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  • of interpreting post 1937 statutes differ materially from that applicable to pre 1937 statutes As regards s 1 of the Act of 1935 this Court in C C v Ireland and ors 2006 4 I R 1 decided that it was inconsistent with the Constitution That section which had not been amended by the Act of 1997 did not benefit from the presumption of constitutionality It was found to be inconsistent with the Constitution essentially because it was manifest from its legislative history and its terms that it excluded an accused from raising in defence to a charge under that section that he reasonably believed that the complainant was over the age below which sexual intercourse was prohibited Section 2 1 is expressed in essentially the same terms as regards the intent to commit the offence If section 2 1 is considered on its own without regard to any amendment and therefore on the basis that it is a pre 1937 provision not enjoying a presumption of constitutionality it ineluctably follows from the precedent in C C v Ireland that it suffers from the same constitutional frailty as s 1 and therefore ought to be declared inconsistent with the Constitution Counsel for the Attorney General accepted that this was an inevitable conclusion if s 2 1 fell to be interpreted as a pre 1937 provision He argued however that s 2 1 as amended by the Act of 1997 must be interpreted as constituting post 1937 legislation and therefore enjoyed the presumption This would allow for a different interpretative approach in deciding the issue in this particular case C C v Ireland did not involve an adjudication or decision on the constitutionality of s 2 1 as amended or otherwise that issue now arises in this case In the High Court the learned trial judge having reviewed the authorities and scrutinised the relevant legislative provisions concluded that s 2 1 must be considered to have been effectively re enacted although not expressly so by the amendment made by the Oireachtas in the Act of 1997 Accordingly he concluded that s 2 1 of the 1935 Act as amended by the 1997 Act enjoyed the presumption of constitutionality It was on the basis of such an interpretive approach that he reached his final conclusion on the issue of constitutionality Before the issue of constitutionality is resolved one way or the other it must be determined whether s 2 1 as amended by the Act of 1997 should be addressed from the perspective of a legislative provision enacted before the coming into force of the Constitution or a provision which should be deemed to have been effectively re enacted by the amending provision of the Act of 1997 This I think is important from the point of view of a coherent and holistic approach to judicial review of the constitutionality of Acts of the Oireachtas The leading authority on such an issue is the decision of this Court in E S B v Gormley 1985 I R 129 In that case this Court first of all acknowledged that it was well established that where Acts passed after the coming into force of the Constitution expressly re enacted pre Constitution statutes such re enactment gave to them the status of having been passed since the coming into force of the Constitution and as a consequence the presumption of constitutionality applied to them That clearly applies to statutory provisions which are expressly or simply stated to be re enacted even if in exactly the same terms Accordingly legislation enacted prior to 1937 and which might otherwise have fallen foul of the Constitution may nonetheless escape condemnation because of its formal and express re enactment in the same terms in post 1937 legislation by virtue of an interpretive approach based on the presumption of constitutionality However what the Court had to consider in the Gormley case was an amendment which did not constitute an express re enactment but which by its terms and nature could be regarded as effectively re enacting the provision or provisions in question and thereby fall to be scrutinised as post 1937 legislation enjoying the presumption of constitutionality In E S B v Gormley the Court was considering the constitutionality of the provisions of s 53 and s 98 of the Electricity Supply Act 1927 as amended by the Electricity Supply Amendment Act 1945 The first issue which the Court had to consider was summed up in the judgment delivered by Finlay C J in the following terms The first issue of law which arose on this aspect of the case was whether s 53 of the Act of 1927 by virtue of the amendment thereof by s 46 of the Act of 1945 and s 98 of the Act of 1927 by virtue of the amendment thereof by s 5 of the Act of 1941 should be deemed to have been enacted or re enacted by the Oireachtas since the coming into force of the Constitution and thus attract a presumption of validity having regard to the provisions of the Constitution The Court then went on to point out that where an Act passed since the coming into force of the Constitution expressly re enacts pre Constitution statutes then according to the established jurisprudence of the Court such re enactment gives to them the status of having been passed after the coming into force of the Constitution However the Court pointed out It is equally clear that the mere fact of an amendment of a pre Constitution statute contained in a statute passed after the coming into force of the Constitution does not of itself give to that pre Constitution statute a presumption of validity The Court then considered whether s 53 and or s 98 of the Act of 1927 although not expressly re enacted should be deemed to have been effectively re enacted by virtue of the amendments made to them The Court began by considering the first

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  • We shall restrict ourselves at this point to making some observations on their literal meaning In general it is appropriate to emphasize that the exceptions in these two articles do not apply automatically in that they do not invariably result in the child s retention nevertheless the very nature of these exceptions gives judges a discretion and does not impose upon them a duty to refuse to return a child in certain circumstances 118 It is significant that the possibility acknowledged in article 20 that the child may not be returned when its return would not be permitted by the fundamental principles of the requested State relating to the protection of human rights and fundamental freedoms has been placed in the last article of the chapter it was thus intended to emphasize the always clearly exceptional nature of this provision s application As for the substance of this provision two comments only are required Firstly even if its literal meaning is strongly reminiscent of the terminology used in international texts concerning the protection of human rights this particular rule is not directed at developments which have occurred on the international level but is concerned only with the principles accepted by the law of the requested State either through general international law and treaty law or through internal legislation Consequently so as to be able to refuse to return a child on the basis of this article it will be necessary to show that the fundamental principles of the requested State concerning the subject matter of the Convention do not permit it it will not be sufficient to show merely that its return would be incompatible even manifestly incompatible with these principles Secondly such principles must not be invoked any more frequently nor must their invocation be more readily admissible than they would be in their application to purely internal matters Otherwise the provision would be discriminatory in itself and opposed to one of the most widely recognized fundamental principles in internal laws A study of the case law of different countries shows that the application by ordinary judges of the laws on human rights and fundamental freedoms is undertaken with a care which one must expect to see maintained in the international situations which the Convention has in view The importance or relevance of Article 20 for Keane J in the ACW case was that if and he was speaking hypothetically there was a constitutionally protected fundamental right which would be infringed if an order was made for the return of a child any constitutional frailty that might be said to attach to the Act and the Convention as a consequence would be saved since the courts could act to protect that right by refusing an order within the terms of Article 20 In considering the terms and ambit of Article 20 the learned trial judge referred to the decision of the full court of the Family Court of Australia in Director General Department of Family Youth and Community v Rhonda May Bennett 2000 Fam C A 253 In that case the Court stated in the course of its judgment According to the report of the Second Special Commission meeting to review the Convention s operation Article 20 was inserted because the Convention might never have been adopted without it and it was intended as a provision which could be invoked on the rare occasion that the return of a child would utterly shock the conscience of the court or offend all notions of due process In another Australian case D P v Commonwealth Central Authority and other parties 2001 FLC at p 88 399 and 2001 HCA 39 Kirby J expressed the view that Article 20 could include a case where it had been demonstrated that notwithstanding formal adherence to The Hague Convention the authorities and officials of the child s country of habitual residence are corrupt that due process would be denied to the child or to the custodial parent or the basic human rights would not otherwise be respected Again in a Spanish case re S Auto de 21 Abril de 1997 INCADAT citation HC E ES 244 a Spanish court refused to order the return of a child wrongfully abducted from Israel According to the International Child Abduction database INCADAT maintained by The Hague Conference on Private International Law the Spanish court held that the return of the child would be contrary to the basic principles of Spanish law because the child would be removed from the mother on her return and no account would be taken of the best interests of the child who had grown up with the mother The court stated that this was equivalent to a denial of the natural guardianship of the child in Israel and was in itself contrary to the basic principles of Spanish law The decision of the Spanish court was based on the evidence then before it of the consequences of a decision by a Rabbinical Court subsequent to the removal of the child on the status with virtually no rights of the mother having regard to her misconduct in removing the child from Israel In any event it is clear that the Spanish court s decision focused on the conclusion on the basis of evidence before it as to Israeli law that on return the mother would be denied fundamental due process and that no account as regards care and custody issues would be taken of the best interests of the child who had grown up solely with the mother In the circumstances I agree fully with the learned trial judge s conclusion in this case on certain principles which should be applied in relation to a reliance on Article 20 of the Convention in this country These principles were outlined by her at p 57 of her judgment in the following terms i The onus is on the person opposing the order for return to establish that Article 20 applies ii Article 20 similar to Article 13 is a rare exception to the general principle of return and as such must be strictly or narrowly construed iii A Court may only refuse to return a child where the fundamental principles of its law do not permit the return of the child Where as in this case reliance is placed on the Constitution it must be established that the relevant article of the Constitution does not permit the return of the child It would be a misunderstanding of the provisions of Article 20 as brought into force by the Act of 1991 if that was interpreted as meaning that any civil or judicial process which had taken place or was due to take place after return of the child in the requesting State should be examined so as to determine whether it conformed to a civil or judicial process as envisaged under the provisions of our Constitution Such an approach would deny the very essence of the Convention As emphasised above the Convention is primarily concerned with jurisdiction and the State in the exercise of its legitimate and sovereign powers as agreed with a view to achieving the objectives of the Convention that in principle the courts in the country of the wrongfully abducted child s habitual residence should have jurisdiction to determine matters concerning his or her care and custody The ousting of the jurisdiction of the courts in Ireland in those special circumstances does not mean that the courts in requesting State can only be permitted so to speak to exercise such jurisdiction if they conform to every aspect of the judicial process as guaranteed by the Constitution Every country even those with similar systems and in particular those with different systems of law have different procedures practices and indeed legal provisions according to which such justiciable issues are determined by the courts Each country may have its own checks and balances to ensure a fair hearing with due regard to fundamental rights and the interests of the child This Court has taken into account similar considerations when considering constitutional objections to the extradition of persons to stand trial or serve a sentence in a foreign country See Minister for Justice v Brennan 2007 I E S C 21 and Minister for Justice v Stapleton 2007 I E S C 30 Although extradition or surrender on foot of a European arrest warrant give rise to a different considerations there is some analogy to be drawn between the approach of this Court in such cases and in a case of this nature where a child is being returned to another country to have its future care and custody determined by the courts there in accordance with the applicable system of laws In the Brennan case it was contended that the sentencing provisions in the United Kingdom did not conform to the principles of Irish law as constitutionally guaranteed governing the sentencing of persons to imprisonment after conviction before our courts for a criminal offence In rejecting that contention the judgment in that case stated The effect of such an argument is that an order for surrender under the Act of 2003 and indeed any order for extradition ought to be refused if the manner in which a trial in the requesting State including the manner in which a penal sanction is imposed does not conform to the exigencies of our Constitution as if such a trial or sentence were to take place in this country That can hardly have been the intention of the Oireachtas when it adopted s 37 1 of the Act of 1973 since it would inevitably have the effect of ensuring that most requests for surrender or extradition would have to be refused And indeed if that were the intent of the Framework Decision which the Act of 1973 implements and other countries applied such a test from their own perspective few if any would extradite to this country It may be said that generally extradition has always been subject to a proviso that an order for extradition as with any order should not be made if it would constitute a contravention of a provision of the Constitution I am not aware of any authority for the principle that the extradition or surrender of a person to a foreign country would contravene the Constitution simply because their legal system and system of trial differed from ours as envisaged by the Constitution The manner procedure and mechanisms according to which fundamental rights are protected in different countries will vary according to national laws and constitutional traditions The checks and balances in national systems may vary even though they may have the same objective such as ensuring a fair trial There may be few if any legal systems which wholly comply with the precise exigencies of our Constitution with regard to these matters Not all for example will provide a right to trial by jury in exactly the same circumstances as our Constitution does in respect of a trial for a non minor offence Rules of evidence may differ The fact that a person would be tried before a judge and jury in this country for a particular offence could not in my view be a basis for refusing to make an order for surrender solely on the grounds that in the requesting State he or she would not be tried before a jury The exceptions which we have to the jury requirement as in trials before the Special Criminal Court acknowledges that a fair trial can take place without a jury even though it is constitutionally guaranteed for most trials in this country That is not by any means to say that a Court in considering an application for surrender has no jurisdiction to consider the circumstances where it is established that surrender would lead to a denial of fundamental or human rights There may well be egregious circumstances such as a clearly established and fundamental defect in the system of justice of a requesting State where a refusal of an application for surrender may be necessary to protect such rights It would not be appropriate in this case to examine further possible or hypothetical situations where this might arise The sole matter which I wish to make clear here is that the mere fact that a trial or sentence may take place in a requesting State according to procedures or principles which differ from those which apply even if constitutionally guaranteed in relation to a criminal trial in this country does not of itself mean that an application for surrender should be refused pursuant to s 37 2 of the Act In the Stapleton case the respondent sought to resist his surrender on foot of a European arrest warrant inter alia on the grounds that there was inordinate delay by the U K authorities in bringing the prosecution against him The respondent relied inter alia on differences between the level of protection to which he would be entitled if the issue of delay was raised before the courts in England and that which would be available to him in this jurisdiction In that case Fennelly J stated that the learned trial judge was mistaken in seeking parity of criminal procedure in the issuing member State He also cited from the decision in the Brennan case He concluded inter alia that no fundamental defect in the system of justice of the requesting State had been established He added On the facts of this case there is available to the respondent a procedure which would enable him on surrender to the issuing member State to seek a remedy based on the very long period of time which has elapsed since the alleged commission of the offences Moreover on the facts of the case it is demonstrably more efficient and more convenient that those matters be debated before the courts of the country where the respondent is to be tried The prosecuting and police authorities as well as other witnesses are available to and amenable to the jurisdiction of the courts of that country Documentary evidence of the type demanded by the respondent will be more readily available there If not its absence may be more readily explained Accordingly Article 20 cannot be interpreted as meaning that the return of a wrongfully abducted child to his her country of habitual residence must be refused by reason only of the fact that the law or judicial process in that country is not the same as that which the law of Ireland would required if the courts here were exercising their own jurisdiction and determining the issue concerning the care and custody of the child and the respective rights and obligations of the parents That of course does not solve the interpretive problems which are generally accepted as being inherent in the wording of Article 20 It also seems clear to me that there is no reformulation of the provisions of Article 20 or gloss to be put on it which would define some golden rule determining how all such issues arising under Article 20 should be resolved Nonetheless it may be said as the Perez Vera report has pointed out that it is not so much that an order returning an abducted child in fulfilment of obligations under the Convention might offend in some way against the law or Constitution of the requested State which prima facie has no jurisdiction on the merits but rather that the fundamental principles of the requested State relating to the protection of human rights and fundamental freedoms do not permit or in other words would forbid such an order being made Absent objective criteria for the interpretation and application of Article 20 it is inevitable that its application would be considered on a case by case basis in the light of the particular circumstances of each such case This would be consistent also with the so called in concreto approach to deciding cases under The Hague Convention which the European Court of Human Rights says should be adopted and which are referred to later in this judgment in another context Grounds for refusing to return a child under Article 20 could arise from egregious circumstances such as a clearly established and fundamental defect in the system of justice of the requesting State where for example consideration of the best interest of the child would be excluded from any subsequent proceeding or a refusal to permit one or both parents to participate in proceedings concerning care and custody But such a statement is necessarily illustrative rather than definitive as to the manner in which Article 20 may fall to be applied The reference in one of the Australian cases cited above to instances where the return of a child would utterly shock the conscience of the court does not advance matters very much but on the other hand the other examples arising from such cases such as corruption of the process in the requested State denial of due process as mentioned by Kirby J or the refusal to take into account the best interests of the child mentioned in the Spanish case are at least illustrative or indicative but no more than that Grounds which are likely to give rise to a refusal under Article 20 are likely to involve not so much fundamental rights as fundamental aspects of fundamental rights A denial of those rights in a fundamental fashion In so observing I am not suggesting that this adds some defining clarity to the manner in which Article 20 should be applied but it does underscore the fact that given the terms of Article 20 issues concerning its interpretation can only be met on a case by case or an in concreto basis in the absence of objective criteria Then each case will be illustrative of the circumstances in which it may successfully or unsuccessfully be invoked Given the fact that up to the present time there are extremely few cases on this interpretive issue across the whole spectrum of countries who have adhered to the Convention it is likely to be quite some time before there is any significant body of at least illustrative law The fundamental principles referred to in Article 20 which could give rise to a refusal to order the return of an abducted child will by their very nature be ones which enjoy protection at a constitutional level in this jurisdiction although not all rights or entitlements protected by the Constitution would necessarily constitute such fundamental principles for the purposes of The Hague Convention I do not consider it useful or necessary to consider further in the abstract what matters guaranteed by the Constitution would not fall within the rubric of fundamental principles for the purposes of The Hague Convention That obviously can be dealt with on a case by case basis but the point I simply wish to make is that the simple fact that the laws of another country differ from constitutional provisions applying to matters occurring within this country does not mean that it is necessarily a breach of a constitutional right of an individual to require that individual to submit to the jurisdiction of the courts of another country Illustrative of this is the example used in relation to extradition The fact that a person would be extradited to another country to face a criminal trial without the benefit of a jury as guaranteed by our Constitution does not mean that it would be in breach of his constitutional rights provided at least that the core right namely the right to a fair trial is respected Accordingly the broad issue in this case is whether in the particular circumstances the order returning the children to the United Kingdom should have been refused because constitutional principles did not permit or forbade their return The onus rests on all appellant to establish that such an exception envisaged by Article 20 exists The Adoption Issue Although referred to above it might be convenient at this stage to recall the issue raised by the appellants in the High Court and subsequently in this Court as succinctly summed up by the learned trial judge at paragraph 59 of her judgment The respondents submission is that if an order for a return of the children to England and Wales is made then in the English care proceedings already commenced orders may be made for adoption of the children without the consent of the respondents in accordance with a statutory scheme and legal principles which do not include a recognition that the family possesses inalienable and imprescriptible rights similar to the recognition given in Article 41 or of the inalienable rights of the parents or natural and imprescriptible rights of the child in the family recognised in Article 42 They submit that the consequences of an order for return is that orders for the adoption of the children without the consent of the respondents may be made by the English Courts in circumstances which would not be permitted in this jurisdiction by Articles 41 and 42 of the Constitution Law and Practice on Adoption in England and Wales 30 As regards English law and practice concerning the making of adoption orders in child care proceedings evidence was placed before the High Court by way of affidavit concerning the law and practice in that country The affidavit was sworn by a solicitor Mr Paul England who has been employed by the respondents since 1988 and specialised in child protection and adoption work until June 2009 He was the County Council s principal legal adviser in relation to adoption 31 In his affidavit he explained that during the last two decades of the twentieth century English local authorities began to use adoption extensively as a means of providing permanence and legal security for children in care who could not return to their family of origin He said that the then existing legal machinery was ill suited to the development of this practice there being a disconnect between care and adoption proceedings with implications for the fairness and efficiency of process 32 In 2002 the British Parliament enacted a comprehensive reforming statute the Adoption and Children Act 2002 the main provisions of which came into force on 3rd December 2005 33 With regard to this Act his observations included the following a Before placing a child for adoption the local authority is now required either to obtain parental consent to placement or judicial authority to place overriding a parental objection in the form of a placement order b The grounds for dispensing with parental consent for placement and adoption are modernised and simplified The primary ground for dispensation is now that the welfare of the child requires the consent to be dispensed with c As a matter of practice local authorities are enjoined to consider twin tracking care and placement applications so that the Court considers a possible disposal by way of adoption at the same time as determining the application for a care order 34 He pointed out that the most conspicuous change is the introduction of the placement machinery He added The concept is that decision making relevant to adoption is brought forward to an earlier stage in the protective process In non consent cases the placing of a child in a proposed adoptive family now requires judicial sanction and it is at the placement stage not the adoption order stage that issues a parental consent are addressed 35 At paragraph 8 of his affidavit he states In general the English courts are supportive of local authority adoptive plans where a clear case for adoption is made This means that the Local Authority proposing adoption must demonstrate that all other means of providing for the needs of the child in a safe enduring and legally stable environment have been explored and discounted The 2002 Act does not create a hierarchy of placement choices but the judicial expectation is that the adoption is to be treated as the outcome of last resort He also points out that a court would be unlikely to endorse an adoption plan if there was an acceptable of placing the child within the extended family but where parents and extended family are ruled out an adoption plan will only be pursued if the Local Authority considers the adoption is a viable choice For some children it is not There may be reasons why a complete severance of the legal tie between parent and child is not in the child s best interests and for such children a long term foster care placement may be the preferred choice He states that peremptory action to bring about forced adoption is not permitted but that the process for adopting a child from public care against the wishes of a parent is imbued with safeguards that emphasise the need for proper decision making rigorous scrutiny procedural fairness and judicial oversight As regards statistics he stated that on 31st March 2009 some 69 000 children were in the care of local authorities in England Of these 4 some 2 500 individuals were placed for adoption In the year to 31st March 2009 some 3 300 children were adopted from public care No figure is available showing the proportion of cases where adoption occurred against the wishes of a parent Some cases would undoubtedly relate to relinquishments almost invariably cases involving newborn infants It is perhaps safe to assume that almost of the remainder would be non consent cases Earlier in his affidavit he had pointed out that one of the purposes or objects of the 2002 Act was to facilitate and promote adoption which had been restrained due to out of date and bureaucratic procedures but for a variety of reasons some of them not readily discernible the 2002 Act has not had that effect 36 He was also asked to comment on the level of contact between parents and children following the making of adoption orders He felt that practice in this matter varied between adoption agencies and he expressed a view which reflected the practice of Nottinghamshire County Council He stated that the benefit of post adoption contact between children and natural parents and other contact with other family members is likely to be of benefit when the parents or those concerned accept and support the adoption and where their acceptance and support is reflected in their approach to contact Where birth family members do not accept and support the adoption it is perhaps unlikely that they will use contact constructively in which case post adoption contact may not benefit the adopted child He added Nottinghamshire s approach is to presume the benefit of indirect contact through the medium of confidential letterbox system Only in cases a small minority where antagonism or non cooperation of a contact recipient makes it impractical to operate such an arrangement is contact in this form denied Direct contact is less common It tends to be permitted only in those cases where an adopted child has a relationship which is highly significant to him and the denial of direct contact would compromise the welfare of the adopted child Most commonly this approach is relevant where an adopted child has a significant relationship with a non adopted sibling who is not living with their parents and is perhaps in care or is looked after within the extended family by a relative who is supportive both of the adoption and of the contact arrangements The 2002 Act itself has no provision for machinery for post adoption contact orders This is left as under the former law to provisions in the Children Act 1989 which theoretically enabled the court to order post adoption contact but which are little used in practice Referring to relatively recent case law he stated that a court will not impose upon adopters an order for post adoption contact save in exceptional circumstances In other words post adoption contact is to be regarded as an aspect of the adopters parental rights and the court would not normally interfere with the exercise of those rights In practice such orders under the 1989 Act are rarely made As regards contact between the adopted child and non adopted siblings the desirability of such contact is governed by the welfare of the child rather than the interests of the adopters 37 Also before the High Court having been an exhibit in an affidavit of one of the appellants was a document entitled Family Proceedings Court Bench Book It appears to have been published by the Judicial Studies Board of England and Wales and comprehensively addresses all aspects of family law proceedings as a guide to the judiciary I think it is sufficient to quote from the introductory paragraph of section 15 which deals with adoption Whenever a court is coming to a decision about the adoption of a child the paramount consideration of the court must be the child s welfare throughout their life The court must always consider the whole range of powers and must not make any order under the Adoption and Children Act 2002 unless it considers that making the order would be better for the child than not doing so 38 The Bench Book makes it clear particularly in sections 14 and 15 that the courts in deciding whether to make a placement order preliminary to an eventual adoption order or an adoption order that the welfare of the child throughout his or her lifetime is the paramount consideration and that all relevant aspects of the child s welfare must be taken into account in deciding whether to make the order sought The fundamental implications of adoption generally Adoption has frequently and aptly been referred to as a life changing event given its profound and usually irreversible implications for the child and his or her natural parent or parents Natural parents have rights and interests to be considered and protected even when those of the child are to be considered as the first and paramount consideration As the Court of Human Rights has had occasion to state and reiterate with regard to adoption that it is an interference of a very serious order to split up a family X v Croatia ECHR 11223 04 2008 para 47 In that case the court recognised that Predominant in any consideration of such matters must be the fact that the decisions may well prove to be irreversible in a case where a child has been taken away from his parents and freed for adoption This is accordingly a domain in which there is an even greater call than usual for protection against arbitrary interferences emphasis added Referring to decisions of this nature concerning children it is again stated that such decisions must perforce include views and interests of the natural parents It added In the Court s view what therefore has to be determined is whether having regard to the particular circumstances of the case and notably the serious nature of the decisions to be taken the parents have been involved in the decision making process seen as a whole to a degree sufficient to provide them with the requisite protection of their interests Thus natural parents not only have procedural rights but substantive rights to have their interests as parents considered and protected On this approach decisions with regard to adoption should not be made exclusively by reference to the interests of the child concerned I think this approach very much mirrors that which is adopted under the law and the Constitution in this country and referred to by the learned High Court judge in her judgment and in particular that due regard must be had to the imprescriptible rights of the parents as well as those of the child see Article 26 and the Adoption No 2 Bill 1987 cited below Of course none of these rights are absolute In Aune v Norway 5202 07 2010 the Court of Human Rights reiterated para 66 it is clear that it is equally in the child s interest for its ties with its family to be maintained except in cases where the family has proved particularly unfit since severing those ties means cutting a child off from its roots It follows that the interest of the child dictates that family ties may only be severed in very exceptional circumstances and that everything must be done to preserve personal relations and if and when appropriate to rebuild the family This Court in addressing the issue of adoption in a constitutional context has stated The Court rejects the submission that the nature of the family as a unit group possessing inalienable and imprescriptible rights makes it constitutionally impermissible for a statute to restore to any member of an individual family constitutional rights of which he has been deprived by a method which disturbs or alters the constitution of that family if that method is necessary to achieve that purpose The guarantees afforded to the institution of the family by the Constitution with their consequent benefit to the children of a family should not be construed so that upon the failure of that benefit it cannot be replaced where the circumstances demand it by incorporation of the child into an alternative family In the matter of Article 26 of the Constitution and the Adoption No 2 Bill 1987 1989 I R 656 at 663 Of course in that case the Court was examining statutory provisions providing for the adoption of a child in circumstances where the natural parent or parents refused to consent Those provisions in turn were ones which fell to be applied to a family in the State where the State and the courts under the provisions of the Act had jurisdiction to determine issues concerning the care custody and possible adoption of children At this point it might be appropriate to refer to the fact that the Adoption Act 1987 lays down stringent conditions which must be fulfilled before an adoption order can be made and approved by the courts Of course it cannot be said that the scheme of the Act necessarily represents an irreducible benchmark for determining the circumstances in which it is constitutionally permissible for children to be adopted against the wishes of one or both parents It may well be that a removal or mitigation of one or more of the preconditions for such adoption laid down in the Act would be still be considered compatible with the Constitution Nonetheless it is clear that a key element in upholding the constitutionality of the bill was the provision that before any decision is made approving such adoption there must be a special regard for the constitutionally protected parental rights Both the Court of Human Rights and this Court have emphasised both in their own way the importance of judicial vigilance in ensuring having regard to the life changing and irreversible nature of a decision on adoption and the cutting off of a child from its roots that fair and due regard is given to the interests of all the persons concerned with of course the interests including the long term interests of the child to the forefront In cases where it falls upon the State or its institutions including the courts to take decisions of this nature it is axiomatic although it may be important to emphasise it nonetheless that this occurs when the making of such a decision is within the jurisdiction of the State and its own institutions It is not the role of the Court in this case to decide whether adoption or any other order as to the children s care and custody should be made but whether there are fundamental principles in the Constitution which would make it impermissible to return the children to the United Kingdom The High Court findings in relation to adoption In considering the issue raised by the appellants concerning the powers

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  • sequence occurred in 1982 at a time prior to the coming into force of the Hague Convention in Ireland and when there was no provision for the adoption of children of married parents and indeed when as Professor Binchy observes there was a widespread if erroneous belief that the adoption of such children would be unconstitutional in any circumstances In Northampton County Council v ABF and MBF the plaintiff Council sought it appears the return of an infant child born in England to an English couple who were married to each other but who were at the time of the case separated from each other The child had been placed by court order in the care of the plaintiff Council The child however was removed by its father and brought to Ireland and placed in the care of the defendants It was common case that if returned to England the child would be adopted with the consent of the mother but against the wishes of the father 29 The application to the Irish Courts for the return of the child to the United Kingdom appears to have been in the nature of an interlocutory or summary proceeding since the order made by the court was merely to direct a full plenary hearing In the High Court the rival propositions were surprisingly blunt On behalf of the father it was contended that the return should not be ordered because the result would be an adoption against the wishes of the lawful father which was it was said a development which is not permissible under the Irish law of adoption This is very similar to the Appellants arguments here The submission on behalf of the Council was equally forthright The father it was said simply could not make that argument since he was not an Irish citizen and moreover he had illegally taken the child out of the jurisdiction of the English Courts This it should be noted is an argument made on behalf of the Council and the Attorney General on this appeal 30 Hamilton J as he then was rejected the submission that the protections of Article 41 and 42 were restricted to Irish citizens Relying on a passage in the judgment of Walsh J in McGee v Attorney General 1974 IR 284 Hamilton J continued It seems to me however that non citizenship can have no effect on the interpretation of Article 41 or the entitlement to the protection afforded by it What Article 41 does is to recognise the Family as the natural primary and fundamental group of society and as a moral institution possessing inalienable and imprescriptible rights antecedent and superior to all positive law which rights the State cannot control In the words of Walsh J already quoted these rights are part of what is generally called the natural law and as such are antecedent and superior to all positive law The natural law is of universal application and applies to all human persons be they citizens of this State or not and in my opinion it would be inconceivable if the father of the infant child would not be entitled to rely on the recognition of the family contained in Article 41 for the purposes of enforcing his rights as the lawful father of the infant the subject matter of the proceedings herein or that he should lose such an entitlement merely because he removed the child to this jurisdiction for the purposes of enforcing his rights These rights are recognised by Bunreacht na h Éireann and the courts created under it as antecedent and superior to all positive law they are not so recognised by the law or the courts of the jurisdiction to which it is sought to have the infant returned 31 Accordingly Hamilton J directed a full plenary hearing There is no record of any such hearing and it appears to be assumed that the case was settled See Shatter Family Law 4th edition para 13 160 There and rather unhelpfully the trail comes to an end 32 The Northampton decision is heavily relied on by the Appellants in this case It represents the high point of the argument that the possible adoption of children of a marriage would prevent the return of children to a jurisdiction where that was envisaged even when neither the child nor the parents had any prior connection to Ireland and even though the circumstances giving rise to their presence in this jurisdiction was wrongful 33 It is perhaps noteworthy however that the decision does not clearly distinguish between the two separate issues identified at the outset of this judgment first the extent to which a non citizen can rely on Articles 41 and 42 and second the extent to which anyone citizen or non citizen can rely on Articles 41 and 42 as preventing the return of children to a jurisdiction of their habitual residence and in this case domicile on the grounds that what might occur in that jurisdiction would not be permitted under the Constitution As Professor Binchy observed in Irish Conflicts of Law at page 336 337 Some obvious difficulties attach to this approach At a very straightforward practical level the laws of very many countries provide for compulsory adoption of legitimate children in certain circumstances regardless of the wishes of the parents The constitutionality of such a process in this country is the subject of debate One may ask whether Northampton County Council v ABF and MBF constitutes a precedent for protecting parents throughout the world from having their children adopted against their wishes Common sense suggests strongly that it does not the problem is to identify precisely why it does not 34 In McDonnell v Ireland 1998 1 IR 134 Barrington J observed that Constitutional rights should not be regarded as wild cards which can be played at any time to defeat existing rules There can be few better examples of the successful playing of the Constitution as a wild card than the Northampton County Council case In spite of the fact that the decision is merely an interlocutory decision and is in very general terms the case has a very significant impact not just upon subsequent decisions and perhaps by reason of the breadth of the concepts invoked caused considerable uncertainty in the field of childcare and conflicts of law generally Subsequent decisions have however tended to treat the decision in Northampton County Council with some caution Subsequent Case Law 35 Two years after the Northampton case an attempt was made to invoke the same argument in Kent County Council v CS 1984 ILRM 292 That case involved a three year old boy of divorced parents in the care of Kent County Council on a court order made in the divorce proceedings The Court had also ordered that he not be removed from England and Wales without leave of the Court until he reached the age of 18 The father however on the pretext of bringing the child on a trip brought him to Dublin As it happened in this case the father was an Irish citizen who had been living in England for a long time and had been married and divorced there Kent County Council invoked the procedure under Article 40 of the Constitution to seek the return of the child to their custody The father expressed the fear that the child would be taken away from him and placed away in someone else s care or even given up for adoption While this argument sought to copy the argument advanced in the Northampton case it will be observed that the factual circumstances were quite different from those in the Northampton case In particular the adoption even if a possibility was a much more remote option than was the case in the Northampton County Council case 36 Finlay P as he then was directed the return of the child to Kent County Council He observed that the entire legal framework as a result of which this child was born of a lawful marriage in England and as a result of which a decree nisi in divorce has been granted in England concerning that marriage is a legal framework which is not known to the law of this country He distinguished the Northampton County Council case on the grounds that in Northampton there was an immediate intention to place the boy for adoption whereas there was no such immediate plan in this case This distinction between cases in which adoption is actually proposed and those in which it can be said to be no more than a possibility has remained the basis of Irish law on this area and was indeed the basis of the decision in the High Court in this case 37 A further child return case came before the Irish High Court in 1988 In Oxfordshire County Council v JH 1 9th May 1988 Costello J made an order returning that child to the care of the County Council in England on the basis of his analysis of the position under English law and accordingly that there was no risk of adoption He did however observe in passing although it may seem somewhat strange so to hold the situation is that people who come into this jurisdiction even for a short while are entitled to gain the benefits that the Constitution confers on citizens as well as non citizens The Saunders Case 38 The next case in the sequence played a large part in the submissions to this Court made on behalf of the Council and the Attorney General In Saunders v Mid Western Health Board High Court 11th May 1987 and Supreme Court 24th June 1987 an application was made by the parents of children English citizens again under Article 40 of the Constitution seeking custody of their three children then in the custody of the Mid Western Health Board 39 Although Hamilton P was the trial judge in Saunders no reference was made to the judgment in Northampton County Council although it should be noted there was no immediate proposal for adoption in the Saunders case and the cases were thus distinguishable on their facts The High Court upheld the entitlement to custody of the Official Solicitor on the somewhat unilluminating basis of the comity of courts The parents appeal to the Supreme Court was dismissed Finlay C J delivered judgment on the 26th of June 1987 The judgment stated that the parents had brought the children to Ireland unlawfully and in breach of an order made by the English courts Finlay C J continued I do not accept that they can by that act alone confer on themselves and their children constitutional rights under Article 41 and 42 of the Constitution 40 This case was central to the submissions made both by the Applicant Council and the Attorney General in this Court It was suggested that the decision of the Supreme Court was a wider and more principled one than that adopted in the High Court It was the only judgment in which the Supreme Court had specifically addressed the issue of the assertion of constitutional rights in the context of the wrongful removal of the children from the jurisdiction of their habitual residence It was suggested that the decision was correct and should not be overruled but should be followed 41 The argument based on Saunders was advanced to the trial judge herein and it was suggested to her that it was binding upon her However because she believed that the judgment was difficult if not impossible to reconcile with subsequent decisions of these Courts in which non citizens had been entitled to rely on provisions of the Irish Constitution the learned trial judge did not accept that argument but rather decided the case on the basis that adoption was only a possibility in this case and that on the distinction established in Kent such a possibility was not as sufficient to mean that a return was not permitted under the Constitution 42 On this appeal the opposing sides seem agreed only on the desirability of making large generalisations albeit that their proposed generalisations are almost diametrically opposed It seems to me however that the small body of case law referred to in this case is itself a salutary reminder of the dangers of basing large propositions upon individual cases decided almost in a vacuum and sometimes under significant pressures created by both the demands of time and the often distressing facts of the cases themselves I consider therefore that the conclusions the Court should draw in this case should so far as possible be more nuanced The Appellants Arguments Considered 43 It is convenient to deal first with the narrowest argument advanced on behalf of the Appellant It was suggested that the trial judge was wrong to conclude that adoption was only a possibility in this case That argument depended in part on discounting the averment in the affidavit of law submitted in this case to the effect that adoption in the United Kingdom was always a remedy of last resort Furthermore it depended almost entirely on the terms of the standard form document PL04 which required county councils to state whether adoption was a possibility in the case On this narrow ground upon which the High Court rested its decision in conformity I should say with the distinction clearly drawn in the decided cases it seems to me the High Court judge was entirely correct There was here no proposed adoption as was the case in the Northampton case nor was there an active care proposal by the local authority envisaging adoption as occurred in the case of Foyle Health Trust v EC 2007 4 IR 528 This case therefore is much closer to those cases where it could be said that adoption was a mere possibility This conclusion might dispose of this case but since the argument ranged much further and since it is necessary to consider why the mere possibility test is consistent with both the Constitution and Article 20 of the Convention it is necessary to consider the more expansive arguments raised in this case 44 It can said that the most far reaching proposition advanced on behalf of the Appellants that no child should be returned to a jurisdiction which does not recognise the inalienable and imprescriptible rights of the family is one which if correct could mean that Article 20 would no longer be the exception but would as least as far as Irish law is concerned become the rule As Professor Binchy has observed it can be fairly said that few if any countries have constitutional provisions relating to the family which can be said to be identical to those contained in Articles 41 and 42 Thus if the Appellants broadest argument was correct then almost any return of any child would not be possible under the Convention However in my view the principle asserted on behalf of the Appellants here has no basis in Irish constitutional law 45 Neither in its general provisions nor in the specific provisions of Articles 41 and 42 does the Irish Constitution contain any suggestion that Ireland wished to assert the form of constitutional splendid isolationism whether relating to the family or more generally which would be involved in determining that there could be no useful cooperation with the legal systems of any other state which had not adopted something approximating to the very specific provisions of the Irish Constitution It is an obvious but nonetheless compelling point that if such an unusual provision was intended one would expect it to have been set out in explicit terms in the text of the Constitution Not only is there no such starkly fundamentalist provision contained in the Constitution but in my view for reasons I will elaborate upon later in this judgment every indicator in the Constitution is to the contrary 46 The next argument advanced by the Appellants seeks to avoid the absolutism of the argument just advanced It was argued that an adoption would not be permitted under Irish law on the facts of this case It was contended therefore that in this case it would offend a fundamental principle of Irish constitutional law to return the children to a jurisdiction where the adoption of a child against the wishes of a parent or parents was contemplated 47 In my view the argument contains at least three errors First it assumes that the present state of Irish legislation necessarily reflects the limits imposed by the Irish Constitution Second it makes exaggerated claims about the state of the law and practice in England and Wales based on a slender evidential foundation Finally by simply assuming that it is sufficient to assert that if the English legislation was enacted here or perhaps if it was applied in this case it or the decision made would be unconstitutional the argument simply ignores the important conditionality in that formulation and thus simply avoids one of the most important and difficult constitutional issues arising in the case 48 The Appellants arguments assume that something which is not permitted at present by Irish law is ipso facto not permitted by the Constitution There is no basis for this assumption As has been observed elsewhere there was prior to 1988 belief in some circles that the Irish Constitution prohibited adoption of what were then described as legitimate children That fallacy was exposed by the decision of this Court in In re Article 26 and the Adoption No 2 Bill 1988 In my view it is a similar error to assert that only the adoptions permitted under the particular procedure of that Act are permitted by the Constitution In fact all that can be said both as a matter of logic and as a matter of now impregnable constitutional law is that the provisions of the 1988 Act do not offend the Constitution However it would be extremely surprising if the provisions of that Act designed to safely surmount constitutional challenge were by some happy or unhappy chance to identify the only circumstances in which the Constitution would permit adoption of children of a married couple 49 When shorn of the rhetoric that has become encrusted upon Articles 41 and 42 through successive generations of judicial decision and legal commentary it is perhaps possible to see that Articles 41 and 42 say nothing in explicit terms about adoption On the contrary the Articles at least in general terms state propositions that are by no means eccentric uniquely Irish or necessarily outdated there is a working assumption that a family with married parents is believed to have been shown by experience to be a desirable location for the upbringing of children that as such the family created by marriage is an essential unit in society that accordingly marriage and family based upon it is to be supported by the State Consequently the State s position is one which does not seek to pre empt the family but rather seeks to supplement its position so that the State will only interfere when a family is not functioning and providing the benefits to its members and thus the benefits to society which the Constitution contemplates In that case the State may be entitled to intervene in discharge of its own duty under the Constitution and to protect the rights of the individuals involved This is not to say that these Articles do not express a distinctive view and do so with considerable force However I would be very slow at a minimum without much more elaborate and comprehensive argument than was made in this case to conclude that in some way the 1988 Act prescribes the absolute minimum that can be permitted in respect of adoption of children of a family so that any statutory code which does not reproduce the precise details of the 1988 Act would if part of the law of Ireland be unconstitutional 50 If anything the Appellants argument in relation to the law of England and Wales is even more exaggerated and crude than the assertion of the position in respect of Irish law just discussed It is only fair to acknowledge that the only evidence of the law of the United Kingdom was that contained in an affidavit submitted on behalf of the Council Counsel on behalf of the Appellants in this Court was thus forced to try and rely on some parts of that affidavit while at the same time inviting the Court to treat other portions of the same affidavit with scepticism and even disbelief even though there was no cross examination on this affidavit in the High Court This is not entirely satisfactory However given the fact that the parents were not represented in the High Court when such evidence as there was adduced I do not think it would right to rest any decision on the inadequacies of the evidence and accordingly I am prepared to accept the assertions made in relation to the law of the United Kingdom at least for the purposes of this argument 51 Even on the limited materials put before us it does not seem to me that the stark distinction which the Appellants seek to draw between the provisions of Irish law and that of the United Kingdom is at all as clear as the arguments would suggest As counsel for the Council pointed out the recent decision of the House of Lords In re G Children 2006 UKHL 43 2006 1 WLR 2305 was cited with approval in a decision of this Court N v Health Service Executive 2006 4 IR 374 The judgment of Lord Nicholls of Birkenhead emphasised the significance of the biological link between parent and child As Hardiman J commented at page 502 in his judgment in N It is interesting to see that in a jurisdiction lacking the specific social and cultural context which has led Ireland to protect the rights of the family by express constitutional provision the interest of a child in being reared in his or her biological family is nonetheless fully acknowledged 52 There can be little doubt that in certain respects the law of Ireland in relation to the care of children particularly children of married parents occupies a different place on a spectrum of views than that of the present law of England and Wales However in my view the fact that they are recognisably part of the same spectrum is at least as important as the differences between them Thus it seems to me that this part of the Appellants argument is also not made out It is not sufficient to show that some aspect of the law of England and Wales is different from that of this jurisdiction or even that some aspect of the law of England and Wales if enacted in this jurisdiction would be found to be unconstitutional in some respect It is necessary to go further and show that the manner in which these children would be dealt with by the courts of the requesting jurisdiction must necessarily offend against the provisions of the Irish Constitution if administered in an Irish court There is I think considerable difficulty in attempting to determine what would be done ads a matter of fact in the courts of a requesting country and whether if occurring in Ireland it would be permitted by the Irish Constitution but in my view the difficulty of the task does not mean that it can be ignored In my judgment the Appellants argument falls short of establishing even this proposition 53 However there is a more fundamental objection to the Appellants argument That argument seems to assume that it is sufficient to establish that a legislative provision of the requesting state is different to that of the law of Ireland at least in respect of an area where Irish law is derived from or influenced by the Constitution In my view as set out above what is required on this leg of the argument goes much further i e that a legislative or administrative provision of the requesting state would be applied in a particular case and would if part of the law of Ireland be unconstitutional Even that however is not the test set by either Article 20 or the Irish Constitution 54 Article 20 does not ask whether the law or even the constitutional law of the requested state differs from that of the requesting State If it did it would be difficult to see how the Convention could function effectively In such circumstances Article 20 might not merely prevent the return of children from Ireland but might just as effectively inhibit the return of children to Ireland The text of the Convention makes it clear however that this is not the test The focus of Article 20 is not upon what occurs or may occur in the requesting State in this case England On the contrary it is what occurs in the requested State the return which is the focus for the Court of the requested State in this case Ireland The concept of return directs attention to at least two relevant matters First that the child has a prior connection with the State requesting the return defined under the Convention as the State of habitual residence to which he or she may be going back Second that a difference in the legal regime and even a constitutional difference will not itself suffice to trigger Article 20 The test is rather whether what is proposed or contemplated in the requesting State is something which departs so markedly from the essential scheme and order envisaged by the Constitution and is such a direct consequence of the Court s order that return is not permitted by the Constitution It is the return not the possible adoption that must be prohibited and which is therefore the focus of the court s inquiry when Article 20 of the Convention is invoked This is I think consistent with the decision of the Australian Court in the Rhonda May Bennett case referred to earlier in this judgment Application of the Test 55 In applying this test it is important to remember that Article 20 was not drafted with the Irish Constitution alone in mind on the contrary it applies equally to all jurisdictions It is therefore entirely possible in theory at least that a national constitution may contain express prohibitions against the return of persons in certain circumstances The test posed by Article 20 must therefore be whether the return is prohibited either by the express provisions of the Constitution or by necessary implication There is no express provision in the Irish Constitution prohibiting the return of children of a marriage who may be adopted and therefore the question arises whether such a prohibition is to be necessarily implied from the Irish Constitution as properly interpreted 56 It is conceivable that what is proposed contemplated or feared in a foreign jurisdiction will be so remote a possibility the an Irish Court could not properly consider that return is not permitted This is in essence what underlies those decisions describing the proposed adoption as a mere possibility However it is also conceivable that what is proposed is proximate and perhaps even a certain consequence of the order of return but yet is not so offensive to the values of the Irish Constitution that it can be said that return is not permitted by the Constitution In other words a return has to satisfy both tests before a court would be justified in concluding that return was not permitted It must be said that the feared consequence is so closely linked to the order for return and is itself so offensive to the Constitution that return cannot be permitted In my judgment in this case neither limb of the test is established First I agree with the trial judge that adoption is only a possibility and not a certainty or near certainty in this case This does not require any further elaboration Second I do not consider the likely application in this case of the law of England and Wales in relation to childcare has been demonstrated to be so at variance with the dictates of the Irish Constitution that a return of a child would be a breach of the constitutional duty of the Irish Courts 57 All we know is that in childcare applications the Courts in England and Wales are required to take a single track approach so that all issues including adoption can be addressed in a single hearing It may perhaps be inferred that in practice adoption orders may be made more readily in England than in Ireland but that is by no means enough to prohibit return It is I think important in this regard that even in the case of an adoption order made in England or anywhere else in circumstances where it could be positively demonstrated that such an order would not have been permitted in Ireland Irish law would not interfere with such an adoption and would in all probability recognise it under the Adoption Act 1991 That is in part because the relationship between Irish law and that of other States is itself a constitutional issue 58 The essence of the argument of the Appellants in this case is that an adoption of the children in this case would be a breach of the constitutional rights of the family On any analysis the act which it is alleged would constitute a breach of the rights of the family is the feared adoption of the children which if it were to occur would happen in England The Northampton derived argument however treats such an adoption as if it occurred in Ireland However that is to beg the question at the heart of the case 59 The statement that the return of a person by order of the court to another jurisdiction is not permissible if the person may be subject to some process which would be a breach of his constitutional rights is perhaps a short hand which might be thought to be in itself unobjectionable But it is important to recall that the question of the extent to which Irish law has regard to events occurring abroad and under and in accordance with the law in another jurisdiction is in itself a distinct constitutional issue 60 If the Irish Constitution is viewed solely through the lens of the reported cases a somewhat distorted picture might emerge It is natural that most constitutional litigation and commentary has focussed upon the important provisions of the Constitution contained in Articles 40 45 But the Irish Constitution is much more than simply a vehicle for the fundamental rights provisions It regulates the relationship between the People and the State they created It establishes the machinery of government and allocates responsibility between the different branches and importantly for present purposes it seeks to locate the State in an international context In this regard the Irish Constitution is not unique In truth it can be said that every constitution regulates the relationship between a state and its citizens and indeed those obtaining the benefit of the society created and maintained by the state But it follows in my view that any question of interaction between Irish law and events occurring abroad and in particular events occurring pursuant to the law of another state raises issues of constitutional dimensions To say that an adoption carried out as it would be in accordance with the law of the United Kingdom and in respect of persons who were subjects of that jurisdiction is nevertheless itself contrary to the Irish Constitution should raise an alarm 61 The true question for an Irish Court is whether what is done within this jurisdiction can be said to be contrary to the Constitution This is why Article 20 can be seen to precisely focus attention on the correct issue That is whether the return and not the adoption would itself be a breach of the Irish Constitution Now if the law was that an Irish Court could not return a person if there was a possibility of some event occurring which would if it occurred in Ireland be a breach of the constitutional rights of the citizen then this would be a merely verbal distinction However framing the issue as to whether the return itself would be a breach of the Constitution focuses attention on the very issue of whether the Irish Constitution does or does not distinguish between events occurring abroad and those occurring in this jurisdiction There is no a priori answer to this question It is a matter of constitutional interpretation 62 Even assuming that an adoption in this or any other case was not merely a possibility but rather a certainty had the family not left England I do not consider that any such adoption would give rise to any concern as a matter of Irish constitutional law If the parents had come to Ireland without the children and sought an injunction to restrain an adoption taking place in the United Kingdom I do not conceive that an Irish Court would have entertained the application By the same token if an adoption were effected in the United Kingdom and subsequently an issue arose in an Irish Court as to the status of the children there would as I understand it be little doubt but that the adoption would be recognised here under the Adoption Act 1991 It might therefore be asked in what way is this case any different A difference does lie however in the fact that in the examples considered above the English jurisdiction is able to carry out its orders without the assistance of an Irish Court In the case of an application under the Hague Convention the Irish Courts processes are invoked and the Court is obliged to uphold the Constitution It is thus a legitimate question whether the Court can lawfully make such an order when it is said that the end point of the process may be an order of the English court which would not be constitutionally permissible in Ireland The issue is the approach that the Constitution requires a court to take when such a claim is made 63 It is conceivable at least in theory that any particular state at any particular time might have so ideological or fundamentalist a view or be so self absorbed or self confident or indeed simply so powerful as to insist that it would through its legal system only deal with those countries who conformed to its precise standards Again it is conceivable that an international convention adhered to by a number of countries might require a country to concern itself with the manner in which persons are dealt with in another country There may be many reasons why a constitution or human rights instrument may require that courts enforcing that instrument should not order the return of a person to another jurisdiction where it is considered that the treatment to be afforded in that jurisdiction will fall below the standards required by that constitution or instrument 64 It seems plain however that the Irish Constitution does not demand the imposition of Irish constitutional standards upon other countries or require that those countries adopt our standards as a price for interaction with us First and most obviously the Constitution simply does not say so Indeed it might be expected that such a sensitive issue would be dealt with if that was the intention of the drafters and thus the people who adopted the Constitution Furthermore the historical context in which the Constitution was introduced was one in which international relationships were to the forefront of public concerns 65 Article 29 of the new Constitution addressed the position Ireland was to

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  • general importance of this issue the more crucial point is how does the section in particular subs 3 b when applied affect the transaction First however it would be useful to remind ourselves of these principles and how they developed The facts of Revenue Commissioners v Doorley 1933 I R 750 are not of individual importance save to note that the appellant tax payers were seeking to benefit from certain exemption provisions regarding succession duty and legacy duty in respect of which the Revenue Commissioners had raised an assessment Having disavowed the existence of any special canons of construction when dealing with taxation provisions Attorney General v Carlton Bank 1899 2 Q B 158 and having rejected any influence derived from an equitable approach Kennedy C J held that a liability to tax would follow if it came within the letter of the imposing provision however great the hardship may appear to be to the judicial mind but where it fell outside it would not however apparently within the spirit of the law the case might be Partington v Attorney General L R 4 H L 100 He summarised his views as follows The duty of the court as it appears to me is to reject a priori line of reasoning and to examine the text of the taxing act in question and determine whether the tax in question is thereby imposed expressly and in clear and unambiguous terms for no person is to be subject to taxation unless brought within the letter of the taxing statute that is as interpreted with the assistance of the ordinary canons of interpretation applicable to the Acts of Parliament p 765 of the Report The learned Chief Justice went on to say that these principles equally apply to the issue of exemption which must also be confirmed in clear and unambiguous language It would be wrong to limit an exemption and thereby extend liability unless clearly mandated by the section to so do In short before a charge can be imposed or an exemption granted the court by adopting the normal rules of construction which include giving the words their ordinary natural meaning in the context in which they appear must be satisfied that the assessment raised is within the clear express and unambiguous language of the provision in question It should be noted that the reference to context must be understood as referring to immediate context and not otherwise as the essence of his judgment clearly demonstrates Inspector of Taxes v Kiernan 1981 I R 117 Kiernan did not in any way demur from that as above stated Henchy J in determining whether the word cattle included pigs for the purposes of s 78 of the Income Tax Act 1967 held that such provision was clearly addressed to the public at large and therefore should be given its ordinary or colloquial meaning In addition when referring specifically to statutes creating a penal or taxation liability the learned judge went on to say that where there is looseness or ambiguity attaching to it the word should be construed strictly so as to prevent a fresh imposition of liability from being created unfairly by the use of oblique or slack language This is entirely consistent with Doorley Before looking at McGrath could I refer to two further authorities the first of which is the famous case of the The Commissioners of Inland Revenue v His Grace The Duke of Westminster 1936 1 A C 1 In that case the court was confronted with an interpretative clash which could only be resolved by according supremacy either to the legal position and effect of a transaction or to the substance and nature of such transaction In confirming the former the court rejected any suggestion that a liability could be imposed by reference to the spirit or contemplation of the statute or by inference or analogy Indeed the substance argument was dismissed by Lord Tomlin in graphic language as being no more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable Consequently as can be seen the approach favoured in the Westminster case was entirely consistent with that of the Supreme Court in Doorley This issue as to legal effect or form and substance once again arose in the case of O Sullivan v P Limited 1962 I T C 355 O Sullivan In that case Kenny J who reviewed a number of English authorities including the Duke of Westminster held quite definitely that whether a tax liability arose out of a transaction depended upon the meaning of the transaction document to be ascertained in accordance with the principles of construction above mentioned In other words a court would evaluate a transaction by reference to its legal effect and not by reference to its form or substance or as sometimes put its financial result In so concluding he felt that Lord Greene M R in I R Commissioners v Wesleyan General Assurance Society 1946 2 A E R 749 had captured the true view of the matter and the effect of the Duke of Westminster case when at p 751 he said In dealing with income tax questions it frequently happens that there are two methods at least of achieving a particular financial result If one of those methods is adopted tax will be payable If the other method is adopted tax will not be payable the net effect from the financial point of view is precisely the same in each case but one method of achieving it attracts tax and the other method does not There have been cases in the past where what has been called a substance of the transaction has been thought to enable the court to construe a document in such a way as to attract tax That doctrine was I hope finally exploded by the decision of the House of Lords in I R Commissioners v Duke of Westminster Accordingly in the lead up to McGrath the above situation represented the law both in England and in this jurisdiction In W T Ramsay Limited v I R C 1982 A C 300 Ramsay the House of Lords solely by judicial intervention modified the Westminster principle many including McCarthy J in McGrath p 278 have said entirely abolished it Whichever a new doctrine of fiscal nullity emerged in which the transaction in issue was to be scrutinised and ultimately determined by reference to legislative intent To that end the nature of the arrangement its form purpose and its results were paramount If by this approach the spirit of the taxation provision was offended the transaction became an avoidance one Several cases quickly followed much along the same lines such as I R C v Burmah Oil Co Ltd 1982 S T C 30 H L Sc Furniss v Dawson 1984 A C 474 being but a few Whilst the precise nature of the individual schemes differed from case to case the courts approach to evaluating their legality by reference to legislative contemplation became established It is the approach rather than the structural detail of the transaction which is important as McGrath s decision was essentially determined not by reference to the transaction but rather by reference to principle In McGrath the Irish Courts were invited by the Revenue Commissioners to follow the Ramsay jurisprudence said at the time to be still evolving Both the High Court and the Supreme Court declined to so do In the High Court Carroll J having surveyed some relevant law followed the Westminster case and Kenny J s decision in O Sullivan She did so on the basis that to do otherwise would be to usurp the legislative function noting that the method of imposing tax in this country was by way of the Annual Finance Act following budgetary decisions In summary her views were However in my opinion the imposition of tax and the granting of relief on tax is solely a matter for the legislature p 272 In the Supreme Court Finlay C J with whom three other members agreed summarised the court s position at p 276 of the report The function of the courts in interpreting a statute of the Oireachtas is however strictly confined to ascertaining the true meaning of each statutory provision resorting 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 construed with it The courts have not got a function to add to or delete from express statutory provisions so as to achieve objectives which to the court appear desirable The reference in this passage to purpose and intention refers to a standard element of literal interpretation when doubt or ambiguity exists No further or extended meaning is possible for to do so is to disregard the remainder of the judgment which decisively dealt with the opposing contentions of the parties In the other decision delivered McCarthy J came to the same conclusion and whilst noting that Doorley was not cited in the High Court nonetheless expressly endorsed the essence of what Kennedy C J had said in that case Therefore as between what was described as the new approach giving rise to the new doctrine and that established in Westminster Doorley the former was firmly rejected and the latter firmly vindicated That this approach has continued to apply after the enactment of s 89 is undoubted and is clearly evidenced by several decision of both the High Court and the Supreme Court Take for instance Texaco Ireland Limited v Murphy 1991 2 I R 449 which curiously enough also involved a tax relieving measure In that case Texaco which had incurred considerable costs in its search for oil sought to bring its activities within s 21 of the Corporation Tax Act 1976 so as to obtain the benefit of the allowances available under that provision McCarthy J speaking for the Supreme Court when referring to the appropriate principles of construction said at p 454 It is an established rule of law that a citizen is not to be taxed unless the language of the statute clearly imposes the obligation In a much quoted observation in Cape Brandy Syndicate v IRC 1921 1 K B 64 at p 74 Rowlatt J said in a taxing act one has to look merely at what is clearly said There is no room for any intendment There is no equity about a tax There is no presumption as to a tax Nothing is to be read in nothing is to be implied One can only look fairly at the language used The learned judge went on once again to affirm Doorley and McGrath and emphasised that the first rule of statutory construction remained that words be given their ordinary literal meaning He then observed that any principle whereby a statute should be construed as a whole has perhaps less relevance to the construction of revenue legislation than for instance that of a social purpose Furthermore by reference to the facts of Texaco he dismissed a submission that the section in question should be construed by reference to other sections proximate or not as being unsound in law See also Saatchi Saatchi Advertising Ltd v McGarry 1998 2 I R 562 where the Supreme Court despite having much sympathy for the tax payer dismissed its appeal as a direct consequence of confirming such principles I mention these cases only to illustrate the validity of McGrath which evidently has continued to be applied well beyond 1989 From this quick survey of the above authorities and those to which they refer the resulting position relative to taxation statutes may thus be summarised i the duty of the court is to establish the intention of the Oireachtas by reference to the language used ii in so doing as such provisions are directed to the public at large at least generally the normal rules of interpretation apply which means that the words used should be given their ordinary and natural meaning having regard where appropriate to the context in which they are employed iii to create a tax charge the same must be founded within the clear unambiguous and express terms of the provision relied upon if the liability comes within the wording of the provision that is an end to the matter the tax payer must be taxed iv the principle last mentioned equally applies where an exemption to tax is asserted such exemption and its scope must likewise be so founded as otherwise the basis of liability may be impermissibly enlarged v if the suggested charge is not within the wording of the provision as so understood the tax payer is not liable Principles of construction based on or derived from equity or approaches based on inferences or analogy or fairness have no part to play in this exercise vi if there is any doubt or ambiguity attaching to the language used the same should be construed strictly so as to prevent the imposition of fresh liability or the extension of existing liability vii in essence legal effect has primacy Despite the courts actual decision in McGrath and its unanimous affirmation to date the Revenue Commissioners seek to rely on the following remarks as confirming the correctness of their submission on this interpretative point Carroll J having noted the absence of any general statutory prohibition on tax avoidance schemes in this jurisdiction unlike others went on to say It is for parliament if it thinks fit to confer on the courts the power to determine whether a scheme was conceived primarily for the purpose of tax avoidance and be disallowed accordingly If the legislature has failed to plug a hole in advance or has failed to pass a law which strikes generally at tax avoidance schemes then I am strongly of the opinion that it is not the function of the court to intervene p 272 emphasis added Reliance is also placed on what Finlay C J said at p 277 In some jurisdictions such as Canada and Australia general statutory provisions against tax avoidance have been enacted which in cases in which they apply would of course affect the interpretation of specific provisions of taxation laws In the absence of any such general provisions in our law there are no grounds for departing from the plain meaning of those sections With great respect I cannot see how these observations can be applied to suggest that when and if as we now have a general avoidance provision the manner of the court s approach to its interpretation must differ from the principles above outlined In other words some new method of construction is required simply because the provision is and is described correctly as a general anti avoidance measure How I view the above passages is to say that the courts were not prepared to condemn a transaction otherwise lawful unless such invalidity resulted from the operation of a statutory provision Whether specific or general it mattered not It was for the Oireachtas to legislate on anti avoidance matters Rules of construction could not be used as a substitute for this omission This is quite clear from other remarks made by Finlay C J at p 277 of McGrath where he said Apart from the special constitutional rights vested in Dáil Éireann in regard to taxation legislation in their character as money bills the acceptance by the Oireachtas of its special powers and duties in regard to tax legislation with particular reference to the desirability of preventing the success of tax avoidance schemes is exemplified by the fact that since 1973 there have been eight Finance Acts containing chapters specifically headed with the words Anti Avoidance or similar words Not only am I quite satisfied that it is outside the functions of the courts to condemn anti avoidance schemes which have not been prohibited by statute law but I would consider it probable that such a role would be undesirable even if it were permissible This passage in essence captures what the court was saying i e this area is within the remit of the legislature Of course I accept the fact that if a general provision is enacted it may have follow on consequences for other specific provisions of the taxation code By the nature of its generality it may precisely be designed intended to and in fact have such effect This however is simply a method of legislative incorporation Instead of inserting a specific anti avoidance clause to apply to each individual taxation stream within the overall code or to invalidate some particular transaction or practice for example that prohibited by s 54 of the Finance Act 1974 the Oireachtas has decided to establish a provision intended to have general application in respect of all statutes nominated for that purpose by s 86 of the Act of 1989 Therefore it is quite likely as I have said that it will have consequences for other provisions That however in my view has nothing to do with how the provision in question should be interpreted I find it impossible to accept that the McGrath principles are appropriate to a specific measure including one of avoidance but ought to be disregarded in respect of a general measure Moreover as previously stated the continuing applicability of such principles has never been doubted See para 38 supra The court in McGrath did not simply reject fiscal nullity it also rejected the means by which the concept was arrived at It said no to establishing a judicial anti avoidance doctrine it was right then and it is right now Consequently I reject any suggestion that the manner in which this Court should interpret s 86 of the Act of 1989should differ in any way from the principles above described Having established in my view what the correct interpretive approach is I now turn to consider the relevant parts of s 86 I do so whilst expressly rejecting any suggestion that such interpretation should be influenced by background as so described by the Revenue They say that it must be assumed that s 86 is a direct response to McGrath s rejection of their invitation to the court in that case to develop a doctrine of fiscal nullity by judicial means Further in effect it is also said that one should proceed on the basis that the section achieved what was intended namely disowning McGrath Such a proposition if I have correctly summarised it is in my view alarming I refuse to speculate as to the motives behind the enactment of s 89 or any other taxation provision for that matter Unless such are clearly grounded and ascertained the exercise is fraught not only with difficulty but also with danger in particular as to the use to which any such conclusion may be put This case illustrates the point it has been squarely said that the provision was intended to override McGrath and of necessity by implication at least to apply Ramsay in this jurisdiction If so why did not the section model itself on the key points deducible from such line of authority In fact the section seems to have been heavily aligned to its Canadian equivalent albeit with some modest judicial and statutory input from elsewhere To try and identify the reasons giving rise to this composite approach may be of great interest to academic lawyers but is surely of little value to judicial decision Moreover it would be unthinkable from my point of view to accept that a provision effectively per se implemented what was intended unless that could be independently verified by acceptable rules of construction Otherwise intolerable uncertainty and confusion would be introduced which would in the long run benefit neither government nor tax payer Therefore in my view the section construed in the manner indicated covers what it does no more no less Much discussion has taken place about the precise meaning of s 86 and the relationship between its individual subsections As is acknowledged by all the provision is clearly complex and is capable of giving rise to considerable difficulty at both a conceptual and practical level As a result I do not propose to conduct a detailed analysis of it or of the interplay between its different aspects unless such becomes necessary so as to determine some key issue in the case One immediate effect of this approach relates to the Proviso As the benefit exemption is in issue subs 3 becomes relevant and consequently the Proviso applies This means that I do not have to decide whether if neither exemption was relied upon the Proviso would still apply If such circumstances should exist it is seriously difficult to see how subs 3 would have any relevance apart from the Proviso Therefore in such event the issue would be whether it is an integral part of subs 2 or simply in some way ancillary to it as being part of subs 3 Questions like why it was not incorporated expressly within the wording of subs 2 arise as does its compatibility with the text of that subsection which declares that the opinion of Revenue shall be regarded as having been formed in accordance with the provisions of this subsection See para 48 infra Any suggested answer on the basis that it applies because it must have been intended to apply is one I would completely reject Other concerns also exist However as I have said I do not have to decide this issue for the reasons given therefore from my point of view the matter remains unresolved As the Proviso in subs 3is to be applied then the form substance and outcome of the transaction fall for consideration However they do so by reason of the express wording of such Proviso not otherwise statute has intervened and its meaning according to McGrath must be given effect to The critical parts of the section which are set out in full at para 11 supra are those contained in subs 2 and subs 3 for it is those provisions which essentially govern the validity of the arrangement under review The remainder of the section inter alia confers power on the Revenue to take certain steps which in effect have the consequences of withdrawing from the tax payer the advantage otherwise secured Under subs 2 a transaction may be declared to be an avoidance transaction if having regard to any one or more of the specified criteria para 65 infra the Revenue Commissioners form the opinion that i a tax advantage arises and ii that the transaction was not undertaken or arranged primarily for purposes other than to give rise to a tax advantage The subsection specifically states that for the purpose of the section its provisions are subject to subsection 3 and that any reference to the opinion of the Revenue Commissioners shall be construed as a reference to the formation of that opinion in accordance with the provisions of the subsection This means that the opinion criteria is to be found here see para 45 supra Subs 3 which opens with the words Without prejudice to the generality of the provisions of subsection 2 goes on to say that when forming the aforesaid opinion the Revenue Commissioners shall not regard a transaction as a tax avoidance transaction if they are satisfied that a or b the transaction was undertaken or arranged for the purpose of obtaining the benefit of any relief allowance or other abatement provided by any provision of the Acts and that transaction would not result directly or indirectly in a misuse of the provision or an abuse of the provision having regard to the purposes for which it was provided the benefit exemption Provided that in forming an opinion as aforesaid in relation to any transaction the Revenue Commissioners shall have regard to I the form of the transaction II the substance of that transaction III the substance of any other transaction or transactions with which that transaction may reasonably be regarded as being directly or indirectly related to or connected with and IV the final outcome and result of that transaction and any combination of those other transactions which are so related or connected the Proviso As can be seen the opening words of subs 2 renders its provisions subject to subs 3 and the opening words of subs 3 classify its provisions as being Without prejudice to the generality of the provisions of subs 2 Given the terminology above underlined it is clear that a relationship exists between both subsections and that neither can be viewed as a stand alone provision or operated in isolation one from the other The phrase Without prejudice to the generality was considered by the learned High Court judge who ascribed to it a meaning which resulted in subs 2 not being limited by subs 3 Whilst Ashbourne Holdings v An Bord Pleanála 2003 2 I R 114 was cited in this regard where s 26 1 and 2 of the Local Government Planning and Development Act 1963 were considered it is not clear to me if any parallel can be drawn between s 86 of the Act of 1989 and these other provisions Section 26 1 of the Act of 1963 contains a general power to impose conditions but only by reference to specified criteria which evidently by itself creates a restriction on the scope of the power Subsection 2 states that Conditions under Subsection 1 may without prejudice to the generality of that subsection include all or any of the following It is therefore clear that subs 1 contains the general provision even if self restricting whereas subs 2 without expressly curtailing the power elaborates with some specific conditions each of which however must be looked at individually so as to determine effect In Ashbourne Holdings condition 2 a of subs 2 which was the relevant one itself had a further limitation within it Therefore at best Ashbourne is an example of one meaning of without prejudice and then only at a most general level In the context of subs 2 and subs 3 of the Act the Without prejudice to the generality phrase could not have such meaning Quite clearly subs 3 does affect subs 2 it does so by prescribing certain conditions in two specific areas which if satisfied have the effect of preventing a transaction from being an avoidance one even if otherwise it would be Therefore it seems to me that subs 3 where applicable is restrictive of subs 2 in the manner described There can be no doubt therefore in my mind but that whenever either the business profit exemption or the relief exemption are in issue the Revenue Commissioners cannot form an opinion if they are satisfied that the transaction in question comes within either provision The wording of the subsection is clear they shall not regard a transaction as an avoidance one if so satisfied What is equally clear is that the section permits of one opinion only Not the formation of a prima facie provisional or interim opinion to be tested or validated through the filter of some later process Nor is there any room for an opinion giving rise to some form of negative clearance or the like That being so it seems to me that the Revenue Commissioners must apply the relevant provisions of subs 2 to all transactions together with subs 3 if either or both of the exemptions are in play See para 45 supra This situation is quite unlike s 245 of the Canadian Income Tax Act 1985 where in certain circumstances a transaction may retain its classification as a tax avoidance transaction but without tax consequences In this jurisdiction either it is an avoidance transaction with tax consequences or it is not In my view therefore on the facts of this case the provisions of both subsections apply subject only to that part of subs 3 which relates directly to the business profit exemption Within this statutory framework as interpreted in the manner indicated the issue on appeal must be considered it is of course whether or not the High Court was correct in determining that the transaction above described was a tax avoidance transaction for the purposes of s 86 of the Act of 1989 Within that question there are a number of specific matters which must be addressed before a conclusion can be reached These include i whether the scheme is a transaction as legislatively defined if so ii whether the transaction gives rise to a tax advantage as so defined in relation to each tax payer if so iii whether by reference to any one or more of the specified criteria in subs 2 a b and c but subject to subs 3 the transaction is a tax avoidance transaction iv whether under subs 3 the transaction was undertaken for the purpose of obtaining the benefit of the tax free status of ESR dividends and if so v whether the transaction resulted directly or indirectly in a misuse or abuse of such relieving provisions having regard to the purposes for which they were enacted All of these questions were asked in the High Court by way of the case as above indicated In addition at that time the tax payer was also relying on the business profit exemption contained in subs 3 a of the section At the hearing of this appeal that issue was not pursued and accordingly it is not specifically dealt with in this judgment General Observations Before addressing these issues there are a number of general matters which should be noted as well as three specific points which it would be convenient to deal with at this juncture Firstly some general observations a there is but one transaction being that as described in the Notice of Opinion it is not suggested that each step constitutes a separate transaction Therefore it is the transaction in its entirety which must be considered when the individual components of the section are being examined b the transaction itself is not in issue the tax payers do not question its existence or that the individual steps within it were carried out c the transaction did not require amendment d the transaction subject to s 86 was effective to achieve the results intended e the transaction is otherwise lawful and does not breach any other provision of the tax code or any provision of company or regulatory law f the question of its validity by reference to s 86 must be judged objectively the subjective motives of the tax payers are irrelevant g there is no distinction between corporate and individual tax payers save that under the heading of tax advantage the company has advanced an additional argument and h there is no constitutional challenge in this case to any part of s 86 The Role of the Appeal Commissioners The Court The first of the three points relates to the role of the appellate bodies in a case such as this Any person aggrieved by the formation of an opinion under s 86 is entitled to appeal the resulting Notice to the Appeal Commissioners who shall determine it in accordance with the provisions of subs 8 and 9 of the section On the hearing of such appeal the Appeal Commissioners having had regard to all matters which the Revenue Commissioners should or did have regard to shall consider whether the transaction the subject matter of the appeal is or is not a tax avoidance transaction If they consider it is they shall make an order that the opinion is to stand good whereas if they arrive at a contrary conclusion they shall order that the opinion shall stand void Under s 86 1 b all references to the Revenue Commissioners in subs 2 and 3 and in the appeal provisions above mentioned shall subject to any necessary modification be considered as referring to the Appeal Commissioners to a judge of the Circuit Court or to the extent necessary to a judge of the High Court as may be appropriate From such provisions it is quite clear that the jurisdiction of the Appeal Commissioners is not one of review regardless of standard but rather is one of re hearing based on the evidence previously adduced before the Revenue Commissioners and such further evidence as may be given before them They therefore form their own opinion as to whether the transaction is an avoidance one One direct and immediate consequence of this is that the failure in itself of the nominated officer to give evidence before the Appeal Commissioners is irrelevant It matters not The Appeal Commissioners are mandated to form their own opinion on the evidence available wherever and from whomsoever that emerges Therefore the submission made by the appellants in this regard cannot succeed The position of the Circuit Court does not arise for consideration that of the High Court is governed by the normal rules applicable to its jurisdiction to advise on points of law having been requested to so do by way of case stated This Court on appeal is in a like situation Matters such as those raised in Mara v Humming Bird Ltd 1982 I L R M 421 do not arise the test is simply one of legal correctness Section 54 of the Act of 1974 The second point arises out of the provisions of s 54 of the Finance Act 1974 Firstly it is said that as being an anti avoidance measure specific to export sales relief which is a self contained code the same dis applies the more general measure from having any application in this case Therefore s 86 must be disregarded I cannot accept this submission The wording of s 86 which was enacted subsequent to s 54 is of sufficient breadth to have general application to any transaction as defined once that transaction relates to a provision of any Act mentioned in the section for this purpose As ESR legislation is undoubtedly so included it seems clear that s 86 is capable of applying Moreover the ambit of s 54 is confined and specific and does not cover a scheme the nature of which is under review in this case Consequently I would not accept this point The second way in which s 54 is relevant is in the context of the history of legislative intervention in the export sales relief code a matter which is separately dealt with at para 93 infra Onus of Proof The final point relates to the tax payers assertion that in respect of each component which must be established so as to give rise to the existence of a tax avoidable transaction the onus of proof is on the Revenue They say that the Revenue Commissioners initiate this jurisdiction and adjudicate on a transaction s tax validity As such a review is entirely within their control they must carry the burden This applies even when an exemption is claimed given the wording of subs 3 which obliges the Revenue to disregard the transaction if the qualifying conditions of either subpara a or b of the subsection are satisfied It is said that the entire procedure is quite unlike the usual run of the mill assessment where the inspector disagrees with the tax payers computation of his or her liability In such circumstances if an appeal is mounted the onus of proof is clearly on the appellant That is not the situation under s 86 and therefore case law under the assessment procedure is not relevant In support they refer to Trustco and in particular on the court s decision that the Minister is obliged

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  • 7 against any matter specified or described in the notice of opinion has been finally determined including any adjustments and acts not so specified or described in the notice of opinion but which form part of a final determination of any appeal as aforesaid in order that the tax advantage resulting from a tax avoidance transaction shall be withdrawn from or denied to any person concerned b Subject to but without prejudice to the generality of paragraph a the Revenue Commissioners may i allow or disallow in whole or in part any deduction or other amount which is relevant in computing tax payable or any part thereof ii allocate or deny to any person any deduction loss abatement relief allowance exemption income or other amount or any part thereof or iii recharacterize for tax purposes the nature of any payment or other amount c Where the Revenue Commissioners make any adjustment or do any act for the purposes of paragraph a they shall afford relief from any double taxation which they consider would but for this paragraph arise by virtue of any adjustment made or act done by them pursuant to the foregoing provisions of this subsection d Notwithstanding any other provision of the Acts where i pursuant to subsection 4 c the Revenue Commissioners determine the tax consequences which they consider would arise in respect of a transaction if their opinion that the transaction is a tax avoidance transaction were to become final and conclusive and ii pursuant to that determination they specify or describe in a notice of opinion any adjustment or act which they consider would be or be part of the said tax consequences then in so far as any right of appeal lay under subsection 7 against any such adjustment or act so specified or described no right or further right of appeal shall lie under the Acts against that adjustment or act when it is made or done in accordance with the provisions of this subsection or against any adjustment or act so made or done that is not so specified or described in the notice of opinion but which forms part of the final determination of any appeal made under the said subsection 7 against any matter specified or described in the notice of opinion e For the purposes of this subsection an opinion of the Revenue Commissioners that a transaction is a tax avoidance transaction shall be final and conclusive i if within the time limited no appeal is made under subsection 7 against any matter or matters specified or described in a notice or notices of opinion given pursuant to that opinion or ii as and when all appeals made under the said subsection 7 against any such matter or matters have been finally determined and none of the appeals has been so determined by an order directing that the opinion of the Revenue Commissioners to the effect that the transaction is a tax avoidance transaction is void 6 a Where pursuant to subsections 2 and 4 the Revenue Commissioners form the opinion that a transaction is a tax avoidance transaction they shall immediately thereupon give notice in writing of the opinion to any person from whom a tax advantage would be withdrawn or to whom a tax advantage would be denied or to whom relief from double taxation would be given if the opinion became final and conclusive and the notice shall specify or describe i the transaction which in the opinion of the Revenue Commissioners is a tax avoidance transaction ii the tax advantage or part thereof calculated by the Revenue Commissioners which would be withdrawn from or denied to the person to whom the notice is given iii the tax consequences of the transaction determined by the Revenue Commissioners in so far as they would refer to the person and iv the amount of any relief from double taxation calculated by the Revenue Commissioners which they would propose to give to the person in accordance with subsection 5 c b Section 542 of the Income Tax Act 1967 shall with any necessary modifications apply for the purposes of a notice given under this subsection or subsection 10 as if it were a notice given under that Act 7 Any person aggrieved by an opinion formed or in so far as it refers to the person a calculation or determination made by the Revenue Commissioners pursuant to subsection 4 may by notice in writing given to the Revenue Commissioners within 30 days of the date of the notice of opinion appeal to the Appeal Commissioners on the grounds and notwithstanding any other provision of the Acts only on the grounds that having regard to all of the circumstances including any fact or matter which was not known to the Revenue Commissioners when they formed their opinion or made their calculation or determination and to the provisions of this section a the transaction specified or described in the notice of opinion is not a tax avoidance transaction or b the amount of the tax advantage or the part thereof specified or described in the notice of opinion which would be withdrawn from or denied to the person is incorrect or c the tax consequences specified or described in the notice of opinion or such part thereof as shall be specified or described by the appellant in the notice of appeal would not be just and reasonable in order to withdraw or to deny the tax advantage or part thereof specified or described in the notice of opinion or d the amount of relief from double taxation which the Revenue Commissioners propose to give to the person is insufficient or incorrect 8 The Appeal Commissioners shall hear and determine an appeal made to them under subsection 7 as if it were an appeal against an assessment to income tax and subject to subsection 9 all the provisions of the Income Tax Act 1967 relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications Provided that on the hearing or rehearing of the appeal a it shall not be lawful to go into any grounds of appeal other than those specified in subsection 7 and b at the request of the appellants two or more appeals made by two or more persons pursuant to the same opinion calculation or determination formed or made by the Revenue Commissioners pursuant to subsection 4 may be heard or reheard together 9 a On the hearing of an appeal made under subsection 7 the Appeal Commissioners shall have regard to all matters to which the Revenue Commissioners may or are required to have regard under the provisions of this section and i in relation to an appeal made on the grounds referred to in paragraph a of subsection 7 they shall determine the appeal in so far as it is made on those grounds by ordering if they or a majority of them I consider that the transaction specified or described in the notice of opinion or any part of that transaction is a tax avoidance transaction that the opinion or the opinion in so far as it relates to that part is to stand good or II consider that subject to such amendment or addition thereto as the Appeal Commissioners or the said majority of them deem necessary and as they shall specify or describe the transaction or any part of it specified or described in the notice of opinion is a tax avoidance transaction that the transaction or that part of it be so amended or added to and that subject to the amendment or addition the opinion or the opinion in so far as it relates to that part is to stand good or III do not so consider as referred to in clause I or II that the opinion is void or ii in relation to an appeal made on the grounds referred to in paragraph b of subsection 7 they shall determine the appeal in so far as it is made on those grounds by ordering that the amount of the tax advantage or the part thereof specified or described in the notice of opinion be increased or reduced by such amount as they shall direct or that it shall stand good or iii in relation to an appeal made on the grounds referred to in paragraph c of subsection 7 they shall determine the appeal in so far as it is made on those grounds by ordering that the tax consequences specified or described in the notice of opinion shall be altered or added to in such manner as they shall direct or that they shall stand good or iv in relation to an appeal made on the grounds referred to in paragraph d of subsection 7 they shall determine the appeal in so far as it is made on those grounds by ordering that the amount of the relief from double taxation specified or described in the notice of opinion shall be increased or reduced by such amount as they shall direct or that it shall stand good b The provisions of this subsection shall subject to any necessary modifications apply to the rehearing of an appeal by a judge of the Circuit Court and to the extent necessary to the determination by the High Court of any question or questions of law arising on the statement of a case for the opinion of the High Court 10 The Revenue Commissioners may at any time amend add to or withdraw any matter specified or described in a notice of opinion by giving notice hereafter in this subsection referred to as the notice of amendment in writing of the amendment addition or withdrawal to each and every person affected thereby in so far as the person is so affected and the foregoing provisions of this section shall apply in all respects as if the notice of amendment were a notice of opinion and any matter specified or described in the notice of amendment were specified or described in a notice of opinion Provided that no such amendment addition or withdrawal may be made so as to set aside or alter any matter which has become final and conclusive on the determination of an appeal made with regard to that matter under subsection 7 11 Where pursuant to subsections 2 and 4 the Revenue Commissioners form the opinion that a transaction is a tax avoidance transaction and pursuant to that opinion notices are to be given under subsection 6 to two or more persons any obligation on the Revenue Commissioners to maintain secrecy or any other restriction upon the disclosure of information by the Revenue Commissioners shall not apply with respect to the giving of the notices as aforesaid or to the performance of any acts or the discharge of any functions authorised by this section to be performed or discharged by them or to the performance of any act or the discharge of any functions including any act or function in relation to an appeal made under subsection 7 which is directly or indirectly related to the acts or functions so authorised 12 The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions including the forming of an opinion authorised by this section to be performed or discharged by the Revenue Commissioners and references in this section to the Revenue Commissioners shall with any necessary modifications be construed as including references to an officer so nominated 13 This section shall apply as respects any transaction where the whole or any part of the transaction is undertaken or arranged on or after the 25th day of January 1989 and as respects any transaction undertaken or arranged wholly before that date in so far as it gives rise to or would but for this section give rise to a a reduction avoidance or deferral of any charge or assessment to tax or part thereof where the charge or assessment arises by virtue of any other transaction carried out wholly on or after a date or b a refund or a payment of an amount or of an increase in an amount of tax or part thereof refundable or otherwise payable to a person where that amount or increase in the amount would otherwise become first so refundable or otherwise payable to the person on a date which could not fall earlier than the said 25th day of January 1989 as the case may be 37 This is a provision of almost mind numbing complexity As will become apparent the core issue in this case is the interpretation of s 86 3 b and in particular whether the transaction here can be said to result directly or indirectly in the misuse or abuse of the ESR provision having regard to the purposes for which it was provided However those words require to be put in their statutory context something which in turn necessitates a consideration of the pre existing case law Furthermore the issue must be analysed in its factual context Accordingly it is necessary to trace a number of factual and legal steps by which it can be said the issue presents itself for resolution by this Court 38 On the 12th August 1997 an Officer of the Revenue Mr P C O Laoighaire nominated under the provisions of s 86 12 of the Act of 1989 issued a notice of opinion to the taxpayers in this case that the transaction was captured by s 86 Against that opinion the taxpayers appealed to the Appeal Commissioners The Appeal Commissioners rejected a number of contentions put forward by the tax payer but concluded that the transaction was entitled to the benefit of s 86 3 b i e that it was undertaken for the purposes of obtaining the benefit of export sales relief and did not result directly or indirectly in a misuse or abuse of the provision having regard to the purposes for which it was provided The reasoning of the Appeal Commissioners is set out in a careful and detailed statement of case stated prepared for the High Court at the request of the parties and dated the 13th July 2005 Subsequently the High Court Mr Justice Smyth rejected the taxpayers appeals for those portions of the Appeal Commissioners determinations where the Appeal Commissioners had rejected the tax payers claims but allowed the Revenue Commissioner s appeal against the Appeal Commissioners determination on s 86 3 b It is against that judgment that the tax payers now appeal to this Court Since all the issues which were debated in this Court are addressed in the case stated and in particular since the Appellants here seek to reinstate the reasoning of the Appeal Commissioners on the interpretation and application of s 86 3 b it is necessary to consider the Appeal Commissioners reasoning in some detail The Determination of the Appeal Commissioners 39 The Appeal Commissioners first determined that the transaction was a tax avoidance transaction within the meaning of s 86 2 The results of the transaction were to deplete the assets of OFCL and to enrich the shareholders of OFCL without either the company or the shareholders incurring any tax There were other means by which the results or at least part of the results could be achieved most obviously by the payment of a dividend by the company to the shareholders Subject to an argument which did not arise in this appeal and remains to be determined the payment of the dividend would have resulted in the company incurring a tax in the shape of Advance Corporation Tax ACT The payment of the dividend would also have involved the shareholders incurring income tax As a result of the transaction the company and the shareholders have thus avoided a potential liability to tax by reason of which the transaction gave rise to a tax advantage within the meaning of the section The Appeal Commissioners further determined the transaction was entered into solely for the purposes of obtaining a tax advantage and accordingly the negative test contained in s 86 2 ii was satisfied in that the transaction was not undertaken or arranged primarily for the purposes other than to give rise to a tax advantage But for ss 3 therefore the Commissioners would have concluded that the transaction was a tax avoidance transaction within the meaning of the section The High Court upheld this reasoning but the tax payer has appealed these determinations to this Court In my judgment the Appeal Commissioners were entirely correct in the conclusion to which they came and I agree with their reasoning save that it seems to me that the proviso to s 86 3 applies to the formation of an opinion under s 86 2 That proviso requires the Revenue Commissioners and on appeal the Appeal Commissioners to have regard when forming their opinion to the form of the transaction the substance of the transaction and the substance of any other transaction or transactions with which that transaction may reasonably be regarded as being directly or indirectly related to or connected with and the final outcome and result of that transaction and any combination of other transactions Because it is included in a proviso and moreover a proviso to s 86 3 the significance of this provision might be overlooked It seems clear however that it requires the Revenue Commissioners in the first place to have regard both to the form and the substance of the transaction Both those tests when applied support the conclusion to which the Appeal Commissioners came The form of the transaction or series of transactions is highly artificial and has no commercial logic Indeed a number of the steps that the participants were required to take to bring the scheme to fruition appear to defy commercial logic The substance of the transaction furthermore is the acquisition of the Mitchelstown ESR to permit the indirect payment of the profits of OFCL to its shareholders without incurring the tax that would be due on a direct payment by the company to its shareholders by way of dividend Consideration of the form and substance of the transaction can only reinforce the conclusion that this was a tax avoidance transaction within the meaning of s 86 unless it could be said to fall within ss 3 40 The Appeal Commissioners concluded however that the opinion of the Revenue Commissioners was void because they the Appeal Commissioners considered that the provisions of s 86 3 b were applicable and that the transactions did not result directly or indirectly in the misuse or abuse of the provisions having regard to the purposes for which the relief was provided 41 The careful reasoning of the Appeal Commissioners on this critical aspect of the decision commenced by observing that the transaction was clearly undertaken to obtain the benefit of ESR They also observed that the subsection distinguished between abuse and misuse They considered that the concept of abuse had to be construed with careful reference to the phrase having regard to the purposes for which it was provided In this regard they referred to the dictum of McCarthy J in Charles McCann v O Culachain 1986 1 IR 196 at p 201 It is manifest that part IV of the Act of 1976 was by tax incentives to encourage the creation of employment within the State and the promotion of exports naturally outside the State objectives of proper social and economic kind which the State would be bound to encourage and considered that the export aspect of the export sales relief scheme was introduced for the same purpose The Commissioners considered that a fraudulent scheme claiming relief for goods which were not exported at all could not constitute an abuse of the scheme as s 86 only applied when a tax advantage was achieved through the use of some arrangements which considered without reference to s 86 were effective in avoiding and reducing the tax A fraudulent scheme was not a use of the ESR scheme at all rather than being an abuse of it However by contrast they considered that a scheme for transferring goods outside the country and then importing them again for sale in Ireland would be an example of an abuse Misuse was they considered a less strong concept but an example might be diverting all expenses to the home sales of the business which profits were taxable and thus indirectly boosting the tax relievable profits on exports made by the same business They observed that the relief was not provided to enable companies to minimise profits on such home sales and accordingly such a scheme would be a misuse of the relief Applying this reasoning to the facts of this case the Appeal Commissioners concluded that there had been no abuse or misuse of the export aspect of the scheme 42 Turning then to the exemption of tax on dividends the Appeal Commissioners observed that there was no obvious limitation on this aspect of the scheme e g no requirement of any payment of the dividend by any specific date or by reference to any specific period nor to any person such as existing shareholders or indeed even shareholders in the exporting company The conclusions of the Appeal Commissioners on this aspect of the case deserve quotation in full Decision of 27th April 2000 xxv In view of the fact that no such restrictions were enacted we conclude that the comprehensive and entirely unencumbered nature of the exemption can only be considered as intentionally buttressing the total exemption of the corporate profits from tax xxvi The above comments may need qualification in connection with an ESR Dividend that was paid in substitution for some other legal entitlement foregone by the recipient e g if a salary entitlement were waived and an equivalent amount was paid in the form an ESR dividend to an employee or director that might in our view be considered a misuse of the relief having regard to the fact that the relief was not enacted to enable employees to avoid tax on their salaries The specific anti avoidance legislation introduced in the 1974 Act can be taken as a confirmation of this point but even in the absence of that legislation we would be of this point of view To generalise it may be that the use of the tax free nature of the dividends to avoid a specific tax charged that otherwise would have arisen could be said to be a misuse whether direct or indirect of the relief xxvii xxviii In regard to the second component of the Export Sales Relief scheme insofar as the shareholders are concerned we are of the view that the payment of bona fide Export Sales Relief relieved profits in the present case does not amount directly or indirectly to a misuse or abuse of the relief having regard to the purposes for which the said second component was enacted and the nature of the relief afforded to those dividends xxix To conclude that there has been a misuse of the export sales relief provisions would in our view be to ignore the statement of the law laid down McGrath v McDermott While it is necessary to look at the purpose for which Section 86 was enacted in our opinion Section 86 in itself cannot be used to abandon the clear principles of statutory construction laid out in that case These principles of statutory interpretations set out in McGrath v McDermott prohibit us from adopting such a purposive approach xxx Accordingly for the reasons set out above we are precluded from forming the view that the transaction was a tax avoidance transaction by virtue of the terms of S86 3 b Finance Act 1989 43 At the request of the Revenue Commissioners the Appeal Commissioners stated the case to the High Court as to whether their conclusions on s 86 3 b was correct in law At the request of the tax payers they also stated the case as to whether 1 the transaction gave rise to a tax advantage for either the company or the individual tax payers 2 whether the transaction was not undertaken or arranged primarily for the purpose other than to give rise to a tax advantage and 3 whether the transaction was not arranged with a view to the realisation of profits in the course of business activities in the company pursuant to s 86 3 a On each of these latter three points the High Court held that the Appeal Commissioners were correct For reasons already set out I am satisfied that the determinations of the Appeal Commissioners on these points were correct in law The main issue argued on this appeal therefore was whether the Appeal Commissioners findings on s 86 3 b were correct 44 There was some argument as to the standard of review to be applied by the High Court and the Supreme Court on appeal in circumstances where the section required the Revenue Commissioners and the Appeal Commissioners to be of an opinion While in different circumstances that issue might become central to the Courts determination it seems clear that here the issue is one as to the true interpretation of s 86 3 b and its application to facts in this case which are not in dispute Accordingly the issue is one of statutory interpretation and therefore an issue of law and no question of deference to the findings of fact or inferences drawn by either the Revenue Commissioners or the Appeal Commissioners arises 45 The High Court found that the Appeal Commissioners were incorrect in law on this issue The Court s reasoning is found in a short passage in the judgment In my judgment the transaction the subject of these proceedings whereby export sales relieved reserves in the Dairygold Group were transferred to a company that was not engaged in the manufacture of goods for export to enable fully tax relieved dividends to be paid to the shareholders of a construction company is completely at odds with the purpose for which the export sales relief was provided 46 The tax payer has appealed that determination to this Court The High Court Decision 47 Among the material relied upon in this appeal is a critical commentary on the High Court decision entitled The O Flynn Case Clarification of s811 TCA 1997 Irish Anti Avoidance Irish Tax Review July 2006 p 37 authored by a tax professional It makes an important point which is heavily relied upon by the Appellant at p 38 The legislation clearly envisaged that a manufacturing company might be within a group and have corporate shareholders It also clearly envisaged that those corporate shareholders could avail of the benefit of export sales relief when they themselves paid dividends out of reserves obtained from dividends from the exporting company 48 It is perhaps an overstatement to say that the legislation clearly envisaged this result although it clearly did not prohibit it However the core argument is important Since there is no temporal or causal link between the exporting of the goods and the receipt of the dividends it would be possible for the tax payers here to have become shareholders in Mitchelstown and to have received themselves or through their company ESR dividends For example if the only asset that Mitchelstown or any parent company had was the ESR reserves then that company could have been acquired by the individual tax payers or the relevant companies who then would have had access to the ESR and could have received dividends which were tax relieved because of the prior export of goods by Mitchelstown assuming all the time and this is an important point that it would be possible to devise a method of introducing funds into the company which would allow it to pay the dividend If such an arrangement is permissible the argument runs then it might be asked why is this present scheme invalid Certainly it is said that the argument that the scheme does not exist to permit tax relief dividends to be paid to directors of property companies is not at a minimum a sufficient reason for disallowance since it is possible to conceive of circumstances in which just that could occur entirely lawfully 49 However the comment is couched in a tendentious tone which while surprising is nevertheless instructive It seems to reflect the frustration among tax practitioners with the uncertainties created by s 86 While criticism even intemperate of judicial decisions is entirely permissible and on many occasions may offer illuminating insights it is in my view significant that this article makes criticisms of the High Court decision including for example the complaint that the High Court did not first decide on the constitutionality of the section which any person with legal experience which extended beyond the field of tax law would immediately recognise as obviously misplaced Tax law is a field where the mathematical virtues of clarity and precision are particularly valued and where concepts such as purpose abuse misuse and even tax advantage may appear frustratingly elusive But there are circumstances of which this case may be an example in which the narrow and penetrating focus which can illuminate fine points of detail can also obscure that which a broader inquiry might discern 50 The decision in this case with the Appeal Commissioners is both clear and concise and is measured and temperate in its tone However in my judgment it contains a number of errors of law which are traceable to its approach to statutory interpretation In focussing sometimes minutely on the language contained in part of s 86 3 b the analysis misses important guides to the meaning of the subsection resulting in an unduly constrained application of the section In order to understand s 86 3 b it is necessary to place that subsection in the context of s 86 more generally and also to understand s 86 against the background of the law which it sought to change 51 It was common case on this appeal that it was significant that s 86 was introduced in the Act of 1989 a provision which followed shortly after the important decision of this Court in McGrath v McDermott 1988 IR 258 It is agreed that the purpose of the section was to address the consequences of that decision and indeed reverse it In that case both the High Court and the Supreme Court had refused to follow a recent development in the two famous if controversial cases then relatively recently decided by the UK House of Lords Ramsay v Ireland Revenue Commissioners 1982 AC 300 and Furniss v Dawson 1984 2 WLR 226 Instead the courts of this jurisdiction had restated the law as set out in IRC v Duke of Westminster 1936 AC 1 52 These cases are familiar to all tax practitioners but they require some elaboration The Westminster case was in many ways the foundation stone for modern tax avoidance and tax mitigation strategies The majority of the House of Lords over the telling dissent of Lord Atkin refused to look to the substance of a transaction in which the employees of the Duke of Westminster engaged a scheme in which they received untaxed covenanted payments equal to the amount that they had previously received as wages The court considered that it could only look at the legal nature of the transaction a covenant which did not attract tax and could not have regard to the substance of the transaction employment which did The principle articulated in the Westminster case is contained in a well known passage in the speech of Lord Tomlin at pp 19 20 it is said that in revenue cases there is a doctrine that the Court may ignore the legal position and regard what is called the substance of the matter and that here the substance of the matter is that the annuitant was serving the Duke for something equal to his former salary or wages and that therefore while he is so serving the annuity must be treated as salary or wages This supposed doctrine seems to rest for its support upon a misunderstanding of language used in some earlier cases The sooner this misunderstanding is dispelled and its supposed doctrine given its quietus the better it will be for all concerned for the doctrine seems to involve substituting the incertain and crooked cord of discretion for the golden and streight metwand of the law Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less that it otherwise would be If he succeeds in ordering them so as to secure this result then however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity he cannot be compelled to pay an increased tax This so called doctrine of the substance seems to me to be nothing more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable 53 The Duke of Westminster s case was considered in this jurisdiction in O Sullivan v P Ltd 1962 3 ITC 355 and endorsed When this approach was coupled with the proposition that taxation like criminal liability was only to be imposed by clear language narrowly construed it was perhaps inevitable that more and more artificial schemes could be produced to seek to exploit perceived loop holes in the tax code In this progression the tax advisor would always be one lucrative step ahead of the Revenue While the legislature might seek to enact legislation to close the loop hole that would only be effective for the future and then the process would begin again 54 It appears that in the UK there was a growing discontent with this state of the affairs In Ramsay and Furniss the House of Lords adopted a novel approach Without reversing or indeed appearing to question the decision in the Westminster case the Court nevertheless concluded that in the words of Lord Fraser in Furniss at pp 228 229 The true principle of the decision in Ramsay was that the fiscal consequences of a pre ordained series of transactions intended to operate as such are generally to be ascertained by considering the result of the series as a whole and not by dissecting the scheme and considering each individual the dual transaction separately 55 This was it was said by some a principle of statutory interpretation i e that in truth the relief sought or loss incurred was not what the statute had meant or was intended to mean In taking this approach it was notable that the courts were adopting an approach first taken in the judgment of the distinguished US Judge Learned Hand in Helvin V Gregory 1934 69 F 2nd 501 a decision nearly contemporaneous with the decision in the Duke of Westminster s case For others the cases represented a significant change in the substantive law 56 The departure illustrated by both Ramsay and Furniss and the doubts as to whether this constituted a new departure in substantive tax law or merely a principle of statutory interpretation or both appears to have given rise to a series of cases and considerable debate in the UK see for example IRC v McGuckian 1997 1 W L R 991 MacNiven v Westmoreland Investments 2003 1 A C 311 and Barclays Mercantile Business Finance Ltd v Mawson 2005 1 A C 684 a paper entitled Ramsay 25 years on Some Reflections on Tax Avoidance delivered by Lord

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  • insolvent liquidations where the insolvencies gave rise to a deficiency of 8 million and where the party disqualified for nine years was in day to day control of the company and knew that the company was lending its funds interest and security free to its holding company in clear breach of the Companies Act and channelled further monies to his own use It had been held that these disqualifications were based on serious incompetence or neglect in relation to the affairs of the company He considered that the function of the court in addressing the question of unfitness is to decide whether the conduct of which a complaint is made viewed cumulatively and taking into account extenuating circumstances had fallen below the standards of probity and competence appropriate for persons fit to be directors of companies and that the appellant s conduct had to be evaluated in context The burden was on the applicant the Director to satisfy the court that the conduct complained of demonstrated incompetence of a high degree assessed in the context of and by reference to the role in the management of the company which was assigned to the appellant and by reference to his duties and responsibilities in that role That standard had to be applied to the facts of each particular case No question of the appellant s probity was mentioned in the Report He adopted the approach of Browne Wilkinson V C in In re Lo Line Electric Motors Ltd 1988 Ch 477 as approved by the Supreme Court in Re Newcastle Timber Limited 2001 4 I R 586 and cited other case law of the Supreme Court as all setting out the applicable test The learned High Court judge next dealt with cases concerning disqualifications within NIB including the case of Director of Corporate Enforcement v Nigel D Arcy Unreported High Court Kelly J 26th October 2005 in which without objection on his part Mr D Arcy was disqualified for a period of twelve years on the basis that he was primarily responsible since 1992 for the promotion and investment in CMI policies in NIB and that those funds had been undisclosed to the Revenue Commissioners and were being targeted by bank personnel for investment in CMI He had also become aware that CMI was being used by NIB to regularise bogus non resident accounts and fictitious named accounts He was disqualified on the basis of lack of commercial probity on his part The learned High Court judge in the present case also considered Director of Corporate Enforcement v Collery Unreported High Court Finlay Geoghegan J 9th March 2006 an application made in relation to the affairs of Ansbacher Cayman Limited The Court found that as a matter of probability Mr Collery was guilty of a serious lack of commercial probity in relation to the affairs of the company under investigation and disqualified him for a lengthy period The Inspectors had concluded that Mr Collery had knowingly assisted Hamilton Ross inter alia in evading tax due on its activities and in its unlicensed banking activities in Ireland and knowingly assisted Hamilton Ross in carrying on its business in such a manner to defraud creditors or other persons The learned High Court judge having also found that a Mr Brennan alerted Mr Seymour to the question of tax evasion continued Mr Seymour failed to make enquiries that any reasonable chief executive would have made knowing what he knew and bearing in mind the very significant and important responsibilities which the Bank had under the provisions of the 1986 Act There is clearly no requirement that the company becomes insolvent as a result of the director s conduct Nor indeed is it necessary that the director s conduct involves the commission of wrongdoing Non feasance in relation to systemic non compliance may be sufficient The clear evidence was that Seymour did know of the recurrent problems and at least in respect to the bogus non resident accounts could have re designated these accounted for the DIRT unpaid and disciplined senior and branch management for non compliance The failure to do so is in the opinion of the court a lack of a proper standard of conduct The same would appear to apply to the other areas identified by the Inspectors which could have been resolved by the repayment of fees improperly charged and by the cessation of the practice whereby bogus non resident accounts were transferred into CMI policies This latter statement appears to be at odds with the learned judge s earlier finding that It does not seem to the court that Mr Seymour s responsibility for the continuance of the CMI practice on its own is a ground for disqualification There was no evidence he could have stopped the practice It was remarkable that Mr Seymour did not communicate to the Audit Committee nor to the Board the extent of these failures and the potential liability of the bank to the Revenue It is in the view of the court not an answer that he was making a strenuous effort in the difficult circumstances to resolve the increasing problems that were dawning upon him during his tenure Neither is it an answer to say that the problem was endemic in Irish banking nor indeed that taxation matters were dealt with outside the Bank No advice was sought in relation to potential retrospective or continuing liability It is clear from the decisions in D Arcy and Collery where notwithstanding that the applications were not contested nonetheless were examined in detail by the courts that a failure to comply with legislation by a person who had responsibility and who could have resolved issues of non compliance is sufficient to justify disqualification It is clear that an order made under s 160 is not penal in nature it is not a criminal sanction nor a determination of liability in respect of any losses that accrued to members creditors or the regulatory authorities but an indication of a lack of commercial probity in relation to the management of a company The court is of the opinion that the appropriate period of disqualification before taking into account any mitigating factors should be one of twelve years given the serious nature of irregularities which were allowed to continue and the senior position of Mr Seymour The court is also mindful of the deterrent element of such a disqualification period emphasis added In the earlier case of Director of Corporate Enforcement v Byrne 2009 2 I L R M 328 the High Court Murphy J the learned High Court judge had reviewed a number of French and Latin dictionary definitions of probity which appeared to equate it with inter alia honesty In that regard he did not refer to any English dictionary The Oxford English dictionary 2nd Ed Vol XII defines probity as moral excellence integrity rectitude uprightness conscientiousness honesty sincerity In this case the learned trial judge did not define what was meant by probity However it seems clear that his earlier adopted definition is correct insofar as he considered it to equate with honesty I mention again however that although the learned High Court judge was speaking about a s 160 order being concerned with an indication of a lack of commercial probity that was not an allegation or a finding ever made against the appellant by the Inspectors although it appears immediately prior to the decision as to the length of the period of a disqualification In the circumstances it is difficult to conclude that it was not a factor going towards that decision and I so find The Appeal The appellant filed a Notice of Appeal on the 13th June 2007 In the Notice of Appeal the appellant asks for 1 an Order setting aside the whole of the Order of the High Court 2 an Order dismissing the application of the Director 3 an Order for costs The basis for the appeal is premised largely on claimed errors in law on the part of the trial judge in 1 failing to adopt and apply the correct test for the purpose of deciding whether a disqualification Order against the appellant was warranted i e whether the appellant was guilty of dishonesty or lack of commercial probity or gross negligence or total incompetence 2 failing to take any account of the fact that no allegation of dishonesty was made against the appellant in the proceedings 3 failing to take into account the purpose of disqualification Orders which is the protection of the public against the future conduct of companies by persons whose past conduct as directors of companies has shown them to be a danger to creditors and others 4 mistakenly evaluating the conduct of the appellant by reference to a finding that an application for a disqualification Order extends to a situation where a director fails to act as he is required to act fails to take action which should have been taken and fails to realize that which ought to be realized 5 assigning a period of disqualification that was excessive and disproportionate to the findings against him The parties submitted helpful written submissions to this Court on the appeal supplemented by detailed oral argument of counsel Before considering the judgment of the High Court and the arguments made in the course of this appeal it is helpful to set out at the outset certain important provisions of the governing legislation its interpretation intention and the likely consequences which may flow from the provisions according to the case law since the approach to be taken to the assessment of the claims made in the originating Notice of Motion and to the possible consequences flowing therefrom derive from that framework The Legislative Framework The provisions of s 160 of the Act of 1990 are fairly pithy in content whether in its original format or as amended by certain provisions of the Company Law Enforcement Act 2001 It sets out a number of circumstances in which a person may be disqualified from acting as an auditor director or other officer or even as a promoter of a company in the following terms 1 Where a person is convicted on indictment of any indictable offence in relation to a company or involving fraud or dishonesty then during the period of five years from the date of conviction or such other period as the court on the application of the prosecutor and having regard to all the circumstances of the case may order a he shall not be appointed or act as an auditor director or other officer receiver liquidator or examiner or be in any way whether directly or indirectly concerned or take part in the promotion formation or management of any company or any society registered under the Industrial and Provident Societies Acts 1893 to 1978 b he shall be deemed for the purposes of this Act to be subject to a disqualification order for that period 2 Where the court is satisfied in any proceedings or as a result of an application under this section that a a person has been guilty while a promoter officer auditor receiver liquidator or examiner of a company of any fraud in relation to the company its members or creditors or b Where a person has been guilty while an officer of a company of any breach of his duty as such officer or d The conduct of any person as officer of a company makes him unfit to be concerned in the management of a company or e In consequence of a report of inspectors appointed by the Court or the Director under the Companies Acts the conduct of any person makes him unfit to be concerned in the management of a company the court may of its own motion or as a result of the application make a disqualification order against such person for such period as it sees fit The section is drafted in a manner which provides for a range of possibilities from no order whatsoever to a disqualification for a relatively short period of time perhaps under certain conditions to quite a long period of disqualification as is clear from the case law Finally to complete this outline and it is only a brief outline of the relevant parts of the Act of 1990 s 160 9 by the provisions of s 42 of the Company Law Enforcement Act 2001 that subsection was amended by the addition of the following provision 9A In considering the penalty to be imposed under this section the court may as an alternative where it adjudges that disqualification is not justified make a declaration under section 150 In these proceedings the Court is concerned only with s 160 2 b d and e and in this appeal is dealing with s 160 2 e since the only order made was one pursuant to that sub section The provisions of s 160 2 have been the subject of considerable case law in this jurisdiction Some of that case law relies on comments made in decisions arising under the United Kingdom statutory but not identical scheme It is almost invariably the case however that decisions are made both in this jurisdiction and in the United Kingdom by specific reference to particular facts arising in the cases in question a matter meriting mention in the judgment of Fennelly J in Director of Corporate Enforcement v Byrne 2009 2 I L R M 328 For my own part I would prefer on balance to deal with s 160 2 by commencing with the provisions themselves as interpreted by this Court inter alia for the following reasons In some of the cases in the United Kingdom such as In Re Barings 1999 1 B C L C 433 the primary thrust of the judgments was to consider the responsibility for and the consequent liability in respect of matters which were the expressly allocated responsibility within the management structure of that bank of the respondent parties I mention this case merely as an example of one of the range of circumstances in which disqualification orders may arise It seems to me that it is not always helpful to transpose willy nilly statements in relation to the interpretation and application of provisions of an Act adopted in the United Kingdom as applied there to particular facts or to particular parties in particular positions with particular and express obligation to all other facts and all other parties or companies affected by the provisions of the legislative scheme in this jurisdiction Coincidentally in the present case the application is also made in the context of a banking institution as was the case in Barings A detailed analysis of the structure of the Act of the intention properly to be understood from the provisions of s 160 2 and of the appropriate manner in which the adjudication should be carried out is found in the judgment of O Donnell J in this Court s decision in The Director of Corporate Enforcement v Patrick McCann Unreported Supreme Court 30th November 2010 In that case and of particular significance in the context of the exercise carried out by O Donnell J the High Court had determined that The only function of the court is to prevent a respondent from acting as an auditor or other officer where the evidence is sufficient to demonstrate that as a matter of probability the person in question would present a current risk to members of the public emphasis added This statement was made in purported reliance on the language used by Browne Wilkinson V C in the oft cited extract from In re Lo Line Electronic Motors Ltd Others 1998 Ch 477 where he stated in part The primary purpose of the section is not to punish the individual but to protect the public against the future conduct of companies by persons whose past records as directors of insolvent companies have shown them to be a danger to creditors and others emphasis added As O Donnell J stated there is a tendency to treat observations such as those above and others as a gloss on the statute so as to replace consideration of the words and structure of the statute itself Not only does this deprive the court of the guidance to be obtained from the entirety of the section in its context it also means that the court does not have the benefit of the decision making structure that the section has been held to require A similarly cautious note was expressed by Fennelly J in Director of Corporate Enforcement v Byrne 2009 2 I L R M 328 when having referred to the longer extract from Lo Line supra next mentioned stated Dillon L J in his judgment in Re Sevenoaks Stationers Ltd 1991 Ch 164 at 176 deplored the tendency to treat these statements as judicial paraphrases of the words of the statute which fall to be construed as a matter of law in lieu of the words of the statute He went on to state the the true question to be tried is a question of fact I agree with and endorse these comments There are nevertheless considered and helpful comments in the case law of this Court on the appropriate approach to be taken to the proper interpretation and application of the statute In the Lo Line decision itself supra Browne Wilkinson V C stated at page 485 What is the proper approach to deciding whether someone is unfit to be a director The approach adopted in all the cases to which I have been referred is broadly the same The primary purpose of the section is not to punish the individual but to protect the public against the future conduct of companies by persons whose past records as directors of insolvent companies have shown them to be a danger to creditors and others Therefore the power is not fundamentally penal Ordinary commercial misjudgement is in itself not sufficient to justify disqualification In the normal case the conduct complained of must display a lack of commercial probity although I have no doubt that in an extreme case of gross negligence or total incompetence disqualification could be appropriate While this extract should not permit a gloss to be put on the provisions of s 160 2 this extract from the Lo Line case has been cited with approval on several occasions in this jurisdiction including in Re Readymix Cahill v Grimes 2002 1 I R 372 in In the matter of Wood Products Longford Ltd Director of Corporate Enforcement v McGowan 2008 4 I R 598 as well as in Director of Corporate Enforcement v Byrne 2009 2 I L R M 328 I also agree with the following statement of O Donnell J in Director of Corporate Enforcement v McCann supra It seems clear to me that the Act of 1990 considers that past conduct is the key to disqualification and which conduct in itself demonstrates either the breaches of duty or general unfitness which can justify disqualification unless the court in the exercise of discretion considers that such an order should not be made This is a more focussed inquiry and one which is rooted in the Act emphasis added A similar emphasis on the importance of past conduct is found in the judgment of the High Court Finlay Geoghegan J in Re Ansbacher Caymon Limited Director of Corporate Enforcement v Collery supra in which she stated at page 581 The period of disqualification should reflect the gravity of the past conduct as found by the Inspectors which makes the appellant unfit to be concerned in the future management of a company Reverting to the section on a correct reading of it the wording also contains an indication that deterrence is also among one of its intentions Clearly if s 160 is intended to ensure and encourage proper corporate governance then a disqualification order will or ought to have a deterrent effect and properly so on the conduct of affected persons and on others in key positions The same extract from Lo Line supra was also cited by the learned High Court judge in this case as representing a correct statement of the law on s 160 of the Act of 1990 In the judgment of Murphy J in Re Readymix Ltd supra with whom all other judges of this Court agreed having cited the extract he continued at page 381 That passage was quoted with approval by the learned trial Judge and likewise was adopted by Shanley J in La Moselle Clothing Ltd v Soualhi 1998 2 ILRM 345 by McGuinness J in Squash Ireland Unreported High Court McGuinness J 8th February 2001 and in the judgment of McCracken J in Re Newcastle Timber Ltd supra It is I believe a correct statement of the law and represents a proper approach to the application and interpretation of s 160 of the Companies Act 1990 emphasis added It was also adopted expressly by this Court in the more recent judgment of Denham J in Director of Corporate Enforcement v Byrne 2009 2 I L R M 328 in which referring to the Readymix case supra she stated Murphy J referred to the above as a correct statement of law and represents a proper approach to the application and interpretation of s 160 of the Companies Act 1990 I shall apply the legal propositions set out earlier in the judgment to this case i There is a distinction between a restriction order under s 150 of the Companies Act 1990 and a disqualification under s 160 of the Companies Act 1990 At issue in this case is a disqualification order under s 160 ii The conduct necessary to justify the making of a disqualification order has to be much more grave and blameworthy than the conduct which justifies a restriction order Therefore more grave and blameworthy conduct is required to be identified in this case if the Director s application is to succeed iii The conduct necessary to justify a disqualification order must be manifestly more blameworthy than merely failing to exercise an appropriate degree of responsibility The Inspectors Report in this instance held that having read the Theme Report and attended the meeting of the 9th February 1995 he ought to have known the consequences of such non compliance for the accuracy of the returns of DIRT being made by him or persons under his control to the Revenue Commissioners At its height the Inspectors Report criticised the appellant for not exercising a responsibility which he did not have and which he did not realise arose Commercial misjudgment is not sufficient However this did not arise as an issue in this case The conduct complained of must display a lack of commercial probity although in an extreme case of gross negligence or total incompetence disqualification could be appropriate The High Court held that there was no evidence of gross negligence or total incompetence There was no issue of dishonest behaviour by the appellant Thus these aspects of the legal test are not met iv The primary purpose of a disqualification order is not to punish the individual but to protect the public against the future running of companies by persons whose past records have shown them to be a danger to creditors and others The learned High Court judge held that the appellant was not a danger to the public and I would affirm that finding v The Court should take into account the entire history of the person in question and not just the alleged act or acts of wrongdoing in isolation The appellant has had an unblemished record apart from the criticisms in the Inspectors Report vi There is an element of deterrence in the exercise of the Court s discretion This discretion arises especially if the person involved is not a danger to the public The High Court found that the appellant was not a danger to the public and as the appellant is no such danger there is no necessity to exercise a discretion relating to deterrence vii The matter is not to be judged with the inevitable benefit of hindsight In this case the appellant had entered his role in 1994 he complied with the requirements of his position neither he nor others in the Bank were alerted to the danger of a retrospective tax liability by either the Theme Report or the meeting on the 9th February 1995 The benefit of hindsight is not given to any one party or to be so assessed viii In the exercise of its discretion the Court is entitled to take into account the fact that the effect of a disqualification order may be greater on a professional person While the appellant is a professional person I am satisfied that the issue of a discretion to be exercised and whether it is proportionate or not does not arise in this case as the Director has not presented a case such as should ground a disqualification order ix The burden of establishing that a disqualification order is warranted rests on the Director In this case I am satisfied that the Director has not discharged the burden of raising the Court s jurisdiction to make an order under s 160 of the Companies Act 1990 In the same case Fennelly J in his judgment having cited the same extract from Lo Line supra in the context of the meaning of unfit stated at 362 Murphy J in his judgment in Readymix with which Murray J as he then was and McGuinness J agreed described that as a correct statement of the law and as representing a proper approach to the application and interpretation of section 160 He cited several cases where it had already been followed It has been treated as a useful point of reference in several later cases It is obvious however that Browne Wilkinson VC was not propounding an exhaustive definition His use of expressions such as in a normal case and primary purpose show that No doubt unfitness could encompass physical or mental incapacity though not mentioned So also might irresponsible behaviour total neglect or a high degree of carelessness All would depend on the circumstances Nonetheless having administered those cautions it is clear that the words of Browne Wilkinson VC provide some useful pointers to how the court should assess unfitness The drastic nature of the remedy necessarily implies that the Director should meet a high standard of proof It is natural to begin by asking whether the person is shown to be dishonest In that event it will be very difficult to show that he should be trusted with the management of a company Counsel for the Director placed particular reliance on some passages from the judgment of Jonathan Parker J in Re Barings plc and others Secretary of State for Trade and Industry v Baker 1999 BCLC 433 ate 483 which were as follows Unfitness may be shown by conduct which is dishonest including conduct showing a want of probity or integrity or by conduct which is merely incompetent In every case the function of the court in addressing the question of unfitness is to decide whether the conduct viewed cumulatively and taking into account any extenuating circumstances has fallen below the standards of probity and competence appropriate for persons fit to be directors of companies Jonathan Parker J went on to say that where the case is based solely on allegations of incompetence the burden on the Secretary of State is to satisfy the court that the conduct complained of demonstrates incompetence of a high degree He referred to the various expressions which had been used in the cases including total incompetence as in the judgment of Browne Wilkinson VC before reiterating that the burden in a case based on incompetence is a heavy one I agree that it is correct to examine the question of the fitness of the person by looking at his behaviour and record as a whole Jonathan Parker J used the word cumulatively The question of unfitness must be assessed generally and rigid categories should be avoided There are degrees of honesty probity and integrity In Re Newcastle Timber Limited 2001 4 I R 586 at 592 McCracken J considered that directors had acted incompetently adding particularly in relation to insolvent trading and preference of trade creditors I think they behaved irresponsibly Nonetheless he was not satisfied that they had been shown to be unfit I do not say that I would necessarily have reached the same conclusion on the facts of that case I mention it as an example of an assessment of all the relevant behaviour taken as a whole One other procedural detail is important Section 160 7 of the Act obliges the Director to give at least ten days notice to the person of his intention to apply for a disqualification order This provides him with an opportunity to respond as he did in the present case This provision illustrates the general principle that any person who is to be the subject of an application under the section must be given clear notice of that fact and of the grounds on which the application is to be made I emphasise the matter here because it has a bearing on the finding of want of commercial probity made by the learned trial judge in the present case The Director by his notice stated that he intended to make the application pursuant to paragraphs b d and e of Section 160 2 but also stated that the application was to be brought having regard to the Inspector s Report In fact both the draft notice of motion sent with the Director s prior notice and the notice of motion actually sent were based exclusively on the contents of the Inspector s Report emphasis added It seems to me that tests in the above case law including when properly read the oft cited extract from Lo Line supra are correct They properly leave to the court as was correctly pointed out by O Donnell J in his judgment in McCann supra the obligation to apply the provisions of the Act in the context of the circumstances of each particular case The principles do however make it clear that when assessing incompetence or breach of duty this must be at least of a high degree even if not necessarily gross and established to be such by the Director upon whom there is a heavy burden If it is established it may also follow that a person is unfit within s 160 2 d There is one other aspect of the section mentioned both by O Donnell J in Director of Corporate Enforcement v McCann supra and also by Fennelly J in the case of In Re Wood Products Longford Ltd supra which requires to be re emphasised In the latter case Fennelly J noted that the logical application of the provisions of the Act of 1990 involves a two stage enquiry the first being whether the court is persuaded that conduct which falls within one or more of the sub paragraphs of s 160 2 invoked by the Director has been established The establishment of such facts and or conduct constitute what Fennelly J called jurisdictional triggers and O Donnell J gateways to the second stage which is the exercise of the court s discretion to disqualify or not In In Re Wood Products Longford Ltd Fennelly J also noted that this two stage enquiry requires the court to consider first as a matter of objective forensic enquiry whether one or more of the criteria under s 160 2 has been established to the necessary level required If not then there is no jurisdiction to make a disqualification order and the exercise of the discretion vesting in the trial judge or as appropriate in this Court on appeal does not arise Once the jurisdictional triggers have been established however then a disqualification order may be made in a manner reflecting the findings under s 160 2 unless in the exercise of the court s discretion such an order is not made I agree that this is the correct approach to the application of the provision In light of the foregoing synopsis of the legislation and of the relevant case law I now turn to the matters arising from the judgment and on the appeal Before doing so and having regard to the case law it is helpful to recall the management structure of NIB There was a Chief Executive later called the Executive Director including the appellant who was not at any time appointed to the Board of NIB to whom the General Manager Banking reported The latter was responsible inter alia for the retail branch network The Branch Managers reported to Regional Managers later called Area Managers who reported in turn to the General Manager Banking also called Head of Retail Banking He reported in turn to the Chief Executive who reported to the Board The Report does not suggest nor has the Director contended that the appellant had direct executive or managerial responsibility in respect of the branches but rather as chief executive had overall responsibility for NIB There was as mentioned earlier an Internal Audit Department or Function which did not report to the appellant but to the Audit Committee of the Board It was chaired by the Chairman of the Board There were also as required by law external auditors to NIB The Issues The issues which arise for consideration on this appeal appear to be agreed as being the following 1 What legal test should apply in order to determine what constitutes unfitness for the purposes of making an order of disqualification 2 Was the correct legal test properly applied in the High Court judgment 3 Did the conduct of the appellant meet the legal test 4 Was a disqualification order justified and if so was the period for which it was ordered appropriate The Arguments of the Parties What legal test should apply in order to determine what constitutes unfitness for purposes of granting an order of disqualification Counsel for the appellant contends that the legal test which must be met in order to make a disqualification order is that the conduct complained of must display a dishonesty or a lack of commercial probity i e integrity or b gross negligence or c total incompetence or some or all of these The Director posits a variation of these arguing that simple breach of duty is sufficient Ordinary commercial misjudgement it is well established is not in itself sufficient to justify disqualification Counsel for both parties also agree that the main purpose of a disqualification order is not to punish the individual but to protect the public against persons whose past record as directors have shown them to be a danger to creditors and others although the appellant in written submissions puts a slant on this by suggesting that the Director must establish that the appellant was and is now a danger to the public He also argues that the level of incompetence or negligence must border on virtual dishonesty The tests are dealt with in the above analysis with the particular caution that a to c are not necessarily exclusive criteria as is clear from the recent case law and that the court cannot be hidebound by phrases such as gross negligence or total incompetence whatever these phrases mean I do not accept as correct the appellant s contention that in a case relying on incompetence or negligence this must be established to a level which amounts to virtual dishonesty and accept the Director s argument to the contrary the legislation giving no hint that this should be so which is well supported by the case law The parties agree

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  • the Garda Síochána while he was driving a car in a public place in Terenure Dublin As a result of observations made by the guard the defendant was arrested In relation to this arrest the learned Circuit Judge found as follows I was not satisfied that at the time of the arrest Garda Rowan specifically said to the accused I am arresting you under s 49 8 of the Road Traffic Act I was satisfied that it was her intention to rely upon the powers given to her under s 49 8 of the Road Traffic Act to effect an arrest but she did not in fact invoke the statute at the time of the arrest 10 There was further uncontested evidence that the defendant was brought to a garda station where another guard subsequently made a demand of him for the production of a specimen of breath This was done pursuant to the power conferred by s 13 of the Road Traffic Act 1994 which provides as follows 1 Where a person is arrested under s 49 8 or 50 10 of the principal Act or s 12 3 or where a person is arrested under s 53 6 106 3A or s 112 6 of the principal Act and a member of the Garda Síochána is of opinion that the person has consumed an intoxicant a member of the Garda Síochána may at a Garda Station at his discretion through either or both of the following a Require the person to provide by exhaling into an apparatus for the purpose of determining the concentration of alcohol in the breath two specimens of his breath and may indicate the manner in which he is to comply with the requirement b irrelevant 11 It thus appears that the power to demand an evidential breath specimen depends on the person of whom the demand is made having been arrested under a specific Section and not otherwise 12 There was evidence in the present case that the defendant provided the specimens as he was required by law to do This was the evidence of a Garda Dooley who produced a s 17 statement in Court This statement was the subject of objection by the defence with the result that according to the case stated A copy of this s 17 statement the original of which was tendered but nor formally admitted into evidence by reason of the issues raised as to compliance with Article 5 of the 1999 Regulations is attached at annex B 13 The case stated also records that the defence cross examined Garda Dooley by asking him whether the account he had given in evidence as to the procedures followed by him in connection with the taking of the specimens was a full and complete account of the procedures followed by the witness He replied yes Questions posed by the trial Judge 14 The learned Circuit Judge sought the opinion of this Court on the following questions a Where

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  • is satisfied that any reliance on the need for increased care or minding has not been deliberately exaggerated and it cannot be said that the respondent s evidence or the evidence adduced by her or in her affidavits is in this respect knowingly false or misleading Travel by Bus and Requirement to be Accompanied 16 A further area considered was the claim as to her ability to travel by bus and the requirement to be accompanied The learned trial judge reviewed the facts and held The overall picture is not one of deliberate falsehood or intention to mislead but of a history which is not precisely correct on every detail as recorded but which provides a substantially correct overview The Court found the respondent to be overall a truthful witness even if every detail of her narrative was not necessarily precise The Court is satisfied that she did not give or cause to be given any false or misleading evidence and any inaccuracies were neither material or knowingly false or misleading The Court is also of the view that Section 26 1 refers to the giving of evidence or adducing of evidence and that such subsection is not dealing with information provided outside the Court and the Court rejects any interpretation to such effect Even if I am wrong on that point the Court is of the view that on the evidence it cannot be said that the respondent knew evidence to be false or misleading 17 The High Court addressed specifically the claims under s 26 of the Act of 2004 and determined that the provisions do not apply to this action Notice of Appeal 18 Against the order and judgment of the High Court the appellant has appealed The grounds of the appeal filed include the following a The learned trial judge erred in law and in fact in failing to dismiss the action of the respondent under the provisions of s 26 1 of the Civil Liability and Courts Act 2004 b The learned trial judge erred in law and in fact in failing to dismiss the action of the respondent against the appellant under the provisions of s 26 2 of the Civil Liability and Courts Act 2004 c The learned trial judge erred in law and in fact in failing to determine that the respondent gave or adduced or dishonestly caused to be given or adduced evidence which was false or misleading in any material respect and which she knew to be false or misleading d The learned trial judge erred in law and in fact in failing to determine that the respondent had sworn an affidavit under s 14 of the Civil Liability and Courts Act 2004 which was false or misleading when swearing the affidavit e The learned trial judge erred in law and in fact in determining that the respondent was a truthful witness overall and in determining that the respondent did not know that her evidence was false or misleading or in determining that the respondent did not have an intention to mislead the Court f The learned trial judge erred in law and in fact in determining that the section 14 affidavit filed by the respondent in these proceedings was not false or misleading in a material respect or in determining that the respondent when swearing the said affidavit did not have a deliberate intention to tell an untruth or to mislead the Court g The learned trial judge erred in law and in fact in determining that the appellant failed to establish that s 26 of the Civil Liability and Courts Act 2004 applied to the facts of this case h The learned trial judge erred in law and in fact in determining that the burden of proof on the appellant under s 26 of the Civil Liability and Courts Act 2004 was higher than simply on the balance of probabilities but instead was on the basis of the balance of probabilities having regard to the additional burden the appellant had to meet having alleged fraud i The learned trial judge erred in law and in fact in approaching s 26 of the Civil Liability and Courts Act 2004 on the basis that it approximated to an allegation of fraud at common law and that the burden of proof on the appellant was not discharged unless the appellant met the proofs to the standard required when such an allegation was made In short the learned trial judge applied the wrong test Submissions 19 Written and oral submissions were made to the Court on behalf of the appellant and the respondent Legislation 20 The appeal in this case raises issues on s 26 of the Act of 2004 Section 26 provides 26 1 If after the commencement of this section a plaintiff in a personal injuries action gives or adduces or dishonestly causes to be given or adduced evidence that a is false or misleading in any material respect and b he or she knows to be false or misleading the court shall dismiss the plaintiff s action unless for reasons that the court shall state in its decision the dismissal of the action would result in injustice being done 2 The court in a personal injuries action shall if satisfied that a person has sworn an affidavit under section 14 that a is false or misleading in any material respect and b that he or she knew to be false or misleading when swearing the affidavit dismiss the plaintiff s action unless for reasons that the court shall state in its decision the dismissal of the action would result in injustice being done 3 For the purposes of this section an act is done dishonestly by a person if he or she does the act with the intention of misleading the court 4 This section applies to personal injuries actions a brought on or after the commencement of this section and b pending on the date of such commencement

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