The High Court has ordered Revenue Commissioners to recover two days’ costs in a tax appeal, while awarding the appellant costs attributable to a separate issue on which he succeeded. The court also divided the costs of written submissions and ordered a stay pending possible appeals of the main judgment.
The costs judgment, delivered by Ms Justice Egan on 17 November 2022, followed her principal judgment of 1 July 2022 in an appeal by way of case stated from the Tax Appeals Commission. The two named appellants were Brendan Thornton and Paul McDermott; the judgment refers to the first-named appellant as the party whose case was addressed. It said he effectively represented the interests of a large number of similarly placed appellants.
The underlying dispute concerned Revenue’s refusal of loss relief for dividend transactions. In the principal judgment, the court upheld the Commission’s determination that the appellant had not shown he was trading in financial instruments and securities through syndicates. It also ruled that the expression of doubt submitted with his tax return was invalid. On a separate issue, however, the court held that section 812 of the Taxes Consolidation Act 1997 applied to deem the dividend income to be that of the share owner rather than the appellant.
The appellant did not overturn the Commission’s determination or obtain the relief sought. But Justice Egan found Revenue was not “entirely successful” for costs purposes because it had failed on the distinct section 812 issue. She treated both sides as partially successful: Revenue on the trading and expression-of-doubt issues, and the appellant on section 812.
Revenue sought all the costs. The court declined, finding that section 812 was one of the two main issues, took substantial hearing time and materially added to the proceedings. The parties had reasonably pursued it, the judgment said, and both had asked the court to decide it.
The court allocated three and a half days of costs to Revenue for the background, trading issue and expression-of-doubt issue, and one and a half days to the appellant for section 812. After setting those amounts against each other, Revenue was awarded two days’ costs. Revenue will also recover the costs of the first and second sets of written submissions; the appellant will recover the costs of the third set, which dealt with section 812 and the meaning of “income”.
Revenue was further awarded one third of the costs of the costs application and related written submissions. The amounts are to be adjudicated if the parties cannot agree. The order was stayed because the appellant indicated an intention to appeal the principal judgment and Revenue said it would cross-appeal on section 812 if necessary.