The High Court awarded Irish Life and Permanent plc and Guinness and Mahon (Ireland) Limited the costs of complying with court orders requiring them to provide Revenue with information about account holders. The ruling did not determine Revenue’s allegations that the banks had negligently or knowingly facilitated bogus non-resident accounts.
Mr Justice O’Sullivan delivered judgment on 19 December 2006 in a motion brought by the banks. The orders had been made under section 908 of the Taxes Consolidation Act 1997, as amended, and required information to be supplied to Gerard Howard, an authorised inspector acting for the Revenue Commissioners. The motion sought the banks’ costs of appearing in court and the costs of compliance, which were said to exceed €3 million.
Revenue argued that the banks should not recover those costs because, it said, their conduct around non-resident accounts had made the applications necessary and increased the work required. Its submissions referred to accounts lacking declarations, alleged failures to act on audit findings, and difficulties with the banks’ initial searches. The judgment records these as allegations and submissions, not findings in this costs decision.
The banks disputed the allegations. They argued that the orders had required substantial work, that most of the 28,280 accounts covered were not bogus and involved people with no tax liability, and that information supplied enabled Revenue to collect about €16 million in tax arrears and penalties unrelated to DIRT. They also said the disputed factual issues could not fairly be resolved on affidavit evidence without cross-examination.
The judge held that a party required to do work for another is generally entitled to the proper costs of doing it. He concluded that section 908 did not give the court a broad mandate to decide collateral disputes about the banks’ conduct. In this procedure, the costs discretion was limited to matters within the section, including whether the banks had complied with the orders.
Although there had been applications to extend the time for compliance, the judge said full compliance was ultimately accepted. He therefore held that the banks were entitled to their costs and expenses of compliance, together with their costs of appearing in court when the orders were made.
The judge also considered the alternative—that the court had a wider discretion. He reached the same result, citing the serious factual conflict, the absence of cross-examination, the partial nature of the evidence and the lack of any attempt to identify what portion of the compliance costs related to the alleged misconduct. The judgment did not resolve whether the banks were negligent or complicit in tax evasion.