is clearly fiscal in nature and is levied not on account of the crossing of the border of the Member State which imposed it, but upon the first registration of a motor vehicle on the territory of that Member State, it must be held that it comes within a general system of internal dues on goods and therefore falls to be assessed in the light of Article 90 EC.”
The compatibility of a tax such as Vehicle Registration Tax with EC law is a matter for Article 110 of the Treaty.
Article 110 states:-

“No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.
Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.”

This provision applies to imports from Member States. It does not apply to direct imports from Japan into the Community.
Tivoli v. Wurzburg C-20/67 ((1968) ECR 199) confirms this in dealing with the policy of the EEC in relation to imports from third countries and the inapplicability of Article 95 (now Article 110) of the EC Treaty.

The Court of Justice stated:-

“It appears from the file that the main action concerns the importation of cereals from a third country. Since the provisions of Article 95 of the Treaty establishing the European Economic Community relate only to products originating in member states, they cannot be applied to imports from a third country.”
Simba SpA and Others v. Ministero Delle Finanze, Joined Cases C-228/90 to C-234/90 and C-353/90, dealt with the direct import of bananas from non-member countries. The question arose whether, in trade with the non-member countries, there is any rule prohibiting fiscal discrimination analogous to that laid down in Article 95.
The court held:-

“13. Since a duty such as the national tax on consumption must be regarded as internal taxation caught by Article 95, the question whether such a charge is contrary to the provision insofar as it is applicable to fresh bananas imported directly from non-member countries must be answered first.
14. According to the case law of the court (See the judgment in case 148/77 cited above), Article 95 is applicable only to products imported from other Member States. It follows that the provision does not apply to products imported directly from non-member States.

15. The answer should therefore be that a duty such as the national consumption tax introduced by the Italian legal system by law No. 986/1964, as amended by law No. 873/1982, is not covered by Article 95 of the EEC Treaty in as much as such a duty is applicable to imports of fresh bananas coming directly from non member countries.”

The same conclusion was arrived at in Hansen v. Hauptzollamt de Flensburg C-148/77, which dealt with tax arrangements for spirits from non-member countries.

At para. 23, the court concluded:-

“For trade with non-member countries, and so far as internal taxation is concerned, the Treaty itself does not include any rule similar to that laid down in Article 95.”

In relation to the issue of embedded VRT, counsel submitted that the ruling in OTO v. Ministero Delle Finanze, C-130/92 was applicable. This case involved the direct imports of audio visual and photo optical products from Japan into Italy. Former Chief Justice Murray J. giving the judgment of the court held as follows:-
“6. On the 18th October 1984, the chief collector of the Rome Customs Office sent to OTO a demand for payment of national consumption tax in respect of imports of goods from Japan affected between the 2nd February, 1983 and the 4th September, 1983.
7. OTO brought an action against the defendant before the Tribunale di Roma (District Court, Rome) in which it claimed that the national consumption tax had been calculated on the basis of the implementing decree, which, as it departed from Law No 53, had to be regarded as unlawful. The Tribunale di Roma upheld its claim …

8. The defendant appealed against that judgment, arguing that Article 4 of Law No. 53 was contrary to Community law on the ground that it had the result of placing goods brought into free circulation in other Member States and then exported to Italy at a disadvantage compared to goods imported directly into Italy from non-member countries.”

The court referred again to previous cases in concluding:-
“18. The Court has also consistently held that Article 95 applies only to products from the Member States and, where appropriate, to goods originating in non-member countries which are in free circulation in the Member States. It follows that that provision is not applicable to products imported directly from non-member countries.
19. Accordingly, a tax such as that which is the subject-matter of the main proceedings does not come within the scope of Article 95 of the Treaty in so far as it is applicable to goods imported directly from non-member countries.”

Vehicle Registration Tax is a system of internal taxation levied on the registration of the vehicle and not on an import crossing the frontier.
That position was made clear as early as 1993 in the letter from Mr. Venturi of the European Commission to the plaintiff:-

“It may that you have already taken professional advice, but for clarity perhaps I should explain that there is no harmonisation of law on car taxes and, therefore, Member States are, in principle, free to tax as they choose.
There is, however, one major proviso to this: there must be no discrimination against the products of other Member States and no tax advantage given to the national product. Thus, second hand cars which you “import” from other Member States (including Japanese cars which have been produced or entered free circulation in other Member States) must not be taxed more heavily than the equivalent cars in Ireland.”

From a consideration of the case law considered above and from Mr. Venturi’s letter it is clear that the plaintiffs claim for damages, based exclusively on alleged discrimination under EU law, must fail.
The complaints made by the plaintiff to the commission on the 21st October 1993, (to Mr. Limo Facco) were based on the alleged breaches of EU law by the defendants. These complaints preceded the initiation of the present proceedings on the 15th March 1995.

While the claim as pleaded goes beyond EU law, the quantification of the claim for damages is based on discrimination at EU law.

The court is of the view that there is no basis for the assertion that discrimination under EU law can apply to imports from outside the community.
29.2 Reference to Intra Community Trade
Niall O’Dowling said that had VRT been more fairly charged on the 44 cars imported from Northern Ireland between 1993 and 1996, the plaintiff could have had a bigger mixture of vehicles including more member state type vehicles. However, his evidence was that the cost, including shipping and taxes of Japanese three to five year old cars was cheaper and accordingly, profitable, suggests that the plaintiffs’ decision, excluding 1995 in respect of which no figures were given, was to import Japanese used cars. Indeed for that period the evidence was that over 1.600 cars were imported directly from Japan. This is reflected in the claim and in the calculation of losses.

The evidence in relation to the intra community imports of 44 cars imported from Northern Ireland cars did not establish that the values as a general rule were not “very close to their actual value”. While Brendan Dowling had remarked on the lack of evidence on landed costs of Japanese used car imports, he did not refer to any evidence for these 44 cars.

The mere assertion of a 20% differential was not substantiated. Mr. O’Boyle was simply asked to apply the losses claimed for Japanese direct imports proportionally to the imports from Northern Ireland.

While Mr. O’Dowling did not give specific details, Mr. Fintan Riordan said that between the 23rd September 1993, and the 7th February 1996, the plaintiff imported 44 cars from Northern Ireland. He said that valuations assigned to cars coming from Northern Ireland were high, but not as high as those placed on Japanese cars. He said if they had not been as high the plaintiff would have increased the numbers of imports from the UK. No satisfactory comparative valuation of OMSP’s was given.

In cross examination Mr. Riordan said that he and Mr. O’Dowling had travelled to England to source cars initially, but were unhappy with the quality and choice of cars available. He said the cars in England would be “harder to get probably”. He agreed to accept Mr. O’Dowling’s evidence in relation to the UK market.

It is unsatisfactory that neither Mr. O’Dowling nor Mr. Riordan gave any evidence of overvaluation of OMSP’s on cars imported by the plaintiff from the UK (or Northern Ireland). Neither is there any specific analysis of the resulting loss of opportunity. There was no mention of imports from Northern Ireland or the UK in Mr. O’Boyle’s report.

The second DKM report of September 2011, at pg. 22 and 23 referred to Japanese imports as being the main source of supply as market characteristics did not favour UK imports:-

“Given that Japanese used cars were running at around 40 per cent of such imports in 1990 – 1992 it is clear that the main source of right hand drive cars for the Irish market, if import demand had increased in the wake of lowering of the VRT barrier, would have been the Japanese market. Imports from the UK might also have been expected to grow but market characteristics operated against the development of a major wholesale business in the distribution of UK sourced cars in the Irish market.
We have no reason to believe that the market share of Japanese used car imports held by UCII in 1992 would have fallen if there was an expansion in Japanese imports from 1993 on the scale indicated by the price elasticities.”

The plaintiff submited that EU law provides for the taking into account of actual depreciation of vehicles based on general criteria to be compatible with the provisions of the Treaty and refers to Case C-393/98 Gomes Valente.
That ruling of the 22nd February, 2001, was, of course, determined in relation to the second hand vehicles imported from other member states as was clear from the facts of that case.

The plaintiff, in this case has not imported the cars from other Member States but from Japan, other than the 44 cars imported from Northern Ireland.

The court is of the view that, by virtue of the decision in Gomes Valente that the plaintiff’s claim would necessarily be restricted to those 44 cars. However, no satisfactory analysis was given as to the overvaluation of OMSP in relation to those imports.

While the DKM report is comprehensive, it relies on divergence of OMSP of Japanese imports from open market prices. There is not a separate analysis of the divergence in relation to the 44 Northern Ireland imports.
29.3 Legislative basis of VRT
Section 133(2)(b) and (3) of the Finance Act 1992, as amended by s. 9 of the Finance (No. 2) Act 1992, provides the basis for calculating OMSP of used cars by reference to the price of a new vehicle:

(2)(a) For a new vehicle on sale in the State which is supplied by a manufacturer or sole wholesale distributor, such manufacturer or distributor shall declare to the Commissioners in the prescribed manner the price, inclusive of vehicle registration tax, which, in his opinion, a vehicle of that model and specification, including any enhancements or accessories fitted or attached thereto or supplied therewith by such manufacturer or distributor, might reasonably be expected to fetch on a first arm’s length sale thereof on the open market in the State by retail.
(b) A price standing declared for the time being to the Commissioners in accordance with this subsection in relation to a new vehicle shall be deemed to be the open market selling price of each new vehicle of that model and specification:

(d) Where a manufacturer or sole wholesale distributor fails to make a declaration under paragraph (a) or to make it in the prescribed manner, the open market selling price of the vehicle concerned may be determined by the Commissioners for the purposes of this section

(3) “new vehicle” means a vehicle which is less than 3 months old when reckoned from its first entry into service or which has travelled less than 3,000 kilometres;

“open market selling price” means
(a) in the case of a new vehicle referred to in subsection (2), the price as determined by that subsection,

133(3) It means the price, inclusive of all taxes and duties, which, in the opinion of the Commissioners, a vehicle . . . might reasonably be expected to fetch on a first arm’s length sale thereof in the State by retail . . .”

This is subject to the provisions of s. 133(2) already referred to as the basis for valuation in which it is the declared price of a new car by the manufacturer or sole wholesale distributor inclusive of VRT. However, artificial this may be as compared to actual prices negotiated by a buyer it is the statutory basis for depreciation.
The OMSP of a vehicle, other than a used vehicle is, accordingly, the price inclusive of all taxes and duties as if the vehicle were in the State following supply by a manufacturer or sole wholesale distributor in the State. Thus the OMSP relates to the manufacturer’s delivered price which may well be higher than a market price.

The definition of such declared price is further seen in the definition of a new car in s. 133(3) as being a vehicle less than three months old when reckoned from its first entry into service or with less than 3,000km.

While a retailer would expect a discount on the declared price and a further discount on a car with some mileage less than 3,000km this is the basis for the determination of the OMSP. The definition is clear and is to be interpreted literally.

Where the words of an Act are clear, the court must follow them in accordance with the rules of strict interpretation. In Byrne v. Conroy [1998] 3 IR 1, Kelly J. stated the effect of the rule was that he was “not permitted to put any gloss upon the words used in the Act and must assume that the words and phrases are used in the ordinary and natural meaning”.

Finlay C.J. in McGrath v. McDermott [1988] I.R. 258 at 276, said that the court may resort “. . . in cases of doubt or ambiguity to a consideration of the purpose and intention of the legislature to be inferred from other provisions of the statute involved, or even of other statutes expressed to be constructed with it”.

The words “in the opinion of the Commissioners” are contained in other Revenue statutes.

Section 15(1) of Capital Acquisitions Tax Act 1976 provides:

“Subject to the provisions of this Act, the market value of any property for the purposes of this Act shall be estimated to be the price which, in the opinion of the Commissioners, such property would fetch if sold in the open market on the date on which the property is to be valued in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the property”.
Section 3(a) of the Stamp Duty Consolidation Act 1999 provides:

“Any instrument chargeable with stamp duty shall, unless it is written on duly stamped material, be duly stamped with the proper stamp before the expiration of 30 days after it is first executed unless the opinion of the Commissioners with respect to the amount of duty with which the instrument is chargeable, has before such expiration, been required under this Act”.

Section 3(b)
“If the opinion of the Commissioners with respect to any instrument chargeable with stamp duty has been required within 30 days after its first execution, the instrument shall be stamped in accordance with the assessment of the Commissioners within 14 days after notice of the assessment”.
Central to the powers of the Commissioners is the statutory provisions of the enabling Act. There must be consistency in, and a basis for, the valuation.
The taxpayer may test both consistency and basis by appeal. The court accepts that the appeals were free and reasonably expeditious. The evidence from the Revenue was that the majority were successful.

There was little evidence on the plaintiffs’ part regarding appeals. The plaintiffs submitted that the successful appeals demonstrated that the OMSP’s were unfair. The initial evidence was that the plaintiff had not been successful and that the plaintiffs’ did not pursue many appeals as it would have to pay the VRT as a condition of appeal. Given the volume of imports and the resolution of appeals within a reasonable period, the court finds that the plaintiff did not avail of its right to challenge the opinion of the Commissioners. They did not seek a remedy by way of appeal at the time. They did not exhaust that remedy.
29.4 Submission that there is no legislative basis for VRT
The plaintiffs’ claim is that there is no legislative basis for the VRT system and that the implementation of the VRT is ultra vires. They submit that there is no mandate given to the Revenue to determine a price which the vehicle may reasonably be expected to fetch by reference to a “completely arbitrary and complex system of valuation in order to determine administrative values which are then used as the chargeable basis of the tax”.

Neither, it is submitted, is there any legislative basis for using the Car Sales Guide. They state that the provision for making regulations was not used and claim that the system was secret, arbitrary and non-transparent.

The statutory provision regarding the determination of OMSP’s is unambiguous. It is based on the opinion of the Revenue Commissioners on the basis of the declared price. The evidence does not establish an arbitrary or secret system. While there is a provision which allows for regulations, there was no suggestion as to what regulations were necessary.

Even if there had been any element of the administration being ultra vires the liability of the defendants for damages does not follow.

There was no specific reference to damages resulting from the law being ultra vires and no calculation upon which damages could be assessed.

In Glencar Explorations plc v. Mayo County Council (No. 2) [2002] 1 IR 84 at 127, Keane C.J. referred to the decision of the respondent to issue a mining ban. He held that that decision constituted the purported exercise by the respondent of a power vested in it by law for the benefit of the public in general and not for particular categories of persons. Keane C.J. held:-

“It follows that the ultra vires exercise of the power in the present case could not of itself provide the basis for an action in damages.”
This was authoritively confirmed in the judgment in Pine Valley Developments v. Minister for the Environment [1987] I.R. 23, where Finlay C.J. was satisfied that there was no liability for damages. He cited with approval the statement of law by Wade in Administrative Law (5th Ed.) at 673:-
“The present position seems to be that administrative action which is ultra vires but not actionable merely as a breach of duty will found an action for damages in any of the following situations:-
1. If it involves the commission of a recognised tort, such as trespass, false imprisonment or negligence.

2. If it is actuated by malice, e.g., personal spite or a desire to injure for improper reasons.

3. If the authority knows that it does not possess the power which it purports to exercise.”

The court is satisfied that none of these situations arise in the present case.
The Commissioners have statutory power; there is no evidence of malice and the first element does not arise.

In Blanchfield v. Hartnett [2002] 3 IR 207, the State had conceded that the orders had been made without jurisdiction, but the High Court and the Supreme Court refused to quash the orders because it would have served no purpose.

The normal rules of statutory interpretation applied to the Finance (No. 2) Act 1992, as appears from the decisions in Revenue Commissioners v. O’Flynn Construction Limited [2011] IESC 47, the 1933 judgment of Kennedy C.J. in Revenue Commissioners v. Doorley [1933] 1 I.R. 750 and in McGrath v. McDermott [1988] 1 I.R. 258, per Finlay C.J.

In Revenue Commissioners v. O’Flynn, O’Donnell J. stated:-
“The suggestion that the principles in McGrath preclude a ‘purposive approach’ is also perplexing. In the first place the express words of s. 86 require the Commissioners to have regard to the “purposes” for which it [the relief] was provided. Furthermore, the decision in McGrath itself expressly contemplates an approach to the interpretation of legislation that has always been understood as purposive.”

Indeed if McGrath stands for any principle of statutory interpretation it implicitly rejects the contention that any different and more narrow principle of statutory interpretation applies to taxation matters.

The relevant section of the Finance (No. 2) Act 1992, s. 133(3)(c) provides:-

“In the case of a vehicle other than a new vehicle, the price, inclusive of all taxes and duties, which, in the opinion of the Commissioners, the vehicle might reasonably be expected to fetch at a first arms length sale thereof in the State by retail and, in arriving at such price . . .”

In the case of Japanese cars, Value Added Tax and the customs tariff is, accordingly, part of the open market selling price.
It is the Commissioners who must form an opinion as to what the vehicle might reasonably be expected to fetch on a first arms length sale thereof in the State by retail.

The court is of the view that the Oireachtas has provided that the Revenue Commissioners form an opinion. They have to form an opinion unless to do so would be unconstitutional. If it is not, then it clear that both the Oireachtas has the power to enact this particular provision and the Revenue has the power to administer it. Even if it were discriminatory, whether in relation to EC or Irish law, that would not necessarily make the provision unconstitutional.

The court is satisfied that there was no evidence such as there was in Motor Distributors Limited v Revenue Commissioners [2001] IEHC 19, to say that it was not the Commissioners who formed the opinion or that the Commissioners have exceeded their mandate in so doing. It is common for the Commissioners to determine open market value as the basis of capital gains tax, capital acquisitions tax and stamp duty in an analogous manner to its powers under s. 133(3)(c).

It is a matter for the Commissioners to decide how they reach their opinion. The details of how they do that are in all likelihood non-justiciable. Moreover, the court is clear that this is a private action being taken against the Revenue Commissioners and the State for damages. It is not a judicial review nor a public inquiry into vehicle registration tax.

There is of course scope for judicial review in relation to the formation of an opinion as is clear from the judgment in the State (Lynch) v. Cooney [1982] I.R. 337. O’Higgins C.J. giving the judgment of the court at p. 361 concludes:-

“The Court is of the opinion that s. 31(1) of the Act of 1960, as amended, does not confer on the Minister the wide, unfettered and sweeping powers which have been alleged by the prosecutor. The Court is satisfied that the sub-section does not exclude review by the Courts and that any opinion formed by the Minister thereunder must be one which is bona fide held and factually sustainable and not unreasonable.”
The court agrees that this is the test to which the court is limited in reviewing the opinion of the Commissioners: that it is bona fide held, factually sustainable and not unreasonable.
There is no evidence to establish that the opinion formed by the Revenue was not bona fide held.

While the court may be critical in relation to inconsistencies of valuation and in the preparation and the production of depreciation tables, it has to acknowledge the administrative difficulties in producing a database that ensured consistency for all importers in every Vehicle Registration Office. Despite allegations of secrecy and lack of transparency, the evidence was that the Revenue staff had been both open and flexible in relation to the determination of open market value by way of the depreciation tables, which were based on the Car Sales Guide, small motor ads and, indeed, the result of appeals.

The difficulty with unusual models imported, in respect of which there was no declared price by manufacturers or wholesale distributors, did cause problems for the Revenue which resulted in delays. The plaintiff did not identify any such models.

Moreover, the Revenue officials made an offer for experts to meet, without lawyers being present, and that offer was never taken up. Mr. Sherlock’s evidence regarding the 2007 inspection of the VRT offices remained uncontradicted – he was not cross examined in that aspect of his evidence. No motions were brought to challenge discovery. The Revenue officials spent considerable time and work in preparing the disc for the plaintiff, as attested to in the evidence given by Prof. Frank Bannister.

The court has to be satisfied, however, not alone that the opinion was bona fide held but that it was also factually sustainable. Every decision can be appealed where there is error and can be judicially reviewed if the correct procedures are not followed.

However, in terms of factual sustainability the defendant submitted that the Revenue looked at a number of sources for information in order to determine market price and determine the depreciation scales. As already referred to, the Revenue used the Car Sales Guide, advertisements and communicated with dealers. The Revenue encouraged the rule in relation to an appeals system, pursuant to s. 138. In addition they provided estimates based on the data gathered. Mr. Campion’s evidence was that the process by which information was obtained on appeal differed from the process of the original valuation in that it was more extensive. This, in itself, does not invalidate the original valuations. The evidence of the plaintiffs’ directors as to the superior quality of Japanese used case relative to domestic used cars was consistent with the default grading of the imported cars as ‘good’.

An increase in valuations was notified in September 1993, because, contrary to the claim made by the plaintiff, the Revenue sought out actual prices obtained by sellers of Japanese cars and discovered that the OMSP that they had been applying from January 1993, was too low. They subsequently informed the plaintiff and other dealers of this increase at a meeting in September 1993. This was not implemented until early 1994. Dr. Lennox’s evidence, from his contemporaneous note of the meeting, indicated that this was explained to the dealers and was not seriously disputed at the time.

The court is satisfied, from the evidence, that the determination of the open market selling price was based on a system that was factually sustainable even if there were anomalies. There was always the right of appeal in relation to those anomalous valuations. There was no cost involved and no unreasonable delay. Moreover, there was a high success rate for the relatively small proportions of valuations appealed. The revised OMSP’s then became precedent.

The court is also satisfied that, given the evidence before it, that the determination of the valuation was not ‘unreasonable’ in the sense applicable to judicial review cases. In particular, O’Donnell v. Dún Laoghaire Corporation [1991] I.L.R.M. 301, The State (Keegan) v. O’Keeffe [1986] I.R. 642 and The State (Lynch) v. Cooney [1982] I.R. 337 all refer to the reasonableness test.

Data relating to age, mileage and condition was inputted by Revenue officials and, while the intention of the system was to harmonise valuations for like cars, it did have some differences that were not entirely explained to the satisfaction of the court. The court accepts the evidence of the plaintiff’s experts that the depreciation scales did not reflect the market. However the court acknowledges that the plaintiff itself, given the volume of imports of three to five year old Japanese cars, had the ability to and did, on occasions, challenge, by way of appeal, such anomalies and was in a better position to do so using its own database, than an individual or a one-off importer.

The court, having regard to the overall evidence beleives that the determination could not be compared with the “eccentric and ludicrous” system that was the subject of Brennan v. The Attorney General and v. Wexford County Council [1984] I.L.R.M. 355, in respect of land valuation. In that case the Supreme Court held:-

“In the assessment of a tax, such as a country rate, reasonable uniformity of a valuation appears essential to justice. If such reasonable uniformity is lacking the inevitable result will be that some ratepayer is required to pay more than his fair share ought to be. This necessarily involves and attack upon his property rights which by definition becomes unjust.”
The OMSP for similar used cars must be uniform throughout the country. There was no evidence that it was not so. In a sellers market where demand is high, the actual selling price may be higher than in a market with low demand. However, a centralised system of assessment may not, in any practicable way, be in a position to record such differences.
Glencar Exploration v. Mayo County Council [2002] I.R. 84 and Pine Valley Developments v. Minister for the Environment [1987] I.R. 23, already referred to, related to a change to the value of the property upon implementing Ministerial decisions. Such change did not necessarily mean that an injustice was done to the plaintiff. In Pine Valley Finlay C.J. elaborated:-

“That fact, itself, however, does not, in my view, necessarily mean that an injustice was done to the plaintiffs and I am certain that that does not constitute an unjust attack on the plaintiffs’ property rights. . . . I am satisfied that it would be reasonable to regard as a requirement of the common good an immunity to persons in whom are vested statutory powers of decision from claims for compensation where they act bona fide and without negligence. Such an immunity would contribute to the efficient and decisive exercise of such statutory powers and would, it seems to me, tend to avoid indecisiveness and delay, which might otherwise be involved.”
The Chief Justice in Glencar was satisfied that the considerations in Pine Valley applied. The Chief Justice (with whom the other members of the court agreed) said:-
“The remedy available to persons affected by the commission of an ultra vires act by a public authority is an order of certiorari or equivalent relief setting aside th e impugned decision and not an action for damages, to allow which, in the case of public officials, would be contrary to public policy for the reasons set out by Finlay C.J. in the passage just cited.”
In the present case the remedy available to the plaintiff was to appeal the determination.
The plaintiff submitted that the Revenue did not take any account of the actual market selling price of the particular vehicle under assessment nor make any effort to value “the” vehicle under assessment but, rather, they charged the tax on a notional value for similar vehicles.

The court notes there was no evidence that the main dealers were, indeed, selected and were not simply a representative sample. No evidence was called by the plaintiff in relation to the compilation of the guide nor, indeed, was that evidence called by the defendants. The court accepts that the Car Sales Guide was a reasonable reference that was used in a widespread way in the industry and corresponded to the declared prices of new cars discounted in respect of used cars.

The chargeable value of a new vehicle is relevant to the registration of a used vehicle when imported into the State.

It is clear that the opinion by which the Revenue Commissioners determine open market value can take into account prices which are higher or lower than the declared value, of a vehicle of similar type and character. The open market selling price may be determined by the Commissioners for the purpose of s. 133 in such circumstances.

The court is satisfied that the taking into account of the Car Sales Guide is a factor which the Commissioners are entitled to make reference.

While the depreciation tables were developed and applied, (presumably with the benefit of the depreciation tables used for the MVED), without any reference to an enabling statutory instrument, the court is not satisfied that the evidence considered by the court showed a significant deviation from the values contained in the Car Sales Guide.

The court is further satisfied, given the expression “in the opinion of the Commissioners”, that this is a fundamental element in determining the open market selling price.

The court has also considered the submissions of the plaintiffs with regard to the absence of regulations made under s. 141(1) of the Finance Act 1992. That section empowers the Commissioners to make such regulations as they consider necessary or expedient for the purpose of managing the registration of vehicles and managing, securing and collecting vehicle registration tax. Particulars are given in subs. (2) which includes at (c) (may) prescribe the manner in which a declaration under s. 131 shall be made. That refers to the declaration of prescribed particulars for each vehicle being declared to the Commissioners for the purpose of registration. The similar provision covering the conversion of vehicles is contained in subsection (3).

Neither generally (under (1)(a) nor particularly (under s. (2)) are there provisions for the Commissioners to make regulations in relation to the open market selling price.

Subsections (3) and (4) empowers the Minister to make regulations as he considers necessarily expedient for the purpose of given full effect to ss. 134 and 135 (permanent reliefs and temporary exemption from registration). Similarly, there is no provision for the Minister to make regulations with regard to the open market selling price.

Accordingly, the court does not accept the submissions made by the plaintiffs in relation to the absence of regulations.

The plaintiffs made reference to the internal memorandum created by Mr. O’Leary of the Revenue, dated the 14th July, 1997, referring to problems within the system. Mr. O’Leary warned that the “extent to which our full system is exposed to public scrutiny will determine the amount of corrective action required within the CVO”. The issues “are questionable and would not survive a public challenge”. “Non disclosure removes the possibility of such challenges. The only test which can then be applied is to determine whether our outcome is accurate”.

When this document was put to Mr. Campion of the Revenue his response was that it was John (O’Leary’s) habit to persistently press his superiors for additional resources and that Mr. Campion would have been delighted with significant additional resources.

I have no doubt that more resources within the Vehicle Registration Office, particularly in the early years after the introduction of VRT, would have assisted the Commissioners in establishing a comprehensive database in relation to the makes and models of used cars being imported, not alone from Japan, but also from the United Kingdom and, to a lesser extent, from other countries.

The plaintiff submitted that secrecy had been and continues to be a central element in the VRT system and refers to the evidence of Niall Butler, who stated that it would have been within his remit to provide details of the depreciation tables, but he was aware that there were concerns about publishing them, and the evidence of Mr. Campion, who stated that he had never arranged for the depreciation codes to be published.

Further, the plaintiff submits that the system whereby the chargeable value for new vehicles was the value declared by franchised domestic distributors and used vehicle values were then derived from such a value, was an unlawful delegation of lawmaking powers.

The plaintiffs relied on the general comments in the Edge Anderson Report which stated that because the open market selling price only reflected values in the 26 counties, they did not reflect the much lower selling price in other member countries and this was “due to the control of the price by the distributors and the subsequent excise duty”.

The court is of the view that even if there was satisfactory proof that the distributors controlled price, and there was no such proof adduced, this would have been a determining element of market price. There was no evidence that the distributors controlled excise duty or VRT.

Whether or not distributors control the price of new cars, this does not affect the actual open market selling price for those cars. Moreover, there was no evidence as to the variation of prices between any of the member states. In any event such variation is of no relevance for VRT purposes.

The Commissioners opinion on prevailing prices at the time of registration is what is relevant. The Commissioners are empowered to do so under the legislation. To say that there is an impermissible delegation of law making power to the Revenue is not borne out by the power given by the Oireachtas to Revenue to form an opinion. It is not a delegation of a power to impose tax. It is the power of an independent organ of the State to impose tax. It is the power to impose a duty of excise, to be called vehicle registration tax, to be charged, levied and paid at whatever of such rates as may stand specified for the time being by an Act of Oireachtas on the registration of a vehicle or the making of a declaration under s. 131(3) in relation to a converted vehicle.
29.5 Infringement of Principles of Law
The plaintiff has pleaded a breach of legitimate expectation, proportionality, legality, equality and legal certainty. Insofar as the plaintiffs’ claim, in respect of the direct import of vehicles from Japan, fall outside the scope of EU law, all of the principles pleaded fall to be tested by reference to Irish domestic law and not by EC law.

It is an important evidential requirement that damages be proven to have arisen under domestic law. The plaintiffs’ experts quantify the claim on the basis of discrimination. There is no quantification of damages that would arise as a result of any of the headings of legitimate expectation, proportionality, legality, equality and legal certainty. At most the court could only give declaratory reliefs. There would appear to be no basis on which the court could award damages under these headings.
29.5.1 Legitimate Expectation
The plaintiff submits that the representation made in the Revenue guide entitled “Vehicle Registration Tax, Trader Guide” was one upon which the plaintiff was entitled to rely, but that the representation of the value being the open market selling price as determined by the Revenue Commissioners was an untrue representation. The chargeable value of a used vehicle bore no relation to the open market selling price of the vehicle being the value declared by the distributor. The plaintiff had a legitimate expectation that the Commissioners would comply with the published representation and would serve the taxpayer fairly, efficiently and in good faith.

Glencar, already cited is of relevance to legitimate expectations. At p. 162, the penultimate page of the judgment, Fennelly J. refers to it being necessary to establish three matters in order to succeed in a claim based on failure of a public authority to respect legitimate expectations:

“Firstly, the public authority must have made a statement or adopted a position amounting to a promise or representation, express or implied as to how it will act in respect of an identifiable area of its activity. Secondly, the representation must be addressed or conveyed directly or indirectly to an identifiable person or group of persons, affected actually or potentially, in such a way that it forms part of a transaction definitively entered into or a relationship between that person or group and the public authority or that the person or group has acted on the faith of the representation. Thirdly it must be such as to create an expectation reasonably entertained by the person or group that the public authority will abide by the representation to the extent that it would be unjust to permit the public authority to resile from it.”
The plaintiff argued that the failure by the Revenue to impose VRT on the open market selling price was a breach of the principle of legitimate expectation. The representation was untrue in that the chargeable value of a used vehicle bore no relation to the open market selling price of that vehicle. Rather it was the value declared by the distributor reduced in accordance with predetermined depreciation schedules.
The court is not satisfied in relation to the evidence given by the plaintiff that the chargeable value of a used vehicle bore no relation to the open market selling price. The court has already referred to the development of the Revenue database, the reference to the Car Sales Guide and the attempt to streamline through depreciation tables which, while not published until 2010, were an effort by the Commissioners to have a uniform opinion in relation to the values.

The court also has regard to the appeals procedure, which was used by the plaintiff, and to meetings held with the Revenue. The court is not satisfied the assertions made are founded on evidence given by the plaintiffs in relation to the Revenue not acting in good faith towards the plaintiff either in terms of the assessment of tax liability or the conduct of these proceedings.

The chargeable value did not relate to landed value which is the basis for VAT, but not the basis for OMSP as required by section 133(3). The evidence of broad correlation with the Car Sales Guide with OMSP as defined in the Act was not controverted by any statistical analysis. The plaintiff’s case was that it did not conform with the landed cost price.

The court accepts that the Revenue’s use of depreciation schedules was unclear even when they were made available to the plaintiff. Cars which moved from one scheme to another without any published or disclosed notice cannot, however, amount to a representation or a breach of legitimate expectation. The absence or paucity of appeals to test the basis and consistency of OMSP for imported cars is an evidential defect.
29.5.2 Proportionality
In the context of proportionality, the plaintiff alleged that the purpose of VRT was somehow to protect the Irish motor trade from international competition and that such protectionist intent was in direct contravention of the State’s obligations pursuant to Irish and EU law. The defendant said the system did not have such purpose.

Under Irish law, even if the State did have such purpose this would have been a legitimate matter of polity in relation to protection of trade subject, of course, to GATT. There was no evidence of such a policy. Moreover, as already found, there was no EU discrimination.

The court considers, in particular, the correspondence with the Society of the Irish Motor Industry.

On the 11th September 1992, Cyril McHugh, Chief Executive of SIMI, wrote to the Assistant Secretary of the Revenue, concerned that VRT was adding a new level of bureaucracy. SIMI’s concern was to ensure that the imposition of a registration tax on their new car sales did not confer a competitive advantage on second hand imports from other countries. SIMI also expressed their concerns in a letter to the Minister for Finance dated 15th September 1992. A meeting was held on the 13th October 1992, and the Minister for Finance replied to SIMI’s representations by letter dated the 16th October 1992, as follows:-

“Valuation of Second Hand Imports: Data on values for used imports will be provided for SIMI periodically. The Society will be given an opportunity to discuss valuations of used vehicles and Revenue will investigate specific complaints about undervaluation.”
Revenue notified the trade and the plaintiff of an increase in the OMSP of Japanese imports at the meeting of the 22nd September, 1992. Mr. O’Dowling said he noticed a 23% increase in the Revenue’s valuation of the plaintiff’s best selling models after January 1993.
While it may be a matter of policy for the defendants, and in particular, the Government to balance particular interests, the court is satisfied that there is no evidence that the Revenue Commissioners had no proper basis for revising OMSP’s. The evidence on behalf of the defendants was that Japanese used cars had been undervalued prior to then and that there had been no objection taken by the trade at that meeting.

The court is not satisfied in the circumstances, that the principle of proportionality has been infringed.
29.5.3 Legality, Certainty and Transparency
The plaintiffs’ complaint is not the calculation of tax that but rather the method by which OMSP is determined. The Oireachtas gave the power to the Commissioners to determine the valuation and allow them to express an opinion on the basis of the legislative provisions as stated above.

The plaintiffs are required to prove that the system was unlawful and non transparent. Dr. Lennox referred to a document dated the 5th October, 1992, before VRT was introduced, which was sent on behalf of the plaintiff, suggesting the use of depreciation scales and suggesting amendments for models with certain specifications. The court notes that there was a high degree of knowledge on the part of the plaintiff before VRT was introduced as is clear from that document which had been prepared on behalf of the plaintiff by Mr. O’Herlihy. The court also accepts that there is evidence of estimates being regularly sought by the plaintiff, at least from April 1993, when the plaintiff obtained statistical codes for models imported into the State.

A year later at the meetings of the 22nd September, 1993, and the 16th December 1993, the issues of confidence and transparency were raised.

Mr. O’Dowling’s evidence was that he had a reasonable idea of the VRT liability on the vehicles he imported. He knew the maximum profits available on four to five year old vehicles. He accepted that Mr. O’Herlihy, as a former Inspector of Taxes was conversant with the system and operation of vehicle registration tax.

Communications were, at the time, by way of fax and telephone, not internet, email or mobile phone. Mr. Butler’s evidence was that a dedicated fax number was provided so that the plaintiff and other importers could receive estimates from the Vehicle Registration Offices.

The plaintiff relied on the memorandum of Mr. O’Leary of the Revenue criticising the imperfections of the VRT system and requesting additional staffing. Mr. O’Leary did not give evidence. The court is of the view that they may have been problems, but that did not, of itself, render unlawful the administration of the VRT system.

Mr. Campion referred an increase in access to information and efficiency in dealing with queries and giving estimates. The Revenue introduced kiosks in their offices, distributed CD ROMs in 1998 and devised the online VRT calculator in 2004.

Dr. Bannister’s evidence was to the effect that the Revenue were converting all of their systems to more updated IT mechanisms. His evidence was that it would not have been responsible for the Revenue to have tackled the VRT system in 1993 when transparency was satisfied by publishing the legislation.

Dr. Bannister’s evidence was also that the Revenue did what it reasonably could to make the information available to the public but it was not under an obligation to do so any more than an inspector of taxes is to explain publicly how the valuation of property or land is assessed. He believed that Mr. Yarrow had not considered the increase in access to information through the provisions of kiosks, CD ROMs and the internet calculator.

The court is of the view that the level of information technology available in 2012 can not be applied to the position obtaining up to twenty years ago. The court is satisfied from the evidence that, even though there were anomalies, Revenue had sought to comply with its legal obligations. The anomalies could have been addressed by way of appeal.

The court notes that the plaintiff company traded successfully from 1993 to 1996. The evidence of Mr. Jacobs of Grant Thornton was that the average price of which used cars were sold for in 1993 exceeded the average price for 1992. There was no evidence that, after the introduction of VRT, the sale prices had declined.

The court is satisfied, as already determined, that the defendants acted on the basis of the legislation. The administration of assessment of VRT was reasonably transparent.
29.5.4 Equality & Property Rights of the Plaintiff
An alleged breach of equality is pleaded. The only issue is whether there is discrimination at Irish law as it would appear that the issue of discrimination at EC law does not apply for reasons already given.

Under Irish law the plaintiff is not in a position to rely on Article 40.1 of the Constitution because that Article relates to personal rights and does not apply to limited companies.

Article 40.1 of the Constitution states:-
“All citizens shall, as human persons, be held equal before the law.

This shall not be held to mean that the State shall not in its enactments have due regard to differences of capacity, physical and moral, and of social function.”

Article 40.3 provides:-

“1. The State guarantees its law to respect and, so far as practicable, by its laws to defend and vindicate the personal rights of every citizen.”

In Quinn Supermarket v Attorney General [1972] 1 I.R. 1, at p. 13 with reference to the State (Nicoloau) v. An Bord Uchtála [1966] I.R. 567, that:-
“. . . this provision is not a guarantee of absolute equality for all citizens in all circumstances but it is a guarantee of equality as human persons and (as the Irish text of the Constitution makes quite clear) is a guarantee related to their dignity as human beings and a guarantee against any inequalities grounded upon an assumption, or indeed a belief, that some individual or individuals or classes of individuals, by reason of their human attributes or their ethnic or racial, social or religious background, are to be treated as the inferior or superior of other individuals in the community. . . . Furthermore, it need scarcely be pointed out that under no possible construction of the Constitutional guarantee could a body corporate or any entity but a human being be considered to be a human person for the purposes of this provision.”
In Browne v. Attorney General [1991] 2 I.R. 58 at 65, in relation to taxation, Murphy J. held:
“(3) That the tax discriminated against sales representatives who, unlike others, were required by the circumstances of their employment to use a motor car in the course of their work and as such was an infringement of their constitutional right to ‘be held equal before the law’ in accordance with Article 40, s. 1 of the Constitution. Whilst this argument was adumbrated, counsel for the plaintiffs properly recognised that it could not succeed before me having regard to the views which I have already expressed (see Greene v. Minister for Agriculture [1990] 2 IR 17 at p. 26) as to the effect of the decision of the Supreme Court in Quinn’s Supermarket v. Attorney General [1972] I.R. 1. Indeed the effect of that decision was more authoritatively and emphatically expressed by the then Chief Justice in Brennan v. The Attorney General [1984] I.L.R.M. 355 at pp. 364 and 365 as follows:-

‘The plaintiffs’ arguments in relation to Article 40.1 have already been noted as have the submissions of the Attorney General. In the view of the court a complaint that a system of taxation imposed on the occupiers of land which has proved to be unfair, even arbitrary or unjust, is not cognisable under the provisions of Article 40.1. This section deals, and deals only, with the citizen as a human person and requires for each citizen as a human person, equality before the law.’”
In Lowth v. Minister for Social Welfare [1998] 4 IR 321, Hamilton C.J. at 339 stated:-
“The particular difficulty of establishing the unconstitutionality of legislation dealing with economic matters was recognised by Kenny J. in Ryan v. Attorney General [1965] IR 294 at p. 312, in the following terms:-

‘When dealing with controversial social, economic and medical matters on which it is notorious that views change from generation to generation, the Oireachtas has to reconcile the exercise of personal rights with the claims of the common good and its decision on the reconciliation should prevail unless it was oppressive to all or some of the citizens or unless there is no reasonable proportion between the benefit which the legislation will confer on the citizens or a substantial body of them and the interference with the personal rights of the citizen. Moreover, the presumption that every Act of the Oireachtas is constitutional until the contrary is clearly established applies with particular force to this type of legislation.’

Taxing statutes are in a separate category as O’Hanlon J. remarked in Madigan v. Attorney General [1986] I.L.R.M. 136 at p. 151:

‘It has been recognised, both in our own jurisdiction and in the United States, where the constitutional guarantees are closely analogous to those provided by the Irish Constitution, that tax laws are in a category of their own, and that very considerable latitude must be allowed to the legislature in the enormously complex task of organising and directing the financial affairs of the State.’

This reasoning was repeated and extended in Murphy v The Attorney General [1982] I.R. 241, at 283 where Kenny J. said:

‘The mere fact that a heavier financial or other burden falls on some defined person or persons does not of itself constitute a repugnancy to s. 1 of Article 40. Having regard to the second paragraph of Article 40, s. 1, an inequality will not be set aside as being repugnant to the Constitution if any state of facts exists which may reasonably justify it.’”
There is a presumption that statutory provisions are constitutional. Given the complex task of administering the provisions of the Finance Acts, similar latitude must be allowed to the Revenue in administering the legislation governing and directing the raising of taxation.
VRT is calculated by reference to a value which is found in the opinion of the Commissioners in relation to the registration of motor vehicles. It is not a transaction tax.

The method by which the market value is determined is similar to the principles of the valuation of property generally. It does not differentiate unfairly against the owners affected. The court is of the view that the Revenue Commissioners valuation has been determined in a reasonable manner which is subject to challenge by way of an appeal procedure by which that valuation can be tested.

Following Madigan, the court is of the view that the imposition of VRT is not an unjust attack on constitutional property rights.
29.6 The Plaintiffs Expert Evidence
Much of the plaintiffs expert evidence relates to landed price, which is not the OMSP to which the legislation relates. The submissions relate largely to discrimination regarding to extra community imports.

All of that evidence, insofar as it relates to imports from outside member states, does not amount to discrimination within the European Union. Accordingly the European decisions, as already stated, are not relevant.

If the court is mistaken in this regard, the assumptions of the DKM report on loss do not take into account the ability or resources of the plaintiff to grow as dramatically as suggested. No account is taken of competition from new as well as from used car suppliers. The resulting change in market price for both was not considered.

What is also significant is Mr. O’Dowling’s evidence that OMSP’s were close to the Car Sales Guide prices, which were not market prices. It was submitted on behalf of the plaintiff that Revenue’s view was that OMSP’s were the prices listed in the Car Sales Guide and, despite over seventeen years of requests, Revenue had not provided a comparison to the plaintiff or to the court.

The court is of the view that is a matter for the plaintiff to adduce. It did not appear to be the subject of an order of discovery.

There was no evidence which analysed the difference in any systematic way. Moreover, the decision to discontinue appeals deprived the plaintiff of what would appear to be the court to be necessary evidence of price deviation.

While there was reference in the legislation to the Car Sales Guide, the court is of the view that the Revenue was entitled to take the Guide into account in arriving at an OMSP. There was not obligation under s. 141 of the Finance Act 1992, to make regulations in relation to the guide.

Dr. Bacon criticised the DKM report 2011 as being inherently wrong on a number of technical issues which, he said, had a cumulative impact on the calculation of loss. Adjusting for these so-called errors reduces the claim for damages by over 98%.

Dr. Bacon, having removed the perceived errors, concluded that the plaintiff would have effectively had an opportunity to sell an additional one thousand cars, or 33% more than were actually sold. He had calculated this using the elasticities of between 0.4 and 0.67 as outlined in the plaintiffs’ submissions.

He also referred to the appeals process and said that about 2% of VRT decisions had been appealed. He said if there was the alleged injustice, unfairness and bias being imposed on participants in a segment of the market, one would expect that number to be higher than 2%.

Dr. Bacon also said he did not know why the plaintiff chose to make their argument on the basis of depreciation schedules because he believed that Revenue did not use them in the manner suggested by the plaintiff. The court has already noted the conflict of evidence on this point.

Mr. Brendan Dowling, on the other hand believed that Dr. Bacon’s model was misspecified, which resulted in a reduction in the estimate of additional imports from 100% down to 1.3%, whereas the DKM model is very clear. He said contrary to Dr. Bacon’s assertions he had not made a mathematical error and that his assumption of 30% was reasonable. He did assume domestic used car prices would fall contrary to what Dr. Bacon said. He also said that a claim that the plaintiff would have maintained a market share of 20% was a matter of opinion.

The court is satisfied from the evidence of the performance of the plaintiff subsequent to 1993, which showed a significant loss of market share to competitors subject to the same conditions, that the assumption of maintaining a 20% market share was not supported. Moreover, the contrasting growth of Mr. O’Dowling’s Sports Car Centre Limited deprived the plaintiff of some market share, turnover and profitability.

Mr. Dowling said the Bacon report referred an earlier report prepared for SIMI by Dr. Bacon on the effect of the abolition of VRT on car sales. That report had developed a model for estimating the impact of GDP on annual car demand. Mr. Dowling disagreed with Dr. Bacon’s model, which was for the annual demand of cars as distinct from the stock. His model was essentially an “income elasticity” model which performed poorly in 2009, showing that it had little explanatory power. He said it was atypical of the specifications of demand.

The court notes the different approaches taken by DKM and by Peter Bacon and Associates in relation to “addressable market” and stock. It may very well be that there is a justification for taking stock rather than flow in the case of houses, capital equipment or consumer durables rather that the incremental flow of consumer goods as the basis for the calculation of price elasticity of demand of the used car market.

The court is of the view that, while a price effect on stock may be more appropriate for cars than a price effect on annual flows, this factor alone does not affect the other elements in Dr. Bacon’s report.

Neither the reports nor the evidence of Mr. O’Dowling or of Dr. Bacon engage with the statutory definition of OMSP.

Dr. Bacon’s report queried DKM’s estimation of Revenue overvaluation and suggested that there could be no such overvaluation as Revenue always used the Car Sales Guide, which was regarded as giving the relevant market prices.

Mr. Dowling compiled a comparison of the application of VRT to used cars stating the result obtained by Dr. Bacon’s 2011 report was incorrect as it ignored the very point at issue – i.e., the impact of VRT on the margins of used car dealers. He said the Bacon report included a dealer margin in the case of an imported car but excluded a margin in the case of a domestically sourced car. However, the legislation necessarily includes such margin in the OMSP of imported cars.

On the basis of Mr. Dowling’s analysis, the DKM 2011 report calculated that the Commissioners overvalued imported 3-5 year old Japanese cars between 32% and 37% higher than would be expected from using international depreciation schedules and using the lower depreciation rates included by Mr. Yarow.

Mr. Dowling looked at what was paid as VRT on the assessed value compared to what the plaintiff actually paid for the cars. The report found that the OMSP’s were on average 23% higher.

The report said at 3.1.12 “we looked at the actual VRT paid during the period and the VRT that would have been payable if the market price for VRT purposes was the wholesale price rather than the expected retail price”. The difference between these two aggregates represented the excess VRT paid which amounted to 23%.

On that basis he calculates the ensuing loss to the plaintiff arising out of that overcharge and the consequential loss in projected demand for 1993 to 2009 and assuming that after tax profits were invested in Government Bonds as follows:

Table 3.8 Gross Margin and Net Profit Projections for UCII 1993 to 2009 (€)

Gross Margin
After Tax Profits
After Tax Interest
Total Net Profit
1993
5,772,804
2,805,583
0
2,805,583
1994
6,559,133
3,187,739
158,908
3,346,647
1995
10,242,692
5,143,880
306,752
5,450,632
1996
8,011,842
4,971,342
610,898
5,582,239
1997
10,203,573
5,289,532
888,905
6,178,438
1998
11,690,471
6,439,112
1,223,011
7,662,122
1999
12,434,381
8,955,755
1,590,649
10,546,404
2000
13,211,726
8,133,139
1,960,662
10,093,801
2001
5,333,589
3,456,166
2,495,743
5,951,908
2002
4,982,574
3,390,143
2,495,743
5,885,886
2003
6,527,662
4,626,480
3,192,688
7,819,168
2004
2,697,575
1,911,907
3,255,421
5,167,328
2005
11,273,607
7,990,169
3,310,947
11,301,116
2006
9,574,095
6,785,640
3,275,929
10,061,569
2007
10,317,476
7,312,511
3,320,525
10,633,036
2008
3,634,676
2,576,077
3,508,820
6,084,897
2009
1,748,981
1,239,590
3,645,730
4,885,320
The loss of opportunity to the plaintiff was, in the present value terms, €119.5 million. If the VRT system had applied to actual market prices of imports then the plaintiff could have been expected to sell an additional 93,633 cars from 1993 to 2009.

However the court is satisfied, for the reasons outlined in relation to the determination of OMSP, that the DKM analysis did not take account of the legislative basis upon which Revenue had to assign OMSP.
29.7 The Plaintiffs’ Loss
The defendants submit that the claim for damages is unsubstantiated in view of the evidence adduced. The plaintiff must substantiate and quantify the claim made against the defendants on the balance of probabilities.

The basis is the loss of vehicles which would have been imported had the open market selling price been lower.

There is little doubt that car prices in Ireland were higher than in other member states, as acknowledged by the European Commission.

The evidence of the expert witness for the plaintiff is that the price of used car sales in the market place was consistently lower than the OMSP of the Revenue.

What is the scope of a price which is the Commissioners opinion the vehicle might reasonably be expected to fetch on a first arms length sale in the State?

Reasonably, as opposed to arbitrary, requires a basis of support or a justification or the exercise of rational powers. It also requires consistency.

The determination of the price of an individual vehicle in the used car market depends on a multitude of factors as is clear from the evidence of the witnesses. The single depreciation scale under the MVED system had, in the plaintiff directors’ opinion, advantages and disadvantages. The development of a multiplicity of depreciation scales by the Revenue may have more accurately reflected different scales of depreciation for different makes and models. The court was not clear on what basis these scales were introduced. What is clear is that the plaintiff was not privy to these scales in the early years after VRT had been introduced.

The Car Sales Guide was partly relied on. It had the advantage of being available to traders and the disadvantage of reflecting the values that the main dealers attributed to used cars. There was no evidence given to the court as to the research underlying the data.

There is, of course, no easy way of collecting and collating data on used car sales. The court accepts the remarks in the report of Niall Butler of the 28th August, 1992, that it is impossible to emulate the complex and inconsistent system of second hand car sales.

DKM tested prices achieved at car auctions (closer to wholesale rather than retail prices), which DKM said were less that 60% of Revenue OMSP. Prices available from dealers and individual sellers were 86% lower. Prices in the Car Sales Guide were about 2% below the values generated by the Revenue model.

However, wholesales prices are not retail arm’s length prices which, with dealers’ margin, would be higher. Significantly prices in the Car Sales Guide were close to OMSP.

The Commission v. Greece, case C-74/06 did not quantify the phrase “very close to their actual value” in the case of intra community trade.

DKM referred to the distortion caused by the application of VRT to the retail price rather than to the dealer costs or landed price.

This is of course is to ignore the statutory definition of OMSP.

In calculating their loss the plaintiff relies on the DKM reports, which find the overvaluation of imported Japanese used cars to be of the order of 30%. This estimate was based on the depreciation graph prepared by Rick Yarrow against the A1 depreciation table from the Revenue scales. Given an average VRT rate of 25% on the open market selling price, this represents an overcharge of 7.5% of the price. The plaintiff claims that, adjusting for this overvaluation, a 7.5% price reduction would be achieved.

The price elasticity of demand referred to in the DKM reports was 0.67, which was not challenged and, indeed, was accepted by Dr. Bacon.

Accordingly, a 7.5% reduction in used car prices should lead to a 5% (7.5 x 0.67%) increase in demand on the basis of international studies of price elasticity to total demand. This rise in stock of 5% would be met from imports on the assumption of there being no competition from new cars.

DKM assumed that 60% of the incremental demand for used cars covered by lower prices would have been supplied by Japanese imports with the balance coming mainly from the UK.

As outlined in the DKM Table 3.8 (Gross Margin & Net Profit Projections for UCII 1993 to 2009), referred to previously, DKM estimated that the plaintiff could have sold on average an additional 8,200 cars per annum, achieving a gross margin equal to the average margins achieved on relatively old cars. The sale of an additional 93,633 cars from 1993 to 2009 would have yielded an aggregate incremental gross margin of €134.2 million before indirect costs, and €108.7 million after, allowing for overheads and selling expenses. DKM’s approach referred to the import market share in New Zealand, Cyprus and Malta, which were deemed to be comparable markets for right hand drive cars.

It was assumed that the plaintiff could have anticipated maintaining its pre 1993 share of the market in directly imported used Japanese cars. The loss of opportunity as calculated by DKM is, in present value terms, €131,606,537.

Donal O’Boyle discounted the first year, 1993, and calculated the loss at €128,381,623.

Dr. Bacon referred in evidence to the six errors he had identified in the DKM report. In removing those, he calculated that the plaintiff would have imported an additional 1,193 cars, rather than 93,659 cars, over the relevant period.

It was Mr. Jacobs’ contention that the plaintiff could not have achieved the level of sales projected by DKM. He stated in evidence:-

“Given my experience as a chartered accountant and partner in Grant Thornton, it would be particularly challenging, if not highly unlikely, for a company such as UCII to increase its gross profit by such a magnitude within one year, as contemplated by the claim.”
It was difficult for the court to ascertain the number of cars imported by the plaintiff during the period 1990 to 2000. The figures given by Mr. O’Dowling, Mr. Riordan and Mr. O’Boyle do not correspond. Moreover, the inclusion of commercial vehicles by Mr. O’Boyle confuses the issue further. Mr. O’Dowling’s figure was 613 imports for 1994, whereas Mr. O’Boyle used a figure of 513.
There was differing evidence submitted by both Mr. Riordan and Mr. O’Dowling in relation to the numbers of vehicles imported by the plaintiff between 1990 and 1994. An explanation for this confusion was given in Donal O’Boyle’s evidence where he stated that Mr. Riordan’s import numbers were for total unit sales whereas Mr. O’Dowling’s were confined to sales upon which VRT was levied. Mr. Riordan accepted in evidence that the discrepancies in the documents meant it would be more difficult to for the court to assess any losses that might have been suffered.

There is no reference made in the witness statement of Mr. O’Dowling, nor the report compiled by DKM, of the number of vehicles imported by the plaintiff in 1995.

Mr. O’Boyle said that in 1994, 19% of the unit sales of the plaintiff did not have VRT applied.

There is no doubt that the evidence of Mr. O’Boyle in relation to this 19% does have a significant effect in relation to the extrapolation of loss up to the present day and will reduce the number of vehicles that form the base for the claim. There was already some divergence between the witnesses for the plaintiff in relation to the number of cars sold.

Mr. Jacobs’s evidence was that: “there are more sales in the booklet than in the accounts which are not accounted for by timing”.

It is a difficult task to reconcile the evidence in the expert reports and the evidence given by the directors of the plaintiff on the one hand, with the audited accounts of the plaintiff on the other.

There remains lack of clarity on the substance of the claim in relation to the basic figures. The evidence of Mr. O’Dowling and Mr. Riordan is critically at variance and, as such is an insufficient foundation for the detailed economic superstructure that is constructed thereon. The reconciliation made by Mr. O’Boyle is not borne out by Mr. Jacobs’s evidence.

Mr. Jacobs’s evidence is that there was a significant increase in selling prices and in gross margins in 1993. This is not consistent with the company being under pressure. In addition, the directors’ drawings increased to approximately one third of the overheads in that year, which was consistent with good performance.

The issue of rent being paid to the directors is also significant. While no evidence was given as to ownership, the plaintiff did not have the benefit of the lease of the bonded premises.

The plaintiff was left with cars in stock but there was no evidence of what efforts were made to mitigate its loss.

Mr. Riordan’s evidence was that he made loans to the plaintiff, though these were not detailed. The plaintiff diversified into the business of container hire.

Significantly, there is no reference in the annual reports of the plaintiff experiencing the difficulties as outlined in these proceedings. The directors’ reports are optimistic, despite the evidence given by Mr. Riordan and Mr. O’Dowling that the plaintiff was being unfairly treated by the defendants.

The end of year accounts for 1994 were not submitted to the Companies Registration Office. The returns were made with the accounts for 1996 after a change in auditors. It coincides with the departure of Mr. O’Dowling from the plaintiff and the commencement of his own import company.

The court has already noted the evidence in relation to Mr. O’Dowling leaving the plaintiff in September 1995, and the evidence of the importance of his relationship with Mr. Murakami. Mr. Jacob’s evidence was that that relationship was a really important issue for the plaintiff. Mr. Murakami’s evidence was that after September 1995, he had no contact with the plaintiff.

The court has difficulty in understanding why, at that stage, Mr. O’Dowling set up Sports Car Centre Limited, which appears to have been in competition with the plaintiff. The plaintiff was deprived of the experience and connections Mr. O’Dowling had, which had undoubtedly contributed to the success of the plaintiff.

In 2003, some eight years after Mr. O’Dowling’s departure, it appeared the plaintiff was trading poorly and had increasing liabilities.

Mr. O’Dowling was asked what arrangements were made by him with Mr. Riordan or UCII to cover his share of indebtedness to the plaintiff.

His reply was significant. He said:-

“Well, I said that I would look after the case that I would work on behalf of the company on the case. I also went into Sports Cars Centre. We had problems in the period 1998/1999. We had continuous interference in the market and we had continuous problems with vehicle registration tax.”
Sport Cars Centre Limited also issued proceedings against the Revenue Commissioners and the State in 2000. There had been no reply to particulars and the proceedings are at a standstill.
Mr. O’Dowling’s evidence was that Sports Cars Centre Limited was set up in 1995 after he split up with Mr. Riordan and he brought it in a different direction selling vehicles to the UK. He also agreed that he had made profit out of selling those cars in Ireland.

He agreed that Sports Car Centre Limited was a profitable company, with gross profits of £394,613 and an operating profit of £113,000 after providing for depreciation, for year the ending 30th September, 1998.

The court is satisfied that this profitable venture could have been replicated within the plaintiff company to mitigate any losses that the plaintiff suffered.

In the circumstances, it is difficult to understand the plaintiffs claim that VRT was the cause of its losses.

The court is fortified in this regard by the audited accounts of the plaintiff which show fundamental weaknesses in turnover, profitability, reserves and an increase in stocks of vehicles, which were referred to in the replies to particulars of the 20th November 1995. Those replies referred to the basis of the claim for damages against the defendant. 100% of the 134 vehicles concerned were designated as “residue stock”. To say that “the minimum (sic) estimated value” of this stock was less than the Revenue value begs the question of the plaintiffs’ management and performance.

Moreover, it is difficult to see how these late 1995 figures can become an element in the calculation of damages attributable to the defendants. Yet it is the evidence of a discrepancy of OMSP and market price of the plaintiffs imports that form the basis of the claim.

As already observed there is no indication in any of the final accounts of such a claim or any note that the losses were caused or alleged to have been caused by the wrongful acts or otherwise of the Revenue.

Of further concern is the lack of clarity as to what the margins were in relation to sales to dealers. There was no evidence given on behalf of the dealers. This was significant in relation to the time that VRT was charged. The figure of 30% given in the DKM report seemed to have been an assumption rather than evidence.

The success of increasing competition in the used Japanese cars import trade is a factor that was not adequately considered by the plaintiffs’ experts.

The DKM report states that the overall stock of cars in Ireland increased by almost two and a half times between 1989 and 2008 and points out that the plaintiff was a major importer of used Japanese cars, citing their average market share of 14.2% between 1990 and 1992 as evidence. The figures cited in the DKM report also show that the total market share of Japanese used vehicles in the same period was, on average, 38% of the total used vehicle market.

The figures cited by Dr. Bacon in his report show a distinct downturn in the Japanese imported used vehicle market in Ireland in the following years. After reaching a peak of 53.1% in 1998, the Japanese share of the market began to decline incrementally with the most significant drop being 8.7% between the years 2004 and 2005. This annual reduction coincided with the Celtic Tiger boom. Sales of new cars were the more popular choice during that period.

Since 2006, the number of used vehicles sold in Ireland increased, from 50,011 to 55,819 in 2008. What is significant about these figures is that over the same period, the market share of used Japanese imported cars decreased. In 2006 the share was 13.4% but by 2010 this had fallen off to 4.2%.

From 1990 to 1992, the plaintiff maintained a high market share because the total numbers of Japanese imports were relatively low during that period, at 18,763 in total for the three years. The most obvious conclusion is that the market opened up when others began to import used cars because the total number of Japanese vehicles imported was highest from 1996 to 1998. The figures suggest that there was a healthy market for used Japanese cars in the years following the introduction of VRT, which contrasts with the position of the plaintiff who claim that the industry became stunted. The DKM report questioned the accuracy of the import data stating that “there are major deficiencies in the import data, especially after the introduction of the SEM thus, a Japanese car bought in the UK and shipped to Ireland would have been classified as a Japanese import”. While Niall Butler had referred to 35,000 used cars being imported from the UK, he made no reference to Japanese used cars.

The data on percentage Japanese imports submitted by DKM shows that despite the plaintiffs’ market share percentage of Japanese imports rising between 1990 and 1992, the actual numbers of cars they imported decreased during those years, from 858 in 1990 to 790 in 1992.

The data also shows that despite the increase in the numbers of used Japanese cars being imported into the country between 1996 and 1998, the plaintiffs’ imports dropped, from an average of 822 between 1990 and 1992, to 535 between 1996 and 1998. One can conclude that, despite the evidence that the consumer demand for Japanese used cars was rising, the seemingly drastic drop in the market share of the plaintiff from its peak of 19.5% in 1992 to just 2.5% in 1998 may be explained by their inability to maintain market share while competition in the sector was obviously increasing and by the departure of Mr. O’Dowling. VRT applied equally to the plaintiffs’ competitors. In 2000, the plaintiffs’ market share was 1.95%.

Despite the projections offered in the DKM report, the court is satisfied, on the balance of probabilities and having regard to the actual sales of imported Japanese cars achieved between 1996 and 2010, that it is apparent that the plaintiff could not have maintained a market share of at “least 20%” and, accordingly, could not have sold an additional 93,633 cars from 1993 to 2009.

It is clear that the decline in the plaintiffs share in the Japanese import market preceded the decline of its competitors share by several years. To say that this decline resulted from the introduction of VRT is the fall into the post hoc ergo propter hoc fallacy.

The calculation of loss has ignored what appears to have been the abandonment of the plaintiff by Mr. O’Dowling. To attribute the sole cause of his departure in September 1995 to the burden of VRT makes less sense in the light of the plaintiffs’ declining market share.

Accordingly, even if the court were wrong in excluding used car imports from outside the Community, it is clear that the legislative provisions, the assumptions made, the actual share in the market and the management ability of the plaintiff could not sustain the increase volume of trade postulated in the DKM Report.
29.8 Summary
1. No intra community trade discrimination proved in respect of over 3,600 cars imported from Japan from 1993 to 2003. The correspondence with the European Commission made it clear that the Treaty provisions related to intra community trade as does the case law. However, DKM relied on EU discrimination policy.

2. The analysis of the VRT estimated as overcharged on the 44 cars imported from Northern Ireland from September 1993 to February 1996, was given as £14,997 or about 40% of the £37,289 paid. This assumes that the overvaluation of OMSP was also about 40% which is inconsistent with DKM’s calculation of 30%. The aggregate sales price was given as £142,669.

3. The VAT paid on the 44 cars was £18,771. No figures were given for the landed cost. The overpayment of VRT of £14,997 on the sales price of £142,669 is approximately 26%, rather than the 23% calculated by DKM.

However, as no analysis of the 44 cars was given, the court does not have an evidential basis of determination of loss. It seems to have been an afterthought in the claim.

4. The calculation of loss by DKM and Mr. O’Boyle’s was on landed cost.

The legislation provides that VRT be calculated on the retail open market selling price. This is defined by s. 133(3) of the Finance Act 1992, as “the price inclusive of vehicle registration tax, which in the opinion of the Commissioners, a vehicle, including any enhancements or accessories fitted or attached thereto or sold therewith, might reasonably be expected to fetch on a first arm’s length sale thereof in the open market in the State by retail. This is subject to subsection (2) which provides for “a price standing declared for the time being to the Commissioners . . . in relation to a new vehicle shall be deemed to be the open market selling price of each new vehicle of that model and specification”. (s. 133(2)(b))

5. The Revenue Commissioners are, accordingly, entitled to relate the open market selling price of a used car by reference to the declaration of the manufacturer or distributor as provided for in subsection (2)(a) of that section.

6. The depreciation of the price declared by way of an increasing number of schedules has caused confusion and misunderstanding.

7. The reliance on the annual Car Sales Guide is an appropriate reference for the assessment of current used cars sale prices, even if it reflects main dealers’ prices. It is comprehensive and used widely as an indication of used car prices over a wide range of models and ages of cars. Prices in the guide were 2% below the values generated by the Revenue Model.

8. It was always open to the plaintiff not alone to get estimates, but also to appeal VRT assessment. The evidence was that the plaintiff was given estimates which were valid for a reasonable period.

9. The plaintiff did avail of appeals in the early 1990s. No analysis of the result of these appeals was given to the court. The directors’ evidence that the outcome of the appeals were unsatisfactory is not supported by the evidence. No satisfactory evidence was given as to why lodging appeals was abandoned.

10. The chargeable basis is clear from the legislation. Mr. O’Dowling and Mr. Riordan’s evidence that the plaintiff did not know the chargeable basis on which the rate would be levied is not borne out by the evidence of estimates being given and appeals resolved in the plaintiff’s favour.

11. There was evidence to support the assertion that there were constant un-notified increases of valuations of cars. As with much of the directors’ evidence, the general complaints were unsupported by evidence.

12. The financial statements of the plaintiff company from 1993 to 2009 do not refer to any issue with regard to VRT nor to the commencement of litigation.

13. The plaintiff lost market share to its competitors including Sports Car Centre Limited which was formed by Mr. O’Dowling when he left the plaintiff in September 1995.

14. No satisfactory explanation was given as to the reason or to the terms of Mr. O’Dowling’s departure.

15. The plaintiffs’ experts’ evidence was predicated on the landing costs of used Japanese imports rather than to the statutory open market selling price.

It was also based on an assumption that the plaintiff would maintain its market share. The evidence is to the contrary. The court is not satisfied that the loss of market share can be attributed to VRT. Competitors, including Sports Car Centre Limited faced the same conditions.

16. The gross margin and net profit projections for the plaintiff from 1993 to 2009 prepared by DKM calculate a total net profit of €2.8 million for 1993 when the plaintiff actually made a loss of £27,043. A projected margin of €5.7 million was given which compared to an actual gross profit of £254,038. Mr. O’Boyle rightly ignored 1993 in his calculations of projected loss.

17. Even if the court were wrong in finding that discrimination in relation to Japanese used car imports does not give the plaintiff a right of action, it does not follow that the plaintiff is entitled to succeed in its claim. The provisions of the legislation regarding OMSP does not relate to landed price. The assumptions regarding market share are not consistent with the evidence. The management ability of the plaintiff together with the departure of Mr. O’Dowling could not sustain the increased value of the trade claimed to have been lost as a result of VRT.

In the circumstances the court reflects the plaintiff’s claim.
30. Orders
The plaintiff, in para. 16 of the statement of claim delivered on the 28th July 1995, sought eight reliefs.

All but two of these were directed against the Revenue Commissioners, the second defendants. Against the third and fourth, they asked for declarations that s. 133 of the Finance Act 1992, as amended, was unconstitutional in that it failed to vindicate the property rights of the plaintiff, infringed their right to equality and was an impermissible delegation of a law making power. The court is satisfied, for the reasons given in its decision, that a corporation such as the plaintiff is not entitled to such property rights. There is no evidence that importers of used vehicles from outside the Community are treated unequally. The court has found that there is no impermissible delegation of a law making power as s. 133 of the Finance Act 1992, as amended, clearly grants the power to determine the open market selling price to the Revenue Commissioners. There was no provision for the making of regulations under s. 14(2) with regard to the determination of OMSP.

The second declaration is that s. 133 of the Finance Act 1992, as amended, is contrary to the provisions of European Community law, as particularised. The court is satisfied that the European decisions distinguished between intra and extra Community trade. This is clearly fundamental in the European case law. The plaintiffs have been so notified at the time of their complaint to the Commission in 1994.

Accordingly, the court will not make the declarations sought under those two paragraphs.

Two of the remaining six reliefs against the Revenue Commissioners seek mandatory injunctions.

The first such relief is for a mandatory injunction requiring the Revenue Commissioners to publish to the plaintiffs the values for vehicle registration tax purposes of the full range of new and used motor vehicles and to publish revised values from time to time as they occur.

There is, of course, no requirement under the Finance Act 1992, as amended, to publish these values. Indeed, given the nature of open market selling price it is clear, that prices, of their very nature, fluctuate depending on supply and demand. Indeed, the more successful the plaintiff and other importers were, the greater the supply of used cars in the market which would, other things being equal, have suppressed the open market selling price. This is so whether the market is understood in terms of total stock or additional flows. In any event, the court is satisfied that the Revenue had put resources into the creation of a database from the introduction of VRT, gave estimates on a timely basis, dealt with appeals, provided an online calculator and computerised the values to the public over the period in question. The court acknowledges that the issue of depreciation tables, which appears to be a hangover from the MVED system, which was in place prior to the VRT system, was a source of some confusion, even from the point of view of the Revenue officials themselves. This appeared to have been clear from the evidence of Mr. O’Callaghan regarding the meeting of the 21st June, 2007, whether or not the issue of depreciation was or was not on the agreed agenda.

However, the court does not think it appropriate nor necessary to grant a mandatory injunction as requested in the first relief.

The second such relief also seeks a mandatory injunction directing the return of all excess vehicle registration tax paid by the plaintiffs. The relief would appear to be in addition to the loss of opportunity and seems to be based on assessment of damages, including damages for wrongful interference with constitutional rights and rights in European law.

The court is satisfied, for the reasons already given, that the plaintiff is not entitled to damages for constitutional rights nor, indeed, to relief under European law which does not arise or apply to extra community trade. There remains the claim for damages for conversion, detinue and negligence, which appeared to be alternative to a claim to return of excess vehicle registration tax. The plaintiff did not avail of the appeal process under s. 138 of the Act, save in a few cases and did not quantify its dissatisfaction on the outcome of those appeals.

Even if the court were, as is indeed indicated in the reliefs sought, to treat damages as a separate heading it is difficult to see from the pleadings how the components of the claim for some €130 million could arise.

While there is some indication of the VRT being paid under protest at the time the complaints were made in 1993 and 1994, the court is not satisfied that that applied to all payments of the tax. Moreover it is not at all clear from the evidence whether it was the plaintiff or an authorised dealer within the meaning of s. 136 who registered the vehicle and paid VRT. There was no documentary evidence as to the agreement with dealers. The argument was that the dealers suffered a loss if the estimated VRT was exceeded in what had to be paid by, or on behalf of the owner (as defined in s. 130). However, as already pointed out, there was no evidence from dealers, nor any documentary evidence of any such claims having been made. A mere assertion without quantification falls short of proof of loss.

In the circumstances, the court will not grant a mandatory injunction as requested.

There remain four reliefs are of a declaratory nature against the Revenue Commissioners at (b), (e), (f) and (g). Both (e) relating to the Constitution and (f) relating to European Community law suffered the same infirmity as (c) and (d) already dealt with.

The second relief, (b), seeks a declaration as to the unlawfulness of the assessment of VRT as contrary to s. 133 of the Finance Act 1992, as amended.

The court notes that these plenary proceedings are not proceedings by way of judicial review which, in any event, would require the decision to be, inter alia, irrational or ultra vires. The court is not satisfied that the opinion was irrational or ultra vires. The evidence was that reliance on sources, including the Car Sales Guide provided the open market selling price. Moreover, the availability of an appeals procedure, which was employed by plaintiff, ensured that there was a channel for the plaintiff to challenge the Revenue opinion.

Insofar as the Revenue Commissioners are entitled and have formed an opinion as to the open market selling price which appears reasonable, the court declines to make such a declaration.

Finally, the plaintiffs seek declaration that the assessment was contrary to the principles of legitimate expectation, proportionality, legality, equality and legal certainty. The court has already dealt with these matters and will refuse the reliefs sought under this heading.

In the circumstances, the court declines the reliefs sought.

Grange Developments Ltd v Dublin County Council (No.4)

[1989] IR 377

[1
Murphy J.
14th March, 1989

Director of Public Prosecutions v. Dougan

[1997] 1 I.L.R.M. 550
Geoghegan J

This is a consultative case stated by Judge Haughton, a judge of the District Court assigned to the Dublin Metropolitan District, pursuant to the provisions of s. 52 of the Courts (Supplemental Provisions) Act 1961. The defendant appeared before Judge Haughton in the District Court on 10 January 1995 and pleaded guilty to two offences with which he had previously been charged on Terenure Charge Sheet No. 1 of 1995. The charges were as follows:

1. That you the said accused on 2 January 1994 at the Tallaght Road a public place in the said district when in charge of a mechanically propelled vehicle reg. number YIA 3528 in a public place with intent to drive the said vehicle (but not driving or attempting to drive it) were under the influence of an intoxicant to such an extent as to be incapable of having proper control of the vehicle contrary to s. 50(1) and 4(1) of the Road Traffic Act 1961 as inserted by s. 11 of the Road Traffic Act 1994, and

2. That you on 3 January 1995 at Terenure Garda Station in the Dublin Metropolitan District being a person arrested under s. 50(1) of the Road Traffic Act 1961 (as inserted by s. 11 of the Road Traffic Act 1994) and brought to a Garda Station, having been required by Garda Louise Doyle, a member of An Garda Síochána, pursuant to s. 13(3) of the Road Traffic Act 1994, to permit a designated medical practitioner to take from you a specimen of your blood, or, at your option, to provide a specimen of your urine, did refuse to comply forthwith with the said requirement, contrary to s. 13(3) of the Road Traffic Act 1994.

The case stated goes on to explain that the judge adjourned the hearing until 11 January 1995 and assigned Mr Garrett Sheehan, solicitor, to represent the defendant under the Criminal Legal Aid Scheme. He also advised the prosecuting garda to have a representative of the Chief State Solicitor’s office in court the following day as he was of the opinion that the provisions relating to penalty and disqualification contained in the Road Traffic Act 1994 in respect of the offence under s. 13(3) of that Act may be such that the offence could not be regarded as a ‘minor offence’ and that in those circumstances he, the District Court judge, would be exceeding his jurisdiction were he to proceed with the matter. The judge states that he was anxious to allow the State Solicitor and a solicitor on behalf of the accused to address him on that issue and to decide whether or not he should state a case for the High Court to determine. Ultimately, the matter came to be argued on 12 January 1995. Mr Mooney, on behalf of the State, submitted to the judge that the decision of the Supreme Court in Conroy v. Attorney General [1965] IR 411 might well have been made 30 years ago but that the decision was binding on the District Court. He argued that the reasoning of the court in the Conroy case applied equally to the circumstances of the case before Judge Haughton. He further submitted that Mr Conroy had made the very point being made in relation to the present case, that is, that his livelihood depended on his being able to drive. Mr Mooney submitted to the court that in any evaluation as to what constituted a minor or non-minor offence regard would have to be had to the circumstances of the particular case before the court and that there was nothing in the case before the judge to distinguish it from that of Mr Conroy. Mr Mooney submitted further that there were many orders in the District Court which would have consequences far beyond that which was directly intended. In particular, the recording of a conviction in the District Court would, in many instances, effectively prevent a person from travelling to many parts of the world and that it had never been suggested at any time that such consequences might be brought into evaluation in considering the gravity of the offence. The judge stated that he would distinguish circumstances where foreign states exercised their sovereignty by refusing to grant visas. The case at issue was one where the State itself had taken steps contrary to the interests of the defendant.

With regard to the second matter, Mr Mooney submitted to the court that the provisions of s. 29 of the Road Traffic Act 1994 were directed to the executive and need not and do not concern the court, that there were many instances where the strict terms of the court order would be mitigated in its execution and he instanced those provisions of law whereby a prisoner might be granted early release or parole. It was submitted that s. 29 was to be read as a directive to the executive. Mr Mooney then went on to submit that it was not within the competence of the District Court to refer a question in the manner proposed on an issue of constitutional law. He made reference to the decision of the Supreme Court in Foyle Fisheries Commission v. Gallen [1960] Ir Jur Rep 35. He further read from the second edition of Kelly, The Irish Constitution . Mr Sheehan, on the other hand, submitted that he would be surprised if it was not within the competence of the court to refer a question for the opinion of the High Court on an issue concerning the jurisdiction of the District Court. According to the case stated the judge then expressed the view that the question he proposed to pose to the High Court was not one which necessarily touched upon the constitutionality of the provisions but the question was as to the nature of the offences before the court. But Mr Mooney submitted further that since the legislature provided for the summary trial of the offences and had not provided any alternative method, that the question to be posed was one which impliedly went to the constitutionality of the statutory provisions. However, the judge ultimately decided to state the case and the questions he has asked are the following:

(1) In the light of the present social circumstances, is a disqualification order to which the defendant is now liable to be considered as a penalty rather than the withdrawal of a privilege?

(2) If the disqualification order can now be deemed to be a penalty, is the offence under s. 13(3) which involves a mandatory two year disqualification which continues until the accused has obtained a certificate of competency a minor offence?

(3) If the offence is not a minor offence, can the defendant be returned for trial and/or sent forward for sentence to the Circuit Court when the legislature has made no provision for trial or penalties on indictment?

(4) If the court directs that a convicted person shall remain disqualified until he/she produces a certificate of competency having been disqualified under ss. 26, 27 or 28(2) of the principal Act, does s. 29 of the Road Traffic Act 1994 effectively invalidate a court order requiring a certificate of competency prior to the removal of disqualification?

The first matter which this Court has to consider is whether the case stated should be entertained by it at all. Counsel for the Director of Public Prosecutions, Mr Ó Caoimh SC, has argued that the district judge had no jurisdiction to state a case because by doing so he was effectively raising the constitutionality of provisions contained in the Road Traffic Act 1994 and that he was totally precluded from doing this by virtue of Article 34.3.2° of the Constitution. There is absolutely no doubt that a District Court judge is not entitled to state a case to the High Court on a question of the validity of a statutory provision having regard to the Constitution. The direct effect of the constitutional provision already cited prevents him deciding the question himself and he can obviously only state a case on questions which he himself would be entitled to decide independently of the case stated. The mere fact, therefore, that the High Court is given jurisdiction under the Constitution to determine a question of the constitutionality of a statutory provision does not mean that this can be done by way of case stated and the former Supreme Court of Justice has made this absolutely clear in Foyle Fisheries Commission v. Gallen cited above. This case was subsequently followed by O’Hanlon J in Minister for Labour v. Costello [1988] IR 235; [1989] ILRM 485 in the context of an issue as to whether a particular offence was a ‘minor offence’ or not, but I will be returning to that case in more detail later in this judgment.

It is clear from the case stated, however, that the district judge takes the view that he is not challenging the constitutionality of any provisions of the 1994 Act as such but that he is concerned in relation to the particular case before him that he should not breach the express provisions of Article 38.5 of the Constitution. That section of the Constitution reads as follows:

Save in the case of a trial of offences under s. 2, s. 3 or s. 4 of this Article no person shall be tried on any criminal charge without a jury.

Ss. 3 and 4 deal with special and military courts and are therefore not relevant to this case. But s. 2 provides as follows:

Minor offences may be tried by courts of summary jurisdiction.

As I understand his concern as expressed in the case stated, the judge believes that he is under a direct constitutional obligation not to try a non-minor offence summarily and that he must consider his position in this regard in relation to any particular prosecution before him. As the District Court judge would see it, he is not in any way raising a question as to the constitutionality of a statutory provision but rather he is raising a question of whether he is entitled to deal with these particular charges before him having regard to Article 38.5 of the Constitution. He believes it to be irrelevant that the same point would arise in every prosecution under these sections in the 1994 Act. As counsel for the defendant puts it, if he is entitled to consider whether the offences are minor offences or not and if he holds as a consequence of a decision upon a case stated or by virtue of his own decision unaided that they are not and that decision is upheld, the effect is not to render the statutory provisions unconstitutional as there would have been no declaration to that effect but rather to render them inoperative. The question of the entitlement of the District Court judge to state the case was fully debated in court. Irrespective of whether the hearing in respect of the charges can be said to have commenced, there were ‘proceedings … before him’. The questions of law posed in this consultative case stated arose in those ‘proceedings’. It follows, in my view, that Judge Haughton did have jurisdiction under s. 52 of the Courts (Supplemental Provisions) Act 1961 to send forward this consultative case stated. If this Court, however, takes the view that the District Court is bound to assume that any offence made a summary offence only by the Oireachtas is a ‘minor offence’ within the meaning of the Constitution, the court must decline to give specific answers to the questions raised for the reasons put forward by Mr Ó Caoimh and the case will be sent back to the District Court accordingly. The mere fact, therefore, that the District Court judge has jurisdiction to send forward the case stated does not mean that he is per se entitled to specific answers to the questions he has posed.

I now turn to the questions in the case stated. I should say at the outset that it is more or less agreed by both parties that question No. (4) is not a question which was relevant to the proceedings before the District Court and ought not to be answered. I agree with this and I do not propose to answer it. The questions I am considering, therefore, are (1), (2) and (3). As I have already indicated, counsel for the Director of Public Prosecutions argues that this Court cannot consider these questions as put because to do so would be effectively to permit a District Court judge to hold that a statutory provision was invalid having regard to the Constitution, something which he is prohibited from doing under Article 34.3.2° of the Constitution. Counsel for the defendant on the other hand adopts the view taken by the district judge that he is not questioning the constitutionality of the section as such but he is considering (as in his view he is bound to do) whether the particular offence before him is a ‘minor offence’. Although counsel for the defendant concedes that if the District Court judge is entitled in this case to consider whether the offence before him is a minor offence or not, and if he decides that it is a non-minor offence and that consequently he has no jurisdiction, the same result would apply to any prosecution under the section and that, therefore, there could be no case which could be summarily tried. There being no provision in the section for a trial upon indictment, the section would be inoperative. Counsel for the defendant argues that an inoperative section is not the same thing as an unconstitutional section. But such a proposition needs very careful examination as it could mean that every time that a District Court judge considered that there was a constitutional infirmity in a particular section he could regard it as inoperative and inapplicable. In my opinion, this would be tantamount to a District Court judge deciding on the constitutionality of a statutory provision and that he is not entitled to do under the Constitution.

I appreciate, of course, that counsel for the defendant would argue that the situation of ‘minor offences’ is quite exceptional. It can be argued that in that instance, the court is directly prohibited from embarking on a trial without a jury by the Constitution itself. Strong reliance has been placed by the defendant on O’Sullivan v. Hartnett [1983] ILRM 79. In that case the plaintiff had been charged in the District Court with two offences concerning the unlawful capture of 900 salmon contrary to s. 182(2)(a) of the Fisheries (Consolidation) Act 1959. S. 182(4) in providing for a penalty on summary conviction necessarily implied that the case could be tried summarily. But before the hearing of the charge, the plaintiff in separate proceedings sought a declaration in the High Court that the offences could not be said to be minor offences and consequently that s. 182(4) was unconstitutional having regard to Article 38.5 which requires that non-minor offences be tried with a jury. McWilliam J held that the offences charged were not minor but the order as drawn up purported to contain a declaration by the High Court that ‘offences under s. 182(2)(a) of the Fisheries (Consolidation) Act 1959 are not minor offences’. On appeal to the Supreme Court, the judgment of McWilliam J was upheld but the Supreme Court varied the order so as to contain a declaration simply that neither of the particular offences charged against the plaintiff was a minor offence. Henchy J who delivered the judgment of the court pointed out that the judgment of McWilliam J decided no more than that the particular offences were not minor offences and that it did not go so far as to hold that all offences under s. 182(2)(a) are not minor offences. The clear implication from those dicta of Henchy J is that some hypothetical offences under that statutory provision could be minor offences and could therefore be tried summarily. That being so, the statutory provision as such was not under constitutional challenge. For that reason the same point could have been determined by the High Court, and on appeal by the Supreme Court, by way of case stated from the District Court, but I do not think that that could have been done if the necessary effect of the particular offence being held to be a non-minor offence would have been that no offence under the statutory provision could be tried summarily. That would be tantamount to challenging the constitutionality of the provision and could only be done by separate action in the High Court. In this regard, I would follow and adopt the view taken by O’Hanlon J in Minister for Labour v. Costello [1988] IR 235. At p. 241 of the report the following passage appears from the judgment:

It appears from the case stated that the defendant contended in the District Court that the statutory provisions in question, if permitting the District Court to order payment of a sum of the magnitude claimed, took the offence out of the category of a ‘minor offence’ and were repugnant to the Constitution in purporting to confer jurisdiction on the District Court to impose such a penalty in criminal proceedings.

This matter was again canvassed in the course of the hearing of the case stated in the High Court. In my opinion, it was not open to the defendant to rely on this plea in the hearing before the District Court having regard to the specific provisions of Article 34.3.2° of the Constitution which provides that no such question ( i.e. as to the validity of any law having regard to the provisions of the Constitution) shall be raised (whether by pleading, argument or otherwise) in any court established under the Constitution other than the High Court or the Supreme Court. The provisions sought to be challenged form part of an Act of the Oireachtas enacted subsequent to the enactment of the Constitution of 1937 and are within the meaning of the expression ‘any law’ as construed by the Supreme Court in State (Sheerin) v. Kennedy [1966] IR 379.

Furthermore, I am of opinion that it is not permissible to raise the issue of constitutionality by way of case stated from the District Court having regard to the decision of the former Supreme Court in Foyle Fisheries Commission v. Gallen [1960] Ir Jur Rep 35. The district justice must proceed on the assumption that powers conferred on him by an Act of the Oireachtas enacted subsequent to the enactment of the Constitution of 1937, may be lawfully exercised by him unless and until the statute has been successfully impugned in proceedings appropriate for that purpose.

It is clear from the report that O’Sullivan v. Hartnett cited above was referred to in the case before O’Hanlon J but he clearly did not consider it relevant. I assume that he discerned a major distinction between the situation where some offences under the particular section would be regarded as ‘minor offences’ and the situation where the logic of a court determination that in any individual case the offence was not a ‘minor offence’ would be that no prosecution could be brought summarily under the section. In the latter instance, the constitutionality of the section was being effectively impugned. This view is consistent also with the judgment of O’Higgins CJ in State (McEvitt) v. Delap [1981] IR 125 (Supreme Court).

For this reason, therefore, I am of the view that even though the District Court judge had jurisdiction to state the case, I should simply answer the questions by saying that by reason of the prohibition on the District Court challenging the constitutionality of a statutory provision, he is obliged to treat this offence as a ‘minor offence’ and to try it summarily accordingly.

There is another reason why the arguments put forward on behalf of the defendant to the effect that the district judge is not attempting to challenge the constitutionality of the section are unsound. At common law there was no such thing as summary jurisdiction. Summary jurisdiction can only be vested in the District Court or any other court in relation to criminal offences by a statute. It follows from that, that the prohibition on trying persons for non-minor offences without a jury contained in Article 38.5 of the Constitution is tantamount to a prohibition on the Oireachtas enacting any post 1937 Act making a non-minor offence a summary offence. But a corollary of that proposition is that it is for the Oireachtas in the first instance to determine whether an offence is a minor offence or not though it may delegate the function to the District Court where it provides for alternative modes of trial. In Conroy v. Attorney General cited above, Walsh J in the course of his judgment says the following at p. 436:

The court cannot accept the submission made on behalf of the Attorney General that the only test of what is or is not a minor offence is the test of the punishment it may attract. The moral quality of the act is a relevant though a secondary consideration. But between the positions of grave and minimal moral guilt, there is a large field which must be left to the discretion of the Oireachtas for consideration as a factor in determining whether to make an offence a minor one or not. That consideration will be reflected in the punishments which an offence may attract either by the express will of the Oireachtas in an Act or at common law without qualification by the Oireachtas.

While I appreciate that that passage in the judgment of Walsh J is in the context of one aspect of whether an offence is minor or not, that is to say, the moral quality of the act, it indicates a broader general view that there must necessarily be quite a range of discretion in the Oireachtas at any given time in considering whether an offence is a minor offence or not. Having regard to the general mores of the community, there may well be legitimate differences of opinion as to whether a particular offence should be regarded as minor or non-minor. An enactment that provided for summary trial of an offence which can legitimately be argued to be minor but which some might equally legitimately regard as non-minor would not, in my view, be declared void having regard to the Constitution. It would be only if on any reasonable view the offence was non-minor that the courts would declare the enactment unconstitutional. If I am right in my view that that is the approach which the Superior Courts should adopt in considering whether an enactment providing for summary trial is constitutional or not in the context of whether the offence is minor or non-minor, then clearly the theory of the inoperative section must be misconceived. If such a principle could ever be countenanced, which I rather doubt, it certainly could not be appropriate in a case such as this where there is a range of discretion in determining whether an offence is minor or non-minor and that discretion is prima facie vested in the Oireachtas. In a case where summary trial only is provided for, any challenge by a district judge to the mode of trial must necessarily be an attack on the constitutionality of the enactment. To put it another way, such a challenge is tantamount to suggesting that the Oireachtas may have gone badly wrong and acted unconstitutionally.

Having regard to the view which I have taken, it would be inappropriate that I should in this judgment consider the arguments put forward to the effect that the new form of disqualification arising from the Road Traffic Act 1994 is different from that considered by the Supreme Court in Conroy’s case and might be regarded as a punishment.

Colmey v Pinewood Developments Ltd

[1995] 1 ILRM 331,
Carroll J
In her action Bridget Colmey seeks a declaration to the effect that the ejectment proceedings served on her on 8 August 1994 by the defendant are offensive to the provisions of the Constitution, in particular Articles 40.3.1°, 40.3.2° and 40.5.

Article 40.3.1° of the Constitution provides:

The State guarantees in its laws to respect, and, as far as practicable, by its laws to defend and vindicate the personal rights of the citizen.

Article 40.3.2° provides:

The State shall, in particular, by its laws protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name, and property rights of every citizen.

Article 40.5 provides:

The dwelling of every citizen is inviolable and shall not be forcibly entered save in accordance with law.

In this application the plaintiff seeks an interlocutory injunction to restrain the defendant from doing anything in pursuance of the notice to quit or of the ejectment proceedings.

The plaintiff is 84 years of age and has resided in a flat in the defendant’s building at Temple Buildings, Upper Dominick Street, Dublin, for approximately 19 years which she holds as a weekly tenant at £12.50p per week. The defendant company is not the original landlord. It acquired the property in 1989 as a commercial investment. A notice to quit was served on 4th May 1994 purporting to determine the tenancy on 4 June 1994. Ejectment proceedings in the District Court were served on 8 August 1994 and they have been adjourned pending this application.

Mrs Colmey claims that successful proceedings for ejectment are calculated to entail very serious consequences for her physical and mental health, with the likelihood of being fatal. Annexed to the statement of claim is a report from Mrs Colmey’s general practitioner in which there is detailed the plaintiff’s health problems. It lists heart problems, fibrillations, loss of weight and hypertension. The GP concludes her report by saying that she feels it would be life-threatening if Mrs Colmey is ejected from her flat.

As far as the defendant is concerned, its investment to date is £650,000. If the injunction is continued the defendant will sustain loss and damage and it could undermine its solvency.

Mr Mackey SC (for the plaintiff) claims that because her health is affected by the ejectment proceedings then the proceedings are contrary to the Constitution. He says that the defendant being an artificial person has no constitutional rights and that the plaintiff’s constitutional rights to health and life and her property rights take precedence over the defendant’s right to obtain an order for possession. Mr Mackey says that he is not attacking the validity of any statutory provision, merely the operation of the law on ejectment which in this case infringes the plaintiff’s constitutional rights. He claims that the plaintiff has a property right which subsists notwithstanding any purported notice to quit. Mr Mackey cited McMahon v. Leahy [1984] IR 525 at p. 541; [1985] ILRM 422 at p. 436 as follows:

When a statute authorises the making of a particular order in stated circumstances, proof that such circumstances exist will normally lead to the making of the authorised order. But where — as in the case here — a post-Constitution statute authorises the making of an order in stated circumstances, the legislative intent must be held to comprehend that the authorised order will not be made, even though the stated circumstances are shown to exist, if it is shown that the order would necessarily infringe a constitutional right of the party against whom it would operate. The fact that parliament is debarred by Article 15.4.1° of the Constitution from enacting ‘any law which is in any respect repugnant to this Constitution or any provision thereof’ carries with it not only the normal presumption that laws enacted by the national parliament are not repugnant to the Constitution but also the presumption that the provisions of such laws will not be administered or applied in a way that will infringe constitutional rights. The presumption of constitutionality extends to both the substance and the operation of a statute: it is a presumption that admits of rebuttal only by a contrary intention appearing in the terms of the statute itself.

Mr Mackey concludes from that that since the powers conferred by statute must be exercised in a constitutional manner, Mrs Colmey’s health and life cannot be jeopardised by proceedings to give effect to the notice to quit.

Mr Finnegan SC (for the defendant) submits that what the plaintiff proposes is an injunction to restrain the District Court from exercising its jurisdiction conferred by a post-1937 statute (the Courts (Supplemental Provisions) Act 1961). He too cited McMahon v. Leahy [1984] IR 525 at p. 541. His interpretation of the same passage from the report is that it must be assumed that the district judge will do justice in hearing any ejectment proceedings, will listen to any application for a stay and will, if necessary, seek information as to the availability of alternative accommodation and so on. Mr Finnegan says that the plaintiff seeks to take away from the district judge his duty to do justice.

Mr Finnegan cited State (Llewellyn) v. Ua Donnchadha [1973] IR 151 where the Supreme Court considered whether there should be an order of prohibition to prevent a prosecution under a particular subsection of a statute where there was in being a civil action in which the constitutionality of the subsection was the main issue. The High Court upheld the validity of the subsection and this was appealed to the Supreme Court. The district justice refused to adjourn the matter pending the outcome of the appeal. The Supreme Court held that he was acting within jurisdiction. At p. 157 of the report Henchy J said:

If the appellant’s argument is correct, not only this district justice but every district justice in the State must adjourn prosecutions of this kind until the Supreme Court finally rules on the constitutional point. In other words, all that is necessary to bring prosecutions in the District Court under a particular statutory provision to a halt is for somebody to impugn the constitutional validity of the statutory provision in the High Court. Even if the High Court ruled that such a claim could not be sustained it would follow that, if an appeal to the Supreme Court was lodged, the District Court would be divested of jurisdiction to hear and determine any such prosecution until the appeal was decided. This submission in my judgment, is untenable. In the first place, a statutory provision enacted by the Oireachtas under the Constitution is entitled to a presumption that it enjoys constitutional validity, unless a violation of the Constitution is patent on its face. This means that the district justice is not entitled to act on the presumption that, if the constitutionality of the provision is questioned in the High Court, such challenge will succeed either in the High Court or on appeal in the Supreme Court. On the contrary, he must act on the basis that the provision will be ruled to be constitutional.

This case gives rise to a somewhat similar position. All that would be necessary in any ejectment proceeding would be for a tenant to say that his health or life would be affected, apply for an injunction and postpone for perhaps two or three years a final determination on his claim. If it could be done in ejectment proceedings, the same claim could be made in proceedings for debt. The possibilities are endless. Mr Finnegan urged that the court should not assume that the jurisdiction conferred on the district judge would be exercised unconstitutionally.

In deciding whether an injunction should issue, the court should first determine whether there is a fair issue to be tried. Mr Finnegan says that the plaintiff falls at this first fence because the case is so weak. But it is not for this Court to hold that the plaintiff would probably not succeed. Once the claim is not frivolous or vexatious (which is not alleged here), the plaintiff is entitled to have her claim, which is completely novel, decided in a full action. Since the claim concerns the right to possession of property, Mr Finnegan does not claim that damages are an adequate remedy in lieu of an injunction; so the last factor is whether the balance of convenience lies in granting or not granting an injunction.

As I see it, an injunction, which is a discretionary remedy, should not be granted in this case. The District Court should not be injuncted from exercising its jurisdiction conferred by statute. This Court must assume that the district judge will administer justice in accordance with the law. The balance of convenience lies in preserving free access to the District Court. In the exercise of my discretion I refuse the injunction sought.

In the second case (Gaynor v. Pinewood Developments Ltd) all the plaintiffs claim a property right under the Constitution which entitles each of them to remain in undisturbed possession as long as each observes the conditions of the contract with the landlord. This is a novel form of property right which sets at nought the right of a landlord to terminate a letting in accordance with the terms and subject to any statutory restrictions.

All the plaintiffs in this case, whose individual circumstances differ, claim to suffer great distress, anxiety and acute depression because of the uncertainty occasioned by the ejectment proceedings. The plenary summons issued on their behalf claims a declaration that the ejectment proceedings served on each of them are offensive to the provisions of the Constitution, in particular Article 40.1, and/or Article 40.3.1°, Article 40.3.2° and/or Article 40.5.

The additional article cited in this case but not in Mrs Colmey’s case is Article 40.1 which provides:

All citizens shall, as human persons, be held equal before the law.

This shall not be held to mean that the State shall not in its enactments have due regard to differences of capacity, physical and moral, and of social function.

The plenary summons also seeks a declaration not sought by Mrs Colmey that the notices to quit are null and void and of no effect and offensive to the provisions of the Constitution. In this application the plaintiffs seek an interlocutory injunction to restrain the defendant from doing anything in pursuance of the notices to quit or of the ejectment proceedings. Here Mr Mackey said that what they are attacking are the ejectment proceedings involved in enforcing the notices to quit. The Constitution guarantees to protect from unjust attack and in these cases it is unjust for a developer to throw innocent tenants on the side of the road.

In my opinion there is no difference in principle between this case and Mrs Colmey’s case. While this case might be considered prima facie to be extremely weak, it is a matter which the plaintiffs are entitled to have decided after a full hearing.

For the same reasons as given in the other case, I consider that the plaintiffs in this case are not entitled to an injunction as the balance of convenience favours keeping access open to the District Court.

Lovett t/a Lovett Transport v Gogan t/a PS Travel and Ors [1995] 1 ILRM 12 Finaly CJ
This is an appeal brought by the first and fifth named defendants against an order made by Costello J in the High Court on 18 March 1993 whereby it was ordered that the first named and fifth named defendants be permanently restrained from operating or participating in the operation of any regular coach service between points in the City of Dublin and points in the County of Clare other than a passenger road service within the meaning of the Road Transport Act 1932 carried on in accordance with the licence granted under the said Act.

The facts and circumstances out of which the case arose and which clearly formed the basis for the decision of the learned trial judge in the High Court may thus be summarised.

The plaintiff is the owner of a number of motor coaches and carries on a motor coach business between the County of Clare and the City of Dublin. He was in March 1993 and prior thereto a holder of an occasional passenger licence granted pursuant to the provisions of the Road Transport Act 1932 entitling him to make journeys on Fridays and Sundays between Miltown Malbay in Co. Clare and Dublin and Dublin/Miltown Malbay and also the holder of a licence entitling him to make journeys on the same occasions between Kilkee in the County of Clare and the City of Dublin and between Dublin and Kilkee.

The plaintiff had apparently held such licences over a sustained period and had operated a motor coach service in effect serving the weekend traffic from Clare to Dublin and from Dublin to Clare for a number of years.

In or before the year 1987 the first named defendant Robert Gogan and the fifth named defendant Go-Travel Ltd being a company owned and operated by Robert Gogan had apparently operated a road service at similar times between points in the County of Clare and Dublin in respect of which he had not got a licence.

Proceedings were then instituted by the present plaintiff in the High Court seeking an injunction restraining the defendants from carrying on that service on the grounds that they were in breach of the provisions of the Road Transport Act 1932 and were committing a criminal offence. A compromise was reached in those proceedings in the month of September 1990 and the plaintiff’s first cause of action in these proceedings was that that compromise involved an agreement on the part of the defendants not to operate such a service in the future unless it was licensed under the Act.

The learned trial judge in the course of his judgment found that such an agreement was not established on the evidence and against that finding the plaintiff has not appealed.

The fifth named defendant had on 15 June 1988 been convicted by a judge of the District Court of an offence of carrying on an occasional passenger service without a licence granted under the Act of 1932 and fined £50. The offence was alleged to have been committed on 2 May 1986 by the carrying out of a journey between Macroom and Dublin. At the request of the defendant the judge of the District Court stated a case by way of appeal to the High Court and this was decided by Lardner J who allowed the appeal. Against that decision the DPP appealed to the Supreme Court and by order of 7 March 1991 the Supreme Court dismissed that appeal pursuant to a judgment delivered by McCarthy J with which the other members of the court concurred.

Subsequent to the delivery of that judgment the defendants who had not in fact resumed the provision of any coach service between Clare and Dublin after the settlement of the previous proceedings between the parties issued an advertisement in a newspaper indicating that they would commence a weekend bus service Dublin/Ennis and West Clare on Fridays and Sundays starting on Friday, 27 September setting out the fares, both single and return, with different amounts for students and setting out the points at which the service would commence and stop. This advertisement had the significant words written underneath it ‘it’s great to be back’. The defendants apparently commenced the operation of the service as promised in that advertisement, evidence was given before the trial judge of persons who at the request of the plaintiff and in order to provide evidence travelled on it and it was clear that whereas some people may have pre-booked on the service it was possible to attend at the point of departure, as set out in the advertisement, enter into one of the buses and pay your fare in the normal fashion to which a person on a road passenger service might be accustomed to paying a fare. The learned trial judge concluded in short that what was now being operated by the defendants clearly was an occasional road passenger service as so defined under the Road Transport Act 1932 in respect of which the defendants did not have a licence.

He further concluded placing particular reliance on the decision of O’Hanlon J in Parsons v. Kavanagh [1990] ILRM 560 that the plaintiff was a person one of whose constitutional rights, namely the right to earn his living, was clearly damaged by an unlawful act on the part of the defendants and that as such he was a person who was entitled to sue for an injunction restraining the defendants from the continuance of the damage.

He further rejected a claim made by the defendants that on certain evidence which they had adduced at the hearing it could be established that the plaintiff was in breach of one or more of the terms of the licence under which he operated his service from County Clare to Dublin, to which I have referred, and that as such he was a person who did not come to the court with ‘clean hands’ and could therefore not obtain the equitable relief of an injunction.

In short, the defendants have appealed against each of these findings.

Their submissions on appeal may thus be summarised.

1. In relation to the finding by the trial judge that the service being provided by the defendants described as the weekend bus service in the advertisement was an occasional passenger service under the Act of 1932 which required a licence, they submitted that this was in conflict with the decision of the Supreme Court in the case of Director of Public Prosecutions v. Go-Travel Ltd [1992] 2 IR 1; [1991] ILRM 577 and the judgment of McCarthy J in that case and that accordingly either on the basis that the defendants were not the owners of the bus which operated on this occasion or on the basis that the ordinary arrangement was that passengers had to pre-book and must therefore be deemed only to be contributing to the overall cost of the defendants’ hiring the bus by a single sum arrangement the particular activity was exempt from the provisions of the 1932 Act.

(2) With regard to the issue of the right of the plaintiff to sue for an injunction, the appellants submitted that the decisions reached in the House of Lords with regard to the question of the suing by an individual to restrain the commission of a breach of a criminal statute by another individual which appear to reject the contention that he can obtain an injunction as a form of relief in such event should be followed by this Court.

(3) With regard to the question of the assertion that the plaintiff had been in breach of his licence, the appellants submitted that the learned trial judge was incorrect in the exercise of his discretion and in concluding, as in the terms of his judgment he did that such breaches as may have occurred were minimal and not the subject matter for a ban on his entitlement to an injunction.

These submissions were countered on behalf of the plaintiff who in effect upheld before this Court the conclusions both as to fact and law reached by the learned trial judge in the High Court.

The statutory provisions applicable to the issues thus arising are as follows. In s. 2 of the Road Transport Act 1932 the following definitions exist:

the expression ‘passenger road service’ means a service of one or more mechanically propelled vehicles travelling wholly or mainly on public roads and carrying passengers (whether passengers’ luggage, merchandise and mails, or any of them are or are not also carried) between specified terminal points or along a specified route for separate charges in respect of each passenger;

the expression ‘occasional passenger road service’ means a passenger road service which is carried on only on one or more specified occasions.

By s. 7 of the Act it is provided:

(1) On and after the appointed day no person shall carry on a passenger road service save under and in accordance with a licence (in this Act referred to as a passenger licence) granted to him under this Act.

(2) Every person who carries on a passenger road service in contravention of this section shall be guilty of an offence under this section and shall be liable on summary conviction thereof to a fine not exceeding fifty pounds together with, in the case of a continuing offence, a further fine not exceeding five pounds for every day during which the offence continues.

By s. 12 of the Act it is provided that:

Whenever the minister grants a passenger licence he may attach to such licence such conditions as he shall think proper and shall specify in such licence and, in particular and without prejudice to the generality of the foregoing power, conditions in respect of all or any of the following matters, that is to say:

(a) the terminal points and route of the passenger road service to which such licence relates;

(b) the frequency of such service, including variations of such frequency on different days or at different periods of each day;

(d) the minimum number of vehicles to be kept available for the operation of such service;

(e) the type of vehicle to be used on such service;

(f) the maintenance of a particular standard of fitness, cleanliness, and appearance of the vehicles used on such service and the organisation to be kept available for the maintenance of that standard;

(g) appointing or restricting the distinctive marks and numbers on or the colours of the vehicles used on such service;

(h) the publication of the time-tables of and charges on such service and the display of such time-tables and charges in the vehicles used on such service;

(i) the notification to the minister or to the public of alterations in the timetables of and charges on such service;

(j) the notification to and approval by the minister of agreements or arrangements made in relation to such service by the licensee under such licence with other persons engaged in the transport of passengers by rail, road or water, or any of them;

(k) the rates of wages and hours of duty of employees and agreements or arrangements in reference thereto in the working of the passenger road service to which a licence relates.

S. 11 of the Act deals with the granting of passenger licences and contains a number of provisions with regard to the information which must be supplied by an applicant and also the grounds on which the minister may refuse to grant it. It is clear from these as a general proposition that the Act is very largely concerned with the safe, orderly and convenient organisation of public transport by way of road passenger services and that is the purpose of the licensing system set up under the Act.

The decision
Having regard to these provisions and the submissions which have been made, I have come to the following conclusions.

(1) In the course of the judgment of this Court in the case of Director of Public Prosecutions v. Go-Travel Ltd it is clear that the court came to the conclusion that the proof upon which the conviction against which the appeal by way of case stated was taken had rested was proof of a single journey and that it also came to the conclusion that the proof before the learned judge of the District Court was to the effect that the only payment made by passengers was a contribution towards the total hire of the coach on the particular occasion of that journey. I am satisfied on the evidence which was before the learned trial judge in this case and on the findings which he made which were fully supported by that evidence that neither of those considerations could be said to apply to what was being done by the defendant on this occasion and what was restrained by the injunction granted in the High Court. From the terms of his advertisement, and from the evidence with regard to the service which he provided in pursuance of that advertisement it is quite clear that he intended to and was operating a regular weekend service from Clare to Dublin at which persons could, provided there was room in the bus, obtain the journey either by booking in advance or by attending at the point of departure and paying the fare required as an individual. Evidence was undoubtedly given that he did not own the coach concerned nor did he employ the driver of it, both of these being supplied to him on a fixed charge per journey basis by coach owners.

(2) Insofar as it appears from the judgment of the court in the case of Director of Public Prosecutions v. Go-Travel Ltd that McCarthy J concluded that in order for a person to provide a passenger service, he must be the owner of the bus concerned, I am satisfied it was obiter to the real issue which was before the court having regard to the facts on which the case stated was apparently based. I must decline to follow that view. There appears to be nothing in the provisions of the Act of 1932 and in particular there is nothing in the conditions which pursuant to s. 12 of that Act the minister may impose which would confine the granting of a licence to a person who owned the coach concerned. Undoubtedly the person must take responsibility for the service, that is to say, for the time and the condition and state and fitness of the coach which operates the service but it is not necessary in my view that he should be the owner. It is of significant importance that in this case the occasional passenger licences issued by the minister to the plaintiff which contain a number of conditions provide at No. 8 of such conditions as follows:

Any vehicle or vehicles hired or borrowed by the licensee for the operation of the service in respect of which this licence is granted shall while on the service bear such conspicuous indications as will identify such vehicle or vehicles with the other licensed services carried on by the licensee and with the vehicles ordinarily used thereon. Such conspicuous identification was established in this case to have been carried out by Go-Travel although of course they were not a licensee and had no condition obliging them to do so.

I am satisfied therefore that the learned trial judge was correct in concluding that the decision in the case of Director of Public Prosecutions v. Go-Travel Ltd was not applicable to the facts proved before him and was correct in his conclusion that the only possible construction of what was being done by the defendants on these occasions was that they were running a road passenger service as it is defined in the Act of 1932.

With regard to the issue as to whether in those circumstances the plaintiff was entitled to an injunction from the court to restrain the defendants’ unlawful act or continued commission of an offence under s. 7 of the 1932 Act I am satisfied that the position is as follows.

In short, I am satisfied that the decision reached by O’Hanlon J in the case of Parsons v. Kavanagh was a decision which was correct in law on the findings of fact made by him in that case. In the course of his judgment the learned trial judge on that occasion reviewed in a comprehensive form the English decisions to which we were again referred concerning the right of individuals to institute proceedings for relief by way of injunction in respect of the criminal offences committed by others contrary to statutes which were not considered by the court to provide an intended protection for the category of persons amongst whom the plaintiff is to be placed. In the Parsons v. Kavanagh case O’Hanlon J concluded that the Act of 1932 could not be construed so as to protect other licensed providers of road passenger services and that in my view is a correct conclusion. He also concluded however that the position in Ireland concerning this right to sue was altered by virtue of the provisions of the Constitution. At p. 565 of the report of his judgment he stated as follows:

The right to earn one’s living by any lawful means was recognised by Kenny J in Murtagh Properties v. Cleary [1972] IR 330 as one of the unspecified or undefined rights arising under the Constitution, to which he had referred in his previous judgment in Ryan v. Attorney General [1965] IR 294. In the Murtagh Properties case he granted an injunction to restrain picketing of a licensed premises on the basis that it amounted to an unlawful interference with the constitutional right of the barmaids employed therein to earn their livelihood.

The same judge in the later case in Yeates v. Minister for Posts and Telegraphs [1978] ILRM 22 again referred to ‘the constitutional right to earn a livelihood’ and Walsh J in Murphy v. Stewart [1973] IR 97 said (with the concurrence of Ó Dálaigh CJ and Budd J):

It has been submitted in this Court on behalf of the plaintiff and not really contested by the defendants that among the unspecified rights guaranteed by the Constitution is the right to work; I accept that proposition. The question whether that right is being infringed or not must depend upon the particular circumstances of any given case.

I have no doubt that on that legal situation correctly outlined that what is involved in this case on the evidence before the learned trial judge in the High Court is an interference actual and threatened in its continuance with a constitutional right of the plaintiff to earn his living by lawful means.

It was suggested in the submissions on behalf of the defendants on this appeal that even though that were so it would not entitle the plaintiff to any remedy other than one which he could frame within one of the causes of action which exist such as breach of contract, inducing of a breach of contract or conspiracy.

I am not satisfied that that is the correct constitutional position.

In the course of his judgment in Meskell v. Coras Iompair Éireann [1973] IR 121 at pp. 132–133 Walsh J with whom the other members of the court agreed stated as follows:

It has been said on a number of occasions in this Court, and most notably in the decision in Byrne v. Ireland, that a right guaranteed by the Constitution or granted by the Constitution can be protected by action or enforced by action even though such action may not fit into any of the ordinary forms of action in either common law or equity and that the constitutional right carries within it its own right to a remedy or for the enforcement of it. Therefore, if a person has suffered damage by virtue of a breach of a constitutional right or the infringement of a constitutional right, that person is entitled to seek redress against the person or persons who have infringed that right.

I am satisfied therefore that the true position in this case is that the plaintiff is entitled to such an injunction if he can establish that it is the only way of protecting him from the threatened invasion of his constitutional rights. Having regard to the limitation contained in the Act of 1932 on the fine which may be imposed on a person running a road passenger service without a licence and in particular on the minimal figure of £5 in respect of a continued offence, there is in my view no doubt that if the plaintiff is entitled to an injunction it is the only remedy which can protect him.

The plaintiff’s own conduct
There remains therefore the question as to whether on the evidence adduced before the learned High Court judge he should have refused to the plaintiff the relief of injunction by reason of the plaintiff’s own conduct in, as it was asserted, being in breach of the licence under which he operated his road passenger service.

If the matter remained merely on the question which was really submitted before us as to the conclusion reached by the learned trial judge as stated in his judgment that this was a minimal or insignificant breach by the plaintiff on the evidence before him, I would be disposed to agree with the conclusion thus reached and certainly would not find it possible on the evidence adduced before the learned trial judge to differ from him on a matter which to some extent depended on his estimate of the bona fides of the plaintiff and his conduct.

There is, however, a further matter which appears to me to be material to this issue in this case. I am not satisfied that the right of the plaintiff to an injunction in this case deriving as I am satisfied it does from an invasion and threatened continued invasion of his constitutional rights must be approached in the same manner as may generally apply to the discretion of a court to grant the equitable relief of injunction and the doctrine that a plaintiff seeking that must come to the court with clean hands. Where the court is, as in my view it correctly is in this case, prepared to grant to a plaintiff an injunction in order to protect his constitutional right the enquiry must rather be as to whether he has got a constitutional right and whether it is that right which is being threatened.

Having regard to that consideration, the test in this case should in my view truly be as to whether the plaintiff’s conduct and any established breaches by him of one or more conditions of his licence under the Act of 1932 removes his conduct in operating the road passenger service as he does having regard to the terms of the licence which has been granted from the category of a lawful method of earning his living into the category of an unlawful method. Quite clearly there can be no constitutional right to earn one’s living by an unlawful method and therefore no right to earn a living in that manner could ever be protected. Looked at from that view it seems to me quite clear that the defendants’ evidence with regard to individual breaches of individual conditions in the licence falls far short indeed of establishing that the plaintiff is not a person who in the running of this passenger service is earning his living by lawful means. I would therefore dismiss this appeal and affirm the order made in the High Court.

Brian Mohan v Ireland and the Attorney General

2015 8925 P

High Court

2 February 2016

unreported
[2016] IEHC 35
Mr. Justice Keane

February 2, 2016

JUDGMENT
Introduction
1. In this action, the plaintiff seeks to challenge the constitutional validity of s. 17 (4B) of the Electoral Act 1997 (“the 1997 Act”), as inserted by s. 42 (c) of the Electoral (Amendment) (Political Funding) Act 2012.

Legislative Background
2. S. 17(4B) is contained in Part III of the 1997 Act. That part of the Act deals with State payments to qualified political parties. S. 16 of the 1997 Act provides that, in order to qualify, a party must be properly registered and its candidates must have obtained not less than two per cent of the total first preference votes cast at the last preceding general election. Under s. 17 (1) and (2), each qualified party that applies receives an annual allocation of funds comprising the euro equivalent of Ir£100,000, together with a further sum in the same proportion to the total fund available as the combined share of the first preference votes obtained by that party’s candidates in the preceding general election bears to the the total number of first preference votes obtained by the candidates of all qualified parties in that election.

The impugned provision
3. S. 17 (4B) provides:

“(a) Payments calculated in accordance with this Part shall be reduced by 50 per cent, unless at least 30 per cent of the candidates whose candidatures were authenticated by the qualified party at the preceding general election were women and at least 30 per cent were men.

(b) Paragraph (a) –

(i) comes into operation on the polling day at the general election held next after section 42 of the Electoral (Amendment) (Political Funding) Act 2012 comes into operation and

(ii) ceases to have effect on the polling day at the general election held next after the expiration of 7 years from the polling day specified in subparagraph (i).

(c) Payments calculated in accordance with this Part shall be reduced by 50 per cent, unless at least 40 per cent of the candidates whose candidatures were authenticated by the qualified party at the preceding general election were women and at least 40 per cent were men.

(d) Paragraph (c) comes into operation on the day after the day on which paragraph (a) ceases to have effect.”

Urgency
4. S. 42 of the Electoral (Amendment) (Political Funding) Act 2012 and, hence, s. 17 (4B) of the 1997 Act came into operation on the 27th September 2012, pursuant to the terms of the Electoral (Amendment) (Political Funding) Act 2012 (Commencement) Order 2012 (S.I. No. 368 of 2012). Accordingly, s. 17 (4B) (a) will apply to State payments made to qualified parties subsequent to the forthcoming general election after the dissolution of the current Dáil. That general election must take place no later than Monday, the 11th April 2016, and may, of course, occur sooner, imparting a specific urgency to the resolution of these proceedings.

The plaintiff’s position
5. The plaintiff Brian Mohan, who gave evidence on his own behalf, is a member of the Con Colbert Cumann, or branch, of the Fianna Fáil party (“the party”). That cumann is located in the Dáil Éireann constituency of Dublin Central. The plaintiff is, at present, the Chair of the party’s Dublin Central Comhairle Dáil Ceantair (“CDC”) or constituency council.

6. In or about the month of July 2015, the party had selected 47 candidates to contest 31 constituencies. 10 of those candidates were women, representing a little over 21% of the total number, as it then stood, of the party’s candidates.

7. The plaintiff was duly nominated to contest the party’s convention to select a candidate or candidates to contest the impending general election in the Dublin Central constituency.

8. On or about the 18th September 2015, the plaintiff received a letter, dated the 17th September 2015, from the general secretary of the party, confirming that, following consultation with the CDC Officer Board, the party’s candidate selection convention had been arranged to take place on the 7th October 2015. The letter continued:

“Having considered the matter very carefully and consulted with the CDC Officer Board, the National Constituencies Committee [“NCC”] has directed that one candidate only be selected at the convention and that the candidate selected must be a woman.

The following candidates are seeking selection:
• Ms. Mary Fitzpatrick
• Ms. Denise McMorrow
• Mr. Brian Mohan”
9. On the 7th October 2015, the party’s Dublin Central constituency candidate selection convention took place and was conducted in accordance with the foregoing direction or, as the plaintiff described it in his evidence, “diktat” of the party’s NCC. The plaintiff was, thus, excluded from participation in the party’s candidate selection contest.

10. The plaintiff has not challenged that direction. Fianna Fáil is not party to these proceedings. Instead, the plaintiff now challenges the constitutionality of s. 17 (4B) of the 1997 Act on the basis that the the purpose of the direction was to enable the party to meet the candidate gender quota necessary to avoid the 50% reduction in the relevant State funding that the section imposes on any party that fails to do so.

11. The plaintiff was requested to provide particulars of the benefit to him of a declaration that s. 17 (4B) of the 1997 Act is constitutionally invalid. The response furnished on his behalf is that it will enable him to request the party to reconsider its candidate selection process in the Dublin Central constituency; will render him eligible for consideration in that regard; and will prevent the application of a 40% candidate gender quota by the party in respect of any future general election in respect of which the plaintiff may seek the party’s nomination.

The plaintiff’s claim
12. As I understand the arguments put forth in the pleadings and in the written and oral submissions that have been made on the plaintiff’s behalf, it is contended that s. 17 (4B) of the 1997 Act is repugnant to the Constitution of Ireland on the following grounds:

(a) It offends the principle, enshrined in Article 6 of the Constitution, that all powers of government, including all legislative powers, derive, under God, from the people, whose right it is to designate the rulers of the State.
(b) It contravenes the requirement under Article 16.1.1° of the Constitution that every citizen, without distinction of sex, who has reached the age of twenty-one years, and who is not placed under a disability or incapacity by the Constitution or by law, shall be eligible for membership of Dáil Éireann, and does not fall within the terms of Article 16.7 whereby, subject to the foregoing provisions of that Article, elections for Dáil Éireann shall be regulated in accordance with law.
(c) It breaches the requirement under Article 40 of the Constitution that all citizens shall, as human persons, be held equal before the law and it cannot be saved as a law enacted by the State with due regard to differences of capacity, physical and moral, and of social function.
(d) It breaches the plaintiff’s liberty, guaranteed by the State under Article 40.6.1°, to exercise freely his rights to freedom of expression, freedom of association and freedom of assembly, and does not amount to a permissible restriction upon, or regulation, of any of those rights. In particular, it cannot be justified as a law regulating or controlling the exercise of the right of association in the public interest, as expressly permitted under Article 40.6.1° (iii). Insofar as it could be so justified, it offends the requirement of Article 40.6.2° that any such law must contain no political discrimination.
The State’s defence
13. The State joins issue with the plaintiff on each of the propositions just summarised and argues that the Constitution confers specific competence on the Oireachtas, under Article 15.2, Article 16.1 and Article 16.7 of the Constitution, to legislate in the manner it has done in enacting s. 17 (4B) of the 1997 Act.

14. Further and as a precursory argument, the State asserts that the plaintiff lacks standing to challenge s. 17 (4B), or is wrongly seeking to rely on third party rights in breach of the ius tertii rule in mounting that challenge, or both, so that the proceedings he has brought should be dismissed in limine. The kernel of that argument is that the rights that the plaintiff seeks to rely upon, in the circumstances presented, are those of the party (of which he is a member and by which he wishes to be selected as a candidate for election to Dáil Éireann) rather than his own.

Agreed facts
15. I do not believe it is in dispute between the parties that women make up approximately 51% of the population of the State.

16. The plaintiff and defendants have agreed certain facts for the purpose of the present action. Those facts include the following.

17. At present, Dáil Éireann is composed of 139 male TDs and 27 female TDs. In percentage terms, its composition is 83.7% male and 16.3% female.

18. The proportion of the members of Dáil Éireann who are women has never exceeded the current percentage of the whole, that is 16.3%, having fallen as low as 0.7% after both the second election of 1927 and the election of 1932.

Women TDs elected to Dáil Éireann at each general election, 1918 – 1977
Election

Number of TDs

Number of Women TDs Elected

Percentage of Women TDs Elected

1918

105

1.0%

1921

128

3.9%

1922

128

1.6%

1923

153

2.6%

1927 (June)

153

2.6%

1927 (Sept)

153

0.7%

1932

153

0.7%

1933

153

1.97%

1937

138

0.73%

1938

138

0.73%

1943

138

2.17%

1944

138

2.9%

1948

147

3.4%

1951

147

3.4%

1954

147

3.4%

1957

147

2.7%

1961

144

2.8%

1965

144

3.5%

1969

144

2.1%

1973

144

2.8%

1977

148

4.05%

19. In every general election from 1977 onwards, the proportion of women candidates has never exceeded 20% of the total (the high point being 19.8% in the 1997 election).

19. Women candidates and TDs at general elections, 1977 – 2011 and women TDs in 2015
Election

Candidates

Deputies

Total

Women

Total

Women

1977

376

25*

6.6

148

4.1

1981

404

10.1

166

6.6

1982 (Feb.)

366

9.6

166

4.8

1982 (Nov.)

365

8.5

166

8.4

1987

466

13.9

166

8.4

1989

371

14.0

166

7.8

1992

482

18.5

166

12.0

1997

484

19.8

166

12.0

2002

463

18.1

166

13.3

2007

470

17.4

166

13.3

2011

566

15.2

166

15.1

2015

–

166

16.3

20. The current proportion of Dáil members who are women puts Ireland joint 23rd (with Latvia) out of the EU28 for representation by women in a lower house of parliament.

21. Within the European Union, the average percentage of female representation in parliament is currently 28%. By way of specific examples, it is 36% in Germany; 38% in the Netherlands; 42% in Spain; 44% in Sweden; and 29% in the United Kingdom.

22. Ireland currently ranks joint 86th (with North Korea and the Republic of Korea) out of 140 countries worldwide in terms of percentage representation by women in parliament.

23. Turning to the separate (though, for the purposes of the legislative provision now at issue, linked) topic of the amount of exchequer funding provided to political parties under s. 17 of the 1997 Act, in 2014 (which is, apparently, the most recent year for which records are currently available) the total fund for distribution was €5,456,000. In the order in which the following figures appear in the Agreed Statement of Facts , Fianna Fáil received €1,168,000 of that total amount, Fine Gael €2,281,000, Labour €1,287,000, and Sinn Fein €720,000.

The State’s evidence
24. The State called Dr. Fiona Buckley as an expert witness. Dr. Buckley is a lecturer in the Department of Government of University College Cork, who specialises in the study of gender politics, including women’s political representation in Ireland. Dr. Buckley had prepared a report, which was admitted into evidence and upon which she was examined.

i. under-representation of women in Dáil Éireann

25. In her report and in her evidence, Dr Buckley addressed what she described as the historic and continuing under-representation of women in Irish public life. Dr Buckley cited the Joint Oireachtas Committee on Justice, Equality, Defence and Women’s Rights, Second Report on Women’s Participation in Politics , October 2009, (PRN. A9/1468) (“the Joint Oireachtas Committee Report”), and its conclusion that international research shows that the following five key challenges (known as the “Five Cs”) face women throughout the world who seek to enter politics (at para. 2.2. of the Rapporteur Report supported by the Committee):

○ Childcare – women are more likely to have this responsibility
○ Cash – women have less access to resources than men
○ Confidence – women are less likely to go forward for selection
○ Culture – a gendered culture is prevalent even within left-wing parties
○ Candidate selection procedures – the processes by which political parties select candidates has been identified as posing a significant obstacle to women’s political participation
26. In her report and in her evidence, Dr. Buckley described the first four factors just listed as supply factors and the fifth, that of ‘candidate selection procedures’, as a demand factor.

27. In addressing the issue of political party candidate selection procedures, the Joint Oireachtas Committee Report noted (at para. 2.2.5.) that they have been identified (by Professor Yvonne Galligan; “Women in Politics” in Coakley & Gallagher (Eds.) Politics in the Republic of Ireland (Oxon: Routledge, 2005 at p. 279) as the single most important obstacle to women’s political representation. Professor Galligan gave evidence to the Committee, stating (at p. 552-3):

“As we clearly see, this process [the candidate selection process] is not working to bring women forward in any significant numbers. Although all parties have made efforts to attract more women to run, the result is less positive than everyone would wish. Therefore, it is incumbent on us to address closely how the proportion of women candidates can be increased.”

28. Although, according to Dr. Buckley, the causes of the under-representation of women in Irish public life generally are multifarious, “culture” appears to be a particularly significant one in the context of political party candidate selection. Professor Galligan gave the following evidence to the Joint Oireachtas Committee (at p. 552):

“Fourth is the issue of culture. In this regard I would like to focus on the culture of political parties rather than on the wider societal culture. As parties are mainly led and run by men, the culture of behaviour and the informally accepted norms of language, views and expressions can mean that parties are uncomfortable places for women to be. Party networks too are often more at the disposal of aspiring men than women, and networks of influence and economic support are important elements in securing a nomination to run and in financing a campaign.”

29. Returning to the fifth factor of candidate selection procedures, the Committee in its Report quoted the following statement from the European Commission for Democracy through Law (“the Venice Commission”) Report on the Impact of Electoral Systems on Women’s Representation in Politics (Strasbourg, 16 June 2009) (at p. 19, para. 124):

“In general, political parties play a prominent role for balancing gender representation in parliament since they nominate the candidates for elections. The nomination process is the most critical one for women’s access to parliament.”

30. Quoting from an article written by Professor Galligan (“Bringing Women In: Global Strategies for Gender Parity in Political Representation”, U.Md.L.J. Race, Religion, Gender and Class , Vol. 6; 319 at 332), the Joint Oireachtas Committee noted (at para. 2.2.5) that “candidate selection is aptly described as the ‘secret garden’ of politics, and this garden is highly male-dominated.”

31. The Joint Oireachtas Committee also quoted part of the following passage to the same effect from a published study by Dahlerup and Friedenvall, commissioned by the European Parliament’s Committee on Women’s Rights and Gender Equality, on Electoral Gender Quota Systems and their Implementation in Europe PE 408.309 (September, 2008) (at para. 2.2.5):

“The selection and nomination process is sometimes called ‘the secret garden of nomination’; this refers to the fact that most often voters have very little knowledge of how the candidates they can choose between have emerged. Although voters may be able to choose candidates, they do so only after political parties have limited the options. Thus, parties are the real gatekeepers to public decision-making bodies….”

32. In her report and in her evidence, Dr. Buckley referred to a study by McElroy and Marsh entitled “ Candidate gender and voter choice: analysis from a multimember preferential voting system” , Political Research Quarterly, 2(1), 1-12 (2009) that, according to Dr. Buckley, found no evidence to suggest that voters, all else being equal, are biased against women. That proposition appears to find broad support in the figures contained in the table set out in paragraph 19, supra, and in the following table compiled by Dr. Buckley ((based on figures calculated by Claire McGing of Maynooth University):

32. Table 4: Women candidates and women elected in the 2011 Dáil election
Party

Total number of candidates

Women candidates

Total number of TDs

Women TDs

Fianna Fáil

11 (15%)

Fine Gael

104

16 (15%)

11 (15%)

Labour

18 (27%)

8 (22%)

Sinn Féin

8 (20%)

2 (14%)

Greens

8 (19%)

United Left Alliance

5 (25%)

2 (40%)

Independents/Others

215

20 (9%)

2 (13%)

Total

566

86 (15%)

166

25 (15%)

33. Dr. Buckley further cited an article by Galligan, Laver and Carney on “ The effect of candidate gender on voting in Ireland” , Irish Political Studies, 14, 118-122 (1997), as authority for the proposition that, in the 1997 general election, women candidates received fewer votes than men, not because of their sex but because they were less likely to be incumbents.

34. In other words, as I understand this aspect of the evidence, it is Dr. Buckley’s expert view, supported by the evidence that she cites, that the pinch point or bottle neck in relation to women’s under-representation in Dáil Éireann is not at the ballot box (whether in getting women to vote or in getting voters generally to choose women candidates) but earlier in the electoral process at the point where political parties select their candidates. Moreover, as the table at paragraph 19 demonstrates, it is Dr. Buckley’s view, supported by the available data, that the number of women candidates elected to Dáil Éireann tends to increase broadly in proportion to any increase in the number of women candidates selected to run.

35. It was put to Dr. Buckley on behalf of the plaintiff that the figures contained in the same table demonstrate little or no difference in the relationship between the number of women candidates in Dáil elections and the success rate of women candidates in those elections (the success rate having remained pretty constant over time while the number of women candidates has slowly, though fairly consistently, increased). As I understood Dr Buckley’s response to that line of questioning, it was that, while she accepts that the premise put to her is correct, she does not consider that it has any significance for the issue at hand, since the purpose or rationale of the provision under challenge is to increase the number of female parliamentarians in Dáil Éireann, not to increase the success rate of women candidates for election to Dáil Éireann.

ii. legislative gender quotas and political party funding

36. Through Dr Buckley’s evidence, the Court’s attention was drawn to Recommendation Rec [2003] 3 of the Committee of Ministers of the Council of Europe (2003) in which, after a number of recitals, the Committee:

“Recommends that the governments of member states:
I. commit themselves to promote balanced representation of women and men by recognising publicly that the equal sharing of decision-making power between women and men of different background and ages strengthens and enriches democracy;
II. protect and promote the equal civil and political rights of women and men, including running for office and freedom of association;
III. ensure that women and men can exercise their individual voting rights and, to this end, take all necessary measures to eliminate the practice of family voting;
IV. review their legislation and practice, with the aim of ensuring that the strategies and measures described in this recommendation are applied and implemented;
V. promote and encourage special measures to stimulate and support women’s will to participate in political and public decision-making;
VI. consider setting targets linked to a time scale with a view to reaching balanced participation of women and men in political and public decision making.
…
Appendix to Recommendation Rec (2003) 3

For the purpose of this recommendation balanced participation of women and men is taken to mean that the representation of either women or men in any decision-making body in political or public life should not fall below 40%.

On this basis, the governments of member states are invited to consider the following measures:

A. Legislative and Administrative Measures

Member states should:

1. consider possible constitutional and/or legislative changes, including positive action measures, which would facilitate a more balanced participation of women and men in political and public decision-making;

…

3. consider adopting legislative reforms to introduce parity thresholds for candidates in elections at local, regional, national and supra-national levels….;

4. consider action through the public funding of political parties in order to encourage them to promote gender equality;

….”

37. In 2010, the Parliamentary Assembly of the Council of Europe passed Resolution 1706 (2010) on “ Increasing women’s representation in politics through the electoral system ”, which states in material part:

“1. Equal participation of women and men in political life is one of the foundations of democracy and one of the goals of the Council of Europe, reaffirmed by the Organisation’s Committee of Ministers as recently as May 2009.

2. Unfortunately, nearly thirty-five years after the first United Nations Conference on Women in Mexico City, and nearly fifteen years after the fourth in Beijing, women remain grievously under-represented in politics. Women still hold less than 20% of parliamentary seats and ministerial portfolios worldwide, and less than 5% of heads of state are women. This under-representation constitutes a waste of talent, and also weakens democracy and human rights.

…

4. The attitudes, customs and behaviour described above influence a country’s institutional, party and electoral landscapes; but conversely, a change in that landscape can also impact on society’s attitudes. Changing the electoral system to one more favourable to women’s representation in politics, in particular by adopting gender quotas, can lead to a more gender-balanced, and thus more legitimate, political and public decision making….

…

6. The Assembly considers that the lack of equal representation of women in men in political and public decision making is a threat to the legitimacy of democracies and a violation of the basic human right of gender equality, and thus recommends that member states rectify this situation as a priority by:

6.1. associating the gender-equality and anti-discrimination provisions in their constitutions and electoral laws with the necessary exception, allowing positive discrimination measures for the under-represented sex, if they have not done so already, as a precondition recognised by the European Commission for Democracy through Law (Venice Commission) of the Council of Europe;

6.2. fully implementing the recommendations contained in the Committee of Ministers Recommendation Rec (2003) 3, in Parliamentary Assembly Recommendation 1676 (2004) on women’s participation in elections and Resolution 1489 (2006) on mechanisms to ensure women’s participation in decision making, and in the Congress of Local and Regional Authorities of the Council of Europe’s Recommendation 273 (2009) on equal access to local and regional elections, in particular as concerns changing electoral systems and introducing gender quotas;

6.3. reforming the electoral system to one more favourable to women’s representation in parliament;

…

6.3.2. in countries with majority or plurality systems, consider introducing the principle of each party choosing a candidate amongst at least one female and one male nominee in each party district, or find other ways of ensuring increased representation of women in politics, such as, for example, applying innovative mandatory gender quotas within political parties, or “all-women shortlists” or “twinned” constituencies, again accompanied by effective sanctions for non-compliance;

….”

38. The State acceded to the 1979 UN Convention on the Elimination of All Forms of Discrimination Against Women on the 23rd December 1985. Article 4, paragraph 1 of that Convention provides:

“Adoption by States Parties of temporary special measures aimed at accelerating de facto equality between men and women shall not be considered discrimination as defined in the present Convention, but shall in no way entail as a consequence the maintenance of unequal or separate standards; these measures shall be discontinued when the objectives of equality of opportunity and treatment have been achieved.”

39. In its response to the State’s fourth and fifth periodic reports pursuant to Article 18 of the said Convention, the concluding comments of the UN Committee on the Elimination of Discrimination against Women (CEDAW/C/IRL/CO/4-5) (22nd July 2005) included the following:

“32. While acknowledging that the President, the Deputy Prime Minister and three members of the Cabinet are women, and that women occupy other visible decision-making positions, including three Supreme Court judges, the President of the District Court, the President of the Law Reform Commission and the Ombudsman, the Committee is concerned at the significant underrepresentation of women in elected political structures, particularly the Oireachtas….

33. The Committee encourages the State party to take sustained measures to increase the representation of women in elected bodies, including temporary special measures in accordance with Article 4, paragraph 1, of the Convention and the Committee’s general recommendation 25 on temporary special measures. It recommends that research be carried out under the aegis of a parliamentary committee into the root causes of lack of progress in the area.”

40. The Venice Commission, Report on the Impact of Electoral Systems on Women’s Representation in Politics (Strasbourg, 16 June 2009), to which reference has already been made, includes the following observation (at p. 13, para. 84):

“Introducing electoral gender quotas can be considered an appropriate and legitimate measure to increase women’s parliamentary representation…. In recent years, an impressive number of countries have introduced quota regulations worldwide. There are almost 40 states with legal gender quotas or reserved women seats for national parliament. In many more countries political parties apply, additionally or alternatively, voluntary gender quotas.”

41. In its ‘Conclusions’ section, the same report continues (at p. 18):

“115. Electoral gender quotas are highly controversial in some countries. Given the profound under-representation of women, however, quotas should be viewed as compensation for existing obstacles to women’s access to parliament. They can help to overcome structural, cultural and political constraints on women’s representation.

116. Since legal quotas are mandatory by nature they seem to be preferable to party quotas. However, voluntary quotas can, additionally or alternatively, contribute to an increase in women’s representation, too.

117. In order to be effective, gender quotas should provide for at least 30% of women on party lists, while 40% or 50% is preferable.”

42. The Joint Oireachtas Committee report, already referred to, addresses electoral gender quotas in the following way (at p. 20, para. 3.2.5):

“Mandatory Opportunity Measures (electoral gender quotas); these are laws requiring that a stated percentage of candidates nominated within political parties must be of each gender, backed up by a series of specified penalities. In Ireland new legislation would be required to implement this model…. The rationale for such measures is that they compensate for existing obstacles to women’s access to politics, and they are usually introduced on a temporary basis, with a “sunset clause” inbuilt so that once the stated proportion of women is reached the law lapses. Law providing for these “electoral gender quotas” are now in place across more than 100 states, particularly in Europe and Latin America. More than half of all Latin American states have now introduced such quotas.”

43. In the final section of the Joint Oireachtas Committee, headed “Recommendations”, the following text appears (at para. 5.2.5) under the sub-heading ‘Candidate Selection Procedures’:

“All the recommendations above are important to encourage greater participation by women in politics, but a difficulty still remains for women in getting selected as candidates by political parties at local, national and European level.

Different models for reform of candidate selection procedures have been reviewed.

The model of reserving seats for women in parliament is not used in European countries, and might be problematic under EU gender equality laws.

Although the voluntary political party quotas have been effective in some countries, notably Sweden, they require strong commitment by individual political parties, and generally take many years before results may be seen.

Experience elsewhere in Europe, especially in Belgium and Spain, shows that legislative electoral quotas might be more effective in the Irish political system.

Thus, it is recommended that candidate quota legislation be adopted, modelled on that used in France, Belgium and Spain, to oblige each political party to impose a maximum limit on the proportion of candidates of any one gender selected to run in elections at local, national and European levels.

Such legislation should be introduced on a temporary basis only, and would have an inbuilt “sunset clause” to ensure that, when targets are met, the law will lapse.

The legislation should provide initially, based on the original Belgian model, that no party could have more than two-thirds of their candidates of one gender in the next general election.

The proportion of women required could then be revised upwards for candidate selection procedures in the 2014 local elections.

Although there is no equivalent of a list system in Ireland, and no electoral commission to accept or reject candidate lists as in Belgium, a system of financial penalties should be imposed based on the French model, so that parties that do not achieve the target of at least 33.3% women candidates for the next general election, for example, would receive reduced levels of State funding as a result.

Clearly, such legislation would require support from all of the political parties to ensure that it would be effective. But it is also clear that there is widespread concern about the low levels of women in Irish politics.

Unless effective positive action measures are adopted, Ireland will continue to languish at the bottom of the international league tables for women’s representation, and our democracy will remain ‘unfinished’.”

iii. the nature and scope of the legislative gender quota created by section 17 (4B)

44. In the course of her evidence and in the report that she had prepared for that purpose, Dr Buckley addressed a number of aspects of the candidate gender quota created by s. 17 (4B).

45. A fundamental feature of the legislative framework within which the candidate gender quota created by s. 17 (4B) is to operate is that the Oireachtas has not been in any way prescriptive concerning the manner in which a political party is to achieve compliance with it. Dr Buckley stated that the options available to political parties include, though are not limited to, the following: gender directives (where the party identifies certain constituencies in which the candidate selected must be a woman); all-women shortlists (such as those which, according to Dr Buckley, the British Labour Party has voluntarily applied for almost two decades to half of the House of Commons seats it deems winnable); minimum candidate lists (whereby a political party implements a rule that at least one candidate must be female in any constituency where the party proposes to run more than one candidate); open constituencies (where women candidates are run in some or all of the constituencies where the party has no incumbent TD or its incumbent TD is retiring); or add-on candidates (where a party centrally decides to add a woman candidate to the candidate(s) already selected locally).

46. Dr Buckley made specific reference to a document produced by the Fianna Fáil party in January 2015 described as the Markievicz Commission Report. That document recites that the Markievicz Commission was established by Uachtarán Fianna Fáil Micheál Martin TD at the 75ú Ard Fheis of the party in March 2014 with the purpose of advising how the party might significantly increase female participation within Fianna Fáil and increase the number of female candidates for the party in future national elections. In the report, the key recommendations of the Markievicz Commission are set out as follows (at pp. 5-6):

“In the context of the forthcoming General Election, the [NCC] should work to field at least one woman candidate in half of the constituencies where the party has no sitting TD and in half of those constituencies where the Party holds one seat and where it wishes to run more than one candidate.

Following on from the 2016 General Election, the Party should work towards selecting at least one woman and one man to contest the election in each constituency (except for constituencies with two incumbent male TDs, or in the future two incumbent male/female TDs).

In giving effect to this framework, the Markievicz Commission recommends that:

• The [NCC] ensures a woman candidate is run in half of the constituencies where the Party has no sitting TD and in half of those constituencies where the Party holds one seat and where it wishes to run more than one candidate.
• In doing so, the NCC may direct constituencies to select a woman at selection convention.
• To reach the minimum 30% candidate gender threshold, the Party should select between 20 and 27 women candidates depending on the overall number of candidates put forward.
• A structured mentoring programme be put in place to aid the Party in fulfilling the 30% candidate gender quota.
• Candidate workshops begin immediately to encourage, identify and support women who may be successful in seeking the party nomination for the general election.”
47. In the context of the plaintiff’s contention, addressed at greater length later in this judgment, that the party has acted strictly under the coercive effect of s. 17 (4B) of the 1997 Act in seeking to implement a 30% candidate gender quota in the forthcoming general election, it is interesting to note that, among the measures that the Markievicz Commission Report concludes must be put in place to sustain the flow of women candidates over the longer term is a 30% gender quota at local government election level.

48. A second feature of s. 17 (4B) of the 1997 Act to which Dr Buckley drew the Court’s attention is that it is gender neutral. The 30% candidate gender quota it creates applies to both genders. Thus the representational interests of each gender receive equal protection or support.

49. A key feature of the provision is that it attempts to provide an effective sanction for non-compliance with the candidate gender quota it creates by reducing by 50% the payment to which a qualified party is otherwise entitled under s. 17 of the 1997 Act. In her report and in her evidence, Dr Buckley referred to this aspect of the provision as a ‘sanction’ for non-compliance, and under cross-examination freely accepted that in a blog post published on its website by the National Women’s Council of Ireland on the 9th August 2013 she had made the following statement:

“A comparative review of gender quota laws elsewhere indicates that the proposed gender quota laws in Ireland will operate one of the most acute and robust sanctions for non-compliance.”

50. However, on that point Dr. Buckley did take the opportunity in her evidence to qualify the statement quoted by reiterating the proposition, already noted above, that the provision is not prescriptive concerning the method or means used by any qualified party to achieve compliance with the quota.

51. Elsewhere in her evidence, Dr Buckley noted that the sanction imposed is not criminal in nature. In addition, as I understood the thrust of Dr Buckley’s evidence, it was that the sanction, while regulatory in the sense that its very purpose is to create a legal norm intended to shape the conduct of qualified political parties, is not strictly coercive in that it operates directly neither to disqualify or exclude a qualified party from full participation in the electoral process nor to limit or qualify the level of that participation. In that context, Dr. Buckley stated in her report (at p. 14):

“Sanctions for non-compliance vary in specifics between jurisdictions employing quotas, but in most cases involve either financial consequences (as in the case of Ireland, France and Portugal) or the rejection or non-admittance of candidate lists by independent electoral authorities. The rejection or non-admittance of lists in constituencies where parties fail to comply with quota thresholds is the most severe sanction and, in the EU, applies to Belgium, Poland, Slovenia and Spain. By contrast in Ireland, even though the financial penalty is highly encouraging and incentivising to compliance (particularly with the tightening up of private donations in the same legislation), and failure to comply with s. 17 (4B) would see an Irish political party lose a significant portion of State funding for their operations, they can continue to contest general elections as normal.” (footnotes omitted)

52. It was put to Dr. Buckley in cross-examination that the sanction under s. 17 (4B) is anomalous in its nature and effect because of the provisions of s. 18 (1) of the 1997 Act, whereby State payments made under s. 17 of the Act are required to be applied to “the general conduct and management of the party’s affairs and the lawful pursuit by it of its objectives.” S. 18 (1) (a) goes on to list non-exhaustively specific purposes falling within that general description, namely: (i) the general administration of the party; (ii) research, education and training; (iii) policy formulation; and (iv) the co-ordination of the activities of the branches and the members of the party. S. 18 (1) (b) states that permitted payments under s. 17 shall be deemed to include provision in respect of expenditure by the party in relation to the promotion of participation by women and young persons in political activity.

53. As I understand the argument being made on behalf of the plaintiff in this regard, it is that there is an obvious anomaly in the State purporting to withhold a portion of the funding that it makes available to political parties for non-electoral purposes (indeed, for purposes that include the promotion of the participation of women in political activity) as a sanction for failure to comply with a measure designed to influence the selection of election candidates by that party with the aim of addressing the under-representation of women in Dáil Éireann.

54. There are three problems with that argument. The first flows from the following observation made by Whelan in his essay “ Changing the Rules of the Political Game ” in Law and Government: A Tribute to Rory Brady (Ruane, O’Callaghan and Barniville, Eds.) (Dublin, 2015) (at p. 48):

“The Act specifically prohibits these monies being spent on elections, although of course in reality the availability of these substantial funds enables parties to divert other finances, such as the proceeds of members’ draws or national collections exclusively to electoral activity.”

An inevitable corollary of that argument is that a reduction in the State funding available to a political party for general administrative purposes will reduce the amount available to a party from its other finances to apply to electoral activity. Accordingly, the suggestion that the sanction is wrongly targeted appears to me to be one of form rather than substance.

55. The second problem is that, of the various streams of State funding available to political parties and candidates, that comprising payments under section 17 does seem to be the most appropriate one for the Oireachtas to target. As Whelan, op. cit., points out (at pp. 49-50), there are broadly three lines of State funding available to political parties and candidates. The first is that under discussion. The second is the reimbursement of election expenses to election candidates under s. 21 of the 1997 Act. It is difficult to see the utility or fairness in targeting the electoral expenses to which an individual election candidate is otherwise entitled in order to sanction the political party of which he or she is a member for failing to meet an overall gender quota. The third is the ‘parliamentary activities allowance’ available to the parliamentary leader of a qualifying party under s. 10 of the Ministerial and Parliamentary Offices Act 1938, as amended. S. 10 (6) of that Act contains an express prohibition on the use of that allowance for, or to recoup, election or poll expenses incurred for the purpose, inter alia, of any election held under the Electoral Acts. In addition, it does seem that the parliamentary activities of political parties are closer to the fulcrum of parliamentary democracy than their organisational and branch activities.

56. The third problem is that it is not at all clear how an anomaly of the kind asserted, even if it were found to exist, could render the law that gave rise to it constitutionally invalid on that basis.

57. In her evidence, Dr Buckley addressed another fundamental feature of the gender quota created by s. 17 (4A), which is that it is legislatively prescribed for, rather than voluntarily adopted by, the qualified parties that it affects. While Counsel for the plaintiff suggested to Dr Buckley that either the experience in other countries where voluntary quotas have operated successfully or the significant level of women’s representation achieved in the most recent local and European Parliament elections in Ireland in 2014, or both, establish that the imposition of a legislative quota in unnecessary, Dr Buckley did not accept that view.

58. In her report, Dr Buckley acknowledges that voluntary action has been found to work in some European countries, being particularly well-established in the Scandinavian region, but states that there are a number of factors critical to their success in terms of achieving gender balance in parliament (at p. 15):

“Voluntary quotas rely on strong dedication and political will from party leaders, a party ethos dedicated to gender equality or at least symbolically looking for more women in politics, highly institutionalised party organisations, and wider societal equality values. The [Joint Oirechtas Committee Report] states that all parties must be “fully committed” (p. 25) to voluntary measures to achieve significant change in the short-term. In contrast, the advantage of legislative quotas is that they are a fast-track measure and can be more effective in a shorter term in increasing women’s political representation. They also contribute to a more even application of affirmative action across all parties rather than voluntary systems where variation can exist across political parties.”

59. The Joint Oireachtas Committee Report, in addressing voluntary quota measures in other countries, concluded (at p. 35, para. 4.2):

“In Sweden, the success of these voluntary measures has required a sustained commitment from each political party over a long period of time – three decades. If change is to be brought about within a shorter time frame in Ireland, legislation imposing mandatory measures seems the preferable option.”

60. Turning to the experience of voluntary quota measures in Ireland, Dr Buckley stated in her report:

“Irish political parties have adopted a range of voluntary strategies, in line with their ideological orientation, to address women’s political under-representation. For the most part however, strategies have been rhetorical and promotional in nature, and have not resulted in significant gains for women in electoral politics (Buckley, 2013; 341). The mostly ‘soft’ voluntary targets were adopted by party hierarchies in the late 1990s and 2000s but largely failed to enhance women’s Dáil seat-holding, as local battles often won out and party leaders lacked a genuine commitment to change. According to McGing (2015) in the 2011 general election, despite a heightened focus on women’s under-representation in politics, only the Labour Party seemed to have implemented a gender-based strategy, and even this proved modest. In light of the poor record in Ireland with regards voluntary approaches, legislative intervention is necessary if significant changes in women’s political representation is to be achieved.” (footnote omitted)

61. When asked specifically about the excellent level of women’s representation achieved in Ireland in the 2014 European Parliament elections, Dr Buckley acknowledged that it was a significant accomplishment but pointed out that in both the European Parliament and local elections of that year, the main political parties had adopted voluntary quotas in anticipation of the legislative quota that is to apply in the forthcoming general election. Dr Buckley also made the point that the major political parties tend to view local and European Parliament elections as ‘second order’ elections when compared with Dáil elections and, in consequence, are more willing to experiment with candidate selection in the former. In addition, Dr Buckley noted when it was put to her by Counsel for the State that in the 2014 local elections, the two largest parties in the State failed to reach the voluntary gender quota that each had set for itself. Indeed, the Markievicz Commission Report, already referred to earlier in this judgment, notes (at p. 5) that “[t]he experience of the local elections in 2014 where Fianna Fáil did not reach its own voluntary quota of running at least 30% female candidates nationally provided further impetus for the establishment of this Commission.”

Findings of fact
62. Three propositions of fact form a significant component of the plaintiff’s case.

63. The first is that the statutory candidate gender quota under s. 17 (4B) is truly coercive in its effect upon the party because the party cannot continue to function or exist with a 50% reduction in its s. 17 funding.

64. In that regard, in the course of his examination in chief, the plaintiff was asked to comment on the statement contained in the party’s Markievicz Commission Report (at p. 13) that failure to reach the s. 17 (4B) candidate gender quota at the forthcoming general election “resulting in a loss of 50% of state funding, is not an option for any successful political party representing Irish society in the 21st century.” The relevant exchange between the plaintiff and his Counsel was as follows:

“Q. “….And [Counsel for the State] said that the legislation doesn’t put [the party] over a barrel, what have you to say about that statement, that it is not an option, if you lose 50% of your funding it’s not an option?

A. Well, as I said, it’s over the barrel, it’s as if it’s turkeys over Christmas. 50% of your funding is gone. The party would – it is impossible to function with 50% of their funding gone if you look at the staffing of the party and everything else like that.”

65. As has already been observed, three separate streams of State funding are available to political parties and their candidates, of which s. 17 funding, though no doubt significant, is just one.

66. In adverting to the legislative history of the State funding of political parties, Counsel for the plaintiff suggested that regard should be had to the essay by Whelan entitled “ Changing the Rules of the Political Game ” already cited earlier in this judgment. That essay traces the development of the regulation of political funding and election expenditure from the Ethics in Public Office Act 1995, through the relevant provisions of the Electoral Act 1997 and the Electoral (Amendment) act 2001, to the Electoral (Amendment) Act 2012. It deals with the introduction of limits on individual and corporate political donations before going on to address the reciprocal arrangements for State funding of politics and electioneering which, Whelan observes, have attracted less attention. It then describes the three lines of State funding to political parties and election candidates that have already been described.

67. In this context, it is important to note that it is, of course, still perfectly permissible for parties to engage in fund raising. As Whelan states (op. cit. p. 48):

“The size of donation that must be declared has shrunk in various Acts since 1997 but is still relatively high. The threshold at which donations to political parties must be published is now set at €1,500 and the threshold at which donations to individual candidates have to be published is now set at €600.

In reality parties can always circumvent these limitations by diversifying their donor base, staggering donations over the years during a gap between elections or having hitherto corporate donors donate instead in a personal capacity. That said the restrictions posed by these limits and the publication requirements have operated, along with the economic downturn it must be said, to dramatically reduce the level of donations to parties and candidates.”

68. Counsel for the plaintiff pointed to the figures released by the Standards in Public Office Commission (“SIPO”) for the year 2014, which demonstrate that the party’s donation statement disclosed no donation exceeding €1,500 in that period. However, no figures have been provided in respect of the number or aggregate value of donations that the party received which were less than that threshold sum.

69. There is no evidence whatsoever before the Court concerning the minimum level of funding that the party requires for general administration; research, education and training; policy formulation; and the co-ordination of branch and member activities, below which it would be ‘impossible’ for the party to function. Nor is there any evidence before the Court concerning the extent to which the party might be able to address any future reduction in State funding by, for example, diversifying its donor base.

70. Of course, the reduction in funding contemplated under s. 17 (4B) is, by its very nature, designed to have some unwelcome effect on the finances of a party that fails to meet the candidate gender quota that the provision creates. But no foundation whatsoever was laid for the plaintiff’s bare assertion in evidence that the reduction in State funding concerned would render it impossible for the party of which he is a member to function. There is no suggestion that the plaintiff has any direct knowledge of the relevant minimum funding requirements of the party in that regard or of the potential scope of the alternative funding sources available to it. Nor is the plaintiff in a position to offer evidence of his opinion in that regard as an independent expert. The statement of the party’s Markievicz Commission that failure to reach the relevant candidate gender quota is not an option for any successful party representing Irish society in the 21st century is far more plausibly a political value statement than an assertion of provable fact or of expert opinion to the effect that any party that fails to reach the quota will be unable to function effectively or will cease to exist.

71. Accordingly, the plaintiff has failed to satisfy me that a 50% reduction in the funding otherwise available to the party under s. 17 of the 1997 Act, would, if applied, make it impossible – or, for that matter, significantly difficult – for the party to continue to function.

72. A second proposition of fact central to the plaintiff’s arguments is that the only effective means available to the party to meet the candidate gender quota set out in s. 17 (4B) of the 1997 Act was to exclude the plaintiff (as a male nominee) from the party’s Dublin Central candidate selection convention, such that the Court should be satisfied that it is a requirement of s. 17 (4B), rather than the exercise of any discretion by the party’s NCC, that resulted in the plaintiff’s exclusion from that selection contest.

73. That proposition flies in the face of the evidence before the Court. Dr Buckley identified a number of alternative strategies available to political parties to meet the candidate gender quota; see para. 45 supra. The party’s own Markievicz Commission Report (in section 1.3), acknowledged that there are a number of different means available to the party to meet the candidate gender quota (at p. 13), before recommending that the party adopt a strategy of working to field at least one woman candidate in half of the constituencies where the party has no sitting TD and, to that end, of permitting the party’s NCC to direct a constituency to select a woman at selection convention (at p. 15). Thus, if the party did indeed adopt that strategy, it did so in the exercise of its discretion. And if, pursuant to that (or some other) strategy, the party’s NCC chose to issue the direction that it did in relation to the Dublin Central constituency as opposed to another constituency or constituencies, that too was done at the discretion of the party and not by reference to any express or implied requirement to that effect imposed by s. 17 (4B) of the 1997 Act.

74. For those reasons, the plaintiff has failed to satisfy me that his exclusion from the Dublin Central candidate selection convention was a requirement imposed on the party by s. 17 (4B) of the 1997 Act rather than a decision made entirely at the discretion of the party.

75. The plaintiff’s arguments rely to a notable extent on a third factual proposition, namely that, in the absence of a coercive statutory candidate gender quota, the party would not have sought to implement a candidate gender quota at all and, hence, the party’s NCC would not have issued the direction that it did in respect of the Dublin Central candidate selection convention. That proposition is implicit in the plaintiff’s assertion (in his replies to particulars) that, if he is granted the order he seeks declaring s. 17 (4B) of the 1997 Act constitutionally invalid, he will become eligible to be freely considered by the party as an additional candidate in the forthcoming general election.

76. Yet, it is common case that the party appeared to welcome the relevant provision upon the introduction of the Bill containing it in the Seanad. According to the Seanad Éireann Debates (Vol. 213, No. 3), Senator Averil Power, then a member of the party, stated in the course of the second stage debate on the Bill, on Thursday, 2 February 2012:

“Like many others, I am a reluctant supporter of quotas. None of us want quotas and I do not think anybody thinks that they represent a good option. However, they are a necessary evil. I appreciate the significant opposition to them outside the House, and there is certainly significant opposition to them in my party. I have received e-mails and correspondence from people who are deeply unhappy about the idea which they see as undemocratic. Equally, I point out that in the history of the State the number of women elected points to the fact that the system is undemocratic and represents a failure of democracy. If the system was perfect, we would not need to tinker with it, but it is fundamentally flawed. The all-party committee came to the conclusion that the experience in other countries showed that the system could not and would not change unless positive measures were put in place. That is why we must support the Bill.”

77. It is also common case that, at the Committee Stage of the Bill (Electoral (Amendment) (Political Funding) Bill 2011 , Committee Debates, Wednesday, 11 July 2012), Deputy Niall Collins stated on behalf of the party:

“I recognise what the Bill is trying to achieve given that were are not going down the route of having a radical discussion on reform of our electoral system or the working of the Oireachtas. In the absence of this, we will go with it and we want to see more gender balance.”

78. The parties agree that no division was called on the enactment of the Bill, from which fact it seems reasonable to infer that the party did not oppose – indeed, supported – the introduction of the provision now at issue. What is more, on behalf of the party at the Committee Stage, Deputy Collins moved an amendment the effect of which, had it been accepted, would have been to extend the application of the relevant candidate gender quota to the following local elections. That amendment was defeated. Nevertheless, as noted earlier, the party adopted a voluntary gender quota of 30% for those local elections in 2014.

79. In the course of his evidence in chief, the plaintiff accepted that all of this had been foreshadowed in a press statement issued by the party on the 15th December 2011 in the following terms:

“Fianna Fáil has welcomed the publication of gender quota legislation by Environment Minister Phil Hogan and stated its intention to publish an amendment to the Bill providing for the implementation of quotas for the 2014 local elections.

‘While Minister Hogan’s legislation will ensure that 30% of candidates are women at the next general election, Fianna Fáil believes it should go further. We will propose that a 30% quota is introduced for the next local elections in 2014. This would make local politics more representative while also increasing the pool of women with experience as public representatives who could run in the next general election. Fianna Fáil intends to ensure that 30% of its candidates at the next local election are female. All parties should do the same.’”

80. In rejecting the proposition that, independent of the requirements of s. 17 (4B), the party supports the imposition of candidate gender quotas, the plaintiff referred, in his evidence in chief, to his recollection that, at the party’s 2012 Ard Fheis, two separate motions endorsing the introduction of such quotas were voted down by the delegates. In argument on the plaintiff’s behalf, it was submitted that the Court should adopt the view that, under the party’s internal constitutional structures or arrangements (of which there was no evidence whatsoever before the Court), these votes of the party’s delegates at its Ard Fheis trump any statement made, or position adopted, by the parliamentary party, the party leader or the party’s NCC. In the absence of the appropriate evidence to that effect, I cannot accept that submission.

81. Accordingly, the plaintiff has failed to satisfy me that, were it not for the provisions of s. 17 (4B) and the funding sanction it contains, the party would not have sought to implement a candidate gender quota for the forthcoming general election and that, in consequence, the party’s NCC would not have issued the direction that it did in respect of the Dublin Central candidate selection convention with the result that the plaintiff would have become eligible to be freely considered by the party as its candidate for the Dublin Central constituency.

82. It is particularly striking that the three issues of fact just considered – the effect on the party of a 50% reduction in its s. 17 funding; the extent of the discretion available to the party in deciding whether and, if so, how to implement the s. 17 (4B) candidate gender quota; and the party’s position on the adoption of candidate gender quotas apart from the requirements of s. 17 (4B) – are all issues that the party, rather than the plaintiff, is best placed to address.

83. That observation is, in turn, of significant relevance to the issue of the plaintiff’s standing to mount a constitutional challenge to s. 17 (4B). I turn to that issue now.

Standing
i. primary rule

84. As is clear from the decision of the Supreme Court (per Henchy J. in Cahill v. Sutton [1980] IR 269 at 286:

“The primary rule as to standing in constitutional matters is that the person challenging the constitutionality of the statute, or some other person for whom he is deemed by the court to be entitled to speak, must be able to assert that, because of the alleged unconstitutionality, his or that other person’s interests have been adversely affected, or stand in real or imminent danger of being adversely affected by the operation of the statute.”

85. The plaintiff in this case cannot assert, on the limited evidence presented, that his rights (whether to stand as a candidate, to equal treatment, or to freedom of expression, assembly or association) have been adversely affected by the operation of s. 17 (4B) because he has failed to establish any, or any sufficient, causal nexus between the direction of the party excluding his nomination from consideration at the relevant candidate selection convention and the operation of that provision.

86. O’Higgins C.J. addressed the issue in the following terms in the same case (at p. 276):

“This Court’s jurisdiction, and that of the High Court, to decide questions concerning the validity of laws passed by the Oireachtas is essential to the preservation and proper functioning of the Constitution itself. Without the exercise of such a jurisdiction, the checks and balances of the Constitution would cease to operate and those rights and liberties which are both the heritage and the mark of free men would be endangered. However, the jurisdiction should be exercised for the purpose for which it was conferred – in protection of the Constitution and of the rights and liberties thereby conferred. Where the person who questions the validity of a law can point to no right of his which has been broken, endangered or threatened by reason of the alleged invalidity, then, if nothing more can be advanced, the Courts should not entertain a question so raised.”

87. In the present case, the plaintiff points to a number of his rights (already enumerated) which he asserts have been broken, but has failed to establish on the scant evidence he has placed before the Court that the reason for that alleged breach, which is to say the reason for the NCC’s directive of the 17th September 2015 in relation to the party’s Dublin Central selection convention, was the coercive effect on the party of s. 17 (4B) of the 1997 Act as opposed to the exercise of the party’s own discretion in its choice of policy and in its selection of the appropriate means of pursuing that policy.

88. The rationale for the rule is a compelling one. Henchy J described it as follows (at p. 282):

“It ensures that normally the controversy will rest on facts which are referable primarily or specifically to the challenger, thus giving concreteness and first-hand reality to what might otherwise be an abstract or hypothetical legal argument.”

89. And later (at p. 283):

“To allow one litigant to present and argue what is essentially another person’s case would not be conducive to the administration of justice as a general rule. Without concrete personal circumstances pointing to a wrong suffered or threatened, a case tends to lack the force and urgency of reality. There is also the risk that the person whose case has been put forward unsuccessfully by another may be left with the grievance that his case was wrongly or inadequately presented.”

90. To concede standing to the plaintiff in the present action, insofar as he seeks to make a case in relation to the party’s funding requirements, financial resilience, internal constitutional arrangements and internal and external policy positions, would be to run the grave risk of leaving the party with a well-founded grievance that any case it might wish to make in that regard had been wrongly or inadequately presented.

91. One part of the rationale for the rule of standing is of particular concern on the facts of the present case. Henchy J described it as follows (at p. 284):

“In particular, the working interrelation that must be presumed to exist between Parliament and the Judiciary in the democratic scheme of things postulated by the Constitution would not be served if no threshold qualification were ever required for an attack in the Courts on the manner in which the legislature had exercised its law making powers. Without such a qualification, the Courts might be thought to encourage those who have opposed a particular Bill on its way through Parliament to ignore or devalue its elevation into an Act of Parliament by continuing their opposition to it by means of an action to have it invalidated on constitutional grounds. It would be contrary to the spirit of the Constitution if the Courts were to allow those who were opposed to a proposed legislative measure, inside or outside Parliament, to have an unrestricted and unqualified right to move from the political arena to the High Court once a Bill had become an Act. It would not accord with the smooth working of the organs of State established by the Constitution if the enactments of the National Parliament were liable to be thwarted or delayed in their operation by litigation which could be brought on the whim of every or any citizen, whether or not he had a personal interest in the outcome.”

92. For the foregoing reasons, I conclude that the plaintiff does not have standing to mount the present action under the primary rule.

ii. grounds for waiver of the primary rule

93. In his judgment in Cahill v. Sutton (at p. 277), O’Higgins C.J. acknowledged the existence of an exceptional category of rare cases, where those whose rights are affected cannot speak for themselves, in which standing might be extended to allow someone to advance the appropriate claim on behalf of those persons. However, this case does not fall into that category. If s. 17 (4B) has had the effect upon the party that the plaintiff contends for, but which he has failed to prove, no impediment has been identified that would prevent the party itself from mounting a challenge to that provision.

94. The judgment of Henchy J in Cahill v Sutton makes plain (at p. 285) that the primary rule already described, as a rule of practice, is subject to qualification when the justice of the case so requires. While examples of such qualifications have been given, their scope (and, conversely, the limits of the rule) have not been clearly defined. Instead, the guiding principle is that the primary rule may be waived or relaxed if, in the particular circumstances of a case, the court finds that there are weighty countervailing considerations justifying a departure from it, amounting to a transcendent need to assert against the statute the constitutional provision that has been invoked.

95. In Cahill v Sutton, the Supreme Court provided two examples of situations warranting the relaxation or waiver of the primary rule. The first is where, although the challenger lacks the personal standing normally required, those prejudicially affected by the impugned statute may not be in a position to assert adequately, or in time, their constitutional rights. The second is where, despite the absence of a prejudice or injury peculiar to the challenger, the impugned provision is directed at or operable against a grouping which includes the challenger, or with whom the challenger may be said to have a common interest – particularly in cases where, because of the subject matter, it is difficult to segregate those affected from those not affected by the challenged provision.

96. The facts of the present case as I have found them to be are not consistent with the situation posited in either of the two examples given by Henchy J. On those facts, the party is more obviously and directly affected by the prejudice asserted in the operation of the provision impugned than the plaintiff. Similarly, insofar as the party may be considered a grouping that includes the plaintiff (as a member of the party), the plaintiff has failed to satisfy me that the impugned provision is directed at or operable against a group interest or common interest in opposing gender quotas shared between the plaintiff and the party.

97. In seeking to suggest the existence of some other weighty countervailing factor justifying a departure from the primary rule, the plaintiff relies on three decisions, although without extensive analysis. The first is that of the High Court in McGimpsey v. Ireland [1988] I.R. 56, a case which involved an unsuccessful challenge to the constitutional validity of an international agreement, namely the Anglo-Irish Agreement of 1985. In the plaintiff’s written submissions it is stated that Barrington J. recognised the standing of the plaintiffs in that case because of the importance of the constitutional issues they had raised, thereby suggesting that that is the test to be applied i.e. whether the plaintiff has raised an important constitutional issue or issues. The relevant portion of the judgment of Barrington J. is as follows (at p. 580):

“The present case is, to say the least, unusual and there is no exact precedent governing it. But it appears to me the plaintiffs are perfectly sincere and serious people who have raised an important constitutional issue which affects them and thousands of others on both sides of the border. Having regard to these factors and having regard to the wording of the preamble to the Constitution and of Articles 2 and 3 it appears to me that it would be inappropriate for this court to refuse to listen to their complaints.”

98. It is clear from the foregoing analysis that the decision of Barrington J. was based on several factors, including a finding that the plaintiffs in that case were directly affected by the impugned international agreement, thereby bringing them within the primary rule, together with a finding that, even in the absence of a prejudice or injury peculiar to the plaintiffs directly arising from that agreement, they were part of a grouping, or had a common interest with a grouping, however defined, to which the impugned agreement was directed. Accordingly, I do not accept that the decision provides authority for the proposition that standing should be extended to any plaintiff who raises, or claims to have raised, an important constitutional issue, on the basis of that claim alone.

99. The second decision upon which the plaintiff relies is that in Crotty v An Taoiseach [1987] I.R. 713, another case involving a constitutional challenge to those parts of the international agreement known as the Single European Act that were to be enacted into domestic law by the European Communities (Amendment) Act 1986. The Supreme Court (per Finlay C.J.) dealt with the issue of the plaintiffs standing as follows (at p. 766):

“The Court is satisfied, in accordance with the principles laid down by the Court in Cahill v. Sutton [1980] I.R. 269, that in the particular circumstances of this case where the impugned legislation, namely the Act of 1986, will if made operative affect every citizen, the plaintiff has a locus standi to challenge the Act notwithstanding his failure to prove the threat of any special injury or prejudice to him, as distinct from any other citizen, arising from the Act.”

100. As just described, the waiver or relaxation of the primary rule in Crotty occurred in the particular circumstances of that case where the impugned legislation was capable of affecting every citizen, thereby bringing it within the second example of an exceptional circumstance warranting such waiver as envisaged by the Supreme Court in Cahill v. Sutton.

101. In the third decision relied upon by the plaintiff, which is McKenna v. An Taoiseach (No. 2) [1995] 2 I.R. 10, the Supreme Court affirmed the decision of the High Court that the plaintiff in that case did have locus standi to challenge the vote of Ir£500,000 by Dáil Éireann to the Minister for Justice, Equality and Law Reform to be used in support of the campaign for a “Yes” vote in a referendum to remove the constitutional prohibition on divorce.

102. In the High Court, Keane J. found that the proceedings clearly fell into a category of cases in which a challenge to the constitutionality of the legislation or other acts was unlikely to emerge if the primary rule in Cahill v. Sutton was applied, before going on to conclude that it was clear from the observations of Finlay C.J. in Crotty that a broader approach should be adopted in cases of that nature (at p. 15 of the report). That finding was affirmed in the Supreme Court by Hamilton C.J. (at p. 40 of the report)

103. It seems to me to have been a common feature of the three cases just discussed that the plaintiff in each was an individual or citizen in a position broadly equivalent to- and certainly no worse than – that of thousands of other citizens, if not all other citizens, in raising the constitutional issue concerned, and that no other party had emerged or was likely to emerge with standing to raise that issue under the primary rule in Cahill v. Sutton. The position in the present case is quite different. It is implicit, if not explicit, in both the plaintiff’s assertions of fact and his arguments of law that the party (together with every other qualified party) is more fundamentally and directly affected by the impugned provision than he is.

104. In those circumstances, and mindful of the need to avoid the various potential problems that the general application of the primary rule is designed to prevent, I have come to the conclusion that there are no weighty countervailing considerations that would warrant the disapplication of that rule in this case.

iii. ius tertii

105. In the course of argument, Counsel for the plaintiff pointed to the potential effect of s. 17 (4B) of the 1997 Act on various actors other than the plaintiff or the party of which he is a member to illustrate the argument that the provision might give rise to certain anomalous results. Thus, reference was made to: a party that failed to meet the candidate gender quota but achieved an equivalent or greater quota of TDs actually elected; a party comprised solely of women members, formed for the purpose of the advancement of women’s rights; a party that ran women candidates in constituencies where it had little or no support as a cynical exercise in meeting the candidate gender quota; or an embattled party seeking merely to protect the seats that it already holds in the face of a snap election and which will not, in those circumstances, meet the candidate gender quota. The purpose behind the identification of these hypothetical situations was, I must confess, not entirely clear to me, although it may have been done in support of a broader argument that the provision is potentially constitutionally infirm as arbitrary in its effects and, therefore, contrary to the requirements of the doctrine of proportionality.

106. In any event, I am satisfied that to permit the plaintiff to mount an argument in reliance on any such hypothetical situation would be to err contrary to the principle, considered earlier, that to allow one litigant to present and argue what is essentially another person’s case would not be conducive to the administration of justice as a general rule. On top of that, it is a notable feature of each of the hypotheticals summarised above that the potential prejudice they apprehend is one to the interests of a qualified political party, lending further weight to the conclusion I have already reached on the question of the plaintiff’s standing or, as I have found, his lack of standing in the absence of any prejudice to his own personal interests attributable to the operation of the provision.

Conclusion
107. For the reasons set out above, I have come to the conclusion that the plaintiff has failed to demonstrate that any of his interests have been adversely affected, or stand in real or imminent danger of being adversely affected, by the operation of s. 17 (4B) of the 1997 Act and that, in consequence, the plaintiff has failed to establish his standing to bring the present action by operation of the primary rule. Further, I have decided that there is no, or no sufficiently weighty, countervailing consideration that would justify a departure from the primary rule in this case.

108. While, in circumstances of perceived urgency and in contemplation of a possible appeal, it would be tempting, in deference to the extensive arguments put forward on both sides, to offer a provisional view on the constitutional question presented, the decision of the Supreme Court in Equality Authority v Portmarnock Golf Club [2010] 1 IR 671 makes it clear that, in accordance with the requirements of the rule of avoidance, it would be wrong to do so.

109. The plaintiff’s claim must, accordingly, be dismissed in limine.

D v Ireland

[2009] IEHC 206

JUDGMENT of Mr. Justice Clarke delivered the 21st April, 2009

1. Introduction

1.1 The plaintiff (“Mr. D”) is a minor who has commenced these proceedings for the purposes of challenging the constitutionality of certain provisions of the Criminal Law (Sexual Offences) Act 2006 (“The Act”). Mr. D currently faces charges under the Act on foot of which he has been returned for trial to the Circuit Criminal Court at Letterkenny. The trial is currently due to commence on the 28th April, 2009. It is in that context that Mr. D brings this application before the court seeking to have a stay placed on his trial until such time as the issues concerning the constitutionality of the relevant legislation have been determined.

1.2 In that context I should turn briefly to the relevant facts.

2. The Facts

2.1 It is alleged that Mr. D was, in the summer of 2006, guilty of certain sexual offences involving a female under the age of seventeen years contrary to the provisions of s. 3(1) of the Act. At the time of the alleged offence it would appear that Mr. D was, himself, fifteen years old and that the female in respect of which he is alleged to have committed the relevant offences was fourteen years old. The female in question was not charged with any offence under the Act. It is in that context that Mr. D alleges that the legislation in question is in breach of the Constitution.

2.2 On the 10th March of last year, Mr. D commenced these proceedings seeking a range of declaratory reliefs including a declaration that s. 3(1) and s. 5 of the Act are in breach of the Constitution or alternatively, in breach of Articles 6 or 14 of the European Convention on Human Rights. It is also alleged that the third named defendant (“the DPP”) has acted in breach of Mr. D’s constitutional rights by prosecuting him in all the circumstances of the case.

2.3 On the 8th May, 2008, a statement of claim was served. Thereafter, a defence was filed on behalf of the defendants.

2.4 In May and June of last year (after the issuing of these proceedings), the DPP informed Mr. D’s solicitor that he intended to proceed with the criminal trial unless an injunction was given by this Court preventing the trial from going ahead. It should be noted in passing that it was not until the 20th January, 2009, that the defendants filed a defence to these proceedings. The filing of the defence arose in circumstances where Mr. D’s solicitor had, on the 19th December, 2008, brought an application for judgment in default of defence. It follows that, had the defendants been more proactive in filing their defence, there is every chance that these proceedings could already have been listed for hearing.

2.5 In any event the criminal proceedings against Mr. D were listed before O’Hagan J. at the Circuit Criminal Court sitting in Letterkenny on the 3rd February, 2009. On that occasion, O’Hagan J. fixed the 28th April next for the trial and indicated that it was his intention that the trial would go ahead in the ordinary way, unless Mr. D should secure an order from this Court which would have the effect of preventing the trial from being proceeded with until after his constitutional challenge to the relevant provisions of the Act had been determined. On that basis, Mr. D brought this application before the court which came on for hearing on the 30th March. Having reviewed the basic facts it is also appropriate to indicate, at least in general terms, the nature of Mr. D’s challenge to the legislation in question. I turn to the legislation and his challenge to it.

3. The Legislation and the Challenge

3.1 Section 3(1) of the Act provides as follows:-

“3.— (1) Any person who engages in a sexual act with a child who is under the age of 17 years shall be guilty of an offence and shall, subject to subsection (3), be liable on conviction on indictment—“

Section 5 of the Act provides as follows:-

“5.— A female child under the age of 17 years shall not be guilty of an offence under this Act by reason only of her engaging in an act of sexual intercourse.”

3.2 It follows that the structure of the Act is to create a general criminal offence which arises in circumstances where a person engages in sexual acts with an underage person. That general offence is to be found in s. 3(1) which is not gender specific. Therefore, if s. 3(1) were the only provision in the Act relevant to such matters, it would follow that an offence could be committed by an underage female in having sex with an underage male.

3.3 However, as is clear from the above cited text, s. 5 provides for an exclusion in the case of sexual intercourse by an underage female person.

3.4 There can be little doubt but that the combined effect of s. 3(1) and s. 5 is that, in the event of there being consensual sexual activity between two underage persons the male is, by virtue of s. 3(1), guilty of an offence but the female is, by virtue of s. 5, not so guilty. In that context Mr. D argues that the Act is discriminatory and seeks to challenge its validity having regard to the Constitution, and also seeks declarations concerning the compatibility of the legislation concerned with the European Convention on Human Rights.

3.5 The defendants oppose Mr. D’s challenge basing their opposition on two general sets of grounds.

3.6 Firstly, it is said that the State is entitled to make a distinction between male and female persons in this area. Thus, the defendants will seek to justify the distinction made in the legislation concerning sexual activity by, on the one hand, underage males and, on the other hand, underage females.

3.7 Secondly, the State defendants draw attention to the fact that s. 3(1) itself is not discriminatory in that it applies to all underage persons, both male and female. Thus, it is said, the only potentially discriminatory aspect of the legislation is to be found in the exclusion of underage females from criminal liability that is contained in s. 5. On that basis the State argues that, even if this Court were satisfied that the distinction contained in the Act as and between underage males and underage females amounted to unjustified discrimination, it could not, it is said, avail Mr. D because the only consequence of such a finding would be to strike down s. 5. The result of s. 5 being struck down would not, it follows, be that Mr. D would be immune from prosecution, but rather that the female involved would herself also be exposed to prosecution. On that basis it is said that, even if Mr. D were able to establish that the Act as a whole was impermissibly discriminatory, it would not avail him in being able to prevent his prosecution.

3.8 Against that background it is next necessary to turn to the relevant principles by reference to which this Court should exercise its power to prevent a criminal trial from proceeding, pending a challenge to the constitutionality of the legislation on foot of which the relevant criminal charges are being mounted. I now turn to the relevant jurisprudence.

4. The Jurisprudence

4.1 Counsel on behalf of the defendants accepted that this Court has a jurisdiction, at the level of principle, to grant an injunction which would have the practical effect of preventing the operation of a statute pending the determination by the court of proceedings in which the validity of the statute concerned was under challenge. That this is so is clear from the decision in Pesca Valentia Ltd v. Minister for Fisheries [1985] IR 193. That being said it was argued, correctly in my view, that the relevant jurisdiction is one which must be most sparingly exercised. The reasons for this are obvious. Legislation which has been passed into law by the Oireachtas enjoys a presumption of constitutionality. If it were to be the case that persons who were able to establish a fair case to be tried concerning the validity of the relevant legislation having regard to the provisions of the Constitution (which is not a particularly high threshold) were able to obtain an injunction preventing, in practice, the application of the legislation to them until the proceedings had been determined, then it would follow that legislation could, in practice, be sterilised pending a final determination of the constitutional issues raised. Those considerations apply with equal force where the statute concerned is one which creates a criminal offence.

4.2 While, in general terms, the principles applicable to the grant or refusal of an interlocutory injunction in a case such as this are no different from those which apply in the case of any other interlocutory injunction, it has to be emphasised that a very significant weight indeed needs to the attached, in considering the balance of convenience, to the desirability that legislation once coming into force should be applied unless and until such legislation is found to be invalid having regard to the Constitution. It should only be where significant countervailing factors can be identified or where it is possible to put in place measures which would minimise the extent to which there would be any interference with the proper and orderly implementation of the legislation concerned, that a court should be prepared to grant an injunction which would have the effect of preventing legislation which is prima facie valid from being enforced in the ordinary way.

4.3 It is also necessary to consider C.C. v. Ireland & Ors (Unreported, Supreme Court, 12th July, 2005) in which the Supreme Court indicated that it was, in the unusual circumstances of that case, prepared to entertain a debate as to the interpretation of criminal legislation in advance of the criminal trial which the plaintiff in those proceedings was facing. It is clear that the Supreme Court was of the view that the normal and ordinary course of events in such circumstances is that the criminal trial concerned should proceed and that a determination of any legal issues (including the validity of any legislation relevant to the criminal trial) should follow but only, of course, in the event that the accused concerned was convicted as otherwise that person would have no standing to challenge the legislation in any event.

4.4 C.C. is, therefore, more concerned with the question of whether, and in what circumstances, it is appropriate for the court to entertain issues (including constitutional issues) in advance of a criminal trial rather than whether it would be appropriate to stay a criminal trial pending a resolution of such proceedings. There is, however, a similarity between that question and the one with which I am faced so that the comments of the Supreme Court in C.C. are relevant to the issue which I have to decide. It is clear that the court retains a jurisdiction, in an appropriate case, to entertain such proceedings in advance of the criminal trial to which it is, principally, directed but that this practice should not be the norm and should only be followed in appropriate cases.

4.5 In summary, I am satisfied that a court, asked to stay criminal proceedings pending a constitutional challenge, must consider the following matters:-

(a) Whether a fair case to be tried has been made out as to the validity of the statute concerned including a consideration of whether any successful challenge would materially affect the pending criminal proceedings;
(b) If so (given that it is difficult to see that damages could be an adequate remedy) where the balance of convenience lies affording a very significant weight indeed to the need to ensure that laws enjoying he presumption of constitutionality are enforced; but

(c) Also considering any special or unusual countervailing factors which might render it disproportionate to require the criminal trial concerned to go ahead immediately, including having due regard to the possibility of minimising any effect on the proper progress of criminal litigation.

4.6 I now turn to the application of the principles to the facts of this case.

5. Application to facts of case

5.1 As in all cases in which a party seeks an interlocutory injunction, the first question to be considered is whether the party concerned has established a fair case to be tried. Counsel for the D.P.P., quite properly, accepted that there might well be a fair case to be tried concerning the question of whether it is permissible for the State to distinguish between underage male and underage female persons who engage in consensual sexual activity. That s. 5 discriminates as and between males and females is without doubt. The question will be as to whether that discrimination can be justified. There is, undoubtedly, in my view, a fair issue to be tried on that question.

5.2 However Counsel for the D.P.P. argued that Mr. D. had not shown how he could get round the second leg of the State’s defence. It seems likely that the way in which the relevant legislation was crafted was designed precisely to deal with a situation where it might be determined that it was impermissible to discriminate between underage males and underage females in the way in which this legislation does. In those circumstances it is at least arguable that the appropriate order for the court to make would be to declare s. 5 inconsistent with the Constitution and thus leave s. 3(1) intact. In those circumstances the legal position would be that both underage males and underage females would be capable of being prosecuted. That, in itself, would not avail Mr. D.

5.3 However it seems to me that there are possible outcomes of this litigation which could avail Mr. D. If, for example, s. 5 was found to be impermissibly discriminatory, it might well then be the case that Mr. D. would be entitled, at least in some circumstances, to question criminal proceedings in which one only of the two parties to a consensual sexual act (both being underage) was prosecuted. While in general terms it is no answer to a criminal charge to complain that others too have committed the same offence but have not been prosecuted, it is at least arguable that there may be limited circumstances where a party may be able to claim that a prosecution of one but not all of the participants in a single act is discriminatory unless there are good grounds for not prosecuting other parties. In those circumstances I have come to the view that Mr. D. has made out a fair case to be tried.

5.4 However, as pointed out earlier, that is far from the end of the matter. A very heavy weight needs to be attached to allowing legislation, which is prima facie valid, to be enforced unless and until it is found to be inconsistent with the Constitution. However it seems to me that on the particular facts of this case it should be possible to do justice to all concerned in a way that does not significantly impair the imperative that legislation be enforced. Provided that a very early trial can be arranged (and I believe this can be done, and propose discussing the matter further with counsel after this judgment has been delivered), then it seems to me that a very short adjournment of the criminal proceedings pending against Mr. D. would not involve any significant interference with the ordinary operation of the criminal process. In particular, in coming to that view, I have taken into account the fact that Mr. D. did, in my view, commence these proceedings in a timely fashion. While the delay on the part of the defendants in filing their defence was not extreme, it nonetheless is the case that, if the defendants had filed their defence in a more timely fashion, it is likely that these proceedings could have been determined in advance of the criminal trial. It would seem to me to be potentially unfair that Mr. D. should be exposed to a criminal trial which, on one view, might be constitutionally inappropriate, at least in part because these proceedings, through no fault of his or his advisors, took somewhat longer to come to trial than might otherwise have been the case. I should emphasise that nothing in this judgment should be taken as implying that that fact, of itself, would justify an injunction. However, when coupled with the fact that it is possible, in my view, to ensure that any delay in the pending criminal trial would be minimal, it seems to me that the balance of justice and convenience leans in favour of placing a stay on the criminal trial provided that measures can be put in place to ensure that these proceedings can be brought to hearing in the shortest possible time.

6. Conclusions

6.1 Subject, therefore, to my being satisfied that it will be possible to ensure that these proceedings are heard in very early course, I would propose making an order placing a stay on the conduct of the criminal trial currently listed for Letterkenny next week. That stay will be strictly conditional on Mr. D. and his advisors complying with all reasonable procedural requirements to ensure that this case is heard at the earliest possible date. The defendants will have liberty to apply in the event that there is any delay on Mr. D.’s part in ensuring such an early trial date.

6.2 I propose hearing counsel further on any measures which are necessary to ensure such an early trial and on the time scale within which any such procedural steps should be taken.

Constitutional Challenge

Cases

Grange Developments Ltd v Dublin County Council (No.4)

The State (D. and D.) v. Groarke

K v Ireland

Damache v DPP

People (DPP) v Kavanagh

Cahill v. Sutton

McDaid v Sheehy

Jonathan v. Ireland

Leonard v Dublin City Council

Grace v Ireland

AHP Manufacturing BV (trading as Wyeth Medicare Ireland) v Director of Public Prosecutions

Hall v Minister for Finance

O’Connell v. Minister for Justice

Society for the Protection of Unborn Children (Irl) Ltd v Coogan and Ors

Society for the Protection of Unborn Children (Irl) Ltd v Grogan and Ors

Used Car Importers of Ireland v Minister for Finance

Grange Developments Ltd v Dublin County Council (No.4)

Director of Public Prosecutions v. Dougan

Colmey v Pinewood Developments Ltd

Brian Mohan v Ireland and the Attorney General

D v Ireland

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