373 / 406
GAZETTE
JANUARY/FEBRUARY 1985
Recent
Irish
Cases
Edited by
Gary Byrne, Solicitor
INCOME TAX
S.81 (5) (d) Income Tax Act 1967, (S.22
Finance Act 1969) — Solicitors and
Auctioneers Fee — Capital Expenses or
Managment Expenses allowable or
nonallowable deduction.
Stephen Court Limited constructed an
office building in Stephen's Green,
Dublin between 1968 and 1971. It was
completed in February 1971. In April
1969, a firm of auctioneers had been
appointed to secure tenancies and leases
of the various units in the building and
various lettings and leases were
negotiated. Solicitors were instructed to
prepare the relevant leases and they did
so. One of the leases was to the E.S.B. for
38 years from 8 November 1971 at a
yearly rent of £77,000.00. The Inspector
of Taxes claimed that the Auctioneers
and Solicitor's Costs in relation to the
lease were of a capital nature and that
they were incurred for the creation of a
capital asset, i.e., the lease. The issue
came down as to whether the Capital of
the applicant is the lease or the actual
premises. It was claimed that as the
business of Stephen Court Limited is that
of letting the premises, then the premises
constitutes the capital of the business.
The Judge took the view that if expenses
incurred for work performed by members
of staff or a business were classified as
management expenses, such expenses
could not cease to be management
expenses because independent qualified
persons were employed for the same
work. The Judge held that the capital was
the premises know as Stephen Court and
the Company business is both the letting
of the property and the collection of the
rent reserved and not as the Revenue had
stated just the collection of the rent and
not the creation of the lease. Therefore it
followed that the expenses of negotiating
the lease and preparing the necessary
documentation were not expenses of a
'capital nature' but were expenses of
management.
The Income Tax Authorities also tried
to have the expenses disallowed as they
were not in the currency of the lease (as
required by S. 8) as they were charged
before the actual signing of the proper
lease but, an agreement for the lease was
signed prior to the billing by the Solicitor
and Auctioneer and it was held by the
Court that this was sufficient to allow the
expenses to be incurred during the
currency of the lease. The case was by way
of case stated to the High Court as to
whether the Circuit Court Judge was or
was not correct in holding that
auctioneers' commission and solicitors'
costs incurred in negotiation of leases did
not constitute costs of management,
within the meaning of Paragraph D of
sub-section 5 of Section 81 of the Income
Tax Act 1967 or recommendations
substituted by S.22 of the Finance Act
1969 on the grounds that they are
expenses of a Capital nature and
therefore not authorised deductions in
computing the Appellant's profits or
gains in accordance with the provisions of
the Section. The High Court was of the
opinion that the Circuit Court was not
correct in holding that the letting fees and
legal expenses were of a Capital nature
and held that the fees were expenses of an
authorised deduction in computing the
profits and gains of the Appellant.
Stephen
Court Limited
-v-
J. A.
Browne
(Inspector
of Taxes)
- High Court
(per
McWilliam
J.). 7 June.
1983
- [1984]
ILRM
231.
John Barry Fox
PRACTICE — MISTAKE
Settlement negotiated between Counsel —
Mutual mistake whether written terms
settled all items of dispute between parties
or those in the Proceedings alone —
Signature of terms of settlement by
Counsel binds Defendants.
In two Actions brought by two
Associated Companies against identical
Defendants possession was claimed of
two premises with arrears of rent and
mesne Rates in each case. In pre-hearing
discussions both cases were dealt with
together. A third company associated
with both Plaintiffs had agreed in 1973
with the Defendants to buy their interest
in the two premises in question and a
deposit paid. The purchase did not
proceed. The Defendants claimed they
were entitled to forfeit the deposit of the
third company. The Plaintiffs were
dissatisfied at that. Settlement was
negotiated between Counsel for both
sides. The first draft was headed "Full
and final settlement of all matters and
acts in dispute between the Parties".
Plaintiffs' Counsel caused this to be
changed. The Memorandum signed by
both Counsel was headed "Full and final
settlement of all matters and acts in
dispute between the Parties in these
Proceedings." The Settlement provided
for payment to the Plaintiffs of
£31,000.00 in two instalments, adjourn-
ment of all the Proceedings and an Order
for Possession with a Decree for balance
of the monies outstanding to be made in
the event of the payments not being
made. The first payment was made on
time. Thereafter the Plaintiff, Aramaic
Limited, terminated the lease relating to
one premises on 23 June 1983 relying on
breach of covenant. The third company
started proceedings to enforce the 1973
Agreement for acquisition of the
Defendants' interest in the premises. The
Defendants argued that the terms of
settlement had covered all matters and
that to re-open the other disputes was a
breach of the Plaintiffs' obligations. The
Defendants with-held further payment.
The Plaintiffs moved the Court to give
effect to the Settlement terms. The Court
heard evidence from both Counsel.
HELD. The Memorandum of Settle-
ment seemed clear. Incorporation in it of
the clause "In these Proceedings"
appeared to confine the terms of
Settlement to the litigation between the
Parties at that time. The Plaintiffs or the
Third Company were not precluded from
bringing the subsequent claims after
settlement of the Ejectment Proceedings
being litigated. The Court accepted that
the Defendants' Counsel believed he had
secured Agreement to include withdrawal
of all claims against his clients and that
the Plaintiffs' Counsel held a different
view. The Parties through their Counsel
concluded an Agreement for settlement
of the High Court Action on 15 June 1983
and it was intended that all these terms
should be in the Memorandum signed by
both Counsel.
There could be no collateral oral
Agreement side by side with the written
Memorandum. The Memorandum was
not vitiated by ambiguity or uncertainty.
The case was not one where equitable
relief against forfeiture could be given
and if it was the relief would not be given.
The Parties were bound by the written
Memorandum which related only to the
matters being litigated in Court.
Judgment was given to the Plaintiffs in
accordance with the Settlement.
Mespil
Limited
& Aramaic
Limited
-v-
Eraneis
Capaidi.
Philip
Capa/di
and
Elizabeth
Bowes
- High
Court
(per
OH anion
J.).
10 February.
1984
-
unreported.
Eugene T. Tormey
ROAD TRAFFIC ACTS
Case stated — Refusal to provide sample
— Amendment of charge sheet.
The Defendant was properly arrested
under Section 49 of the Road Traffic Act
1961 and brought to a Garda Station
where he was required by the Sergeant to
permit a Doctor to take from him a
sample of blood or at the Defendant's
option he could provide a sample of urine.
The Defendant opted to provide a sample
of urine. He was provided with necessary
containers but failed to provide a sample