The Gazette 1985

JANUARY/FEBRUARY 1985

GAZETTE

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.

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.

Mespil Eraneis

Limited

& Aramaic

Limited

-v-

Capaidi.

Philip

Capa/di

and (per

Elizabeth

Bowes

- High

Court

OH anion unreported.

J.).

10 February.

1984

-

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

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